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AH-VEST LIMITED - Unaudited Condensed Group Consolidated Interim Financial Results For The Six Months Ended 31 December 2016

Release Date: 17/03/2017 16:57
Code(s): AHL     PDF:  
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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





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