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UBU
UBU
UBU - Ububele Holdings Limited - Reviewed Provisional Financial Statements
for the year ended 30 June 2011
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")
Reviewed Provisional Financial Statements for the year ended 30 June 2011
Commentary on results
Revenue increased by 14%*
Operating profit increased by 70%*
Profit before tax increased by 47%*
Total assets increased by 33%*
Cash available increased by 130%
Profitability
The most positive result this year is the 50% increase in the operating
profit margin* from 3.3% to 4.9%. This means that for every R1 additional
sales, we made an operating margin of 1.6% higher than last year. The
additional profit generated from sales, due to an additional sales margin of
1.65% is R8 million, and the additional profit generated due to an increase
in sales volume, is R20 million.
The profit before tax* increased by 47% and the profit after tax by 5%.
Working capital
Of the group`s total assets, 56% is tied up in working capital. It is
encouraging to note that we have improved our working capital ratio by 41%
(from 1.09 to 1.53). The net result is that the current assets increased by
62% and the current liabilities by only 15% over the comparative period.
The late and continuous rains, which delayed planting and harvesting in the
biggest area of our agricultural market, led to a delayed debtors` scenario
for the year. The debtors are therefore 73% higher when compared to 30 June
2010, although sales only increased by 20% for all operations.
Cash flow
The day-to-day cash position improved by R8.6 million as at 30 June.
Cash generated from operations, before working capital changes, increased by
R6.7 million or 32%.
The non-current liabilities increased by R77 million, mainly due to an
increase in investments of total assets of R95 million.
Business realignment
Large scale syndicated theft was discovered in the wholesale section at Just
Fruit and Veg and a forensic audit was conducted to determine quantum and
guilty parties. Analysis revealed that this section was no longer profitable
after an estimated loss of R2.4 million over the period March to May 2011 was
recorded. Corrective action has been taken and in addition, management
systems have been implemented to minimize the risk of theft. The wholesale
section has subsequently been downscaled.
Furthermore, in order to make Just Fruit and Veg more profitable, aggressive
cost cutting initiatives were implemented, which included moving to more cost
effective premises and optimising human resources.
The restructuring of Just Fruit and Veg is estimated to result in direct
savings of R4.5 million per annum.
Divisional reporting
The Agri division had a good year when compared to the previous financial
year. Turnover grew by 15% and profit after tax by 8.3%.Selling prices in the
agricultural division were under pressure during the year and were on average
3% lower than the prior year. This drop was offset by an increase of 16% in
sales volumes to outside parties. A special effort is being made to register
at least 19 new product registrations before the end of 2011.
The Food division had an average price increase of 8%, but large-scale theft
and further loss of income due to uncompetitive pricing lead to a decrease in
turnover in Just Fruit & Veg of 9%. The said decrease was offset by an
increase in turnover of 5% and 13% in UDP and Alpine respectively. The Food
division as a whole increased turnover by 24% compared to 2010.
Outlook
The current low levels of stock in maize, wheat and sunflower should continue
to keep the selling prices of these commodities at high levels until at least
February 2013. This means higher income for the farmer, bigger sales volumes
and a decreased risk of bad debts for Ububele`s Agri division.
The food industry is expected to remain under pressure, as high levels of
household debt remain a restraining factor to household consumption.
Our ice cream business, however, is expected to counter this trend by
increased sales of lower priced ranges, a trend that was already witnessed
during the current financial year.
The initial indications are that our Namibian-based operations will continue
to grow during the next financial period due to increased air traffic
activity at Hosea Kutako International Airport, Windhoek.
* - From continuing operations
Dividends
Ordinary shares
The directors of Ububele have approved an ordinary dividend of two cents per
share.
The following are the salient dates for the payment of the final dividend:
Last day to trade cum dividend Thursday, 8 December 2011
Trading ex dividend commences Friday, 9 December 2011
Record date Thursday, 15 December 2011
Day of payment Monday, 19 December 2011
Share certificates may not be dematerialised or rematerialised between
Friday, 9 December 2011 and Thursday, 15 December 2011, both days inclusive.
