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AON AOVP AOO
AOO
African & Overseas - Interim group results: six months ended 31 December 2005
African & Overseas Enterprises Limited
Registration number 1947/027461/06
Share codes: AOO - AON - AOVP
ISIN: ZAE000000485 - ZAE000009718 - ZAE000000493
(Incorporated in the Republic of South Africa)
INTERIM GROUP RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2005
INCOME STATEMENT
Consolidated (R"000)
Six months ended Year ended
December 31 June 30
2005 2004 2005
Restated Restated
(Unaudited) (Unaudited) (Audited)
Continuing operations
Sales 15 1 592 163 774 312 549
4 538 16 461 23 412
Net operating income
Net interest received 1 603 2 317 4 703
Net income 6 141 18 778 28 115
Income/(loss) from associated
company 30 26 (101)
Income before taxation 6 171 18 804 28 014
Taxation 3 015 6 607 10 138
3 156 12 197 17 876
Income after taxation
Attributable to outside
shareholders in subsidiaries 1 515 5 432 8 080
Profit from continuing operations 1 641 6 765 9 796
Discontinued operation
Loss from discontinued operation (4 553) (1 644) (39 880)
Attributable to outside
shareholders in subsidiaries 2 007 725 17 575
(2 546) (919) (22 305)
(Loss)/profit (905) 5 846 (12 509)
Preference dividends 151 126 168
Net (loss)/income attributable to
ordinary and "N" ordinary
shareholders (1 056) 5 720 (12 677)
Reconciliation of headline earnings
Attributable (loss)/earnings (1 056) 5 720 (12 677)
Loss arising from discontinuance 372 - 19 037
Headline (loss)/earnings (684) 5 720 6 360
Headline (loss)/earnings per share
(6.0) 50.2 55.9
cents)
(Loss)/earnings per share (cents) (9.3) 50.2 (111.3)
Weighted average number of equity
shares on which earnings per share
is based (000) 11 387 11 387 11 387
Number of equity shares in
issue (000) 11 387 11 387 11 387
ABRIDGED CASH FLOW STATEMENT
Consolidated (R"000)
December 31 June 30
2005 2004 2005
Restated Restated
(Unaudited) (Unaudited) (Audited)
Cash generated by operations 5 769 19 787 (8 681)
Working capital changes 486 (4 121) 30 473
Interest received (net) 1 603 2 317 4 703
Taxation paid (3 693) (4 344) (8 356)
Dividends paid (5 991) (5 543) (5 585)
Net cash (outflow)/inflow from
operations (1 826) 8 096 12 554
Additions to property, plant and
equipment (12 274) (9 685) (17 929)
Proceeds on disposal of property,
plant and equipment - 622 637
Other (110) (14) -
Net cash outflows from investing
activities (12 384) (9 077) (17 292)
Net decrease in cash (14 210) (981) (4 738)
Cash at the beginning of the
period 59 964 64 702 64 702
Cash at the end of the period 45 754 63 721 59 964
SEGMENTAL REPORTING
Turnover
Manufacturing 91 100 121 698 215 689
Less: intersegment sales (69 299) (76 969) (139 051)
External sales 21 801 44 729 76 638
Retail 140 220 148 550 286 777
Total 162 021 193 279 363 415
Net operating (loss)/income
Manufacturing (7 856) (1 598) (50 965)
Retail 6 400 13 774 22 222
Intergroup 1 424 1 804 2 148
Total (32) 13 980 (26 595)
Depreciation included in net
operating (loss)/income
Manufacturing 701 1 834 3 253
Retail 5 084 4 110 8 867
Total 5 785 5 944 12 120
Total segment assets
Manufacturing 53 182 74 821 60 290
Retail 70 006 69 736 64 274
Cash 45 754 63 721 59 964
Intergroup (1 501) (3 236) (2 635)
Total 167 441 205 042 181 893
Total segment liabilities
Manufacturing (15 803) (16 604) (23 786)
Retail (12 757) (9 812) (11 668)
Total (28 560) (26 416) (35 454)
Capital expenditure
Manufacturing 801 996 1 057
Retail 11 475 8 689 16 872
Total 12 276 9 685 17 929
OTHER INFORMATION
Capital expenditure 12 276 9 685 17 929
Capital commitments
Contracted for 3 993 1 571 5 881
Authorised - not contracted for 3 502 2 034 1 878
Current ratio 4.9 7.7 4.4
BALANCE SHEET
Consolidated (R"000)
December 31 June 30
2005 2004 2005
Restated Restated
(Unaudited) (Unaudited) (Audited)
Assets
Non-current assets 60 888 50 673 54 698
Property, plant and equipment 49 311 46 690 42 810
Investments (unlisted) 2 249 2 226 2 446
Deferred taxation 9 328 1 757 9 442
106 553 154 369 127 195
Current assets
41 855 59 657 40 273
Inventory
Debtors 16 861 30 666 25 720
Taxation 2 083 325 1 238
Cash 45 754 63 721 59 964
167 441 205 042 181 893
Total assets
Equity and liabilities
Capital and reserves 138 881 178 626 146 439
Ordinary shareholders" interest
Share capital 1 200 1 200 1 200
Share premium 6 616 6 616 6 616
Non-distributable reserves 2 625 2 444 2 685
Distributable reserves 66 850 89 928 71 549
Outside shareholders" interest
on-current liability 61 590 78 438 64 389
Post-retirement liability 6 592 6 393 6 748
Current liabilities 21 968 20 023 28 706
Provisions 928 - 3 851
Accounts payable 20 987 18 462 24 855
Taxation 53 1 561 -
Total equity and liabilities 167 441 205 042 181 893
STATEMENT OF CHANGES IN EQUITY
Share capital 1 200 1 200 1 200
Share premium 6 616 6 616 6 616
Non-distributable reserves
Opening balance 2 685 2 319 2 319
IFRS: share-based payments 67 113 162
Foreign exchange rate changes (127) 12 204
2 625 2 444 2 685
Distributable reserves
Opening balance 71 549 83 581 83 581
IFRS: property, plant and
equipment - 4 325 4 325
IFRS: share-based payments - (36) (36)
Opening balance restated 71 549 87 870 87 870
(Loss)/profit after taxation (905) 5 846 (12 509)
Dividends (3 794) (3 788) (3 812)
66 850 89 928 71 549
Outside shareholders" interest
Opening balance 64 389 75 496 75 496
Movement for the period (2 799) 2 942 (11 107)
Closing balance 61 590 78 438 64 389
NOTES
1. Basis of preparation
These interim group financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) with effect from 1 July
2005. The opening balance sheets of 1 July 2004 and 1 July 2005, as well as the
comparative income statements, were restated having considered the transitional
arrangements provided by IFRS 1: First-time adoption of International Financial
Reporting Standards. The information presented has neither been audited nor
reviewed by the external auditors.
