Wrap Text
Unaudited interim condensed consolidated group results for the six months ended 31 December 2014
AFRICAN & 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")
UNAUDITED INTERIM CONDENSED CONSOLIDATED GROUP RESULTS
for the six months ended 31 December 2014
HIGHLIGHTS
Revenue increased by 4.2% to R276.3 million (31 December 2013: R265.1 million)
Operating profit increased by 374.9% to R15.7 million
(31 December 2013: loss of R5.7 million)
Gross profit margin % increased to 54.8% (31 December 2013: 47%)
Headline earnings per share increased by 258.9% to 36.7 cents
(31 December 2013: loss of 23.1 cents)
Earnings per share increased by 376.7% to 52.3 cents
(31 December 2013: loss of 18.9 cents)
Net asset value per share increased by 0.9% to 1 188 cents
(31 December 2013: 1 178 cents)
No ordinary dividend per share was paid for the year ended 30 June 2014
(A dividend of 35 cents for the year ended June 2013 was paid in December 2013)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at As at
31 December 31 December 30 June
2014 2013 2014
Unaudited Unaudited Audited
R'000 R'000 R'000
ASSETS
Non-current assets 148 689 135 549 142 159
Property, plant and equipment 118 207 108 819 108 762
Investment property 3 510 5 496 5 440
Intangible assets 16 039 9 263 13 920
Other investments 524 524 524
Deferred tax asset 10 409 11 447 13 513
Current assets 164 406 164 834 154 697
Inventories 68 334 77 039 82 124
Trade and other receivables 24 635 13 914 13 671
Forward exchange contracts 1 498 2 534 -
Income tax receivable 264 1 381 215
Cash and cash equivalents 69 675 69 966 58 687
Total assets 313 095 300 383 296 856
EQUITY AND LIABILITIES
Capital and reserves 250 967 247 602 239 458
Share capital 1 200 1 200 1 200
Share premium 6 076 6 076 6 076
Other reserves 553 548 553
Retained earnings 130 717 129 553 124 760
Non-controlling interest 112 421 110 225 106 869
Non-current liabilities 19 831 17 257 15 775
Post-retirement liability 2 675 2 744 2 653
Accrued operating lease liability 15 533 12 608 12 833
Deferred tax liability 1 623 1 905 289
Current liabilities 42 297 35 524 41 623
Provisions - - -
Trade and other payables 42 259 35 417 40 604
Forward exchange contracts - - 927
Income tax payable 38 107 92
Total equity and liabilities 313 095 300 383 296 856
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2014 2013 2014
% Unaudited Unaudited Audited
change R'000 R'000 R'000
Revenue 4.2 276 336 265 128 500 843
Turnover 2.9 268 660 261 138 492 079
Cost of sales (121 537) (138 432) (249 774)
Gross profit 19.9 147 123 122 706 242 305
Other income 10 198 2 114 5 118
Other operating costs (142 248) (130 532) (265 971)
Operating profit/(loss) 15 073 (5 712) (18 548)
Dividend income 18 16 16
Finance income 1 324 1 860 3 630
Finance costs (140) (153) (251)
Profit/(loss) before tax 16 275 (3 989) (15 153)
Income tax expense (4 741) 921 3 900
Profit/(loss) for the period 11 534 (3 068) (11 253)
Other comprehensive income
Actuarial gains on post-retirement defined
benefit plan - - 9
Total comprehensive income/(loss) for the period 11 534 (3 068) (11 244)
Profit/(loss) attributable to:
Ordinary and 'N' ordinary shareholders 5 957 (2 153) (6 930)
Preference shareholders 17 165 181
Profit/(loss) attributable to equity holders
of the parent 5 974 (1 988) (6 749)
Non-controlling interest 5 560 (1 080) (4 504)
Profit/(loss) for the period 11 534 (3 068) (11 253)
Total comprehensive income attributable to:
Ordinary and 'N' ordinary shareholders of
the parent 5 957 (2 153) (6 925)
Preference shareholders 17 165 181
Profit/(loss) attributable to equity holders of
the parent 5 974 (1 988) (6 744)
Non-controlling interest 5 560 (1 080) (4 500)
Total comprehensive income for the year 11 534 (3 068) (11 244)
Reconciliation of headline earnings/(loss)
Profit/(loss) attributable to equity holders 5 957 (2 153) (6 930)
Adjusted for:
Profit from disposal of property, plant and
equipment and investment property (1 780) (473) (454)
Impairment loss on equipment and shopfittings - - 1 346
Headline earnings/(loss) 4 177 (2 626) (6 038)
Basic earnings/(loss) per ordinary share (cents) 52.3 (18.9) (60.9)
Headline earnings/(loss) per ordinary share (cents) 36.7 (23.1) (53.0)
Diluted basic earnings/(loss) per ordinary
share (cents) 52.2 (18.9) (60.7)
Diluted headline earnings/(loss) per ordinary
share (cents) 36.6 (23.0) (52.9)
