Wrap Text
Audited final results for the year ended 28 February 2013
HOLDSPORT LIMITED
("Holdsport" or "the company" or "the group")
Registration number: 2006/022562/06
Share code: HSP
ISIN: ZAE000157046
AUDITED FINAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2013
Sales up 10.5% to R1 374.5 million
Core headline earnings per share up 7.3% to 415.7 cents
Strong cash flow from operating activities
Total gross dividend for the year of 200 cents, up 23.4%
GROUP OVERVIEW
The Holdsport Limited group comprises the retail divisions Sportsmans Warehouse and
Outdoor Warehouse, and Performance Brands, a wholesale business that includes the
First Ascent and Capestorm brands.
The group delivered a satisfactory result for the year under review with total sales
increasing by 10.5% to R1 374.5 million. Retail sales increased by 10.4% to
R1 321.3 million.
Operating profit increased by 7.4% to R243.3 million. In evaluating this performance
shareholders should take the following factors into account:
- The preceding two comparative reporting years coincided with a rugby and football
world cup respectively. This resulted in a strong performance from replica apparel
during these years, which was not repeated during the current year.
- The accounting treatment of foreign exchange denominated transactions coupled with
the volatile Rand/Dollar exchange rate results in a non-cash income or expense at the
end of every reporting period which is partly included in cost of sales and partly
recognised as foreign exchange gains or losses within trading expenses. During the
current year the aggregate adjustment was an expense of R1.8 million compared to an
aggregate profit of R6.1 million during the prior year. The majority of the adjustment
is included in cost of sales.
Core headline earnings amounted to 415.7 cents per share, a 7.3% increase on the
previous year. Core headline earnings excluding the effect of foreign exchange
adjustments increased by 11.0% to 418.7 cents per share.
Holdsport's total investment in working capital increased by 24.3% as a result of
the increase in trading space and the effect of the weaker exchange rate on the cost
of imported stock.
TRADING DIVISIONS
Sales for the various trading divisions were as follows:
Increase
Number Sales in sales
of stores R'm %
Sportsmans Warehouse 35 999.0 11.4
Outdoor Warehouse 19 322.3 7.4
Retail sales 54 1 321.3 10.4
Performance Brands - 53.2 11.9
Total sales 54 1 374.5 10.5
Like-for-like retail sales grew by 8.3% while the retail divisions experienced price
inflation of approximately 2.9% for the year. The time weighted trading area increased
by 3.7% relative to the prior year.
The Sportsmans Warehouse division expanded its Fourways store, relocated the store in
Polokwane and added stores in Rustenburg and Bloemfontein. The Capestorm store in
Wynberg was closed. Like-for-like sales increased by 9.3%. Sportsmans Warehouse now
trades out of 35 stores.
The Outdoor Warehouse division comprises 19 stores after opening a new store in
Rustenburg. Like-for-like sales increased by 5.2%.
Performance Brands achieved external sales of R53.2 million, an increase of 11.9%.
CAPITAL EXPENDITURE
During the year the group incurred R40.7 million on maintaining and expanding its
retail operations and purchased the Capestorm trademark for R8.2 million.
The group entered into a 50-50 joint venture agreement with Redefine Properties to
purchase land in Philippi, Cape Town and develop a new distribution centre for its
retail operations. The group will invest approximately R51.0 million in this new
distribution centre, of which R19.8 million has already been incurred this year. This
project is proceeding successfully and will be completed in July 2013.
Performance Brands acquired its premises for R12.0 million and will construct an
additional warehouse on this property in the next year for approximately R12.3 million.
FUNDING
Term debt of R124.3 million is repayable to Standard Bank on 2 September 2013 and
accordingly has been disclosed under current liabilities in the statement of financial
position as at 28 February 2013. The group is in advanced negotiations with the
FirstRand Group to replace this term debt.
FORFEITABLE SHARE PLAN
During the year the group purchased and awarded R12.1 million of Holdsport shares in
terms of and subject to the rules of the 2011 Holdsport Forfeitable Share Plan (FSP).
The forfeitable share plan is expensed over the vesting period and the R4.9 million
expensed for the current year was R2.8 million higher than the prior year.
CHANGE IN BOARD OF DIRECTORS
In terms of 3.59(b) and (c) of the Listings Requirements of the JSE Limited,
shareholders are advised that Toni Haarburger (an executive director) will resign
from the boards of Holdsport and various subsidiary companies within the group with
effect from 30 August 2013.
