Your SlideShare is downloading. ×

ZECO Holdings Limited FY 2013 results

120

Published on

ZECO Holdings Limited FY 2013 results

ZECO Holdings Limited FY 2013 results

Published in: Investor Relations
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
120
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. CHAIRMAN’S STATEMENT On behalf of the Board of Directors I present the Zeco Holdings Limited results for the year ended 31 December 2013. OPERATING ENVIRONMENT The economic conditions prevailing in 2013 were tough, characterised by liquidity constraints, slowed growth and depressed economic activity with the manufacturing sector severely affected. Demand was generally weak. However, inflation was low and stable. The business environment was largely gripped by pre and post-election anxiety which led to low business activity throughout the year. Due to the liquidity crisis that persisted, there was low aggregate demand. This in turn led to depressed manufacturing sector activity and low capacity utilisation which averaged 39%.Planned private and public infrastructure and construction projects were suspended largely due to funding constraints. GROUPFINANCIALPERFORMANCE The financial results under review reflect the challenging macroeconomic environment that was prevailing in the country during the period.The group revenue declined to US$0,6 million from US$1,5 million in the prior year attributable to depressed market conditions. Pursuant to aligning costs to the operating base, a number of cost containment strategies were successfully implemented including right sizing the head count resulting in once-off charge of US$0,4 million. Due to our huge asset base, depreciation and impairment at US$1,4 million significantly contributed to the loss before tax. The group recorded a loss before tax of US$3,3 million similar to the US$3,3 million in the prior year. The group has a huge base of property, plant and equipment valued at US$45 million at the end of the period. Delward Engineering T/A ZECO The group’s flagship subsidiary based in Bulawayo is equipped with the largest heavy engineering capacity and capability in Sub-Sahara Africa outside of South Africa. The subsidiary relies on infrastructure projects. Its poor performance was attributable to the lack of significant local infrastructure activity during 2013.Efforts to secure re-entry into lucrative regional markets that would culminate in improved performance are still on- going. Negotiations with a major regional rail operator are still underway, and if successfully concluded should have a major impact on the performance of the company in 2014.On the local market, the company has entered into a strategic alliance with a private rail operator, which should result in more work and improved performance for the company. Delward also successfully negotiated and sealed a major contract with a foreign based company which won a local infrastructure tender and work has already commenced. These contracts are expected to have a positive impact on results in the current year. Crittall Hope The subsidiary which is in the steel construction materials sector had a flat performance. This was attributable to a slowdown in construction activity emanating from low liquidity in the economy.According to the National Budget Statement, the construction sector is projected to grow by 11% in 2014 and the subsidiary is well poised to take advantage of the opportunities that will arise which should result in its improved performance. Zimplastics The business has been affected by changing local market dynamics. Viable regional markets have been identified. Re-engineering of the business model and machinery modernisation is underway to realign it to face competition and re-focus it to serve the export market.This is expected to turnaround the fortunes of the business. FUTURE OUTLOOK We believe the local economy has reached a turning point and is poised for a rebound. Your Board is optimistic of bright prospects in 2014 going forward and according to its assessment the Group has ability to continue as a going concern.The groundwork covered by Delward Engineering regarding its core business of rolling stock coupled with the Zim-Asset programme, bodes well for the company’s future.Growth is also projected in the construction sector. The Group’s subsidiary, Crittal Hope, which is part of the construction sector value chain, is set to benefit from major construction projects that will be undertaken by building societies, pension funds and government housing development programmes. Exports represent a key growth area for the plastics extrusion subsidiary, Zimplastics, and there is a robust plan that will be implemented to enter regional markets. The Group’s strength lies in its huge asset base. I am confident that the Group will achieve its