| Tue 24 Apr 2001, 0:00 | | Forza - Interim Results |
|
Forza Group Limited
(Registration number 1987/004218/06)
("Forza" or "the Group")
HIGHLIGHTS
* Turnover 42% ahead of previous corresponding period
* 14% growth in headline earnings
* EBITDA up 45%
INTERIM RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2001
Consolidated income statement
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
Feb 2001 Feb 2000 Aug 2000
R'000 R'000 R'000
Turnover 501 721 353 966 737 575
Operating profit before
depreciation and
amortisation (EBITDA) 22 277 15 376 34 237
Depreciation and amortisation 2 169 394 1 208
Operating profit 20 108 14 982 33 029
Net interest paid 2 463 1 206 1 891
Profit before tax 17 645 13 776 31 138
Tax 5 720 4 132 9 341
Profit after tax 11 925 9 644 21 797
Minority interest 1 622 - (127)
Attributable profit 10 303 9 644 21 924
Goodwill amortised 727 - -
Headline earnings 11 030 9 644 21 924
Shares in issue and to be
issued ('000) 564 736 484 055 508 630
Weighted average number
of fully diluted ordinary
shares in issue ('000) 564 736 484 055 520 887
Earnings per share (cents) 1,8 2,0 4,3
Headline earnings per share (cents) 2,0 2,0 4,2
Net tangible asset value
per share (cents) 7,4 2,3 7,3
Consolidated balance sheet
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
Feb 2001 Feb 2000 Aug 2000
R'000 R'000 R'000
ASSETS
Non-current assets 23 480 11 415 6 590
Fixed assets 9 672 3 426 6 590
Goodwill and tangibles 13 808 7 989 -
Current assets 172 460 101 231 111 787
Inventories 122 200 57 427 72 380
Trade and other receivables 49 728 39 843 23 261
Cash and cash equivalents 532 3 961 16 146
Total assets 195 940 112 646 118 377
EQUITY AND LIABILITIES
Shareholder's equity 47 382 18 960 37 079
Shares to be issued - acquisitions 8 200 - -
55 582 18 960 37 079
Minority interest 8 949 - -
Total shareholders' equity 64 531 18 960 37 079
Non-current liabilities 4 713 275 3 314
Long-term liabilities 1 838 - 439
Deferred tax 2 875 275 2 875
Current liabilities 126 696 93 411 77 984
Trade and other payables 78 666 29 914 25 380
Vendor loan 500 12 163 5 972
Floorplan liability 40 725 40 710 32 338
Current portion of long-term liability 1 181 - 1 279
Tax 5 624 10 624 13 015
Total shareholders' equity
and liabilties 195 940 112 646 118 377
Abridged consolidated cash flow statement
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
Feb 2001 Feb 2000 Aug 2000
R'000 R'000 R'000
Cash generated from operations 10 355 1 470 18 614
Tax paid (13 130) - -
Finance charges (2 463) (1 206) (1 891)
Cash flows from operating activities (5 238) 264 16 723
Investing activities (31 839) (6 991) (10 077)
Financing activities 21 463 421 (767)
Net (decrease)/increase in cash (15 614) (6 306) 5 879
Balance at beginning of period 16 146 10 267 10 267
Balance at end of period 532 3 961 16 146
Statement of changes in total shareholders' equity
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
Feb 2001 Feb 2000 Aug 2000
R'000 R'000 R'000
Balance at beginning of period 37 079 9 318 9 318
Shares issued and to be issued 8 200 (2) 14 772
Minority interest 8 949 - -
Write-down of goodwill - - (8 095)
Listing and share issue
expenses written-off - - (840)
Attributable profit for the period 10 303 9 644 21 924
Balance at end of period 64 531 18 960 37 079
Background and nature of business
Forza is an integrated group of motor, watercraft and leisure retail operations
listed in the Industrial - "Retail" sector of the JSE Securities Exchange SA
lists.
