Wrap Text
Unaudited Interim Condensed Consolidated Results for the half-year ended 31 August 2016
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 2016
- Sales up 6.5% to R807.2 million
- Core headline earnings per share before foreign exchange effect up 0.2% to 212.0 cents
- Interim gross dividend up 8.3% to 130.0 cents per share
GROUP OVERVIEW
The Holdsport Limited group comprises the retail divisions Sportsmans Warehouse and
Outdoor Warehouse and a wholesale division that includes the First Ascent, Capestorm
and Second Skins brands.
In a challenging retail environment total sales increased 6.5% to R807.2 million and
retail sales increased 5.7% to R775.2 million.
Core headline earnings excluding the effect of foreign exchange adjustments were
212.0 cents per share, an increase of 0.2% from the 211.5 cents per share in the first
half of last year.
In evaluating this performance shareholders should take into account that the aggregate
foreign exchange adjustment during this period was a loss of R17.6 million compared to
an aggregate profit of R5.7 million during the prior period. Holdsport's policy is to
take out forward exchange contracts to cover all its imported merchandise commitments
and this has been applied consistently with previous years. This accounting adjustment
does not have an operational or cash flow effect.
Operating profit decreased 20.1% to R98.8 million. Core headline earnings amounted to
181.7 cents per share, a 17.8% decrease on the comparable period.
TRADING DIVISIONS
Sales for the various trading divisions were as follows:
Increase in
Number of Sales sales
stores R'm %
Sportsmans Warehouse 38 588.9 7.3
Outdoor Warehouse 23 186.3 1.0
Retail sales 61 775.2 5.7
Wholesale - 32.0 31.0
Total sales 61 807.2 6.5
Like-for-like retail sales grew by 3.3% while the retail divisions experienced price
inflation of approximately 8.6% for the period. The weighted trading area increased by
2.3% relative to the prior corresponding period.
The Sportsmans Warehouse division trades out of 38 stores. The division opened a new
store in Mall of Africa and expanded the store in the Pavillion Centre during the
period. Sportsmans will open another store in Menlyn Park Shopping Centre in the second
half of the year. Like-for-like sales increased by 5.4%.
The Outdoor Warehouse division currently trades from 23 stores. The division relocated
its store in Nelspruit and expanded its store in Somerset West during the period.
Outdoor will open a new store in George in the second half of the year. Like-for-like
sales decreased by 2.9%.
The Wholesale division's external sales were 31.0% higher than the previous period
year whilst sales to the group's retail divisions increased by 3.8%.
BUSINESS ACQUISITIONS
Holdsport acquired a 100% interest in Second Skins (Proprietary) Limited during the
period and will also acquire the business of African Nature (Proprietary) Limited from
1 October 2016. These acquisitions enhance the group's specialist manufacturing capacity
and its access to niche markets.
CASH FLOW
Holdsport refinanced its term debt of R130 million during the period with a new loan
of R160 million, repayable to Standard Bank on 31 August 2018. The increase in the loan
funded the acquisition of Second Skins and, accordingly, net debt of R132.5 million at
the end of this period was higher than the R92.6 million at the end of the prior
comparable period.
The aggregate investment in working capital increased by 18.6% due to the increase in
trading space and the effect of the weaker exchange rate on the cost of imported stock.
Despite this, cash generated from operations increased by 3.7% compared to the first
half of the previous year.
The group incurred R23.9 million in maintaining and expanding its retail operations
and anticipates spending a further R47.0 million in the second half of this year.
During the period the group awarded R12.9 million of Holdsport shares in terms of and
subject to the rules of the 2011 Holdsport Forfeitable Share Plan (FSP). A portion of
the award was funded from the treasury shares held by the group. The forfeitable share
plan is expensed over the vesting period and the expense of R6.4 million for the
current period is R0.4 million higher than the prior period.
STORE EXPANSION
The group signed lease agreements for a further three new stores to be opened in the
next financial year.
