[PPT] - Analyst Presentation for the year ended 28 February 2014 Agenda 1. PowerPoint Presentation

SLIDE 1

Analyst Presentation

for the year ended 28 February 2014

SLIDE 2

Analyst Presentation - 9 May 2014

Page 2

Agenda

1.

General commentary on the period Kevin Hodgson

2.

Financial commentary Cobus Loubser

3.

Questions

SLIDE 3

General Commentary

SLIDE 4

Analyst Presentation - 9 May 2014

Page 4

Review of the period

Group sales increased 3.1% to R1 417.5 million
Operating profit increased 2.8% to R250.0 million
Profit before tax of R242.5 million increased by

3.3% from comparative R234.8 million

Core headline earnings per share increased 1.9%

to 423.3 cents per share

Final gross dividend of 145.0 cents per share, up

11.5% from last year

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Analyst Presentation - 9 May 2014

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Review of the period

Sportsmans Warehouse
sales increased by 4.3% (2.9% like-for-like)
increased operating profit by 9.0% from last year
good growth in online sales
Outdoor Warehouse
0.2% increase in sales (3.9% decrease like-for-like)
perating profit 6.6% lower than last year
launched online sales
Performance Brands
1.5% lower sales to external customers
Intergroup sales up 26.9%
Capestorm strategy successful
Operating profit 18.8% lower than last year due to lower gross

margin and capacity investment

Trading space
Two new stores
One expansion and one store closed

SLIDE 6

Financial Commentary

SLIDE 7

Analyst Presentation - 9 May 2014

Page 7

Financial highlights

Low sales growth in a tough economic

environment

Increase in gross margin and tight control over

expenses maintained operating margin at 17.6% (2013: 17.7%)

Cash generated from operations increased by

14.6%

Investment in distribution facilities completed
Gross final dividend declared of 145.0 cents

SLIDE 8

Analyst Presentation - 9 May 2014

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Income Statement review

Low sales growth despite higher price inflation
Gross profit margin increased to 48.2% from 47.8% in the previous year due to change in sales mix.
Trading expenses tightly controlled
Aggregate foreign exchange loss for the year of R0.4m (2013: R1.8m)
Net finance cost lower in line with reduction in net debt and interest rate charged.

Year ended on 28 February 2014 Year ended on 28 February 2013 Audited Audited

Change

R000 R 000

%

Sales 1,417,584 1,374,531

3.1

Cost of sales (734,035) (717,971)

2.2

Gross profit 683,549 656,560

4.1

Other income 5,470 3,667

49.2

Trading expenses (439,010) (416,937)

5.3

Operating profit 250,009 243,290

2.8

Finance income 2,441 3,104

(21.4)

Finance cost (10,000) (11,652)

(14.2)

Profit before taxation 242,450 234,742

3.3

Taxation (68,740) (66,226)

3.8

Profit for the period and total comprehensive income for the period attributable to equity holders of the company 173,710 168,516

3.1

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Analyst Presentation - 9 May 2014

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Sales

Challenging year with low levels of consumer confidence translating into weak demand
Total sales increased by 3.1%
Total retail sales increased by 3.3%
Like for like retail sales increased by 1.1%
Performance Brands external sales decreased by 1.4% but sales to rest of group up 26.9%
Sales mix broadly consistent with last year with greater share of apparel assisting margin
Performance Brands
Continue to expand ranges
Good demand for Capestorm

2014 2013

Change Like-for- like Store Growth Sales by segment 2014 Sales by segment 2013

Rm R m

% % % %

Sportsmans Warehouse 1,042.0 999.0

4.3% 2.9% 73.5% 72.7%

Outdoor Warehouse 323.1 322.3

0.2%

3.9%

22.8% 23.4%

Retail sales 1,365.1 1,321.3

3.3% 1.1% 96.3% 96.1%

Performance Brands 52.5 53.2

1.4%

3.7% 3.9%

Total sales 1,417.6 1,374.5

3.1% 100.0% 100.0%

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Analyst Presentation - 9 May 2014