The Group's businesses comprise: Investment Cars, South Africa's leading
exotics, luxury and 4x4 retailer; Investment Cars Drivers Club, an innovative
scheme enabling car enthusiasts to use high performance sports cars,
convertibles and 4x4s by redeeming points; Bloomsbury and Ashley's, the leading
used luxury vehicle and 4x4 retailers in the Western Cape; Lyndhurst Auto and
Lyndhurst Auto Hyde Park, two premier BMW dealerships; Lyndhurst AutoBody, a
BMW-approved paint and panel shop; the Waterworld Group, a dominant leisure
watercraft, boating and quad bike retailer; Monaco Leisure, the
recently-launched integrated leisure vehicle and watercraft retail outlet and
Forzaweb.com, the Group's motor and lifestyle portal.
Review of operations
Increasingly competitive market conditions and the launch of numerous new
luxury model vehicles impacted on the trading margins of Investment Cars. The
two Lyndhurst Auto dealerships performed well, evidenced once again by their
achievement of various BMW awards for new and used vehicle sales and service.
Investment Cars Drivers Club continues to gain momentum, particularly in the
corporate incentive market.
Both the acquisitions of a 51% interest in Bloomsbury and Ashley's, and a 70%
stake in the Waterworld Group as reported at year-end in August 2000, have
become unconditional during the period under review and have consequently been
consolidated into these results with effect from 1 September 2000. Both new
Forza companies have met expectations, integrating successfully into the Group.
In order to exploit cross-marketing opportunities within the Group arising from
these acquisitions, Forza opened Monaco Leisure, an exotic vehicle and leisure
watercraft retail outlet in Bryanston, during December 2000.
As the Group operates solely in the leisure lifestyle market, a segmental
analysis has not been provided.
Acquisition
During the period under review BMW SA granted Lyndhurst Auto approval to
operate a BMW-accredited paint and panel shop. This approval offered Lyndhurst
Auto the opportunity to increase the range of services provided to the BMW
customer base. With effect from 1 March 2001 a successful panel shop was
acquired and re-branded Lyndhurst AutoBody.
Disposal
In the Group year-end report Forza indicated that its strategy with respect to
Sportech would remain under review. Agreement has since been reached to dispose
of Sportech to the management of the business with effect from 1 April 2001. As
Sportech formed a small component of Forza, its disposal will not impact
materially on the Group.
Restatement of comparative figures
Tax has been provided at 30% in terms of the new accounting statement AC 102,
notwithstanding that the actual tax payment will be at a lower rate.
Accordingly the tax has been restated in the comparative figures for the six
and 12-month periods. Headline earnings per share for the 12-month period to 31
August 2000 has therefore been restated from 4,8 cents to 4,2 cents.
Financial commentary
The Group posted turnover of R501,7 million for the six months ended February
2001, 42% ahead of the R353,9 million reported in the corresponding interim
period to February 2000.
Operating profit before depreciation and amortisation (EBITDA) increased to
R22,3 million, 45% ahead of the R15,4 million for the previous corresponding
interim period, maintaining an EBITDA margin of 4,4%.
An increase in net interest paid reflects the effect of the Waterworld and
Bloomsbury/Ashley's acquisitions as well as additional investment in current
assets arising mainly within the Waterworld Group.
Headline earnings increased by 14% from R9,6 million to R11 million for the
period under review. This increase in headline earnings has been offset by the
increase in the number of shares in issue resulting in headline earnings per
share being maintained at 2 cents.
The increase in the weighted average fully diluted ordinary shares in issue
arises from the rights issue during the second half of the previous financial
year and the issue of shares for the Waterworld acquisition.
The effect of the acquisitions of Bloomsbury, Ashley's and Waterworld are
reflected in the significant increase in the current assets and current
liabilities in the consolidated balance sheet. These acquisitions have been
funded from the proceeds of the rights issue and by the issue of new shares in
Forza.
Despite the utilisation of cash resources for investing activities during the
period, the Group remains adequately funded to meet both operating and organic
growth requirements from internal resources.
Appointments
David Mc Alpin, previously the chief executive of CNA and managing director of
Dion Stores, has been appointed as Group chief executive officer from 1 May
2001. Steve Hochstadter, formerly an independent consultant to and
non-executive director of Forza, has been appointed as commercial director and
Ronnie Arenson, managing director of Waterworld, has also been appointed to the
board.
Peter Shaff has resigned from the board with effect from 16 April 2001. The
board extends its appreciation to him for his valuable contribution.
Prospects
Forza's current management team reflects a good balance of corporate skill and
entrepreneurial flair. The Group's investment in this senior management and
infrastructure provides the platform for sustainable future growth.
