Holdsport Ltd HY 2014 financial results presentation

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Holdsport Ltd HY 2014 financial results presentation

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Holdsport Ltd HY 2014 financial results presentation

  1. 1. Analyst Presentation for the six months ended 31 August 2013
  2. 2. Agenda 1. General commentary on the period Kevin Hodgson 2. Financial review Cobus Loubser 3. Questions Page 2 Analyst Presentation - 14 October 2013
  3. 3. Review of the period · Group sales increased 5.0% to R630.9 million · Operating profit increased 3.5% to R94.1 million · Profit before tax of R90.2 million increased by 4.0% from comparative R86.7 million · Core headline earnings per share increased 3.8% to 163.1 cents per share · Interim gross dividend of 75.0 cents per share Page 3 Analyst Presentation - 14 October 2013
  4. 4. Review of the period · Sportsmans Warehouse - sales increased by 5.9% (3.4% like-for-like) - increased operating profit by 8.5% from comparable period - online sales successful · Outdoor Warehouse - 1.8% increase in sales (-1.4% like-for-like) - operating profit 7.7% lower than comparable period · Performance Brands - 6.1% growth in sales to external customers - operating profit decreased by 9.3% from comparable period · Expansion - Two new stores opening in second half - Two stores expanding Page 4 Analyst Presentation - 14 October 2013
  5. 5. Financial Review Page 5 Analyst Presentation - 16 May 2013
  6. 6. Financial highlights · Weak growth in sales · Forex profits increased operating profit - The accounting treatment of foreign exchange denominated transactions coupled with the volatile Rand/Dollar exchange rate results in a non-cash income or expense at the end of every reporting period which is partly included in cost of sales and partly recognised as foreign exchange gains or losses within trading expenses. - During the first half of this year the aggregate adjustment was a profit of R1.2 million compared to an aggregate loss of R2.5 million during the prior period. The majority of the adjustment is included in overheads. - Core headline earnings excluding foreign exchange adjustments unchanged from comparable period · Capital expenditure · Refinanced term debt · Gross interim dividend declared of 75.0 cents per share Page 6 Analyst Presentation - 14 October 2013
  7. 7. Income Statement review 6 months ended 31 August 2013 Unaudited R 000 Sales Cost of sales Gross profit Other income Trading expenses Operating profit Finance income Finance cost Profit before taxation Taxation Profit for the period and total comprehensive income for the period attributable to equity holders of the company 6 months ended 31 August 2012 Unaudited R 000 630,985 (326,506) 304,479 2,163 (212,583) 94,059 1,232 (5,066) 90,225 (25,841) 601,217 (309,873) 291,344 1,813 (202,302) 90,855 2,279 (6,386) 86,748 (24,943) 64,384 61,805 Change % 5.0 5.4 4.5 19.3 5.1 3.5 (45.9) (20.7) 4.0 3.6 4.2 · Like for like retail sales growth of 2.5% with sales price inflation of 4.6% · Gross profit margin reduced slightly to 48.3% from 48.5% in the previous period. · Trading expenses well controlled despite 6.2% additional trading space, benefiting partly from foreign exchange profits · Net finance cost lower in line with repayments of term debt. Page 7 Analyst Presentation - 14 October 2013
  8. 8. Sales Lik e-forlik e Store Change Growth % % Sales by segment Aug '13 % Sales by segment Aug '12 % August 2013 Rm August 2012 Rm Sportsmans Warehouse 458.1 432.5 5.9% 3.4% 72.6% 71.9% Outdoor Warehouse 141.9 139.5 1.8% -1.4% 22.5% 23.2% Retail sales 600.0 572.0 4.9% 2.5% 95.1% 95.1% First Ascent 30.9 29.2 6.1% 4.9% 4.9% Total sales 630.9 601.2 5.0% 100.0% 100.0% · Challenging first half · Total sales increased by 5.0% - Total retail sales increased by 4.9% Like for like retail sales increased by 2.5% Performance Brands external sales increased by 6.1% · Sales mix broadly consistent with last year · Performance Brands - higher sales growth achieved through the group relaunch of Capestorm successful Page 8 Analyst Presentation - 14 October 2013
  9. 9. Sales August August 2012 2013 2009 2010 2011 2012 2013 Increase in retail sales (%) Sportsmans Warehouse Outdoor Warehouse Total 6.0 11.1 7.2 9.7 8.1 9.3 10.5 14.8 11.6 9.2 7.3 8.7 11.4 7.4 10.4 5.9 1.8 4.9 10.3 6.0 9.2 Like-for-like sales increase (%) Sportsmans Warehouse Outdoor Warehouse Total 0.5 2.3 0.9 6.5 4.1 5.9 10.8 16.1 12.1 7.5 3.7 6.6 9.3 5.2 8.3 3.4 (1.4) 2.6 8.4 6.1 7.8 · Price inflation of 4.6% (first half last year 2.2% inflation) · Weighted space growth of 6.2% (1.4% in first half of last year) Page 9 Analyst Presentation - 14 October 2013
