AICO FY 2013 Presentation.pdf

8/14/2019 AICO FY 2013 Presentation.pdf

1/30

AUDITED

GROUP RESULTS

IMPORTANT

This presentation is podcast in full and will be

published on our website www.aicoafrica.com

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questions.

Please note that the information provided in these

presentations is accurate as of the date of the originalpresentation. Presentations will remain posted on this web site

from one to twelve months following the initial presentation,

but content will not be updated to reflect new information that

may become available after the original presentation posting.

This presentation contains forward-looking statements, that is,statements related to future, not past, events. Like other

businesses, AICO is subject to risks and uncertainties that could

cause its actual results to differ materially from its projections

or that could cause other forward-looking statements to prove

incorrect. Reported results should not be considered as an

indication of future performance.

for the year ended

31 MARCH 2013

28 June 2013
http://www.aicoafrica.com/http://www.aicoafrica.com/


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CORPORATE PROFILE

Please refer to our Group corporate websites for generic

corporate information:-

www.thecottoncompany.com

www.seedcogroup.co.zw www.olivine.co.zw

Seed Co is Africa'slargest proprietary seed

breeding, production,

processing and

distribution group,

operating in 15

countries

Cottco is the largestcotton processor and

marketer in sub-

Saharan Africa

Olivine is a dominant,Zimbabwe-based

manufacturer &

marketer of fast moving

consumer goods

(FMCG)

www.aicoafrica.com
http://www.olivine.co.zw/http://www.seedcogroup.co.zw/http://www.olivine.co.zw/http://www.olivine.co.zw/http://www.seedcogroup.co.zw/http://www.olivine.co.zw/http://www.olivine.co.zw/


3/30

AGENDA

OVERVIEW

OPERATIONS REVIEW AND OUTLOOK

FINANCIAL REVIEW

DISCUSSION


4/30

OVERVIEW The year under review has not been good

for the Group

Zimbabwean operations performed belowexpectation

Regional economies are stable but flags are

coming up in Zambia where economic

policy changes are adversely affectingbusiness

The Malawian economy is moving in the

right direction

The Eastern African economies arepromising with the stability that came after

the successful holding of elections in Kenya

The West African market is risky but full of

potential

Salient Features

120.7

162.9

225.9

293.3

263.9

0

500

USDmillion

Group Revenue

FY2009 FY2010 FY2011 FY2012 FY2013

26.912.8

33.2 38.5 24.20

50

USDmillion

Group Operating Profit

FY2009 FY2010 FY2011 FY2012 FY2013

33.422.4

43.8 47.632.7

0

50

USDmillion

EBITDA

FY2009 FY2010 FY2011 FY2012 FY2013


5/30

OPERATIONS REVIEW


6/30

FMCG

Olivines performance is improving but

still loss making.

Working Capital and liquidity constraints

continue to hinder sustainable good

performance

Improved soya bean supplies and toll

crushing arrangements has resulted in

improved margins

The Olivine Board together with its

shareholders continue to explore avenues

of improving the Companys liquidity

situation.

Sales volume

12,027 tonnes

2% up on LY

Sales Revenue

USD24.4 million 27% higher than LY

Salient Features

2.6

14.9

18.5 19.2

24.4

0

5

10

15

20

25

30

USDmillion

Revenue

FY2009 FY2010 FY2011 FY2012 FY2013


7/30

COTTON

Cottco recorded an intake of 150

000 tonnes supported by a high

inputs scheme

The price impasse experienced

resulted in a delayed and

compressed buying season resulting

in side marketing.

This scenario adversely affected our

inputs recoveries

The high inputs underrecovery

resulted in a huge debtors

impairment.

Revenue

USD138.0 million

20% down on LY

Profit before tax

USD7.6 million loss

225% below LY

Salient Features

78.8 77.8119.0

170.9138.0

-

50.0

100.0

150.0

200.0

USDmillion

Revenue

FY2009 FY2010 FY2011 FY2012 FY2013


8/30

COTTON (Continued)

Current season inputs scheme participants were thoroughly

screened.

We have learnt our lessons from the 2012 season

Core debt still the biggest problem facing this business


9/30


10/30

PEOPLE

The Group has retained its key staff.

Staff development and training at all levels continue to be the

Groups priority.


11/30

OUTLOOK

The Group continues to focus on cost containment and right

sizing initiatives.

