Wrap Text
Unaudited Condensed Consolidated Interim Results for the Six Months Ended 31 August 2016
Nutritional Holdings Limited
Reg no 2004/002282/06
(Incorporated in the Republic of South Africa)
("the Group" or "the Company")
Share code : NUT ISIN code : ZAE000156485
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED
31 AUGUST 2016
Unaudited Unaudited Audited
Unaudited Condensed Six months Six months Year ended
Consolidated Statement of
Profit and Loss and
Comprehensive Income
for the period ended 31 Aug 2016 31 Aug 2015 29 Feb 2016
R’000 R’000 R’000
Revenue 21,805 18,162 38,269
Cost of sales (13,431) (11,696) (25,779)
Gross profit 8,374 6,466 12,490
Operating loss before
interest and taxation (1,599) (2,109) (4,693)
Finance costs (692) (244) (710)
Loss before taxation (2,291) (2,353) (5,403)
Taxation (29) 23 (12)
Loss for the period (2,320) (2,330) (5,415)
Other comprehensive income
for the year net of - - (59)
taxation
Total comprehensive loss (2,320) (2,330) (5,474)
Loss per share (cents) –
basic and diluted (0.07) (0.08) (0.16)
Headline loss per share
(cents) – basic and diluted (0.07) (0.08) (0.16)
Number of ordinary shares in issue (000)
- issued net of treasury 3,407,368 3,407,368 3,407,368
shares
- weighted-average 3,407,368 2,938,532 3,407,368
- Diluted weighted-average 3,458,193 2,938,532 3,458,193
Calculation of headline earnings (R’000)
Loss attributable to
ordinary shareholders (2,320) (2,330) (5,474)
Profit on disposal of (19)
property, plant and - -
equipment
Headline loss attributable
to ordinary shareholders (2,320) (2,330) (5,493)
Unaudited Condensed
Consolidated
Statement of Financial Unaudited Unaudited Audited
Position for the period Six months Six months Year ended
ended 31 Aug 2016 31 Aug 2015 29 Feb 2016
R’000 R’000 R’000
ASSETS
Non-current assets
Property, plant and 24,925 24,607 24,764
equipment
Intangibles 13,862 13,005 13,834
Deferred taxation 10,281 9,919 10,310
49,068 47,531 48,908
Current assets
Inventories 5,254 6,198 4,819
Trade and other receivables 6,209 4,842 4,758
Loans receivable - 54 -
Bank balance and cash 89 93 67
11,552 11,187 9,644
Non-current assets
held for sale - - 20
TOTAL ASSETS 60,620 58,718 58,572
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 145,750 145,750 145,750
Reserves 10,870 10,760 10,818
Accumulated loss (118,678) (113,273) (116,358)
Total shareholders’ funds 37,942 43,237 40,210
Non-current liabilities
Interest-bearing borrowings - 66 20
Loans from related parties 10,085 - 7,374
Deferred taxation 5,222 4,737 5,222
15,307 4,803 12,616
Current liabilities
Trade and other payables 4,721 4,986 4,499
Bank overdraft 2,340 3,605 920
Loans from related parties 250 2,020 250
Current portion of 60 67 77
interest-bearing borrowings
7,371 10,678 5,746
TOTAL EQUITY AND 60,620 58,718 58,572
LIABILITIES
Net asset value per share 1.1 1.3 1.2
(cents)
Unaudited Condensed Unaudited Unaudited Audited
Consolidated
Statement of Cash Flows For Six months Six months Year ended
the period ended 31 Aug 2016 31 Aug 2015 29 Feb 2016
R’000 R’000 R’000
Cash utilised by operations (2,536) (1,267) (2,146)
Finance costs (692) (244) (710)
Cash flows from operating
activities (3,228) (1,511) (2,856)
Cash flows from investing
activities (864) (5,137) (6,667)
Cash flows from financing
activities 2,690 2,020 7,554
Net (decrease)increase in
cash and cash equivalents (1,402) (4,628) (1,969)
Cash and cash equivalents
at beginning of period (853) 1,116 1,116
Cash and cash equivalents
at end of period (2,255) (3,512) (853)
Unaudited Condensed
Consolidated
Statement of Changes
in Equity for the Trea- Share-
Stated sury based Reval- Accu- Equity
period ended capital shares payment uation mulated
31 August 2016 reserve reserve loss
R’000 R’000 R’000 R’000 R’000 R’000
Balance at 28
February 2015 -
audited 152,491 (6,741) 149 10,580 (110,943) 45,536
Total comprehensive
loss for the period (2,330) (2,330)
Share-based payment 31 31
reserve
Balance at 31 August
2015 – unaudited 152,491 (6,741) 180 10,580 (113,273) 43,237
