| Mon 3 Dec 2001, 0:00 | | Kolosus Holdings Limited - Unaudited Group Results |
|
31 October 2001
Summary of Earnings Reviewed Reviewed Audited
6 months 6 months 12 months
31 October 31 October 30 April
2001 2000 2001
R'000 R'000 R'000
Earnings/loss) per share (cents) 0.27 (6.96) (23.24)
Earnings/loss) per share (cents) 0.26 (6.63) (22.13)
- diluted (cents)
Earnings/loss) per share (cents) 0.11 (6.96) (18.20)
- headline (cents)
Group Income Statement Reviewed Reviewed Audited
6 months 6 months 12 months
31 October 31 October 30 April
2001 2000 2001
R'000 R'000 R'000
Sales
644,114 647,463 1,284,543
- continuing operations
594,429 647,463 1,126,051
- discontinued operations
49,685 - 158,492
Cost of sales
(564,978) (589,705) (1,170,821)
Gross profit
79,136 57,758 113,722
Impairment of assets
- - (17,500)
Abnormal stock write-offs and
rework costs - (12,267) (54,123)
Abnormal items
- (3,072) (9,608)
Distribution, administration and
other expenses (61,880) (64,959) (132,162)
Operating profit/(loss)
17,256 (22,540) (99,671)
- continuing operations
17,366 (22,540) (99,456)
- discontinued operations
(110) - (215)
Finance costs (15 343)
(15,973) (30,933)
Share of result of associates
882 (94) 849
Profit/(loss) before tax
2,165 (37,977) (129,755)
Taxation
(631) (928) (272)
Profit/(loss) from ordinary
activities 1,534 (38,905) (130,027)
Minority interest
- (90) (200)
Net profit/(loss)
1,534 (38,995) (130,227)
Group Statement of Changes in Reviewed Reviewed Audited
Equity
6 months 6 months 12 months
31 October 31 October 30 April
2,001 2,000 2,001
R'000 R'000 R'000
Share capital
5,604 5,604 5,604
Share premium
515,718 515,718 515,718
Non-distributable reserves
13,488 13,502 13,488
Balance at the beginning of the
period 13,488 13,679 13,679
Movement for the year
- (177) (191)
Accumulated loss
(368,398) (274,258) (365,916)
Balance at the beginning of the
period (365,916) (233,929) (233,929)
Profit/(Loss) for the period
1,534 (38,995) (130,227)
Currency translation differences
(4,016) (1,334) (1,760)
166,412 260,566 168,894
Group Balance Sheet Reviewed Reviewed Audited
31 October 31 October 30 April
2001 2000 2001
R'000 R'000 R'000
Assets
Non-current assets 155,551
206,080 173,354
Fixed assets
140,239 189,712 157,758
Investments and loans
7,306 9,442 7,590
Long-term debtors
8,006 6,926 8,006
Current assets
365,701 459,965 427,438
Inventories
204,721 279,392 232,113
Receivables and prepayments
152,847 177,293 142,524
Cash and cash equivalents
8,133 3,280 52,801
Total assets
521,252 666,045 600,792
Equity and liabilities
Capital and reserves
166,412 260,566 168,894
Share capital
5,604 5,604 5,604
Share premium
515,718 515,718 515,718
Reserves
(354,910) (260,756) (352,428)
Minority interest 432 245 432
Non-current liabilities 27,894 27,512 33,161
Long term interest bearing 15,406 14,168 19,817
borrowings
Retirement benefit obligation 12,488 13,344 13,344
Deferred tax liabilities 45 381 143
27,939 27,893 33,304
Current liabilities
326,469 377,341 398,162
Trade and other payables
116,013 148,546 141,025
Bank overdrafts and short
term borrowings 195,422 209,897 241,218
Provisions
10,939 11,426 11,426
Tax liabilities
4,095 7,472 4,493
Total equity and liabilities
521,252 666,045 600,792
Number of shares in issue 560,4 560,4 560,4
(million)
Earnings/(loss) per share 0,27 (6,96)
(cents) (23,24)
Earnings/(loss) per share 0,26 (6,63)
(cents) -diluted (cents) (22,13)
Earnings/(loss) per share 0,11 (6,96) (18,20)
(cents) -headline (cents)
Net asset value per share 29,70 46,5 30,14
(cents)
Group Cash Flow Statement Reviewed Reviewed Audited
6 months 6 months 12 months
31 October 31 October 30 April
2,001 2,000 2,001
R'000 R'000 R'000
Operating profit/(loss)
17,256 (22,540) (99,671)
Depreciation
11,631 12,130 24,573
Surplus on disposal of fixed
assets (936) (160) (1,730)
Goodwill amortisation
- - 900
Foreign exchange differences
- - 628
Impairment charge
- - 17,500
Impairment of investments
- - 540
27,951 (10,570) (57,260)
Changes in working capital
(9,682) (19,226) 69,670
Finance costs
