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Spanjaard Limited - Audited Group Results For The Year Ended 28 February 2017

Release Date: 31/05/2017 12:06:00      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")

AUDITED GROUP RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2017

CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

                                                                                               Year ended
                                                                                 Year ended   29 February
                                                                                28 February          2016
                                                                                       2017      Restated
                                                                                    Audited       Audited
                                                                                      R'000         R'000
Revenue                                                                             120 055       125 825
Cost of sales                                                                      (73 690)      (73 286)
Gross profit                                                                         46 365        52 539
Other income                                                                            202           776
Distribution costs                                                                 (11 115)      (11 785)
Administrative expenses                                                            (34 538)      (33 993)
Finance costs                                                                         (871)       (1 287)
Profit before tax                                                                        43         6 250
Taxation                                                                                370       (1 244)
Profit for the year                                                                     413         5 006
Other comprehensive income
Items that may be subsequently reclassified
Movement in foreign currency translation reserve                                      (114)         (284)
Items that will not be be reclassified
Revaluation on property, plant and equipment                                          1 592             -
Tax on revaluation on property, plant and equipment                                   (446)             -
Total comprehensive income for the year attributable to ordinary shareholders         1 445         4 722
Earnings and diluted earnings per ordinary share                                        5.1          61.5


CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                                                         As at      As at
                                                                           As at   29 February    1 March
                                                                     28 February          2016       2015
                                                                            2017      Restated   Restated
                                                                         Audited       Audited    Audited
                                                                           R'000         R'000      R'000
Assets 
Non-current assets                                                        33 157        33 681     36 227
Property, plant and equipment                                             31 098        31 042     32 886
Goodwill                                                                     437           437        437
Intangibles                                                                1 622         2 202      2 904
Current assets                                                            35 595        40 286     40 399
Inventories                                                               17 051        17 433     19 202
Trade receivables and other receivables                                   16 419        20 911     15 865
Amount due by ultimate holding company                                        95             -      2 932
Current income tax receivable                                                207           346      1 774
Cash and cash equivalents                                                  1 823         1 596        626
Total assets                                                              68 752        73 967     76 626
Equity and liabilities 
Capital and reserves attributable to the company's equity holders 
Ordinary shares                                                              407           407        407
Share premium                                                              6 464         6 464      6 464
Reserves                                                                  38 614        37 169     33 750
Foreign currency translation reserve                                          17           131        415
Revaluation reserve                                                        8 536         9 147     10 207
Share-based payment compensation reserve                                   1 906         1 906      1 906
Retained earnings                                                         28 155        25 985     21 222
Total shareholders' equity                                                45 485        44 040     40 621
Non-current liabilities                                                    5 478         6 055      7 799
Borrowings                                                                   386         1 143      3 088
Deferred tax liabilities                                                   5 092         4 912      4 711
Current liabilities                                                       17 789        23 872     28 206
Trade and other payables                                                  11 831        13 335     17 393
Borrowings                                                                 1 130         2 717      3 087
Loans from ultimate holding company                                            -         1 953          -
Shareholders for dividends                                                     8         1 362      1 518
Bank overdraft                                                             4 820         4 505      6 208
Total liabilities                                                         23 267        29 927     36 005
Total equity and liabilities                                              68 752        73 967     76 626
 
CONSOLIDATED STATEMENT OF CASH FLOW 
 
                                                                                 Year ended    Year ended
                                                                                28 February   29 February
                                                                                       2017          2016
                                                                                    Audited       Audited
                                                                                      R'000         R'000
Cash flows from operating activities                
Cash receipts from customers                                                        124 637       120 352
Cash paid to suppliers and employees                                              (117 464)     (116 559)
Cash generated from operations                                                        7 173         3 793
Interest paid                                                                         (871)       (1 287)
Tax received                                                                            140           385
Net cash generated from operating activities                                          6 442         2 891
Cash flows from investing activities                
Purchases of property, plant and equipment                                            (600)         (709)
Proceeds on sale of property, plant and equipment                                         -            52
Purchases of intangible assets                                                        (230)         (388)
Amount due by holding company - loans granted                                          (30)             -
Amount due by holding company - receipts from                                            71         2 932
Net cash (used in)/generated from investing activities                                (789)         1 887
Cash flows from financing activities                
Borrowings repaid                                                                   (2 611)       (2 852)
Proceeds from borrowings                                                                267           537
Loans from holding company - loans received                                             230         2 001
Loans from holding company - repayments made                                        (2 319)          (48)
Dividends paid to company's shareholders                                            (1 294)       (1 459)
Net cash used in financing activities                                               (5 727)       (1 821)
Net (decrease)/increase in cash and cash equivalents                                   (74)         2 957
Cash and cash equivalents at beginning of year                                      (2 909)       (5 582)
Effects of exchange rate changes on cash and cash equivalents                          (14)         (284)
Cash and cash equivalents at end of year                                            (2 997)       (2 909)
 
