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UBU
UBU
UBU - Ububele Holdings Limited - Interim results for the six months ended 31
December 2010
Ububele Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1998/011074/06)
Share code: UBU
ISIN code: ZAE000144739
("Ububele" or "the Company" or "the Group")
Interim results for the six months ended 31 December 2010
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 31 December 30 June
2010 2009 2010
R R R
Gross revenue 324 158 124 295 633 833 481 973 805
Cost of sales (226 744 984) (209 707 583) (340 254 716)
Gross profit 97 413 140 85 926 250 141 719 089
Operating expenses (80 437 352) (70 866 504) (137 107 360)
Other income 6 291 069 5 594 624 11 159 638
Operating profit 23 266 857 20 654 370 15 771 367
Investment revenue 1 988 568 2 124 101 6 660 760
Finance costs (3 731 335) (3 421 992) (5 337 010)
Profit before taxation 21 524 090 19 356 479 17 095 117
Taxation (4 909 620) (1 125 446) (1 209 432)
Profit for the period 16 614 470 18 231 033 15 885 685
Attributable to:
Equity holders of the 11 380 407 15 420 306 9 873 096
parent
Non-controlling 5 234 063 2 810 727 6 012 589
interests
Other comprehensive income - - 1 140 590
Net change in fair - - 1 140 590
value of available-for-
sale financial asset
Total comprehensive income 16 614 470 18 231 033 17 026 275
for the period
Attributable to:
Equity holders of the 11 380 407 15 420 306 11 013 686
parent
Non-controlling interests 5 234 063 2 810 727 6 012 589
Reconciliation of headline
earnings:
Comprehensive income 11 380 407 15 420 306 9 873 096
attributable to ordinary
shareholders
(Profit) / loss on (104 480) (129 436) 85 493
disposal of property,
plant and equipment
Bargain purchase on (2 693 194) - -
business combinations
Profit on disposal of - - (431 957)
investment
Impairment of investment - - 4 365 935
Headline earnings 8 582 733 15 290 870 13 892 567
attributable to ordinary
shareholders
Number of ordinary shares in 177 167 824 174 835 003 177 090 820
issue
Weighted number of ordinary 177 161 069 160 032 868 167 414 748
shares in issue
Diluted weighted average 177 161 069 160 032 868 167 414 748
number of ordinary shares
Earnings per ordinary share 6.42 9.64 5.90
(cents)
Headline earnings per 4.84 9.55 8.30
ordinary share (cents)
Diluted earnings per 6.42 9.64 5.90
ordinary share (cents)
Diluted headline earnings 4.84 9.55 8.30
per ordinary share (cents)
Condensed consolidated statement of financial position
Unaudited Audited
31 December 2010 30 June 2010
R R
Assets
Non-current assets 151 144 990 145 124 218
Property, plant and equipment 25 494 410 23 692 743
Goodwill 80 085 181 80 085 181
Intangible assets 28 763 506 23 710 249
Deferred taxation 11 149 368 14 396 117
Available-for-sale financial assets at 5 652 525 3 239 928
fair value
Current assets 361 151 972 132 939 580
Trade and other receivables 246 895 866 75 098 265
Inventories 90 329 429 49 609 325
Loans receivable 852 976 99 078
Cash and cash equivalents 23 073 701 8 132 912
Total assets 512 296 962 278 063 798
Equity and liabilities
Capital and reserves 150 371 082 144 667 031
Share capital and premium 99 749 429 99 649 329
Other reserves 1 388 800 1 388 800
Accumulated profit 38 271 415 26 891 008
139 409 644 127 929 137
Non-controlling interest 10 961 438 16 737 894
Non-current liabilities 65 822 721 11 510 359
Loans payable 5 573 1 405 473
Interest-bearing borrowings 65 817 148 6 312 064
Deferred taxation - 3 792 822
Current liabilities 296 103 159 121 886 408
Trade and other payables 257 961 083 62 495 697
Loans from shareholders 5 599 210 2 832 601
Loans payable 14 890 010 36 306 267
Taxation 6 776 730 2 845 178
Interest-bearing borrowings 3 227 072 2 625 960
Derivative financial instruments - 44 391
Bank overdraft and acceptances 7 649 054 14 736 314
Total equity and liabilities 512 296 962 278 063 798
Condensed consolidated statement of changes in equity
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 31 December 30 June
2010 2009 2010
R R R
Balance at beginning of the 144 667 031 102 227 424 102 227 424
period
Share capital and premium 99 649 329 67 774 997 67 774 997
Other reserves 1 388 800 248 210 248 210
Retained earnings 26 891 008 17 017 912 17 017 912
Non-controlling interest 16 737 894 17 186 305 17 186 305
77 000 Shares issued 100 100 29 249 449 31 874 332
Acquisition of previously - - -
issued shares
Profit for the period - 11 380 407 15 420 306 9 873 096
attributable to ordinary
shareholders
Profit for the period - non- 5 234 063 2 810 727 6 012 589
controlling interest
Revaluation of unlisted - - 1 140 590
investment
Transfer from other reserves - (61 075) -
Transfer to retained earnings - 61 075 -
Dividend paid - non-controlling (11 010 519) (1 980 000) (6 461 000)
interest
Net acquisition of subsidiaries
Balance at end of period 150 371 082 147 727 906 144 667 031
Share capital and premium 99 749 429 97 024 446 99 649 329
Other reserves 1 388 800 187 135 1 388 800
Retained earnings 38 271 415 32 499 293 26 891 008
