Ububele holdings Limited HY 2014 results

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Ububele holdings Limited HY 2014 results

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Ububele holdings Limited HY 2014 results

  1. 1. 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”) UBUBELE HOLDINGS LIMITED ABRIDGED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
  2. 2. 2 ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Note Unaudited 6 months 31 December 2013 R Unaudited 6 months 31 December 2012 R Audited 12 months 30 June 2013 R Gross revenue 407 234 077 359 578 540 590 881 516 Cost of sales (361 317 900) (313 849 990) (507 795 331) Gross profit 45 916 177 45 728 550 83 086 185 Operating expenses (58 238 552) (40 092 654) (90 310 016) Other income 1 080 143 2 276 271 3 950 578 Operating (loss)/profit (11 242 232) 7 912 167 (3 273 253) Investment revenue 2 387 930 4 985 129 11 718 754 Finance costs (10 473 085) (10 978 409) (21 089 803) Impairment of goodwill and intangibles 4 (8 316 151) – – (Loss)/profit before taxation (27 643 538) 1 918 887 (12 644 302) Taxation 2 142 306 (201 807) 1 651 755 (Loss)/profit from continuing operations (25 501 232) 1 717 080 (10 992 547) Discontinued operations Profit/(loss) from discontinued operations 5 1 831 596 5 476 716 (12 507 024) (Loss)/profit for the period (23 669 636) 7 193 796 (23 499 571) Other comprehensive income Net change in fair value of available-for-sale financial asset – – 499 405 Total comprehensive (loss)/income for the period (23 669 636) 7 193 796 (23 000 166) Total comprehensive (loss)/income attributable to: Owners of the parent: (Loss)/profit for the year from continuing operations (25 501 232) 1 717 080 (10 493 142) Profit/(loss) for the year from discontinued operations 1 029 046 3 206 598 (15 098 190) (Loss)/profit attributable to owners of the parent (24 472 186) 4 923 678 (25 591 332) Non-controlling interest: Profit for the year from continuing operations – – – Profit for the year from discontinued operations 802 550 2 270 118 2 591 166 Profit for the year attributable to non-controlling interest 802 550 2 270 118 2 591 166 Number of ordinary shares in issue 178 382 824 178 417 824 178 382 824 Weighted number of ordinary shares in issue 178 382 824 178 417 824 178 411 879 Earnings per ordinary share (cents) 6 (13,72) 2,76 (14,62) Headline earnings per ordinary share (cents) 6 (9,08) 1,50 (11,43)
  3. 3. 3 ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Note Unaudited 31 December 2013 R Unaudited 31 December 2012 R Audited 31 June 2013 R ASSETS Non-current assets 108 154 723 147 481 985 135 855 937 Property, plant and equipment 7 517 673 28 578 876 22 546 615 Goodwill 57 690 761 73 424 363 66 006 912 Intangible assets 22 386 508 18 041 090 21 766 733 Deferred taxation 15 379 889 22 871 800 20 355 785 Available-for-sale financial assets at fair value 7 5 179 892 4 565 856 5 179 892 Current assets 504 071 227 474 195 316 267 988 370 Trade and other receivables 286 193 759 308 777 980 160 747 738 Deposits 2 883 010 – 2 833 010 Inventories 185 327 041 137 348 744 86 865 903 Loans receivable 1 250 550 2 327 919 2 228 441 Cash and cash equivalents 23 535 967 23 690 475 14 242 706 Taxation 4 880 900 2 050 198 1 070 572 Non-current assets held for sale and assets of disposal groups 5 9 653 271 – 515 000 TOTAL ASSETS 621 879 221 621 677 301 404 359 307 EQUITY AND LIABILITIES Capital and reserves (8 638 404) 45 242 694 15 031 232 Share capital and premium 100 981 928 100 999 428 100 981 928 Other reserves 2 894 553 2 582 334 2 894 553 Accumulated loss (120 009 335) (64 897 572) (95 537 150) (16 132 854) 38 684 190 8 339 331 Non-controlling interest 7 494 450 6 558 504 6 691 900 Non-current liabilities 198 503 932 229 333 075 223 025 185 Loans payable 195 342 613 215 433 917 216 783 748 Interest-bearing borrowings 2 058 460 11 971 589 2 775 805 Deferred taxation 1 102 859 1 927 569 3 465 632 Current liabilities 432 013 693 347 101 532 166 302 890 Trade and other payables 410 777 212 339 414 590 149 221 204 Loans from shareholders 12 034 521 – – Loans payable 6 005 165 – 12 880 135 Taxation 1 597 247 3 664 606 924 845 Interest-bearing borrowings 1 599 548 1 711 802 2 156 969 Bank overdraft and acceptances – 2 310 533 1 119 737 TOTAL EQUITY AND LIABILITIES 621 879 221 621 677 301 404 359 307
