Wrap Text
Reviewed results for the year ended 30 June 2012
UBUBELE HOLDINGS LIMITED
(Incorprated in the Republic of South Africa)
(Registration number: 1998/011074/06)
Share code : UBU
ISIN code: ZAE000144739
("Ububele" or "the company")
REVIEWED RESULTS 2012
ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Group
Reviewed Audited
Year ended Year ended
30 June 30 June
2012 2011
R R
Continuing operations
Revenue 667 171 936 547 193 053
Cost of sales (476 010 351) (377 252 866)
Gross profit 191 161 585 169 940 187
Other income 4 504 893 4 987 325
Operating expenses (173 318 215) (148 116 538)
Operating profit 22 348 263 26 810 974
Investment revenue 8 824 250 7 145 446
Loss on non-current assets
held for sale or disposal
groups (67 775)
Impairment of goodwill (9 298 498)
Finance costs (19 249 328) (8 753 505)
Profit before taxation 2 556 912 25 202 915
Taxation (6 816 068) (8 508 016)
(Loss)/profit from
continuing operations (4 259 156) 16 694 899
Discontinued operations
Loss from discontinued
operations (37 826 236) (6 163 956)
(Loss)/profit for the year (42 085 392) 10 530 943
Other comprehensive income:
Available-for-sale financial
assets adjustments 477 611 528 737
Total comprehensive
(loss)/income (41 607 781) 11 059 680
Net profit attributable to:
Owners of the parent:
(Loss)/profit for the year
from continuing operations (10 447 348) 8 371 921
Loss for the year from
discontinued operations (37 816 868) (6 163 956)
(Loss)/profit for the year
attributable to owners of
the parent (48 264 216) 2 207 965
Non-controlling interest:
Profit for the year from
continuing operations 6 188 192 8 322 978
Loss for the year from
discontinued operations (9 368)
Profit for the year
attributable to non-
controlling interest 6 178 824 8 322 978
Total comprehensive income
attributable to:
Owners of the parent (47 786 605) 2 736 702
Non-controlling interest 6 178 824 8 322 978
(41 607 781) 11 059 680
EARNINGS PER SHARE (CENTS)
Basic from continuing
operations (5.87) 4.73
Diluted basic from
continuing operations (5.87) 4.73
Basic from all operations (27.14) 1.25
Diluted basic from all
operations (27.14) 1.25
Headline earnings per share
from continuing operations (0.44) 4.10
Headline earnings per share
from all operations (4.54) 0.62
Number of ordinary shares in
issue 178 417 824 177 167 822
Weighted number of ordinary
shares in issue 177 844 054 177 161 405
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Group
Reviewed Audited Audited
2012 2011 2010
R R R
ASSETS
Non-current assets
Property, plant and
equipment 34 508 140 27 542 244 23 692 743
Goodwill 73 424 364 98 577 678 88 295 532
Intangible assets 15 331 261 27 762 093 23 710 249
Deferred taxation 23 242 621 17 666 609 14 396 117
Available-for-sale
financial assets at
fair value 4 565 856 3 854 738 3 239 928
151 072 242 175 403 362 153 334 569
Current assets
Trade and other
receivables 154 717 349 129 827 257 75 197 342
Inventories 89 718 021 72 963 357 49 609 325
Loans receivable 2 250 772
Cash and cash
equivalents 17 869 530 13 464 017 8 132 913
Taxation 662 144 1 473 440 1 686 885
265 217 816 217 728 071 134 626 465
Non-current assets
held for sale and
assets of
disposal groups 1 294 645 1 385 766
Total assets 417 584 703 394 517 199 287 961 034
EQUITY AND
LIABILITIES
EQUITY
Equity attributable
to equity holders of
parent
Share capital and
premium 100 999 428 99 749 428 99 649 328
Other reserves 2 395 148 1 917 537 1 388 800
Accumulated
(loss)/profit (62 708 599) 29 098 973 26 891 008
40 685 977 130 765 938 127 929 136
Non-controlling
interest 10 421 395 13 075 372 16 737 894
51 107 372 143 841 310 144 667 030
LIABILITIES
Non-current
liabilities
Loans payable 219 393 719 91 373 641 1 405 473
