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Unaudited Condensed Group Interim Financial Results For The Six Months Ended 31 December 2018
AH-VEST LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1989/000100/06)
(“AH-Vest” or “the Company”)
Share code: AHL ISIN code: ZAE000129177
Unaudited Condensed Group Interim Financial Results For The Six Months Ended 31 December 2018
Condensed group statement of financial position
Unaudited Audited Unaudited
6 Months 12 Months 6 Months
31 Dec 2018 30 Jun 2018 31 Dec 2017
R R R
ASSETS
Non-current assets 50,888,144 53,249,737 50,020,908
Property, plant and equipment 46,246,221 47,412,404 44,785,667
Intangible assets 80,594 80,594 72,699
Deferred tax 4,561,329 5,756,739 5,162,542
Current assets 46,067,585 37,240,398 46,655,649
Replace Inventories 14,770,540 12,644,262 18,167,414
Trade and other receivables 24,965,415 18,596,649 28,381,222
Loan to shareholders 4,767,471 5,886,657 2,837,656
Cash and cash equivalents 1,564,158 112,830 269,357
Total Assets 96,955,729 90,490,135 99,676,557
EQUITY AND LIABILITIES
Capital and reserves 23,719,227 20,645,245 21,879,851
Share capital 21,293,071 21,293,071 21,293,071
Retained income/(Accumulated loss) 2,426,156 (647,826) 586,780
Non-current liabilities 24,822,034 21,649,621 24,313,555
Finance lease and instalment sale obligations 2,594,953 3,667,047 5,206,700
Deferred income 5,636,897 5,839,715 6,042,533
Other financial liabilities 16,590,183 12,142,859 13,064,322
Current liabilities 48,414,468 48,195,269 53,483,151
Provisions 1,693,268 751,978 3,862,939
Trade and other payables 37,567,313 34,249,097 35,482,285
Finance lease and instalment sale obligations 1,854,501 2,206,980 2,377,001
Other financial liabilities 1,998,427 2,929,472 2,857,143
Deferred income 405,637 405,637 405,637
Bank overdraft 4,895,322 7,652,105 8,498,146
Total Equity and Liabilities 96,955,729 90,490,135 99,676,557
Net asset value per share (cents) 23.26 20.25 21.46
Tangible net asset value per share (cents) 23.18 20.17 21.39
Shares in issue at period end 101,973,333 101,973,333 101,973,333
Condensed group statement of comprehensive income
Unaudited Audited Unaudited
6 Months 12 Months 6 Months
31 Dec 2018 30 June 2018 31 Dec 2017
R R R
Revenue 92,184,215 155,779,317 82,626,254
Cost of sales (55,060,243) (94,098,530) (50,272,352)
Gross profit 37,123,972 61,680,787 32,353,902
Other operating income 73,297 634,213 159,243
Operating expenses (31,594,087) (58,666,835) (28,234,137)
Operating profit 5,603,182 3,648,165 4,279,008
Investment revenue 347,989 1,145,324 306,662
Finance costs (1,681,780) (3,403,274) (1,366,646)
Profit before taxation 4,269,392 1,390,215 3,219,024
Taxation (1,195,410) (307,129) (901,326)
Profit for the period 3,073,982 1,083,090 2,317,698
Attributed to:
Equity holders of the company 3,073,982 1,083,090 2,317,698
Per share information (cents)
Earnings per share 3.01 1.06 2.27
Headline earnings per share 3.09 1.05 2.27
Diluted earnings per share 3.01 1.06 2.27
Diluted headline earnings per share 3.09 1.05 2.27
Weighted average shares in issue 101,973,333 101,973,333 101,973,333
Diluted weighted average shares in issue 101,973,333 101,973,333 101,973,333
Condensed group statement of changes in equity
Unaudited Audited Unaudited
6 Months 12 Months 6 Months
31 Dec 2018 30 Jun 2018 31 Dec 2017
R R R
Share capital and share premium
Opening balance 21,293,071 21,293,071 21,293,071
Changes during the year - - -
Closing balance 21,293,071 21,293,071 21,293,071
Retained income/(Accumulated loss)
Opening balance (647,826) (1,730,916) (1,730,918)
Profit for the period 3,073,982 1,083,090 2,317,698
Closing balance 2,426,156 (647,826) (586,780)
Total 23,719,227 20,645,245 21,879,851
Condensed Group statement of cash flows
Unaudited Audited Unaudited
6 months 12 Months 6 months
31 Dec 2018 30 June 2018 31 Dec 2017
R R R
Cash flows from operations 2,436,657 11,270,454 (5,026,689)
Interest received - 3,207 2,799
Interest paid (1,568,012) (3,403,274) (1,366,646)
Taxes - - -
Cash generated from / (utilised in) operating activities 868,644 7,870,387 (6,390,536)
Cash flows from investing activities
Purchase of property plant and equipment (1,360,730) (5,900,744) (1,599,927)
Purchase of intangible assets - (7,895) -
Advances to shareholders - (15,960,057) -
Advances to shareholder repaid 1,119,186 14,741,469 -