(15,973) (15,343) (30,933)
Taxation paid
(730) (375) (2,937)
Net cash flow from operating
activities 1,566 (45,514) (21,460)
Net cash inflow/(outlfow) from
fixed asset
acquisitions and investment
activities 7,990 (12,686) (10,418)
Translation reserves
(4,016) (1,334) (1,760)
(Increase)/decrease in interest
bearing
borrowings and bank
5,540 (59,534) (33,638)
Reconciliation of Headline Reviewed Reviewed Audited
Earnings
6 months 6 months 12 months
31 October 31 October 30 April
2,001
2,001 2,000
R'000 R'000 R'000
Operating profit/(loss) 1,534 (38,995) (130,227)
Impairment of property, plant & - - 17,500
equipment
(Profit)/loss on sale of (936) - 215
discontinued operations
Goodwill amortisation - - 900
Restructuring cost, - - 9,608
discontinued and other abnormal
costs
598 (38,995) (102,004)
Kolosus Holdings Limited
1978/000181/06
Unaudited financial statements for the six months ended 31 October 2001
Review of operations
The financial results for the six months ended 31 October 2001 have shown a
material improvement over those presented on 30 April 2001. As indicated in
the annual financial report, the Group has begun to exhibit a turnaround,
and is clearly no longer incurring the losses sustained in both six-month
periods of the previous financial year. In particular, the various trading
operations have not incurred the same degree of stock write-downs or the
need for warranties and bad debt provisions exhibited in the previous
period. Furthermore, trading in export-oriented products has been greatly
assisted by the depreciation of the rand, although this has been offset to
some extent by the continuation of the ban on meat products into the
European markets. However, the impact of the 11 September 2001 atrocity has
created significant uncertainties in economic activity world-wide, which
will impact on business in general.
Kolosus Automotive Leathers (KAL) has returned to profitability in the six-
month period. This is mainly attributable to the re-organisation that
commenced in March of this year, together with improvements in operating
efficiencies, particularly cutting yield, an almost complete reduction of
credit notes, which are now in line with industry norms, and no stock write-
downs of any significance. Notwithstanding the loss of a major automotive
customer, our remaining customers have continued to support us. This,
together with a reduction in fixed costs, has enabled KAL to look forward to
improvement in its business in the next six months. Much work has been done
on sourcing new clients for the business, and positive results are showing.
Mossop Western Leathers (MWL) has continued its improvement of the last few
months of the previous financial year, and has traded very well in this
period. Its operating profits exceeded expectations, as did the control of
working capital, and its new product development is creating future
opportunities for the Group. The plant has now completely settled down in
Wellington, and serious consideration is being given to further upgrading
and rationalisation of its manufacturing capability. Mossop's future appears
sound, and with new product development its current performance should
continue.
African Hide Trading (AHT), having shown a profit in the previous year, is
currently not performing to expectation. This is mainly due to the over-
supply of ostrich skins in the market, a result of increased demand for
ostrich meat. In addition, the American recession has resulted in a
curtailment of spending on luxury goods, notably on ostrich and exotic
leather products. The reduction in turnover at KAL has impacted upon the
affairs of AHT. Alternative strategies are being developed, which are mainly
export-orientated, and therefore the timeframe for the recovery of debts is
increased, as is the subsequent risk involved. AHT is considering its
position carefully, reviewing its fixed costs, and particularly its
strategies for the future in relation to the significant change in economic
circumstances that it is encountering.
