Wrap Text
Condensed consolidated audited results 2014
CHEMICAL SPECIALITIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2005/039947/06)
("ChemSpec" or "the company")
Share code: CSP
ISIN: ZAE000109427
condensed consolidated audited results 2014
Performance highlights
revenue up 25% R579
(2013: R463 million) million
R41 loss for the period
million (2013: R31 million)
basic loss per share up 33%
(2013: 2,89 cents) 3,83 cents
36% debt/equity (2013: 60%)
current ratio
(2013: 1,55) 1,55
broad-based black economic
level 3 empowerment (2013: level 6)
employee turnover
(2013: 11,7%) 11%
carbon footprint (2013: 0,30)
0,30 tons CO2 equivalent
per ton production
Letter from the chairman
Dear Shareholder
Current year
We again incurred a loss for the year. This is despite having, in my view, the best business leaders in the coatings
industry working for ChemSpec. We are now in a third austerity plan to reduce our overhead costs even further, where
we are planning to take around R5 million per month off our overhead structure and provided we can make sales in line with our
predictions, the business will be able to turn.
Cash
ChemSpec is working on a fairly low debt equity ratio of around 40%. This has made us concentrate on a capital
expenditure moratorium and a reduction in working capital. While we remain in turnaround, maintaining sufficient cash
will always be a significant focus area of the group.
Black industrial consortium
We are currently in negotiations with a black industrialist consortium which, if successful, would result in additional
capital being introduced.
We are currently at level 3 on the B-BBEE scorecard. As a truly South African company we are working hard to improve
that score and are uniquely placed to take advantage of government and parastatal business particularly if the black
industrialist consortium comes on board.
Supply chain
We have made good progress with our supply of decorative paint to the retail market and this progress should continue
in the coming year.
The mix of our business has changed quite considerably with a larger decorative paint share within our business which,
together with our already strong position in the industrial/woodfinish and auto refinish markets, requires us to put even
more emphasis on supply chain distribution.
International operations
Our operations in the United States of America and Australia are now performing satisfactorily.
The coatings market
The international coatings market continues to show interest in South Africa and the rest of Africa.
The coatings industry is in a state of change where some interesting opportunities exist for certain players to consolidate
into a much more powerful combined entity. We would welcome constructive discussion with these players.
Increase sales
We know we have many supporters and friends out there who are doing everything in their power to swing business our
way. We are following up every sales lead that comes our way and working hard to provide our partners with the service
they deserve.
Best of breed
I have been working very closely with the executive team for the best part of the last three years and am convinced we
have the right people to take this business forward. We hope we are but months away from turnaround but this will only
be achieved if our sales performance matches the lower overhead structure.
To a team of wonderful individuals – hang in there, success will follow the brave.
Ivan Clark
Chairman
Chief Executive Officer's review and comments on the results
Overview and highlights
ChemSpec continues to build its status as a new generation coatings company focused on developing strategic
relationships with partners to develop market leading positions for them. Although this year has been tough in many
respects, it has also been encouraging for employees and shareholders alike. Whilst we have not made the financial
progress we had hoped for, we have built new systems, new structures and more importantly new relationships in the
market. These will all stand us in good stead for future growth and sustainability.
To reflect for a moment on what we have accomplished over the last year:
- We acquired a new business (Jack's Paint and Hardware supply contract) and integrated this into our business
(completed in February 2014).
- We have grown sales another 25% year on year.
- We implemented a significant austerity programme to reduce our total global operating expenses by more than 15%.
- In the midst of this, we implemented globally, a new ERP system in SYSPRO together with the QLIKVIEW business
reporting tool and upgraded our wide area network connectivity with Telkom and Internet Solutions.
- We implemented a very structured sales and operations planning process (S&OP) in South Africa to help institute
sales forecasting and structured MRP (materials requirement planning) processes into the business to better serve
our customers and improve the overall balance of our stock.
- We developed and launched some fantastic new products in Urban woodcare products for Buildit, HealthCoat,
Paint Fresh, Deco 116 Colour system, new Professional products, new packaging for Deco and Professional, new
industrial products, including a new multi-chemistry industrial tinting system and a handheld spectrophotometer
for the automotive market in Australia.
- We completed a successful rights issue and recapitalised the business to improve the balance sheet and set us up
to continue growing into profitability.
- We registered a level 3 B-BBEE scorecard.
