Wrap Text
Condensed consolidated preliminary financial results for the year ended 30 June 2017
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 and Overseas")
CONDENSED CONSOLIDATED PRELIMINARY FINANCIAL RESULTS
for the year ended 30 June 2017
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
30 June 30 June
2017 2016
Reviewed Audited
R'000 R'000
ASSETS
Non-current assets 159 628 155 705
Property, plant and equipment 57 150 53 355
Investment property 71 032 71 849
Intangible assets 24 773 23 432
Other investments 524 576
Deferred tax asset 6 149 6 493
Current assets 170 987 185 827
Inventories 77 842 61 319
Trade and other receivables (note 5.2) 28 300 35 657
Forward exchange contracts 38 -
Income tax receivable 1 304 1 114
Accrued operating lease asset 3 558 3 219
Cash and cash equivalents (note 5.3) 59 945 84 518
Total assets 330 615 341 532
EQUITY AND LIABILITIES
Capital and reserves 260 795 262 410
Share capital 1 200 1 200
Share premium 6 616 6 076
Share-based payment reserve (116) 314
Other reserves 1 301 731
Retained earnings 134 518 136 688
Non-controlling interest 117 276 117 401
Non-current liabilities 22 549 22 274
Post-retirement liability 899 1 991
Accrued operating lease liability 18 536 18 104
Deferred tax liability 3 114 2 179
Current liabilities 47 271 56 848
Trade and other payables 47 245 54 634
Forward exchange contracts - 2 176
Income tax payable 26 38
Total equity and liabilities 330 615 341 532
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
30 June 30 June
2017 2016
% Reviewed Audited
change R'000 R'000
Revenue (1.7) 548 572 558 229
Turnover (1.6) 528 759 537 588
Cost of sales (237 200) (248 937)
Gross profit 1.0 291 559 288 651
Other income 0.4 15 243 15 176
Other operating costs 4.4 (307 583) (294 550)
Operating (loss)/profit (108.4) (781) 9 277
Dividend income 21 20
Finance income 4 549 5 445
Finance costs (163) (222)
Profit before tax (75.0) 3 626 14 520
Income tax expense (1 939) (4 946)
Profit for the period (82.4) 1 687 9 574
Other comprehensive income
Actuarial gain on post-retirement defined benefit plan 1 072 708
Fair value adjustment on available-for-sale investments (52) -
Total comprehensive income for the period 2 707 10 282
Profit attributable to:
Ordinary and "N" ordinary shareholders of the parent 147 4 241
Preference shareholders 102 33
Profit attributable to equity holders of the parent 249 4 274
Non-controlling interest 1 438 5 300
Profit for the year 1 687 9 574
Total comprehensive income attributable to:
Ordinary and "N" ordinary shareholders of the parent 756 4 746
Preference shareholders 102 33
Profit attributable to equity holders of the parent 858 4 779
Non-controlling interest 1 849 5 503
Total comprehensive income for the year 2 707 10 282
Reconciliation of headline earnings
Earnings attributable to ordinary and "N" ordinary shareholders 147 4 241
Adjusted for:
Loss/(profit) from disposal of property, plant and equipment 232 (28)
Impairment reversal on equipment and shopfittings - (305)
Headline earnings 379 3 908
Basic earnings per ordinary share (cents) (96.5) 1.3 37.2
Headline earnings per ordinary share (cents) (90.4) 3.3 34.3
Diluted earnings per ordinary share (cents) (96.5) 1.3 37.1
Diluted headline earnings per ordinary share (cents) (90.4) 3.3 34.2
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) 11 393 11 418
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended Year ended
30 June 30 June
2017 2016
Reviewed Audited
R'000 R'000
Share capital 1 200 1 200
Share premium 6 616 6 076
Opening balance 6 076 6 076
Reallocation relating to share options 540 -
Share-based payment and other reserves 1 185 1 045
Opening balance 1 045 540
Actuarial gains on post-retirement defined benefit plans 638 505
Fair value adjustment on available-for-sale investments (29) -
Delivery of treasury shares (430) -
Change in degree of control (39) -
Retained earnings 134 518 136 688
Opening balance 136 688 136 581
Profit for the year 249 4 274
Change in degree of control (381) -
Preference dividends paid (102) (33)
Ordinary dividends paid (1 936) (4 134)
Non-controlling interest 117 276 117 401
Opening balance 117 401 117 563
Profit for the year 1 438 5 300
Preference dividends paid (17) (17)
Ordinary dividends paid (2 501) (5 648)
Delivery of treasury shares 430 -
Reallocation relating to share options (540) -
