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Abridged consolidated interim financial statements for the six months ended 31 December 2013
UBUBELE HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration Number: 1998/011074/06
Share code: UBU
ISIN: ZAE 000144739
("Ububele" or "the Company" or "the Group")
ABRIDGED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 2013 31 December 2012 30 June 2013
Note R R R
Gross revenue 407 234 077 359 578 540 590 881 516
Cost of sales (361 317 900) (313 849 990) (507 795 331)
Gross profit 45 916 177 45 728 550 83 086 185
Operating expenses (58 238 552) (40 092 654) (90 310 016)
Other income 1 080 143 2 276 271 3 950 578
Operating (loss)/profit (11 242 232) 7 912 167 (3 273 253)
Investment revenue 2 387 930 4 985 129 11 718 754
Finance costs (10 473 085) (10 978 409) (21 089 803)
Impairment of goodwill and intangibles 4 (8 316 151) - -
(Loss)/profit before taxation (27 643 538) 1 918 887 (12 644 302)
Taxation 2 142 306 (201 807) 1 651 755
(Loss)/profit from continuing operations (25 501 232) 1 717 080 (10 992 547)
Discontinued operations
Profit/(loss) from discontinued operations 5 1 831 596 5 476 716 (12 507 024)
(Loss)/profit for the period (23 669 636) 7 193 796 (23 499 571)
Other comprehensive income
Net change in fair value of available-for-sale
financial asset - - 499 405
Total comprehensive (loss)/income for the period (23 669 636) 7 193 796 (23 000 166)
Total comprehensive (loss)/income attributable to:
Owners of the parent:
(Loss)/profit for the year from continuing operations (25 501 232) 1 717 080 (10 493 142)
Profit/(loss) for the year from discontinued operations 1 029 046 3 206 598 (15 098 190)
(Loss)/profit attributable to owners of the parent (24 472 186) 4 923 678 (25 591 332)
Non-controlling interest:
Profit for the year from continuing operations - - -
Profit for the year from discontinued operations 802 550 2 270 118 2 591 166
Profit for the year attributable to non-controlling interest 802 550 2 270 118 2 591 166
Number of ordinary shares in issue 178 382 824 178 417 824 178 382 824
Weighted number of ordinary shares in issue 178 382 824 178 417 824 178 411 879
Earnings per ordinary share (cents) 6 (13,72) 2,76 (14,62)
Headline earnings per ordinary share (cents) 6 (9,08) 1,50 (11,43)
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
Note 31 December 2013 31 December 2012 30 June 2013
R R R
ASSETS
Non-current assets 108 154 723 147 481 985 135 855 937
Property, plant and equipment 7 517 673 28 578 876 22 546 615
Goodwill 57 690 761 73 424 363 66 006 912
Intangible assets 22 386 508 18 041 090 21 766 733
Deferred taxation 15 379 889 22 871 800 20 355 785
Available-for-sale financial assets at fair value 7 5 179 892 4 565 856 5 179 892
Current assets 504 071 227 474 195 316 267 988 370
Trade and other receivables 286 193 759 308 777 980 160 747 738
Deposits 2 883 010 - 2 833 010
Inventories 185 327 041 137 348 744 86 865 903
Loans receivable 1 250 550 2 327 919 2 228 441
Cash and cash equivalents 23 535 967 23 690 475 14 242 706
Taxation 4 880 900 2 050 198 1 070 572
Non-current assets held for sale and assets of disposal groups 5 9 653 271 - 515 000
TOTAL ASSETS 621 879 221 621 677 301 404 359 307
EQUITY AND LIABILITIES
Capital and reserves (8 638 404) 45 242 694 15 031 232
Share capital and premium 100 981 928 100 999 428 100 981 928
Other reserves 2 894 553 2 582 334 2 894 553
Accumulated loss (120 009 335) (64 897 572) (95 537 150)
(16 132 854) 38 684 190 8 339 331
Non-controlling interest 7 494 450 6 558 504 6 691 900
Non-current liabilities 198 503 932 229 333 075 223 025 185
Loans payable 195 342 613 215 433 917 216 783 748
Interest-bearing borrowings 2 058 460 11 971 589 2 775 805
Deferred taxation 1 102 859 1 927 569 3 465 632
Current liabilities 432 013 693 347 101 532 166 302 890
Trade and other payables 410 777 212 339 414 590 149 221 204
Loans from shareholders 12 034 521 - -
Loans payable 6 005 165 - 12 880 135
Taxation 1 597 247 3 664 606 924 845
Interest-bearing borrowings 1 599 548 1 711 802 2 156 969
