| Mon 29 Nov 2004, 8:31 | | CONAFEX - UNAUDITED PRELIMS FOR YEAR ENDED 31 AUGU |
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CONAFEX - UNAUDITED PRELIMS FOR YEAR ENDED 31 AUGUST 2004
CONAFEX HOLDINGS SOCIETE ANONYME
(Incorporated in Luxembourg - RC Luxembourg No. B 17789)
(`Conafex`)
JSE CODE: CNX ISIN: LU0167907293
PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS FOR THE YEAR ENDED 31ST AUGUST
2004.
GROUP PROFILE
Conafex is a pan African agri-resource group listed on the Luxembourg and
Johannesburg stock exchanges and focused on horticulture, niche and value-added
agriculture.
OVERVIEW.
- Accord Services, the tea packing business in the United Kingdom, had a
satisfactory year and continues to grow a client base requiring high
quality and personalized packaging solutions.
- Coffee Tea and Chocolate Company (Pty) Limited (`CTC`), based in Cape Town
and acquired in November 2003, performed well ahead of expectations. CTC
packs, brands and markets black and herbal teas and coffee to all the
leading supermarket chains in South Africa. CTC benefited from the strong
rand as raw materials are mainly imported from the rest of Africa.
- Cape Natural Tea Products (Pty) Limited, the herbal tea processing and
marketing business based in Cape Town had a disappointing year. The main
reasons were higher cost of rooibos tea following two poor agricultural
seasons in the Western Cape, price resistance from export customers
exacerbated by the strong rand and an exceptional write-off of stock.
- Intertrading Limited is an agri-service and marketing company listed on the
JSE Securities Exchange South Africa that procures Southern African fresh
fruit, vegetables and macadamia nuts and markets them internationally via
sea and air freight. It also provides freight forwarding and logistics
services for the export of perishable agricultural cargo to European
markets. Conafex acquired a 17.5% interest in November 2003 in concert with
Katope International who acquired a similar stake. In common with other
exporters Intertrading had a tough twelve months to 31st August 2004 due to
the strong rand, intense competition in international markets and write-
offs in respect of discontinued grain trading operations. The stake in
Intertrading is currently treated as an investment and as such only
dividend receipts are recognised in the Conafex income statement.
- Operations in Zimbabwe enjoyed a good agricultural season from a production
standpoint but the unrealistic exchange rates applied to export crops
impaired margins and also adversely affected the pricing of locally
consumed crops through the distortion of import parity pricing.
FINANCIAL
The Group incurred a pre tax loss on ordinary activities of US$65,000 (2003-
loss US$ 346,000) and before exceptional items. However the impairment
provision against possible losses arising from the compulsory acquisition of the
Group`s agricultural estates in Zimbabwe, referred to below, resulted in a loss
attributable to shareholders of US$6,497,000 (2003 - profit of US$680,000).
In accordance with practice adopted in 2002 financial year, earnings emanating
from Zimbabwe are no longer consolidated and the Group`s financial results
include only United States dollar receipts from Zimbabwe. The financial results
of the Group`s wholly owned subsidiary in Zimbabwe, Zimcor Limited, achieved a
profit after tax of Z$4.2 billion (US$748,000). Dividends are remittable from
Zimbabwe and have been received albeit through a protracted process.
ZIMBABWE.
A Cautionary Notice published on 17th August 2004 advised shareholders that the
Government of Zimbabwe had compulsorily acquired two of the Group`s agricultural
estates namely Highbury and Trelawney Estates. In compliance with the law, all
farming operations ceased within the stipulated forty-five day period. The
process of selling all moveable assets will commence shortly. Conafex has
accepted the Zimbabwe Government`s right and need to acquire land for
resettlement purposes and no legal challenge has been made despite the fact that
the Zimbabwe Foreign Investment Committee approved the purchase of Highbury
Estate in 1987. Conafex expects the Government of Zimbabwe to adhere to statute
and settle compensation in a timely and fair and reasonable manner.
DIVIDEND.
As a result of the provision made against the investments in Zimbabwe, the
Company is unable to pay a dividend for the year ended 31st August 2004.
PROSPECTS.
The Conafex Group has been in a transitional phase since it was formed in 1998.
The initial dependence on Zimbabwe has been substituted with a more balanced
portfolio of investments now concentrated in South Africa. The recently
announced acquisition of a 26.86 % stake in Grassroots Group (Pty) Limited adds
a further exciting dimension to niche and value-added agriculture. Your
directors have decided that the time is not opportune to increase its holding in
Intertrading and will therefore not exercise its call option over an additional
15.56% of the shares. We are very pleased with the investment in Intertrading
and the manner in which the executive team have operated under very difficult
trading conditions. There is no intention to dispose of our stake which is
deemed strategic and we will continue to add value where we can and in concert
with our co-shareholders Katope International Societe Anonyme.
MARK BURRELL
Chairman
29th November 2004
NOTICE OF MEETING
The Annual General Meeting will take place on Friday 25th February 2005 at 3.30
p.m. at the registered office of the Company, 6 rue Adolphe Fischer L-1520
Luxembourg. Copies of the annual report and accounts will be posted to
shareholders in December 2004.
