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IMU
IMU
IMU - Imuniti - Reviewed Financial Results For The Year Ended 28 February 2009
IMUNITI HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2004/002282/06)
(JSE Code: IMU & ISIN: ZAE000089199)
("Imuniti" or "the Group")
Reviewed Financial Results For The Year Ended 28 February 2009
Condensed consolidated income statement
Reviewed Audited
Year ended
Year ended 28 29 February
February 2009 2008(Restated)
R R
Continuing Operations
Sales 60,500,725 68,780,723
Cost of sales (30,469,491) (35,937,704)
Gross profit 30,031,234 32,843,019
Other income 1,258,124 304,594
Impairments
- Customer contracts - (7,673,310)
- Loan accounts (134,197) (732,131)
- Goodwill (20,868,448) -
- Distribution rights (24,000,000) -
Operating expenditure (39,637,947) (44,142,913)
Operating loss before interest and (53,351,234) (19,400,741)
taxation
Interest income 850,368
812,720
Finance costs (1,994,617) (1,385,797)
Loss before taxation (54,533,131) (19,936,170)
Taxation - (503,034)
Net loss from continuing (54,533,131) (20,439,204)
operations
Discontinued operations
Loss from discontinued operations - (5,058,294)
Net loss for the year (54,533,131) (25,497,498)
EPS and HEPS
Reviewed Audited
Year ended
Year ended 28 29 February
February 2009 2008(Restated)
R R
Earnings per share
Earnings per income statement (54,533,131) (25,497,498)
Weighted average number of 863,415,929 753,555,956
shares
EPS (cents) (6.32) (3.38)
Headline earnings per share
Earnings per income statement (54,533,131) (25,497,498)
Adjust for
Profit from disposal of (241,385) (10,746)
property,
plant & equipment
Impairments
- Customer contracts - 7,673,310
- Loan accounts 134,197 732,131
- Goodwill 20,868,448 -
- Distribution rights 24,000,000 -
Loss from discontinued - 5,058,294
operations
Headline earnings (9,771,871) (12,044,509)
Weighted average number of 863,415,929 753,555,956
shares
HEPS (cents) (1.13) (1.60)
Reviewed Audited
Condensed consolidated balance Year ended
sheet
Year ended 28 29 February
February 2009 2008(Restated)
R R
Assets
Non-Current Assets 24,004,170 69,756,695
Property, plant and equipment 12,309,953 12,986,923
Intangible assets 11,694,217 35,694,216
Goodwill - 21,075,556
Current Assets 19,833,682 20,271,914
Inventories 9,025,404 7,334,443
Trade and other receivables 10,624,517 12,360,604
Prepayments 38,738 59,231
Other loans receivable 76,048 368,319
Cash and cash equivalents 68,975 149,317
Total Assets 43,837,852 90,028,609
Equity and Liabilities
Equity 23,473,081 70,800,516
Share capital & premium 106,267,213 99,061,517
Accumulated loss (83,043,872) (28,510,741)
Revaluation reserve 249,740 249,740
Liabilities 2,126,577 2,240,725
Instalment sale obligations 2,126,577 2,240,725
Current Liabilities 18,238,194 16,987,369
Current portion of instalment 1,351,323 733,852
sale obligations
Loans payable 180,949 -
Current tax payable 323,334 277,883
Trade and other payables 11,855,564 10,430,824
Provisions 1,194,499 1,288,342
Overdraft 3,332,525 4,256,467
Total Equity and Liabilities 43,837,852 90,028,609
Consolidated statement of changes in equity
Share Share
capital premium
R R
Opening balance as previously 75,295 97,790,601
reported
Prior year error - -
Balance at 1 March 2007 as restated 75,295 97,790,601
Loss for the year - -
Issue of shares 1,463 1,194,158
Balance at 29 February 2008 76,758 98,984,759
Loss for the year - -
Issue of shares 11,383 7,194,313
Balance at 28 February 2009 88,141 106,179,072
Revaluation Accumulated
reserve loss
R R
Opening balance as previously 249,740 831,693
reported
Prior year error - (3,844,936)
Balance at 1 March 2007 as restated 249,740 (3,013,243)
Loss for the year - (25,497,498)
Issue of shares - -
Balance at 29 February 2008 249,740 (28,510,741)
Loss for the year - (54,533,131)
Issue of shares - -
Balance at 28 February 2009 249,740 (83,043,872)
Total equity
R
Opening balance as previously 98,947,329
reported
Prior year error (3,844,936)
Balance at 1 March 2007 as restated 95,102,393
Loss for the year (25,497,498)
Issue of shares 1,195,621
Balance at 29 February 2008 70,800,516
Loss for the year (54,533,131)
