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IMU
IMU
IMU - Imuniti - Unaudited Interim Results For The Six Months Ended
31 August 2009
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")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2009
CONSOLIDATED INCOME STATEMENTS
6 months 6 months ended Year
ended ended
31-Aug 31-Aug 28-Feb
2009 2008 2009
Unaudited Unaudited Audited
R R R
Revenue 27,461,588 31,189,364 60,500,725
Gross profit 11,187,713 17,259,691 30,031,234
Gross profit % 40.7% 55.3% 49,6%
Other income 315,579 258,271 1,258,124
Impairments:
Goodwill 0 0 -21,075,556
Distribution Rights 0 0 -24,000,000
Loans 0 -81,282 -167,074
Write down of 0 -598,660 0
inventory
Operating costs -16,885,942 -19,919,361 -39,397,962
Loss before interest -5,382,650 -3,081,341 -53,351,234
and taxation
Interest expense -888,510 -691,615 -1,994,617
Interest received 104,592 17,318 812,720
Loss before taxation -6,166,568 -3,755,638 -54,533,131
Taxation 0 923,959 0
Net loss from -6,166,568 -2,831,679 -54 533,131
continuing operations
Loss from 0 -360,327 0
discontinued
operations
Loss attributable to -6,166,568 -3,192,006 -54,533,131
ordinary shareholders
Reconciliation of
headline loss:
Loss attributable to -6,166,568 -3,192,006 -54,533,131
ordinary shareholders
Adjusted for:
Impairments 0 0 45,242,630
Loss/(profit) on sale 31,864 -38,536 -241,385
of property, plant
and equipment
Headline loss -6,134,704 -3,230,542 -9,531,886
attributable to
ordinary shareholders
Weighted average 905,221 843,126 863,415
shares in issue on
which earnings per
share are based
(`000)
Shares in issue at 909,983 874,416 881,411
period end (`000)
Loss per share -0.68 -0.38 -6.32
(cents)
Headline loss per
share -0.68 -0.38 -1.10
CONSOLIDATED BALANCE SHEETS
31 August 31 August 28 February
2009 2008 2009
Unaudited Unaudited Audited
R R R
ASSETS
Non-current assets 22,957,346 77,955,551 24,004,168
Property, plant and 11,263,130 12,565,730 12,309,952
equipment
Intangible assets 11,694,216 35,694,216 11,694,216
Goodwill 0 25,414,407 0
Deferred taxation O 4,281,198 0
Current assets 16,570,576 22,538,905 19,833,694
Inventories 6,858,554 8,465,160 9,025,407
Trade and other receivables 9,668,706 12,197,115 10,663,265
Loans receivable 0 769,226 76,047
Current tax receivable 28,175 - -
Cash and cash equivalents 15,141 1,107,404 68,975
Total assets 39,527,922 100,494,456 43,837,862
EQUITY AND LIABILITIES
Capital and reserves 18,256,513 80,400,510 23,473,081
Share capital and premium 107,217,213 106,022,358 106,267,213
Accumulated loss -89,210,440 -25,871,588 -83,043,872
Revaluation reserve 249,740 249,740 249,740
Non-current liabilities
Borrowings and other 1,527,166 2,395,679 2,126,577
payables
Current liabilities 19,744,243 17,698,267 18,238,204
Provisions 882,000 1,451,198 1,194,499
Current portion of 1,523,323 873,511 1,351,323
borrowings
Loans from related 822,817 - 180,948
parties
Current tax payable - - 323,334
Trade and other 12,796,184 12,267,482 11,855,575
payables
Bank overdraft 3,719,919 3,106,076 3,332,525
Total equity and 39,527,922 100,494,456 43,837,862
liabilities
Shares in issue (`000) 909,983 843,126 881,411
Net asset value per 2.0 10 2.7
share (cents)
Net tangible asset 0.7 2 1.3
value per share (cents)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Share Total
capital premium Share
capital
R R R
Balance at 1 March 2008 76,758 98,984,759 99,061,517
Issue of shares 10,684 6,950,158 6,960,842
Net loss for 6 months 0 0 0
Balance at 31 August 2008 87,442 105,934,917 106,022,359
Re-Stated (See Note) 0 0 0
Issue of shares 699 244,155 244,854
Net loss for 6 months 0 0 0
Balance at 1 March 2009 88,141 106,179,072 106,267,213
Issue of shares 2,857 947,143 950,000
Net loss for 6 months 0 0 0
Balance at 31 August 2009 90,998 107,126,215 107,217,213
Revaluation Retained Total
reserve Earnings equity
R R R
Balance at 1 March 2008 249,740 - 76,631,674
22,679,583
