Wrap Text
Interim results for the six months ended 31 December 2012
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 2012
Restated Restated
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 2012 31 December 2011 30 June 2012
ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Note R R R
Gross revenue 383 858 411 340 131 911 667 171 936
Cost of sales (322 172 244) (273 884 003) (530 409 481)
Gross profit 61 686 167 66 247 908 136 762 455
Operating expenses (49 482 801) 45 687 376 (118 919 085)
Other income 3 747 151 462 571 4 504 893
Operating profit 15 950 517 21 023 103 22 348 263
Investment revenue 5 147 763 3 643 963 8 824 250
Loss on non-current assets held for sale or disposal groups - - (67 775)
Finance costs (11 531 473) (6 489 636) (19 249 328)
Impairment of goodwill and intangibles - (4 493 961) (9 298 498)
Profit before taxation 9 566 807 13 683 469 2 556 912
Taxation (2 331 637) (5 304 792) (6 816 068)
Profit/(loss) from continuing operations 7 235 170 8 378 677 (4 259 156)
Discontinued operations
Loss from discontinued operations 4 (41 374) (29 375 053) (37 826 236)
Profit/(loss) for the period 7 193 796 (20 996 376) (42 085 392)
Attributable to:
Equity holders of the parent 4 923 678 (24 005 996) (48 264 216)
Non-controlling interests 2 270 118 3 009 620 6 178 824
Other comprehensive income - - 477 611
Net change in fair value of available-for-sale financial asset - - 477 611
Total comprehensive income/(loss) for the period 7 193 796 (20 996 376) (41 607 781)
Attributable to:
Equity holders of the parent 4 923 678 (24 005 996) (47 786 605)
Non-controlling interests 2 270 118 3 009 620 6 178 824
Number of ordinary shares in issue 178 417 824 178 417 824 178 417 824
Weighted number of ordinary shares in issue 178 417 824 177 283 313 177 844 054
Fully diluted weighted average number of ordinary shares 178 417 824 177 283 313 177 844 054
Earnings per ordinary share (cents) 5 2.76 (13.54) (27.14)
Fully diluted earnings per ordinary share (cents) 5 2.76 (13.54) (27.14)
Earnings per ordinary share from continuing operations (cents) 5 2.78 3.01 (27.05)
Fully diluted earnings per ordinary share from continuing operations (cents) 5 2.78 3.01 (27.05)
Restated Restated Restated
Unaudited Unaudited Audited Unaudited
31 December 2012 31 December 2011 30 June 2012 31 December 2010
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION R R R R
ASSETS
Non-current assets 147 481 985 138 655 307 151 072 242 159 355 341
Property, plant and equipment 28 578 876 25 163 061 34 508 140 25 494 410
Goodwill 73 424 363 82 869 985 73 424 364 88 295 532
Intangible assets 18 041 090 17 033 236 15 331 261 28 763 506
Deferred taxation 22 871 800 14 481 356 23 242 621 11 149 368
Available-for-sale financial assets at fair value 6 4 565 856 7 318 020 4 565 856 5 652 525
Current assets 474 195 316 483 979 497 265 217 816 361 151 972
Trade and other receivables 308 777 980 273 125 139 154 717 349 246 895 866
Inventories 137 348 744 149 648 595 89 718 021 90 329 429
Loans receivable 2 327 919 7 105 595 2 250 772 852 976
Cash and cash equivalents 23 690 475 45 888 135 17 869 530 23 073 701
Taxation 2 050 198 1 682 662 144 -
Non-current assets held for sale and assets of disposal groups 4 - 3 858 049 1 294 645 -
TOTAL ASSETS 621 677 301 626 492 853 417 584 703 520 507 313
EQUITY AND LIABILITIES
Capital and reserves 45 242 694 71 113 879 51 107 372 150 371 082
Share capital and premium 100 999 428 100 999 428 100 999 428 99 749 429
Other reserves 2 582 334 1 917 537 2 395 148 1 388 800
Accumulated (loss)/profit (64 897 572) (29 767 687) (62 708 599) 38 271 415
38 684 190 73 149 278 40 685 977 139 409 644
Non-controlling interest 6 558 504 (2 035 399) 10 421 395 10 961 438
Non-current liabilities 229 333 075 235 200 730 228 513 716 65 822 721
