| Tue 27 Mar 2012, 9:55 | | UBU - Ububele - Interim results for the six months ended 31 December 2011 |
|
UBU
UBU
UBU - Ububele - Interim results for the six months ended 31 December 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")
Interim results for the six months ended 31 December 2011
Abridged consolidated statement of comprehensive income
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 31 December 30 June
2011 2010 2011
R R R
Gross revenue 387 325 155 324 158 124 547 193 053
Cost of sales (269 755 141) (226 744 984) (377 252 866)
Gross profit 117 570 014 97 413 140 169 940 187
Operating expenses (96 885 428) (80 437 352) (148 116 538)
Other income 1 985 752 6 291 069 4 987 325
Operating profit 22 670 338 23 266 857 26 810 974
Investment revenue 3 643 963 1 988 568 7 145 446
Finance costs (6 817 485) (3 731 335) (8 753 505)
Impairment of intangibles (4 493 961) - -
Profit before taxation 15 002 855 21 524 090 25 202 915
Taxation (5 674 220) (4 909 620) (8 508 016)
Profit from continuing 9 328 635 16 614 470 16 694 899
operations
Discontinued operations
Loss from discontinued (30 325 011) - (6 163 956)
operations
(Loss)/Profit for the period (20 996 376) 16 614 470 10 530 943
Attributable to:
Equity holders of the parent (24 005 996) 11 380 407 2 207 965
Non-controlling interests 3 009 620 5 234 063 8 322 978
Other comprehensive income - - 528 737
Net change in fair value of
available-for-sale financial
asset - - 528 737
Total comprehensive income for (20 996 376) 16 614 470 11 059 680
the period
Attributable to:
Equity holders of the parent (24 005 996) 11 380 407 2 736 702
Non-controlling interests 3 009 620 5 234 063 8 322 978
Reconciliation of headline
earnings (continuing
operations):
Comprehensive income 6 319 015 11 380 407 2 207 965
attributable to ordinary
shareholders
(Profit)/loss on disposal of
property, plant and equipment (260 474) (104 480) 36 149
Bargain purchase on business
combinations - (2 693 194) -
Impairment of investment 4 493 961 - -
Headline earnings attributable 10 552 502 8 582 733 2 244 114
to ordinary shareholders
Number of ordinary shares in 178 417 824 177 167 824 177 167 824
issue
Weighted number of ordinary 177 283 313 177 161 069 177 161 405
shares in issue
Fully diluted weighted average 177 283 313 177 161 069 177 161 405
number of ordinary shares
Earnings per ordinary share 3.56 6.42 1.25
from continuing operations
(cents)
Headline earnings per ordinary 5.95 4.84 1.27
share from continuing
operations (cents)
Fully diluted earnings per 3.56 6.42 1.25
ordinary share from continuing
operations (cents)
Fully diluted headline earnings 5.95 4.84 1.27
per ordinary share from
continuing operations (cents)
Reconciliation of headline
earnings (all operations)
Comprehensive income (24 005 996) 11 380 407 2 207 965
attributable to ordinary
shareholders
(Profit)/loss on disposal of
property, plant and equipment (260 474) (104 480) 36 149
Bargain purchase on business
combinations - (2 693 194) -
Impairment of investment 28 347 781 - -
Headline earnings attributable 4 081 311 8 582 733 2 244 114
to ordinary shareholders
(Loss)/Earnings per ordinary (13.54) 6.42 1.25
share (cents)
Headline earnings per ordinary 2.30 4.84 1.27
share (cents)
Fully diluted (loss)/earnings (13.54) 6.42 1.25
per ordinary share (cents)
Fully diluted headline earnings 2.30 4.84 1.27
per ordinary share (cents)
Abridged consolidated statement of financial position
Unaudited Unaudited Audited
31 December 31 December 30 June
2011 2010 2011
R R R
Assets
Non-current assets 138 655 307 151 144 990 167 193 011
Property, plant and equipment 25 163 061 25 494 410 27 542 244
Goodwill 74 659 634 80 085 181 90 367 327
Intangible assets 17 033 236 28 763 506 27 762 093
Deferred taxation 14 481 356 11 149 368 17 666 609
Available-for-sale financial 7 318 020 5 652 525 3 854 738
assets at fair value
Current assets 483 979 497 361 151 972 217 728 071
Trade and other receivables 273 125 139 246 895 866 129 827 257
Inventories 149 648 595 90 329 429 72 963 357
Loans receivable 15 315 946 852 976 -
Cash and cash equivalents 45 888 135 23 073 701 13 464 017