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
 
                                                                                                    As at
                                                                                      As at   29 February
                                                                                28 February          2016
                                                                                       2017      Restated
                                                                                    Audited       Audited
                                                                                      R'000         R'000
Ordinary shares                                                                         407           407
Share premium                                                                         6 464         6 464
Foreign currency translation reserve                                                     17           131
Opening balance                                                                         131           415
Net movement for the year                                                             (114)         (284)
Revaluation reserve                                                                   8 536         9 147
Opening balance                                                                       9 147        10 207
Revaluation                                                                           1 146             -
Transfer to retained earnings                                                       (1 757)       (1 060)
Share based payment compensation reserve                                              1 906         1 906
Opening balance                                                                       1 906         1 906
Net movement for the year                                                                 -             -
Retained earnings                                                                    28 155        25 985
Opening balance                                                                      25 985        21 222
Profit for the year                                                                     413         5 006
Transfer from revaluation reserve                                                     1 757         1 060
Dividend declared                                                                         -       (1 303)                                     
Total shareholders' equity                                                           45 485        44 040
 
DIVIDENDS 
 
Dividend declared per ordinary share (cents) 
-  interim                                                                                -             -
-  final                                                                                  -            16


RELATED PARTY TRANSACTIONS
                                                                                 Year ended    Year ended
                                                                                28 February   29 February
                                                                                       2017          2016
                                                                                    Audited       Audited
                                                                                      R'000         R'000
Transactions with close family members of key management personnel                      397           214
Amount due by holding company - receipts from                                           301         4 933
Loans from holding company - repayments made                                        (2 349)          (48)
           
SUPPLEMENTARY INFORMATION 
 
                                                                                 Year ended    Year ended
                                                                                28 February   29 February
                                                                                       2017          2016
                                                                                    Audited       Audited
                                                                                      R'000         R'000
Capital expenditure                                                                     830         1 097

During the 2017 financial year Motor vehicles with a cost of R327 077 and accumulated depreciation of R275 433 as well
as plant and equipment with a cost of R147 383 and accumulated depreciation of R110 139 were disposed of. During the
2016 financial year Motor vehicles with a cost of R141 054 and accumulated depreciation of R140 051 were sold in the
normal course of business. Office furniture and equipment with a cost of R64 627 and accumulated depreciation of R32 610
were disposed of in the normal course of business.

The Group's land and buildings comprise Erf 547, Wynberg, Sandton, with a factory building, warehouses and offices
erected thereon. The Group's land and buildings at Wynberg were revalued in the current year on 28 February 2017 by 
JC Bokhorst Valuation Services (Pty) Ltd (independent valuators) using a combination of the capitalised rental approach,
which is based on a market capitalisation rate of 10.5% as well as the depreciated replacement cost approach and also
the estimated new replacement cost approach. The land portion was valued based on the estimated new replacement cost
approach and depreciated replacement cost approach due to the value being the same in both valuation approaches.