Forza will concentrate on extracting value from its recent acquisitions and
exploiting organic growth initiatives, leveraging off its high profile brands
and excellent customer service reputation.
Due to the significant number of additional shares in issue, as explained
above, management does not anticipate a growth in earnings per share for the
full year to August 2001. Nonetheless, in spite of the seasonality of the
Waterworld operation which now enters the winter season and the fact that
certain of the Group's future growth initiatives will contribute to
profitability only during the next financial year, management expects to show a
growth in earnings for the full year.
Dividends
In line with Group policy, no dividend has been declared.
By order of the board
P D Acheson S M Hochstadter
Executive Chairman Commercial Director
24 April 2001
Investment Lyndhurst Auto Investment Cars Forzaweb
Cars at Lyndhurst and Hyde Park Drivers Club
Lyndhurst Autobody
Monaco Waterworld Bloomsbury Ashley's
Leisure
Directors: P D Acheson (Executive Chairman), R Arenson, S M Hochstadter, G B
Liebmann*, M A Malherbe, A M Schlesinger*, R P Sexton (*Non-executive)
24 Hurlingham Road Illovo 2196, PO Box 1348, Highlands North 2037 Tel: +27 11
327 7007 Fax: +27 11 327 7009
FORZA RELEASES SOLID INTERIM RESULTS
PRESS RELEASE
TUESDAY 24 APRIL 2001
Forza, the JSE-listed leisure lifestyle retail group, has posted interim
turnover of R501,7 million for the six months ended February 2001, 42% ahead of
the R353,9 million reported in the corresponding interim period to February
2000.
Interim headline earnings of R11 million were 14% higher than the R9,6 million
for the previous corresponding interim period. However, as a result of a
significant increase in the number of shares in issue, headline earnings per
share (EPS) of 2,0 cents remained consistent with the previous corresponding
interim figure.
"Overall the group performed well in light of challenging market conditions,"
says Peter Acheson, Forza's executive chairman. He explains that the issue of
shares to Waterworld management who met their first year profit warranty, and
to stakeholders in terms of the rights issue in February last year, account
for the increase in the number of shares in issue.
Forza extended its lifestyle division comprising Investment Cars, Investment
Cars Drivers Club, Ashley's, Bloomsbury and Waterworld by opening a
first-of-its-kind leisure vehicle and watercraft retail outlet, Monaco Leisure,
in December 2000. "We undertook to our stakeholders to exploit
cross-marketing opportunities within the group arising from our acquisitions.
Early indications of increased trading through Monaco Leisure are encouraging,"
Acheson says.
SporTech, the vehicle customisation centre that formed a small component of the
group, was sold during the period under review. "The disposal of SporTech to
its management is in line with our previously stated intention to review its
role in the group. The sale is in the best interests of the group and has had
no material impact on these results," Acheson says.
During the period under review BMW SA granted Lyndhurst Auto approval to
operate a BMW-accredited paint and panel shop, which offered Lyndhurst Auto the
opportunity to increase its range of services. With effect from 1 March 2001 a
successful panel shop was acquired and re-branded Lyndhurst AutoBody.
The group has, in addition, bolstered its senior management team. David Mc
Alpin, previously the chief executive of CNA and managing director of Dion
Stores, has been appointed group chief executive officer from 1 May 2000.
Steve Hochstadter, formerly an independent consultant to and non-executive
director of Forza, joined as commercial director to oversee group finance as
well as undertake specific operational responsibilities. Ronnie Arenson,
managing director of Waterworld, has also been appointed to the board.
Acheson remains cautiously optimistic for the next six months. "We will reap
the benefits of our investment in senior management who combine corporate skill
and discipline with entrepreneurial flair, and will continue to exploit our
high-profile brands and excellent customer service reputation. We anticipate
continued growth in earnings for the full year. However due to the significant
number of additional shares in issue, growth in EPS is unlikely."
Ends.
Issued by : Fleishman-Hillard Vallun Wilkins
Nicole Sacks
(011) 706 8800 / 083 287 2771
On behalf of : Forza Group Limited
Pete Acheson
(011) 886 1084 / 082 854 1492
Steve Hochstadter
(011) 327 7007 / 083 656 3066
Date of issue : 24 April 2001