Weighted average number of equity shares on
which earnings per share is based (000's) 11 387 11 387 11 387
Weighted average number of equity shares on
which diluted earnings per share is based (000's) 11 418 11 414 11 417
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2014 2013 2014
Unaudited Unaudited Audited
R'000 R'000 R'000
Share capital 1 200 1 200 1 200
Share premium 6 076 6 076 6 076
Other reserves
Opening balance 553 544 544
Share-based payment expense - 4 4
Actuarial gains on post-retirement defined
benefit plans - - 5
Closing balance 553 548 553
Retained earnings
Opening balance 124 760 135 692 135 692
Profit/(loss) for the period 5 974 (1 988) (6 749)
Preference dividends declared/paid (17) (165) (181)
Ordinary dividends paid - (3 986) (3 986)
Net effect of take-up of share options - - 31
Change in degree of control - - (47)
Closing balance 130 717 129 553 124 760
Non-controlling interest
Opening balance 106 869 116 952 116 952
Profit/(loss) for the period 5 560 (1 080) (4 504)
Preference dividends declared/paid (8) (8) (17)
Ordinary dividends paid - (5 643) (5 643)
Net effect of take-up of share options - - 26
Change in degree of control - - 47
Other - 4 8
Closing balance 112 421 110 225 106 869
Total capital and reserves 250 967 247 602 239 458
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2014 2013 2014
Unaudited Unaudited Audited
R'000 R'000 R'000
Operating profit/(loss) before working
capital changes 23 029 (1 671) 1 811
Working capital changes* 9 340 7 741 9 190
Interest income 1 324 1 860 3 630
Interest expense (140) (153) (251)
Dividends paid - (9 629) (9 827)
Dividends received 18 16 16
Normal tax (paid)/refunded (405) 260 708
Net cash inflows/(outflows) from operations 33 166 (1 576) 5 277
Additions to property, plant and equipment (20 321) (28 119) (42 704)
Additions to intangible assets (2 295) (1 506) (5 170)
Proceeds from disposal of property, plant
and equipment 438 - 60
Proceeds from disposal of trademark - 1 000 1 000
Net cash outflows from investing activities (22 178) (28 625) (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 10 988 (30 201) (41 480)
Cash and cash equivalents at the beginning
of the period 58 687 100 167 100 167
Cash and cash equivalents at the end of the period 69 675 69 966 58 687
* Included in working capital changes is the outstanding amount receivable in respect
of the sale of the property.
GROUP SEGMENTAL REPORTING
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2014 2013 2014
Unaudited Unaudited Audited
R'000 R'000 R'000
Revenue
Total external retail revenue 269 577 261 833 493 292
Retail segment revenue 272 687 263 668 496 938
Intersegment revenue earned (3 110) (1 835) (3 646)
Total external property revenue 5 417 1 419 3 905
Property segment revenue 7 585 3 540 8 146
Intersegment revenue earned (2 168) (2 121) (4 241)
Dividends received 18 16 16
Interest income 1 324 1 860 3 630
Total group revenue 276 336 265 128 500 843
Segment operating profit/(loss)
Retail segment profit/(loss) 13 912 (3 772) (14 046)
Property segment profit/(loss) 4 479 (169) 22
Group services operating loss (3 318) (1 771) (4 524)
Total group operating profit/(loss) 15 073 (5 712) (18 548)
Depreciation and amortisation
Retail 9 619 9 001 22 151
Property 1 251 238 751
Total group depreciation and amortisation 10 870 9 239 22 902
Segment assets
Retail 220 345 212 506 203 295
Property 78 001 49 382 60 622
Group services* 14 749 38 495 32 939
Total group segment assets 313 095 300 383 296 856
Segment liabilities
Retail 54 556 45 373 49 908
Property 4 039 3 634 3 373
Group services* 3 533 3 774 4 117
Total group segment liabilities 62 128 52 781 57 398
Capital expenditure
Retail 8 552 12 783 19 718
Property 14 064 16 842 28 156
Total group capital expenditure 22 616 29 625 47 874
* Group services include corporate costs.
OTHER INFORMATION
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2014 2013 2014
Unaudited Unaudited Audited
Capital commitments
Authorised - not contracted for (R'000) 16 929 21 808 36 362
Authorised - contracted for (R'000) 18 193 8 613 11 989
Gross profit margin (%) 54.8 47.0 49.2
Operating profit/(loss) margin (%) 5.6 (2.2) (3.8)
Retail segment operating profit/(loss) margin (%) 5.2 (1.4) (2.8)
Net asset value (R) 11.88 11.78* 11.37
* This has been revised and is based on the net asset value definition applied
at June 2014.
