| Wed 14 May 2003, 11:17 | | Steers Holdings Limited - Results For The Year End |
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STEERS HOLDINGS LIMITED - RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2003 AND
CAUTIONARY ANNOUNCEMENT
Steers Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1969/004875/06)
("the company")
Share code: STE ISIN: ZAE000008330
AUDITED GROUP RESULTS for the year ended 28 February 2003
Highlights!
* Gross revenue +20%
* Operating Profit +26%
* Headline Earnings per Share +49%
OVERVIEW
Steers Holdings Limited, Africa"s leading Quick Service Restaurant (QSR) group
is represented in all four major segments of the QSR market, namely burgers,
pizza, fish and chicken through its brands Steers, Debonairs Pizza, FishAways
and Church"s Chicken, which it has marketed under license from Atlanta-based AFC
Enterprises since December 2001. During the period under review, Steers and
Debonairs Pizza retained brand leadership status in their categories and
FishAways consolidated its niche position. Church"s Chicken, given the nature of
the category in which it competes, affords the Group important growth
opportunities.
The company was recognised by its consumers during the year through the popular
publication, Leisure Options, which awarded Steers "Best Burger" (for the
seventh consecutive year), "Best Chips" and "Best Takeaway" titles, while
Debonairs Pizza received the "Best Pizza" award (for the fourth consecutive
year) in the QSR category for 2002.
FINANCIAL RESULTS
In a sector challenged by difficult trading conditions, Steers Holdings has
performed well to deliver exceptional results. Despite food and fuel inflation
and pressure on consumer spending, gross revenue for the period under review
increased 20% from R242,9 million to R291,0 million. Net income after taxation
increased by 51,2% to R16,2 million. Headline earnings per share of 25,8 cents
reflect a 49,1% increase over the previous period.
These results bear testimony to the strength of the Group"s brand portfolio and
its committed franchisee and licensee network, which is underpinned by a
comprehensive food service function, which extends across the product-supply
value chain.
SEGMENT REPORT
Gross revenue
2003 2002 Growth
R000 R000 %
Franchising 55 557 42 300 31
Manufacturing and distribution 239 619 203 230 18
Corporate services 16 222 15 266 6
Less: Inter segment revenue (20 335) (17 909) -
Total 291 063 242 887 20
Operating profit
2003 2002 Growth
R000 R000 %
Franchising 10 703 8 132 32
Manufacturing and distribution 13 232 10 803 22
Corporate services 103 83 24
Eliminations (201) (133) -
Total 23 837 18 885 26
FRANCHISING DIVISION
The Franchising Division reported revenue of R55,6 million, an improvement of
31% from R42,3 million in the prior comparable period. Operating profit
increased 32% to R10,7 million from R8,1 million. These results reflect Steers
Holdings" philosophy of focusing on its core competencies and single-minded
passion for building brands.
This past year saw the evolution of two major trends: the intensified demand for
convenience by consumers and the move away from poor-quality processed food. The
Group is strategically poised to manage these trends though its convenience-
focused service offerings, including home delivery, drive-thru options and prime
restaurant locations. In terms of demand for authenticity and good value, the
Group"s brands are widely recognised as best-in-class, evinced by strong local
consumer support.
During the period under review, the first phase of the Group"s brand re-
engineering programme was successfully implemented and completed. Designed to
revitalise the existing restaurant network in order to meet consumer
expectations over the next three years, the programme has been favourably
received by both franchisees and consumers alike. The company is cognisant of
operating in a sophisticated retail environment where a world-class offering is
critical - thus re-investing and re-engineering in order to maintain leadership
in a brand-conscious market are imperative.
As at 28 February 2003, the Group"s franchised network was as follows:
South Rest of
Africa Africa Total
Steers 281 40 321
Debonairs Pizza 147 25 172
FishAways 28 1 29
Church"s Chicken 10 - 10
Total 466 66 532
The Group exited the year with 532 branded outlets, adding a net gain of 50
outlets during the year under review. Of these, only four outlets are company
owned.
MANUFACTURING AND DISTRIBUTION DIVISION
This business unit continued to dedicate its efforts to service, quality and
cost efficiency, and was rewarded with improved levels of franchisee loyalty.
Gross revenue improved 18% from R203,2 million to R239,6 million, while
operating profit increased 22% to R13,2 million up from R10,8 million.
Pressure on margins as a result of raw material increases was addressed by
prudent buying practices and enhanced operational efficiencies, which enabled
the unit to contain price increases to franchisees. A business evaluation
programme conducted within the unit highlighted opportunities in the financial,
warehousing and manufacturing systems and these have and will be capitalised on
going forward. During the period, labour and equipment efficiencies were
instituted.
In addition, the entire Steers Retail Product range is currently the subject of
a packaging re-launch programme, which will be completed in the near future.
ACQUISITIONS
During the year under review, the Group acquired the remaining 25% shares of
Pouyoukas Foods (Pty) Limited, making it a wholly owned subsidiary.
In line with the company"s strategic intent not to sub-contract its brands
within homogenous markets with a common currency, the Master License Agreement
was bought back from the Eastern Cape licensee during the year under review for
R7,2 million. The Western Cape is now the only region within the borders of
South Africa outside the direct control of the company.
EVENTS AFTER BALANCE SHEET DATE
With effect from 1 June 2003 the Group will acquire the shares in Creative
Coffee Franchise Systems (Pty) Limited, a company licenced to develop franchised
coffee outlets under The House of Coffees, Brazilian and ESP Illy Boutique
branded trademarks. This acquisition is subject to the completion of a due
diligence exercise and the conclusion by Creative Coffee of suitable license
agreements.