PROSPECTS
Holdsport's low sales growth during this period follows strong growth in the comparable
period. We continue to face low levels of consumer confidence, weak economic growth and
a sporting goods industry which is intensely competitive. Sales growth will remain
muted over the medium term but we are confident that our strategies will enhance returns
for our stakeholders.
INTERIM DIVIDEND ANNOUNCEMENT
The directors declared an interim gross dividend of 130.0 cents per share payable on
Monday, 12 December 2016 to ordinary shareholders recorded in the books of the company
at the close of business on Friday, 9 December 2016. The gross dividend is covered
1.6 times by the core headline earnings for the period, excluding the effect of
foreign exchange adjustments.
The last day to trade ("cum" the dividend) in order to participate in the dividend
will be Tuesday, 6 December 2016. The Holdsport Limited ordinary shares will commence
trading "ex" the dividend from the commencement of business on Wednesday, 7 December 2016
and the record date, as indicated, will be Friday, 9 December 2016.
Ordinary shareholders should take note that share certificates may not be dematerialised
or rematerialised during the period Wednesday, 7 December 2016 to Friday, 9 December 2016,
both dates inclusive.
In terms of the withholding tax on dividends, the following additional information is
disclosed:
- the dividend has been declared out of total reserves;
- the South African tax dividend rate is 15%;
- 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
SA MULLER KG HODGSON
Chairman CEO
Cape Town
11 October 2016
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 Aug 2016 31 Aug 2015 29 Feb 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 144 324 132 146 145 429
Goodwill and other intangibles 610 102 600 894 594 410
Total non-current assets 754 426 733 040 739 839
Current assets
Inventories 495 012 426 554 459 191
Trade and other receivables 25 114 23 672 23 994
Cash and cash equivalents 27 498 37 405 93 363
Taxation 22 617 10 900 -
Derivative instruments - 4 957 1 726
Total current assets 570 241 503 488 578 274
Total assets 1 324 667 1 236 528 1 318 113
EQUITY AND LIABILITIES
Capital and reserves
Share capital 229 312 229 312 229 312
Treasury shares (56 716) (39 341) (63 895)
Share-based payment reserve (28 266) (27 243) (21 726)
Retained earnings 817 903 752 365 832 912
Equity attributable to owners of the company 962 233 915 093 976 603
Non-current liabilities
Loan 160 000 130 000 -
Deferred taxation 28 102 35 901 28 070
Straight-lining lease liability 39 656 32 759 36 496
Total non-current liabilities 227 758 198 660 64 566
Current liabilities
Trade and other payables 131 720 122 775 143 808
Taxation - - 3 136
Loan - - 130 000
Derivative instruments 2 956 - -
Total current liabilities 134 676 122 775 276 944
Total liabilities 362 434 321 435 341 510
Total equity and liabilities 1 324 667 1 236 528 1 318 113
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
6 months 6 months Year
ended ended ended
31 Aug 2016 31 Aug 2015 29 Feb 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Sales 807 265 757 977 1 727 436
Cost of sales (417 362) (391 015) (899 421)
Gross profit 389 903 366 962 828 015
Other income 3 718 2 169 6 294
Trading expenses (294 791) (245 441) (525 384)
Operating profit 98 830 123 690 308 925
Finance income 3 907 4 150 6 591
Finance cost (6 552) (5 806) (11 388)
Profit before taxation 96 185 122 034 304 128
Taxation (26 863) (34 523) (85 352)
Profit and total comprehensive income for
the period attributable to equity holders
of the company 69 322 87 511 218 776
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
6 months 6 months Year
ended ended ended