Issue of shares 7,205,696
Balance at 28 February 2009 23,473,081
Condensed consolidated cash flow statement
Reviewed Audited
Year ended
Year ended 29 February
28 February 2008(Restated)
2009
R R
Cash flow from operating activities (6,276,022) (5,166,094))
- Cash used in operations (5,139,576) (4,685,359)
- Finance costs (1,994,617) (1,385,797)
- Interest received 812,720 850,368
- Normal tax paid 45,451 54,694
Cash flow from investing activities (770,346) (1,549,342)
- Purchase of property, plant & (1,226,213) (1,619,524)
equipment
- Proceeds on disposal of property,
plant 297,793 95,005
& equipment
- Decrease/(increase) in other loans 158,074 (22,329)
receivable
- Cash outflow from discontinued - (2,494)
operations
Cash flow from financing activities 7,889,967 2,399,385
- Increase in loans payable and 684,272 1,203,764
instalment sales
- Issue of shares 7,205,696 1,195,621
Net cash movement 843,600 (4,316,051)
Net cash at beginning (4,107,150) 208,901
Net cash at end (3,263,550) (4,107,150)
Notes to cash flow
Operating loss (53,351,234) (19,400,741)
Profit on disposal of property, plant and (241,385) (10,746)
equipment
Depreciation and scrapping 1,846,775 2,194,450
Provisions (93,843) 1,069,402
Other non-cash flow items 207,107 (207,107)
Cash outflow from discontinuing - (2,305,941)
operations
Impairments 45,002,645 8,405,441
(6,629,935) (9,841,028)
Working capital changes
- (Increase)/decrease in inventory (1,690,961) 3,366,083
- Decrease in trade & other receivables
1,736,087 680,894
- Increase in trade & other payables 1,424,740 1,515,146
- Decrease in prepayments
20,493 7,760
Net cash utilised by operations (5,139,576) (4,685,359)
Basis of preparation
The condensed consolidated annual financial statements are 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, JSE listing requirements
and the Companies Act of South Africa.
Reviewed results
The condensed consolidated financial statements for the year ended 28 February
2009 have been reviewed by our auditors RSM Betty & Dickson (Durban). Their
unmodified review report is available for inspection at the Company`s
registered office.
Commentary:
Nutritional Foods (Pty) Ltd
The Board is satisfied with the results of Nutritional Foods. General market
trends did effect this company in two areas. Pricing became much more
competitive and sales to the mining houses declined. The directors are
confident that this company will be successful and make significant
contribution to the Group.
Impilo Marketing (Pty) Ltd
This company produced the best results of all the subsidiaries. Its re-focus
has proved to be successful in that it concentrates on selected products
identified by management with a proven track record, at a pricing level that
the market has accepted.
Impilo Drugs (1966) (Pty) Ltd
The area for concern in the Group to date has been Impilo Drugs. A major
restructuring exercise has been concluded and further cost reductions will be
seen in the new year. Subsequent to year end the management of Impilo Drugs has
been outsourced to our new BEE partner, and we are confident that these actions
will turn this company around.
PROSPECTS
The Board is mindful that the increased level of macro-economic uncertainty
over the last few months has created a challenging trading climate that will
impact on the Group. The Group however remains committed to focusing on its
core capabilities and will continue to improve its performance with a shift of
focus to the marketing, distribution and sales of specific products to selected
target markets.
The Nutritional Foods business can capture additional market share through
aggressive pricing, revised trading terms and conditions and growth incentives.
A new Managing Director has recently been appointed which will result in a much
more focused approach to this business.
In respect if Impilo Drugs, a management contract has been entered into to
manage the manufacturing of this business. The contract is with a long
established, successful manufacturing concern in a similar industry. This will
enable Impilo to focus on the sales and distribution of the Impilo brands.
