To view the PDF file, sign up for a MySharenet subscription.

BK ONE LIMITED - Unaudited condensed interim results for the six months ended 31 August 2014

Release Date: 12/12/2014 14:30
Code(s): BK1P     PDF:  
Wrap Text
Unaudited condensed interim results for the six months ended 31 August 2014

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 2014
                                                                                                   
CONDENSED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME                                       CONDENSED SEGMENT REPORT
                                                           Unaudited six    Unaudited six         Audited   Unaudited six months ended 31 August 2014                                              Fair Value
                                                           months ended     months ended      year ended                                                                                       Gains (Losses)
                                                              31 August        31 August     29 February                                                              Interest                   on financial
                                                                   2014             2013            2014    Investment                              Industry         Received           Split % instruments          Split %
                                                                       R                R               R   Pure Ocean Aquaculture               Aquaculture        1 332 014             94%               -            0%
Revenue                                                        1 422 615        5 343 482       2 673 225   Avalloy                               Superalloys                -              0%              -            0%
Fair value gains (losses) on financial instruments                     -        1 521 656     21 131 335    Other                                      Other           90 601               6%              -            0%
Cost recovery                                                    672 134                -               -                                                           1 422 615            100%               -            0%
Reversal of impairment                                         2 364 133                -               -   Unaudited six months ended 31 August 2013                                              Fair Value
Employee benefit expense                                     (1 235 848)      (1 169 000)     (2 089 542)                                                                                      Gains (Losses)
Impairment of loan                                                     -                -   (30 296 724)                                                              Interest                   on financial
Other expenses                                               (1 286 169)      (3 051 124)   (11 016 867)    Investment                              Industry         Received           Split % instruments          Split %
Profit (loss) before taxation                                  1 936 865        2 645 014   (19 598 573)    Pure Ocean Aquaculture               Aquaculture        4 763 040              89%     1 521 656          100%
Finance income                                                 2 509 200                -       2 324 559   Avalloy                               Superalloys          82 938               2%              -            0%
Finance costs                                                          -      (3 000 000)     (3 000 000)   Other                                      Other          497 504               9%              -            0%
Taxation                                                               -                -               -                                                           5 343 482             100%     1 521 656          100%
Profit (loss) for the period                                   4 446 065        (354 986)   (20 274 014)    Audited year ended 29 February 2014                                                    Fair Value
Other comprehensive income                                             -                -               -                                                                                      Gains (Losses)
                                                                       -                -               -                                                             Interest                   on financial
Total comprehensive income (loss) for the period               4 446 065        (354 986)   (20 274 014)    Investment                              Industry         Received           Split % instruments          Split %
Loss for the period attributable to:                                                                        Pure Ocean Aquaculture               Aquaculture        2 313 272             87%     14 454 464           69%
Ordinary shareholders                                                  -                -              -    Avalloy                               Superalloys          97 900               4%     6 676 871           31%
Preference shareholders                                        4 446 065        (354 986)   (20 274 014)    Other                                      Other          262 053               9%
                                                               4 446 065        (354 986)   (20 274 014)                                                            2 673 225             100%     21 131 335         176%
Total comprehensive loss for the period attributable to:                                                    There is no inter-segment trading.
Ordinary shareholders                                                  -                -              -
Preference shareholders                                        4 446 065        (354 986)   (20 274 014)
                                                               4 446 065        (354 986)   (20 274 014)
                                                                                                            CONDENSED STATEMENT OF CASH FLOWS
                                                                                                                                                                           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                                                                            2014                2013            2014
                                                              31 August        31 August    28 February                                                                                R                   R              R
                                                                  2014             2013            2014     Cash flows from operating activities
                                                                      R                R              R     Cash absorbed by operations                                          (2 613 069)      (3 341 025)   (10 977 210)
ASSETS                                                                                                      Finance income                                                                 -          307 690        106 656
Non-current assets                                                                                          Finance costs                                                                  -      (3 000 000)    (3 000 000)
Property, plant and equipment                                    103 106          162 388       132 304     Taxation                                                                       -                -              -
Intangible assets                                                 15 191           52 155        33 825     Net cash from operating activities                                   (2 613 069)      (6 033 335)   (13 870 554)
Investments                                                   75 976 019       58 289 375    75 976 019     Cash flows from investing activities
Loans                                                         99 968 923      130 760 038    97 754 792     Investments made                                                               -      (5 213 751)              -
                                                             176 063 239      189 263 956   173 896 940     Purchase of plants, equipment and intangibles                                  -        (105 542)      (105 542)
Current assets                                                                                              Non- current loans advanced                                                    -                -              -
Loans                                                          4 937 886        1 185 182       876 329     Net cash from investing activities                                             -      (5 319 293)      (105 542)
Other receivables                                                623 275          509 626        58 654     Cash flows from financing activities
Cash and cash equivalents                                         93 083        4 485 240     2 685 892     Current loans advanced                                                         -        7 500 000       7 500 000
                                                               5 654 244        6 180 048     3 620 875     Loans paid                                                                     -      (6 925 183)     (6 947 240)
Total assets                                                 181 717 483      195 444 004   177 517 815     Loans repaid                                                                   -     (12 500 000)   (12 500 000)
EQUITY AND LIABILITIES                                                                                      Net cash from financing activities                                        20 260       27 293 002     28 139 179
Equity                                                                                                      Total cash movement for the period                                   (2 592 809)        4 015 191       2 215 843
Share capital                                                        200              200            200    Cash and cash equivalents at the beginning of the period               2 685 892          470 049         470 049
Accumulated loss                                            (54 431 041)     (38 958 078)   (58 877 106)    Cash and cash equivalents at the end of the period                        93 083        4 485 240       2 685 892
Total equity                                                (54 430 841)     (38 957 878)   (58 876 906)    HEADLINE EARNINGS PER SHARE                                           Unaudited        Unaudited          Audited
Liabilities                                                                                                                                                                       31 August         31 August    29 February
Non-current liabilities                                                                                                                                                                2014             2013            2014
Preference shares                                            232 926 374      197 799 790   232 926 374     Shares in issue:
                                                             232 926 374      197 799 790   232 926 374     Ordinary shares: Number of shares in issue                                  200              200            200
Current liabilities                                                                                         Preference shares: Number of shares in issue                         24 492 823       20 102 000     24 492 823
Trade and other payables                                       3 221 950        2 602 092     3 468 347
                                                               3 221 950        2 602 092     3 468 347     Weighted average number of shares in issue
Total liabilities                                            236 148 324      234 401 882   236 394 721     Ordinary shares: Number of shares in issue                                  200              200            200
Total equity and liabilities                                 181 717 483      195 444 004   177 517 815     Preference shares: Number of shares in issue                         24 492 823       20 102 000     22 297 437


