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UBU - Ububele Holdings Limited - Interim results for the six months ended 31

Release Date: 02/03/2011 08:12
Code(s): UBU
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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 Supplied by www.sharenet.co.za 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.

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