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Unaudited condensed interim results for the six months ended 31 August 2013
BK One Limited
Company Registration Number: 2011/008103/06
(Incorporated in the Republic of South Africa)
ISIN Number: ZAE 000161352 Share Code: BK1P
Unaudited Condensed Interim Results for the Six Months ended 31 August 2013
CONDENSED STATEMENT OF COMPREHENSIVE INCOME CONDENSED SEGMENT REPORT
Unaudited six Unaudited six Audited Unaudited six months ended 31 August 2013
months ended months ended year ended Investment Industry Interest Split % Fair Value Split %
31 August 31 August 29 February Received Adjustment
2013 2012 2013 Pure Ocean Aquaculture Aquaculture 4,763,040 98% 1,521,656 100%
R R R
Avalloy Superalloys 82,938 2% - -
Revenue 5,343,482 5,510,320 11,039,322
Tor Holdings Construction - - -
Fair value adjustments on investments 1,521,656 (42,805,076) (43,180,258)
4,845,978 100% 1,521,656 100%
Employee benefit expense (1,169,000) (330,000) (801,000)
Unaudited six months ended 31 August 2012
Impairment of loan (35,731,071) (35,731,071)
Investment Industry Interest Split % Fair Value Split %
Other expenses (3,051,124) (2,012,274) (5,505,997) Received Adjustment
Finance costs (3,000,000) Pure Ocean Aquaculture Aquaculture 3,723,720 95% (10,215,555) -24%
Loss before taxation (354,986) (75,368,101) (74,179,004) Avalloy Superalloys 179,173 5% (24,308,229) -57%
Taxation - 6,866,453 6,866,453 Tor Holdings Construction - 0% (8,281,292) -19%
Loss for the period (354,986) (68,501,648) (67,312,551) 3,902,893 100% (42,805,076) -100%
Other comprehensive income - - - Audited year ended 29 February 2013
- - - Investment Industry Interest Split % Fair Value Split %
Total comprehensive income (loss) for the period (354,986) (68,501,648) (67,312,551) Received Adjustment
Loss for the period attributable to: Pure Ocean Aquaculture Aquaculture 7,673,827 96% (8,575,908) -20%
Ordinary shareholders - - - Avalloy Superalloys 344,579 4% (26,323,058) -61%
Preference shareholders (354,986) (68,501,648) (67,312,551) Tor Construction - 0% (8,281,292) -19%
(354,986) (68,501,648) (67,312,551) 8,018,406 100% (43,180,258) -100%
Total comprehensive loss for the period attributable to: There is no inter-segment trading.
Ordinary shareholders - - -
Preference shareholders (354,986) (68,501,648) (67,312,551)
CONDENSED STATEMENT OF CASH FLOWS
(354,986) (68,501,648) (67,312,551)
Unaudited six Unaudited six Audited
months ended months ended year ended
CONDENSED STATEMENT OF FINANCIAL POSITION 31 August 31 August 29 February
Unaudited Unaudited Audited 2013 2012 2013
31 August 31 August 28 February R R R
2013 2012 2013 Cash flows from operating activities
R R R Cash absorbed by operations (3,341,025) (2,593,740) (5,734,184)
ASSETS Finance income 307,690 - 3,020,916
Non-current assets Finance costs (3,000,000) - -
Property, plant and equipment 162,388 - 84,065 Taxation - - -
Intangible assets 52,155 - 70,790 Net cash from operating activities (6,033,335) (2,593,740) (2,713,268)
Investments 58,289,375 51,442,794 51,067,624 Cash flows from investing activities
Loans 130,760,038 106,681,510 77,062,923 Acquisition of investment and loans (5,213,751) (12)
189,263,957 158,124,304 128,285,402 Purchase of plants, equipment and intangibles (105,542) (160,037)
Current assets Non- current loans advanced - (5,380,000) (5,380,000)
Loans 1,185,182 36,816,209 Net cash from investing activities (5,319,293) (5,380,000) (5,540,049)
Other receivables 509,626 88,095 Cash flows from financing activities
Cash and cash equivalents 4,485,240 439,163 470,049 Loans received 7,500,000 - 5,000,000
6,180,048 439,163 37,374,353 Current loans advanced (6,925,182) (4,935,000)
Total assets 195,444,005 158,563,467 165,659,755 Loans paid (12,500,000)
EQUITY AND LIABILITIES Loans repaid 27,293,001 7,134,825 7,380,288
Equity Net cash from financing activities 15,367,819 7,134,825 7,445,288
Share capital 200 200 200 Total cash movement for the period 4,015,191 (838,915) (808,029)
Retained income (38,958,078) (39,792,189) (38,603,092) Cash and cash equivalents at the beginning of the period 470,049 1,278,078 1,278,078
Total equity (38,957,878) (39,791,989) (38,602,892) Cash and cash equivalents at the end of the period 4,485,240 439,163 470,049
Liabilities HEADLINE EARNINGS PER SHARE Unaudited Unaudited Audited
Non-current liabilities 31 August 31 August 29 February
