Wrap Text
Unaudited Condensed Consolidated Interim Results for the Six Months Ended 31 August 2017
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 2017
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 2017 31 Aug 2016 28 Feb 2017
R’000 R’000 R’000
Revenue 22,462 21,805 43,215
Operating loss before
interest and taxation (2,275) (1,599) (14,870)
Finance costs (701) (692) (1,336)
Loss before taxation (2,976) (2,291) (16,206)
Taxation (2,726) (29) (825)
Loss for the period (5,702) (2,320) (17,031)
Other comprehensive income
for the year net of taxation - - -
Total comprehensive loss (5,702) (2,320) (17,031)
Loss per share (cents) –
basic and diluted (0.16) (0.07) (0.49)
Headline loss per share
(cents) – basic and diluted (0.16) (0.07) (0.24)
Number of ordinary shares in issue (000)
- issued net of treasury 3,653,368 3,407,368 3,653,368
shares
- weighted-average 3,653,368 3,407,368 3,505,231
- Diluted weighted-average 3,667,633 3,458,193 3,521,251
Calculation of headline earnings (R’000)
Loss attributable to
ordinary shareholders (5,702) (2,320) (17,031)
Loss on disposal of
intangible assets - - 7,633
Tax effect of adjustments 908
Headline loss attributable
to ordinary shareholders (5,702) (2,320) (8,490)
Unaudited Condensed
Consolidated
Statement of Financial Unaudited Unaudited Audited
Position for the period Six months Six months Year ended
ended 31 Aug 2017 31 Aug 2016 28 Feb 2017
R’000 R’000 R’000
ASSETS
Non-current assets
Property, plant and 24,232 24,925 24,730
equipment
Intangibles 1,675 13,862 1,762
Deferred taxation 6,902 10,281 9,629
32,809 49,068 36,121
Current assets
Inventories 6,559 5,254 6,375
Trade and other receivables 8,659 6,209 7,569
Bank balance and cash 57 89 91
15,275 11,552 14,035
TOTAL ASSETS 48,084 60,620 50,156
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 150,086 145,750 150,086
Reserves 10,949 10,870 10,918
Accumulated loss (139,091) (118,678) (133,389)
Total shareholders’ funds 21,944 37,942 27,615
Non-current liabilities
Loans from related parties 8,484 10,085 7,813
Secured loan 2,313 2,192
Deferred taxation 5,366 5,222 5,366
16,163 15,307 15,371
Current liabilities
Trade and other payables 7,293 4,721 5,442
Bank overdraft 2,684 2,340 1,518
Loans from related parties 250 190
Current portion of interest- 60 20
bearing borrowings
9,977 7,371 7,170
TOTAL EQUITY AND LIABILITIES 48,084 60,620 50,156
Net asset value per share 0.6 1.1 0.8
(cents)
Unaudited Condensed Unaudited Unaudited Audited
Consolidated
Statement of Cash Flows For Six months Six months Year ended
the period ended 31 Aug 2017 31 Aug 2016 28 Feb 2017
R’000 R’000 R’000
Cash utilised by operations (872) (2,536) (9,130)
Finance costs (701) (692) (1,336)
Cash flows from operating
activities (1,573) (3,228) (10,466)
Cash flows from investing
activities (89) (864) 3,062
Cash flows from financing
activities 461 2,690 6,830
Net (decrease)increase in
cash and cash equivalents (1,201) (1,402) (574)
Cash and cash equivalents at
beginning of period (1,427) (853) (853)
Cash and cash equivalents at
end of period (2,628) (2,255) (1,427)
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 2017 reserve reserve loss
R’000 R’000 R’000 R’000 R’000 R’000
Balance at 28
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
reserve
Balance at 31 August
2016 – unaudited 152,491 (6,741) 349 10,521 (118,678) 37,942
Total comprehensive
loss for the period (14,711) (14,711)
Share-based payment
reserve 48 48
Issue of shares 4,336 4,336
Balance at 28
February 2017 –
audited 156,827 (6,741) 397 10,521 (133,389) 27,615
Total comprehensive
loss for the period (5,702) (5,702)
Share-based payment 31 31
Balance at 31 August
2017 – unaudited 156,827 (6,741) 428 10,521 (139,091) 21,944
Unaudited Condensed Foods Healthcare Services Consolidated
Consolidated Group Solutions
Segmental Analysis
R’000 R’000 R’000 R’000
Business segments
for the six months ended 31
August 2017 - unaudited
Revenue from external sales 22,043 419 - 22,462
Segment Profit (Loss) (1,140) (213) (1,623) (2,976)
before tax
Taxation (2,726)
Loss for the period (5,702)
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 year ended 29
February 2017 - audited
Revenue from external sales 42,162 1,053 - 43,215
Segment Profit (Loss) (2,363) 4,362 (18,205) (16,206)
before tax
Taxation (825)
Loss for the year (17,031)
COMMENTARY
Basis of presentation
The unaudited, unreviewed condensed interim financial results for the period
ended 31 August 2017 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
Reporting Pronouncements as issued by the Financial Reporting Accountants
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, except for the measurement of land and
buildings and certain financial instruments which are measured at fair value
and are consistent, in all material respects, with the accounting policies
and methods applied in the previous annual financial statements.
The unaudited, unreviewed condensed interim financial results have been
prepared under the supervision of the Group Financial Director, Mr RS
Etchells.