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Sales

Price inflation of 4.9% (2013: 2.9% inflation)
Weighted space growth of 5.6%

2009 2010 2011 2012 2013 2014 Increase in retail sales (%) Sportsmans Warehouse 6.0 9.7 10.5 9.2 11.4 4.3 Outdoor Warehouse 11.1 8.1 14.8 7.3 7.4 0.2 Total 7.2 9.3 11.6 8.7 10.4 3.3 Like-for-like sales increase (%) Sportsmans Warehouse 0.5 6.5 10.8 7.5 9.3 2.9 Outdoor Warehouse 2.3 4.1 16.1 3.7 5.2 (3.9) Total 0.9 5.9 12.1 6.6 8.3 1.1

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Analyst Presentation - 9 May 2014

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Growth in stores & trading density

Added Outdoor Warehouse store in Rondebosch
Added new Sportsmans Warehouse store in Sea Point and closed

Sportsmans Warehouse in Amanzimtoti

Lower demand for big ticket items, especially outdoor equipment

2009 2010 2011 2012 2013 2014

Change %

Number of stores Sportsmans Warehouse 32 32 32 33 35 35 Outdoor Warehouse 17 18 17 18 19 20 Total 49 50 49 51 54 55 Trading density (R'000s per m2) Sportsmans Warehouse 13.6 14.3 15.8 16.9 18.0 18.0 0.0% Outdoor Warehouse 15.5 15.8 18.1 18.9 19.7 18.6

5.6%

Total 14.0 14.7 16.4 17.4 18.4 18.1

1.6%

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Analyst Presentation - 9 May 2014

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Expenses

Total expenses increased by 5.3% on prior year, and 3% like-for-like as a result of rigorous cost control.
Occupancy costs benefited from various electrical savings initiatives.
Depreciation calculated over 4 years.
Advertising costs lower due to substitution of print cost with greater electronic distribution.
The group recorded R0.8m of foreign exchange gains compared to foreign exchange profits of R0.4m in the previous year.
Other operating costs include banking costs and credit card commission (which are linked to sales), security, IT, telephones,

insurance, cleaning and maintenance. 28 February 2014 28 February 2013 Audited Audited

Change

R000

%

R 000

% % %

Staff costs 167,711 11.8 159,888 11.6

4.9 3.3

Occupancy cost 123,625 8.7 113,791 8.3

8.6 3.2

Straightlining of leases 138 0.0 2,480 0.2

(94.4) (94.4)

Depreciation 29,762 2.1 25,110 1.8

18.5 12.1

Amortisation of intangibles 12,963 0.9 12,963 0.9

-

Advertising costs 19,639 1.4 20,818 1.5

(5.7) (5.7)

Foreign exchange losses (862) (0.1) (461) (0.0)

86.9 86.9

Other operating costs 86,034 6.1 82,348 6.0

4.5 2.7

439,010 31.0 416,937 30.3

5.3 3.0 Ratio to turnover Ratio to turnover Like-for- like change

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Analyst Presentation - 9 May 2014

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Staff costs

Maintained the ratio of staff costs to sales at 11.3% before accounting for the share plan expense as

a result of lower incentives than last year

The like-for-like increase in staff costs exclude stores opened since March 2012
The forfeitable share plan expense is calculated in terms of IAS 2

Share based payments over the vesting period, which generally is five years.

28 February 2014 28 February 2013 Audited Audited

Change

R000

%

R 000

% % %

Salaries & Wages 151,537 10.7 143,455 10.4

5.6 3.9

Incentives 8,633 0.6 11,534 0.8

(25.2) (26.3)

Staff costs before share plan expense 160,170 11.3 154,990 11.3

3.3 1.6

Forfeitable share plan expense 7,541 0.5 4,898 0.4

54.0 54.0

Total staff costs 167,711 11.8 159,888 11.6

4.9 3.3 Ratio to turnover Ratio to turnover Like-for- like Store Growth

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Analyst Presentation - 9 May 2014

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Balance Sheet

Plant and equipment include the land and

construction cost of the new retail and wholesale distribution centers and two new stores.

