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Audited condensed consolidated financial results for the year ended 30 June 2014
AH-VEST LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1989/000100/06)
Share code: AHL ISIN code: ZAE000129177
AUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2014
Condensed statement of financial position
Audited
Audited 15 Months
Year Ended Ended
30 June 2014 30 June 2013
R R
Assets
Non-current assets 24 535 839 11 668 241
Property, Plant & Equipment 16 583 383 10 983 032
Intangible assets 208 164 485 715
Deferred tax 7 744 292 199 494
Current assets 31 064 617 45 585 271
Inventories 14 117 443 20 046 808
Advances paid to employees 8 334 163
Trade & other receivables 16 938 740 22 022 794
Cash & cash equivalents 100 3 515 506
Non-current asset held for sale and assets of
disposal groups 257 542 5 372 974
Total Assets 55 857 998 62 626 486
Equity and Liabilities
Capital and reserves 15 270 230 19 765 610
Share capital 21 293 071 21 293 071
Reserves - 3 332 271
Accumulated loss (6 022 841) (4 859 732)
Non-current liabilities 9 668 600 8 656 975
Loan from shareholder 9 668 600 -
Other financial liabilities - 8 656 975
Current liabilities 30 811 204 33 326 990
Other financial liabilities - 1 999 315
Loan from shareholder - 237 659
Finance lease obligation - 127 822
Trade and other payables 26 469 131 30 962 194
Current tax payable 2 992 -
Provisions 692 996 -
Bank overdraft 3 646 085 -
Liabilities of disposal groups 107 964 876 911
Total Equity and Liabilities 55 857 998 62 626 486
Net asset value per share (cents) 14.97 19.38
Tangible net asset value per share (cents) 14.77 18.91
Shares in issue at period end 101 973 333 101 973 333
Condensed statement of comprehensive income
Audited
Audited 15 Months
Year Ended Ended
30 June 2014 30 June 2013
R R
Revenue 122 936 160 136 586 316
Cost of sales (85 265 807) (84 002 266)
Gross profit 37 670 353 52 584 050
Other income 268 901 471 994
Operating expenses (49 711 692) (49 722 962)
Operating (loss)/profit before finance costs (11 772 438) 3 333 082
Investment revenue 1 066 22 188
Finance costs (1 216 903) (1 314 635)
(Loss)/Profit before tax (12 988 275) 2 040 635
Taxation 7 544 798 (250 506)
(Loss)/Profit for the period from continuing
operations (5 443 477) 1 790 129
Profit from discontinued operations 948 097 235 745
(Loss)/Profit for the period (4 495 380) 2 025 874
Other comprehensive loss for the period net of
taxation - (1 356 339)
Total comprehensive (loss)/income (4 495 380) 669 535
Attributed to:
Equity holders of the company (4 495 380) 2 025 874
Minority interest - -
Headline earnings reconciliation:
(Loss)/Profit attributed to equity holders of the
company (4 495 380) 2 025 874
Adjusted for:
Profit on sale of property, plant and equipment - (40 000)
Headline earnings (4 495 380) 1 985 874
Weighted average shares in issue 101 973 333 101 973 333
Diluted weighted average shares in issue 101 973 333 101 973 333
Per share information (cents)
Earnings per share (4.41) 1.99
- from continuing operations (5.34) 1.76
- from discontinued operations 0.93 0.23
Headline earnings per share (4.41) 1.95
- from continuing operations (5.34) 1.72
- from discontinued operations 0.93 0.23
Statement of changes in equity
Audited
Audited 15 Months
Year Ended Ended
30 June 2014 30 June 2013
R R
Share capital and share premium 21 293 071 21 293 071
Revaluation reserve (transferred to accumulated loss) - 3 332 271
Accumulated loss (6 022 841) (4 859 732)
Capital and reserves 15 270 230 19 765 610
Condensed statement of cash flows
Audited
Audited 15 Months
Year Ended Ended
30 June 2014 30 June 2013
R R
Net cash (utilised in)/generated from operating activities (4 001 381) 8 772 576
Net cash used in investing activities (1 798 768) (6 530 272)
Net cash used in financing activities (1 361 342) (1 829 906)
Net (decrease)/increase in cash and cash
equivalents (7 161 491) 412 398
Cash and cash equivalents at the beginning of period 3 515 506 3 103 108
Cash and cash equivalents at end of period (3 645 985) 3 515 506
COMMENTARY
The board presents the audited results for the twelve months ended 30 June 2014 and reports
that the initiatives by the new management team taken surrounding working capital
management and stock controls, together with continued support of AH-Vest Limited’s
customers and stakeholders, has led to a turnaround in the management of working capital but
the initiatives that resulted in an initial return to profitability have been negatively impacted by
external or once off factors as detailed further below.
