| Mon 26 Sep 2005, 16:19 | | Results for the six months ended 30 June 2005 |
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Enaleni - Unaudited Interim Results for the six months ended 30 June 2005
Enaleni Pharmaceuticals Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/018027/06)
(JSE code: ENL & ISIN: ZAE000067740)
(`Enaleni` or `the company`)
Warning: The listing of ordinary shares in the company is on ALTx. Investors
are advised of the risks of investing in a company listed on ALTx. Investors are
advised that the JSE does not guarantee the viability or the success of a
company listed on ALTx. In terms of the Listings Requirements, the company is
obliged to appoint and retain a Designated Adviser, which is required to, inter
alia, attend all board meetings held by the company to ensure that all the
Listings Requirements and applicable regulations are complied with, approve the
Financial Director of the company and guide the company in a competent,
professional and impartial manner. If the company fails to retain a Designated
Adviser, it must make arrangements to appoint a new Designated Adviser within 10
business days, failing which the company faces suspension of trading of its
securities. If a Designated Adviser is not appointed within 30 days of its
suspension, the company faces the termination of its listing without the
prospect of an appropriate offer to minority shareholders.
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005
Commentary on historical results
Enaleni increased its sales by 103% and profits after tax by 52% compared with
comparative period.
The company has established its four focused divisional platforms to target
specific markets being pharmaceuticals, consumer care, vitality and wellness and
contract manufacturing, including tenders.
The contract manufacturing and pharmaceutical divisions exceeded sales and
profit forecast during the first six months, with slower than budgeted sales for
the consumer and vitality and wellness divisions with the overall performance of
the group in line with the profit forecast as set out in the prospectus dated 26
May 2005. The trading conditions of Enaleni are traditionally more buoyant in
the second half of the financial year.
Enaleni has recently consolidated a number of businesses into one operating
platform, and most of the synergies, cost savings and economies of scale will be
unlocked over the short to medium term. The company has a solid platform to
evolve into a brand owner with more than 50% of its revenues being generated
from own brands.
The successful JSE Limited (`JSE`) listing on 10 June 2005 with the capital
raising and private placing of R30 million, reduced borrowings and strengthened
the Enaleni balance sheet and cash flow position, enabling substantial future
growth.
Achievements of Enaleni subsequent to the reporting period
* In August 2005 Government awarded tenders to the amount of R54 million to
Enaleni and its joint venture partners over a two year period.
* Acquisition of Xeragen Laboratories (Pty) Limited trading as FirstPharm, a
branded generic pharmaceutical company for R32 million, with effect from 1
September 2005.
* Acquisition of Cipla Medpro Holdings (Pty) Limited (`Cipla Medpro`), the
third largest generic pharmaceutical company in South Africa for R1.2
billion, with effect from 1 November 2005, subject to certain conditions
precedent.
* Acquisition of Specpharm (Pty) Limited and the Westbury Group (Pty) Limited
for R17 million, both companies, which specialise in the development of
strategic products for the generic markets, subject to certain conditions
precedent.
The management of all acquisitions who were instrumental to the successes of
their respective organisations will remain unchanged.
Future Prospects
* Enaleni is acknowledged as South Africa`s leading empowerment
pharmaceutical company with Black Economic Empowerment (`BEE`) shareholding
of approximately 35%, including all permanent employees being shareholders.
Enaleni has substantial local manufacturing capabilities (approximately the
sixth largest manufacturing operation in South Africa) and it is expected
that further government tenders and contract manufacturing contracts will
be awarded to the company.
* The directors of the company are committed to increasing the BEE
shareholding from the current 35% in line with the proposals of the
imminent Healthcare Sector Charter.
* Enaleni will continue to explore strategic acquisitions and joint venture
opportunities in the pharmaceutical and vitality and wellness sectors to
ensure that it becomes a well-established long term player in these
exciting, fast growing markets.
* The Enaleni group is poised to grow significantly into Africa.
* Enaleni will continue to invest significantly in human capital and Capex.
* The acquisition of Cipla Medpro will result in the enlarged group being one
of the top ten pharmaceutical companies in South Africa with a combined
annual turnover of approximately R750 million expected in the 2006
financial year. Enaleni will also be the third largest supplier of generic
medicines in volume terms in the South African private market.
* The enlarged group is considering the cost of converting its current local
manufacturing facilities to achieve FDA (US) standards that will allow it
to supply significant antiretroviral (`ARV`) volumes.
