Wrap Text
Reviewed condensed consolidated preliminary financial results for the year ended 30 June 2016
AFRICAN AND 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")
REVIEWED CONDENSED CONSOLIDATED PRELIMINARY FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2016
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
30 June 30 June
2016 2015
Reviewed Audited
R'000 R'000
ASSETS
Non-current assets 155 705 151 146
Property, plant and equipment 53 355 54 467
Investment property 71 849 72 539
Intangible assets 23 432 17 396
Other investments 576 576
Deferred tax asset 6 493 6 168
Current assets 185 827 175 955
Inventories 61 319 70 084
Trade and other receivables 38 876 22 904
Forward exchange contracts - 883
Income tax receivable 1 114 303
Cash and cash equivalents 84 518 81 781
Total assets 341 532 327 101
EQUITY AND LIABILITIES
Capital and reserves 262 410 261 960
Share capital 1 200 1 200
Share premium 6 076 6 076
Other reserves 1 045 540
Retained earnings 136 688 136 581
Non-controlling interest 117 401 117 563
Non-current liabilities 22 274 21 548
Post-retirement liability 1 991 2 673
Accrued operating lease liability 18 104 17 084
Deferred tax liability 2 179 1 791
Current liabilities 56 848 43 593
Trade and other payables 54 634 43 573
Forward exchange contracts 2 176 -
Income tax payable 38 20
Total equity and liabilities 341 532 327 101
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Year ended Year ended
30 June 30 June
2016 2015
% Reviewed Audited
change R'000 R'000
Revenue 4.1 558 229 536 217
Turnover 4.2 537 588 516 086
Cost of sales (248 937) (225 698)
Gross profit (0.6) 288 651 290 388
Other income (8.1) 15 176 16 509
Other operating costs 5.9 (294 550) (278 227)
Operating profit (67.6) 9 277 28 670
Dividend income 20 18
Finance income 5 445 3 604
Finance costs (222) (214)
Profit before tax (54.7) 14 520 32 078
Income tax expense (4 946) (9 501)
Profit for the period (57.6) 9 574 22 577
Other comprehensive income
Actuarial gain/(loss) on post-retirement defined benefit plan 708 (77)
Gain on available-for-sale investments - 52
Total comprehensive income for the period 10 282 22 552
Profit attributable to:
Ordinary and "N" ordinary shareholders of the parent 4 241 11 821
Preference shareholders 33 33
Profit attributable to equity holders of the parent 4 274 11 854
Non-controlling interest 5 300 10 723
Profit for the year 9 574 22 577
Total comprehensive income attributable to:
Ordinary and "N" ordinary shareholders of the parent 4 746 11 808
Preference shareholders 33 33
Profit attributable to equity holders of the parent 4 779 11 841
Non-controlling interest 5 503 10 711
Total comprehensive income for the year 10 282 22 552
Reconciliation of headline earnings
Earnings attributable to equity holders 4 241 11 821
Adjusted for:
Profit from disposal of property, plant and equipment (28) (1 840)
Impairment (reversal)/loss on equipment and shopfittings (305) 305
Headline earnings 3 908 10 286
Basic earnings per ordinary share (cents) (64.2) 37.2 103.8
Headline earnings per ordinary share (cents) (62.0) 34.3 90.3
Diluted earnings per ordinary share (cents) (64.2) 37.1 103.6
Diluted headline earnings per ordinary share (cents) (62.0) 34.2 90.1
Weighted average number of equity shares on which
earnings per share is based (000's) 11 387 11 387
Weighted average number of equity shares on which
diluted earnings per share is based (000's) 11 418 11 414
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended Year ended
30 June 30 June
2016 2015
Reviewed Audited
R'000 R'000
Share capital 1 200 1 200
Share premium 6 076 6 076
Other reserves
Opening balance 540 553
Actuarial gains on post-retirement defined benefit plans 505 (42)
Gain on available-for-sale financial instruments - 29
Closing balance 1 045 540
Retained earnings
Opening balance 136 581 124 760
Profit for the year 4 274 11 854
Preference dividends paid (33) (33)
Ordinary dividends paid (4 134) -
Closing balance 136 688 136 581
Non-controlling interest
Opening balance 117 563 106 869
Profit for the year 5 300 10 723
Preference dividends paid (17) (17)
Ordinary dividends paid (5 648) -
Other comprehensive income/(loss) 203 (12)
Closing balance 117 401 117 563
Total capital and reserves 262 410 261 960
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended Year ended
30 June 30 June
2016 2015
Reviewed Audited
R'000 R'000