CONDENSED STATEMENT OF CHANGES IN EQUITY                                                                    (LOSS) EARNINGS PER SHARE, IN RANDS
                                                            Share capital        Retained          Total    Basic
                                                                                  income          equity    Ordinary shareholders                                                         -                 -               -
Balance at 29 February 2013                                          200     (38 603 092)   (38 602 892)    Preference shareholders                                                    0,18            (0,02)          (0,83)
Changes:                                                                                                    Earnings (loss) per share, in Rands
Loss for the period                                                    -        (354 986)      (354 986)    Diluted
Other comprehensive income for the period                              -                -              -    Ordinary shareholders                                                                           -
Balance at 31 August 2013                                            200     (38 958 078)   (38 957 878)    Preference shareholders                                                    0,18            (0,02)          (0,83)
Changes:                                                                                                    Reconciliation of headline earnings (loss)
Profit for the six month period                                        -     (19 919 028)   (19 919 028)    Profit (loss) attributable to preference shareholders                 4 446 065        (354 986)    (20 274 014)
Other comprehensive income for the period                              -                -              -                                                                          4 446 065        (354 986)    (20 274 014)
Balance at 28 February 2014                                          200     (58 877 106)   (58 876 906)    Headline earnings (loss) per ordinary share (Rand)                                             -               -
Changes:                                                                                                    Diluted earnings (loss) per ordinary share (Rand)                                              -               -
Loss for the six month period                                          -        4 446 065      4 446 065    Headline earnings (loss) per preference share (Rand)                       0,18           (0,02)          (0,83)
Other comprehensive income for the period                              -                -              -    Diluted earnings (loss) per preference share (Rand)                        0,18           (0,02)          (0,83)
Balance at 31 August 2014                                            200     (54 431 041)   (54 430 841)


