Wrap Text
Unaudited interim condensed consolidated results for the six months ended 31 December 2016
AFRICAN & OVERSEAS ENTERPRISES LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA - REG. NO. 1947/027461/06)
JSE share codes: AOO - AON - AOVP
ISIN: ZAE000000485 - ZAE000009718 - ZAE000000493
("the company" or "the group")
UNAUDITED INTERIM CONDENSED CONSOLIDATED RESULTS
for the six months ended 31 December 2016
Highlights
Revenue decreased by 5.2% to R280.7 million (31 December 2015: R296.1 million)
Operating profit decreased by 77.3% to R3.6 million (31 December 2015: R15.8 million)
Gross profit margin % increased to 55.1% (31 December 2015: 55.0%)
Headline earnings per share decreased by 73.3% to 15.4 cents (31 December 2015: 57.8 cents)
Earnings per share decreased by 76.6% to 13.5 cents (31 December 2015: 57.8 cents)
Net asset value per share decreased by 1.6% to 12.40 cents (31 December 2015: 12.60 cents)
Ordinary dividend per share paid amounted to 17 cents (31 December 2015: 35 cents)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at As at
31 Dec 31 Dec 30 Jun
2016 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
ASSETS
Non-current assets 158 498 148 602 155 705
Property, plant and equipment 56 061 51 319 53 355
Investment property 72 027 73 177 71 849
Intangible assets 24 600 18 717 23 432
Other investments 576 576 576
Deferred tax asset 5 234 4 813 6 493
Current assets 174 030 189 585 185 827
Inventories 74 003 71 601 61 319
Trade and other receivables (note 4.5) 23 267 16 347 35 657
Forward exchange contracts - 4 383 -
Income tax receivable 1 052 2 1 114
Accrued operating lease asset 3 438 2 425 3 219
Cash and cash equivalents 72 270 94 827 84 518
Total assets 332 528 338 187 341 532
EQUITY AND LIABILITIES
Capital and reserves 261 432 264 950 262 410
Share capital (note 4.2) 1 200 1 200 1 200
Share premium 6 076 6 076 6 076
Other reserves (note 4.3) 1 045 540 1 045
Retained earnings 136 291 139 174 136 688
Non-controlling interest 116 820 117 960 117 401
Non-current liabilities 24 128 23 515 22 274
Post-retirement liability 2 006 2 703 1 991
Accrued operating lease liability 19 432 18 677 18 104
Deferred tax liability 2 690 2 135 2 179
Current liabilities 46 968 49 722 56 848
Trade and other payables 46 418 49 176 54 634
Forward exchange contracts 519 - 2 176
Income tax payable 31 546 38
Total equity and liabilities 332 528 338 187 341 532
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 Jun
2016 2015 2016
% Unaudited Unaudited Audited
change R'000 R'000 R'000
Revenue (5.2) 280 656 296 097 558 229
Turnover (5.3) 270 740 286 042 537 588
Cost of sales (121 463) (128 640) (248 937)
Gross profit (5.2) 149 277 157 402 288 651
Other income 2.2 7 616 7 452 15 176
Other operating costs 2.8 (153 309) (149 065) (294 550)
Operating profit (77.3) 3 584 15 789 9 277
Dividend income 20 20 20
Finance income (11.7) 2 280 2 583 5 445
Finance costs (111) (115) (222)
Profit before tax (68.4) 5 773 18 277 14 520
Income tax expense (2 222) (5 480) (4 946)
Profit for the period (72.3) 3 551 12 797 9 574
Other comprehensive income:
Actuarial gain on post-retirement
defined benefit plan - - 708
Total comprehensive income for the period 3 551 12 797 10 282
Profit attributable to:
Ordinary and "N" ordinary shareholders
of the parent 1 539 6 579 4 241
Preference shareholders 85 165 33
Profit attributable to equity holders
of the parent 1 624 6 744 4 274
Non-controlling interest 1 927 6 053 5 300
Profit for the period 3 551 12 797 9 574
Total comprehensive income attributable to:
Ordinary and "N" ordinary shareholders
of the parent 1 539 6 579 4 746
Preference shareholders 85 165 33
Profit attributable to equity holders
of the parent 1 624 6 744 4 779
Non-controlling interest 1 927 6 053 5 503
Total comprehensive income for the period 3 551 12 797 10 282
Reconciliation of headline earnings
Profit attributable to equity holders 1 539 6 579 4 241
Adjusted for:
Loss/(profit) from disposal of property, plant
and equipment and investment property 219 - (28)
Impairment reversal on equipment and shopfittings - - (305)
Headline earnings 1 758 6 579 3 908
Basic earnings per ordinary share (cents) (76.6) 13.5 57.8 37.2
Headline earnings per ordinary share
(cents) (73.3) 15.4 57.8 34.3
Diluted basic earnings per ordinary share
(cents) 13.5 57.6 37.1
Diluted headline earnings per ordinary share
(cents) 15.4 57.6 34.2
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 11 418
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 Jun
2016 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Share capital (note 4.2) 1 200 1 200 1 200
