SPANJAARD LIMITED - Audited group results for the year ended 28 February 2018

Release Date: 31/05/2018 09:20
Code(s): SPA
 
Wrap Text
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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