| Mon 31 May 2010, 11:34 | | IMU - Imuniti Holdings Limited - Reviewed consolidated financial results for the |
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IMU
IMU
IMU - Imuniti Holdings Limited - Reviewed consolidated financial results for the
year ended 28 February 2010
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 CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED
28 FEBRUARY 2010
STATEMENT OF COMPREHENSIVE INCOME
Year Year
ended ended
28 February 28 February
2010 2009
Reviewed Audited
R R
Revenue 53,607,034 60,500,725
Gross profit 21,820,544 30,031,234
Gross profit % 40.7% 49.6%
Other income 2,734,687 1,258,124
Impairments:
Goodwill - -21,075,556
Distribution Rights - -24,000,000
Loans - -167,074
Operating costs -32,749,930 -39,397,962
Loss before interest and taxation -8,194,699 -53,351,234
Interest expense -1,695,786 -1,994,617
Interest received 579,680 812,720
Loss before taxation -9,310,805 -54,533,131
Taxation - -
Net loss from continuing operations -9,310,805 -54 533,131
Other comprehensive income 680,000 -
Total comprehensive loss attributable to ordinary -8,630,805 -54,533,131
shareholders
Reconciliation of headline loss:
Total comprehensive loss attributable to ordinary -8,630,805 -54,533,131
shareholders
Adjusted for:
Impairments - 45,242,630
Loss/(profit) on sale of property, plant and 20,209 -241,385
equipment
Other comprehensive income -680,000 -
Headline loss attributable to ordinary -9,290,595 -9,531,886
shareholders
Weighted average shares in issue on which 947,267 863,416
earnings per share are based (`000)
Shares in issue at year end (`000) 1,092,535 881,411
Loss per share (cents) -0.91 -6.32
Headline loss per share
-0.98 -1.10
STATEMENT OF FINANCIAL POSITION
28 February 28 February
2010 2009
Reviewed Audited
R R
ASSETS
Non-current assets 22,638,425 24,004,168
Property, plant and equipment 10,944,209 12,309,952
Intangible assets 11,694,216 11,694,216
Current assets 14,158,036 19,833,694
Inventories 5,439,518 9,025,407
Trade and other receivables 7,800,712 10,663,265
Loans to related parties 2,540 76,047
Current tax receivable 405,472 -
Cash and cash equivalents 509,794 68,975
Total assets 36,796,461 43,837,862
EQUITY AND LIABILITIES
Capital and reserves 21,233,720 23,473,081
Share capital and premium 112,658,657 106,267,213
Accumulated loss -92,354,677 -83,043,872
Revaluation reserve 929,740 249,740
Non-current liabilities
Borrowings and other payables 1,398,178 2,126,577
Current liabilities 14,164,563 18,238,204
Provisions 1,010,357 1,194,499
Current portion of borrowings 1,117,787 1,351,323
Loans from related parties 104,759 180,948
Current tax payable - 323,334
Trade and other payables 9,416,009 11,855,575
Bank overdraft 2,515,651 3,332,525
Total equity and liabilities 36,796,461 43,837,862
Shares in issue (`000) 1,092,535 881,411
Net asset value per share (cents) 1.9 2.7
Net tangible asset value per share (cents) 0.9 1.3
CONSOLIDATED STATEMENT 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 11,383 7,194,313 7,205,696
Total comprehensive loss for the year - - -
Balance at 1 March 2009 88,141 106,179,072 106,267,213
Issue of shares 21,112 6,370,332 6,391,444
Total comprehensive loss for the year - - -
Balance at 28 February 2010 109,253 112,549,404 112,658,657
Revaluation Accumulated Total
reserve loss equity
R R R
Balance at 1 March 2008 249,740 -28,510,741 70,800,516
Issue of shares - - 7,205,696
Loss for the year - -54,533,131 -54,533,131
Balance at 1 March 2009 249,740 -83,043,872 23,473,081
Issue of shares - - 6,391,444
Loss for the year 680,000 -9,310,805 -8,630,805
Balance at 28 February 2010 929,740 -92,354,677 21,233,720
STATEMENT OF CASH FLOWS
Year Year
ended ended
28 February 28 February
2010 2009
Reviewed Audited
R R
Cash flow from operating activities -4,291,850 -6,410,221
Cash outflow from operations -2,446,938 -5,273,775
Interest received 579,680 812,720
Interest paid -1,695,786 -1,994,617
Tax (paid)/refund -728,806 45,451
Cash flows from investing activities 120,035 -928,418
Property, plant and equipment acquired -27,832 -1,226,210
Proceeds on disposals of property, plant and
equipment
147,867 297,792
Cash flows from financing activities 5,429,508 8,812,239
Long term borrowings -961,936 503,323
Proceeds on share issue 6,391,444 7,205,696
Net movement in loans - 473,220
Change in cash and cash equivalents 1,257,693 843,600
Cash and cash equivalents at beginning of year -3,263,550 -4,107,150
Cash and cash equivalents at end of year -2,005,857 -3,263,550
SEGMENTAL ANALYSIS
The Group has three reportable segments, which are the group`s strategic
business units.
