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HOLDSPORT LIMITED - Audited Summarised Consolidated Results for the year ended 28 February 2014

Release Date: 06/05/2014 15:00
Code(s): HSP     PDF:  
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Audited Summarised Consolidated Results for the year ended 28 February 2014

HOLDSPORT LIMITED
("Holdsport" or "the company" or "the group")
Registration number: 2006/022562/06
Share code: HSP
ISIN: ZAE000157046


AUDITED SUMMARISED CONSOLIDATED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2014


Sales up 3.1% to R1 417.5 million
Operating profit up 2.8% to R250.0 million
Core headline earnings per share up 1.9% to 423.3 cents
Final gross dividend increased by 11.5% to 145 cents per share


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.

In a challenging environment total sales increased by 3.1% to R1 417.5 million and 
retail sales increased by 3.3% to R1 365.1 million. 

Operating profit increased by 2.8% to R250.0 million. Core headline earnings amounted 
to 423.3 cents per share, a 1.9% increase on the previous year.

During the current year the aggregate foreign exchange adjustment was an expense of 
R0.4 million compared to an aggregate expense of R1.8 million during the prior year. 
Core headline earnings excluding the effect of foreign exchange adjustments increased 
by 1.3% to 424.0 cents per share.

TRADING DIVISIONS
External sales for the various trading divisions were as follows: 
                                                                             Increase
                                                   Number         Sales      in sales
                                                of stores           R'm             %
Sportsmans Warehouse                                   35       1 042.0           4.3
Outdoor Warehouse                                      20         323.1           0.2
Retail sales                                           55       1 365.1           3.3
Performance Brands                                      -          52.4         (1.4)
Total sales                                            55       1 417.5           3.1

Like-for-like retail sales grew by 1.1% while the retail divisions experienced price 
inflation of approximately 4.9% for the year. The time weighted trading area increased 
by 5.6% relative to the prior year.

The Sportsmans Warehouse division now trades out of 35 stores. The division opened a 
new store in Sea Point and closed a store in Amanzimtoti. Like-for-like sales 
increased by 2.9%. 

The Outdoor Warehouse division comprises 20 stores after opening a new store in 
Rondebosch. Like-for-like sales decreased by 3.9%.

Performance Brands' external sales were 1.4% lower than last year but sales to the 
group's retail divisions increased by 26.9%.

CAPITAL EXPENDITURE
During the year the group incurred R42.1 million on maintaining and expanding its 
retail operations and R40.2 million to complete construction of its retail and 
wholesale distribution centres in Cape Town. 

CASH FLOW 
Holdsport repaid loans of R124.3 million to Standard Bank during the year and replaced
them with a R130 million loan from the FirstRand Group, repayable by 31 August 2016. 
The group's net debt amounted to R72.4 million at the end of the current year compared 
to R87.9 million in the prior year. 

During the year the group purchased and awarded R4.9 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 
R7.5 million for the current year is R2.6 million higher than the prior year.

PROSPECTS
We expect trading conditions to remain challenging in 2014. The group signed lease 
agreements for a further two new stores to be opened in the next financial year and 
are evaluating other opportunities. 

FINAL DIVIDEND ANNOUNCEMENT
The directors declared a final gross dividend of 145.0 cents per share for the year
ended 28 February 2014 payable on Monday, 9 June 2014 to ordinary shareholders 
recorded in the books of the company at the close of business on Friday, 6 June 2014.

The last day to trade ("cum" the dividend) in order to participate in the dividend 
will be Friday, 30 May 2014. The Holdsport Limited ordinary shares will commence 
trading "ex" the dividend from the commencement of business on Monday, 2 June 2014 
and the record date, as indicated, will be Friday, 6 June 2014.

Ordinary shareholders should take note that share certificates may not be dematerialised
or rematerialised during the period Monday, 2 June 2014 to Friday, 6 June 2014, 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 123.25 cents per ordinary share for shareholders 
   liable to pay dividend tax and 145.0 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
6 May 2014


SUMMARISED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                                            28 February   28 February
                                                                   2014          2013
                                                                Audited       Audited
                                                                  R'000         R'000
ASSETS
Non-current assets
Property, plant and equipment                                   150 265        98 282
Goodwill and other intangibles                                  620 336       633 299
Total non-current assets                                        770 601       731 581
                    
Current assets
Inventories                                                     354 436       346 054
Trade and other receivables                                      24 782        22 346
Cash and cash equivalents                                        57 577        36 284
Taxation                                                            857             -
Derivative instruments                                                -           402
Total current assets                                            437 652       405 086
Total assets                                                  1 208 253     1 136 667
                    
EQUITY AND LIABILITIES
Capital and reserves
Share capital                                                   229 312       229 312
Other reserves                                                 (17 926)      (20 521)
Retained earnings                                               689 544       604 291
Equity attributable to owners of the company                    900 930       813 082

