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AUDITED
GROUP RESULTS
IMPORTANT
This presentation is podcast in full and will be
published on our website www.aicoafrica.com
Please use the microphone and identify yourself before asking
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/ -
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AGENDA
OVERVIEW
OPERATIONS REVIEW AND OUTLOOK
FINANCIAL REVIEW
DISCUSSION
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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
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OPERATIONS REVIEW
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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
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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
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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
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PEOPLE
The Group has retained its key staff.
Staff development and training at all levels continue to be the
Groups priority.
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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
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FINANCIAL REVIEW
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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
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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
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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
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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
%
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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
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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%
Group Cotton Seed FMCG
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
7% higher than last year
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)
28% of revenue (LY: 19%)
IMPAIRMENT
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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 Cotton Seed FMCG
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
USD7.4 m (LY: USD4.3 m)
72% higher than last year
7% of revenue (LY: 4%)
High inventory & trade receivables
Seed
USD1.9 m (LY: USD2.3 m)
17% down on last year
8% of revenue (LY12%)
Lower borrowing/equity injection
FMCG
4% higher than last year
10% of revenue (LY: 8%)
PROFITS AND EPS
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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
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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
Group Cotton Seed FMCG
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
Group Cotton Seed FMCG
BALANCE SHEET SUMMARY
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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
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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
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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
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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
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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
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THANK
YOU
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DISCUSSIONAUDITED
GROUP RESULTS
for the year ended31 MARCH 2013