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Audited Group Results for the year ended 28 February 2017
Spanjaard Limited
(Incorporated in the Republic of South Africa)
Registration number 1960/004393/06
Share code: SPA ISIN: ZAE000006938
("Company" or "Group")
AUDITED GROUP RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2017
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
Year ended
Year ended 29 February
28 February 2016
2017 Restated
Audited Audited
R'000 R'000
Revenue 120 055 125 825
Cost of sales (73 690) (73 286)
Gross profit 46 365 52 539
Other income 202 776
Distribution costs (11 115) (11 785)
Administrative expenses (34 538) (33 993)
Finance costs (871) (1 287)
Profit before tax 43 6 250
Taxation 370 (1 244)
Profit for the year 413 5 006
Other comprehensive income
Items that may be subsequently reclassified
Movement in foreign currency translation reserve (114) (284)
Items that will not be be reclassified
Revaluation on property, plant and equipment 1 592 -
Tax on revaluation on property, plant and equipment (446) -
Total comprehensive income for the year attributable to ordinary shareholders 1 445 4 722
Earnings and diluted earnings per ordinary share 5.1 61.5
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
As at 29 February 1 March
28 February 2016 2015
2017 Restated Restated
Audited Audited Audited
R'000 R'000 R'000
Assets
Non-current assets 33 157 33 681 36 227
Property, plant and equipment 31 098 31 042 32 886
Goodwill 437 437 437
Intangibles 1 622 2 202 2 904
Current assets 35 595 40 286 40 399
Inventories 17 051 17 433 19 202
Trade receivables and other receivables 16 419 20 911 15 865
Amount due by ultimate holding company 95 - 2 932
Current income tax receivable 207 346 1 774
Cash and cash equivalents 1 823 1 596 626
Total assets 68 752 73 967 76 626
Equity and liabilities
Capital and reserves attributable to the company's equity holders
Ordinary shares 407 407 407
Share premium 6 464 6 464 6 464
Reserves 38 614 37 169 33 750
Foreign currency translation reserve 17 131 415
Revaluation reserve 8 536 9 147 10 207
Share-based payment compensation reserve 1 906 1 906 1 906
Retained earnings 28 155 25 985 21 222
Total shareholders' equity 45 485 44 040 40 621
Non-current liabilities 5 478 6 055 7 799
Borrowings 386 1 143 3 088
Deferred tax liabilities 5 092 4 912 4 711
Current liabilities 17 789 23 872 28 206
Trade and other payables 11 831 13 335 17 393
Borrowings 1 130 2 717 3 087
Loans from ultimate holding company - 1 953 -
Shareholders for dividends 8 1 362 1 518
Bank overdraft 4 820 4 505 6 208
Total liabilities 23 267 29 927 36 005
Total equity and liabilities 68 752 73 967 76 626
CONSOLIDATED STATEMENT OF CASH FLOW
Year ended Year ended
28 February 29 February
2017 2016
Audited Audited
R'000 R'000
Cash flows from operating activities
Cash receipts from customers 124 637 120 352
Cash paid to suppliers and employees (117 464) (116 559)
Cash generated from operations 7 173 3 793
Interest paid (871) (1 287)
Tax received 140 385
Net cash generated from operating activities 6 442 2 891
Cash flows from investing activities
Purchases of property, plant and equipment (600) (709)
Proceeds on sale of property, plant and equipment - 52
Purchases of intangible assets (230) (388)
Amount due by holding company - loans granted (30) -
Amount due by holding company - receipts from 71 2 932
Net cash (used in)/generated from investing activities (789) 1 887
Cash flows from financing activities
Borrowings repaid (2 611) (2 852)
Proceeds from borrowings 267 537
Loans from holding company - loans received 230 2 001
Loans from holding company - repayments made (2 319) (48)
Dividends paid to company's shareholders (1 294) (1 459)
Net cash used in financing activities (5 727) (1 821)
Net (decrease)/increase in cash and cash equivalents (74) 2 957
Cash and cash equivalents at beginning of year (2 909) (5 582)
Effects of exchange rate changes on cash and cash equivalents (14) (284)
Cash and cash equivalents at end of year (2 997) (2 909)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at
As at 29 February
28 February 2016
2017 Restated
Audited Audited
R'000 R'000
Ordinary shares 407 407
Share premium 6 464 6 464
Foreign currency translation reserve 17 131
Opening balance 131 415
Net movement for the year (114) (284)
Revaluation reserve 8 536 9 147
Opening balance 9 147 10 207
Revaluation 1 146 -
Transfer to retained earnings (1 757) (1 060)
Share based payment compensation reserve 1 906 1 906
Opening balance 1 906 1 906
Net movement for the year - -
Retained earnings 28 155 25 985
Opening balance 25 985 21 222
Profit for the year 413 5 006
Transfer from revaluation reserve 1 757 1 060
Dividend declared - (1 303)
Total shareholders' equity 45 485 44 040
DIVIDENDS
Dividend declared per ordinary share (cents)
- interim - -
- final - 16
RELATED PARTY TRANSACTIONS
Year ended Year ended
28 February 29 February
2017 2016
Audited Audited
R'000 R'000
Transactions with close family members of key management personnel 397 214
Amount due by holding company - receipts from 301 4 933
Loans from holding company - repayments made (2 349) (48)
SUPPLEMENTARY INFORMATION
Year ended Year ended
28 February 29 February
2017 2016
Audited Audited
R'000 R'000
Capital expenditure 830 1 097
During the 2017 financial year Motor vehicles with a cost of R327 077 and accumulated depreciation of R275 433 as well
as plant and equipment with a cost of R147 383 and accumulated depreciation of R110 139 were disposed of. During the
2016 financial year Motor vehicles with a cost of R141 054 and accumulated depreciation of R140 051 were sold in the
normal course of business. Office furniture and equipment with a cost of R64 627 and accumulated depreciation of R32 610
were disposed of in the normal course of business.