Loans payable 215 433 917 229 300 512 219 393 719 59 410 047
Interest-bearing borrowings 11 971 589 5 900 218 4 764 571 6 412 674
Deferred taxation 1 927 569 - 4 355 426 -
Current liabilities 347 101 532 320 178 244 137 963 615 304 313 510
Trade and other payables 339 414 591 312 902 720 118 429 972 272 851 093
Loans from shareholders - 165 794 - 13 809 561
Loans payable - - 13 321 297 -
Taxation 3 664 606 4 719 307 2 906 867 6 776 730
Interest-bearing borrowings 1 711 802 2 367 751 3 260 801 3 227 072
Bank overdraft and acceptances 2 310 533 22 672 44 678 7 649 054
TOTAL EQUITY AND LIABILITIES 621 677 301 626 492 853 417 584 703 520 507 313
Share capital and Non-controlling
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY premium Other reserves Retained earnings interest Total equity
Balance at 1 July 2011 99 749 428 1 917 537 29 098 973 13 075 372 143 841 310
Shares issued 1 250 000 - - - 1 250 000
Total comprehensive income/(loss) for the period - 477 611 (48 264 216) 6 178 824 (41 607 781)
Dividends paid - - (3 543 356) (8 832 801) (12 376 157)
Acquisition from non-controlling interest - - (40 000 000) - (40 000 000)
Balance at 30 June 2012 100 999 428 2 395 148 (62 708 599) 10 421 395 51 107 372
Total comprehensive income for the period - - 4 923 678 2 270 118 7 193 796
Dividends paid - - - (6 057 974) (6 057 974)
Acquisition from non-controlling interest 7 187 186 (7 112 651) (75 035) (7 000 500)
Balance at 31 December 2012 100 999 428 2 582 334 (64 897 572) 6 558 504 45 242 694
Unaudited Unaudited Audited
6 months 6 months 12 months
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS 31 December 2012 31 December 2011 30 June 2012
R R R
Cash generated from continuing operations 37 448 619 12 754 553 24 477 124
Operating cash in/(out)flow from discontinued operations 1 667 420 (6 471 191) (41 243 138)
Interest income 5 147 762 3 643 963 8 564 730
Dividends received - - 259 520
Finance costs (11 531 473) (6 817 485) (19 249 328)
Taxation paid (5 018 988) (7 328 735) (6 023 158)
Cash flows from operating activities 27 713 341 (4 218 895) (33 214 250)
Disposal of/(additions to) property plant and equipment 3 095 397 (1 556 713) (15 646 409)
Additions to intangible assets (4 706 358) (1 184 900) (3 239 080)
Acquisition of non-controlling interest (7 000 500) (40 000 000) (40 000 000)
Loans receivable raised (77 147) (14 676 948) (2 250 772)
Disposal of interest in subsidiaries 2 211 411 - -
Acquisition of available-for-sale-financial assets - - (711 118)
Cash flows from investing activities (6 477 197) (57 418 561) (61 847 379)
Proceeds from share issue - - 1 250 000
Loans payable (repaid)/raised (17 281 099) 121 116 469 125 053 524
Repayment of shareholders' loans - (1 287 963) (1 453 757)
Proceeds/(repayment) from interest-bearing borrowings 5 658 019 (1 309 635) (1 552 232)
Dividends paid (6 057 974) (12 981 055) (12 376 157)
Cash flows from financing activities (17 681 054) 105 537 816 110 921 378
Net increase in cash and cash equivalents 3 555 090 43 900 360 15 859 749
Net cash at beginning of period 17 824 852 1 965 103 1 965 103
Cash and cash equivalents 17 869 530 13 464 017 13 464 017
Bank overdraft (44 678) (11 498 914) (11 498 914)
Net cash at end of period 21 379 942 45 865 463 17 824 852
Cash and cash equivalents 23 690 475 45 888 135 17 869 530
Bank overdraft (2 310 533) (22 672) (44 678)
NOTES TO THE ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2012
1 HIGHLIGHTS FOR THE PERIOD
Ububele Holdings is pleased to present its financial results for the six months ending 31 December 2012.
The agricultural season was characterised by a big shift in product mix and sales, due to the monsoon rains arriving late in South Africa from Central Africa.