Interest-bearing
borrowings 4 764 571 5 724 003 6 312 066
Deferred taxation 4 355 426 3 199 054 3 792 822
228 513 716 100 296 698 11 510 361
Current liabilities
Trade and other
payables 95 350 458 92 442 657 62 495 695
Loans from
shareholders 9 664 108 11 042 952
Loans payable 36 400 811 31 412 792 36 306 268
Taxation 2 906 867 1 461 273 4 532 063
Interest-bearing
borrowings 3 260 801 3 853 601 2 625 960
Derivative financial
instruments 45 846 44 391
Bank overdraft 44 678 11 498 914 14 736 314
137 963 615 150 379 191 131 783 643
Total liabilities 366 477 331 250 675 889 143 294 004
Total equity and
liabilities 417 584 703 394 517 199 287 961 034
ABRIDGED
CONSOLIDATED
STATEMENT OF
CHANGES IN EQUITY
Total
share Total
capital attributable to Non-
Share Share and Other Accumulated equity holders controlling Total
capital premium premium reserves Profit/(loss) of the group interest equity
R R R R R R R R
Group
Balance
at 1 July 2010 88 545 409 11 103 919 99 649 328 1 388 800 26 891 008 127 929 136 16 737 894 144 667 030
Changes
in equity
Total
comprehensive
income for the
for the year 528 737 2 207 965 2 736 702 8 322 978 11 059 680
Issue of
shares 38 500 61 600 100 100 100 100 100 100
Dividends
paid (11 985 500) (11 985 500)
Total
changes 38 500 61 600 100 100 528 737 2 207 965 2 836 802 (3 662 522) (825 720)
Balance
at 30 June 2011 88 583 909 11 165 519 99 749 428 1 917 537 29 098 973 130 765 938 13 075 372 143 841 310
Changes
in equity
Total
comprehensive income
for the year 578 369 (48 264 216) (47 685 847) 6 178 824 (41 507 023)
Rate change - - - (100 758) - (100 758) - (100 758)
Issue of shares 625 000 625 000 1 250 000 1 250 000 1 250 000
Acquisition of
non-controlling interest (40 000 000) (40 000 000) (40 000 000)
Dividends paid - - (3 543 356) (3 543 356) (8 832 801) (12 376 157)
Total changes 625 000 625 000 1 250 000 477 611 (91 807 572) (90 079 961) (2 653 977) (92 733 938)
Balance
at 30 June 2012 89 208 909 11 790 519 100 999 428 2 395 148 (62 708 599) 40 685 977 10 421 395 51 107 372
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
Group
Reviewed Audited
Year ended Year ended
30 June 30 June
2012 2011
R R
Cash used in operations (16 766 014) (19 016 679)
Interest income 8 564 730 6 905 872
Dividends received 259 520 239 574
Finance costs (19 249 328) (8 753 505)
Taxation paid (6 023 158) (11 870 534)
Net cash outflow from
operating activities (33 214 250) (32 495 272)
Cash flows from investing
activities
Additions to property, plant
and equipment (21 296 235) (11 356 628)
Proceeds on disposal of
property, plant and
equipment 5 649 826 443 168
Additions to intangible
assets (3 239 080) (692 232)
Acquisition of interest in
subsidiaries (40 000 000) (16 998 398)
Acquisition of available-
for-sale financial assets (711 118) (528 737)
Loans receivable repaid (2 250 772)
Net cash outflows from
investing activities (61 847 379) (29 132 827)
Cash flows from financing
activities
Proceeds on share issue 1 250 000 100 100
Proceeds from loans payable 125 053 524 117 418 838
Repayment of loans payable (34 312 225)
Repayment of shareholder's
loan (1 453 757) (1 378 844)
Interest-bearing borrowings
repaid (1 552 232) (4 604 688)
Interest-bearing borrowings
raised 4 958 923
Dividends paid (12 376 157) (11 985 500)
Net cash inflow from
financing activities 110 921 378 70 196 604
Net increase in cash and
cash equivalents for the
year 15 859 749 8 568 505
Cash and cash equivalents at
the beginning of the year 1 965 103 (6 603 402)
Cash and cash equivalents at
the end of the year 17 824 852 1 965 103
1.Introduction
Ububele Holdings is pleased to present its reviewed financial results for the year
ended 30 June 2012.
