Wrap Text
Reviewed condensed consolidated preliminary financial results for the year ended 30 June 2015
AFRICAN AND OVERSEAS ENTERPRISES LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA
(Registration number): 1947/027461/06)
JSE share codes: AOO - AON - AOVP
ISIN: ZAE000000485 - ZAE000009718 - ZAE000000493
("the company" or "the group" or "African & Overseas")
REVIEWED CONDENSED CONSOLIDATED PRELIMINARY FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2015
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
30 June 30 June
2015 2014
Reviewed Audited
R'000 R'000
ASSETS
Non-current assets 151 146 142 159
Property, plant and equipment 54 467 108 762
Investment property 72 539 5 440
Intangible assets 17 396 13 920
Other investments 576 524
Deferred tax asset 6 168 13 513
Current assets 175 955 154 697
Inventories 70 084 82 124
Trade and other receivables 22 904 13 671
Forward exchange contracts 883 -
Income tax receivable 303 215
Cash and cash equivalents 81 781 58 687
Total assets 327 101 296 856
EQUITY AND LIABILITIES
Capital and reserves 261 960 239 458
Share capital 1 200 1 200
Share premium 6 076 6 076
Other reserves 540 553
Retained earnings 136 581 124 760
Non-controlling interest 117 563 106 869
Non-current liabilities 21 548 15 775
Post-retirement liability 2 673 2 653
Accrued operating lease liability 17 084 12 833
Deferred tax liability 1 791 289
Current liabilities 43 593 41 623
Provisions - -
Trade and other payables 43 573 40 604
Forward exchange contracts - 927
Income tax payable 20 92
Total equity and liabilities 327 101 296 856
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Year ended Year ended
30 June 30 June
2015 2014
% Reviewed Audited
change R'000 R'000
Revenue 7.1 536 217 500 843
Turnover 4.9 516 086 492 079
Cost of sales (225 698) (249 774)
Gross profit 19.8 290 388 242 305
Other income 222.6 16 509 5 118
Other operating costs 4.6 (278 227) (265 971)
Operating profit/(loss) 254.6 28 670 (18 548)
Dividend income 18 16
Finance income 3 604 3 630
Finance costs (214) (251)
Profit/(loss) before tax 311.7 32 078 (15 153)
Income tax expense (9 501) 3 900
Profit/(loss) for the period 300.6 22 577 (11 253)
Other comprehensive income/(loss)
Acturial (loss)/gain on post-retirement defined
benefit plan (77) 9
Gain on available-for-sale investments 52 -
Total comprehensive income/(loss) for the period 22 552 (11 244)
Profit/(loss) attributable to:
Ordinary and 'N' ordinary shareholders of the parent 11 821 (6 930)
Preference shareholders 33 181
Profit/(loss) attributable to equity holders of the parent 11 854 (6 749)
Non-controlling interest 10 723 (4 504)
Profit/(loss) for the year 22 577 (11 253)
Total comprehensive income attributable to:
Ordinary and 'N' ordinary shareholders of the parent 11 808 (6 925)
Preference shareholders 33 181
Profit/(loss) attributable to equity holders of the parent 11 841 (6 744)
Non-controlling interest 10 711 (4 500)
Total comprehensive income for the year 22 552 (11 244)
Reconciliation of headline earnings/(loss)
Earnings/(loss) attributable to equity holders 11 821 (6 930)
Adjusted for:
Profit from disposal of property, plant and equipment (1 840) (454)
Impairment loss on equipment and shopfittings 305 1 346
Headline earnings/(loss) 10 286 (6 038)
Basic earnings/(loss) per ordinary share (cents) 270.4 103.8 (60.9)
Headline earnings/(loss) per ordinary share (cents) 270.4 90.3 (53.0)
Diluted earnings/(loss) per ordinary share (cents) 270.7 103.6 (60.7)
Diluted headline earnings/(loss) per ordinary
share (cents) 270.3 90.1 (52.9)
Weighted average number of equity shares on which
earnings per share is based (000's) 11 387 11 387
Weighted average number of equity shares on which
diluted earnings per share is based (000's) 11 414 11 417
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended Year ended
30 June 30 June
2015 2014
Reviewed Audited
R'000 R'000
Share capital 1 200 1 200
Share premium 6 076 6 076
Other reserves
Opening balance 553 544
Share-based payment expense - 4
Actuarial gains on post-retirement defined benefit plans (42) 5
Gain on available-for-sale financial instruments 29 -
Closing balance 540 553
Retained earnings
Opening balance 124 760 135 692
Profit/(loss) for the year 11 854 (6 749)
Preference dividends paid (33) (181)
Ordinary dividends paid - (3 986)
Net effect of take-up of share options - 31
Change in degree of control - (47)
Closing balance 136 581 124 760
Non-controlling interest
Opening balance 106 869 116 952
Profit/(loss) for the year 10 723 (4 504)
Preference dividends paid (17) (17)
Ordinary dividends paid - (5 643)
Net effect of take-up of share options - 26
Change in degree of control - 47
Other comprehensive (loss)/income (12) 8
Closing balance 117 563 106 869
Total capital and reserves 261 960 239 458
