Wrap Text
Unaudited interim condensed consolidated results for the half-year ended 31 August 2014
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 2014
Sales up 7.3% to R677.1 million
EBITDA increased by 8.4% to R123.6 million
Core headline earnings per share increased by 6.7% to 174.0 cents
Interim gross dividend increased to 85.0 cents per share
Proceeds of warehouse sale to be distributed as special dividend
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 retail environment total sales increased 7.3% to R677.1 million and
retail sales increased 8.1% to R648.5 million.
Operating profit increased 5.1% to R98.8 million. Core headline earnings amounted to
174.0 cents per share, a 6.7% increase on the comparable period.
During the current period the aggregate foreign exchange adjustment was a loss of
R0.8 million compared to an aggregate profit of R1.2 million during the prior period.
Core headline earnings, excluding the effect of foreign exchange adjustments, was
175.4 cents per share, an increase of 8.8% from the 161.2 cents per share in the
first half of last year.
TRADING DIVISIONS
Sales for the various trading divisions were as follows:
Increase
Number Sales in sales
of stores R'm %
Sportsmans Warehouse 35 499.0 8.9
Outdoor Warehouse 20 149.5 5.3
Retail sales 55 648.5 8.1
Performance Brands - 28.6 (7.3)
Total sales 55 677.1 7.3
Like-for-like retail sales grew by 6.4% while the retail divisions experienced price
inflation of approximately 7.2% for the period. The weighted trading area increased by
2.4% relative to the prior corresponding period.
The Sportsmans Warehouse division trades out of 35 stores. The division expanded
three stores and reduced one store during the period. The Windhoek and Klerksdorp
stores will be relocated to new regional shopping centres opening in the second half
of the year, whilst the opening of a new store in George was delayed to April 2015.
Like-for-like sales increased by 8.1%.
The Outdoor Warehouse division currently trades from 20 stores. The division will
relocate the stores in Bloemfontein and Fourways and open a new store in Windhoek in
the second half of the year. Like-for-like sales increased by 1.0%.
Performance Brands achieved R28.6 million of external sales, a 7.3% decrease from the
previous period.
CASH FLOW
The group's net debt reduced to R89.8 million at the end of this period from
R153.6 million at the end of the prior comparable period.
The aggregate investment in working capital increased by 1.5% and cash generated from
operations increased by 41.5% from the first half of the previous year.
The group spent R20.5 million in maintaining and expanding its retail operations and
anticipates spending a further R25.0 million in the second half of this year.
During the period, the group purchased and awarded R13.2 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 R5.2 million for the current period is R1.9 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
strongly influence the performance of the group in the second half and for the year.
DISPOSAL OF DISTRIBUTION CENTRE
Holdsport concluded an agreement on 1 September 2014 to dispose of its 50% share of
its distribution centre in Philippi to Redefine Properties Limited (Redefine) for gross
proceeds of R42.5 million. Post the disposal Redefine will own 100% of the distribution
centre and Holdsport will continue to use the distribution facility under the existing
lease terms, which remain unchanged.
The disposal proceeds will be received upon registration of transfer to Redefine,
which is anticipated in the last quarter of this financial year. It is the directors'
intention to declare the gross proceeds of the sale as a special dividend. This special
dividend will be approximately 99.0 cents per share, based on the number of shares
currently in issue.
INTERIM DIVIDEND ANNOUNCEMENT
The directors declared an interim gross dividend of 85.0 cents per share
(2013: 75.0 cents) payable on Monday, 15 December 2014 to ordinary shareholders
recorded in the books of the company at the close of business on Friday, 12 December 2014.
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
174.0 cents.
The last day to trade ("cum" the dividend) in order to participate in the dividend
will be Friday, 5 December 2014. The Holdsport Limited ordinary shares will commence
trading "ex" the dividend from the commencement of business on Monday, 8 December 2014
and the record date, as indicated, will be Friday, 12 December 2014.