  4. 4. 4 ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS Unaudited 6 months 31 December 2013 R Unaudited 6 months 31 December 2012 R Audited 12 months 30 June 2013 R Cash flows from operating activities 22 708 224 27 713 341 26 071 473 Cash flows from investing activities (4 664 060) (6 477 197) (18 554 151) Cash flows from financing activities (6 648 810) (17 681 054) (12 219 205) Net increase in cash and cash equivalents 11 395 354 3 555 090 (4 701 883) Net cash at beginning of period 13 122 969 17 824 852 17 824 852 Net cash at end of period 24 518 323 21 379 942 13 122 969 ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share capital and premium R Other reserves R Retained earnings R Non- controlling interest R Total equity R Balance at 1 July 2012 100 999 428 2 395 148 (62 708 599) 10 421 395 51 107 372 Total comprehensive (loss)/income for the year – 499 405 (26 090 737) 2 591 166 (23 000 166) Repurchase of shares (17 500) – – – (17 500) Dividends paid – – – (6 057 974) (6 057 974) Acquisition from non-controlling interest – – (6 737 814) (262 686) (7 000 500) Balance at 30 June 2013 100 981 928 2 894 553 (95 537 150) 6 691 900 15 031 232 Total comprehensive (loss)/income for the period – – (24 472 186) 802 550 (23 669 636) Balance at 31 December 2013 100 981 928 2 894 553 (120 009 336) 7 494 450 (8 638 404) Balance at 31 December 2012 100 999 428 2 582 334 (64 897 572) 6 558 504 45 242 694 NOTES TO THE ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2013 1. REVIEW FOR THE PERIOD Ububele is pleased to present its financial results for the six months ending 31 December 2013. The period under review proved to be challenging for Ububele, its board members, old and new, and shareholders and stakeholders a like. On 5 September 2013 the board decided to dispose of its interest in the Namibian subsidiary as part of its strategy to disinvest from the foods sector and divert all of its available resources and effort into the agricultural businesses. Certain conditions precedent within the purchase agreement of Turf-Ag, were not fulfilled and accordingly the agreement has lapsed and is of no force or effect. Ububele has recovered all monies owed to it in terms of the initial advances made. In an effort to re-focus on productivity and efficiencies in the agricultural business, various cost cutting exercises were performed. Due to the contractual nature of these expenses, most of the savings will only be realised in the 2015 financial year. Performance in the agricultural chemical business was satisfactorily, given the difficult trading conditions. For the second year running, the summer rains were late, causing a shift in product mix and sales. This rainfall shift meant that a big portion of the sales moved from the October to January period, to the period December to March. Drought conditions in the North West Province and areas of the Free State persisted. This continued to have a direct impact on Ububele’s gross profits and revenues achieved. The rand played havoc throughout the period under review and caused losses to much of the South African industries reliant on imported goods. Ububele was no exception and came under tremendous pressure to maintain margins. Despite all the challenges faced, Ububele has continued to register new products aimed at high demand and high margin agricultural-sectors. It has also launched initiatives aimed at increasing its market share of in-house generic brands. As stated in the annual report of 2013, Ububele is in a good position to define a new direction, properly engage and inform its shareholders and important stakeholders and pursue its future with transparency and vigour.
