| Mon 31 Mar 2008, 7:05 | | BCH - Best Cut Limited - Unuadited condensed financial results for the six |
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BCH
BCH
BCH - Best Cut Limited - Unuadited condensed financial results for the six
months ended 31 December 2007
BEST CUT LIMITED
(previously Integrear Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1989/001319/06)
JSE code: BCH & ISIN: ZAE000105391
("Best Cut" or "the company")
UNUADITED CONDENSED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2007
Note:
The unaudited results for the six months ended 31 December 2007 as presented
below consolidates the accounts of the Intergrear Limited cash shell and only
three trading months since 1 October 2007 of the Best Cut businesses acquired as
set out in the circular to Integrear Limited shareholders and the revised
listing particulars dated 4 October 2007.
The comparative numbers represent the audited results of the cash shell
Integrear Limited for the financial year ended June 2007 and are therefore not
comparable with the current results.
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited Audited
December June
2007 2007
R` R`
ASSETS
Non current assets 34 032 147 -
Equipment 34 032 147 -
Current assets 30 601 176 673 755
Trade and other receivables 21 806 935 244 235
Bank balances and cash 3 297 230 429 520
Inventory 5 497 012 -
Total assets 64 633 323 673 755
EQUITY AND LIABILITIES
Capital and reserves 26 467 077 (691 076)
Share capital 177 793 125 642
Share premium 27 593 927 4 735 530
Non-distributable reserves 48 558 48 558
Capital redemption fund 828 000 828 000
Accumulated (loss) (2 181 201) (6 428 805)
Non-current liabilities
Long-term borrowings: Interest bearing 6 607 904 1 072 917
Current liabilities 31 558 342 291 915
Trade and other payables 29 534 539 279 924
Bank overdraft 371 957 11 990
Taxation payable 1 281 810 -
Deferred tax liability 370 036 -
TOTAL EQUITY AND LIABILITIES 64 633 323 673 755
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Audited
December June
2007 2007
6 months 12 months
R` R`
Revenue 39 426 506 -
Cost of sales (24 566 173) -
Gross profit 14 860 333 -
Other income 119 187 -
Operating expenses 8 611 107 939 936
Profit from operations 6 368 413 (939 936)
Profit on write-off of loan - 39 563
Depreciation 395 271 -
Finance costs 94 814 (73 248)
Income from investments 21 122 57 005
Profit/(loss) before tax 5 899 450 (916 617)
Income tax 1 651 846 -
Net profit/(loss) for the period 4 247 604 (916 617)
Weighted average number of shares in
issue 127 356 658 12 564 190
Basic earnings per share (cents) 3,34 (7,30)
Headline earnings per share (cents) 3,34 (7,30)
CONDENSED CONSOLIDATED CASHFLOW STATEMENT
Unaudited Audited
December June
2007 2007
6 months 12 months
R` R`
OPERATING ACTIVITIES
Cash receipts from customers 17 982 993 -
Cash paid to suppliers and employees (3 922 666) (765 024)
Cash invested in stock (5 497 012) -
Cash generated from/(used in)
operations 8 563 316 (765 024)
Interest paid (94 814) (73 248)
Interest received 21 122 57 005
Net cash from/(used in) operating
activities 8 489 624 (781 267)
INVESTING ACTIVITIES
Purchases of equipment - maintaining
operations (34 427 418) -
Net cash (used in)/from investing
activities (34 427 418) -
FINANCING ACTIVITIES
Issue of shares 29 885 327 -
Listing costs (6 974 779) -
Repayment of share premium - (3 450 000)
Increase in borrowings 5 534 987 1 000 000
Net cash from/(used in) financing 28 445 535 (2 450 000)
activities
Net Increase in cash and cash 2 507 742 (3 231 267)
equivalents
Cash and cash equivalents at beginning 417 529 3 648 797
of the year
Cash and cash equivalents at end of 2 925 272 417 529
the period
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non-
Share Share Distributable
Capital Premium reserve
R` R` R`
Balance at 30 June 2005 125 642 685 530 828 000
Net profit for the period - - -
Balance at 30 June 2006 125 642 685 530 828 000
Net loss for the period - - -
Repayment of capital - (3 450 000) -
Investment written off - 7 500 000 -
