Wrap Text
Unaudited condensed consolidated interim group results for the six months ended 31 December 2015
AFRICAN AND OVERSEAS ENTERPRISES LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA) (REGISTRATION NUMBER 1947/027461/06)
("the company" or "the group" or "African and Overseas)
JSE share codes: AOO - AON - AOVP
ISIN: ZAE000000485 - ZAE000009718 - ZAE000000493
UNAUDITED CONDENSED CONSOLIDATED INTERIM GROUP RESULTS
for the six months ended 31 December 2015
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at As at
31 December 31 December 30 June
2015 2014 2015
Unaudited Unaudited Audited
Notes R'000 R'000 R'000
ASSETS
Non-current assets 148 602 148 689 151 146
Property, plant and equipment 4.1 51 319 118 207 54 467
Investment property 4.1 73 177 3 510 72 539
Intangible assets 4.4 18 717 16 039 17 396
Other investments 576 524 576
Deferred tax asset 4 813 10 409 6 168
Current assets 189 585 164 406 175 955
Inventories 71 601 68 334 70 084
Trade and other receivables 16 347 24 635 20 978
Forward exchange contracts 4.3 4 383 1 498 883
Income tax receivable 2 264 303
Accrued operating lease asset* 2 425 - 1 926
Cash and cash equivalents 94 827 69 675 81 781
Total assets 338 187 313 095 327 101
EQUITY AND LIABILITIES
Capital and reserves 264 950 250 967 261 960
Share capital 4.5 1 200 1 200 1 200
Share premium 6 076 6 076 6 076
Other reserves 4.6 540 553 540
Retained earnings 139 174 130 717 136 581
Non-controlling interest 117 960 112 421 117 563
Non-current liabilities 23 515 19 831 21 548
Post-retirement liability 2 703 2 675 2 673
Accrued operating lease liability 18 677 15 533 17 084
Deferred tax liability 2 135 1 623 1 791
Current liabilities 49 722 42 297 43 593
Trade and other payables 49 176 42 259 43 573
Income tax payable 546 38 20
Total equity and liabilities 338 187 313 095 327 101
* Trade and other receivables as at 31 December 2014 included an amount of R1 160 000
relating to an accrued operating lease asset.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
Unaudited Unaudited Audited
% change R'000 R'000 R'000
Revenue 7.2 296 097 276 336 536 217
Turnover 6.5 286 042 268 660 516 086
Cost of sales (128 640) (121 537) (225 698)
Gross profit 7.0 157 402 147 123 290 388
Other income 7 452 10 198 16 509
Other operating costs 4.8 (149 065) (142 248) (278 227)
Operating profit 4.8 15 789 15 073 28 670
Dividend income 20 18 18
Finance income 2 583 1 324 3 604
Finance costs (115) (140) (214)
Profit before tax 12.3 18 277 16 275 32 078
Income tax expense (5 480) (4 741) (9 501)
Profit for the period 11.0 12 797 11 534 22 577
Other comprehensive income
Actuarial loss on post-retirement
defined benefit plan - - (77)
Fair value adjustment on
available-for-sale financial assets - - 52
Total comprehensive income for the period 12 797 11 534 22 552
Profit attributable to:
Ordinary and 'N' ordinary shareholders 6 579 5 957 11 821
Preference shareholders 165 17 33
Profit attributable to equity
holders of the parent 6 744 5 974 11 854
Non-controlling interest 6 053 5 560 10 723
Profit for the period 12 797 11 534 22 577
Total comprehensive income attributable to:
Ordinary and 'N' ordinary shareholders
of the parent 6 579 5 957 11 808
Preference shareholders 165 17 33
Profit attributable to equity holders
of the parent 6 744 5 974 11 841
Non-controlling interest 6 053 5 560 10 711
Total comprehensive income for the period 12 797 11 534 22 552
Reconciliation of headline earnings
Profit attributable to equity holders 6 579 5 957 11 821
Adjusted for:
Profit from disposal of property,
plant and equipment and investment property - (1 780) (1 840)
Impairment loss on equipment and shopfittings - - 305
Headline earnings 6 579 4 177 10 286
Basic earnings per ordinary share (cents) 10.5 57.8 52.3 103.8
Headline earnings per ordinary share
(cents) 57.5 57.8 36.7 90.3
Diluted basic earnings per
ordinary share (cents) 57.6 52.2 103.6
Diluted headline earnings per ordinary
share (cents) 57.6 36.6 90.1
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) 11 414 11 418 11 414
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
Unaudited Unaudited Audited
Notes R'000 R'000 R'000
Share capital 4.5 1 200 1 200 1 200
Share premium 6 076 6 076 6 076
Other reserves 4.6
Opening balance 540 553 553