target of revenue growth and profitability into the future through cost effectiveness coupled with improved production efficiencies.Your company is committed to upholding the best corporate governance practices, creating wealth for its stakeholders and enriching shareholder value. ACKNOWLEDGEMENT Finally, I commend all our stakeholders, fellow Board members, management and staff for their support and perseverance. Dr PChiyangwa. CHAIRMAN Harare 27 March 2014 ASSETS Non-current assets Property, plant and equipment Current assets Inventories Trade and other receivables Related party receivables Financial assets at fair value through profit or loss Cash and cash equivalents Total assets EQUITY AND LIABILITIES Equity Capital and reserves Retained loss Non-current liabilities Related party payables Shareholders' loans Deferred tax liability Current liabilities Trade and other payables Related party payables Bank overdraft Total equity and liabilities 2013 2012 Note USD USD 5 44 996 463 46 511 958 6 224 895 447 582 7 165 808 131 555 5 780 2 000 6 953 6 953 8 393 9 817 411 829 597 907 45 408 292 47 109 865 38,663,020 38,663,020 (10 878 065) (6 167 984) 27 784 955 32 495 036 8 1 219 811 - 9 382 192 365 137 12 060 635 10 670 054 13 662 638 11 035 191 10 3 722 980 3 354 896 208 617 195 402 29 102 29 340 3 690 699 3 579 638 45 408 292 47 109 865 Revenue Cost of sales Gross profit Other income Other gains/(losses)-net Administrative expenses Loss from operations Finance costs Loss before taxation Taxation Loss for the year Other comprehensive income net of tax TOTAL COMPREHENSIVE (LOSS) FOR THE YEAR Attributable to: Equity holders of the parent company: Weighted average number of shares in issue Loss per share (cents) - Basic - Diluted - Headline Basic loss per share is calculated by dividing the net loss attributable to shareholders by the weighted average number of ordinary shares in issue during the year, excluding the average number of ordinary shares purchased by the group and held as treasury shares. For diluted loss per share (cents), the weighted average number of shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group does not have any dilutive potential ordinary shares. 2013 2012 Note USD USD 604 526 1 482 840 ( 291 764) (1 014 971) 312 762 467 869 229 185 59 355 21 737 5 971 (3 883 184) (3 844129) 4 (3 319 500) (3 310 934) - ( 5) (3 319 500) (3 310 939) (1 390 581) 849 523 (4 710 081) (2 461 416) - - (4 710 081) (2 461 416) (4 710 081) (2 461 416) 463 337 661 463 337 661 1.02 53 1.02 53 1.02 53 CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax Adjustment for non-cash items - Depreciation and impairment losses -Interest received - Finance cost - Fair value (gain)/loss on listed securities - Loss on disposal of property and equipment Operating cash flow before changes in working capital Net effect of working capital changes Cash generated from operating activities Interest received Finance cost Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds on disposal of property and equipment Acquisition of property and equipment Net cash flows generated from/(utilised in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from shareholders' loans Increase in related party payables Net cash flows generated from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year Represented by: Cash and cash equivalents Bank overdraft 2013 2012 Note USD USD (3 319 500) (3 310 939) 1 511 840 1 445 177 (6) (11) - 5 - ( 438) (21 737) (5 533) (1 829 403) (1 871 739) 17 565 953 1 455 930 (1 263 450) (415 809) 6 11 - ( 5) (1 263 444) (415 803) 35 778 8 850 (10 386) (3 664) 25 392 5 186 17 055 286 138 1 219 811 - 1 236 866 286 138 (1 186) (124 479) (19 523) 104 956 (20 709) (19 523) 8 393 9 817 (29 102) (29340) (20 709) (19 523)ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2013 ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2013 ABRIDGED CONSOLIDATED STATEMENT OF CASHFLOWS for the year ended 31 December 2013 ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2013 Directors: Dr P Chiyangwa(Chariman), H Madziwo(Group CEO) C Warara Eng. B Rafemoyo, M Jonga, D Chambara ABRIDGED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013 Share Derived Revaluation Retained capital equity reserve loss Total USD USD USD USD USD Balance at 1 January 2012 - 11 970 797 26 692 223 (3 706 568) 34 956 452 Total comprehensive loss for the year - - - (2 461 416) (2 461 416) Balance at 31 December 2012 - 11 970 797 26 692 223 (6 167 984) 32 495 036 Balance at 1 January 2013 - 11 970 797 26 692 223 (6 167 984) 32 495 036 Total comprehensive loss for the year - - - (4 710 081) (4 710 081) Balance at 31 December 2013 11 970 797 26 692 223 (10 878 065) 27 784 955 1 Statement of compliance The underlying financial statements to these results have been prepared in accordance with 2 Accounting