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Condensed Audited Financial Results For The Year Ended 28 February 2015 And Notice Of Annual General Meeting
NUTRITIONAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 2004/002282/06
Share Code: NUT ISIN: ZAE000156485
("Nutritional Holdings" or "the Group")
CONDENSED AUDITED FINANCIAL RESULTS
FOR THE YEAR ENDED 28 FEBRUARY 2015
AND NOTICE OF ANNUAL GENERAL MEETING
BASIS OF PRESENTATION
The abridged financial results for the year ended 28 February
2015 have been prepared in accordance with International
Financial Reporting Standards ("IFRS"), the presentation
and disclosure requirements of IAS 34: Interim Financial Reporting,
the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee, Financial Pronouncements as issued by
the Financial Reporting Standards Council, the Listings
Requirements of the JSE Limited and the requirements of the
Companies Act, No. 71 of 2008. The results have been prepared
in terms of IFRS on the historical cost basis and are consistent
in all material respects, with the accounting policies and
methods applied in the previous corresponding period, except
for the measurement of land and buildings and certain financial
instruments which are measured at fair value and the adoption
of improved, revised or new standards and interpretations.
The aggregate effect of these changes in respect of the year
ended 28 February 2015 is nil. The condensed financial results
have been prepared under the supervision of RS Etchells, in his
capacity as Group Financial Director.
NATURE OF BUSINESS
The Group's primary business focus is to manufacture,
market and sell fortified dry food products and supplements,
manufactured from maize, sorghum and soya as well as
the sale of scheduled pharmaceuticals registered with the
Medicines Control Council and other complementary/natural
medicines.
OVERVIEW
During the year under review the Group made great strides
towards achieving its medium-term turnaround strategy.
However, due to procedural and regulatory constraints, the
time taken to finalise it's BBE transaction resulted in very little,
if any, positive "flow through" in the current reporting period.
The annual report provides the results for the year under
review, with the Group's financial and operational performance
achievements.
HIGHLIGHTS/ACHIEVEMENTS
- Nutritional Foods attaining a Level 2 BEE rating.
- Sustained low gearing at 1%.
- Successful conclusion of BEE deal with Philisani Proprietary Limited.
- Successful raising of capital to fund the expansion of
product base as well as output.
- Successful launch of first FMCG product lines incorporating
"BC30", a "one of a kind" patented strain of powerful
probiotic.
- Successful testing of "OneDrop" and "BacSan" with the
CSIR. Both products will be introduced into the Southern
African market during 2015.
FOODS DIVISION
Expansion of Klerksdorp factory facility
In order to keep up to date with competitive and technological
advancements the Group has invested in the latest extrusion
capabilities. Currently the dry foods factory does not have
sufficient extrusion capacity to enable it to produce sufficient
volumes of extruded maize and textured vegetable protein
("TVP") to make it competitive from a pricing point of view
and to target high-volume food programmes with both local
government as well as neighbouring southern states.
Current factory facilities with regards to blending and
packaging are sufficient, but due to the high cost of key
source raw material inputs, that are currently being bought-
out, Nutritional Foods continues to be uncompetitive in the
marketplace. The current factory buildings are sufficient to
house the new equipment needed, however, additional labour
force will need to be employed.
The Group has set aside an amount of R8.6 million to be
invested into additional equipment.
In order to finance these acquisitions funds were raised
via a specific issue of shares to a BEE consortium as well
as in terms of the general authority granted to the board at
the previous AGM held in August 2014. The Group has also
applied to the Department of Trade and Industry in terms of
the DTI's Manufacturing Investment Programme for a grant of
R3.5 million.
PHARMACEUTICAL DIVISION
As part of the refocus of management's attention an agreement
was entered into with a medium-sized South African distributor
of Medicines Control Council registered medicines called Avid
Brands (AVID). In terms of the agreement AVID will take full
responsibility for the manufacture, marketing and distribution of
certain of Impilo's range of basic family healthcare medicines.
This will relieve management from the day-to-day operational
requirements of running this division and free up cash-flow
for investment into the Foods Division. AVID will pay Impilo a
monthly royalty of 10% of the net sales achieved with certain
minimum turnover targets put in place to protect the Group's
investment in the registered dossiers. It should be noted that
Impilo retains full ownership of all intellectual property as well
as ownership of the dossiers.
FINANCIAL PERFORMANCE
Group turnover of R37.753 million was 4% up on the
R36.284 million of the previous year.