Bank overdraft and acceptances - 2 310 533 1 119 737
TOTAL EQUITY AND LIABILITIES 621 879 221 621 677 301 404 359 307
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
capital and Other Retained Non-controlling
premium reserves earnings interest Total equity
R R R R R
Balance at 1 July 2012 100 999 428 2 395 148 (62 708 599) 10 421 395 51 107 372
Total comprehensive
(loss)/income for the year - 499 405 (6 090 737) 2 591 166 (23 000 166)
Repurchase of shares (17 500) - - - (17 500)
Dividends paid - - - (6 057 974) (6 057 974)
Acquisition from non-controlling
interest - - (6 737 814) (262 686) (7 000 500)
Balance at 30 June 2013 100 981 928 2 894 553 (95 537 150) 6 691 900 15 031 232
Total comprehensive
(loss)/income for the period - - (24 472 186) 802 550 (23 669 636)
Balance at 31 December 2013 100 981 928 2 894 553 (120 009 336) 7 494 450 (8 638 404)
Balance at 31 December 2012 100 999 428 2 582 334 (64 897 572) 6 558 504 45 242 694
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 2013 31 December 2012 30 June 2013
R R R
Cash flows from operating activities 22 708 224 27 713 341 26 071 473
Cash flows from investing activities (4 664 060) (6 477 197) (18 554 151)
Cash flows from financing activities (6 648 810) (17 681 054) (12 219 205)
Net increase in cash and cash equivalents 11 395 354 3 555 090 (4 701 883)
Net cash at beginning of period 13 122 969 17 824 852 17 824 852
Net cash at end of period 24 518 323 21 379 942 13 122 969
NOTES TO THE ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
1. REVIEW FOR THE PERIOD
Ububele is pleased to present its financial results for the six months ending 31 December 2013.
The period under review proved to be challenging for Ububele, its board members, old and new, and shareholders and stakeholders
a like.
On 5 September 2013 the board decided to dispose of its interest in the Namibian subsidiary as part of its strategy to disinvest
from the foods sector and divert all of its available resources and effort into the agricultural businesses.
Certain conditions precedent within the purchase agreement of Turf-Ag, were not fulfilled and accordingly the agreement has lapsed
and is of no force or effect. Ububele has recovered all monies owed to it in terms of the initial advances made.
In an effort to re-focus on productivity and efficiencies in the agricultural business, various cost cutting exercises were performed.
Due to the contractual nature of these expenses, most of the savings will only be realised in the 2015 financial year.
Performance in the agricultural chemical business was satisfactorily, given the difficult trading conditions. For the second year
running, the summer rains were late, causing a shift in product mix and sales. This rainfall shift meant that a big portion of
the sales moved from the October to January period, to the period December to March. Drought conditions in the North West Province
and areas of the Free State persisted. This continued to have a direct impact on Ububele's gross profits and revenues achieved.
The rand played havoc throughout the period under review and caused losses to much of the South African industries reliant on
imported goods. Ububele was no exception and came under tremendous pressure to maintain margins.
Despite all the challenges faced, Ububele has continued to register new products aimed at high demand and high margin agricultural-
sectors. It has also launched initiatives aimed at increasing its market share of in-house generic brands. As stated in the annual
report of 2013, Ububele is in a good position to define a new direction, properly engage and inform its shareholders and important
stakeholders and pursue its future with transparency and vigour.
2. COMMENTARY ON RESULTS
Tough economic conditions, exacerbated by severe drought and increasing input costs, led to negative valuations of trade
receivables, inventory and goodwill. This, together with certain non-recurring costs associated with employment settlements and
legal matters, caused weaker than expected results.
