| Thu 1 Mar 2001, 0:00 | | The House Of Busby - Interim Results |
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The House of Busby Limited
Incorporated in the Republic of South Africa
Registration number 1997/009173/06
INTERIM RESULTS
for the six months ended 31 December 2000
- Operating income up 27%
- Headline earnings per share up 5%
- Tangible net asset value per share up 14%
GROUP INCOME STATEMENT
Six months Six months Year ended
to 31 Dec to 31 Dec 30 June
2000 1999 2000
Unaudited Percentage Unaudited Audited
R'000 change R'000 R'000
Turnover 217 031 103 106 736 209 075
Operating income 22 257 27 17 583 29 723
Net investment (cost)/income (303) 3 496 5 053
21 954 4 21 079 34 776
Attributable to outside
shareholders 1 154 115 718
Net income before taxation 23 108 9 21 194 35 494
Taxation 3 886 3 267 5 384
Net income before
exceptional item 19 222 7 17 927 30 110
Exceptional item - Note 1 4 350 - -
Attributable to ordinary
shareholders 14 872 (17) 17 927 30 110
Weighted average number
of shares in issue ('000) 76 637 3 74 699 74 886
Headline earnings per
share (cents) 25,1 5 24,0 40,2
Earnings per share (cents) 19,4 (19) 24,0 40,2
RECONCILIATION OF HEADLINE EARNINGS
Earnings attributable to
ordinary shareholders 14 872
Exceptional item - Note 1 4 350
Headline earnings 19 222
GROUP BALANCE SHEET
31 Dec 31 Dec 30 June
2000 1999 2000
Unaudited Percentage Unaudited Audited
R'000 change R'000 R'000
Assets
Non-current assets 75 307 65 436 98 012
Property, plant
and equipment 32 274 20 349 27 114
Intangible assets 3 220 2 750 3 220
Investments and
non-current receivables 28 200 42 337 55 172
Deferred tax 11 613 - 12 506
Current assets 192 379 174 401 158 114
Inventory 104 221 57 364 72 933
Receivables 85 604 62 248 56 003
Cash and cash equivalents 2 554 54 789 29 178
Total assets 267 686 239 837 256 126
Equity and liabilities
Shareholders' funds 212 706 178 377 199 332
Long-term liabilities 167 25 047 19 731
Current liabilities 54 813 36 413 37 063
Total equity and liabilities 267 686 239 837 256 126
Tangible net asset value
per share (cents) 268,6 14 235,1 260,5
Number of shares in issue ('000) 77 985 74 699 75 289
ABRIDGED CASH FLOW STATEMENT
Six months Six months Year ended
to 31 Dec to 31 Dec 30 June
2000 1999 2000
Unaudited Unaudited Audited
R'000 R'000 R'000
Cash generated/(utilised)
from operations 7 349 (6 156) 18 749
Investment (cost)/income (303) 3 496 5 053
Dividends paid (1 497) (5 602) (5 602)
Taxation paid (2 418) (2 451) (6 654)
Cash flow from operating activities 3 131 (10 713) 11 546
Cash outflow from investing activities (10 191) (1 770) (48 523)
Cash outflow from financing
activities (19 564) (7 537) (8 654)
Decrease in cash and
cash equivalents (26 624) (20 020) (45 631)
Cash and cash equivalents
at beginning of period 29 178 74 809 74 809
Cash and cash equivalents
at end of period 2 554 54 789 29 178
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' FUNDS
R'000
Balance at 1 July 2000 199 332
Shares issued during the period 5 392
Earnings for the period 14 872
Dividend 6 890
212 706
EXCEPTIONAL ITEM - NOTE 1
A decision was taken by the group in July 2000 to enter in to the value retail
distribution business, which enabled the group to offer an additional service
to its existing client base. As is common business practice in this industry,
the group purchased Duty Free Credit (DFC) permits via a permit broker.
The validity of the Duty Free Credit permits have subsequently been challenged
with the vendors of the permit. This has had a material impact on our value
retail distribution business. The company has paid the broker for the DFC
permit, and should the permit prove to be invalid, the company is potentially
liable for full duty on the stock that cleared using this permit. We have
provided in full for the potential loss on the basis that the permit may prove
to be invalid, and the difference between what we would have paid in duty had
we not bought the permit, and what we are now potentially liable for, has been
shown as an exceptional net after-tax amount of R4 350 000.
