JSE-listed Nutritional Holdings says it had made “great strides” towards achieving its medium-term turnaround strategy during the year ended February 28.

However, owing to procedural and regulatory constraints, the time taken to finalise the company’s black economic-empowerment (BEE) transaction resulted in “very little, if any, positive flow-through” in the current reporting period, Nutritional Holdings advised on Friday.

The group reported turnover of R37.753-million for the year under review, a 4% increase on the R36.284-million of the previous financial year.

Nutritional Holdings also noted a headline loss for the year of R3.238-million, decreasing from a loss of R6.029-million. The group's gearing remained 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 looks forward to reporting back on such in due course,” the company said in a statement to shareholders.

Further achievements by Nutritional Holdings during the year under review include Nutritional Foods, its food division, attaining a Level 2 BEE rating, the conclusion of a BEE deal with Philisani, the launch of the first fast-moving consumer goods product lines incorporating BC30, a "one-of-a-kind patented strain of powerful probiotic” and the successful testing of OneDrop and BacSan with the Council for Scientific and Industrial Research. Both products would be introduced into the Southern African market during 2015.

FOOD DIVISION

To keep up to date with competitive and technological advancements Nutritional Foods had invested R8.6-million in additional equipment to expand its Klerksdorp facility, in the North West.

The dry foods factory did not currently have enough extrusion capacity to enable it to produce sufficient volumes of extruded maize and textured vegetable protein to make it competitive from a pricing point of view and to target high-volume food programmes run by the government and South Africa’s neighbouring southern States.

Current facilities with regard to blending and packaging were, however, sufficient, but owing to the high cost of key-source raw-material inputs, which were currently being bought-out, Nutritional Foods continued to be uncompetitive in the marketplace.

The current factory buildings were sufficient to house the new equipment needed; however, additional labour would need to be employed.

To raise the funds need for the expansion, a specific issue of shares to a BEE consortium, in terms of the general authority granted to the board at the previous annual general meeting, in August 2014, was undertaken. Nutritional Holdings had also applied to the Department of Trade and Industry in terms of its Manufacturing Investment Programme for a grant of R3.5-million.

PHARMACEUTICALS 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- (MCC-) registered medicines called Avid Brands (AVID).

In terms of the agreement, AVID would take full responsibility for the manufacture, marketing and distribution of certain products in Nutritional Holdings’ pharmaceuticals division, Impilo Drug'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 food division,” Nutritional Holdings explained.

AVID would 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. Impilo would retain full ownership of all intellectual property and the dossiers.

Nutritional Holdings advised shareholders that the audited results for the year ended February 28 had been prepared on a going-concern basis, presuming that funds would be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments would occur in the ordinary course of business.

The company did not declare a dividend for the year.

Nutritional Holdings manufactures, markets and sells fortified dry food products and supplements, manufactured from maize, sorghum and soya, as well as sells scheduled pharmaceuticals registered with the MCC and other complementary and/or natural medicines.