Wrap Text
Unaudited condensed interim results for the six months ended 31 August 2012
BK One Limited
Incorporated in the Republic of South Africa
Registration Number: 2011/008103/06
Preference Share Code: BK1P
ISIN: ZAE000161352
“BK One” or “the Company”
Unaudited condensed interim results for the six months ended 31 August 2012
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Unaudited
Unaudited six six Audited
months
months ended ended year ended
31 August 31 August 29 February
2012 2011 2012
R R R
Revenue 5 510 320 - 4 992 021
Fair value adjustments on investments (42 805 076) - 34 046 192
Administrative expenses (53 576) - (100 491)
Employee benefits expense
- Directors (330 000) (340 000)
Other expenses (refer note 1) (37 689 769) - (3 021 810)
Profit (loss) before taxation (75 368 101) - 35 575 912
Taxation 6 866 453 - (6 866 453)
Profit (loss) for the period (68 501 648) - 28 709 459
Other comprehensive income - -
- - -
Total comprehensive income (loss) for the
period (68 501 648) - 28 709 459
Profit (loss) for the period attributable to:
Ordinary shareholders - - -
Preference shareholders (68 501 648) - 28 709 459
(68 501 648) - 28 709 459
Total comprehensive income (loss) for the period
attributable to:
Ordinary shareholders - - -
Preference shareholders (68 501 648) - 28 709 459
(68 501 648) - 28 709 459
CONDENSED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 August 31 August 29 February
2012 2011 2012
R R R
ASSETS
Non-current assets
Investments 51 442 794 - 94 247 870
Loans 106 681 510 - 138 657 085
158 124 304 - 232 904 955
Current assets
Cash and cash equivalents 439 163 200 1 278 078
439 163 200 1 278 078
Total assets 158 563 467 200 234 183 033
EQUITY AND LIABILITIES
Equity
Share capital 200 200 200
Retained income (39 792 189) - 28 709 459
Total equity (39 791 989) 200 28 709 659
Liabilities
Non-current liabilities
Preference shares 197 799 790 - 197 799 790
Deferred tax - - 6 866 453
197 799 790 - 204 666 243
Current liabilities
Trade and other payables 555 666 - 807 131
555 666 - 807 131
Total liabilities 198 355 456 - 205 473 374
Total equity and liabilities 158 563 467 200 234 183 033
CONDENSED STATEMENT OF CHANGES IN EQUITY
Non-
Share controlling
capital Retained income interest Total equity
R R R R
Balance at 1 March 2011 - - - -
Changes:
Ordinary shares issued 200 - - 200
Profit for the period - - - -
Other comprehensive income for the
period - - - -
Balance at 31 August 2011 200 - - 200
Balance at 1 March 2011 - - - -
Changes:
Ordinary shares issued 200 - - 200
Profit for the year - 28 709 459 - 28 709 459
Other comprehensive income for the
year - - - -
Balance at 29 February 2012 200 28 709 459 - 28 709 659
Changes:
Loss for the period - (68 501 648) - (68 501 648)
Other comprehensive income for the
period - - - -
Balance at 31 August 2012 200 (39 792 189) - (39 791 989)
CONDENSED STATEMENT OF CASH FLOWS
Unaudited
six Unaudited six Audited
months months
ended ended year ended
31 August 31 August 29 February
2012 2011 2012
R R R
Cash flows from operating activities
Cash used in operations (2 593 740) - (2 655 170)
Finance income - - -
Finance costs - - -
Taxation - - -
Net cash from operating activities (2 593 740) - (2 655 170)
Loans advanced (5 380 000) -
Investments made - - (52 168 813)
Net cash from investing activities (5 380 000) - (52 168 813)
Share capital raised - 200 200
Capital raised - preference shares (net of capital
raising fees) - - 197 799 790
Borrowings - advanced - - (143 697 929)
Borrowings - repaid 7 134 825 2 000 000
Net cash from financing activities 7 134 825 200 56 102 061
Total cash movement for the period (838 915) 200 1 278 078
Cash and cash equivalents at the beginning of the
period 1 278 078 - -
Cash and cash equivalents at the end of the
period 439 163 200 1 278 078
CONDENSED SEGMENT REPORT
Audited year ended 29 February 2012
Interest Fair Value
Investment Industry Received Split % Adjustment Split %
Pure Ocean Aquaculture (Pty) Ltd
(“Pure Ocean Aquaculture”) Aquaculture 1 593 863 60% 20 633 006 61%
Avalloy (Pty) Ltd (“Avalloy”) Superalloys 309 395 12% 5 131 912 15%
Tor Holdings (Pty) Ltd (“Tor
Holdings”) Construction 731 071 28% 8 281 274 24%
2 634 329 100% 34 046 192 100%
Unaudited six months ended 31 August 2011
Interest Fair Value
Investment Industry Received Split % Adjustment Split %
Pure Ocean Aquaculture Aquaculture - - - -
Avalloy Superalloys - - - -
Tor Holdings Construction - - - -
- - - -
Unaudited six months ended 31 August 2012
Interest Fair Value
Investment Industry Received Split % Adjustment Split %
Pure Ocean Aquaculture Aquaculture 3 723 720 95% (10 215 555) 24%
Avalloy Superalloys 179 173 5% (24 308 229) 57%
Tor Holdings Construction - 0% (8 281 292) 19%
3 902 893 100% (42 805 076) 100%
There is no inter-segment trading.
