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Spanjaard Limited - Unaudited Interim Group Results For The Six Months Ended 31 August 2016

Release Date: 07/10/2016 13:22:00      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 2016

CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
                                                           Six months to     Six months to
                                                               31 August         31 August
                                                                    2016              2015
                                                                   R'000             R'000
Revenue                                                           60 703            58 348
Cost of sales                                                   (37 680)          (39 548)
Gross profit                                                      23 023            18 800
Operating expenses                                              (19 977)          (18 974)
Depreciation and amortisation                                    (1 779)           (1 580)
Operating profit/(loss)                                            1 267           (1 754)
Finance costs                                                      (462)             (672)
Profit/(loss) before income tax                                      805           (2 426)
Taxation                                                           (311)               105
Profit/(loss) for the period from continuing operations              494           (2 321)
Other comprehensive income
Movement in foreign currency translation reserve                      87             (836)
Total comprehensive income/(loss) for the period                     581           (3 157)
Profit/(loss) per ordinary share
? basic and diluted (cents)                                         0,06            (28,5)
Headline profit/(loss) per ordinary share
? basic and diluted (cents)                                         0,06            (28,5)

CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
                                                                   As at             As at
                                                               31 August       29 February
                                                                    2016              2016
                                                                   R'000             R'000
Assets                          
Non-current assets                                                30 774            32 051
 Property, plant and equipment                                    28 394            29 412
 Goodwill                                                            437               437
 Intangibles                                                       1 943             2 202
Current assets                                                    36 133            40 286
 Inventories                                                      16 054            17 433
 Trade receivables and prepayments                                18 044            20 911
 Amount due by ultimate holding company                               13                 ?
 Current income tax receivable                                       577               346
 Cash and cash equivalents                                         1 445             1 596
Total assets                                                      66 907            72 337
Equity and liabilities                          
Total shareholders' equity                                        43 272            42 866
 Ordinary shares and premium                                       6 871             6 871
 Reserves                                                         36 401            35 995                 
Liabilities                           
Non-current liabilities                                            5 417             5 599
 Borrowings                                                          587             1 143
 Deferred tax liabilities                                          4 830             4 456
Current liabilities                                               18 218            23 872
 Trade and other payables                                         10 217            13 335
 Borrowings                                                        2 169             2 717
 Loans from ultimate holding company                                   ?             1 953
 Shareholders for dividends                                           67             1 362
 Bank overdraft                                                    5 765             4 505                    
Total equity and liabilities                                      66 907            72 337
Net asset value per share                                          531,4             526,4

CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
                                                           Six months to     Six months to
                                                               31 August         31 August
                                                                    2016              2015
                                                                   R'000             R'000
Cash flows from operating activities                               3 482             (146)
Cash flows from investing activities                               (502)             2 969
Cash flows from financing activities                             (4 365)           (1 522)
Net (decrease)/increase in cash and cash equivalents             (1 385)             1 301
Cash and cash equivalents at beginning of period                 (2 909)           (5 583)
Effect of exchange rate movement on cash balances                   (26)             (286)
Cash and cash equivalents at end of period                       (4 320)           (4 568)

CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
                                                         Six months to       Six months to
                                                             31 August           31 August
                                                                  2016                2015
                                                                 R'000               R'000
Ordinary shares                                                    407                 407
Share premium                                                    6 464               6 464
Share-based payment compensation reserve                         1 906               1 906
Foreign currency translation reserve                                44                 106
 Opening balance                                                   131               (730)
 Movement for the year                                            (87)                 836
Revaluation reserve                                              6 315              10 708
 Opening balance                                                 6 457              10 868
 Movement for the year                                           (142)               (160)
Retained earnings                                               28 136              22 667
 Opening balance                                                27 500              24 988
 Total profit/(loss) for the period from continuing  
 operations                                                        494             (2 321)
 Movement in reserves                                              142                   ?
Total shareholders' equity                                      43 272              42 258

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

SUPPLEMENTARY INFORMATION
                                                             Six months to   Six months to
                                                                 31 August       31 August
                                                                      2016            2015
                                                                     R'000           R'000
Capital expenditure                                                    331             214