Management is confident that the combination of Steers Holdings" proven
expertise in establishing and developing franchise outlets together with the
reputable brand names it is acquiring, will enable the Group to grow the
Creative Coffee franchising business, and over time add value to the Group"s
operations and earnings.
PROSPECTS
Steers Holdings" growth will continue to be fuelled by three major factors,
namely consumer desire for convenience, growth of the middle-income market and
demand for quality. The Group is well positioned to capitalise on each of these
trends.
Primary focus will remain on establishing restaurants in the South African
market and maximising all opportunities presented locally. The company will
continue to explore potential prospects and acquisitions in the QSR sector
according to the Group"s stringent criteria of whether they are, or have the
potential to be, best-in-class.
With continued focus on the Group"s key drivers: growth, customers, quality and
leadership, management is satisfied that performance will be enhanced in the
year ahead.
CAUTIONARY ANNOUNCEMENT
Shareholders are advised that Steers Holdings Limited continues to trade under
cautionary as a result of negotiations that have been entered into, which if
concluded successfully, would have a material effect on the price of the
company"s securities. Accordingly, shareholders are advised to exercise caution
when dealing in the company"s securities until a full announcement is made.
DIVIDENDS
The Board of Directors have resolved to withhold the recommendation of a final
dividend until the negotiations, as detailed in the cautionary announcement
above, have been finalised.
On behalf of the Board
P Halamandaris T Halamandaris
Chairman Chief Executive Officer
14 May 2003
Consolidated income statement
28 February 28 February
2003 2002 %
R000 R000 change
Gross revenue 291 063 242 887 20
Operating profit 23 837 18 884 26
Net interest received/(paid) 112 (638)
Net income before taxation 23 949 18 246 31
Taxation (7 777) (7 556)
Net income after taxation 16 172 10 690 51
Attributable to minority
Shareholders - -
Attributable profit 16 172 10 690 51
Adjusted for:
Amortisation of goodwill 695 479
Loss on loan written off 3 16
Profit on sale of non-current
Assets (224) (223
Headline earnings 16 646 10 962 52
Weighted average number of
shares in issue 64 513 599 63 187 918
Operating margin (%) 8,2 7,8 5
Earnings per share - cents 25,1 16,9 48
Headline earnings per
share - cents 25,8 17,3 49
Dividends
- final (prior year) 7,0 8,0
- interim (current year) 6,0 5,0
Total dividend for the year 13,0 13,0
Consolidated balance sheet
28 February 28 February
2003 2002
R000 R000
ASSETS
Non-current assets 60 678 49 948
Tangible fixed assets 13 850 12 963
Intangible fixed assets 37 943 30 079
Deferred taxation 2 873 573
Loans 6 012 6 333
Current assets 64 625 53 772
Inventory 22 162 17 061
Trade and other receivables 32 650 35 624
Bank balances and cash 9 813 1 087
Total assets 125 303 103 720
EQUITY AND LIABILITIES
Share capital and reserves 81 444 75 659
Ordinary shareholders" interest 81 301 75 516
Minority shareholders" interest 143 143
Non-current liabilities 10 597 2 652
Interest bearing borrowings 10 597 2 652
Current liabilities 33 262 25 409
Trade and other payables 29 374 23 627
Shareholders for dividend 155 142
Taxation 3 733 1 640
Total equity and liabilities 125 303 103 720
Consolidated statement of changes in equity
28 February 28 February
2003 2002
R000 R000
Balance at beginning of year 75 516 69 467
Net gains not recognised in the income statement -
currency translation
differences (2 597) 2 692
Attributable profit 16 172 10 690
Dividends (8 387) (8 229)
Net movement in share capital 597 896
Ordinary shareholders" interest 81 301 75 516
Consolidated cash flow statement
28 February 28 February
2003 2002
R000 R000
Net cash flow from operating
activities 15 128 7 391
Cash generated by operations 31 373 27 569
Net interest received/(paid) 112 (638)
Taxation paid (7 983) (11 390)
Dividends paid (8 374) (8 150)
Net cash flow from investing
activities (15 438) (4 609)
Expended on non-current
assets (15 917) (5 681)
Proceeds from disposal of
non-current assets 479 1 072
Net cash flow from financing
activities 9 036 (3 848)
Movement in share capital
and reserves 597 896
Increase/(decrease) in interest
bearing borrowings 8 439 (4 744)
Change in cash and cash
equivalents 8 726 (1 066)
Cash and cash equivalents
at beginning of year 1 087 2 153
Cash and cash equivalents at
end of year 9 813 1 087
Notes
1 These financial statements have been prepared in conformity with South
African Statements of Generally Accepted Accounting Practice, and the accounting
policies are consistent with those applied in the previous year ended 28
February 2002.
2 These financial results have been audited by RSM Betty and Dickson and
Galatis Chartered Accountants and their unqualified audit opinion is available
for inspection at the company"s registered office.
3 For the purposes of consistency with revised management structures, the
Stores Development business unit is now accounted for in the Franchising
Division. The comparative figures have been amended.
Registered office:
478 James Crescent, Midrand 1685
PO Box 2884, Halfway House 1685
E-mail investorrelations@steers.co.za
Website www.steersholdings.co.za
Transfer secretaries:
Ultra Registrars (Pty) Limited
(Registration number 2000/007239/07)
11 Diagonal Street, Johannesburg
PO Box 15610, Woodmead 3610
Directors:
P Halamandaris (Chairman) T Halamandaris (Chief Executive Officer)
KA Hedderwick JL Halamandres* HR Levin* P Halamandaris (jnr)*
* Non-executive
Company secretary:
P Papageorgiou
Sponsor
Java Capital (Pty) Limited
14 May 2003
Date: 14/05/2003 10:00:51 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
