Wrap Text
Provisional Reviewed Consolidated Financial Results for the Year Ended 28 February 2018
NUTRITIONAL HOLDINGS LIMITED
Registration number 2004/002282/06
(Incorporated in the Republic of South Africa)
("the Group" or "the Company")
Share code: NUT ISIN: ZAE000156485
PROVISIONAL REVIEWED CONSOLIDATED FINANCIAL RESULTS FOR THE
YEAR ENDED 28 FEBRUARY 2018
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND COMPREHENSIVE
INCOME
Reviewed Audited
year ended year ended
Figures in R thousands 28 February 28 February
2018 2017
Revenue 42 496 43 215
Gross profit 12 034 16 389
Operating expenses (19 297) (23 665)
Operating loss (7 263) (7 276)
Other income 51 39
Loss on disposal of subsidiary (2 484) -
Loss on disposal of intangible
assets - (7 633)
Operating loss before interest and
taxation (9 696) (14 870)
Net interest expense (1 535) (1 336)
Loss before taxation (11 231) (16 206)
Taxation - deferred (2 551) (825)
Loss for the year (13 782) (17 031)
Other comprehensive income for the - -
year net of taxation
Total comprehensive loss (13 782) (17 031)
Loss per share (cents) – basic and
diluted (0.38) (0.49)
Headline loss per share (cents) -
basic and diluted (0.31) (0.24)
Number of ordinary shares in issue
(000)
- issued net of treasury shares 3 653 368 3 653 368
- weighted-average 3 653 368 3 505 231
- Diluted weighted-average 3 661 146 3 521 251
Calculation of headline loss
(R’000)
Loss attributable to ordinary
shareholders (13 782) (17 031)
Loss on disposal of intangible
assets - 7 633
Loss on disposal of subsidiary 2 484
Tax effect of adjustments 908
Headline loss attributable to
ordinary shareholders (11 298) (8 490)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
year ended year ended
Figures in R thousands 28 February 28 February
2018 2017
ASSETS
Non-current assets
Property, plant and equipment 23 730 24 730
Intangible assets 1 581 1 762
Deferred taxation 5 568 9 629
Total non-current assets 30 879 36 121
Current assets
Inventories 3 828 6 375
Trade and other receivables 4 390 7 569
Cash and cash equivalents 21 91
Total current assets 8 239 14 035
TOTAL ASSETS 39 118 50 156
EQUITY AND LIABILITIES
Stated capital 150 086 150 086
Reserves 10 939 10 918
Accumulated loss (147 171) (133 389)
Total shareholders’ funds 13 854 27 615
Non-current liabilities
Loans from related party 8 910 7 813
Secured loan - 2 192
Deferred taxation 5 568 5 366
Total non-current liabilities 14 478 15 371
Current liabilities
Trade and other payables 3 968 5 442
Loans from related parties 2 551 190
Secured loan 2 432 -
Bank overdraft 1 835 1 518
Instalment sale creditors - 20
Total current liabilities 10 786 7 170
Total liabilities 25 264 22 541
TOTAL EQUITY AND LIABILITIES 39 118 50 156
Net asset value per share (cents) 0.4 0.8
CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
year ended year ended
28 February 28 February
2018 2017
Figures in R thousands
Cash used in operations (4 370) (9 130)
Net interest expense (1 535) (1 336)
Cash flows from operating
activities (5 905) (10 466)
Cash flows from investing
activities
Purchase of property, plant and
equipment (608) (1 396)
Purchase of intangible assets (323) (242)
Proceeds on sale of intangible
assets - 4 700
Disposal of subsidiary 2 771 -
Cash flows from investing
activities 1 840 3 062
Cash flows from financing
activities
Proceeds on share issue - 4 336
Advances on related party loans 3 458 379
Advances on secured loans 240 2 192
Repayment of instalment sale (20) (77)
creditors
Cash flows from financing
activities 3 678 6 830
Net decrease in cash and cash
equivalents (387) (574)
Cash and cash equivalents at
beginning of year (1 427) (853)
Cash and cash equivalents at end
of year (1 814) (1 427)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED
28 FEBRUARY 2018
Total
Stated Treasury share
Figures in R thousands capital shares capital
Balance at 29 February 2016
- audited 152 491 (6 741) 145 750
Issue of shares 4 336 - 4 336
Share-based payment reserve - - -
