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Audited group results for the year ended 28 February 2018
Audited group results
for the year ended 28 February 2018
Spanjaard Limited
(Incorporated in the Republic of South Africa)
Registration number 1960/004393/06
Share code: SPA ISIN: ZAE000006938
(“Company” or “Group”)
Consolidated statement of profit or loss and other comprehensive income
Year ended Year ended
28 February 28 February
2018 2017
Audited Audited
R’000 R’000
Revenue 117 678 120 055
Cost of sales (76 547) (73 690)
Gross profit 41 131 46 365
Other income 329 202
Distribution costs (12 295) (11 115)
Administrative expenses (33 567) (34 538)
Finance costs (1 029) (871)
(Loss)/profit before tax (5 431) 43
Taxation 897 370
(Loss)/profit for the year (4 534) 413
Other comprehensive (loss)/income
Items that may be subsequently reclassified
to profit or loss
Movement in foreign currency translation
reserve (15) (114)
Items that will not be be reclassified to
profit or loss
Revaluation on property, plant and equipment 0 1 592
Tax on revaluation on property, plant and
equipment 0 (446)
Total comprehensive (loss)/income for the year
attributable to ordinary shareholders (4 549) 1 445
(Loss)/earnings and diluted (loss)/earnings
per ordinary share (55,7) 5,1
Consolidated statement of financial position
As at As at
28 February 28 February
2018 2017
Audited Audited
R’000 R’000
Assets
Non-current assets 30 572 33 157
Property, plant and equipment 28 994 31 098
Intangibles 1 141 1 622
Goodwill 437 437
Current assets 33 658 35 595
Inventories 16 768 17 051
Trade receivables and other receivables 16 255 16 419
Cash and cash equivalents 635 1 823
Amount due by ultimate holding company - 95
Current income tax receivable - 207
Non-current assets held for sale 126 -
Total assets 64 356 68 752
Equity and liabilities
Capital and reserves attributable to the
Company's equity holders
Ordinary shares 407 407
Share premium 6 464 6 464
Reserves 34 065 38 614
Foreign currency translation reserve 2 17
Revaluation reserve 7 621 8 536
Share-based payment compensation reserve 1 906 1 906
Retained earnings 24 536 28 155
Total shareholders' equity 40 936 45 485
Non-current liabilities 4 553 5 478
Deferred tax liabilities 4 164 5 092
Borrowings 389 386
Current liabilities 18 867 17 789
Trade and other payables 11 479 11 831
Bank overdraft 7 035 4 820
Borrowings 345 1 130
Shareholders for dividends 8 8
Total liabilities 23 420 23 267
Total equity and liabilities 64 356 68 752
Consolidated statement of cash flow
Cash flows from operating activities
Year ended Year ended
28 February 28 February
2018 2017
Audited Audited
R’000 R’000
Cash receipts from customers 117 839 124 637
Cash paid to suppliers and employees (119 158) (117 464)
Cash (used in)/ generated from operations (1 319) 7 173
Interest paid (1 029) (871)
Tax received 207 140
Net cash (used in)/generated from operating
activities (2 141) 6 442
Cash flows from investing activities
Purchases of property, plant and equipment (959) (600)
Proceeds on sale of property, plant and
equipment 639 0
Purchases of intangible assets (209) (230)
Amount due by holding company – loans granted 0 (30)
Amount due by holding company – receipts from 0 71
Net cash generated used in investing activities (529) (789)
Cash flows from financing activities
Borrowings repaid (1 474) (2 611)
Proceeds from borrowings 692 267
Loans from holding company – loans received 244 230
Loans from holding company – repayments made (149) (2 319)
Dividends paid to Company's shareholders 0 (1 294)
Net cash used in financing activities (687) (5 727)
Net decrease in cash and cash equivalents (3 357) (74)
Cash and cash equivalents at beginning of year (2 997) (2 909)
Effects of exchange rate changes on cash and
cash equivalents (46) (14)
Cash and cash equivalents at end of year (6 400) (2 997)