Ububele's revenue from continuing operations increased by 13% (R48 million) from the comparative prior period whilst gross profit
were maintained at R46 million for the six month period. Gross profit margins declined as a result of the weakening rand and
increasing distribution costs coupled with a difficult trading environment for farmers. Inventory impairments of R2,4 million also
contributed to lower reported gross profits.
Operating expenses increased by 53% (R18 million) from the comparative prior period. The high operating expenses resulted in a
operating loss reported for the period under review. Major non-recurring expenses and impairments included in other expenses are
detailed below:
31 December 2013 31 December 2012
R R
Employment settlement costs 1 746 666 573 333
Foreign exchange loss 5 697 223 -
Increase in bad debt provision 7 060 850 -
Corporate action legal fees 2 762 249 -
17 266 988 573 333
Goodwill to the value of R8 million were impaired as a result of declining margins in certain distribution areas.
Lower interest rates and a declining loan balance led to a decrease of 5% in finance costs.
Due to the cyclical nature of the business, both current assets and current liabilities are significantly higher at end of
December, which is in the middle of our high season, than at year-end.
Trade receivables decreased by 7% compared to the comparative prior period. At period end, more than 60% of our debt was 30 days
aged and younger. Continuing drought in certain areas and increased operating costs for farmers resulted in non-performance of
their debt obligations. This caused a re-assessment of the provision for bad debt, which was increased by R7 million (80%). The
total provision for bad debt now stands at 6% of our book value.
Inventories increased by 35% compared to the comparative prior period. The increase is due to various factors, among others,
increased order values to utilise bulk discounts, the late start to the season, persistent drought in certain areas of the country
and higher landed cost of goods imported.
Trade payables increased by 21% compared to the comparative prior period due to value and volume increases in inventory.
On 5 September 2013 the board decided to sell its Namibian subsidiary, which would enable renewed focus on its agricultural
businesses. The assets and liabilities of this investment is disclosed separately on the face of the statements of comprehensive
income and financial position as discontinued operations and assets of disposal group respectively. As a result, a significant
decrease in fixed assets and loans payable, due to this reclassification, was affected when compared to June 2013.
Going concern
Ububele is currently in a negative net equity position. The board approved an imminent rights offer (refer to the declaration
announcement released simultaneously with this results announcement) and expects the current situation to be temporary. Expected
equity to arise as a result of the rights offer is R17 million, effectively restoring positive equity. The rights offer will be
underwritten by Rovic Agri Proprietary Limited, a shareholder in Ububele. R12 million has been advanced by Rovic Agri in anticipation
of the rights offer. This is disclosed as loans from shareholders.
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 2013, 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.
In accordance with IFRS 5, comparative income and expenses for discontinued operations were reclassified towards separate line
items in the statement of comprehensive income. The assets and liabilities of the disposal group were separately disclosed for the
current reporting period in the statement of financial position.
New standards and interpretations had no effect on the reported results for the period under review.
4. IMPAIRMENT OF GOODWILL
6 months 6 months 12 months
31 December 2013 31 December 2012 30 June 2013
R R R
Yield Avello goodwill 8 316 151 - -
Fine Cut trademark (goodwill) - - 7 417 452
The goodwill raised in terms of the Yield Avello (Proprietary) Limited (previously Avello (Proprietary) Limited) acquisition in
2011 was assessed for impairment in terms if IAS 36, which requires that an impairment loss should be recognised based on the higher
of value in use and its fair value less costs to sell. As a result of more than expected competition in Yield Avello's distribution
area and pressure placed on margins, the recoverable amount was less than the carrying value.
Given the decision taken in 2012 to primarily disinvest from the food sector, the board of directors decided to impair the remaining
Just Fresh brand in the 2013 financial year. This brand held minimal usage at the Group's airline catering company in Namibia.
5. DISCONTINUED OPERATIONS AND NON-CURRENT ASSETS HELD-FOR-SALE
On 5 September 2013, the board took a decision to sell the Company's share in Mediva Group Holdings (Pty) Limited, our Namibian
subsidiary. During the December 2012 interim period, the Company disposed of its equity share and claims in Unique Dairy Products.
Both disposals formed 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.
