| Tue 23 Oct 2001, 0:00 | | Forza -audited Results For The Year Ended 31 Augus |
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Forza Group Limited
(Registration number 1987/004218/06)
Share code: FOZ ISIN: ZAE000018446
("Forza" or "the Group")
AUDITED RESULTS FOR THE YEAR ENDED 31 AUGUST 2001
HIGHLIGHTS
* Turnover 34% ahead of previous financial year
* 24% growth in EBITDA
* Cash generated from operations up 16%
* 37% increase in ordinary shareholders' equity
Consolidated income statement
2001 2000
R'000 R'000
Turnover 988 477 737 575
Operating profit before interest,
depreciation and amortisation (EBITDA) 42 557 34 237
Depreciation 3 527 1 208
Operating profit 39 030 33 029
Net interest paid 6 073 1 891
Profit before taxation 32 957 31 138
Taxation 9 887 9 341
Profit after taxation 23 070 21 797
Minority interest 1 029 (127)
Headline earnings 22 041 21 924
Goodwill amortised 1 865 -
Attributable earnings 20 176 21 924
Shares in issue and to be issued ('000) 564 736 508 630
Weighted average number of
ordinary shares in issue ('000) 564 736 520 887
Earnings per share (cents) 3,6 4,3
Headline earnings per share (cents) 3,9 4,2
Net tangible asset value
per share (cents) 9,2 7,9
Consolidated balance sheet
2001 2000
R'000 R'000
ASSETS
Non-current assets 54 407 34 006
Property, plant and equipment 11 910 6 590
Investment in associate company 389 -
Goodwill 16 801 -
Deferred tax asset 25 307 27 416
Current assets 175 424 111 787
Inventories 118 353 72 380
Trade and other receivables 46 046 23 261
Cash and cash equivalents 11 025 16 146
Total assets 229 831 145 793
EQUITY AND LIABILITIES
Shareholders' equity 57 857 37 064
Shares to be issued - acquisitions 4 300 -
Non-distributable reserve 31 633 31 633
93 790 68 697
Minority interest 8 727 -
Total shareholders' equity 102 517 68 697
Non-current liabilities 608 416
Long-term liabilities 505 439
Deferred tax liability 103 (23)
Current liabilities 126 706 76 680
Trade and other payables 80 446 39 704
Vendor loan - 5 972
Floorplan liability 37 583 18 014
Current portion of long-term liability 2 440 1 279
Taxation 6 237 11 711
Total shareholders' equity
and liabilities 229 831 145 793
Abridged consolidated cash flow statement
2001 2000
R'000 R'000
Cash generated from operations 38 299 32 938
Taxation paid (13 130) -
Finance charges (6 073) (1 891)
Cash flows from operating activities 19 096 31 047
Investing activities (37 201) (10 077)
Financing activities 12 984 (15 091)
Net (decrease)/increase in cash (5 121) 5 879
Balance at beginning of year 16 146 10 267
Balance at end of year 11 025 16 146
Statement of changes in total shareholders' equity
2001 2000
R'000 R'000
Balance at beginning of year 68 697 9 303
Shares issued and to be issued 4 917 14 772
Minority interest 8 727 -
Non-distributable reserve - 31 633
Write-down of intangibles - (8 095)
Listing and share issue expenses
written-off - (840)
Attributable profit for year 20 176 21 924
Balance at end of year 102 517 68 697
Introduction
The directors of Forza are pleased to report the annual financial results
for the year ended 31 August 2001, which reflect solid increases in turnover
and EBITDA.
Forza is an integrated group of luxury motor and watercraft retail
operations listed in the Industrial - "Retail" sector of the JSE Securities
Exchange South Africa lists. The Group comprises three divisions - Leisure;
Luxury Dealerships and Forza Marine.
Review of operations
While trading margins in the Leisure Division were placed under pressure by
declining sentiment and an increasingly competitive market, Investment Cars
nonetheless performed satisfactorily. The recently opened Monaco Leisure
showroom in Bryanston capitalised on the synergy between the luxury vehicle
and watercraft markets, exceeding expectations. The division expanded into
the Cape with a 51% stake in Ashley's and Bloomsbury, and was appointed as
the exclusive Lamborghini franchisee for SA.
