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HSP
HSP
HSP - Holdsport Limited - Final results for the year ended 29 February 2012
Holdsport Limited
(Incorporated in the Republic of South Africa)
Registration number: 2006/022252/06
Share code: HSP
ISIN: ZAE000157046
("Holdsport" or "the company" or "the group")
FINAL RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2012
- SALES UP 9.8% TO R1 243.5 MILLION
- CORE HEADLINE EARNINGS PER SHARE UP 22.5% TO 387.4 CENTS
- STRONG CASH FLOW FROM OPERATING ACTIVITIES
- FINAL GROSS DIVIDEND DECLARED OF 115 CENTS PER SHARE
GROUP OVERVIEW
The Holdsport Limited group comprises the retail chains: Sportsmans Warehouse
and Outdoor Warehouse; and Performance Brands (previously First Ascent SA), an
expanding outdoor apparel and equipment wholesale business. Holdsport was listed
on the JSE Limited on 18 July 2011, and these are its maiden set of final
results.
The group delivered a pleasing result for the year with total sales increasing
by 9.8% to R1 243.5 million and retail sales increasing by 8.7% to R1 195.9
million. The group`s core headline earnings increased by 22.5% to R167.2
million. Pro forma comparative figures have been provided to allow for a better
evaluation of the group`s performance.
Holdsport has maintained strong margins through its procurement strategies and
rigorous cost management. The group`s operating profit margin for the period
increased from 17.3% to 18.2%, mainly as a result of profits on foreign exchange
denominated transactions of R1.4 million in this financial year compared to
losses of R6.7 million in the previous year.
The group opened two new stores during the period and relocated three stores,
with a weighted increase in trading area of 3.0%.
A final gross dividend of 115.0 cents per share has been declared, this being in
line with the group`s dividend policy of two times cover by core headline
earnings, which amounted to 228.2 cents per share in the second half of the
year.
TRADING DIVISIONS
Sales for the various trading divisions were as follows:
Increase
Number of Sales in sales
stores Rm %
Sportsmans Warehouse 33 896.0 9.2
Outdoor Warehouse 18 299.9 7.3
Retail sales 51 1 195.9 8.7
Performance Brands - 47.6 45.9
Total sales 51 1 243.5 9.8
Like-for-like store retail sales grew by 6.6%, while the retail chains
experienced price inflation of approximately 0.6% for the year. Total group
trading expenses increased by 7.7% on a like-for-like basis, excluding foreign
exchange profits and losses.
The Sportsmans Warehouse division opened one new store in Pietermaritzburg and
relocated two stores in Pretoria and Johannesburg, and is now trading out of 33
stores. Like-for-like store sales increased by 7.5%.
The Outdoor Warehouse division opened one new store in Vanderbijlpark and
relocated a store in Somerset West, and is now trading out of 18 stores. Like-
for-like store sales increased by 3.7%.
Performance Brands (previously First Ascent SA) has been positioned as a
wholesale business specialising in the development and distribution of sports
and outdoor apparel and equipment. The company traded well, and achieved R47.6
million of external sales, a 45.9% growth from the previous year.
FUTURE CAPITAL EXPENDITURE
The group purchased the CAPESTORM trademark and related inventory on 1 March
2012. Performance Brands will manage this trademark as part of its portfolio of
wholesale brands.
Holdsport is currently considering the expansion of its distribution facilities.
This could result in the group developing two new distribution centres over the
next 15 months which will increase the distribution capacity for its retail
stores and cater for Performance Brands` growth.
The group signed lease agreements for a further three new stores to be opened in
the next financial year, and is currently evaluating other opportunities.
In addition, the group will be increasing the size of its Fourways store and
relocate a store in Polokwane.
PROSPECTS
The 2010 FIFA World CupTM and the 2011 Rugby World Cup in the last two years
created a high base from which to grow. Furthermore, low selling price
inflation, creeping cost inflation, increased competition and the risk of
overtrading in the sporting goods sector are likely to present challenges in the
year ahead.
Notwithstanding the above challenges, the group is confident that it will
attract customers and show growth as long as it continues to provide its
distinctive retail experience with exciting choice, depth of product and
exceptional service.
FINAL DIVIDEND ANNOUNCEMENT
The directors declared a final gross dividend of 115.0 cents per share payable
on Monday, 25 June 2012 to ordinary shareholders recorded in the books of the
company at the close of business on Friday, 22 June 2012.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Friday, 15 June 2012. The Holdsport Limited ordinary shares
will commence trading "ex" the dividend from the commencement of business on
Monday, 18 June 2012 and the record date, as indicated, will be Friday, 22 June
2012.
