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BIO
BIO
BIO - Bioscience Brands Limited - Reviewed results for the 12-month period ended
29 February 2008 and renewal of cautionary announcement
BIOSCIENCE BRANDS LIMITED
(Formerly Wellco Health Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 2005/005805/06)
("BioScience Brands" or "the company")
ISIN Code: ZAE000115036 Share code: BIO
REVIEWED RESULTS FOR THE 12-MONTH PERIOD ENDED 29 FEBRUARY 2008 AND RENEWAL
OF CAUTIONARY ANNOUNCEMENT
Group Balance Sheets
Reviewed Reviewed Audited as
as at as at at
29 31 August 28
February 2007 February
2008 R 2007
R R
ASSETS
Non-current assets 8 622 356 13 468 515 14 928 537
Property, plant and 204 175 314 981 986 651
equipment
Intangible assets 8 418 181 13 153 534 13 941 886
Current assets 5 408 181 3 346 901 7 345 901
Inventories 658 518 1 516 253 2 484 631
Trade and other 4 746 603 1 804 285 4 860 955
receivables
Cash and cash 3 060 26 363 315
equivalents
Total assets 14 030 537 16 815 416 22 274 438
EQUITY AND LIABILITIES
Capital and (1 454 (1 458 4 637 356
(deficit)/reserves 004) 119)
Issued capital 9 208 9 208 9 208
Share premium 40 100 751 40 100 751 40 100 751
Accumulated loss (41 563 (41 568 (35 472
963) 078) 603)
Non-current liabilities 8 982 627 2 515 598 991 731
Deferred tax liability -- 363 027 363 027
Interest bearing 8 982 627 1 652 571 152 574
liabilities
Non-interest bearing -- 500 000 479 130
liabilities
Current liabilities 6 501 914 15 757 937 16 642 351
Taxation payable -- 2 477 466 2 477 466
Trade and other payables 3 002 891 10 017 669 11 004 845
Current portion of non- 96 105 96 105 117 523
interest bearing
liabilities
Bank overdraft 3 402 918 3 166 697 3 042 517
Total equity and 14 030 537 16 815 416 22 274 438
liabilities
Ordinary shares in issue 92 083 686 92 083 686 92 083 686
(000`s)
Net (liability)/asset (1.58) (1.58) 5.04
value per share (cents)
Tangible net liability (10.72) (15.87) (10.10)
value per share (cents)
Group Income Statements
Reviewed Reviewed 6- Audited
12-months months Year ended
ended ended 28 Feb
29 Feb 31 Aug 2007
2008 2007 R
R R
Revenue 3 791 284 3 045 943 16 975 822
Cost of sales (2 561 (1 822 (13 903
349) 517) 732)
Gross profit 1 229 935 1 223 426 3 072 090
Operating expenses (6 919 (6 272 (16 832
541) 006) 339)
Impairment of goodwill (788 352) (788 352) (19 333
and intangible assets 248)
Amortisation of (935 353) -- --
intangible assets
Loss on disposal of (17 584) (4 705) (20 161)
fixed assets
Operating loss (7 430 (5 841 (33 113
895) 637) 658)
Net finance costs (518 515) (253 838) (1 100
223)
Loss before taxation (7 949 (6 095 (34 213
410) 475) 881)
Taxation 1 858 050 -- (548 335)
Net Loss attributable to (6 091 (6 095 (34 762
ordinary shareholders 360) 475) 216)
Loss per share
information:
Loss per share (6.62) (6.62) (37.75)
Headline loss per share (5.27) (5.29) (16.74)
Weighted average shares 92 083 686 92 083 686 92 083
in issue 686
Abridged Group Cash Flow Statements
Reviewed Reviewed 6- Audited
12-months months Year ended
ended ended 28 Feb
29 Feb 31 Aug 2007
2008 2007 R
R R
Net cash outflow from (12 487 (1 610 (6 720
operating activities 161) 449) 496)
Net cash 3 800 000 12 868 (7 240
inflow/(outflow) from 121)
investing activities
Net cash inflow from 8 329 505 1 499 449 11 071 487
financing activities
Decrease in cash and (357 656) (98 132) (2 889
cash equivalents 130)
Cash and cash equivalents (3 042 (3 042 (153 072)
at beginning of year 202) 202)
Cash and cash (3 399 (3 140 (3 042
equivalents at end of 858) 334) 202)
year
Group Statement of Changes in Equity
Share Share Accumulat Total
Capital Premium ed Loss
R R R R
Balance at 1 March -- -- -- --
2005
Issue of share 5 683 29 321 29 327
capital 482 165
Net loss for the (710 387) (710 387)
year
Balance at 28 5 683 29 321 (710 387) 28 616
February 2006 482 778