2. Statement of compliance
The condensed consolidated interim financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) for interim
financial statements. These are the group"s first IFRS financial statements for
part of the period covered by the first IFRS financial statements and IFRS 1:
First-time adoption of IFRS has been applied. The condensed consolidated
interim financial statements do not include all information required for full
financial statements. An explanation of how the transition from previous GAAP
to IFRS has affected the group"s financial statements is detailed in note 3.
There was no impact on the reported cash flows of the group.
3. 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 2005, except for the policies adopted to
comply with IFRS as noted below:
3.1 First-time adoption of International Financial Reporting Standards
(IFRS 1). The group has elected the following exemptions:
Property, plant and equipment: The group has elected to use the fair value on
1 July 2004 as deemed cost on transition for certain properties.
Share-based payments: The group has elected to expense all share-based
payments vested after 7 November 2002.
3.2 The value of adjustments as a result of the adoption of IFRS is disclosed
below and in the statement of changes in equity:
December 31 June 30
2005 2004 2005
Balance sheet
Property, plant and equipment 6 933 6 933 6 933
Deferred tax (339) (339) (339)
6 594 6 594 6 594
Income statement
Operating profit (67) (49) (97)
Attributable to outside
shareholders 30 21 43
(37) (28) (54)
3.3 Property, plant and equipment (IAS 16): The useful lives and residual
values of assets are reviewed annually.
Share-based payments (IFRS 2): Share-based payments are measured at fair value
and the cost recognised in the income statement over the vesting period. Share
options granted after November 2002 were valued and expensed to the income
statement, with the corresponding credit to equity.
4. Discontinued operation
An agreement was concluded in June 2005 in terms of which the company closed
its Salt River factory. A lease agreement has been entered into with an outside
party to lease the property and plant.
December 31 June 30
2005 2004 2005
Sales 10 429 29 505 50 846
Loss on discontinued operation (3 887) (2 529) (8 230)
Loss arising from discontinuance (666) - (41 873)
Loss before taxation (4 553) (2 529) (50 103)
Taxation - (885) (10 223)
Loss from discontinued operation (4 553) (1 644) (39 880)
5. Preference dividend
A dividend on the 6% participating preference shares for the six months ended
31 December 2005 in the amount of R16 500 was declared in December 2005 and
paid on 27 December 2005.
COMMENT
The principal operating subsidiary, Rex Trueform Clothing Company Limited,
reports as follows:
"Results for the half year to December 2005 fell short of expectations.
Queenspark"s turnover was 10% below target and 5,6% below that of the previous
comparable period. However, unit volumes in comparable stores increased during
the period. The decrease in turnover was partly the result of a 25-week trading
period compared with a 26-week period in the previous year. The operating
profit of Queenspark decreased by 52% on the comparable period of the previous
year.
Although gross profit margins were maintained, operating profit has been
affected by an increase in occupancy and employee costs relative to the reduced
turnover. Furthermore, increased overhead costs, largely related to the
provision of an expanded infrastructure and in particular, information
technology expenditure to accommodate a higher level of activity, adversely
affected net operating income.
Ongoing challenges in the manufacturing sector of the business had a severely
detrimental effect on group profit. The downsized Salt River manufacturing
facility continued to operate at a loss, as did the re-organised production
facility in Atlantis which has taken longer than expected to produce the
required level of performance.
Interest earned has decreased due to lower cash resources resulting from the
major retrenchment costs incurred late in the previous financial year at the
Salt River factory, the capital expenditure incurred in Queenspark and the
lower interest rate currently earned.
Queenspark should benefit during the coming trading period from an improved
planning and distribution system, and the provision of enhanced credit
facilities for customers. Three new stores were opened and a further two stores
will open during the second half of the financial year.
The Salt River manufacturing facility was closed at the end of December and,
given a satisfactory supply of electricity, an improved result is expected from
the Atlantis facility during the second half of the year.
Overall the group should benefit from the continuing buoyancy in consumer
spending and some improvement in profitability is expected during the second
half of the year".
Signed on behalf of the Board:
G M Thomas P E Shub
(Chairman) (Chief Executive Officer)
Cape Town
8 March 2006
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Ltd
70 Marshall Street
Johannesburg, 2001
Sponsor
Nedbank Capital
Registered Office
Rex Buildings
263 Victoria Road
Salt River
Cape Town, 7925
Directors: G M Thomas (Chairman), P E Shub (Chief Executive Officer),
M L Krawitz, CEA Radowsky
Secretary: A A Hodgkinson
Date: 10/03/2006 12:31:14 PM Produced by the JSE SENS Department
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