Wrap Text
Audited condensed financial results for the year ended 28 February 2013
Nutritional Holdings Limited
Reg no 2004/002282/06
(Incorporated in the Republic of South Africa)
("the Group" or "the Company")
Share code : NUT ISIN : ZAE000156485
AUIDITED CONDENSED FINANCIAL RESULTS FOR THE YEAR ENDED 28
FEBRUARY 2013
The audited financial results are presented on a consolidated
basis
Condensed consolidated Statement Audited Audited
of Comprehensive Income for the year ended year ended
year ended 28 Feb 2013 29 Feb 2012
R’000
Revenue 34 178 41 212
Operating loss before interest (5 861) (5 319)
(Impairment)/Impairment reversal –
Distribution rights (7 200) 7 200
Finance costs (696) (577)
Finance income 186 577
Profit/(loss) before taxation (13 571) 1 881
Taxation 138 738
Profit/(loss) for the year (13 433) 2 619
Other comprehensive income:
Gain on property revaluation - 2 909
Taxation related to components of
other comprehensive income - (797)
Other comprehensive income for the
year net of taxation - 2 112
Total comprehensive income/(loss) (13 433) 4 731
(Loss)/earnings per share (cents)
– basic and diluted (0.89) 0.20
Headline (loss) per share (cents)
- basic and diluted (0.41) (0.35)
Number of ordinary shares in issue
(000)
- issued net of treasury shares 1 907 368 1 489 768
- weighted-average 1 515 068 1 297 890
- Diluted weighted-average 1 515 068 1 297 890
Cost of sales (R’000) 20 367 25 373
Calculation of headline earnings
(R’000)
Earnings attributable to ordinary
shareholders (13 433) 2 619
Impairment/(Reversal of
impairment) of intangible assets 7 200 (7 200)
Loss/(profit) on disposal of
property, plant and equipment (10) 3
Headline(loss)/ earnings
attributable to ordinary
shareholders (6 243) (4 578)
Condensed Consolidated Statement Audited Audited
of Financial Position year ended year ended
for the year ended 28 Feb 2013 29 Feb 2012
R’000
ASSETS
Non-current assets
Property, plant and equipment 14 052 14 251
Intangible assets 11 766 18 943
Deferred taxation 8 410 8 757
34 228 41 951
Current assets
Inventories 3 385 4 829
Trade and other receivables 4 376 6 268
Loans receivable 9 9
Finance lease receivables - 1 147
Bank balance and cash 2 588 630
10 358 12 883
TOTAL ASSETS 44 586 54 834
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 131 722 123 231
Reserves 5 659 5 659
Retained earnings (101 614) (88 181)
Total shareholders’ funds 35 767 40 709
Non-current liabilities
Interest-bearing borrowings 230 30
Deferred taxation 3 115 3 600
3 345 3 630
Current liabilities
Trade and other payables 3 984 4 277
Bank overdraft 1 433 5 631
Current portion of interest-
bearing borrowings 57 587
5 474 10 495
Total liabilities 8 819 14 125
TOTAL EQUITY AND LIABILITIES 44 586 54 834
Net asset value per share (cents) 1.9 2.7
Condensed consolidated Audited Audited
statement of cash flows year ended year ended
for the year ended 28 Feb 2013 29 Feb 2012
R’000
Cash utilised by operations (2 086) (10 930)
Finance costs (696) (577)
Finance income 186 577
Taxation (paid) - (141)
Cash flows from operating
activities (2 596) (11 071)
Cash flows from investing
activities (556) (270)
Cash flows from financing
activities 9 308 8 616
Net increase/(decrease) in cash
and cash equivalents 6 156 (2 725)
Cash and cash equivalents at
beginning of year (5 001) (2 276)
Cash and cash equivalents at
end of year 1 155 (5 001)
Condensed
Consolidated
Statement of
Changes in Equity Share/ Total
for the year ended Stated Share Treasury share
28 February 2013 capital premium Shares capital
R’000
Balance at 28
February 2011 -
audited 114 113 188 113 302
Issue of shares 16 670 (6 741) 9 929
Conversion of shares
to no par value 113 188 (113 188)
Total comprehensive
income for the year
Balance at 29
February 2012 -
audited 129 972 - (6 741) 123 231
Issue of shares 8 491 8 491
Total comprehensive
loss for the year
Balance at 28
February 2013 138 463 - (6 741) 131 722
Revaluation Accumulated Total
R’000 reserve loss equity
Balance at 28
February 2011 -
audited 3 547 (90 800) 26 049
Issue of shares 9 929
Conversions of shares
to no par value -
Total comprehensive
income for the year 2 112 2 619 4 731
Balance at 29
February 2012 –
audited 5 659 (88 181) 40 709
Issue of shares 8 491
Total comprehensive
loss for the year (13 433) (13 433)
Balance at 28
February 2013 5 659 (101 614) 35 767
Condensed Group Segmental Analysis
Business Nutritional Pharmaceutical Services Consolidated
Segments Foods
R'000
For the year
ended 28
February 2013 -
audited
Revenue from
external sales 29 014 5 164 - 34 178
Segment profit/
(loss) before
tax (5 242) (3 144) (5 185) (13 571)
Taxation 138
Segment (loss)
for the year
(13 433)
For the year
ended 29
February 2012 -
audited
Revenue from
external sales 37 393 3 819 - 41 212
Segment profit/
(loss) before
tax 5 622 4 501 (5 333) 4 790
Taxation (59)
Segment profit
for the year 4 731
For management purposes the Group is organised into three
major operating divisions, namely Nutritional Foods,
Pharmaceuticals and Services. These divisions are the basis on
which the Company reports it primary segment information.