  5. 5. 5 2. COMMENTARY ON RESULTS Tough economic conditions, exacerbated by severe drought and increasing input costs, led to negative valuations of trade receivables, inventory and goodwill. This, together with certain non-recurring costs associated with employment settlements and legal matters, caused weaker than expected results. Ububele’s revenue from continuing operations increased by 13% (R48 million) from the comparative prior period while gross profit were maintained at R46 million for the six-month period. Gross profit margins declined as a result of the weakening rand and increasing distribution costs coupled with a difficult trading environment for farmers. Inventory impairments of R2.4 million also contributed to lower reported gross profits. Operating expenses increased by 53% (R18 million) from the comparative prior period. The high operating expenses resulted in a operating loss reported for the period under review. Major non-recurring expenses and impairments included in other expenses are detailed below: 31 December 2013 R 31 December 2012 R Employment settlement costs 1 746 666 573 333 Foreign exchange loss 5 697 223 – Increase in bad debt provision 7 060 850 – Corporate action legal fees 2 762 249 – 17 266 988 573 333 Goodwill to the value of R8 million was impaired as a result of declining margins in certain distribution areas. Lower interest rates and a declining loan balance led to a decrease of 5% in finance costs. Due to the cyclical nature of the business, both current assets and current liabilities are significantly higher at end of December, which is in the middle of our high season, than at year-end. Trade receivables decreased by 7% compared to the comparative prior period. At period end, more than 60% of our debt was 30 days aged and younger. Continuing drought in certain areas and increased operating costs for farmers resulted in non-performance of their debt obligations. This caused a re-assessment of the provision for bad debt, which was increased by R7 million (80%). The total provision for bad debt now stands at 6% of our book value. Inventories increased by 35% compared to the comparative prior period. The increase is due to various factors, among others, increased order values to utilise bulk discounts, the late start to the season, persistent drought in certain areas of the country and higher landed cost of goods imported. Trade payables increased by 21% compared to the comparative prior period due to value and volume increases in inventory. On 5 September 2013 the board decided to sell its Namibian subsidiary, which would enable renewed focus on its agricultural businesses.The assets and liabilities of this investment is disclosed separately on the face of the statements of comprehensive income and financial position as discontinued operations and assets of disposal group respectively.As a result, a significant decrease in fixed assets and loans payable, due to this reclassification, was affected when compared to June 2013. Going concern Ububele is currently in a negative net equity position. The board approved an imminent rights offer (refer to the declaration announcement released simultaneously with this results announcement) and expects the current situation to be temporary. Expected equity to arise as a result of the rights offer is R17 million, effectively restoring positive equity. The rights offer will be underwritten by Rovic Agri Proprietary Limited, a shareholder in Ububele. R12 million has been advanced by Rovic Agri Proprietary Limited in anticipation of the rights offer. This is disclosed as loans from shareholders. 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 2013, which have been prepared in accordance with International Financial Reporting Standards and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council. 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. In accordance with IFRS 5, comparative income and expenses for discontinued operations were reclassified towards separate line items in the statement of comprehensive income.The assets and liabilities of the disposal group were separately disclosed for the current reporting period in the statement of financial position. New standards and interpretations had no effect on the reported results for the period under review.
  6. 6. 6 5. DISCONTINUED OPERATIONS AND NON-CURRENT ASSETS HELD-FOR-SALE On 5 September 2013, the board took a decision to sell the Company’s share in Mediva Group Holdings (Pty) Ltd, our Namibian subsidiary. During the December 2012 interim period, the Company disposed of its equity share and claims in Unique Dairy Products. Both disposals formed part of the Company’s strategy to disinvest in the short to medium term from the food sector and divert all of its available resources and effort into the agricultural and services sectors. 31 December 2013 R 31 December 2012 R 30 June 2013 R Profit/(loss) from discontinued operations Revenue 24 039 875 67 313 383 94 322 044 Expenses (21 346 341) (59 990 381) (91 310 744) Impairment of intangible assets – – (7 417 452) Tax (861 938) (1 846 286) (8 100 872) 1 831 596 5 476 716 (12 507 024) Non-current assets/(liabilities) held-for-sale and assets/(liabilities) of disposal group Property, plant and equipment 15 218 281 – 515 000 Intangible assets 968 929 – – Deferred taxation 1 837 770 – – Inventories 2 651 241 – – Loans receivable – current 509 250 – – Trade and other receivables 12 276 718 – – Cash and cash equivalents 982 815 – – Loans payable – non-current (8 309 452) – – Amounts due on instalment sale agreements – non-current (105 965) – – Deferred taxation (682 661) – – Trade and other payables (12 915 022) – – Taxation (286 051) – – Loans payable – current (2 492 123) – – Bank overdraft (458) – – 9 653 271 – 515 000 Cash flows from discontinued operations Net cash inflows/(outflows) from operating activities 6 221 691 1 667 420 (7 513 655) Net cash inflows/(outflows) from financing activities (2 048 267) – 1 310 751 Net cash inflows/(outflows) from investing activities (2 318 086) – 671 139 1 855 338 1 667 420 (5 531 765) 4. IMPAIRMENT OF GOODWILL 6 months 31 December 2013 R 6 months 31 December 2012 R 12 months 30 June 2013 R Yield Avello goodwill 8 316 151 – – Fine Cut trademark (goodwill) – – 7 417 452 The goodwill raised in terms of the Yield Avello Proprietary Limited (previously Avello Proprietary Limited) acquisition in 2011 was assessed for impairment in terms of IAS 36, which requires that an impairment loss should be recognised based on the higher of value in use and its fair value less costs to sell. As a result of more than expected competition in Yield Avello’s distribution area and pressure placed on margins, the recoverable amount was less than the carrying value. Given the decision taken in 2012 to primarily disinvest from the food sector, the board of directors decided to impair the remaining Just Fresh brand in the 2013 financial year. This brand held minimal usage at the Group’s airline catering company in Namibia.
