| Fri 30 Jan 2004, 14:04 | | REVIEWED FINANCIAL STATEMENTS FOR SIX MONTHS ENDED |
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KOLOSUS HOLDINGS LIMITED - REVIEWED FINANCIAL STATEMENTS FOR SIX MONTHS ENDED 31
OCTOBER 2003
Kolosus Holdings Limited
Registration number: 1978/000181/06
Share code: KOS
ISIN: ZAE000008504
Reviewed financial statements for six months ended 31 October 2003
Introduction
The Group continued to be under pressure from the stronger rand and this has had
a negative effect on all business units. African Hide Trading however was
markedly affected and posted an operating loss of R12,6 m up to 31 August 2003
at which date it was sold to a fellow subsidiary of Daun et Cie ("Daun"). The
Group at its AGM on 31 October 2003 changed its year-end to 31 December to fall
in line with its majority shareholder Daun and changed its auditors to Deloitte
& Touche. These financial statements have been reviewed by Deloitte & Touche and
their unqualified review report is presented below.
Review of operations
The Group achieved an operating profit from continuing operations of R14 m and a
net profit from continuing operations of R4 m. These results have been achieved
in tough market conditions and are a reflection of the dedication and hard work
of management and staff. Cost reductions have continued and are more fully
described in the post balance sheet note below.
Kolosus Automotive Leathers (KAL)
KAL has continued to trade profitably despite difficult trading conditions. The
business continued to generate operating profits on its limited throughput. The
strong rand will continue to put pressure on the ongoing business of KAL.
Nevertheless management will continue with its cost cutting drive and pursue new
business over the next 12 to 18 months.
Mossop Western Leathers (MWL)
Although deflation and a strong and unpredictable rand have favoured importers
and posed severe challenges in the past year, MWL"s results have exceeded
expectations due to management attention to risk management, diversification of
raw material sources, optimal utilisation of raw material, and particular
attention to quality control and customer relations. Although market conditions
in 2004 are expected to remain unpredictable and tough, the good results of the
past three years, new opportunities arising from membership of the Daun
organisation and an experienced management and workforce provide a sound
platform for the future.
Bull Brand Foods (BBF)
BBF produced better than expected operating profits for the period under review
from both its fresh meat and canning businesses despite difficult trading
conditions. However, cheap protein imports as a result of the strong rand,
coupled with an overproduction of local beef continued to depress meat prices,
which will negatively impact on the expected cyclical upturn. The canning
operation continued to build on its return to profitability and
yielded reasonable results. The continued drought has and will also contribute
to a challenging year ahead.
Changes in accounting policies and comparatives
During the period under review the Group adopted AC137 - Agricultural assets -
for the first time and has restated headline earnings. This has resulted in an
adjustment to the October 2002 results as follows:
Revenue, net profit and the value of inventories increased by R9,67 m.
Earning per share and headline earnings per share has increased from 0,55c
to 2,27c and 2,29c respectively
Diluted earning per share increased from 0,54c to 2,2c
Net asset value per share increased from 32,34c to 34,06c
No adjustment was necessary to the April 2003 results as the agricultural assets
were shown at fair value.
The effect on the current period"s results is as follows:
* Revenue, net profit and the value of inventories increased by R0,197 m
* Loss per share and headline loss per share decreased from (2,03c) to
(2,00c) and (3,20c) to (3,17c) respectively
* Diluted loss per share decreased from (2,01c) to (1,97c)
* Net asset value per share increased from 7,9c to 7,94c
Seton claim
The Seton claim has now been settled and all outstanding matters have been
finalised. See the post balance sheet event note for details of changes in
Seton"s shareholding.
Lease and capital commitments
Lease commitments comprise mainly the current lease between Kolosus Automotive
Leathers and the KwaZulu National Development Corporation payable over 6,4 yrs.
Rentals outstanding amounted to R36,6 m at the end of October 2003 or a
discounted net present value of R26,7 m.
Solvency & going concern
The Group"s current trading and borrowing position and its trading and cash flow
forecasts (after the rights issue referred to in the post balance sheet events
note below) indicate that the Group is, and will remain, solvent and will
continue to be a going concern. Our bankers and Daun continue to provide
facilities on the same basis as previously. The financial statements have
accordingly been prepared on a going concern basis.
Post balance sheet events
* On 12 November 2003 Seton USA exercised their put option on Daun which had
the effect of increasing Daun"s shareholding by 138,000,000 shares (6 900 000
shares after the consolidation referred to below) (24,6% of the then issued
share capital).
* On 17 November 2003 the company"s shares were consolidated on a 1-for-20
basis thereby reducing the shares in issue to 28,020,000.