policies, functional and presentation currency 3 Auditor's statement 2013 2012 USD USD There have been no changes in the Group's accounting policies since the date of the last audited financial statements.The underlying financial statements to these results are presented in United States dollars,which is the functional currency of the Group. These abridged financial statements should be read in conjunction with the complete set of financial statements for the year ended 31 December 2013, which have been audited by Jack and Fieldsand Registered Public Auditors.The auditors report on the financial statements which form the basis of these financial results is available for inspection at the company's registered office. International Financial Reporting Standards and in the manner required by the Companies Act (Chapter 24:03). Registered Public Auditors (Zimbabwe) Jack and Fieldsand In our opinion, the financial statements present fairly, in all material respects, the financial position of Zeco Holdings Limited as at 31 December 2013, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards. Emphasis of matter – Going concern The Group made relevant going concern disclosures in the financial statements in accordance with International Statements on Auditing 570 “Going Concern”. Accordingly, in forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 13 to the financial statements concerning the company’s ability to continue as a going concern. 4 Loss from operations Depreciation of property, plant and equipment ( 1 395 422) ( 1 445 177) Impairment loss (116 418) - Audit fees (4.1) 50 603 - Employee benefit expense (4.2) 847 794 1 215 065 Directors’ remuneration - - 4.1 Audit fees The amount relates to prior period fees that had not been recorded in the financial statements 4.2 Employee benefit expense Salaries and wages 83 695 1 205 056 Contribution to National Social Security Authority 12 099 10 009 847 794 1 215 065 Loss from operations for the year has been arrived at after charging the following: 6 Inventories Raw materials 166,397 361,165 Work in progress 13,222 19,657 Finished goods 45,276 66,760 224,895 447,582 7 Trade and other receivables Trade 127,979 110,628 Other 37,829 20,927 165,808 131,555 8 Related party balances Name of related party Relationship Nature of Transactions Native Investments (Private) Limited Common control Loans and advances Pinnacle Properties (Private) Limited Common control Loans and advances T&S Marketing (Private) Limited Common control Sales and purchases Jetmaster (Private) Limited Common control Sales and purchases 9.1 Related party receivables Due from: Pinnacle Properties Holdings 680 - T&S Marketing (Private) Limited 5,000 - Native Investments (Private) Limited 100 2,000 5,780 2,000 9.2 Related party payables 9.2.1 Non - current liabilities due to: Pinnacle Properties Holdings 1,219,811 - 9.2.2 Current liabilities due to: Pinnacle Properties Holdings 206,384 195,402 Jetmaster (Private) Limited 2,233 - 208,617 195,402 The Group’s related parties include its companies under common control, fellow subsidiaries and others as described below: Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given or received. 9 Shareholders' loans Total USD USD Balance at 31 December 2012 365,137 78,999 Advances during the year 17,055 286,138 Balance at 31 December 2013 382,192 365,137 These represents amounts advanced by shareholders. There is no fixed repayment date for the loans advanced, they bear no interest and are not secured. The reconciliation of the loans are as follows: Non-interest bearing 10 Trade and other payables Trade 1,248,492 1,012,350 Other 2,211,611 2,342,546 3,460,103 3,354,896 11 Net effect of changes in working capital Decrease in inventory 222,687 71,886 (Increase)/Decrease in trade and other receivables (34,253) 201,496 Increase in related party receivables (3,780) (2,000) Increase in trade and other payables 368 084 1,296,233 Increase/ (Decrease) in related party payables 13,215 (111,685) 565 953 1,455,930 13 Going concern 14 There were no events that occurred after the reporting date that were material to require separate disclosure in these financial statements. As at 31 December 2013, the company was experiencing cash flow difficulties in consistently meeting its obligations. The company is currently negotiating for capital injection; continuation of the company’s activities is dependent upon the successful outcome of these negotiations. To date most of the pressing liabilities threatening litigation have been settled by the shareholders through a loan advancement. These financial statements have been prepared on a going concern basis which assumes that adequate capitalisation will be made. The ultimate outcome of the capital raising initiatives cannot presently be determined, and no provision for any liability that may result