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SPANJAARD LIMITED - Audited Group results for the year ended 28 February 2019

Release Date: 31/05/2019 07:05
Code(s): SPA     PDF:  
 
Wrap Text
Audited Group results for the year ended 28 February 2019

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 2019

Consolidated statement of profit or loss and other comprehensive income

                                                 Year ended   Year ended
R'000                                           28 Feb 2019  28 Feb 2018
Revenue                                             126 244      117 678
Cost of sales                                       (78 296)     (76 547) 
Gross profit                                         47 948       41 131
Other income                                            792          329
Distribution costs                                  (11 345)     (12 295) 
Administration expenses                             (32 356)     (33 567) 
Finance costs                                        (1 197)      (1 029) 
Profit/(loss) before tax                              3 842       (5 431) 
Taxation                                             (1 340)         897
Profit/(loss) for the year                            2 502       (4 534) 
Other comprehensive income/(loss)
Items that may be subsequently 
reclassified to profit or loss
Movement in foreign currency translation
reserve                                                  58          (15)
Items that will not be reclassified to 
profit or loss
Revaluation on property, plant and 
equipment                                              985            - 
Tax on revaluation on property, plant and
equipment                                             (180)           -
Total comprehensive income/(loss) for 
the year attributable
to ordinary shareholders                             3 365       (4 549) 
Earnings/(loss) and diluted earnings/(loss)
per ordinary share (cents)                            30,7        (55,7)


Consolidated statement of financial position

                                                      As at        As at
R'000                                           28 Feb 2019  28 Feb 2018
Assets
Non-current assets                                   33 370       30 572
Property, plant and equipment                        31 047       28 994
Intangibles                                           1 886        1 141
Goodwill                                                437          437
Current assets                                       37 160       33 658
Inventories                                          20 091       16 768
Trade receivables and other receivables              16 531       16 255
Cash and cash equivalents                               538          635
Non-current assets held for sale                          -          126
Total assets                                         70 530       64 356
Liabilities
Non-current liabilities                               8 025        4 553
Deferred tax liabilities                              5 675        4 164
Borrowings                                            2 350          389
Current liabilities                                  18 204       18 867
Trade and other payables                             10 524       11 487
Bank overdraft                                        6 780        7 035
Borrowings                                              900          345
Total liabilities                                    26 229       23 420
Net assets                                           44 301       40 936
Equity
Capital and reserves attributable to the
Company's equity holders
Ordinary shares                                         407          407
Share premium                                         6 464        6 464
Reserves                                             37 430       34 065
Total equity                                         44 301       40 936

Dividends

                                                      As at        As at
Dividend declared per ordinary share (cents)    28 Feb 2019  28 Feb 2018
- interim                                               0,0          0,0
- final                                                 0,0          0,0


Supplementary information

                                                 Year ended   Year ended
R'000                                           28 Feb 2019  28 Feb 2018
Capital expenditure                                   4 250        1 168

During the financial year new packaging machinery was purchased at a cost 
of R2 555 000 as well as a new telephone system at a cost of R376 000 in 
order to replace outdated equipment. The DHL IT integration was also 
capitalised at a cost of R909 000.

Consolidated statement of cash flows

                                                  Year ended  Year ended
R'000                                            28 Feb 2019 28 Feb 2018
Cash flows from operating activities
Cash receipts from customers                         126 214     117 839
Cash paid to suppliers and employees                (123 271)   (119 158)
Cash generated from/(used in) operations               2 943      (1 319) 
Interest paid                                         (1 197)     (1 029) 
Tax received                                               -         207
Net cash generated from/(used in) operating
activities                                             1 746      (2 141) 
Cash flows from investing activities
Purchases of property, plant and equipment              (138)       (959)
Proceeds on sale of property, plant and
equipment                                                  7         639
Proceeds on sale of non-current assets held for
sale                                                      90           - 
Purchases of intangible assets                          (572)       (209) 
Net cash generated used in investing activities         (613)       (529) 
Cash flows from financing activities
Borrowings repaid                                     (1 024)     (1 474) 
Proceeds from borrowings                                   -         692
Loans from holding company - loans received                -         244
Loans from holding company - repayments made               -        (149) 
Net cash generated used in financing activities       (1 024)       (687)
Net increase/(decrease) in cash and cash
equivalents                                              109      (3 357) 
Cash and cash equivalents at beginning of year        (6 400)     (2 997)
Effects of exchange rate changes on cash and
cash equivalents                                          49         (46)
Cash and cash equivalents at end of year              (6 242)     (6 400)


Consolidated statement of changes in equity

                                                       As at       As at
R'000                                            28 Feb 2019 28 Feb 2018
Ordinary shares                                          407         407
Share premium                                          6 464       6 464
Foreign currency translation reserve                      60           2
Opening balance                                            2          17
Net movement for the year                                 58         (15) 
Revaluation reserve                                    7 497       7 621
Opening balance                                        7 621       8 536
Revaluation                                              805           - 
Transfer to retained earnings                           (929)       (915) 
Share-based payment compensation reserve                   -       1 906
Opening balance                                        1 906       1 906
Transfer to retained earnings                         (1 906)          - 
Retained earnings                                     29 873      24 536
Opening balance                                       24 536      28 155
Profit/(loss) from continuing operations               2 502      (4 534)
Transfer from share-based payment compensation
reserve                                                1 906           - 
Transfer from revaluation reserve                        929         915
Total shareholders' equity                            44 301      40 936


