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AFRICA LIMITED

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Cottco Holdings Limited FY 2011 financial results

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Cottco Holdings Limited leading Agriculture company listed on the Zimbabwe Stock Exchange has released their full year Results . Check out insights into this company in their presentation which appears below.
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Cottco Holdings Limited FY 2011 financial results

  1. 1. * *Y‘*XY, .-‘‘ AFRICA LIMITED Growth beyond boundaries tired a/ rite 15! Floor. $A1BiAiId1rly. Morilvend close. uorrhridge nrrlr. Bormwdole. Harm! rrovawssr. Bdrruwdaie. Prarurt. Yel-1§3'l'552795. assert-6. 553059 ran 265-4-559705 ECONOMIC OVERVIEW The macro-economic environment was fairly stable for the year under review with modest economic growth recorded, Access to capital remains highly problematic and as a result economic recovery will be slow and arduous. Bank deposits rose steadily during the year highlighting improvements in trading conditions. volumes and business profits though this will continue to be retarded by shortage of capital. Liquidity. which seemed to ease in the eany pan of the year. tightened in the second hall of the year due to an apparent slowdown of offshore loans and other FDi iniiows, consequently. bonowing costs continue to be high and local loan tenures remain largely short tertn - to the detriment of business. Although there have been some notable improvements in the supply of coal. power shortages remain unresolved and are a substantial constraint to the expansion and smooth running of business activities. Despite the above constraints the agro sector has steadily recovered and crop production is on the increase. Global agro commodity prices have been firming against a background of adverse weatheninduced supply constraints in some parts of the world. OPERATIONS REVIEW corrott The national crop for the year improved to 265.000 tonnes from 210.000 tonnes last year. CDttc0‘s intake volumes also improved to 111.075 tonnes compared to the previous years 93.091 tonnes. representing a grovirth of 13% for the period. nevenue ior the year was 33% higher than prior year due to an increase in both lint volumes and prices. However. the peak iirrt prices enjoyed in the last quarter of the 2010 calendar year will only be realised in the new financial year. as stocks had already been sold out when this occurred. A voluntary mtrencttment package was implemented and concluded during the year under review and we expect a much leaner and more cost alfsctive start structure going forward. The total cost of this exercise amounted to uss2.7 million. statutory instrument 142 of 2009 (cotton sector Fteguiations) was amended during the year. we continue to work with our peers in the industry and expect these changes to runher consolidate industry viability and ordeniness. cottco invested uss11.7 million in crop inpirts during the year and this should msuit in higher crop intake volumes as indications on the ground suggest. world lint prices rose significantly and pushed above 200usc/ lb in February 2011. though the company did not beneht because lint stocks had run oirt by this time. The above factors. in spite of the receding pnces. are a good basis for a larger national crop. intake volumes and improvement in profits in the new financial year. The business recorded a US$135 million turnaround to post a profit before tax of US$3.A million. Profit after tax amounted to US$63 million aftera deferred tax cream of US$36 million. seen seed-co sales volumes increased across all the seed business units resulting in a growth 1n overall sales volumes of 15%. in turn. revenue of ussss million was 27% higher than last year. Maize and cotton seed were the biggest contributors to this growth. overall. seed production increased by 45% on the back of increases in hectares and better yields. The production bottlenecks which were affecting Seed-Co's capacity to adequately meet demand have been resolved and we expect steady and persistent growth in volumes in the years ahead, Seed production activity in East Africa is intensifying and demand for Seed-Co's varieties continue to grow, inaugural seed production activities in Tanzania and Ethiopia point to a very prom ng future in these markets. The