The period under review has been dominated by major cost-cutting exercises with
accompanying impairments predominantly in Ububele's food division. On the macro
front the company also had to absorb a foreign exchange loss in its agriculture
division while the food retail sector provided its own challenges in terms of price
and downward pressure on margins. Maize achieved record prices accompanied by
increased planting which resulted in Ububele's agriculture division achieving
increased turnover. However, our agriculture division experienced downward pressure
on our margins due to a lack of rain in the later part of the season, resulting in a
change in the product mix.
The board has reviewed its strategy and decided to reduce its investment in the food
production sector in South Africa and focus on developing Ububele's agriculture
business. One such area is that of increasing the supply of products to fruit and
vegetable crop producers in order to achieve an optimal product mix. The company is
well positioned to achieve this. On both the organic and the acquisitive side,
Ububele will continue expanding and diversifying agriculture in both South Africa
and the rest of the continent.
2.Commentary on results
The revenue increase of 22% was largely as a result of growth in annual-crop areas
which form part of our agri division. This resulted in a lower gross profit
percentage of 29% (compared to 31% in 2011), as turnover in the higher margin
perennial areas stayed constant. The group is currently actively growing its sales
in the perennial crop areas.
Operating expenses increased by 17% year-on-year. The increase was in part due to
higher sales volumes, but the following also had a material effect on the increased
operating expenses:
· A loss of R2.2 million on foreign exchange due to the devaluation of the rand vs.
the dollar. The exchange risk in the group is being actively monitored and steps
are taken to minimise this risk in future.
· Transport and distribution costs in our agri division were materially higher than
the previous year, partly due to a bumper season in August which forced the company
to outsource part of the distribution of our product. The group has subsequently
enlarged their fleet of trucks to avoid a similar incident in future. Transport
costs in both the food and agri divisions were also negatively affected by fuel
price increases during the year.
· Electricity and water price increases had a negative effect on the operating
expenses, especially in the food division.
· Retrenchment costs led to a higher than usual salary bill.
· During the year the group spent R2.8 million on the development of the Yield brand.
Finance costs increased by 123% year-on-year. This was due to a R90 million increase
in the Land Bank facility, a R40 million Land Bank term loan to finance the
acquisition of the minority share in Erintrade and the higher than normal stock
levels at year-end. Also included in finance costs is interest due on dividends
payable to the previous outside shareholders of Erintrade. These loans will be fully
repaid after year-end.
Inventories were 23% higher than at 30 June 2011, mainly as a result of the drought
from December 2011 resulting in fungicides not being sold.
During the period under review, The Land Bank of South Africa increased its facility
to Ububele by R90 million. This facility was utilised to finance the increase in
stock and debtors.
A term loan of R40 million was granted by The Land Bank to finance the purchase of
the additional 49.9% share in Erintrade.
The period under review reflected an effective 25% of the profits of Flamingo
(previously Ububele Alpine In-Flight). On 1 August 2012, our effective holding
increased to 50%. During the period under review, an investment of R7.7 million was
made towards the construction of a new kitchen facility at Hosea Kutako
International Airport. A 15-year lease with the option to renew for another five
years was signed with Namibia Airports Company commencing on 1 August 2012. The new
facility will ensure better service to Flamingo's clients and an increased capacity.
This remains a strategic investment for Ububele.
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 first six months of the financial year,
management spent a significant amount of time and effort in implementing remedial
actions, as well as implementing 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 return
to profitability 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.
On 19 May 2012, the group sold all the assets and liabilities of Just Fruit & Veg
for approximately R2 million.
3.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 opinion 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 2012 have been prepared in accordance with
IFRS (including IAS 34: Interim Financial Reporting), the AC 500 standards as issued
by the Accounting Practices Board or its successor, 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
2011.
4.Impairment of intangible assets and goodwill
During the period under review, the company impaired the following intangible assets
and goodwill:
2012
R
Continuing operations
Unique Dairy Products (Milkworx) goodwill 9 298 498
Discontinued operations
Linktrade customer contract 5 948 994
Just Fruit & Veg recipes 4 968 966
Just Fruit & Veg goodwill 15 854 816
Just Fruit & Veg brands 90 000
Just Fruit & Veg restraint of trade 554 167
So Gourmet trademark 3 114 343
39 829 784
Negotiations were entered into after the reporting date to dispose of the shares and
claims of Unique Dairy Products (see note 6). A final sale of shares agreement was
signed with the seller on 25 September 2012 and initial indications were that
goodwill may need to be impaired. The goodwill 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 of the asset and its fair value less costs to sell. As a
result of the assessment in terms of IAS 36 the goodwill was impaired by R9 298 498.