28 February 2010 Nutritional Pharma- Con-
Foods ceuticals Services solidated
Year Year Year Year
Figures in Rand Ended Ended Ended Ended
2010 2010 2010 2010
Segment revenue
Total revenue 49 614 115 4 155 582 1 360 000 55 129 697
Intersegment revenue - (162 663) (1 360 000) (1 522 663)
Total external revenue 49 614 115 3 992 919 - 53 607 034
Segment results
Loss before interest
and taxation (3 317 373) (3 435 817) (8 130 739) (8 194 699)
Finance costs (725 634) (570 448) (399 704) (1 695 786)
Finance income 495 843 23 367 60 470 579 680
Taxation - - - -
Other comprehensive 680 000 680 000
income
Segment loss (2 867 164) (3 982 898) (8 469 973) (8 630 805)
Segment assets 20 440 004 4 639 600 13 190 223 36 796 461
Segment liabilities 28 211 833 23 217 293 (9 252 753) 15 562 741
Capital and non-cash
items
Additions to property,
plant and equipment 27 832 27 832
Disposals of property,
plant and equipment 43 714 124 364 - 168 078
Depreciation 910 097 937 904 57 498 1 905 499
Impairment losses (577 998) 7 050 992 -
Number of employees
at period end 60 49 2 111
28 February 2009 Nutritional Pharma Services Con-
Foods ceuticals solidated
Year Year Year Year
Figures in Rand Ended Ended Ended Ended
2009 2009 2009 2009
Segment revenue
Total revenue 49 970 101 6 749 700 7 567 561 64 287 362
Intersegment revenue (257 073) (17 602) (3 511 982) (3 786 657)
Total external revenue 49 713 028 6 732 098 4 055 579 60 500 705
Segment results
Loss before interest
and taxation (2 949 051) (5 157 196) (55 151 829) (53 351 234)
Finance costs (1 220 241) (640 182) (134 194) (1 994 617)
Finance income 636 685 87 555 88 480 812 720
Taxation - - - -
Segment loss (3 532 607) (5 709 823) (55 197 543) (54 533 131)
Segment assets 25 167 371 6 788 502 27 052 345 43 837 852
Segment liabilities
30 072 032 16 831 375 7 535 765 20 364 781
Capital and non-cash
items
Additions to property,
plant and equipment 318 393 893 480 14 340 1 226 213
Disposals of property,
plant and equipment - - - -
Depreciation 1 012 650 735 023 99 102 1 846 775
Impairment losses - - 53 445 198 45 242 630
Number of employees
at period end 59 92 5 156
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 with the
exception of the adoption of the revised IAS 1 - Presentation of Financial
Statements. Such adoption did not have any material effect on the financial
performance or position of the group. The results have been reviewed by RSM
Betty & Dickson (Durban) whose unmodified review opinion is available for
inspection at the Company`s registered office. The review report contained a
Report on Other Legal and Regulatory Requirements in relation to a reportable
irregularity relating to the incorrect declaration of revenue and the
corresponding output VAT to the South African Revenue Service. The amended VAT
return has since been submitted to the South African Revenue Service and the
reportable irregularity has been rectified.
Nutritional Foods
The year 2009/2010 was a period of consolidation and re-positioning for
Nutritional Foods. Steps were taken to regain the market share previously lost
in the segment`s traditional markets especially the mining sector and these
steps were starting to yield the desired results towards the end of this period.
In addition, there were deliberate moves into some new market segments
particularly the export and small pack markets. There was a strong focus on
working capital management during the period and stock and debtors management
received particular attention. The focus on margin improvement also yielded
pleasing results.
