Wrap Text
Audited Summary Consolidated Financial Statements For The Year Ended 28 February 2017
HOLDSPORT LIMITED
("Holdsport" or "the company" or "the group")
Registration number: 2006/022562/06
Share code: HSP
ISIN: ZAE000157046
AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 28 February 2017
Sales up 5.8% to R1 828.6 million
Core earnings per share before foreign exchange effect down 2.3% to 522.3 cents
Final gross dividend increased by 10.0% to 220.0 cents per share
Gross dividend yield of 5.7%
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,
Second Skins and African Nature brands.
In a particularly challenging retail environment total sales increased by 5.8% to
R1 828.6 million and retail sales increased by 4.4% to R1 753.2 million. Holdsport's
sales growth during this year follows strong growth in the comparable 2016 financial year.
Core headline earnings excluding the effect of foreign exchange adjustments were
522.3 cents per share, a decrease of 2.3% from the 534.5 cents for the previous
financial year.
In evaluating this performance shareholders should take into account that the aggregate
foreign exchange adjustment during the current year was a loss of R19.5 million compared
to an aggregate profit of R8.4 million during the prior year. 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 by 11.4% to R273.7 million. Core headline earnings amounted
to 489.0 cents per share, a 10.9% decrease on the previous year.
TRADING DIVISIONS
External sales for the various trading divisions were as follows:
Increase
Number of Sales in sales
stores R'm %
Sportsmans Warehouse 39 1 335.1 4.4
Outdoor Warehouse 24 418.1 4.5
Retail sales 63 1 753.2 4.4
Wholesale - 75.4 54.9
Total sales 63 1 828.6 5.8
Like-for-like retail sales grew by 1.8% while the retail divisions experienced price
inflation of approximately 8.1% for the year. The time weighted trading area increased
by 3.4% relative to the prior year.
The Sportsmans Warehouse division now trades out of 39 stores. The division opened
new stores in Mall of Africa and Menlyn Park Shopping Centre during the year and
expanded the store in the Pavilion Centre. Like-for-like sales increased by 2.1%.
The Outdoor Warehouse division comprises 24 stores. The division relocated its store
in Nelspruit, expanded its store in Somerset West and opened a new store in George
during the year. Like-for-like sales increased by 0.6%.
The Wholesale division's external sales were 54.9% higher than last year and sales to
the group's retail divisions increased by 11.1%. Of the R19.5 million forex losses for
the group R10.5 million (2016: R4.9 million profit) relates to the wholesale division.
BUSINESS ACQUISITIONS
The group acquired a 100% interest in Second Skins (Proprietary) Limited effective
from 1 June 2016 and 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 R130.0 million during the year with a new loan
of R160.0 million. The increase in the loan funded the business acquisitions and
accordingly net debt increased to R72.5 million (2016: R36.6 million).
The aggregate investment in working capital increased by 19.1% due to the acquisitions
of the Second Skins and African Nature businesses and the increase in retail trading
space, coupled with the effect of the weaker exchange rate on the cost of imported
stock. As a result cash generated from operations decreased by 1.8% compared to the
previous year.
The group invested R60.3 million in maintaining and expanding its operations in the year.
During the year the group purchased and awarded R15.4 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 for
this year was R11.4 million (2016: R11.6 million).
Holdsport holds 1 260 878 shares in treasury at 28 February 2017, which equates to
2.92% of its issued share capital. The shares were purchased over the last three
financial years at an average cost of R51.41 per share.
STORE EXPANSION
The group signed lease agreements for a further three new stores to be opened in the
next financial year.
PROSPECTS
Holdsport continues to face low levels of consumer confidence, weak economic growth
and a sporting goods industry which is intensely competitive.
Household budgets are under pressure due to high food inflation, rising utility costs
and increasing taxation whilst real incomes are stagnating within a low-growth
environment. The recent political disruptions and subsequent downgrades are concerning
and may result in muted sales growth over the medium term. In these difficult times
the group is firmly committed to its strategies to enhance returns for our stakeholders.
FINAL DIVIDEND ANNOUNCEMENT
The directors declared a final gross dividend of 220.0 cents per share payable on
Monday, 12 June 2017 to ordinary shareholders recorded in the books of the company at
the close of business on Friday, 9 June 2017. The gross dividend for the year is
covered 1.5 times by the core headline earnings for the year, excluding the effect
of foreign exchange adjustments. This represents a gross dividend yield of 5.7% on
the year-end share price of R61.22 per share.
The last day to trade ("cum" the dividend) in order to participate in the dividend
will be Tuesday, 6 June 2017. The Holdsport Limited ordinary shares will commence
trading "ex" the dividend from the commencement of business on Wednesday, 7 June 2017
and the record date, as indicated, will be Friday, 9 June 2017.
