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WLL
WLL
Wellco - Audited consolidated final results: 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")
AUDITED CONSOLIDATED FINAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2006
RESTATED CONSOLIDATED BALANCE SHEET
Audited Unaudited Pro Forma
Restated After
for the year for the year Private
ended ended Placement
28 February 28 February 28 February
2006 2006 2005
R R R
Assets
Non current assets
Plant and Equipment 1,212,136
1,212,136 987,066
Goodwill 13,524,492
13,548,702 13,579,546
Intangible assets 12,765,740
12,765,740 9,937,128
Deferred tax 259,082
185,308 57,720
Total non-current assets 27,761,450
27,711,886 24,561,460
Current assets
Inventories
4,771,055 3,427,818 2,933,899
Trade and other receivables
3,401,968 7,639,222 1,661,091
- 4,044 -
Cash
14 14 8,571,124
Total current assets
8,173,037 11,071,098 13,166,114
Total assets
35,884,923 38,832,548 37,727,574
EQUITY AND LIABILITIES
Share capital and reserves
Issued Capital
5,683 5,683 5,683
Share premium
29,321,482 29,380,017 28,824,113
Distributable Reserve
(710,387) 2,147,250 -
Ordinary shareholders
equity 28,616,778 31,532,950 28,829,796
LIABILITIES
Non current liabilities
Interest bearing borrowings
332,798 332,798 340,224
Total non-current
liabilities 332,798 332,798 340,224
Current liabilities
Loans repayable - 9,517 129,620
Taxation
2,184,637 2,184,644 1,976,200
Trade and other payables
4,469,888 4,491,817 5,030,748
Current portion of
borrowings 127,736 127,736 73,249
Bank overdraft
153,086 153,086 1,347,737
Total current liabilities
6,935,347 6,966,800 8,557,554
Total equity and 35,884,923
liabilities 38,832,548 38,727,574
Net Asset Value per share -
cents 50,36 55,49 50,73
Net tangible assets per
share - cents 4,05 9,23 9,35
Weighted average number of
shares in issue 56,827,842 56,827,842 56,827,842
RESTATED CONSOLIDATED INCOME STATEMENT
Audited Unaudited Pro Forma
Restated After
for the year for the year Private
ended ended Placement
28 February 28 February 28 February
2006 2006 2005
R R R
Revenue
14,538,057 18,324,487 25,456,156
Profit / (Loss) before
interest, taxation, (81,470) 2,711,675 54,247
depreciation ("EBITD)
Amortisation of intangible - - -80,698
assets
Depreciation
(391,272) (391,272) (167,540)
Profit / (Loss) from
operations (472,742) 2,320,402 (193,991)
Net interest paid
(389,442) (374,506) (116,225)
Profit / (Loss) before
taxation (862,184) 1,945,896 (310,216)
Taxation
151,797 201,362 (407,141)
Net Profit / (Loss) for the
year (710,387) 2,147,258 (717,357)
HEADLINE EARNINGS PER SHARE
Net Profit / (Loss)
(710,387) 2,147,258 (717,357)
Profit on sale of plant and -
equipment (2,579) -
Profit on sale of -
intangible assets (133,773) -
Headline earnings
(846,739) 2,147,258 (717,357)
EPS-cents
-1,25 3,78 -1,26
HEPS-cents
-1,49 3,78 -1,12
RESTATED CONSOLIDATED CHANGES IN EQUITY
Audited Unaudited
Restated
for the year for the year
ended ended
28 February 28 February
2006 2006
R R
Balance at 1 March 2005
- -
Issue of share capital and
share premium 29,327,165 29,385,700
Net (Loss)/Profit for the
year -710,387 2,147,250
Balance at 28 February 2006
28,616,778 31,532,950
RESTATED CONSOLIDATED CASH FLOW STATEMENT
Audited Unaudited
Restated
for the year for the year
ended ended
28 February 28 February
2006 2006
R R
Net cash flow from
operating activities -4,612,846 -4,547,234
Cash generated by
operations -4,431,848 -4,381,172
Dividend paid
- -
Net interest paid
-389,442 -374,506
Taxation paid
208,444 208,444
Net cash flow from
investing activities -3,227,905 -3,257,600
Plant and equipment
acquired -670,751 -670,751
Intangible assets developed
-2,815,140 -2,840,791
Proceeds on disposal of
intangible assets 201,000 201,000
Proceeds on disposal of
plant and equipment 56,986 56,986
Decrease/(increase) in
loans receivable - -4,044
Net cash inflow from
financing activities 8,464,291 8,428,375
(Decease)/increase in share
capital and reserves 8,471,717 8,555,904
(Decease)/increase in loans
receivable - -120,103
(Decease)/increase in long-
term liabilities -7,426 -7,426
Change in cash and cash
equivalents 623,540 623,540
Cash and cash equivalents
at beginning of period -776,613 -776,613
Cash and cash equivalents
at end of period -153,072 -153,072
The restated consolidated audited final results presented above comply with
International Financial Reporting Standards (IFRS). The audit opinion expressed
on these results is unqualified and the audited financial statements will be
available for review at the company offices, the auditor"s offices, Horwath
Leveton Boner, and the company secretary premises on Wednesday 30 August 2006.