OPERATING SEGMENTS

                                                                                              Year ended
                                                                                Year ended   29 February
                                                                               28 February          2016
                                                                                      2017      Restated
                                                                                   Audited       Audited
                                                                                     R'000         R'000
Segment revenue                                     
Special lubricants and allied chemicals                                            114 195       118 259
External foreign customers                                                          22 686        25 635
External local customers                                                            91 509        92 624
Anti-friction powders                                                                3 764         5 473
External foreign customers                                                           2 959         4 039
External local customers                                                               805         1 434
Other                                                                                7 675         7 075
External foreign customers                                                           5 172         5 035
External local customers                                                             2 503         2 040
Interdivisional transactions                                                       (5 579)       (4 982)
Inter segment sales                                                                (5 579)       (4 982)
                                                                                   120 055       125 825
Segment result                                     
Special lubricants and allied chemicals                                              2 951         6 474
Anti-friction powders                                                                (859)          (87)
Other                                                                                  227         1 508
Interdivisional transactions                                                       (1 405)         (358)
Earnings before interest and tax                                                       914         7 537
Segment assets                                     
Special lubricants and allied chemicals                                             55 823        60 895
Anti-friction powders                                                               11 256        13 522
Other                                                                               20 617        26 595
Interdivisional transactions                                                      (18 944)      (27 045)
                                                                                    68 752        73 967
Segment liabilities                                     
Special lubricants and allied chemicals                                             25 049        32 554
Anti-friction powders                                                                2 543         4 077
Other                                                                               13 288        15 537
Interdivisional transactions                                                      (17 613)      (22 241)
                                                                                    23 267        29 927

RECONCILIATION OF HEADLINE EARNINGS

                                                                                Year ended    Year ended
                                                                               28 February   29 February
                                                                                      2017          2016
                                                                                   Audited       Audited
Continuing operations                                                                R'000         R'000
Profit attributable to shareholders                                                    413         5 006
Loss on disposal of property, plant and equipment                                      123            67
Income tax effect on disposal                                                         (34)          (19)
Headline earnings                                                                      502         5 054
Weighted average number of ordinary shares in issue ('000)                           8 143         8 143
Headline earnings per ordinary share                  
- basic and diluted (cents)                                                            6.2          62.1
                  
PRIOR PERIOD ERRORS
Due to an improvement of departmental allocations in the current year the Group reallocated warehousing expenses to
distribution costs and administration expenses instead of cost of sales where it was disclosed in the prior year. This
has resulted in a restatement of prior period costs which is reflected in the income statement.

Statement of profit or loss and other comprehensible income     2016   Increase/(Decrease)   2016 Restated
(Extract)                                                      R'000                 R'000           R'000
Cost of sales                                                 83 509              (10 223)          73 286
Distribution costs                                             3 916                 7 869          11 785
Administrative expenses                                       31 639                 2 354          33 993
Net impact on profit/(loss) before tax                                                   -

During the current year it was discovered that accumulated depreciation at the date of the revaluation of land and
buildings was not eliminated against the gross carrying amount of the asset and the net amount was not restated to the
revalued amount of the asset. This has resulted in a restatement as seen below:

Statement of financial position                                 2016   Increase/(Decrease)        Restated
(Extract)                                                      R'000                 R'000           R'000
Property, plant and equipment                                 29 412                 1 630          31 042
Revaluation reserve                                          (6 457)               (2 690)         (9 147)
Retained earnings                                           (27 501)                 1 516        (25 985)
Deferred tax liabilities                                     (4 456)                 (456)         (4 912)
                          
Statement of financial position                                 2015   Increase/(Decrease)        Restated
(Extract)                                                      R'000                 R'000           R'000
Property, plant and equipment                                 31 256                 1 630          32 886
Revaluation reserve                                          (7 517)               (2 690)        (10 207)
Retained earnings                                           (22 738)                 1 516        (21 222)
Deferred tax liabilities                                     (4 255)                 (456)         (4 711)
                          
BASIS OF PREPARATION

The summary consolidated financial statements are prepared in accordance with the requirements of the JSE 
Limited Listings Requirements for provisional reports, and the requirements of the Companies Act applicable to summary 
financial statements. The Listings Requirements require provisional reports to be prepared in accordance with the framework
concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the
SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued
by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34
Interim Financial Reporting. The accounting policies applied in the preparation of the consolidated financial statements
from which the summary consolidated financial statements were derived are in terms of International Financial Reporting
Standards and are consistent with those accounting policies applied in the preparation of the previous consolidated
annual financial statements.