Proceeds from delivery of employee share options 234 -
Change in degree of control 420 -
Other comprehensive income 411 203
Total capital and reserves 260 795 262 410
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended Year ended
30 June 30 June
2017 2016
Reviewed Audited
R'000 R'000
Operating profit before working capital changes 25 640 36 013
Working capital changes (17 731) 4 737
Interest received 4 549 5 445
Interest paid (163) (222)
Dividends paid (4 556) (9 832)
Dividends received 21 20
Income tax paid (862) (5 676)
Net cash inflows from operating activities 6 898 30 485
Additions to property, plant, equipment and investment property (25 555) (20 288)
Additions to intangible assets (3 410) (7 685)
Proceeds from disposal of property, plant, equipment and
investment property 199 225
Acquisition of business (note 5.1) (2 939) -
Net cash outflows from investing activities (31 705) (27 748)
Cash flows from financing activities
Proceeds from delivery of employee share options 234 -
Net cash outflows from investing activities 234 -
Net (decrease)/increase in cash and cash equivalents (24 573) 2 737
Cash and cash equivalents at the beginning of the year 84 518 81 781
Cash and cash equivalents at the end of the year 59 945 84 518
GROUP SEGMENTAL REPORTING
Year ended Year ended
30 June 30 June
2017 2016
Reviewed Audited
R'000 R'000
Revenue
Total external retail revenue 528 972 538 579
Retail segment revenue 532 746 542 437
Intersegment revenue earned (3 774) (3 858)
Total external property revenue 15 030 14 185
Property segment revenue 20 359 19 277
Intersegment revenue earned (5 329) (5 092)
Dividends received 21 20
Interest income 4 549 5 445
Total group revenue 548 572 558 229
Segment operating profit/(loss)
Retail segment profit/(loss) (1 923) 9 372
Property segment profit 7 951 8 450
Group services operating loss (6 809) (8 545)
Total group operating profit (781) 9 277
Depreciation and amortisation
Retail 21 742 20 118
Property 3 720 3 466
Total group depreciation and amortisation 25 462 23 584
Segment assets
Retail 216 059 223 584
Property 80 797 79 042
Group services* 33 759 38 906
Total group assets 330 615 341 532
Segment liabilities
Retail 61 737 68 856
Property 5 884 7 485
Group services* 2 199 2 781
Total group liabilities 69 820 79 122
Capital expenditure
Retail 23 904 25 100
Property 5 061 2 873
Total group capital expenditure 28 965 27 973
* Group services include corporate costs.
OTHER INFORMATION
Year ended Year ended
30 June 30 June
2017 2016
Reviewed Audited
Capital commitments
Authorised - not contracted for (R'000) 21 553 20 786
Authorised - contracted for (R'000) 7 632 10 655
Gross profit margin (%) 55.1 53.7
Operating profit margin (%) (0.1) 1.7
Retail segment operating (loss)/profit margin (%) (0.4) 1.7
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 2017 have been reviewed by 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 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. This report was
compiled under the supervision of the group financial director, DS 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 Dividends
A dividend on the 6% cumulative participating preference shares for the six months
ended 30 June 2017 in the amount of 6 cents per preference share was declared by
the board of directors on 19 June 2017 and was paid on 10 July 2017.
The directors have not proposed a dividend in respect of the ordinary and
"N" ordinary shares in the six-month period ended 30 June 2017.
5 Notes to the financial statements
5.1 Acquisition of business - The group acquired the Queenspark Namibian franchise
business, previously operated by a third party, during the year under review
for a cash consideration of R2 939 000. The rationale for the acquisition was
to implement an expansion strategy in Namibia. The assets acquired are listed
below and represent their fair value. No liabilities were acquired or assumed.
The purchase price is comprised of the following:
R'000
Intangible asset 1 100
Property, plant and equipment 500
Inventory 1 339
2 939
5.2 Trade and other receivables - Trade and other receivables decreased at
30 June 2017 due to prepayments being lower than the corresponding period.
5.3 Cash and cash equivalents - The reduction in cash and cash equivalents was
largely the result of the increase in inventory held at 30 June 2017.
