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IMU
IMU
IMU - Imuniti Holdings Limited - Audited consolidated condensed financial
results for the year ended 28 February 2011
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")
AUDITED CONSOLIDATED CONDENSED FINANCIAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY
2011
Earnings up by 153 %
Headline earnings up by 120%
Headline earnings per share up by 117%
Net asset value per share up by 21.1%
Revenue down by 12.9 %
STATEMENT OF COMPREHENSIVE INCOME
Figures in Rand 2011 2010 2009
thousand
Audited Restated Audited
Audited
Revenue 46 708 53 607 60 500
Cost of sales (24 939) (31 786) (30 469)
Gross profit 21 769 21 821 30 031
Other income 481 2 735 1 259
Operating expenses (26 524) (33 120) (39 397)
excluding impairments
Impairments
Loans - - (167)
Distribution rights - - (24 000)
Goodwill - - (21 076)
Operating loss (4 274) (8 564) (53 350)
Investment revenue 1 039 580 813
Finance costs (1 070) (1 696) (1 996)
Loss before taxation (4 305) (9 680) (54 533)
2011 2010 2009
Figures in Rand Audited Restated Audited
thousand Audited
6 239 260 -
Taxation
Profit (loss) for the 1 934 (9 420) (54 533)
year
Other comprehensive
income:
Gain on property 3 900 680 -
revaluation
Taxation related to (1 022) (261) -
components of other
comprehensive income
Other comprehensive 2 878 419 -
income for the
year net of taxation
Total comprehensive 4 812 (9 001) (54 533)
income (loss)
Earnings per share
Weighted average shares 1 120 493 947 267 863 416
in issue
Attributable 4 812 (9 001) (54 533)
profit/(loss)
Earnings per share 0.43 (0.95) (6.32)
Headline Earnings per
share
Weighted average shares 1 120 493 947 267 863 416
in issue
Reconciliation of
headline earnings
Attributable 4 812 (9 001) (54 533)
profit/(loss)
Adjust for:
Loss/(profit) from (84) 20 (241)
disposal of property,
plant and equipment
Impairment of customer
contracts / goodwill/
distribution rights - - 45 076
Figures in Rand 2011 2010 2009
thousand Audited Restated Audited
Audited
Other comprehensive (2 878) (420) -
income
Headline profit/(loss) 1 851 (9 401) (9 698)
Headline earnings per
share 0,17 (0,99) (1,12)
Diluted earnings per
share
Weighted average shares 1 120 493 947 267 863 416
in issue
Diluted weighted 1 120 493 947 267 863 416
average shares in issue
Attributable earnings 4 812 (9 001) (54 533)
Diluted earnings per 0.43 (0.95) (6.32)
share
STATEMENT OF FINANCIAL POSITION
Figures in Rand thousand 2011 2010 2009
Audited Restated Audited
Audited
Assets
Non-Current Assets
Property, plant and 11 656 10 944 12 309
equipment
Intangible assets 11 694 11 694 11 694
Deferred tax 8 865 1 721 -
Finance lease 1 147 - -
receivables
33 362 24 359 24 003
Current Assets
Inventories 4 056 5 439 9 025
Loans to related parties 8 3 76
Current tax receivable - 537 -
Finance lease 751 - -
receivables
Trade and other 6 439 7 386 10 664
receivables
Cash and cash 56 510 68
equivalents
11 310 13 875 19 833
Total Assets 44 672 38 234 43 836
Equity and Liabilities
Equity
Share capital 113 302 112 658 106 267
Reserves 3 547 669 250
Accumulated loss (90 530) (92 464) (83 044)
26 319 20 863 23 473
Liabilities
Non-Current Liabilities
Installment sale 601 1 398 2 127
creditors
Deferred tax 3 649 1 721 -
4 250 3 119 2 127
Figures in Rand thousand 2011 2010 2009
Audited Restated Audited
Audited
1 200 134 181
Loans from related
parties
Current tax payable 141 131 323
Installment sale 879 1 118 1 351
creditors
Trade and other payables 9 551 10 343 13 048
Bank overdraft 2 332 2 526 3 333
14 103 14 252 18 236
Total Liabilities 18 353 17 371 20 363
Total Equity and 44 672 38 234 43 836
Liabilities
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Total
Figures in Rand Share Share share
Thousand capital premium capital
Group balance at
01 March 2009 88 106 179 106 267
Changes in equity
Total comprehensive
loss for the year - - -
Issue of shares 21 6 370 6 391
Total changes 21 6 370 6 391
Balance at
01 March 2010* 109 112 549 112 658
Changes in equity
Total comprehensive
income for the year - - -
Issue of shares 5 639 644
Total changes 5 639 644
Balance at
28 February 2011 114 113 188 113 302
* Restated
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued/...)