The headline loss for the year decreased from a loss of
R6.029 million to a loss of R3.238 million. The Group's gearing
remains low at less than 1%. Management feels confident
that over the next two to three years the Group's medium-term
turnaround strategy will start to bear fruit and look forward to
reporting back on such in due course.
EVENTS AFTER THE REPORTING PERIOD
There are no material events after the period ended 28 February
2015 to report on.
GOING CONCERN
Shareholders are advised that the audited results for the
year ended 28 February 2015 have been prepared on a going-
concern basis. 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.
DIVIDEND
No dividend has been declared for the year.
CHANGES TO THE BOARD OF DIRECTORS
JA Etchells resigned as a non-executive director during the
year and C Kapnias was appointed in her place. ARJ Spanjaard
resigned as an executive director during the year and CD Angus
the Group Financial Director resigned on 2 March 2015 after
year-end.
TV Mokgatlha was appointed as the Chief Executive Officer
on 1 January 2015 and RS Etchells took over the role of Chief
Operating Officer on this date and as Group Financial Director on
2 March 2015.
CORPORATE GOVERNANCE
Nutritional Holdings endorses the Code of Corporate Practices
and Conduct as contained in South Africa's King III report. The
Group believes that its governance practices are sound and that
the Group conforms to the principles embodied within Chapter
2 of the King III Report (King III) on Corporate Governance and
the Listings Requirements of the JSE Limited (JSE).
Nutritional Holdings and its subsidiaries are intent on
implementing the highest standards of corporate governance.
The Group is committed to good corporate citizenship and
organisational integrity in the running of its affairs.
This commitment provides stakeholders with the comfort
that the Group's affairs will be managed in an ethical and
disciplined manner. Nutritional Holding's philosophy is founded
on principles of transparency, accountability and responsibility.
A summary of the extent of the Group's current compliance with
Chapter 2 of the King Code is set out on the Group's website
www.nholdings.co.za.
AUDIT OPINION
Grant Thornton have audited the annual financial statements
for the year ended 28 February 2015 and their modified audit
report with an emphasis of matter relating to the Group's ability
to continue as a going concern owing to the fact that the Group
has an accumulated loss of R110.943 million is available for
inspection at the Company's registered office.
These condensed results are extracted from audited
information, but are not in itself audited. The directors
therefore take full responsibility for the preparation of the
condensed results and that the financial information has been
correctly extracted from the underlying financial statements.
The auditor's report does not necessarily cover all of the
information contained in this announcement/financial report.
Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditor's work, they should
obtain a copy of that report, together with the accompanying
financial information, from the registered office of the
Company.
ANNUAL INTEGRATED REPORT
In accordance with the provisions of the new Companies Act,
we will make the complete integrated annual report as well
as the notice to the annual general meeting available on our
website (as we currently do viz.www.nholdings.co.za) and
printed copies will be available on request.
