| Wed 17 Feb 2010, 13:49 | | MYD - Myriad Medical Holdings - Condensed Consolidated Interim Results For The |
|
MYD
MYD
MYD - Myriad Medical Holdings - Condensed Consolidated Interim Results For The
6 Months Ended 30 November 2009
MYRIAD MEDICAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2006/006371/06)
JSE code: MYD & ISIN: ZAE000085825
(Myriad or the Group)
CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 NOVEMBER 2009
- Earnings per share up 17%
- Turnover up 16%
- Net asset value per share up 10% from 31 May 2009
- Cash generated by operating activities up 85%
- Announcement of Litha acquisition
STATEMENT OF FINANCIAL POSITION
(R`000) Reviewed Audited
At at at
30 November 30 November 31 May
2009 2008 2009
ASSETS
Non-current assets 85,146 84,777 86,508
Property, plant and equipment 3,591 3,359 2,878
Intangibles 81,468 81,298 81,468
Deferred taxation asset 87 120 2,162
Current assets 136,378 102,500 119,634
Inventory 52,870 57,428 60,807
Trade and other receivables 63,968 44,000 50,711
Taxation 1,382 - 3,015
Cash and cash equivalents 18,158 1,072 5,101
Total assets 221,524 187,277 206,142
EQUITY AND LIABILITIES
Total equity 140,461 145,669 156,082
Share capital and premium 64,371 94,240 94,271
Accumulated profits and reserves 76,090 51,429 61,811
Non-current liabilities 29,096 2,076 383
Long term liabilities 27,014 - -
Instalment sale liabilities 374 618 383
Deferred taxation liability 1,708 1,458 -
Current liabilities 51,967 39,532 49,677
Accounts payable and provisions 37,871 35,911 43,820
Short term portion of long term 7,165 454 402
liabilities
Bank overdraft 6,010 - -
Taxation 921 3,167 5,455
Total equity and liabilities 221,524 187,277 206,142
COMMENTARY TO THE FINANCIAL
POSITION
Total number of shares in issue 154,230,364 188,675,164 188,230,364
Net asset value per share (cents) 91.1
77.1 82.9
Net tangible asset value per share 38.2 34.0 39.6
(cents)
STATEMENT OF COMPREHENSIVE INCOME
(R`000) Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 November 30 November 31 May
2009 2008 2009
Revenue 155,289 133,880 277,899
Turnover 153,201 132,454 273,614
Cost of sales (83,015) (76,036) (159,418)
Gross profit 70,186 56,418 114,196
Net operating costs (50,095) (39,206) (82,968)
Operating profit 20,091 17,212 31,228
Interest received 404 801 2,586
Interest paid (800) (965) (2,274)
Profit before taxation 19,695 17,048 31,540
Taxation (5,514) (4,783) (8,858)
Total comprehensive income for the 14,181 12,265 22,682
period
Earnings per share (cents) 7.6 6.5 12.0
COMMENTARY TO THE STATEMENT OF
COMPREHENSIVE INCOME
Headline earnings reconciliation
Profit after taxation 14,181 12,265 22,682
(Profit)/loss from disposal of (55) 3 (30)
fixed assets
Tax effect of adjustments 15 (1) 8
Headline earnings 14,141 12,267 22,660
Weighted average number of shares 186 000 856 190,106,568 189 316 410
Diluted weighted average number of 193 909 081 198,055,292 197 224 365
shares
Earnings per share (cents) 7.6 6.5 12.0
Diluted earnings per share (cents) 7.3 6.2 11.5
Headline earnings per share (cents) 7.6 6.5 12.0
Diluted headline earnings per share 7.3 6.2 11.5
(cents)
STATEMENT OF CHANGES IN EQUITY
(R`000) Share Share based Accumulated Total
capital payment profits
and reserve
premium
Balance at 1 June 2008 95,909 578 38,456 134,943
Share buy-back (Treasury (1,669) - - (1,669)
shares)
Total comprehensive income - - 12,265 12,266
Share based payment reserve - 130 - 130
adjustment
Balance at 30 November 2008 94,240 708 50,721 145,669
Total comprehensive income - - 10,417 10,417
Share based payment reserve - (35) - (35)
adjustment
Movement in treasury shares 31 - - 31
Balance at 31 May 2009 94,271 673 61,138 156,082
Total comprehensive income - - 14,181 14,181
Share based payment reserve - 98 - 98
adjustment
Share repurchase (29,900) - - (29,900)
Balance at 30 November 2009 64,371 771 75,319 140,461
STATEMENT OF CASH FLOWS
(R`000) Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 November 30 November 31 May
2009 2008 2009
Cash generated by operating activities 9,757 5,265 18,749
Cash flows from operating activities 4,517 2,120 6,614
Cash flows from investing activities (1,341) (2,482) (1,022)
Cash flows from financing activities 3,871 (210) (2,135)
Net increase/(decrease) in cash and cash 7,047 (572) 3,457
equivalents
Cash and cash equivalents at beginning of 5,101 1,644 1,644
period
Cash and cash equivalents at end of 12,148 1,072 5,101
period
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
The condensed consolidated interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting and in compliance with the
South African Companies Act, 1973 and the Listing Requirements of JSE limited.