Total comprehensive loss for
the year - - -
Balance at 28 February 2017
– audited 156 827 (6 741) 150 086
Issue of shares - - -
Share-based payment reserve - - -
Total comprehensive loss for
the year - - -
Balance at 28 February 2018 156 827 (6 741) 150 086
- reviewed
Share-based Revaluation Accumulated
payment
reserve reserve loss
Figures in R thousands
Balance at 29 February
2016 - audited 297 10 521 (116 358)
Issue of shares - - -
Share-based payment
reserve 100 - -
Total comprehensive loss
for the year - - (17 031)
Balance at 28 February
2017 – audited 397 10 521 (133 389)
Issue of shares - - -
Share-based payment
reserve 21 - -
Total comprehensive loss
for the year - - (13 782)
Balance at 28 February
2018 - reviewed 418 10 521 (147 171)
Total
equity
Figures in R thousands
Balance at 29 February
2016 - audited 40 210
Issue of shares 4 336
Share-based payment
reserve 100
Total comprehensive loss
for the year (17 031)
Balance at 28 February
2017 – audited 27 615
Issue of shares -
Share-based payment 21
reserve
Total comprehensive loss
for the year (13 782)
Balance at 28 February
2018 - reviewed 13 854
GROUP SEGMENTAL ANALYSIS
Business Nutritional Health
Solutions
Segments Foods Services Consolidated
R'000
For the year
ended 28
February 2018 -
reviewed
Revenue from
external sales 41 721 775 - 42 496
Revenue from
internal sales - - 513
Segment
(loss)/profit (6 709) (838) (3 728) (11 231)
before tax
Taxation (2 551)
Loss for the
year (13 782)
Total assets 38 641 2 475 39 118
For the year
ended 28
February 2017 -
audited
Revenue from
external sales 42 162 1 053 - 43 215
Revenue from
internal sales - - 1 250 1 250
Segment (loss)
profit before (2 363) 4 362 (18 205) (16 206)
tax
Taxation (825)
Loss for the
year (17 031)
Total assets 41 806 7 921 429 50 156
For management purposes the Group was organised into three
major operating divisions, namely Foods, Healthcare solutions
and Services. These divisions are the basis on which the
Company reports its primary segment information. Impilo Health
Solutions Pty Ltd that made up the Healthcare segment was sold
on 23 February 2018. Going forward the Group will only have
two segments namely Foods and Services.
The Foods division involves the manufacture of staple dry
foods for the lower LSM and mass feeding markets. The
Healthcare Solutions division involved the supply of a range
of chlorine free water purification products. The Services
division involves the providing of administration and
management services.
These operating segments are monitored by the Group’s Board
and strategic decisions are made on the basis of adjusted
segment operating results.
BASIS OF PRESENTATION
The financial results for the year ended 28 February 2018 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 Standards Council, the
Listing 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 corresponding
period. The provisional reviewed financial results have been
prepared under the supervision of RS Etchells, in his capacity
as Chief Financial Officer.
NATURE OF BUSINESS
The Group’s primary business focus during the year was to
manufacture and market staple dry food products to the lower
LSM market sector as well as mass feeding schemes. The water
purification business was sold in February 2018.
OVERVIEW
During the course of the year under review, the Board of
Directors resolved to cement its position as a bulk
manufacturer of staple dry foods supplying the lower LSM and
mass feeding sectors. To this end the Directors elected to
dispose of the Health Solutions division to raise working
capital for the Group. The proposed acquisition of Velani
Strategic Solutions (“VSS”) was cancelled during the year
under review as it became apparent that the profit warranty
issued by VSS would not be attained.
Nutritional Foods continues to underperform due to lower
volumes through the factory as well as pressure on gross
margins. Increasing the tonnage put through the factory
remained a major challenge during the year under review.