Issue of share 3 525 10 779 0 10 782
capital 269 794
Net loss for the (34 762 (34 762
year 216) 216)
Balance at 28 9 208 40 100 (35 472 4 637 356
February 2007 751 603)
Net loss for the (6 091 (6 091
year 360) 360)
Balance at 29 9 208 40 100 (41 563 (1 454
February 2008 751 963) 004)
COMMENTARY
The board presents the reviewed results for the twelve month interim period
ended 29 February 2008. Shareholders are advised that the company has changed
its year end to June each year and the next reporting period will be for the 16
months ended 30 June 2008.
1 REVIEW BY INDEPENDENT AUDITORS
The auditor of BioScience Brands is Deloitte & Touche. An extract of the
independent auditor`s modified review opinion is set out below and is
available for inspection at the company`s registered office.
"Without qualifying our review opinion above, we draw attention to
the commentary by the directors with respect to going concern and
restructuring which indicates that the group recorded a net loss of
R6.1 million (2007: R34.8 million) for the twelve month period ended
29 February 2008 and as of that date, the group`s liabilities exceeded
its assets by R1.5 million (2007: R4.6 million positive). The restructuring
plan as outlined by the directors, whilst partly implemented, remains
subject to shareholder approval.
These conditions, along with other matters as set forth in the commentary
by the directors, indicate the existence of a material uncertainty which
may cast significant doubt on the group`s ability to continue as a going
concern."
2 BASIS OF PREPARATION AND ACCOUNTING POLICIES
The interim financial results have been prepared in accordance with IAS
34: Interim Financial Reporting and the JSE Limited`s ("JSE") Listing
Requirements and using accounting policies in compliance with
International Financial Reporting Standards and the Companies Act in
South Africa. The accounting policies used are consistent with the prior
period.
BioScience Brands has adopted all the statements and interpretations
issued and effective during the current period by the International
Accounting Standards Board ("IASB"), however the result of adopting these
standards and interpretations did not have any significant impact on the
financial results.
3 LOSS, HEADLINE LOSS AND NET ASSET VALUE PER SHARE
Reviewed Reviewed Audited
29 31 August 28
February 2007 February
2008 2007
R R R
Calculation of
headline earnings
Loss attributable to (6 091 (6 095 (34 762
ordinary shareholders 360) 475) 216)
Adjustments for:
Impairment of goodwill -- -- 13 548 702
Impairment and 788 352- 788 352 5 784 546
amortisation of
intangible assets
Impairment of 431 431 431 431 --
property, plant and
equipment
Loss on disposal of 17 584 4 705 20 161
property, plant and
equipment
Profit on disposal of -- -- (7 800)
intangible asset
Headline loss for the (4 853 (4 870 (15 416
period 993) 987) 607)
Share Information Cents per Cents per Cents per
share share share
Loss per share (6.62) (6.62) (37.75)
Headline loss per (5.27) (5.29) (16.74)
share
Net (liability) / (1.58) (1.58) 5.04
asset value per share
Weighted average 92 083 686 92 083 686 92 083 686
shares in issue
4 RESULTS
During the twelve month interim period ended 29 February 2008,
BioScience Brands Limited (previously Wellco Health Limited) recorded a
loss of R6.1 million for the period compared to a loss of R34.8 million
for the year ended 28 February 2007 and total liabilities exceed total
assets by R1.5 million. There has been limited trading over the last 6
months, with some marginal recovery of the financial position from the
interim results as at 31 August 2007. This is despite the new management,
who were appointed on 25 October 2007, taking a prudent view on matters
relating to the obsolescence of stock and the recoverability of debtors
from previous periods.