Intangibles reduced by the annual amortisation

charge

Inventory is higher due to additional store space.

Trade and other payables are lower than last year due to timing of stock purchases and imports with Easter being three weeks later.

Other reserves consist of the shares purchased

for the Forfeitable Share Plan, with a further R4.9m purchased and awarded in the first half and R7.5m expensed.

The derivatives consist of FEC

s marked to market.

Term debt of R124.3m was repaid on 30 August

2013 and replaced with a new 3-year bullet loan

f R130m. Net debt reduced to R72.4m at year

end, from R87.9m at end of last year.

28 February 2014 28 February 2013 Audited Audited

Change

R000 R 000

%

Assets Non-current assets Plant and equipment 150,265 98,282

52.9

Goodwill and other intangibles 620,336 633,299

(2.0)

Total non-current assets 770,601 731,581

5.3

Current assets Inventories 354,436 346,054

2.4

Trade and other receivables 24,782 22,346

10.9

Taxation 857 - Cash and cash equivalents 57,577 36,284

58.7

Derivative instruments

402

Total current assets 437,652 405,086

8.0

Total assets 1,208,253 1,136,667

6.3

Equity and liabilities Capital and reserves Share capital 229,312 229,312

Other reserves

(17,926) (20,521)

(12.6)

Retained earnings 689,544 604,291

14.1

Equity attributable to owners of the company 900,930 813,082

10.8

Non-current liabilities Loans 130,000 - Deferred taxation 42,806 49,623

(13.7)

Straight-lining lease liability 24,590 24,452

0.6

Total non-current liabilities 197,396 74,075

166.5

Current liabilities Trade and other payables 109,843 125,085

(12.2)

Derivative instruments 84 - Short term portion of loans

124,282

(100.0)

Taxation

143

(100.0)

Total current liabilities 109,927 249,510

(55.9)

Total liabilities 307,323 323,585

(5.0)

Total equity and liabilities 1,208,253 1,136,667

6.3

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Analyst Presentation - 9 May 2014

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Working Capital

Net investment in working capital increased by 10.7%
Higher stockholdings due to the increase in store space
Increase in receivables due to prepayments of rentals and expenses
Purchases deferred to March since Easter is three weeks later than in the previous year

28 February 2014 28 February 2013 31 August 2013 Audited Audited

Change

Unaudited

Change

R000 R000

%

R000

%

Working capital Inventories 354,436 346,054

2.4

363,810

(2.6)

Trade and other receivables 24,782 22,346

10.9

24,909

(0.5)

Trade and other payables (109,843) (125,085)

(12.2)

(111,420)

(1.4)

269,375 243,315

10.7

277,299

(2.9)

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Analyst Presentation - 9 May 2014

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Cash Flow

Cash generated from operations increased by

14.6% from last year due to R21.7m lower movement in working capital and higher

perating profit.
Additions to plant and equipment were funded

from operating cash and include:

Completion of Performance Brands

warehouse of R12.2m (R2013: R12m);

Completion of the new distribution centre for R28m

(2013: R19m)

Expansion of two stores and two new stores
pened in 2014; and
Ongoing maintenance and refurbishment of stores.
Financing activities
Net increase in debt of R5.7m due to

introduction of new R130m loan, net of loans repaid

R4.9m to purchase shares for forfeitable

share plan, which has been awarded to staff

Group has a R150m overdraft facility

Year ended on 28 February 2014 Year ended on 28 February 2013 Audited Audited

Change

R000 R 000

%

Cash flows from operating activities Cash generated from operations 274,182 239,122