31 December 2013 31 December 2012 30 June 2013
R R R
Profit/(loss) from discontinued operations
Revenue 24 039 875 67 313 383 94 322 044
Expenses (21 346 341) (59 990 381) (91 310 744)
Impairment of intangible assets - - (7 417 452)
Tax (861 938) (1 846 286) (8 100 872)
1 831 596 5 476 716 (12 507 024)
Non-current assets/(liabilities) held-for-sale and
assets/(liabilities) of disposal group
Property, plant and equipment 15 218 281 - 515 000
Intangible assets 968 929 - -
Deferred taxation 1 837 770 - -
Inventories 2 651 241 - -
Loans receivable - current 509 250 - -
Trade and other receivables 12 276 718 - -
Cash and cash equivalents 982 815 - -
Loans payable - non-current (8 309 452) - -
Amounts due on instalment sale agreements - non-current (105 965) - -
Deferred taxation (682 661) - -
Trade and other payables (12 915 022) - -
Taxation (286 051) - -
Loans payable - current (2 492 123) - -
Bank overdraft (458) - -
9 653 271 - 515 000
Cash flows from discontinued operations
Net cash inflows/(outflows) from operating activities 6 221 691 1 667 420 (7 513 655)
Net cash inflows/(outflows) from financing activities (2 048 267) - 1 310 751
Net cash inflows/(outflows) from investing activities (2 318 086) - 671 139
1 855 338 1 667 420 (5 531 765)
6. EARNINGS PER SHARE AND HEADLINE EARNINGS PER SHARE 6 months 6 months 12 months
31 December 2013 31 December 2012 30 June 2013
R R R
Continuing operations
Reconciliation of headline earnings
(Loss)/profit attributable to ordinary shareholders (25 501 232) 1 717 080 (10 493 142)
Profit on disposal of property, plant and equipment - (28 276) (481 156)
Impairment of goodwill 8 316 151 - -
Headline earnings attributable to ordinary shareholders (17 185 081) 1 688 804 (10 974 298)
Number of ordinary shares in issue 178 382 824 178 417 824 178 382 824
Weighted number of ordinary shares in issue 178 382 824 178 417 824 178 411 879
Fully diluted weighted average number of ordinary shares 178 382 824 178 417 824 178 411 879
Earnings per ordinary share from continuing operations (cents) (14,30) 0,96 (27,05)
Headline earnings per ordinary share from continuing operations (cents) (9,63) 0,95 (0,44)
Fully diluted earnings per ordinary share from continuing
operations (cents) (14,30) 0,96 (27,05)
Fully diluted headline earnings per ordinary share from continuing
operations (cents) (9,63) 0,95 (0,44)
All operations
Reconciliation of headline earnings
(Loss)/profit attributable to ordinary shareholders (24 472 186) 4 923 678 (26 090 737)
Profit on disposal of property, plant and equipment (35 955) (28 276) (481 156)
Profit on disposal of investment - (2 211 411) (1 232 488)
Impairment of goodwill 8 316 151 - 7 417 452
Headline earnings attributable to ordinary shareholders (16 191 990) 2 683 991 (20 386 929)
Earnings per ordinary share (cents) (13,72) 2,76 (14,62)
Headline earnings per ordinary share (cents) (9,08) 1,50 (11,43)
Fully diluted earnings per ordinary share (cents) (13,72) 2,76 (14,62)
Fully diluted headline earnings per ordinary share (cents) (9,08) 1,50 (11,43)
7. AVAILABLE-FOR-SALE FINANCIAL ASSETS AT FAIR VALUE
Unlisted shares 5 179 892 4 565 856
Non-current assets
Available-for-sale 5 179 892 4 565 856
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 5 179 892 4 565 856
8. SEGMENT INFORMATION
The Group has four 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 agriculture, holding company, Namibia and foods.