Commentary                                                                                            Advanced Vacuum Alloys (“AVA”)

Basis of preparation                                                                                  Having successfully emerged from business rescue, AVA is currently operational at a relatively
                                                                                                      low level and is in the process of finalising both a working capital and trade finance facility that
The unaudited condensed interim financial statements for the six months ended 31 August
                                                                                                      is envisaged to be implemented in the first quarter of 2015. Market dynamics remain positive
2014 have been prepared in accordance with the framework concepts and the recognition
                                                                                                      in the industry and Avalloy remains well positioned in an industry with high barriers to entry to
and measurement requirements of International Financial Reporting Standards (“IFRS”), the
                                                                                                      exploit its position as one of very few independent superalloy producers in the world able to
information requirements of IAS34: Interim Financial Reporting, the AC 500 standards as issued
                                                                                                      operate in both the spot and long term offtake markets.
by the Accounting Practices Board and the requirements of the Companies Act of South Africa.
                                                                                                      The restructure of the balance sheet by virtue of the business rescue plan and the securing
The accounting policies and method of computation applied in presentation of these unaudited
                                                                                                      of interim post commencement funding, had a positive effect on the investment portfolio as
condensed interim financial statements are consistent with those applied in the audited
                                                                                                      reported in previous Company reports. Once the aforementioned working capital and trade
financial statements for the year ended 28 February 2014. The above information has not been
                                                                                                      finance facilities have been secured, AVA will be poised to return to full production capacity.
reviewed or audited by the Company’s auditors.
The unaudited condensed interim financial statements have been prepared by A de Nobrega
– Thorold CA (SA).                                                                                    Investment Impact
                                                                                                      As at 28 February 2014 the fair value of the portfolio was R174.6m as determined by an
                                                                                                      independent valuation expert using financial information provided by management of the
Introduction                                                                                          individual projects. As at 31 August 2014 the fair value of the portfolio increased to R179.5m.
During the interim period ended 31 August 2014, the Company has continued to focus on                 This equates to a 2.8% increase in fair value for the interim period 2014 predominantly as a
stabilising its portfolio companies, and has made significant progress towards protecting             result of the re-recognition of previously impaired loan to the POA portfolio companies to the
shareholders’ value through finding funding solutions in conjunction with the Company’s co-           value of R903 737 and accrued interest following the securing of funding arrangement for them.
shareholders and stakeholders in the businesses operated by its portfolio companies.
The Company continued to face challenging headwinds with respect to the procurement of
                                                                                                      Subsequent Events
finance for itself, as well as its investee companies, however these challenges have been largely
overcome and new financing arrangements and capital injection agreements were successfully            Trading of shares
concluded (or are close to completion) to obtain working capital and trade finance both for the       Trading of our shares since listing has been limited with wide spreads between bids and offers
Company and the investee companies.                                                                   evident. This state of affairs has led to ad hoc and uncharacteristic high volatility in the share
                                                                                                      price with small trades having a large impact on the quoted price of the Company’s preference
                                                                                                      shares. While the share price at the time of this commentary being published was quoted at
Investment Portfolio                                                                                  2 cps, it has been noted that the cause of this decrease relates to one minor share trade that
Pure Ocean Aquaculture                                                                                took place on 2 December 2014 leading to, in the Company’s opinion, an aberrational effect on
POA is an investment holding company that holds aquaculture-based investments. POA holds              the share price. It remains our belief that our initial investors understand the nature of Private
two entities: Highlands Trout (“HT”), a Lesotho-based company, and Pure Ocean East London             Equity and are therefore willing to wait for the growth to emerge over time.
(“POEL”) which are independently valued.
POA’s business plan has been previously modified, as alluded to in previous reports, to adapt         Going concern
to funding delays and constraints. These delays have been largely addressed or are close to
                                                                                                      Previous reports by the Company indicated that it was facing liquidity issues which were being