Taxation 1 682 - 1 473 440
Non-current assets held for 3 858 049 - 1 385 766
sale and assets of disposal
groups
Total assets 626 492 853 512 296 962 386 306 848
Equity and liabilities
Capital and reserves 71 113 879 150 371 082 143 841 310
Share capital and premium 100 999 428 99 749 429 99 749 428
Other reserves 1 917 537 1 388 800 1 917 537
Accumulated (loss)/profit (29 767 687) 38 271 415 29 098 973
73 149 278 139 409 644 130 765 938
Non-controlling interest (2 035 399) 10 961 438 13 075 372
Non-current liabilities 239 672 811 65 822 721 100 296 698
Loans payable 233 772 593 60 005 573 91 373 641
Interest-bearing borrowings 5 900 218 5 817 148 5 724 003
Deferred taxation - - 3 199 054
Current liabilities 315 706 163 296 103 159 142 168 840
Trade and other payables 298 300 330 257 961 083 92 442 657
Loans from shareholders 165 794 5 599 210 1 453 757
Loans payable 10 130 309 14 890 010 31 412 792
Taxation 4 719 307 6 776 730 1 461 273
Interest-bearing borrowings 2 367 751 3 227 072 3 853 601
Derivative financial - - 45 846
instruments
Bank overdraft and acceptances 22 672 7 649 054 11 498 914
Total equity and liabilities 626 492 853 512 296 962 386 306 848
Abridged consolidated statement of changes in equity
Share Other Retained Non- Total
capital reserves earnings controllin equity
and g interest
premium
Balance at
1 July 2010 99 649 328 1 388 26 891 008 16 737 894 144 667
800 030
Net shares 100 100 - - - 100 100
issued
Total - 528 737 2 207 965 8 322 978 11 059 680
comprehensive
income for the
period
Dividends paid - - - (11 985 (11 985
500) 500)
Balance at
30 June 2011 99 749 428 1 917 29 098 973 13 075 372 143 841
537 310
Net shares 1 250 000 - - - 1 250 000
issued
Total - - (24 005 3 009 620 (20 996
comprehensive 996) 376)
income for the
period
Dividends paid - - (3 543 (9 437 (12 981
356) 699) 055)
Acquisition - - (31 317 (8 682 (40 000
from non- 307) 693) 000)
controlling
interest
Balance at
31 December 100 999 1 917 (29 767 (2 035 71 113 879
2011 428 537 687) 399)
Abridged consolidated statement of cash flows
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 31 December 30 June
2011 2010 2011
R R R
Cash generated from 12 754 553 14 790 294 (12 852 723)
continuing operations
Operating loss from (6 471 191) - (6 163 956)
discontinued operations
Interest income 3 643 963 1 988 568 6 905 872
Dividends received - - 239 574
Finance costs (6 817 485) (3 731 335) (8 753 505)
Taxation paid (7 328 735) (7 327 442) (11 870 534)
Cash flows from operating (4 218 895) 5 720 085 (32 495 272)
activities
Additions to property,
plant and equipment (1 817 187) (9 627 608) (11 356 628)
Proceeds on disposal of 260 474 - 443 168
property, plant and
equipment
Acquisition of intangibles (1 184 900) - (692 232)
Acquisition of interest in (40 000 000) - (16 998 398)
subsidiaries
Loans receivable raised (14 676 948) (753 898) -
Acquisition of available- - (2 389 267) (528 737)
for-sale-financial assets
Cash flows from investing (57 418 561) (12 770 774) (29 132 827)
activities
Proceeds from share issue - 100 100 100 100
Proceeds from loans 121 116 469 37 116 352 83 106 613
payable
(Repayment)/proceeds of (1 287 963) 2 766 609 (1 378 844)
shareholders` loans
(Repayment)/proceeds from (1 309 635) 106 196 354 235
interest-bearing
borrowings
Dividends paid (12 981 055) (11 010 519) (11 985 500)
Cash flows from financing 105 537 816 29 078 738 70 196 604
activities
Net increase in cash and 43 900 360 22 028 049 8 568 505
cash equivalents
Cash and cash equivalents 1 965 103 (6 603 402) (6 603 402)
at beginning of period
Cash and cash equivalents 45 865 463 15 424 647 1 965 103
at end of period
Notes to the abridged consolidated financial statements for the six months ended
31 December 2011
1. Highlights for the period
Headline earnings per share from continuing operations increased by 23%
Gross revenue from continuing operations increase by 19%
Gross profit from continuing operations increased by 21%
Operating profit, before other income, increased by 22%
Operating profit decreased by 3%
Ububele Holdings is pleased to present its financial results for the six months
ending 31 December 2011.