In contrast with the previous year, the Sams operation has shown a positive
turnaround. Improved operational efficiencies have resulted in an operating
profit in excess of expectation. This trend will continue in November,
December and January, and good results are expected from this business for
the ensuing quarter. The fourth quarter of this year and the first part of
the following financial year will, however, be difficult. Nevertheless, the
operation should return an improved profit for the current year compared to
that of the previous year. The Bull Brand canning operation has had a poor
trading period, with a shortage of products and problems in its trade
discount position. While this has resulted in losses being incurred, it is,
however, slowly returning to break-even and improved profitability in
future.
During the past six months, numerous discussions have been held with our
bankers concerning our financial position. In response to their request, the
Group has recapitalised Kolosus Foods (Pty) Limited, and has completed the
securitisation of the assets within this company in favour of the Consortium
of Bankers. This has resulted in the Consortium removing retrospectively
punitive interest rates as applied from June. In essence, the Group's
borrowing position has been stabilised. The short-term borrowings of the
Group have remained below our facility, which is primarily attributable to
excellent working capital management and cash management at all operations.
Debt reduction is being further assisted by cash inflow from the disposal of
various small properties, through the sale of the Spekenam operation.
Approximately a third of the funds will flow in before the completion of the
current calendar year, and the balance on transfer of the Spekenam property.
The total cash flow from these transactions is some R16 million, which
should reduce the overall borrowings significantly before the end of the
current financial year. Our bankers continue to provide facilities on a
basis consistent with that of the previous financial year.
Seton claim
As disclosed in previous published financial results, Seton USA has brought
a claim against Silveroak Industries Ltd amounting to R100 million. At this
stage of the proceedings there is no claim against Kolosus Holdings Ltd and
it is not possible to determine the outcome of these actions. The existence
of all alleged claims and their estimated limits are stated only for the
reason of prudent disclosure to shareholders.
Commitments and contingent liabilities
Contingent liabilities together with the outstanding amount on the lease
agreement with KwaZulu National Development Corporation, payable over 7,5
years, amounted to approximately R42 million at the end of October. Capital
expenditure commitments for refurbishment and equipment on loan, amounts to
R5 million. Capital expenditure amounts to R180 000 for the six months (12
months prior: R13 million). Depreciation was R11,5 million (12 months prior:
R25,0 million).
Solvency and going concern principles
The Group has traded profitably during the past six months, and has a
positive cash flow, which has resulted in a reduction of debt, the payment
of overseas extended term creditors, and the restocking of feedlots.
Accordingly, the directors can confirm that the Group is and remains
solvent, and that the financial statements have been prepared on a going
concern basis.
Future prospects
The return to profitability and positive cash flows have enabled the Group
to reassess its future options. The restructuring of operating portfolios is
being considered to achieve a focused business structure with tight
financial control and disciplined operational efficiencies. Accordingly, a
steady pattern of improvement in the results is anticipated.
By order of the Board
JC Nell
Secretary
3 December 2001
Independent Auditor's Review
The financial information set out above has been reviewed, but not audited
by PricewaterhouseCoopers Inc. Their review report has been modified as
follows:
Without qualifying our opinion, we draw attention to the following matters,
which were discussed in the operations review of the Group:
- Seton Claim
As discussed in the financial results, there are contingent liabilities with
regard to legal action from Seton amounting to R100 million. At this stage
of the proceedings it is not possible to determine the outcome of these
actions. No provision was made in the financial results for these claims.
- Going Concern
The financial statements have been prepared on a going concern basis. The
Group is dependent on the continued support of its financiers. Because of
this factor a risk exists that the Company and the Group may not be able to
continue as a going concern. However, the financiers are currently
continuing to provide short term facilities (mainly overdraft facilities) on
a basis which is consistent with that of the previous financial year.
