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AOO /AON/AOVP - African & Overseas Enterprises Limited - Reviewed results for

Release Date: 08/09/2011 08:02
Code(s): AOO AOVP AON
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AOO /AON/AOVP - African & Overseas Enterprises Limited - Reviewed results for the year ended 30 June 2011 African & Overseas Enterprises Limited (Incorporated in the Republic of South Africa - Reg No. 1947/027461/06) Share codes: AOO - AON - AOVP ISIN: ZAE000000485 - ZAE000009718 - ZAE000000493 REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2011 HIGHLIGHTS: - REVENUE FROM CONTINUING OPERATIONS UP 10.1% - OPERATING PROFIT FROM CONTINUING OPERATIONS UP 15.9% - HEADLINE EARNINGS PER SHARE FROM CONTINUING OPERATIONS UP 14.9% STATEMENT OF COMPREHENSIVE INCOME Consolidated (R`000) 2011 2010 (Reviewed) (Audited) Continuing operations Revenue 518 506 470 839 Turnover 508 078 460 939 Cost of sales (221 987) (200 760) Gross profit 286 091 260 179 Employment costs (91 982) (83 322) Occupancy costs (70 729) (64 637) Depreciation and amortisation (15 595) (13 636) Other operating costs (66 306) (62 516) Rental income 605 128 Royalties 1 009 995 Operating profit 43 093 37 191 Dividends received 12 16 Interest received 8 802 8 761 Interest paid (367) (359) Profit before tax 51 540 45 609 Income tax expense (16 117) (15 223) Profit for the year from continuing operations 35 423 30 386 Profit/(loss) from discontinued operation (net of income tax) 3 135 (1 073) Profit for the year 38 558 29 313 Other comprehensive income Net change in fair value for available-for-sale financial assets - (146) Total comprehensive income for the year 38 558 29 167 Profit attributable to: Ordinary and `N` ordinary shareholders of the parent 20 562 15 613 Preference shareholders 148 138 Profit attributable to equity holders of the parent 20 710 15 751 Non-controlling interest 17 848 13 562 Profit for the year 38 558 29 313 Total comprehensive income attributable to: Ordinary and `N` ordinary shareholders of the parent 20 562 15 532 Preference shareholders 148 138 Profit attributable to equity holders of the parent 20 710 15 670 Non-controlling interest 17 848 13 497 Total comprehensive income for the year 38 558 29 167 Reconciliation of headline earnings Profit/(loss) attributable to equity holders 20 562 15 613 Continuing operations 18 828 16 210 Discontinued operation 1 734 (597) Adjusted for: Loss on disposal of plant and equipment 372 510 Profit on sale of discontinued operation (68) - Headline earnings/(loss) 20 866 16 123 Continuing operations 19 200 16 720 Discontinued operations 1 666 (597) Basic earnings per ordinary share (cents) 180.6 137.1 Continuing operations 165.3 142.4 Discontinued operation 15.3 (5.3) Headline earnings per ordinary share (cents) 183.2 141.6 Continuing operations 168.6 146.8 Discontinued operation 14.6 (5.2) Dividend cover (based on headline earnings) 6.1 5.1 Weighted average number of equity shares on which earnings per share is based (000`s) 11 387 11 387 STATEMENT OF FINANCIAL POSITION Consolidated (R`000) 2011 2010 (Reviewed) (Audited) ASSETS Non-current assets 80 584 67 847 Property, plant and equipment 69 328 57 394 Investment property 5 776 3 511 Intangible assets 1 455 2 107 Other investments 576 576 Deferred taxation 3 449 4 259 Current assets 243 580 222 447 Inventories 71 099 57 994 Trade and other receivables 21 562 21 026 Forward exchange contracts - 522 Income tax receivable 2 050 1 248 Cash and cash equivalents 148 869 141 657 Total assets 324 164 290 294 EQUITY AND LIABILITIES Capital and reserves 266 942 234 874 Share capital 1 200 1 200 Share premium 6 076 6 076 Other reserves 538 500 Retained earnings 139 194 122 299 Non-controlling interest 119 934 104 799 Non-current liabilities 13 573 13 263 Post-retirement liability 3 996 4 122 Accrued operating lease liability 9 577 9 141 Current liabilities 43 649 42 157 Provisions 467 560 Trade and other payables 42 461 40 976 Forward exchange contracts 602 - Income tax payable 119 621 Total equity and liabilities 324 164 290 294 ABRIDGED STATEMENT OF CASH FLOW Consolidated (R`000) 2011 2010 (Reviewed) (Audited)
