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Unaudited Interim Group Results for the Six Months Ended 31 August 2015
Spanjaard Limited
(Incorporated in the Republic of South Africa)
Registration number 1960/004393/06
Share code: SPA ISIN: ZAE000006938
("Company" or "Group")
UNAUDITED INTERIM GROUP RESULTS
FOR THE SIX MONTHS ENDED
31 AUGUST 2015
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
Restated
Six months to Six months to
31 August 31 August
2015 2014
R'000 R'000
Revenue 58 694 60 764
Turnover 58 348 59 832
Cost of sales (39 548) (40 737)
Gross profit 18 800 19 095
Operating expenses (18 974) (18 593)
Depreciation and amortisation (1 580) (826)
Operating loss (1 754) (324)
Finance costs (672) (615)
Loss before income tax (2 426) (939)
Income tax expense 105 480
Loss for the period from continuing operations (2 321) (459)
Other comprehensive income
Movement in foreign currency translation reserve (836) 302
Total comprehensive income for the six months (3 157) (157)
Loss per ordinary share
– basic and diluted (cents) (28,5) (5,6)
Headline loss per ordinary share
– basic and diluted (cents) (28,5) (3,0)
CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
Six months to 12 months to
31 August 28 February
2015 2015
R'000 R'000
Assets
Non-current assets 36 675 38 087
Property, plant and equipment 35 172 36 638
Goodwill 437 437
Intangibles 1 066 1 012
Current assets 36 351 42 057
Inventories 17 985 18 027
Trade receivables and prepayments 15 482 18 698
Amount due by holding company – 2 932
Current income tax receivable 2 073 1 774
Cash and cash equivalents 811 626
Total assets 73 026 80 144
Equity and liabilities
Total shareholders' equity 42 258 43 903
Ordinary shares and premium 6 871 6 871
Reserves 35 387 37 032
Liabilities
Non-current liabilities 8 028 8 035
Borrowings 3 154 3 088
Deferred tax liabilities 4 874 4 947
Current liabilities 22 740 28 206
Trade and other payables 15 427 17 393
Borrowings 1 499 3 087
Loans from group companies 375 –
Shareholders for dividends 60 1 518
Cash and cash equivalents 5 379 6 208
Total equity and liabilities 73 026 80 144
Net asset value per share (cents) 518,9 539,2
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
Restated
Six months to Six months to
31 August 31 August
2015 2014
Cash flows from operating activities (146) (2 167)
Cash flows from investing activities 2 969 2 575
Cash flows from financing activities (1 522) (1 272)
Net increase/(decrease) in cash and cash equivalents 1 301 (864)
Cash and cash equivalents at beginning of period (5 583) (223)
Effect of exchange rate movement on cash balances (286) (717)
Cash and cash equivalents at end of period (4 568) (1 804)
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
Restated
Six months to Six months to
31 August 31 August
2015 2014
R'000 R'000
Ordinary shares 407 407
Share premium 6 464 6 464
Foreign currency translation reserve 106 (843)
Opening balance (730) (541)
Movement for the year 836 (302)
Revaluation reserve 10 708 8 082
Opening balance 10 868 8 082
Movement for the year (160) –
Retained earnings 24 573 26 868
Opening balance 26 894 28 141
Total comprehensive income for the year (2 321) (459)
Dividends paid – (814)
Total shareholders' equity 42 258 40 978
DIVIDENDS
Dividend declared per ordinary share (cents)
– interim – 10
SUPPLEMENTARY INFORMATION
Restated
Six months to Six months to
31 August 31 August
2015 2014
R'000 R'000
Capital expenditure 214 989
OPERATING SEGMENTS
Restated
Six months to Six months to
31 August 31 August
2015 2014
R'000 R'000
Segment turnover
Special lubricants and allied chemicals 55 097 57 316
External customers 13 863 13 441
Local customers 41 234 43 875
Lubricant powders/Metal powders 2 529 4 266
External customers 1 660 2 763
Local customers 869 1 503
Other 2 018 2 331
External customers 2 018 2 331
Reconciling items (1 296) (4 081)
External customers (1 046) (3 566)
Local customers (250) (515)
58 348 59 832
Segment result
Special lubricants and allied chemicals (2 359) (760)
Lubricant powders/Metal powders (26) (53)
Other 781 639
Reconciling items (150) (150)
(1 754) (324)
Six months to 12 months to
31 August 28 February
2015 2015
R'000 R'000
Segment assets
Special lubricants and allied chemicals 50 091 65 607
Lubricant powders/Metal powders 12 832 12 288
Other 21 126 28 612
Reconciling items (11 023) (26 363)
73 026 80 144
Segment liabilities
Special lubricants and allied chemicals 24 848 38 353
Lubricant powders/Metal powders 3 166 3 259
Other 12 780 19 843
Reconciling items (10 026) (25 214)
30 768 36 241
RECONCILIATION OF HEADLINE EARNINGS
Restated
Six months to Six months to
31 August 31 August
2015 2014
R'000 R'000
Loss attributable to shareholders (2 321) (459)
Loss on disposal of property, plant and equipment – 303
Income tax effect on disposal – (85)
Headline loss (2 321) (241)
Weighted average number of ordinary
shares in issue ('000) 8 143 8 143
Headline loss per ordinary share
– basic and diluted (cents) (28,5) (3,0)
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated financial statements for the six months ended 31 August 2015
have been prepared in accordance with International Financial Reporting Standards, IAS 34:
Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and the Financial Pronouncements as issued by the Financial Reporting
Standards Council, as well as the requirements of the South African Companies Act and the
JSE Listings Requirements.
