BK ONE LIMITED - Unaudited condensed interim results for the six months ended 31 August 2015

Release Date: 18/12/2015 16:35
Code(s): BK1P
 
Wrap Text
Unaudited condensed interim results for the six months ended 31 August 2015

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 2015

CONDENSED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME                                                CONDENSED SEGMENT REPORT
                                                              Unaudited six      Unaudited six            Audited    Unaudited six months ended 31 August 2015                                              Fair Value
                                                               months ended       months ended         year ended                                                                                        Gains (Losses)
                                                                  31 August          31 August        29 February                                                             Interest                    on financial
                                                                       2015               2014               2015    Investment                              Industry         Received         Split %     instruments          Split %
                                                     Notes                R                  R                  R    Pure Ocean Aquaculture               Aquaculture                -              0%        (930 000)              2%
Revenue                                                                   -          1 422 615          3 118 105    Avalloy                              Superalloys                -              0%     (51 546 205)             98%
Fair value gains (losses) on financial instruments    1         (52 476 205)                 -        (23 499 814)                                                                   -              0%     (52 476 205)            100%
Cost recovery                                                       360 000            672 134          1 016 775
(Provision) Reversal of impairment                                2 364 133          2 335 114                  -    Unaudited six months ended 31                                                           Fair Value
Employee benefit expense                                           (906 000)        (1 235 848)        (2 242 392)   August 2014                                                                          Gains (Losses)
Provision of impairment of loans                      2        (105 090 021)                 -                  -                                                             Interest                     on financial
                                                                                                                     Investment                              Industry         Received         Split %      instruments         Split %
Other expenses (refer note 1)                                      (982 853)        (1 286 169)        (3 190 928)
                                                                                                                     Pure Ocean Aquaculture               Aquaculture        1 332 014            100%                -              0%
Profit (loss) before taxation                                  (159 095 080)         1 936 865        (22 463 140)
                                                                                                                     Avalloy                               Superalloys               -              0%                -              0%
Finance income                                                      107 926          2 509 200          5 130 081
                                                                                                                                                                             1 332 014            100%                -              0%
Finance costs                                                        (6 708)                                    -
Taxation                                                                  -                  -                  -    Audited year ended 28                                                                   Fair Value
Profit (loss) for the period                                   (158 993 862)         4 446 065        (17 333 059)   February 2015                                                                        Gains (Losses)
Other comprehensive income                                                -                  -                  -                                                             Interest                     on financial
Total comprehensive income (loss) for the period               (158 993 862)         4 446 065        (17 333 059)   Investment                               Industry        Received         Split %      instruments         Split %
Profit (loss) for the period attributable to:                             -                  -                  -    Pure Ocean Aquaculture                Aquaculture       2 969 321            100%      (21 175 950)            90%
Ordinary shareholders                                                     -                  -                  -    Avalloy                               Superalloys               -              0%       (2 323 864)            10%
Preference shareholders                                        (158 993 862)         4 446 065        (17 333 059)                                                           2 969 321            100%      (23 499 814)           100%
                                                               (158 993 862)         4 446 065        (17 333 059)   There is no inter-segment trading.
Total comprehensive income (loss) for the period
attributable to:                                                                                                     CONDENSED STATEMENT OF CASH FLOWS
Ordinary shareholders                                                     -                  -                  -                                                                   Unaudited six       Unaudited six           Audited
Preference shareholders                                        (158 993 862)         4 446 065        (17 333 059)                                                                   months ended        months ended        year ended
                                                               (158 993 862)         4 446 065        (17 333 059)                                                                      31 August           31 August       29 February
                                                                                                                                                                                             2015                2014              2015
                                                                                                                                                                                                R                   R                 R
CONDENSED STATEMENT OF FINANCIAL POSITION                                                                            Cash flows from operating activities
                                                                  Unaudited          Unaudited           Audited     Cash absorbed by operations                                       (2 347 407)         (2 613 069)       (4 616 982)
                                                                  31 August          31 August       28 February     Finance income                                                         3 987                   -           149 667
                                                                       2015               2014              2015     Finance costs                                                         (6 708)                  -                 -
                                                     Notes                R                  R                 R
                                                                                                                     Taxation                                                                   -                   -                 -
ASSETS
                                                                                                                     Net cash from operating activities                                (2 350 128)         (2 613 069)       (4 467 315)
Non-current assets
                                                                                                                     Cash flows from investing activities
Property, plant and equipment                                             -            103 106            67 483
                                                                                                                     Current loan advance                                                                                      (122 075)
Intangible assets                                                         -             15 191                 -
                                                                                                                     Repayment of loan advanced                                                                               1 553 452
