| Fri 30 Sep 2011, 7:30 | | BIO - Bioscience Brands Limited - Audited condensed Consolidated Financial |
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BIO
BIO
BIO - Bioscience Brands Limited - Audited condensed Consolidated Financial
results for the year ended 30 June 2011
BioScience Brands Limited
(Registration number 2005/005805/07)
Incorporated in the Republic of South Africa
Share code: BIO
ISIN code: ZAE000115036
("BioScience" or "the Company")
AUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2011
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011
30 June 30 June
2011 2010
R R
ASSETS
Non-current assets 39 401 277 56 665 926
Plant and equipment 543 032 924 573
Intangible assets 37 232 683 54 659 016
Deferred tax 1 625 562 1 082 337
Current assets 12 382 447 20 232 948
Inventories 4 574 525 9 791 385
Trade and other receivables 7 738 342 10 039 734
Cash and cash equivalents 69 580 401 829
Total assets 51 783 724 76 898 874
EQUITY AND LIABILITIES
Total equity 17 922 031 44 261 961
Issued capital 262 136 262 136
Share premium 113 138 113 138 607
607
Accumulated loss (95 478 (69 138
712) 782)
Non-current liabilities 2 037 328 -
Loans and borrowings 2 037 328 -
Current liabilities 31 824 365 32 636 913
Taxation payable 2 220 826 1 928 433
Trade and other payables 15 794 478 20 424 966
Short-term portion of loans and 3 672 594 766 115
borrowings
Bank overdraft 10 136 467 9 517 399
Total equity and liabilities 51 783 724 76 898 874
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2011
30 June 30 June
2011 2010
R R
Revenue 29 762 219 51 370 241
Trading Loss (9 859 (4 704 419)
541)
Brand Impairments (14 926 -
333)
Operating loss (24 785 (4 704 419)
874)
Net financing costs (1 833 (2 164 578)
092)
Loss before taxation (26 618 (6 868 997)
966)
Taxation 279 036 422 906
Loss and comprehensive loss for the (26 339 (6 446 091)
year 930)
Loss attributable to:
Equity holders of the parent (26 339 (6 446 091)
930)
Basic and diluted loss per share (1.00) (0.26)
(cents)
Headline earnings reconciliation:
Loss attributable to equity holders of (26 339 (6 446 091)
the parent 930)
Adjusted for:
Loss on disposal of plant and equipment 41 760 46 959
Impairment of intangible assets (tax 14 926 333 -
impact is nil)
Headline loss (11 371 (6 399 132)
837)
Headline and diluted loss per share (0.43) (0.26)
(cents)
Weighted average number of shares on 2 621 362 2 451 672
which loss and headline loss per share 757 812
are based
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2011
30 June 30 June
2011 2010
R R
Cash flows from (used in) operating
activities:
Cash operating loss (9 502 (4 266 420)
667)
Working capital requirements 2 887 764 6 587 906
Cash generated from (used in) operating (6 614 2 321 486
activities 903)
Financing costs, taxation and dividend (1 833 (2 164 578)
092)
Cash flows from (used in) operating (8 447 156 908
activities 995)
Cash flows used in investing
activities:
Plant and equipment acquired (37 960) (450 674)
Proceeds on disposal of plant and 90 831 39 600
equipment
Proceeds on disposal of intangible 2 500 000 -
assets
Cash flows from (used in) investing 2 552 871 (411 074)
activities
Cash flows from (used in) financing 4 943 807 (1 956 391)
activities
Net decrease in cash and cash (951 317) (2 210 557)
equivalents
Cash and cash equivalents at beginning (9 115 (6 905 013)
of year 013)
Cash and cash equivalents at end of (10 066 (9 115 570)
year 887)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2011
30 June 30 June
2011 2010
R R
Share capital
Balance at beginning of the year 262 136 244 287
Issue of new shares - 17 849
Balance at end of the year 262 136 262 136
Share premium
Balance at beginning of the year 113 138 111 371 533
607
Issue of new shares - 1 767 074
Balance at end of the year 113 138 113 138 607
607
Accumulated Loss
Balance at beginning of the year (69 138 (62 692
782) 691)
Comprehensive loss for the year (26 339 (6 446 091)
930)
Balance at end of the year (95 478 (69 138
712) 782)
Total equity 17 922 031 44 261 961
OTHER SALIENT FEATURES 30 June 30 June
2011 2010
Net asset value per share (cents) 0.68 1.69
Net tangible asset value per share (0.74) (0.40)
(cents)
Number of shares in issue at period end 2 621 362 2 621 362
757 757
Depreciation (R) 286 910 391 040
Lease commitments (R)
- land and buildings 133 148 824 503
Net financing costs (R) 1 833 092 2 164 578
Interest paid 1 833 092 2 164 583
Less: Interest received - (5)
COMMENTARY
The board presents the results for the year ended 30 June 2011.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The consolidated financial results of the company and its subsidiaries (together
referred to as the "group") has been prepared in accordance with the framework
concepts and the measurement and recognition requirements of International
Financial Reporting Standards (IFRS), the AC 500 standards as issued by
Accounting Practices Board, the Companies Act of South Africa, 2008, the
disclosure requirements of the Listing Requirements of the JSE Limited, and the
information as required by IAS 34: Interim Financial Reporting. The condensed
consolidated financial statements were prepared under the supervision of the
financial manager, R Jubber (CA) SA.
