Unaudited Condensed Group Consolidated Interim Financial Results For The Six Months Ended 31 December 2016 AH-VEST LIMITED (Incorporated in the Republic of South Africa) (Registration number 1989/000100/06) Share code: AHL ISIN code: ZAE000129177 UNAUDITED CONDENSED GROUP CONSOLIDATED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2016 Condensed group statement of financial position Unaudited Audited Unaudited 6 Months 12 Months 6 Months 31 Dec 2016 30 Jun 2016 31 Dec 2015 R R R ASSETS Non-current assets 43 483 318 42 574 635 36 978 372 Property, Plant & Equipment 36 791 729 35 545 998 30 290 539 Intangible assets 72 699 72 699 72 699 Deferred tax 6 618 890 6 955 938 6 615 134 Current assets 50 145 237 26 555 510 39 274 110 Inventories 13 120 287 9 448 247 13 110 393 Trade & other receivables 33 087 014 16 424 816 25 128 778 Cash & cash equivalents 3 937 936 682 447 1 034 939 Total Assets 93 628 555 69 130 145 76 252 482 EQUITY AND LIABILITIES Capital and reserves 19 111 598 18 244 903 17 361 254 Share capital 21 293 071 21 293 071 21 293 071 Accumulated loss (2 181 473) (3 048 168) (3 931 817) Non-current liabilities 30 731 557 16 632 467 18 072 594 Loans from shareholder 7 006 693 9 822 855 17 327 804 Provisions - - 480 000 Finance lease obligation 1 814 250 2 193 313 - Deferred income 4 456 747 4 616 299 - Long term loan 17 453 867 - - Other financial liabilities - - 264 790 Current liabilities 43 785 400 34 252 775 40 818 634 Other financial liabilities - - 132 395 Trade and other payables 37 609 991 29 550 052 36 772 754 Finance lease obligation 596 317 725 062 - Provisions 430 500 500 107 - Short term portion of long term loan 1 831 848 - - Deferred income 338 118 338 118 - Bank overdraft 2 978 626 3 139 436 3 913 485 Total Equity and Liabilities 93 628 555 69 130 145 76 252 482 Net asset value per share (cents) 18.74 17.89 17.03 Tangible net asset value per share (cents) 18.67 17.82 16.95 Shares in issue at period end 101 973 333 101 973 333 101 973 333 Condensed group statement of comprehensive income Unaudited Audited Unaudited 6 Months 12 Months 6 Months 31 Dec 2016 30 Jun 2016 31 Dec 2015 R R R Revenue 91 544 370 142 305 259 80 691 485 Cost of sales (62 414 460) (96 602 988) (47 130 031) Gross profit 29 129 910 45 702 271 33 561 454 Other income 797 262 3 218 559 71 612 Operating expenses (27 271 122) (45 632 186) (31 663 940) Operating profit before finance costs 2 656 050 3 288 644 1 969 126 Investment revenue 576 6 944 - Finance costs (1 452 883) (1 793 649) (1 010 037) Profit before taxation 1 203 742 1 501 939 959 089 Taxation (337 048) 90 804 (250 000) Profit for the period 866 694 1 592 743 709 089 Other comprehensive income for the period net of taxation - - - Total comprehensive income 866 694 1 592 743 709 089 Attributed to: Equity holders of the company 866 694 1 592 743 709 089 Minority interest - - - Headline earnings reconciliation: Profit attributed to equity holders of the company 866 694 1 592 743 709 089 Adjustments: - - - Headline earnings 866 694 1 592 743 709 089 Per share information (cents) Earnings per share 0.85 1.56 0.70 Headline earnings per share 0.85 1.56 0.70 Weighted average shares in issue 101 973 333 101 973 333 101 973 333 Diluted weighted average shares in issue 101 973 333 101 973 333 101 973 333 Condensed group statement of changes in equity Unaudited Audited Unaudited 6 Months 12 Months 6 Months 31 Dec 2016 30 Jun 2016 31 Dec 2015 R R R Share capital and share premium 21 293 071 21 293 071 21 293 071 Accumulated loss (2 181 473) (3 048 168) (3 931 817) Capital and reserves 19 111 598 18 244 903 17 361 254 Group statement of Cash Flows Unaudited Audited Unaudited 6 months 12 Months 6 months 31 Dec 2016 30 Jun 2016 31 Dec 2015 R R R Net profit before interest and tax 1 203 742 1 501 939 959 089 Adjustment for: Depreciation 548 421 2 327 944 1 873 910 Interest Received (576) (6 944) - Finance costs 1 452 883 1 729 556 1 010 037 (Increase)/Decrease in Trade & Other Receivables (16 662 198) 11 441 (8 692 521) Increase in Trade & Other Payables 8 059 940 1 373 087 8 595 794 (Decrease) in Provisions & Accruals (69 607) (774 478) (794 585) (Increase)/Decrease in Inventories (3 672 040) 5 869 596 2 207 450 Income related from government grant (159 552) (1 569 397) - Capital portion of grant amortised - (319 102) - Net cash (utilised in)/generated from operations (9 298 985) 10 143 642 5 159 174 Interest income 576 6 944 Interest