HEADLINE EARNINGS PER SHARE Unaudited Unaudited Audited
31 August 31 August 29 February
2012 2011 2012
Shares in issue:
Ordinary shares: Number of shares in issue 200 200
Preference shares: Number of shares in issue 20 102 000 20 102 000
Weighted average number of shares in issue
Ordinary shares: Number of shares in issue 200 200
Preference shares: Number of shares in issue 20 102 000 20 102 000
Earnings (loss) per share, in Rands
Basic
Ordinary shareholders - -
Preference shareholders (3.41) 1.43
Earnings (loss)per share, in Rands
Diluted
Ordinary shareholders - -
Preference shareholders (3.41) 1.43
Reconciliation of headline earnings
Profit (loss) attributable to preference shareholders (68 501 648) 28 709 459
(68 501 648) 28 709 459
Headline earnings (loss) per ordinary share (Rand) - -
Diluted earnings (loss) per ordinary share (Rand) - -
Headline earnings (loss) per preference share
(Rand) (3.41) 1.43
Diluted earnings (loss) per preference share (Rand) (3.41) 1.43
NOTES
Unaudited six Unaudited six Audited
months
months ended ended year ended
31 August 31 August 29 February
2012 2011 2012
R R R
1. Significant amounts included under other
expenses:
Impairment of Loan with Tor Holdings 35 731 071 - -
35 731 071 - -
Commentary
The interim period ended 31 August 2012 has been a challenging one for the Company. Our co-
investment partner, Basileus Capital, suffered a major setback with the untimely death of its CEO.
After this major loss for Basileus Capital Proprietary Limited (“Basileus Capital”), which was then
exacerbated by a capital shortage, the remaining Directors of Basileus Capital decided to place their
company into business rescue during August 2012.
As Basileus Capital was responsible for the sourcing and primary management of the investee
companies in which the Company is invested, it required a swift response from the Board of
Directors of BK One (the “Board”) to protect the value of BK One’s investments and, in turn, BK One
preference shareholders.
The Board consequently decided to reconsider the co-investment relationship with Basileus Capital
and, to ensure that BK One would be able to direct the future direction of the investee companies in
a manner which would benefit BK One preference shareholders, entered into a Memorandum of
Understanding (“MoU”) with Basileus Capital whereby BK One, or its nominee, would acquire a
number of assets held by Basileus Capital (please refer to the SENS announcement dated 28 August
2012 in this regard).The Board also identified the importance of creating a new management team
capable of successfully managing the assets being acquired from Basileus Capital.
After entering into the MoU, the Board, in consultation with its advisers, examined a number of
options and, for the reasons set-out in the Company’s SENS announcement dated 8 November 2012,
decided to enter into an assignment agreement with Isitsaba Investment Group Limited (“IIG”), in
terms of which IIG would take control of the assets being acquired from Basileus Capital.
IIG is presently in the process of raising equity capital to ensure that the Company’s portfolio
companies have sufficient funding for the foreseeable future.
Within the context of the above restructuring, shareholders are advised that the change in
circumstances at Basileus Capital negatively affected the BK One investment portfolio.
The original investments were made in December 2011 at which time the initial investment, at
carrying value, was R196.5m. The first year end results as at 29 February 2012 had the fair value of
the portfolio at R232.9m. As at 31 August 2012 the fair value of the portfolio was R158.1m.
This reflects a 19% reduction in fair value from 8 December 2011 (listing date) and a 32% reduction
in fair value since 29 February 2012. The key reasons for this reduction are firstly, the write down of
Tor Holdings and secondly, a change in the valuation assumptions due to the change in
circumstances. Both the valuations at 28 February 2012 and 31 August 2012 were performed by
independent professional valuation experts
One of the first consequences of the capital shortage at Basileus Capital, together with the particular
industry challenges facing Tor Construction, was a decision taken by Basileus Capital to apply for
voluntary liquidation of Tor Construction in August 2012. Therefore, the Board has decided to
provide for the impairment of the loan to Tor Holdings at full value and this amounts to R35 731 071.
