Wrap Text
Unaudited interim condensed consolidated results
for the half-year ended 31 august 2013
HOLDSPORT LIMITED
("Holdsport" or "the company" or "the group")
Registration number: 2006/022562/06
Share code: HSP
ISIN: ZAE000157046
UNAUDITED INTERIM CONDENSED CONSOLIDATED RESULTS
for the half-year ended 31 August 2013
Sales up 5.0% to R630.9 million
Operating profit increased by 3.5% to R94.1 million
Core headline earnings per share increased by 3.8% to 163.1 cents
Interim gross dividend increased to 75 cents per share
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 August 31 August 28 February
2013 2012 2013
Unaudited Unaudited Audited
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 130 301 70 567 98 282
Goodwill and other intangibles 626 820 639 780 633 299
Total non-current assets 757 121 710 347 731 581
Current assets
Inventories 363 810 323 852 346 054
Trade and other receivables 24 909 17 248 22 346
Cash and cash equivalents - - 36 284
Taxation 10 839 8 766 -
Derivative instruments 1 326 - 402
Total current assets 400 884 349 866 405 086
Total assets 1 158 005 1 060 213 1 136 667
EQUITY AND LIABILITIES
Capital and reserves
Share capital 229 312 229 312 229 312
Other reserves (23 120) (24 857) (20 521)
Retained earnings 612 580 527 785 604 291
Equity attributable to owners of the company 818 772 732 240 813 082
Non-current liabilities
Loans 130 000 110 351 -
Deferred taxation 47 485 53 852 49 623
Straight-lining lease liability 26 759 23 950 24 452
Total non-current liabilities 204 244 188 153 74 075
Current liabilities
Trade and other payables 111 420 91 762 125 085
Bank overdraft 23 569 19 119 -
Short-term portion of loans - 27 357 124 282
Derivative instruments - 1 582 -
Taxation - - 143
Total current liabilities 134 989 139 820 249 510
Total liabilities 339 233 327 973 323 585
Total equity and liabilities 1 158 005 1 060 213 1 136 667
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
6 months 6 months Year
ended ended ended
31 August 31 August 28 February
2013 2012 2013
Unaudited Unaudited Audited
R'000 R'000 R'000
Sales 630 985 601 217 1 374 531
Cost of sales (326 506) (309 873) (717 971)
Gross profit 304 479 291 344 656 560
Other income 2 163 1 813 3 667
Trading expenses (212 583) (202 302) (416 937)
Operating profit 94 059 90 855 243 290
Finance income 1 232 2 279 3 104
Finance cost (5 066) (6 386) (11 652)
Profit before taxation 90 225 86 748 234 742
Taxation (25 841) (24 943) (66 226)
Profit and total comprehensive income for
the period attributable to equity holders
of the company 64 384 61 805 168 516
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
6 months 6 months Year
ended ended ended
31 August 31 August 28 February
2013 2012 2013
Unaudited Unaudited Audited
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from operations 84 386 60 070 239 122
Finance income 1 232 2 279 3 104
Finance costs (5 066) (6 386) (11 652)
Dividends paid (56 095) (49 623) (79 828)
Taxation paid (38 961) (37 621) (74 224)
Net cash (outflows)/inflows from
operating activities (14 504) (31 281) 76 522
Cash flows from investing activities
Additions to property, plant and equipment (45 558) (31 527) (72 489)
Additions to intangibles - (8 179) (8 179)
Proceeds on sale of assets 429 751 1 357
Net cash outflows from investing activities (45 129) (38 955) (79 311)
Cash flows from financing activities
Increase/(decrease) in loans 5 718 (12 826) (26 252)
Forfeitable share plan (5 938) (13 431) (12 049)
Net cash outflows from financing activities (220) (26 257) (38 301)
Net (decrease)/increase in cash
and cash equivalents (59 853) (96 493) (41 090)
Cash and cash equivalents at the beginning
of the period 36 284 77 374 77 374
Cash and cash equivalents at the end of
the period (23 569) (19 119) 36 284
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Other Retained Total
capital reserves earnings equity
R'000 R'000 R'000 R'000
Balance at 1 March 2012 229 312 (13 370) 515 603 731 545
Share-based payment reserve:
initial award - (13 431) - (13 431)
Share-based payment expense - 1 944 - 1 944
Dividends paid - - (49 623) (49 623)
Total comprehensive income for the
half-year - - 61 805 61 805
Balance at 31 August 2012 229 312 (24 857) 527 785 732 240
Share-based payment reserve:
initial award - 1 382 - 1 382
Share-based payment expense - 2 954 - 2 954
Dividends paid - - (30 205) (30 205)
Total comprehensive income for the
half-year - - 106 711 106 711
Balance at 28 February 2013 229 312 (20 521) 604 291 813 082
Share-based payment reserve:
initial award - (5 938) - (5 938)
Share-based payment expense - 3 339 - 3 339
Dividends paid - - (56 095) (56 095)
Total comprehensive income for the
half-year - - 64 384 64 384
Balance at 31 August 2013 229 312 (23 120) 612 580 818 772
GROUP SEGMENTAL ANALYSIS
Sportsmans Outdoor Performance
Warehouse Warehouse Brands
R'000 R'000 R'000
6 months ended 31 August 2013 (Unaudited)
External revenue 458 083 141 974 30 928
External interest received - - 36
External interest paid - - -