OPERATING SEGMENTS
                                                            Six months to    Six months to
                                                                31 August        31 August
                                                                     2016             2015
                                                                    R'000            R'000
Segment revenue                    
Special lubricants and allied chemicals                            58 602           55 097
 External customers                                                11 849           13 863
 Local customers                                                   46 753           41 234
Lubricant powders/metal powders                                     1 016            2 529
 External customers                                                   757            1 660
 Local customers                                                      259              869
Other                                                               2 786            2 018
 External customers                                                 2 786            2 018
Reconciling items                                                 (1 701)          (1 296)
 External customers                                               (1 651)          (1 046)
 Local customers                                                     (50)            (250)
                                                                   60 703           58 348
Segment result               
 Special lubricants and allied chemicals                            1 063          (2 359)
 Lubricant powders/metal powders                                    (248)             (26)
 Other                                                                812              781
 Reconciling items                                                  (360)            (150)
                                                                    1 267          (1 754)
Segment assets                
Special lubricants and allied chemicals                            46 326           60 895
Lubricant powders/metal powders                                    11 789           13 522
Other                                                              24 134           26 595
Reconciling items                                                (15 342)         (28 675)
                                                                   66 907           72 337
Segment liabilities                
Special lubricants and allied chemicals                            17 673           32 554
Lubricant powders/metal powders                                     2 461            4 077
Other                                                              16 207           15 537
Reconciling items                                                (12 706)         (22 697)
                                                                   23 635           29 471

RECONCILIATION OF HEADLINE EARNINGS
                                                            Six months to    Six months to
                                                                31 August        31 August
                                                                     2016             2015
                                                                    R'000            R'000
Profit/(Loss) attributable to shareholders                            494          (2 321)
Headline profit/(loss)                                                494          (2 321)
Weighted average number of ordinary               
shares in issue ('000)                                              8 143            8 143
Headline profit/(loss) per ordinary share               
? basic and diluted (cents)                                          0,06           (28,5)

BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated interim financial statements for the six months ended 31 August
2016 have been prepared in accordance with International Financial Reporting Standards (IFRS),
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
(2008) 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. Ian Saunders CA(SA), Financial Director, is responsible for this set of condensed
consolidated interim financial statements.

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 29 February 2016. The condensed 
consolidated interim financial statements have not been reviewed or audited by the group's auditors.

COMMENTARY
POINTS OF INTEREST
- Group Revenue is up by 4%.
- EBITDA up from (R174,000) to R3 046 000.
- Net asset value improved from 526,4 to 531,4 cents per share.

EXECUTIVE CHAIRMAN'S STATEMENT
The total comprehensive income for the first half of the year is a modest R581 000 amounting to
a positive change of R3 738 000 compared to the same period last year.

We have had an interesting first six months of the 2017 financial year and continue to consolidate
after the turbulent times we experienced during the same period last year. Our management
team now has a firm understanding of the business and has established a strong base from
which to grow.

Sales increased by 4%, much of which was a result of excellent growth of 86% in our food
products manufacturing division. Our cost reduction programme has been extremely successful
with our total EBITDA improving from a loss position at this stage last year to R3 046 000 for the
current reporting period.

Our mining/industrial/marine division continues to cope with challenges such as shutdowns of
a number of mining operations. Our Eskom business, where we supply special lubricants for
critical applications, has dropped to some extent. Our international sales division is receiving
additional marketing attention which should reflect in the results for the second half.

We have continued making significant ground in the area of inventory management with new
inventory planning software assisting us in this regard. This in turn has resulted in more efficient
purchasing of raw materials which has greatly assisted us in better cash and accounts payable management.

We look forward to the second half of the financial year which has traditionally been the better
half for us.

SEGMENTAL ANALYSIS
The special lubricants and allied chemicals segment has achieved sales growth of 6,4%
compared to the same period last year largely due to the increase in the food products
manufacturing division. The significant weakening of the Rand has had an overall positive effect
on our financials as a whole. A lot of energy is currently being spent looking for new markets to
develop where our product quality and pricing are favourable factors in achieving growth.

Our metal powders segment has coped with some quality difficulties in the previous year caused by quality
fluctuations in the raw material we obtained from certain suppliers. As a result certain cost-cutting
measures have been put in place at Coppermet Proprietary Limited including staff reduction
and a cut of overtime which will help in producing better results. We are still trying to win back
lost export customers after last year's quality issues, but this is taking longer than anticipated.

We are hopeful that the business will be operating at its usual capacity by the beginning of the
next financial year.

Our Rotterdam-based EU distribution from the Netherlands is experiencing good growth off a
low base when compared to the same period last year. We are working closely with our partners
in the Netherlands to improve efficiencies in our logistics operations.

INTERIM DIVIDEND
No dividends have been declared nor are any proposed for the period reported on (2015: RNil).

By order of the Board

Levitt Kirson Business Services Proprietary Limited
Company Secretary

07 October 2016

Directors
RJW Spanjaard (Executive Chairman), K Welgemoed, I Saunders, GF Cort,
CKT Palmer MSc, MBA, Mrs S Hari*, BL Montgomery*, Prof DP van der Nest* *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: 07/10/2016 01:22:00 Supplied by www.sharenet.co.za                     
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