| Tue 27 Mar 2001, 0:00 | | Afribrand Holdings Limited Interim Financial Resul |
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AFRIBRAND HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/008992/06)
("the group")
INTERIM FINANCIAL RESULTS FOR THE 6 MONTHS ENDED 31 DECEMBER 2000
GROUP INCOME STATEMENT
Six months Six months Year ended
31 December 31 December 30 June
2000 1999 2000
R'000 R'000 R'000
R'000 (Unaudited) (Unaudited) (Audited)
Turnover 381 821 360 220 710 738
Operating (loss)/profit (4 004) 21 198 28 266
Dividends received - - 935
Financing costs (8 052) (5 378) (5 943)
Equity accounted profit
from joint venture - 197 1 374
Exceptional items (52 409) (3 876) (16 921)
(Loss)/profit before taxation (64 465) 12 141 7 711
Taxation (793) (1 661) (1 426)
(Loss)/profit after taxation (65 258) 10 480 6 285
Extraordinary item (insurance
claim provision) (653) - (20 986)
Net (loss)/profit for
the period (65 911) 10 480 (14 701)
Weighted average number of
shares in issue (000's) 454 955 464 271 449 082
(Loss)/earnings per share
(cents) (14,5) 2,3 (3,3)
Headline (loss)/earnings
per share (cents) (11,4) 3,0 5,0
Headline (loss)/earnings
Net (loss)/profit for the
period (65 911) 10 480 (14 701)
Adjusted for:
Amortisation of goodwill 280 - -
Loss/(profit) on sale of
property, plant, equipment
and investments 109 (653) (830)
Exceptional items added back
for calculation of
headline earnings 13 045 3 876 16 921
Extraordinary item (insurance
claim provision) 653 - 20 986
Headline (loss)/earnings (51 824) 13 703 22 376
GROUP BALANCE SHEET
31 December 31 December 30 June
2000 1999 2000
R'000 R'000 R'000
(Unaudited) (Unaudited) (Audited)
Assets
Non-current assets
Property, plant and equipment 143 062 145 971 152 642
Goodwill 8 555 - -
Investments in joint ventures 6 935 15 251 10 107
Loan to Afribrand employee
share incentive trust 491 1 966 1 966
159 043 163 188 164 715
Current assets 170 097 247 826 202 815
Total assets 329 140 411 014 367 530
Equity and liabilities
Capital and reserves
Issued capital 124 196 132 477 123 785
Foreign currency translation
difference - (261) (428)
(Accumulated losses)/
distributable reserves (3 692) 87 400 62 219
120 504 219 616 185 576
Non-current liabilities
Long-term liabilities 124 228 191
Deferred taxation 3 228 4 010 2 965
3 352 4 238 3 156
Current liabilities
Accounts payable, accruals
and provisions 83 668 97 183 93 636
Net short-term borrowings 121 616 89 977 85 162
205 284 187 160 178 798
Total equity and liabilities 329 140 411 014 367 530
(Certain comparatives have
been restated)
GROUP CASH FLOW STATEMENT
Six months Six months Year ended
31 December 31 December 30 June
2000 1999 2000
R'000 R'000 R'000
(Unaudited) (Unaudited) (Audited)
Cash (utilised in)/generated
by operating activities (12 201) (12 129) 22 850
Cash component of exceptional
and extraordinary items (2 223) (1 299) (5 662)
Finance costs (8 052) (5 378) (5 943)
Net dividends received - - 934
Taxation paid (49) (4 983) (4 582)
(22 525) (23 789) 7 597
Net cash (utilised in)/
generated by investing
activities (13 862) 2 139 (9 723)
Net cash utilised in
financing activities (67) (14 493) (29 202)
Increase in net short-term
borrowings (36 454) (36 143) (31 328)
Net short-term borrowings at
beginning of period (85 162) (53 834) (53 834)
Net short-term borrowings
at end of period (121 616) (89 977) (85 162)
(Certain comparatives have
been restated)
SUPPLEMENTARY INFORMATION
Six months Six months Year ended
31 December 31 December 30 June
2000 1999 2000
R'000 R'000 R'000
(Unaudited) (Unaudited) (Audited)
Amortisation of goodwill 280 - -
Depreciation 8 081 6 370 13 134
Loss/(profit) on sale of
property, plant, equipment
and investments 109 (653) (830)
Exceptional items
Losses and provisions
against foreign entities 18 846 3 244 9 196
Restructuring costs,
impairment of assets and
write-down of debtors
and stock
Golden Wheat Biscuits 22 174 - 7 093
Other FMCG entities 9 914 - -
Write-down of loan to
Afribrand employee share
incentive trust 1 475 632 632
Total per group income
statement 52 409 3 876 16 921
Exceptional items added back
for calculation of
headline earnings 13 045 3 876 16 921
Capital expenditure
Incurred 6 452 16 892 37 593
Contracted 564 2 134 2 117
Authorised not contracted 323 1 729 7 000
Interest bearing liabilities
Long-term 124 228 191
Net short-term borrowings 121 616 89 977 85 162
121 740 90 205 85 353
Operating lease commitments
Property - payable within
one year 12 346 11 023 11 328