Issue of shares 0 0 6,960,842
Net loss for 6 months 0 -3,192,006 -3,192,006
Balance at 31 August 2008 249,740 - 80,400,510
25,871,589
Re-Stated (See Note) 0 -5,831,158 -5,831,158
Issue of shares 0 0 244,854
Net loss for 6 months 0 - -
51,341,125 51,341,125
Balance at 1 March 2009 249,740 - 23,473,081
83,043,872
Issue of shares 0 0 950,000
Net loss for 6 months 0 -6,166,568 -6,166,568
Balance at 31 August 2009 249,740 - 18,256,513
89,210,440
CONSOLIDATED CASH FLOW STATEMENTS
6 months 6 months year
ended ended ended
31-Aug 31-Aug 28-Feb
2009 2008 2009
Unaudited Unaudited Audited
R R R
Cash flow from operating -1,774,233 -4,211,638 -
activities 6,410,221
Cash outflow from -638,806 -3,537,341 -
operations 5,273,775
Interest received 104,592 17,318 812,720
Interest paid -888,510 -691,615 -
1,994,617
Tax (paid)/refund -351,509 0 45,451
Cash flows from investing 810,416 -937,833 -455,198
activities
Property, plant and 0 -633,133 -
equipment acquired 1,226,210
Proceeds on disposals of 92,500
property, plant and
equipment
96,208 297,792
Increase in goodwill 0 0 0
Net movement in loans 717,916 -400,908 473,220
Cash flows from financing 522,589 7,255,455 7,709,019
activities
Long term borrowings -427,411 294,613 503,323
Proceeds on share issue 950,000 6,960,842 7,205,696
Change in cash and cash -441,228 2,105,984 843,600
equivalents
Cash and cash equivalents -3,263,550 -4,104,656 -
at beginning of year 4,107,150
Cash and cash equivalents -3,704,778 -1,998,672 -
at end of year 3,263,550
SEGMENTAL ANALYSIS
The Group has three reportable segments, which are the group`s strategic
business units.
Nutritional Foods Pharmaceuticals
Six months Year Six months Year
Figures in Ended Ended Ended Ended
Rand 31 Aug 28 Feb 31 Aug 28 Feb
2009 2009 2009 2009
Segment revenue
Total revenue
25,814,765 49,970,101 1,852,392 6,749,700
Inter-segment
revenue
- (257,073) (205,569) (17,602)
Total external
revenue
25,814,765 49,713,028 1,646,823 6,732,098
Segment results
Loss before
Interest and (1,590,782) (2,949,051) (2,704,331) (5,157,196)
Taxation
Finance costs
(469,603) (1,220,241) (418,907) (640,182)
Finance income
73,314 636,685 - 87,555
Taxation - - - -
Segment
Loss (1,987,071) (3,532,607) (3,123,238) (5,709,823)
Segment assets
22,155,782 25,167,371 5,572,046 6,788,502
Segment
Liab-ilities
29,047,517 30,072,032 21,875,374 16,831,375
Capital and non-
cash items
Additions to
Property, Plant
and Equipment
- 318,393 - 893,480
Disposals of
Property, Plant
and Equipment
- - 124,364 -
Depre-ciation
518,233 1,012,650 374,666 735,023
Impair-ment
losses
- - - -
Number of
employees 60 59 49 92
Services Consolidated
Six months Year Six months Year
Figures in Ended Ended Ended Ended
Rand 31 Aug 28 Feb 31 Aug 28 Feb
2009 2009 2009 2009
Segment
revenue
Total
revenue 880,000 7,567,561 28,547,157 64,287,362
Inter-
segment
revenue (880,000) (3,511,982) (1,085,569) (3,786,657)
Total
external
revenue - 4,055,579 27,461,588 60,500,705
Segment
results
Loss before
Interest and
Taxation
(1,227,226) (55,151,829) (5,382,650) (53,351,234)
Finance costs
- (134,194) (888,510) (1,994,617)
Finance
income 31,278 88,480 104,592 812,720
Taxation - - - -
Segment
Loss (1,195,948) (55,197,543) (6,166,568) (54,533,131)
Segment
assets 12,126,353 27,052,345 39,527,922 43,837,852
Segment
Liab-ilities
3,011,126 7,535,765 21,271,409 20,364,781
Capital and
non-cash
items
Addit-ions to
Property,
Plant and
Equip-ment
- 14,340 - 1,226,213
Dis-posals of
Property,
Plant and
Equip-ment
- - 124,364 -
Depre-ciation
29,560 99,102 922,459 1,846,775
Impair-ment
losses
- 53,445,198 - 45,242,630
No of
emp-loyees
3 5 112 156
Note: The segmental analysis for the 6 months ended 31 August 2008 is not
available
COMMENTARY
These results have been prepared in terms of IAS 34: Interim Financial
Reporting and the accounting policies, which are in line with International
Financial Reporting Standards ("IFRS"). They are consistent with the prior
year.