BioScience Brands Limited ("BioScience") has adopted all the statements and
interpretations issued and effective during the current period by the
International Accounting Standards Board ("IASB"). The accounting policies
adopted are consistent with those applied in the previous financial year.
RESULTS
BioScience owns well recognised brands in the premium priced nutritional
supplements and sports nutrition categories. These are Bioharmony, Muscle
Science, including Xplode and Staminade, Herbology and KGB.
BioScience stated in the 2010 Annual Financial Results that, for the Company to
be successful in a difficult trading environment, a combined strategy of brand
rationalisation, corporate restructuring to ensure a cash injection and a
stringent cost management programme needed to be implemented. BioScience has
pursued such a strategy and this reached a key milestone in May 2011 with:
the sale of the Phyto Nova brand which comprises a range of complimentary
medicines requiring a sales and market focus different from the other
nutritional supplements and vitamins in the BioScience product portfolio;
the outsourcing of sales, distribution management, administration, supply chain
management including logistics and procurement, regulatory and quality
management and brand activation to Akacia Healthcare (Pty) Ltd ("Akacia") ,
formerly Thebe Medicare Proprietary Limited. Akacia is the owner of a large
range of pharmaceutical products, over-the-counter medicines and consumer
products. BioScience and Akacia, both call on largely the same customers, have
several common suppliers and service providers and also run similar IT systems.
Akacia is a significant shareholder in BioScience. This outsource management
agreement has allowed BioScience to close its Durban head-office, leading to
significant annual cost savings, whilst simultaneously providing BioScience
access to Akacia`s large national sales infrastructure and good standing with
major retail chains;
a loan by Akacia to BioScience in May 2011 up to a maximum of R 2m which
BioScience will repay by way of monthly instalments by no later than 1 July
2014;
a loan by Herbal & Homeopathic (Pty) Ltd, a key supplier to BioScience, in May
2011 which allows for BioScience to borrow up to a maximum amount of R 2.5m,
which BioScience will repay by no later than 30 August 2012;
Akacia agreeing to grant BioScience a further amount of R 1m by way of a
deferment of management fees owed to no later than 31 December 2012 if and when
BioScience has drawn down the maximum amounts available in terms of both the
Akacia Loan and H&H Loan respectively; and
BioScience retaining all responsibility for:
strategic planning including the annual budget, new product launches, strategic
brand management and brand plans, working capital planning;
corporate finance function including acquisitions or divestments of companies or
assets;
investor, stakeholder and securities exchange relationships including banking
relationships;
legal including all contracts and agreements; and
financial reporting and statutory audit.
Sales in 2011 were impacted by decreasing discretionary consumer spend and the
cancellation of the Patrick Holford licence for the Holford range of products by
Holford and Associates. This is being disputed and is the still the subject of
legal proceedings. BioScience replaced the Holford range of products in January
2011 with its own innovative Bioharmony `Ultimate` range. Unfortunately there
was an unexpected 6 month delay in listing the new range at some key retailers.
This has been overcome and the new range has been listed at all key retailers by
June 2011. The unexpected delay impacted sales by approximately R 8m. It also
had an impact on sales of other complimentary Bioharmony products during this
time. The shortfall in Bioharmony sales during the period also affected Muscle
Science as it was necessary to reduce its advertising and promotional
expenditure during the year.