These rains normally start in October and end in March the following year. This season, however, the monsoon rains only arrived in South Africa in December.
These rains led to severe storms during January in Gauteng, eastern parts of North West Province, eastern Free State, Mpumalanga and KwaZulu-Natal.
This rainfall shift meant that a big portion of the sales moved from the October to January period, to the period December to March.
The most recent indications of the USA drought show that the impact is severe and therefore leads to much higher world and local maize and wheat prices. In
South Africa, the real gross income from grain increased by 6.3% in 2012 and a further 13% in 2013. Beyond 2013, the growth rate is expected to be stagnant
as local prices in real terms are expected to remain flat. In 2012, South Africa will reach its highest area under production of field crops since 2004 by
expanding production by almost 300 000 ha on the back of increases in commodity prices and the drought in the USA.
Considering the challenges that we face in food security, most farmers rely on innovation in all the fields of agricultural sciences to offer solutions
in the ever demanding productivity cycle.
One key area where we believe there exists a massive need is the monitoring, analysis and dissemination of accurate field level climate data. Understanding
the effect of climate today, as well as the future impact of changing climate conditions on our production systems, will be vital to ensure that our farmers
remain competitive.
Ububele Agri Science, through its Enviro Crop Protection business, is investing in climate monitoring systems (weather stations) in our key regions where we
operate and aim to add this technical innovation to our current service and advice to our clients.
Our in-flight catering company, Flamingo In-Flight Services (previously Ububele Alpine In-Flight), re-branded in October 2012. With the opening of the new
state-of-the-art kitchen at Hosea Kutako International Airport in Windhoek, our staff uniforms, delivery vehicles, internal and external building signage,
etc was re-branded with the new Flamingo brand.
The continuous focus on better inventory control paid off, and the inventory levels were lower than comparative periods, even though sales increased.
Save for the strategic investment in our airline catering company, the group finalised the closing down of the high-risk, low-margin food division during the
period under review. We look forward to focusing our resources and expertise to grow and expand our agricultural division in the years to come.
Ububele started the process of implementing Sage X3 in some of its divisions during the period. The increased accuracy of information promises to be of great
benefit to the group going forward.
2 COMMENTARY ON RESULTS
It has been six months now since Ububele decided to primarily exit from the food sector and focus all of its energy on agriculture. This strategic decision
paid off, in that it moved the company from a loss making position for the prior six months period, to a profitable turnaround of more than 130%. During the
period we increased our sales by more than 13%, our attributable profit by more than 120% and very importantly, our cash generated from operations increased
with more than 190% from R13 million to R37 million.
Ububele's turnover from continuing operations increased by 13% from the comparative prior period. Turnover in our Agri division increased by 12%, while
turnover in the Food division increased by 21%.
Gross profit for the period decreased by 7%. The reason for this seemingly downward trend, is the fact that the monsoon rains arrived later in Southern Africa
than normal. Early-season sales of herbicides and insecticides occur at lower margins than the sales later in the season, leading to lower than average
margins for the first six months of the year. Margins also remain under pressure, as farmers are price sensitive after a very dry season in 2011/2012.
Included in other income, is a profit on sale of investment of R2 211 411 as a result of the sale of shares in UDP on 30 November 2012.
Operating profit decreased by 24%, and operating expenses were 8% higher than that of the comparative period.
Finance costs increased significantly due to the term loan for the acquisition of Enviro Crop Protection and higher interest rates.
Due to the cyclical nature of our business, both current assets and current liabilities are significantly higher at end December, which is in the middle of
our high season, than at year-end.
The decrease in property, plant and equipment is mostly due to the sale of UDP. At the effective date, the property, plant and equipment of UDP had a book
value of R13.8 million.
Development costs for registrations of R1.8 million were capitalised during the period and computer software of R4.4 million was capitalised.
Trade and other receivables increased by 13% from the previous six month period. At period-end, more than 60% of our debtors were 30 days and younger.
The group gives 90-day terms in certain instances in the agri division, and our debtors book is insured by Coface.
Inventory levels were 8% lower, the effect of our consistent efforts to reduce the levels of stock.
Included in non-current interest-bearing borrowings, is a building loan from Bank Windhoek of R6.8 million to finance the new kitchen facilities at Hosea Kutako
International Airport.