Figures in Rand Revaluation Accumulated Total
Thousand reserve Loss equity
Group balance at
01 March 2009 250 (83 044) 23 473
Changes in equity
Total comprehensive
loss for the year 419 (9 420) (9 001)
Issue of shares - - 6 391
Total changes 419 (9 420) (2 610)
Balance at
01 March 2010* 669 (92 464) 20 863
Changes in equity
Total comprehensive
income for the year 2 878 1 934 4 812
Issue of shares - - 644
Total changes 2 878 1 934 5 456
Balance at
28 February 2011 3 547 (90 530) 26 319
* Restated
STATEMENT OF CASH FLOWS
Figures in Rand 2011 2010 2009
thousand Audited Restated Audited
Audited
Cash flows from
operating activities
Cash receipts from 47 699 59 575 63 274
customers
Cash paid to (49 693) (62 035) (68 493)
suppliers and
employees
Cash (used in) (1 994) (2 460) (5 219)
generated from
operations
Interest income 464 580 813
Finance costs (1 070) (1 696) (1 995)
Tax received (paid) 547 (729) 45
Net cash from (2 053) (4 305) (6 356)
operating activities
Cash flows from
investing activities
Purchase of (12) (28) (1 226)
property, plant and
equipment
Sale of property, 2 460 153 297
plant and equipment
Net cash from 2 448 125 (929)
investing activities
Cash flows from
financing activities
Proceeds on share 643 6 391 7 206
issue
STATEMENT OF CASH FLOWS (Continued/....)
2011 2010 2009
Figures in Rand Audited Restated Audited
Thousand Audited
Net movement in 1 061 - 473
related party loans
Net movement on (1 036) (962) 503
installments sale
creditors
Finance lease (1 323) - -
receipts
Net cash from (655) 5 429 8 127
financing activities
Total cash movement (260) 1 249 842
for the year
Cash at the (2 016) (3 265) (4 107)
beginning of the
year
Total cash at end of (2 276) (2 016) (3 265)
the year
SEGMENTAL ANALYSIS
The Group has three reportable segments, which are the group`s strategic
business units.
Nutritional Foods
Year ended
Figures in R`000 2011 2010 2009
Segment revenue
Total revenue 43 327 49 614 49 970
Intersegment revenue - - (257)
Total external revenue 43 327 49 614 49 713
Segment results
Loss before interest
and taxation (4 050) (3 688) (2 949)
Consolidation
eliminations
Intersegment expenses
Loss before interest (4 050) (3 688) (2 949)
and taxation
Finance costs (652) (726) (1 338)
Finance income 461 497 688
Taxation 1 499 260 -
Other comprehensive 2 878 419 -
income
Segment profit/(loss) 136 (3 238) (3 599)
Segment assets 22 850 20 584 25 167
Consolidation
eliminations
Figures in R`000 2011 2010 2009
(19) (336)
Intersegment Assets
Total External assets 22 850 20 565 24 831
Segment Liabilities 30 856 28 726 30 072
Consolidation
eliminations
Intersegment (21 696) (19 859) (19 145)
liabilities
Total external 9 160 8 867 10 927
liabilities
SEGMENTAL ANALYSIS (Continued/...)
Nutritional Foods
Year ended
Figures in R`000 2011 2010 2009
Capital and non-cash
items
Additions to property, - - 318
plant and equipment
Disposals of property, 85 55 25
plant and equipment
Depreciation 682 910 1 013
Impairment losses -
Number of employees at 51 60 59
period end
SEGMENTAL ANALYSIS (Continued...)
