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Steers Holdings Ltd - Audited Group Results
STEERS HOLDINGS LIMITED
(registration number 1969 / 004875 / 06)
AUDITED GROUP RESULTS
OVERVIEW
Despite challenging trading conditions and severe pressure on margins and
costs during fiscal 2002, the Group returned positive earnings for the year
ended 28 February 2002.
FINANCIAL RESULTS
Gross revenue increased 8% from R235.5 million to R253.9 million for the
year under review. However this increase in revenue was not carried forward
to operating profit before interest and taxation, which decreased by 24%
from R24.8 million last year to R 18.9 million.
Throughout this testing period, brand integrity amongst the Groups` brands
was maintained by refusing to compromise on quality. At the same time, the
Group absorbed many cost increases from suppliers, enabling franchisees to
entrench the Groups` value proposition in a highly competitive retail
market.
SEGMENT REPORT
Gross Revenue
2002 2001 Growth
R000 R000 %
Franchising 52 824 48 238 10
Manufacturing and 203 684 189 444 8
distribution
Corporate Services 15 266 19 004 (20)
Less: Inter segment (17 909) (21 152) -
revenue
Total 253 865 235 534 8
Operating profit
2002 2001 Growth
R000 R000 %
Franchising 8 939 7 755 15
Manufacturing and 9 996 16 721 (40)
distribution
Corporate Services 82 486 (83)
Eliminations (133) (120) -
Total 18 884 24 842 (24)
FRANCHISING DIVISION
In the Franchising Division, the Steers and Debonairs Pizza brands showed
enduring strength and maintained their leadership positions, achieving a
heartening measure of growth both locally and internationally. Gross Revenue
increased by 10% from R48.2 million to R52.8 million. Effective management
of costs and resources resulted in 15% growth in operating profit before
interest and taxation from R7.8 million to R8.9 million.
During the latter half of the financial year, Steers Holdings Limited signed
a master franchise agreement with AFC Enterprises, the world`s second
biggest chicken franchisor. The introduction of the Church`s Chicken brand
to the South African consumer will herald our entry into this rapidly
expanding sector of the Quick Service Restaurant market in which we were not
previously represented. The Group is now poised to roll out its first ever
chicken outlet, rounding off our representation in all the major key food
categories, namely burgers, pizza, fish and now chicken.
As at the 28 February 2002, the Group`s franchised network was as follows:
South Rest of Total
Africa Africa
Steers 278 36 314
Debonairs Pizza 132 19 151
FishAways 17 0 17
Total 427 55 482
The Group exited the year with 482 branded outlets, adding a net gain of 29
outlets during the year under review. Currently there are 55 outlets located
outside of the borders of South Africa.
The introduction of the Church`s Chicken brand to Africa, together with the
tried and tested offering of the Steers, Debonairs Pizza and FishAways
brands, promises to deliver healthy growth in store numbers in the new
financial year.
MANUFACTURING AND DISTRIBUTION DIVISION
Increased pressure on margins, in addition to one off costs in respect of
the restructuring and outsourcing of the Store Development business unit,
had a negative effect on the Manufacturing and Distribution Division.
Consequently volume increase of 8% to R203.7 million could not be carried
through to the bottom line, resulting in a decrease in operating profit
before interest and taxation from R16.7 million to R10.0 million.
Pressure on margins, arising primarily as a result of the increase in the
price of red meat, the increase in the price of fuel, as well as the rapid
devaluation of the Rand, have been addressed by management, and margins are
returning to previous levels.
CHANGE IN ACCOUNTING POLICIES
During the year under review the Group changed its accounting policy in
respect of accounting for dividends paid in order to bring it in line with
South African statements of Generally Accepted Accounting Practice. The
Group previously accounted for dividends on an accrual basis. Dividends will
now be accounted for when declared.
PROSPECTS
Responsiveness to consumers has always been a strength of the Group. Our
closeness to our franchisees and our quick response to changing consumer
demands, will ensure the expansion of our already successful brands.
We are committed to growth in South Africa and the rest of Africa. and we
have begun to assess the prospects for growth out of Africa. Our ability to
meet and beat the stringent quality parameters of a global player like
Church`s Chicken was confirmation that the Group is capable of sourcing,
manufacturing, presenting and packaging products that are truly world class.