The Nutritional Foods division involves the manufacture of
high-protein and fortified powdered food and food supplements.
The Pharmaceutical division involves the supply of
pharmaceutical, complementary and natural medicines. The
Services involve the provision of administration and
management services.
These operating segments are monitored by the Group’s chief
decision-maker and strategic decisions are made on the basis
of adjusted segment operating results.
BASIS OF PRESENTATION
The condensed financial results for the year ended 28 February
2013 have been prepared in accordance with International
Financial Reporting Standards (“IFRS”), the presentation and
disclosure requirements of IAS 34, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Board,
the Listings Requirements of the JSE Limited and the
requirements of the Companies Act, No 71 of 2008, as amended.
They have been prepared in terms of IFRS on the historical
cost basis and are consistent with the accounting policies of
previous corresponding period, except for certain financial
instruments which are measured at fair value or at amortised
cost. The significant accounting policies and methods of
computation are consistent in all material respects with those
applied in the previous financial year, except for the
adoption of improved, revised or new standards and
interpretations. The aggregate effect of these changes in
respect of the year ended 28 February 2013 is nil.
The condensed financial results have been prepared under the
supervision of the Chief Financial Officer, C.D. Angus CA(SA).
NATURE OF BUSINESS
The Group’s primary business focus is to manufacture, market
and sell fortified high-protein dry food products and
supplements, manufactured from maize, sorghum and soya, as
well as the sale of Medical Control Council registered
pharmaceuticals and other complementary/natural medicines.
OVERVIEW
For most of the trading year under review the Group found
itself under extreme cash flow pressures, which contributed to
stock shortages and a resultant shrinking in turnover. This,
coupled with pressure on margins from competitors as well as
issues with 3rd party contract manufacturers supplying Impilo,
resulted in lower than expected trading results.
Whilst this is disappointing, during the last few months of
the current reporting period and into the new trading year,
the Group has commenced with a major restructuring programme
including its successful raising of capital via the sale of
shares. The board is confident that this, together with the
newly appointed executive team and their “hands-on” approach,
will bear fruit in the coming year.
Nutritional Foods Division
Having realized orders for the Imuniti Nutritional Combo Pack
were not going to materialize for the foreseeable future,
management has shifted its focus to supplying both the
Industrial catering and “end User” FMCG markets. To this end
the Company undertook to apply for its ISO 22 000:2005
accreditation. This was granted during the second half of the
report period under review. The Klerksdorp factory is now
fully HACCP and GMP compliant, giving Nutritional Foods the
ability to meet the stringent quality standards demanded by
the FMCG trade.
The Company has recently embarked on a program to re-design
its entire packaging range to meet market expectations.
However, the cash constraints at the time hampered progress in
this regard. Since March 2013 management has been able to get
this process back on track as a result of a successful capital
raising exercise and expects to roll out its new packaging
range during the first half of the 2013/14 trading period. The
ISO 22000:2005 accreditation has given the Company the ability
to market itself as not only a supplier of foodstuffs to the
general FMCG trade, but also as a 3rd party contract
manufacturer for other “big brand” companies supplying dry
foodstuffs into the same market. This approach will help
management to maximise its own brands potential as well as
increase tonnage throughput at the factory. It is expected
that the financial effects of this strategy will be seen in
the next 12 to 18 months.
During the last few months of the year, Group management has
adopted a “Hands-on“ management approach, which is starting to
show results, with a far greater strategic focus on the direct
needs of its core business units. The Klerksdorp factory has
considerable spare capacity and the impact of the anticipated
increase in volumes as a result of this new strategy on
profitability is expected to be substantial.