Balance at 30 June 2007 125 642 4 735 530 828 000
Shares issued 52 151 29 833 176 -
Listing costs - (6 974 779) -
Net profit for the period - - -
Balance as at 31 December 2007 177 793 27 593 927 828 000
Capital Accumulated
Redemption (loss)/
Fund profit Total
R` R` R`
Balance at 30 June 2005 48 558 (485 574) 1 202 156
Net profit for the period - 2 500 127 2 500 127
Balance at 30 June 2006 48 558 2 014 553 3 702 283
Net loss for the period - (916 617) (916 617)
Repayment of capital - - (3 450 000)
Investment written off - (7 526 741) (26 741)
Balance at 30 June 2007 48 558 (6 428 805) (691 075)
Shares issued - - 29 885 327
Listing costs - - (6 974 779)
Net profit for the period - 4 247 604 4 247 604
Balance as at 31 December
2007 48 558 (2 181 201) 26 467 077
INTRODUCTION
The directors are pleased to announce the unaudited interim results of Best Cut
for the six months ended 31 December 2007, following the successful reverse
listing of the operations of the Best Cut Group into the Integrear Limited cash
shell on 14 January 2008 on the Development Capital Market ("DCM") board of the
JSE Limited. The results herein represent the trading of the acquired businesses
for the three months from 1 October 2007 only.
NATURE OF BUSINESS
The Best Cut Group`s operations are in Empangeni and Richards Bay respectively
in Kwa-Zulu Natal. The businesses of the group comprise an abattoir operation,
biltong factory, meat processing and wholesale operation as well as five meat
retail outlets. The processed products are distributed primarily in Kwa-Zulu
Natal.
ACQUISITION OF THE BEST CUT BUSINESSES
The transfer of the Best Cut businesses to the Best Cut Limited subsidiaries,
namely Best Cut Foods (Pty) Ltd and Best Cut Retail (Pty) Ltd, was effective on
1 October 2007. The process of transferring these businesses has commenced in
January 2008 following the listing of Best Cut Limited on the DCM of the JSE
Limited. The transferring of staff, supplier accounts, debtor accounts, bank
accounts, etc., is ongoing and should be completed by 31 March 2008.
The adjustment accounts in terms of the acquisitions are being completed and,
once signed off by the parties, will be published on SENS.
CAPITAL STRUCTURE
With the reverse listing of Best Cut into the Integrear Limited cash shell the
issued shares were subdivided from 12 564 190 ordinary shares to 90 000 000
ordinary shares with a par value of 0,1396 cents each.
On listing 37 356 658 shares were issued at 80 cents per share. The total cost
of listing amounted to R6,9 million, which costs were accounted for against
share premium.
FINANCIAL REVIEW
The unaudited interim financial results for the six months ended 31 December
2007 consolidates the accounts of the Integrear Limited cash shell and the three
trading months since 1 October 2007 in terms of the business acquired from Best
Cut companies as set out in the circular to Integrear shareholders and the
revised listing particulars ("RLP") dated 4 October 2007.
Best Cut generated a net profit after tax and head line earnings of R4,2 million
for the period under review.
This was 3% more than one third of the projected after tax profit as per the
RLP, being for a three month period, while the pro forma projections as
published on SENS included nine months of trading from 31 October 2007 to 30
June 2008.
The profit so generated can furthermore be compared with the accumulated results
for the seven acquired Best Cut businesses that generated a combined profit of
R5,3 million for the 12 months ended 30 June 2007, in terms of which financial
statements were disclosed along with the appropriate Independent Reporting
Accountant`s report in the Circular to shareholders dated 4 October 2007.
This result can be contrasted against the fact that December is one of the best
trading months, at the same time considering that the group`s expansion plans
could only be implemented after meeting of all suspensive conditions in terms of
the Best Cut business acquisitions and the subsequent listing that took place in
January 2008.
