| Wed 30 Sep 2009, 15:05 | | MKX - Milkworx - Abridged Reviewed Financial Results For The Year Ended |
|
MKX
MKX
MKX - Milkworx - Abridged Reviewed Financial Results For The Year Ended
30 June 2009
MILKWORX LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/011074/06)
Share code MKX ISIN ZAE000058020
("Milkworx" or "the company")
ABRIDGED REVIEWED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2009
Balance Sheets
Reviewed Audited
30 June 09 30 June 08
R`000 R`000
ASSETS
Non-current assets 15 017 21 989
Property, plant and equipment 13 280 16 622
Intangible assets 57 110
Deferred taxation 1 680 5 257
Current assets 12 346 10 527
Inventories 5 922 4 862
Trade and other receivables 3 314 5 541
Cash and cash equivalents 3 110 124
Total assets 27 363 32 516
EQUITY AND LIABILITIES
Capital and reserves 17 436 11 747
Share capital 11 686 5 952
Share premium 39 326 30 863
Retained income/(loss) (33 636) (25 068)
Share based payment reserve 60 -
Non-current liabilities 8 5 084
Borrowings - 549
Shareholders loans 8 4 535
Current liabilities 9 919 15 685
Trade and other payables 6 188 9 757
Bank overdraft 2 887 3 000
Provision 351 473
Interest bearing liabilities 493 2 455
Total equity and liabilities 27 363 32 516
Net asset value per share (cents) 1.49 1.97
Net tangible asset value per share 1.49 1.95
(cents)
Shares in issue at period end (`000) 1 168 665 595 248
Income Statements
Reviewed Audited
12 Months 12 Months
ended ended
30 June 09 30 Jun 08
R`000 R`000
Revenue 67 997 59 749
Cost of sales (53 026) (53 236)
Gross profit 14 971 6 513
Other income 307 474
Operating expenses (19 046) (15 733)
Loss before interest and taxation (3 768) ( 8 746)
Interest received 2 2
Finance charges (1 225) (1 197)
Loss before taxation (4 991) ( 9 941)
Taxation (3 577) 2 452
Loss for the period (8 568) ( 7 489)
Reconciliation between loss and
headline loss:
Loss for the period (8 568) ( 7 489)
(Profit) / Loss on disposal of assets (15) 160
Impairment of goodwill - 568
Impairment of assets 913 -
Headline loss for the period (7 670) (6 761)
Earnings per share information:
Loss per share (cents) (1.10) (1.17)
Diluted loss per share (cents) (1.09) (1.17)
Headline loss per share (cents) (0.98) (1.06)
Diluted Headline loss per share (cents) (0.98) (1.06)
Weighted average number of shares 782 379 637 765
(`000)
Diluted weighted average number of 784 732 637 765
shares (`000)
Cash Flow Statements
Reviewed Audited
12 Months ended 12 Months
ended
30 June 09 30 Jun 08
R`000 R`000
Cash flows from operating activities (4 101) (977)
Cash flows from / (utilised in) 42 (656)
investing activities
Cash flows from financing activities 7 159 2 145
Net movement in cash and cash 3 100 512
equivalents
Cash and cash equivalents at beginning (2 877) (3 389)
of year
Cash and cash equivalents at end of (223) (2 877)
year
Statements of Changes
in Equity
Share Share Share Accumulat Total
based ed
capital premium payment Profit R`000
reserve
R`000 R`000 R`000 R`000
Balance at 1 July 5 752 30 463 - (17 579) 18 636
2007
Net loss for the - - - (7 489) (7 489)
period
Issue of shares 200 400 - - 600
Balance at 1 July 5 952 30 863 - (25 068) 11 747
2008
Net loss for the - - - (8 568) (8 568)
period
Issue of shares 7 821 8 854 - - 16 675
Share issue expenses - (188) - - (188)
Repurchase of shares (2 087) (203) - - (2 290)
Share option reserve - - 60 - 60
Balance at 30 June 11 686 39 326 60 (33 636) 17 436
2009
Segment results
Operating Head office Group
12 Months 12 Months 12 Months
Ended Ended Ended
30 June 09 30 June 09 30 June 09
R`000 R`000 R`000
Income Statement
Revenue
External sales 67 997 - 67 997
Total Revenue 67 997 - 67 997
Results (940) (2 829) (3 769)
Interest received 2
Interest expense (1 224)
Taxation (3 577)
Results (8 568)
Balance Sheet
Segment assets 24 052 3 311 27 363
Consolidated assets 27 363
Segment liabilities (6 473) (3 454) (9 927)
Consolidated liabilities (9 927)
Net capital additions (934) - (934)
Depreciation (2 454) (7) (2 461)
Other Income 306 1 307
Segment results
Operating Head office Group
12 Months 12 Months 12 Months
Ended Ended Ended
30 June 08 30 June 08 30 June 08
R`000 R`000 R`000
Income Statement
Revenue
External sales 59 419 - 59 419
Total Revenue 59 419 - 59 419
Results (8 177) (568) (8 745)
Interest received 2
Interest expense (1 198)
Taxation 2 452
Results (7 489)
Balance Sheet
Segment assets 27 245 5 270 32 515
Consolidated assets 32 515
Segment liabilities (15 796) (4 973) (20 769)
Consolidated liabilities (20 769)
Net capital additions (112) - (112)
Depreciation (2 566) (7) (2 573)
Other Income 446 3 449
Commentary
Group Review
Milkworx manufactures and distributes ice cream and other related products, both
under its own brands, Avondale and Creamstar and as a contract manufacturer for
various multinational companies. Milkworx recently expanded its product range
to include fresh milk, yoghurt, drinking yoghurt, maas, dairy blends and fresh
cream.
