| Wed 31 May 2006, 15:46 | | Wellco- Unaudited Consolidated Final Results for t |
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WLL
WLL
Wellco- Unaudited Consolidated Final Results for the year ended 28 February 2006
WELLCO HEALTH LIMITED
(formerly Nungu Trading 279 (Pty) Ltd)
(Registration No: 2005/005805/06
JSE code: WLL
ISIN: ZAE000071841
("Wellco" or "the Company")
Unaudited Consolidated Final Results for the year ended 28 February 2006
Consolidated Balance Sheet
Unaudited Pro Forma
for the year After
ended
Private
Placement
28 February 28 February
2006 2005
R R
Assets
Non current assets
Tangible fixed assets 1,212,136 987,066
Goodwill 13,524,492 13,579,546
Intangibles assets 12,765,740 9,937,128
Deferred tax 259,082 57,720
Total non-current assets 27,761,450 24,561,460
Curent assets
Inventories 3,427,818 2,933,899
Trade and other receivables 7,639,222 1,661,091
Loans receivable 4,044 -
Cash 14 9,571,124
Total current assets 11,071,098 14,166,114
Total assets 38,832,548 38,727,574
Equity and liabilities
Share capital and reserves
Issued Capital 5,683 5,683
Share premium 29,380,017 29,824,113
Distributable Reserve 2,147,250 -
Ordinary shareholders equity 31,532,950 29,829,796
LIABILITIES
Non current liabilities
Interest bearing borrowings 332,798 340,224
Inter company Loan account - -
Total non-current liabilities 332,798 340,224
Current liabilities
Loans repayable 9,517 129,620
Taxation 2,184,644 1,976,200
Trade and other payables 4,491,817 5,030,748
Current portion of borrowings 127,736 73,249
Bank overdraft 153,086 1,347,737
Total current liabilities 6,966,800 8,557,554
Total equity and liabilities 38,832,548 38,727,574
-
Net Asset Value per share - cents 55.49 52.49
Net tangible assets per share - 9.23 11.11
cents
Weighted average number of shares 56,827,842 56,827,842
in issue
Consolidated Income Statement
Unaudited Pro Forma
for the year After
ended
Private
Placement
28 February 28 February
2006 2005
R R
Gross revenue 18,324,487 25,456,156
Profit / (Loss) before interest, 2,711,675 -26,451
taxation, depreciation ("EBITD)
Depreciation -391,272 -167,540
Profit / (Loss) from operations 2,320,402 -193,991
Net interest paid -374,506 -116,225
Profit / (Loss) before taxation 1,945,896 -310,216
Taxation 201,362 -407,141
Net Profit / (Loss) for the year 2,147,258 -717,357
Headline Earnings per share
Net Profit / (Loss) 2,147,258 -717,357
Amortisation of intangible assets - 80,698
Headline earnings 2,147,258 -636,659
EPS-cents 3.78 -1.26
HEPS-cents 3.78 -1.12
Consolidated Changes in Equity
Unaudited Pro Forma
for the year After
ended
Private
Placement
28 February 28 February
2006 2005
R R
Balance at the beginning of the 146,253 5,922,773
period as previously stated
Reinstated balance at beginning of 2,147,258 -636,659
period
Net Profit / (Loss) for the year 2,147,258 -717,357
Change in accounting policy - 80,698
Dividend paid - -5,139,861
Net movement in share capital - -
Balance at the end of the period 2,293,511 146,253
Consolidated Cash flow Statement
Unaudited Pro Forma
for the year After
ended
Private
Placement
28 February 28 February
2006 2005
R R
Net cash flow from operating -4,547,234 -3,399,472
activities
Cash generated by operations -4,381,172 2,572,819
Dividend paid - -5,139,861
Net interest paid -374,506 -116,225
Taxation paid 208,444 -716,205
Net cash flow from investing -3,257,600 -3,078,891
activities
Expended on non current assets -3,511,542 -3,123,390
Proceeds from non current assets 257,986 44,499
Decrease/(increase) in loans -4,044 -
receivable
Net cash inflow from financing 8,428,375 11,028,597
activities
(Decease)/increase in share 8,555,904 9,568,124
capital and reserves
(Decease)/increase in loans -120,103 1,460,473
receivable
(Decease)/increase in long-term -7,426 -
liabilities
Change in cash and cash equivalent 623,541 4,550,234
Cash and cash equivalents at -776,613 3,673,153
beginning of period
Cash and cash equivalents at end -153,072 8,223,387
of period
COMMENTS:
Introduction
Wellco is pleased to announce that we are on track to meet our projected
earnings per share despite certain sales and distribution factors that have led
to lower than anticipated revenue. Our significant improvement from the pro-
forma results published in the prospectus results is the start to a new chapter
for the Company as a listed entity.
Financial Review
The key performance indicators are as follows:
Revenue decreased from R25,456,116 to R18,324,487, being a 28% reduction.