Non-current liabilities
Loans                                                           130 000             -
Deferred taxation                                                42 806        49 623
Straight-lining lease liability                                  24 590        24 452
Total non-current liabilities                                   197 396        74 075

Current liabilities
Trade and other payables                                        109 843       125 085
Derivative instruments                                               84             -
Short-term portion of loans                                           -       124 282
Taxation                                                              -           143
Total current liabilities                                       109 927       249 510
Total liabilities                                               307 323       323 585
Total equity and liabilities                                  1 208 253     1 136 667


SUMMARISED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                             Year ended    Year ended
                                                            28 February   28 February
                                                                   2014          2013
                                                                Audited       Audited
                                                                  R'000         R'000
Sales                                                         1 417 584     1 374 531
Cost of sales                                                 (734 035)     (717 971)
Gross profit                                                    683 549       656 560
Other income                                                      5 470         3 667
Trading expenses                                              (439 010)     (416 937)
Operating profit                                                250 009       243 290
Finance income                                                    2 441         3 104
Finance cost                                                   (10 000)      (11 652)
Profit before taxation                                          242 450       234 742
Taxation                                                       (68 740)      (66 226)
Profit and total comprehensive income for the year 
attributable to equity holders of the company                   173 710       168 516


SUMMARISED CONSOLIDATED CASH FLOW STATEMENTS
                                                             Year ended    Year ended
                                                            28 February   28 February
                                                                   2014          2013
                                                                Audited       Audited
                                                                  R'000         R'000
Cash flows from operating activities
Cash generated from operations                                  274 182       239 122
Finance income                                                    2 441         3 104
Finance costs                                                  (10 000)      (11 652)
Dividends paid                                                 (88 457)      (79 828)
Taxation paid                                                  (76 557)      (74 224)
Net cash inflows from operating activities                      101 609        76 522

Cash flows from investing activities
Additions to property, plant and equipment                     (82 353)      (72 489)
Additions to intangibles                                              -       (8 179)
Proceeds on sale of assets                                        1 265         1 357
Net cash outflows from investing activities                    (81 088)      (79 311)

Cash flows from financing activities                    
Increase/(decrease) in loans                                      5 718      (26 252)
Forfeitable share plan awards                                   (4 946)      (12 049)
Net cash inflow/(outflows) from financing activities                772      (38 301)

Net (decrease)/increase in cash and cash equivalents             21 293      (41 090)
Cash and cash equivalents at the beginning of the year           36 284        77 374
Cash and cash equivalents at the end of the year                 57 577        36 284


SUMMARISED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
                                               Share      Other   Retained
                                             capital   reserves   earnings      Total
                                             Audited    Audited    Audited    Audited
                                               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         -   (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                  229 312   (20 521)    604 291    813 082
                                        
Balance at 1 March 2013                      229 312   (20 521)    604 291    813 082
Share-based payment reserve: initial award         -    (4 946)          -    (4 946)
Share-based payment expense                        -      7 541          -      7 541
Dividends paid                                     -          -   (88 457)   (88 457)
Total comprehensive income for the year            -          -    173 710    173 710
Balance at 28 February 2014                  229 312   (17 926)    689 544    900 930


SUMMARISED CONSOLIDATED SEGMENTAL ANALYSIS
                              Sportsmans    Outdoor Performance 
                               Warehouse  Warehouse      Brands  Corporate      Group
                                   R'000      R'000       R'000      R'000      R'000
Year ended 28 February 2014
Total sales                    1 042 008    323 117     111 003          -  1 476 128
Less intersegment sales                -          -    (58 544)          -   (58 544)
External sales                 1 042 008    323 117      52 459          -  1 417 584
External interest received             -          -          88      2 353      2 441
External interest paid                 -          -         (3)    (9 997)   (10 000)
Depreciation and amortisation   (19 732)    (6 263)     (3 407)   (13 323)   (42 725)
Profit/(loss) before taxation    219 692     50 739      19 017   (46 998)    242 450
Capital expenditure               28 698      9 190      14 338     30 126     82 352
Segment assets                   301 671    105 835     115 149    685 598  1 208 253
Segment liabilities               81 601     18 629      10 790    196 303    307 323
                                                  
Year ended 28 February 2013
Total sales                      999 042    322 251      99 348          -  1 420 641
Less intersegment sales                -          -    (46 110)          -   (46 110)
External sales                   999 042    322 251      53 238          -  1 374 531
External interest received             -          -         258      2 846      3 104
External interest paid                 -          -         (4)   (11 648)   (11 652)
Depreciation and amortisation   (16 856)    (5 691)     (2 954)   (12 572)   (38 073)
Profit/(loss) before taxation    201 540     54 300      23 393   (44 491)    234 742
Capital expenditure               29 164      7 891      22 327     21 286     80 668
Segment assets                   283 545    100 183     101 925    651 014  1 136 667
Segment liabilities               87 644     24 638      11 117    200 186    323 585