Ordinary shareholders should take note that share certificates may not be
dematerialised or rematerialised during the period Monday, 18 June 2012 to
Friday, 22 June 2012, both dates inclusive.
In terms of the new 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 97.75 cents per ordinary share for
shareholders liable to pay the new dividend tax, and 115 cents per ordinary
share for shareholders exempt from the new 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.
PRO FORMA INFORMATION
The unaudited pro forma statement of financial position at 28 February 2011 and
pro forma statement of comprehensive income of Holdsport for the year then ended
is included in these results. This information was previously published in
Annexure 3 of Holdsport`s prelisting statement (dated 28 June 2011) to show the
impact of Holdsport`s listing and of the shareholder loans which were converted
to share capital before the listing.
The unaudited pro forma financial information for the year ended 28 February
2011 has been provided to allow for a better evaluation of the group`s
performance.
Pro forma information has been prepared consistently with the accounting
policies applied to the current and prior periods presented.
The independent reporting accountants` report on the unaudited pro forma
statement of financial position and statement of comprehensive income was also
published in Holdsport`s prelisting statement and is available for inspection at
the company`s registered office during normal business hours and on its website
www.holdsport.co.za.
Signed on behalf of the board.
SA Muller KG Hodgson
Chairman CEO
Cape Town
18 May 2012
Preliminary Consolidated Statements of Financial Position
29 February 28 February 28 February
2012 2011 2011
Audited Pro forma Audited
R`000 R`000 R`000
Assets
Non-current assets
Plant and equipment 51 903 42 759 42 759
Goodwill and other intangibles 638 083 650 637 650 637
Total non-current assets 689 986 693 396 693 396
Current assets
Inventories 296 723 232 762 232 762
Trade and other receivables 19 389 15 558 15 558
Cash and cash equivalents 77 374 19 337 67 919
Total current assets 393 486 267 657 316 239
Total assets 1 083 472 961 053 1 009 635
Equity and liabilities
Capital and reserves
Share capital 229 312 229 312 19
Other reserves (13 370) (15 500) -
Retained earnings 515 603 382 189 384 244
Equity attributable to owners of
the company 731 545 596 001 384 263
Non-controlling interest - - 1 027
Total equity 731 545 596 001 385 290
Non-current liabilities
Loans 124 841 150 642 379 935
Deferred taxation 55 595 59 738 59 738
Straight-lining lease liability 21 972 19 160 19 160
Total non-current liabilities 202 408 229 540 458 833
Current liabilities
Trade and other payables 120 562 100 132 100 132
Derivative instruments 1 095 6 563 6 563
Short-term portion of loans 25 693 24 174 54 174
Taxation 2 169 4 643 4 643
Total current liabilities 149 519 135 512 165 512
Total liabilities 351 927 365 052 624 345
Total equity and liabilities 1 083 472 961 053 1 009 635
Preliminary Consolidated Cash Flow Statements
Year ended Year ended
29 February 28 February
2012 2011
Audited Audited
R`000 R`000
Cash flows from operating activities
Cash generated from operations 219 514 210 713
Finance income 3 773 4 038
Finance costs (19 005) (23 042)
Dividends paid (20 281) -
Taxation paid (70 181) (52 639)
Net cash inflows from operating activities 113 820 139 070
Cash flows from investing activities
Additions to plant and equipment (32 214) (20 940)
Proceeds on sale of plant and equipment 601 1 072
Net cash outflows from investing activities (31 613) (19 868)
Cash flows from financing activities
Repayment of loans (54 170) (140 660)
Forfeitable share plan (15 500) -
Acquisition of non-controlling interest (3 082) (13 101)
Net cash outflows from financing activities (72 752) (153 761)
Net increase/(decrease) in cash and cash
equivalents 9 455 (34 559)
Cash and cash equivalents at the beginning of the year 67 919 102 478
Cash and cash equivalents at the end of the year 77 374 67 919
Preliminary Consolidated Statements of Comprehensive Income
Year Year Year
ended ended ended
29 February 28 February 28 February
2012 2011 2011
Audited Pro forma Audited
R`000 R`000 R`000
Sales 1 243 539 1 132 482 1 132 482
Cost of sales (638 807) (581 640) (581 640)
Gross profit 604 732 550 842 550 842
Other income 5 094 3 389 3 389
Trading expenses (383 395) (365 247) (358 624)
Operating profit 226 431 188 984 195 607
Finance income 3 773 4 038 4 038