Fair value adjustment on
available-for-sale financial assets - - 29
Actuarial loss on post-retirement
defined benefit plan - - (42)
Closing balance 540 553 540
Retained earnings
Opening balance 136 581 124 760 124 760
Profit for the period 6 744 5 974 11 854
Preference dividends declared/paid (165) (17) (33)
Ordinary dividends paid (3 986) - -
Closing balance 139 174 130 717 136 581
Non-controlling interest
Opening balance 117 563 106 869 106 869
Profit for the period 6 053 5 560 10 723
Preference dividends declared/paid (8) (8) (17)
Ordinary dividends paid (5 648) - -
Actuarial loss on post-retirement
defined benefit plan - - (35)
Fair value adjustment on available-for-sale
financial assets - - 23
Closing balance 117 960 112 421 117 563
Total capital and reserves 264 950 250 967 261 960
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Six months Year
ended ended ended
31 December 31 December 31 December
2015 2014 2015
Unaudited Unaudited Audited
R'000 R'000 R'000
Operating profit before working capital changes 26 214 23 029 50 328
Working capital changes 8 929 9 340 4 849
Interest income 2 583 1 324 3 604
Interest expense (115) (140) (214)
Dividends paid (9 634) - (50)
Dividends received 20 18 18
Normal tax paid (2 954) (405) (814)
Net cash inflow from operations 25 043 33 166 57 721
Additions to property, plant and equipment (7 686) (20 321) (31 775)
Additions to investment property (2 290) - (5 295)
Additions to intangible assets (2 021) (2 295) (3 823)
Proceeds from disposal of property, plant
and equipment - 438 471
Proceeds from disposal of investment property - - 5 795
Net cash outflow from investing activities (11 997) (22 178) (34 627)
Net increase in cash and cash equivalents 13 046 10 988 23 094
Cash and cash equivalents at the beginning
of the period 81 781 58 687 58 687
Cash and cash equivalents at the end of the period 94 827 69 675 81 781
GROUP SEGMENTAL REPORTING
Six months Six months Year
ended ended ended
31 December 31 December 31 December
2015 2014 2015
Unaudited Unaudited Audited
R'000 R'000 R'000
Revenue
Total external retail revenue 286 614 269 577 517 314
Retail segment revenue 288 515 272 687 521 822
Intersegment revenue earned (1 901) (3 110) (4 508)
Total external property revenue 6 880 5 417 11 417
Property segment revenue 9 358 7 585 15 942
Intersegment revenue earned (2 478) (2 168) (4 525)
Dividends received 20 18 18
Interest income 2 583 1 324 3 604
Profit on sale of property - - 3 864
Total group revenue 296 097 276 336 536 217
Segment operating profit
Retail segment profit 14 942 13 912 26 807
Property segment profit 4 048 4 479 7 825
Group services operating loss (3 201) (3 318) (5 962)
Total group operating profit 15 789 15 073 28 670
Segment profit before tax
Retail segment profit before tax 14 942 13 912 26 807
Property segment profit before tax 4 048 4 479 7 825
Group services loss before tax (713) (2 116) (2 554)
Total group profit before tax 18 277 16 275 32 078
Depreciation and amortisation
Retail 11 508 9 619 20 121
Property 1 678 1 251 2 103
Total group depreciation and amortisation 13 186 10 870 22 224
Segment assets
Retail 223 255 220 345 216 705
Property 80 222 78 001 79 204
Group services* 34 710 14 749 31 192
Total group segment assets 338 187 313 095 327 101
Segment liabilities
Retail 64 545 54 556 55 895
Property 3 412 4 039 4 987
Group services* 5 280 3 533 4 259
Total group segment liabilities 73 237 62 128 65 141
Capital expenditure
Retail 9 683 8 552 21 433
Property 2 314 14 064 19 460
Total group capital expenditure 11 997 22 616 40 893
* Group services include corporate costs.
OTHER INFORMATION
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
Unaudited Unaudited Audited
Capital commitments
Authorised - not contracted for (R'000) 16 482 16 929 35 950
Authorised - contracted for (R'000) 6 803 18 193 5 566
Gross profit margin (%) 55.0 54.8 56.3
Operating profit/(loss) margin (%) 5.5 5.6 5.6
Retail segment operating profit/(loss) margin (%) 5.2 5.2 5.2
Net asset value (R) 12.60 11.88 12.38
Notes
1 Basis of presentation of financial statements
These unaudited condensed consolidated interim financial statements for the six months
ended 31 December 2015 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 2015.