Cash utilised in investing activities (241,545) (7,127,227) (1,599,927)
Cash flows from financing activities
Long term loan received 5,000,000 - -
Repayment of other financial liabilities (411,390) (2,870,918) (2,021,784)
Finance lease and instalment sale payments (1,007,599) (2,207,845) (1,421,650)
Cash generated from/ (utilised in) financing activities 3,581,011 (5,078,763) (1,671,618)
Net increase/(decrease) in cash and cash equivalents 4,208,111 (4,335,603) (5,025,112)
Cash and cash equivalents at beginning of period (7,539,275) (3,203,672) (3,203,672)
Cash and cash equivalents at period end (3,331,164) (7,539,275) (8,228,789)
Cash flows from operations
Profit before taxation for the year 4,269,392 1,390,221 3,219,023
Finance income (347,989) (1,145,324) (306,662)
Finance costs 1,686,158 3,403,274 1,366,646
Depreciation 1,156,600 2,316,829 1,445,508
Movement in provisions 941,291 (1,477,549) 1,633,407
Loss/(profit) on disposal of assets 110,852 (16,253) -
Government grants (202,818) (405,636) (202,818)
(Increase)/decrease in inventories (2,126,278) 281,570 (5,241,581)
(Increase /decrease in trade receivables (6,368,766) 989,992 (8,252,298)
Increase in trade payables 3,318,216 5,933,330 7,720,871
2,436,657 11,270,454 (5,026,689)
COMMENTARY
The Board of Directors (“the Board”) of AH-Vest, presents the results for the half year ended 31 December 2018.
Net revenue has increased to R92.2 million for the half year ended 31 December 2018 (HY2019), compared to R82.6
million for the half year ended 31 December 2017 (HY2017), an increase of 12%. This can be attributed but not
limited to the company’s owned value- added brands gaining market share, the significant improvements in the
company’s service levels to its main trade customers and participation in the “Black Friday” sales promotions.
Gross profit margins increased marginally to 40% from 39% in the prior period. This can be attributed to increased
market share of added value brands with unique offerings and improved efficiencies as mentioned above.
Operating expenses have increased from R28.2m to R31.6m over the prior period an increase of 12%. This was mainly
caused by an increase in sales and distribution costs due to improved sales.
Finance costs increased from R1.4m to R1.7m over the prior period an increase of 23%. This was due to increased
working capital requirements to meet the increased demand.
Profit before taxation increased from R3.2m to R4.3m over the prior period an increase of 33%. This was due to
increased sales as well as improvement in sales of higher margin products.
Profit after taxation increased from R2.3m to R3.1m over the prior year an increase of 33%.
Management reported previously that it was addressing its production capacity challenges and anticipates an improved
performance, this was achieved in the period under review.
During the period the company purchased plant and equipment for R1.3m and commissioned the Veri Peri line as advised in
prior year. This has assisted management in improving capacity.
Inventory increased by 17% from R12.6m to R14.8m. This was due to increased demand for stock across the depots nationally.
Trade and other receivables increased by 34% from R18.6m to R25m. This was due to increased sales over the period under
review.
The finance lease and instalment obligations have decreased by 25% from R5.9m (FY2018) to R4.4m. This was mainly due to
repayments in the year under review.
The Group received in total an amount of R9,236,399 in the previous two financial years as part of the Department of
Trade's Manufacturing Competitiveness Enhancement Programme (MCEP), an incentive programme that aims to support manufacturing
enterprises with competitiveness improvement interventions.
The government grant was received for capital expenditure and operating expenses already incurred. The portion relating
to the capital expenditure is recognised in profit or loss over the life of the related depreciable assets as other income.
The government grant portion relating to operating expenses which has already been incurred is recognised in other income
in the year the grant is received.
The capital portion recognised as other income during this period was R202,818 (HY2018: R202,818). The operating
expenditure portion recognised in income during the period was R nil (HY2018: R nil).