5.4 Financial instruments - Financial instruments included in trade and other
receivables, trade and other payables and forward exchange contract assets/
liabilities are short term in nature, settled within 12 months, and the
carrying value substantially approximates the fair value.
6 Events subsequent to the reporting date
No events material to the understanding of the condensed consolidated preliminary
financial statements have occurred between the financial year-end and the date hereof.
COMMENTARY
The principal operating subsidiary Rex Trueform Clothing Company Limited reports as
follows:
"Group profile
Rex Trueform Clothing Company Limited ("Rex") is invested in property and retail
segments. Its interest in retail is through its South African subsidiary company
Queenspark Proprietary Limited ("Queenspark"). During the 2017 financial year Queenspark
has expanded its operations by way of, amongst other things, investing in a wholly-owned
subsidiary company incorporated and operating in Namibia ("QP Nam"). Rex's interest
in property includes direct property ownership and indirect property investment
through a wholly-owned subsidiary.
Group results
The group's retail performance during the 2017 financial year was impacted by the weak
economic environment which, together with other factors, negatively influenced consumer
confidence and disposable income. Revenue, mainly impacted by the retail segment,
decreased by 1.7% to R549.0 million (2016: R558.6 million). The gross profit generated
from the retail segment increased by 1.0% to R291.6 million (2016: R288.7 million).
Other group income, including rental and royalty income, increased by 0.6% and was
impacted by the reduction of third party royalty income. Trading expenses were
contained and increased by 4.7%.
The above resulted in the operating profit decreasing by 93.4% to R0.8 million
(2016: profit of R11.5 million). Profit after tax decreased by 73.0% to R3.2 million
(2016: profit of R11.8 million) resulting in the earnings per share decreasing by 73.2%.
Retail (Queenspark)
The retail segment now includes the wholly-owned Queenspark subsidiary company
operating in Namibia. This new group company operates two Queenspark-branded retail
stores in Namibia. During the 2017 financial year Queenspark started selling its
products on the Spree website. The Queenspark product is therefore now available on
two online platforms (being Zando and Spree). Queenspark continues to open stores
where feasible and close unprofitable stores.
Trading in both South Africa and Namibia has been challenging. While turnover decreased
by 1.6% the gross profit margin increased to 55.1% (2016: 53.7%). Retail operating costs
(which included the additional operating costs of the Namibian operation) increased
by a conservative 4.1%. The above resulted in an operating loss of R1.9 million
compared to a R9.4 million operating profit in the prior period.
Property
Rex Trueform Office Park complex is the main income-generating operation within the
group's property segment. The operating profit of this segment amounted to R8.0 million
(2016: R8.5 million). This reduction in operating profit was mainly due to exceptional
once-off maintenance costs incurred during the 2017 financial year.
Group services
Group services' costs decreased by 16.3% to R5.3 million (2016: R6.3 million, which
included once-off corporate costs relating to the comparable offer made by a
consortium to Rex's ordinary and "N" ordinary shareholders). Excluding the prior year
once-off costs the group's service costs increased by 3.9%.
Prospects
Retail (Queenspark)
The Queenspark strategy includes the introduction of new brands to complement the
existing ranges. These new brands, together with new product categories, are expected
to provide an improved offering to customers. Although a few new brands were
introduced towards the end of the 2017 financial year most of these new initiatives
will be phased in during the 2018 financial year.
The online offering through both the Zando and Spree websites will continue to allow
Queenspark to service a larger client base. The product offering will be improved to
suit the needs of the online customers. Queenspark and its Namibian subsidiary will
also continue to open new stores where feasible.
The initiatives above are to be introduced with a view to improving turnover, however
the tough economic trading and market conditions are still likely to continue to
impact the business in the short term.
Property
Rex has the intention to develop two further properties in the medium term, both
situated in the Cape Town area, and is continuing to consider development options in
this regard. The one property is classified as a heritage site, which limits the
development opportunities and has caused a delay in the development process."
ML Krawitz CEA Radowsky
(Chairman) (Chief Executive Officer)
Cape Town
8 September 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.
ML Krawitz will retire as chairman and as a non-executive director of the company and
RV Orlin and HJ Borkum will retire as independent non-executive directors of the
company with effect from 30 September 2017.
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
Date: 08/09/2017 12:39:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
