Wrap Text
Unaudited Interim Group Results for the Six Months Ended 31 August 2018
Spanjaard Limited
(Incorporated in the Republic of South Africa)
Registration number: 1960/004393/06
Share code: SPA ISIN: ZAE000006938
(“Company” or “Group”)
Unaudited interim Group results for the six months ended 31 August 2018
Condensed consolidated statement of comprehensive income
Six months to Six months to
R’000 31 Aug 2018 31 Aug 2017
Revenue 63 737 56 181
Cost of sales (38 907) (36 149)
Gross profit 24 830 20 032
Other income 76 485
Distribution costs (5 706) (6 235)
Administration expenses (16 524) (17 335)
Finance costs (559) (432)
Profit/(loss) before tax 2 117 (3 485)
Taxation (863) 684
Profit/(loss) for the period 1 254 (2 801)
Other comprehensive income/(loss)
Items that may be subsequently
reclassified to profit or loss
Movement in foreign currency translation
reserve (92) 24
Total comprehensive income/(loss) for the
period attributable to ordinary shareholders 1 162 (2 777)
Profit/(loss) per ordinary share
— basic and diluted (cents) 15,40 (34,39)
Headline profit/(loss) per ordinary share
— basic and diluted (cents) 15,50 (35,48)
Condensed consolidated statement of financial position
As at As at
R’000 31 Aug 2018 28 Feb 2018
Assets
Non-current assets 32 592 30 572
Property, plant and equipment 31 047 28 994
Intangibles 1 108 1 141
Goodwill 437 437
Current assets 41 381 33 658
Inventories 17 555 16 768
Trade receivables and other receivables 23 365 16 255
Cash and cash equivalents 461 635
Non-current assets held for sale 22 126
Total assets 73 995 64 356
Equity and liabilities
Capital and reserves attributable to the
Company's equity holders
Ordinary shares 407 407
Share premium 6 464 6 464
Reserves 35 411 34 065
Foreign currency translation reserve 94 2
Revaluation reserve 7 379 7 621
Share-based payment compensation reserve — 1 906
Retained earnings 27 938 24 536
Total shareholders' equity 42 282 40 936
Non-current liabilities 7 492 4 553
Deferred tax liabilities 5 108 4 164
Borrowings 2 384 389
Current liabilities 24 221 18 867
Trade and other payables 14 418 11 479
Bank overdraft 8 833 7 035
Borrowings 962 345
Shareholders for dividends 8 8
Total liabilities 31 713 23 420
Total equity and liabilities 73 995 64 356
Net asset value per share 519,24 502,71
Dividends
Six months to Six months to
Dividend declared per ordinary share (cents) 31 Aug 2018 31 Aug 2017
— interim — —
Supplementary information
Six months to Six months to
R’000 31 Aug 2018 31 Aug 2017
Capital expenditure (3 121) (967)
Condensed consolidated statement of cash flows
Six months to Six months to
R’000 31 Aug 2018 31 Aug 2017
Cash flows from operating activities
Cash receipts from customers 56 985 54 327
Cash paid to suppliers and employees (58 164) (58 239)
Cash used in operations (1 179) (3 912)
Interest paid (559) (432)
Tax received — 207
Net cash used in operating activities (1 738) (4 137)
Cash flows from investing activities
Purchases of property, plant and equipment (3 019) (861)
Purchases of intangible assets (102) (106)
Proceeds on sale of property, plant and
equipment 3 270
Proceeds on sale of non-current assets held
for sale 98 —
Net cash used in investing activities (3 020) (697)
Cash flows from financing activities
Borrowings repaid (344) (957)
Proceeds from borrowings 2 956 680
Loans from holding company — loans received — 374
Loans from holding company — repayments made — (285)
Net cash generated from/(used in) financing
activities 2 612 (188)
Net decrease in cash and cash equivalents (2 146) (5 022)
Cash and cash equivalents at beginning of
period (6 400) (2 997)
Effect of exchange rate changes on cash and
cash equivalents 174 (11)
Cash and cash equivalents at end of period (8 372) (8 030)
Condensed consolidated statement of changes in equity
Six months to Six months to
R’000 31 Aug 2018 31 Aug 2017
Ordinary shares 407 407
Share premium 6 464 6 464
Share-based payment compensation reserve — 1 906
Opening balance 1 906 1 906
Transfer to retained earnings (1 906) —
Foreign currency translation reserve 94 (7)
Opening balance 2 17
Movement for the period 92 (24)
Revaluation reserve 7 379 8 193
Opening balance 7 621 8 536
Transfer to retained earnings (242) (343)
Retained earnings 27 938 25 697
Opening balance 24 536 28 155
Total profit/(loss) for the period 1 254 (2 801)
Transfer from share-based compensation
reserve 1 906 —
Transfer from revaluation reserve 242 343
Total shareholders’ equity 42 282 42 660
Operating segments
Six months to Six months to
R’000 31 Aug 2018 31 Aug 2017
Segment revenue
Special lubricants and allied chemicals 62 566 54 496
External foreign customers 12 072 7 285
External local customers 50 494 47 211
Anti-friction powders 41 965
External foreign customers — 435
External local customers 41 530
Other 3 953 3 271
External foreign customers 2 753 2 071
External local customers 1 200 1 200
Interdivisional transactions (2 823) (2 551)
Inter-segment sales (2 823) (2 551)
63 737 56 181
Six months to Six months to
R’000 31 Aug 2018 31 Aug 2017
Segment earnings/(loss) before interest
and tax
Special lubricants and allied chemicals 2 496 (3 125)
Anti-friction powders (562) (370)
Other 863 563
Reconciling items (121) (121)
2 676 (3 053)
Segment assets
Special lubricants and allied chemicals 62 200 52 967
Anti-friction powders 9 133 9 510
Other 21 178 20 579
Reconciling items (18 516) (18 700)
73 995 64 356
Segment liabilities
Special lubricants and allied chemicals 33 609 25 743
Anti-friction powders 2 305 2 078
Other 12 520 12 659
Reconciling items (16 721) (17 060)
31 713 23 420
Reconciliation of headline earnings
R’000
Six months to Six months to
31 Aug 2018 31 Aug 2017
R’000
Profit/(loss) attributable to shareholders 1 254 (2 801)
Loss/(profit) on disposal of property, plant
and equipment 12 (123)
Income tax effect on disposal (3) 36
Headline earnings/(loss) 1 263 (2 888)
Weighted average number of ordinary
Shares in issue (’000) 8 143 8 143
Headline earnings/(loss) per ordinary share
— basic and diluted (cents) 15,50 (35,48)
Basis of preparation and accounting policies
The condensed consolidated interim financial statements for the six months
ended 31 August 2018 have been prepared in accordance with International
Financial Reporting Standards (IFRS), IAS 34 Interim Financial Reporting,
the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and the Financial Pronouncements as issued by the Financial
Reporting Standards Council, as well as the requirements of the South
African Companies Act and the JSE Listings Requirements.