Turnover has reduced to just under R123 million for the year ended 30 June 2014 compared to
R136.5 million the 15 month period ended 30 June 2013 although this represents an effective
increase of average monthly turnover from R9.1 million up to R10.25 million. However, gross
margins have been negatively impacted by increased raw material costs caused by the
deterioration in the Rand, combined with an increase in a major raw material input being that of
the cost of tomato paste through both duties imposed by the Government on import of tomato
paste as well as general price increases due to world-wide shortages of the commodity. This led
to the gross margin percentage dropping to 30.6% from 38.4%. Corrective measures are being
put in place, including price increases and cost rationalisation, but these actions will take a while
to take effect. The net loss after taxation was R4 495 380 for the period under review compared
to a profit of R2 025 874 for the fifteen months ended 30 June 2013.
The Company experienced a problem with its logistics service provider during the prior year with
service delivery levels as low as 65%. This negatively impacted both the achievement of sales
(lost sales) as well as margins and notice was given earlier during the current year to the said
service provider and deliveries are now being handled by The Eastern Trading Group, with
service delivery levels above 80% being achieved in the year under review. The company also
suffered disruptions due to on-going service level protests and the steel and plastic sector
strikes.
Efficiency has remained a serious problem during the year whilst operating at the existing
Tarlton plant due to capacity constraints and many orders could not be filled in full. However,
the lease has now come to an end and the company is in the process of moving its entire
operations to Eikenhof. This process will happen gradually until the middle of the 2015 financial
year once the production at the new facility has been stabilised. The new production facility has
been designed to house 10 production lines. The board is happy to announce that two of the
lines have already been commissioned. The remaining lines will be commissioned during the
course of the 2015 financial year.
Whilst operating expenses have been well contained, as a percentage of turnover they have
increased slightly, which is to be expected with the increase in transport costs, activity
surrounding the construction of the new plant, administration and rental costs of running two
factories in different locations. Operating expenses are expected to be well controlled going
forward as the company will see a significant increase in capacity, the staffing will be rationalised
due to increased automation. The company will have increased factory and warehousing
capacity to enable greater stock holding reducing delivery delays as well as lost sales .The
company will also start to benefit from group synergies.
The company made a provision for retrenchments and relocations amounting to R0.7 million that
is included in operating expenses. This is a once off cost that will be incurred in order to relocate
the staff from Tarlton area to Eikenhof as well as rationalise and align the workforce with the new
facility’s labour requirement. Going forward, the company will benefit from a more streamlined
and leaner work force.
Discontinued operations in the prior period primarily related to the sale of the land and buildings
owned by the subsidiary company, All Joy Property Holdings (Pty) Limited. The asset was
transferred during the year under review and the full proceeds were applied to reduce the Land
Bank facility.
During the year the company paid off the remaining Land Bank Loan in full and cancelled all the
securities and guarantees that had been given to the bank.
During the year the company invested a further R4.4 million on plant and equipment and R1.8
million on the factory infrastructure and part of the ongoing recapitalisation programme. The
factory is now in the final phase of completion. This will ensure that our capacity increases by
more than 100% based on one production shift.
BASIS OF PREPARATION
The audited condensed consolidated financial results for the year ended 30 June 2014 are
prepared on a going concern basis.
These audited condensed consolidated financial results, comprise a condensed consolidated
statement of financial position at 30 June 2014, a condensed consolidated statement of
comprehensive income, a condensed consolidated statement of changes in equity and a
condensed consolidated statement of cash flow for the year ended 30 June 2014.
The audited condensed consolidated financial results have been prepared in accordance with
the framework concepts and the measurement and recognition requirements of International
Financial Reporting Standards (“IFRS”), IAS 34: Interim Financial Reporting and the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Reporting Pronouncements as issued by Financial Reporting Standards Council, the
Johannesburg Stock Exchange (“JSE”) Listings Requirements and the requirements of the
South African Companies Act, 2008 (No. 71 of 2008).
The accounting policies are in terms of IFRS and are consistent with those of the previous
annual financial statements. The principal accounting policies, which comply with IFRS, have
been consistently applied in all material respects in the current and comparative period. All new
interpretations and standards were assessed and adopted with no material impact.
These annual financial statements from which this announcement has been extracted have
been audited by Nexia SAB&T, who have issued an unqualified audit opinion on the results for
the year ended 30 June 2014.
A copy of the audit opinion is available for inspection at the registered office of the company.