Ordinary shareholders should take note that share certificates may not be dematerialised
or rematerialised during the period Monday, 8 December 2014 to Friday,
12 December 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 72.25 cents per ordinary share for shareholders
liable to pay the dividend tax, and 85.0 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 board
SA MULLER KG HODGSON
Chairman CEO
Cape Town
3 October 2014
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 August 31 August 28 February
2014 2013 2014
Unaudited Unaudited Audited
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 152 410 130 301 150 265
Goodwill and other intangibles 613 854 626 820 620 336
Total non-current assets 766 264 757 121 770 601
Current assets
Inventories 368 606 363 810 354 436
Trade and other receivables 28 454 24 909 24 782
Cash and cash equivalents 40 170 - 57 577
Taxation 9 630 10 839 857
Derivative instruments - 1 326 -
Total current assets 446 860 400 884 437 652
Total assets 1 213 124 1 158 005 1 208 253
EQUITY AND LIABILITIES
Capital and reserves
Share capital 229 312 229 312 229 312
Other reserves (25 964) (23 120) (17 926)
Retained earnings 695 769 612 580 689 544
Equity attributable to owners of the company 899 117 818 772 900 930
Non-current liabilities
Loans 130 000 130 000 130 000
Deferred taxation 40 912 47 485 42 806
Straight-lining lease liability 26 984 26 759 24 590
Total non-current liabilities 197 896 204 244 197 396
Current liabilities
Trade and other payables 115 622 111 420 109 843
Bank overdraft - 23 569 -
Derivative instruments 489 - 84
Total current liabilities 116 111 134 989 109 927
Total liabilities 314 007 339 233 307 323
Total equity and liabilities 1 213 124 1 158 005 1 208 253
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
6 months 6 months Year
ended ended ended
31 August 31 August 28 February
2014 2013 2014
Unaudited Unaudited Audited
R'000 R'000 R'000
Sales 677 074 630 985 1 417 584
Cost of sales (350 635) (326 506) (734 035)
Gross profit 326 439 304 479 683 549
Other income 2 874 2 163 5 470
Trading expenses (230 487) (212 583) (439 010)
Operating profit 98 826 94 059 250 009
Finance income 2 646 1 232 2 441
Finance cost (5 192) (5 066) (10 000)
Profit before taxation 96 280 90 225 242 450
Taxation (27 488) (25 841) (68 740)
Profit and total comprehensive income for
the period attributable to equity holders
of the company 68 792 64 384 173 710
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
6 months 6 months Year
ended ended ended
31 August 31 August 28 February
2014 2013 2014
Unaudited Unaudited Audited
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from operations 119 433 84 386 274 182
Finance income 2 646 1 232 2 441
Finance costs (5 192) (5 066) (10 000)
Dividends paid (62 567) (56 095) (88 457)
Taxation paid (38 155) (38 961) (76 557)
Net cash inflows/(outflows) from
operating activities 16 165 (14 504) 101 609
Cash flows from investing activities
Additions to property, plant and equipment (20 544) (45 558) (82 353)
Proceeds on sale of assets 216 429 1 265
Net cash outflows from investing activities (20 328) (45 129) (81 088)
Cash flows from financing activities
Increase in loans - 5 718 5 718
Forfeitable share plan (13 244) (5 938) (4 946)
Net cash (outflows)/inflows from financing
activities (13 244) (220) 772
Net (decrease)/increase in cash
and cash equivalents (17 407) (59 853) 21 293
Cash and cash equivalents at the beginning
of the period 57 577 36 284 36 284
Cash and cash equivalents at the end
of the period 40 170 (23 569) 57 577
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity
holders of
Share Other Retained Holdsport Total
capital reserves earnings Limited equity
R'000 R'000 R'000 R'000 R'000
Balance at 1 March 2013 229 312 (20 521) 604 291 813 082 813 082
Share-based payment reserve:
initial award - (5 938) - (5 938) (5 938)
Share-based payment expense - 3 339 - 3 339 3 339
Dividends paid - - (56 095) (56 095) (56 095)
Total comprehensive income for
the half-year - - 64 384 64 384 64 384
Balance at 31 August 2013 229 312 (23 120) 612 580 818 772 818 772
Share-based payment reserve:
initial award - 992 - 992 992
Share-based payment expense - 4 202 - 4 202 4 202
Dividends paid - - (32 362) (32 362) (32 362)
Total comprehensive income for
the half-year - - 109 326 109 326 109 326
Balance at 28 February 2014 229 312 (17 926) 689 544 900 930 900 930
Share-based payment reserve:
initial award - (13 244) - (13 244) (13 244)