Paid (1 452 883) (765 233) (1 010 037) Taxes - (47 333) (47 333) Net Cash (utilised in)/generated from Operations (10 751 293) 9 338 020 4 101 804 CASH FLOWS FROM INVESTMENT ACTIVITIES Capital Expenditure (1 794 153) (4 367 168) (1 576 049) Net cash used in investment activities (1 794 153) (4 367 168) (1 576 049) CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) in Shareholders Loan (2 816 162) (15 606 513) (2 630 375) Loans received from shareholders 4 506 865 (Repayment of)/increase in other financial liabilities (507 808) - 397 185 Government grant received - 6 842 918 - Long term loan received 20 000 000 - Long term loan repaid (714 286) Net Cash generated by (used in) financing activities 15 961 744 (4 256 730) (2 233 190) Net increase in cash and cash equivalents 3 416 299 714 122 292 565 Cash and cash equivalents at the beginning of the period (2 456 989) (3 171 111) (3 171 111) Cash and cash equivalents at the end of the period 959 110 (2 456 989) (2 878 546) COMMENTARY The board presents the unaudited results for the six month period ended 31 December 2016. The group performed well in this reporting period and is showing signs of a turn around that management can build on to put the company back on a solid footing. The new factory built in Eikenhof is now operating satisfactorily with the production capacity increasing steadily. Power shortages continue to affect the ramping up of production. FINANCIAL PERFORMANCE Turnover for the six month period ended 31 December 2016 increased by R10.9m from R80.7m to R91.5m an increase of 13%. This was mainly due to an increase in volumes from the previous comparable period. Gross margin decreased from 42% to 32% over the same period. This was due to significant increases in raw material costs that came through in the first quarter of the year. The company took a decision to absorb most of the cost increases and not pass all of it onto the consumers. Management believes this decision is in the long term interest of the company in defending shelf space. Operating expenses decreased from R31.7m to R27.3m a decrease of 13.8% over the comparative period. This was due to improved group synergies as well as tighter cost control. The operating expenses as a percentage of turnover decreased from 39% to 29.8% in the current period. This shows the business is moving in a positive direction in improving profitability. Earnings per share increased from 0.7c to 0.85c over the period. In an effort to improve the stock levels and service levels, inventory levels were increased from R9.4m at the year ended 30 June 2016 to R13.1m at 31 December 2016, an increase of 39%. Management will continue to invest in building up stock levels in all its warehouses across the country. Trade and other receivables increased from R16.7m to R33.1m. This was due to a significant increase in sales in the second quarter of the year which is the busiest period. During the six month period the company obtained a loan term loan of R20m in order to refinance the long term assets. The loan is repayable over 7 years. The current asset ratios have improved from 0.96 to 1.15 due to improvement in working capital management. BASIS OF PREPARATION The unaudited condensed group financial results for the 6 months ended 31 December 2016 are prepared on a going concern basis and comprise a condensed group statement of financial position at 31 December 2016, a condensed group statement of comprehensive income, a condensed group statement of changes in equity and a condensed group statement of cash flow for the 6 months ended 31 December 2016. The unaudited financial results have been prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the presentation and disclosure requirements of IAS 34 – Interim Financial Reporting, and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council, the JSE Limited Listings Requirements and the requirements of the South African Companies Act 71 of 2008, as amended. SIGNIFICANT ACCOUNTING POLICIES These financial results for the six months ended 31 December 2016 have not been audited or reviewed by the company’s auditors, Nexia SAB&T. The accounting policies are in terms of International Financial Reporting Standards (IFRS) and are consistent with those of the previous audited annual financial statements for the year ended 30 June 2016. The principal accounting policies, which comply with International Financial Reporting Standards, 