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Forza - Audited Financial Results For The Year Ended 31 August 2002
Forza Group Limited
(Registration number 1987/004218/06)
JSE Share code: FOZ ISIN: ZAE000018446
("Forza" or "the group")
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2002
Consolidated income statement
2002 2001 Variance
R`000 R`000 %
Turnover 1 378 665 988 477 39,5
Operating profit before interest,
depreciation and amortisation (EBITDA) 55 773 42 557 31,1
Depreciation 3 408 3 527
Operating profit 52 365 39 030
Net interest paid 7 557 6 073
Profit before taxation 44 808 32 957
Taxation 13 408 9 887
Profit after taxation 31 400 23 070
Minority interest (2 471) (1 029)
Share in associate`s profit 111 -
Headline earnings 29 040 22 041 31,8
Goodwill amortised 1 865 1 865
Attributable earnings 27 175 20 176
Shares in issue (`000) 558 380 564 736
Weighted average number of fully
diluted ordinary shares in issue (`000) 566 836 564 736
Earnings per share (cents) 4,9 3,6
Earnings per share - fully diluted (cents) 4,8 3,6
Headline earnings per share (cents) 5,2 3,9
Headline earnings per share - fully
diluted (cents) 5,1 3,9 31,3
Net tangible asset value per share (cents) 14,3 9,2
Abridged consolidated cash flow statement
2002 2001
R`000 R`000
EBITDA 55 773 42 557
Working capital changes (14 985) 1 060
Taxation paid (14 550) (13 130)
Finance charges (7 557) (6 073)
Cash flows from operating activities 18 681 24 414
Investing activities (1 076) (32 679)
Financing activities (4 774) 7 738
Net increase/(decrease) in cash 12 831 (527)
Cash acquired - (4 594)
Balance at beginning of year 11 025 16 146
Balance at end of year 23 856 11 025
Consolidated balance sheet
2002 2001
R`000 R`000
ASSETS
Non-current assets 48 809 54 407
Property, plant and equipment 9 578 11 910
Investment in associate company 500 389
Goodwill 14 936 16 801
Deferred tax 23 795 25 307
Current assets 212 069 175 424
Inventories 138 343 118 353
Trade and other receivables 49 870 46 046
Cash and cash equivalents 23 856 11 025
Total assets 260 878 229 831
EQUITY AND LIABILITIES
Shareholders` equity 87 108 57 857
Shares to be issued - acquisitions - 4 300
Non-distributable reserve 31 402 31 633
118 510 93 790
Minority interest 10 953 8 727
Total shareholders` equity 129 463 102 517
Non-current liabilities 440 608
Long-term liabilities 440 505
Deferred tax - 103
Current liabilities 130 975 126 706
Trade and other payables 79 359 70 467
Short-term interest bearing liabilities 47 498 47 562
Current portion of long-term liability 200 2 440
Taxation 3 918 6 237
Total shareholders` equity and liabilities 260 878 229 831
Statement of changes in total shareholders` equity
2002 2001
R`000 R`000
Balance at beginning of year 102 517 68 697
(Reduction in purchase price)/shares
to be issued (2 224) 4 917
Minority interest 2 226 8 727
Non-distributable reserve (231) -
Attributable earnings 27 175 20 176
Balance at end of year 129 463 102 517
Introduction
The group`s divisions performed well during the year ended 31 August 2002
("the year"), boosted by macro economic conditions that offered short-term
growth opportunities. The Rand`s depreciation during the year stimulated trading
by triggering pre-emptive buying in anticipation of future price increases.
Accounting policies
The accounting policies used in the preparation of the annual financial
statements for the year are consistent with those applied in the annual
financial statements for the previous year ended 31 August 2001 ("the previous
year"), and comply with South African Statements of Generally Accepted
Accounting Practice.
Financial results
These financial results have been audited by Moores Rowland whose unqualified
audit opinion is available for inspection at Forza`s registered office.
Turnover for the year of R1,379 million was 39,5 % higher than the R988,5
million for the previous year.
EBITDA increased by 31,1% to R55,8 million from R42,6 million for the
previous year. Headline earnings of R29 million exceeded R22 million for the
previous year by 31,8%, translating into a 31,3% rise in fully diluted headline
earnings per share to 5,1 cents from 3,9 cents.
Cash on hand peaked at year-end, temporarily reducing net borrowings to R23,6
million from the group`s average net borrowings of R55 million.
As Forza operates in the leisure lifestyle market, no segmental analysis has
been provided.
Accompanying announcement
Shareholders` attention is directed to an accompanying announcement regarding
proposals by Forza to:
* dispose of Lyndhurst Auto Hyde Park;
* dispose of its remaining businesses;
* distribute cash of 20 cents per share to minority shareholders; and
* delist preparatory to winding up.
Prospects
In accordance with BMW SA`s strategy to reduce the influence of retail groups
in favour of empowerment and independent entrepreneurial ownership, Forza will
dispose of one of its BMW dealerships Lyndhurst Auto Hyde Park. The disposal
will significantly reduce Forza`s critical mass and negatively impact on the
group`s earnings and profitability going forward. Given that Forza`s poor share
price performance has consistently failed to reflect the group`s historical
profitability, the disposal is anticipated to weaken further Forza`s position as
a listed group.
Depressed sentiment towards micro capitalisation stocks and the lack of
liquidity in Forza`s share is not expected to improve. This will perpetuate
negative perceptions of customers and suppliers and difficulties in raising
capital and incentivising staff.
In light of these prospects the Board believes that the delisting of the
group, facilitated by the disposal of Lyndhurst Auto Hyde Park and Forza`s
remaining businesses, is in the best interests of all shareholders and enables
minorities to realise value.
P D Acheson I D Mc Alpin
28 October 2002
Directors: P D Acheson (Chairman); I D Mc Alpin (CEO); R Arenson;
S M Hochstadter; G B Liebmann*; A M Schlesinger*; R P Sexton
* Non-executive
Registered Office: 24 Hurlingham Road Illovo 2196,
PO Box 1348 Highlands North 2037.
Tel: +27 11 327 7007 Fax: +27 11 327 7009
Date: 25/10/2002 05:06:00 PM Produced by the JSE SENS Department