Pharmaceuticals
Year ended
Figures in R`000 2011 2010 2009
Segment revenue
Total revenue 3 381 4 156 6 750
Intersegment revenue - (163) (18)
Total external revenue 3 381 3 993 6 732
Segment results
Loss before interest
and taxation (728) (3 436) (5 157)
Consolidation 619 (578) -
eliminations
Intersegment expenses 216 -
Loss before interest (109) (3 798) (5 157)
and taxation
Finance costs (281) (570) (640)
Finance income 575 23 88
Taxation 4 740 -
Other comprehensive -
income
Segment profit/(loss) 4 925 (4 345) (5 709)
Segment assets 8 759 3 803 6 789
Consolidation -
eliminations
SEGMENTAL ANALYSIS (Continued...)
Pharmaceuticals
Year ended
Figures in R`000 2011 2010 2009
(233) -
Intersegment Assets
Total External assets 8 526 3 803 6 789
Segment Liabilities 23 027 21 139 16 831
Consolidation
eliminations
Intersegment (18 979) (19 241) (16 737)
liabilities
Total external 4 048 1 898 94
liabilities
Capital and non-cash
items
Additions to property, - - 894
plant and equipment
Disposals of property, 2 423 93 245
plant and equipment
Depreciation 72 938 735
Impairment losses 619 (578) -
Number of employees at 3 49 92
period end
SEGMENTAL ANALYSIS (Continued...)
Services
Year ended
Figures in R`000 2011 2010 2009
Segment revenue
Total revenue 2 040 1 360 7 567
Intersegment revenue (2 040) (1 360) (3 512)
Total external revenue - - 4 055
Segment results
Loss before interest
and taxation (1 233) (8 249) (54 443)
Consolidation 1 118 7 171 9 199
eliminations
Intersegment expenses -
Loss before interest (115) (1 078) (45 244)
and taxation
Finance costs (137) (400) (18)
Finance income 3 60 37
Taxation -
Other comprehensive
income
Segment profit/(loss) (249) (1 418) (45 225)
Segment assets 26 923 26 046 28 793
Consolidation 670 1 359 20
eliminations
Intersegment Assets (14 297) (13 539) (16 597)
Total External assets 13 296 13 866 12 216
Segment Liabilities 5 327 3 726 4 275
SEGMENTAL ANALYSIS (Continued...)
Services
Year ended
2011 2010 2009
Figures in R`000
Consolidation (182) 2 880 5 067
eliminations
Intersegment
liabilities
Total external 5 145 6 606 9 342
liabilities
Capital and non-cash
items
Additions to property, 28 14
plant and equipment
Disposals of property, 28
plant and equipment -
Depreciation 23 57 99
Impairment losses 1 118 7 171 53 444
Number of employees
at period end 1 2 5
SEGMENTAL ANALYSIS (Continued...)
Consolidated
Year ended
Figures in R`000 2011 2010 2009
Segment revenue
Total revenue 48 748 55 130 64 287
Intersegment revenue (2 040) (1 523) (3 787)
Total external revenue 46 708 53 607 60 500
Segment results
Loss before interest (6 011) (15 373) (62 549)
and taxation
Consolidation 1 737 6 593 9 199
eliminations
Intersegment expenses - 216 -
Loss before interest (4 274) (8 564) (53 350)
and taxation
Finance costs (1 070) (1 696) (1 996)
Finance income 1 039 580 813
Taxation 6 239 260 -
Other comprehensive 2 878 419 -
income
Segment profit/(loss) 4 812 (9 001) (54 533)
Segment assets 58 532 50 433 60 749
Consolidation 670 1 359 20
eliminations
Intersegment Assets (14 530) (13 558) (16 933)
Total External assets 44 672 38 234 43 836
Segment Liabilities 59 210
53 591 51 178
SEGMENTAL ANALYSIS (Continued...)
