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AFRICAN AND OVERSEAS ENTERPRISES LD - Reviewed Condensed Consolidated Financial Statements Results for the year ended 30 June 2013

Release Date: 06/09/2013 16:01
Code(s): AOO AOVP AON     PDF:  
Wrap Text
Reviewed Condensed Consolidated Financial Statements Results for the year ended 30 June 2013

AFRICAN & OVERSEAS ENTERPRISES LIMITED
(Incorporated in the Republic of South Africa) (Registration No.: 1947/027461/06)
("the company" or "the group" or "African & Overseas")
JSE share codes: AOO - AON - AOVP
ISIN: ZAE000000485 - ZAE000009718 - ZAE000000493


REVIEWED CONDENSED CONSOLIDATED FINANCIAL RESULTS
FOR THE YEAR ENDED 30 JUNE 2013


CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                                                   2013         2012
                                                             (Reviewed)    (Audited)
                                                                  R'000        R'000
ASSETS
Non-current assets                                              114 458       90 263
Property, plant and equipment                                    89 631       74 910
Investment property                                               5 551        5 662
Intangible assets                                                 8 010        4 510
Other investments                                                   524          524
Deferred tax asset                                               10 742        4 657
Current assets                                                  204 901      238 727
Inventories                                                      88 231       61 881
Trade and other receivables                                      11 187       11 700
Forward exchange contracts                                        3 660        1 072
Income tax receivable                                             1 656        2 795
Cash and cash equivalents                                       100 167      161 279
Total assets                                                    319 359      328 990
EQUITY AND LIABILITIES
Capital and reserves                                            260 464      280 751
Share capital                                                     1 200        1 200
Share premium                                                     6 076        6 076
Other reserves                                                      544          535
Retained earnings                                               135 692      146 524
Non-controlling interest                                        116 952      126 416
Non-current liabilities                                          16 123       15 681
Post-retirement liability                                         2 776        3 101
Accrued operating lease liability                                11 168       11 150
Deferred tax liability                                            2 179        1 430
Current liabilities                                              42 772       32 558
Provisions                                                        3 077            -
Trade and other payables                                         39 631       32 534
Income tax payable                                                   64           24
Total equity and liabilities                                    319 359      328 990


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                                        %          2013         2012
                                                   change    (Reviewed)    (Audited)
                                                                  R'000        R'000
Revenue                                           (10.7%)       483 517      541 310
Turnover                                          (10.6%)       474 438      530 593
Cost of sales                                                 (231 176)    (246 182)
Gross profit                                      (14.5%)       243 262      284 411
Employment costs                                              (104 281)     (97 915)
Occupancy costs                                                (84 102)     (76 447)
Depreciation and amortisation                                  (17 585)     (21 338)
Other operating costs                                          (60 252)     (66 296)
Rental income                                                     1 599        1 526
Royalties                                                         1 009        1 038
Operating (loss)/profit                          (181.5%)      (20 350)       24 979
Dividends received                                                   13           13
Interest income                                                   6 458        8 140
Interest expense                                                  (241)        (331)
(Loss)/profit before tax                         (143.0%)      (14 120)       32 801
Income tax expense                                                3 380     (10 713)
(Loss)/profit for the year                       (148.6%)      (10 740)       22 088
Other comprehensive (loss)/income
Net change in fair value of available-for-sale 
financial assets                                                      -         (52)
Total comprehensive (loss)/income for the year                 (10 740)       22 036
(Loss)/profit attributable to:
Ordinary and "N" ordinary shareholders of the parent            (6 659)       11 246
Preference shareholders                                             181          168
(Loss)/profit attributable to equity holders of the parent      (6 478)       11 414
Non-controlling interest                                        (4 262)       10 674
(Loss)/profit for the year                                     (10 740)       22 088
Total comprehensive (loss)/income attributable to:
Ordinary and "N" ordinary shareholders of the parent            (6 659)       11 217
Preference shareholders                                             181          168
(Loss)/profit attributable to equity holders of the parent      (6 478)       11 385
Non-controlling interest                                        (4 262)       10 651
Total comprehensive (loss)/income for the year                 (10 740)       22 036
Reconciliation of headline (loss)/earnings
(Loss)/profit attributable to equity holders                    (6 659)       11 246
Adjusted for:
Loss from disposal of property, plant and equipment                  43           10
Impairment (reversal)/loss on equipment and shopfitting           (170)          848
Headline (loss)/earnings                                        (6 786)       12 104
Basic (loss)/earnings per 
ordinary share (cents)                           (159.2%)        (58.5)         98.8
Headline (loss)/earnings per 
ordinary share (cents)                           (156.1%)        (59.6)        106.3
Dividend cover (based on headline (loss)/earnings)                (1.7)          3.0
Weighted average number of  equity shares on which 
earnings per share is based (000's)                              11 387       11 387
The company has no dilutionary instruments in issue.


