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BCH
BCH
BCH - Best Cut Limited - Unaudited condensed consolidated interim results
for the six
Best Cut Limited
months ended 31 December 2008
(Incorporated in the Republic of South Africa)
(Registration number: 1989/001319/06
Share Code: BCH & ISIN: ZAE000105391
("Best Cut","the company" or "the group")
Unaudited condensed consolidated interim results for the six months ended 31
December 2008
Condensed Consolidated Income Statement
Unaudited Unaudited Audited
6 months 3 months 9 months
ended ended ended
Dec 2008 Dec 2007 June 2008
R`000 R`000 R`000
CONTINUING OPERATIONS
Revenue 40 810 24 371 60 801
Cost of sales (26 504) (14 692) (36 918)
Gross profit 14 306 9 679 23 883
Other income 2 520 99 156
Operating expenses (14 331) (5 495) (18 195)
Profit from operations before
depreciation and amortisation 2 495 4 283 5 844
Depreciation and amortisation (587) (196) (983)
Profit from operations before
net finance costs 1 908 4 087 4 861
Finance costs (1 514) (94) (1 367)
Finance income - 11 39
Profit before tax 394 4 004 3 533
Taxation (401) (1 083) (1 179)
(Loss)/profit for the period from
continuing operations (7) 2 921 2 354
Discontinued operations
(Loss)/profit from discontinued
operations (1 053) 1 327 1 174
(Loss)/profit for the period (1 060) 4 248 3 528
Weighted average number of shares
in issue 127 357 108 678 118 017
(Loss)/earnings per share - basic and (0,83) 3,91 2,99
diluted
Headline (loss)/earnings per share -
basic and diluted (2,80) 3,91 2,99
Headline earnings reconciliation
(Loss)/earnings attributable to
ordinary shareholders (1 060) 4 428 3 528
Shareholder`s loan written off (2 500) - -
Headline (loss)/earnings (3 560) 4 428 3 528
Condensed Consolidated Balance Sheet
Unaudited Unaudited Audited
Dec 2008 Dec 2007 June 2008
R`000 R`000 R`000
ASSETS
Non-current assets 30 032 34 032 41 527
Property, plant and equipment 25 912 34 032 37 885
Intangible assets 4 120 - 3 642
Current assets 54 098 30 601 29 508
Trade and other receivables 14 785 21 807 14 756
Loans receivable - - 8 334
Inventory 2 909 5 497 4 919
Cash and cash equivalents 2 826 3 297 1 499
Assets classified as held for sale 33 578 - -
TOTAL ASSETS 84 130 64 633 71 035
EQUITY AND LIABILITIES
Capital and reserves 24 688 26 467 25 748
Share capital 178 178 178
Share premium 27 594 27 594 27 594
Non-distributable reserves 828 828 828
Capital redemption fund 48 48 48
Accumulated loss (3 960) (2 181) (2 900)
Non-current liabilities 24 262 6 978 22 678
Long-term borrowings 14 102 6 608 9 991
Shareholder`s loans 8 683 - 11 183
Deferred tax 1 477 370 1 504
Current liabilities 35 180 31 188 22 609
Trade and other payables 14 334 29 535 13 455
Short-term borrowings 4 193 - 7 787
Taxation payable 103 1 282 103
Bank overdraft 20 371 1 264
Liabilities classified as held for
sale 16 530 - -
TOTAL EQUITY AND LIABILITIES 84 130 64 633 71 035
Net asset value per share (cents) 19,4 20,8 20,2
Net tangible asset value per share
(cents) 16,1 20,8 17,4
Number of shares in issue (000) 127 357 127 357 127 357
Disposal groups and other assets classified as held for sale
Meat
Total Retail processing
Dec 2008 Dec 2008 Dec 2008
R`000 R`000 R`000
Assets held for sale
Property plant and equipment 12 049 7 945 4 104
Trade and other receivables 16 140 8 654 7 486
Inventory 2 636 1 523 1 113
Cash and cash equivalents 2 753 1 477 1 276
33 578 19 599 13 979
Liabilities directly associated with
assets held for sale
Deferred taxation liabilities 428 286 142
Trade payables and accruals 15 995 11 964 4 031
Bank overdraft 107 - 107
16 530 12 250 4 280
Condensed Consolidated Cash Flow Statement
Unaudited Unaudited Audited
6 months 3 months 9 months
ended ended ended
Dec 2008 Dec 2007 June 2008
R`000 R`000 R`000
OPERATING ACTIVITIES
Cash receipts from customers 87 170 31 478 95 993
Cash paid to suppliers and employees (87 740) (22 380) (89 174)
Cash (utilized)/generated by
operations (570) 9 098 6 819
Finance income 5 21 45
Finance costs (1 526) (95) (1 379)
Taxation paid - (1) -
Net cash flow from operating
activities (2 091) 9 023 5 485
INVESTING ACTIVITIES (1 141) (235) (28 430)
Investment in subsidiaries - - (19 500)
Additions to fixed assets - expand
operations (1 141) (235) (8 930)
FINANCING ACTIVITIES 8 449 (6 280) 22 762
Increase/(decrease)in borrowings 116 (6 280) 27 886
Share issue - - 10 184
Loans receivable 8 333 - (8 333)
Listing costs - - (6 975)