* On 19 December 2003 the clawback rights issue closed with minorities taking
up 1,033,250 shares of the 140,100,000 shares on offer with the balance of the
shares being taken up by Daun. This had the effect of increasing Daun"s
shareholding to 97,82% of the issued share capital. After the clawback rights
issue there are 168,120,000 shares in issue.
* The head office staff complement has been significantly reduced and head
office has been relocated to the Bull Brand Foods premises in Krugersdorp with
effect from 1 December 2003 to further reduce costs.
Future prospects
Trading conditions remain tough and are expected to remain difficult especially
if the rand remains strong. All operations continue to seek ways of reducing
costs further. The full effect of these savings will only be seen in the
December 2004 financial year. The completed rights issue will have the effect of
strengthening the Group"s Balance Sheet and improving the Debt to Equity ratio.
The Board wishes to express its sincere appreciation to management and staff for
their commitment to the Group and their continuing efforts to return the Group
to profitability.
By order of the Board
Paul Schouten
Chairperson and Managing Director
23 January 2004
Secretary and registered office
John Nell
1st Floor, Podium Building 2, Corner of Atterbury & Lois Road, Menlyn, Pretoria,
0181
Registrars
Computershare Limited
70 Marshall Street, Johannesburg, 2001
Directors
PCT Schouten (Chairperson)*, CL Campher*, CE Daun,
RD Radford, AZ Keyser* *Executive
Sponsor
PSG Capital Limited (Registration number: 2000/017362/06)
Review report of the Independent Auditors
We have reviewed the accompanying condensed consolidated interim balance sheet
of Kolosus Holdings Limited and its subsidiaries ("the Group") at 31 October
2003, and the related condensed consolidated interim statements of income and
cash flows for the six months then ended. These financial statements are the
responsibility of the company"s directors. Our responsibility is to issue a
report on these condensed consolidated interim financial information based on
our review.
Scope
We conducted our review in accordance with the statements of South African
Auditing Standards applicable to review engagements. This standard requires that
we plan and perform the review to obtain moderate assurance that the financial
statements are free of material misstatement. A review is limited primarily to
enquiries of company personnel and analytical procedures applied to financial
data and thus provides less assurance than an audit. We have not performed an
audit and, accordingly, we do not express an audit opinion.
Review opinion
Based on our review, nothing has come to our attention that causes us to believe
that the accompanying condensed consolidated interim financial statements are
not fairly presented, in all material respects, in accordance with SA statement
of GAAP applicable to Interim Financial Reporting and the Companies Act in South
Africa.
Deloitte & Touche
Registered Accountants and Auditors
Chartered Accountants (SA)
Pretoria - 23 January 2004
Notes to the interim results
The principal accounting policies adopted are consistent with the previous
annual financial statements with the exception of the adoption of AC 137 (see
note above). The financial information has been prepared in accordance with and
complies with SA statement of GAAP applicable to interim reporting and the
Companies Act.
Financial statistics
Reviewed Reviewed Audited
31 October 31 October 30 April
2003 2002 2003
Number of shares in issue (million) 560,4 560,4 560,4
Earnings/(loss) per share basic (cents) (2,00) 2,27 (21,75)
Earnings/(loss) per share diluted (cents) (1,97) 2,23 (21,46)
Earnings/(loss) per share headline (cents) (3,17) 2,29 (5,03)
Earnings/(loss) per share headline
diluted (cents) (3,12) 2,26 (4,96)
Net asset value per share (cents 7,94 34,06 10,05
Reconciliation of headline earnings
R`000 R`000 R`000
Net profit (11 206) 12 731 (121 878)
Profit on sale of leased assets - - (4 200)
Settlement of the Seton claim - - 50 100
Impairment of property, plant &
equipment - - 37 503
Impairment of investments 250 - -
Loss on sale of subsidiary 148 - -
Impairment on African Hide
Trading loan 1 252 - -
Restructuring costs, discontinued and other
abnormal costs - - 6 449
Headline earnings as previously stated - - (32 026)
Loss/(profit) on sale of property, plant
