| Thu 1 Nov 2001, 0:00 | | Afribrand Holdings Limited - Annual Financial |
|
June 2001
Afribrand Holdings Limited
ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2001
(Incorporated in the Republic of South Africa) (Registration number
1997/008992/06) ("the group")
GROUP INCOME STATEMENT
Year ended Year ended
30 June 30 June
2001 2000
R'000 R'000
(Unaudited) (Restated)
Continuing operations 676 838 648 034
Discontinued operations 26 088 70 465
Total turnover 702 926 718 499
Operating (loss)/profit before
amortisation and depreciation (2 238) 43 575
Amortisation of goodwill (6 775) -
Depreciation (13 110) (9 504)
Dividends received - 935
Financing costs (23 780) (12 479)
Equity (loss)/profit from joint venture (1 374) 1 374
Exceptional items (109 043) (25 961)
Loss before taxation (156 320) (2 060)
Taxation 1 973 (1 426)
Loss after taxation (154 347) (3 486)
Extraordinary item (1 489) (20 986)
Net loss for the year (155 836) (24 472)
Weighted average number of shares
in issue (000's) 454 955 449 082
Loss per share (cents) (34,3) (5,4)
Headline loss per share (cents) (19,3) (0,1)
Headline loss
Net loss for the year (155 836) (24 472)
Adjusted for:
Amortisation of goodwill 6 775 -
Loss/(profit) on sale of property, plant,
equipment and investments 792 (478)
Exceptional items added back for
calculation of headline earnings 58 901 3 453
Extraordinary item 1 489 20 986
Headline loss (87 879) (511)
Prior year adjustment:
Net loss for the year as previously
disclosed (14 701)
Adjusted for:
Property finance structure (9 771)
- Exceptional portion (6 683)
- Adjustment to operating profit before
amortisation and depreciation (3 088)
Net loss for the year - restated (24 472)
group balance sheet
30 June 30 June
2001 2000
R'000 R'000
(Unaudited) (Restated)
Assets
Non-current assets
Property, plant and equipment 147 225 188 985
Goodwill 10 991 -
Investments in joint ventures - 10 194
Afribrand employee share trust 208 1 966
158 424 201 145
Current assets 146 330 205 138
Total assets 304 754 406 283
Equity and liabilities
Capital and reserves
Issued capital 124 139 123 785
Non-distributable reserve - (428)
(Accumulated losses)/retained income (103 388) 52 448
20 751 175 805
Non-current liabilities
Long-term liabilities 45 248 46 138
Deferred taxation 2 110 2 965
47 358 49 103
Current liabilities
Accounts payable, accruals and provisions 94 396 96 434
Short-term liabilities 2 461 2 690
Bank overdrafts less cash balances 139 788 82 251
236 645 181 375
Total equity and liabilities 304 754 406 283
group cash flow STATEMENT
30 June 30 June
2001 2000
R'000 R'000
(Unaudited) (Restated)
Cash (utilised in)/generated by operating
activities (5 250) 26 836
Cash component of exceptional and
extraordinary items (15 241) (6 110)
Finance costs (23 780) (12 479)
Net dividends received - 934
Taxation refunded/(paid) 47 (4 582)
(44 224) 4 599
Cash flows from investing activities
Net cash utilised in investing activities (13 041) (52 290)
Cash flows from financing activities
Loan raised - 46 000
Borrowings repaid (272) (26 777)
Net cash (utilised in)/generated by
financing activities (272) 19 223
Increase in bank overdrafts less
cash balances (57 537) (28 468)
Bank overdrafts less cash balances at
beginning of year (82 251) (53 783)
Bank overdrafts less cash balances at
end of year (139 788) (82 251)
SUPPLEMENTARY INFORMATION
30 June 30 June
2001 2000
R'000 R'000
(Unaudited) (Restated)
Amortisation of goodwill
Current year (3 553) -
Accelerated since date of acquisition (3 222) -
(6 775) -
Depreciation (13 110) (9 504)
Loss/(profit) on sale of property, plant,
equipment and investments 792 (478)
Exceptional items
Restructuring costs, impairment of assets
and write down of debtors and stock
Golden Wheat biscuits (44 507) (10 755)
Other entities (36 952) (2 275)
Losses and provisions against foreign
entities (25 825) (5 616)
Adjustment of property finance structure - (6 683)