Results
Revenue growth continues at double digit growth rates which it has consistently achieved for the last two years. The
growth and positioning strategies, particularly in the decorative and industrial markets, are slowly bearing fruit in an
extremely competitive space. Revenue in the automotive business, specifically in the USA and Australia, has grown at a
slower pace than anticipated but both territories have been restructured to generate profit. Whilst this is encouraging,
the return to profitability is being hampered by the high fixed cost base that the business has historically carried.
In order to speed up the return to profitability, management has embarked on an extensive structural review which
includes a de-complication and rationalisation strategy to substantially reduce fixed costs while at the same time
improving revenue and service delivery to customers. This has continued into the new fiscal year.
The current results show a loss of 3,83 cents per share which includes discontinued operations losses and restructuring
costs that amount to 2,94 cents per share. These restructuring costs have already been eliminated and management
continues to work at further savings in the current year to ensure that the business is returned to profitability.
Trading
Revenue increased by 25% to R579 million, but margins reduced by 1% point as a result of increased cost push inflation
through rand weakness, oil price and general commodity price increases from suppliers. Overhead costs (excluding
restructuring costs and discontinued operations) were up by 10%, leaving an operating loss of R727 thousand versus
R23 427 thousand in the prior year, which is an improvement of nearly 97%.
The South African and African operations which comprise over 70% of the business performed well and grew by close
to 35%, primarily as a result of the Jack's Paint and Hardware supply contract as well as some market share growth in
Mica. Margins were unfortunately adversely affected by the weakening exchange rate, exacerbated by a strong oil price
and further exacerbated by product mix issues in the industrial and decorative businesses.
The USA business grew steadily in turnover but performance was masked by underperforming start-up customers
which we had to acquire. On top of this, overhead costs were slightly higher due to strategic increases in resource – this
was dealt with through the austerity programme instituted late in the year.
Australia again showed flat sales on last year as a result of some quality-related issues in 2011/2012 (caused by raw
material variations). These have been resolved. In addition, significant austerity measures were put in place and we look
forward to better growth opportunities and an improved performance from Australia.
Financial position
At year end our borrowed debt to equity ratio was 36% and our current ratio was 1.55:1.
Available unutilised finance facilities at year end totaled R80 million.
Working capital increased by R21,7 million as a result of increased business and cost inflation.
Austerity plan
The executive mapped out a plan to reduce overheads by over R5 million per month and managed to execute 90% by the
end of the financial year. This included a reduction of 102 people out of 764 people globally. A further austerity plan has
been mapped out to reduce overheads even further to breakeven to the current level of sales in which we envisage to
reduce staff by another 50 to 60 positions globally.
Prospects
ChemSpec has been working with various customers on a host of opportunities over the last year. The Jack's Paint and
Hardware supply contract acquisition has added value to the decorative business and we will continue to improve our
position in these stores. A strategic relationship has been entered into with the LRB group (MICA, DIY Depot, House of
Paint) and ChemSpec will roll out its products into a number of its associate brands stores over the next year. There are
numerous other opportunities in the decorative space which are being developed. The industrial business is working
with some significant customers which, if successful, will have a large impact on the business. The African territories
are stable, with a new facility in Zambia recently opened. The US business is self-sustaining with good growth prospects
in the medium term. The Australian business has been restructured and is looking for further growth opportunities.
The key focus areas for the next year are:
1. possible alliance/amalgamation with similar businesses which will improve sales and product range as well as
possible cost synergies
2. a more defined international growth plan
3. further alliance growth with selected retail groups
4. the development of some significant new customer relationships and
5. building stronger brand awareness.
As I said last year, the business requires a strategic and methodical plan which will take time to implement, but which
will allow sustainable growth through building brands and relationships, both of which are earned through consistency
and credibility.
Appreciation
We have certainly made progress, albeit slowly, but the business is rebuilding credibility with customers and suppliers
alike. We thank all our customers and suppliers for their belief in us, their continued support and for the opportunity to
rebuild this business. We thank our shareholders for their patience and continued support of our plans. Last but certainly
not least, we thank our valued employees for working tirelessly to improve this business for all our stakeholders.
Annual general meeting
The annual general meeting of the company will be held at 2029 Old Mill Road, Canelands, Verulam, KwaZulu-Natal, on
Friday, 26 September 2014 at 10:00.
Website
A full set of reporting publications, can be found on our website at www.chemspecpaint.com.