Included in trade and other payables are R44 million distributions retained from agents, which relate to outstanding debtors at period-end. These amounts are
repayable as and when the related debtor is recovered.
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 2012, 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.
The statement of comprehensive income, as at 30 June 2012 and 31 December 2011, has been restated for the reclassification of commission paid between
cost of sales and operating expenses. This resulted in an increase in cost of sales of R54 399 130 (30 June 2012) and R36 366 674 (31 December 2011), with
a corresponding decrease in operating expenses.
This reclassification was done in order to provide increased disclosure and because the directors felt that it gave a better reflection of the classification of
expenses. There has been no impact on profit, statement of financial position, statement of changes in equity or statement of cash flows.
The statement of financial position as at 30 June 2012, 31 December 2011 and 31 December 2010, has been restated for the reclassification of distributions
retained from agents from loans payable to trade and other payables. This resulted in an increase in trade and other payables of R23 079 514 (30 June 2012)
R14 602 390 (31 December 2011) and R14 890 010 (31 December 2010), with a corresponding decrease in loans payable.
This reclassification was done in order to provide increased disclosure and because the directors felt that it gave a better reflection of the classification of
amounts payable. There has been no impact on profit, statement of comprehensive income or statement of changes in equity.
4 DISCONTINUED OPERATIONS AND NON-CURRENT ASSETS HELD-FOR-SALE
During the period under review, the company disposed of its equity share and claims in UDP. 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 and
services sectors.
Ububele believes that the emphasis on food security and the current high agricultural commodity prices makes the agricultural sector very lucrative.
Included in other income is a profit on sale of shares of R2 211 511.
In the December 2011 interim period, the group decided to discontinue its fruit and vegetable operations in Cape Town, Just Fruit & Veg. So Gourmet was
also liquidated during the period. The assets that were disposed of are included in the comparatives below.
31 December 2012 31 December 2011
Profit and loss R R
Revenue 42 198 581 59 611 712
Expenses (42 239 954) (64 763 517)
Impairment of intangible assets - (23 853 820)
Tax - (369 428) -
(41 374) (29 375 053)
Assets and liabilities
Non-current assets held-for-sale
Property, plant and equipment - 3 858 049
Cash flows from discontinued operations
Net cash inflows/(outflows) from operating activities 1 667 420 (6 471 191)
6 months 6 months 12 months
5 EARNINGS PER SHARE AND HEADLINE EARNINGS PER SHARE 31 December 2012 31 December 2011 30 June 2012
Reconciliation of headline earnings (CONTINUING OPERATIONS):
Comprehensive income attributable to ordinary shareholders 4 965 052 5 369 057 (10 447 348)
(Profit)/loss on disposal of property, plant and equipment (28 276) (260 474) 363 492
Profit on disposal of investment (2 211 411) - -
Impairment of investment - 4 493 961 9 298 498
Headline earnings attributable to ordinary shareholders 2 725 364 9 602 544 (785 358)
Number of ordinary shares in issue 178 417 824 178 417 824 178 417 824
Weighted number of ordinary shares in issue 178 417 824 177 283 313 177 844 054
Fully diluted weighted average number of ordinary shares 178 417 824 177 283 313 177 844 054
Earnings per ordinary share from continuing operations (cents) 2.78 3.01 (27.05)
Headline earnings per ordinary share from continuing operations (cents) 1.53 5.38 (0.44)
Fully diluted earnings per ordinary share from continuing operations (cents) 2.78 3.01 (27.05)
Fully diluted headline earnings per ordinary share from continuing operations (cents) 1.53 5.38 (0.44)
Reconciliation of headline earnings (ALL OPERATIONS):
Comprehensive income attributable to ordinary shareholders 4 923 678 (24 005 996) (48 264 216)
(Profit)/loss on disposal of property, plant and equipment (28 276) (260 474) 363 492
Profit on disposal of investment (2 211 411) -
Impairment of investment - 28 347 781 9 298 498
Headline earnings attributable to ordinary shareholders 2 683 991 4 081 311 (38 602 226)
Earnings per ordinary share (cents) 2.76 (13.54) (27.14)
Headline earnings per ordinary share (cents) 1.50 2.30 (21.71)
Fully diluted earnings per ordinary share (cents) 2.76 (13.54) (27.14)
Fully diluted headline earnings per ordinary share (cents) 1.50 2.30 (21.71)
6 AVAILABLE-FOR-SALE FINANCIAL ASSETS AT FAIR VALUE
Unlisted shares 4 565 856 7 318 020
Non-current assets
Available-for-sale 4 565 856 7 318 020
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 4 565 856 7 318 020
7 ACQUISITION OF NON-CONTROLLING INTEREST
During the period under review, the group purchased the remainder of Flamingo's share capital from minorities for an amount of R7 000 500. The company
already had control over Flamingo, and its assets and liabilities were fully consolidated.