Preference shares 197,799,790 197,799,790 197,799,790 2013 2012 2013
Deferred tax - - - Shares in issue:
197,799,790 197,799,790 197,799,790 Ordinary shares: Number of shares in issue 200 200 200
Current liabilities Preference shares: Number of shares in issue 20,102,000 20,102,000 20,102,000
Creditor for shares: Pure Ocean Aquaculture 34,000,000 - -
Loans - 5,000,000 Weighted average number of shares in issue
Trade and other payables 2,602,092 555,666 1,462,857 Ordinary shares: Number of shares in issue 200 200 200
36,602,092 555,666 6,462,857 Preference shares: Number of shares in issue 20,102,000 20,102,000 20,102,000
Total liabilities 234,401,882 198,355,456 204,262,647
Total equity and liabilities 195,444,005 158,563,467 165,659,755 EARNINGS PER SHARE, IN RANDS
Basic
CONDENSED STATEMENT OF CHANGES IN EQUITY Ordinary shareholders - - -
Share capital Retained Non-controlling Total Preference shareholders (0.02) (3.41) (3.35)
income interest equity Loss per share, in Rands
Balance at 29 February 2012 200 28,709,459 - 28,709,659 Diluted
Changes: Ordinary shareholders -
Loss for the period - (68,501,648) - (68,501,648) Preference shareholders (0.02) (3.41) (3.35)
Other comprehensive income for the period - - - - Reconciliation of headline loss
Balance at 31 August 2012 200 (39,792,189) - (39,791,989) Loss attributable to preference shareholders (354,986) (68,501,648) (67,312,551)
Changes: (354,986) (68,501,648) (67,312,551)
Profit for the six month period - 1,189,097 - 1,189,097 Headline loss per ordinary share (Rand) - -
Other comprehensive income for the period - - - - Diluted loss per ordinary share (Rand) - -
Balance at 28 February 2013 200 (38,603,092) - (38,602,892) Headline loss per preference share (Rand) (0.02) (3.41) (3.35)
Changes: Diluted loss per preference share (Rand) (0.02) (3.41) (3.35)
Loss for the six month period - (354,986) - (354,986)
Other comprehensive income for the period - - - -
Balance at 31 August 2013 200 (38,958,078) - (38,957,878)
Commentary
During the interim period ended 31 August 2013, the Company has focused on stabilising its investee businesses Market dynamics for Avalloy remain positive and after having completed its Business Rescue process,
and meeting the funding requirements for its key investments in order to protect and enhance shareholder the company is well positioned in an industry with high barriers to entry. Despite managing the business
value. on extremely low capital levels, the management of Avalloy has managed to retain its quality assurance
The board of directors of BK One (“the Board”) is pleased that, despite extremely challenging conditions accreditations and expect to recommence production.
associated with its investee companies and its erstwhile co-investment partner, the Company’s strategies over Basis of Preparation
the last eighteen months has achieved the above objectives. The unaudited condensed interim financial statements for the six months ended 31 August 2013 have been
Pure Ocean Aquaculture, in particular, was able to attract capital which has resulted in continued growth in prepared in accordance with the framework concepts and the recognition and measurement requirements of
that business. Its Lesotho based Highlands Trout project’s results are particularly noteworthy. Avalloy, due International Financial Reporting Standards (“IFRS”), the information requirements of IAS34: Interim Financial
to legacy issues and the complexity of its previous balance sheet, has found it challenging to raise capital; the Reporting, The AC 500 standards as issued by the Accounting Practices Board and the requirements of the
Board is however optimistic that Avalloy is better positioned after completing its business rescue process to Companies Act of South Africa.
achieve its potential. The accounting policies and method of computation applied in presentation of these unaudited condensed
As previously communicated in Securities Exchange News Service (“SENS”) announcements the call option, over interim financial statements are consistent with those applied in the audited financial statements for the year
assets held by Isitsaba Investment Group Proprietary Limited (“IIG”) was partially finalised during this period. ended 28 February 2013. The above information has not been reviewed or audited by the Company’s auditors.
