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SENS - Interim Results Dec 2005

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									UNAUDITED RESULTS FOR THE 6 MONTHS ENDED 31 DECEMBER 2005
BRANDCORP
– Operating profit up 12,4%
– Dividend up 25%
– Net cash resources R65,2 million
Abridged group income statement
                            31 Dec    31 Dec                30 June
                            2005      2004                  2005
                            Unaudited Unaudited %           Audited
                            R’000     R’000      Change     R’000
Revenue                    470 345    437 948    7,4        824 578
Operating profit            59 081    52 551     12,4       114 420
Fair value of forward
exchange contracts         (6 097)    (2 505)               11 399
Net finance income         1 035      448                   475
Net profit before taxation 54 019     50 494     6,9        126 294
Taxation                   (18 816)   (16 896)              (40 393)
Current                    (14 952)   (14 434)              (37 480)
Secondary tax on companies (3 151)    (1 724)               (2 491)
Deferred taxation          (713)      (738)                 (422)
Net profit after taxation 35 203      33 598     4,8        85 901
Number of shares in
issue (000)*               78 773     76 635     2,8        76 635
Weighted average number
of shares (000)*           78 023     75 684     3,1        76 159
Headline earnings per
share – cents              45,1       44,4       1,6        112,8
Earnings per share – cents 45,1       44,4       1,6        112,8
Diluted headline earnings
per share – cents          44,6       43,0       3,7        109,0
Diluted earnings per
share – cents              44,6       43,0       3,7        109,0
*Net of treasury stock
RECONCILIATION OF EARNINGS AND HEADLINE EARNINGS
                            31 Dec    31 Dec                30 June
                            2005      2004                  2005
                            Unaudited Unaudited %           Audited
                            R’000     R’000      Change     R’000
Net profit after taxation 35 203      33 598                85 901
Profit on disposal of
tangible assets            (37)       (5)                   (5)
Headline earnings          35 166     33 593     4,7        85 896
ABRIDGED GROUP BALANCE SHEET
                            31 Dec    31 Dec                30 June
                            2005      2004                  2005
                            Unaudited Unaudited %           Audited
                            R’000     R’000      Change     R’000
Assets
Non-current assets          32 330    24 863                31 847
Tangible assets             17 934    16 629                16 313
Intangible Assets          7 310      750                   7 734
Deferred taxation          7 086      7 484                 7 800
Current assets             392 586    374 994               385 273
Inventories                134 578    140 591               146 972
Accounts receivable          176 508       175 202                153 752
Cash and cash equivalents    81 500        59 201                 84 549
                             424 916       399 857                417 120
Equity and liabilities
Capital and reserves         285 039       226 421                272 676
Long-term liabilities        4 906         14 999                 7 223
Current liabilities          134 971       158 437                137 221
Non-interest-bearing
liabilities                  91 150        123 905                94 216
Interest-bearing
liabilities                  11 332        15 697                 15 927
Taxation                     32 489        18 835                 27 078
                             424 916       399 857                417 120
Net asset value per share-
cents                        361,8           295,5        22,4     355,8
ABRIDGED GROUP CASH FLOW STATEMENT
                                       31 Dec        31 Dec       30 June
                                       2005          2004         2005
                                       Unaudited     Unaudited    Audited
                                       R’000         R’000        R’000
Operating activities                   30 171        9 842        58 673
Operating profit before
working capital movements              61 363        51 875       119 485
Increase in working capital            (19 537)      (32 872)     (36 107)
Net finance income                     1 036         448          475
Taxation paid                          (12 691)      (9 609)      (25 180)
Investing activities                   (3 440)       (2 367)      (12 189)
Purchase of tangible assets            (3 518)       (2 413)      (4 873)
Proceeds on disposal of tangible
assets                                 78            46           46
Purchase of intangible assets          —             —            (7 362)
Financing activities                   (29 780)      (20 011)     (33 672)
Proceeds from issue of share
capital                                2 328         1 868        1 868
Payment of borrowings                  (6 912)       (8 093)      (15 638)
Distributions to shareholders          (25 196)      (13 786)     (19 902)
Net movement in cash resources         (3 049)       (12 536)     12 812
Cash and cash equivalents at the
beginning of the period                84 549        71 737       71 737
Cash and cash equivalents at the
end of the period                      81 500        59 201       84 549
STATEMENT OF CHANGES IN EQUITY
                                                Accu-
                         Share     Share        mulated
                         capital   premium      profits   NDR       Total
                         R’000     R’000        R’000     R’000     R’000
Balance at
1 July 2004            739         1 842        202 088   —         204 669
Net profit after
taxation                 —         —            85,901    —         85,901
Share-based payments     —         —            —         163       163
Ordinary shares
issued                 15          1 021        —         —         1 036
Net transactions by
share trust            12       5 450     (4 630) —           832
Dividend               —        —         (19 925) —          (19 925)
Balance at
1 July 2005            766      8 313     263 434   163      272 676
Net profit after
taxation               —         —         35 203   —         35 203
Share-based payments   —         —         —        39        39
Ordinary shares
issued                 21       2 307      —        —         2 328
Dividend               —        —          (25 207) —         (25 207)
Balance at
31 Dec 2005            787      10 620    273 430   202      285 039
SEGMENT ANALYSIS
                                          Operating
                             Turnover   profit    Assets    Liabilities
                             R’000      R’000     R’000     R’000
Tools & Hardware             306 045    38 358    245 223   77 828
Leisure & Accessories         70 298     8 567     62 702    24 234
House & Home                  94 002     13 075    67 511    31 414
Corporate                    —          (919)     49 480    6 401
Total                        470 345    59 081    424 916   139 877
COMMENTARY
NATURE OF BUSINESS
Brandcorp distributes niche consumer and industrial products to a
broad range of customers through three trading divisions:
Tools & Hardware – Matus distributes power tools, hand tools and
hardware, servicing the needs of the industrial, building and
construction, engineering, agricultural, DIY and mining sectors.
House & Home – Prestige/MIC/Decocraft distributes dinnerware, cutlery,
tableware, gifting, homewares, kitchen tools, kitchenware, bakeware,
paper products and BBQ products.
Leisure & Accessories – Cellini/Interbrand distributes luggage,
handbags, backpacks and accessory products.
FINANCIAL REVIEW
Brandcorp has produced solid results for the six months ended 31
December 2005, with growth in revenue of 7,4% and in operating profit
of 12,4%.
The group has a policy of hedging its foreign exchange exposure by the
utilisation of forward exchange contracts. In terms of International
Financial Reporting Standard (IFRS), IAS39, profits or losses on
forward exchange contracts on hand are recognised at balance sheet
date, measured on a ―mark to market‖ basis.
The impact of this accounting treatment was a charge of 5,5 (2004:
2,3) cents against earnings and headline earnings per share.
Earnings per share and headline earnings per share, nonetheless
increased from 44,4 cents to 45,1 cents.
Management’s continued focus on working capital has once again borne
fruit with cash generated by operating activities amounting to
R30,2million (2004: R9,8million).
The balance sheet remains sound with net cash resources amounting to
R65,2million.
Net asset value has increased to 361,8 cents per share.
DIVISIONAL PERFORMANCE
The tool & hardware division enjoyed growth both in revenue (8,9%) and
in operating profit (13,7%). Demand continues to remain solid.
The house & home division produced a revenue increase of 7,1% and an
operating profit increase of 5,1%. Whilst demand for the Prestige
product range continues to grow, the MIC business slowed down
resulting in a lower contribution to the division’s revenue and
operating profit. Decocraft, the hospitality and catering business,
produced pleasing growth in both revenue and operating profit.
The leisure & accessories division has exceeded expectations with an
operating profit increase of 14,5%.
ACCOUNTING POLICIES
The unaudited interim results of the group for the six months ended 31
December 2005 have been prepared in accordance with the group’s
accounting policies.
These comply with International Financial Reporting Standards (IFRS)
and were adopted with effect from 1 July 2005. This interim report
complies with International Accounting Standard 34 - Interim Financial
Reporting.
Due to the adoption of IFRS, the comparative figures for the six
months ended 31 December 2004 have been restated, resulting in share
based payments amounting to R81 000 being charged to the income
statement for such comparative period.

