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CFO - Country Foods Limited - Update to shareholders
COUNTRY FOODS LIMITED
Incorporated in the Republic of South Africa
(Registration number 2005/018743/06)
Share code: CFO ISIN: ZAE000105052
("Country Foods" or "the company" or "group")
UPDATE TO SHAREHOLDERS
Following the quarterly update to shareholders released on SENS on 12 December
2008 relating to the suspension of Country Foods on 12 September 2008, Country
Foods remains in a critical cash position.
In terms of the unaudited management accounts, the company made an operating
loss for the year ended 30 September 2008 of R5.3 million.
The board is expecting to announce a loss on discontinued operations, relating
to the liquidation of Edulis Mushrooms (Proprietary) Limited ("Edulis"), for the
year ended 30 September 2008 of approximately R99 million after write-offs and
impairment. The loss in respect of continuing operations is R81.4 million.
As per the management accounts as at 30 September 2008 the company had a net
overdraft of R10.4 million and had current interest bearing borrowings of R10
million including the liability to Chester Finance of R7.3 million. The net
overdraft position as at 31 December 2008 is R8.1 million and the current
interest bearing borrowings are R9.2 million.
The group has referred a number of what it believes to be irregular material
contracts involving previous executive management to their legal advisers to
assess and advise on. A referral has also been made to the liquidators of Edulis
regarding one million euros of invoicing, in the period March to September 2007,
which would appear not to be supported by the delivery of goods.
The group is also further investigating the basis of recognition of income, non-
provisions and impairments in the accounts to September 2008.
Since the year end significant progress has been made in rationalising and
cutting costs throughout the group.
A number of initiatives relating to the restructuring and refinancing have been
pursued with shareholders, third parties and our major bankers. However
discussions are still in progress as it has proved difficult to resolve a
restructuring of the group as it remains in severe difficulty due to its
negative cash position.
The board estimates that equity financing immediately required is not less than
R12 million in order for the group to continue on a sustainable basis.
Johannesburg
12 February 2009
Designated Adviser
Merchantec (Proprietary) Limited
Date: 12/02/2009 16:12:13 Produced by the JSE SENS Department.
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