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 the 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 impair the remainder of the customer contract to zero.
During the period under review, So Gourmet was liquidated and the trademark impaired
to zero.
5.Discontinued operations or disposal groups or non-current assets held for sale
The group has decided to discontinue its fruit and vegetable operations in Cape
Town, Just Fruit & Veg. The assets and liabilities of this company was sold on 19
May 2012 for an amount of R2 million.
So Gourmet was also liquidated during the period under review.
The decision was taken by the board to discontinue these operations due to a lack of
return on investment.
2012 2011
Profit and loss R R
Revenue 19 185 490 18 862 990
Expenses (60 428 628) (27 424 040)
Net loss before tax (41 243 138) (8 561 050)
Tax 3 416 902 2 397 094
(37 826 236) (6 163 956)
Assets and liabilities
Non-current assets held for
sale
Property, plant and
equipment 1 294 645 1 385 766
6.Earnings per share (Rand)
The calculation of basic and headline earnings per share is based on the following
attributable profits and weighted average number of shares.
Continued operations 2012 2011
(Losses)/profits
attributable to parent
shareholders (10 447 348) 8 371 921
Loss on disposal of property
plant and equipement 363 492 36 149
Bargain purchase on business
combination - (1 137 796)
Impairment of assets 9 298 498
Headline earnings (785 358) 7 270 274
Continued and discontinued
operations
(Losses)/profits
attributable to parent
shareholders (48 264 216) 2 207 965
Loss on disposal of
property, plant and
equipment 363 492 36 149
Bargain purchase on business
combination - (1 137 796)
Impairment of investment 39 829 784
Headline earnings (8 070 940) 1 106 318
7.Acquisition of interest from non-controlling interests
During the year under review, the group purchased the remainder of Erintrade's share
capital (49.9%) from minorities for an amount of R40 million. The company already
had control over Erintrade and its assets and liabilities were fully consolidated.
8.Share capital
During the year under review, the company issued 1 250 000 ordinary shares at R1.00
each.
9.Prior period error
During the financial year it came to the directors attention that the purchase
consideration for the Erintrade acquisition in the 2010 financial year was
incorrectly calculated.
The purchase consideration was based on an average earnings after tax for 2009 and
2010 financial years of Erintrade and an average listed price earnings ratio of
Ububele for the 2010 financial year. As Ububele was not yet listed at the time of
the final calculation and no listed average price earnings ratio was available the
seller and purchaser agreed to an average earnings and price earnings ratio for the
period and amended the contract accordingly. This resulted in an increase of R8.2
million to the purchase consideration and a similar increase to the goodwill
relating to the purchase of Erintrade in terms of IFRS 3.
This error resulted in goodwill being understated by R8 210 351 in the 2010 and 2011
financial years.
The additional goodwill has been allocated to the agri division cash-generating unit
and based on value-in-use calculations in terms of IAS 36 does not require any
impairment.
10.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
Foods
Agriculture Foods discontinued Total
2012 R R R R
Revenue
external 540 453 960 127 917 977 19 185 489 687 557 426
Revenue
internal 149 642 809 37 006 789 186 649 599
Interest income 8 625 338 172 301 893 8 798 532
Finance costs 15 203 440 2 112 913 285 741 17 602 094
Depreciation and
amortisation 3 027 376 2 676 075 1 299 921 7 003 372
Segment
profits/(losses)
attributable to
parent
shareholders 13 072 012 (8 705 088) (37 816 868) (33 459 312)
Segment
profits/(losses)
attributable to
non-controlling
interest 6 188 192 (9 368) 6 178 824
Trade and other
payables 70 915 992 22 049 207 92 965 199
Trade and other
receivables 131 943 056 21 267 284 153 210 340
Agriculture Foods Total
R R R
Reconciliation
between segment
profits and total
profits for the
group:
Segment
profits/(losses)
attributable to
ordinary
shareholders 13 072 012 (8 705 088) 4 366 924
Net loss in
Ububele Holdings
Limited holding
company - - (14 804 904)
Loss from
discontinued
operations - - (37 826 236)
Total loss for
the period
attributable to
ordinary
shareholders - - (48 264 216)
BUSINESS SEGMENTS
Foods
Agriculture Foods discontinued Total
2011 R R R R
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) (2 113 164) (535 758) (5 005 681)
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
Agriculture Foods Total
R R R
Reconciliation
between segment
profits and total
profits for the
group:
Segment
profits/(losses)
attributable to
ordinary
shareholders 11 229 033 (2 857 112) 8 371 921
Net loss in
Ububele Holdings
Limited holding
company
Loss from
discontinued
operations (6 163 956)
Total loss for
the period
attributable to
ordinary
shareholders 2 207 965
11.Events after the reporting date
Subsequent to the reporting date, the board decided to dispose of Ububele's equity
share and claims in Unique Dairy Products (Pty) Limited (UDP), subject to
shareholder approval.
