Balls up at All Joy
No pasting over allegations of non-payment and staying at Formula 1 hotel
ALL JOY FOODS attracted quite a following in the market at one time, which it lost after a couple of aborted takeovers, the disclosure of an apparent overstatement of historic profits and a lapse into losses. I don’t think its rehabilitation will be helped much by founder, chairman and CEO Marci Pather’s remarks about its latest results.
In an interview with a daily newspaper Pather attributed an improvement in headline earnings to an increase in revenue and the implementation of a cost-cutting turnaround strategy. That’s highly misleading: the company actually recorded a R148 000 loss pre-tax and the only reason there were any headline earnings is the R473 000 write-back of deferred tax provisions.
True, the six-month pre-tax loss is less, pro rata, than the R2,4m for the preceding 16 months. But to consider that a tax write-back can in any meaningful way turn a loss into a profit is to deceive yourself.
If you look at the alternative and sometimes cruel yardstick of cash flow, while there was an inflow at operating level overall during the six months, the cash position deteriorated by R800 000, pushing the defi- cit up to almost R10m. Not much joy there, I’m afraid.
However, it’s good to hear that Pather is positive concerning the acquisition of Mrs Govender All-in-One curry paste. Mrs Govender is a New South African version of Mrs Balls of chutney fame, starting her business with her husband in a one-room flat in Maritzburg in 1990 and building up an international clientele that included the ultimate accolade, Harrods.
When last heard of, Mrs Govender was threatening to sue All Joy, alleging that she had been paid neither the R125 000 cash component of the R250 000 buying price for her paste nor been issued the 192 000 shares meant to settle the other R125 000 (with the share price down to 50c, she’s losing money on them anyway) and complaining that when the company took them up to Johannesburg she and her husband were booked into a Formula 1 hotel – a fate, it must be agreed, hardly better than death.
Maybe Pather’s kind remarks about the product will encourage the parties to settle and avoid further unjust enrichment of Messrs Sue, Grabbitt & Run.