Wrap Text
Unaudited Interim Condensed Consolidated Results
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 2017
Sales increased 8.1% to R872.2 million
Cash generated from operations increased 37.9% to R142.6 million
Core headline earnings per share before foreign exchange effect decreased 2.2% to 207.4 cents
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 challenging retail environment, total sales increased 8.1% to R872.2 million and
retail sales increased 5.9% to R821.2 million.
Operating profit increased 19.5% to R118.1 million. Core headline earnings amounted
to 214.7 cents per share, an 18.2% increase on the comparable period.
In evaluating this performance shareholders should take into account that the aggregate
foreign exchange adjustment during this period was a profit of R4.2 million compared
to an aggregate loss of R17.6 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.
Core headline earnings excluding the effect of foreign exchange adjustments was
207.4 cents per share, a decrease of 2.2% from the 212.0 cents per share in the first
half of last year.
TRADING DIVISIONS
Sales for the various trading divisions were as follows:
Increase in
Number of Sales sales
stores R'm %
Sportsmans Warehouse 40 621.3 5.5
Outdoor Warehouse 25 199.9 7.3
Retail sales 65 821.2 5.9
Wholesale - 51.0 59.4
Total sales 65 872.2 8.1
Like-for-like retail sales grew by 2.8% while the retail divisions experienced price
inflation of approximately 6.6% for the period. The weighted trading area increased by
4.7% relative to the prior corresponding period.
The Sportsmans Warehouse division trades out of 40 stores. The division opened a new
store in Ballito during the period. Like-for-like sales increased by 3.0%.
The Outdoor Warehouse division currently trades from 25 stores. The division opened a
new store in Parklands during the period. Outdoor will open a new store in the new
Cornubia Centre in the second half of the year. Like-for-like sales increased by 2.4%.
The Wholesale division's external sales were 59.4% higher than the previous period
whilst sales to the group's retail divisions increased by 16.9%.
CASH FLOW
The aggregate investment in working capital increased by 10.6% due to the increase in
trading space. Despite this, cash generated from operations increased by 37.9% compared
to the first half of the previous year.
The group incurred R29.9 million in maintaining and expanding its retail operations
and anticipates spending a further R40.0 million in the second half of this year.
The wholesale division sold a property for R10.6 million.
During the period the group awarded R18.3 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 R8.4 million for the
current period is R1.9 million higher than the prior period.
PROSPECTS
Holdsport continues 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. The group signed a lease agreement to open one new Sportsmans
Warehouse store in the next financial year.
LONG4LIFE OFFER TO ACQUIRE HOLDSPORT
Shareholders are referred to the joint cautionary announcement released on SENS on
25 July 2017 regarding the Firm Intention Offer by Long4Life Limited (Long4Life) to
acquire the entire issued share capital of Holdsport through a Scheme of Arrangement
in terms of section 114(1)(c) of the Companies Act 71 of 2008, as amended.
Further to the Firm Intention Announcement, a Scheme Circular with details of the
Scheme and a notice convening the Scheme Meeting of Holdsport Shareholders was posted
to shareholders on 31 August 2017 and is available on Holdsport's website. The Scheme
Meeting will be held on 3 October 2017.
INTERIM DIVIDEND
It is Holdsport's dividend policy to declare an interim and final dividend, with the
aggregate gross dividend covered approximately 1.5 to two times by the core headline
earnings for the period, excluding the effect of foreign exchange adjustments.
However, the Scheme Consideration offered by Long4Life has been determined on the
basis that Holdsport will not make any distributions to shareholders before the
proposed Scheme is implemented and, accordingly, the directors do not declare an
interim dividend at this stage.