Share premium 6 076 6 076 6 076
Other reserves (note 4.3) 1 045 540 1 045
Opening balance 1 045 540 540
Actuarial gain on post-retirement defined
benefit plans - - 505
Retained earnings 136 291 139 174 136 688
Opening balance 136 688 136 581 136 581
Profit for the period 1 624 6 744 4 274
Preference dividends declared/paid (85) (165) (33)
Ordinary dividends paid (1 936) (3 986) (4 134)
Non-controlling interest 116 820 117 960 117 401
Opening balance 117 401 117 563 117 563
Profit for the period 1 927 6 053 5 300
Preference dividends declared/paid (8) (8) (17)
Ordinary dividends paid (2 500) (5 648) (5 648)
Actuarial gain on post-retirement defined
benefit plan - - 203
Total capital and reserves 261 432 264 950 262 410
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 Jun
2016 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Operating profit before working capital changes 16 022 26 214 36 013
Working capital changes (7 466) 8 929 4 737
Interest income 2 280 2 583 5 445
Interest expense (111) (115) (222)
Dividends paid (4 453) (9 634) (9 832)
Dividends received 20 20 20
Normal tax paid (396) (2 954) (5 676)
Net cash inflow from operating activities 5 896 25 043 30 485
Additions to property, plant and equipment (11 876) (7 686) (17 539)
Additions to investment property (1 973) (2 290) (2 749)
Additions to intangible assets (1 508) (2 021) (7 685)
Proceeds from disposal of property, plant
and equipment 152 - 225
Acquisition of business (2 939) - -
Net cash outflow from investing activities (18 144) (11 997) (27 748)
Net (decrease)/increase in cash and cash equivalents (12 248) 13 046 2 737
Cash and cash equivalents at the beginning of
the period 84 518 81 781 81 781
Cash and cash equivalents at the end of the period 72 270 94 827 84 518
GROUP SEGMENTAL REPORTING
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 Jun
2016 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Revenue
Total external retail revenue 270 980 286 614 538 579
Retail segment revenue 273 088 288 515 542 437
Intersegment revenue earned (2 108) (1 901) (3 858)
Total external property revenue 7 376 6 880 14 185
Property segment revenue 9 893 9 358 19 277
Intersegment revenue earned (2 517) (2 478) (5 092)
Dividends received 20 20 20
Interest income 2 280 2 583 5 445
Total group revenue 280 656 296 097 558 229
Segment operating profit
Retail segment profit 3 174 14 942 9 372
Property segment profit 3 958 4 048 8 450
Group services operating loss (3 548) (3 201) (8 545)
Total group operating profit 3 584 15 789 9 277
Depreciation and amortisation
Retail 10 393 11 508 20 118
Property 1 808 1 678 3 466
Total group depreciation and amortisation 12 201 13 186 23 584
Segment assets
Retail 220 493 223 255 223 584
Property 79 828 80 222 79 042
Group services* 32 207 34 710 38 906
Total group segment assets 332 528 338 187 341 532
Segment liabilities
Retail 62 305 64 545 68 856
Property 5 192 3 412 7 485
Group services* 3 599 5 280 2 781
Total group segment liabilities 71 096 73 237 79 122
Capital expenditure
Retail 12 737 9 683 25 100
Property 2 620 2 314 2 873
Total group capital expenditure 15 357 11 997 27 973
* Group services include corporate costs.
OTHER INFORMATION
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 Jun
2016 2015 2016
Unaudited Unaudited Audited
Capital commitments
Authorised - not contracted for (R'000) 10 218 16 482 20 786
Authorised - contracted for (R'000) 7 475 6 803 10 655
Gross profit margin (%) 55.1 55.0 53.7
Operating profit margin (%) 1.3 5.5 1.7
Retail segment operating profit margin (%) 1.2 5.2 1.7
Net asset value per share (R) 12.40 12.60 12.43
NOTES
1 Basis of presentation of financial statements
The unaudited condensed consolidated interim financial statements are prepared in
accordance with the requirements of the JSE Limited Listings Requirements and the
requirements of the Companies Act of South Africa. The JSE Listings Requirements
require interim 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 financial statements have been prepared using accounting policies that comply
with IFRS and which are consistent with those applied in the preparation of the
annual financial statements for the year ended 30 June 2016.
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 9 March 2017.
3 Preference dividends
Dividends on the 6% cumulative participating preference shares for the six months
ended 31 December 2016 in the aggregate amount of R85 250 were declared by the
board of directors on 14 December 2016 and were paid on 16 January 2017.