Feedback
We invite feedback on our report and its contents and ask that you contact us at annual.report@chemspecpaint.com.
For and on behalf of the board.
IAJ Clark BC Schreuder
Chairman Chief Executive Officer
30 June 2014
Condensed consolidated statements of financial position
as at 31 March 2014
GROUP
Restated Restated
Figures in R'000 Note 2014 2013 2012
Assets
Non-current assets
Property, plant and equipment 242 095 237 454 196 684
Intangible assets 87 486 46 065 29 312
Goodwill 23 869 22 937 22 926
Deferred tax 94 760 75 081 60 851
448 210 381 537 309 773
Current assets
Inventories 176 175 147 924 127 473
Trade and other receivables 116 196 102 198 77 426
Cash and cash equivalents 15 534 9 772 14 264
307 905 259 894 219 163
Assets held for sale 8 3 235 10 915 3 614
Total assets 759 350 652 346 532 550
Equity and liabilities
Equity
Stated capital 468 055 468 055 466 656
Preference shares 2 120 851 – –
Translation reserve 13 777 9 615 (1 353)
Share option reserve 5 587 3 187 1 187
Accumulated loss (179 712) (138 664) (107 721)
428 558 342 193 358 769
Non-current liabilities
Preference share liability 2 21 114 – –
Other financial liabilities 107 283 137 891 69 978
Deferred tax 2 711 2 828 3 168
131 108 140 719 73 146
Current liabilities
Preference share liability 2 11 752 – –
Other financial liabilities 34 906 26 454 27 936
Trade and other payables 111 470 90 997 71 428
Bank overdraft 40 629 50 331 728
198 757 167 782 100 092
Liabilities held for sale 8 927 1 652 543
Total liabilities 330 792 310 153 173 781
Total equity and liabilities 759 350 652 346 532 550
Condensed consolidated statements of financial performance
for the year ended 31 March 2014
GROUP
Restated Restated
Figures in R'000 Note 2014 2013 2012
Continuing operations
Revenue 3 579 378 463 068 380 790
Cost of sales 4 (369 530) (290 789) (222 427)
Gross profit 209 848 172 279 158 363
Other income 5 35 310 28 294 27 328
Operating expenses (245 885) (224 000) (175 871)
Operating (loss)/profit 6 (727) (23 427) 9 820
Restructuring costs (31 735) – –
Finance income 286 270 4 034
Finance costs (16 820) (7 802) (22 796)
Loss before taxation (48 996) (30 959) (8 942)
Taxation 7 16 617 10 394 3 171
Loss from continuing operations (32 379) (20 565) (5 771)
Discontinued operations 8 (8 669) (10 378) (6 250)
Loss for the period (41 048) (30 943) (12 021)
Basic loss per share 9
Continuing operations (cents) (3,02) (1,92) (0,87)
Discontinued operations (cents) (0,81) (0,97) (0,94)
Total basic loss per share (cents) (3,83) (2,89) (1,81)
Diluted loss per share 9
Continuing operations (cents) (3,02) (1,92) (0,86)
Discontinued operations (cents) (0,81) (0,97) (0,94)
Total diluted loss per share (cents) (3,83) (2,89) (1,80)
Condensed consolidated statements of comprehensive income
for the year ended 31 March 2014
GROUP
Restated Restated
Figures in R'000 2014 2013 2012
Loss for the period (41 048) (30 943) (12 021)
Other comprehensive income 4 162 10 968 4 827
Exchange differences on translating foreign operations 4 162 10 968 4 827
Total comprehensive loss for the period (36 886) (19 975) (7 194)
Condensed consolidated statement of cash flows
for the year ended 31 March 2014
GROUP
Restated
Figures in R'000 2014 2013
Cash flows from operating activities
Cash used by operations (61 165) (31 223)
Interest received 286 270
Interest paid (16 820) (7 802)
Taxation paid (49) (650)
Net cash utilised by operating activities (77 748) (39 405)
Cash flows from investing activities
Purchase of plant and equipment (16 909) (61 253)
Proceeds on sale of plant and equipment 3 300 815
Acquisition of intangible assets (11 509) (18 982)
Acquisition of business (17 453) (1 884)
Assets held for sale 4 222 (2 867)
Net cash utilised by investing activities (38 349) (84 171)
