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BRC
BRC
BRC - Brandcorp - Unaudited results, dividend declaration and cautionary
Brandcorp Holdings Limited
(incorporated in the Republic of South Africa)
("Brandcorp" or "the Group")
Reg No: 1992/006647/06
JSE Code: BRC ISIN No: ZAE000013611
Unaudited results for the six months ended 31 December 2006, dividend
declaration and cautionary announcement
- Turnover up 23,5%
- Operating profit up 25,7%
- Dividends per share up 20,0%
- Core headline earnings per share up 25,3%
Abridged group income statement
31 Dec 2006 31 Dec 2005 % change 30 June
Unaudited Unaudited 2006
R`000 R`000 Audited
R`000
Revenue 555 368 449 517 23,5% 916 249
Operating profit 74 264 59 081 25,7% 132 027
Fair value of forward (14 101) (6 097) 10 210
exchange contracts
Net interest received 358 1 035 2 397
Net profit before 60 521 54 019 12,0% 144 634
taxation
Taxation (20 984) (18 816) (46 821)
Current (16 838) (14 952) (41 713)
Secondary tax on (3 433) (3 151) (4 131)
companies
Deferred taxation (713) (713) (977)
Net profit after taxation 39 537 35 203 12,3% 97 813
Number of shares in issue 78 350 78 773 77 573
(000)*
Weighted average number 78 062 78 023 78 200
of
shares (000)*
Headline earnings per 50,6 45,1 12,2% 125,1
share - cents
Earnings per share - 50,6 45,1 12,2% 125,1
cents
Diluted headline earnings 50,5 44,6 13,2% 123,6
per share - cents
Diluted earnings per 50,5 44,6 13,2% 123,6
share - cents
*Net of treasury stock
Reconciliation of headline earnings
31 Dec 31 Dec 30 June
2006 2005 2006
Unaudited Unaudited Audited
R`000 R`000 R`000
Net profit after taxation 39 537 35 203 97 814
Adjust for: (24) (37) (19)
Profit on disposal of property, plant
and equipment
Headline earnings 39 513 35 166 97 795
Abridged group balance sheet
31 Dec 31 Dec 30 June
2006 2005 2006
Unaudited Unaudited Audited
R`000 R`000 R`000
ASSETS
Non-current assets 40 697 32 330 40 862
Property, plant and equipment 21 359 17 934 20 327
Intangible assets 13 228 7 310 13 712
Deferred taxation 6 110 7 086 6 823
Current assets 428 945 392 586 443 116
Inventories 192 132 134 578 144 229
Accounts receivable 216 676 176 508 212 397
Cash and cash equivalents 20 137 81 500 86 490
469 642 424 916 483 978
EQUITY AND LIABILITIES
Capital and reserves 340 822 285 039 328 382
Long term liabilities 3 944 4 906 4 366
Current liabilities 124 876 134 971 151 230
Non-interest bearing liabilities 120 492 91 150 121 766
Interest bearing liabilities 1 815 11 332 4 132
Taxation 2 569 32 489 25 332
469 642 424 916 483 978
Abridged group cash flow statement
31 Dec 31 Dec 30 June
2006 2005 2006
Unaudited Unaudited Audited
R`000 R`000 R`000
OPERATING ACTIVITIES (33 038) 30 171 86 516
Operating profit before working 77 208 61 363 137 429
capital movements
Increase in working capital (67 571) (19 537) (5 720)
Net finance charges 358 1 036 2 397
Taxation paid (43 033) (12 691) (47 590)
INVESTING ACTIVITIES (4 480) (3 440) (39 212)
Purchase of property, plant and (3 603) (3 518) (8 262)
equipment
Proceeds on disposal of property, 131 78 208
plant and equipment
Businesses acquired - - (19 719)
Ordinary shares repurchased (1 008) - (11 439)
FINANCING ACTIVITIES (28 835) (29 780) (45 363)
Proceeds from issue of share capital 1 354 2 328 2 328
Payment of borrowings (2 739) (6 912) (14 652)
Dividends to shareholders (27 450) (25 196) (33 039)
NET MOVEMENT IN CASH RESOURCES (66 353) (3 049) 1 941
Cash and cash equivalents at the 86 490 84 549 84 549
beginning of the period
Cash and cash equivalents at the end 20 137 81 500 86 490
of the period
Statement of changes in equity
Share Accum- NDR
Share premium ulated R`000 Total
capital R`000 profits R`000
R`000 R`000
Balance at 766 8 313 263 434 163 272 676
1 July 2005
Net profit after - - 97 813 - 97 813
taxation
Share based - - - 88 88
payments
Ordinary shares (12) (11 427) - - (11 439)
repurchased and
cancelled
Ordinary shares 21 2 307 - - 2 328
issued
Dividend - - (33 084) - (33 084)
Transfer from - 808 (808) - -
reserves