Total comprehensive
loss for the period (59) (3,085) (3,144)
Share-based payment
reserve 117 117
Balance at 29
February 2016 –
audited 152,491 (6,741) 297 10,521 (116,358) 40,210
Total comprehensive
loss for the period (2,320) (2,320)
Share-based payment 52 52
Balance at 31 August
2016 – unaudited 152,491 (6,741) 349 10,521 (118,678) 37,942
Unaudited Condensed Nutritional Pharmaceutical Services Consolidated
Consolidated Group Foods
Segmental Analysis
R’000 R’000 R’000 R’000
Business segments
for the six months ended 31
August 2016 - unaudited
Revenue from external sales 20,940 865 - 21,805
Segment Profit (Loss) 121 102 (2,514) (2,291)
before tax
Taxation (29)
Loss for the period (2,320)
for the six months ended 31
August 2015 - unaudited
Revenue from external sales 17,701 658 - 18,359
Segment Profit (Loss) 181 400 (2,934) (2,353)
before tax
Taxation 23
Loss for the period (2,330)
for the year ended 29
February 2016 - audited
Revenue from external sales 37,070 1,199 - 38,269
Segment Profit (Loss) (728) 722 (5,397) (5,403)
before tax
Taxation (12)
Loss for the year (5,415)
COMMENTARY
Basis of presentation
The unaudited condensed consolidated interim financial results for the
period ended 31 August 2016 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 and the previous annual financial statements, except
for the measurement of land and buildings and certain financial instruments
which are measured at fair value and the adoption, revised or new standards
and interpretations. The aggregate effect of these accounting changes in
respect of the period ended 31 August 2016 is nil.
The unaudited condensed consolidated financial results have been prepared
under the supervision of the Chief Financial Officer, RS Etchells.
Neither these unaudited condensed consolidated interim financial results,
nor any reference to future financial performance included in this results
announcement, has been audited or reviewed or reported on by the Company’s
external auditor, Grant Thornton.
Nature of business
For management purposes the Group is organized into three major operating
divisions, namely Nutritional Foods, Pharmaceuticals and Services. These
divisions are the basis on which the Group reports its primary segment
information.
Nutritional Foods (NF)
NF, which is located in Klerksdorp, operates a dry food manufacturing
facility. The company formulates, manufactures and sells a large range of
fortified basic dry food products for the LSM 3-6 market. In addition it has
a wide basket of products serving the industrial catering sector throughout
Southern Africa.
Impilo Drugs 1966 (ID)
ID markets a range of basic family health care products via a licensing
agreement with Avid Brands (Pty) Ltd (AVID). In terms of the agreement AVID
manufacture, market and distribute the products directly to pharmacies for
their own risk and reward. ID is paid a royalty fee of 10% of the net
invoiced value of all sales. The Company’s range of products includes
registered medicines with the South African Medicines Control Council as
well as certain nutraceutical complimentary medicines.
Impilo Health Solutions (IHS)
IHS markets and distributes a range of “chlorine free” water purification
products under licence from the manufacturer ACN Chemicals UK Limited. These
products include “point of use” water purification drops called OneDrop as
well as BacSan, an industrial application for use by municipalities and
other bulk water suppliers.
OVERVIEW
Nutritional Foods Division
The first six months of the year have seen management focus on building
relationships with key players in the feeding scheme space with specific
emphasis on the National Schools Nutritional Program (NSNP). This process
has been extremely time consuming. Slow but steady progress is being made in
the sector. Management continue to engage with potential service providers
and government departments but are of the opinion that revenue streams and
gross margins from this market sector will remain depressed in the short to
medium term.