DIVIDEND DECLARATION
The board has declared an interim dividend of 10 cents per share. The
salient dates are as follows:
– Declaration date                        Wednesday, 15 February 2006
– Last date to trade ―cum‖ dividend       Friday, 3 March 2006
– Date trading commences ―ex‖ dividend    Monday, 6 March 2006
– Record date                             Friday, 10 March 2006
– Date of payment                         Monday, 13 March 2006
Share certificates may not be dematerialised or rematerialised between
Monday, 6 March 2006 and Friday, 10 March 2006, both days inclusive.
EMPOWERMENT
Brandcorp continues to explore the most optimal manner in which to
structure an empowerment transaction, taking into account the
aspirations of all stakeholders, including employees, shareholders and
customers.
ACQUISITION
The board is pleased to announce the acquisition of the business of
the Moto Quip group (including ownership of the successful brands,
Moto Quip, Leisure Quip and Travel Quip) and the incorporation of the
business into Brandcorp with effect from 1 February 2006.
Moto Quip is a distributor of aftermarket vehicle accessories (not
spare parts), outdoor and camping equipment, travel aids and accessory
products.
The acquisition will be funded by internal cash resources. Had the
acquisition been effective 1 July 2005, earnings per share for the
reporting period would have been enhanced by approximately 7%, whilst
tangible net asset value per share would have decreased by
approximately 8 cents.
We welcome the Moto Quip team to the Brandcorp group and are excited
about the prospects and future growth potential that this experienced
and competent management team, all of whom retain their executive
roles, will bring to Brandcorp.
Brandcorp will continue to actively pursue its stated acquisition
strategy.
PROSPECTS
The current outlook for the South African economy remains positive, as
do the key indicators that influence the Brandcorp businesses.
On behalf of the board
Colin Datnow                    Brad Taurog
Chief Executive                 Chief Financial Officer
15 February 2006
Registrars: Computershare Investor Services 2004 (Pty) Ltd – Ground
Floor 70 Marshall Street Johannesburg 2001
Secretary and Registered Office: Light and Livingstone Financial
Services CC – 3rd Floor Palm Grove 196 Louis Botha Avenue Houghton
Estate 2198
Directors: C S Datnow, S Ellerine*, J D Goldberg, J C Livingstone*, H
B Marcus, B D Taurog, M Yachad* (*Non-executive)
Brandcorp Holdings Limited (incorporated in the Republic of South
Africa) (―Brandcorp‖ or ―The Group‖) Reg No: 1992/006647/06 JSE
Code: BRC ISIN No: ZAE000013611
These results can be viewed on our website: www.brandcorp.co.za

								
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