The 29 February 2012 year end independent valuations were done on a “funded basis” for all the
projects. Taking into account the original major funder’s present financial position and that it has
been placed into business rescue; the current independent valuations were performed on a more
conservative basis. The end result of this is that the portfolio has been adjusted down by a further
R42 805 076. These valuations should improve substantially on the back of further funding.
A loss per preference share of 341 cents for the period ended 31 August 2012 compares with
earnings of 143 cents per preference share for the previous financial year end 29 February 2012.
Investment portfolio
Pure Ocean Aquaculture remains an exciting and, to date, successful business. The business plan has
been modified to adapt to funding constraints. Nevertheless, significant progress has been made at
both of its production farms.
Highlands Trout has made substantial progress and as at 31 August 2012 had some 220 000 fish in
the water. The grow-out rates are in line with the business plan and the first harvest is expected at
the end of this year, with the trout size expected to be in the 2.8kg to 3.2kg range. Numerous visits
have taken place to Japan to establish off take agreements. The processing facilities at Highlands
Trout are almost complete and will be able to handle the harvesting needs.
The East London plant has completed the hatchery phase and has an initial batch of some 10 000
cob with which it will test the production capacity of the plant. It has successfully closed the
spawning cycle of cob and now supplies other cob farms in South Africa.
Avalloy continues to require working capital and has been operating on a reduced operating budget.
Avalloy requires no further capital expenditure and has adjusted its business strategy to deal with
reduced working capital and to ensure that the business will react quickly when new working capital
becomes available. Avalloy has been focusing its efforts on raising working capital from various
sources. Market dynamics remain positive in this industry and Avalloy remains well positioned in an
industry with high barriers to entry, having completed the lengthy accreditation processes to ensure
marketability of its products.
Tor Construction experienced extreme challenges, due to the drastic deterioration in the operating
environment within the construction industry. The road construction sector was hit particularly hard
due to the bitumen shortage during the course of 2012 and, in many cases, the removal of working
capital finance facilities and credit terms which had previously been available to industry
participants. These issues, together with the capital shortage at Basileus Capital, led Basileus Capital
to apply for the liquidation of Tor Construction.
Basis of preparation
The unaudited condensed consolidated interim financial statements for the six months ended 31
August 2012 have been prepared in accordance with the framework concepts and the recognition
and measurement requirements of International Financial Reporting Standards (“IFRS”), the
information requirements of IAS34: Interim Financial Reporting, the AC 500 standards as issued by
the Accounting Practices Board and the requirements of the Companies Act of South Africa.
The accounting policies and method of computation applied in presentation of these unaudited
condensed consolidated interim financial statements are consistent with those applied in the
audited annual financial statements for the year ended 29 February 2012. The above information
has not been reviewed or audited by the Company’s auditors.
The unaudited condensed interim financial statements have been prepared under the supervision of
Mariska Peens CA (SA).
Subsequent events
Progress has taken place with respect to the transaction to acquire targeted Basileus Capital Assets
and a new company, IIG, has been established to facilitate an efficient transfer of assets.
Shareholders are again referred to the SENS announcement on 8 November 2012 in this regard.
Dividend
No interim dividend has been declared.
Prospects
The Directors and associated parties, with the assistance of their advisors, have been actively
building the new business entity and are in the middle of a capital raising with an anticipated listing
and offer to existing preference shareholders of BK One in the first quarter of 2013.
All of these activities are directed at improving the underlying prospects and values of the
investment portfolio with a concomitant positive impact on total equity.
The above information has not been reviewed or reported on by BK One’s auditors.
On behalf of the board
P. Ncetezo D. Richards
Chairperson Chief Executive Officer
Directorate and Administration
Registered Office: 12th Floor, 2 Long Street, Cape Town
Company Secretary: SecCorp Secretarial Services (Pty) Ltd: Postnet Suite 113, private bag X7, Tyger
Valley, 7536
Transfer Secretary: Computershare Investor Services (Pty) Ltd: PO Box 61051, Marshalltown, 2107,
South Africa
Website:www.bkone.co.za
Investment Bank and Debt Sponsor: Nedbank Capital, a division of Nedbank Limited: 135 Rivonia
Road, Sandown, Sandton, 2196, South Africa
Auditors: Deloitte&Touche: 27 Sommerset Road, Cape Quarter, Greenpoint, Cape Town, Western
Cape, 8005, South Africa
Directors:
Independent Non-Executive Directors
P.K.V Ncetezo
P.G Gaylard
H.P van Noort
Executive Directors
D.P Richards
J.S Sieff
13 December 2012
Cape Town
Investment Bank and Debt Sponsor
Nedbank Capital, a division of Nedbank Limited
Date: 13/12/2012 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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