31 Aug 2016 31 Aug 2015 29 Feb 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from operations 103 398 99 745 316 971
Finance income 3 907 4 150 6 591
Finance costs (6 552) (5 806) (11 388)
Dividends paid (84 331) (70 901) (121 619)
Taxation paid (52 847) (44 578) (89 202)
Net cash (outflows)/inflows from operating
activities (36 425) (17 390) 101 353
Cash flows from investing activities
Additions to property, plant and equipment (23 864) (33 646) (73 500)
Business acquisition (29 972) - -
Proceeds on sale of property, plant and equipment 208 832 2 544
Net cash outflows from investing activities (53 628) (32 814) (70 956)
Cash flows from financing activities
Increase in loan 30 000 - -
Share-based payment awards (12 991) (14 980) (15 069)
Treasury shares disposed/(acquired) 7 179 (27 257) (51 811)
Net cash inflows/(outflows) from financing
activities 24 188 (42 237) (66 880)
Net decrease in cash and cash equivalents (65 865) (92 441) (36 483)
Cash and cash equivalents at the beginning of
the period 93 363 129 846 129 846
Cash and cash equivalents at the end of the period 27 498 37 405 93 363
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share-
based
Share Treasury payment Retained Total
capital shares reserve earnings equity
R'000 R'000 R'000 R'000 R'000
Equity at 28 February 2015
(audited) 229 312 (12 084) (18 278) 735 755 934 705
Share buy-back - (27 257) - - (27 257)
Share-based payment reserve:
initial reward - - (14 980) - (14 980)
Share-based payment expense - - 6 015 - 6 015
Dividends paid - - - (70 901) (70 901)
Total comprehensive income for
the year - - - 87 511 87 511
Equity at 31 August 2015
(unaudited) 229 312 (39 341) (27 243) 752 365 915 093
Share buy-back - (24 554) - - (24 554)
Share-based payment reserve:
initial reward - - (89) - (89)
Share-based payment expense - - 5 606 - 5 606
Dividends paid - - - (50 718) (50 718)
Total comprehensive income for
the year - - - 131 265 131 265
Equity at 29 February 2016
(audited) 229 312 (63 895) (21 726) 832 912 976 603
Utilised for share plan - 7 179 - - 7 179
Share-based payment reserve:
initial reward - - (12 991) - (12 991)
Share-based payment expense - - 6 451 - 6 451
Dividends paid - - - (84 331) (84 331)
Total comprehensive income for
the year - - - 69 322 69 322
Equity at 31 August 2016
(unaudited) 229 312 (56 716) (28 266) 817 903 962 233
CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS
Sportsmans Outdoor
Warehouse Warehouse Wholesale Corporate Group
R'000 R'000 R'000 R'000 R'000
6 months ended 31 August 2016
(unaudited)
External revenue 588 929 186 299 32 037 - 807 265
Internal revenue - - 54 635 - 54 635
External interest received - - 278 3 629 3 907
External interest paid - - (70) (6 482) (6 552)
Depreciation and amortisation (16 850) (6 436) (2 749) (7 544) (33 579)
Profit/(loss) before taxation 104 776 17 557 7 481 (33 629) 96 185
Capital expenditure 14 981 6 496 1 093 1 294 23 864
Segment assets 416 018 161 081 156 933 590 635 1 324 667
Segment liabilities 129 561 53 749 6 994 172 130 362 434
6 months ended 31 August 2015
(unaudited)
External revenue 549 023 184 489 24 465 - 757 977
Internal revenue - - 52 615 - 52 615
External interest received - - 130 4 020 4 150
External interest paid - - (5) (5 801) (5 806)
Depreciation and amortisation (15 263) (4 591) (1 902) (7 246) (29 002)
Profit/(loss) before taxation 110 878 25 910 17 361 (32 115) 122 034
Capital expenditure 22 186 9 321 884 1 255 33 646
Segment assets 375 191 134 143 112 030 615 164 1 236 528
Segment liabilities 107 395 55 302 4 773 153 965 321 435
Year ended 29 February 2016
(audited)
External revenue 1 278 569 400 210 48 657 - 1 727 436
Internal revenue - - (96 743) - (96 743)
External interest received - - 306 6 285 6 591
External interest paid - - (6) (11 382) (11 388)