The condensed consolidated interim financial statements are prepared on the
historical cost basis, with the exception of certain financial instruments which
are measured at fair value. The results of the interim period are not
necessarily indicative of the results for the entire year, and these financial
statements should be read in conjunction with the audited financial statements
for the year ended 31 May 2009. The interim financial statements for the period
ending 30 November 2009 have not been reviewed by the Group`s auditors, Mazars
Moores Rowland.
The preparation of condensed consolidated interim financial statements requires
the use of estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date
of the condensed consolidated interim financial statements and the reported
amounts of revenue and expenses during the reporting periods. Although these
estimates are based on management`s best knowledge of current events and actions
that the Group may undertake in the future, actual results may differ from those
estimates.
The accounting policies and methods of computation are consistent with those
applied in the financial statements for the year ended 31 May 2009.
2. SUBSEQUENT EVENTS
It was announced on 14 December 2009 that Myriad had concluded agreements to
acquire 51% of the issued share capital of Litha Healthcare Holdings Limited
("Litha") for a purchase consideration of approximately R114 000 000 and has
concluded options for the acquisition by Myriad of the balance of the shares in
Litha at a price equivalent to 7.2x 49% of the average profit after tax earned
by Litha for the two financial years preceding the date on which the option is
exercised. 70% of the purchase price payable will be funded by way of an
underwritten rights offer by Blackstar Group Plc to raise R100 million at a
price of 80 cents per share. The balance of the purchase price will be settled
by the issue of 42 800 001 Myriad shares at an issue price of 80 cents per
share. The acquisition remains conditional upon shareholder approval being
obtained.
Other than this, no events material to the understanding of the report have
occurred in the period between the period end and the date of this report.
3. RELATED PARTY TRANSACTIONS
There were no trading transactions between related parties during the reporting
period.
4. ACQUISITIONS AND DISPOSALS OF PROPERTY, PLANT AND EQUIPMENT
During the period under review, the group purchased fixed assets to the value of
R1.3 million, with no material disposals of equipment or other assets.
5. SEGMENT INFORMATION
Segment Single-use Medical Technical Group
medical capital services
devices equipment
(R`000)
30 November 2009
Turnover 146,327 5,156 1,718 153,201
Reportable segment profit 23,658 (3,637) 70 20,091
Reviewed 30 November 2008
Turnover 118,300 9,908 4,246 132,454
Reportable segment profit 16,360 540 312 17,212
Audited 31 May 2009
Turnover 242,709 21,633 9,272 273,614
Reportable segment profit 30,355 533 340 31,228
COMMENTARY
1. NATURE OF BUSINESS
The Myriad Group is South Africa`s only listed exclusive supplier of medical
devices, single use consumables and medical capital equipment to both the public
and private hospital sectors. The Group currently consists of seven business
units, with exclusive distribution rights to 32 leading agencies with a wide
range of different premier brands.
Myriad has two wholly-owned subsidiaries, Myriad Medical (Proprietary) Limited
(MMPL) and Filterworks (Proprietary) Limited (Filterworks). Besides the Pall
medical filter and Van Straten wound drainage agencies which are housed in
Filterworks, MMPL houses Myriad`s training division as well as all of the
Group`s operating divisions. These include, as separate divisions, Manta
Medical, Manta Forensic, ICU Medical, Earth Medical and Myriad Medical Capex and
Technical.
Myriad focuses on both the public and private healthcare sectors, with its
client base consisting of hospitals and private clinics. Currently, the private
sector contributes 62% and the public sector 38% to Group turnover. The Group is
consistently progressing towards a balanced mix between these sectors.