The condensed consolidated interim financial statements do not include all
the disclosures required for a full set of financial statements prepared in
accordance with International Accounting Standards (IFRS) as issued by the
International Accounting Standards Board.
The condensed consolidated interim financial statements appearing in this
announcement are the responsibility of the directors and the directors
take full responsibility for the preparation thereof. Ian Saunders CA(SA),
Financial Director, is responsible for this set of condensed consolidated
interim financial statements.
The accounting policies applied in the preparation of these condensed
consolidated interim financial statements are in terms of IFRS and are
consistent with those applied in the consolidated annual financial
statements for the year ended 28 February 2018. The condensed consolidated
interim financial statements have not been reviewed or audited by the
group’s auditors.
Commentary
Points of interest
* Group revenue is up by 13,4%
* Operating profit of R2,67 million
* Net asset value increased from 502,71 to 519,24 cents per share
Statement by the CEO
Spanjaard saw somewhat of a recovery during the first half of the financial
year. Revenue grew by 13,45%, mainly as a result of increasing export sales
and a recovery in cooking spray sales which was a concern for the group
during the comparative period. As a result of these increased sales and a
reduction in costs, we managed to improve from a loss before tax of
R3,485 million in the comparative period a year ago to a profit before
tax of R2,117 million for this reporting period.
The resulting headline earnings per share has increased from a loss of
35,48 cents per share to a profit of 15,50 cents per share. Gross profit
margins also improved by 3,3% to 38,95% which is pleasing. Management has
continued to aggressively interrogate all costs and substantial savings
have been made in many operational areas.
The closure of the operations of our anti-friction powders subsidiary
Coppermet (Pty) Ltd was completed in April 2018. Although this had a
negative effect on revenue during the period, we look forward to the
anticipated future savings of operational expenses. Although we have
closed our own manufacturing operations we will still continue to trade
graphite powders into the foreseeable future. Management will continue
to look for ways in which we can grow the special lubricants and allied
chemicals business, where revenue grew by 14,81%, organically through
the development of new products and entering new markets.
Our special lubricants and allied chemical product exports improved by
66% as a result of new business and we look forward to strengthening and
establishing long-term partnerships with our new distributors with the
support of our dedicated team to ensure their success. Our export pipeline
looks stable for the remainder of the year. Our European operation out
of Rotterdam has also shown good growth in revenue and profit.
During the reporting period, our new gassing equipment arrived from
Europe and was successfully commissioned. This equipment was financed
through traditional asset finance and has improved the efficiency of
two of our aerosol lines. We will continue to invest in new machinery
to replace aging machinery which is proving difficult to maintain as
replacement parts become harder to source.
The outsourcing of our warehousing and distribution commenced in September
2018. While we acknowledge that, while the transition is taking place, we
may experience slight teething problems that could impact our sales in the
short term, we are confident that as a result of this move our service to
our customers will improve and lead to improved performance and efficiency.
Our negative cash flow for the period, although not ideal, can largely be
attributed to short-term timing differences. These include the prepayment
of our learnership program earlier in the year, which only commenced in
September 2018 and also the slightly delayed receipts from relatively large
debtors which amounts were due by 31 August 2018. Increased finance charges
that can be attributed to our higher overdraft levels as well as the
financing of our new equipment impacted both cash flow and the income
statement.
As reported in our integrated annual report for the year ended 28 February
2018, we are currently cooperating with the Department of Labour in terms
of an employment equity dispute. We expect the matter to be amicably resolved
in the near future.
With added costs of learnerships, increased warehousing and distribution costs
as well as the recessionary environment the Country currently finds itself in,
management will continue to work hard to ensure that we have a successful second
half of the year.
Mr Bernard Montgomery, a long-standing independent non-executive director of the
company, resigned as a director and member of the Audit Committee with effect
from 31 August 2018.
Interim dividend
The Board has resolved that no interim dividend will be declared for the six
months ended 31 August 2018 (2017: RNil).
By order of the Board
Prof DP van der Nest
Independent Non-executive Chairman
K Welgemoed
Chief Executive Office
I Saunders
Financial Director
18 October 2018
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 MSc MBA, TN Stewart, 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
info@spanjaard.biz www.spanjaard.biz
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