The condensed financial statements should be read in conjunction with the 2017 annual financial statements. The 2017
annual financial statements and the related audit report can be viewed on the Company's website at www.spanjaard.biz.

The annual financial statements, from which this report is extracted, were audited in terms of the Companies Act, 71 of
2008.

The audited condensed consolidated results has been prepared in accordance with IAS 34.

Summarised Group results prepared by: Executive Director Finance, I Saunders - CA(SA)  published on 31 May 2017.

COMMENTARY

SALIENT FEATURES
- Revenue down 4.6%
- NAV increased to R5.59 per share
- Operating expenses exceptionally well controlled

Dear shareholder

Business conditions and international markets for our products have been subject to fluctuations and the result is that
revenue for the year is slightly down. Earnings per share are 5.1 cents which is a substantial reduction on the previous
year.     

Financially, the Company has performed adequately in extremely testing times. The South African economy has not lent
itself to be supportive of our business, with further declines in mining production being a challenge to overcome for
our Industrial/Marine division.

The good news is that we have an outstanding management team and financially, from a cash point of view, we are sound.
There are some areas of growth in our sales. Furthermore our international sales efforts are being increased.  We have
gained some exciting new business in the food contract packaging space, the majority of which will be reflected in the
upcoming 2017/2018 financial year. Even so, turnover in this area grew by just short of 15% year-on-year, which is a
shining light on otherwise ordinary sales numbers. 

The weakening exchange rate during the 2016 financial year contributed positively to last year's results, but reversed
during the current financial year as the rand strengthened from R15.85 against the US dollar to a closing rate of R13.18
at 28 February 2017.

Administration and Distribution costs continue to be exceptionally well controlled and we continue to look for further
opportunities to become more efficient in our operations. Our declining debt levels and good working capital management
have also had a positive impact on our finance costs for the year which have declined by 32%.

Our Net Asset Value per share has grown to R5.59 per share (from R5.41) and our cash flow position has been strong
considering the loan from the ultimate holding company was settled during the year. Our mortgage bonds on our property
will also be settled come June this year which will allow us to access funding for future projects. We intend investing
in new manufacturing machinery in the short-term to expand production capacity as well as to replace existing equipment
which is ageing and becoming expensive to maintain. In light of this, and our financial performance during the current
financial year, we are also being conservative in our dividend policy and not declaring a dividend.

AUDIT OPINION
These summary consolidated financial statements for the year ended 28 February 2017 have been audited by
PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon. The auditor also expressed an unmodified
opinion on the annual financial statements from which these summary consolidated financial statements were derived. 

A copy of the auditor's report on the summary consolidated financial statements and of the auditor's report on the annual
consolidated financial statements are available for inspection at the company's registered office, together with the
financial statements identified in the respective auditor's reports.

NOTICE OF ANNUAL GENERAL MEETING AND PUBLICATION OF ANNUAL REPORT
Shareholders are advised that:
- the Annual General Meeting of the Company ("the AGM") will be held at 12:00 on Thursday, 27 July 2017 at The Wanderers
  Club, 21 North Road, Illovo, Johannesburg; 
- the annual report, incorporating a notice convening the AGM, is available on the website of the Company at
  www.spanjaard.biz.

Levitt Kirson Business Services (Pty) Ltd
Company Secretary

31 May 2017

Directors: RJW Spanjaard (Chief Executive Officer), Prof DP van der Nest (Independent Non-Executive Chairman)*, 
K Welgemoed CA(SA), I Saunders CA(SA) appointed 27 May 2016, GF Cort, CKT Palmer, Mrs S Hari*, BL Montgomery*,
*Independent Non-Executive

Registered office: 748-750 Fifth Street, Wynberg, Sandton, 2090

Transfer Secretaries: Computershare Investor Services Proprietary Limited Rosebank Towers, 15 Biermann Avenue, Rosebank,
Johannesburg, 2196

Sponsor: Arbor Capital Sponsors Proprietary Limited

Ground Floor, ONE Health Building, Woodmead North Office Park, 54 Maxwell Drive, Woodmead

E-mail: info@spanjaard.biz

Website: www.spanjaard.biz


Date: 31/05/2017 12:06:00 Supplied by www.sharenet.co.za                     
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