Non-controlling interest 10 961 438 18 017 032 16 737 894
Condensed consolidated statement of cash flows
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 31 December 30 June 2010
2010 2009
R R R
Cash generated from operations 14 790 294 36 949 668 21 734 542
Interest income 1 988 568 2 124 101 6 025 228
Dividends received - - 635 532
Finance costs (3 731 335) (3 421 992) (5 337 010)
Taxation paid (7 327 442) (5 371 328) (7 864 422)
Dividend paid - non-controlling (11 010 519) (1 980 000) (6 461 000)
interest
Cash flows from operating (5 290 434) 28 300 449 8 732 870
activities
Cash flows from investing (12 770 774) (8 409 867) (12 814 842)
activities
Cash flows from financing 40 089 257 (5 602 740) (601 937)
activities
Net increase / (decrease) in 22 028 049 14 287 842 (4 683 909)
cash and cash equivalents
Cash and cash equivalents at (6 603 402) (1 919 493) (1 919 493)
beginning of period
Cash and cash equivalents - (681 093) -
acquired in business
combinations
Cash and cash equivalents at 15 424 647 11 687 256 (6 603 402)
end of period
Notes to the condensed consolidated financial statements for the six months
ended 31 December 2010
1. Highlights for the period
Gross revenue increased by 10%
Gross profit increased by 13%
Operating profit increased by 13%
Profit before tax increased by 11%
Ububele Holdings Limited ("Ububele" or "the Company" or "the Group") is a
company trading in the food - and agricultural sectors. These are `must`
business sectors - food security is high on everybody`s agendas and the
world`s growing population is going to need more and more food to eat. We
have many growth opportunities to look forward to.
During the reporting six months and more specifically from November 2010
onwards, both our Agri and Food divisions recorded increases in sales
volumes and the encouraging thing about this is that the increase in
sales could be supported by production without having to increase
capacity. Careful production planning and scheduling was at the order of
the day.
Agri Division:
Our agriculture division operates in a highly cyclical environment and
experience has shown that these cycles have a habit of shifting. In major
parts of South Africa such a shift was experienced at the beginning of
the current summer mainly in the summer rainfall areas. The first six
months in the agricultural sector was characterised by the late start of
the rainy season, particularly in the western areas of South Africa,
where some areas received their first rainfall as late as early December.
However, since mid-December and particularly in January, heavy rains fell
in the greater South Africa, particularly in the central and eastern
parts of the country, which includes the maize triangle. This resulted in
sales in the agriculture division occurring later than historically
experienced. The effects of the change in sales period will be felt and
accounted for in the second 6 month period. Total sales in the
agriculture division to the end of January 2011, increased substantially
compared to the previous corresponding period.
Output of corn is expected to fall almost 7% in 2011 after the bumper
harvest in 2010 which resulted in an oversupply in grain and thus the
falling of grain prices. However during 2010 some farmers switched to
alternative crops in the short-term which resulted in an increase in the
sales of our agriculture division, more particularly an increase in the
sale of other crop protection compounds.
Food Division:
Our Food division again experienced a substantial increase in sales
volumes during the first six months. We did, however, notice a clear
shift in consumer spending patterns. The biggest growth was in
convenience-, aviation-, and low priced consumer goods. There was clearly
a lower demand and thus smaller volume growth in our hospitality-, hotel-
and luxury food supplies.
Just Fruit and Veg, our food production unit, will be relocating in the
very near future. This should result in immediate cost savings.
We have successfully turned around Ububele Dairy products (previously
Milkworx) from a loss making concern to a profitable business.
2. Commentary on results
Ububele`s gross revenue increased by 10% for the period. Due to the late
rains, the Agriculture division experienced a forward shift in sales
which resulted in a one percent decrease when compared to the six months
July 2009 to December 2009. The strong volume growth in our food
division, specifically in our ice cream and retail sales, led to an
increase of 54%. Combining the two divisions, an increase of R29m was
recorded.
Gross profit increased by 13%, mainly due to total sales increase of 10%
and an average price increase of 3%. This resulted in gross profit
increasing by R11.5m.
Operating profit increased by 23%, on the back of additional income
earned through extending financing terms to customers in the agricultural
sector.
Profit before tax increased by 11%, very much in line with the 13%
increase in operating profit.
