GROUP PRIMARY SEGMENT REPORT 
for the six months ended 30 September 2012 
BUSINESS SEGMENT 
Abridged Group 
Unaudited Resu...
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Cottco Holdings Limited HY 2013 financial results

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Cottco Holdings Limited leading Agriculture company listed on the Zimbabwe Stock Exchange has released their half year Results . Check out insights into this company in their presentation which appears below.
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Transcript of "Cottco Holdings Limited HY 2013 financial results"

  1. 1. GROUP PRIMARY SEGMENT REPORT for the six months ended 30 September 2012 BUSINESS SEGMENT Abridged Group Unaudited Results for the Half Year ended 30 September 2012 Cotton FMCG Seed Other Group Total Discontinued Continuing business business business eliminations operations operations US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 30 September 2011 Continuing operations Revenue 80,060 9,838 30,388 2,206 (7,471) 115,021 - 115,021 Profit/(loss) from operations 15,176 (654) 1,301 (3,169) (4,063) 8,591 - 8,591 Investment income 1,424 11 345 4 (447) 1,337 - 1,337 Other gains/(losses) 5 - (64) (213) - (272) - (272) Finance costs (10,668) (1,122) (1,427) (972) 447 (13,742) - (13,742) Profit/(loss) before taxation 5,937 (1,765) 155 (4,350) (4,063) (4,086) - (4,086) Other information Segment assets 198,286 31,335 146,805 180,433 (206,596) 350,263 (2,289) 347,974 Segment liabilities (147,659) (23,033) (82,298) (27,516) 46,555 (233,951) 637 (233,314) Segment net assets 50,627 8,302 64,507 152,917 (160,041) 116,312 (1,652) 114,660 Capital expenditure 7,163 243 6,004 5 - 13,415 - 13,415 Depreciation 1,469 859 1,149 239 - 3,716 - 3,716 1st Floor, SAZ Building, Northend Close, Northridge Park, P.O.Box BW537, Borrowdale, Harare, Tel: 263-4-852795, 853054-6, 853059, Fax: 263-4-850705, www.aicoafrica.com ABRIDGED GROUP INCOME STATEMENTS for the six months ended 30 September 2012 30 Sept 30 Sept 31 Mar 2012 2011 2012 US$'000 US$'000 US$'000 Revenue 53,977 115,021 293,292 (Loss)/profit from operations (18,119) 8,591 38,537 Investment income 215 1,337 3,147 Other gains/(losses) (966) (272) 752 Finance costs (11,996) (13,742) (24,363) (Loss)/profit before taxation (30,866) (4,086) 18,073 Income tax expense 3,521 (961) (2,716) (Loss)/profit after tax from continuing operations (27,345) (5,047) 15,357 Loss from discontinuing operations - - (509) (Loss)/profit for the year (27,345) (5,047) 14,848 Profit attributable to: Equity holders of the parent (22,802) (4,105) 6,156 Non-controlling Interest (4,543) (942) 8,692 (27,345) (5,047) 14,848 Weighted number of shares in issue 534,126 532,638 532,673 Basic (loss)/earnings per share (US cents) (4.27) (0.77) 1.16 Diluted (loss)/earnings per share (US cents) (4.10) (0.74) 1.11 ABRIDGED GROUP STATEMENTS OF FINANCIAL POSITION as at 30 September 2012 30 Sept 30 Sept 31 Mar 2012 2011 2012 US$'000 US$'000 US$'000 ASSETS Non-current assets Property, plant and equipment 104,334 111,166 105,017 Investment property 332 864 332 Other intangibles 21 8 25 Other financial assets 347 39 268 Total non-current assets 105,034 112,077 105,642 Current assets Assets classified as held for sale 1,513 2,398 5,318 Other current assets 225,954 235,788 201,582 Total current assets 227,467 238,186 206,900 Total assets 332,501 350,263 312,542 EQUITY AND LIABILITIES Capital and reserves Shareholders' funds 58,715 83,808 83,551 Non-controlling interest 34,561 32,504 41,243 Total equity 93,276 116,312 124,794 Non-current liabilities Borrowings 12,402 14,659 11,659 Deferred tax liabilities 14,643 19,056 16,313 Finance lease liabilities - - 66 Total non-current liabilities 27,045 33,715 28,038 Current liabilities Liabilities classified as held for sale 472 637 2,909 Other current liabilities 211,708 199,599 156,801 212,180 200,236 159,710 Total equity and liabilities 332,501 350,263 312,542 