Reconciliation of headline earnings

                                                  Year ended  Year ended
R'000                                            28 Feb 2019 28 Feb 2018
Continuing operations
Profit/(loss) attributable to shareholders             2 502      (4 534) 
Impairment of non-current assets held for sale             9         245
Income tax effect on impairment                           (3)        (69)
Loss on disposal of non-current assets held for
sale                                                      27           - 
Income tax effect on disposal                             (8)          -
Loss/(profit) on disposal of property, plant
and equipment                                             64         (63) 
Income tax effect on disposal                            (18)         18
Headline earnings/(loss)                               2 573      (4 403)
Weighted average number of ordinary shares in
issue ('000)                                           8 143       8 143
Headline earnings/(loss) per ordinary share
- basic and diluted (cents)                             31,6       (54,1)


Operating segments
R'000                                   Automotive Industrial   Exports
2019
Segment sales                               36 177     44 192    19 396
External foreign customers                   4 972        464    19 396
External local customers                    31 205     43 728         - 
Segment cost of sales                      (18 405)   (20 459)   (9 874) 
External foreign customers                  (2 324)      (235)   (9 874) 
External local customers                   (16 081)   (20 224)        - 
Segment gross profit/(loss)                 17 772     23 733     9 522
External foreign customers                   2 648        229     9 522
External local customers                    15 124     23 504         - 
Segment other income                             -          -         - 
Segment distribution costs                  (1 687)    (2 207)   (4 451) 
Segment administrative expenses             (4 900)    (5 631)   (1 249) 
Segment finance income/(costs)                   -          8         - 
Profit/(loss) before tax                    11 185     15 903     3 822
Taxation                                         -          -      (124) 
Profit/(loss) for the year                  11 185     15 903     3 698
2018 - Restated
Segment sales                               35 319     44 354    12 091
External foreign customers                   4 905        547    12 091
External local customers                    30 414     43 807         - 
Segment cost of sales                      (17 751)   (21 360)   (6 556) 
External foreign customers                  (2 146)      (247)   (6 556) 
External local customers                   (15 605)   (21 113)        - 
Segment gross profit/(loss)                 17 568     22 994     5 535
External foreign customers                   2 759        300     5 535
External local customers                    14 809     22 694         - 
Segment other income                             -          -         - 
Segment distribution costs                  (1 627)    (2 050)   (4 860) 
Segment administrative expenses             (4 633)    (5 753)   (1 179) 
Segment finance costs                            -          -         - 
Profit/(loss) before tax                    11 308     15 191      (504) 
Taxation                                         -          -       (32) 
Profit/(loss) for the year                  11 308     15 191      (536)

                                                 Head office, 
                                      Consumer  manufacturing
R'000                                    goods      and other     Total
2019
Segment sales                           26 163            316   126 244
External foreign customers                   -              -    24 832
External local customers                26 163            316   101 412
Segment cost of sales                  (18 822)       (10 736)  (78 296) 
External foreign customers                   -              -   (12 433) 
External local customers               (18 822)       (10 736)  (65 863) 
Segment gross profit/(loss)              7 341        (10 420)   47 948
External foreign customers                   -              -    12 399
External local customers                 7 341        (10 420)   35 549
Segment other income                         -            792       792
Segment distribution costs                (287)        (2 713)  (11 345) 
Segment administrative expenses              -        (20 576)  (32 356) 
Segment finance income/(costs)               -         (1 205)   (1 197) 
Profit/(loss) before tax                 7 054        (34 122)    3 842
Taxation                                     -         (1 216)   (1 340)
Profit/(loss) for the year               7 054        (35 338)    2 502

2018 - Restated
Segment sales                           23 464          2 450   117 678
External foreign customers                   -          1 060    18 603
External local customers                23 464          1 390    99 075
Segment cost of sales                  (18 920)       (11 960)  (76 547) 
External foreign customers                   -              -    (8 949) 
External local customers               (18 920)       (11 960)  (67 598) 
Segment gross profit/(loss)              4 544         (9 510)   41 131
External foreign customers                   -          1 060     9 654
External local customers                 4 544        (10 570)   31 477
Segment other income                         -            329       329
Segment distribution costs                (308)        (3 450)  (12 295) 
Segment administrative expenses              -        (22 002)  (33 567) 
Segment finance costs                        -         (1 029)   (1 029)
Profit/(loss) before tax                 4 236        (35 662)   (5 431) 
Taxation                                     -            929       897
Profit/(loss) for the year               4 236        (34 733)   (4 534)

The way in which we have determined our operating segments has been re- 
evaluated based on recent changes to the organisational structure. We 
have broken the business down into segments based on how management 
assesses sales performance. The comparative figures have been restated 
in line with this.