Seed business posted a profit atter tax of uss17,4 million representing an increase of 30% over the previous year. Fast Moving consumer Goods (FMGG) - 49% Alco share olivine continued to suffer from liquidity and working capital constraints. This resulted in low production levels and stagnant sales volumes. Flevenue of us$13.3 million is 23% above the prior year of uss14.9 million. due to higher relative pnces. l. ow margins and high operating costs resulted in a loss before tax or us$4.5 million. subiect to timely iniection of capital. this business will record a profit in the new financial year. in this regard. the shareholders have agreed to put in the required capital. staning with a total of US$10 million to be injected before end of June 2011 and a further US$5 million by end of July 2011. These amounts will be used for working capital purposes (mostly raw materials) and to restructure some of the shon term debt. we are. therefore. excited about the prospects of this business going forward. SPINNING scottco yam prices signiiicantly lagged behind lint prices for most of the year. This mismatch in pnces made marketing ofyarn and maintaining profitability thereof challenging. As a result. volumes were low and the business was put into care and maintenance for most of the year in order to avoid he losses and borrowings that would have arisen irom (i) the above phenomenon and i1 the need to increase working capital. on this basis. volumes were in line with prior year. Flervenue of US$52 million was 5% higher than last year due to relatively firmer prices. Profit before tax amounted to US$03 million. The business had no outstanding loans at 31 March 2011. GROUP FINANCIAL PERFORMANCE Group financial perronnance improved significantly over prior year on the back or a us$13.5 million turnaround in cotton and 30% pront growth in seed. This was. however. negated by the FMCG business and discontinued operations which recorded losses or us$4.5 million and US$1 ,1 million, respectively. Aggregate Group sales volumes fell by 2% to 190.150 tonnes due to low carryover stocks in Oottcrl and stagnation in FMGG volumes. hlevenheiess. Group revenue of US$21U.6 million grew by 29% on account of firmer commodity and sales prices throughout. Gross margins improved throughout the Group. resulting in composite gross margin of 41 % (last year: 33%) while trading profit margin rose to 15% from 3% last year as a result. Group profit from operations of US$332 million grew 150% over prior year. Profit before tax rose by 311% to us$20.0 million. after charging interest costs of US$172 million. Group net profit from continuing operations of uss13.5 million was 309% higher than pnor year. Group attributable earnings improved by US$132 million from a loss of US$43 million - a growth oi 309% over prior year. Net cash utilised in operations was US$29.11 million and was mainly a result of increased irlvestrflerits in iriput schemes, as well as build up of stocks and receivables. Capital expenditure amounted to US$128 million for the year. Going forward. anticipated injection 01‘ capital into Olivine will turn this business around wniie buttressrng overall growth in performance or the Group. YREASURV The Group indicated earlier in the year its irnention to raise capital. including eouity. However. work and consultations in the course of the year has revealed a lack of support for the equity option from shareholders. The Group Board has. theretore. decided to pursue alternative courses oi action, Primary among these is to harness internally generated cash flows from anticipated strong performance across the Group. complemented by long term debt. OUTLOOK we expect much stronger peitormahce across the Group in the new fina ial year. Performance will be driven by volume growth and efhciency improvements. Recent in atives to recapnalise olivine should see the turnaround of this business and its return to proiitabi y. in seed and cotton. activities on the ground are promising and everything being equal. we should witness lunher growth in volumes. revenue and profits. DWIDEND Due to the prevailing liquidity challenges and concurrent funding requirements in the Group. the Directors have not declared a dividend. DIRECTORATE The Board wishes to advise that Messrs Patrick Rooney. Filip Montfort. Farai Rwodzi and innocent chagonda wem appointed Directors of the company with effect from 5 August 2010. 