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AOO AOVP AON
AOO
AOO / AON / AOVP - African & Overseas Enterprises Limited - Unaudited interim
group results for the six months ended 31 December 2010
AFRICAN & OVERSEAS ENTERPRISES LIMITED
(Incorporated in the Republic of South Africa)
(Reg No. 1947/027461/06)
Share codes: AOO - AON - AOVP
ISIN: ZAE000000485 - ZAE000009718 - ZAE000000493
UNAUDITED INTERIM GROUP RESULTS
for the six months ended 31 December 2010
HIGHLIGHTS:
- REVENUE UP 17.7%
- OPERATING PROFIT UP 55.2%
- HEADLINE EARNINGS PER SHARE UP 47.0%
COMMENTARY
The principal operating subsidiary Rex Trueform Clothing Company Limited reports
as follows:
"Group results
Revenue increased by 17.7% during the six-month period to end-December 2010
reflecting an improvement in the trading environment.
Operating profit increased by 54.2%. This was achieved through a better
performance by the group`s core retail activities and an improvement in the
contribution of the manufacturing and property segments of the group compared to
last year. As a result earnings per share increased by 46.0% to 106.7 cents
(73.1 cents in 2009). Headline earnings per share increased by 46.2% to 106.7
cents (73.0 cents in 2009).
Retail
A higher level of consumer confidence resulted in an improvement of 14.4% in the
turnover of the group`s QUEENSPARK and J CREW retail stores. This increase in
turnover was largely generated by existing stores, certain of which were
refurbished, relocated or expanded during the past year. One new store was
opened during the period as management concentrated on improving the performance
of the existing store base. Same store sales increased by 11%.
The operating profit of the retail segment improved by 17.2% representing a
return of 10.1% on turnover compared to 9.9% in the corresponding period of last
year.
Manufacturing
Extraneous expenses related to a reorganisation of the manufacturing operation
during the comparative period of last year impacted negatively on results for
that period. The reorganised operation which represents a relatively modest 6%
of group revenue contributed positively to profit during the period under
review. The volumes realised in this segment were higher than usual and there is
no certainty that this level of profitability will be achieved again in the
future.
Prospects
Although the six months under review reflected some recovery in consumer
confidence, particularly in Queenspark`s niche retail market, it is expected
that the second half of the current financial year will not provide the same
level of growth as achieved during this first half to December 2010. In
particular, the material benefits provided by the Duty Credit Certificate Scheme
are now no longer available from the beginning of January and this, together
with expected inflationary pressures, will result in pressure on margins.
Queenspark continues to focus on initiatives to further strengthen and
consolidate its position in the market-place through the opening of new stores,
upgrades of existing stores and improvements in its product offering. The
achievement of sales and profit targets will, however, remain challenging during
the remainder of the current financial year."
Signed on behalf of the board
ML Krawitz
Chairman
PE Shub
Chief Executive Officer
Cape Town
2 March 2011
Statement of comprehensive income
Consolidated (R`000)
Six months ended
31 December
% 2010
change (Unaudited)
Revenue 17.7% 290 126
Turnover 17.9% 284 911
Cost of sales (136 819)
Gross profit 19.4% 148 092
Employment costs (45 748)
Occupancy costs (34 209)
Depreciation and
amortisation (7 481)
Other operating costs (34 738)
Rental income 249
Royalties 503
Operating profit 55.2% 26 668
Dividends received 12
Interest received 4 451
Interest paid (122)
Profit before tax 45.5% 31 009
Income tax expense (9 919)
Profit for the period 47.1% 21 090
Other comprehensive income
Net changes in fair value of
available-for-sale financial assets -
Total comprehensive income for the
period 21 090
Profit attributable to:
Ordinary and `N` ordinary shareholders 11 251
Preference shareholders 132
Profit attributable to equity holders
of the parent 11 383
Non-controlling interest 9 707
Profit for the period 21 090
Total comprehensive income
attributable to:
Ordinary and `N` ordinary shareholders 11 251
Preference shareholders 132
Comprehensive income attributable to
