37 / 198
35
BLUE LABEL INTEGRATED ANNUAL REPORT 2016
Financial Director’s report
continued
interest capitalised on loans of
R46 million, unrealised foreign
exchange gains thereon of R35 million
and the gain of R30 million on dilution
relating to the Group’s share of the
increased net asset value emanating
from the rights issue in OSI. These
increases were partially offset by the
Group’s share of losses totalling
R102 million inclusive of the
amortisation of applicable intangible
assets.
The net decline in intangible assets
and goodwill mainly pertained to the
amortisation of intangibles by
R130 million, the decline in goodwill
and intangible assets by R5 million
relating to the disposal of Velociti,
offset by R85 million expended on the
purchase of software, development
costs, starter pack bases and the
expansion of distribution channels.
There was a net increase in current
assets of R44 million. The material
movements relate to an increase in
inventories of R226 million and loans
receivable of R54 million, offset by
declines in cash resources of
R199 million and trade receivables of
R33 million.
The stock turn was 25 days. Bulk
inventory purchase opportunities at
favourable discounts validated the
consequent increase in inventory. The
nature of the business enables it to
reduce its inventory holdings within
the above number of days at any
given time.
The debtors collections improved from
46 days in the comparative year to
38 days.
The net profit attributable to equity
holders of R692 million, less a
dividend of R209 million, resulted in
retained earnings accumulating to
R3.1 billion.
In spite of an increase in trading
activities, trade and other payables
declined by R332 million as a result of
early settlement payments in return
for favourable settlement discounts.
Consequently, average credit terms
declined from 53 days in the
comparative year to 40 days.
Statement of cash flows
Cash flows from operating activities
amounted to R433 million
predominately attributable to
increased trading activity, net of
working capital requirements.
Cash flows applied to investing
activities amounted to R396 million.
Of this amount, R43 million related to
an additional investment in BLM and
R159 million to OSI. A further
R59 million was applied to a loan to
the associated Edgars Connect stores,
R85 million to the purchase of
intangible assets, R29 million to net
loans granted and R42 million to
capital expenditure. The above
outflows were partially offset by net
inflows received of R21 million of
which R13 million related to the
disposal of Velociti.
After applying R23 million to the
acquisition of treasury shares and a
dividend payment of R213 million to
shareholders and non-controlling
interests, cash on hand at year-end
amounted to R589 million.
Forfeitable share scheme
Forfeitable shares totalling
2 591 066 (2015: 2 937 836) were
issued to qualifying employees.
During the period 612 453 (2015:
419 998) shares were forfeited and
3 163 359 (2015: 3 819 409) shares
vested.
Dividend
The Group’s current dividend policy is
to declare an annual dividend. On
23 August 2016 the Board approved
a gross ordinary dividend (dividend
number 7) of 36 cents per ordinary
share (30.6 cents per ordinary share
net of dividend withholding tax) for
the year ended 31 May 2016.
This dividend of R242 823 255
inclusive of withholding tax, equates
to a 2.73 cover on headline earnings.
The dividend for the year ended
31 May 2016 has not been
recognised in the financial statements
as it was declared after that date.
Appreciation
I wish to express my gratitude to the
Group’s finance team for their
professional input and dedication
throughout the year.
Dean Suntup
Financial Director
9 November 2016