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Provisional Reviewed Condensed Consolidated Financial Results For The Year Ended 30 June 2017
AH-VEST LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1989/000100/06)
(“AH-Vest” or “the company”)
Share code: AHL ISIN code: ZAE000129177
Provisional Reviewed Condensed Consolidated Financial Results For The Year Ended 30 June 2017
Condensed statement of financial position
Reviewed Audited
Year Ended Year Ended
30 June 2017 30 June 2016
R R
Assets
Non - Current Assets 48 996 001 42 574 635
Property, Plant & Equipment 42 859 433 35 545 998
Intangible assets 72 699 72 699
Deferred tax 6 063 869 6 955 938
Current Assets 39 344 763 26 555 510
Inventories 12 925 833 9 448 247
Trade and other receivables 20 128 924 16 424 816
Loan to shareholder 6 178 386 -
Cash and Cash Equivalents 111 620 682 447
Total Assets 88 340 764 69 130 145
Equity and Liabilities
Capital and reserves 19 562 155 18 244 903
Stated capital 21 293 071 21 293 071
Accumulated loss -1 730 916 -3 048 168
Non-current liabilities 26 160 605 16 632 467
Loan from shareholder - 9 822 855
Finance lease and instalment obligation 4 915 254 2 193 313
Other financial liabilities 15 000 000 -
Deferred income 6 245 351 4 616 299
Current Liabilities 42 618 004 34 252 775
Provisions 2 229 531 500 107
Trade and other payables 31 406 013 29 550 052
Finance lease and instalment obligation 2 318 282 725 062
Other financial liabilities 2 943 249 -
Deferred income 405 637 338 118
Bank overdraft 3 315 291 3 139 436
Total equity and liabilities 88 340 764 69 130 145
Net asset value per share (cents) 19.18 17.89
Tangible net assets value per share (cents) 19.11 17.82
Shares in issue at period end 101 973 333 101 973 333
Condensed statement of comprehensive income
Reviewed Audited
Year Ended Year Ended
30 June 2017 30 June 2016
R R
Revenue 165 495 293 142 305 259
Cost of sales -108 650 924 -96 602 988
Gross profit 56 844 369 45 702 271
Other income 1 458 341 3 218 559
Operating expenses -53 776 618 -45 632 186
Operating profit 4 526 092 3 288 644
Investment revenue 714 001 6 944
Finance costs -3 030 780 -1 793 649
Profit before taxation 2 209 313 1 501 939
Taxation -892 070 90 804
Profit for the year 1 317 243 1 592 743
Attributed to:
Equity holders of the company 1 317 243 1 592 743
Per share information (cents)
Earnings per share 1.29 1.56
Headline earnings per share 1.29 1.56
Weighted average shares in issue 101 973 333 101 973 333
Diluted weighted average shares in issue 101 973 333 101 973 333
Condensed statement of changes in equity
Reviewed Audited
Year Ended Year Ended
30 June 2017 30 June 2016
R R
Share capital and share premium 21 293 071 21 293 071
Accumulated loss -1 730 916 -3 048 168
Capital and reserves 19 562 155 18 244 903
Consolidated statement of cash flows
Reviewed Audited
Year Ended Year Ended
30 June 2017 30 June 2016
R R
Net cash flows from operations 3 054 888 10 143 642
Interest paid -2 785 998 -765 233
Interest received 957 6 944
Income taxes paid 0 -47 333
Net cash flows from operating activities 269 847 9 338 020
Cash flows from investing activities
Purchase of property plant and equipment -5 095 409 -4 367 168
Loans advanced to shareholder -5 465 342 0
Cash flows used in investing activities -10 560 751 -4 367 168
Cash from financing activities
Loans received from shareholder 244 783 4 506 865
Loans repaid to shareholder -10 312 421 -15 606 513
Proceeds from other financial liabilities 17 943 249 0
Finance lease payments -724 869 0
Government grants received 2 393 480 6 842 918
Cash flows from financing activities 9 544 224 -4 256 730
Net (decrease)/increase in cash and cash equivalents -746 682 714 122
Cash and cash equivalents at beginning of year -2 456 990 -3 171 111
Cash and cash equivalents at end of year -3 203 672 -2 456 989
Net cash flow from operations
Profit for the year 1 317 243 1 501 939
Taxation 892 070 0
Finance income -714 001 -6 944
Finance costs 3 030 781 1 729 556
(Increase)/decrease in inventories -3 477 586 5 869 596
(Increase)/decrease in trade receivables -3 704 108 0
(Increase)/decrease in other receivables 0 11 441
Increase/(decrease) in trade payables 1 855 970 1 373 087
Depreciation and amortisation 2 822 005 2 327 944
Movement in provisions 1 729 424 -774 478
Government grants -696 910 -1 888 499
3 054 888 10 143 642
COMMENTARY
The board is pleased to present the reviewed results for the year ended 30 June 2017. Turnover has increased to R165.5 million for the year
ended 30 June 2017, compared to R142.3 million for the year ended 30 June 2016, an increase of 16.3%. This can be partly attributed to the
fact that the new factory has now started to achieve its production targets and initiatives taken surrounding the company’s relocation together
with continued support of the AH-Vest’s customers and stakeholders are being realised.