Group balance sheets
30 June 2005 31 December 31 December
unaudited 2004 2004
R`000 As restated As previously
under IFRS reported
audited under SA GAAP
R`000 audited
R`000
ASSETS
Fixed assets 17 578 8 753 8 596
Intangible assets 9 301 7 900 7 900
Goodwill on acquisitions 12 216 - -
Investments in other companies - 1 984 1 984
Deferred taxation 11 158 1 044 1 091
Current assets 65 657 39 763 39 763
Total assets 115 910 59 444 59 334
EQUITY AND LIABILITIES
Ordinary shareholders` equity 55 383 5 153 5 043
Minority interests (1 266) (277) (277)
Total shareholders` funds 54 117 4 876 4 766
Non interest bearing debt 5 642 5 467 5 467
Long-term debt 7 037 13 692 13 692
Current liabilities 49 114 35 409 35 409
Total equity and liabilities 115 910 59 444 59 334
Unaudited group income statements
30 June 2005 30 June 2004 30 June 2004
unaudited As restated As previously
6 months under IFRS reported
R`000 unaudited under SA GAAP
6 months unaudited
R`000 6 months
R`000
Revenue 87 413 43 136 43 136
Gross Profit 40 057 12 528 12 528
Less: Staff costs (14 258) (4 843) (4 843)
Share-based payments (574) - -
Retrenchment costs (366) - -
Other operating expenses (19 664) (5 444) (5 327)
EBITDA 5 195 2 241 2 358
Depreciation (949) (101) (139)
Profit before interest and 4 246 2 140 2 219
taxation
Net interest paid (1 059) (204) (204)
Profit before taxation 3 187 1 936 2 015
Taxation (1 135) (582) (605)
Profit after taxation 2 052 1 354 1 410
Minority interests 395 (73) (73)
Add: Net non-recurring costs 940 - -
for headline earnings (2)
Headline earnings attributable 3 387 1 281 1 337
to ordinary shareholders
Less: Net non-recurring costs (940) - -
for earnings (2)
Earnings attributable to 2 447 1 281 1 337
ordinary shareholders
Weighted average shares in 65 433 47 770(1) 47 770
issue (000)
Shares in issue at period end 113 545 47 770 47 770
(000)
Earnings per share (cents) 3.7 2.7 2.8
Headline earnings per share 5.2 2.7 2.8
(cents)
Notes:
1. Pro forma calculation for 30 June 2004 is based on the conversion of the
original 100 weighted number of ordinary shares in issue to 47 770 700 on
19 May 2005.
2. The additional non-recurring costs incurred in 2005 refer to share-based
payments and restructuring costs.
Statement of changes in equity
30 June 2005 30 June 2004 30 June 2004
unaudited As restated As previously
R`000 under IFRS reported
unaudited under SA GAAP
R`000 unaudited
R`000
Balance at 1 January 2005 4 876 1 865 2 057
Total earnings after minorities 2 447 1 281 1 337
Issue of share capital 47 351 - -
Purchase of Bioharmony (Pty) (557) - -
Limited
Shareholders` funds at 30 June 54 117 3 146 3 394
2005
Group cash flow statements
30 June 2005 30 June 2004 30 June 2004
unaudited As restated As previously
R`000 under IFRS reported
unaudited under SA GAAP
R`000 unaudited
R`000
Cash flows from operating (11 412) 546 546
activities
Cash flow from investing (6 694) (6 342) (6 342)
activities
Cash flow from financing 8 743 260 260
activities
Net decrease in cash and cash (9 363) (5 536) (5 536)
equivalents
Cash and cash equivalents at 7 800 5 586 5 586
beginning of period
Cash and cash equivalents at (1 563) 50 50
end of period
Accounting policies and presentation
The interim financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) effective at 30 June 2005 as
well as the South African Companies Act, 1973.
These are Enaleni`s first IFRS interim financial statements and the provisions
of IFRS 1 First-time adoption of International Financial Reporting Standards,
have been applied. The condensed interim financial statements have been
prepared in accordance with IAS 34.
Audit opinion
The 30 June 2004 restatements are unaudited. The restatements of financial
information for the opening 2004 and 2005 balance sheets, financial information
for the year ended 31 December 2004 have been audited by the group`s auditors,
KPMG Inc., and their audit opinion is available for inspection at the group`s
registered office. Their report includes an emphasis of matter that the scope
of their review does not include the presentation and disclosure aspects of IFRS
and was limited to the recognition and measurement criteria of IFRS only. They
further note that amendments to the interpretive guidance issued by the IASB,
between the date of this announcement and the finalisation of the financial
statements for the year ending 31 December 2005, may result in changes to the
restatements published.
S`bu Luthuli Trevor Edwards
Chairman Chief Executive Officer
26 September 2005
Designated Adviser
Exchange Sponsors
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Limited
(Registration number: 2004/003647/07)
Ground Floor, 70 Marshall Street, Johannesburg 2000
PO Box 61051, Marshalltown, 2107
These results and an overview of the Enaleni Group are available at
www.enaleni.com.
Date: 26/09/2005 04:02:21 PM
Produced by the JSE SENS Department