Consolidated statement of changes in equity
As at As at
28 February 28 February
2018 2017
Audited Audited
R’000 R’000
Ordinary shares 407 407
Share premium 6 464 6 464
Foreign currency translation reserve 2 17
Opening balance 17 131
Net movement for the year (15) (114)
Revaluation reserve 7 621 8 536
Opening balance 8 536 9 147
Revaluation 0 1 146
Transfer to retained earnings (915) (1 757)
Share based payment compensation reserve 1 906 1 906
Opening balance 1 906 1 906
Net movement for the year 0 0
Retained earnings 24 536 28 155
Opening balance 28 155 25 985
(Loss)/profit from continuing operations (4 534) 413
Transfer from revaluation reserve 915 1 757
Total shareholders’ equity 40 936 45 485
Dividends
Dividend declared per ordinary share (cents)
– interim 0,0 0,0
– final 0,0 0,0
Supplementary information
Year ended Year ended
28 February 28 February
2018 2017
Audited Audited
R’000 R’000
Capital expenditure 1 168 830
During the 2018 financial year motor vehicles with a cost of R848 246 and
accumulated depreciation of R334 855 as well as plant and equipment with
a cost of R173 606 and accumulated depreciation of R123 606 were disposed
of. During the 2017 financial year plant and equipment with a cost of
R76 634 and accumulated depreciation of R75 906 as well as motor vehicles
with a cost of R327 077 and accumulated depreciation of R275 433 were
disposed.
Related party transactions
Year ended Year ended
28 February 28 February
2018 2017
Audited Audited
R’000 R’000
Transactions with close family members of key
management personnel 263 397
Amount due by holding company – receipts from 244 301
Loans from holding company – repayments made (149) (2 349)
Operating segments
Year ended Year ended
28 February 28 February
2018 2017
Audited Audited
R’000 R’000
Segment revenue
Special lubricants and allied chemicals 114 003 114 195
External foreign customers 15 976 22 686
External local customers 98 027 91 509
Anti-friction powders 2 337 3 764
External foreign customers 1 060 2 959
External local customers 1 277 805
Other 6 374 7 675
External foreign customers 3 974 5 172
External local customers 2 400 2 503
Interdivisional transactions (5 036) (5 579)
Intersegment sales (5 036) (5 579)
117 678 120 055
Segment result
Special lubricants and allied chemicals (3 928) 2 951
Anti-friction powders (1 382) (859)
Other 1 151 227
Interdivisional transactions (243) (1 405)
(Loss)/earnings before interest and tax (4 402) 914
Segment assets
Special lubricants and allied chemicals 52 967 55 823
Anti-friction powders 9 510 11 256
Other 20 579 20 617
Interdivisional transactions (18 700) (18 944)
64 356 68 752
Segment liabilities
Special lubricants and allied chemicals 25 743 25 049
Anti-friction powders 2 078 2 543
Other 12 659 13 288
Interdivisional transactions (17 060) (17 613)
23 420 23 267
Reconciliation of headline earnings
Year ended Year ended
28 February 28 February
2018 2017
Audited Audited
Continuing operations R’000 R’000
(Loss)/profit attributable to shareholders (4 534) 413
Impairment of non current assets held for sale 245 -
Income tax effect on impairment (69) -
(Profit)/loss on disposal of property, plant
and equipment (63) 123
Income tax effect on disposal 18 (34)
Headline (loss)/earnings (4 403) 502
Weighted average number of ordinary
shares in issue (’000) 8 143 8 143
Headline (loss)/earnings per ordinary share
– basic and diluted (cents) (54,1) 6,2
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 annual financial statements, from which this report is extracted, were
audited in terms of the Companies Act, 71 of 2008.
The audited summary consolidated financial statements have been prepared
in accordance with IAS 34.
The audited summary consolidated financial statements were prepared by:
Finance Director I Saunders - CA(SA) published on 31 May 2018.