During the period March to August 2016 the company has struggled to contain
the cost of raw material input cost, specifically the record high cost of
raw maize and sugar. These two products constitute 80% of the material input
cost of all products manufactured by NF. This has had a serious effect on
gross margins.
Impilo Drugs Division
As reported in the Financial Year End results of the previous period ended
28 February 2015 the Company entered into a long term royalty agreement with
Avid Brands whereby AVID took over complete control of the manufacture,
marketing and sale of its scheduled medicines and range of complementary
medicine. Per the SENS announcement released on 26th September 2016,
shareholders were advised that management had resolved to sell the assets
and intellectual property rights of ID to AVID for R5m. The proceeds from
the sale to be used to reduce debt and provide working capital for the
Nutritional Foods division.
Impilo Health Solutions Division
The Company continues to make inroads within the mainstream retail FMCG
market to distribute a range of chlorine free water purification solutions.
Progress has been slower than anticipated and management do not foresee any
significant increase in revenue streams from the sale of OneDrop/Bacsan
during the balance of the current financial year as it continues to invest
in marketing the products to potential governmental and FMCG customers.
FINANCIAL HIGHLIGHTS
Group Turnover increased by R2,643 (14.5%) to R 20,805 million compared to
R18,162 million in the previous corresponding period. The headline loss for
the period under review remained static at R2,320 million compared to a loss
of R2,330 million in the previous corresponding period, with both the loss
per share and Headline loss per share reducing from a loss of 0,8 cents in
the previous period to 0,7 cents in the current year.
Other than certain related parties/shareholders loans secured via a general
notarial bond, the Group has no long-term debt with all assets on it’s
balance sheet remaining unencumbered with the exception of a covering bond
held by the Group’s bankers over the property as security for certain
overdraft facilities.
Events after the reporting period
Shareholders are referred to the SENS announcement released on the 26th
September 2016 relating to the sale of assets and intellectual property
owned by Impilo Drugs (1966) Proprietary Limited.
Deferred Tax Assets
The Group is made up of three trading companies and the holding company. No
deferred tax asset has been recognised for tax losses available for set-off
against future taxable income where it is not probable that future taxable
income will be available. Two of the companies in the Group earned a taxable
income and it is probable that taxable profit will be available in future in
order to utilise the assessed losses available. A deferred tax asset has
therefore been raised on these two companies’ assessed losses. These
companies (separate taxable entities) did not suffer a loss in the current
period in the tax jurisdiction to which the deferred tax assets relate. A
deferred tax asset has also been recognised on the assessed loss of the
other trading company to the extent of the deferred tax liability arising
from capital allowances on the property, plant and equipment.
Going concern
Shareholders are advised that the unaudited condensed consolidated interim
results for the six months ended 31 August 2016 have been prepared on the
going concern concept.
Changes to the Group’s board
Mr Ian Murgatroyd was appointed as a director of the Company effective 25
April 2016. Following management’s decision not to proceed with the
acquisition of Kairos Nutrition (Proprietary) Limited, Mr Murgatroyd
resigned as a director of the Company effective 8 August 2016.
Dividends
No dividends were declared for the six months ended 31 August 2016.
On behalf of the board
T.V.Mokgatlha
Chief Executive Officer
Umhlanga Rocks
3rd November 2016
Directors
TV Mokgatlha (Chief Executive Officer)
RS Etchells (Group Financial Director & Chief Operating Officer)
C Kapnias (Independent Non-executive)
AR Pinfold (Non-executive)
GR Wambach (Independent Non-executive Chairman)
Registered office
Unit 20 Boulevard Business Park, 14 Belladonna Road, Cornubia, Durban
Tel: +27 31 536 8066
Designated Advisor
PSG Capital Proprietary Limited
Transfer secretaries
Trifecta Capital Services Proprietary Limited
Trifecta Capital House, 13 Beacon Road, Florida-North, 1709
Date: 03/11/2016 10:55:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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