Net increase/(decrease) in cash and
cash equivalents 5 217 2 508 (183)
Cash and cash equivalents at the
beginning of the period 235 418 418
Cash and cash equivalents at end of
the period 5 452 2 926 235
Cash flows from discontinued
operations
Cash flows from operating activities (767) 2 797 1 810
Cash flows from investing activities (199) (73) (129)
Cash flows from financing activities 3 006 (2 198) (3 006)
Increase/(decrease) in cash and cash
equivalents from
discontinued operations 2 040 526 (1 325)
Condensed Consolidated Statement of changes in equity
Non- Capital Accumu-
distri- redemp- lated
Share Share butable tion (loss)/
capital premium reserve fund profits Total
R`000 R`000 R`000 R`000 R`000 R`000
Balance at 30 June
2007 126 4 736 828 48 (6 429) (691)
Shares issued 52 29 833 - - - 29 885
Listing costs - (6 975) - - - (6 975)
Net profit for the
period - - - - 4 248 4 248
Balance as at
31 December 2007 178 27 594 828 48 (2 181) 26 467
Net loss for the
period - - - - (719) (719)
Balance at 30 June
2008 178 27 594 828 48 (2 900) 25 748
Net loss for the
period - - - - (1 060) (1 060)
Balance as at
31 December 2008 178 27 594 828 48 (3 960) 24 688
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
6 months 3 months 9 months
ended ended ended
Dec 2008 Dec 2007 June 2008
R`000 R`000 R`000
Revenue
Continuing operations 40 810 24 371 60 801
Meat processing 43 349 25 882 64 049
Retail - - -
Intersegment revenues (2 539) (1 511) (3 248)
Discontinued operations 62 510 15 056 36 027
Meat processing 62 744 13 306 35 090
Retail 20 016 10 315 29 221
Intersegment revenues (20 250) (8 565) (28 284)
Profit/(loss) before taxation
Continuing operations 394 4 004 3 533
Meat processing 394 4 004 3 533
Retail - - -
Discontinued operations (1 053) 1 895 1 602
Meat processing (479) 796 486
Retail (574) 1 099 1 116
Operating assets
Continuing operations 46 443 64 633 71 035
Meat processing 46 443 51 798 51 337
Retail - 12 013 8 708
Intersegment revenues - 822 10 990
Discontinued operations 37 687 - -
Meat processing 23 708 - -
Retail 13 979 - -
Discontinued operations
The (loss)/profit from discontinued operations is analysed as follows:
Total
Unaudited Unaudited Audited
Dec 2008 Dec 2007 June 2008
6 months 3 months 9 months
R`000 R`000 R`000
Revenue 62 510 15 056 36 027
Cost of sales (50 134) (9 875) (22 010)
Gross profit 12 376 5 181 14 017
Other income - 20 31
Operating expenses (13 422) (3 115) (11 826)
Profit from operations before
depreciation and amortisation (1 046) 2 086 2 222
Depreciation and amortisation - (200) (614)
Profit from operations before net
finance costs (1 046) 1 886 1 608
Finance costs (12) (1) (12)
Finance income 5 10 6
Profit before tax (1 053) 1 895 1 602
Taxation - (568) (428)
(Loss)/profit for the period from
continuing operations (1 053) 1 327 1 174
Retail
Unaudited Unaudited Audited
Dec 2008 Dec 2007 June 2008
6 months 3 months 9 months
R`000 R`000 R`000
Revenue 15 119 7 433 19 327
Cost of sales (10 954) (4 521) (11 440)
Gross profit 4 165 2 912 7 887
Other income - 6 -
Operating expenses (4 736) (1 729) (6 504)
Profit from operations before
depreciation and amortisation (571) 1 189 1 383
Depreciation and amortisation - (93) (269)
Profit from operations before net
finance costs (571) 1 096 1 114
Finance costs (7) - (4)
Finance income 4 3 6
Profit before tax (574) 1 099 1 116
Taxation - (329) (142)
(Loss)/profit for the period from
continuing operations (574) 770 974
Meat processing
Unaudited Unaudited Audited
Dec 2008 Dec 2007 June 2008
6 months 3 months 9 months
R`000 R`000 R`000
Revenue 47 391 7 623 16 700
Cost of sales (39 180) (5 354) (10 570)
Gross profit 8 211 2 269 6 130
Other income - 14 31
Operating expenses (8 686) (1 386) (5 322)
Profit from operations before
depreciation and amortisation (475) 897 839
Depreciation and amortisation - (107) (345)
Profit from operations before net (475) 790 494
finance costs
Finance costs (5) (1) (8)
Finance income 1 7 -
Profit before tax (479) 796 486
Taxation - (239) (286)
(Loss)/profit for the period from
continuing operations (479) 557 200
COMMENTARY
INTRODUCTION
The directors are pleased to announce the unaudited interim financial results
for the six months ended 31 December 2008. These financial results have not
been audited or reviewed by the Group`s auditors. The condensed consolidated
interim financial results were approved by the Board on 30 March 2009.