equity holders of the parent 11 383
Non-controlling interest 9 707
Total comprehensive income for the period 21 090
Reconciliation of headline earnings
Attributable earnings 11 251
(Profit)/loss on disposal
of plant and equipment (2)
Headline earnings 11 249
Headline earnings per share (cents) 47.0% 98.8
Earnings per share (cents) 46.8% 98.8
Weighted average number of
equity shares on which earnings
per share is based (000) 11 387
Consolidated (R`000)
Year
Six months ended ended
31 December 30 June
2009 2010
(Unaudited) (Audited)
Revenue 246 526 490 750
Turnover 241 687 480 850
Cost of sales (117 708) (221 915)
Gross profit 123 979 258 935
Employment costs (38 914) (83 322)
Occupancy costs (31 106) (62 683)
Depreciation and
amortisation (6 547) (13 754)
Other operating costs (30 753) (64 598)
Rental income 17 128
Royalties 503 995
Operating profit 17 179 35 701
Dividends received 16 16
Interest received 4 303 8 761
Interest paid (182) (359)
Profit before tax 21 316 44 119
Income tax expense (6 977) (14 806)
Profit for the period 14 339 29 313
Other comprehensive income
Net changes in fair value of
available-for-sale financial assets - (146)
Total comprehensive income for the period 14 339 29 167
Profit attributable to:
Ordinary and `N` ordinary shareholders 7 662 15 613
Preference shareholders 72 138
Profit attributable to equity holders of
the parent 7 734 15 751
Non-controlling interest 6 605 13 562
Profit for the period 14 339 29 313
Total comprehensive income attributable to:
Ordinary and `N` ordinary shareholders 7 662 15 532
Preference shareholders 72 138
Comprehensive income attributable to equity
holders of the parent 7 734 15 670
Non-controlling interest 6 605 13 497
Total comprehensive income for the period 14 339 29 167
Reconciliation of headline earnings
Attributable earnings 7 662 15 613
(Profit)/loss on disposal
of plant and equipment (9) 510
Headline earnings 7 653 16 123
Headline earnings per share (cents) 67.2 141.6
Earnings per share (cents) 67.3 137.1
Weighted average number of equity shares on
which earnings per share is based (000) 11 387 11 387
Statement of financial position
Consolidated (R`000)
At
31 December 30 June
2010 2009 2010
(Unaudited) (Unaudited) (Audited)
Assets
Non-current assets 75 471 65 590 67 847
Property, plant and equipment 65 157 53 883 57 394
Investment property 3 511 3 511 3 511
Intangible assets 1 317 2 065 2 107
Other investments 576 722 576
Deferred taxation 4 910 5 409 4 259
Current assets 226 507 196 126 222 447
Inventories 62 349 50 202 57 994
Trade and other receivables 13 584 16 891 21 026
Forward exchange contracts - - 522
Income tax receivable 15 394 1 248
Cash and cash equivalents 150 559 128 639 141 657
Total assets 301 978 261 716 290 294
Equity and liabilities
Capital and reserves 249 382 220 016 234 874
Share capital 1 200 1 200 1 200
Share premium 6 076 6 076 6 076
Other reserves 516 551 500
Retained earnings 129 994 114 299 122 299
Non-controlling interest 111 596 97 890 104 799
Non-current liabilities 12 823 12 353 13 263
Post-retirement liability 4 074 4 085 4 122
Accrued operating lease liability 8 749 8 268 9 141
Current liabilities 39 773 29 347 42 157
Provisions 514 578 560
Trade and other payables 35 785 27 829 40 976
Forward exchange contracts 2 180 940 -
Income tax payable 1 294 - 621
Total equity and liabilities 301 978 261 716 290 294
Abridged statement of cash flows
Consolidated (R`000)
Year
Six months ended ended
31 December 30 June
2010 2009 2010
(Unaudited) (Unaudited) (Audited)
Operating profit before
working capital changes 36 028 25 573 52 149
Working capital changes (1 675) 10 077 11 316
Interest received 4 451 4 303 8 761
Interest paid (122) (182) (359)
Taxation paid (8 664) (6 420) (13 332)
Dividends received 12 16 16
Dividends paid (6 971) (6 137) (6 162)
Net cash inflow from
operating activities 23 059 27 230 52 389
Additions to property,
plant and equipment (14 726) (12 874) (25 166)
Proceeds on disposal of
property, plant and equipment 198 24 175
Net cash outflows from
investing activities (14 528) (12 850) (24 991)
Proceeds on delivery of
shares by share trust 371 - -
Net cash inflows from
financing activities 371 - -
Net increase in cash and
cash equivalents 8 902 14 380 27 398
Cash and cash equivalents
at the beginning of the period 141 657 114 259 114 259
Cash and cash equivalents
at the end of the period 150 559 128 639 141 657