Land Bank
Ububele advise shareholders that it has concluded a new financing facility
with the Land and Agricultural Development Bank of South Africa ("Land
Bank"). In terms of the new facility Ububele has R180 million available for
working capital and R40 million available for new acquisitions, on a draw
down basis. The new facility replaces all previous facilities of Ububele. The
new relationship with the Land Bank will allow Ububele to explore tailor made
funding arrangements with the Land Bank for specific projects going forward.
Statements of financial position
Group
Figures in Rand 2011 2010
Assets
Non-current assets
Property, plant and equipment 27,542,244 23,692,743
Goodwill 90,367,327 80,085,181
Intangible assets 27,762,093 23,710,249
Deferred taxation 17,666,609 25,901,122
Available-for-sale financial assets
at fair value 3,854,738 3,239,928
167,193,011 156,629,223
Current assets
Trade and other receivables 129,827,257 75,197,342
Inventories 72,963,357 49,609,325
Cash and cash equivalents 13,464,017 8,132,913
Taxation 1,473,440 1,686,885
217,728,071 134,626,465
Non-current assets held for sale and assets
of disposal groups 1,385,766 -
Total assets 386,306,848 291,255,688
Equity and liabilities
Equity
Equity attributable to equity holders of parent
Share capital and premium 99,749,428 99,649,328
Other reserves 1,917,537 1,388,800
Accumulated profit 29,098,973 26,891,008
130,765,938 127,929,136
Non-controlling interest 13,075,372 16,737,894
143,841,310 144,667,030
Liabilities
Non-current liabilities
Loans payable 91,373,641 1,405,473
Interest-bearing borrowings 5,724,003 6,312,066
Deferred taxation 3,199,054 15,297,827
100,296,698 23,015,366
Current liabilities
Trade and other payables 92,442,657 62,495,695
Loans from shareholders 1,453,757 2,832,601
Loans payable 31,412,792 36,306,268
Taxation 1,461,273 4,532,063
Interest-bearing borrowings 3,853,601 2,625,960
Derivative financial instruments 45,846 44,391
Bank overdraft 11,498,914 14,736,314
142,168,840 123,573,292
Total liabilities 242,465,538 146,588,658
Total Equity and Liabilities 386,306,848 291,255,688
Statements of comprehensive income
Group
Figures in Rand 2011 2010
Continuing operations
Revenue 547,193,053 481,973,805
Cost of sale (377,252,866) (340,254,716)
Gross profit 169,940,187 141,719,089
Other income 4,987,325 11,159,638
Operating expenses (148,116,538) (137,107,360)
Operating profit 26,810,974 15,771,367
Investment revenue 7,145,446 6,660,760
Finance costs (8,753,505) (5,337,010)
Profit before taxation 25,202,915 17,095,117
Taxation (8,508,016) (1,209,432)
Profit from continuing operations 16,694,899 15,885,685
Discontinued operations
Loss from discontinued operations (6,163,956) -
Profit for the year 10,530,943 15,885,685
Other comprehensive income:
Available-for-sale financial assets adjustments 528,737 1,388,800
Total comprehensive income 11,059,680 17,274,485
Net profit attributable to:
Owners of the parent:
Profit for the year from continuing operations 8,371,921 9,873,096
Loss for the year from discontinuing operations (6,163,956) -
Profit for the year attributable to owners
of the parent 2,207,965 9,873,096
Non-controlling interest:
Profit for the year from continuing operations 8,322,978 6,012,589
Total comprehensive income attributable to:
Owners of the parent 2,736,702 11,261,896
Non-controlling interest 8,322,978 6,012,589
11,059,680 17,274,485
Earnings per share (cents)
Basic from continued operations 4.73 5.90
Diluted basic from continued operations 4.73 5.90
Basic from all operations 1.25 5.90
Diluted basic from all operations 1.25 5.90
Headline earnings per share from
continued operations 4.75 8.30
Headline earnings per share from all operations 1.27 8.30
Number of ordinary shares in issue 177,167,822 177 090 820
Weighted number of ordinary shares in issue 177,161,405 167,414,748
Statements of changes in equity
Figures in Rand
Group
Share Share premium Total share Other
capital capital and reserves
premium
Balance at 1 July 2009 21,544 67,753,453 67,774,997 248,210
Total comprehensive
income for the year - - - 1,140,590
Issue of shares 244 2,195,761 2,196,005 -
Share conversion at
3465 per 100 75,473,784 (75,473,784) - -
Effective shares issued
to Milkworx