Unaudited Consolidated Profit and Loss Account
Year 11 months
ended ended
31st 31st
August August
2004 2003
US$000 US$000
Group revenue including share of 4,247 1,238
Associates
Less share of revenue of (271) (500)
Associates
Revenue 3,976 738
Operating costs (4,152) (1,094)
Operating loss (176) (356)
Share of associated companies` (26) 11
results
Income from investment in 131 -
Zimbabwe subsidiary - dividend
Dividend receivable 14 -
Interest receivable 58 1
Exchange gains 103 22
Interest paid and similar charges (155) (24)
Loss on ordinary activities (51) (346)
before exceptional items and tax
Exceptional items (6,379) 1,040
(Loss)/Profit before tax and (6,430) 694
minority interests
Taxation on ordinary activities (44) (10)
(Loss)/Profit after tax before (6,474) 684
minority interests
Minority interests (9) (4)
(Loss)/Profit attributable to (6,483) 680
shareholders of the Group
Reconciliation of headline earnings
per share
Basic (loss)/earnings per share (US (120)c 13 c
cents)
Adjusted for exceptional item, net 118 c (20)c
of tax and minority interests (US
cents)
Headline loss per share (US cents) (2)c (7)c
Unaudited Consolidated Statement of Recognised Gains and Losses
Year ended 11 months
31st August ended
2004 31st
US$000 August
2003
US$000
Exchange differences on translation
of the financial statements of 41 49
foreign entities
Fair value adjustment (195) -
Dividend paid in respect of prior (163) -
year
Net (loss)/profit not recognised in (317) 49
the income statement
Net (loss)/profit for the year (6,483) 680
Total recognised (loss)/profit and (6,800) 729
change in shareholders` funds
Opening shareholders` funds 11,748 11,019
Closing shareholders` funds 4,948 11,748
Unaudited Consolidated Balance Sheet
At 31st August
2004 2003
US$000 US$000
Assets
Non current assets
Property, plant & equipment 124 109
Negative goodwill - (58)
Intangibles 296 269
Investments 3,056 9,000
3,476 9,320
Current assets
Inventories 571 502
Accounts receivable 1,460 1,071
Cash and bank balances 1,099 2,642
3,130 4,215
Current liabilities
Accounts payable falling due within (1,540) (1,552)
one year
Net current assets 1,590 2,663
Total assets less current 5,066 11,983
liabilities
Non current liabilities
Accounts payable falling due after - (100)
more than one year
5,066 11,883
Capital and reserves
Called up share capital 8,130 8,130
Other reserves (note 4) 91 2,609
Retained earnings (3,273) 1,009
Shareholders` funds 4,948 11,748
Minority interests 118 135
5,066 11,883
Unaudited Consolidated Cash Flow Statement
Year ended 11 months
31st August ended
2004 31st
US$000 August
2003
US$000
Cash Flows from Operating Activities
Cash utilised by operations (792) (29)
Interest paid (155) (2)
Taxation paid (38) (5)
Net cash outflow from operating (985) (36)
activities
Investment activities
Purchase of tangible assets (56) (23)
Purchase of investments (796) (180)
Disposal of tangible assets - 39
Investment in joint venture - (871)
Further acquisition of minority (73) (16)
interest
Disposal of investments - 2,952
Dividends received from Zimbabwean 131 -
subsidiary
Interest received and other 72 1
investment income
Net cash (outflow)/inflow from (722) 1,902
investment activities
Net cash (outflow)/inflow before (1,707) 1,866
financing
Financing
Dividend paid to minorities (3) -
Dividends paid to shareholders (163) -
(166) -
Net (decrease)/increase in funds (1,873) 1,866
Net funds at start of period 2,510 643
Effect of foreign exchange rate (6) 1
changes
Net funds at end of period 631 2,510
Notes:
1. As described in the Chairman`s Review, the earnings, assets and
liabilities of Zimbabwean subsidiaries and associated companies have
not been consolidated. Investments have been reflected in accordance
with IAS 39. The results for the year ended 31st August 2004 and the
balance sheet at that date, which are unaudited, have been prepared on
the basis of accounting policies adopted for the period ended 31st
August 2003. The financial statements comply with International
Accounting Standards and Luxembourg law in all material respects. The
results, which have been reviewed by the Company`s auditors, AGN
Horsburgh & Co., are unaudited.
2. Capital expenditure during the year was US$56,000. At 31st August
2004, there were no material outstanding capital commitments (2003
-US$nil).
3. Earnings per share are based on the results attributable to
shareholders and the average number of shares in issue during the year
- 5,420,152 (2003 - 5,420,152).
4. Following shareholder approval at the Annual General Meeting held on
27th February 2004, the Special Reserve of US$2,573,000 was released
to Retained Earnings.
Registered office
6 rue Adolphe Fischer, L-1520,
(PO Box 1361, L-1013)
Luxembourg
Group Offices
South Africa
11 Sunbury Park,
La Lucia 4051,Durban,
(P.O. Box 4126, The Square, 4021)
United Kingdom
25 City Road,
London,
EC1Y 1BQ
Zimbabwe
215 Fife Avenue/10th Street,
(P.O. Box 2733),
Harare, Zimbabwe
Sponsor
Imara Corporate Finance South Africa (Pty) Ltd