  7. 7. 7 6. EARNINGS PER SHARE AND HEADLINE EARNINGS PER SHARE 6 months 31 December 2013 R 6 months 31 December 2012 R 12 months 30 June 2013 R Continuing operations Reconciliation of headline earnings: (Loss)/profit attributable to ordinary shareholders (25 501 232) 1 717 080 (10 493 142) Profit on disposal of property, plant and equipment – (28 276) (481 156) Impairment of goodwill 8 316 151 – – Headline earnings attributable to ordinary shareholders (17 185 081) 1 688 804 (10 974 298) Number of ordinary shares in issue 178 382 824 178 417 824 178 382 824 Weighted number of ordinary shares in issue 178 382 824 178 417 824 178 411 879 Fully diluted weighted average number of ordinary shares 178 382 824 178 417 824 178 411 879 Earnings per ordinary share from continuing operations (cents) (14,30) 0,96 (27,05) Headline earnings per ordinary share from continuing operations (cents) (9,63) 0,95 (0,44) Fully diluted earnings per ordinary share from continuing operations (cents) (14,30) 0,96 (27,05) Fully diluted headline earnings per ordinary share from continuing operations (cents) (9,63) 0,95 (0,44) All operations Reconciliation of headline earnings: (Loss)/profit attributable to ordinary shareholders (24 472 186) 4 923 678 (26 090 737) Profit on disposal of property, plant and equipment (35 955) (28 276) (481 156) Profit on disposal of investment – (2 211 411) (1 232 488) Impairment of goodwill 8 316 151 – 7 417 452 Headline earnings attributable to ordinary shareholders (16 191 990) 2 683 991 (20 386 929) Earnings per ordinary share (cents) (13,72) 2,76 (14,62) Headline earnings per ordinary share (cents) (9,08) 1,50 (11,43) Fully diluted earnings per ordinary share (cents) (13,72) 2,76 (14,62) Fully diluted headline earnings per ordinary share (cents) (9,08) 1,50 (11,43) 7. AVAILABLE-FOR-SALE FINANCIAL ASSETS AT FAIR VALUE Unlisted shares 5 179 892 4 565 856 Non-current assets Available-for-sale 5 179 892 4 565 856 Fair value hierarchy of financial assets at fair value For financial assets recognised at fair value, disclosure is required of a fair value hierarchy which reflects the significance of the inputs used to make the measurements. Level 1 represents those assets which are measured using unadjusted quoted prices for identical assets. Level 2 applies inputs other than quoted prices that are observable for the assets either directly (as prices) or indirectly (derived from prices). Level 3 applies inputs which are not based on observable market data (unobservable input). Level 3 Unlisted shares 5 179 892 4 565 856
  8. 8. 8 9 8. SEGMENT INFORMATION The Group has four 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 agriculture, holding company, Namibia and foods. 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: Continuing Discontinued 6 months ended 31 December 2013 Agriculture R Holding company R Subtotal R Namibia R Foods R Subtotal R Total R Revenue – external 407 234 077 – 407 234 077 24 039 875 – 24 039 875 431 273 952 Revenue – internal 95 800 361 4 157 438 99 957 799 2 220 000 330 000 2 550 000 102 507 799 Interest income 2 387 930 – 2 387 930 222 387 – 222 387 2 610 317 Finance costs (10 448 470) (24 615) (10 473 085) (894 928) (10 705) (905 633) (11 378 718) Depreciation and amortisation (2 242 814) (125 260) (2 368 074) (1 130 205) (56 112) (1 186 317) (3 554 391) Impairment of intangible assets and goodwill (8 316 151) – (8 316 151) – – – (8 316 151) Segment profits/(losses) attributable to ordinary shareholders (15 709 161) (9 792 071) (25 501 232) 865 250 163 796 1 029 046 (24 472 186) Segment profits attributable to minorities – – – 802 550 – 802 550 