Investments                                           1                   -         75 976 019        52 476 205
                                                                                                                     Net cash from investing activities                                         -                   -         1 431 377
Loans                                                 2                   -         99 968 923       106 757 048
                                                                                                                     Cash flows from financing activities
                                                                          -        176 063 239       159 300 736
                                                                                                                     Share capital raised                                                     800                   -                 -
Current assets
                                                                                                                     Share premium raised                                               2 999 200                   -                 -
Loans                                                             1 770 965          4 937 886           523 074
                                                                                                                     Repayment of loans advanced                                          523 074              20 260           353 255
Other receivables                                                 1 228 068            623 275           996 711
                                                                                                                     Net cash from financing activities                                 3 523 074              20 260           353 255
Cash and cash equivalents                                         1 176 155             93 083             3 209
                                                                                                                     Total cash movement for the period                                 1 172 946          (2 592 809)       (2 682 683)
                                                                  4 175 188          5 654 244         1 522 994
                                                                                                                     Cash and cash equivalents at the beginning of the period               3 209           2 685 892         2 685 892
Total assets                                                      4 175 188        181 717 483       160 823 730
                                                                                                                     Cash and cash equivalents at the end of the period                 1 176 155              93 083             3 209
EQUITY AND LIABILITIES
Equity                                                                                                               HEADLINE EARNINGS PER SHARE                                        Unaudited           Unaudited           Audited
Share capital                                                         1 000                200               200                                                                        31 August           31 August       28 February
Share premium                                                     2 999 200                  -                 -     Shares in issue:                                                        2015                2014              2015
Accumulated loss                                               (235 204 027)       (54 431 041)      (76 210 165)    Ordinary shares: Number of shares in issue                             1 000                 200               200
Total equity                                                   (232 203 827)       (54 430 841)      (76 209 965)    Preference shares: Number of shares in issue                      24 492 823          24 492 823        24 492 823
Liabilities                                                                                                          Weighted average number of shares in issue
Non-current liabilities                                                                                              Ordinary shares: Number of shares in issue                             1 000                 200               200
Preference shares                                               232 926 374        232 926 374       232 926 374     Preference shares: Number of shares in issue                      24 492 823          24 492 823        24 492 823
                                                                232 926 374        232 926 374       232 926 374
Current liabilities                                                                                                 (LOSS) EARNINGS PER SHARE, IN RANDS
Trade and other payables                                          3 452 641          3 221 950         4 107 321
                                                                                                                     Basic
                                                                  3 452 641          3 221 950         4 107 321
                                                                                                                     Ordinary shareholders                                                      -                   -                 -
Total liabilities                                               236 379 015        236 148 324       237 033 695
                                                                                                                     Preference shareholders                                                (6,49)               0,18             (0,71)
Total equity and liabilities                                      4 175 188        181 717 483       160 823 730
                                                                                                                     Earnings(loss) per share, in Rands
                                                                                                                     Diluted
CONDENSED STATEMENT OF CHANGES IN EQUITY                                                                             Ordinary shareholders                                                                          -
                                                      Share           Share            Retained            Total     Preference shareholders                                                (6,49)               0,18             (0,71)
                                                     capital       Premium              income            equity     Reconciliation of headline earnings (loss)
Balance at 29 February 2013                             200               -        (38 603 092)     (38 602 892)     Profit (loss) attributable to preference shareholders           (158 993 862)          4 446 065       (17 333 059)
Loss for the first six months period                       -              -           (354 986)        (354 986)                                                                     (158 993 862)          4 446 065       (17 333 059)
Balance at 31 August 2013                               200               -        (38 958 078)     (38 957 878)     Headline earnings (loss) per ordinary share (Rand)                                             -                 -
Loss for the last six month period                         -              -        (19 919 028)     (19 919 028)     Diluted earnings (loss) per ordinary share (Rand)                                              -                 -
Balance at 28 February 2014                             200               -        (58 877 106)     (58 876 906)     Headline earnings (loss) per preference share (Rand)                   (6,49)               0,18             (0,71)
Profit for the first six months period                     -              -           4 446 065        4 446 065     Diluted earnings (loss) per preference share (Rand)                    (6,49)               0,18             (0,71)
Balance at 31 August 2014                               200               -        (54 431 041)     (54 430 841)
Loss for the last six months period                        -              -        (21 779 124)     (21 779 124)
Balance at 28 February 2015                             200               -        (76 210 165)     (76 209 965)
Share issue                                             800                                   -              800
Share premium                                              -      2 999 200                   -        2 999 200
Loss for the six month period                              -              -       (158 993 862)    (158 993 862)
Balance at 31 August 2014                             1 000       2 999 200       (235 204 027)    (232 203 827)
Commentary
Introduction                                                                                          owed to AVA’s creditors and therefore the likelihood that the Company will realise any value in