being addressed such that both of its investments are expected to stabilise and be poised
                                                                                                      addressed by the Directors via the implementation of various solutions.
for consolidation followed by growth over the short to medium term. As such, no fair- value
adjustments have been made to the POA investments for the interim period.                             Subsequent to year end, 28 February 2014, the Company has successfully concluded a
                                                                                                      subscription for its remaining unissued ordinary share capital for three million rand (see SENS
                                                                                                      announcement dated 5 September 2014). These funds are anticipated to flow in January 2015,
Highlands Trout                                                                                       which upon receipt will generate the cash flow for the Company to continue as a going concern.
Highlands Trout has a licence to operate a salmon trout farm on the Katse Dam in the Kingdom          The Company furthermore recouped a previously impaired loan to Kawuleza Connect (now in
of Lesotho. Sales of its salmon trout in terms of a twelve-month off-take agreement with one of       liquidation) in the amount of R1 580 162 during October 2014 from the guarantor thereof that
the largest Japanese retailers have commenced while sales into the South African and Lesotho          created additional liquidity in the Company. The previous impairment of R 1 460 395 has been
markets continue to increase steadily. Further possibilities for offtake of its farm harvest appear   reversed for the interim period due to the recoupment of the loan.
to be promising with demand for its product increasing worldwide following problems that
are being experienced at sea-based salmon trout farms in Chile and Norway particularly. The
processing facilities at HT have been upgraded to facilitate the growing harvesting needs and         Changes in board of directors
are presently being commissioned.                                                                     D Richards (Chief Executive Officer) resigned 30 April 2014
                                                                                                      A Keet (Chief Executive Officer) appointed 16 October 2014
POEL                                                                                                  H van Noort (Independent Non-executive) resigned 9 October 2014
POEL owns and operates a land-based dusky cob fish farm in the Industrial Development Zone            W Voigt (Independent Non-executive) appointed 1 December 2014
of East London. The POEL Board have indicated that they are now comfortable, lessons having
been learnt during the pilot phase of its development, that the biological fundamentals for
the pilot phase have been proven hence a decision has been made to procure funding for the            Dividend
implementation of the next phase of the development of the business – the construction of a           No interim dividend has been declared.
500 ton production facility on the same site. Low level offtake arrangements have furthermore
been concluded with one of the largest fish distributors in South Africa with initial feedback
from the market regarding the POEL production being very favourable.                                  Corporate Responsibility
No further impairment of the POEL investment was undertaken following the securing of a               We remain committed to the transformation of our country and, together with our business
working capital facility for POEL together with a non-binding undertaking to secure funding for       partners and shareholders, will actively look for opportunities to support this objective.
the construction of the aforementioned 500 ton production facility. A positive side effect of the
new financing arrangements has been that previous impairment of POEL short term loan due by           Conclusion
POEL to the Company has been reversed.
                                                                                                      The potential in the BK One portfolio companies remains, and we believe that the individual
Several other prospective funders have also indicated willingness to participate in the funding of    projects have the ability to deliver value for shareholders upon the successful implementation
the production facility and the POEL Board are now concentrating their efforts in this direction.     of their business plans. Critical to this is the ability of the underlying investments to attract the
                                                                                                      funding required to do so and the Board are happy to report that considerable progress has been
POA Call Option                                                                                       made in this respect during the interim period. The Board will continue to strive to minimize risk
                                                                                                      exposure in its underlying investment interests and extract value for all its stakeholders.
The Company entered into a Call Option (see SENS announcement dated 5 November 2014) in
terms of which the Company has granted a call option, subject to various conditions precedent,
to Pure Ocean Aquaculture Limited (“the Acquirer”) to acquire the Company’s entire right,             On behalf of the Board
interest and title in the claims and shares held in POA and claims held in POEL.                      P Ncetezo                                           A Keet
It remains to be seen whether the Call Option shall be exercised by the Acquirer however              Chairperson                                         Chief Executive Officer
irrespective of whether the Call Option is in fact exercised, the Company is of the view that
either alternative will be favourable for it in that the granting of the Call Option has secured
funding for the POA investments while providing a possibility (subject to the Call Option being
exercised) to convert its holdings in POA into more easily tradable instruments in the future
should the Company so elect.

Date: 12/12/2014 02:30:00 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
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story