Consolidated
Year ended
2011 2010 2009
Figures in R`000
(182) 2 880 5 067
Consolidation
eliminations
Intersegment (40 675) (39 100) (35 882)
liabilities
Total external 18 353 17 371 20 363
liabilities
Capital and non-cash
items
Additions to property, - 28 1 226
plant and equipment
Disposals of property, 2 508 148 298
plant and equipment
Depreciation 777 1 905 1 847
Impairment losses - -
Number of employees at
period end
55 111 156
COMMENTARY
Basis of presentation
These consolidated condensed financial statements have been prepared in terms of
Schedule 4 of the South African Companies Act and Listing Requirements of the
JSE Limited and 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. The results have been audited by Grant
Thornton whose modified report is available for inspection at the Company`s
registered office.
Introduction
Imuniti is a manufacturer and marketer of pharmaceutical, complementary and
natural medicines as well as high-protein, fortified powdered food products and
supplements. The Group consists of three wholly owned trading entities.
The group apart from new executives on the board of directors, appointed a Chief
Operating Officer, Peter Brierley in April 2011 to assist with the new focus and
to ensure a complete turnaround to profitability. Peter has more than 25 years`
experience in the industry.
Nutritional Foods
The 2011 financial year was a period of difficulty for Nutritional Foods. With
an over emphasis on working capital management, valuable sales were lost and the
group was compromised by not having critical inventory ready when the market
demand for certain inventory lines picked up.
With the group now being freshly capitalized, the focus will be on managing the
working capital optimally so as not to lose critical sales but also be able to
expand group market share. The production facilities are currently underutilized
and management in the new financial year will be working on ways to address this
problem. The results of this will start flowing through during the second
quarter of the 2012 financial year.
The factory still has considerable spare capacity and the impact of the expected
increase in volumes on profitability will be considerable.
Pharmaceuticals
The Pharmaceuticals business (Impilo Marketing and Impilo Drugs) has a contract
manufacturing agreement with Pac-Con Pharmaceuticals ("Pac-Con") in terms of
which Pac-Con manufactures the Impilo product range. Due to working capital
constraints at Pac-Con Pharmaceuticals, Impilo struggled to obtain enough
product to supply to the market as demand far exceeded available supply.
This problem has now been addressed by the strengthening of Pac-Con`s working
capital position and Impilo engaging with two other contract manufactures to
manufacture product on its behalf. The results of this will only be felt in the
second quarter of the 2012 financial year.
A major R10 million upgrade of the manufacturing facility at Isithebe was
commenced by Pac-Con in December 2009 and is due for completion in July 2011,
delayed as a result of working capital constraints. This will ensure that the
factory is fully compliant with all Medicines Control Council ("MCC")
regulations.
Prospects
The Board remains pleased with the progress that has been made in stabilising
and turning around the Nutritional Foods and Impilo businesses since the
management changes to date.
The Imuniti Head Office, which will move to Gauteng, 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.
Financial Results
Financial Performance
Sales of R46.7 million were 12,9% down on the R53.6 million of the previous
year. This was mainly due to a decline in sales in the Nutritional and
Pharmaceuticals sector. Sales at Nutritional Foods dropped to R43 million for
the year. Gross profit declined marginally to R21,7 million from R21,8 million
as a result of the decline in Sales but the gross margin percentage increased
from 40,7% to 46,6%. The increase in the margin percentage was primarily as a
result of inventory shortages increasing demand. There was also a reduction in
expenses from R33,1 million to R26,5 million (20%). The loss from last year has
been reversed this year with the loss of R9,4 million in 2009/2010 to a profit
of R1,9 million in 2010/2011. A pleasing feature of the results was the fact
that the loss before taxation of R2,8 million in the first six months of the
financial year reduced to a loss before taxation of R 1,4 million 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.
Financial Position
The profit of the group, even though there was a increase in the number of
shares in issue contributed to the increase in the Net Asset Value per share
from 1,9 cents to 2,3 cents. There were also pleasing reductions in Inventories
from R5 439 518 to R4 057 036.