                                                                                                      its favour is remote.
During the interim period ended 31 August 2015, the Company continued to face challenging
headwinds as had been reported in its Annual Report for the period ended 28 February 2015
(“Annual Report”) and previous financial statements and reports. It was noted in the Annual           Call Options
Report that the ability of the Company to continue as a going concern was dependent on a
                                                                                                      Given the above state of affairs, it is not considered probable that the call options pertaining to
number of factors. The most significant of those included:
                                                                                                      AVA and or POA will be exercised at their agreed values, if at all.
a) that the ultimate shareholders continue to financially support the Company after the existing
                                                                                                      Subsequent Events
   funding facilities have been utilised. It was noted by the Directors in the Annual Report that
   these facilities will be utilised by February 2016; and / or                                       Mr Peter Gaylard has resigned as director of the Company with effect from 1 October 2015.
b) the ability of the Directors to procure adequate additional funding for the Company from           Dividend
   a combination of alternative sources once the facilities referred to had been utilised.            No interim dividend has been declared
   The significant alternative sources available are to sell part or whole of its investments;
                                                                                                      Conclusion
   implement plans to actively recover short term loans receivable; restructure the operations
   of the Company; settle the largest trade payable by issuing shares; secure the largest trade       It is regrettable that due to circumstances and events entirely outside of the Board’s control, the
   payable by procuring a third party guarantee for same; issue additional Preference Shares;         Company is faced with imminent closure. While considerable progress, and indeed success in
   procure the subordination of one million Rand in management fees owing to the Company’s            attracting and securing the funding required by the underlying investments, had been achieved
   investment advisor, Kwanda Capital Investments, at year end for twelve months.                     since the publication of the previous interim results, such progress has been fatally undermined
                                                                                                      by the events surrounding its major preference shareholders and funders and the reputational
While the Directors managed to successfully address several of the alternative sources of
                                                                                                      challenges that this has had on further fund-raising efforts both for the Company and its
funding, it was established that the Company’s three largest preference share shareholders are
                                                                                                      underlying investments.
unable to support the Company as the largest preference share shareholder has been placed
under administration in the Bailiwick of Guernsey and cannot make any funding decisions on            The Board of the Company has called a special shareholders meeting simultaneously with the
any of it investments, the second largest preference share shareholder of the Company is in           publication of these results and shareholders are referred to such notice for further information
the process of being dissolved (and its shares in the Company being distributed to several
shareholders) and the third largest preference share shareholder has indicated that they wish
to disinvest from the Company.
                                                                                                      Notes to Financial Statements
                                                                                                      Basis of preparation
The Company has, in close conjunction with the boards of its underlying investments,
investigated several options to sell its shareholding in its underlying investments however having    The interims are prepared using the liquidation basis of accounting to present relevant
regard to the funding constraints being experienced by the said investments, the possibility of       information about an entity’s expected resources in liquidation by measuring and presenting
any such trade sale is presently remote and remains viable in the medium to long term (if at all)     assets at the amount of the expected cash proceeds from liquidation.
which, given the circumstances of the Company, are of no great assistance to it.                      Reason for basis of preparation
The Company has furthermore restructured those parts of its operations that are capable               The Board in consultation with the Company’s auditors, legal advisors and sponsor, have now
of restructuring. These efforts have been finalised and include significant reduction of non-         determined that they are not in a position to release the Company’s interim results for the six
executive director fees, renegotiation of secretarial functions and the elimination of any            months ended 31 August 2015 (“interim results”) on a “going concern” basis due to the risks as
expenses not deemed core to the Company’s function.                                                   fully set out in the annual financial statements for the period ended 28 February 2015 having
Negotiations have been on-going with the Company’s largest and significant creditor in order          materialised. This will result in the preparation of BK One’s interim results on a “liquidation”
to settle the amount due to them through the issue of preference shares. The authority to             basis and as a result. IFRS provides no guidance on the requirements for the preparation of
issue such shares was however not supported by the Company’s preference shareholders at               financial statements on a liquidation basis.
the most recent Annual General Meeting and as such, this alternative is not an option. This           In addition, the following developments have taken place:
has further constrained the Company’s ability to raise funds, such ability already being heavily      1. The Company’s three largest shareholders are unable to support the Company as the
constrained by the issues being experienced by shareholders and funders of the Company and               largest shareholder has been placed under administration in the Bailiwick of Guernsey and
its underlying investments that furthermore led to the collapse of the financing arrangements            cannot make any funding decisions on any of it investments, the second largest shareholder
and capital injection agreements that were successfully concluded by the Company’s investee              of the Company is in the process of being dissolved (and its shares in the Company being
companies and further materially compromised the possibilities to secure replacement funding             distributed to several shareholders) and the third largest shareholder has indicated that they
for the investee companies.                                                                              wish to disinvest from the Company.
Until recently, the Company had made significant progress in securing a third party guarantee         2. The Company has, in close conjunction with the boards of its underlying investments,
for the claim of its largest trade creditor through the pledge of shares by its second largest           investigated several options to sell its shareholding in its underlying investments however
preference shareholder however such shareholder chose to withdraw from these discussions at              having regard to the funding constraints being experienced by the said investments; the
a late stage and has taken the decision to dissolve in the interim.                                      possibility of any such trade sale is presently remote within the requisite timeframes of the
As such, as indicated in the Annual Report and above, the Company is not in a position to                Company.
continue on a “going concern” basis due to the risks as fully set out in the annual financial         3. The Company has furthermore restructured those parts of its operations that are capable
statements for the year ended 28 February 2015 having materialised.                                      of restructuring. These efforts have been finalised and include significant reduction of non-
                                                                                                         executive director fees, renegotiation of secretarial functions and the elimination of any
Investment Portfolio                                                                                     expenses not deemed core to the Company’s function.

