| Thu 29 Nov 2007, 7:05 | | IMU - Imuniti Holdings - Reviewed Financial Result |
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IMU
IMU
IMU - Imuniti Holdings - Reviewed Financial Results For The Six Months
Ended 31 August 2007
Imuniti Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2004/002282/06)
(JSE Code: IMU & ISIN: ZAE000089199)
("Imuniti" or "the company" or "the group")
REVIEWED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2007
CONSOLIDATED INCOME STATEMENTS
6 months 6 months 14 months ended
ended ended
31 August 30 June 28 February
2007 2006 2007
Reviewed Unaudited Audited
R R R
Revenue 36,121,496 26,208,634 63,314,940
Gross profit 18,624,069 13,082,429 31,421,700
Other income 42,622 54,620 1,121,986
Operating costs (25,108,098) (12,871,926) (29,717,317)
(Loss)/Profit before (6,441,406) 265,123
interest and taxation 2,826,369
Interest expense (259,889) (2,223,024) (120,665)
Interest received 21,605 - 39,764
Loss before taxation (6,679,691) (1,957,901) 2,745,468
Taxation 1,347,967 (739,297) (300,096)
Loss attributable to (5,331,724) (2,697,198)
ordinary shareholders 2,445,372
Reconciliation of headline
loss:
Loss attributable to (5,331,724) (2,697,198)
ordinary shareholders 2,445,372
Adjusted for:
Profit on sale of property, (3,216) -
plant and equipment -
Headline earnings (5,334,940) (2,697,198)
attributable to ordinary 2,445,372
shareholders
Weighted average shares in 752,946 50
issue on which earnings per
share are based (`000) 587,203
Shares in issue at period 752,946 50
end (`000) 752,946
Earnings per share (cents) (0.71) (539.44) 0.42
Headline earnings per share (0.71) (539.44)
(cents) 0.41
CONSOLIDATED BALANCE SHEETS
31 August 30 June 28 February
2007 2006 2007
Reviewed Unaudited Audited
R R R
ASSETS
Non-current assets 87,212,925 12,707,640 87,879,730
Property, plant and 12,454,632 13,646,108
equipment 12,707,640
Intangible assets 47,445,169 - 47,445,169
Goodwill 24,507,374 - 25,207,298
Deferred taxation 1,851,001 - 503,034
Loans receivable 954,749 - 1,078,121
Current assets 26,369,806 21,421,686 25,075,003
Inventories 11,068,902 5,035,158 10,700,526
Trade and other receivables 15,128,340 11,236,916 13,213,499
Cash and cash equivalents 172,564 5,149,612 1,160,978
Total assets 113,582,731 34,129,326 112,954,733
EQUITY AND LIABILITIES
Capital and reserves 93,612,975 (4,270,877) 98,947,330
Share capital and premium 97,863,265 50,000 97,865,896
Accumulated loss (4,500,030) (4,320,877) 831,694
Revaluation reserve 249,740 - 249,740
Non-current liabilities
Borrowings and other 736,238 1,348,198
payables 11,610,564
Current liabilities 19,233,518 26,789,639 12,659,205
Provisions 976,885 - 218,940
Acquisition liability - 17,052,001 -
Current portion of 751,421 422,615
borrowings -
Trade and other payables 13,043,612 9,737,638 11,065,575
Bank overdraft 4,461,600 - 952,075
Total equity and 113,582,731 34,129,326 112,954,733
liabilities
Shares in issue (`000) 752,946 50 752,946
Net asset value per share 12 197,895 13
(cents)
Net tangible asset value 3 51,584 3
per share (cents)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share
capital & Accumulated Revaluation Total equity
premium loss reserve R
R R R
Balance at 1 50,000 (1,613,679) (1,563,679)
January 2006 -
Net loss for 6 - (2,707,198) (2,707,198)
months -
Balance at 30 50,000 (4,320,877) (4,270,877)
June 2006 -
Issue of shares 97,815,896 - - 97,815,896
Revaluation of - - 249,740
land and 249,740
buildings
Net profit for 6 - 5,152,571 5,152,571
months -
Balance at 1 97,865,896 831,694 98,947,330
March 2007 249,740
Listing expenses (2,631) - - (2,631)
Net loss for 6 - (5,331,724) - (5,331,724)
months
Balance at 31 97,863,265 (4,500,030) 93,612,975
August 2007 249,740
CONSOLIDATED CASH FLOW STATEMENTS
6 months 6 months 14 months
ended ended ended
