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Unaudited Results for the six months ended 31 December 2006

2 March 2007

Results for the six-month period to 31 December 2006 were much improved over the last six months as well as the comparative period. This was primarily due to resolution of the historic problems within the food trading businesses combined with solid performances at all other business units. The overall result however was impacted by the costs of implementing the BEE transaction with Akenton as well as costs associated with reducing the centralised management structure.

Revenue for the six months ended 31 December 2006 decreased by R16,5 million from R289,2 to R272,7 million mainly due to the downsizing of operations at the Food Trading division. Revenue in the Food Trading Division decreased by R41,6 million as a result of the elimination of unprofitable trading lines. Net profit attributable to shareholders however showed a pleasing increase to R11,1 million for the six months, representing an increase of 19,9% over the comparative period. Headline earnings increased by 53,5% over the comparative period.

Fully diluted earnings per share increased by 19% to 5,0 cents per share, whilst fully diluted headline earnings per share increased by 54,5% to 5,1 cents per share.

Cash flows generated by operations amounted to R19,2 million before taking into account R29,2 million utilised to expand the working capital requirement. Cash flows utilised in investing activities amounted to R3,8 million of which the majority were used for the acquisition of property, plant and equipment. The overall effect of these items along with R7,8 million generated by financing activities and tax and interest payments of R3,0 million and R3,2 million respectively, was a decrease in cash and cash equivalents amounting to R12,2 million since 30 June 2006. It is expected that cash generation will be stronger in the second half.

Operational overview

Trading-Distribution

The revenue in the Trading-Distribution segment of the business decreased by R22,8 million to R207,6 million mainly due to re-structuring of the Food Trading Division. Operating profit increased by 82,6% to R16,0 million as a result of solid trading performances at Goldenmarc and Foodserv coupled with a return to profitable trading in the Food Trading division. Foodserv enjoyed strong demand for its products on the back of industry growth and new initiatives, whilst Goldenmarc also achieved good sales growth on strong demand from the retailers.

The Food Trading division achieved modest operating profits but still incurred some costs on winding up historically non-profitable areas. The business unit is expected to continue to trade profitably in the next six months.

Services

Revenue in the Services segment of the business increased by R6,3 million to R65,1 million. Operating profits however were relatively flat at R10,2 million. This was due mainly to non-recurring operational issues relating to a specific contract at Interpark which was offset by a stronger performance at Sterikleen on the back of strong cost management. Levingers has achieved good revenue growth for the period with similarly improved results.

Empowerment

On 18 December 2006, a general meeting of shareholders approved the agreements with Akenton Services (Pty) Ltd as a BEE partner to take up a 25% shareholding in the operating subsidiaries of the group. The board is of the view that Akenton will add significant value, not only as a BEE partner but also for their innovative and dynamic outlook on business. All conditions precedent to the agreements have been fulfilled and the agreements have been fully implemented.

The group’s 49% investment in the Katanga group of companies continues to yield good results. Several new contracts have been secured in the Services segment. The group continues to enjoy strong relations with its empowerment partner, Ikamva Labantu.

Prospects

The Group has completed a re-structuring exercise and now operates the business units on a more de-centralised basis. This is expected to deliver some financial benefits within the Group head office as well as at the business units themselves. In addition, a culture of strong growth and cash generation has been set, and this is expected to have an impact in the coming period. The expected positive cash flow will enable the Group to finance acquisitions.

Trading-Distribution

Goldenmarc will continue to grow organically, and expects to consolidate some of the smaller operators in the industry, whilst Foodserv expects to achieve growth through improved capacity coupled with focus on a broader section of the market. The Food Trading Division is expected to grow off a low base.

Services

Both Sterikleen and Interpark expect to grow through aggressively pursuing new contracts as well as through acquisitions within their sectors of the industry. Levingers is expected to achieve growth through the roll out of further outlets.

Accounting policies

The condensed interim financial statements for the six months ended 31 December 2006 has been prepared in accordance with International Financial Reporting Standards (‘IFRS’) applying IAS34: Interim Financial Reporting. The accounting policies used to prepare the interim results are consistent with those applied in the previous period, except for a reclassification between sales and cost of sales for the six months to December 2005 to give effect to the full adoption of IFRS. There was no effect on the profit line.

Changes to the board

Chris Hall resigned as Chief Executive Officer of the group effective 31 December 2006. The board of directors thanks Chris Hall for his contribution to the Group.

Gordon Hulley who joined the group as Chief Operating Officer in February 2006 accepted the appointment to Chief Executive Officer of the Group with effect from 1 January 2007.

Dividend

As the group pursues opportunities to grow by acquisition and reduce interest- bearing borrowings, the directors have decided not to declare a dividend at this time.

For and on behalf of the Board
Gordon Hulley
Chief Executive Officer
Sandton
28 February 2007

For more information, please see Unaudited Results for the six months ended 31 December 2006 (PDF – 206KB)