The Board of Directors is confident that the forecast for the year ending
February 2007 will be achieved. The auditors have not withdrawn their opinion
with regards to the forecast as stated in the prospectus and due to the above
adjustments regarding IFRS compliance hereby withdraw the qualification as
stated in their opinion with regard thereto.
The JSE Limited has agreed to lift the trading halt in due course.
Wellco published its un-audited provisional results for the year ended 28
February 2006 on the 31 May 2006. Subsequent to the publication the directors
realised that these results included gross revenue that according to IFRS IAS 18
should not have been recognised.
It was initially believed that there would need to be an impairment of a debtor,
reflecting the deemed uncertainty of the recoverability and financial strength
of the customer, a licensed black empowered distributor ("the distributor"),
however, the directors, after consultation with their auditors, now understand
and accept that the limitations imposed by IAS 18 paragraph 14, mean that gross
revenue of R3,786,430 can not be recognised in the 2006 financial year.
Whilst the conditions (a),(c),(d) and (e) of IAS 18 paragraph 14 had been met,
the applicability of condition (b) was not certain as at financial year end.
This condition (b) states that: "the revenue from the sale of goods shall be
recognised when the company retains neither continuing managerial involvement to
the degree usually associated with ownership nor effective control over the
goods sold".
The directors recognised that this condition, pertaining to having no continuing
managerial involvement, was not certain as, in line with the South African
Government"s draft BEE Codes of Good Practice, the company and its management
are actively seeking to develop a strong BEE procurement and enterprise
development programme and in so doing facilitating the transfer of business
management skills to our BEE partners, one of which is the distributor. Thus the
directors envisaged being involved in supporting the distribution and retail
sales function and effectively have a certain amount of involvement and control
over the goods sold to the distributor. This meant the reversal of gross revenue
in the 2006 financial year. In line with IAS 18, and in agreement with the
auditors, a vast majority of this gross revenue will be recognised as revenue in
the 2007 financial year when the distributor sells the goods to the end
retailers.
This gross revenue had been derived from sales to Black Economic Empowerment
(BEE) partners as a result of long term license and distribution contracts that
provide exclusive distribution of our traditional range and related products
into the informal township and rural community markets in all South African
provinces other than Kwazulu-Natal.
Wellco would like to advise shareholders that the audited consolidated results
presented above are materially different to the un-audited consolidated results
published on the 31 May 2006. The net effect of the reduction in gross revenue
of R3,786,430 is a R2,793,145 reduction in profit before interest, taxation,
depreciation. The revised profit / (loss) before interest, taxation,
depreciation (EBITD) is (R81,470), with net profit / (loss) for the year after
taxation being (R710,387) and earning per share being -1.25c.
The annual financial statements will be posted to shareholders on Thursday, 31
August 2006.
Johannesburg
30 August 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: 30/08/2006 01:56:08 PM Produced by the JSE SENS Department
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