Ordinary shareholders should take note that share certificates may not be dematerialised
or rematerialised during the period Wednesday, 7 June 2017 to Friday, 9 June 2017,
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 20%;
- the net local dividend amount is 176.0 cents per ordinary share for shareholders
liable to pay dividend tax, and 220.0 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
5 May 2017
SUMMARISED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
At At
28 Feb 2017 29 Feb 2016
Audited Audited
R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 131 233 145 429
Goodwill and other intangibles 608 748 594 410
Total non-current assets 739 981 739 839
Current assets
Inventories 511 845 459 191
Assets held for sale 21 082 -
Trade and other receivables 30 879 23 994
Cash and cash equivalents 87 505 93 363
Taxation 7 451 -
Derivative instruments - 1 726
Total current assets 658 762 578 274
Total assets 1 398 743 1 318 113
EQUITY AND LIABILITIES
Capital and reserves
Share capital 229 312 229 312
Share-based payment reserve (25 724) (21 726)
Treasury shares (64 832) (63 895)
Retained earnings 885 296 832 912
Equity attributable to owners of the company 1 024 052 976 603
Non-current liabilities
Loan 160 000 -
Deferred taxation 30 762 28 070
Straight-lining lease liability 42 497 36 496
Total non-current liabilities 233 259 64 566
Current liabilities
Trade and other payables 138 376 143 808
Derivative instruments 3 056 -
Loan - 130 000
Taxation - 3 136
Total current liabilities 141 432 276 944
Total liabilities 374 691 341 510
Total equity and liabilities 1 398 743 1 318 113
SUMMARISED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended Year ended
28 Feb 2017 29 Feb 2016
Audited Audited
R'000 R'000
Sales 1 828 600 1 727 436
Cost of sales (950 080) (899 421)
Gross profit 878 520 828 015
Other income 9 568 6 294
Trading expenses (614 400) (525 384)
Operating profit 273 688 308 925
Finance income 6 439 6 591
Finance cost (14 074) (11 388)
Profit before taxation 266 053 304 128
Taxation (74 858) (85 352)
Profit and total comprehensive income for the year
attributable to equity holders of the company 191 195 218 776
SUMMARISED CONSOLIDATED CASH FLOW STATEMENTS
Year ended Year ended
28 Feb 2017 29 Feb 2016
Audited Audited
R'000 R'000
Cash flows from operating activities
Cash generated from operations 311 378 316 971
Finance income 6 439 6 591
Finance costs (14 074) (11 388)
Dividends paid (138 811) (121 619)
Taxation paid (88 729) (89 202)
Net cash inflows from operating activities 76 203 101 353
Cash flows from investing activities
Additions to property, plant and equipment (60 286) (73 500)
Acquisition of new businesses (38 494) -
Proceeds on sale of property, plant and equipment 3 010 2 544
Net cash outflows from investing activities (95 770) (70 956)
Cash flows from financing activities
Increase in loans 30 000 -
Treasury shares acquired (937) (51 811)
Forfeitable share plan awards (15 354) (15 069)
Net cash inflows/(outflows) from financing activities 13 709 (66 880)
Net decrease in cash and cash equivalents (5 858) (36 483)
Cash and cash equivalents at the beginning of the year 93 363 129 846
Cash and cash equivalents at the end of the year 87 505 93 363
SUMMARISED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share-
based
Share payment Treasury Retained Total
capital reserve shares earnings equity
R'000 R'000 R'000 R'000 R'000
Balance at 1 March 2015
(audited) 229 312 (18 278) (12 084) 735 755 934 705
Share-based payment reserve:
initial award - (15 069) - - (15 069)
Share-based payment expense - 11 621 - - 11 621
Treasury shares acquired - - (51 811) - (51 811)
Dividends paid - - - (121 619) (121 619)
Total comprehensive income
for the year - - - 218 776 218 776
Balance at 29 February 2016
(audited) 229 312 (21 726) (63 895) 832 912 976 603
Balance at 1 March 2016
(audited) 229 312 (21 726) (63 895) 832 912 976 603
Share-based payment reserve:
initial award - (15 354) - - (15 354)
Share-based payment expense - 11 356 - - 11 356
Treasury shares acquired - - (937) - (937)
Dividends paid - - - (138 811) (138 811)
Total comprehensive income
for the year - - - 191 195 191 195
Balance at 28 February 2017
(audited) 229 312 (25 724) (64 832) 885 296 1 024 052
SUMMARISED CONSOLIDATED SEGMENTAL ANALYSIS
Sportsmans Outdoor Performance
Warehouse Warehouse Wholesale Corporate Group
R'000 R'000 R'000 R'000 R'000
Year ended 28 February 2017
(audited)
Total sales 1 335 076 418 116 182 908 - 1 936 100
Less inter-segment sales - - (107 500) - (107 500)
External sales 1 335 076 418 116 75 408 - 1 828 600
External interest received - - 503 5 936 6 439
External interest paid - - (175) (13 899) (14 074)
Depreciation and amortisation (34 007) (13 139) (6 362) (14 613) (68 121)
Profit/(loss) before taxation 268 784 53 345 11 497 (67 573) 266 053
Capital expenditure 39 347 13 143 2 945 4 851 60 286
Segment assets 444 226 166 321 155 232 632 964 1 398 743
Segment liabilities 115 078 32 282 14 798 212 533 374 691
Year ended 29 February 2016
(audited)
Total sales 1 278 569 400 210 145 400 - 1 824 179
Less inter-segment sales - - (96 743) - (96 743)
External sales 1 278 569 400 210 48 657 - 1 727 436
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 SUMMARY FINANCIAL STATEMENTS
1. These summary consolidated financial statements for the year ended 28 February 2017
have been audited by KPMG Inc., who expressed an unmodified opinion thereon. The auditor
also expressed an unmodified opinion on the annual consolidated financial statements
from which these summary consolidated financial statements were derived.