We expect a resurgent performance in Seed Co

Need to strike a balance on key operating and strategic variables

in Cottco

Intake volumes, buying prices, lint prices and input scheme

recoveries

Olivine, performance dependant on funding

At Group level, the key issue is to get the balance sheet in shape

Get funding into the SBUsNegotiations with potential partners in progress


12/30

FINANCIAL REVIEW


13/30

Accounting policies

Consistent with those used in prior year Group financial

statements

Presentation

Financial statements are presented in US$, which is the

Groups functional currency

Compliance with IAS/IFRS

Compliant

Audit opinion

Clean, with emphasis of matter in respect of going concernissues in Olivine

BASIS OF PREPARATION


14/30

Good improvement in gross margins

But interest bill is still a major concern.diluting earnings and earnings per share

Downgrading of profits in Cotton and Seed amajor issue

SALIENT FEATURES

120.7

162.9

225.9

293.3

263.9

0

500

USDmillio

n

Group Revenue

FY2009 FY2010 FY2011 FY2012 FY2013

26.912.8

33.2 38.524.2

0

50

USDmillion

Group Operating Profit

FY2009 FY2010 FY2011 FY2012 FY2013

33.422.4

43.8 47.632.7

0

50

USDmillion

Group EBITDA

FY2009 FY2010 FY2011 FY2012 FY2013

Sales volume: 18% up

Revenue: 10% down

Gross profit: 5% up

Operating profit: 37% down

PAT: 114% down

Attributable earnings: 209% down

Borrowings: 9% lower


15/30

Key Issues

High intake volumes in Cotton

45% higher to 150,000 tonnes,

Sales 42% higher to 141,838 tonnes Lower sales volumes in Seed - 12% down

especially in Zimbabwe 35% down onLY

Higher factory throughput in FMCG

Though still constrained by workingcapital challenges

SALES VOLUME

136.7

193.6 189.9 180.5213.7

-

50.0

100.0

150.0

200.0

250.0

SalesVolumes(000to

nnes)

Group Sales Volume

FY2009 FY2010 FY2011 FY2012 FY2013

5242Cotton141,838

66

Seed59,40628

FMCG12,027

6

FY2013 Sales Volume

Cotton

99,753

55%

Seed

67,241

37%

FMCG

11,798

7%

Spinning

1,659

1%

FY2012 Sales Volume

18


16/30

Key Issues

Sales volumes, were 18% higher than LY

in Cotton

but Lint prices were 45% lower

Lower revenue in Seed

lower sales volumes in Zimbabwe

FMCG sales volumes were 2% higher

than LY

REVENUE

120.7

162.9

225.9

293.3263.9

0

50

100

150

200

250

300

350

SalesRevenue(USD

million)

Group Sales Revenue

FY2009 FY2010 FY2011 FY2012 FY2013

30

%

39

%

35

%

Cotton

138

51%Seed

110.6

40%

FMCG

24.4

9%

FY2013 Revenue

Cotton

170.9

55%

Seed

117.7

38%

FMCG

19.2

6%

Spinning

4.5

1%

FY2012 Revenue

10

%


17/30

INCOME STATEMENT SUMMARY

Mar-13 Mar-12%

Change

Sales volumes 213.3 180.5 18Revenue 263.9 293.3 (10)

Operating profit 24.2 38.5 (37)

Profit before tax (0.5) 18.1 (103)

Profit after tax (2.1) 15.4 (114)

EBITDA 32.7 47.6 (31)

Attributable earnings (6.7) 6.2 (109)

EPS (US cents) (1.26) 1.16 (109)

Firm prices during the year

But lint prices 45% lower

Working capital inducedsupply chain constraints

Higher margins than LY

Includes

Total impairment chargesof USD19.2m

Interest charges ofUSD25.4 m

Corporate overheads 29%higher to USD73.4 m (incl.impairments)

11% higher (excl.impairments)

Loss for the year caused by: low sales volumes in Seed

lower lint prices in Cotton

interest costs,

impairment charges

supply chain inefficiencies


18/30

Key issues

Cotton: cost reduction initiatives bearing fruit

Seed: cost management and stable prices FMCG: higher efficiencies/better product mix

MARGINS

Group Cotton Seed FMCG

Gross profitFY2013 94.4 40.8 50.9 3.1

FY2012 89.9 36.1 53.0 0.3

Y-o-y growth (%) 5% 13% (4%) 1033%


Gross margins (%)

FY2013 36 30 46 13

FY2012 31 21 45 1

Cotton40.843Seed50.9

54

FMCG3.13

Gross profit by SBU 2013

Cotton36.141

Seed53

59

FMCG0.30

Gross profit by SBU 2012

Gross profit affected by lower salesvolumes and revenue in Seed

O S


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OVERHEADS

48.645.0

57.5 56.7

73.4

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

USDmillions

Group Overheads

FY2009 FY2010 FY2011 FY2012 FY2013

40%

23%25%

19%

28%

0%

5%

10%

15%

20%

25%

30%

35%

40%45%

FY2009 FY2010 FY2011 FY2012 FY2013

Group Overheads - % ofRevenue

Group overheads were USD73.4 m (last year: USD56.7 m)

