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WLL
WLL
Wellco Health Limited - Trading Update
WELLCO HEALTH LIMITED
(Registration No: 2005/005805/06
JSE code: WLL
ISIN: ZAE 000071841
("Wellco" or "the Company")
TRADING UPDATE
Wellco would like to advise shareholders that the turnover of the company will
be substantially lower but, the results in relation to earnings and headline
earnings for the year ended 28 February 2006 are anticipated to be in line with
the forecast per the prospectus.
Turnover will be substantially lower "substantially" being a decrease of equal
to or greater than 30% as defined in the JSE Listing Requirements when compared
to the forecast turnover per their prospectus, for the following reasons:
* The sales returns included in the prospectus for the discontinued lines
were lower than the actual returns received from a major retailer. The
`swap out" with the new lines only occurred after the financial year end
and hence there was no setting off of the new range with the discontinued
range as previously agreed with the retailer.
* The export revenue for KGB in the United Kingdom and Ireland was deflated
due to our distributors launching KGB after the Christmas period in
January. This meant the distributors missed the major consumption period
over Christmas and New Years Eve.
* The sales for the African Traditional division were substantially lower
than forecast due to the launch of the range in Gauteng and the Northern &
Mpumulanga provinces only in February and not November as anticipated.
* The launch of the new condom range has had to be rescheduled to the second
quarter of 2006 to enable our partners to effectively implement the unique
manufacturing and technology infrastructure.
Wellco has been able to maintain its forecast earnings within a 20% variance as
disclosed in the prospectus due to the following reasons:
* Due to the substantially lower African Traditional revenue there has been a
positive effect on the overall gross margin percentage as the sales product
mix has favoured the premium higher gross margin product sales.
* Advertising and marketing expenses have been maintained at commensurate
levels to the sales turnover.
* The staffing costs have been kept in line with sales growth and headcount
expansion has not been initiated as envisaged per the forecast.
* Change of the group"s accounting policy treatment on Intangible Assets
while conducting a full review of the accounting policies under IFRS.
The Wellco board is presently finalising their review of the Company"s results
for the year ended 28 February 2006. These unaudited results will be published
on or about the 31 May 2006.
Johannesburg
23 May 2006
Designated Advisor
River Group
Warning: The listing of the ordinary shares in the company is on the ALTX.
Shareholders are advised of the risks of investing in a company listed on the
ALTX. Shareholders are advised that the JSE does not guarantee the viability or
the success of a company listed on the ALTX. In terms of the JSE Listings
Requirements a designated advisor has to be retained by the company. The
designated advisor is required to, inter alia, attend all board meetings held by
the company to ensure that all JSE 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 advisor it must make arrangements to
appoint a new designated advisor within 10 business days, failing which the
company faces suspension of trading of its securities. If a designated advisor
is not appointed within 30 days of its suspension the company faces the
termination of its listing without an offer to minority shareholders.
Date: 23/05/2006 02:53:27 PM Produced by the JSE SENS Department
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