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BRC
BRC
Brandcorp - Audited results for the year ended 30 June 2006
BRANDCORP HOLDINGS LIMITED
(Incorporated in the republic of South Africa)
(Registration No. 1992/006647/06)
Share Code: BRC & ISIN Number: ZAE000013611
("Brandcorp")
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2006
Turnover up 15,1%
Operating profit up 15,4%
Dividends per share up 12,5%
Net asset value per share up 18,9%
ABRIDGED GROUP INCOME STATEMENT
30 June 2006 30 June 2005
Audited Audited %
R000 R000 change
Revenue 916 249 795 906 15,1
Operating profit 132 027 114 420 15,4
Fair value of forward exchange
contracts 10 210 11 399
Net interest received 2 397 475
Net profit before taxation 144 634 126 294 14,5
Taxation (46 821) (40 393)
Current (41 713) (37 480)
Secondary tax on companies (4 131) (2 491)
Deferred taxation (977) (422)
Net profit after taxation 97 813 85 901 13,9
Number of shares in issue
(000)* 77 573 76 635 1,2
Weighted average number of
shares (000)* 78 200 76 159 2,7
Headline earnings per share
- cents 125,1 112,8 10,9
Earnings per share - cents 125,1 112,8 10,9
Diluted headline earnings
per share - cents 123,6 109,0 13,4
Diluted earnings per share
- cents 123,6 109,0 13,4
*Net of treasury shares
RECONCILIATION OF HEADLINE EARNINGS
30 June 2006 30 June 2005
Audited Audited
R000 R000
Net profit after taxation 97 813 85 901
Adjust for:
Profit on disposal of property,
plant and equipment (19) (5)
Headline earnings 97 794 85 896
ABRIDGED GROUP BALANCE SHEET
30 June 2006 30 June 2005
Audited Audited
R000 R000
ASSETS
Non-current assets 40 862 31 847
Property, plant and equipment 20 327 16 313
Intangible assets 13 712 7 734
Deferred taxation 6 823 7 800
Current assets 443 116 385 273
Inventories 144 229 146 972
Accounts receivable 212 397 153 752
Cash and cash equivalents 86 490 84 549
483 978 417 120
EQUITY AND LIABILITIES
Capital and reserves 328 382 272 676
Long-term liabilities 4 366 7 223
Current liabilities 151 230 137 221
Non-interest bearing
liabilities 121 766 94 216
Interest bearing liabilities 4 132 15 927
Taxation 25 332 27 078
483 978 417 120
ABRIDGED GROUP CASH FLOW STATEMENT
30 June 2006 30 June 2005
Audited Audited
R000 R000
Operating activities 86 516 58 673
Operating profit before
working capital movements 137 429 119 485
Increase in
working capital (5 720) (36 107)
Net finance charges 2 397 475
Taxation paid (47 590) (25 180)
Investing activities (39 212) (12 189)
Purchase of property, plant
and equipment (8 262) (4 873)
Proceeds on disposal of
property, plant and
equipment 208 46
Purchase of intangible assets - (7 362)
Businesses acquired (19 719)
Ordinary shares repurchased (11 439) -
Financing activities (45 363) (33 672)
Proceeds from issue of
share capital 2 328 1 868
Payment of borrowings (14 652) (15 638)
Dividends to shareholders (33 039) (19 902)
Net movement in cash resources 1 941 12 812
Cash and cash equivalents at the
beginning of the year 84 549 71 737
Cash and cash equivalents at the end
of the year 86 490 84 549
STATEMENT OF CHANGES IN EQUITY
Accu-
Share Share mulated
capital premium profits NDR Total
R000 R000 R000 R000 R000
Balance at
1 July 2004 739 1 842 202 088 204 669
Net profit after
taxation 85 901 85 901
Share-based
payments 163 163
Ordinary shares
issued 15 1 021 1 036
Net transactions
by share trust 12 5 450 (4 630) 832
Dividends (19 925) (19 925)
Balance at
1 July 2005 766 8 313 263 434 163 272 676
Net profit after
taxation 97 813 97 813
Share-based
payments 88 88
Ordinary shares
issued 21 2 307 2 328
Dividends (33 084) (33084)
Transfer from
reserves 808 (808) -
Ordinary shares
repurchased and
cancelled (12) (11 427) (11 439)
Balance at
30 June 2006 775 1 327 355 251 328 382
SEGMENT ANALYSIS
Operating
Turnover profit Assets
R000 R000 R000 Liabilities
Tools & Hardware 601 345 84 547 260 071 85 901
Leisure & Accessories 128 619 20 759 68 218 24 223
House & Home 186 285 25 308 72 080 35 102
Corporate - 1 413 83 609 10 370
Total 916 249 132 027 483 978 155 596
COMMENTARY
Nature of Business
Brandcorp distributes niche consumer and industrial products to a broad
range of customers through three trading divisions:
Matus (Tools & Hardware) distributes power tools, welding & safety
equipment, compressors, abrasives, hand tools & hardware, servicing the
needs of the industrial, building and construction, engineering,
agricultural, DIY and mining sectors.