Pharmaceuticals
As previously announced, the Pharmaceuticals business (Impilo Marketing and
Impilo Drugs) concluded an interim agreement with Pac-Con Pharmaceuticals in
terms of which Pac-Con manufactured the Impilo product range and paid Impilo
Drugs a rental for the use of its equipment. In terms of this agreement, Impilo
Marketing purchased its stock from Pac-Con instead of from Impilo Drugs as
previously. The Impilo product dossiers (registered product formulations)
remained the sole property of Impilo.
This agreement benefited Impilo considerably during the period and as a result,
similar longer term agreements were entered into with Pac-Con subsequent to the
financial year end. The strong performance of this segment in the last quarter
of 2009 in particular reinforced the potential of this business.
Prospects
The Board remains pleased with the progress that has been made in stabilising
and re-focussing the Imuniti businesses to date.
In line with the strategy of focussing on the profitability and health of the
two underlying businesses, the new position of Managing Director was created at
Nutritional Foods. This has resulted in far higher levels of coordination and
cooperation between the different elements of this business and a far greater
strategic focus on the direct needs of the business. The factory still has
considerable spare capacity and the impact of the expected increase in volumes
on profitability will be considerable.
The agreements between the Impilo businesses and Pac-Con have had the effect of
eliminating the extensive losses that Impilo was previously incurring. It has
provided the platform and the capacity to re-establish the Impilo range in the
market place. In order to drive this process, a full time National Sales Manager
for Impilo Marketing was appointed after year end. A major R10 million upgrade
of the manufacturing facility was commenced by Pac-Con in December 2009 and is
due for completion by June 2010. This will ensure that the factory is fully
compliant with all Medicines Control Council ("MCC") regulations.
The Imuniti Head Office will continue to operate on a considerably downsized
basis until the Group has stabilised fully and is ready to move into the next
phase of its strategic development.
As reported previously, the MCC Phase 1 trials of the Imuniti Wellness Pack have
been concluded and Phase 2 trials are currently underway.
NATURE OF THE BUSINESS
The group`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
Sales of R53 607 000 were 11.4% down on the R60 500 000 of the previous year.
This was mainly due to a decline in sales in the Pharmaceuticals sector. Sales
at Nutritional Foods remained at R50 million for the year. Gross profit declined
by R8 211 000 to R21 820 000 as a result of the decline in Sales as well as a
reduction in the gross margin from 49.6% to 40.7%. The reduction in margin was
primarily as a result of the outsourced manufacturing agreement with Pac-Con
which did lead to lower margins in the Pharmaceutical sector. This reduction in
margin, however, was offset by a reduction in expenses from R39 637 000 to R32
749 000 (17.4%). All operating expenses were well contained. The loss
attributable to shareholders was reduced from R9 291 000 to R8 631 000. There
was also no impairment of goodwill or intangibles during this period so the
attributable loss decreased from a loss of R54 533 000 in 2008/2009 to a loss of
R8 630 000 in 2009/2010. A pleasing feature of the results was the fact that the
attributable loss of R6 166 000 in the first six months of the financial year
reduced to an attributable loss of R2 464 000 for the second half of the year
which includes the months of December and January which are historically the
worst trading months of the Group. This confirms the Board`s view that the
current strategy of the Group is starting to produce the desired results.
Financial Position
The Operating Loss of the company as well as the increase in the number of
shares in issue were the major factors in reducing the Net Asset Value per share
from 2.7 cents to 1.9 cents. There were, however, pleasing reductions in
Inventories from R9 025 000 to R5 439 000 and in Creditors from R11 855 000 to
R9 416 009.
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. Johan Barnard resigned as a Non-executive
director with effect from 23 September 2009.
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 R6
391 444. The shares were issued at an average price of 3.02 cents amounting to
211 123 182 ordinary shares.
DIVIDEND
No dividend was declared for the year under review.
DURBAN
27 MAY 2010
CORPORATE INFORMATION
Independent 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 B.Comm.Professional Accountant
Telephone: (031) 312 4141
Facsimile: (031) 312 4595
Transfer secretaries: Link Market Services (Pty) Ltd
Designated Advisor: Arcay Moela Sponsors (Pty) Ltd
Date: 31/05/2010 11:34:01 Produced by the JSE SENS Department.
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