Annual Report Harel Frère Ltd 2006 - Investing In Africa

35
managing director’s
review of operations (cont'd)
Performance
Wine & spirits
The consolidation of the Distell portfolio has comforted
Grays in its position as leader in quality wines and spirits,
with turnover showing a 25% growth over the previous
year. However, sales patterns in this sector were affected
by changes during the year to customs and excise duties
and tariffs, which caused a shift in consumer behaviour in a
number of product categories.
Local production
The upgrading of bottling facilities reported last year and
the commissioning of new equipment for bulk wine bottling
allowed us to cope with additional volumes of 35% in
comparison to 2005. The need for additional equipment in
order to handle further forecasted volume increases is being
assessed.
Personal care, hygiene and cosmetics
Following the take over of Gillette by Procter & Gamble
reported last year, Grays was given notice of termination of
its distribution agreement for September 2008. Alternative
sources of supply are being sought and a distribution
contract with “Revlon” from South Africa has recently been
concluded.
The above mentioned joint venture, Cosmebelle (Mauritius)
Ltd, which distributes locally a wide range of hygiene and
cosmetics products, is managed by Grays Inc. Ltd in terms of
a management contract. It is showing encouraging growth
and has posted a profit of MUR 0.4 M after tax for the year.
Household and consumer goods
New products were added to the range of consumer goods
introduced last year. This department of Grays Inc. Ltd has
performed well, resulting in healthy growth in its operating
results. As for the household category, which represents
20% of the department activity, it has not been performing
up to expectations. Management is taking corrective
measures and is confident in this department's future
prospects.
"Vingt sur Vin" outlets (VSV)
The "boutique" type retail outlets owned by Grays Inc. Ltd
fared well during the year and the VSV outlet situated in the
Floréal shopping mall was revamped, offering as a result a
wider range on an increased floor space. All four outlets
have all shown interesting growth and the company intends
to open new ones when adequate locations are identified in
other regions.
Harel Frères Limited Annual Report ‘06