Neither these unaudited, unreviewed condensed 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 Foods, Healthcare Solutions and Services. These divisions
are the basis on which the Group reports its primary segment information.
Shareholders are referred to the SENS announcements released on the 30
August 2016 and 7 November 2016, wherein Shareholders were advised of the
Board’s decision to diversify the Company’s exposure to include investments
outside the food manufacturing sector to that of industrial, manufacturing
and renewable energy. During the period under review little if any progress
has been made in this regard. Management continue to engage with interested
parties and will update shareholders in due course.
Foods (NF)
NF operates a dry food manufacturing factory in Klerksdorp, North West
Province. The company formulates, manufactures and sells a large range of
staple dry food products. The company’s main customers being the Department
of Basic Education, via the National Schools Nutrition Program (NSNP),
industrial catering outlets as well as independent wholesalers for their LSM
3-6 customer base.
Healthcare Solutions (IHS)
IHS markets and distributes a range of “chlorine free” water purification
products under license 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
Foods Division
During the period under review NF continued to target growth via the
introduction of new products to its basket of staple food products. However
despite management’s best efforts the constrained cash flow position of the
company continues to hamper progress. This fact together with pressure on
gross margins resulted in the foods division making an operating loss for
the period. It should be noted that without a significant cash injection
allowing management at the factory to purchase raw materials, used in the
manufacture of it’s products, at cost effective prices, pressure on gross
margins will continue.
The new BBBEE scorecard system introduced in 2016 has resulted in NF’s BBBEE
rating dropping from a level 2 supplier to level 6. This has proved to be a
major obstacle with regards to the company’s customers in the mining sector
as well as government departments.
Healthcare Solutions Division
Both OneDrop and BacSan are imported in bulk format from Europe, which
necessitates a protracted cash flow cycle from placement of orders with the
supplier, shipping to Durban, bottling and the final sale of the finished
product to customers, resulting in further pressure on the cash resources of
the Group. Despite this the company has secured listings with 3 major
retailers for it’s “point of use” applications but still struggles to find
traction in the larger industrial market sector, where chlorine based
products dominate large scale water purification. Management are of the
opinion that until such time as government and municipalities undergo a
mindset change with a bias towards the utilization of more environmentally
friendly products in mainstream water purification, volumes will continue to
remain small.
FINANCIAL HIGHLIGHTS
Group Turnover increased to R22,462 million compared to R21,805 million in
the previous corresponding period. The Headline loss increased by 145.8% for
the period under review, to R5,702 million after the write-off of deferred
tax amounting to R2,786 million as a result of the sale of Impilo Drugs in
the previous financial year, compared to a loss of R2,320 million in the
previous corresponding period. Both the loss per share and headline loss per
share increased by 128.6% for the period under review, to 0,16 cents
compared a loss of 0,7 cents in the previous corresponding period.
It should be noted that the deferred tax write-off has had the effect of
increasing the headline loss by 95.6% during the period under review and is
a once off, non-recurring item.
The Board considers it pertinent to bring to the attention of shareholders
that the Company has continued to generate operating losses in the current
period which has had a further negative impact on the cash resources
available to the Company.
Accordingly, shareholders are advised that the Board is busy with
discussions relating to all options available to re-capitalize the Company
and will revert to shareholders in due course, once progress has been made.
DEFERRED TAX
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. One of the companies in the Group has changed from
a company that earned a taxable income and it is probable that taxable
profit will be available in future in order to utilise the assessed losses
available, to a company where the probability of future taxable profit is no
longer there. As a result there is a reversal of R2,786 million of the
deferred tax assets in the current period.
GOING CONCERN
As stated in the commentary above the Company has continued to make
operating losses. These losses have placed further negative stress on the
Company’s cash flow situation and as such raised certain issues regarding
the going concern assumption. Management has been forced to review the
current status of the Company’s disposable cash resources as well as its
commitments to repay its overdraft facilities and certain shareholders
loans. The Company’s bankers continue to support the operations of its major
subsidiary, being Nutritional Foods, but are reducing NUT’s – the holding
company’s - facilities on a monthly basis. Management has been able to
accommodate the reduction in NUT’s overdraft facilities via own funding but
the need to repay the shareholders and unsecured loans of R10,797m at the
end of March 2018 is of concern. Management is of the opinion that the
substantial doubt surrounding its ability to fund its monthly operations as
well as the re-negotiation of the shareholders loans due on the 31st of March
2018 place the going concern assumption in doubt.
Accordingly shareholders are advised that management are perusing all
avenues including the sale of its major asset, Nutritional Foods, to raise
capital in order to meeting the company’s financial obligations as and when
they fall due. The outcome of these discussions, whilst ongoing, are unknown
at this point in time.
Shareholders are advised that the unaudited condensed consolidated interim
results for the six months ended 31 August 2017 have been prepared on the
going concern concept and do not reflect any effects of the substantial
uncertainties over the going concern assumption. This basis presumes that
funds will be available to finance future operations and that the
realization of assets and settlement of liabilities, contingent obligations
and commitments will occur in the ordinary course of business.
Changes to the Group’s board
There were no changes to the board during the period.
Dividends
No dividends were declared for the six months ended 31 August 2017.
On behalf of the board
T.V.Mokgatlha
Chief Executive Officer
Umhlanga Rocks
20 October 2017
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
Terbium Financial Services Proprietary Limited
Beacon House, 13 Beacon Road, Florida-North, 1709
Company secretary
JA Etchells CA(SA)
Date: 20/10/2017 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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