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Spanjaard Limited - Unaudited Interim Group Results For The Six Months Ended 31 August 2015

Release Date: 11/11/2015 14:00:00      Code(s): SPA     
Spanjaard Limited
(Incorporated in the Republic of South Africa)
Registration number 1960/004393/06
Share code: SPA ISIN: ZAE000006938
("Company" or "Group")

UNAUDITED INTERIM GROUP RESULTS
FOR THE SIX MONTHS ENDED
31 AUGUST 2015

CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME

                                                                          Restated
                                                    Six months to    Six months to
                                                        31 August        31 August
                                                             2015             2014
                                                            R'000            R'000

Revenue                                                    58 694           60 764
Turnover                                                   58 348           59 832
Cost of sales                                             (39 548)         (40 737)
Gross profit                                               18 800           19 095
Operating expenses                                        (18 974)         (18 593)
Depreciation and amortisation                              (1 580)            (826)
Operating loss                                             (1 754)            (324)
Finance costs                                                (672)            (615)
Loss before income tax                                     (2 426)            (939)
Income tax expense                                            105              480
Loss for the period from continuing operations             (2 321)            (459)
Other comprehensive income
Movement in foreign currency translation reserve             (836)             302
Total comprehensive income for the six months              (3 157)            (157)
Loss per ordinary share
? basic and diluted (cents)                                 (28,5)            (5,6)
Headline loss per ordinary share
? basic and diluted (cents)                                 (28,5)            (3,0)

CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION

                                     Six months to   12 months to
                                         31 August    28 February
                                              2015           2015
                                             R'000          R'000
Assets
Non-current assets                          36 675         38 087
 Property, plant and equipment              35 172         36 638
 Goodwill                                      437            437
 Intangibles                                 1 066          1 012
Current assets                              36 351         42 057
 Inventories                                17 985         18 027
 Trade receivables and prepayments          15 482         18 698
 Amount due by holding company                   ?          2 932
 Current income tax receivable               2 073          1 774
 Cash and cash equivalents                     811            626
Total assets                                73 026         80 144
Equity and liabilities
Total shareholders' equity                  42 258         43 903
 Ordinary shares and premium                 6 871          6 871
 Reserves                                   35 387         37 032

Liabilities
Non-current liabilities                      8 028          8 035
 Borrowings                                  3 154          3 088
 Deferred tax liabilities                    4 874          4 947
Current liabilities                         22 740         28 206
 Trade and other payables                   15 427         17 393
 Borrowings                                  1 499          3 087
 Loans from group companies                    375              ?
 Shareholders for dividends                     60          1 518
 Cash and cash equivalents                   5 379          6 208

Total equity and liabilities                73 026         80 144
Net asset value per share (cents)            518,9          539,2

CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS

                                                                              Restated
                                                        Six months to    Six months to
                                                            31 August        31 August
                                                                 2015             2014
Cash flows from operating activities                             (146)          (2 167)
Cash flows from investing activities                            2 969            2 575
Cash flows from financing activities                           (1 522)          (1 272)
Net increase/(decrease) in cash and cash equivalents            1 301             (864)
Cash and cash equivalents at beginning of period               (5 583)            (223)
Effect of exchange rate movement on cash balances                (286)            (717)
Cash and cash equivalents at end of period                     (4 568)          (1 804)

CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY

                                                                 Restated
                                           Six months to    Six months to
                                               31 August        31 August
                                                    2015             2014
                                                   R'000            R'000
Ordinary shares                                      407              407
Share premium                                      6 464            6 464
Foreign currency translation reserve                 106             (843)
 Opening balance                                    (730)            (541)
 Movement for the year                               836             (302)
Revaluation reserve                               10 708            8 082
 Opening balance                                  10 868            8 082
 Movement for the year                              (160)               ?
Retained earnings                                 24 573           26 868
 Opening balance                                  26 894           28 141
 Total comprehensive income for the year          (2 321)            (459)
 Dividends paid                                        ?             (814)

Total shareholders' equity                        42 258           40 978

DIVIDENDS
Dividend declared per ordinary share (cents)
? interim                                              ?               10

SUPPLEMENTARY INFORMATION
                                                                Restated
                                           Six months to   Six months to
                                               31 August       31 August
                                                    2015            2014
                                                   R'000           R'000
Capital expenditure                                  214             989

OPERATING SEGMENTS
                                                                Restated
                                         Six months to     Six months to
                                             31 August         31 August
                                                  2015              2014
                                                 R'000             R'000
Segment turnover
Special lubricants and allied chemicals         55 097            57 316
 External customers                             13 863            13 441
 Local customers                                41 234            43 875
Lubricant powders/Metal powders                  2 529             4 266
 External customers                              1 660             2 763
 Local customers                                   869             1 503
Other                                            2 018             2 331
 External customers                              2 018             2 331
Reconciling items                               (1 296)           (4 081)
 External customers                             (1 046)           (3 566)
 Local customers                                  (250)             (515)
                                                58 348            59 832

Segment result
Special lubricants and allied chemicals         (2 359)             (760)
Lubricant powders/Metal powders                    (26)              (53)
Other                                              781               639
Reconciling items                                 (150)             (150)
                                                (1 754)             (324)

                                           Six months to     12 months to
                                               31 August      28 February
                                                    2015             2015
                                                   R'000            R'000
Segment assets
Special lubricants and allied chemicals           50 091           65 607
Lubricant powders/Metal powders                   12 832           12 288
 Other                                            21 126           28 612
 Reconciling items                               (11 023)         (26 363)
                                                  73 026           80 144
Segment liabilities
Special lubricants and allied chemicals           24 848           38 353
Lubricant powders/Metal powders                    3 166            3 259
 Other                                            12 780           19 843
 Reconciling items                               (10 026)         (25 214)
                                                  30 768           36 241