Operating profit before working capital changes 65 200 52 149 Working capital changes (11 528) 11 316 Interest received 8 802 8 761 Interest paid (367) (359) Dividends paid (7 001) (6 162) Dividends received 12 16 Taxation paid (17 830) (13 332) Net cash inflow from operating activities 37 288 52 389 Additions to property, plant and equipment (31 191) (25 166) Proceeds on disposal of property, plant and equipment 672 175 Net cash outflows from investing activities (30 519) (24 991) Proceeds on delivery of shares by share trust 454 - Subsidiary shares repurchased (11) - Net cash inflow from financing activities 443 - Net increase in cash and cash equivalents 7 212 27 398 Cash and cash equivalents at the beginning of the year 141 657 114 259 Cash and cash equivalents at the end of the year 148 869 141 657 OTHER INFORMATION Capital commitments Authorised - not contracted for 53 436 16 998 Gross profit margin from continuing operations 56.3% 56.4% Operating profit margin from continuing operations 8.5% 8.1% Retail segment operating profit margin 9.2% 9.4% STATEMENT OF CHANGES IN EQUITY Consolidated (R`000) 2011 2010 (Reviewed) (Audited) Share capital 1 200 1 200 Share premium 6 076 6 076 Other reserves Opening balance 500 530 Share-based payments 38 51 Fair value adjustment for available-for-sale financial assets - (81) Closing balance 538 500 Retained earnings Opening balance 122 299 109 533 Profit for the year 20 710 15 751 Dividends paid (3 337) (2 985) Subsidiary shares repurchased (6) - Net effect of take up of share options 251 - Change in degree of control (723) - Closing balance 139 194 122 299 Non-controlling interest Opening balance 104 799 94 438 Profit for the year 17 848 13 562 Dividends paid (3 664) (3 177) Subsidiary shares repurchased (5) - Net effect of take up of share options 203 - Change in degree of control 723 - Other 30 (24) Closing balance 119 934 104 799 Total capital and reserves 266 942 234 874 SEGMENTAL REPORTING Consolidated (R`000) 2011 2010 (Reviewed) (Audited)
Revenue Total external retail revenue 509 087 461 934 Retail segment revenue 511 307 464 032 Intersegment revenue earned from continuing operations (1 548) (1 446) Intersegment revenue earned from discontinued operations (672) (652) Total external property revenue 605 128 Property segment revenue 4 758 1 973 Intersegment revenue earned from continuing operations (3 635) (1 365) Intersegment revenue earned from discontinued operations (518) (480) Dividends received 12 16 Interest received 8 802 8 761 Segment revenue from continuing operations 518 506 470 839 Total external manufacturing revenue 34 990 19 911 Manufacturing segment revenue 35 067 21 170 Less: intersegment revenue (77) (1 259) Segment revenue from discontinued operation 34 990 19 911 Total revenue 553 496 490 750 Segment operating profit/(loss) Retail segment profit 46 906 43 678 Property segment profit/(loss) 1 331 (681) Group services operating loss* (5 144) (5 806) Group profit from continuing operations 43 093 37 191 Manufacturing operating profit/(loss) - discontinued operation 4 354 (1 490) Total group operating profit 47 447 35 701 Depreciation and amortisation Retail 15 417 13 518 Property 179 118 Segment depreciation and amortisation from continuing operations 15 596 13 636 Manufacturing - discontinued operation 259 358 Total depreciation and amortisation 15 855 13 994 Segment assets Retail 200 355 171 860 Property 10 571 9 236 Group services* 101 866 95 618 Segment assets from continuing operations 312 792 276 714 Manufacturing - discontinued operation 11 372 13 580 Total segment assets 324 164 290 294 Segment liabilities Retail 48 239 46 622 Property 751 30 Group services* 5 120 5 132 Segment liabilties from continuing operations 54 110 51 784 Manufacturing - discontinued operation 3 112 3 636 Total segment liabilities 57 222 55 420 Capital expenditure Retail 30 559 25 159 Property 602 - Capital expenditure from continuing operations 31 161 25 159 Manufacturing - discontinued operation 30 7 Total capital expenditure 31 191 25 166 * Group services include corporate costs. NOTES 1 Basis of preparation These reviewed results have been prepared in terms of the South African Companies Act (71 of 2008, as amended), IFRS, IAS 34: Interim Financial Reporting, the JSE Listings Requirements and the AC 500 Standards as issued by the Accounting Practices Board or its successor. These reviewed results have been prepared under the supervision of the group financial director, Damian Johnson (CA(SA)). 2 Accounting policies The accounting policies applied are consistent with those applied in the preparation of the group`s annual financial statements for the year ended 30 June 2010. 3 Reclassification The group is presenting the sale of its manufacturing division as a discontinued operation in the current year and where applicable certain comparative information has been reclassified. 