80% up on last year

24% of revenue (LY: 11%)

Affected by impairment charges

Cotton

16% higher than last year

31% of revenue (LY: 25%) Costs running ahead of productionand sales

Seed


17% of revenue (LY20%)

still need further growth in

revenue

FMCG

29% higher last year

Includes impairments of USD16.4 m (LY:USD5.5 m)


IMPAIRMENT


20/30

Impairment provisions charged to income statement amounted to

USD19.2 m

USD16.4 charged directly to operating expenses/overheads

IMPAIRMENTCotton Seed FMCG Total

PPE - 0.7 - 0.7

Inventories 1.7 - 1.1 2.8

Trade and other receivables 0.5 3.1 - 3.6

Input scheme receivables 12.0 - 0.1 12.1

Total 14.2 3.8 1.2 19.2

Last Year 1.8 2.4 0.6 4.8

INTEREST COST


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xx

INTEREST COST

9.010.8

17.2

24.4 25.4

-

5.0

10.0

15.0

20.0

25.0

30.0

USDmillion

Group Interest Costs

FY2009 FY2010 FY2011 FY2012 FY2013

7%7% 8% 8%

10%11%

12%11%

11%12%

5%

3% 3%4%

7%

0% 1%

10%

12%

8%

0%

2%

4%

6%

8%

10%

12%

14%

FY2009 FY2010 FY2011 FY2012 FY2013

Group Interest Costs


Group interest costs were USD25.4 m (last year: USD24.4 m)

USD16.8 m (LY: USD18.5 m)

9% down on last year

12% of revenue (LY: 11%) High borrowings

Cotton




High inventory & trade receivables

Seed


17% down on last year

8% of revenue (LY12%)

Lower borrowing/equity injection

FMCG



PROFITS AND EPS


22/30

PROFITS AND EPS

26.

9

16.

8

15.

3

7.

8

12.

8

4.

9

2.

4

(4.

3)

33.

2

20.

0

17.

5

8.

9

38

.5

18.

1

14.

8

6.

2

24.2

0.5)

2.1)

6.7)

(10.0)

(5.0)

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Operating

profit

Profit before

tax

Profit after tax Attributable

earnings

USDmillions

Profit Trends

FY2009 FY2010 FY2011 FY2012 FY2013

Operating profit down 37%

Lower lint prices

Lower seed sales volumes Weighed down by impairments

PBT down 103%

Lower profits in Seed and Cotton

PBT FY2013USD m

%

Cont

FY2012

USD m

%

Cont

%

ChangeCotton (7.6) (1520%) 6.1 34% (225%)

Seed 12.4 2480% 23.5 130% (47%)

FMCG (2.8) (560%) (5.8) (32%) 52%

Spinning - - (3.1) (17%) n/a

Other (2.5) (500%) (2.6) (15%) 4%

PAT down 114%

Low PBTAE & EPS

down 109%

US1.26 cents lossversus US1.16 LY

Lower earnings

Impairments

EBITDA


23/30

EBITDA softened to USD32.7 m dropped 31% over LY

affected by high impairment

charges

and lower profits in Cotton/Seed

Significant improvement in FMCG

required

Funding, raw material availability

and supply chain efficiencies still

an issue

EBITDA

33.

4

16.

8

18.

2

0.

1

22.

4

(2.

7)

18.

3

3.

6

43.8

17.

7

29.

3

(2.

2)

47

.6

23.

7

29.

8

(1.

8)

32.7

11.4 2

3.2

1.2

(10.0)

-

10.0

20.0

30.0

40.0

50.0

60.0


USDmillions

EBITDA

FY2009 FY2010 FY2011 FY2012 FY2013

FY2013 FY2012

%

Change

Cotton 11.4 23.7 (52%)

Seed 23.2 29.8 (22%)

FMCG 1.2 (1.8) 167%

28%

14%

19%16%

21%

-3%

15% 14%

33%

24%30%

25%

0%

24%

-12%-10%

-15%

-10%

-5%

0%

5%

10%

15%

20%25%

30%

35%

40%

FY2009 FY2010 FY2011 FY2012

USDmillions

EBITDA Margin


BALANCE SHEET SUMMARY


24/30

Deferred tax assets grew

5% to USD10.1 m

Deferred tax liabilities fell9% to USD24.2 m

Total borrowings fell by

9% to USD125.9 million

BALANCE SHEET SUMMARY

Asset category Mar-13 Mar-12

%

change

Non-current assets 105.8 105.6 0%

Assets held for sale 1.5 5.3 (71%)