Operating profit before working capital changes 36 013 50 328
Working capital changes 4 737 4 849
Interest received 5 445 3 604
Interest paid (222) (214)
Dividends paid (9 832) (50)
Dividends received 20 18
Income tax paid (5 676) (814)
Net cash inflows from operating activities 30 485 57 721
Additions to property, plant, equipment and investment property (20 288) (37 070)
Additions to intangible assets (7 685) (3 823)
Proceeds from disposal of property, plant, equipment
and investment property 225 6 266
Net cash outflows from investing activities (27 748) (34 627)
Net increase in cash and cash equivalents 2 737 23 094
Cash and cash equivalents at the beginning of the year 81 781 58 687
Cash and cash equivalents at the end of the year 84 518 81 781
GROUP SEGMENTAL REPORTING
Year ended Year ended
30 June 30 June
2016 2015
Reviewed Audited
R'000 R'000
Revenue
Total external retail revenue 538 579 517 314
Retail segment revenue 542 437 521 822
Intersegment revenue earned (3 858) (4 508)
Total external property revenue 14 185 11 417
Property segment revenue 19 277 15 942
Intersegment revenue earned (5 092) (4 525)
Dividends received 20 18
Interest income 5 445 3 604
Profit on sale of property - 3 864
Total group revenue 558 229 536 217
Segment operating profit/(loss)
Retail segment profit 9 372 26 807
Property segment profit 8 450 7 825
Group services operating loss (8 545) (5 962)
Total group operating profit 9 277 28 670
Depreciation and amortisation
Retail 20 118 20 121
Property 3 466 2 103
Total group depreciation and amortisation 23 584 22 224
Segment assets
Retail 223 584 216 705
Property 79 042 79 204
Group services* 38 906 31 192
Total group segment assets 341 532 327 101
Segment liabilities
Retail 68 856 55 895
Property 7 485 4 987
Group services* 2 781 4 259
Total group segment liabilities 79 122 65 141
Capital expenditure
Retail 25 100 21 433
Property 2 873 19 460
Total group capital expenditure 27 973 40 893
* Group services include corporate costs.
OTHER INFORMATION
Year ended Year ended
30 June 30 June
2016 2015
Reviewed Audited
Capital commitments
Authorised - not contracted for (R'000) 20 786 35 950
Authorised - contracted for (R'000) 10 655 5 566
Gross profit margin (%) 53.7 56.3
Operating profit margin (%) 1.7 5.6
Retail segment operating profit margin (%) 1.7 5.2
Net asset value per share (R) 12.43 12.38
NOTES
1 REVIEW OF THE INDEPENDENT AUDITORS
These condensed consolidated preliminary financial statements of African and Overseas
Enterprises Limited for the year ended 30 June 2016 have been reviewed by the
company's auditors, KPMG Inc., who expressed an unmodified review conclusion.
The auditor's report does not necessarily report on all of the information contained
in these financial results. Shareholders are therefore advised that in order to
obtain a full understanding of the nature of the auditor's engagement they should
obtain a copy of the auditor's report together with the accompanying financial
statements from the issuer's registered office.
2 BASIS OF PREPARATION
The condensed consolidated preliminary financial statements are prepared in accordance
with the requirements of the JSE Limited Listings Requirements for preliminary
reports and the requirements of the Companies Act of South Africa. The JSE Listings
Requirements require preliminary reports to be prepared in accordance with the
framework concepts and the measurement and recognition requirements of International
Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Pronouncements as issued
by the Financial Reporting Standards Council and to also, as a minimum, contain
the information required by IAS 34: Interim Financial Reporting.
These reviewed financial statements have been prepared under the supervision of the
group financial director, Damian Johnson CA(SA).
3 ACCOUNTING POLICIES
The accounting policies applied in the preparation of the condensed consolidated
preliminary financial statements are in terms of IFRS and are consistent with those
applied in the previous consolidated annual financial statements.
4 NOTE TO THE FINANCIAL STATEMENTS
4.1 Intangible assets - The balance of intangible assets has increased during the
year due to the acquisition and implementation of a new IT ERP system.
4.2 Trade and other receivables - The balance of trade and other receivables has
increased at 30 June 2016 due to an increase in prepayments made in respect
of imported merchandise.