Finance cost (12 945) (23 036) (100 644)
Profit before taxation 217 259 169 986 99 001
Taxation (63 564) (49 584) (29 708)
Profit for the year 153 695 120 402 69 293
Attrituable to:
Equity holders of the company 153 695 120 402 68 866
Non-controlling interest - - 427
Profit for the period and total
comprehensive income for the period 153 695 120 402 69 293
Preliminary Consolidated Segmental Analysis
Per-
Sportsmans Outdoor formance
Warehouse Warehouse Brands
R`000 R`000 R`000
Year ended 29 February 2012
External revenue 896 007 299 956 47 576
External interest received - - 246
External interest paid - - (72)
Depreciation and amortisation (15 372) (4 964) (1 991)
Group profit/(loss) before taxation 188 362 55 641 20 759
- Segment profit/(loss) before taxation 188 362 55 641 20 759
- IFRS charges - - -
Capital expenditure 23 286 7 141 501
Segment assets 230 846 94 765 34 847
Segment liabilities 84 639 18 550 8 643
Year ended 28 February 2011
External revenue 820 382 279 500 32 600
External interest received - - 541
External interest paid - - (18)
Depreciation and amortisation (16 253) (4 949) (1 696)
Group profit/(loss) before taxation 161 137 49 445 16 089
- Segment profit/(loss) before taxation 161 137 49 445 16 089
- IFRS charges - - -
Capital expenditure 13 950 3 853 1 587
Segment assets 210 017 81 526 17 388
Segment liabilities 69 752 18 261 8 636
Corporate Group
R`000 R`000
Year ended 29 February 2012
External revenue - 1 243 539
External interest received 3 527 3 773
External interest paid (12 873) (12 945)
Depreciation and amortisation (12 844) (35 171)
Group profit/(loss) before taxation (47 503) 217 259
- Segment profit/(loss) before taxation (44 693) 220 069
- IFRS charges (2 810) (2 810)
Capital expenditure 1 286 32 214
Segment assets 723 014 1 083 472
Segment liabilities 240 095 351 927
Year ended 28 February 2011
External revenue - 1 132 482
External interest received 3 497 4 038
External interest paid (23 024) (23 042)
Depreciation and amortisation (12 908) (35 806)
Group profit/(loss) before taxation (127 670) 99 001
- Segment profit/(loss) before taxation (48 033) 178 638
- IFRS charges (79 637) (79 637)
Capital expenditure 1 550 20 940
Segment assets 700 704 1 009 635
Segment liabilities 527 696 624 345
Preliminary Consolidated Statements of Changes in Equity
Share Other Retained
capital reserves earnings
R`000 R`000 R`000
Balance at 1 March 2010 19 110 141 216 558
Acquisition of non-controlling interest
without a change in control - - (11 321)
Reclassification of other reserves to
retained earnings - (110 141) 110 141
Total comprehensive income for the year - - 68 866
Balance at 28 February 2011 19 - 384 244
Balance at 1 March 2011 19 - 384 244
Acquisition of non-controlling interest
without a change in control - - (2 055)
Capitalisation of shareholder loans 229 293 - -
Share-based payment reserve: initial award - (15 500) -
Share-based payment expense - 2 130 -
Dividends paid - - (20 281)
Total comprehensive income for the year - - 153 695
Balance at 29 February 2012 229 312 (13 370) 515 603
Non-controlling
Total interest Total
R`000 R`000 R`000
Balance at 1 March 2010 326 718 2 380 329 098
Acquisition of non-controlling
interest without a change in control (11 321) (1 780) (13 101)
Reclassification of other reserves
to retained earnings - - -
Total comprehensive income for
the year 68 866 427 69 293
Balance at 28 February 2011 384 263 1 027 385 290
Balance at 1 March 2011 384 263 1 027 385 290
Acquisition of non-controlling
interest without a change in control (2 055) (1 027) (3 082)
Capitalisation of shareholder loans 229 293 - 229 293
Share-based payment reserve:
initial award (15 500) - (15 500)
Share-based payment expense 2 130 - 2 130
Dividends paid (20 281) - (20 281)
Total comprehensive income for
the year 153 695 - 153 695
Balance at 29 February 2012 731 545 - 731 545
NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS
1. KPMG Inc., the group`s independent auditor, has audited the preliminary
financial statements for the year to 29 February 2012 contained in these
preliminary financial statements and has expressed an unmodified opinion on the
preliminary financial statements. Their audit report is available for inspection
at the company`s registered office. These preliminary financial statements are
prepared in accordance with the recognition and measurement requirements of
International Financial Reporting Standards (IFRS) and the disclosure
requirements of IAS 34.