12 october 2010. 1 December 2010 and 1 January 2011. respectively. Mr Filip Montron. however. subsequently resigned from the Board with effect from 12 January 2011. The Board extends a warm welcome to these new members and iookstorward to their valuable contribution. Mr l>atison sithoie. who had been the chainnan for the Group for the past five years. stepped down from the Board on 10 November 2010. atter serving the Group Board for a total often years. Mr Bekithemba Lloyd Nkomo. who was the Audit committee chairman during this time. took over from Mr sithoie as chainnan of the Board. The Board and staff at AICE) wish to take this opponunity to thank Mr sithoie for his leadership. counsel and guidance dunng what was a most difficult period. we wish him well in his future endeavours. By Order of the Board F‘. Manamike company secretary 22 June 2011 Abridged Group Income Statements ior the year ended 3| March 2011 31 March 31 March 2011 2010 uss'upu | .|5$‘00fl nevonuo 210.537 152.379 Profll from oguatlonl 33.245 12.733 investment income 1.055 519 other gains 2.303 2.413 Finance costs 117.139) (1o.34o1 profit before larraltran 20.013 4.375 income In oxperite 1.450) 3391 Frolit after lax from continuing operations 13.533 4.533 Loss from discontinuing operations (1.039) (2.139) Prolll for the ynr 17.473 2.997 Protlt Ittribuubln to: Equity holders of the parem 3.345 (4.270) Non-controlling interest 3 33 5.037 1 E weighted number of shares in issue 530.550 523.340 basic earnings/ (loos) per share (09 cents) 1.53 (0.301 Diluted eamingsi(ioss1 per share (us cents) 1.32 (0.731 Abridged Group Statements of Comprehensive Income tor the year ended 31 Mamtt 2oii . 31 March 31 March 2011 2010 uss-puo uss-nuo Pmfil for the period 17473 2397 Dthar cornrmlnntivo income Foreign currency translation differences for operations (2.952) 1.025 Revaluation of property. plant and equipment (14.5131 112.2711 Transfer 1min revaluation reserve (9) — lnipainmni of inventories in associate (25) V Fnor year inventory adjustment (3491 - income tax on other comprehensive income 3 533 7 394 other comprehensive loss tor the period 114 351 Total comprehensive incomeilloss) lorlhe period Tnhl ccmprehesive income mllibutbhl: to: Euuilv holders ofthe parent 13.4941 (4.102) lvon-oorrtrolling interest 5,073 3,143 2 594 1954) Abridged Group Statements of Financial Position tIsa|31Mam1t2011 31Macli 31March 1Aprll 2011 2010 2009 uss'0o0 uss'0oo us: '000 ASSEIS Nofrcunanlanivlt Fropeny, plarn and equipment investment propeny other intangibles inveslrneni in aguciate Total norr-current Duets current nuts Assets classified as held for sale other current assets 'lotII wrnnt nut: '| ’otIl cum EOUITV Atln LIABILITIES capital and reserves Stlarehniders‘ funds 30.595 32.456 35,555 ltonoontroiling imerest 35.957 32,115 29.521 Total equity 115.552 114.su 115,213 tiomcurrerit llnhtlmu borrowings 14.430 10 139 Detefred tax liabilities 13.793 25.974 39.539 Finance lease liabilities 194 101:! non-currlttt liabilities as 457 3 773 Currlnl ilabiiltlot 540 1.252 - 101.076 32 515 57,355 jrfijrfljifl Total equity and liabilities if Abridged Group Statement of Cash Flows tor the year ended 31 Mardi 2011 31 March 31 March 2011 2010 uss'n00 uss'000 cash flow from operating activities Opemling cash flow belore reinvesting in working capital 41,732 13,154 Movement in working capital 144.2351 3.094 lvet finance costs 115.5521 110.3401 Taxation pa (3.342) (2.022) uctcath tirii tad inlfoanorated from operations 123.3571 3.335 Net cash outflow from investing activities (3.023) (5.371) Net cash inflow lrom nnancihg activities 11.371 340 ibocromvlitcruu in curt and cnh Oqulvnluml 1 41 355 Group Statements at Changes in Equity For the vsaranded 31 March 1011 balance at 31 March 2003 changes in equity for 2009 share based payments transactions Total comprehensive income for the year (net of taxi aaiance at 31 March 2000 changes in equity for 2010 share based payments transactions Reversal oi ftclnrcurilrollirig imeresi reserves Dividend paid Total comprehensive income for the year (net of tax) balance at 31 March 2010 changes in equity for 2011 share based payments transactions nedenoniinaiion of share capital poqusrtiori of 'nrered(s) in loreagn siibsiaarylamooateaoirrt venture Dividend paid and recieved within the group Dividend paid Total comprehensive income for the year (not of taxi anlance at 31 March 3011 Inna-ttrltonui Jitter rdflirznd _ hretv1=1a11diV““(¢11- .1;-{maria an-. Iiu= )1. . II1‘t0l. tl. -lrtdtri. ldlififtm-ttrilit. I Attributable to equity holders of bio Dlfuftl lion - rbtal share capitnl amriiio Total orrrrtroiltiig nquhy capital rmrvoe fuidrwl lfmust ussinuo ussirina usthtrt us: -boo Ussmn usvaoa . 