Balance at 30 775 1 327 355 251 328 382
June 2006
Net profit after - - 39 537 - 39 537
taxation
Share based - - - 19 19
payments
Ordinary shares 9 1 345 - - 1 354
issued
Dividend - - (27 462) - (27 462)
Transfer to - (338) 338 - -
reserves
Ordinary shares (1) (1 007) - - (1 008)
repurchased
and cancelled
Balance at 31 783 1 339 768 270 340 822
December 2006
Segment analysis
Turnover Operating Assets Lia-
R`000 profit R`000 bilities
R`000 R`000
2006 341 351 45 194 269 330 70 273
Tools & Hardware
Leisure & Accessories 80 219 10 243 71 611 21 990
House & Home 133 798 19 767 75 341 29 342
Corporate - (940) 53 360 7 215
Total 555 368 74 264 469 642 128 820
2005 292 165 38 358 245 223 77 828
Tools & Hardware
Leisure & Accessories 68 637 8 567 62 702 24 234
House & Home 88 715 13 075 67 511 31 414
Corporate - (919) 49 480 6 401
Total 449 517 59 081 424 916 139 877
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 and safety
equipment, abrasives, hand tools and 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
The Group produced highly satisfactory results for the period under review
recording solid growth in both revenue and operating profit.
Revenue increased from R449,5 m to R555,4 m (23,5%).
Operating profit increased from R59,1 m to R74,3 m (25,7%).
During the year ended 30 June 2006, the Group adopted the additional guidance
to IAS18 "Revenue" (SAICA circular 9/2006). The prior period figure for
turnover has been restated to reflect turnover net of volume rebates and
discounts allowed. Turnover for the prior period was previously stated as
R470,3 m.
Earnings per share and headline earnings per share increased from 45,1 cents
to 50,6 cents (12,2%). It should be noted that 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".
The impact of this accounting treatment, which is a non-cash item, has
resulted in a charge to earnings and headline earnings of R10,0 m after tax
(2005: R4,3 m) which equates to 12,8 cents (2005: 5,5 cents).
Core headline earnings per share, which eliminates this accounting treatment
from headline earnings per share, increased from 50,6 cents to 63,4 cents
(25,3%).
The balance sheet remains sound, with a current ratio of 3,4 (2005: 2,9). The
Group has increased its investment in inventories in order to address the
continuing demand for its products and to maintain the highest service levels.
The net asset value per share has increased from 361,8 cents to 435,0 cents
(20.2%).
Presentation of interim financial statements
The unaudited interim results of the Group for the six months ended 31
December 2006 have been prepared in accordance with the Group`s accounting
policies.
The financial statements have been prepared on the historical-cost basis,
except for the measurement of certain financial instruments at fair value, in
compliance with International Financial Reporting Standards. This interim
report complies with International Accounting Standard 34 - Interim Financial
Reporting.
DIVIDEND DECLARATION
The board has declared an interim dividend of 12 cents per share.
The salient dates are as follows:
- Last date to trade "cum" dividend Friday, 2 March 2007
- Date trading commences "ex" dividend Monday, 5 March 2007
- Record date Friday, 9 March 2007
- Date of payment Monday, 12 March 2007
Share certificates may not be dematerialised or rematerialised between Monday,
5 March 2007 and Friday, 9 March 2007, both days inclusive.
Prospects
The board is optimistic that the Group will continue to deliver satisfactory
returns to all its stakeholders.
CAUTIONARY ANNOUNCEMENT
Shareholders are advised that Brandcorp has entered into negotiations which,
if successfully concluded, may 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 further announcement
is made.
On behalf of the board
Colin Datnow Brad Taurog
Chief Executive Chief Financial Officer
14 February 2007
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: 14/02/2007 16:20:01 Produced by the JSE SENS Department.
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