The Company acquired claims and equity held by IIG in Pure Ocean Aquaculture for R34.0m, to be settled by the The unaudited condensed interim financial statements have been prepared by A. de Nobrega – Thorold CA (SA)
issue of 4 250 000 BK One preference shares at R8 per share. The effects of this transaction have been reflected under the supervision of H. van Noort CA (SA).
in the interim results.
Subsequent Events
The fair value of the investments at the last interims at 31 August 2012 was R158.1m. The fair value of the
investments as at 31 August 2013, taking into account the additional R34m IIG assets acquired, is R189.0m. Avalloy
Earnings per share has improved from a R3.41 loss per share to a R0.02 loss per share. BK One finalised its rights in terms of the call option to acquire a further stake in Avalloy from IIG. The transaction
price was R1 126 000 which will be settled by the issue of 140 750 BK One preference shares at R8 per share.
Investment Portfolio
The successful outcome of the Avalloy business rescue process in November 2013 resulted in the conversion
Pure Ocean Aquaculture of BK One’s equity and loans arrangements into shareholder’s equity. Together with the acquisition of the IIG
Pure Ocean Aquaculture continued to make substantial progress, and in particular, with respect to the stake in Avalloy, the BK One shareholding in Avalloy has increased to 28.41%. A recent independent valuation
company’s Lesotho based Highlands Trout business. The first harvest was completed successfully with the fish of Avalloy places a fair value on this equity of R54.5m. This reflects an increase in fair value of approximately
being sold to both the Japanese and South African markets. R8.4m. This increase has not been reflected in the interim reporting period ending 31 August 2013.
Since the last reporting period, and in line with its business plan supported by the successful first harvest, Pure Ocean Aquaculture
Highlands Trout has increased its annual production capacity from 500 tonnes to 1250 tonnes. Harvesting of this Pure Ocean Aquaculture raised more capital, resulting in a dilution in the BK One shareholding from 52% to 38%.
increased production is expected to begin in April 2014. The effect of this dilution has been reflected in the interim reporting period ending 31 August 2013.
Pure Ocean East London (farming Dusky Cob) continues to build and test the business model for the farm On 14 November 2013, unanimous approval was given by both the preference and ordinary shareholders, at
operations. The hatchery continues to successfully supply cob farms in Southern Africa. their respective General Meetings, to issue a further 5 000 000 authorised but unissued preference shares. 4
Pure Ocean Aquaculture continues to assess its strategy with respect to marketing and distribution in South 390 750 of these shares will be used to settle the acquisition of the IIG Pure Ocean Aquaculture and Avalloy
Africa and international markets. assets.
Avalloy Dividend
The raising of capital during 2013 proved difficult for Avalloy as a result of legacy issues and complexity of its No interim dividend has been declared.
previous balance sheet. As communicated to shareholders through SENS, the directors of Avalloy resolved to Prospects
place the company into business rescue in compliance with the provisions of Section 150 of the Companies
Act 71 of 2008 (the “Act”). On 13th September 2013 the creditors and shareholders of Avalloy approved the The directors, advisors and associated parties have worked hard to stabilise the businesses, raise capital to fund
business rescue plan. All conditions precedent in relation to the business rescue plan were met and on 1 the projects and to further develop the businesses in line with their business plans, and in certain instances, to
November 2013 the substantial implementation of the Avalloy Business Rescue plan was effected. As a result, improve these businesses’ financial position. As a result of these actions, these businesses are better placed to
Avalloy is no longer trading under business rescue, allowing the directors of Avalloy, and its advisors, to procure unlock value and to continue moving up the value curve, and hopefully, deliver long-term value to shareholders.
to successfully raise additional funding and financing for Avalloy. The Board would like to extend a sincere thanks to the Company’s shareholders for their patience and support
The affect of the Business Rescue plan on BK One was that all BK Ones loans, short term credit and equity during the past 18 months. The Board will continue our efforts, in conjunction with the management team and
arrangements were converted to shareholders’ equity in the business. advisors, to profitably grow the Company and its selected investee companies.
For interim financial reporting purposes as at 31 August 2013, the Board decided to keep the valuation for The above information has not been reviewed or reported on by BK One’s auditors.
Avalloy unchanged from the previous reporting period due to the uncertainty of the business rescue process at On behalf of the Board
that time. The uncertainty could have resulted in an impairment of the value of Avalloy; however the successful
outcome of the business rescue process confirmed that no impairment was needed. P.Ncetezo D. Richards
Chairperson Chief Executive Officer
Cape Town
29 November 2013
Sponsor : Nedbank Capital
Date: 29/11/2013 04:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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