Statement of changes in equity
Consolidated (R`000)
At
31 December 30 June
2010 2009 2010
(Unaudited) (Unaudited) (Audited)
Share capital 1 200 1 200 1 200
Share premium 6 076 6 076 6 076
Other reserves
Opening balance 500 530 530
Share-based payments 16 21 51
Fair value adjustment for
available-for-
sale financial assets - - (81)
Closing balance 516 551 500
Retained earnings
Opening balance 122 299 109 533 109 533
Profit attributable to equity
holders of the parent 11 383 7 734 15 751
Dividends (3 316) (2 968) (2 985)
Loss from dilution of interest in
subsidiary (372) - -
Closing balance 129 994 114 299 122 299
Non-controlling interest
Opening balance 104 799 94 438 94 438
Profit attributable to
non-controlling interest 9 707 6 605 13 562
Share-based payments 13 16 41
Fair value adjustment for
available-for-sale financial
assets - - (65)
Change in degree of control 732 - -
Dividends (3 655) (3 169) (3 177)
Closing balance 111 596 97 890 104 799
Total capital and reserves 249 382 220 016 234 874
Segmental reporting
Consolidated (R`000)
Year
Six months ended ended
31 December 30 June
2010 2009 2010
(Unaudited) (Unaudited) (Audited)
Segment revenue
Retail 268 200 234 461 461 934
Property 249 17 128
Property total 1 244 786 1 973
Less: intersegment rentals (995) (769) (1 845)
Manufacturing 17 214 7 729 19 911
Manufacturing total 17 291 8 815 21 170
Less: intersegment sales (77) (1 086) (1 259)
Total segment revenue 285 663 242 207 481 973
Dividends received 12 16 16
Interest received 4 451 4 303 8 761
Total revenue 290 126 246 526 490 750
Segment profit/(loss)
Retail 27 151 23 162 44 409
Property 456 (348) (202)
Manufacturing 1 875 (3 116) (2 700)
Segment profit 29 482 19 698 41 507
Group Services* (2 814) (2 519) (5 806)
Total operating profit 26 668 17 179 35 701
Depreciation and amortisation
Retail 7 359 6 375 13 439
Manufacturing 57 109 190
Total manufacturing depreciation 138 266 430
Less: included in cost of sales (81) (157) (240)
Property 65 63 125
Total depreciation and amortisation 7 481 6 547 13 754
Total segment assets 301 978 261 716 290 294
Retail 178 051 180 388 171 860
Property 10 412 8 695 9 236
Manufacturing 13 117 10 288 13 580
Group Services* 100 398 62 345 95 618
Total segment liabilities 52 596 41 700 55 420
Retail 41 691 34 096 46 622
Property 30 - 30
Manufacturing 5 030 2 259 3 636
Group Services* 5 845 5 345 5 132
Capital expenditure 14 726 12 874 25 166
Retail 14 396 12 874 25 159
Property 330 - -
Manufacturing - - 7
Group Services* - - -
* Group Services includes corporate costs.
Other information
Capital commitments (authorised -
not contracted for) 6 011 11 050 16 998
Gross profit margin 52.0% 51.3% 53.8%
Operating profit margin 9.4% 7.1% 7.4%
Retail segment operating
profit margin 10.1% 9.9% 9.6%
Notes
1. Basis of preparation
These interim financial statements have been prepared in accordance with
International Accounting Standard IAS 34: Interim Financial Reporting and the AC
500 Standards as issued by the Accounting Practices Board or its successor.
They are also compliant with International Financial Reporting Standards (IFRS).
These results have not been audited or reviewed by the company`s auditors, KPMG
Inc.
2. Accounting policies
The accounting policies applied in these interim statements are consistent with
those applied in the preparation of the group`s annual financial statements for
the year ended 30 June 2010.
3. Preference dividend
A dividend on the 6% cumulative participating preference shares for the six
months ended 31 December 2010 in the amount of R132 000 was declared on
1 December 2010 and paid on 28 December 2010.
Directors: ML Krawitz+ (Chairman), PE Shub (Chief Executive Officer)
(alt ML Krawitz), CEA Radowsky, JC O`Brien, PM Naylor*, RV Orlin* and
DS Johnson.
* Independent non-executive + Non-executive
African & Overseas Enterprises Limited
(Incorporated in the Republic of South Africa)
(Reg No. 1947/027461/06)
Share codes: AOO - AON - AOVP
ISIN: ZAE000000485 - ZAE000009718 - ZAE000000493
Registered office: Rex Buildings, 263 Victoria Road, Salt River, Cape Town,
7925
Secretary: AA Hodgkinson
Transfer secretaries: Computershare Investor Services (Pty) Limited,
70 Marshall Street, Johannesburg, 2001
Sponsor: Java Capital
Websites:
www.queenspark.com
www.rextrueform.com
Date: 04/03/2011 12:20:01 Produced by the JSE SENS Department.
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