There were no unfulfilled conditions and other contingencies attached to the government assistance that have been
recognized.
Provisions have increased by 125% from R0.8m (FY2018) to R1.7m. The increase was mainly due to the provision for growth
incentives to customers during the period under review. The growth incentive provision runs on a calendar year basis
hence at HY2019 it will reflect the full calendar year provision compared to FY2018 which only reflected six months’
provision.
Other financial liabilities, being a term loan, have increased by 24.0% from R15m (FY2018) to R18.6m. This was mainly
due to additional funding obtained to refinance assets that had been funded with short term debt during the period under
review.
The bank overdraft has decreased by 36% from R7.7m (FY2018) to R4.9m. This was mainly due to capital expenditure
investments refinanced by longer term debt in FY2019. Cash flows also improved due to improved sales in the period under
review.
RELATED PARTY BALANCES AND TRANSACTIONS
Eastern Trading (Pty) Limited is deemed to be a related party because it is the holding company of AH Vest Limited.
Tin Can Man (Pty) Limited is also a related party as it is a 100% subsidiary of Eastern Trading (Pty) Limited.
Unaudited Audited Unaudited
6 months 12 Months 6 months
31 Dec 2018 30 June 2018 31 Dec 2017
R R R
Transactions with Eastern Trading (Pty) Ltd
Purchase of goods 5,569,032 11,331,002 8,637,567
Revenue from sale of goods (8,524,385) (11,337,871) (5,325,156)
Rent paid 1,500,000 3,000,000 1,500,000
Administration and management fees paid 2,065,766 3,966,300 2,065,766
Transport 6,502,661 8,672,417 5,280,703
Interest received (347,989) (1,142,417) (303,863)
Energy and operating costs 3,977,388 7,063,878 3,247,039
Balances with Eastern Trading (Pty) Ltd
Loan 4,767,471 5,886,657 2,837,656
Trade receivables - 2,236,022 2,553,793
Trade payables - - (2,480,099)
Transactions with Tin Can Man (Pty) Ltd
Purchase of goods 5,209,333 6,719,651 2,817,712
Key management remuneration
Executive directors’ remuneration 2,454,635 5,152,945 2,562,132
Non-executive directors’ remuneration 88,400 247,500 141,450
STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION
The unaudited condensed group interim financial statements have been prepared in accordance with the framework
concepts and the measurement and recognition requirements of the International Financial Reporting Standards (“IFRS”),
the information required by IAS 34: Interim Financial Reporting, the South African Companies Act 2008 (as amended),
SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements
as issued by Financial Reporting Standards Council and the JSE Listings Requirements.
The results have been prepared by the Financial Director, Mr C Sambaza CA (SA). These results have not been audited or
reviewed by the Group’s external auditors. The directors take full responsibility for the preparation of these condensed
unaudited financial results.
CHANGE IN ACCOUNTING POLICIES
The interim condensed consolidated financial statements do not include all the information and disclosures required in the
annual financial statements and should be read in conjunction with the Group’s annual financial statements as at 30 June 2018.
The accounting policies adopted in the preparation of the interim condensed group interim financial statements are consistent
with those followed in the Group’s annual consolidated financial statements for the year ended 30 June 2018, except for the
adoption of new standards effective as of 1 January 2018.
IFRS 9: Financial instruments
The standard requires financial assets to be measured either at amortised cost or fair value depending on the business model
under which they are held and the cash flow characteristics of the instrument. In addition, the standard replaces the incurred
loss impairment model in IAS 39 with an expected loss model. It will no longer be necessary for a credit event to have occurred
before credit losses are recognised.
The amendments have not materially impacted the Group’s financial statements as presented.
IFRS 15: Revenue from contracts with customers
The IFRS replaces IAS 18 Revenue and provides a single, principles based five-step model to be applied to all contracts with
customers. The steps involve identifying the contract, identifying the performance obligations under the contract, determining
the transaction price, allocating the transaction price to the performance obligations in the contract, and recognising revenue
when the entity satisfies a performance obligation.
The amendments have no impact on the Group’s financial statements as presented.
New standards and interpretations not yet adopted
A new standard has been issued by the International Accounting Standards Board (IASB), but is effective only in future accounting
periods, as listed below:
IFRS16: Leases – Effective date: 1 January 2019
The IFRS 16 replaces IAS 17 Leases. IFRS 16 has one model for lessees which will result in almost all the leases being included on
the Statement of Financial Position. Lessors continue to classify leases as operating or finance leases.
