HUNY | Trading update for the year ended 31 Oct 13

Published: 06 December 2013

Introduction

Since the publication of the results for the six months ended 30 April 2013, there have been several developments, which in the opinion of the directors warrant that a trading update be published in order that shareholders are kept informed.

Developments

a)Sale of properties

The sale of certain non-core properties in Bulawayo and Norton, as part of the rationalization and restructuring of the group’s activities, has been concluded and as a result a profit on disposal of $2.1 million has been realized. Of this amount $1 million was recognized at the half year.

b)Biological Assets fair valuation

Consistent with the group’s accounting policy and in terms of International Accounting Standard 41 (IAS 41), Agriculture, the group undertook a valuation of its forestry plantations. Due to significant fire damage and extensive harvesting of compartments of mature timber, the valuation arrived at was lower than reported at 31 October 2012 by an amount of $426 000, which is accounted as a fair value loss through the profit and loss.

c)Overstatement of Hunyani Flexible Products Divisional Results

A tip-off was received during the year to the effect that divisional management had overstated results at Flexible Products Division. The board commissioned an investigation through the Group Internal Audit Department, the findings of which revealed that certain inventories had been overvalued by $567 000, of which $473 000 related to prior years. The results of the investigation revealed that the overstatement had been made by divisional management in order to reflect enhanced financial results. There are no indications that the group lost cash and or inventories. Disciplinary procedures have been implemented resulting in the deployment of new management.

d)Relocation and Restructuring Costs

The move of Printopak to Harare was authorized by the board last year and implemented in the current financial year. This process involved the purchase of a new printer, the downsizing and transfer of divisional manpower and the relocation of certain other plant and equipment from Bulawayo to Harare. These initiatives have resulted in a total cost of $866 000 being incurred in the current financial year.

Publication of Results

The net effect of the above transactions will be incorporated in the financial statements for the year ended 31 October 2013, which will be published in January 2014. These will also include any prior year adjustments relating to the misstatement of results at Flexible Products Division that may be necessary. The above figures are the subject of the annual audit process which is currently in progress. The fundamentals of the business remain sound, the company is liquid and results are in line with expectations.

HUNY Trading Update for the Year Ended 31 Oct 13

- HUNY

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