NOTICE OF ANNUAL GENERAL MEETING
Shareholders are hereby advised that the integrated annual report
was released today, which incorporates the notice of annual general
meeting to be held at 5 Sneezewood Lane, Glen Anil, Durban on
Friday, 3 July 2015 at 10h00. The integrated report will also be
available on the company’s website at www.nholdings.co.za. The date
on which shareholders must be recorded as such in the share register
for purposes of being entitled to attend and vote at this meeting is
Friday, 26 June 2015 with the last day to trade being Friday,
19 June 2015.
On behalf of the Board
TV Mokgatlha Umhlanga Rocks
Chief Executive Officer 29 May 2015
CONDENSED CONSOLIDATED
STATEMENT OF PROFIT AND LOSS AND COMPREHENSIVE INCOME
Audited Audited
year ended year ended
28 February 28 February
Figures in R thousands 2015 2014
Revenue 37 753 36 284
Operating loss before interest, taxation and impairment (4 063) (5 575)
Impairment
– intellectual property and distribution rights (38)
Finance costs (786) (488)
Loss before taxation (4 849) (6 101)
Taxation 1 671 (50)
Loss for the year (3 178) (6 151)
Other comprehensive income for the year net of
taxation 4 921
Total comprehensive profit (loss) 1 743 (6 151)
Loss per share – basic and diluted (cents) (0,15) (0,32)
Headline loss per share – basic and diluted (cents) (0,15) (0,32)
Number of ordinary shares in issue
– issued net of treasury shares (000) 3 407 368 1 907 368
– weighted average (000) 2 133 053 1 907 368
– diluted weighted average (000) 2 133 053 1 907 368
Calculation of headline loss
Loss attributable to ordinary shareholders (3 178) (6 151)
Impairment of intangible assets 84
(Profit)/loss on disposal of property,
plant and equipment (60) 38
Headline loss attributable to ordinary shareholders (3 238) (6 029)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
year ended year ended
28 February 28 February
Figures in R thousands 2015 2014
Cash used in operations (5 035) (5 789)
Finance costs (786) (488)
Cash flows from operating activities (5 821) (6 277)
Cash flows from investing activities (770) (1 080)
Cash flows from financing activities 12 957 952
Net increase/(decrease) in cash and cash equivalents 6 366 (6 405)
Cash and cash equivalents at beginning of year (5 250) 1 155
Cash and cash equivalents at end of year 1 116 (5 250)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
year ended year ended
28 February 28 February
Figures in R thousands 2015 2014
ASSETS
Non-current assets
Property, plant and equipment 20 055 13 438
Intangible assets 12 791 12 494
Deferred taxation 9 896 8 256
42 742 34 188
Current assets
Inventories 6 184 5 141
Trade and other receivables 5 675 4 662
Loans receivable 59 9
Cash and cash equivalents 1 693 94
13 611 9 906
Non-current assets held for sale 20 70
Total assets 56 373 44 164
EQUITY AND LIABILITIES
Equity
Stated capital 145 750 131 722
Reserves 10 729 5 659
Accumulated loss (110 943) (107 765)
Total shareholders' funds 45 536 29 616
Non-current liabilities
Instalment sale creditors 98 167
Deferred taxation 4 737 3 012
4 835 3 179
Current liabilities
Instalment sale creditors 69 63
Trade and other payables 5 356 4 953
Loans from related parties 1 009
Bank overdraft 577 5 344
6 002 11 369
Total liabilities 10 837 14 548
Total equity and liabilities 56 373 44 164
Net asset value per share (cents) 1,3 1,6
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 28 February 2015
Total Share-based Re- Accu-
Stated Treasury share payment valuation mulated Total
Figures in R thousands capital shares capital reserve reserve loss equity
Balance at 28 February 2013 – audited 138 463 (6 741) 131 722 5 659 (101 614) 35 767
Total comprehensive loss for the year (6 151) (6 151)
Balance at 28 February 2014 – audited 138 463 (6 741) 131 722 5 659 (107 765) 29 616
Issue of shares 14 028 14 028 14 028
Share-based payment reserve 149 149
Total comprehensive income/(loss) for the year 4 921 (3 178) 1 743
Balance at 28 February 2015 – audited 152 491 (6 741) 145 750 149 10 580 (110 943) 45 536
CONDENSED GROUP SEGMENTAL ANALYSIS
Nutritional
Figures in R thousands Foods Pharmaceuticals Services Consolidated
Business segments for the year ended 28 February 2015 – audited
Revenue from external sales 33 904 3 849 37 753
Revenue from internal sales 2 640 2 640
Segment (loss) profit before tax (157) 282 (4 974) (4 849)
Taxation 1 671
Loss for the year before other comprehensive income (3 178)
Total assets 37 893 6 471 12 009 56 373
Business segments for the year ended 28 February 2014 – audited
Revenue from external sales 30 327 5 957 36 284
Revenue from internal sales 2 640 2 640
Segment (loss) profit before tax (1 660) 181 (4 622) (6 101)
Taxation (50)
Loss for the year before other comphrehensive income (6 151)
Total assets 25 020 7 295 11 849 44 164
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 its primary segment information. The Nutritional Foods
division involves the manufacture of fortified dry foods and food supplements.
The Pharmaceuticals division involves the sale of registered pharmaceuticals,
complementary and natural medicines. The Services division involves the providing 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.
Registered Office
Suite 3, 49 Richefond Circle
Ridgeside Office Park
Umhlanga Ridge
4319
Tel: +27 31 536 8066
29 May 2015
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
JA Etchells CA (SA)
Directors
TV Mokgatlha (Chief Executive Officer)
RS Etchells (Group Financial Director and Operating Officer)
TR Hendry (Non-executive)
Dr C Kapnias (Non-executive)
AR Pinfold (Non-executive)
GR Wambach (Non-executive Chairman)
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