Signed on behalf of the board
SA MULLER KG HODGSON
Chairman CEO
Cape Town
28 September 2017
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 Aug 2017 31 Aug 2016 28 Feb 2017
Unaudited Unaudited Audited
R'000 R'000 R'000
Assets
Non-current assets
Property, plant and equipment 134 067 144 324 131 233
Goodwill and other intangibles 621 453 610 102 608 748
Total non-current assets 755 520 754 426 739 981
Current assets
Inventories 521 095 495 012 511 845
Assets held for sale 12 333 - 21 082
Trade and other receivables 43 038 25 114 30 879
Cash and cash equivalents 27 162 27 498 87 505
Taxation 14 606 22 617 7 451
Total current assets 618 234 570 241 658 762
Total assets 1 373 754 1 324 667 1 398 743
Equity and liabilities
Capital and reserves
Share capital 229 312 229 312 229 312
Treasury shares (81 213) (56 716) (64 832)
Other reserves (55 348) (28 266) (25 724)
Retained earnings 876 459 817 903 885 296
Equity attributable to owners of the company 969 210 962 233 1 024 052
Non-controlling interest 5 966 - -
Total equity 975 176 962 233 1 024 052
Non-current liabilities
Loan 160 000 160 000 160 000
Purchase option liability 19 600 - -
Deferred taxation 37 811 28 102 30 762
Straight-lining lease liability 44 106 39 656 42 497
Total non-current liabilities 261 517 227 758 233 259
Current liabilities
Trade and other payables 134 426 131 720 138 376
Derivative instruments 2 635 2 956 3 056
Total current liabilities 137 061 134 676 141 432
Total liabilities 398 578 362 434 374 691
Total equity and liabilities 1 373 754 1 324 667 1 398 743
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
6 months 6 months Year
ended ended ended
31 Aug 31 Aug 28 Feb
2017 2016 2017
Unaudited Unaudited Audited
R'000 R'000 R'000
Sales 872 295 807 265 1 828 600
Cost of sales (441 854) (417 362) (950 080)
Gross profit 430 441 389 903 878 520
Other income 4 721 3 718 9 568
Trading expenses (317 025) (294 791) (614 400)
Operating profit 118 137 98 830 273 688
Finance income 3 925 3 907 6 439
Finance cost (6 909) (6 552) (14 074)
Profit before taxation 115 153 96 185 266 053
Taxation (31 791) (26 863) (74 858)
Total profit 83 362 69 322 191 195
Non-controlling interest (259) - -
Profit and total comprehensive income
for the period attributable to equity
holders of the company 83 103 69 322 191 195
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
6 months 6 months Year
ended ended ended
31 Aug 31 Aug 28 Feb
2017 2016 2017
Unaudited Unaudited Audited
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from operations 142 627 103 398 311 378
Finance income 3 925 3 907 6 439
Finance costs (6 909) (6 552) (14 074)
Dividends paid (91 940) (84 331) (138 811)
Taxation paid (38 904) (52 847) (88 729)
Net cash inflows/(outflows) from
operating activities 8 799 (36 425) 76 203
Cash flows from investing activities
Additions to property, plant and equipment (29 998) (23 864) (60 286)
Acquisition of business (15 024) (29 972) (38 494)
Proceeds on sale of property, plant and equipment 10 635 208 3 010
Net cash outflows from investing activities (34 387) (53 628) (95 770)
Cash flows from financing activities
Increase in loans - 30 000 30 000
Share-based payment awards (18 374) (12 991) (15 354)
Treasury shares (acquired)/disposed (16 381) 7 179 (937)
Net cash (outflows)/inflows from
financing activities (34 755) 24 188 13 709
Net decrease in cash and cash equivalents (60 343) (65 865) (5 858)
Cash and cash equivalents at the beginning
of the period 87 505 93 363 93 363
Cash and cash equivalents at the end
of the period 27 162 27 498 87 505
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share- Equity
based Purchase holders of Non-con-
Share payment option Retained Treasury Holdsport trolling Total
capital reserve reserve earnings shares Limited interest equity
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Equity at 29 February 2016 229 312 (21 726) - 832 912 (63 895) 976 603 - 976 603
Utilised for share plan - - - - 7 179 7 179 - 7 179
Share-based payment reserve:
initial reward - (12 991) - - - (12 991) - (12 991)
Share-based payment expense - 6 451 - - - 6 451 - 6 451
Dividends paid - - - (84 331) - (84 331) - (84 331)
Total comprehensive income
for the year - - - 69 322 - 69 322 - 69 322
Equity at 31 August 2016 229 312 (28 266) - 817 903 (56 716) 962 233 - 962 233
Share buy-back - - - - (8 116) (8 116) - (8 116)
Share-based payment reserve:
initial award - (2 363) - - - (2 363) - (2 363)
Share-based payment expense - 4 905 - - - 4 905 - 4 905
Dividends paid - - - (54 480) - (54 480) - (54 480)
Total comprehensive income