We are currently investigating the possibility of taking legal action against
both the broker as well as the vendor, should the permit prove to be invalid.
In light of the above, and the potential effect of a volatile Rand on this low
margin business, the value retail distribution business has been restructured.
In the future, this division will act as a facilitator and will earn a
commission for providing this service. This will ensure that the division is no
longer exposed to the risks highlighted above and will further more
substantially reduce the working capital requirements of the division. The
profitability ratios of the group, which have been skewed by this division for
the six months under review, will also benefit from this change.
COMMENTS
Earnings
Despite the subdued retail trading conditions that prevailed during the period
under review, the group traded satisfactorily for the six months ended 31
December 2000. Turnover increased by a significant 103% to R217 031 000. 21% of
this growth is attributable to divisions that were in existence at the
beginning of the period, while the balance of the growth comes from the new
value retail distribution division.
Operating income increased by 27%, while the substantial investment made during
the period on existing as well as new growth opportunities resulted in a net
interest charge of R303 000. Net income before exceptional item rose by 7%,
leading to a 5% increase in headline earnings per share to 25,1 cents per
share. The exceptional item, as detailed above, reduced earnings per share by
19% to 19,4 cents per share.
Tangible net asset value per share increased by 14% to 268,6 cents per share.
Review of activities
The retail division of the group opened 16 new stores during the period under
review and now has over 50 stores in the most sought after shopping centres
country-wide. The next six months will see a consolidation process taking place
within the division, thus ensuring that the retail division is well-positioned
to take advantage of better retail trading conditions as soon as they occur.
The core businesses within the distribution division performed solidly during
the period and are also poised to take advantage of any improvement that may
occur in the trading conditions going forward. The corporate promotions
division of the group performed well under difficult conditions, and is about
to launch its exciting e-commerce initiative. The sunglasses division continues
to gain market share, and has introduced the exciting Bolle range of
sunglasses, which is performing well. The Guess apparel division traded well
during the period and the process of integrating the Calvin Klein brand in to
the business is at an
advanced stage.
Prospects
The trading conditions under which the group operates remain subdued. The group
has made a significant investment in existing as well as new operations and
infrastructure, and the next six months will see the group going through a
consolidation process, ensuring that the group is ready and able to take
advantage of any improvements in the market place as soon as they occur.
Management will be focusing on managing the working capital cycle and ensuring
that the substantial amount of cash invested in expanding the group
materialises in the form of cash inflows.
The Cosmo brand of hair accessories was launched recently, and is performing
beyond expectations. It will start to contribute to group earnings in the
second half of the year.
The group is extremely proud that Picto Busby was chosen as the official
licensing agent for all merchandise relating to the Cricket World Cup to take
place in South Africa in 2003. Although this is not expected to contribute
significantly to earnings in the immediate future, it will do so going forward,
and we are confident that the rest of the group will benefit from the exposure
to be gained as a result of this significant achievement.
Post-balance sheet event
Subsequent to the balance sheet date, but prior to the publication of these
results, the group sold its investment in Brandcorp Holdings Limited. This sale
resulted in a profit of R3 129 568, and will ensure a cash inflow of R11 142
540.
Dividend
In accordance with group policy, no interim dividend has been declared.
The interim financial statements presented above comply with South African
Statements of Generally Accepted Accounting Practice, and the accounting
policies used are consistent in all material respects with those used for the
June 2000 financial statements.
On behalf of the Board of Directors
K.L. Brouze (Chief Executive Officer)
Johannesburg
01 March 2001
Directors: M.A. Stange (Chairman*), K.L. Brouze, M.G. Duarte, M.G. Gordon, P.
Klisser, S.N. Melnick, S.M. Moss, S. Stein, D.S. Brouze*, A. Rogoff*, J.H.
Krein (Alternate)
*Non executive
Transfer secretaries:
Mercantile Registrars Limited. 11 Diagonal Street Johannesburg 2001
Registered Address:
11 Height Street Doornfontein 2094.
PO Box 16647 Doornfontein 2028