Cash flows from financing activities
Proceeds on share issue 120 851 1 399
Proceeds/(repayment) of other financial liabilities (22 156) 68 082
Proceeds on preference share liability 32 866 –
Net cash from financing activities 131 561 69 481
Net movement for the period 15 464 (54 095)
Balance at the beginning of the period (40 559) 13 536
(Overdraft)/cash and cash equivalents at the end of the period (25 095) (40 559)
Reconciled as follows:
Cash and cash equivalents 15 534 9 772
Bank overdraft (40 629) (50 331)
(Overdraft)/cash and cash equivalents at the end of the period (25 095) (40 559)
Condensed consolidated statement of changes in equity
for the year ended 31 March 2014
Restated Share
Stated Preference Accumulated Translation option
Figures in R'000 capital shares loss reserve reserve Total
GROUP
Balance at 31 March 2012 466 656 – (107 721) (1 353) 1 187 358 769
Transfer to stated capital – – – – – –
Issue of shares 1 404 – – – – 1 404
Share issue expenses (5) – – – – (5)
Loss for the period – – (30 943) – – (30 943)
Share options – – – – 2 000 2 000
Translation reserve – – – 10 968 – 10 968
Balance at 31 March 2013 468 055 – (138 664) 9 615 3 187 342 193
Transfer to stated capital – – – – – –
Issue of shares – 122 893 – – – 122 893
Share issue expenses – (2 042) – – – (2 042)
Loss for the period – – (41 048) – – (41 048)
Share options – – – – 2 400 2 400
Translation reserve – – – 4 162 – 4 162
Balance at 31 March 2014 468 055 120 851 (179 712) 13 777 5 587 428 558
Condensed consolidated segmental analysis
for the year ended 31 March 2014
GROUP
2014 Restated
Figures in R'000 2013
Segment revenues
Automotive 262 114 238 426
Buy-ins 19 752 18 076
Decorative 120 571 52 594
Industrial/Woodfinish 152 608 133 196
Solvents 31 781 29 277
Total of all segments 586 826 471 569
Discontinued operations (7 448) (8 501)
Consolidated revenue 579 378 463 068
Segment result
Automotive (21 885) (15 653)
Buy-ins (1 649) (1 187)
Decorative (10 067) (3 453)
Industrial/Woodfinish (12 742) (8 744)
Solvents (2 653) (1 922)
Total of all segments (48 996) (30 959)
Income tax 16 617 10 394
Discontinued operations (8 669) (10 378)
Loss for the year (41 048) (30 943)
Segment assets
Automotive 337 729 324 308
Buy-ins 25 450 24 587
Decorative 155 354 71 539
Industrial/Woodfinish 196 633 181 174
Solvents 40 949 39 823
Discontinued operations 3 235 10 915
Total of all segments 759 350 652 346
Revenue from
external customers Segmental assets
Figures in R'000 2014 2013 2014 2013
Geographical segments
South Africa 372 254 279 790 609 587 521 639
International 207 124 183 278 149 763 130 707
579 378 463 068 759 350 652 346
Notes to the condensed consolidated audited results
for the year ended 31 March 2014
1. Accounting policies and basis of preparation
The condensed consolidated financial results for the year ended 31 March 2014 have been prepared under the
supervision of JG Maehler (CA) SA, in accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards (IFRS), International Accounting Standards (IAS) 34 Interim
Financial Reporting, the requirements of the South African Companies Act, 71 of 2008, as amended, the South African
Institute of Chartered Accountants (SAICA), Financial Reporting Guides as issued by the Accounting Practices Committee
and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council and in compliance with the
Listings Requirements of the JSE Limited (JSE). They do not include all the information required for a complete set of
IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are
significant to understanding the Groups financial position and performance
The condensed consolidated financial results have been prepared on the historical cost basis excluding financial
instruments which are fairly valued.