  10. 10. Growth in stores & trading density August August 2012 2013 2009 Number of stores Sportsmans Warehouse Outdoor Warehouse Total 2010 2011 2012 2013 32 17 49 32 18 50 32 17 49 33 18 51 35 19 54 35 19 54 34 18 52 13.6 15.5 14.0 14.3 15.8 14.7 15.8 18.1 16.4 16.9 18.9 17.4 18.0 19.7 18.4 18.1 19.4 18.4 17.3 19.2 17.7 Change % (R'000s per m2) Trading density Sportsmans Warehouse Outdoor Warehouse Total 4.6% 1.0% 4.0% · New stores opened in previous year traded for the full period Page 10 Analyst Presentation - 14 October 2013
  11. 11. Expenses 31 August 2013 Unaudited R 000 Staff costs Occupancy cost Straightlining of leases Depreciation Amortisation of intangibles Advertising costs Foreign exchange losses Other operating costs 80,363 60,485 2,307 13,537 6,481 8,880 (1,408) 41,938 212,583 Ratio to turnover % 12.7 9.6 0.4 2.1 1.0 1.4 (0.2) 6.6 33.7 31 August 2012 Unaudited R 000 74,060 55,096 1,978 12,212 6,481 8,905 1,851 41,719 202,302 % Lik e-forlik e change % 12.3 8.5 6.9 9.2 9.8 6.1 0.3 16.6 16.6 2.0 10.9 1.7 1.1 (0.0) 0.0 1.5 (0.3) (0.4) 0.3 (176.1) (176.0) 6.9 0.5 (0.4) 33.6 5.1 2.8 Ratio to turnover % Change · Total expenses increased by 5.1% and by 6.8% excluding the effect of foreign exchange transactions · Occupancy costs continue to benefited from various electrical savings initiatives. · Depreciation calculated over 4 years. · Advertising costs similar to last year due to lower printing cost and digital strategies · The group recorded R1.4m of foreign exchange gains in the period compared to foreign exchange losses of R1.9m in the previous year. · Other operating costs include banking costs (which are linked to sales), security, IT, telephones, insurance, cleaning and maintenance. Page 11 Analyst Presentation - 14 October 2013
  12. 12. Staff costs 31 August 2013 Unaudited R 000 Ratio to turnover % Salaries & Wages Incentives Staff costs before share plan expense 73,008 4,016 77,024 11.6 Forfeitable share plan expense Total staff costs 3,339 80,363 0.5 0.6 12.2 12.7 31 August 2012 Unaudited R 000 Lik e-forlik e Store Change Growth % % Ratio to turnover % 68,363 3,753 72,116 11.4 6.8 5.1 0.6 7.0 6.0 12.0 6.8 5.2 1,944 74,060 0.3 71.8 71.8 12.3 8.5 6.9 · The ratio of staff costs to sales increased slightly due to weaker sales growth · The like-for-like increase in staff costs exclude stores opened since September 2012 · The forfeitable share plan expense is calculated in terms of IAS 2 Share based payments over the full period compared a portion of the previous period, driven by the timing of awards. Page 12 Analyst Presentation - 14 October 2013
  13. 13. Balance Sheet 31 August 2013 Unaudited R 000 Assets Non-current assets Plant and equipment Goodwill and other intangibles Total non-current assets Current assets Inventories Trade and other receivables Taxation Derivative instruments Total current assets Total assets Equity and liabilities Capital and reserves Share capital Other reserves Retained earnings Equity attributable to owners of the company Non-current liabilities Loans Deferred taxation Straight-lining lease liability Total non-current liabilities Current liabilities Trade and other payables Derivative instruments Short term portion of loans Bank overdraft Total current liabilities Total liabilities Total equity and liabilities 31 August 2012 Unaudited R 000 130,301 626,820 757,121 70,567 639,780 710,347 363,810 24,909 10,839 1,326 400,884 1,158,005 323,852 17,248 8,766 349,866 1,060,213 229,312 (23,120) 612,580 818,772 229,312 (24,857) 527,785 732,240 130,000 47,485 26,759 204,244 110,351 53,852 23,950 188,153 111,420 23,569 134,989 339,233 1,158,005 91,762 1,582 27,357 19,119 139,820 327,973 1,060,213 Change % · Plant and equipment include construction costs for 84.6 (2.0) 6.6 12.3 44.4 23.6 the new distribution centre and initial costs on the Performance Brands warehouse and some store refurbishments · Inventory is higher due to additional store space and a weaker currency increasing the cost of imported stock. 14.6 9.2 (7.0) 16.1 11.8 17.8 (11.8) 11.7 8.6 · Other reserves consist of the shares purchased for the Forfeitable Share Plan, with a further R5.9m purchased and awarded in the first half and R3.4m expensed. · The derivatives consist of FEC s marked to market. · Total term debt of R124.3m was repaid and replaced with new term debt of R130.0m which is repayable by 31 August 2016. 21.4 (100.0) (100.0) (3.5) 3.4 9.2 Page 13 Analyst Presentation - 14 October 2013
  14. 14. Working Capital 31 August 2013 Unaudited R 000 Working capital Inventories Trade and other receivables Trade and other payables 28 February 2013 31 August 2012 Audited R 000 Change 363,810 24,909 (111,420) 277,299 346,054 22,346 (125,085) 243,315 5.1% % 11.5% -10.9% 14.0% Unaudited R 000 Change 323,852 17,248 (91,762) 249,338 12.3% % 44.4% 21.4% 11.2% · Net investment in working capital increased due to higher stockholdings: - Inventory increase by more than growth in sales Weighted store space increased by 6.2% Weaker currency lead to a 18.7% increase in the average USD exchange rate in first half of the year Page 14 Analyst Presentation - 14 October 2013