Basis of preparation
The reviewed abridged financial statements have been prepared in accordance with
International Accountings Standards (IAS) 34: Interim Financial Reporting and
the JSE Listing Requirements. The accounting policies of the company comply in
all material respects with International Financial Reporting Standards ("IFRS")
and the Companies Act, 1973. The accounting policies and methods of measurement
and recognition are consistent with those applied in the previous financial
period.
Financial and operational overview
The loss before taxation for the twelve month period ended 30 June 2009 showed a
significant improvement in the company`s performance from the past year, with
losses decreasing by 49.8% for the period under review. The after tax effect
shows a slight increase in losses due to the fact that the deferred tax asset of
R3 557 291 arising from previous losses incurred, has been written back.
The improved pre-tax losses are due to increased turnover of 13.8% and, a 129.9%
increase in gross profit. The company also experienced an improvement of 6% in
the loss per share and a 7.5% improvement in headline loss per share compared to
the corresponding year ended 30 June 2008.
The increase in gross profit was attributable to the easing in volatility in raw
material prices and an increased demand in contract packing.
Operating expenses increased by 21.1%. After corporate and associated fees (R1
898 000) relating to the restructuring of the company is eliminated the
operating expenditure increased by 9% year on year. These restructuring fees
include corporate consultations, accounting fees, circular fees, guarantee fees,
underwriting fees and printing fees.
A cash inflow from shares issued to a strategic investor, a capitalisation of
shareholders loans and a rights issue were utilised to repurchase share in the
company, increase inventory levels and decrease trade and other payable levels.
The balance of the proceeds from the share issues will be utilised to facilitate
the merging of the two ice cream factories.
Strategic focus and prospects
The short term strategic goal as set out by the board includes efforts to
improve EBITDA by:
consolidating the Avondale & Cream Star plant to reduce overhead costs,
28% reduction in staff,
outsourcing of certain services and
the sale of depots as going concerns which in effect will retain the revenue for
the company, but will reduce the overhead costs and administrative burden.
The long term strategic goal is to increase the market share by:
adding more distribution channels beyond the current Gauteng market sector,
developing product attributes and in effect improve the quality of some product
lines, increase the advertising expenditure to ensure adequate market exposure
and to introduce new product lines to diversify the current product range in
order to counter the seasonality of the business.
Continuous improvements
The board is very confident that with the consolidation of the Avondale & Cream
Star plant together with the necessary upgrade of the new facility, that the
plant would pass the HACCP & AIB audits with a new level of standard, which
could increase current contract packaging business prospects.
The board also plans a capital investment in new technology for the production
of long life products, which will broaden the market sector even further into
Africa.
Post balance sheet events
Subsequent to year end a fire broke out at the Creamstar facility due to an
electrical fault. The estimated damage to stock is R 948,000, while cost
related to the fire (Fire Department and cleaning up of the store) is estimated
at R75,000. The company is insured against fire and it is expected that the full
amount of the claim less any excess fees will be recovered from the insurers.
In addition, a circular to shareholders has been finalised relating to the
proposed acquisition of Ububele Holdings Limited by way of a reverse listing.