4 Note to the financial results
4.1 Acquisition of business
A payment of R2 939 000 was made for the acquisition of the business operated
by Queenspark Proprietary Limited's Namibian franchisee effective 2 October 2016.
The purchase price comprises the following:
R'000
Intangible asset 1 100
Fixed assets 500
Inventory 1 339
2 939
4.2 Share capital is comprised of the following:
As at As at As at
31 Dec 31 Dec 30 Jun
2016 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Ordinary share capital 650 650 650
Preference share capital 550 550 550
1 200 1 200 1 200
4.3 Other reserves is comprised of the following:
As at As at As at
31 Dec 31 Dec 30 Jun
2016 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Share-based payment reserves 314 314 314
Other reserves 731 226 731
1 045 540 1 045
4.4 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 approximate
the fair value.
4.5 Trade and other receivables
The balance of trade and other receivables has increased when compared to the
corresponding period partly due to an increase in the online partner trade
accounts receivable.
COMMENTARY
The principal operating subsidiary Rex Trueform Clothing Company Limited reports
as follows:
"Group results
Rex Trueform Clothing Company Limited ("the company") and its subsidiaries
(collectively, "the group") performance was negatively influenced by the difficult
trading conditions, which mainly impacted the retail segment. Retail consumer
confidence and spending continued to be adversely impacted by, amongst other things,
the sluggish economy, the increase in living costs and regulatory changes to
credit legislation.
Revenue decreased by 5.2% to R280.9 million (2015: R296.2 million). The gross profit
generated from the retail segment decreased, in line with the decline in turnover,
by 5.2% to R149.3 million (2015: R157.4 million). Other income, which includes rental
income, increased by 4%. Trading expenses were contained and increased by 2.9%.
The above resulted in the operating profit decreasing by 73.7% to R4.3 million
(2015: R16.4 million). Profit after tax decreased by 68.2% to R4.3 million
(2015: R13.4 million) resulting in the earnings per share decreasing by 68.2%.
Retail (Queenspark)
Queenspark Proprietary Limited ("Queenspark") (through a wholly-owned subsidiary) has,
during the period, acquired the Queenspark retail store business operated by its
Namibian franchisee and has opened a further store in Namibia. The retail segment
comprises Queenspark and its Namibian subsidiary.
The retail segment, while operating in a challenging market, produced an operating
profit of R3.2 million (2015: R14.9 million). Turnover, impacted by the tough trading
environment, decreased by 5.3%. The gross profit margin remained stable at 55.1%
(2015: 55.0%). Costs were contained and increased by 1.9%.
Queenspark recently started selling its products on the Spree website with positive
results, with products now available on both the Zando and Spree online platforms.
A lay-by payment option has been implemented at stores in South Africa since
September 2016 and, although still in its infancy, uptake has been pleasing.
Property
The operating profit of this segment amounted to R4.0 million (2015: R4.0 million),
being impacted by certain once-off costs incurred during the period.
Prospects
Retail (Queenspark)
Queenspark will continue to be under severe pressure during the second half of the
year, as economic and market conditions are likely to remain difficult. Shareholders
are reminded that the second six months of the year are generally worse than the
first six months.
Queenspark will continue to focus on store growth. Further product categories are to
be added to existing ranges in an endeavour to improve performance. As a result of
Queenspark products being offered on both the Zando and Spree websites, Queenspark is
now able to service a larger client base. Knowledge gained from Queenspark's online
exposure will be leveraged in an endeavour to refine the offerings going forward.
The new IT Enterprise Resource Planning system caters, amongst other things, for the
improved capturing and analyses of customer and product data, which would inform
business decisions going forward. It is anticipated that these initiatives will
improve performance in the next financial year.
Property
The Rex Trueform Office Park will, as from 1 April 2017, be fully let. The group has
yet to develop two further properties. The one property is classified as a heritage site,
which limits development opportunities. Development options will continue to be
considered in respect of these properties."
Signed on behalf of the board
ML Krawitz CEA Radowsky
(Chairman) (Chief Executive Officer)
Cape Town
10 March 2017
Directors: ML Krawitz** (Chairman), CEA Radowsky (Chief Executive Officer),
DS Johnson (Financial Director), MJA Golding**, HJ Borkum*, PM Naylor* and RV Orlin*
** Non-executive * Independent 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 in order to fill the vacancy arising from the retirement of
PE Shub. MJA Golding retired as a director at the annual general meeting of the
company held on 17 November 2016 and was duly elected as a director by the shareholders.
Registered office: Rex Buildings, 263 Victoria Road, Salt River, Cape Town, 7925
Company secretary: AT Snitcher
Transfer secretaries: Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
Sponsor: Java Capital
Website: http://www.queenspark.com - http://www.rextrueform.com
Date: 10/03/2017 11:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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