shareholders
per reverse listing 11,686,653 15,192,651 26,879,304 -
Issue of shares after
reverse listing 1,363,184 1,435,838 2,799,022 -
Dividends paid - - - -
Total changes 88,523,865 (56,649,534) 31,874,331 1,140,590
Balance at 1 July 2010 88,545,409 11,103,919 99,649,328 1,388,800
Changes in equity
Total comprehensive
income for the year - - - 528,737
Issue of shares 38,500 61,600 100,100 -
Dividends paid - - - -
Total changes 38,500 61,600 100,100 528,737
Balance at 30 June 2011 88,583,909 11,165,519 99,749,428 1,917,537
Statements of changes in equity (continued)
Figures in Rand
Group
Accumulated Total Non-control- Total
profit attributable ling equity
to equity interest
holders
of the group
Balance at 01 July 2009 17,017,912 85,041,119 17,186,305 102,227,424
Total comprehensive
income for the year 9,873,096 11,013,686 6,012,589 17,026,275
Issue of shares - 2,196,005 - 2,196,005
Share conversion at
3465 per 100 - - - -
Effective shares issued
to Milkworx shareholder
per reverse listing - 26,879,304 - 26,879,304
Issue of shares after
reverse listing - 2,799,022 - 2,799,022
Dividends paid - - (6,461,000) (6,461,000)
Total changes 9,873,096 42,888,017 (448,411) 42,439,606
Balance at 01 July 2010 26,891,008 127,929,136 16,737,894 144,667,030
Changes in equity
Total comprehensive
income for the year 2,207,965 2,736,702 8,322,978 11,059,680
Issue of shares - 100,100 - 100,100
Dividends paid - - (11,985,500) (11,985,500)
Total changes 2,207,965 2,836,802 (3,662,522) (825,720)
Balance at 30 June 2011 29,098,973 130,765,938 13,075,372 143,841,310
Statements of Cash Flows
Group
Figures in Rand 2011 2010
Cash flows from operating activities
Cash used in/generated from operations 27,728,821 21,008,543
Changes in working capital (46,745,500) 725,999
(19,016,679) 21,734,542
Interest income 6,905,872 6,025,228
Dividends received 239,574 635,532
Finance costs (8,753,505) (5,337,010)
Taxation paid (11,870,534) (7,864,422)
Net cash (outflow)/inflow from
operating activities (32,495,272) 15,193,870
Cash flows from investing activities
Additions to property, plant and equipment (11,356,628) (5,832,785)
Proceeds on disposal of property,
plant and equipment 443,168 1,470,826
Additions to intangible assets (692,232) (527,256)
Acquisition of interest in subsidiaries (16,998,398) (7,835,039)
Acquisition of available-for-sale
financial assets (528,737) (532,401)
Loans receivable repaid - 9,856
Proceeds on disposal of unlisted investment - 431,957
Net cash outflows from investing activities (29,132,827) (12,814,842)
Cash flows from financing activities
Proceeds on share issue 100,100 4,995,027
Proceeds from loans payable 117,418,838 25,256,665
Repayment of loans payable (34,312,225) -
Repayment of shareholders loan (1,378,844) (31,093,025)
Interest-bearing borrowings repaid (4,604,688) (2,666,388)
Interest-bearing borrowings raised 4,958,923 2,905,784
Dividends paid (11,985,500) (6,461,00)
Net cash inflow from financing activities 70,196,604 (7,062,937)
Net increase/(decrease) in cash and cash
equivalents
for the year 8,568,505 (4,683,909)
Cash and cash equivalents at the
beginning of the year (6,603,402) (1,919,493)
Cash and cash equivalents at end of the year 1,965,103 (6,603,402)
1. Basis of presentation and accounting policies
Nolands Inc., the Group`s independent auditor, has reviewed the provisional
financial statements contained in this provisional report and has expressed
an unmodified conclusion on the provisional financial statements. The review
report is available for inspection at the company`s registered office. These
financial statements for the year ended 30 June 2011 have been prepared in
accordance with, and containing the information required by IFRS (including
IAS 34: Interim Financial Reporting) and the AC 500 Standards as issued by
the Accounting Practices Board or its successor and the requirements of the
South African Companies Act and the JSE Limited Listings Requirements. The
accounting policies and methods of computation applied in the preparation of
these financial statements are in accordance with IFRS and are consistent
with those applied in the preparation of the Group`s annual financial
statements for the year ended 30 June 2010.