The period under review has been characterised by a more than 34% growth in our
agricultural division, but also negative growth of 23% in our food division. The
group, however, still showed positive growth of 19% for the period.
The agricultural industry, in general, has shown more resilience to the economic
downturn than most other industries. The long-term demand for most agricultural
commodities will remain strong, driven by rising local living standards and a
continued increase in world demand.
Latest figures suggest that food prices are, once again, on the rise in South
Africa. This has major implications for consumption, the retail industry and
production. For more than twelve months now the food and non- alcoholic
beverages index was higher than consumer price inflation.
Given the tough trading conditions in the food sector and the continuous
negative growth at Just Fruit & Veg, the board has decided to fully impair the
investment in Just Fruit & Veg. Just Fruit & Veg was classified as a
discontinued operation for the results now presented.
Mainly due to the positive growth in agriculture, the group however still
achieved a 23% growth in headline earnings per share from continued operations.
2. Commentary on results
Ububele`s turnover from continuing operations increased by 19% from the
comparative prior period. The growth in turnover can mostly be attributed to
Ububele`s agricultural distribution companies, as well as increased turnover in
its airline catering company in Namibia.
In the company`s June 2011 annual report it was reported that the wholesale
division of Just Fruit & Veg, Ububele`s fruit and vegetable operation in Cape
Town, will be partly discontinued. During the last six months of the financial
year, management spent a significant amount of time and effort to implement
remedial actions, as well as implement strategic plans to stimulate future
growth potential. Various steps were introduced to improve productivity,
including more stringent controls over stock, serious cost-cutting exercises,
improved customer service as well as a significant drop in wastage.
Despite all management`s efforts, it became clear that this company will not
turn profitable in the near future. Spiralling raw material costs and economies
of scale are just some of the challenges faced in this industry. The board
therefore decided to discontinue this business completely within the next 12
months.
Gross profit for the period increased by 21%, in line with the overall increase
in turnover of 19%. The gross profit percentage for the group stayed constant at
30%.
Operating profit decreased by 3%. This drop was due to various factors,
including the effect of the devaluation of the rand which led to a foreign
exchange loss, higher listing expenses and an increase in interest paid. The
nature of our agriculture supply is such that the bulk of interest received from
debtors only occur in the last six months of the financial year. Included in
other income in 2010, was a once off profit on bargain purchase of R2.7 million.
Profit before tax decreased significantly, due to impairment of intangible
assets and goodwill explained in note 4 below. If the effect of the impairment
is disregarded, the group showed a decrease in profit before tax of 9%.
Trade and other receivables increased by 11% from the previous six-month period,
a welcoming downward trend when compared to increased turnover. Inventory levels
were, however, 66% higher. The dryer than expected December led to higher
carrying of stock and more than 30% of this stock was sold within the first
month of 2012. Despite the higher inventory levels, both the current ratio as
well as the quick ratio increased for the six months under review. The current
ratio increased from 1.22 to 1.55 or 27%, while the quick ratio increased by 17%
to 1.07, from 0.91 previously.
The net asset value per share decreased by 45% to 43 cents per share, mainly due
to the effect of the acquisition of the additional 49.9% share in Erintrade (see
note 6 below).
3. Basis of presentation and accounting policies
The condensed unaudited interim consolidated financial statements have been
prepared in terms of IAS 34 - 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 2011, which have been prepared in accordance with International Financial
Reporting Standards and the AC 500 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. Impairment of intangible assets and goodwill
During the period under review, the company impaired the following intangible
assets and goodwill:
31 December
2011
R
Continuing operations:
Linktrade customer contract 4 493 961
Discontinued operations:
Just Fruit & Veg recipes 4 389 804
Just Fruit & Veg goodwill 16 434 024
So Gourmet trademark 3 029 992
28 347 781
The group has decided to discontinue its fruit and vegetable operations in Cape
Town, Just Fruit & Veg. The recipes and goodwill relating to the transaction was
therefore impaired.
A lack of revenue from Linktrade Foods for this period under review, as well as
prior periods, necessitated the group to review the value of the customer
contract. It was decided by the board to write off the remainder of the customer
contract to zero.
During the period under review, So Gourmet was liquidated. The trademark was
therefore impaired to zero.
5. Discontinued operations and non-current assets held-for-sale
The group has decided to discontinue its fruit and vegetable operations in Cape
Town, Just Fruit & Veg. So Gourmet was also liquidated during the period under
review. The assets to be disposed of are included below.