Having served the group with distinction since her appointment in 1988, Toni will
continue to assist the group with various strategic initiatives. The group expresses
its deep gratitude to Toni for the pivotal role she has played in the group's success
over the last 25 years.
Bradley Moritz, the chief operating officer, will be appointed to the board of
directors as an executive director effective from 30 August 2013. Bradley joined the
group in 1998 and brings a wealth of experience to his new role.
PROSPECTS
The current retail environment is challenging and we do not envisage an improvement
during the remainder of the year. We have signed leases to open a further two stores
during the current year and remain confident that our strategies will deliver a unique
and differentiated retail offering to the market.
FINAL DIVIDEND ANNOUNCEMENT
The directors declared a final gross dividend of 130.0 cents per share payable on
Monday, 10 June 2013 to ordinary shareholders recorded in the books of the company at
the close of business on Friday, 31 May 2013.
The total gross dividend declared for the year is 200 cents per share
(2012: 162 cents), which is in line with the dividend policy of the group to have
dividends covered approximately twice by the core headline earnings for the year.
The last day to trade ("cum" the dividend) in order to participate in the dividend
will be Friday, 31 May 2013. The Holdsport Limited ordinary shares will commence
trading "ex" the dividend from the commencement of business on Monday, 3 June 2013
and the record date, as indicated, will be Friday, 7 June 2013.
Ordinary shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Monday, 3 June 2013 to Friday,
7 June 2013, both dates inclusive.
In terms of the withholding tax on dividends which became effective on 1 April 2012,
the following additional information is disclosed:
- the dividend has been declared out of total reserves;
- the South African tax dividend rate is 15%;
- there are no STC credits utilised;
- the net local dividend amount is 110.5 cents per ordinary share for shareholders
liable to pay the dividend tax, and 130.0 cents per ordinary share for shareholders
exempt from the dividend tax;
- the issued share capital of Holdsport at the date of declaration is 43 150 220
ordinary shares; and
- Holdsport's tax reference number is 9618595152.
Certificated ordinary shareholders are reminded that all entitlements to dividends
with a value less than R5.00 per certificated shareholder will be aggregated and the
proceeds donated to a registered charity of the directors' choice, in terms of the
memorandum of incorporation of the company.
Signed on behalf of the board
S MULLER K HODGSON
Chairman CEO
Cape Town
15 May 2013
PRELIMINARY CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
28 February 29 February
2013 2012
Audited Audited
R'000 R'000
Assets
Non-current assets
Property, plant and equipment 98 282 51 903
Goodwill and other intangibles 633 299 638 083
Total non-current assets 731 581 689 986
Current assets
Inventories 346 054 296 723
Trade and other receivables 22 346 19 389
Derivative instruments 402 -
Cash and cash equivalents 36 284 77 374
Total current assets 405 086 393 486
Total assets 1 136 667 1 083 472
Equity and liabilities
Capital and reserves
Share capital 229 312 229 312
Other reserves (20 521) (13 370)
Retained earnings 604 291 515 603
Total equity 813 082 731 545
Non-current liabilities
Loans - 124 841
Deferred taxation 49 623 55 595
Straight-lining lease liability 24 452 21 972
Total non-current liabilities 74 075 202 408
Current liabilities
Trade and other payables 125 085 120 562
Derivative instruments - 1 095
Short-term portion of loans 124 282 25 693
Taxation 143 2 169
Total current liabilities 249 510 149 519
Total liabilities 323 585 351 927
Total equity and liabilities 1 136 667 1 083 472
PRELIMINARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended Year ended
28 February 29 February
2013 2012
Audited Audited
R'000 R'000
Sales 1 374 531 1 243 539
Cost of sales (717 971) (638 807)
Gross profit 656 560 604 732
Other income 3 667 5 094
Trading expenses (416 937) (383 395)
Operating profit 243 290 226 431
Finance income 3 104 3 773
Finance cost (11 652) (12 945)
Profit before taxation 234 742 217 259
Taxation (66 226) (63 564)
Profit and total comprehensive income for the year
attributable to equity holders of the company 168 516 153 695
PRELIMINARY CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended Year ended
28 February 29 February
2013 2012
Audited Audited
R'000 R'000
Cash flows from operating activities
Cash generated from operations 239 122 219 514