The Group has chosen not to early adopt the standard and interpretations. The amendments will have a material impact on the Group’s
future annual financial statements. It will materially increase the carrying amount of property, plant and equipment due to
recognition of right of use assets. Financial liabilities will increase due to the recognition of the financial lease liabilities.
It will also materially reduce the future profit and total comprehensive income due to an increase in depreciation and finance
expenses.
SEGMENTAL REPORTING
IFRS 8 requires an entity to report financial and descriptive information about its reportable segments,which are operating segments
or aggregations of operating segments that meet specific criteria. Operating segments are components of an entity about which separate
financial information is available that is evaluated regularly by the chief operating decision maker. The Chief Executive Officer
of the Group is the chief operating decision maker. He evaluates the financial information of the Group as one operating unit.
Separate operating segment financial information is not available.
Therefore IFRS 8 was not implemented.
CUSTOMER ANALYSIS
An analysis of the revenue of customers over 7% is set out below: -
31 December 30 June 31 December
2018 2018 2017
Customer A 50% 49% 49%
Customer B 18% 19% 20%
Customer C 7% 8% 7%
Total 75% 76% 76%
The Company’s overall dependence on its top 3 customers decreased by 1 percentage point during the current financial period.
This was mainly due to the growth in the independent trade customers but also a marginal decrease in the proportion of sales
to the retail trade. This is a positive outcome as the efforts to market into the non-retail market are bearing fruit and
management will continue to focus on growing this side of the business.
HEADLINE EARNINGS
31 December 30 June 31 December
2018 2018 2017
Headline earnings reconciliation:
Profit attributed to equity holder of the company 3,073,982 1,083,086 2,317,698
Adjustments:
Loss/(Profit) on disposal of property plant and equipment 110,852 (16,253)
Taxation thereon (31,039) 4,551
Headline earnings 3,153,795 1,071,384 2,317,698
ACQUISITIONS AND DISPOSALS OF PROPERTY PLANT AND EQUIPMENT
Property, plant and equipment decreased by a net amount of 1.2m (-2.5%). Capital expenditure was R1.3m. The book value of
disposals was R0.9m. Depreciation for the period was R1.2m.
CONTINGENCIES
The Company has no contingencies in the period under review.
ISSUE AND REPURCHASE OF SHARES
There were no new share issues or share repurchases during the period under review.
LITIGATIONS
The Company is currently not involved in any litigations.
GOING CONCERN
The interim financial statements have been based on accounting policies applicable to a going concern. This basis presumes that
funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent
obligations and commitments will occur in the ordinary course of business.
SUBSEQUENT EVENTS
There were no material subsequent events from the period end to the publication of these results.
FAIR VALUES
The Company does not currently carry any assets or liabilities at fair value which required any disclosure on its fair value
measurement. The directors are of the opinion that the carrying amount of the financial assets and financial liabilities
approximate their fair values due to the short-term nature thereof. Remaining long term borrowings bear interest at market
related interest rates which results in the carrying amount approximating its fair value.
DIVIDENDS
No dividends were declared during the period. (HY2018: Nil).
FUTURE PROSPECTS
Ongoing load shedding, increasing labour costs and the uncertainty created because of infrastructural issues in the country
continues to weigh down on business sentiment.
The business has experienced increases in the prices of key raw materials namely sugar, the cost of electricity and labour and
the business’s ability to pass on these increases continues to be a challenge.
The Board believes that inflation will continue on an upward trajectory because of fuel, sugar taxes, increases in the price of
electricity and high municipal costs.
The Company continues to focus on growing its exports in strategically targeted countries promoting its authentically South African
brands. The Company is optimistic about continued growth prospects for the future.
I E Darsot
Johannesburg
11 April 2019
Executive Directors: IE Darsot (Chairman/CEO); MNI Darsot; BI Darsot; SI Darsot; R Darsot; MT Pather; C Sambaza
Non-Executive Directors: H Takolia*; MS Appelgryn*; J Du Plooy* U Speirs* (*independent)
Registered address: 15 Misgund Road, Eikenhof, Johannesburg
Designated Advisor Transfer secretaries
Arbor Capital Sponsors Proprietary Limited Computershare Investor Services Proprietary Limited
Auditors Company Secretary
Nexia SAB&T Arbor Capital Company Secretarial Proprietary Limited
Date: 11/04/2019 04:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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