Rationale for the offer
The directors of both Milkworx and Ububele have identified key areas of synergy
between the two companies, including distribution and marketing networks,
production facilities and geographic footprint. It is believed that the
acquisition of Ububele by Milkworx will result in significant shareholder value
being unlocked for shareholders of both companies. The transaction will be a
reverse listing in terms of the JSE Listings Requirements.
Terms of the offer
In terms of an agreement signed on 2 July 2009 and a reinstatement and addendum
dated 7 September 2009, Milkworx has made an offer to acquire 100% of the issued
share capital of Ububele on the basis of a share swap of 3 465 Milkworx shares
for every 100 Ububele shares held, subject to a minimum of 90% of existing
Ububele shareholders accepting the offer. The value of the transaction is
estimated at a maximum of R173 639 814, depending on the number of Ububele
shareholders whom accept the offer, and the maximum number of new Milkworx
shares to be issued in terms of the offer is 7 549 557 142, or 650% of the
existing issued share capital of Milkworx.
Subsequent to the successful implementation of the proposed transaction, the
current operations of Milkworx will become a division of Ububele.
Effective date
The effective date of the transaction is 1 July 2009.
Conditions precedent to the offer
The transaction is subject to the following conditions precedent:
The written irrevocable acceptance of the offer by a minimum of 90% of the
current Ububele shareholders by 31 October 2009;
The approval of the offer to Ububele by Milkworx shareholders in general meeting
by 31 October 2009.
The JSE Alternative Exchange Advisory Committee has approved the suitability of
Ububele for listing on the AltX.
Warranties
Normal warranties for a transaction of this nature have been given. In addition,
SA Roux, whom is currently a director of Milkworx, will remain on the board of
the company after the successful implementation of the proposed transaction,
with responsibility for the performance and profitability of Milkworx, which
shall be a division of the new company following the successful implementation
of the proposed transaction. Mr. Roux has provided personal profit warranties on
behalf of Milkworx to Ububele as follows:
Year ended Annual Operating Profit Cumulative Operating Profit
30 June 2010 R1 500 000 R1 500 000
30 June 2011 R2 000 000 R3 500 000
30 June 2012 R2 500 000 R6 000 000
In addition, Milkworx has guaranteed the book debts of the company.
Ububele is involved in the supply of a variety of agricultural related products
to the agricultural sector as well as the beneficiation and distribution of food
products. For the year ended 28 February 2009, Ububele achieved turnover of
R390 million and attributable earnings of R13 million.
A profit forecast on the new combined group is in the process of being finalised
and will be published on SENS in due course.
Board changes
During the period under review R Viviers was appointed to the board to replace
the previous financial director, P van Heerden who resigned in April 2009.
HW Cloete ,MP Mocke and JT Kleinhans were appointed to the board as non-
executive directors in anticipation of the acquisition of Ububele and line with
a request from the JSE Limited. Dr HR Grimmer and J Usher both resigned as
directors of Milkworx Limited. These appointments and resignations were with
effect from 7 September 2009.
Auditors
The abridged results have been reviewed by PKF Pretoria Inc and the unmodified
review opinion is available for inspection at the registered office of the
company.
Dividends
No dividends were recommended or declared for the period under review.
Share issues and repurchases
During the year under review, the following shares were issued:
Issued and repurchased in terms of a specific authority
266 666 667 ordinary shares of R 0,01 were issued at R 0,025 per share
220 657 277 ordinary shares of R 0,01 were issued at R 0,0213 per share
61 039 084 ordinary shares of R 0,01 were issued at R 0,0213 per share
233 733 088 ordinary shares of R 0,01 were issued at R 0,02 per share by means
of a fully underwritten rights issue 208 678 199 ordinary shares of R 0,01 were
repurchased at R 0,011 per share
For and on behalf of the board
Stephan Roux
Chief Executive Officer
30 September 2009
Directors
SA Roux (Chief Executive Officer), T Dajcar, R Viviers
(Financial Director), A Stander*, HW Cloete*
MP Mocke*, JT Kleinhans*.
(* Non-executive)
Company Secretary Registered Office
Fusion Corporate Secretarial 290 Slegtkamp Street,
Services (Pty) Ltd Hermanstad, Pretoria
Designated Advisor Transfer Office
Arcay Moela Sponsors (Pty) Ltd Computershare Investor
Services (Pty) Ltd
Date: 30/09/2009 15:05:16 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.