As previously reported:
"Imuniti shareholders are advised that the Company has raised R6 000 000 in
capital by the issue of 171 428 571 ordinary shares at 3,5 cents per share.
The investor qualifies as a BEE company, and the investment stake in Imuniti
will be significant.
The investor will add significant value to Imuniti from a business perspective.
The company is a reputable manufacturer of personal and home care branded
products. The company`s customers are multi-national companies. In addition it
owns a company that manufacturers packaging that are used by the Impilo Group.
The company has been in existence for 7 years.
In addition to providing Imuniti with expert advice in manufacturing processes
and procedures, the company is building a pharmaceutical manufacturing facility
to PIC, GMP and the implementation of GMP quality assurances practices e.g.
Good Documentation Practices, Qualification and validation. This synergy is the
exciting part of this investment, in that Impilo will enter into a subcontract
agreement with the company to manufacture (including in-process QC) Impilo`s
pharmaceutical products. This will enable Impilo to increase the sales volumes
of these products. "
This investment will add value to Imuniti and will only be reflected in the
future results.
NATURE OF THE BUSINESS
The Group`s primary business focus is to manufacture, market and sell
pharmaceutical products and complementary natural medicines as well as high-
protein fortified powdered nutritional food products and supplements.
FINANCIAL RESULTS
Financial Performance
Sales have decreased by 12 % as compared the twelve month financial period
ended 29 February 2008 to R 60,500,725 (2008: R 68,780,723 (restated)). The
Group managed to reduce operating costs significantly from R 44,142,913
(restated) in 2008 to R39,637,947 in 2009. This resulted in an operating loss
before write-offs of R 8,348,589 (2008: restated loss R 10,995,300).
The Group`s gross profit margin increased by 1,89% to 49,64% (2008: 47,75%)
An impairment has been made to goodwill and distribution rights to write them
down to fair value. There was also an inventory write down made to stock, due
to a quantity of stock having expired. This is in line with the stringent risk
assessments that are required in this present economic climate. The intangible
impairment amounted to R 44 868 448 and inventory write down amounted to
R557,602 (2008 : R2,901,854).
Liquidity has been negatively affected in that the company has had to fund the
losses made.
Financial Position
Balance Sheet strength remains at acceptable levels with the net asset value of
R 23,473,081 equating to 2,66 c per share. This is after the impairment of R 44
868 448 of intangible assets.
Share capital has increased by the 113 830 000 shares that the company issued
for cash to fund working capital raising an amount of R 7 205 696, less JSE
transaction costs. This was in accordance with the general authority to issue
shares for cash given to the Directors at the AGM.
Restatements
The errors made in the prior year include:
- Interest paid on funding used for the purchase of the Nutritional Foods and
Impilo subsidiaries in the 2007 year was incorrectly capitalised in Investment
in subsidiaries (R4,338,8500). This balance was previously treated as goodwill
in the consolidation. Portion of this balance (R1,703,150) should have been
written off in Nutritional Foods` books which would have reduced tax payable in
the 2007 year by R493,914.
- Deferred tax assets on assessed losses in the group were provided for in
prior years (R3,357,239-Group: R755,408- Company). As there was no convincing
evidence that these assessed losses would be utilised, the deferred tax assets
have been reversed.
- Sales and cost of sales have been restated to account for transactions at
fair value.
- The decision to liquidate Imuniti health Management Services was given full
effect in the 2008 financial year and creditors and assets were incorrectly
consolidated. This has been amended resulting in a decrease in the loss from
discontinued operations of R1,325,296.
DIVIDEND
No dividend was declared for the year.
CORPORATE INFORMATION
Non executive directors: M R Gahagan * (Chairperson), S R Bean,
N Lamble, J J Barnard
Executive directors: P H Fouche (CEO), M A Mantel(CFO)
* British
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: M A Mantel
Telephone: (031) 312 4141
Facsimile: (031) 312 4595
Transfer secretaries: Link Market Services (Pty) Ltd
Designated Adviser: Grindrod Bank Ltd
29 May 2009
Date: 29/05/2009 10:14:02 Produced by the JSE SENS Department.
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