Audit opinion
These summary consolidated financial statements for the year ended
28 February 2018 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 Friday, 17 August 2018 at The Wanderers Club, 21 North Road,
Illovo, Johannesburg;
- the annual report, incorporating a notice convening the AGM, will be
available at the registered office of the Company.
Levitt Kirson Business Services (Pty) Ltd
Company Secretary
31 May 2018
Commentary
Dear shareholder
25 September 2017 will be remembered for the sad passing of Robert Spanjaard,
who was the founder and Chief Executive Officer of the Spanjaard Group of
Companies since 1960. We pay tribute to his tenure of 57 years at the helm,
and commend his tireless devotion to the business.
We, as Spanjaard’s executive directors and management, are now tasked with
leading the Group, and establishing a base upon which to guide the business
into the future. We have deployed the skills of our management team to look
for ways to modernise and explore additional markets, using additional, new
product ranges as well as unlocking the potential of products that have been
historically misperceived in the market.
The year under review was challenging as our export volumes decreased from
23% of total revenue to 16%, which has impacted our overall financial
performance. These lower export volumes were largely as a result of our
historical approach to exports, which management has addressed.
It is pleasing to report that we achieved significant overall volume growth
of 7,5%, which somewhat offset the lower export volumes, although sales revenue
was flat year-on-year. This was partly due to a strategic price reduction
decision taken early in the year to increase our competitiveness in the market,
and our increased market share and volume growth was therefore achieved at
lower overall margins.
We are pleased to report a 15% growth year-on-year in the food products sector
of our business. We diversified our customer base significantly during the year,
which has assisted in this growth. We are encouraged by this performance and
anticipate further growth in our food products in the coming year and beyond.
In the consumer sector, improved sales seen in the automotive spares businesses
was encouraging. Sales in the industrial sector were lower, as many of our
customers in the mining sector have been impacted by rightsizing activities
and shaft closures for a number of years. We regrettably lost a contract on
certain power stations in the prior year, which continues to negatively affect
our industrial sector performance.
We are also pleased to report that a large quantity of aerosol cans, initially
manufactured for another contract, have been successfully repurposed and have
been fully utilised. This has now resolved a legacy issue, in terms of related
storage requirements and the recovery of materials cost. Furthermore, we can
report the end of a loss-making contract for a major retailer, and we have
subsequently filled that production capacity by manufacturing for more
profitable orders.
Our cash position, although tight, continued to be very well managed, as were
our costs. Our debtors were firmly under control, with excellent collections
and bad debts being insignificant for the year under review.
We take a conservative approach in this regard, and customers are required
to achieve a clear credit rating from Credit Guarantee before being supplied.
As a cost-conscious business, our head office costs have been very well
controlled, reducing our administration costs by 3% across the Group, with all
write-offs included.
Coppermet (Pty) Ltd had been a loss-making business for Spanjaard for a number
of years, and officially closed when operations were discontinued, subsequent to
year-end, at the end of April 2018. Coppermet was unable to remain competitive due
to the availability of cheaper alternative materials, particularly those from China.
Coppermet will continue to trade in limited capacities. The positive impact of
this closure is largely financial, and sharpens the focus on our core, more
profitable businesses. We have made provision in our financial results for stock
write-offs, impairments of assets held for sale at the financial year end and
retrenchment costs.
Due to our financial performance during the current financial year, we are not
declaring a dividend.
Directors: Prof DP van der Nest (Independent Non-executive Chairman)*,
K Welgemoed CA(SA)(Chief Executive Officer), I Saunders CA(SA) (Financial
Director), GF Cort, CKT Palmer, TN Stewart (appointed 12 October 2017) 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
20 Stirrup Lane, Woodmead Office Park, Corner Woodmead Drive and Van
Reenens Avenue, Woodmead, 2191
E-mail: info@spanjaard.biz
Website: www.spanjaard.biz
Date: 31/05/2018 09:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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