The relevant Standards and Interpretations which are not yet effective and which should be disclosed for March
2014 year ends are identified in the table below, together with the dates on which these were issued by the IASB:
Effective date
Periods
Date issued beginning
Standard/Interpretation by IASB (1) on or after
IFRS 10, IFRS 12 and Investment Entities October 2012 1 January 2014
IAS 27 amendment
IAS 32 Offsetting Financial Assets and December 2011 1 January 2014
Financial Liabilities
IAS 36 Recoverable amount disclosures for May 2013 1 January 2014
Non-financial Assets
IAS 39 Novation of Derivatives and Continuation of June 2013 1 January 2014
Hedge Accounting
IFRIC 21 Levies May 2013 1 January 2014
IAS 19 Defined Benefit Plans: Employee November 2013 1 July 2014
Contributions
Amendments to 6 standards Improvements to IFRSs 2010-2012 Cycle December 2013 1 July 2014
Amendments to 4 standards Improvements to IFRSs 2011-2013 Cycle December 2013 1 July 2014
IFRS 14 Regulatory Deferral Accounts January 2014 1 January 2016
IFRS 9 (2009) Financial Instruments November 2009 To be decided
IFRS 9 (2010) Financial Instruments October 2010 To be decided
These pronouncements had no material impact on the accounting transactions or the disclosure thereof.
The accounting standards and amendments issued to accounting standards and interpretations which are relevant
to the group, but not yet effective at 31 March 2014, have not been adopted. It is expected that where applicable,
these standards and amendments will be adopted on each respective effective date, except where specifically
identified.
The accounting policies, methods of measurement, recognition, computation and presentation adopted in the
preparation of the condensed consolidated financial results are consistent with those applied in the annual fi-
nancial statements for the year ended 31 March 2013, except for the accounting policy for property, plant and
equipment which has changed from the revaluation method to the cost method.
The report of the independent auditor, on the condensed consolidated financial results which were derived from
the audited annual financial statements, on which an unmodified opinion was expressed, is available for inspection
at the company's registered office together with the condensed consolidated financial results identified in the
auditor's report.
1.1 Related parties
There have been no significant changes in related party relationships since the previous year or significant
transactions during the year, other than in the normal course of business.
1.2 Post balance sheet events
A gross dividend of 1,6 cents per compulsory convertible preference shares was declared and paid after year
end. The directors are not aware of any other material matter or circumstance arising since the financial
year end that is not disclosed in this report.
1.3 Dividends
No dividends were declared or paid during the year (2013: nil)
GROUP
Figures in R'000 2014 2013
2. Preference shares
Authorised
536 930 824 (2013: nil) Compulory Convertible Preference Shares (CCPS)
Issued
389 006 238 (2013: nil) CCPS 155 602 –
Less share issue expenses (2 042) –
Less preference share liability (32 709) –
120 851 –
Preference share liability 32 709 –
Finance costs capitalised 157 –
32 866 –
Non-current liabilities
At amortised cost 21 114 –
Current liabilities
At amortised cost 11 752 –
Preference shareholders are entitled to a dividend over three years paid in six-monthly periods. A dividend of
R6,224 million is payable every six months.
Results of the rights issue
The results of the rights issue of shares for cash on 22 November 2013 are set out below:
Value at
Number of 40 cents
rights offer per share
shares R'000
Total rights offer CCPs available for subscription 535 930 824 214 372
Total of rights offer CCPs exercised 378 420 238 151 368
Excess rights offer CCPs applied for and allocated 586 000 234
Rights offer CCPs taken up by the underwriter 10 000 000 4 000
389 006 238 155 602
GROUP
Restated
Figures in R'000 2014 2013
3. Revenue
Gross sale of goods 614 235 483 071
Less: Discount allowed (14 946) (6 875)
Less: Rebates (12 463) (4 627)
Less: Discontinued operations (7 448) (8 501)
579 378 463 068
4. Cost of sales
Gross cost of goods sold 377 429 299 641
Less: Discount received (1 218) (1 973)
Less: Rebates (703) (387)
Less: Discontinued operations (5 978) (6 492)
369 530 290 789
5. Other income
Profit on disposal of assets – 167
Foreign exchange gain 2 239 1 438
Insurance claim – 15 000
Rental income 10 008 7 520
Other sundry income 63 4 169
Negative goodwill 23 000 –
35 310 28 294
Rental income is received from the sub-leasing of certain portions of property leased by the company.
Negative goodwill arose from the acquisition of the business of Turnkey Paint Solutions and the related Jacks Paint
and Hardware supply contract.