The acquisition of BioHarmony (Proprietary) Limited ("BioHarmony") and
Aldabri 53 (Proprietary) limited t/a MuscleScience ("MuscleScience") will
only be incorporated into the results of BioScience Brands from 01 March
2008 and shareholder are referred to paragraph 5 below.
No segmental analysis has been presented as the company does not currently
have any distinct operating segments or geographical segmental locations.
5 RESTRUCTURING AND SUBSEQUENT EVENTS
5.1 Shareholder Approval
Irrevocable Undertakings have been received from more than 75% of the
shareholders to vote in favour of the resolutions required to implement
the restructuring of the Company in terms of an agreement entered into on
25 October 2007 by the then board of directors of the Company and Arcay
Merchant (Pty) Ltd ("Arcay Merchant"), the corporate advisors to the
Company as outlined in the commentary to the Interim Report of 31 August
2007 ("the Restructuring Agreement"). In addition, approval was obtained
from the JSE to proceed with the acquisition of BioHarmony and
MuscleScience on this basis. The progress on the restructure to-date is
further detailed below.
5.2 Recapitalisation of the company
As part of the restructuring transaction, BioScience agreed to issue new
shares at 3.5 cents per share in order to settle creditors, raise
sufficient capital in order for it to pay for the acquisitions detailed
in paragraph 5.4 below and have sufficient working capital to operate the
expanded business. Approximately R44.5 million of this has been raised
through an issue of shares for cash and for the acquisition, whilst an
estimated R13 million will be reserved for a rights offer to existing
minority shareholders so as to enable them to retain an interest in the
company at the restructuring price. The R44.5 million issue of shares
for cash and for the acquisition was substantially completed after this
current reporting period.
5.3 Settlement with Creditors
The new management has received support from creditors in the
restructuring of the group. Settlements have been reached with all
major creditors which has allowed the business to continue trading.
The group has had positive discussions with the South African Revenue
Services ("SARS"). Arising from these discussions, the group has made
payments amounting to R2.7 million in terms of a payment arrangement
agreed upon with SARS. It is anticipated that confirmation of these
settlement amounts will be finalised in the next three months.
Consequently, the financial results above have recorded no further
amounts due to SARS which relate to prior periods.
5.4 Acquisition of Assets
The Company has acquired BioHarmony and MuscleScience from Fluxrab
Investments 163 (Pty) Ltd ("the Vendor"), with effect from 01 March 2008.
As disclosed in paragraph 5.1 above, the JSE allowed the Company to
implement the acquisitions subject to ratification by shareholders and
more than 75% of shareholders have undertaken to vote in favour of the
required resolutions to ratify the acquisitions. BioHarmony was acquired
for a purchase consideration of R28 924 574.63, which was settled by the
payment of R26 597 310 in cash and the issue of 166 233 188 shares at
1.4 cents per share to the Vendor and MuscleScience was acquired for a
purchase consideration of R14 575 425.38 and was settled by the payment
of R13 402 690 in cash and the issue of 83 766 813 shares at 1.4 cents
per share to the Vendor.
5.5 Herbology Transaction
As previously announced and as agreed with Oxyboost (Proprietary) Limited
("Oxyboost"), and following shareholder approval, the licence agreement to
market and sell the Herbology range of products will be reversed with
effect from 01 March 2008 and BioScience Brands will take over the
marketing and manufacture of Herbology going forward..
