| Mon 14 Nov 2005, 17:41 | | Enaleni Pharmaceuticals Limited - Reviewed interim |
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Enaleni Pharmaceuticals Limited - Reviewed interim results 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.
Introduction
Shareholders are advised that as part of the acquisition of Cipla Medpro
Holdings (Pty) Limited ("Cipla Medpro"), the directors of Enaleni requested that
the auditors review the previously released unaudited interim results, dated 26
September 2005. During the review it was identified that negative goodwill on
the acquisition of Enaleni Pharmaceuticals Consumer Division (Pty) Limited,
trading as Modex Cosmetics to the amount of R3.262 million had not been written
back to income in terms of International Financial Reporting Standards ("IFRS
3"): (AC 140); Business Combinations, therefore effectively increasing the
previously published earnings of Enaleni with R3.262 million for the period
ending 30 June 2005. This will affect the previously published pro forma
financial information and profit forecast for the year ending 31 December 2005.
The revised pro forma financial effects and profit forecast will be published as
soon as practicably possible.
Commentary on historical results
Enaleni increased its sales by 103% and profits after tax by 159% 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 operational
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, the third largest generic pharmaceutical company in
South Africa for R1.2 billion, with effect from 1 November 2005, 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 R730 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 30 June 2005 31 December 31 December
Reviewed Unaudited 2004 2004
R"000 previously As restated As previously
published under IFRS reported
R"000 audited under SA GAAP
R"000 audited
R"000
ASSETS
Fixed assets 17 578 17 578 8 753 8 596
Intangible assets 23 001 9 301 7 900 7 900
Goodwill on 1 778 12 216 - -
acquisitions
Investments in - - 1 984 1 984
other companies
Deferred taxation 11 158 11 158 1 044 1 091
Current assets 65 657 65 657 39 763 39 763
Total assets 119 172 115 910 59 444 59 334
EQUITY AND
LIABILITIES
Ordinary 58 645 55 383 5 153 5 043
shareholders"
equity
Minority interests (1 266) (1 266) (277) (277)
Total 57 379 54 117 4 876 4 766
shareholders"
funds
Non interest 5 642 5 642 5 467 5 467
bearing debt
Long-term debt 7 037 7 037 13 692 13 692
Current 49 114 49 114 35 409 35 409
liabilities
Total equity and 119 172 115 910 59 444 59 334
liabilities
Reviewed group income statements
30 June 2005 30 June 2005 30 June 2004 30 June 2004
Reviewed Unaudited As restated As previously
6 months previously under IFRS reported
R"000 published unaudited under SA GAAP
6 months 6 months unaudited
R"000 R"000 6 months
R"000
Revenue 87 413 87 413 43 136 43 136
Gross Profit 40 057 40 057 12 528 12 528
Less: Staff (14 258) (14 258) (4 843) (4 843)
costs
Share-based (574) (574) - -
payments
Restructuring (366) (366) - -
costs
Negative goodwill 3 262 - - -
on acquisition
Other operating (19 664) (19 664) (5 444) (5 327)
expenses
EBITDA 8 457 5 195 2 241 2 358
Depreciation (949) (949) (101) (139)
Profit before 7 508 4 246 2 140 2 219
interest and
taxation
Net interest paid (1 059) (1 059) (204) (204)
Profit before 6 449 3 187 1 936 2 015
taxation
Taxation (1 135) (1 135) (582) (605)
Profit after 5 314 2 052 1 354 1 410
taxation
Minority interests 395 395 (73) (73)
Less : Net non- (2 322) 940 - -
recurring income
for headline
earnings(2)
Headline earnings 3 387 3 387 1 281 1 337
attributable to
ordinary
shareholders
Add: Net non- 2 322 (940) - -
recurring income
for earnings(2)
Earnings 5 709 2 447 1 281 1 337
attributable to
ordinary
shareholders
Weighted average 65 433 65 433 47 770(1) 47 770
shares in issue
(000)
Shares in issue at 113 545 113 545 47 770 47 770
period end (000)
Earnings per share 8.7 3.7 2.7 2.8
(cents)
Headline earnings 5.2 5.2 2.7 2.8
per share (cents)
Notes:
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.
The additional non-recurring income incurred in 2005 refer to share-based
payments, restructuring costs and the negative goodwill on the acquisition of
Enaleni Pharmaceuticals Consumer Division (Pty) Limited, trading as Modex
Cosmetics.
Statement of changes in equity
30 June 2005 30 June 2005 30 June 2004 30 June 2004
Reviewed Unaudited As restated As previously
R"000 previously under IFRS reported
published unaudited under SA GAAP
R"000 R"000 unaudited
R"000
Balance at 1 4 876 4 876 1 865 2 057
January 2005
Total earnings 5 709 2 447 1 281 1 337
after minorities
Issue of share 47 351 47 351 - -
capital
Purchase of (557) (557) - -
Bioharmony (Pty)
Limited
Shareholders" 57 379 54 117 3 146 3 394
funds at 30 June
2005
Group cash flow statements
30 June 2005 30 June 2005 30 June 2004 30 June 2004
Reviewed Unaudited As restated As previously
R"000 previously under IFRS reported
published unaudited under SA GAAP
R"000 R"000 unaudited
R"000
Cash flows from (8 150) (11 412) 546 546
operating
activities
Cash flow from (9 956) (6 694) (6 342) (6 342)
investing
activities
Cash flow from 8 743 8 743 260 260
financing
activities
Net decrease in (9 363) (9 363) (5 536) (5 536)
cash and cash
equivalents
Cash and cash 7 800 7 800 5 586 5 586
equivalents at
beginning of
period
Cash and cash (1 563) (1 563) 50 50
equivalents at end
of period
Note:
The cash flow from operations was affected by the consolidation of the net
working capital of the new acquisitions.
Accounting policies and presentation
The interim financial statements have been prepared in accordance with 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.
The 30 June 2005 interim results have been reviewed. The auditors" review
opinion is available for inspection at the group"s registered office
S"bu Luthuli Trevor Edwards
Chairman Chief Executive Officer
14 November 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: 14/11/2005 05:41:31 PM Produced by the JSE SENS Department