Nutritional Foods (Pty) Limited
The performance of Nutritional Foods for the period was disappointing and the
business has undoubtedly lost market share in its traditional markets over the
past few years. However the appointment of a Managing Director has resulted in
a new focus on recapturing lost market share and taking advantage of new
opportunities that exist specifically in exports and retail.
Pharmaceuticals
The Pharmaceuticals business (Impilo Marketing and Impilo Drugs) underwent
major re-alignment during the period. The manufacturing of the Impilo product
range was sub-contracted to a reputable manufacturer as from 1 June 2009 so
the results reflected include elements of the previous in-house and current
sub-contracted manufacturing arrangements. The sub contract arrangement has
brought significant benefits to this business unit from a profitability and
cash flow perspective and has provided a firm basis from which to re-establish
the Impilo brand as a major factor in the pharmaceutical, natural and
complementary health markets.
Post Balance Sheet events
As previously announced, Imuniti raised R4 500 000 in capital through the
issue of 150 000 000 ordinary shares at 3,0 cents per share.
Prospects
The Board is pleased at this point with the progress that has been made in
stabilizing the company and re-focusing the company strategy and structure on
the two underlying businesses. The Impilo business units are already showing a
significant improvement in performance and profitability and the prospects for
this part of the company are very promising. The Nutritional Foods business is
in the process of re-aligning itself to changed market and competitive
environments.
The factory is still operating well below its design capacity and increased
volumes will have a significant impact on the efficiencies and profitability
of this business.
There are considerable market opportunities for new products, smaller pack
sizes of existing products and exports especially to other African countries
The resources that are now available with the investment of R4 500 000 into
the Imuniti Group (as announced recently) will enable Nutritional Foods to
effectively implement its realignment process and take full advantage of the
many opportunities that exist for its products. The Imuniti Head Office
structure has been significantly downsized and management resources have been
directed at the structures of the underlying businesses. The MCC Phase 1
Trials of the Imuniti Wellness Pack have now been successfully concluded and
ethical approval has been granted for Phase 2 of the Trials. Opportunities for
the Pack remain huge on a continent where malnutrition and HIV/AIDS are daily
realities for millions of people.
NATURE OF THE BUSINESS
The company`s primary business focus is to manufacture, market and sell
pharmaceutical products and complementary and natural medicines as well as
high-protein fortified powdered nutritional food products and supplements.
FINANCIAL RESULTS
Financial Performance
Revenue at R27 461k was 12% down on the comparative period last year mainly
due to the continuing decline in sales at Nutritional Foods. The Gross Profit
at R11 187k (40.7%) was significantly lower than the Gross Profit of R17 259k
(55.3%) in the previous period. This was mainly due to the sub-contracting of
the Impilo manufacturing which (despite the other benefits of this
arrangement) has resulted in the change to margins in the manufacturing
operation. The other major factor in this decline was the write-off of expired
Impilo stock which was charged to the Cost of Sales. Expenses at R16 885k were
15.2% lower than the comparative period due to the downsized Head Office and
the significant savings in expenses as a result of the Impilo sub-contracting
arrangement.
The Operating Loss of R5 382k was R2 301k worse than the comparative period
last year mainly as a result of the declines in Revenue and Gross Profit which
were not fully offset by the decrease in Expenses.
Financial Position
The write-off of R49 414k in Goodwill and Intangible Assets at Financial Year
End as well as the operating loss of the company and the increase in the
number of shares in issue, resulted in a decrease in Net Asset Value per share
from 10.0 to 2.0. Inventories (19%) and Trade and other receivables (20.7%)
both showed pleasing decreases due to more focused management in these areas.
CHANGES TO THE BOARD
Mike Mantell the CFO and Company Secretary of Imuniti Holdings Limited
resigned with effect from 31 May 2009 and he was replaced in both capacities
by Paul Fouche the previous CEO of the Group as from 1 June 2009. Neil Lamble
was appointed as Acting CEO as from 1 June 2009 and as such relinquished his
position as a Non-Executive Director. There were no other changes to the Board
during the period.
SHARES ISSUED
During the period shares were issued for cash. The amount raised amounted to R
1 m. The shares were issued at 3,5 c amounting to 28 571 428 ordinary shares.
The cash was received prior to the period end and the shares were issued after
the period end. In this report we accounted for the shares being in issue
before the period end.
RE-STATEMENTS
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 (R4,338,850). 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` accounts 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 6 month period.
JOHANNESBURG
27 NOVEMBER 2009
CORPORATE INFORMATION
Non executive directors: M R Gahagan* (Chairperson), S R Bean.
Executive directors: N P Lamble (Acting CEO) P H Fouche (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: P H Fouche
Telephone: (031) 312 4141
Facsimile: (031) 312 4595
Transfer secretaries: Link Market Services (Pty) Ltd
Designated Advisor: Arcay Moela Sponsors (Pty) Ltd
Date: 27/11/2009 14:33:01 Produced by the JSE SENS Department.
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