NOTES TO THE SUMMARISED FINANCIAL STATEMENTS                              
1. KPMG Inc., the group's independent auditor, has audited the consolidated financial 
   statements for the year to 28 February 2014 and has expressed an unmodified opinion 
   on the consolidated financial statements. The summary financial statements have been 
   audited and an unmodified opinion has been expressed on the summary financial 
   statements. The summary consolidated financial statements presented in this 
   announcement have been summarised from the audited consolidated financial statements.

   Their audit reports are available for inspection at the company's registered office.

   The summary consolidated financial statements are prepared in accordance with the 
   requirements of the JSE Limited Listings Requirements for preliminary reports, and 
   the requirements of the Companies Act applicable to summary financial statements. 
   The Listings Requirements require preliminary reports to be prepared in accordance 
   with the framework concepts and the measurement and recognition requirements of 
   International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting
   Guides as issued by the Accounting Practices Committee and Financial Pronouncements 
   as issued by the Financial Reporting Standards Council and to also, as a minimum, 
   contain the information required by IAS 34 Interim Financial Reporting.

   The accounting policies applied in the preparation of the consolidated financial 
   statements from which the summary financial statements were derived are in terms of 
   International Financial Reporting Standards and are consistent with those accounting
   policies applied in the preparation of the previous consolidated annual financial 
   statements.

   These audited summarised 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   28 February
                                                                   2014          2013
                                                                Audited       Audited
                                                                  R'000         R'000
3. Trading expenses
   Depreciation on property, plant and equipment                 29 762        25 110
   Amortisation of intangibles                                   12 963        12 963
   Occupancy cost                                               123 625       113 791
   Straight-lining of leases                                        138         2 480
   Staff costs                                                  167 711       159 888
   Foreign exchange gains                                         (862)         (461)
   Other operating costs                                        105 673       103 166
                                                                439 010       416 937

4. Cash generated from operations                    
   Operating profit                                             250 009       243 290
   Adjustments for:                    
   Depreciation                                                  29 762        25 110
   Amortisation of intangibles                                   12 963        12 963
   Profit on sale of assets                                       (657)         (357)
   Fair value loss/(gain) on derivative instruments                 486       (1 497)
   Forfeitable share plan expense                                 7 541         4 898
   Straight-lining of leases                                        138         2 480
   Changes in working capital:                    
   Increase in trade and other receivables                      (2 436)       (2 957)
   Increase in inventories                                      (8 382)      (49 331)
   (Decrease)/increase in trade and other payables             (15 242)         4 523
   Cash generated from operations                               274 182       239 122
                              
5. Earnings per share and net asset value per share
   Earnings per ordinary share (cents)
   - Basic                                                        402.6         390.5
   - Headline                                                     401.5         389.9
   - Core headline                                                423.3         415.7
   - Core headline before foreign exchange effect                 424.0         418.7

   Ordinary shares in issue ('000)                             43 150.2      43 150.2
   Weighted average ordinary shares in issue ('000)            43 150.2      43 150.2

   Net asset value per ordinary share (cents)                   2 087.9       1 884.3
   Net tangible asset value per ordinary share (cents)            789.6         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, 
   the amortisation of trademarks and the lease straight-lining expense and is 
   presented below:
                                                             Year ended    Year ended
                                                            28 February   28 February
                                                                   2014          2013
                                                                Audited       Audited
                                                                  R'000         R'000
   Basic earnings                                               173 710       168 516
   Adjusted for (net of taxation):                    
   Profit on sale of assets                                       (473)         (257)
   Headline earnings                                            173 237       168 259
                              
   Adjusted for (net of taxation):                    
   Amortisation of intangibles                                    9 334         9 333
   Straight-lining of leases                                         99         1 786
   Core headline earnings                                       182 670       179 378
                              
   Adjusted for (net of taxation):                    
   Foreign exchange gains                                         (621)         (332)
   Foreign exchange adjustments in cost of sales                    922         1 636
   Core headline earnings before foreign exchange effect        182 971       180 682
                              
6. Dividend per share                    
   Dividend declared per share (cents)                    
   - Interim                                                       75.0          70.0
   - Final                                                        145.0         130.0
   Total dividend                                                 220.0         200.0
                              
   Dividend cover (by core headline earnings)                       1.9           2.1


Registered office: The Mill House, 1 Canterbury Street, Cape Town 8001
Executive directors: KG Hodgson, JP Loubser, B Moritz
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


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