The decision was made by the board to discontinue these operations due to the
lack of return on investment.
The non-current assets are to be sold piecemeal.
31 December
2011
R
Profit and loss
Revenue 10 895 287
Expenses (17 366 478)
Impairment of intangible assets (23 853 820)
Tax -
(30 325 011)
Assets and liabilities
Non-current assets held-for-sale
Property, plant and equipment 3 858 049
Cash flows from discontinued operations
Net cash outflows from operating activities (6 471 191)
6. Acquisition of interest from non-controlling interests
During the period under review, the group purchased the remainder of Erintrade`s
share capital from minorities for an amount of R40 million. The company already
had control over Erintrade and its assets and liabilities were fully
consolidated.
The shares were purchased from the following related parties:
RT Wimbush 26.30% 21 082 164
RP Wimbush 16.90% 13 547 094
JJ Faul 6.70% 5 370 741
49.90% 40 000 000
7. Shares issued
On Wednesday, 14 December 2011, shareholders approved the issue of 1 250 000
ordinary shares of 100 cents per share to Arcay Investment Portfolio (Pty)
Limited (AIP). This serves as settlement of an amount owed for services rendered
to Ububele by Arcay Corporate Finance as previous corporate advisor to Ububele
during the reverse listing of Ububele into Milkworx Limited in November 2009.
Arcay Corporate Finance ceded the aforementioned claim to AIP.
8. 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 compounds in the Republic of South Africa and Namibia.
The Food business unit is involved in the catering and distribution of food
products in the Republic of South Africa and Namibia.
Business segments:
6 months ended 31 December 2011 Agriculture Food Total
R R R
Revenue - external 320 045 467 67 279 688 387 325 155
Revenue - internal 66 759 604 24 151 506 90 911 110
Interest income 3 094 575 549 388 3 643 963
Finance costs (5 587 465) (1 230 (6 817 484)
019)
Depreciation and amortisation (838 583) (1 636 (2 475 333)
750)
Segment profits/(losses) 15 194 198 (1 399 13 794 863
attributable to ordinary 335)
shareholders
Segment profits attributable to - 3 009 620 3 009 620
minorities
Segment current assets 437 758 207 44 348 677 482 106
889(a)
Segment current liabilities (284 372 499) (29 776 (314 148
412) 911)
6 months ended 31 December 2010 Agriculture Food Total
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 (3 731 335)
667)
Depreciation and amortisation (497 903) (2 379 (2 877 164)
261)
Segment profits attributable to 5 281 187 6 099 220 11 380 407
ordinary shareholders
Segment profits attributable to 3 270 252 1 963 811 5 234 063
minorities
Segment current assets 317 290 042 43 861 930 361 151 972
Segment current liabilities (264 456 752) (31 669 (296 126
507) 259)
Reconciliation between segment Agriculture Food Total
profits and total profits for the
group:
R R R
Segment profits/(losses) 15 194 198 (1 399 13 794 863
attributable to ordinary 335)
shareholders
Net loss in Ububele Holdings (7 475 848)
Limited - holding company
Loss from discontinued operations (30 325 011)
Total loss for the period (24 005 996)
attributable to ordinary
shareholders
(a) The increase in the agriculture division`s current assets of R120 468 165 is
mainly due to an increase in stock levels of R59 million, trade and other
receivables of R31 million and cash and cash equivalents of R18 million.
The abridged consolidated interim financial statements have been prepared by E
Kruger (CA)SA, the financial director.
On behalf of the board
HW Cloete E Kruger
Chief executive officer Financial director
Directors: MK Makaba (Chairman)#*, JT Kleinhans (Vice-Chairman)#,
HW Cloete (CEO), MP Mocke, JMK Matlala, SA Roux, E Kruger, TB Hayter#*,
MJ Krastanov#*
# Non-executive
* Independent
Company Secretary: Fusion Corporate Secretarial Services
Registration number: 1998/011074/06
Postal address: PO Box 6309, Roggebaai, 8012
Telephone: +27 (0)21 425 7650
Facsimile: +27 (0)21 421 5791
Registered office: 9th Floor, Metlife Centre, 7 Coen Steytler Avenue,
The Foreshore, Cape Town
Transfer secretaries: Computershare Investor Services (Pty) Ltd
Ground Floor, 70 Marshall Street, Johannesburg 2001
Designated advisor: PSG Capital
Auditors: Nolands Inc
27 March 2012
Date: 27/03/2012 09:55:01 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.
