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Provisional audited condensed consolidated financial results for the year ended 30 June 2016
AH-VEST LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1989/000100/06)
Share code: AHL ISIN code: ZAE000129177
PROVISIONAL AUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR
ENDED 30 JUNE 2016
Condensed statement of financial position
Audited Audited
Year Ended Year Ended
30 June 2016 30 June 2015
R R
Assets
Non-current assets 42 574 635 37 526 233
Property, Plant & Equipment 35 545 998 30 588 399
Intangible assets 72 699 72 699
Deferred tax 6 955 938 6 865 135
Current assets 26 555 510 33 866 144
Inventories 9 448 247 15 317 843
Trade & other receivables 16 424 816 16 436 257
Cash & cash equivalents 682 447 2 112 044
Total Assets 69 130 145 71 392 377
Equity and Liabilities
Capital and reserves 18 244 903 16 652 165
Share capital 21 293 071 21 293 071
Accumulated loss (3 048 168) (4 640 906)
Non-current liabilities 16 632 467 20 438 179
Loan from shareholder 9 822 855 19 958 179
Finance lease obligation 2 193 313 -
Deferred income 4 616 299 -
Provisions - 480 000
Current liabilities 34 252 775 34 302 033
Trade and other payables 29 550 052 28 176 960
Finance lease obligation 725 062 -
Current tax payable - 47 333
Deferred income 338 118
Provisions 500 107 794 585
Bank overdraft 3 139 436 5 283 155
Total Equity and Liabilities 69 130 145 71 392 377
Net asset value per share (cents) 17.89 16.33
Tangible net asset value per share (cents) 17.82 16.26
Shares in issue at period end 101 973 333 101 973 333
Condensed statement of comprehensive income
Audited Audited
Year Ended Year Ended
30 June 2016 30 June 2015
R R
Revenue 142 305 259 140 707 262
Cost of sales (96 602 988) (81 490 120)
Gross profit 45 702 271 59 217 142
Other income 3 218 559 315 689
Operating expenses (45 632 186) (55 237 893)
Operating profit 3 288 644 4 294 938
Investment revenue 6 944 547
Finance costs (1 793 649) (1 468 671)
Profit before taxation 1 501 939 2 826 814
Taxation 90 804 (892 996)
Profit for the year from continuing operations 1 592 743 1 933 818
Loss from discontinued operations - (551 883)
Profit for the year 1 592 743 1 381 935
Attributed to:
Equity holders of the company 1 592 743 1 381 935
Minority interest - -
Headline earnings reconciliation:
Profit attributed to equity holders of the company 1 592 743 1 381 935
Adjustments: - -
Headline earnings 1 592 743 1 381 935
Per share information (cents)
Earnings per share 1.56 1,36
- from continuing operations 1.56 1,90
- from discontinued operations - (0,54)
Headline earnings per share 1.56 1,36
- from continuing operations 1.56 1,90
- from discontinued operations - (0,54)
Weighted average shares in issue 101 973 333 101 973 333
Diluted weighted average shares in issue 101 973 333 101 973 333
Statement of changes in equity
Audited Audited
Year Ended Year Ended
30 June 2016 30 June 2015
R R
Share capital and share premium 21 293 071 21 293 071
Accumulated loss (3 048 168) (4 640 906)
Capital and reserves 18 244 903 16 652 165
Condensed statement of cash flows
Audited Audited
Year Ended Year Ended
30 June 2016 30 June 2015
R R
Net cash generated from operating activities 9 338 020 7 328 886
Net cash used in investing activities (4 367 168) (9 448 936)
Net cash (used in)/from financing activities (4 256 730) 2 594 924
Net increase in cash and cash equivalents 714 122 474 874
Cash and cash equivalents at the beginning of period (3 171 111) (3 645 985)
Cash and cash equivalents at end of period (2 456 989) (3 171 111)
COMMENTARY
The board is pleased to present the audited results for the year ended 30 June 2016 and reports
that the initiatives by the new management team taken surrounding the Company’s factory relocation
and stock controls, together with continued support of AH-Vest Limited’s customers and stakeholders,
have led to the Company achieving an improvement in the Company’s operations.
Turnover has increased to R142.3 million for the year ended 30 June 2016 compared to R140.7 million
for the year ended 30 June 2015 an increase of 1.1%. During the year the company struggled to
stabilise the production flow of the new factory until late April 2016 negatively impacting on volumes,
leading to only a small growth in overall revenue compared to the prior year.
Gross margins decreased to 32% from 42% in the prior year due to lower than anticipated service levels
declined from 87.5% to 85.7% as a result of lower production levels. For this reason, it became very
difficult to negotiate any price increases in the period under review. Costs of raw materials and packaging
escalated and were absorbed by the company. Improved service levels are expected in the forthcoming year.
The order book is increasing and management aims to continue improving service levels, efficiencies,
production output and achieve the envisioned business growth. The demand for hot sauce has grown exponentially
and the company’s supply is unable to meet the demand. The Company is in the process of installing a new
dedicated production line. It will become one of the first processing facilities to operate a separate hot sauce
line. The hot sauce capacity will increase significantly and it is expected to increase the company’s profitability.
Operating expenses have been reduced to 32% of turnover compared to 39% of turnover in the prior year due to
staff costs declining and the company benefiting from an integrated facility as opposed to two locations. The
maintenance costs are still high due to the problems being encountered with machines failing due to continuous
power cuts.