Depreciation and amortisation (31 411) (10 273) (4 061) (14 625) (60 370)
Profit/(loss) before taxation 281 406 58 227 28 481 (63 986) 304 128
Capital expenditure 42 219 21 600 7 315 2 366 73 500
Segment assets 393 761 143 820 134 420 646 112 1 318 113
Segment liabilities 111 705 26 955 10 386 192 464 341 510
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. The unaudited interim condensed consolidated results for the half-year ended
31 August 2016 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 Aug 31 Aug 29 Feb
2016 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
3. Trading expenses
Depreciation on property, plant and equipment 26 850 22 522 47 407
Amortisation of intangibles 6 729 6 480 12 963
Occupancy cost 81 277 73 010 151 624
Straight-lining of leases 3 160 3 841 7 578
Staff costs 106 585 92 939 201 103
Foreign exchange losses/(gains) 10 046 (6 699) (11 315)
Other operating costs 60 144 53 349 116 024
294 791 245 441 525 384
4. Cash generated from operations
Operating profit 98 830 123 690 308 925
Adjustments for:
Depreciation 26 850 22 522 47 407
Amortisation of intangibles 6 729 6 480 12 963
Profit on sale of property, plant and equipment (208) (567) (593)
Fair value losses/(gains) on derivative
instruments 4 682 (4 570) (1 339)
Forfeitable share plan expense 6 451 6 015 11 621
Straight-lining of leases 3 160 3 841 7 578
Changes in working capital:
Decrease in trade and other receivables 676 1 947 1 625
Increase in inventories (26 145) (61 158) (93 795)
(Decrease)/increase in trade and other payables (17 627) 1 545 22 579
Cash generated from operations 103 398 99 745 316 971
5. Earnings per share and net asset value per share
Earnings per ordinary share (cents)
- Basic 165.1 204.7 514.9
- Headline 164.7 203.8 513.9
- Core headline 181.7 221.1 548.7
- Core headline before foreign exchange effect 212.0 211.5 534.5
Ordinary shares in issue ('000) 43 150 43 150 43 150
Weighted average ordinary shares in issue ('000) 41 975 42 739 42 488
Net asset value per ordinary share (cents) 2 289.5 2 160.7 2 332.4
Net tangible asset value per ordinary share
(cents) 959.1 870.8 1 038.8
Reconciliation to core headline earnings
The group uses core headline earnings before foreign exchange effect as a consistent
measure of performance for management purposes. Core headline earnings exclude
exceptional once-off costs and the amortisation of trademarks and the lease
straight-lining expense, and are presented below:
6 months 6 months Year
ended ended ended
31 Aug 31 Aug 29 Feb
2016 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Basic earnings 69 322 87 511 218 776
Adjusted for (net of taxation):
Profit on sale of assets (150) (408) (427)
Headline earnings 69 172 87 103 218 349
Adjusted for (net of taxation):
Amortisation of intangibles 4 845 4 667 9 333
Straight-lining of leases 2 275 2 766 5 456
Core headline earnings 76 292 94 536 233 138
Adjusted for (net of taxation):
Foreign exchange losses/(gains) 7 233 (4 823) (8 147)
Foreign exchange adjustments in cost of sales 5 466 691 2 124
Core headline earnings before foreign exchange
effect 88 991 90 404 227 115
6. Dividend per share
Dividend declared per share (cents)
- Interim 130.0 120.0 120.0
- Final - - 200.0
Total dividend 130.0 120.0 320.0
Normal dividend cover (by core headline earnings
before foreign echange effect) 1.6 1.7 1.6
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, P Matlakala,
KR Moloko, KA Hedderwick
Company secretary: R Thomas
Transfer secretaries: Computershare Investor Services (Proprietary) Limited
Ground Floor, 70 Marshall Street, Johannesburg, 2001
Sponsor: UBS South Africa (Proprietary) Limited
Date: 11/10/2016 12:02:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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