Pure Ocean Aquaculture (“POA”)                                                                        4. Negotiations have been on-going with the Company’s largest significant creditor in order
                                                                                                         to settle the amount due to them through the issue of preference shares. The authority to
POA is an investment holding company that holds aquaculture-based investments. POA holds
                                                                                                         issue such shares was however not supported by the Company’s preference shareholders
two entities: Highlands Trout (“HT”), a Lesotho-based company, and Pure Ocean East London
                                                                                                         at the most recent Annual General Meeting and as such, this alternative is no longer an
(“POEL”) which are independently valued. Both investments have been impaired to nil value
                                                                                                         option. This has further constrained the Company’s ability to raise funds, such ability already
due to the likelihood that neither investment is considered likely to deliver any value to the
                                                                                                         being heavily constrained by the issues being experienced by shareholders and funders of
Company within the time frames available to the Company for such realisation.
                                                                                                         the Company and its underlying investments.
POEL owns and operates a land-based dusky cob fish farm in the Industrial Development Zone
                                                                                                      5. Until recently, the Company had made significant progress in securing a third party guarantee
of East London. The POEL investment via POA, due predominantly to the failure of its working
                                                                                                         for the claim of its largest trade creditor through the pledge of shares by its second largest
capital funders to continue to advance funds as agreed in terms of its financing arrangements
                                                                                                         preference shareholder however such shareholder chose to withdraw from these discussions
but also as a result of a complete lack of governmental support despite the programs announced
                                                                                                         at a late stage and has taken the decision to dissolve in the interim.
as being available for this purpose and, for instance, the publication of the Operation Phakisa
initiative, has been impaired to a nil value. While remote opportunities exist to secure a sale of    Glossary
the POEL business or stakeholding, it is considered remote that any such sale will result in the      Fair Value: The price that would be received to sell an asset or paid to transfer a liability in an
realisation of value in favour of the Company.                                                        orderly transaction between market participants at the measurement date.
Highlands Trout has a licence to operate a salmon trout farm on the Katse Dam in the Kingdom          Liquidation: The process by which an entity converts its assets to cash or other assets and settles
of Lesotho. The HT investment via POA has similarly been impaired to a nil value. Despite there       its obligations with creditors in anticipation of the entity ceasing all activities. Upon cessation of
being value attributable to such investment, the associated preferent debt (not held by the           the entity’s activities, any remaining cash or other assets are distributed to the entity’s investors
Company) in POA is likely to exceed any value realised by the sale of the HT investment in POA        or other claimants (albeit sometimes indirectly).
at the time of this report and therefore the likelihood that the Company will realise any value       Measurement
in its favour is remote.
                                                                                                      Assets are initially recognised at the estimated amount of cash or other consideration that it
Advanced Vacuum Alloys (“AVA”)                                                                        expects to collect in settling or disposing of those assets in carrying out its plan for liquidation.
AVA is a superalloy producer located in the North West province of South Africa. The AVA              In some cases, fair value may approximate the amount that an entity expects to collect.
investment, due predominantly to the failure of its working capital funders to advance any            The fair value adjustments are recognised in profit and loss.
funds as agreed in terms of its financing arrangements but also as a result of a complete lack
of governmental support despite the programs announced as being available for this purpose,           For financial assets carried at amortised cost, the amount of the impairment is the difference
has been impaired to a nil value. AVA is presently mothballed and the Board is of the view that       between the asset’s carrying amount and the present value of estimated future cash flows,
the realisable value of the AVA assets is likely to be consumed in its entirety by the secured debt   discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all         different scenarios ranging from a consolidation of current activities through to various levels
financial assets. Impairments and/or reversal of impairments are recognised in profit and loss        of expansion however such model has still to be approved by HT’s shareholders. Each scenario
Cash and cash equivalents comprise cash on hand, other deposits held at call with banks and           requires varying levels of funding and has a material effect on the valuation of POA. POEL is a
others short-term highly liquid investments that have original maturities of three months or          small pilot facility with a much lower certainty around future income and current sale value.
less. Cash equivalents are short-term highly liquid investments that are readily convertible to       A decision was made in the previous financial year to value the POEL business on a net asset
known amounts of cash and which are subject to an insignificant risk of change in value. Cash         value basis due to the uncertainty of future income. Thus BK One board, with the advice from
and cash equivalents are carried at amortised cost which approximates fair value.                     their advisory team, has valued POA equity value at nil primarily due to the POA exposure to
                                                                                                      Transholding Investments Limited.
Revenue is measure at the fair value of the consideration received or receivable when it is
probable that the economic benefits will flow to the entity.
Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the                                                      31 August 2015    31 August 2014   28 February 2015
effective interest rate applicable, which is the rate that exactly discounts estimated future cash
                                                                                                         Opening balance                                      930 000        22 105 950         22 105 950
receipts through the expected life of the financial asset to that asset’s net carrying amount.
                                                                                                         Fair value adjustment                               (930 000)                -        (21 175 950)