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. The unaudited results have been prepared by the Financial Director, Mr. C. Sambaza CA (SA) CA (Z). SEGMENTAL REPORTING ANALYSIS No segmental reporting analysis has been presented as the company operates primarily within one product segment, namely food products, and one geographical segment namely South Africa. The company has commenced with its export strategy during the period under review. An analysis of the revenue of the top three customers is set out below: Customer Analysis 31 December 2016 31 December 2015 Customer A 48% 41% Customer B 18% 18% Customer C 6% 6% DISPOSALS/ACQUISITIONS There have been no disposals or acquisitions during the six months ended 31 December 2016. ISSUE AND REPURCHASE OF SHARES There were no share issues or share repurchases during the six months under review. DIVIDENDS No dividends have been declared in respect of the six month period and the directors are preserving cash and re-investing the cash into the business. (2015: Nil). CHANGE IN DIRECTORS During the period under review there were no changes to the board. SUBSEQUENT EVENTS There are no significant events that have happened up until the reporting date. FINANCIAL INSTRUMENTS RECOGNISED AT FAIR VALUE There are no financial instruments that have been recognised at fair value. CONTINGENCIES All contingencies are as reported in the annual report for the year ended 30 June 2016. GOING CONCERN The directors believe that the group has adequate financial resources to continue in operation for the foreseeable future and accordingly the financial statements have been prepared on a going concern basis. The directors have satisfied themselves that the group is in a sound financial position and that it has access to sufficient borrowing facilities to meet its foreseeable cash requirements. The directors are not aware of any new material changes that may adversely impact the group. The directors are not aware of any material non-compliance with statutory or regulatory requirements or of any pending changes to legislation which may affect the group. Unaudited Audited Unaudited 6 months 12 Months 6 months 31 Dec 2016 30 Jun 2016 31 Dec 2015 R R R RELATED PARTY BALANCES Loan accounts - Owing (to) / by related parties Eastern Trading Proprietary Limited (7 006 693) (9 822 855) (17 327 804) Amounts included in Trade receivable (Trade Payable) regarding related parties Eastern Trading Proprietary Limited 3 181 051 336 644 RELATED PARTY TRANSACTIONS Interest paid to/(received from) related parties Eastern Trading Proprietary Limited 500 000 964 324 600 000 Purchases from / (sales to) related parties Eastern Trading Proprietary Limited (2 863 471) (4 883 900) (2 925 319) Eastern Trading Proprietary Limited 19 704 458 14 338 865 3 578 780 Rent paid to related parties Eastern Trading Proprietary Limited 1 500 000 3 000 000 2 100 000 Administration fees paid to related parties Eastern Trading Proprietary Limited 2 065 766 4 178 073 2 700 000 Purchase of plant & equipment Eastern Trading Proprietary Limited 4 570 148 FUTURE PROSPECTS The company is steadily improving its production capacity to increase its market share despite the many challenges being faced including inadequate power. The company used locally produced tomato paste produced from its parent companies facilities in Limpopo. This was a major mile stone in the company’s strategy of backward integrating its businesses. The business completed the implementation of its new computer information system and the system is now stable. The system is now assisting management to make better decisions due to availability of more detailed data. Management is focused on continuously improving its efficiency and increasing capacity. The Board remains confident that the prospects of the business are bright both locally and internationally. I E Darsot Johannesburg 17 March 2017 Directors: Executive Directors: I Darsot (Chairman and CEO); MN Darsot; B. Darsot; S. Darsot; R. Darsot;MT Pather, C Sambaza (FD) Non-Executive Directors: H Takolia*; MS Appelgryn*; JJ Du Plooy* (*independent) Registered address: 15 Misgund Road, Eikenhof, 1872 Designated Advisor Transfer secretaries Arbor Capital Sponsors (Pty) Ltd Computershare Investor Services (Pty) Ltd Auditors Company Secretary Nexia SAB&T Arbor Capital Company Secretarial (Pty) Ltd Date: 17/03/2017 04:57:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.