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITy
                                                                   2013         2012
                                                             (Reviewed)    (Audited)
                                                                  R'000        R'000
Share capital                                                     1 200        1 200
Share premium                                                     6 076        6 076
Other reserves
Opening balance                                                     535          538
Share-based payment expense                                           9           26
Fair value adjustment of available-for-sale financial assets          -         (29)
Closing balance                                                     544          535
Retained earnings
Opening balance                                                 146 524      139 194
(Loss)/profit for the year                                      (6 478)       11 414
Preference dividends paid                                         (181)        (168)
Ordinary dividends paid                                         (3 986)      (3 644)
Net effect of take-up of share options                              145          171
Change in degree of control                                       (332)        (443)
Closing balance                                                 135 692      146 524
Non-controlling interest
Opening balance                                                 126 416      119 934
(Loss)/profit for the year                                      (4 262)       10 674
Preference dividends paid                                          (17)         (17)
Ordinary dividends paid                                         (5 643)      (4 754)
Net effect of take-up of share options                              118          138
Change in degree of control                                         332          443
Other                                                                 8          (2)
Closing balance                                                 116 952      126 416
Total capital and reserves                                      260 464      280 751


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                   2013         2012
                                                             (Reviewed)    (Audited)
                                                                  R'000        R'000
Operating (loss)/profit before working capital changes          (2 971)       43 793
Working capital changes                                        (18 225)        4 874
Interest income                                                   6 458        8 140
Interest expense                                                  (241)        (331)
Dividends paid                                                  (9 827)      (8 583)
Dividends received                                                   13           13
Income tax paid                                                   (777)     (10 258)
Secondary tax on companies paid                                       -      (1 073)
Net cash (outflows)/inflows from operating activities          (25 570)       36 575
Additions to property, plant and equipment                     (31 866)     (26 253)
Additions to intangible assets                                  (4 134)      (3 862)
Proceeds from disposal of property, plant and equipment             195          229
Proceeds from disposal of discontinued operation                      -        5 412
Net cash outflows from investing activities                    (35 805)     (24 474)
Proceeds on delivery of shares by share trust                       263          309
Net cash inflows from financing activities                          263          309
Net (decrease)/increase in cash and cash equivalents           (61 112)       12 410
Cash and cash equivalents at the beginning of the year          161 279      148 869
Cash and cash equivalents at the end of the year                100 167      161 279


GROUP SEGMENTAL REPORTING
                                                                   2013         2012
                                                             (Reviewed)    (Audited)
                                                                  R'000        R'000
Revenue
Total external retail revenue                                   475 447      531 631
Retail segment revenue                                          478 234      533 815
Intersegment revenue earned                                     (2 787)      (2 184)
Total external property revenue                                   1 599        1 526
Property segment revenue                                          5 527        5 388
Intersegment revenue earned                                     (3 928)      (3 862)
Dividends received                                                   13           13
Interest income                                                   6 458        8 140
Total group revenue                                             483 517      541 310
Segment operating (loss)/profit
Retail segment (loss)/profit                                   (14 754)       28 681
Property segment (loss)/profit                                    (243)        1 287
Group services operating loss                                   (5 353)      (4 989)
Total group operating (loss)/profit                            (20 350)       24 979
Depreciation and amortisation
Retail                                                           17 308       21 113
Property                                                            277          225
Total group depreciation and amortisation                        17 585       21 338
Segment assets
Retail                                                          217 474      214 762
Property                                                         32 672       15 286
Group services*                                                  69 213       98 942
Total group segment assets                                      319 359      328 990
Segment liabilities
Retail                                                           51 333       42 389
Property                                                          2 606        2 099
Group services*                                                   4 956        3 751
Total group segment liabilities                                  58 895       48 239
Capital expenditure
Retail                                                           19 030       26 991
Property                                                         16 970        3 124
Total group capital expenditure                                  36 000       30 115
* Group services include corporate costs.


OTHER INFORMATION
Capital commitments
Authorised - not contracted for                                  32 361       56 685
Authorised - contracted for                                       3 048        7 955
Gross profit margin                                               51.3%        53.6%
Operating (loss)/profit margin                                   (4.3%)         4.7%
Retail segment operating profit margin                           (3.1%)         5.4%


NOTES
1  REVIEW BY AUDITORS
   The condensed consolidated financial statements of African & Overseas for the year 
   ended 30 June 2013 have been reviewed by the company's auditors, KPMG Inc. In their
   review report dated 5 September 2013 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 condensed consolidated preliminary 
   financial statements.