GROUP
Restated
Figures in R'000 2014 2013
6. Operating loss
The analysis of expenses recognised in profit or loss using the classification
based on the function within the entity comprises:
Operating expenses 245 885 224 000
Administration 136 072 107 176
Distribution 55 401 48 490
Selling 99 434 84 618
Less: Restructuring costs (31 735) –
Less: Discontinued operations (13 287) (16 284)
Profit for the year has been arrived at after charging:
Operating lease charges:
Premises 20 547 31 873
Motor vehicles 116 302
Office equipment 1 344 981
22 007 33 156
Auditors' remuneration:
Fees – Current year 1 104 1 355
Depreciation and amortisation:
Depreciation of property, plant and equipment 21 812 21 881
Amortisation of intangible assets 4 557 4 477
26 369 26 358
Loss on disposal of assets 2 683 –
Staff costs 154 997 148 096
Pension (defined contribution plan) included in staff costs 7 288 6 137
7. Taxation
Income tax
Current taxation (487) (343)
Deferred tax
Taxable and deductible temporary differences: 20 252 14 634
Capital allowances (6 520) (8 725)
Provisions 1 793 841
Prepayments 227 (249)
Assessed losses 24 752 22 767
Less: Discontinued operation (3 148) (3 897)
16 617 10 394
GROUP
Restated
Figures in R'000 2014 2013
8. Discontinued operations
During the 2012 financial year the board decided to discontinue certain of
the groups retail stores. Of the stores identified to be discontinued, some
of these will be closed and others will be sold. During the current financial
year, the board identified additional retail stores to be discontinued. The
results of the discontinued operations as well as the effects on the
statement of financial position are detailed below:
Results of the discontinued operations
Revenue 7 448 8 501
Cost of sales (5 978) (6 492)
Operating expenses (13 287) (16 284)
Operating loss (11 817) (14 275)
Taxation 3 148 3 897
Net loss from discontinued operations (8 669) (10 378)
Basic loss per share (cents) (0,81) (0,97)
Basic headline loss per share (cents) (0,81) (0,97)
Diluted loss per share (cents) (0,81) (0,97)
Diluted headline loss per share (cents) (0,81) (0,97)
Cash flows from (used in) discontinued operations
Net cash from (used in) operating activities (11 817) (14 275)
Net cash from (used in) investing activities – –
Net cash from (used in) financing activities – –
Net cash outflows for the year (11 817) (14 275)
Effect on the statement of financial position
Plant and equipment 1 519 4 977
Inventory 1 716 5 272
Trade receivables – 666
Instalment sale liabilities (927) (1 652)
Net assets and liabilities 2 308 9 263
Assets held for sale 3 235 10 915
Liabilities held for sale (927) (1 652)
GROUP
Restated
Figures in R'000 2014 2013
9. Basic and diluted loss and headline loss per share
Basic loss per share
Continuing operations (cents) (3,02) (1,92)
Discontinued operations (cents) (0,81) (0,97)
Total basic loss per share (cents) (3,83) (2,89)
Basic headline loss per share
Continuing operations (cents) (4,58) (1,93)
Discontinued operations (cents) (0,81) (0,97)
Total basic headline loss per share (cents) (5,39) (2,90)
Diluted loss per share
Continuing operations (cents) (3,02) (1,92)
Discontinued operations (cents) (0,81) (0,97)
Total diluted loss per share (cents) (3,83) (2,89)
Diluted headline loss per share
Continuing operations (cents) (4,58) (1,93)
Discontinued operations (cents) (0,81) (0,97)
Total diluted headline loss per share (cents) (5,39) (2,90)
Basic loss per share
The loss used in the calculation of basic loss per share is as follows:
Loss for the year (continuing operations) (32 379) (20 565)
Loss for the year (discontinued operations) (8 669) (10 378)
Total loss attributable to equity holders of the parent (41 048) (30 943)
Reconciliation of total loss to headline loss attributable to
equity holders of the parent
Total loss attributable to equity holders of the parent (32 379) (20 565)
Non-headline earnings
Negative goodwll (23 000) –
Loss/(profit) on disposal of assets 2 683 (167)
Total tax effect of adjustments 3 538 47
Headline loss (continuing operations) (49 158) (20 685)
Headline loss (discontinued operations) (8 669) (10 378)
Total headline loss (57 827) (31 063)
Weighted average shares
The weighted average number of ordinary shares used in the
calculation of loss per share is as follows:
Opening shares 1 073 861 648 1 071 261 648
Specific issue: 1 October 2012 of 2 600 000 shares – 1 300 000
Weighted average number of ordinary shares (basic) 1 073 861 648 1 072 561 648
Preference shares * – –
Share options * – –
Weighted average number of ordinary shares (diluted) 1 073 861 648 1 072 561 648
Actual number of ordinary shares 1 073 861 648 1 073 861 648
* Due to the loss incurred, potential shares are not included in the weighted average number of shares as they
are anti-dilutive.