RECONCILIATION OF HEADLINE EARNINGS

                                                                          Restated
                                                    Six months to    Six months to
                                                        31 August        31 August
                                                             2015             2014
                                                            R'000            R'000

Loss attributable to shareholders                          (2 321)            (459)
Loss on disposal of property, plant and equipment               ?              303
Income tax effect on disposal                                   ?              (85)
Headline loss                                              (2 321)            (241)
Weighted average number of ordinary
shares in issue ('000)                                      8 143            8 143
Headline loss per ordinary share
? basic and diluted (cents)                                 (28,5)            (3,0)

BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated financial statements for the six months ended 31 August 2015
have been prepared in accordance with International Financial Reporting Standards, IAS 34:
Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and the Financial Pronouncements as issued by the Financial Reporting
Standards Council, as well as the requirements of the South African Companies Act and the
JSE Listings Requirements.

The condensed consolidated interim financial statements do not include all the disclosures
required for a full set of financial statements prepared in accordance with International Accounting
Standards (IFRS) as issued by the International Accounting Standards Board.

The condensed consolidated interim financial statements appearing in this announcement
are the responsibility of the directors and the directors take full responsibility for the preparation
thereof. Robert Southey, Financial Manager, is responsible for this set of condensed consolidated interim
financial statements and has supervised the preparation thereof in conjunction with the Executive Director,
Kentin Welgemoed CA(SA).

The accounting policies applied in the preparation of these condensed consolidated interim
financial statements are in terms of IFRS and are consistent with those applied in the consolidated
annual financial statements for the year ended 28 February 2015.

Restatement of comparative figures
During the finalisation of the financial statements for the year ended 28 February 2015, it became
evident that certain accounting errors occurred following the implementation of a new ERP
system in June 2014. Such errors also affected the results for the six months ended 31 August
2014 and it was necessary to restate the comparative figures in the Condensed Consolidated
Comprehensive Financial Statement, reducing the total comprehensive income for the period by
R1.7 million. In addition, in preparing the consolidated financial statements for the six months
ended 31 August 2014, the figures for the foreign subsidiaries were converted to Rand using the
incorrect exchange rate. This error resulted in an understatement of the consolidated revenue
and comprehensive income by R1.8 million and R0.4 million respectively. The net restatement
is as follows:

                                                                                     R'000
Consolidated comprehensive income as previously reported                             1 168
Accounting errors following the implementation of the new ERP system                (1 709)
Incorrect foreign exchange rate                                                        384
Restated consolidated comprehensive loss                                              (157)

COMMENTARY
POINTS OF INTEREST
-Sales down 2.5%.
-Depreciation up 91% due to large I.T. acquisitions associated with the ERP system and plant
 and machinery revaluations.
-Operating expenses well controlled and only up 2%.
-Cash flow positive for the six months.

EXECUTIVE CHAIRMAN'S STATEMENT
During the preparation of the Interim Accounts as at 31 August 2015 it became apparent that the
figures for the 2014 period were incorrect.

Last year upon consolidation the figures in EURO in respect of our Netherlands subsidiary were
not translated into SA Rands. It also came to light that various expenditures in the accounts had
not been processed correctly.

We are satisfied that the consolidated statements now published together with the restatement
of the comparative period figures are accurate.

The entire financial management team which produced the 2014 Interim Accounts has been
replaced.

We also discovered that a deal was entered into by previous management, whereby products
were being sold in large quanities at a substantial loss. This situation was immediately terminated
when discovered.

In contrast, our new management is fully in control, with a significant turnaround experienced
in the 2nd quarter.

There have been no material related party transactions during the period under review.

SEGMENTAL ANALYSIS
Due to a struggling economy, especially in the mining sector, Special Lubricants and Allied
Chemicals revenue is down by 3,8%. Operating expenses are flat while depreciation is up due
to additions, since August 2014, of Computer Equipment and software relating to the new ERP
system as well as revaluations in Plant and Machinery in February 2015.

Lubricant Powders/Metal Powders revenue is down by 40,7%, but an increase in GP% reduced
the effect on the Operating Loss. Reduced sales from exports are the result of a struggling world
economy and timing differences with customer orders which we are expecting to catch up in the
second half of the year. The decrease in local revenue is attributable to the timing of customer
orders and some lost sales due to a major customer changing their own product formulation.
Operating expenses and depreciation are flat compared to 2014.

The main contributing factor to profits in "Other" is the large increase in GP% in the European
operation while our costs remained flat compared to 2014. Foreign exchange differences also
account for some of the increases.

INTERIM DIVIDEND
No dividend has been declared nor are any proposed for the period reported on (2014: 10 cents).

By order of the Board

Ms L Passmore
Company Secretary

11 November 2015

Directors
RJW Spanjaard (Executive Chairman), Mr K Welgemoed, GF Cort, Mrs S Hari**,
BL Montgomery*, CKT Palmer, Prof DP van der Nest**

*Non-executive
**Independent Non-Executive

Registered office
748 ? 750 Fifth Street, Wynberg, Sandton, 2090

Transfer Secretaries
Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001

Sponsor
Arbor Capital Sponsors Proprietary Limited, Ground Floor, ONE Health Building,
Woodmead North Office Park, 54 Maxwell Drive, Woodmead, 2157

Email: info@spanjaard.biz

Website: www.spanjaard.biz



Date: 11/11/2015 02:00:00 Supplied by www.sharenet.co.za                     
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