ABRIDGED GROUP STATEMENT OF CASH FLOWS for the six months ended 30 September 2012 30 Sept 30 Sept 31 Mar 2012 2011 2012 US$'000 US$'000 US$'000 Cash flow from operating activities Operating cash flow before reinvesting in working capital (15,580) 21,375 48,535 Decrease in working capital (24,853) (85,187) (47,001) Net finance costs (12,325) (10,199) (22,942) Taxation paid (3,637) (2,395) (5,990) Net cash utilised in operations (56,395) (76,406) (27,398) Net cash outflow from investing activities (3,862) (9,006) (12,156) Net cash inflow from financing activities 32,695 57,718 15,120 Increase/ (decrease) in cash and cash equivalents (27,562) (27,694) (24,434) GROUP STATEMENTS OF CHANGES IN EQUITY for the six months ended 30 September 2012 Attributable to equity holders of the parent Non- Total Share Capital Revenue Total controlling Equity Capital Reserves Reserves Interest US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Balance at 31 March 2010. - 52,536 29,919 82,455 32,117 114,572 Changes in equity for 2011 Share based payments transactions 2 810 - 812 307 1,119 Redenomination of share capital 5,311 (7,172) - (1,861) (95) (1,956) Acquisition of interest(s) in foreign subsidiary/asociate/joint venture - 745 576 1,321 (1,129) 192 Dividend paid and recieved within the group - - 1,352 1,352 - 1,352 Dividend paid - - - - (1,321) (1,321) Total comprehensive income for the year (net of tax) - (13,870) 10,386 (3,484) 6,078 2,594 Balance at 31 March 2011 5,313 33,049 42,233 80,595 35,957 116,552 Changes in equity for 2012 Share based payments transactions 28 145 735 908 446 1,354 Acquisition of interest(s) in foreign subsidiary/asociate/joint venture - - 16 16 16 32 Disposal of interest(s) in foreign subsidiary/asociate/joint venture - (1) - (1) (31) (32) Impairment of investment in subsidiary - (3,000) - (3,000) - (3,000) Dividend paid and recieved within the group - - 2,290 2,290 - 2,290 Dividend paid - - - - (2,347) (2,347) Total comprehensive income for the year (net of tax) - (3,678) 6,421 2,743 7,202 9,945 Balance at 31 March 2012 5,341 26,515 51,695 83,551 41,243 124,794 Changes in equity for 2013 Share based payments transactions - 52 101 153 - 153 Disposal of interest(s) in foreign subsidiary/asociate/joint venture - (2,308) - (2,308) - (2,308) Dividend paid - - - - (1,586) (1,586) Total comprehensive income for the year (net of tax) - 121 (22,802) (22,681) (5,096) (27,777) Balance at 30 September 2012 5,341 24,380 28,994 58,715 34,561 93,276 Notes to the financial statements 1. General Information Aico Africa Limited (the Group) is a diversified agro-industrial conglomerate involved in ginning and selling of cotton products through its 100% owned subsidiary The Cotton Company of Zimbabwe, developing and marketing of hybrid maize and other broad acre crop seeds as well as cotton planting seed through its subsidiary Seed Co Limited. The Group is also a major player in the local fast moving consumer goods (FMCG) market in which the major products include edible oils and fats, canned vegetables, soaps, cotton and soya meal. 2. Presentation The financial statements are presented in United States dollars, which is the Group's functional currency rounded off to the nearest thousand. 3. Accounting policies The principal accounting policies of the Group have been applied consistently in all material respects with those of the previous period. 4. Statement of responsibility The report of the financial information is the responsibility of the Directors of the Group. 5. Seasonality of operations The Group's Cotton and Seed segments are subject to seasonal flactuations. Profitability and cashflows of the business have a strong weghting towards the second half which reflect the key selling period. 6. Statement of compliance The unaudited financial statements have been prepared in conformity with International Financial Reporting Standards/ International Accounting Standards (IFRS/IAS). 