A copy of the auditor's report on the summary consolidated financial statements and
of the auditor's report on the annual consolidated financial statements are available
for inspection at the company's registered office, together with the financial
statements identified in the respective auditor's reports. The auditor's report does
not necessarily report on all of the information contained in these financial results.
Shareholders are therefore advised that in order to obtain a full understanding of
the nature of the auditor's engagement, they should obtain a copy of the auditor's
report together with the accompanying financial information from the company's
registered office.
The summary consolidated financial statements presented in this announcement have been
summarised from the audited consolidated financial statements. The summary consolidated
financial statements are prepared in accordance with the requirements of the
JSE 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 Feb 2017 29 Feb 2016
Audited Audited
R'000 R'000
3. Trading expenses
Depreciation on property, plant and equipment 54 325 47 407
Amortisation of intangibles 13 796 12 963
Occupancy cost 170 009 151 624
Straight-lining of leases 6 001 7 578
Staff costs 223 073 201 103
Foreign exchange loss/(gains) 17 236 (11 315)
Other operating costs 129 960 116 024
614 400 525 384
4. Cash generated from operations
Operating profit 273 688 308 925
Adjustments for:
Depreciation 54 325 47 407
Amortisation of intangibles 13 796 12 963
Profit on sale of property, plant and equipment (321) (593)
Fair value gain on derivative instruments 4 782 (1 339)
Forfeitable share plan expense 11 356 11 621
Straight-lining of leases 6 001 7 578
Changes in working capital:
(Increase)/decrease in trade and other receivables (5 089) 1 625
Increase in inventories (35 976) (93 795)
(Decrease)/increase in trade and other payables (11 184) 22 579
Cash generated from operations 311 378 316 971
5. Earnings per share and net asset value per share
Earnings per ordinary share (cents)
- Basic 455.6 514.9
- Headline 455.0 513.9
- Core headline 489.0 548.7
- Core headline before foreign exchange effect 522.3 534.5
Ordinary shares in issue ('000) 43 150 43 150
Weighted average ordinary shares in issue ('000) 41 969 42 488
Net asset value per ordinary share (cents) 2 444.7 2 332.4
Net tangible asset value per ordinary share (cents) 1 123.1 1 038.8
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 are
presented below:
Year ended Year ended
28 Feb 2017 29 Feb 2016
Audited Audited
R'000 R'000
Basic earnings 191 195 218 776
Adjusted for (net of taxation):
Profit on sale of assets (231) (427)
Headline earnings 190 964 218 349
Adjusted for (net of taxation):
Amortisation of intangibles 9 933 9 333
Straight-lining of leases 4 321 5 455
Core headline earnings 205 218 233 138
Adjusted for (net of taxation):
Foreign exchange losses/(gains) 12 410 (8 147)
Foreign exchange adjustments in cost of sales 1 592 2 124
Core headline earnings before foreign exchange effect 219 220 227 115
6. Dividend per share
Dividend declared per share (cents)
- Interim 130.0 120.0
- Final 220.0 200.0
Total dividend 350.0 320.0
Dividend cover (by core headline earnings
before foreign exchange effect) 1.5 1.7
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
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196.
Sponsor: UBS South Africa (Proprietary) Limited
To view the results online visit www.holdsport.co.za
Date: 05/05/2017 11:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.