Gross profit margins increased to 34% from 32% in the prior year. This can be attributed to increased production capacity in the factory and
increased market share of our added value brands namely our Veri-Peri, All Joy Spaghetti Sauce and the Big Squeeze range. Service levels
increased during the year under review. Operating expenses have decreased marginally to 31.5% of turnover compared to 32% in the prior year.
During the current year the company invested a further R10.1 million (2016 – R7.2 million), on new plant and equipment and factory
infrastructure as part of the on-going expansion programme. Capacity has been increased on our premier tomato sauce line that is packed
in glass bottles, this will add to our production capability. This is in line with the company’s strategy to increase its volumes on added
value tomato based products. During the current year the company received the balance of the R2.4 million expansion grant from the DTI-MCEP
SCHEME.
Tomato Paste Production
The holding company of AH-Vest, Eastern Trading Company (Pty) Limited, (‘’Eastern Trading’’) successfully commissioned and launched
36/38% brix bulk tomato paste production in June 2017 at its Tzaneen plant. The new plant has an additional daily processing capacity of
500 tons of fresh tomatoes in the season. This will improve the security of supply of tomato paste and guarantee authenticity of our main
raw material, produced in South Africa, a product of Limpopo.
In FY2018, it is expected that the new tomato paste factory will produce bulk paste for the entire tomato season resulting in improved
efficiencies and costs. The main objectives of this project are to promote the South African tomato industry and facilitate import substitution,
reduce the dependency on imported tomato paste and promote our local tomato farmers. A canning factory has been set up in the same location
to further enhance the volumes and take up the production from the farmers in the Limpopo region. These exciting developments will uplift the
province that has unacceptably huge levels of unemployment. This new processing plant will increase capacity to 750 tons per day, to produce
about 33% of the country’s current tomato paste requirement. This will achieve a major mile stone in the government’s desire to support the
local industry and reduce imports.
In this regard, the company supports the maintenance of the import tariff that was imposed on imported tomato paste to deter dumping by
foreign companies and protect local farmers. The new factory has already passed stage one of its FSSC 22000 audit process and is expected
to complete the process shortly.
BASIS OF PREPARATION
The reviewed condensed consolidated financial results for the year ended 30 June 2017 are prepared on a going concern basis consistent with
prior years.
These reviewed condensed consolidated financial results, comprise a condensed consolidated statement of financial position at 30th June 2017,
a condensed consolidated statement of comprehensive income, a condensed consolidated statement of changes in equity and a full consolidated
statement of cash flow for the year ended 30th June 2017.
The condensed consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements
for provisional reports and the requirements of the Companies Act of South Africa. The Listings Requirements require provisional reports
to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting
Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as
issued by Financial Reporting Standards Council and to also, as a minimum, to contain the information required by IAS 34 Interim Financial Reporting.
The accounting policies applied in the preparation of the condensed consolidated financial statements are in terms of IFRS and are consistent with
those applied in the previous consolidated annual financial statements.
These provisional condensed consolidated financial results have been reviewed by Nexia SAB&T,who have issued an unmodified review conclusion
thereon. A copy of the review opinion is available for inspection at the registered office of the company.
The results have been prepared by the Financial Director, Mr C Sambaza.
The directors take full responsibility for the preparation of this provisional report and are satisfied that the financial information
has been correctly extracted from the underlying financial statements.
SEGMENTAL ANALYSIS
The company has a single reportable segment which is the sale of sauces to external customers based on a group of similar products. The
company operates primarily within one geographical segment, namely South Africa.