Finance income 3 104 3 773
Finance costs (11 652) (19 005)
Dividends paid (79 828) (20 281)
Taxation paid (74 224) (70 181)
Net cash inflows from operating activities 76 522 113 820
Cash flows from investing activities
Additions to property, plant and equipment (72 489) (32 214)
Additions to intangibles (8 179) -
Proceeds on sale of assets 1 357 601
Net cash outflows from investing activities (79 311) (31 613)
Cash flows from financing activities
Repayment of loans (26 252) (54 170)
Forfeitable share plan (12 049) (15 500)
Acquisition of non-controlling interest - (3 082)
Net cash outflows from financing activities (38 301) (72 752)
Net (decrease)/increase in cash and cash equivalents (41 090) 9 455
Cash and cash equivalents at the beginning of the year 77 374 67 919
Cash and cash equivalents at the end of the year 36 284 77 374
PRELIMINARY CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Other Retained
capital reserves earnings
Audited Audited Audited
R'000 R'000 R'000
Balance at 1 March 2011 19 - 384 244
Acquisition of non-controlling interest
without a change in control - - (2 055)
Capitalisation of shareholder loans 229 293 - -
Share-based payment reserve: initial award - (15 500) -
Share-based payment expense - 2 130 -
Dividends paid - - (20 281)
Total comprehensive income for the year - - 153 695
Balance at 29 February 2012 229 312 (13 370) 515 603
Balance at 1 March 2012 229 312 (13 370) 515 603
Share-based payment reserve: initial award - (12 049) -
Share-based payment expense - 4 898 -
Dividends paid - - (79 828)
Total comprehensive income for the year - - 168 516
Balance at 28 February 2013 229 312 (20 521) 604 291
Non-
controlling
Total interest Total
Audited Audited Audited
R'000 R'000 R'000
Balance at 1 March 2011 384 263 1 027 385 290
Acquisition of non-controlling interest
without a change in control (2 055) (1 027) (3 082)
Capitalisation of shareholder loans 229 293 - 229 293
Share-based payment reserve: initial award (15 500) - (15 500)
Share-based payment expense 2 130 - 2 130
Dividends paid (20 281) - (20 281)
Total comprehensive income for the year 153 695 - 153 695
Balance at 29 February 2012 731 545 - 731 545
Balance at 1 March 2012 731 545 - 731 545
Share-based payment reserve: initial award (12 049) - (12 049)
Share-based payment expense 4 898 - 4 898
Dividends paid (79 828) - (79 828)
Total comprehensive income for the year 168 516 - 168 516
Balance at 28 February 2013 813 082 - 813 082
PRELIMINARY CONSOLIDATED SEGMENTAL ANALYSIS
Sportsmans Outdoor Performance
Warehouse Warehouse Brands
R'000 R'000 R'000
Year ended 28 February 2013
External revenue 999 042 322 251 53 238
External interest received - - 258
External interest paid - - (4)
Depreciation and amortisation (16 856) (5 691) (2 954)
Profit/(loss) before taxation 201 540 54 300 23 393
Capital expenditure 29 164 7 891 22 327
Segment assets 283 545 100 183 101 925
Segment liabilities 87 644 24 638 11 117
Year ended 29 February 2012
External revenue 896 007 299 956 47 576
External interest received - - 246
External interest paid - - (72)
Depreciation and amortisation (15 372) (4 964) (1 991)
Profit/(loss) before taxation 188 362 55 641 20 759
Capital expenditure 23 286 7 141 501
Segment assets 230 846 94 765 69 350
Segment liabilities 84 639 18 550 8 643
Corporate Group
R'000 R'000
Year ended 28 February 2013
External revenue - 1 374 531
External interest received 2 846 3 104
External interest paid (11 648) (11 652)
Depreciation and amortisation (12 572) (38 073)
Profit/(loss) before taxation (44 491) 234 742
Capital expenditure 21 286 80 668
Segment assets 651 014 1 136 667
Segment liabilities 200 186 323 585
Year ended 29 February 2012
External revenue - 1 243 539
External interest received 3 527 3 773
External interest paid (12 873) (12 945)
Depreciation and amortisation (12 844) (35 171)
Profit/(loss) before taxation (47 503) 217 259
Capital expenditure 1 286 32 214
Segment assets 688 511 1 083 472
Segment liabilities 240 095 351 927
NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS
1. KPMG Inc., the group's independent auditor, has audited the group annual financial
statements for the year to 28 February 2013 and has expressed an unmodified opinion on
the preliminary consolidated financial statements. Their audit report is available for
inspection at the company's registered office. The preliminary consolidated financial
statements presented in this announcement have been summarised from the audited group
annual financial statements. The complete set of the group annual financial statements
is available for inspection at the company's registered office.