Related party transactions

                                                 Year ended   Year ended
R'000                                           28 Feb 2019  28 Feb 2018
Transactions with subsidiaries

Management fees charged to subsidiary                   840          840
Operating lease charged from subsidiary              (2 400)      (2 400) 
Purchase of vehicle from subsidiary                    (105)           -
Purchases of non-current assets held for sale
from subsidiary                                         (14)           - 
Sales to subsidiary                                   3 192        2 636

Basis of preparation
The summary consolidated financial statements are prepared in accordance 
with the requirements of the JSE 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 Group has adopted the following new accounting standards as issued 
by the IASB, which were effective for the Group from 1 March 2018: 
IFRS 15 Revenue from Contracts with Customers (IFRS 15) and IFRS 9 
Financial Instruments (IFRS 9). The application of both IFRS 15 and 
IFRS 9 has had no material impact on the Group's results.

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: 
Financial Director I Saunders – CA(SA) published on 31 May 2019.

Audit opinion
These summary consolidated financial statements for the year ended 
28 February 2019 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, 8 August 2019 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 and on the Company's 
website at www.spanjaard.biz.

Commentary
Dear Shareholder
There has been a gratifying turnaround in our year-on-year financial 
performance. We achieved our highest-ever sales during the year, which 
increased by 7,3% to R126,24 million (2018: R117,68 million). This was 
accomplished despite the completion of a loss-making contract for a 
major retailer earlier in the year and discontinuing our Coppermet 
operations. Cost of sales increased by a marginal 2,3%, demonstrating 
the benefits of our fixed cost base within challenging conditions.

Our gross profit percentage improved by 3% to 38% and was boosted by a 
corresponding 4,7% reduction in operating expenses, including all costs 
related to distribution and administration. However, finance costs 
increased, which is attributable to new finance leases as we purchased 
new gas filling machinery during the year.

In our Exports segment, we can report a major improvement as sales grew 
by 60,4% to R19,39 million (2018: R12,09 million), which increased the 
segment's contribution to total sales to 15,4% (2018: 10,3%). Sales in 
the Exports segment diversify our revenue streams and are anticipated 
to increase further as we expand our presence into these buoyant 
economies.

Consumer goods sales increased by 11,5% to R26,16 million (2018: R23,46 
million), which includes the loss-making retail contract that was 
concluded earlier in the year.

Automotive segment sales experienced modest growth year-on-year 
reflecting the weak consumer environment.

Industrial segment sales were flat year-on-year at R44,19 million (2018: 
R44,35 million), reflecting the general lack of business activity within 
the mining and manufacturing sectors of the economy. We note improved 
prospects in selected mining markets in Africa, which could stimulate 
the Industrial segment sales in the year ahead.

Our cash generated from operations improved meaningfully during the 
year, resulting in a marginal improvement in cash position at year-end, 
despite higher prepayments relating to our new skills plan.

We continued our strict cost management during the year, maintaining our 
good cash collections and keeping bad debts at low levels. This positive 
financial performance was aided by our stringent customer vetting process 
and supported by the services of Credit Guarantee.

The Board resolved to deregister Spanjaard UK Limited on 10 October 2018. 
The Company has since been dissolved on 26 March 2019.

For their hard work throughout a busy and challenging year, we give our 
sincere thanks to our employees and to management. We also extend our 
heartfelt gratitude to our loyal customers, for building a future together 
by supporting our business.

We appreciate the support of our shareholders and thank them sincerely for 
facilitating the efforts of our management as we guide Spanjaard forward. 
For helping us reach greater heights, we give thanks to our financiers and 
bankers, suppliers and surrounding communities. We look forward to another 
year of growing the business together.

Finally, we are grateful to our Chairman and Board of Directors for 
providing their invaluable oversight, wisdom and guidance.

Due to the need to retain working capital the Board has resolved not to 
declare a dividend.

By order of the Board
Prof DP van der Nest
Independent Non-executive Chairman

K Welgemoed
Chief Executive Officer

I Saunders
Financial Director
31 May 2019

Company information
Registration number
1960/004393/06

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 and S Hari*
*Independent Non-executive

Registered office
748 – 750 Fifth Street, Wynberg, Sandton, 2090

Company Secretary
Levitt Kirson Business Services (Pty) Ltd, 4th Floor, Aloe Grove, 
Houghton Estate Office Park, 2 Osborn Road, Houghton, 2198

Transfer Secretaries
Computershare Investor Services Proprietary Limited, Rosebank 
Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196

Sponsors
Arbor Capital Sponsors Proprietary Limited, 20 Stirrup Lane, 
Woodmead Office Park, Corner Woodmead Drive and Van Reenens 
Avenue, Woodmead 2191

Auditors
PricewaterhouseCoopers Inc., 4 Lisbon Lane, Waterfall City, 
Jukskei View, 2090 

info@spanjaard.biz 
www.spanjaard.biz
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