31 August 30 June 28 February
2007 2006 2007
Reviewed Unaudited Audited
R R R
Cash flow from operating (5,007,751) 7,762,309 (2,727,958)
activities
Cash (used in)/generated by (4,769,467) 9,940,713
operating activities (2,647,057)
Interest received 21,605 54,620 39,764
Interest paid (259,889) (2,233,024) (120,665)
Cash flows from investing 792,965 (11,943,048) (92,293,532)
activities
Property, plant and equipment (132,948) (12,707,640)
acquired (1,479,543)
Proceeds on disposals of 103,216 -
property, plant and equipment 361,414
Loans advanced/(advanced) 822,698 - (1,078,121)
Acquisition of businesses - - (62,019,639)
Increase in intangible assets - - (28,077,643)
Investments - 764,592 -
Cash flows from financing (283,154) 8,738,489 94,638,531
activities
Long term borrowings (283,154) 8,738,489 (3,177,365)
Proceeds on share issue - - 97,815,896
Change in cash and cash (4,497,940) 4,557,750 (382 959)
equivalents
Cash and cash equivalents at 208,903 591,862
beginning of year 591 862
Cash and cash equivalents at (4,289,037) 5,149,612
end of year 208,903
BASIS OF PREPARATION
Statement of compliance
The abridged financial statements comprise a consolidated balance sheet at 31
August 2007, a consolidated income statement, consolidated statement of changes
in equity and summarised consolidated cash flow statement for the period ended
31 August 2007. The abridged financial statements have been prepared in
accordance with the recognition and measurement criteria of International
Financial Reporting Standards ("IFRS") and the presentation and disclosure
requirements of IAS 34, Interim Financial Reporting.
The basis of preparation is consistent with the prior periods.
The abridged financial statements were approved by the board of directors on
27 November 2007.
Auditor`s report
The results have been reviewed by our auditors, Siyabala Inc. whose unqualified
review report is available for inspection at the registered office of the
company.
Basis of measurement
The abridged financial statements have been prepared on the historic cost basis
except for certain financial instruments measured at fair value.
Financial Results
The directors of Imuniti hereby present the reviewed interim results for the six
months ended 31 August 2007 ("interim period"). The company`s primary business
focus is to manufacture and market, pharmaceutical products and complementary
medicines as well as high protein fortified powdered food products and
supplements.
In comparison to the unaudited results for the period ended 30 June 2006:
Income Statement:
Turnover increased by R10 million to R36 million (2006: R26 million) for the
period. The gross margin increased by 1,5 percentage points to 51,5% (2006:
50%). The Group experienced an increase in operating expenses due to:
a) the R7,5 million incurred by the Impilo Group being incorporated into
Imuniti Holdings from November 2006,
b) the R2,03 million associated with establishing Imuniti Health Management
Services to deal with the roll out of wellness centres, and
c) the R3,3 million invested into the infrastructure to handle an anticipated
increase in revenue that did not materialise.
The combination of poor sales in the flagship Imuniti Wellness Packs and within
the Impilo Group, continued investment in the wellness clinics and high head
office costs contributed towards the loss to shareholders of R 5,3 million
against a loss of R 2,7 million sustained in the comparative period to June.
Balance Sheet:
The net asset value (NAV) reduced by R5 334 355 during the period under review
due to the losses incurred. NAV amounts to R93 612 975 equating to 12,4 cents on
a per share basis. The solvency ratios thus remain solid. The losses impacted on
the working capital in that net current assets reduced by R6 574 314.