Depreciation and amortisation (9 205) (2 818) (1 693)
Profit/(loss) before taxation 84 048 19 619 14 163
Capital expenditure 7 011 3 590 4 536
Segment assets 293 219 104 887 110 918
Segment liabilities 76 780 24 195 11 777
6 months ended 31 August 2012 (Unaudited)
External revenue 432 572 139 482 29 163
External interest received - - 139
External interest paid - - (3)
Depreciation and amortisation (8 066) (2 795) (1 400)
Profit/(loss) before taxation 77 466 21 261 15 611
Capital expenditure 14 914 3 190 21 184
Segment assets 253 201 81 992 97 360
Segment liabilities 69 044 19 352 6 355
Year ended 28 February 2013 (Audited)
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
Corporate Group
R'000 R'000
6 months ended 31 August 2013 (Unaudited)
External revenue - 630 985
External interest received 1 196 1 232
External interest paid (5 066) (5 066)
Depreciation and amortisation (6 303) (20 019)
Profit/(loss) before taxation (27 606) 90 224
Capital expenditure 30 418 45 556
Segment assets 648 982 1 158 005
Segment liabilities 226 481 339 233
6 months ended 31 August 2012 (Unaudited)
External revenue - 601 217
External interest received 2 139 2 279
External interest paid (6 383) (6 386)
Depreciation and amortisation (6 433) (18 693)
Profit/(loss) before taxation (27 590) 86 748
Capital expenditure 418 39 706
Segment assets 627 660 1 060 213
Segment liabilities 233 222 327 973
Year ended 28 February 2013 (Audited)
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
NOTES TO THE FINANCIAL STATEMENTS
1. The unaudited interim condensed consolidated results for the half-year ended
31 August 2013 have been prepared in accordance with the recognition, measurement,
presentation and disclosure requirements of IAS 34 Interim Financial Reporting,
using the group's accounting policies that are in line with International Financial
Reporting Standards (IFRS), the Companies Act No. 71 of 2008, as amended, SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and
Financial Reporting Pronouncements as issued by the Financial Reporting Standards
Council and have been consistently applied to prior periods.
The unaudited interim condensed consolidated results have been prepared under the
supervision of the group financial director, 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.
6 months 6 months Year
ended ended ended
31 August 31 August 28 February
2013 2012 2013
Unaudited Unaudited Audited
R'000 R'000 R'000
3. TRADING EXPENSES
Depreciation on property, plant and equipment 13 537 12 212 25 110
Amortisation of intangibles 6 482 6 481 12 963
Occupancy cost 60 485 55 096 113 791
Straight-lining of leases 2 307 1 978 2 480
Staff costs 80 363 74 060 159 888
Foreign exchange (gains)/losses (1 408) 1 851 (461)
Other operating costs 50 817 50 624 103 166
212 583 202 302 416 937
4. CASH GENERATED FROM OPERATIONS
Operating profit 94 059 90 855 243 290
Adjustments for:
Depreciation 13 537 12 212 25 110
Amortisation of intangibles 6 481 6 481 12 963
Profit on sale of assets (429) (98) (357)
Fair value (gains)/losses on derivative
instruments (924) 487 (1 497)
Forfeitable share plan expense 3 339 1 944 4 898
Straight-lining of leases 2 307 1 978 2 480
Changes in working capital:
(Increase)/decrease in trade and other
receivables (2 563) 2 141 (2 957)
Increase in inventories (17 756) (27 129) (49 331)
(Decrease)/increase in trade and other payables (13 665) (28 801) 4 523
Cash generated from operations 84 386 60 070 239 122
5. EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE
Earnings per ordinary share (cents)
- Basic 149.2 143.2 390.5
- Headline 148.4 143.0 389.9
- Core headline 163.1 157.1 415.7
- Core headline before foreign exchange effect 161.2 161.3 418.7
Ordinary shares in issue ('000) 43 150 43 150 43 150
Weighted average ordinary shares in issue ('000) 43 150 43 150 43 150
Net asset value per ordinary share (cents) 1 897.5 1 697.0 1 884.3
Net tangible asset value per ordinary share
(cents) 588.3 366.2 564.2
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 and
the amortisation of trademarks, fair value adjustments to loans and the lease
straight-lining expense, and are presented below:
6 months 6 months Year
ended ended ended
31 August 31 August 28 February
2013 2012 2013
Unaudited Unaudited Audited
R'000 R'000 R'000
Basic earnings 64 384 61 805 168 516
Adjusted for:
Profit on sale of assets (309) (71) (257)
Headline earnings 64 075 61 734 168 259
Adjusted for (net of taxation):
Amortisation of intangibles 4 667 4 667 9 333
Straight-lining of leases 1 661 1 424 1 786
Core headline earnings 70 403 67 825 179 378
Adjusted for (net of taxation):
Foreign exchange (gains)/losses (1 014) 1 333 (332)
Foreign exchange adjustments in cost of sales 176 459 1 636
Core headline earnings before foreign
exchange effect 69 566 69 617 180 682
6. Dividend per share
Dividend declared per share (cents)
- Interim 75.0 70.0 70.0
- Final 130.0
Total dividend 75.0 70.0 200.0
Dividend cover (by core headline earnings) 2.2 2.2 2.1
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.