Pharmaceutical Division
The Impilo business unit (Impilo Marketing and Impilo Drugs)
has a contract manufacturing agreement with a 3rd party
contract manufacturer in KZN. During the year under review
supply problems from the 3rd party contractor have severely
hampered the Company’s ability to meet orders, resulting in
lost turnover and in some instances lost customers. During the
latter part of the period under review management took the
decision to look for additional contract manufacturers to
ensure consistency of supply. To this end the Company has made
representations to the Medical Controls Council of South
Africa to have additional contract manufacturers approved.
This process is currently ongoing. In the interim the Company
has cancelled its “exclusive manufacturing agreement” with its
current contract manufacturer and agreed to enter into a
short-term arrangement whilst it obtains MCC approval. The
loss of sales has directly impacted on the Group’s trading
results for the year.
Financial Performance
Group Turnover of R34,178 million was 17% down on the R41,212
million of the previous year. Gross profit declined by R2,028
million to R13,811 million (-12.8%) as a result of the
decreased turnover. However, the reduced trading margin was
offset by a reduction in expenditure from R21,430 million to
R20,227 million (-5,6%). EBITDA decreased by 8% in comparison
to the previous year, which reflects the trading operations of
the Group. The headline earnings decreased from a loss of
R4,578 million to a loss of R6,243 million.
Impairment of prior year impairment reversal of intangible
assets
The intangible asset relating to the Distribution Rights of
the ISCP was impaired in 2009. A portion of this impairment
had been reversed in 2012 as the Company had received orders
for this product during the period and anticipated that this
order level will be the minimum to be received in the 10 years
that the exclusive supply of the product relates to. Further
anticipated orders did not materialize and as a result the
R7,2 million impairment reversal from 2012 has once again been
impaired. The impairment of R7,2 million was a once off event
in the current year and will not reoccur in the next year.
Prospects
After Rob Etchells joining the Group as Chief Executive in
December 2012 the management team has instituted a fresh
“hands-on” approach and expects that its current turnaround
programme will see the Group return to profitability in due
course. The new strategy of a dual focus, being a supplier to
“end users” as well as that of a 3rd party contract
manufacturer, to other leading brands, should result in an
improvement in sales levels with the associated economies of
scale coming to the fore at the Nutritional Foods factory.
Furthermore, focus is being placed on gross margins at Impilo
via the introduction of additional contract manufacturers.
The Imuniti Nutritional Supplement Combo Pack is still a
product which could create opportunities for the Company in
the near future, however the slower than anticipated progress
with product development as well as the clinical trials has
forced management to go back to its roots and focus on its
core businesses.
Events after the reporting period
There are no material events after the period ended 28
February 2013 to report on.
Going Concern
Shareholders are advised that the audited results for the year
ended 28 February 2013 have been prepared on the going concern
concept. This basis presumes that funds will be available to
finance future operations and that the realisation of assets
and settlement of liabilities, contingent obligations and
commitments will occur in the ordinary course of business.
Shares to the value of R8,528 million were issued during the
current financial year which has helped the Group’s cash flow.
As a result of the share issues, the Group’s gearing ratio
percentage of net debt to total capital has improved from 12%
in the previous reporting period to 5% as at 28 February 2013.
This additional funding has enabled the Group to continue as a
going concern.
DIVIDEND
In view of the Group’s current financial position, no dividend
has been declared for the year.
AUDIT OPINION
Grant Thornton have audited the annual financial statements
for the year ended 28 February 2013 and their modified audit
report with emphasis of matter on Going Concern draws
attention to the fact that the Group has an accumulated
assessed loss of R101,614 million (2012: R88,181 million).
This report is available for inspection at the Company`s
registered office.
On behalf of the Board
RS Etchells
Chief Executive Officer
Umhlanga Rocks
24 May 2013
Registered Office:
Suite 3, 49 Richefond Circle. Ridgeside Office Park Umhlanga
Ridge, 4319
Tel: +27 31 536 8066
Auditors:
Grant Thornton
Designated advisors:
PSG Capital Proprietary Limited
Transfer secretaries:
Link Market Services South Africa Proprietary Limited, 13th
Floor, Rennie House, 19 Ameshoff Street, Braamfontein,
Johannesburg, 2001
Company secretary:
GA Verga
Directors:
CD Angus (Chief Financial Officer), RS Etchells (Chief
Executive Officer), JA Etchells (Non-executive), TR Hendry
(Non-executive), AR Pinfold (Non-executive), GR Wambach (Non-
executive Chairman)
Date: 24/05/2013 04:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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