4 Review by auditors The financial information has been reviewed by KPMG Inc, whose unqualified review opinion is available for inspection at the company`s registered office. It is anticipated that an unqualified audit opinion will be issued once the detailed financial statements have been finalised. The annual report containing a detailed review of the operations of the company together with the audited financial statements will be posted to shareholders towards the end of September 2011. Commentary The principal operating subsidiary Rex Trueform Clothing Company Limited reports as follows: "The group continued to perform well despite the unfavourable global and domestic economic conditions which resulted in a difficult trading environment. As anticipated in the interim report, turnover growth in the second half of the financial year slowed down following the high level of performance during the first six months of the year. Accordingly, and in line with expectations, group revenue from continuing operations for the year was restricted to an increase of 10.1% over the previous year with an increase in operating profit from continuing operations of 15.8%. Total group operating profit increased by 32.3%. The property and manufacturing segments contributed positively and profit was further supplemented by a marginal increase in interest earned and a slightly lower effective rate of tax. Group profit after tax amounted to R39.9 million compared to R30.5 million last year, an increase of 30.7%. In line with performance, headline earnings improved by 28.3% to 198.3 cents per share. Earnings increased by 30.4% to 195.6 cents per share. Retail The Queenspark retail segment achieved R508.1 million in turnover, an improvement of 10.2% on last year. As a consequence of the reallocation of intersegment rentals, retail operating profit was restricted to an improvement of 7.4% over the comparative period. Had the reallocation not taken place the retail segment operating profit would have improved by 10.8%. Manufacturing The manufacturing segment posted a positive return for the year. This followed losses in the previous years where interventions were required to downsize the business as a consequence of a decrease in orders from the major customer. The group disposed of the manufacturing facility on 30 June 2011 in line with group strategy. Prospects It is likely that the South African economy will be faced with slower growth and higher inflation during the remainder of the current year. This scenario will result in extended low levels of confidence in consumers as they continue to feel the effects of a depressed economy. The group benefited in the 2011 and prior financial years from the Duty Credit Certificate Scheme. This benefit ceased during the course of last year and as a result there will be a materially negative impact on operating profit in the 2012 financial year. Although Queenspark is presently experiencing a reasonable level of acceptance of its current ranges in stores, we anticipate the achievement of turnover and profit targets will remain challenging." Dividend The board is recommending to shareholders that the dividend on the ordinary and `N` ordinary shares be increased to 32 cents per share. In terms of the Articles of Association, the 6% cumulative participating preference shares carry the right to receive an additional 0.5% dividend for every completed 1.25% dividend in excess of 2.5% declared on ordinary shares in any one financial year. Preference shareholders will therefore be entitled to an extra dividend of 24.5% (49 cents per share) which will be included in the half- yearly payment in December 2011. Shareholders will be asked to consider and approve the directors` dividend recommendation at the annual general meeting of the company to be held on 16 November 2011. An announcement detailing the terms of the dividend declaration will be made immediately following the annual general meeting. Signed on behalf of the board ML Krawitz PE SHUB (Chairman) (Chief Executive Officer) Cape Town 8 September 2011 Directors: ML Krawitz+ (Chairman), PE Shub (Chief Executive Officer) (alt ML Krawitz), CEA Radowsky, DS Johnson, PM Naylor*, RV Orlin* and RW Rees(UK)* +Non-executive * Independent non-executive Registered office Rex Buildings, 263 Victoria Road, Salt River, Cape Town, 7925 Secretary AA Hodgkinson Transfer secretaries Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg, 2001 Sponsor Java Capital Websites www.queenspark.com www.rextrueform.com Date: 08/09/2011 08:02:58 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). 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