Share-based payment expense - 5 206 - 5 206 5 206
Dividends paid - - (62 567) (62 567) (62 567)
Total comprehensive income for
the half-year - - 68 792 68 792 68 792
Balance at 31 August 2014 229 312 (25 964) 695 769 899 117 899 117
GROUP SEGMENTAL ANALYSIS
Sportsmans Outdoor Performance
Warehouse Warehouse Brands Corporate Group
R'000 R'000 R'000 R'000 R'000
Six months ended 31 August 2014
(unaudited)
External revenue 498 951 149 491 28 632 - 677 074
Internal revenue - - 34 930 - 34 930
External interest received - - 64 2 583 2 646
External interest paid - - (2) (5 190) (5 192)
Depreciation and amortisation (11 872) (3 646) (1 925) (7 345) (24 788)
Profit/(loss) before taxation 90 883 17 246 13 799 (25 647) 96 281
Capital expenditure 16 385 3 211 432 516 20 544
Segment assets 322 829 116 120 104 637 669 539 1 213 124
Segment liabilities 77 469 29 380 10 587 196 569 314 006
Six months ended 31 August 2013
(unaudited)
External revenue 458 083 141 974 30 928 - 630 985
Internal revenue - - 33 322 - 33 322
External interest received - - 36 1 196 1 232
External interest paid - - - (5 066) (5 066)
Depreciation and amortisation (9 205) (2 818) (1 693) (6 303) (20 019)
Profit/(loss) before taxation 84 048 19 619 14 163 (27 606) 90 225
Capital expenditure 7 011 3 590 4 536 30 418 45 556
Segment assets 293 219 104 887 110 918 648 982 1 158 005
Segment liabilities 76 780 24 195 11 777 226 481 339 233
Year ended 28 February 2014
(audited)
External revenue 1 042 008 323 117 52 459 - 1 417 584
Internal revenue - - 58 544 - 58 544
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
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. The unaudited interim condensed consolidated results for the half-year ended
31 August 2014 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
2014 2013 2014
Unaudited Unaudited Audited
R'000 R'000 R'000
3. Trading expenses
Depreciation on property, plant
and equipment 18 306 13 537 29 762
Amortisation of intangibles 6 482 6 482 12 963
Occupancy cost 63 689 60 485 123 625
Straight-lining of leases 2 394 2 307 138
Staff costs 85 270 80 363 167 711
Foreign exchange losses/(gains) 1 762 (1 408) (862)
Other operating costs 52 584 50 817 105 673
230 487 212 583 439 010
4. Cash generated from operations
Operating profit 98 826 94 059 250 009
Adjustments for:
Depreciation 18 306 13 537 29 762
Amortisation of intangibles 6 482 6 481 12 963
Profit on sale of assets (123) (429) (657)
Fair value losses/(gains) on
derivative instruments 405 (924) 486
Forfeitable share plan expense 5 206 3 339 7 541
Straight-lining of leases 2 394 2 307 138
Changes in working capital:
Increase in trade and other receivables (3 672) (2 563) (2 436)
Increase in inventories (14 170) (17 756) (8 382)
Increase/(decrease) in trade and
other payables 5 779 (13 665) (15 242)
Cash generated from operations 119 433 84 386 274 182
5. Earnings per share and net asset value per share
Earnings per ordinary share (cents)
- Basic 159.4 149.2 402.6
- Headline 159.2 148.4 401.5
- Core headline 174.0 163.1 423.3
- Core headline before foreign exchange effect 175.4 161.2 424.0
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) 2 083.7 1 897.5 2 087.9
Net tangible asset value per ordinary
share (cents) 796.0 588.3 789.6
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,
the amortisation of trademarks and the lease straight-lining expense and is
presented below:
6 months 6 months Year
ended ended ended
31 August 31 August 28 February
2014 2013 2014
Unaudited Unaudited Audited
R'000 R'000 R'000
Basic earnings 68 792 64 384 173 710
Adjusted for:
Profit on sale of assets (88) (309) (473)
Headline earnings 68 704 64 075 173 237
Adjusted for (net of taxation):
Amortisation of intangibles 4 667 4 667 9 333
Straight-lining of leases 1 724 1 661 99
Core headline earnings 75 095 70 403 182 669
Adjusted for (net of taxation):
Foreign exchange losses/(gains) 1 269 (1 014) (621)
Foreign exchange adjustments in cost of sales (676) 176 922
Core headline earnings before foreign
exchange effect 75 688 69 566 182 970
6. Dividend per share
Dividend declared per share (cents)
- Interim 85.0 75.0 75.0
- Final - - 145.0
Total dividend 85.0 75.0 220.0
Dividend cover (by core headline earnings) 2.0 2.2 1.9
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, M Matlakala, K Moloko
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: 03/10/2014 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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