Notes to Interims                                                                                        Closing balance

The fair values of financial assets and financial liabilities are determined as follows:                                                                            -        22 105 950            930 000

• the fair value of financial assets and financial liabilities with standard terms and conditions        131 655 050 ordinary shares of R0, 000001 each (31 August 2015 representing 15% interest;
  and traded on active liquid markets is determined with reference to quoted market prices;              28 February 2014 representing 15% interest and 31 August 2014 representing 37.4% interest)
  and
• the fair value of other financial assets and financial liabilities (excluding derivative               2. Long term loans
  instruments) is determined in accordance with generally accepted pricing models based on
  discounted cash flow analysis using prices from observable current market transactions.                                                              31 August 2015    31 August 2014   28 February 2015

Specifically significant assumptions used in fair valuing the investments (financial assets) are         Pure Ocean Aquaculture – Loan 1                   16 162 373        15 045 236         16 162 373
set out below:                                                                                           Pure Ocean Aquaculture – Loan 2                    8 851 833         8 332 546          8 851 833
The financial statements include holdings in unlisted shares which are measured at fair value.           Pure Ocean Aquaculture – Loan 3                   42 688 058        40 222 323         42 688 058
These are all level 3 fair value measurements which are those derived from valuation techniques
that include inputs that are not based on observable market data (unobservable inputs). There            Pure Ocean Aquaculture – Loan 4                            -                 -          1 667 026
are no instruments which are measured at level 1 or level 2.                                             Pure ocean East London – Loan 1                   36 368 817        36 368 817         36 368 817
The fair values of investments held are estimated by an independent valuator using a discounted          Pure Ocean East London – Loan 2                    1 018 941`                 `         1 018 941
cash flow model which includes some assumptions that are not supportable by observable
                                                                                                         Impairments                                     (105 090 021)
market prices or rates. Business assumptions are not generally supported by historical
performance, and also assume that the required funding support is received.                                                                                         -        99 968 923        106 757 048