Write down of loan to Afribrand employee
share trust (1 759) (632)
Total per group income statement (109 043) (25 961)
Exceptional items added back for
calculation of headline earnings 58 901 3 453
Capital expenditure
Incurred 7 405 28 227
Contracted 500 2 117
Authorised not contracted 1 153 7 000
Interest bearing liabilities
Long-term liabilities 45 248 46 138
Short-term liabilities 2 461 2 690
Bank overdrafts less cash balances 139 788 82 251
187 497 131 079
Operating lease commitments
Property - payable within one year 5 170 5 589
- payable thereafter 16 437 16 737
Equipment - payable within one year 2 667 652
- payable thereafter 3 672 891
Contingent liabilities
Guarantees issued 48 754 29 059
Pending legal disputes - liability 446 -
Value of forward exchange contracts
commitments 209 -
Value of letter of credit commitments 3 626 -
Lease commitments 7 567 -
Property finance structure 26 539 -
Other 182 -
STATEMENT OF CHANGES IN EQUITY
(Accu-
Foreign mulated
currency losses)/
Share Share translation retained Total
capital premium reserve income equity
(Unaudited) R'000 R'000 R'000 R'000 R'000
Balance at
1 July 1999 4 461 136 845 (261) 76 920 217 965
Net loss for the
year as restated (24 472) (24 472)
Net loss for the
year as previously
disclosed (14 701) (14 701)
Prior year adjustment (9 771) (9 771)
Transfer to foreign
currency translation
reserve (167) (167)
Issued capital 105 14 514 14 619
Share issue expenses (58) (58)
Vendor shares
cancelled (75) (3 786) (3 861)
Merger provision
created (3 995) (3 995)
Intangible assets
written off (24 226) (24 226)
Balance at 30 June
2000 - restated 4 491 119 294 (428) 52 448 175 805
Net loss for the year (155 836)(155 836)
Write off foreign
currency translation
reserve 428 428
Issued capital 59 352 411
Share issue expenses (57) (57)
Balance at
30 June 2001 4 550 119 589 - (103 388)20 751
SEGMENTALINFORMATION
Commodity Trading
FMCG, Alpine and (Farm Feed
Moonlite Services)
Year ended Year ended Year ended Year ended
30 June 30 June 30 June 30 June
2001 2000 2001 2000
R'000 R'000 R'000 R'000
(Unaudited)(Restated) (Unaudited) (Restated)
Turnover
- External sales 363 065 377 438 313 773 270 596
- Inter-segmental
sales - - 2 896 11 009
Total 363 065 377 438 316 669 281 605
Operating (loss)/profit
before amortisation
and depreciation 3 933 38 764 3 857 10 076
1% 10% 1% 4%
SEGMENTALINFORMATION
Holdings, Head office and
Property finance
structure Continuing operations
Year ended Year ended Year ended Year ended
30 June 30 June 30 June 30 June
2001 2000 2001 2000
R'000 R'000 R'000 R'000
(Unaudited)(Restated) (Unaudited) (Restated)
Turnover
- External sales - - 676 838 648 034
- Inter-segmental
sales - -
Total - -
Operating (loss)/profit
before amortisation
and depreciation (10 ,028) (5 265) (2 238) 43 575
Comments
The balance sheet represents the financial position of Afribrand at 30 June
2001 on a going concern basis. The quantum of losses reported in the current
year's income statement suggests that some of these may relate to prior
years. After due consideration with the auditors it has been decided to make
only one prior year adjustment, namely to adjust a property finance
structure as required by Statements of Generally Accepted Accounting
Practice, resulting in a loss of
R9,8 million.
The exceptional items included in the current year are made up of:
- Golden Wheat biscuits discontinued operation - R44 million (operating loss
of R12 million, working capital write off of R18 million and impairment of
fixed assets of R14 million);
- Write-off and impairment of other fixed assets - R16 million;
- Write-off and provisions against working capital in other entities - R15
million;
- Restructuring and retrenchments costs - R6 million;
- Losses and provisions against foreign entities - R26 million;
- Write-down of the loan to the Afribrand employee share trust - R2
million.