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:
Continuing Discontinued
6 months ended 31 December 2013 Agriculture Holding company Subtotal Namibia Foods Subtotal Total
R R R R R R R
Revenue - external 407 234 077 - 407 234 077 24 039 875 - 24 039 875 431 273 952
Revenue - internal 95 800 361 4 157 438 99 957 799 2 220 000 330 000 2 550 000 102 507 799
Interest income 2 387 930 - 2 387 930 222 387 - 222 387 2 610 317
Finance costs (10 448 470) (24 615) (10 473 085) (894 928) (10 705) (905 633) (11 378 718)
Depreciation and amortisation (2 242 814) (125 260) (2 368 074) (1 130 205) (56 112) (1 186 317) (3 554 391)
Impairment of intangible assets
and goodwill (8 316 151) - (8 316 151) - - - (8 316 151)
Segment profits/(losses)
attributable to ordinary
shareholders (15 709 161) (9 792 071) (25 501 232) 865 250 163 796 1 029 046 (24 472 186)
Segment profits attributable
to minorities - - - 802 550 - 802 550 802 550
Segment current assets 503 377 720 693 507 504 071 227 15 405 057 1 014 967 16 420 024 520 491 251
Segment current liabilities 430 912 079 1 101 614 432 013 693 13 898 519 1 795 135 15 693 654 447 707 347
Continuing Discontinued
6 months ended 31 December 2012 Agriculture Holding company Subtotal Namibia Foods Subtotal Total
R R R R R R R
Revenue - external 359 578 540 - 359 578 540 25 695 270 1 618 113 67 313 383 426 891 923
Revenue - internal 115 013 674 3 000 000 118 013 674 - 3 203 960 3 203 960 121 217 634
Interest income 4 985 129 - 4 985 129 162 634 - 162 634 5 147 763
Finance costs (10 565 353) (413 056) 10 978 409) (426 465) (126 599) (553 064) (11 531 473)
Depreciation and
amortisation (2 707 570) (43 267) (2 750 837) (2 384 343) 1 800 905) (4 185 248) (6 936 085)
Impairment of intangible
assets and goodwill - - - - (7 417 452) (7 417 452) (7 417 452)
segment profits/(losses)
attributable to ordinary
shareholders 2 999 358 (1 282 278) 1 717 080 1 478 519 1 728 079 3 206 598 4 923 678
Segment profits attributable
to minorities - - - 2 270 118 - 2 270 118 2 270 118
Segment current assets 444 530 761 203 681 444 734 442 17 771 040 11 689 834 29 460 874 474 195 316
Segment current liabilities 319 838 845 3 912 221 323 751 066 19 844 809 3 505 657 23 350 466 347 101 532
9. CHANGES TO THE BOARD
During the period under review and to the date of this report, the directors are as follows:
WDK Buys Appointed 1 February 2014
HW Cloete Resigned 22 November 2013
CA Hall Appointed 28 August 2013
TB Hayter Resigned 27 August 2013
JT Kleinhans Appointed 28 August 2013
MJ Krastanov Resigned 27 August 2013
E Kruger Resigned 28 February 2014
MK Makaba Term ended 5 December 2013
JMK Matlala Removed 28 August 2013
MP Mocke Removed 28 August 2013
JD Newton Appointed 28 August 2013
CH Rickens Appointed 28 August 2013
SA Roux Resigned 4 December 2013
WJ Raubenheimer Appointed 5 December 2013
10. SUBSEQUENT EVENTS
Subsequent to the reporting date, the board approved a rights offer. There have been no other 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
Ububele Holdings is near completion in its strategy to disinvest from the foods sector. Ububele will in future concentrate on its core
business, which is crop protection, and this should bring stability and sustainability to our activities.
We believe that scientific farming is the only solution to the world's growing demand for food. Through our exciting agro-chemical
product range, combined with our geographic footprint and renewed focus on agriculture, we are well positioned to assist our farmers
to be more competitive and sustainable for the future.
These abridged consolidated interim financial statements have been prepared by E Kruger CA(SA) and WDK Buys CA(SA), the financial director.
On behalf of the board
CH Rickens WDK Buys
Chief executive officer Financial director
6 March 2014
Directors: CA Hall (Chairman)#*, CH Rickens (CEO), WDK Buys (FD), JD Newton#*, JT Kleinhans#, WJ Raubenheimer#*
# Non-executive
* Independent
Company Secretary: Fusion Corporate Secretarial Services (Pty) Ltd
Reg. no: 1998/011074/06
Postal address: PO Box 4637, Tyger Valley, 7536
Telephone: +27 (0)21 914 3553 Facsimile: +27 (0)21 914 8859
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: 06/03/2014 08:50:00 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
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