NOTES
1 Basis of presentation of financial statements
These unaudited condensed consolidated interim financial statements for the six months
ended 31 December 2014 have been prepared in accordance with the framework concepts
and the measurement and recognition requirements of International Financial Reporting
Standards (IFRS), the interpretations adopted by the International Accounting Standards
Board, the South African Institute of Chartered Accountants' Financial Reporting Guides
as issued by the Accounting Practices Committee and Financial Reporting Pronouncements
as issued by the Financial Reporting Standards Council and include disclosure as
required by IAS 34: Interim Financial Reporting, the Companies Act of South Africa 2008
and the JSE Listings Requirements.
The financial statements have been prepared using accounting policies that comply
with IFRS and which are consistent with those applied in the preparation of the
financial statements for the year ended 30 June 2014.
2 Unaudited results
These results have not been reviewed or reported on by the group's auditors. The
condensed consolidated interim financial statements have been prepared under the
supervision of Damian Johnson CA(SA) and were approved by the board of directors
on 10 March 2015.
3 Preference dividend
A dividend on the 6% cumulative participating preference shares for the six months
ended 31 December 2014 in the amount of R16 500 was declared by the board of
directors on 15 December 2014 and paid on 12 January 2015.
COMMENTARY
The principal operating subsidiary Rex Trueform Clothing Company Limited reports
as follows:
GROUP RESULTS
The group had a pleasing first half performance mainly due to the performance of
the retail segment. The group's revenue increased by 4.2% to R276.6 million
(2013: R265.4 million). The gross profit increased to R147.1 million
(2013: R122.7 million). Other income, which includes rental income, increased
from R2.4 million to R10.5 million. Operating costs increased by 8.9% during the
period and were negatively impacted by additional depreciation on properties and
once-off operating costs.
The above resulted in the group returning to profitability. The operating profit
amounted to R15.9 million (2013: loss of R5.1 million) and included an amount of
R3.9 million in respect of the profit on sale of the Atlantis property. The group's
operating profit excluding the profit on sale of the property amounts to R12.0 million.
The group's profit (after tax) for the period amounts to R12.3 million
(2013: loss of R2.4 million), resulting in a basic earnings per share of 60 cents
(2013: loss of 11.8 cents). Headline earnings amounted to R9.1 million, resulting in
headline earnings per share of 44.2 cents (2013: loss of 15.9 cents).
RETAIL
The retail segment reflected a modest increase in the turnover of 2.9% and was
impacted by the closure of three unprofitable stores and the opening of two new stores.
Due to the introduction of certain initiatives the gross profit margin increased to
54.8% compared to 47% in 2013, resulting in a 19.9% increase in gross profit. The
segment's operating costs increased by 5.7% as this segment continues to focus on cost
containment.
The above resulted in a segment operating profit of R13.9 million
(2013: loss of R3.8 million).
PROPERTY
The main focus of this segment has been the development of the Rex Trueform Office
Park ("RTOP") in Salt River which is near completion.
The property segment revenue showed an improvement during the year, increasing to
R7.6 million from R3.5 million in 2013 mainly due to the additional rental income
received from the RTOP.
The operating profit of this segment amounted to R4.5 million and was negatively
impacted by once-off operating costs of R1.5 million and positively impacted by the
profit on the sale of the Atlantis property to the amount of R3.9 million.
PROSPECTS
Retail segment
Retail sales in the second half of the year are traditionally lower than the first
half. This, together with electricity loadshedding and increased competition, is
expected to constrain profit growth during the six months ending June 2015.
In order to grow turnover in the 2016 year and beyond the company is to introduce
initiatives to increase the turnover of the existing store base and increase the
Queenspark footprint within South Africa by the roll-out of further stores.
The implementation of the enterprise resource planning ("ERP") software, once complete,
will also provide future benefits to the business.
Property segment
The RTOP is located in a vibrant area within Salt River (Cape Town). In close proximity
to this building are two other group-owned properties, which have development potential.
Feasibilities in respect of these properties are to be prepared in due course. The
one property is classified as an important Heritage site, which limits the development
opportunities, and will cause a delay in the development process.
Signed on behalf of the board
ML Krawitz CEA Radowsky
(Chairman) (Chief Executive Officer)
Cape Town
10 March 2015
Directors: ML Krawitz+ (Chairman), CEA Radowsky (Chief Executive Officer),
DS Johnson (FD), PE Shub+, PM Naylor*, RV Orlin* and HJ Borkum*
+ Non-executive *Independent non-executive
M Segal resigned as an independent non-executive director on 24 November 2014 and
HJ Borkum was appointed as an independent non-executive director in his stead on
12 January 2015. PE Shub ceased to be the chief executive officer with effect from
1 March 2015, but will remain on the board of directors as a non-executive director.
CEA Radowsky was appointed as the chief executive officer with effect from 5 March 2015.
Registered office: Rex Buildings, 263 Victoria Road, Salt River, Cape Town, 7925
Secretary: AT Snitcher
Transfer secretaries: Computershare Investor Services (Pty) Ltd, 70 Marshall Street,
Johannesburg, 2001
Sponsor: Java Capital
Date: 10/03/2015 03:22:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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