The successful turnaround at our ice cream factory (previously Milkworx)
led to a substantial increase in profits, of course with the resultant
additional R3.8m tax provision for the current period.
The non-current assets increased by 4%, mainly due to an 8% increase in
plant and equipment due to replacements and capacity expansion and a 21%
increase in intangible assets acquired through business combinations as
described in note 4.
The current assets increased by 172% to R366 million, mainly due to the
following:
- R212 million increase in trade debtors and stock. This increase is
mainly due to the cyclical nature of our Agri division, and the
comparative figure for June being in the quiet season. The group has also
experienced an increase in turnover, which resulted in an increase in
trade debtors and stock.
The R14.7 million cash generated from operations resulted in a cash
equivalents increase of R15 million.
Due to the additional trade, the current liabilities increased by 143% to
R296 million and trade payables increased by R196 million.
The non-current liabilities increased by R53 million, mainly due to a
Land Bank facility granted during the period.
Due to the above mentioned facility, the loans payable decreased by R21
million and the bank overdraft decreased by R8 million.
The net effect of the substantial increase in trade and settlement of
loans payable, resulted in the net current assets increasing by 225% to
R65 million and the current asset ratio increasing from 1.1 to 1.22.
3. Basis of presentation and accounting policies
The condensed interim consolidated financial statements have been
prepared in terms of IAS34 - Interim Financial Reporting, The South
African Companies Act, as amended, and the JSE`s Listings Requirements
and should be read in conjunction with the annual financial statements
for the year ended 30 June 2010, which have been prepared in accordance
with International Financial Reporting Standards.
The accounting policies applied in the preparation of the interim
consolidated financial statements are consistent with those used in the
previous year, as described in those annual financial statements.
4. Business combination
During the period under review the Food division acquired 100% of the
share capital of Leaf Food and Leisure (Pty) Ltd.
The acquisition of this company was made to serve as a platform for
Ububele Foods to establish and expand its current and future brands.
Details of net assets acquired and goodwill are as follows:
R
Effective consideration paid 100
Fair value of net identifiable assets (2 693 294)
acquired (see below)
Profit on bargain purchase (2 693 194)
The assets and liabilities arising from the acquisition are as follows:
Acquiree`s Provisional
carrying fair value
amount
R R
Intangible assets 8 225 000 4 000 000
Deferred tax (682 997) (682 997)
Trade and other receivables 138 355 138 355
Loans payable (725 440) (725 440)
Trade and other payables
(36 624) (36 624)
6 918 294 2 693 294
5. Segment information
The group`s reportable segments have been identified as the Agriculture
and Food business units:
The Agriculture business unit is involved in the manufacturing and
distribution of agricultural crop protection and growth enhancing
compounds in the Republic of South Africa and Namibia.
The Food business unit is involved in the production and distribution of
food and dairy products in the Republic of South Africa and Namibia.
Business segments:
6 months ended Agriculture Food Total
31 December 2010
R R R
Revenue - external 238 043 002 86 115 123 324 158 125
Revenue - internal 36 192 000 - 36 192 000
Interest income 1 753 538 235 030 1 988 568
Finance costs (2 718 668) (1 012 667) (3 731 335)
Depreciation and (497 903) (2 379 261) (2 877 164)
amortisation
Segment profits 5 281 187 6 099 220 11 380 407
attributable to ordinary
shareholders
Segment profits 3 270 252 1 963 811 5 234 063
attributable to minorities
Segment current assets 317 290 042 43 861 930 361 151 972
Segment current (264 456 752) (31 669 507) (296 126 259)
liabilities
6 months ended Agriculture Food Total
31 December 2009
R R R
Revenue - external 239 757 631 55 876 202 295 633 833
Revenue - internal 12 811 400 300 000 13 111 400
Net interest income / (564 926) (420 504) (985 430)
(expense)
Depreciation and 489 349 1 452 283 1 941 632
amortisation
Segment profits 8 237 348 7 448 458 15 685 806
attributable to ordinary
shareholders
Segment profits 2 563 163 247 565 2 810 728
attributable to minorities
Segment current assets 243 758 495 31 898 802 275 657 297
Segment current (209 817 253) (53 142 129) (262 959 382)
liabilities
JT Kleinhans HW Cloete
Executive Chairman Financial director
Cape Town
28 February 2011
Directors: JT Kleinhans (Executive Chairman)*, HW Cloete (Financial Director)*,
MP Mocke*, SA Roux*, JMK Matlala*, TB Hayter#, (*executive #non- executive)
Secretary and registered office: Fusion Corporate Secretarial Services (Pty)
Limited, 56 Regency Road, Route 21 Corporate Park, Irene, Pretoria
Transfer Secretaries: Computershare Investor Services (Pty) Limited, Ground
Floor, 70 Marshall Street, Johannesburg, 2001
Designated Adviser: PSG Capital
Auditors: Nolands Inc
Date: 02/03/2011 08:12:01 Produced by the JSE SENS Department.
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