Considering the above, Best Cut generated revenue of R39,4 million for the
period under review. The group is currently expanding its abattoir activities as
well as its Gauteng and Eastern Cape distribution activities which will show a
marked increase in turnover.
Best Cut has a healthy cash position with cash balances exceeding R3,2 million
at 31 December 2007.
SEGMENTED ANALYSIS
The operations of Best Cut are clearly distinguishable as meat processing and
retail.
Revenue from meat processing for the period under review amounted to R27,2
million and revenue from retail amounted to R12,2 million. Profit after tax
generated from meat processing was R 3,88 million and R 0,49 million from
retail.
GAUTENG EXPANSION
Best Cut Foods has opened up a depot in Olifantsfontein, Gauteng to expand its
distribution services for the Group`s meat products across Gauteng. This
expansion will allow the Group to supply a greater number of stores owned by
existing national retail customers. Having a presence in Gauteng also allows for
a shorter response time and improved service to our Gauteng customers.
SALES FORCE EXPANSION
Following the opening of our Olifantsfontein distribution depot, the group has
set out to recruit and train a sales and marketing team that will expand the
Gauteng customer base. The focus is on serving more stores in our existing
customer base and acquiring more customers in the retail, wholesale, catering
and restaurant industries.
FACTORY EXPANSION
The Best Cut Foods factory in Empangeni is being expanded through the
acquisition of additional plant and equipment that will increase output in a
single shift from 26 tons per day to 42 tons per day.
INCREASES IN THE PRICE OF MEAT AND INTEREST RATES
Recent increases in the price of meat as a result of the high maize price, is
expected to be maintained for some time. This, however, as well as the increase
in interest rates, are not regarded as threats since protein, and in particular
processed meat is, not regarded a luxury item while the target market is less
sensitive to interest rate hikes.
TRANSFER TO THE ALTX
The AltX Advisory Committee has approved the transfer of Best Cut Limited to the
AltX. The process is underway which will see Best Cut`s listing move from the
DCM sector of the JSE Limited to the AltX.
APPOINTMENT OF SPONSOR
In support of Best Cut`s move to the AltX, the group has appointed Vunani
Corporate Finance as its Sponsor.
DIVIDENDS
No dividend has been declared during this reporting period.
BASIS OF PREPARATION OF THE UNAUDITED RESULTS
The condensed interim financial statements has been prepared in accordance with
International Financial Reporting Standards (IFRS) and the requirements of the
South African Companies Act. This report has been prepared in terms of IAS 34 -
"Interim Financial Reporting".
The accounting policies used to prepare this interim financial report are
consistent with those applied in the circular to share holders issued on 4
October 2007 and the RLP.
CORPORATE GOVERNANCE
The Board of Directors of Best Cut is committed to the promotion of good
Corporate Governance and the doctrine of transparency as set out in the King II
report. To ensure an effective corporate governance policy and framework and in
the interest of transparency, the Board of Directors of Best Cut initiated the
implementation of the recommendations of the King II report.
STATEMENT ON GOING CONCERN
The financial statements have been prepared on the going-concern basis since the
directors have every reason to believe that the company has adequate resources
in place to continue in operation for the foreseeable future.
For and on behalf of the Board
Nick Serfontein Ben Jones
Chief Executive Officer Financial Officer
31 March 2008
CORPORATE INFORMATION
Non executive directors: M Tshishonga (Chairperson), A Volschenk, M Lindeque, TJ
Hill
Executive directors: NF Serfontein (CEO), B Jones, AH Steenkamp
Registration number: 1989/001319/06
Registered address: 24A 18th Street, Menlo Park 0081
Postal address: PO Box 397, Menlyn, 0063
Company secretary: Morestat Corporate Services (Pty) Ltd
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited
Auditors: Sizwe Ntsaluba VSP
Sponsor: Vunani Corporate Finance
Date: 31/03/2008 07:05:04 Produced by the JSE SENS Department.
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