Whilst the net loss for the year was R 26.3m (1.00 cents per share) (2010: R
6.4m loss or 0.26 cents per share) it includes a R 6.5m impairment of the Phyto
Nova brand, sold to alleviate some pressure on working capital and fulfilling
the strategy to focus resources on its larger brands, and a R 8.4m impairment to
the Herbology brand. BioScience operates a portfolio of brands and it decided to
support its leading brands in 2011. As a result Herbology`s sales and
profitability has fallen. When BioScience is able to realise the benefits of its
restructuring, it may be possible to reinvest in and grow Herbology and
consequently revalue the brand and recoup this impairment. In addition
provisions for the stock obsolescence and settlement of legal issues totalling R
0.9m were also accrued.
Headline loss per share for the year was 0.43 cents per share compared to a
headline loss of 0.26 cents per share for the prior period.
SEGMENTAL REPORTING
The group`s brands operate in one market segment and sales are made in South
Africa.
ACQUISITIONS AND DISPOSALS
There were no acquisitions during the year.
BioScience disposed of the Phyto Nova brand for R 2.5m on 1 February 2011, which
was settled by way of R 2m in cash and R 500 000 in lieu of a cancellation of
debt owing to Akacia and/or its subsidiaries or related companies.
CONTINGENCIES AND COMMITMENTS
The directors are not aware of any contingencies and commitments at the date of
this report.
DIVIDENDS
No dividend has been declared for the period under review (2010: R nil)
BOARD CHANGES
The following director appointments, resignations and changes occurred during
the year under review and up to and including the date of this announcement:
Status Date
S Schutz Appointed non-executive 29 June 2011
MG Allan Designated financial director 29 June 2011
JJ Fenster Designated chairman 30 April 2011
PA Ireland Resigned 30 April 2011
MM Di Nicola Resigned 1 February 2011
M Strydom Resigned 7 December 2010
SHARE CAPITAL
No shares were issued during the year.
PROSPECTS AND GOING CONCERN
BioScience has weathered the difficult trading environment of the past three
years and is much better placed to succeed in FY 2012. It has completed the
restructuring and relocation of the Company over the year-end 2011 - reducing
its overhead cost base by almost half and starting to utilise Akacia`s large
sales force to extend its reach in the South African market and benefit from the
added scale when dealing with the large retailers in the retail pharmacy sector.
It has secured working capital financing referred to in point 2 above and has
been successful in negotiating favourable settlements and scheduling payment of
old debts originating from when the company still traded as Wellco Health
Limited.
As a result, whilst historically, BioScience was vulnerable to multiple threats,
the future success of BioScience is now dependent only on achieving the sales
targets required to deliver a favourable return. Based on the brands, strategy
and presence of Akacia, BioScience is confident that these targets will be
achieved. Notably, BioScience possesses a range of well recognised brands and
trusted products, with the potential to deliver and exceed these targets.
Akacia, as a significant shareholder in BioScience, and well respected role
player in the industry, is committed and determined to achieve the sales targets
and has ample resources to strive to meet same, albeit in a difficult trading
environment.
The restructuring of the business has just been completed and accordingly,
whilst the Muscle Science brand has already started achieving its sales targets,
the Bioharmony brand, having only been relisted at major retailers in the last
three months, has not as yet delivered the sales growth envisaged, however, the
processes, strategy and people are in place to do so and sales have latterly
started to show an upward trend. As a result the directors are confident that
the group will continue as a going concern and the company and the group
financial statements have been prepared on this basis.
AUDITED RESULTS - AUDITOR`S OPINION
The auditors, Deloitte & Touche, have issued their opinion on the group`s
financial statements for the year ended 30 June 2011. The audit was conducted in
accordance with International Standards on Auditing. They have issued an
unqualified audit opinion with an emphasis of matter relating to the material
uncertainty of the group`s ability to continue as a going concern. These
summarised financial statements have been derived from the group financial
statements and are consistent in all material respects, with the group financial
statements. A copy of their audit report is available for inspection at the
company`s registered office. Any reference to future financial performance
included in this announcement has not been reviewed or reported on by the
Company`s auditors.
By order of the Board
MG Allan
Chief Executive Officer
30 September 2011
Johannesburg
Company Secretary and Directors
Registered Office JJ Fenster (Chairman)*#, MG Allan
Statucor (Pty) Ltd (Chief Executive Officer & Financial
4 Brewery Street, Isando, 1609 Director- temporary), Y Bhayat*, S
PO Box 191, Isando, 1600 Schutz*.
(* Non-executive) (# independent)
Designated Advisor Transfer Office
PricewaterhouseCoopers Computershare Investor Services (Pty)
Corporate Finance (Pty) Ltd Ltd
Date: 30/09/2011 07:30:01 Produced by the JSE SENS Department.
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