Despite the challenging retail environment total sales increased 5.0% to
R630.9 million and retail sales increased 4.9% to R600.0 million.
Operating profit increased 3.5% to R94.1 million. Core headline earnings amounted to
163.1 cents per share, a 3.8% increase on the comparable period.
During the current period the aggregate foreign exchange adjustment was a profit of
R1.2 million compared to an aggregate loss of R2.5 million during the prior period.
Core headline earnings excluding the effect of foreign exchange adjustments was
161.2 cents per share (first half 2013: 161.3 cents per share).
TRADING DIVISIONS
Sales for the various trading divisions were as follows:
Number of Sales Increase in
stores R'm sales %
Sportsmans Warehouse 35 458.1 5.9
Outdoor Warehouse 19 141.9 1.8
Retail sales 54 600.0 4.9
Performance Brands - 30.9 6.1
Total sales 54 630.9 5.0
Like-for-like retail sales grew by 2.5% while the retail divisions experienced price
inflation of approximately 4.6% for the period. The weighted trading area increased
by 6.2% relative to the prior corresponding period.
The Sportsmans Warehouse division is now trading out of 35 stores and will open one
new store in Sea Point and expand three stores in the second half of the year.
Like-for-like sales increased by 3.4%.
The Outdoor Warehouse division currently trades from 19 stores and opened a further
store in Rondebosch on 14 September 2013. Like-for-like sales decreased by 1.4%.
Performance Brands achieved R30.9 million of external sales, a 6.1% increase from
the previous period.
CAPITAL EXPENDITURE
Holdsport successfully completed and moved into its new retail distribution centre
during the period. Performance Brands commenced with construction of an additional
warehouse which will be completed at the end of the year. The group incurred
R32.8 million on its distribution projects in this period and anticipates spending
approximately R8.8 million in the second half of this year.
The group incurred R12.8 million in maintaining and expanding its retail operations
and anticipates spending a further R30.7 million in the second half of the year.
CASH FLOW
Holdsport repaid loans of R124.3 million to Standard Bank during the period and
replaced them with a R130 million loan from the FirstRand Group, repayable by
31 August 2016. The group's net debt amounted to R153.6 million at the end of the
current period compared to R156.8 million in the prior period.
The total investment in working capital increased by 11.2% as a result of the
increase in trading space and the effect of the weaker exchange rate on the cost of
imported stock.
During the period, the group purchased and awarded R5.9 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 expense of
R3.3 million for the current period is R1.4 million higher than the prior period.
PROSPECTS
We expect trading conditions to remain challenging for the remainder of the year but,
as always, the second half is heavily dependent on Christmas trading, which will
largely determine the performance of the group in the second half and for the year.
The group signed lease agreements for a further two new stores to be opened in the
next financial year and are evaluating other opportunities.
INTERIM DIVIDEND ANNOUNCEMENT
The directors declared an interim gross dividend of 75.0 cents per share payable on
Monday, 9 December 2013 to ordinary shareholders recorded in the books of the company
at the close of business on Friday, 6 December 2013. The gross dividend is in line
with the dividend policy of the group to have dividends covered approximately twice
by the core headline earnings for the period, which is 163.1 cents.
The last day to trade ("cum" the dividend) in order to participate in the dividend
will be Friday, 29 November 2013. The Holdsport Limited ordinary shares will commence
trading "ex" the dividend from the commencement of business on Monday, 2 December 2013
and the record date, as indicated, will be Friday, 6 December 2013.
Ordinary shareholders should take note that share certificates may not be dematerialised
or rematerialised during the period Monday, 2 December 2013 to Friday, 6 December 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 63.75 cents per ordinary share for shareholders
liable to pay the new dividend tax, and 75.0 cents per ordinary share for
shareholders exempt from the new 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
11 October 2013
Registered office: The Mill House, 1 Canterbury Street, Cape Town 8001
Executive directors: KG Hodgson, B Moritz, 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
Sponsor: UBS South Africa (Proprietary) Limited
Date: 11/10/2013 12:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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