2. RESULTS
Financial review
Despite difficult market conditions, Myriad has delivered another set of solid
results for the period under review. Turnover grew by 16% to R153.2 million
(2008: R132.5 million) due to continued strong demand in both the public and
private sectors and the benefit of two new agencies acquired towards the end of
2009. Myriad focused on maintaining strong customer relations and brand
loyalties through its highly specialised sales force. Gross margin, which was
aided by the strength of the Rand, improved to 46% (2008:43%). Net operating
costs increased by 28% due to a R2.9 million "once off" restraint and notice
period payment made to Jacob and Reuben Shapiro on their resignation as
directors of the Group, R2.2 million in restructuring costs in the Capex and
Technical division and increased overheads to support the growth in the company.
Earnings increased by 16% and earnings per share improved by 17% to 7.6 cents
per share (2008: 6.5 cents per share).
In November 2009, the Group repurchased 34 million shares from founding
shareholders Jacob Shapiro and Reuben Shapiro. A loan of R34 million was raised
to fund the repurchase and related costs. Despite this increase in long term
debt, the Group has maintained a healthy balance sheet with low gearing. Net
asset value per share at 30 November 2009 improved to 91.1 cents per share (31
May 2009: 82.9 cents per share). The period under review also saw an improvement
in overall working capital management. Inventory days improved to 117 days (31
May 2009: 139 days) and Debtor`s days increased marginally to 75 days from 68
days in May 2009. This increase was due to a large prepayment made to a supplier
just before period end to take advantage of discounts. Before taking into
account the effect of the above prepayment, Creditor`s days were maintained at
101 days when compared to 31 May 2009.
The Group achieved a significant growth of 85% in cash generated by operations.
Cash generated by operating activities was utilised to fund the increase in
working capital requirements due to increased turnover and also contributed to
the 11 fold improvement in the cash and cash equivalents balance in comparison
to 30 November 2008.
One of the Group`s divisions did not achieve their warranted profit target in
terms of the acquisition agreement entered into between the Group and the
vendors of the division. The vendors have disputed the warranted profit
certificate issued by the Group`s auditors. The dispute has been referred to an
independent expert, however, the directors expect the result to be favourable to
the company.
Operational review
96% of the Group`s revenue was derived from single use medical consumables
distributed by the Group`s Manta Medical, Manta Forensic, Filterworks, ICU
Medical and Earth Medical divisions.
The Filterworks and Earth Medical divisions exceeded their budgets for the 6
month period. The new agencies acquired by each of these divisions have been
successfully integrated into their businesses and are complementary to their
existing product range. The Manta Medical division performed well and exceeded
its budget, with significant tenders being won in the Government sector and the
retention of existing formularies in the private sector. Manta Forensic had a
slow start to the financial year as the existing SAPS forensic tender came to a
close. The division however secured all products in the new forensic tender, the
benefits of which are starting to show. ICU Medical performed in line with its
budget.
The Group`s Capex and Technical division, which contributed 4% to Group revenue,
underwent a significant restructuring during the 6 months. These restructuring
expenses contributed towards the loss in this division. The division, however,
is now in a position to realise the benefits of this restructuring.
3. PROSPECTS
Myriad`s businesses remain well positioned to benefit from increased Government
spend on healthcare and maintain market share in the private sector through its
quality products and services. The acquisition of Litha will diversify the
Group`s product range across the healthcare sector to include biotechnology
(vaccines) and pharmaceutical products in addition to its current medical
consumable and device businesses. Management will be strengthened through the
appointment of Selwyn Kahanovitz, Martin Kahanovitz and Morena Makhoana to the
Board of Myriad. They bring strong operational and industry experience to the
Board and the Group. On implementation of the acquisition and subject to
regulatory and shareholder approval, Myriad will be renamed Litha Healthcare
Group Limited and its listing moved to the main board. The increased size of
the company, its share capital and its position on the main board should help
liquidity in its shares. The Board looks forward to concluding the transaction.
We believe the new management team will significantly contribute to the Group`s
growth prospects as well as maintaining its strong relationships with its
suppliers and continuing its distribution of quality products to its customers.
4. CHANGE OF YEAR END
The company announced on SENS on 8 January 2010, that it had changed its
financial year-end from 31 May to 31 December. This change will commence with
the financial year ended 31 December 2009.
5. DIVIDEND
No dividend has been recommended or declared for the interim period.
For and on behalf of the board
A Bonamour, Chairperson
Johannesburg
17 February 2010
Directors: A Bonamour*, W Marshall-Smith, BC Budler, E Senamolele*
(*non-executive)
Designated Adviser
Java Capital (Proprietary) Limited
Auditors
Mazars Moores Rowland
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Ltd
Registered Office
Manta Place
Turnberry Office Park
48 Grosvenor Road
Bryanston
2021
Date: 17/02/2010 13:49:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