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 2012 Agriculture Food Total
R R R
Revenue - external 359 578 540 24 279 871 383 858 411
Revenue - internal 115 013 674 3 203 960 118 217 633
Interest income 4 985 128 162 634 5 147 762
Finance costs (11 057 877) (473 596) (11 531 473)
Depreciation and amortisation (2 707 570) (92 111) (2 799 681)
Segment profits attributable to ordinary shareholders 2 999 358 4 368 844 7 368 203
Segment profits attributable to minorities - 2 270 118 2 270 118
Segment current assets 486 297 875 29 460 874 515 758 749
Segment current liabilities (555 773 993) (23 350 466) (579 124 460)
Reconciliation between segment profits and total profits for the group: Agriculture Food Total
R R R
Segment profits attributable to ordinary shareholders 2 999 358 4 368 844 7 368 203
Net loss in Ububele Holdings Limited - holding company (2 403 151)
Loss from discontinued operations (41 374)
Total profit for the period attributable to ordinary shareholders 4 923 678
6 months ended 31 December 2011 Agriculture Food Total
R R R
Revenue - external 320 045 467 20 086 444 340 131 911
Revenue - internal 66 759 604 3 182 898 69 942 502
Interest income 3 094 575 549 388 3 643 963
Finance costs (5 587 465) (902 170) (6 489 635)
Depreciation and amortisation (838 583) (1 636 750) (2 475 333)
Segment profits/(losses) attributable to ordinary shareholders 15 194 198 (2 349 293) 12 844 905
Segment profits attributable to minorities - 3 009 620 3 009 620
Segment current assets 437 758 207 44 348 677 482 106 884
Segment current liabilities (284 372 499) (29 776 412) (314 148 911)
Reconciliation between segment profits and total profits for the group: Agriculture Food Total
R R R
Segment profits/(losses) attributable to ordinary shareholders 15 194 198 (2 349 293) 12 844 905
Net loss in Ububele Holdings Limited - holding company (7 475 848)
Loss from discontinued operations (29 375 053)
Total loss for the period attributable to ordinary shareholders (24 005 996)
9 PRIOR PERIOD ERRORS
As reported in the annual report for the period ended 30 June 2012, 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 and loans from shareholders being understated by R8 210 351 in the December 2010 and 2011 interim periods.
The additional goodwill has been allocated to the Agricultural division cash-generating unit and, based on value-in-use calculations in terms of IAS 36, does not
require any impairment.
10 SUBSEQUENT EVENTS
There have been no 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
We believe that scientific farming is the only solution to the world's growing demand for food. Through our exciting agro-chemical and biological product and
service range, combined with our new investment in water management and irrigation, we are well positioned to assist our farmers to be more competitive and
sustainable for the future.
Ububele will continue to invest into scientific products in the future, whether by acquisition or organically, to grow our business even further.
These abridged consolidated interim financial statements have been prepared by E Kruger CA(SA), the financial director.
On behalf of the board
H W Cloete E Kruger
Chief executive officer Financial director
20 March 2013
Directors: M K Makaba (Chairman)#, H W Cloete (CEO), M P Mocke, J M K Matlala, S A Roux, E Kruger, T B Hayter#*, M J Krastanov#*, L N Altini#.
# Non-executive
* Independent
Company Secretary: Fusion Corporate Secretarial Services (Pty) Limited
Reg. no: 1998/011074/06
Postal address: PO Box 6309, Roggebaai, 8012
Telephone: +27 (0)21 914 3553 Facsimile: +27 (0)21 421 5791
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
Date: 20/03/2013 10:21:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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