Other current assets 181.0 201.6 (10%)

Total Assets 288.3 312.5 (8%)

Equity 113.2 124.8 (9%)

Non current Liabilities 26.3 28.0 (6%)

Liabilities held for sale 0.5 2.9 (83%)

Other Current Liabilities 148.3 156.8 (5%)

Total Equity & Liabilities 288.3 312.5 (8%)

Equity down 9% over last year

Affected by low earnings

Reduction in capital reserves re: disposal

212.9 224.7251.7

312.5288.3

-

50.0

100.0

150.0

200.0

250.0

300.0

350.0

USDmillion

Total Assets

FY2009 FY2010 FY2011 FY2012 FY2013

TOTAL ASSETS


25/30

Total assets declined by 8%

Spent USD10.9 m in capex

Last year: USD17.8 m

High inventories and trade receivables

Slow debtors payments in Seed SBU

Also, high input scheme impairment

TOTAL ASSETS

Cotton113.738Seed

157.853

FMCG279

Other0.20

Total Assets by SBU 2013Asset category Mar-13 Mar-12 % change

PPE 103.3 105.0 (2%)

Inventory 72.4 81.6 (11%)

Input Schemes 10.6 29.2 (64%)

Trade receivables 83.3 70.2 19%

Other 18.7 26.5 (29%)

Total Assets 288.3 312.5 (8%)

Cotton

161.5

47%

Seed

157.4

45%

FMCG

25

7%

Spinning

1

0%

Other

1.6

1%

Total Assets by SBU - 2012

BORROWINGS


26/30

BORROWINGS

35.048.5 47.4

66.3 62.5

55.08.8

30.4

59.751.6

-14.5

11.7

11.8

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

FY2009 FY2010 FY2011 FY2012 FY2013

USDmillion

Borrowings

Short term Overdrafts Long term

Total borrowings were USD125.9 m

9% lower than LY

91% is cheaper offshore loans High working capital requirements Does not include USD4.9 m of

shareholder loans to FMCG

Cotton72.057

Seed46.837

FMCG7.16

Total Borrowings FY2013

Cotton

80.0

60%

Seed

46.034%

FMCG

7.9

6%

Total Borrowings FY2012

PERFORMANCE STATISTICS


27/30

Gearing going up

Interest cover weakeningEquity/total assets ratio going down

Working capital a concern

low quick ratio: high inventory levels

Financial returns are volatile

Possible undervaluation of counter

PERFORMANCE STATISTICSFY2013 FY2012 FY2011

Interest cover (times) 0.96 1.61 2.10

Equity/total assets 0.39 0.40 0.46

Current ratio 1.23 1.30 1.45

Quick ratio 0.61 0.52 0.53

Return on total assets 8% 13% 14%

Return on equity (9%) 7% 11%

Return on capital employed 17% 26% 24%

180.

0

160.

0

120.

0

60.

0

29.

4

154.

9

114.

6

116.

5

124.

8

113.

3

7.8

(4.3)

8.96.2

(6.7) (8.0)

(6.0)

(4.0)

(2.0)

-

2.0

4.0

6.0

8.0

10.0

-

50.0

100.0

150.0

200.0

FY2009 FY2010 FY2011 FY2012 FY2013

S

illion

USDmillion

Market Cap vs Net Assets

Market cap Net assets AE

40.

5

57.

3

92.

0

137.7

125.

9

33.

4

22.

4

43.

8

47.

6

32.

7

1.2

2.6

2.1

2.9

3.9

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

S

illion

USDmillion

Borrowings

vs EBITDA

Borrowings

EBITDA

Borrowings/EBITDA (times)

KEY ISSUES Focus areas


28/30

KEY ISSUES Focus areas

Reduction of debt levels and annual interest bill

Improvement in input scheme recoveries

Cotton

Downward management of inventory levels

Collection of outstanding trade receivablesSeed

Raw material supply

Margin improvement

Funding and supply chain efficiencies

FMCG

Harness supply chain based synergies

Fund raising and correction of capital structure

Reduction of Groupwide debt and gearing levels

Group


29/30

THANK

YOU


30/30

DISCUSSIONAUDITED

GROUP RESULTS

for the year ended31 MARCH 2013

AICO FY 2013 Presentation.pdf

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