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended Year ended
30 June 30 June
2015 2014
Reviewed Audited
R'000 R'000
Operating profit before working capital changes 50 328 1 811
Working capital changes 4 849 9 190
Interest received 3 604 3 630
Interest paid (214) (251)
Dividends paid (50) (9 827)
Dividends received 18 16
Income tax paid (814) 708
Net cash inflows from operating activities 57 721 5 277
Additions to property, plant, equipment and investment property (37 070) (42 704)
Additions to intangible assets (3 823) (5 170)
Proceeds from disposal of property, plant, equipment and
investment property 6 266 60
Proceeds from disposal of trademark - 1 000
Net cash outflows from investing activities (34 627) (46 814)
Proceeds on delivery of shares by share trust - 57
Net cash inflows from financing activities - 57
Net increase/(decrease) in cash and cash equivalents 23 094 (41 480)
Cash and cash equivalents at the beginning of the year 58 687 100 167
Cash and cash equivalents at the end of the year 81 781 58 687
GROUP SEGMENTAL REPORTING
Year ended Year ended
30 June 30 June
2015 2014
Reviewed Audited
R'000 R'000
Revenue
Total external retail revenue 517 314 493 292
Retail segment revenue 521 822 496 938
Intersegment revenue earned (4 508) (3 646)
Total external property revenue 11 417 3 905
Property segment revenue 15 942 8 146
Intersegment revenue earned (4 525) (4 241)
Dividends received 18 16
Interest income 3 604 3 630
Profit on sale of property 3 864 -
Total group revenue 536 217 500 843
Segment operating profit/(loss)
Retail segment profit/(loss) 26 807 (14 046)
Property segment profit 7 825 22
Group services operating loss (5 962) (4 524)
Total group operating profit/(loss) 28 670 (18 548)
Depreciation and amortisation
Retail 20 121 22 151
Property 2 103 751
Total group depreciation and amortisation 22 224 22 902
Segment assets
Retail 216 705 203 295
Property 79 204 60 622
Group services* 31 192 32 939
Total group segment assets 327 101 296 856
Segment liabilities
Retail 55 895 49 908
Property 4 987 3 373
Group services* 4 259 4 117
Total group segment liabilities 65 141 57 398
Capital expenditure
Retail 21 433 19 718
Property 19 460 28 156
Total group capital expenditure 40 893 47 874
*Group services include corporate costs.
OTHER INFORMATION
Year ended Year ended
30 June 30 June
2015 2014
Reviewed Audited
Capital commitments
Authorised - not contracted for (R'000) 35 950 36 362
Authorised - contracted for (R'000) 5 566 11 989
Gross profit margin (%) 56.3 49.2
Operating profit/(loss) margin (%) 5.6 (3.8)
Retail segment operating profit/(loss) margin (%) 5.2 (2.8)
Net asset value per share (R) 12.38 11.37
NOTES
1 REVIEW BY AUDITORS
The reviewed condensed consolidated preliminary results of African and Overseas
Enterprises Limited for the year ended 30 June 2015 have been reviewed by the company's
auditors, KPMG Inc. In their review report dated 7 September 2015, which is available
for inspection at the company's registered office, KPMG Inc. state that their review was
conducted in accordance with the International Standard on Review Engagements 2410,
Review of Interim Information Performed by the Independent Auditor of the Entity,
which applies to a review of consolidated preliminary financial information, and have
expressed an unmodified conclusion on the reviewed condensed consolidated preliminary
financial results. The auditor's report does not necessarily report on all of the
information contained in these financial results. Shareholders are therefore advised that
in order to obtain a full understanding of the nature of the auditor's engagement they
should obtain a copy of the auditor's report together with the accompanying financial
results from the issuer's registered office.
2 BASIS OF PREPARATION
The reviewed condensed consolidated preliminary financial results for the year ended
30 June 2015 are prepared in accordance with the requirements of the JSE Limited Listings
Requirements for preliminary reports and the requirements of the Companies Act of
South Africa. The JSE Listings Requirements require preliminary 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. These reviewed results have
been prepared under the supervision of the group financial director, Damian Johnson CA(SA).
3 Accounting policies
The accounting policies applied in the preparation of the condensed consolidated financial
results are in terms of IFRS and are consistent with those applied in the previous
consolidated financial results, except for the adoption of new standards and interpretations
effective as of 1 July 2014. The new standards have no material impact on the reviewed
condensed consolidated preliminary financial results and are not expected to materially
impact the annual consolidated financial statements.