7. Discontinued operations 7.1 The local subsidiary Scottco (Private) Limited disclosed in the annual report for the year ended 31 March 2012 as a discontinued operation was disposed of by the Group during the half year ended 30 September 2012. 7.2 Results of discontinued operations In compliance with the requirements of International Financial Reporting Standards 5 (IFRS 5), the assets and liabilities of the discontinuing operations amounting to $1.4 million and $0.5 million have been included in the Group Statement of Financial Position as 'assets classified as held for sale', and as 'liabilities classified as held for sale' respectively. During the half year, discontinued operations did not operate and therefore no profit or loss was recorded. The analysis of assets, liabilities and performance of the discontinued operations is shown below. BUSINESS SEGMENT Cotton FMCG Seed Other Group Total Discontinued Continuing business business business eliminations operations operations US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 31 March 2012 Continuing operations Revenue 170,904 19,238 117,708 4,463 (14,558) 297,755 (4,463) 293,292 Profit/(loss) from operations 19,212 (1,526) 27,029 (7,998) 1,343 38,060 477 38,537 Investment income 4,096 57 891 758 (2,651) 3,151 (4) 3,147 Other (losses)/gains 1,267 (2) (175) (344) - 746 6 752 Finance costs (18,519) (2,316) (4,289) (2,522) 2,651 (24,995) 632 (24,363) Profit/(loss) before taxation 6,056 (3,787) 23,456 (10,106) 1,343 16,962 1,111 18,073 Other information Segment assets 156,537 24,139 156,940 170,963 (196,037) 312,542 (5,190) 307,352 Segment liabilities (104,865) (18,527) (75,022) (36,909) 47,575 (187,748) 2,909 (184,839) Segment net assets 51,672 5,612 81,918 134,054 (148,462) 124,794 (2,281) 122,513 Capital expenditure 7,414 594 9,802 12 - 17,822 - 17,822 Depreciation 3,249 1,719 2,970 395 - 8,333 - 8,333 ABRIDGED GROUP STATEMENT OF COMPREHENSIVE INCOME for the six months ended 30 September 2012 30 Sept 30 Sept 31 Mar 2012 2011 2012 US$'000 US$'000 US$'000 Profit for the period (27,345) (5,047) 14,848 Other Comprehensive Income Impairment charge against revaluation reserve - (357) (2,374) Transfer from revaluation reserve - - (196) Exchange differences on translating foreign operations (432) - (2,995) Gains on available for sale investments - 1,052 - Income tax on other comprehensive income - - 662 Other comprehensive income for the period (432) 695 (4,903) Total comprehensive income for the period (27,777) (4,352) 9,945 Total comprehesive income attributable to: Equity holders of the parent (22,681) (2,981) 2,743 Non-controlling Interest (5,096) (1,371) 7,202 (27,777) (4,352) 9,945 30 Sept 30 Sept 31 Mar 2012 2011 2012 US$'000 US$'000 US$'000 Property, plant ad equipment 1,372 2,223 3,207 Current Assets 14 66 1,983 Total assets 1,386 2,289 5,190 Deferred Tax 444 612 444 Current liabilities 28 25 2,465 Total liabilities 472 637 2,909 Net assets 914 1,652 2,281 Revenue - - 4,463 Profit from operations - - (477) Loss for the year - - (509) 8. Supplementary Information 8.1 Profit from operations is stated after the following impairment losses Impairment Losses by Operating Segment Operating Segment Cotton Seed FMCG Total 30 Sept 30 Sept 30 Sept 30 Sept 2012 2012 2012 2012 US$'000 US$'000 US$'000 US$'000 Trade debtors and other receivables 29 - - 29 Inputs scheme debtors 8,632 - - 8,632 Total 8,661 - - 8,661 30 Sept 30 Sept 31 Mar 2012 2011 2012 US$'000 US$'000 US$'000 8.2 Depreciation 3,673 3,716 8,336 8.3 Capital expenditure 3,916 13,415 17,822 8.4 Commitments for capital expenditure Contracted for 368 - - Approved by the Directors but not yet contracted for 1,661 9,800 2,385 TOTAL 2,029 9,800 2,385 8.5 Borrowings Current 185,738 101,252 66,280 Non-current 12,402 14,659 11,659 198,140 115,911 77,939 Secured 166,513 101,016 51,295 Unsecured 31,627 14,895 26,644 198,140 115,911 77,939 The increase in loans is a result of the late start of the selling season due to the