2. Discontinued operations or disposal groups or non-current assets held for
sale
The group has decided to discontinue a part of its wholesale fruit and
vegetable operations in Cape Town. The assets and liabilities of the disposal
group are set out below.
The decision was made by the board to discontinue these operations due the
lack of return on investment.
The non-current assets are to be sold piecemeal.
2011 2010
Profit and loss R R
Revenue 18,862,990 -
Expenses (27,424,040) -
Net loss before tax (8,561,050) -
Tax 2,397,094 -
(6,163,956) -
Assets and liabilities
Non-current assets held for sale
Property, plant and equipment 1,385,766 -
3. Business combinations
So Gourmet (Pty) Limited
On 1 April 2011 the group acquired 100% of the voting equity interest of So
Gourmet (Pty) Limited which resulted in the group obtaining control over So
Gourmet (Pty) Limited. So Gourmet (Pty) Limited is principally involved in
the food and beverage industry.
Fair value of assets acquired and liabilities assumed R
Property, plant and equipment 9,078
Intangible assets 3,114,344
Inventories 365,588
Taxation 2,004
Trade and other receivables 287,772
Cash and cash equivalents 343
Loans payable (222,780)
Trade and other payables (898,942)
Bank overdraft (157,407)
2,500,000
Acquisition date fair value of consideration paid
Cash (2,500,000)
Revenue and profit or loss of So Gourmet (Pty) Ltd
Revenue of R772,500 and loss of R567,192 of So Gourmet (Pty) Limited have
been included in the group/s results since the date of acquisition.
AG Foods (Pty) Limited
On 1 March 2011 the group acquired 100% of the voting equity interest of AG
Foods (Pty) Limited which resulted in the group obtaining control over AG
Foods (Pty) Limited. AG Foods is principally involved in the processed foods
industry. As a result of the acquisition, the group is expecting to be the
leading provider of prepared fruit and vegetable products and services in
those markets. It is also expecting to reduce costs through economies of
scale.
Fair value of assets acquired and liabilities assumed R
Property, plant and equipment 1,190,226
Intangible assets 1,200,000
Deferred taxation (182,830)
Inventories 66,013
Trade and other receivables 205,670
Cash and cash equivalents 36,644
Trade and other payables (177,927)
Surplus on acquisition (1,137,796)
1,200,000
Acquisition date fair value of consideration paid
Cash (1,200,000)
Fair value of equity interest held before the acquisition
The measurement to fair value of the equity interest held in AG Foods (Pty)
Limited immediately prior to the acquisition, resulted in a gain of
R1,137,796 which has been included in other income in comprehensive income.
Avello (Pty) Limited
On 1 March 2011 the group acquired 100% of the voting equity interest of
Avello (Pty) Limited. This resulted in the group obtaining control over
Avello (Pty) Limited with the purpose to expand the Yield group`s
distribution footprint nationally and as such to become the preferred
distributor for various multinationals and generic manufacturers` products.
Avello (Pty) Limited is principally involved in the distribution of
agricultural chemicals industry. As a result of the acquisition, the group is
expecting to be the leading provider of agricultural chemicals throughout
South Africa. It is also expecting to reduce costs through economies of
scale.
Goodwill of R10,282,146 arising from the acquisition consists largely of the
synergies and economies of scale expected from combining the operations of
the entities, as well as from intangible assets which did not qualify for
separate recognition. Goodwill is not deductible for income tax purposes.