Both Lyndhurst Auto dealerships performed exceptionally and entrenched their
position in the Gauteng market. Post year-end Lyndhurst Auto relocated from
Lyndhurst to a state-of-the-art showroom and workshop in the premium Melrose
Arch development.
The acquisition of 70% of the Waterworld group became unconditional in the
year under review. High inventory levels carried over from the summer
resulted in increased holding costs, reduced trading margins and
disappointing performance during the winter season. Management has
implemented initiatives to rectify this.
Forzaweb, the Group's Internet service, has migrated to individual business
sites in order to sustain the valuable sales leads generated via the
Internet.
Finance and insurance income of R7,6 million provided a strong complementary
revenue stream, reflecting an increase of 27% on the previous financial
year.
A segmental analysis has not been provided as Forza operates in the leisure
lifestyle market only.
Acquisitions
The Group acquired a successful paint and panel shop with effect from March
2001. Rebranded Lyndhurst AutoBody and BMW-accredited, it secures BMW
customer loyalty and is also expected to enhance the Luxury Dealerships
division's spares distribution.
Disposal and closure
In line with previously stated strategy Forza disposed of the business of
Sportech to its management with effect from April 2001. As Sportech formed a
minor component of the Group, its disposal had no material financial effect.
Drivers Club, which offered members access to a range of vehicles, was
closed post year-end. Despite its high brand awareness and initial
penetration of the corporate incentive market, Drivers Club failed to
generate critical mass to yield a sustainable profit. Management anticipates
that the closure will have no negative financial effect. All closure costs
have been fully provided for in the results under review.
Restatement of comparative figures
Tax has been provided in compliance with the new accounting standard AC 102.
Accordingly, tax has been restated in the comparative figures for the
preceding 12-month period to 31 August 2000, resulting in a restatement of
headline earnings per share (HEPS) from 4,8 cents to 4,2 cents. In addition,
a deferred tax asset has been raised to bring to account the anticipated
future tax benefits arising on the write-off of trademarks.
Financial commentary
The Group posted turnover of R988,5 million for the year under review, 34%
ahead of the R737,6 million reported in the previous 12-month period ended
31 August 2000 ("the previous financial year").
EBITDA increased by 24,3% to R42,6 million from R34,2 million for the
previous financial year, reflecting an EBITDA margin of 4,3%.
The increase in net interest paid reflects the effect of the Waterworld,
Bloomsbury/Ashley's and Lyndhurst AutoBody acquisitions as well as
additional investment in current assets arising mainly within the Waterworld
group.
While headline earnings increased marginally to R22 million from R21,9
million, an increase in the number of shares in issue resulted in HEPS of
3,9 cents compared with 4,2 cents for the previous financial year.
The increase in the weighted average ordinary shares in issue arose from the
rights issue effected during the second half of the previous financial year
and the issue of shares for the Waterworld acquisition.
The significant increase in current assets and current liabilities arose
mainly from the acquisitions of Waterworld, Bloomsbury/Ashley's and
Lyndhurst AutoBody.
Cash generated from operations amounted to R38,3 million. Cash outflows
included the R19,2 million cash element paid for acquisitions. Cash tax paid
of R13,1 million relates to the prior 17-month period.
Despite the utilisation of cash resources for investing activities during
the year under review, the Group remains adequately funded to meet both
operating and organic growth requirements from internal resources.
Prospects
Focus on operational efficiency should positively affect margins and
inventory levels, while Forza's business strategy and well-balanced
management teams firmly position the Group to pursue strategic growth
opportunities.
Although Forza's niche customer base is more insulated than the mass market,
the as yet unquantifiable impact of recent global events on consumer markets
must be considered. With this factor tempering its outlook, management is
nonetheless confident of delivering positive earnings growth in the year
ahead.
Dividends
No dividend has been declared.
P D Acheson I D Mc Alpin
Chairman Chief Executive Officer
23 October 2001
Investment Cars
Ashleys
Bloomsbury
Monaco Leisure
Lyndhurst Auto
at Hyde Park and Melrose Arch
Lyndhurst AutoBody
Waterworld
Wet n Wild
Boating distributors
Directors: P D Acheson (Chairman), I D Mc Alpin (CEO), 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