The Group's land and buildings comprise Erf 547, Wynberg, Sandton, with a factory building, warehouses and offices
erected thereon. The Group's land and buildings at Wynberg were revalued in the current year on 28 February 2017 by
JC Bokhorst Valuation Services (Pty) Ltd (independent valuators) using a combination of the capitalised rental approach,
which is based on a market capitalisation rate of 10.5% as well as the depreciated replacement cost approach and also
the estimated new replacement cost approach. The land portion was valued based on the estimated new replacement cost
approach and depreciated replacement cost approach due to the value being the same in both valuation approaches.
OPERATING SEGMENTS
Year ended
Year ended 29 February
28 February 2016
2017 Restated
Audited Audited
R'000 R'000
Segment revenue
Special lubricants and allied chemicals 114 195 118 259
External foreign customers 22 686 25 635
External local customers 91 509 92 624
Anti-friction powders 3 764 5 473
External foreign customers 2 959 4 039
External local customers 805 1 434
Other 7 675 7 075
External foreign customers 5 172 5 035
External local customers 2 503 2 040
Interdivisional transactions (5 579) (4 982)
Inter segment sales (5 579) (4 982)
120 055 125 825
Segment result
Special lubricants and allied chemicals 2 951 6 474
Anti-friction powders (859) (87)
Other 227 1 508
Interdivisional transactions (1 405) (358)
Earnings before interest and tax 914 7 537
Segment assets
Special lubricants and allied chemicals 55 823 60 895
Anti-friction powders 11 256 13 522
Other 20 617 26 595
Interdivisional transactions (18 944) (27 045)
68 752 73 967
Segment liabilities
Special lubricants and allied chemicals 25 049 32 554
Anti-friction powders 2 543 4 077
Other 13 288 15 537
Interdivisional transactions (17 613) (22 241)
23 267 29 927
RECONCILIATION OF HEADLINE EARNINGS
Year ended Year ended
28 February 29 February
2017 2016
Audited Audited
Continuing operations R'000 R'000
Profit attributable to shareholders 413 5 006
Loss on disposal of property, plant and equipment 123 67
Income tax effect on disposal (34) (19)
Headline earnings 502 5 054
Weighted average number of ordinary shares in issue ('000) 8 143 8 143
Headline earnings per ordinary share
- basic and diluted (cents) 6.2 62.1
PRIOR PERIOD ERRORS
Due to an improvement of departmental allocations in the current year the Group reallocated warehousing expenses to
distribution costs and administration expenses instead of cost of sales where it was disclosed in the prior year. This
has resulted in a restatement of prior period costs which is reflected in the income statement.
Statement of profit or loss and other comprehensible income 2016 Increase/(Decrease) 2016 Restated
(Extract) R'000 R'000 R'000
Cost of sales 83 509 (10 223) 73 286
Distribution costs 3 916 7 869 11 785
Administrative expenses 31 639 2 354 33 993
Net impact on profit/(loss) before tax -
During the current year it was discovered that accumulated depreciation at the date of the revaluation of land and
buildings was not eliminated against the gross carrying amount of the asset and the net amount was not restated to the
revalued amount of the asset. This has resulted in a restatement as seen below:
Statement of financial position 2016 Increase/(Decrease) Restated
(Extract) R'000 R'000 R'000
Property, plant and equipment 29 412 1 630 31 042
Revaluation reserve (6 457) (2 690) (9 147)
Retained earnings (27 501) 1 516 (25 985)
Deferred tax liabilities (4 456) (456) (4 912)
Statement of financial position 2015 Increase/(Decrease) Restated
(Extract) R'000 R'000 R'000
Property, plant and equipment 31 256 1 630 32 886
Revaluation reserve (7 517) (2 690) (10 207)
Retained earnings (22 738) 1 516 (21 222)
Deferred tax liabilities (4 255) (456) (4 711)
BASIS OF PREPARATION
The summary consolidated financial statements are prepared in accordance with the requirements of the JSE
Limited Listings Requirements for provisional reports, and the requirements of the Companies Act applicable to summary
financial statements. The Listings Requirements require provisional 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. The accounting policies applied in the preparation of the consolidated financial statements
from which the summary consolidated financial statements were derived are in terms of International Financial Reporting
Standards and are consistent with those accounting policies applied in the preparation of the previous consolidated
annual financial statements.