The preliminary consolidated financial statements is prepared in accordance with the
recognition and measurement principles of International Financial Reporting Standards
and presented in accordance with the minimum content, including disclosures,
prescribed by IAS 34 Interim Financial Reporting applied to year end reporting, and
South African Statements and Interpretations of Statements of Generally Accepted
Accounting Practice (AC 500 Series) and the requirements of the Companies Act of
South Africa 2008, as amended and have been consistently applied to prior periods.
These audited preliminary consolidated results have been prepared under the
supervision of the group's chief financial officer, JP Loubser (CA(SA)).
2. These financial statements incorporate the financial statements of the company, all
its subsidiaries and all entities over which it has operational and financial control.
Year ended Year ended
28 February 29 February
2013 2012
Audited Audited
R'000 R'000
3. Trading expenses
Depreciation on property, plant and equipment 25 110 22 617
Amortisation of intangibles 12 963 12 554
Occupancy cost 113 791 103 706
Straight-lining of leases 2 480 2 812
Staff costs 159 888 145 796
Foreign exchange gains (461) (1 422)
Other operating costs 103 166 97 332
416 937 383 395
4. Finance cost
Interest paid on loans 11 652 19 005
Decrease in interest rate swap derivative - (5 949)
Fair value adjustment on loans - (111)
11 652 12 945
5. Cash generated from operations
Operating profit 243 290 226 431
Adjustments for:
Depreciation 25 110 22 617
Amortisation of intangibles 12 963 12 554
Profit on sale of property, plant and equipment (357) (148)
Fair value (gain)/loss on derivative instruments (1 497) 480
Forfeitable share plan expense 4 898 2 130
Straight-lining of leases 2 480 2 812
Changes in working capital:
Increase in trade and other receivables (2 957) (3 831)
Increase in inventories (49 331) (63 961)
Increase in trade and other payables 4 523 20 430
Cash generated from operations 239 122 219 514
6. Earnings per share and net asset value per share
Earnings per ordinary share (cents)
- Basic 390.5 356.1
- Headline 389.9 355.8
- Core headline 415.7 387.4
- Core headline before foreign exchange effect 418.7 377.3
Ordinary shares in issue ('000) 43 150 43 150
Weighted average ordinary shares in issue ('000) 43 150 43 150
Net asset value per ordinary share (cents) 1 884.3 1 695.3
Net tangible asset value per ordinary share (cents) 564.2 372.6
Reconciliation to core headline earnings
The group uses core headline earnings as a consistent measure of performance for
management purposes. Core headline earnings exclude exceptional once-off costs,
fair value adjustments to loans, the amortisation of trademarks and the lease
straight-lining expense, and are presented below:
Year ended Year ended
28 February 29 February
2013 2012
Audited Audited
R'000 R'000
Basic earnings 168 516 153 695
Adjusted for:
Profit on disposal of property, plant and equipment (257) (148)
Headline earnings 168 259 153 547
Adjusted for (net of taxation):
Amortisation of intangibles 9 333 9 039
Straight-lining of leases 1 786 2 023
Fair value adjustment on loans - (80)
Non-recurring professional fees - 2 661
Core headline earnings* 179 378 167 190
Adjusted for (net of taxation):
Foreign exchange gains (332) (1 024)
Foreign exchange adjustments in cost of sales 1 636 (3 353)
Core headline earnings before foreign exchange effect 180 682 162 813
* In order to compare the core headline earnings per share
over time for this report, earnings is divided by the
number of shares in issue at the last reporting date,
being 43 150 220 shares at 28 February 2013.
7. Dividend per share
Dividend declared per share (cents)
- Interim 70.0 47.0
- Final 130.0 115.0
Total dividend 200.0 162.0
Dividend cover (by core headline earnings) 2.1 2.4
Registered office: The Mill House, 1 Canterbury Street, Cape Town 8001
Executive directors: KG Hodgson, EA Haarburger, JP Loubser
Non-executive directors: SA Muller (Chairman), B Hopkins, C Sonn, M Vilakazi
Company secretary: AE van Zyl
Transfer secretaries: Computershare Investor Services (Proprietary) Limited,
Ground Floor, 70 Marshall Street, Johannesburg 2001
15 May 2013
Sponsor: UBS South Africa (Proprietary) Limited
Date: 15/05/2013 08:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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