GROUP
Figures in R'000 2014 2013
10. Acquisition of businesses
Property, plant and equipment 7 640 650
Intangible assets 33 000 –
Inventory 12 616 684
Goodwill 2 035 1 327
Accounts receivable 439 –
Accounts payable (3 170) –
Liabilities (720) –
Negative goodwill (23 000) –
28 840 2 661
Cash paid 17 453 1 884
Franchise debtor – 777
Loan 11 387 –
28 840 2 661
Acquisitions 2014
On 1 April 2013 ChemSpec acquired the manufacturing contract for Jack's Paint and Hardware exclusive decorative
paint brands: Panache, Coverkote and Artisan. In addition to this supply agreement, ChemSpec have acquired
the business of TPS (Turnkey Paint Solutions), a Gauteng-based manufacturing facility from Kansai Plascon for
R26 million. Negative goodwill in the amount of R23 million was recognised as a result of the valuation of intangible
assets.
On 1 October 2013 ChemSpec USA Inc acquired the business operations of JCL Holdings LLC, a paint retailer and
distributor in California, USA. The purchase price of $250 000 included a premium (goodwill) for the acquisition
for the whole business.
Acquisitions 2013
The group acquired the business operations of its Umgeni franchise store. The acquisition was paid in part with
cash and a release of the outstanding franchise debtor.
11. Change in accounting policy
During the year, the company changed its accounting policy from the revaluation model to the cost model for plant
and equipment. Plant and equipment is a depreciating asset and is not acquired with the intention of enjoying any
capital appreciation. Any appreciation in value is therefore incidental to the main purpose of this asset class and,
while there may be a difference between the carrying value using the revaluation model and the carrying value
using the cost model from time to time, this difference is incidental to and not indicative of the performance of the
group. Furthermore, the useful life and residual value of this asset class is reviewed by management on an annual
basis in terms of IAS 16, Property Plant and Equipment. Over time the gap between the adjustments following
sworn property revaluations and the carrying values assessed internally will narrow. Based on the reasons above
the relevance to users of the financial statements of a revaluation of plant and equipment is reduced and therefore
it has become necessary to change the accounting policy and rely on the annual assessments that are done
internally.The comparative statement of financial position and statement of financial performance have been
restated.
The effects of the change are as follows:
Previously
Figures in R'000 stated Adjustment Restated
Plant and equipment
Balance as at 31 March 2012 230 828 (34 144) 196 684
Balance as at 31 March 2013 276 625 (34 194) 242 431
Deferred taxation (Asset)
Balance as at 31 March 2012 51 291 9 560 60 851
Balance as at 31 March 2013 65 507 9 574 75 081
Revaluation reserve
Balance as at 31 March 2012 31 858 (31 858) –
Balance as at 31 March 2013 31 858 (31 858) –
Accumulated loss
Balance as at 31 March 2012 (114 996) 7 275 (107 721)
Balance as at 31 March 2013 (145 903) 7 239 (138 664)
Loss for the period
For the year ended 31 March 2012 (14 131) 2 110 (12 021)
For the year ended 31 March 2013 (30 907) (36) (30 943)
Basic loss per share
For the year ended 31 March 2012 (cents) (2,13) 0,32 (1,81)
For the year ended 31 March 2013 (cents) (2,89) (0,00) (2,89)
Diluted loss per share
For the year ended 31 March 2012 (cents) (2,12) 0,32 (1,80)
For the year ended 31 March 2013 (cents) (2,87) (0,00) (2,87)
Ordinary shareholder profile
Register date: 28 March 2014
Issued share capital: 1 073 861 648 ordinary shares (2013: 1 073 861 648)
2014 2013
Number Number
of of
share- Number share- Number
holders of shares % holders of shares %
Public/non-public shareholders
Directors less than 10% 5 71 905 340 6,70 5 71 405 340 6,65