Management are acutely aware of this issue and are constantly
looking for potential off-take contracts. It should be noted
that in December 2017 management successfully negotiated a 3-
year manufacturing contract with a supplier to the National
Department of Health for the supply of a fortified porridge.
This should result in a significant increase in throughput.
The Board has been in discussions with a potential new
investor who will be able to secure off-take agreements for
the factory as well as inject the necessary working capital to
be able to fund such increased tonnage through the Klerksdorp
factory. These discussions have been finalized, more details
of which are set out below.
Cash flows remain a major challenge requiring tight control.
To this end the Board is considering all options on the table
including a possible Rights Issue.
FINANCIAL PERFORMANCE
Group Turnover of R 42,496 million, 1.7% down on the R 43,215
million of the previous corresponding period. The headline
loss increased by 28%, largely as a result of the reversal of
the deferred tax asset raised in previous years on the tax
loss for Functional Nutraceuticals Pty Ltd amounting to R2.795
million.
GOING CONCERN
The Group incurred an operating loss for the year of R7.263
million (2017 R7.276 million)
The Group's total assets exceed its total liabilities by
R13.854 million (2017 R27.615) despite having an accumulated
loss of R147.171 million (2017 R133.389 million).
The Group continued to incur losses as a result of the current
depressed market conditions within the lower LSM market
segment. This fact coupled with the lack of adequate cash
resources continues to hamper the Group’s turnaround plan.
The directors have taken the following steps in assessing the
group's ability to continue as a going concern:
- The directors took the decision to sell Impilo Health
Solutions during the current financial year. This was done in
order to raise much needed capital to sustain the on-going
cash flow requirements of the Group, whilst they continued to
engage with the Group’s lenders and potential investors.
- The directors have been in discussions with a third party to
underwrite a Claw Back-Right Issue to raise R10 million. These
discussions have been finalised and terms have been agreed
with the third party to fully underwrite the Claw-Back Right
Issue.
The funds raised from the Claw-Back Right Issue will be used
to settle a portion of debt, circa R2.5m, with the balance
being used to fund the working capital requirements of the
Group.
- The directors have engaged with the providers of certain
loans to the Group. An agreement has been reached with one of
lenders to extend their loan of circa R8.9 million for a
period of 36 months. The remaining loan of circa R2.4 million
will be repaid utilising a new medium term loan negotiated
with a third party lender. This loan is disclosed as a current
liability but is to be replaced as a medium term loan
subsequent to the year end.
- Management has successfully negotiated a manufacturing
contract with a supplier to the National Department of Health
which should result in a significant increase in throughput at
its Klerksdorp factory. It is envisaged that this increase in
tonnage pushed through the factory and result in the Group
returning to profitability.
Given all of the above, the directors evaluate that the Group
has sufficient cash resources to meet its obligations as they
fall due, as such the financial statements have been prepared
on the 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 and
commitments will occur in the ordinary course of business.
DIVIDEND
No dividend has been declared for the year.
REVIEW CONCLUSION
Grant Thornton Durban has reviewed the annual financial
statements for the year ended 28 February 2018 and their
unmodified report is available for inspection at the Company’s
registered office.
The auditor’s reviewed 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.
CHANGES TO THE GROUP’S BOARD
There were no changes to the Board during the year.
On behalf of the Board
TV Mokgatlha Umhlanga Rocks
Chief Executive Officer 30 May 2018
Registered Office:
Unit 20, Boulevard Business Park, 14 Belladonna Road,
Cornubia, Kwa-Zulu Natal
Tel: +27 31 536 8066
Auditors
Grant Thornton (Durban)
Designated advisors
PSG Capital
Transfer secretaries:
Terbium Financial Services Proprietary Limited, Beacon House,
13 Beacon Road, Florida-North, 1709
Company secretary
JA Etchells CA(SA)
Directors:
RS Etchells (Chief Financial Officer), C Kapnias (Non-
Executive), TV Mokgatlha (Chief Executive Officer), AR Pinfold
(Non-Executive), GR Wambach (Non-Executive Chairman)
Date: 30/05/2018 11:59:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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