- payable thereafter 90 128 107 088 103 299
Equipment - payable within
one year 2 311 679 652
- payable thereafter 3 417 882 891
Contingent liabilities
Guarantees issued 37 856 33 198 29 059
(Certain comparatives have been restated)
STATEMENT OF CHANGES IN EQUITY
Foreign (Accu-
currency mulated
Share Share translation loss)/ Total
capital premium difference profit equity
R'000 R'000 R'000 R'000 R'000
Balance at
30 June 2000 4 491 119 294 (428) 62 219 185 576
Net loss for the year (65 911) (65 911)
Foreign currency
translation
difference
written off 428 428
Issue of share
capital 59 352 411
Balance at
31 December 2000 4 550 119 646 - (3 692) 120 504
COMMENTS
OVERVIEW
Whilst turnover grew by 6% tight trading conditions and disruptions caused by
the centralisation of activities have resulted in operating margins being
reduced substantially.
Earnings before interest, tax and depreciation decreased by R23 million to R4
million when compared to the same period last year.
The net loss of R65,9 million consists mainly of exceptional non-recurring
write-offs and provisions of R52,4 million. This reflects the reality of the
tough market environment and enables the business to focus on improved
profitability in the future.
Borrowings, which are traditionally high in December, increased to R122 million
mainly due to earn outs and capital expenditure of R28 million.
REVIEW OF OPERATIONS
The company's operations have been extensively reviewed. This has resulted in
the write-offs and provisions as mentioned above and includes the exposure
associated with the international ventures. The report on the individual
divisions is as follows:
Turnover of the FMCG division (incorporating bubble gum, biscuits, powdered
soft drinks and snacks) was slightly down on the same period last year with
lower margins. Exceptional non-recurring write-offs and provisions amounted to
R9,9 million.
The down-sizing of the Golden Wheat biscuit operation resulted in turnover
declining by 50% and an operating loss of R7 million being realised. In
addition there were exceptional non-recurring write-offs and provisions
amounting to R22 million.
Moonlite Sweets delivered consistent turnover levels compared with the previous
year, however with lower margins. The import and distribution company, Alpine,
performed well in difficult trading conditions and grew turnover by 14%,
margins were, however, under pressure and profit was in line with the previous
year.
Farm Feed Services, the trading division, generated profitable growth, although
margins were slightly down due to unfavourable product mixes.
While exports have grown, they have been at low margins. New markets have
opened up and further prospects are being pursued, but the focus will be on
improved profitability.
Afribrand intends to review its international equity ventures, to focus on its
locally based businesses and reduce the risks associated with these
investments. A provision of R18,8 million has been made against the existing
exposure.
FUTURE PROSPECTS
Owen Gowar was recently appointed as the CEO of Afribrand. He brings
significant experience in operational management, following his 13 years at
Cadbury Schweppes, and will strengthen disciplines, enhance focus and adopt a
"back to basics" approach to restore profitability in the long term.
Greater attention to cash generation through cost reduction, improved margins,
minimum capital expenditure and working capital management will result in debt
being reduced.
The programmes recently put in place, have been presented to the majority of
the group's capital providers, including the banks, and they have indicated
their support for the new management and approach.
Trading conditions for the balance of the year are not expected to change
significantly and the emphasis will be on establishing a sound platform for
future profitable growth.
Shareholders of Afribrand are advised that the negotiations referred to in the
cautionary announcements dated 17 January 2001 and 14 November 2000, have been
terminated.
For and on behalf of the board
C A Stride W B de Clercq
(Chairman) (Financial Director) 28 March 2001
REGISTERED OFFICE
57 Sarel Baard Crescent
Gateway Industrial Park
Centurion
TRANSFER SECRETARIES
Mercantile Registrars Limited
11 Diagonal Street
Johannesburg
DIRECTORS
C A Stride*(Chairman), D R S Morley*, NJ Gurney-Sharpe*, M Z Krok*, O M Gowar
(Chief Executive Officer), W B de Clercq, P A Huggins
*Non-executive
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