Total Segment Revenue from
external Customers
30 June 2017
Total Revenue 165 495 293 165 495 293
30 June 2016
Total Revenue 142 305 259 142 305 259
An analysis of the revenue of customers over 10% is set out below: -
Customer Analysis
2017 2016
Customer A 55% 52%
Customer B 22% 21%
Total 77% 73%
The company’s overall dependence on its top 2 customers increased by 4 percentage points during the current year due to the growth in the
retail trade customers.
HEADLINE EARNINGS
Headline earnings reconciliation:
Profit attributable to equity holders of the company 1 317 243 1 592 743
Adjustments: - -
Headline earnings 1 317 243 1 592 743
Per share information (cents)
Earnings per share 1.29 1.56
Headline earnings 1.29 1.56
Weighted average shares in issue 101 973 333 101 973 333
Diluted weighted average shares in issue 101 973 333 101 973 333
ACQUISITIONS AND DISPOSALS
There were no acquisitions or disposals during the year under review.
CONTINGENCIES
The Company has one issue pending, with the Financial Services Board ("FSB"). The details are contained in the Annual Financial Statements and
the subsequent event note below.
ENERGY CHALLENGES
The Company is still experiencing 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. Eastern Trading has also
begun investigating the installation of a 10MW solar farm on the Eikenhof premises. The solar farm has the potential to reduce the
company’s electricity expenses by moving the company’s electricity supply requirements off the Eskom grid and to 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 provide the group with a sustainable long-term electricity supply. Most importantly, this will make the company
one of the first environmentally friendly factories in Africa.
SUBSEQUENT EVENT - FSB PENALTY
As reported in the 30 June 2016 annual financial statements, the Enforcement Committee of the FSB imposed a penalty of R 1 500 000 on AH Vest.
AH-Vest prepared an appeal against the findings of guilt and the administrative penalties imposed by the Enforcement Committee of the FSB.
No provision had been raised for this penalty as the AH Vest’s legal representatives and directors’ best estimates indicated that it was not
likely that the penalty would be enforced by the FSB appeal board. Subsequent to the 30 June 2017 year-end, the Supreme Court of Appeal
ruled against the company and dismissed the case. The company believes that this ruling is unconstitutional and the company is in the process
of lodging an appeal to the Constitutional Court. Notwithstanding the proposed appeal, a full provision for the penalty has been made amounting
to R1 500 000 in the year under review. This resulted in an adjusting subsequent event.
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. (2016: Nil).
CHANGE IN DIRECTORS
There were no 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 and ongoing margin pressure from dominant trade customers, the board of directors is cautiously
optimistic that the new Eikenhof factory will realise the expected volumes going into the summer of 2017, which traditionally has higher demand
from our trade customers when consumers increase their consumption of our products. Eastern Trading has 5 factories on the Eikenhof site and the
envisaged benefits of shared services, warehouse and logistics are expected to positively improve competitiveness and absorption of manufacturing
overheads in the year ahead. New plant capacity commissioned in 2017 to produce premium tomato sauce only partially realized revenue in the year
under review. The full benefit of additional production capability will be realised in the year ahead.
A new brand range of innovative canned products with easy open ends has been developed and will be launched using the manufacturing capability of
the larger group. The company is now able to offer trade customers a full range of long shelf life quality bottled and canned products that offer
authenticity, innovation, diversity, value and social responsibility. Earthwise is a new brand that will be launched in the summer of 2017.
Earthwise will offer consumers the natural but not certified organic produce from emerging farmers in Limpopo that deliver fresh South African
produce, canned fresh without any additives.
AH Vest has the benefit of synergies derived from having a tomato processing factory located in Limpopo to produce high quality single strength
tomato products that will be launched in 2017 and 2018. The company embarked on its strategy to start exporting its added value authentically
South African products into new markets. The company has set its sights on exports to: -
1. China
2. Dubai
3. Saudi Arabia
4. Israel
5. Mauritius
6. Seychelles
7. 10 African countries
The company is committed to growing its exports in strategically targeted countries promoting its authentically South African brands and expects
the export efforts to gain traction in FY2018. 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 published in due course.
I E Darsot
Johannesburg
13 October 2017
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 Limited Computershare Investor Services Proprietary Limited
Auditors Company Secretary
Nexia SAB&T Arbor Capital Company Secretarial Proprietary Limited
Date: 13/10/2017 04:29:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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