Interbrand (Leisure & Accessories) distributes luggage, handbags, backpacks
and accessory products.
MIC/Prestige/Moto Quip/Leisure Quip (House & Home) distributes dinnerware,
cutlery, tableware, gifting, homewares, kitchen tools, kitchenware,
bakeware, paper products, BBQ products, aftermarket vehicle accessories
(excluding spare parts), outdoor and camping equipment, travel aids and
accessory products.
Review
Brandcorp achieved another highly successful operational and financial
performance with mainly organic growth leading to healthy rises in revenue,
operating profit and dividends to shareholders.
Ongoing adherence to the proven strategy of niche marketing within broader
industries has maintained the group"s competitive advantage in its chosen
sectors.
Revenue increased from R795.9 million to R916.2 million (15.1%).
Operating profit increased from R114,4 million to R132.0 million (15.4%).
Earnings per share and headline earnings per share increased from 112,8
cents to 125.1 cents (10.9%).
The group has a policy of hedging against currency volatility by way of
forward exchange contracts. In terms of IAS39, profits or losses on forward
exchange contracts on hand are recognised at balance sheet date, measured
on a "mark to market" basis.
Earnings and headline earnings include the effect of the fair value
adjustments of forward exchange contracts amounting to R10.2 million (2005:
R11.4 million) which equates to 9.3 (2005: 10.6) cents per share.
A continued and strong focus on working capital management has resulted in
solid cash flows from operations. Before working capital movements, cash
generated by operating activities during this financial year amounted to
R137.4 million (2005: R119.5 million) resulting in net cash resources at
year end of R77.9 million (2005: R61.4 million). This is after returning
R44.4 million in cash to shareholders by way of dividends and share
repurchases.
Net asset value per share increased from 355.8 cents to 423.3 cents
(18.9%).
Presentation of Annual Financial Statements
These financial statements have been prepared on the historical cost basis,
in compliance with International Financial Reporting Standards ("IFRS").
Previously the Annual Financial Statements of the group were reported under
South African Statements of Generally Accepted Accounting Practice ("SA
GAAP").
The accounting policies have been applied consistently to all periods
presented in these group financial statements. The effects of the
transition from SA GAAP to IFRS on the group"s financial position,
financial performance and cash flows were not material. Accordingly there
is no requirement to restate the prior year figures.
In the year ended 30 June 2006, the Group adopted the additional guidance
to IAS 18 `Revenue" (SAICA circular 9/2006). The prior year figures have
been restated accordingly to reflect turnover net of volume rebates and
discounts allowed as follows :-
Amount Adjustment Amount
Previously Restated
Reported
Turnover (Rm"s) 824,578 (28,672) 795,906
Dividend Declaration
The board has declared a final dividend of 35 cents per share, bringing the
total dividend for the year (taking into account the interim dividend of 10
cents per share declared on 15 February 2006) to 45 cents per share. The
salient dates are as follows:
- Last date to trade "cum" dividend Friday, 8 September 2006
- Date trading commences "ex" dividend Monday, 11 September 2006
- Record date Friday, 15 September 2006
- Date of payment Monday, 18 September 2006
Share certificates may not be dematerialised or rematerialised between
Monday, 11 September 2006 and Friday, 15 September 2006, both days
inclusive.
Auditors" Report
These results have been audited by Grant Thornton and their unqualified
audit opinion is available for inspection at the company"s registered
office.
Empowerment
Brandcorp has been proactive with its empowerment endeavours. Empowerment
and the opportunities it brings to the group, continue to be a focus of
management. The group is awaiting the further guidelines to be issued by
the Department of Trade and Industry prior to finalising its strategy.
Acquisitions
The Moto Quip group was acquired effective 1 February 2006 and has
performed ahead of expectations. We are confident that this business,
under the guidance of its experienced, entrepreneurial and motivated
management team, will continue to prosper.
The group is committed to continue to enhance growth by way of acquisition,
in which regard a number of opportunities have been and continue to be
evaluated.
All potential targets are closely scrutinized to ensure that they meet the
group"s rigid acquisition criteria.
Prospects
Matus (Tools & Hardware), the group"s largest division, is well placed to
benefit from the expected increase in infrastructure spend, and the growth
in activity in the several industries to which it is exposed.
While there are signs that higher inflation and interest rates are
beginning to impact on South African consumers, it is anticipated that the
continued focus on product innovation coupled with exciting marketing
initiatives will stimulate demand and result in satisfactory performances
by all divisions.
On behalf of the board
Colin Datnow Brad Taurog
Chief Executive Chief Financial Officer
18 August 2006
Registrars: Computershare Investor Services 2004 (Pty) Limited Ground
Floor 70 Marshall Street Johannesburg 2001
Secretary and Registered Office: Light and Livingstone Financial Services
CC 3rd Floor Palm Grove 196 Louis Botha Avenue Houghton Estate 2198
Directors: CS Datnow, S Ellerine*, JD Goldberg, JC Livingstone*, HB Marcus,
BD Taurog, M Yachad* (*Non-executive)
These results can be viewed on our website: www.brandcorp.co. za
Date: 21/08/2006 10:20:10 AM Produced by the JSE SENS Department
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