  15. 15. Cash Flow 6 months ended 31 August 2013 Unaudited R 000 Cash flows from operating activities Cash generated from operations Finance income Finance costs Dividends paid Taxation paid Net cash (outflows) / inflows from operating activities Cash flows from investing activities Additions to plant and equipment Proceeds on sale of plant and equipment Net cash outflows from investing activities Cash flows from financing activities Repayment of loans Forfeitable share plan Net cash outflows from financing activities Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 6 months ended 31 August 2012 Unaudited R 000 Change % · Cash generated from operations 84,386 1,232 (5,066) (56,095) (38,961) 60,070 2,279 (6,386) (49,623) (37,621) (14,504) (31,281) (53.6) (45,558) 429 (39,706) 751 14.7 40.5 (45.9) (20.7) 3.6 increased due higher operating profit and control over working capital. · Additions to plant and equipment were funded from operating cash and include: - Completion of the new retail distribution centre and development cost on Performance Brands to date totalling R32.8m; and - Store refurbishments of R12.8m (42.9) (45,129) (38,955) 15.8 5,718 (5,938) (12,826) (13,431) (144.6) (220) (26,257) (99.2) · Financing activities - Total term debt of R124.3m was repaid and replaced with new term debt of R130.0m which is repayable by 31 August 2016. - R5.9m to purchase shares for forfeitable share plan, which has been awarded to staff (55.8) (59,853) (96,493) (38.0) 36,284 77,374 (53.1) (23,569) (19,119) 23.3 Page 15 · Group has a R110m overdraft facility Analyst Presentation - 14 October 2013
  16. 16. Investing for the future Page 16 Analyst Presentation - 14 October 2013
  17. 17. Investing for the future Distribution · Retail Distribution Centre - 50:50 joint venture with Redefine Properties Purchased land and commenced with construction in November 2012 New 11 000m2 distribution facility completed in July 2013 Moved in and fully operational · Performance Brands - Purchased land in September 2013 - Started construction of additional 1 500m2 warehouse on adjacent plot - To be completed by 30 November 2013 and fully operational by February 2014 · Incurred R31m in 2013 and R32.8m in the first half of this year, expect a further R8.8m in second half to complete the warehouse projects. · Capex funded from operational cash flows · Investment in distribution centres reduces the return on net assets Page 17 Analyst Presentation - 14 October 2013
  18. 18. Investing for the future - Other · Store expansion previous year - Three new stores opened at end of 2012 traded for the full first half - Sportsmans Warehouse in Bloemfontein of 1 600m2 - Sportsmans Warehouse in Rustenburg of 1 400m2 - Outdoor Warehouse in Rustenburg of 800m2 - Expanded Sportsmans Fourways traded for full first half · Store expansion in second half - Expect to incur R30.7m in second half on store portfolio - Expand Sportsmans Rondebosch, Sportsmans Nelspruit and Sportsmans Tokai in second half of this year - Open two new stores: - Outdoor Warehouse in Rondebosch of 1 100m2 opened in September 2013 - Sportsmans Warehouse in Sea Point of 1 500m2 opening in December 2013 · Store expansion for next year - Signed leases to open two new stores · Capex funded from operational cash flows Page 18 Analyst Presentation - 14 October 2013
  19. 19. Dividend 31 August 2013 31 August 28 February 2012 Change 2013 cents per share % cents per share 75 Interim Final cents per share 70 7.1% 70 130 Total 200 Dividend cover 2.2 2.2 2.1 · Interim gross dividend of 75.0 cents per share to be paid on 9 December 2013 · The group s dividend policy is to have dividends covered approximately twice by core headline earnings. · The interim gross dividend for the first half of 75.0 cents is 2.2 times covered. Page 19 Analyst Presentation - 14 October 2013
  20. 20. In closing... · Group sales increased 5.0% to R630.9 million · Profit before tax of R90.2 million increased by 4.0% from comparative R86.7 million · Core headline earnings per share increased 3.8% to 163.1 cents per share · Cash flow from operating activities funded capital expenditure · Interim gross dividend of 75.0 cents per share Page 20 Analyst Presentation - 14 October 2013
  21. 21. Questions? Page 21 Analyst Presentation - 14 October 2013
  22. 22. Thank you! Investor Relations www.holdsport.co.za Cobus Loubser (Chief Financial Officer) Tel: +27 21 464 5366 E-mail: cobus@moresport.co.za
  23. 23. Disclaimer This presentation contains certain forward-looking statements with respect to the financial condition and results of operations of Holdsport Limited and its subsidiaries, which by their nature involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Page 23 Analyst Presentation - 14 October 2013

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