2  BASIS OF PREPARATION
   The condensed consolidated preliminary financial statements are prepared in 
   accordance with the framework concepts and recognition and measurement principles 
   of International Financial Reporting Standards and presented in accordance with the
   minimum content, including disclosures, prescribed by IAS 34 Interim Financial 
   Reporting applied to year-end reporting, the SAICA Financial Reporting Guides as 
   issued by the Accounting Practices Committee and Financial Pronouncements as issued
   by the Financial Reporting Standards Council, the requirements of the Companies Act
   of South Africa  and the JSE Listings Requirements.

   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 are consistent with those applied in the preparation
   of the group's annual financial statements for the year ended 30 June 2012.

   The integrated annual report containing a detailed review of the operations of the 
   company together will be posted to shareholders towards the end of September 2013. 
   The annual financial statements will be posted onto the company's website 
   www.rextrueform.co.za at the end of September 2013.


COMMENTARY
The principle operating subsidiary Rex Trueform Clothing Company Limited 
("Rex Trueform"), reports as follows:

As anticipated in the interim report, the group's retail segment continued to find 
trading conditions difficult in the second six months.

The group's revenue for the year decreased by 10.7% to R484.0 million (2012: 
R541.7 million) and the gross profit decreased by 14.5% to R243.3 million (2012: 
R284.4 million). Group operating costs increased by 1.8% to R265.5 million (2012: 
R260.8 million) and included a R3.1 million retrenchment provision incurred as a 
result of the reorganising of the retail business.

The above resulted in the group's operating profit decreasing from R26.6 million to a 
loss of R19.1 million. The loss after tax amounted to R9.5 million (2012: profit of 
R23.8 million). In line with performance, headline earnings per share decreased by 
138.3% resulting in a headline loss per share of 47.4 cents, and the earnings per 
share decreased by 139.8% resulting in a loss per share of 46.3 cents.

RETAIL
The turnover in the Queenspark retail segment was R474.4 million (2012: R530.6 million),
a decrease of 10.6% on last year. The gross profit margin decreased to 51.3% (2012: 
53.6%) mainly due to product inflation pressures resulting from the weakening of 
the Rand. The retail segment operating profit decreased by 151.3% resulting in loss of
R14.7 million for the year (2012: profit of 28.7 million).

PROPERTY
As noted in the interim report and in line with the business strategy, the development
of the Rex Trueform Office Park in Salt River continued during the year. The segment
made a small operating loss for the year (R0.2 million) mainly due to higher operating
costs. Capital expenditure of R17.0 million was incurred in the segment during the 
current year, of which R16.6 million relates to the Rex Trueform Office Park.

PROSPECTS

Retail
The outlook for retail sales continues to be impacted by the slow-down in the growth
of economy, consumer debts levels, tight lending standards and rising living costs. 
Ongoing weakness in the Rand exchange rate against the US Dollar will continue to add
inflationary pressure to the cost of merchandise. International brands continue to 
enter the local clothing retail market, intensifying industry competition.

Against this back-drop, the company's retail segment will remain under pressure in the
2014 financial year. Certain strategic initiatives initiated during the year are 
expected to positively impact the year ahead. Further initiatives are planned and will
be implemented during the forthcoming year.

Property
The main focus of this segment relates to the development of the Rex Trueform Office 
Park. The main construction activities are expected to be completed during the 2014 
financial year, whereafter substantial tenant occupancy is expected."
  
Dividend
The board of directors is proposing to shareholders that the dividend on the 
ordinary and "N" ordinary shares be kept at 35 cents per share (2012: 35 cents 
per share).
 
In terms of the Memorandum of Incorporation, 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 be entitled to an extra dividend of 27.0% 
(54 cents per share) which will be included in the half-yearly payment in 
December 2013.

Shareholders will be asked to consider and approve the directors' dividend proposal 
at the annual general meeting of the company to be held on 14 November 2013.

An announcement detailing the terms of the dividend declaration will be made 
immediately following the annual general meeting.

Any reference to the future financial performance included in this statement has not 
been reviewed and reported on by the company's external auditors and does not 
constitute an earnings forecast.


African & Overseas Enterprises Limited
(Incorporated in the Republic of South Africa) (Reg No.: 1947/027461/06)
("the company" or "the group" or "African & Overseas")
JSE share codes: AOO - AON - AOVP
ISIN: ZAE000000485 - ZAE000009718 - ZAE000000493
Registered office: Rex Buildings, 263 Victoria Road, Salt River, Cape Town, 7925
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
There were no changes to the board of directors during the year, other than the 
resignation of SM Lawrence as company secretary and the appointment of AT Snitcher in 
her stead with effect from 12 July 2013.
Company secretary: AT Snitcher
Transfer secretaries: Computershare Investor Services (Pty) Ltd, 70 Marshall Street, 
Johannesburg, 2001
Sponsor: Java Capital
Websites: www.queenspark.com - www.rextrueform.com


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