Operating profit increased from a loss of (R26,451) to R2,711,675,
Net profit increased from a loss in the prior year of (R717,357) to R2,147,258.
Earnings per share has increased from (1.26) cents to 3.78 cents.
Net asset value per share has increased from 52.49 cents to 55.49 cents, being a
6% increase.
Dividend
It is envisaged that no dividend will be distributed within the next three years
due to reinvestment into the Company"s existing brands, acquisitions and new
development projects.
Prospects
We are confident that the measures implemented and actions taken in this
financial year will bear positive returns in the future. Now that the listing
process is behind us the Executive team can now focus on the enhanced
performance and growth of our brands and new product initiatives.
The major brand, Herbology, has now been successfully re-branded and the
significant sales returns of the old range have been cleared from the retail
trade. This `swap out" exercise allows us to aggressively market and distribute
the new lines. We do not anticipate any more returns. Sales volume growth and
consumer acceptance of the new range is very positive and corroborates our new
strategic direction for the brand.
We anticipate that we will now `collect" on the significant investments made in
developing the export and distribution initiatives for KGB. The successful
launch of KGB by our strategic distribution partners into Portugal in May, and
Brazil, Spain, Canada and the USA in October and November will continue to
strengthen our export markets and allow us to develop a year long revenue stream
removing the previous reliance on the South African festive season over November
to January to generate significant revenue streams.
We achieved dominant market share in KwaZulu-Natal for the African Traditional
brand, Igugu Lempilo and are in the process of launching into Gauteng and the
Northern & Mpumulanga provinces where the market size and retail footprint is
significantly larger. This will enable us to achieve higher returns on
investment from our national advertising and marketing programme.
The new financial year will see the launch of two new ranges in the enriched
food and beverages category as well as the condom category. Both are exciting
initiatives as they are innovative and at the forefront of consumer demand.
From an operational perspective we have been able to successfully manage our
product costs as well as the headcount, leading to a sound operating margin of
14.8%. This `lean" approach allows us to scale our operations to growth and the
demands of a developing market.
Research and Development
The Company"s key objective is to successfully develop and commercialise
innovative and consumer driven wellness and health products / brands for global
market. This investment requires an efficient cash flow management protocol that
balances the operational needs with the research and development requirements.
The success of our KGB brand in the international market illustrates the strong
potential of a global brand strategy.
Whilst we are aware that the South African market provides us with the
sustainable revenue base and operational capability we believe that the Research
and Development investments of today will derive the strong export revenues for
tomorrow.
Accounting Policies
Wellco Health Limited changed its accounting from General Accepted Accounting
Practise (GAAP) to International Financial Reporting Standards (IFRS), as
required by the listing requirements of the JSE Limited. The Group date of
transition to IFRS is 1 March 2004.
The following summarises the impact of the change from GAAP to IFRS
The unaudited results of the group for the year ended 28 February 2006 have been
prepared in accordance with accounting policies that comply with international
financial reporting standards (IFRS), with the date of transition to IFRS for
the group being 1 March 2004
The accounting policies used in the preparation of the results are consistent
with those applied in the prior years, except for those which have arisen due to
the transition of IFRS, and the change in accounting policy covering Intangible
Assets
IAS 18 - Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable taking into account the amount of any trade discounts and volume
rebates allowed. Terms are given to our black market segment based on a
distribution agreement. Payments will be discounted back at a present value to
determine any material adjustments to be made.
IAS 17 - Leases
IAS 17 requires operating lease costs to be accounted for on a straight line
basis over the lease period. Future lease increases in terms of lease contracts
are calculated and the average lease expense is recognized in equal amounts over
the lease period. The adjustment is not of a material nature as all existing
leases have a remaining period of 1 year.
IAS 38
In accordance with IAS 38, Intangible assets and trademarks have been assessed
to have an infinite useful life. Intangible assets are initially recognized at
cost if acquired separately and internally generated or at fair value if
acquired as part of a business combination. The Intangible assets are not
amortised, but are tested for impairment annually and impaired if necessary.
IAS 3 Goodwill
In terms of IAS 3, Business Combinations, Goodwill is no longer amortised, but
is subject to at least an annual impairment review. The group recognizes
Goodwill on acquisition at cost. In terms of the Business Combination, the
impairment review will be conducted at year end.
Directors:
D Marais (CEO), B Meyer, C Sossen, *JM Damons, *A Khumalo
*Non-executive
Company Secretary: River Group
Registered address:
13 Centuria Office Park, 265 Von Willigh Avenue, Centurion, 0046
Postal address:
PO Box 7705, Centurion, 0046
Transfer secretaries:
Computershare Investor Services 2004 (Pty) Ltd
Designated Advisor: River Group
Warning: Investors are warned that investing in companies listed on ALTx is
speculative in nature and the JSE does not guarantee the viability or success of
the company. In accordance with ALTx"s Listing 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 Listing 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 the 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: 31/05/2006 03:46:27 PM Produced by the JSE SENS Department