The audited preliminary consolidated results for the year ended 29 February 2012
have been prepared in accordance with the recognition, measurement, presentation
and disclosure requirements of IAS 1: Presentation of Financial Statements,
using the group`s accounting policies that are in line with IFRS, the Companies
Act No. 71 of 2008, as amended, and the AC 500 series as issued by the APB and
have been consistently applied to prior periods.
These audited preliminary 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.
29 February 28 February 28 February
2012 2011 2011
Audited Pro forma Audited
R`000 R`000 R`000
3. Trading expenses
Depreciation on plant and equipment 22 617 23 251 23 251
Amortisation of intangibles 12 554 12 555 12 555
Occupancy cost 103 706 91 030 91 030
Straight-lining of leases 2 812 1 945 1 945
Staff costs 145 796 133 195 133 195
Foreign exchange (gains)/losses (1 422) 6 742 6 742
Other operating costs 97 332 96 529 89 906
383 395 365 247 358 624
4. Finance cost
Interest paid on loans 19 005 23 036 23 042
Interest rate swap (5 949) - -
Fair value adjustment on loans (111) - 45 998
Imputed interest on loans - - 31 604
12 945 23 036 100 644
5. Cash generated from operations
Operating profit 226 431 195 607
Adjustments for:
Depreciation 22 617 23 251
Amortisation of intangibles 12 554 12 555
Profit on sale of plant and
equipment (148) (193)
Fair value loss on derivative
instruments 480 166
Straight-lining lease 2 812 1 945
Forfeitable share plan expense 2 130 -
Changes in working capital:
Increase in trade and other
receivables (3 831) (2 342)
Increase in inventories (63 961) (32 592)
Increase in trade and other
payables 20 430 12 316
219 514 210 713
6. Earnings per share and net
asset value per share
Earnings per ordinary share (cents)
- Basic 356.1 279.0 189.6
- Headline 355.8 278.5 189.1
- Core headline 387.4 310.8 316.2
Ordinary shares in issue (`000) 43 150 43 150 36 306
Weighted average ordinary shares
in issue (`000) 43 150 43 150 36 306
Net asset value per ordinary share
(cents) 1 695.3 1 381.2 1 061.2
Net tangible asset value per
ordinary share (cents) 372.6 37.5 (535.8)
Reconciliation to core headline earnings
The group uses core headline earnings as a consistent measure of performance for
management purposes, and provided this in its prelisting statement. Core
headline earnings exclude exceptional once-off costs and the amortisation of
trademarks, fair value adjustments to loans and the lease straight-lining
expense, and are presented below:
29 February 28 February 28 February
2012 2011 2011
Audited Pro forma Audited
R`000 R`000 R`000
Basic earnings 153 695 120 402 68 866
Adjusted for:
Profit on disposal of plant and
equipment (148) (193) (193)
Headline earnings 153 547 120 209 68 673
Adjusted for:
Fair value adjustments on loans,
net of taxation (80) - 55 878
Amortisation of intangibles net
of taxation 9 039 9 040 9 040
Straight-lining of leases net
of taxation 2 023 1 400 1 400
Non-recurring professional fees
net of taxation 2 661 3 468 1 464
Core headline earnings* 167 190 134 117 136 455
* In order to compare the core headline earnings per share over time for this
report, earnings are divided by the number of shares in issue at the last
reporting date, being 43 150 220 shares at 29 February 2012.
Executive directors
KG Hodgson, EA Haarburger, JP Loubser
Non-executive directors
SA Muller (Chairman), BD Hopkins, CF Sonn, M Vilakazi
Company secretary
AE van Zyl
Registered office
The Mill House, 1 Canterbury Street, Cape Town 8001
Transfer secretaries
Computershare Investor Services (Proprietary) Limited
Ground Floor, 70 Marshall Street, Johannesburg 2001
18 May 2012
Sponsor
UBS South Africa (Proprietary) Limited
TO VIEW THE RESULTS ONLINE VISIT www.holdsport.co.za
Date: 18/05/2012 08:00:02 Produced by the JSE SENS Department.
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