DIVIDENDS
The Board of Directors has resolved to declare a final dividend (number 19)
of 7 cents per ordinary share. The last date to trade in order to
participate in the dividend will be Friday 28 June 2002. The shares will
commence trading "Ex" dividend from Monday 1 July 2002. The dividend will be
payable to all shareholders recorded in the books of the Company at the
close of business on Friday 5 July 2002 ("record date"). The dividend will
be payable on Monday 8 July 2002. No dematerialisation or rematerialisation
of share certificates may take place between Monday 24 June 2002 and Friday
5 July 2002, both days inclusive.
On behalf of the Board
P.Halamandaris T.Halamandaris
Chairman Chief Executive Officer
14 May 2002
Registered Office 478 James Crescent Midrand 1685
PO Box 2884 Halfway House 1685
Email: investorrelations@steers.co.za
Website: www.steersholdings.co.za
Transfer Secretaries Ultra Registrars (Pty) Ltd
(registration no: 2000/007239/07)
11 Diagonal Street Johannesburg
PO Box 15610 Woodmead 3610
Directors P.Halamandaris (Chairman), T.Halamandaris (Chief Executive
Officer), K.A.Hedderwick, J.L.Halamandres*, H.R.Levin*, P.Halamandaris
(jnr)*.
* non executive
Available on SENS
Share code STE ISIN code ZAE 000 008 330
CONSOLIDATED INCOME
STATEMENT
28-Feb-02 28-Feb-01
R 000`s R 000`s change
Gross revenue 253 865 235 534 8%
Operating profit 18 884 24 842 -24%
Net interest paid ( 638) ( 740)
Net income before 18 246 24 102 -24%
taxation
Taxation ( 7 556) ( 10 044)
Net income after taxation 10 690 14 058 -24%
Attributable to minority - 139
shareholders
Attributable profit 10 690 14 197 -25%
Adjusted for:
Amortisation of goodwill 479 479
Loss on loan written off 16 178
Prior year under - 1 009
provision
Profit on sale of non ( 223) ( 103)
current assets
Headline earnings 10 962 15 760 -30%
Weighted average number 63 187 62 625 933
of shares in issue 918
Operating margin 7.4% 10.5% -29%
Earnings per share - 16.9 22.7 -26%
cents
Headline earnings per 17.3 25.2 -31%
share - cents
Dividends
- final (prior year) 8.0 7.0
- Interim (current year) 5.0 5.0
Total dividend for the 13.0 12.0
year
- final (current year)1 7.0 8.0
1. The dividend has been proposed subsequent to year end
and has been presented for information purposes only. No
provision regarding this dividend has been taken into
account.
CONSOLIDATED BALANCE SHEET
28-Feb-02 28-Feb-01
R 000`s R 000`s
ASSETS
Non-current assets 49 374 51 320
Tangible fixed assets 12 963 13 934
Intangible fixed assets 30 078 30 926
Loans 6 333 6 460
Current assets 76 027 63 049
Inventory 17 061 18 185
Trade and other 35 624 32 448
receivables
Bank balances and cash 23 342 12 416
Total assets 125 401 114 369
EQUITY AND LIABILITIES
Share capital and 75 658 69 611
reserves
Ordinary shareholders` 75 515 69 467
interest
Minority shareholders` 143 144
interest
Non-current liabilities 2 078 4 761
Interest bearing 2 652 4 693
borrowings
Deferred taxation ( 574) 68
Current liabilities 47 665 39 997
Trade and other payables 23 628 24 838
Shareholders for dividend 142 63
Taxation 1 640 4 833
Bank overdraft 22 255 10 263
Total equity and 125 401 114 369
liabilities
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
28-Feb-02 28-Feb-01
R 000`s R 000`s
Balance at beginning of 63 821 56 986
year
Change in accounting 5 646 4 928
policies
Restated balance 69 467 61 914
Net gains not recognised 2 691 773
in the income statement -
currency translation
differences
Attributable profit 10 690 14 197
Dividends ( 8 229) ( 7 510)
Net movement in Share 896 93
Capital
Ordinary shareholders 75 515 69 467
interest
CONSOLIDATED CASH FLOW
28-Feb-02 28-Feb-01
R 000`s R 000`s
Net cash flow from 7 394 13 335
operating activities
Cash generated by 27 573 29 961
operations
Net interest paid ( 638) ( 740)
Taxation paid ( 11 390) ( 8 073)
Dividends paid ( 8 151) ( 7 813)
Net cash flow from ( 4 612) ( 2 744)
investing activities
Expended on non-current ( 5 507) ( 4 505)
assets
Proceeds from disposal of 895 1 761
non-current assets
Net cash flow from ( 3 847) ( 5 386)
financing activities
Movement in share capital 896 ( 239)
and reserves
Decrease in interest ( 4 743) ( 5 147)
bearing borrowings
Change in cash and cash ( 1 065) 5 205
equivalents
Cash and cash equivalents 2 153 ( 3 052)
at beginning of year
Cash and cash equivalents 1 088 2 153
at end of year
Date: 14/05/2002 05:05:00 PM Produced by the SENS Department
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