5.6 Nutrimax Transaction
As previously announced, shareholders will be requested to approve the
sale and assignment of the trademarks copyrights and domain names
pertaining to the Nutrimax brand to Oxyboost for an amount of R3.8
million. The proceeds from the sale of the brand remain due and payable
pending conclusion of the shareholders meeting which is expected to be
held in August 2008.
5.7 Renaming of the Company
Over the last two years the name Wellco Health Limited had become
tainted with suppliers, customers and the investor community as a result
of out-of-stocks status, an inability to settle debt timeously and
unfulfilled promises. As a result of the above, and in anticipation of
the acquisition of the BioHarmony and MuscleScience, shareholder support
to change the name of the company to BioScience Brands Limited was sought
and obtained at a General Meeting held on 28 February 2008. The company
began trading on the JSE under the name BioScience Brands Limited on 14
March 2008.
5.8 Consolidation of the Shares
In order to manage the quantity of shares in issue following the
conclusion of the restructuring transaction, the directors propose to
proceed with a share consolidation during the later part of 2008 at a
ratio to be confirmed.
6 DIRECTORS
The board of directors announced the resignation of Carol Ansara from
the board of BioScience Brands with effect from 13 May 2008. Carol
resigned to tend to personal and family commitments and will continue
to work with, and support, the management of BioScience Brands in a
consultant capacity.
7 GOING CONCERN AND CONTINUITY
Herbology initially traded well during the period it was managed by the
licensee and with some listings and full stock range being reinstated.
However, the performance waned and Herbology will now be transferred back
to BioScience and will be re-launched with new packaging and updated
formulations in August 2008.
BioHarmony and MuscleScience have been under new management since
01 December 2007 and continue to trade well. The results will be
consolidated into BioScience Brands from 01 March 2008.
The KGB brand was re-launched with a new advertising campaign in May 2008.
Delays have been experienced in complying with all the JSE requirements
for the unsuspension of the Company. The board has been advised by the
Company`s Designated Advisor that all the JSE requirements are expected
to be completed before the end of July and a meeting of shareholders to
ratify and approve the resolutions in respect of the restructuring of the
company will be held in August 2008. Following the various shareholder
approvals, the company will then apply for the lifting of the suspension
in trade of its securities.
As a result of the progress with the restructure plans as discussed
above, the new directors believe that BioScience Brands is a going
concern. Accordingly, these interim financial results have been prepared
on a going concern basis which presumes that funds will be available
to finance future operations and that the realisation of assets and
settlement of liabilities will occur in the ordinary course of business.
These interim financial statements do not include any adjustments which
may be necessary to the valuation or classification of assets and
liabilities should BioScience Brands not be able to continue as a going
concern.
8 HEAD OFFICE
The business has relocated its head-office to 10 Ennisdale Drive, Durban
North.
9 CONTINGENCIES AND COMMITMENTS
Except as disclosed as part of the restructuring (as detailed in
paragraph 5 above), the group has no other outstanding contingencies
or commitments that the directors are aware of.
10 RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised to continue to exercise caution in dealing in
the Company`s securities until such time as the pro forma financial
effects of the restructuring of the Company have been released on SENS.
By order of the Board
J I Black / MG Allan
Chairman / Chief Executive Officer
03 June 2008
Johannesburg
Company Secretary and Registered Office
Arcay Client Support (Pty) Ltd (Registration number
1998/025284/07)
Arcay House II, Number 3 Anerley Road, Parktown, 2193
PO Box 62397, Marshalltown, 2107
Directors
JI Black (Chairman)*#, MG Allan (Chief Executive Officer), M
Strydom, L Cameron, Y Bhayat*.
(* Non-executive) (# British)
Designated Advisor Transfer Office
Arcay Moela Sponsors (Pty) Ltd Computershare Investor
Services (Pty) Ltd
Date: 04/06/2008 16:12:01 Produced by the JSE SENS Department.
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