The integrated annual report containing a detailed review of the operations of the
company will be posted to shareholders towards the end of September 2015. The annual
financial statements will be posted on the company's website www.rextrueform.co.za at
the end of September 2015.
4 NOTE TO THE FINANCIAL RESULTS
4.1 Property, plant and equipment - During the year under review there was a
reclassification from property, plant and equipment to investment property.
This property was previously owner occupied, but was reclassified on 1 January 2015
when Queenspark Proprietary Limited moved to a smaller space within the building,
resulting in the previously occupied space being rented out to third parties.
4.2 Investment property - During the year under review there was a reclassification
from property, plant and equipment to investment property. This property was
previously owner occupied, but was reclassified on 1 January 2015 when Queenspark
Proprietary Limited moved to a smaller space within the building, resulting in
the previously occupied space being rented out to third parties.
4.3 Financial instruments - Financial instruments included in trade and other receivables
and trade and other payables are short term in nature, settled within 12 months,
and the carrying value substantially approximates the fair value.
COMMENTARY
The principal operating subsidiary Rex Trueform Clothing Company Limited reports as follows:
GROUP RESULTS
"The group produced a very pleasing result mainly due to the improved performance of the retail
segment. Many initiatives implemented by the group added benefits which reflect in the results.
Revenue increased by 7.1% to R536.6 million (2014: R501.2 million). The gross profit generated
from the retail segment increased by 19.8% to R290.4 million (2014: R242.3 million).
Other income, which includes rental income and the profit on sale of the Atlantis property,
increased from R5.6 million to R17.0 million. Trading expenses were contained and increased
by 4.6%.
The above resulted in the operating profit increasing by 273% to R29.9 million (2014: loss
of R17.3 million) which includes an amount of R3.9 million in respect of the profit on sale
of the Atlantis property. The operating profit excluding the profit on sale of the property
amounts to R26 million. Profit after tax increased by 337.4% to R23.8 million (2014: loss
of R10 million) resulting in the earnings per share increasing by 336.9%.
RETAIL (QUEENSPARK)
Queenspark returned to profitability despite the challenging market and produced an operating
profit of R26.8 million compared to a R14 million operating loss in the prior period.
Certain initiatives implemented produced the desired results: these included cost containment,
the closure of three unprofitable stores, opening of new stores and improved processes employed
to improve the gross margin, which increased to 56.3% (2014: 49%).
PROPERTY
The operating profit of this segment amounted to R7.8 million (2014: R0.0 million) which
includes the R3.9 million profit on the sale of the non-strategic property located in Atlantis.
The operating profit excluding the profit on sale of the Atlantis property amounts to
R3.9 million.
The group's three remaining investment properties are located in Salt River (Cape Town),
one of which has been recently developed, namely the Rex Trueform Office Park ("RTOP").
PROSPECTS
RETAIL (QUEENSPARK)
The current summer season's stock sold during the first nine weeks of the 2016 financial year
has been well received by customers and the group plans to roll out further stores in order
to capture additional market share. The enterprise resource planning system is planned to be
implemented during the 2016 financial year. The benefits to be gained therefrom will mostly
be realised in the 2017 financial year and thereafter. Other initiatives being considered
mainly focus on turnover growth and are predominantly aimed at improving the performance
over the medium to long term.
PROPERTY
The business has commenced with development feasibilities in respect of the two undeveloped
investment properties and intends to complete the feasibilities during the 2016 financial year.
The one property is classified as an important Heritage site, which limits the development
opportunities, and will cause a delay in the development process.
In relation to the RTOP, lease agreements in respect of approximately 90% of the office space
have been entered into. However, due to the required reorganisation of space within the building
a smaller part of the rental was only due from the beginning of July 2015. The balance of the
office space not yet let, amounting to approximately 900 m2, is likely to be let during the
2016 financial year."
DIVIDEND
The directors of African and Overseas Enterprises Limited have proposed a distribution of 35 cents
per share in respect of the ordinary and "N" ordinary shares. Shareholders will be asked to approve
this proposal of the board at the annual general meeting.
Signed on behalf of the board
ML Krawitz CEA Radowsky
(Chairman) (Chief Executive Officer)
Cape Town
7 September 2015
Non-executive directors: ML Krawitz (Chairman), HJ Borkum*, PM Naylor*, RV Orlin* and PE Shub
* Independent non-executive directors
Executive directors: CEA Radowsky (Chief Executive Officer) and DS Johnson (FD)
Registered office: Rex Buildings, 263 Victoria Road, Salt River, Cape Town, 7925
Secretary: AT Snitcher
Transfer secretaries: Computershare Investor Services Proprietary Limited, 70 Marshall Street,
Johannesburg, 2001
Sponsor: Java Capital
Date: 07/09/2015 02:47:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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