The results have been prepared by the Financial Director, Mr C Sambaza. This summarised
report is extracted from the audited information, but is not itself audited. The directors take full
responsibility for the preparation for this provisional report and are satisfied that the financial
information has been correctly extracted from the underlying financial statements.
SEGMENTAL ANALYSIS
No segmental analysis has been presented as the company operates primarily within one
product segment, namely sauces, and one geographical segment namely South Africa. An
analysis of the revenue of customers over 10% is set out below:
Customer Analysis
2014 2013
Customer A 49% 46%
Customer B 28% 29%
ACQUISITIONS AND DISPOSALS
Disposal of head office and relocation of factory and head office
During the prior year, the Company concluded the transfer of the head office premises, located
at 103 Booysens Reserve Road Johannesburg, with effect from May 2014.
The total cash consideration for the disposal of the property was R5 150 000 and the proceeds
of the disposal, after associated costs, have been utilised to reduce the Land Bank liability.
.
CONTINGENCIES
As previously reported the Company entered into a lease agreement with JR 209 Investments
(Pty) Ltd to rent the premises known as Twenty One Industrial Estate, with the purpose of
relocating the factory and headquarters into one location in Clayville, Johannesburg.
A dispute arose in relation to this lease agreement and a notification of cancellation of lease
was received following a demand for payment of R42 523 377 plus interest at prime plus 2%
from 15 February 2013 to date of payment or alternatively payment of R9 272 401.60 plus
interest at prime plus 2% from the date of the summons being 26 March 2013, alternatively at
15.5% per annum.
The Company’s attorneys were consulted in this regard and they are now handling this matter.
The action has been defended by AH-Vest and a notice in terms of Rule 35 (12) and 35 (14) of
the Supreme Court rules has been served on JR 209 Investments (Pty) Ltd on the 3 May 2013
which required a response from them within five days of the service of the notice.
A bare denial plea was submitted and the company has thus responded in the same manner
and the matter is currently at a stalemate.
MATTERS SETTLED DURING THE YEAR
As previously reported, the NEF made a claim of interest and capital against the company and
its former CEO, Mr Marci Pather amounting to approximately R11 million for a disputed option.
After some lengthy negotiations the major shareholder, Eastern Trading (Pty) Limited, managed
to reduce the claim substantially and a settlement was reached. This matter is now closed and
all the sureties have now been released by NEF.
ISSUE AND REPURCHASE OF SHARES
There were no new share issues or share repurchases during the year under review.
DIVIDENDS
No dividends were declared during the period. (2013: Nil).
CHANGE IN DIRECTORS
During the period under review and to the date of issue of this announcement, the following
board changes occurred:
Director Appointed Resigned
R Noorbaai 16 October 2013
C Sambaza 21 October 2013
JJ du Plooy 15 October 2013
Z Elias 15 October 2013 11 September 2014
The board would like to welcome Messrs C Sambaza and JJ Du Plooy to the board and looks
forward to their valuable contribution to the future of the company. The board would also like to
thank Mr R Noorbaai and Mr Z Elias who have resigned from the board for their invaluable
contribution to the board during their time in office. The board wishes them well in their new
endeavours.
FUTURE PROSPECTS
Following the change in control of the Company and due to the unavailability of the Clayville
factory development and the current Tarlton factory lease coming to an end, the factory
premises is in the process of being moved to the 200-acre estate in Eikenhof, Johannesburg,
from which all of the other businesses owned by Eastern Trading Company are operated.
AH-Vest has continued to operate the current Tarlton factory, to defend its shelf space, albeit at
a higher cost. Certain new production lines have already been commissioned in the 2015
financial year with the balance being commissioned towards the middle of the financial year.
The board of directors are confident that any losses incurred as a result of the Tarlton factory not
producing the required volumes as well as the low service delivery levels will be made up in the
forthcoming year with increased volumes expected out of the new “state of the art” plant.
I E Darsot
Johannesburg
26 September 2014
Directors:
Executive Directors: IE Darsot (Chairman/CEO); MN Darsot; B Darsot; SI Darsot; R Darsot;
MT Pather; C Sambaza
Non-Executive Directors: H Takolia*; MS Appelgryn*; J Du Plooy* (*independent)
Registered address:
15 Misgund Road, Eikenhof, Johannesburg
Designated Advisors Transfer secretaries
Arcay Moela Sponsors (Pty) Ltd trading as Arbor Computershare Investor Services (Pty) Ltd
Capital Sponsors
Auditors Company Secretary
Nexia SAB&T Arcay Client Support (Pty) Ltd trading as
Arbor Capital Company Secretarial
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