Employees less than 10% 5 10 472 000 0,98 5 12 958 580 1,21
Shareholding greater than 10% 3 689 163 191 64,18 3 683 103 183 63,61
Public shareholders 1 510 232 508 930 21,65 1 629 236 487 358 22,02
Non-public shareholders 15 841 352 718 78,35 21 837 374 290 77,98
1 525 1 073 861 648 100,00 1 650 1 073 861 648 100,00
Shareholding spread
1 - 1 000 shares 66 32 069 0,00 69 35 367 0,00
1 001 - 10 000 shares 343 2 021 793 0,19 365 2 153 403 0,20
10,001 - 100 000 shares 777 35 762 901 3,33 849 37 808 307 3,52
100 001 - 1 000 000 shares 298 94 031 748 8,76 319 97 696 289 9,10
1 000 001 shares and above 41 942 013 137 87,72 48 936 168 282 87,18
1 525 1 073 861 648 100,00 1 650 1 073 861 648 100,00
Beneficial shareholders holding 5% or more
IBB Buchan 55 949 695 5,21 55 949 695 5,21
Shalamuka Capital (Pty) Ltd 69 812 187 6,50 69 812 187 6,50
Industrial Development Corporation 150 000 000 13,97 150 000 000 13,97
IAJ Clark 183 488 915 17,09 177 428 907 16,52
Corvest 6 (Pty) Ltd 355 674 276 33,12 355 674 276 33,12
814 925 073 75,89 808 865 065 75,32
Beneficial shareholding of directors
JG Jones 1 000 000 0,09 500 000 0,05
BR Mackinnon 4 954 634 0,46 4 954 634 0,46
JG Maehler 5 000 000 0,47 5 000 000 0,47
NA Page 5 001 011 0,47 5 001 011 0,47
IBB Buchan 55 949 695 5,21 55 949 695 5,21
IAJ Clark 183 488 915 17,09 177 428 907 16,52
255 394 255 23,78 248 834 247 23,18
Preference shareholder profile
Register date: 28 March 2014
Issued preference shares: 389 006 238 ordinary shares (2013: nil)
2014
Number of Number of
shareholders shares %
Public/non-public shareholders
Directors less than 10% 2 5 000 506 1,29
Shareholding greater than 10% 3 354 630 710 91,16
Public shareholders 244 29 375 022 7,55
Non-public shareholders 5 359 631 216 92,45
249 389 006 238 100,00
Shareholding spread
1 – 1 000 shares 17 11 192 0,00
1 001 – 10 000 shares 86 517 234 0,13
10 001 – 100 000 shares 112 4 265 693 1,10
100 001 – 1 000 000 shares 25 6 694 572 1,72
1 000 001 shares and above 9 377 517 547 97,05
249 389 006 238 100,00
Beneficial shareholders holding 5% or more
Industrial Development Corporation 75 000 000 19,28
IAJ Clark 101 793 572 26,17
Corvest 6 (Pty) Ltd 177 837 138 45,72
354 630 710 91,17
Beneficial shareholding of directors
JG Maehler 2 500 000 0,64
NA Page 2 500 506 0,64
IAJ Clark 101 793 572 26,17
106 794 078 27,45
Corporate information
Country of incorporation and domicile South Africa
Registration number 2005/039947/06
Share code CSP
ISIN ZAE000109427
Nature of business and principal activities Manufacture, distribution and supply of paint and ancillary products
Directors IAJ Clark (Non-executive chairman)
BC Schreuder (Chief executive officer)
BR Mackinnon (Chief operations officer)
JG Maehler (Financial director)
GV Metzer (Marketing and sales director)
RD Simpson (Global automative director)
WA Waller (Industrial sales director)
JG Jones (Lead independent non-executive director)
NTY Siwendu (Independent non-executive director)
SE Sono (Independent non-executive director)
IBB Buchan (Non-executive director)
NA Page (Non-executive director)
ZM Buchan (Alternate non-executive director)
Registered office 2029 Old Mill Road
Canelands
Verulam 4339
Business address 2029 Old Mill Road
Canelands
Verulam 4339
Postal address PO Box 2359
Canelands
Verulam 4340
Auditors KPMG Incorporated
20 Kingsmead Boulevard
Kingsmead Office Park
Durban 4001
Transfer secretaries Computershare Investor Services (Pty) Ltd
70 Marshall Street
Johannesburg 2001
Company secretary Statucor (Pty) Ltd
BDO House
Richefond Circle
Ridgeside Office Park
Umhlanga 4319
Designated Advisor Grindrod Bank Limited
Website www.chemspecpaint.com
Telephone +27 32 541 8600
Fax +27 32 541 8653
Date: 30/06/2014 04:37:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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