2 Unaudited results
These results have not been reviewed nor audited by the group's auditors. The
unaudited 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 3 March 2016.
3 Preference dividend
A dividend on the 6% cumulative preference shares for the six months ended
31 December 2015 in the amount of R165 000 was declared by the board of directors
on 14 December 2015 and paid on 11 January 2016.
4 Note to the financial results
4.1 Property, plant and equipment - During the prior year there was a
reclassification from property, plant and equipment to investment property.
This property was previously owner occupied, but was reclassified on
1 January 2015 when Queenspark Proprietary Limited moved to a smaller space
within the building, resulting in the previously occupied space being rented
out to third parties.
4.2 Financial instruments - The carrying value of financial instruments which are
short term in nature, settled within 12 months, substantially approximates the
fair value.
The carrying value of financial instruments which are long term in nature, settled
after 12 months, substantially approximates the fair value.
4.3 Forward exchange contracts - The increase in forward exchange contracts is due
to the significant weakening in the Rand.
4.4 Intangible assets - The increase relates to the implementation of a new ERP system.
4.5 Share capital is comprised of the following:
31 December 31 December 30 June
2015 2014 2015
R'000 R'000 R'000
Ordinary share capital 650 650 650
Preference share capital 550 550 550
1 200 1 200 1 200
4.6 Other reserves is comprised of the following:
Share-based payment reserves 314 314 314
Other reserves 226 239 226
540 553 540
COMMENTARY
The principal operating subsidiary Rex Trueform Clothing Company Limited reports as
follows:
"Group results
The group produced satisfactory results for the six months ended 31 December 2015.
Revenue increased by 7.1% to R296.2 million (2014: R276.6 million). The gross profit
which is generated from the retail segment increased by 7.0% to R157.4 million
(2014: R147.1 million).
Other income increased by 15.0%, if the previous year's once-off profit of R3.9 million
from the sale of the property situated in Atlantis is excluded from such other income.
Trading expenses, which were a key area of focus, were contained and increased by 4.9%.
The above resulted in the operating profit increasing by 3.4% to R16.4 million
(2014: R15.9 million). Excluding the prior period profit on sale of the property,
the operating profit increased by 36.6%. This increase was mainly due to the improvement
in the trading performance of the property segment.
Profit after tax increased by 8.9% to R13.4 million (2014: R12.3 million), resulting in
the basic earnings per share increasing by 8.9%. Headline earnings per share (which does
not take into account the once-off profit on sale of the property in the prior period)
increased by 47.7%.
Retail (Queenspark)
Queenspark, while operating in a challenging market, increased turnover during the
period by 6.5% to R286.0 million (2014: R268.7 million). The gross profit margin increased
marginally to 55% (2014: 54.8%). This, together with the containment of costs,
contributed to the 7.4% increase in operating profit which increased to R14.9 million
(2014: R13.9 million).
Key business initiatives being introduced include the recent implementation of the
new enterprise resource planning ("ERP") system at the head office and distribution
centre. Queenspark is in the process of rolling out the new point-of-sale system
(connected to the ERP system) at its retail stores.
Property
The operating profit of this segment amounted to R4.0 million. The previous period's
operating profit of R4.5 million includes the R3.9 million profit on the sale of the property.
Prospects
Retail (Queenspark)
The clothing retail market is expected to remain under pressure due to various factors
that include the sluggish economy. The cost of goods imported is subject to the
weakening of the Rand. Going forward the weaker Rand will likely put pressure on gross margins.
Initiatives being considered and introduced mainly focus on turnover growth and are
predominantly aimed at improving the performance over the medium to long term. The
recent implementation of the ERP system is expected to provide benefits in the 2017
financial year and thereafter. The company recently started selling its product online
through the Zando website. This is part of the company's strategy towards servicing a
larger customer base and is showing signs of potential.
Property
The group continues to focus on the development of the feasibility studies in respect
of the undeveloped investment properties located in Salt River (Cape Town)."
Signed on behalf of the board
ML Krawitz CEA Radowsky
(Chairman) (Chief Executive Officer)
Cape Town
4 March 2016
Non-executive directors: ML Krawitz (Chairman), HJ Borkum*, PM Naylor*, RV Orlin* and PE Shub
* Independent non-executive director
Executive directors: CEA Radowsky (Chief Executive Officer) and DS Johnson
(Financial Director)
Registered office: Rex Buildings, 263 Victoria Road, Salt River, Cape Town, 7925
Secretary: AT Snitcher
Transfer secretaries: Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001
Sponsor: Java Capital
Date: 04/03/2016 01:38:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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