FIVE-YEAR REVIEW
Restated
2011 2010
Revenue (R`000) 46 708 53 607
Attributable earnings (9 001)
for the year (R`000) 4 812
Attributable
earnings/(loss) per
share (cents) 0,43 (0,95)
Headline earnings/(loss)
per share (cents) 0,17 (0,99)
Net asset value per
share (cents) 2,30 1,9
Net asset value per
share (excluding
intangibles) (cents) 1,3 0,8
Total assets employed (R`000) 44 672 38 234
Return on shareholders`
equity (%) 18,30 (43,14)
FIVE-YEAR REVIEW (Continued/...)
Restated 14 months
2009 2008 2007
Revenue 60 500 68 781 63 315
Attributable earnings
for the year (54 533) (23 511) 2 445
Attributable
earnings/(loss) per
share (6,32) (3,38) 0,42
Headline earnings/(loss)
per share (1,12) (1,46) 0,42
Net asset value per
share 2,7 9,2 13,0
Net asset value per
share (excluding
intangibles) 1,3 1,8 3,3
Total assets employed 43 836 69 757 86 802
Return on shareholders`
equity (232,32) (36,01) 2,50
Subsequent events
Subsequent to year end the company changed its board of directors and executive
team. The company further agreed terms with current and new shareholders to
inject new capital of R12 million into the business. This capital injection is
currently the subject of a shareholder meeting convened for 24 June 2011. Other
than the facts and developments reported on in these audited results, there have
been no material changes in the affairs, financial or trading position of the
group since the year end.
Changes to the Board
Messrs MR Gahagan, NP Lamble and Mr SR Bean resigned with effect from 31 October
2009 and Mr PHA Fouche resigned with effect from 31 July 2011.
Mr GR Wambach (Chairman), Mr HJ van der Merwe (Chief Executive Officer) and Ms
JA Etchells (Non-executive) were appointed on 4 March 2011 to the board of
directors.
There were no other changes to the Board during the period.
Shares Issued
During the period 51 500 000 shares were issued for cash. The amount raised
amounted to R643 306 (net of share issue costs). The shares were issued at an
average price of 1,25 cents per share.
Audit opinion
The annual financial statements of the group have been audited by the company`s
auditors, Grant Thornton. The audit report has been modified to draw attention
to the existence of a material uncertainty which may cast significant doubt on
the group`s ability to continue as a going concern which has been disclosed in
the directors` report. Their modified report is available for inspection at the
registered office of the company.
Dividends
No dividends have been declared.
Restatement
Revaluation of the property in a subsidiary company was previously revalued by
R680 000 and the entire revaluation was taken to a revaluation reserve, however,
this was incorrect as deferred taxation should have been provided for and the
net amount taken to the revaluation reserve.
In the prior period certain accruals were classified as provisions. These have
been reclassified to accrued expenses as these items were not of uncertain
timing or amount.
The correction of the error(s) results in adjustments as follows:
Figures in R GROUP GROUP GROUP COMPANY COMPANY COMPANY
thousands 2011 2010* 2009 2011 2010 2009
Statement of
financial
position
Revaluation 260 260 - - - -
reserve
Deferred tax (260) (260) - - - -
* Restated
Annual report and annual general meeting
The Annual Report for the year ended 28 February 2010 will be posted to
shareholders on 31 May 2010.
Notice is hereby given that the Annual General Meeting of shareholders will be
held at Durban Country Club, 101 Isaiah Ntshangase (formerly Walter Gilbert Road
at 10:30 on Friday, 24 June 2010, to transact the business as stated in the
notice of annual general meeting forming part of the Annual Report.
GENERAL
The board of directors has approved these audited condensed consolidated
results. On behalf of the board, I wish to thank our management team, personnel,
stakeholders and shareholders for their valuable input and support over the past
year.
On behalf of the board
HJ van der Merwe
Chief Executive Officer
27 May 2010
CORPORATE INFORMATION
Independent Non executive directors: GR Wambach (Chairperson), JA Etchells
Executive directors: HJ van der Merwe (CEO) PHA Fouche (CFO)
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: PHA 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: 27/05/2011 14:33:01 Produced by the JSE SENS Department.
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