Legal costs amounting to R1,5 million associated with an insurance claim
have been included as an extraordinary item.
The majority of the additional losses are attributed to the centralised Fast
Moving Consumer Goods (FMCG) structure as a result of poor systems and
controls, high overhead costs and the servicing of the group's debt.
The remaining businesses, which were not centralised, namely Moonlite,
Alpine and Farm Feed Services all contributed positively.
Assisted by information provided by new auditors KPMG, management concluded
that major changes were needed to restore Afribrand's profitability.
Endorsed by the board, a restructuring programme was instituted with the
objective of:
- Reducing debt;
- Ceasing unprofitable activities;
- Disposing of unutilised assets;
- Decreasing overhead costs; and
- Creating a sustainable foundation for future growth.
To date progress has been:
- Golden Wheat, which incurred losses of some R78 million (cash related
losses of R46 million) over the past two years, has been sold.
- The FMCG structure has been dismantled, with Powdered Soft Drinks
re-established as a stand-alone business. A portion of the Pepe bubble gum
assets and rights to exports were sold. The Pepe bubble gum factory has been
relocated from Johannesburg and incorporated into Moonlite in East London.
- Extruded snacks manufacturing has been relocated to a smaller facility in
Boksburg. Subsequent to 30 June 2001 it has been agreed to sell 51% of this
business to its management.
- All overseas equity ventures have ceased and all international initiatives
have been restructured to ensure cash profitability.
- A number of onerous contracts, mainly building leases, have been
terminated without significant costs being incurred.
- Banking facilities have been arranged against acceptable terms and
security.
- Excluding the sale of the snacks business, head count has reduced by 34%
since January 2001.
- Negotiations are well advanced to dispose of Farm Feed Services. While
being a consistent positive contributor to profit and cash over the past
years, this business is not seen as core to the new group.
Prospects
On completion of the restructuring programme the new group will consist of
the following:
- Alpine Importers;
- Dowmont Potato Chips;
- Fruti Flow (ice lollies reporting through Alpine);
- Moonlite Sweets (including Pepe bubble gum);
- Powdered Soft Drinks.
All these entities have management teams with proven track records and
adequate systems and controls.
The group head office has been downsized and will ensure proper corporate
governance and financial discipline and will drive improvements in supply
chain and marketing practices across the group.
While the individual entities within the new group are all profitable in
their own right, the level of residual debt is proving very onerous for the
group to bear.
The future viability of Afribrand is therefore dependent on:
- The formal completion (including shareholder approval) of the disposal and
restructuring programme.
- Obtaining a suitable tenant and sale of the property finance structure of
certain of the group's vacant fixed property.
- Adequate banking facilities from the group's banks.
- Reducing debt by additional equity funding.
The board is facilitating discussions with the company's major stakeholders
to address the debt situation.
We wish to express our appreciation for the efforts, patience and support
received from our employees, suppliers, customers and banks during these
difficult times.
Unaudited results
The auditors have reviewed the financial position of the company and the
group at 30 June 2001 and the results of the respective operations and cash
flows for the year then ended. The financial information has been prepared
in accordance with Statements of Generally Accepted Accounting Practice and
in a manner consistent with that of prior periods - other than the
adjustment detailed up. The future viability of the group is dependant on
the success of the restructuring, funding requirements and other factors
mentioned above that must be completed before the issuance of the audited
annual financial statements in December 2001. In addition, the auditors
intend to qualify the comparative balances and the current year income
statement given that some of the exceptional items processed may relate to
prior year's annual financial statements. The review option expressed by the
auditors will be available for inspection at the Registered Offices of the
company as stated below.
For and on behalf of the board
CAStride O M Gowar
(Chairman) (Chief Executive Officer)
31 October 2001
directors
C A Stride*(Chairman), D R S Morley*, M Z Krok*,
O M Gowar (Chief Executive Officer). *Non-executive
COMPANY SECRETARY
ARHolt
Registered Office
57 Sarel Baard Crescent
Gateway Industrial Park
Centurion
transfer secretaries
Mercantile Registrars Limited
11 Diagonal Street
Johannesburg
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