Cash Flow:
Cash flow was negative due to the losses. Imuniti extended its borrowings, but
remains with relatively low gearing.
Forecast update
The directors do not believe it likely that the company will achieve its
forecast earnings for the year ending 29 February 2008 as contained in the
company`s prelisting statement. The company will update the shareholders as and
when they have further information in this regard.
Strategy forward
The overall pre-listing vision of large volumes of wellness pack sales and the
roll-out of wellness clinics did not materialise, an issue the board had
realised by June 2007 and thus approved the following strategy in July:
As a manufacturer, Imuniti`s strength and competitive advantage is that it owns
two factories wherein lies its NAV. By increasing market awareness of the
group`s products, specifically the Imuniti Wellness Pack, turnover can grow.
This will be backed by lower operating expenses to ensure the sales translate
into bottom line profit.
The following actions have been taken:
Marketing
Imuniti has appointed Malusi Mngxathi as the Impilo Health Care, Nutritional
Foods and Imuniti Wellness Pack marketing executive, fulfilling a portfolio
formerly lacking in the group. Malusi has extensive experience in marketing,
joining the group from Enaleni Pharmaceuticals consumer division where he was
marketing manager on health care and previously from Tiger Brands where his
brand management experience included Ingram`s Camphor Cream, Panado and Citro
Soda. Malusi`s role will be to unlock brand value as Imuniti expands into the
retail market with its existing brands.
Imuniti Wellness Pack
In line with our overall strategy, Imuniti has created an Imuniti Wellness Pack
business unit. The Imuniti Wellness Pack contains a combination of nutrients,
vitamins and minerals that provide consumers with adequate substance and a
balanced intake of the required micro and macro nutrients for a one-month period
and aimed at tackling Africa`s malnutrition problems. Various anecdotal trials
have been conducted since December 2003 and the results to date have been
extremely encouraging.
Imuniti`s founder members have introduced new initiatives to market and sell
this product. Imuniti hope to announce these initiatives shortly.
Imuniti Health Management Services
Imuniti has deferred further investment in this operation.
Reduce Costs
Imuniti has introduced measures to reduce costs:
Impilo
Imuniti have restructured managerial positions.
Head Office
Imuniti reduced salaries across the board, including reducing executive
directors` salaries by up to 30 %. The group relocated premises to lower rent
and related expenses and entered into negotiations with staff to reduce salaries
and become more incentive based.
Prospects
With the appointment of a marketing executive, Imuniti will begin to unlock the
value of its range of products and brands. This move will help the group
increase top line growth by entering new markets thus building national
distribution in different channels i.e. retail, pharmacies and business to
business.
The group will also begin the process of categorising its brands into aligned
portfolios to allow optimum focus, increase ability to innovate, cross-
categorise, and improve margins resulting in the development of a sustainable
portfolio of businesses and brands. This process will also help the group to
exploit cross-opportunities, align and integrate internal processes such as
sourcing, manufacturing, distribution and sales.
Steps to unlock shareholder value will include entry into retail markets,
accelerating top line growth, expanding bottom line margins and building a
reputation for innovation.
The above will have an impact on all business units within the Imuniti Group.
DIVIDEND POLICY
No dividend was declared for the six month period.
On behalf of the Board
P H Fouche J J Barnard
Chief Executive Officer Chief Operating
Officer
29 November 2007
CORPORATE INFORMATION
Non executive directors: M C Matjila (Chairperson), N B Gxowa
Executive directors: P H Fouche (CEO), J J Barnard (COO), H A
K Slabbert (CFO), H J Wessels, NGPO Tambo
Registration number: 2004/002282/06
Registered address: Suite E101 Hampden Court, 7 Hampden Road,
Durban
Postal address: PO Box 201966, Durban North, 4016
Company secretary: H J Wessels
Telephone: (031) 312 4141
Facsimile: (031) 303 4106
Transfer secretaries: Link Market Services (Pty) Ltd
Designated Adviser: Exchange Sponsors (Pty) Limited
Date: 29/11/2007 07:05:05 Produced by the JSE SENS Department.
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