14.7

Finance income 2,441 3,104

(21.4)

Finance costs (10,000) (11,652)

(14.2)

Dividends paid (88,457) (79,828)

10.8

Taxation paid (76,557) (74,224)

3.1

Net cash (outflows) / inflows from

perating activities

101,609 76,522

32.8

Cash flows from investing activities Additions to plant and equipment (82,353) (72,489)

13.6

Additions to intangibles

(8,179)
Proceeds on sale of plant and equipment

1,265 1,357

(6.8)

Net cash outflows from investing activities (81,088) (79,311)

2.2

Cash flows from financing activities Repayment of loans 5,718 (26,252)

(121.8)

Forfeitable share plan (4,946) (12,049)

(59.0)

Net cash outflows from financing activities 772 (38,301)

(102.0)

Net (decrease) / increase in cash and cash equivalents 21,293 (41,090)

(151.8)

Cash and cash equivalents at the beginning of the period 36,284 77,374

(53.1)

Cash and cash equivalents at the end of the period 57,577 36,284

58.7

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Analyst Presentation - 9 May 2014

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Investing for the future Distribution

Retail Distribution Centre
50:50 joint venture with Redefine Properties
Purchased land and commenced with construction in November 2012
New 11 000m2 distribution facility completed in July 2013
Fully operational
Performance Brands Wholesale Distribution Centre
Purchased land in September 2013
Started construction of additional 1 500m2 warehouse on adjacent plot
Completed and fully operational from February 2014
Invested total of R71.4m in distribution capacity over last

two years, funded from operational cash flows

The investment in distribution centres constrains the

group s return on net assets by c10%.

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Analyst Presentation - 9 May 2014

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Investing for the future - Stores

Store expansion previous year
Three new stores opened at end of 2012 traded for the full year
Sportsmans Warehouse in Bloemfontein of 1 600m2
Sportsmans Warehouse in Rustenburg of 1 400m2
Outdoor Warehouse in Rustenburg of 800m2
Expanded Sportsmans Fourways traded for full year
Store expansion this year
Expanded Sportsmans Rondebosch and Sportsmans Nelspruit in second

half of this year

Open two new stores:
Outdoor Warehouse in Rondebosch of 1 100m2 opened in September 2013
Sportsmans Warehouse in Sea Point of 1 500m2 opened in December 2013
Closed Sportsmans Amanzimtoti at end of year
Store expansion for next year
Signed leases to open two new stores
Expanding three stores, relocate two stores and reduce one store size
Capex funded from operational cash flows

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Analyst Presentation - 9 May 2014

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Dividend

Final gross dividend of 145.0 cents per share to be paid
n 9 June 2014
The group

s dividend policy is to have dividends covered approximately twice by core headline earnings.

The total gross dividend for the year of 220 cents

increased by 10% and is 1.9 times covered.

2014 2013 cents per share cents per share

Increase %

Interim 75 70

7.1

Final 145 130

11.5

Total 220 200

10.0

Dividend cover 1.9 2.1

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Analyst Presentation - 9 May 2014

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In closing...

Group sales increased 3.1% to R1 417.5 million
Profit before tax of R242.5 million increased by

3.3% from comparative R234.7 million

Core headline earnings per share increased

1.9% to 423.3 cents

Cash flow from operating activities was up

14.6% and funded capital expenditure

Final gross dividend of 145.0 cents per share

SLIDE 21

Analyst Presentation - 9 May 2014

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Questions?

SLIDE 22

Thank you!

Investor Relations

www.holdsport.co.za Cobus Loubser (Chief Financial Officer) Tel: +27 21 464 5366 E-mail: cobus@moresport.co.za

SLIDE 23

Analyst Presentation - 9 May 2014

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Disclaimer

This presentation may contain certain forward-looking statements with respect to the financial condition and results of operations of Holdsport Limited and its subsidiaries, which by their nature involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future.