has been made in the financial statements. Accordingly, the financial statements do not include any adjustments, relating to the recoverability and reclassification of assets or to the amounts and reclassification of liabilities that might be necessary if the company is unable to continue as a going concern. The company incurred a net loss of USD4 710 081.00 during the year ended 31 December 2013 and, at that date, the company’s current liabilities exceeded its total assets by USD3 548 870.00. The Group is a defendant in court relating to labour cases whose outcomes is not presently determinable as at 31 December 2013. Events after reporting date In regard to a litigation case relating to a dispute with a former Director who feels that the Group infringed on his rights and is seeking compensation amounting to USD 2 432 930. The court has reviewed the Director's claim and the case has been referred to an arbitrator for determination of a reasonable amount of compensation. As at 31 December 2013 the amount is yet to be determined by the arbitrators as stated in note 22. The directors have reviewed the strategy, business activities, contracts that have already entered into, on-going negotiations for more contracts and believe that there is not likely to be sufficient grounds at this stage, to reclassify assets and liabilities and also to de-recognise the going concern basis of preparing these annual financial statements. Registered Office: Stand 7753, Corner Canberra Road / Greenock Road, Workington, Harare Notes to the abridged financial statements for the year ended 31 December 2013 5 Property,plant and Equipment Plant and Furniture Motor Office Computer Land Buildings machinery Cranes and fixtures vehicles equipment equipment USD USD USD USD USD USD USD USD At 1 January 2012 Cost or Valuation 766 650 45 458 872 4 122 333 32 291 5 686 140 505 18 182 105 647 Accumulated depreciation - ( 1 586 143) ( 1 034 035) ( 9 687) ( 1 707) ( 43 961) ( 5 803) ( 28 609) Carrying amount 766 650 43 872 729 3 088 298 22 604 3 979 96 544 12 379 77 038 Year ended 31 December 2012 Opening carrying amount 766 650 43 872 729 3 088 298 22 604 3 979 96 544 12 379 77 038 Additions - - 650 - 1 937 - - 1 077 Cost - - - - - ( 5 700) - ( 400) Depreciation - - - - - 2 623 - 160 Depreciation for the year - ( 1 136 471) ( 275 602) ( 3 229) ( 2 567) ( 14 886) (248) ( 9 906) Carrying amount 766 650 42 736 258 2 813 346 19 375 3 349 78 581 12 131 67 969 At 31 December 2012 Cost or valuation 766 650 45 458 872 4 122 983 32 291 7 623 134 805 18 182 106 324 Accumulated depreciation - ( 2 722 614) ( 1 309 637) ( 12 916) ( 4 274) ( 56 224) ( 6 051) ( 38 355) Carrying amount 766 650 42 736 258 2 813 346 19 375 3 349 78 581 12 131 67 969 Year ended 31 December 2013 Opening carrying amount 766 650 42 736 258 2 813 346 19 375 3 349 78 581 12 131 67 969 Additions - - - - - 9,956 - 430 Disposals -Cost - - (177,227) - - ( 26 984) ( 31 150) - - 177,227 - - 12 942 31,150 Impairment loss (116,418) Depreciation for the year - ( 1 136 471) ( 227 460) ( 3 229) ( 2 243) ( 12 565) (246) ( 10 940) Carrying Amount 766 650 41 599 787 2 469 468 16 146 1 106 61 930 11 885 57 459 At 31 December 2013 Cost or Valuation 766 650 45 458 872 3 945 756 32 291 7 623 117 777 18 182 75 604 Accumulated depreciation - ( 3 859 085) ( 1 476 287) ( 16 145) ( 4 855) ( 55 847) ( 6 297) ( 18 145) Carrying amount 766 650 41 599 787 2 469 468 16 146 2 768 61 930 11 885 57 459 N.B Included in the fixed assets are certain properties whose title has not yet been transfered to the group No assests have been used as security for any loans. Tools and equipment Total USD USD 22 679 50,672,845 ( 6 112) ( 2 716 057) 16 567 47 956 788 16 567 47 956 788 - 3 664 - ( 6 100) - 2 783 ( 2 268) ( 1 445 177) 14 299 46 511 958 22 679 50 670 409 ( 8 380) ( 4 158 451) 14 299 46 511 958 14 299 46 511 958 - 10 386 - ( 235 361) - 221 319 ( 116 418) ( 2 268) ( 1 395 422) 12 031 44 996 463 22 679 50,445,434 ( 10 648) ( 5 448 971) 12 031 44 996 463 12 Reclassification The reclassification had the following impact on the consolidated statement of comprehensive income: All figures in USD 2013 2012 2011 Other gains/(losses)-net As previously stated - (50,921) (25,457) Reclassified to administration expenses - 56,892 29,983 As currently stated - 5,971 4,526 Administration expenses As previously stated - (3,787,237) (3,732,867) Reclassified from other gains/(losses)-net - (56,892) (29,983) As currently stated - (3,844,129) (3,762,850) Some items within the consolidated statement of comprehensive income for the year ended 31 December 2012 have been reclassified. The Group reclassified certain other gains/(losses)-net to administration expenses in lime with the true nature of the underlying balances. This has resulted in the comparatives being reclassifed for 31 December 2012.

×