delay of the cotton intake period following price disagreements with cotton farmers. The high inventories held will significantly reduce the debt levels in the second half as they are sold. GROUP PRIMARY SEGMENT REPORT for the six months ended 30 September 2012 BUSINESS SEGMENT Cotton FMCG Seed Other Group Total Discontinued Continuing business business business eliminations operations operations US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 30 September 2012 Continuing operations Revenue 31,669 11,487 13,256 - (2,435) 53,977 - 53,977 (Loss)/profit from operations (9,286) (244) (7,484) 17,198 (18,303) (18,119) - (18,119) Investment income 1,172 30 80 393 (1,460) 215 - 215 Other (losses)/gains 2 - (958) (10) - (966) - (966) Finance costs (8,804) (974) (2,557) (1,121) 1,460 (11,996) - (11,996) (Loss)/profit before taxation (16,916) (1,188) (10,919) 16,460 (18,303) (30,866) - (30,866) Other information Segment assets 154,981 27,663 154,798 143,369 (148,310) 332,501 (1,386) 331,115 Segment liabilities (140,213) (17,588) (86,060) (7,910) 12,546 (239,225) 472 (238,753) Segment net assets 14,768 10,075 68,738 135,459 (135,764) 93,276 (914) 92,362 Capital expenditure 425 152 3,286 53 - 3,916 - 3,916 Depreciation 1,693 567 1,362 51 - 3,673 - 3,673 ECONOMIC OVERVIEW In Zimbabwe, economic activity slowed down during the period under review resulting in the economic growth projection being reviewed downwards from 9.4% to 5.6%. Liquidity constraints continue to be a major challenge as financial institutions are increasingly hamstrung by non performing loans. The high cost of borrowing and the short term nature of funding on the local market do not match attendant cash flow cycles of key industries and thus continue to impede recovery and growth of businesses and the economy. Inflation is expected to close the year at 5%. Power availability will continue to be a major risk until a long term solution is put in place to increase local power generating capacity. The availability of other utilities like water, have deteriorated in major cities adversely affecting the smooth running of businesses. In the region; the Zambian kwacha will be debased in January 2013, with inflation for 2013 estimated at no more than 6%. In Malawi, foreign currency shortages persist and interest rates continue to firm with the base lending rate now at 31%. In Kenya, general elections are likely to be held in March 2013 and the economy appears rather subdued on account of underlying political uncertainty, while in Tanzania the economy continues to perform strongly though headline inflation of 15% is a cause for concern. OPERATIONS Cotton The cotton crop intake improved significantly to 150 000 tonnes up from 103 224 tonnes last year as farmers responded to the previous year's good prices by increasing their hectarage under cotton. Cotton lint prices, however, retreated from the record high prices of over US$2.30 per pound last year to US$0.70 per pound this year as market fundamentals changed. This resulted in a lower producer price, than last year being offered to the cotton growers much to their displeasure resulting in a price impasse with farmers withholding their crop. Eventually market forces were allowed to prevail with the bulk of the crop being marketed in July and August. However, the delayed start to the buying season occasioned by the price impasse resulted in extensive side marketing and poor recoveries on input scheme advances. As a result the Cotton business has been forced to downgrade its profit forecasts due to impairment provisions of US$8.7 million arising from this phenomenon. Seed The half year performance was subdued due to low winter cereal sales and delayed uptake of summer cropping programs in the various markets. The business has adequate stocks to meet seed demand for the new season. The business will continue to focus on improving quality and production capacity in new markets. Liquidity constraints in