Fair value of assets acquired and liabilities assumed R
Property, plant and equipment 535,097
Deferred tax 2,450,970
Inventories 3,241,515
Loans to directors, managers and employees 160,609
Trade and other receivables 25,376,273
Cash and cash equivalents 812,122
Loans payable (1,745,299)
Interest-bearing borrowings (285,343)
Trade and other payables (26,837,990)
Bank overdraft (9,475,100)
Total identifiable net assets (5,767,146)
Goodwill 10,282,146
4,515,000
Acquisition date fair value of consideration paid
Cash (4,515,000)
Revenue and profit or loss of Avello (Pty) Limited
Revenue of R10,671,132 and loss of R1,195,653 of Avello (Pty) Limited have
been included in the group`s results since the date of acquisition.
4. Segment information
The group has two operating segments as described below, which are the
group`s strategic business units. The strategic business units are managed
separately as they offer entirely different services. For each of the
strategic business units, the board reviews internal management reports on at
least a quarterly basis. The following summary describes the operations in
each of the group`s reportable segments, being foods and agriculture.
Information regarding the results of each reportable segment is included
below. Performance is measured based on segment profit before interest and
income tax, as included in the internal management reports. Segment profit
before net finance income/expenses and income tax is used to measure
performance as management believes that such information is the most relevant
in evaluating the results of certain segments relative to other entities that
operate within these industries.
Business segments - Figures in Rand
2011 Agriculture Foods Foods - Total
discontinued
Revenue - external 401,026,749 146,166,303 18,739,720 565,932,772
Revenue - internal 105,924,692 8,263,575 - 114,188,267
Interest income 6,827,424 78,448 - 6,905,872
Finance costs (7,736,489) (1,017,016) (75,106) (8,828,611)
Depreciation and
amortisation (2,356,759) (2,648,922) (535,758) (5,541,439)
Segment
profits/(losses)
attributable to
parent shareholders 11,229,033 (2,857,112) (6,163,956) 2,207,965
Segment profits
attributable to
non-controlling
interest 4,729,874 3,593,104 - 8,322,978
Trade and other
payables (76,921,653) (15,521,004) - (92,442,657)
Trade and other
receivables 114,704,593 15,122,664 - 129,827,257
2010 Agriculture Foods Total
Revenue - external 349,430,712 132,543,093 481,973,805
Revenue - internal 81,643,145 1,000,000 82,643,145
Interest income 5,909,859 115,369 6,025,228
Finance costs (4,303,926) (1,033,084) (5,337,010)
Depreciation and
amortisation (1,754,547) (3,981,755) (5,736,302)
Impairment of
intangible assets - (4,365,935) (4,365,935)
Segment profits/(losses)
attributable to parent
shareholders 11,464,617 (450,931) 11,013,686
Segment profits
attributable to
non-controlling interest 3,268,340 2,744,249 6,012,589
5. Earnings per share
The calculation of basic and headline earnings per share is based on the
following attributable profits and weighted average number of shares.
Continued operations
Profits attributable to parent shareholders 8,371,921 9,873,096
Loss on disposal of PPE 36,149 85,493
Profit on disposal of investment - (431,957)
Impairment of investment - 4,365,935
8,408,070 13,892,567
Continued and discontinued operations:
Profits attributable to parent shareholders 2,207,965 9,873,096
Loss on disposal of property, plant and equipment 36,149 85,493
Profit on disposal of investment - (431,957)
Impairment of investment - 4,365,935
2,244,114 13,892,567
6. Reviewed provisional financial statements
These reviewed provisional financial statements were prepared and compiled by
Ms E Kruger, a Chartered Accountant (SA).
On behalf of the board
HW Cloete
Chief Executive Officer
E Kruger
Financial director
Cape Town
15 September 2011
Directors:
JT Kleinhans (Chairman)#, HW Cloete (Chief Executive Officer)*,
E Kruger (Financial Director)* MP Mocke*, SA Roux*, JMK Matlala*,
TB Hayter#, MJ Krastanov#, MK Makaba#
(*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: 15/09/2011 11:17:01 Produced by the JSE SENS Department.
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