& equipment (8 186) 118 3 853
Headline earnings (17 742) 12 849 (28 173)
Group Income Statement
Reviewed Reviewed Audited
31 October 31 October 30 April
2003 2002 2003
R`000 R`000 R`000
Sales 474 824 576 664 1 158 367
- continuing operations 395 613 576 664 1 158 367
- discontinued operations 79 211 - -
Cost of sales (419 012) (499 468) (1 052 191)
Gross profit 55 812 77 196 106 176
Impairment of assets (250) - (37 503)
Abnormal items (3 197) - (53 415)
Distribution, administration
and other expenses (50 881) (51 742) (110 120)
Operating profit/(loss) 1 484 25 454 (94 862)
- continuing operations 14 043 25 454 (93 818)
- discontinued operations (12 559) - (1 044)
Finance costs (12 439) (13 039) (26 460)
Share of associates - 399 (603)
Profit/(loss) before taxation (10 955) 12 814 (121 925)
Taxation (251) (83) 29
Profit/(loss) from ordinary
activities (11 206) 12 731 (121 896)
Minority interest - - 18
Net profit/(loss) attributable
to ordinary shareholders (11 206) 12 731 (121 878)
Cash Flow Statement
Operating profit/(loss) 1 484 25 454 (94 862)
Depreciation 1 944 8 771 17 878
Surplus on disposal of
fixed assets 8 186 (118) (3 853)
Impairment of assets - - 37 503
Provision for Seton claim - - 50 100
Abnormal items - - 283
Foreign exchange differences (643) - 90
10 971 34 107 7 139
Changes in working capital (21 747) (19 542) 27 952
Finance costs (12 439) (13 039) (26 460)
Taxation paid (249) 637 (913)
Net cash flow from
operating activities (23 464) 2 163 7 718
Net cash inflow/(outflow)
from fixed asset acquisitions
and investment activities (15 760) 1 069 9 708
Total flows from operating
and investing activities (39 224) 3 232 17 426
Group Statement of Change in Equity
Reviewed Reviewed Audited
31 October 31 October 30 April
2003 2002 2003
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 13 488 13 488
Balance at beginning of period 13 488 13 488 13 488
Movement for the year - - -
Accumulated loss (490 335) (343 922) (478 485)
Balance at beginning of period (478 486) (355 150) (355 150)
Profit/(loss) for the period
as previously reported (11 206) 3 061 (121 878)
Restatement of the prior periods
Results due to AC137 adoption - 9 670 -
Currency translation
differences (643) 162 484
Hedging reserve - (1 665) (1 941)
44 475 190 888 56 325
Group Balance Sheet
Assets
Non-current assets 76 355 120 721 70 707
Fixed assets 50 898 106 180 54 705
Investments and loans 353 6 962 8 849
Long-term debtors 25 104 7 579 7 153
Current assets 261 418 387 574 333 415
Inventories 158 936 250 991 205 163
Receivables and prepayments 91 019 131 992 119 277
Cash and cash equivalents 11 463 4 591 8 975
Total assets 337 773 508 295 404 122
Equity and liabilities
Capital and reserves 44 475 190 888 56 325
Share capital 5 604 5 604 5 604
Share premium 515 718 515 718 515 718
Reserves (476 847) (330 434) (464 997)
Minority interest 44 453 44
Non-current liabilities 8 810 13 792 13 279
Long term interest
bearing borrowings - 3 180 237
Long term interest free
borrowings 184 - 185
Retirement benefit obligation 8 626 10 612 12 857
Deferred taxation liabilities - (204) -
8 810 13 588 13 279
Current liabilities 284 444 303 366 334 474
Trade and other payables 67 982 120 999 117 555
Bank overdrafts and
short term borrowings 188 868 172 000 155 275
Short term interest free
borrowings 8 350 - -
Provisions 13 620 6 777 60 186
Taxation liabilities 5 624 3 590 1 458
Total equity and liabilities 337 773 508 295 404 122
Group Segmental Report
Revenue
Foods 256 044 263 158 534 627
Leather 218 780 313 506 623 740
Investments - - -
Other - - -
Total 474 824 576 664 1 158 367
Expenses
Foods 249 468 241 383 531 286
Leather 225 087 311 373 645 382
Investments 1 540 (481) 14 001
Other (2 755) (1 065) 62 560
Total 473 340 551 210 1 253 229
Results
Foods 6 576 21 775 3 341
Leather (6 307) 2 133 (21 642)
Investments (1 540) 481 (14 001)
Other 2 755 1 065 (62 560)
Total 1 484 25 454 (94 862)
Assets
Foods 200 163 222 144 190 785
Leather 139 823 253 272 213 253
Investments 7 941 36 786 11 346
Other 515 491 486 532 522 367
Intergroup (525 645) (490 439) (533 629)
Total 337 773 508 295 404 122
Liabilities
Foods 167 763 154 575 163 380
Leather 370 669 438 869 438 031
Investments 66 413 74 024 65 483
Other 214 054 139 924 78 953
Intergroup (525 645) (490 438) (398 094)
Total 293 254 316 954 347 753
Date: 30/01/2004 02:00:14 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