The condensed financial statements should be read in conjunction with the 2017 annual financial statements. The 2017
annual financial statements and the related audit report can be viewed on the Company's website at www.spanjaard.biz.
The annual financial statements, from which this report is extracted, were audited in terms of the Companies Act, 71 of
2008.
The audited condensed consolidated results has been prepared in accordance with IAS 34.
Summarised Group results prepared by: Executive Director Finance, I Saunders - CA(SA) published on 31 May 2017.
COMMENTARY
SALIENT FEATURES
- Revenue down 4.6%
- NAV increased to R5.59 per share
- Operating expenses exceptionally well controlled
Dear shareholder
Business conditions and international markets for our products have been subject to fluctuations and the result is that
revenue for the year is slightly down. Earnings per share are 5.1 cents which is a substantial reduction on the previous
year.
Financially, the Company has performed adequately in extremely testing times. The South African economy has not lent
itself to be supportive of our business, with further declines in mining production being a challenge to overcome for
our Industrial/Marine division.
The good news is that we have an outstanding management team and financially, from a cash point of view, we are sound.
There are some areas of growth in our sales. Furthermore our international sales efforts are being increased. We have
gained some exciting new business in the food contract packaging space, the majority of which will be reflected in the
upcoming 2017/2018 financial year. Even so, turnover in this area grew by just short of 15% year-on-year, which is a
shining light on otherwise ordinary sales numbers.
The weakening exchange rate during the 2016 financial year contributed positively to last year's results, but reversed
during the current financial year as the rand strengthened from R15.85 against the US dollar to a closing rate of R13.18
at 28 February 2017.
Administration and Distribution costs continue to be exceptionally well controlled and we continue to look for further
opportunities to become more efficient in our operations. Our declining debt levels and good working capital management
have also had a positive impact on our finance costs for the year which have declined by 32%.
Our Net Asset Value per share has grown to R5.59 per share (from R5.41) and our cash flow position has been strong
considering the loan from the ultimate holding company was settled during the year. Our mortgage bonds on our property
will also be settled come June this year which will allow us to access funding for future projects. We intend investing
in new manufacturing machinery in the short-term to expand production capacity as well as to replace existing equipment
which is ageing and becoming expensive to maintain. In light of this, and our financial performance during the current
financial year, we are also being conservative in our dividend policy and not declaring a dividend.
AUDIT OPINION
These summary consolidated financial statements for the year ended 28 February 2017 have been audited by
PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon. The auditor also expressed an unmodified
opinion on the annual financial statements from which these summary consolidated financial statements were derived.
A copy of the auditor's report on the summary consolidated financial statements and of the auditor's report on the annual
consolidated financial statements are available for inspection at the company's registered office, together with the
financial statements identified in the respective auditor's reports.
NOTICE OF ANNUAL GENERAL MEETING AND PUBLICATION OF ANNUAL REPORT
Shareholders are advised that:
- the Annual General Meeting of the Company ("the AGM") will be held at 12:00 on Thursday, 27 July 2017 at The Wanderers
Club, 21 North Road, Illovo, Johannesburg;
- the annual report, incorporating a notice convening the AGM, is available on the website of the Company at
www.spanjaard.biz.
Levitt Kirson Business Services (Pty) Ltd
Company Secretary
31 May 2017
Directors: RJW Spanjaard (Chief Executive Officer), Prof DP van der Nest (Independent Non-Executive Chairman)*,
K Welgemoed CA(SA), I Saunders CA(SA) appointed 27 May 2016, GF Cort, CKT Palmer, Mrs S Hari*, BL Montgomery*,
*Independent Non-Executive
Registered office: 748-750 Fifth Street, Wynberg, Sandton, 2090
Transfer Secretaries: Computershare Investor Services Proprietary Limited Rosebank Towers, 15 Biermann Avenue, Rosebank,
Johannesburg, 2196
Sponsor: Arbor Capital Sponsors Proprietary Limited
Ground Floor, ONE Health Building, Woodmead North Office Park, 54 Maxwell Drive, Woodmead
E-mail: info@spanjaard.biz
Website: www.spanjaard.biz
Date: 31/05/2017 12:06:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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