802 550 Segment current assets 503 377 720 693 507 504 071 227 15 405 057 1 014 967 16 420 024 520 491 251 Segment current liabilities 430 912 079 1 101 614 432 013 693 13 898 519 1 795 135 15 693 654 447 707 347 6 months ended 31 December 2012 Revenue – external 359 578 540 – 359 578 540 25 695 270 41 618 113 67 313 383 426 891 923 Revenue – internal 115 013 674 3 000 000 118 013 674 – 3 203 960 3 203 960 121 217 634 Interest income 4 985 129 – 4 985 129 162 634 – 162 634 5 147 763 Finance costs (10 565 353) (413 056) (10 978 409) (426 465) (126 599) (553 064) (11 531 473) Depreciation and amortisation (2 707 570) (43 267) (2 750 837) (2 384 343) (1 800 905) (4 185 248) (6 936 085) Impairment of intangible assets and goodwill – – – – (7 417 452) (7 417 452) (7 417 452) Segment profits/(losses) attributable to ordinary shareholders 2 999 358 (1 282 278) 1 717 080 1 478 519 1 728 079 3 206 598 4 923 678 Segment profits attributable to minorities – – – 2 270 118 – 2 270 118 2 270 118 Segment current assets 444 530 761 203 681 444 734 442 17 771 040 11 689 834 29 460 874 474 195 316 Segment current liabilities 319 838 845 3 912 221 323 751 066 19 844 809 3 505 657 23 350 466 347 101 532
  9. 9. 10 9. CHANGES TO THE BOARD During the period under review and to the date of this report, the directors are as follows: WDK Buys Appointed 1 February 2014 HW Cloete Resigned 22 November 2013 CA Hall Appointed 28 August 2013 TB Hayter Resigned 27 August 2013 JT Kleinhans Appointed 28 August 2013 MJ Krastanov Resigned 27 August 2013 E Kruger Resigned 28 February 2014 MK Makaba Term ended 5 December 2013 JMK Matlala Removed 28 August 2013 MP Mocke Removed 28 August 2013 JD Newton Appointed 28 August 2013 WJ Raubenheimer Appointed 5 December 2013 CH Rickens Appointed 28 August 2013 SA Roux Resigned 4 December 2013 10. SUBSEQUENT EVENTS Subsequent to the reporting date, the board approved a rights offer. There have been no other events of a material nature, that in our opinion require further disclosure, after the date of approval of these abridged unaudited interim consolidated financial statements. 11. FUTURE PROSPECTS Ububele Holdings is near completion in its strategy to disinvest from the foods sector. Ububele will in future concentrate on its core business, which is crop protection, and this should bring stability and sustainability to our activities. We believe that scientific farming is the only solution to the world’s growing demand for food. Through our exciting agro-chemical product range, combined with our geographic footprint and renewed focus on agriculture, we are well positioned to assist our farmers to be more competitive and sustainable for the future. These abridged consolidated interim financial statements have been prepared by E Kruger CA(SA) and WDK Buys CA(SA), the financial director. On behalf of the board CH Rickens WDK Buys Chief executive officer Financial director 6 March 2014
  10. 10. GREYMATTER & FINCH # 7963 Directors CA Hall (Chairman)# * CH Rickens (CEO) WDK Buys (FD) JD Newton# * JT Kleinhans# WJ Raubenheimer# * # Non-executive * Independent Company secretary Fusion Corporate Secretarial Services (Pty) Limited Reg. no: 1998/011074/06 Postal address: PO Box 4637,Tyger Valley, 7536 Telephone: +27 (0)21 914 3553 Facsimile: +27 (0)21 914 8859 Registered office Ground Floor Acorn House West Wing Old Oak Office Park cnr Old Oak & Durban Roads Bellville Transfer secretaries Computershare Investor Services (Pty) Ltd Ground Floor 70 Marshall Street Johannesburg 2001 Designated advisor PSG Capital Auditors Nolands Inc

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