NATURE OF BUSINESS
Best Cut`s main operations are meat processing and wholesale and retail sales
of a variety of processed and fresh meat products. The continuing operations
will be primarily that of meat processing and distribution.
Basis of preparation
The unaudited condensed interim financial information has been prepared in
accordance with International Financial Reporting Standards (IFRS),
the Listings Requirements of the the JSE Limited and the requirements of the
South African companies Act 1973 as amended. This report has been prepared in
accordance with IAS34: Interim Financial Reporting. The accounting policies
are consistent with those used in the annual financial statements for 30 June
2008.
Discontinued operations
Best Cut has entered into an agreement on 3 December 2008 to cancel the sale
agreement entered into on 13 June 2007. Further details are included in the
SENS announcement dated 29 December 2008. In terms of this agreement certain
of the businesses acquired are to be taken back by the vendor. The rational
for the transaction is that the businesses are at an early stage of
development and have thus required and still require constant capital
investment which has placed strain on the cash resources of Best Cut.
Furthermore, Best Cut has been unable to place the shares issued to the
vendor, in terms of the sale agreement, with other investors, therby
precluding the vendor from realising the purchase consideration for cash. A
circular will be issued to shareholders shortly in this regard.
The results of operations and financial position of such businesses have been
disclosed as discontinued operations and assets classified as held for sale
in the income statement and balance sheet respectively, with the summarised
cash flows being disclosed under the cash flow statement.
Borrowings
During the period under review the short-term portions of the loans payable
to Natal Landbou Ko-op BPK amounting to R8,5 million including interest were
repaid. Best Cut has entered into a financing agreement with Journey Finance
whereby certain assets were sold and leased back. This has resulted in an
increase in borrowings of R8,4 million. Best Cut has also entered into a
factoring agreement with Merchant Factors under which a significant portion
of the debtors book has been factored in order to improve the timing of cash
flows. A shareholder`s loan amounting to R2.5 million was written off through
the income statement.
Financial review - continuing operations
The pronounced effect of the global economic crises and its impact on trading
conditions has had a significant negative impact on the
Group`s performance.
Revenue amounted to R41 million for the period under review. Meat and input
prices increased significantly during the period under review resulting in an
increased cost of sales. Profit from operations before finance costs amounted
to
R1,9 million. The Group paid finance costs amounting to R1,5 million, the
bulk of which relates to the Natal landbou Ko-op loans. The Group made a net
profit before tax of R394,000.
Operational Review
The operations of the Group are going through a restructuring exercise which
impacts operational management structures, logistics and distribution, cash
cycle management and financial controls. The goal is to improve operational
efficiency, controls and profitability.
Changes to the Board
The following changes to the Board of Directors took place during the period,
N Serfontein resigned as non-executive director effective 26 January 2009.
JV Swart was appointed as non-executive director on 26 January 2009.
R Donald resigned as executive director effective 23 March 2009. N Makhari
was appointed as non-executive director effective 27 March 2009.
Dividends
No dividend has been declared for this reporting period.
Auditors
The Group`s auditors, Van Dyk & Associates have as yet not been approved by
the JSE in terms of the new JSE requirements. The company is in the process
of appointing new auditors.
Renewal of cautionary announcement
Shareholders are referred to the previous cautionary announcements, the last
of which was dated 13 February 2009, and are advised that negotiations are
still in progress which, if successfully concluded, may have an effect on the
price of Best Cut`s securities. Accordingly shareholders are advised to
continue to exercise caution when dealing in the company`s securities until a
further announcement is made.
Going concern
The interim financial results 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 in the foreseeable
future.
By order of the Board
MM Tshishonga
Chairperson
31 March 2009
CORPORATE INFORMATION
Non-executive directors: M Tshishonga (Chairperson), JV Swart,
N Makhari
Executive director: TJ Hill (Chief Executive Officer)
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) Limited
Transfer secretaries: Computershare Investor Services 2004
(Pty) Limited
Auditors: Van Dyk & Associates
Sponsor: PSG Capital (Pty) Limited
www.bestcut.co.za
Date: 31/03/2009 17:36:24 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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