During the current year the company invested a further R7.2 million (2015: R16.4 million) on new plant and
equipment and the factory infrastructure as part of the on-going expansion programme. The company is now
entering a phase of increasing its capacity now that all the production lines are running. The shareholder
loan decreased during the year under review primarily due to management focusing on reducing the Company’s
debts.
The Company also established its own distribution warehouse in the Kwa-Zulu Natal province (“KZN”). This has
been necessitated by the fact that the KZN market is very receptive to the entire All Joy product range as the
stock moves quickly off the shelves. The company’s new distribution centre will improve efficiencies and enable
the warehousing of more products closer to that market. In future the company will pursue the opening of its own
distribution centres throughout the country.
During the current year the company received a R6.8 million expansion grant from the DTI which it had applied
for three years ago.
BASIS OF PREPARATION
The audited condensed consolidated financial results for the year ended 30 June 2016 are prepared on a going
concern basis.
These audited condensed consolidated financial results, comprise a condensed consolidated statement of financial
position at 30 June 2016, 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 2016.
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 2016. 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 food
products, and one geographical segment namely South Africa. Whilst the Company has started exporting product, this
only represents around 3% of the total revenue. An analysis of the revenue of customers over 10% is set out below:
Customer Analysis 2016 2015
Customer A 52% 53%
Customer B 21% 23%
Total 73% 76%
The company’s overall dependence changed marginally and its reliance on its top 2 customers is decreasing due to
the growth of independent customers.
ACQUISITIONS AND DISPOSALS
There were no acquisitions or disposals during the current year under review.
CONTINGENCIES
The Company has one issue pending, with the Financial Services Board. The details are contained in the Annual Financial
Statements.
INDUSTRY CHALLENGES AND OUTLOOK
The company is still experiencing serious power shortages due to Eskom not being able to supply the additional required
power to this site in the foreseeable future. To mitigate this problem management has resorted to running day and night
shifts. Management has also begun investigating the installation of a 10MW solar farm. The solar farm has the potential
to reduce the company’s electricity expenses by moving the company’s electric supply requirements off the Eskom grid and
also allow the Company to sell its excess electricity to Eskom. The installation of the solar farm will reflect positively
on the company’s image and will save the group long term costs and also provide the group with a sustainable long term
electricity supply. Most importantly this will make the company one of the first fully environmentally friendly factory
in Africa.
TOMATO PASTE PRODUCTION
A sister company to AH-Vest has successfully launched a tomato paste factory in Modjadjiskloof, Tzaneen, Limpopo and it is
anticipated that this will greatly reduce the company’s costs and improve the security of supply of tomato paste in the
upcoming two years when the factory is fully operational.
The main objectives of this project are to facilitate import substitution, reduce dependency on imported tomato paste and
promote the local tomato farmers. A canning factory is being set up on the same location and it will be up and running in
2017. These exciting developments will uplift the province that has unacceptably high levels of unemployment.
In addition to this the company has committed to invest in a new tomato processing plant that will produce a higher grade
36/38 Brix paste. This new plant will increase the capacity from the current 300t to 1000t of fresh tomatoes per day. This
will create capacity to produce about 50% of the countries tomato paste requirement. This will achieve a major milestone in
the government’s desire to support local industry and reduce imports. In this regard the company supports the maintenance of
the import tariff that was imposed on imported by government to deter dumping by foreign companies as well as to protect the
local producers.
The new factory is in the process of obtaining its FSA approval in the short term in preparation for a rapid migration to FSSC
22000. Management is excited about executing on this plan.
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. (2015: Nil).
CHANGE IN DIRECTORS
There were no other changes to the board of directors for the year under review and to the date of this announcement
FUTURE PROSPECTS
Despite the industry challenges mentioned above, the Company is cautiously optimistic that the new Eikenhof factory will realise
the expected volumes going into the summer of 2016/7, which traditionally has a higher demand from our trade customers when
consumers increase their consumption of our products.
The group’s holding company has 5 factories on the Eikenhof site and the envisaged benefits of shared services, warehousing, and
logistics are expected to positively improve competitiveness and absorption of manufacturing overheads in the year ahead.
A new range of innovative canned food products have been developed and will be launched using the manufacturing capability of the
larger group and the Company is now able to offer trade customers a full range of long shelf life quality canned and bottled food
products that offer innovation, value and diversity.
Alljoy has the benefit of synergies derived from having a tomato processing factory located in Limpopo, high quality single strength
tomato products that will be launched in 2017.
Further benefits should be derived from sourcing environmentally friendly PET bottles and closures from PETCAN, a sister company to
AH-Vest.
The Company’s new separate and dedicated hot sauce factory is expected to increase the Veri Peri production levels as stated earlier,
in order to meet the increased demand for this product. The directors are confident that with the capability of the Eikenhof factories
and additional capacity, the objective to further improve service levels to trade customers will be achieved. In addition, the export
strategy embarked on last year has started to bear fruit. The Company’s export revenue increased marginally during the current period.
The Company will continue to aggressively seek to promote its added value products and brands in the year ahead.
The company is optimistic about continued growth prospects for the future.
ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING
The annual report is in the process of being compiled and will be posted in due course and a further announcement providing details of
the Annual General Meeting will be made.
I E Darsot
Johannesburg
12 October 2016
Directors:
Executive Directors: IE Darsot (Chairman/CEO); MNI Darsot; BI 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 Advisor Transfer secretaries
Arbor Capital Sponsors Proprietary Computershare Investor Services Proprietary
Limited Limited
Auditors Company Secretary
Nexia SAB&T Arbor Capital Company Secretarial
Proprietary Limited
Date: 13/10/2016 05:37:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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