The condensed consolidated interim financial statements do not include all the disclosures
required for a full set of financial statements prepared in accordance with International Accounting
Standards (IFRS) as issued by the International Accounting Standards Board.
The condensed consolidated interim financial statements appearing in this announcement
are the responsibility of the directors and the directors take full responsibility for the preparation
thereof. Robert Southey, Financial Manager, is responsible for this set of condensed consolidated interim
financial statements and has supervised the preparation thereof in conjunction with the Executive Director,
Kentin Welgemoed CA(SA).
The accounting policies applied in the preparation of these condensed consolidated interim
financial statements are in terms of IFRS and are consistent with those applied in the consolidated
annual financial statements for the year ended 28 February 2015.
Restatement of comparative figures
During the finalisation of the financial statements for the year ended 28 February 2015, it became
evident that certain accounting errors occurred following the implementation of a new ERP
system in June 2014. Such errors also affected the results for the six months ended 31 August
2014 and it was necessary to restate the comparative figures in the Condensed Consolidated
Comprehensive Financial Statement, reducing the total comprehensive income for the period by
R1.7 million. In addition, in preparing the consolidated financial statements for the six months
ended 31 August 2014, the figures for the foreign subsidiaries were converted to Rand using the
incorrect exchange rate. This error resulted in an understatement of the consolidated revenue
and comprehensive income by R1.8 million and R0.4 million respectively. The net restatement
is as follows:
R'000
Consolidated comprehensive income as previously reported 1 168
Accounting errors following the implementation of the new ERP system (1 709)
Incorrect foreign exchange rate 384
Restated consolidated comprehensive loss (157)
COMMENTARY
POINTS OF INTEREST
-Sales down 2.5%.
-Depreciation up 91% due to large I.T. acquisitions associated with the ERP system and plant
and machinery revaluations.
-Operating expenses well controlled and only up 2%.
-Cash flow positive for the six months.
EXECUTIVE CHAIRMAN'S STATEMENT
During the preparation of the Interim Accounts as at 31 August 2015 it became apparent that the
figures for the 2014 period were incorrect.
Last year upon consolidation the figures in EURO in respect of our Netherlands subsidiary were
not translated into SA Rands. It also came to light that various expenditures in the accounts had
not been processed correctly.
We are satisfied that the consolidated statements now published together with the restatement
of the comparative period figures are accurate.
The entire financial management team which produced the 2014 Interim Accounts has been
replaced.
We also discovered that a deal was entered into by previous management, whereby products
were being sold in large quanities at a substantial loss. This situation was immediately terminated
when discovered.
In contrast, our new management is fully in control, with a significant turnaround experienced
in the 2nd quarter.
There have been no material related party transactions during the period under review.
SEGMENTAL ANALYSIS
Due to a struggling economy, especially in the mining sector, Special Lubricants and Allied
Chemicals revenue is down by 3,8%. Operating expenses are flat while depreciation is up due
to additions, since August 2014, of Computer Equipment and software relating to the new ERP
system as well as revaluations in Plant and Machinery in February 2015.
Lubricant Powders/Metal Powders revenue is down by 40,7%, but an increase in GP% reduced
the effect on the Operating Loss. Reduced sales from exports are the result of a struggling world
economy and timing differences with customer orders which we are expecting to catch up in the
second half of the year. The decrease in local revenue is attributable to the timing of customer
orders and some lost sales due to a major customer changing their own product formulation.
Operating expenses and depreciation are flat compared to 2014.
The main contributing factor to profits in "Other" is the large increase in GP% in the European
operation while our costs remained flat compared to 2014. Foreign exchange differences also
account for some of the increases.
INTERIM DIVIDEND
No dividend has been declared nor are any proposed for the period reported on (2014: 10 cents).
By order of the Board
Ms L Passmore
Company Secretary
11 November 2015
Directors
RJW Spanjaard (Executive Chairman), Mr K Welgemoed, GF Cort, Mrs S Hari**,
BL Montgomery*, CKT Palmer, Prof DP van der Nest**
*Non-executive
**Independent Non-Executive
Registered office
748 – 750 Fifth Street, Wynberg, Sandton, 2090
Transfer Secretaries
Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001
Sponsor
Arbor Capital Sponsors Proprietary Limited, Ground Floor, ONE Health Building,
Woodmead North Office Park, 54 Maxwell Drive, Woodmead, 2157
Email: info@spanjaard.biz
Website: www.spanjaard.biz
Date: 11/11/2015 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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