Ariston shareholder to convert US$5 million debt to equity


Ariston chief executive officer Paul Spear

ARISTON shareholders on Friday approved management`s plan to increase the authorised share capital from 1,6 billion to 2,0 billion, as the company seeks to convert a US$5 million debt owed to majority shareholder Origin Global Holdings to equity.

“About US$5 million of our US$15 million debt is owed to our major shareholder who has agreed to convert it into equity or otherwise deal with it. This process has been going on for some time and demonstrates confidence in our business,” chief executive officer Paul Spear told the AGM.

“We are having a little bit of trouble concluding the exercise but after the events of this past week, we are going to see some progress,” Spear added.

Ariston Holdings revenue in the year ended 30 September 2015 declined 6% to US$11,8 million from $12.5 million in 2014 owing to a mixed performance across its units. Subsequently, the group incurred an after tax loss of $1.7 million largely due to a $2.2 million increase in finance costs.

Spear said that the group was working on improving its overall liquidity, and several banks had shown interest in the company.

“We have some opportunities to improve our funding situation and there has been some significant cooperation from various banks and that exercise is ongoing. The interest rates we are seeing are a big improvement on what we have seen in the past, and that’s all very positive,” Spear said.

In 2016, the group is forecasting an increase in all its crops: potato would grow 748% from 2012, Tea 97% Macadamia 75% Poultry 150% Pome 33% Stone 191%.

Spear noted that the improvements in power supply since December have heard a positive impact on the group`s performance this year. The group also experienced some pricing pressures due to delayed civil servants salaries.

In terms of estates performance, Claremont had enjoyed the biggest impact from the capital raise in terms of the mix of crops produced. Spear noted that the company was in the process of improving its hydro-electric scheme at Claremont.

“At Claremont, we are in the process of rehabilitating the hydro-scheme which has been there for years, but out of action for the last three. Hopefully that will be done before next season and that will be a big help to us,” said Spear.

The estate (Claremont) had a record yield for stone fruit while clingstones production increased by 68%. Spear said. Last year, the group indicated that there is still room for improvement on quality and yields while benefits of investment in irrigation will increase in the seasons ahead. “The apple quality has now improved and yields are expected to increase by 20%.

Spear said the effects of the drought the country has experienced have been mitigated, as a number of their orchards are irrigated. However, the high temperatures associated with the patchy rains have had a negative impact on tea yields in the first quarter of the year.

Spear also noted that the weaker rand had resulted in South African produced apples getting into the country at very competitive prices. Ariston has in the past estimated that Zimbabwe consumes an average of 20,000t of apples annually against a national production of 5,000t, and that it intends to capture a significant portion of the local market.

At Kent which is close to 10% of the Group`s business, poultry was operating at 50% capacity as there is an ongoing land dispute, which the company hopes to resolve soon. On the horticultural side, Spear said that there were no dry land crops on account of unfavorable weather patterns.

He said that “We have heard a record yield for stone fruit and there is still some more to come and we are targeting around 900t next year from about 720t done this year,” he said.

Southdown Estate has been greatly affected by the late rainfall season as well as the high temperatures which affected the early production of tea. However, Spear said the certification by the Rain Forest Alliance will be a major advantage this year.

“There was a big breakthrough for us towards the end of the last calendar year when we passed our audit for rain forest alliance certification, and there has been an immediate impact in that the range of buyers prepared to buy our product has increased significantly, and the price has also increased,” Spear commented.

Spear noted that tea prices have improved to $200/t and while production would be the same as prior year, tea would have a bigger contribution to the bottom-line.

Demand for macadamia nuts continues to outstrip supply, with the group achieving record yields of the crop, while it has installed new sizing and sorting equipment.

Going forward, the company intends to focus on cost management, improving yields and quality to improve sales as well as restructuring its debt.

Auditors’ remuneration of $100,000 and directors` fees of $58,250 were approved at the AGM.
Grace Chella resigned from the board, and Friday’s AGM was the last one for Robbie Mupawose as board chair as he is also stepping down.FinX
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