The disposal forms 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 sector.
Ububele believes that the emphasis on food security and the current high
agricultural commodity prices makes the agricultural sector very lucrative.
UDP forms part of Ububele's Food division.
UDP is a specialist producer of ice cream, soft serve, frozen yoghurt and related
products catering for both the emerging and high-end markets. The company has
concentrated on frozen yoghurts, soft serve ice cream, and both speciality and fun
lines including scoops, cups and tubs, together with smoothies and milkshakes.
Alongside this, the company also focuses on the manufacture of water-based ice-pops,
flavoured stick ice creams, frozen desserts and related products.
In addition, the company is actively involved in contract manufacturing, packing and
distribution on behalf of multinational brands, including fast food franchises such
as McDonalds.
Ububele Holdings Limited has entered into an agreement with Stefan van der Berg and
the Stephan Roux Familie Trust, in terms of which the company will dispose of:
100% if its equity stake and loan account in UDP; and
all trademarks relating to UDP and Uni-Way, with the specific exclusion of the
trademark "Just Fresh".
In terms of the agreement the effective date of the disposal will be 1 December
2012.
The total consideration payable for the shares and claims in terms of the agreement
is R25 650 100, and will be paid on the following basis to the seller:
Payment of the amount of R10 000 000 by the purchaser on or before 1 December 2012.
Payment of the amount of R185 254 93 monthly for 23 months from 1 January 2013.
Payment of the amount of R185 255.02 on the 1st of December 2014.
By setting off the debt owed to Ububele Holdings and/or its subsidiaries in the
amount of R6 703 981.59.
By paying the net current asset value as calculated at close of business on 30
November 2012 which value shall not be more than R4 500 000, over 24 months from 1
January 2013 in equal amounts.
Goodwill relating to UDP 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 of the asset and its fair value less costs to sell. As a result of the
assessment in terms of IAS 36, the goodwill was impaired by R9 298 498.
12. Future prospects
After the past year's consolidation of our food division, Ububele's focus in the
immediate future will be to invest even more in the agricultural sector. We foresee
more normalised results from our operations and we will enhance and expand in the
current scientific service and agricultural products that we sell to our clients.
The only solution for the world to produce more food from the same amount of land
lies in scientific farming. Our clients will yield more from their land by way of
our current and new exciting product mix and our continuous investment into research
and development.
The strategic investment in our airline services company in Namibia, Flamingo Food
Services, opened many doors for us in Southern Africa. We have also started to
increase our footprint even further into Africa with new registrations and strategic
partners in African countries such as Namibia, Mozambique, Angola, Zimbabwe, Zambia
and Botswana. We will continue to grow our business into Africa even further.
The world is looking to Africa, with all its arable land, as a solution for the
world food crisis. We at Ububele are very excited to be part of the solution.
13. Reviewed provisional financial statements
These reviewed provisional financial statements were prepared and compiled by
Ms E Kruger, Chartered Accountant (SA).
On behalf of the board
HW Cloete E Kruger
Chief executive officer Financial director
Cape Town
4 October 2012
Directors: MK Makaba (Chairman)#, JT Kleinhans# (Vice-chairman),
HW Cloete (Chief Executive Officer)*, E Kruger (Financial Director)* MP Mocke*, SA
Roux*, JMK Matlala*, TB Hayter#, MJ Krastanov#, (*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 Advisor: PSG Capital
Auditors: Nolands Inc
Date: 04/10/2012 01:02:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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