for the year - - - 121 873 - 121 873 - 121 873
Equity at 28 February 2017 229 312 (25 724) - 885 296 (64 832) 1 024 052 - 1 024 052
Share buy-back - - - - (16 381) (16 381) - (16 381)
Share-based payment reserve:
initial reward - (18 374) - - - (18 374) - (18 374)
Share-based payment expense - 8 350 - - - 8 350 - 8 350
Dividends paid - - - (91 940) - (91 940) - (91 940)
Acquisition of subsidiary - - (19 600) - - (19 600) 5 707 (13 893)
Total comprehensive income
for the year - - - 83 103 - 83 103 259 83 362
Equity at 31 August 2017 229 312 (35 748) (19 600) 876 459 (81 213) 969 210 5 966 975 176
GROUP SEGMENTAL ANALYSIS
Sportsmans Outdoor
Warehouse Warehouse Wholesale Corporate Group
R'000 R'000 R'000 R'000 R'000
6 months ended 31 August 2017 (unaudited)
External revenue 621 331 199 908 51 056 - 872 295
Internal revenue - - 60 172 3 706 63 878
External interest received 27 - 144 3 754 3 925
External interest paid (1) - (2) (6 906) (6 909)
Depreciation and amortisation (18 395) (6 497) (3 492) (7 577) (35 962)
Profit/(loss) before taxation 105 009 21 042 15 183 (26 081) 115 153
Capital expenditure 19 489 7 605 2 106 798 29 998
Segment assets 463 995 172 635 166 091 571 033 1 373 754
Segment liabilities 131 359 42 421 29 456 195 341 398 578
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) (6 481) (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
Year ended 28 February 2017 (audited)
External sales 1 335 076 418 116 75 408 - 1 828 600
Internal revenue - - (107 500) - (107 500)
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
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. The unaudited interim condensed consolidated results for the half-year ended
31 August 2017 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 28 Feb
2017 2016 2017
Unaudited Unaudited Audited
R'000 R'000 R'000
3. Trading expenses
Depreciation on property, plant
and equipment 28 581 26 850 54 325
Amortisation of intangibles 7 380 6 729 13 796
Occupancy cost 88 136 81 277 170 009
Straight-lining of leases 1 609 3 160 6 001
Staff costs 120 379 106 585 223 073
Foreign exchange losses 2 883 10 046 17 236
Other operating costs 68 057 60 144 129 960
317 025 294 791 614 400
4. Cash generated from operations
Operating profit 118 137 98 830 273 688
Adjustments for:
Depreciation 28 581 26 850 54 325
Amortisation of intangibles 7 380 6 729 13 796
Profit on sale of property, plant
and equipment (1 886) (208) (321)
Fair value (gains)/losses on derivative
instruments (421) 4 682 4 782
Forfeitable share plan expense 8 350 6 451 11 356
Straight-lining of leases 1 608 3 160 6 001
Changes in working capital:
(Increase)/decrease in trade and
other receivables (11 293) 676 (5 089)
Decrease/(increase) in inventories 766 (26 145) (35 976)
Decrease in trade and other payables (8 595) (17 627) (11 184)
Cash generated from operations 142 627 103 398 311 378
5. Earnings per share and net asset value per share
Earnings per ordinary share (cents)
- Basic and diluted 199.6 165.1 455.6
- Headline 196.4 164.7 455.0
- Core headline 214.7 181.7 489.0
- Core headline before foreign exchange effect 207.4 212.0 522.3
Ordinary shares in issue ('000) 43 150 43 150 43 150
Weighted dilutive average ordinary shares
in issue ('000) 41 753 41 975 41 969
Net asset value per ordinary share (cents) 2 343.7 2 289.5 2 444.7
Net tangible asset value per ordinary
share (cents) 990.8 959.1 1 123.1
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 profits
and costs, 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 28 Feb
2017 2016 2017
Unaudited Unaudited Audited
R'000 R'000 R'000
Basic earnings 83 362 69 322 191 195
Adjusted for (net of taxation):
Profit on sale of assets (1 358) (150) (231)
Headline earnings 82 004 69 172 190 964
Adjusted for (net of taxation):
Amortisation of intangibles 5 314 4 845 9 933
Straight-lining of leases 1 158 2 275 4 321
Non-recurring professional fees 1 170 - -
Core headline earnings 89 646 76 292 205 218
Adjusted for (net of taxation):
Foreign exchange losses 2 075 7 233 12 410
Foreign exchange adjustments in cost
of sales (5 121) 5 466 1 592
Core headline earnings before
foreign exchange effect 86 600 88 991 219 220
6. Dividend per share
Dividend declared per share (cents)
- Interim - 130.0 130.0
- Final - 220.0
Total dividend - 130.0 350.0
Normal dividend cover (by core headline
earnings before foreign exchange effect) - 1.6 1.5
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: 28/09/2017 03:00:00 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.
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