Zimbabwe are affecting collections from our major debtors who are paying slowly but on-going discussions suggest that this will be resolved by year end. FMCG Olivine continues to suffer from inadequate capital despite recent equity injection into this business. The extraction of about US$10.0 million in facilities by some local banks, after the capital injection, has meant that this business has remained at a standstill from a capitalisation point of view. However, and due to various initiatives developed by management, sales volumes are 3% ahead of last year and the loss for the period of US$1.1 million is 20% better than last year's US$1.3 million. Production has improved over prior year and the business is generally performing better than last year. Focus is on finding ways and means to at least break even in the second half though this will be largely dependent on availability and swift renewal of existing facilities which are predominantly short term. GROUP FINANCIAL PERFORMANCE First half sales volumes were 30% lower than last year due to low winter cereal sales in and the late start to the cotton buying season which in turn resulted in a delayed start to lint sales deliveries. As a result Group sales revenue of US$53.8 million was 53% lower than last year. In addition current year sales prices, particularly for lint, were significantly lower than last year's record prices hence the much lower revenue values. Operating loss of US$18.1 million (September 2011: UD$8.6 million profit) was arrived at after charging impairment losses of US$8.7 million - most of which were in respect of cotton input scheme recoveries. Loss after tax of US$27.3 million was 446% higher than last year's loss of US$5.0 million. Generally, profits for the half were affected by lower prices and low sales activity relative to prior year as well as the impairment charges alluded to above. Shareholders' funds and equity fell in sympathy with the losses recorded for the year to-date. Borrowings of US$198.1 million, at the end of the first half, were much higher than last year due to higher crop intake this year as well as slow cash turnaround arising from late start to the crop buying and resultant delays in lint shipments. Net cash utilized in operations amounted to US$15.6 million. Capital expenditure for the period amounted to US$3.9 million, with the bulk of this being spent in the Seed business. Net increase in loans in the year to date amounted to US$120.2 million and was driven mainly by buildup of inventories and trade receivable balances. Management of the inputs scheme, inventory and trade receivables complex will be critical in cash and profit enhancement initiatives. TREASURY The Group is actively pursuing funding initiatives designed to fully capitalise its units. Financial Advisors have been appointed and work done has progressed reasonably well so far. The Board will advise the market and seek necessary approvals as soon as it becomes practical to do so. OUTLOOK We expect good performance from the Seed business in the year to March 2013 and reasonable performance from Cotton for the same period. However, FMCG performance will continue to be retarded by lack of funding though this is expected to improve over last year. On the other hand, forecast performance in the Cotton business, though positive, will be negated by poor input scheme recoveries for which additional impairment provisions of US$8.7 million have been made. DIRECTORATE There were no changes in the Directorate in the period under review. DIVIDEND In line with the Groups' policy, no interim dividend has been declared. By Order of the Board P MANAMIKE Company Secretary 19 November 2012 1507 Adrenalin Advertising & Design 1 Directors: BL Nkomo (Chairman), P St. L Devenish* (Group Chief Executive), I Chagonda, CC Chitiyo (Ms), BC Mudzimuirema*, AF Nhau, LF Preston, JP Rooney, F Rwodzi (*Executive)

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