53.542 25.733 109.330 17.435 126,356 ~ 3.930 . 3.300 09 4.073 — 135.479) 7.774 (27.7051 12.005 115.5591 - 52.143 33.512 35.655 29.521 115,276 ~ (11 1 476 405 74 530 — 235 201 4:17 (437) — - - - » (233) (2331 — 130 14.2701 14.1021 3.143 19541 - 52.536 23.319 32.455 32.117 114.572 - 312 - 312 307 1 .113 5.311 (7.1721 s 11.3611 (95) (1.950) - 745 576 1.321 (Lia) 102 — - 1.352 1.352 . 1.352 7 7 » - (1,321) (1,321) - 113.3701 10.336 (3.434) 3.070 2.594 5.311 33.051 42.233 30.595 35.957 115.552 Notes to the financial statements 1. Frountrrrlon The hnancial statements are preseriited in unhed states dollars. which is the Groups functional currency The linancal information presented in united states dollars has been rounded offto the nearest thousand 2. Accounting policies Accounting policies have been applied consistently with those used in the Group financial statements of Aico Africa Limited for 1110 year ended 31 March 2010. 3. basis of preparation The basis of preparation of these financial statements is lntemational Financial neponing standards 3.1 statement of compliance The Groups linancial statements have been prepared in accordance wI|1'1 international Financial neporting standards (lFFls1 and the international Financial neponiriglnlerpretationscommiitee(lFnlc1inlerpretations 3.2 IFRS and tFR|0|n1lml'lI1i1|ofts The Group is resuming presentation 01 IFRS financial statements alter adoption of iFRS 1 — Filsrtlme Adoption 13! international Financial Reporting standards IFRS 1 - FifI1-lime Adoption 47! international financial neportinp standards The Group has adopted iFRS1 and this adoption will not resuh in restatement of any prior year balances as the 6101117‘: opening statement of hnaricii-ii position. at 1 April 2009. is lFns compliant The abridged hrranciai statements. therefore. include three statements or linancial position. two income statements. two statements or comprehensive income. two statements 01 cash llows and two statements of changes in equity- 4. Discontinued operations 41 The Group closed down two (21 or its smaller apemtlarls — Exrlnn En| erprlses1Pv1|_imIled and Salamax Trading (Fty) Limited. 4.: Rllultl o1 dltcontlnucd opcrritlonr in compliance with the requirements or IFRS 5 — hionsurror-it Assels Held tor sale and Discontinued openrtions. the assets and liabilities olltre discontinued operations amounting to uss2 3 million and 11550 5 million have been included in Group statement or Fifiartciai Position as ‘as5e| s olassttied as held ior saie’. and as ‘ilabtlrfias classified as held for saia‘. respectively During the year. discontinued operations recorded a loss cl us:1.l million which has been included in the Group income statement as loss lrom discontinued operations‘ The analysis or assets. liabilities and penormance al the discontinued operations is shown below . at rriereti 31 rrercri 2011 20111 usspoti tissloou Frapeny. plant ad e0ur¢”iient 2.223 2.29:1 current assets 70 1 129 Total assets 2 M 3.412 Defened tax 512 512 cunent liabilities 23 2 303 Total iiriblilou 540 3.421 Net assets lteverrue Loss from opar Loss 1Dr the year 5. supnlcrrtcnt-ry Inlorlmtlon 5.1 Prvfit from operations is stnbd rftortltc following ugmorit-rclntad lrnpnlmiont losses . impairment losses by operating segment oporrtlnosaonroni cotton Seed spinning Ft/ icG reiai 11Marcf1 : I1II1:fc11 31Mar: I1 aiiriaren 11 March 21711 21111 2011 2011 2011 ustboo Usfnflfl ussboo ussooii Ils: ‘0o0 inventories 559 - 410 1.125 Trade and other receivables - 200 143 Properly. plant and equipment 102 Total 735 200 553 T si. u.rcrr Slvlfl-rch ztrii zplii usmo ltsspoo 5.2 Dopnclntlon 1.350 7.233 5.: capltaleirperrdlture 12.775 5,030 5.4 commitments for capital expenditure conlractedtor Approved by the Directors but not yet contracted for Total 5.5 included in the assets classified as held for sale are assets wonh ussi 09.330 relating to the cotton business. gm. .f': vtvr-rdultlsztadrtnuari ADrerfaiirtAnIcllisiW 5 oesiaii 93 3959

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