4.3 Financial instruments - Financial instruments included in trade and other
receivables, trade and other payables and forward exchange contract liabilities
are short term in nature, settled within 12 months, and the carrying value
substantially approximates the fair value.
COMMENTARY
The principal operating subsidiary Rex Trueform Clothing Company Limited reports
as follows:
"GROUP RESULTS
The group's performance unfortunately did not meet expectations mainly due to the
performance of the retail segment, the volatility of the Rand and the unseasonably warm
winter. Consumer confidence and spending has been adversely impacted by, amongst other
things, the sluggish economy, the increase in living costs, the increase in interest
rates and regulatory changes to credit legislation introduced during the year.
Revenue increased by 4.1% to R558.6 million (2015: R536.6 million). The gross profit
generated from the retail segment decreased by 0.6% to R288.7 million
(2015: R290.4 million). Other income, which includes rental income, decreased by 7.7%.
Other income increased by 19.5% if the prior year R3.9 million profit on the sale of the
Atlantis property is excluded. Trading expenses were contained and increased by 5.5%.
The above resulted in the operating profit decreasing by 61.5% to R11.5 million
(2015: profit of R29.9 million). The prior year operating profit includes an amount of
R3.9 million in respect of the profit on sale of the Atlantis property. Excluding the
prior year profit on sale of the Atlantis property, the operating profit decreased by
55.8%. Profit after tax decreased by 50.6% to R11.8 million (2015: profit of R23.8 million)
resulting in the earnings per share decreasing by 50.6%.
RETAIL (QUEENSPARK)
Queenspark, while operating in a challenging market, produced an operating profit of
R9.4 million compared to a R26.8 million operating profit in the prior period. Turnover
increased by a modest 4.2%, with the regulatory changes to credit legislation mostly
impacting the second half of the year.
The gross profit margin decreased to 53.7% (2015: 56.3%) impacted by the weakening of
the Rand. A new enterprise resource planning system was implemented during the year.
The company will focus on deriving benefits from this.
PROPERTY
The operating profit of this segment amounted to R8.5 million (2015: R7.8 million
which included the R3.9 million profit on sale of the non-strategic property located
in Atlantis). Excluding the impact of the prior year sale of the Atlantis property,
the segment operating profit increased by 113.3%. This improvement is driven by the
successful development of the Rex Trueform Office Park.
GROUP SERVICES
Group services costs increased by 34% to R6.3 million (2015: R4.7 million). This
increase included the once-off corporate costs relating to the recent comparable offer
made by a consortium to the company's ordinary and "N" ordinary shareholders.
Excluding the once-off costs, the group services costs increased by 7.9%.
PROSPECTS
RETAIL (QUEENSPARK)
The sale of the current summer season's stock during the first eight weeks of the 2017
financial year has been below expectations due to the difficult trading conditions.
During the 2016 financial year the company started selling its products on the Zando
website and results so far have been pleasing. This is part of the company's strategy
towards servicing a larger client base.
Various other initiatives are to be introduced going forward with a view to improving
turnover, however the tough economic trading conditions and regulatory changes to credit
legislation will, amongst other things, continue to impact the business in the short term.
PROPERTY
The business has yet to develop two further properties and has been considering various
development options during the year. The one property is classified as a Heritage site,
which limits the development opportunities and has caused a delay in the development
process. The business will continue to consider feasibilities with a view to developing
the properties."
DIVIDEND
The directors have proposed a distribution of 17 cents per share in respect of the
ordinary and "N" ordinary shares. Shareholders will be asked to approve this proposal
of the board at the annual general meeting of the company.
Signed on behalf of the board
ML Krawitz CEA Radowsky
(Chairman) (Chief Executive Officer)
Cape Town
8 September 2016
Directors: ML Krawitz** (Chairman), CEA Radowsky (Chief Executive Officer), DS Johnson (FD),
PM Naylor*, RV Orlin*, HJ Borkum* and MJA Golding**
* Independent non-executive ** Non-executive
PE Shub was a non-executive director of the company until her retirement on 15 August 2016.
On 2 September 2016 MJA Golding was appointed as a non-executive director of the company by
the board in order to fill the vacancy arising from the retirement of PE Shub.
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
Websites: http://www.queenspark.com - http://www.rextrueform.com
Date: 08/09/2016 04:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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