The fair value of the investments is monitored by the Board by ensuring that a member of the
Board or advisory team serves on the board of directors of the underlying investment. The fair           There have been formal offers for HT but none these will have any benefit for BK One equity
value of the investments, are reviewed quarterly. The fair value gains (losses) are reviewed and         portion or loan payments. Thus BK One board, with the advice from their advisory team,
approved and adjusted by the Board on a bi-annual basis.                                                 has valued POA value of loans is nil due to all the loans been subordinated to Transholding
In the period under review, due to the fact that the funding source has not materialised in the          Investments Limited.
underlying investments and no other reasonable prospects exist for alternative funding sources.          The Interest for the six month period hasn’t been recognised as interest is only payable on the
Both investments will be valued at fair value by measuring and presenting assets at the amount           maturity of the loans payable to BK One, provided POA is liquid and solvent.
of the expected cash proceeds from liquidation thereof.         .

                                                                                                         3. Prior period error: Incorrect classification of loans advanced in the statement of
1. Investments                                                                                              cash flows (“SOCF”)
                                                                                                         During the JSE Proactive monitoring of the annual financials for year ended 28 February 2015,
                                                 31 August 2015    31 August 2014    28 February 2015
                                                                                                         the following classification errors in the cash flow statement were identified.
Unlisted investments at fair value:
                                                                                                         Loans advanced – amount R 122 075.
Investment in Advanced Vacuum Alloys                          -        53 870 069          51 546 205
Proprietary Limited
                                                                                                         Loan advanced to Pure Ocean Aquaculture Proprietary Limited. The loan was a short term loan
                                                                                                         to bridge a shortfall of working capital in the underlying investment. It was advanced on the 31
Ordinary shares                                                                                          October 2014 and repaid on the 1 December 2014.
Investment in Pure Ocean Aquaculture                          -        22 105 950             930 000    This was incorrectly classified as a financing activity by management and should have been
Proprietary Limited
                                                                                                         classified as investing activities in terms of 7.16 (c).
                                                              -        75 976 019          52 476 205
                                                                                                         Repayment of loans advanced R 1 906 707, consist of the following individual movements:
                                                                                                         The repayment of the loan advanced to Kawuleza Connect Proprietary Limited – R1 431 377:
Advance Vacuum Alloys Proprietary Limited “AVA”                                                          • This was incorrectly classified by management as a financing activity and should have been
On the 14 October 2015, all the then directors resigned from AVA as there had been no support              classified as investment activities in terms if 7.16 (f).
from the shareholders. On the 12 November, a new director was appointed to board. AVA                    The part payment of a loan account in Highlands Trout Proprietary Limited - R353 255:
is not operating at date of this report and the expected value from sale is not anticipated to
                                                                                                         • This loan was obtained via the Call Option with Isitsaba. BK One preference shares were
will not have any financial benefit for BK One. Thus BK One board, with the advice from their
                                                                                                           issued as payment for the loan obtained. This was correctly classified as it was cash flows
advisory team, has valued AVA equity value at nil as its assets are held as security in favour of
                                                                                                           raised from financing activities as per 7.17(a) –“cash proceeds from issuing shares or other
Transholding Investments Limited for loans due to the latter.
                                                                                                           equity instruments”
                                                31 August 2015     31 August 2014    28 February 2015    The repayment of the loan advanced to Pure Ocean Aquaculture –R122 075
Opening balance                                     51 546 205         53 870 069          53 830 069    • This was incorrectly classified by management as a financing activity and should have been
Fair value adjustment                              (51 546 205)                 -          (2 323 864)     classified as investment activities in terms if 7.16 (f).

Closing balance                                                                                          The above classification errors have been corrected in the interims comparatives figures of
                                                                                                         28 February 2015.
                                                              -        53 870 069          51 546 205


5 960 611 ordinary shares of R0.001 each (representing 28.41% interest), in current and
comparative periods.


Pure Ocean Aquaculture Proprietary Limited “POA”
POA consists of two investments: Highlands Trout Proprietary Limited (“HT”) and Pure
Ocean East London Proprietary Limited (“POEL”). HT is the predominant value driver in the
POA valuation. The Board of HT has engaged with several investors that have expressed an
interest in either purchasing HT in its entirety or providing expansion capital. These discussions
are ongoing. A reworked HT financial model was prepared by management comprising of

Sponsor
Nedbank Corporate and Investment Banking
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