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BLUE LABEL
INTEGRATED ANNUAL REPORT 2017
/
32
Financial Director’s report
continued
Statement of financial
position
Total assets increased by R1.4 billion
to R8.7 billion of which current assets
increased by R1.5 billion and non-
current assets reduced by R76 million.
Non-current assets included increases
in capital expenditure net of
depreciation of R11 million, in loans
receivable of R30.9 million and trade
and other receivables of R13.3 million.
These increases were offset by
decreases of R86 million in intangible
assets and goodwill and R50.6 million
in investments in associates and joint
ventures.
The net decrease of R50.6 million in
investment in associate and joint
ventures comprised the R160 million
gains measured at fair value relating
to Oxigen Services India and 2DFine,
a capital contribution of R25.5 million
to Oxigen Services India, a further
equity loan granted to Lornanox of
R9.3 million, the acquisition of Utilities
World for R12 million, interest of
R23.5 million capitalised on loans and
loans granted of R14 million. These
increases were offset by the Group’s
share of losses therein totalling
R165 million inclusive of the
amortisation of applicable intangible
assets, a negative impact on foreign
currency translation reserves of
R82.4 million and unrealised
foreign exchange losses on loans
of R47.2 million.
The net decline of R86 million in
intangible assets and goodwill mainly
pertained to the amortisation of
intangibles by R143 million, offset by
R56 million expended on the purchase
of software, internally generated
software development costs and
starter pack bases.
Of the increase in current assets,
material movements included increases
in inventories of R521 million, loans
receivable of R90 million, cash
resources of R762 million and trade
receivables of R80 million.
The stock turn equated to 33 days
compared to 25 days for the
comparative year. Bulk inventory
purchase opportunities at favourable
discount rates 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’ collection period
increased to 39 days compared to
38 days for the comparative year.
Net profit attributable to equity
holders of R787 million, less a
dividend of R243 million, resulted in
retained earnings accumulating to
R3.6 billion.
Trade and other payables increased
by R881 million, with average credit
terms increasing to 53 days compared
to 40 days for the comparative year.
Statement of cash flows
Cash flows generated from operating
activities amounted to R1.36 billion,
predominately attributable to
increased trading activity, net of
working capital requirements.
Cash flows applied to investing
activities amounted to R320 million.
Of this amount, R56 million related
to the purchase of intangible assets,
R57 million to capital expenditure,
R25.5 million to a capital contribution
to Oxigen Services India, R133 million
to net loans granted, R50.7 million to
earn outs relating to prior acquisitions
and R7.5 million to the acquisition of
Utilities World. These outflows were
partially offset by R1.7 million from
the sale of fixed assets and
R13 million from an earn-out received
emanating from the sale of Ukash.
After applying R7 million to the
acquisition of treasury shares and a
dividend payment of R270 million to
shareholders and non-controlling
interests, cash on hand at year-end
amounted to R1.35 billion.
Forfeitable share scheme
Forfeitable shares totalling
1 376 257 (2016: 2 591 066) were
issued to qualifying employees.
During the year 121 226 (2016:
612 453) shares were forfeited and
2 141 673 (2016: 3 163 359) shares
vested.
Dividend
The Group’s current dividend policy
is to declare an annual dividend. On
23 August 2017 the Board approved
a gross ordinary dividend (dividend
number 8) of 40 cents per ordinary
share (32 cents per ordinary share net
of dividend withholding tax) for the
year ended 31 May 2017.
The dividend of R349 803 616 inclusive
of withholding tax equates to a
2.25 cover on headline earnings. The
dividend for the year ended 31 May
2017 has not been recognised in the
financial statements as it was declared
after this date.
Subsequent events
On 2 August 2017, Blue Label,
through its wholly owned subsidiary,
The Prepaid Company Proprietary
Limited (The Prepaid Company),
acquired 45% of the issued share