Amid a flurry of what appear to be positive reports from Imuniti and the trebling of the share price, it's easy to miss the bigger picture: the AltX-listed firm is still stuck in the doldrums and prospects are a long way from looking up. Last month's spike in trading volumes (before the trading update, results and an announcement of a lucrative deal with Africa Forum) prompted the JSE's surveillance team to review Imuniti's share trading activity "as a matter of routine".
This doesn't seem to worry CE Paul Fouché, whose list of things to do includes explaining to investors why Imuniti cancelled a contract worth almost R200 000 with Geva Holdings, at a time when the company is low on cash.
This is not the first time that Imuniti has cancelled an order. Earlier this year it cited a potential bad debt. But with the Geva order, Imuniti would have boosted its shabby cash flow statements.
Geva boss George Georgiou, who co-founded the firm (with interests in nutrition and HIV/Aids businesses) in 1999, is upset that Imuniti has, without explanation, cancelled the production and distribution orders of its wellness products. It's worth noting that Geva's range is in competition with the group's own flagship product, called Imuniti Pack (billed as a nutrient-rich food pack that provides a balanced diet for the poor), which has so far failed to meet forecasts.
For the latest interim period, pretax loss is R6,7m, with operating activities sucking R5m from the bottom line.
The latest results suggest Imuniti won't meet its forecasts of R22,1m in pretax profits next year. Fouché's admission that a paltry 5 000 packs were sold this year is disconcerting. It also serves as a wake-up call to the empowerment shareholders.
Since it was the task of the black economic empowerment block - including the ANC Women's League, Cosatu and the Tambo family - to lift sales by 100 000/month, their failure should cost them their 34% equity if the relevant clauses in the agreement are invoked. But, given the obsession with political connections in SA, their stake (worth about R43m by this week's market prices) is safe.
Despite a dismal performance, Colin Matjila of Kopano, Cosatu's Investment arm, isn't facing the axe as company chairman. Neither are non executive directors Bertha Gxowa, an ANC veteran, and Tembi Tambo.
But now, with Nelson Mandela's Africa Forum (AF) wanting 7m packs worth R1,75bn to be delivered in Africa, Imuniti investors finally have a reason to smile, because the company is set to earn a cool R630m/year. AF is an NGO whose focus is "to serve the cause of Africa". It lists as members African grandees, including Mandela (patron), Sam Nujoma of Namibia and Zambia's Kenneth Kaunda.
Though the AF and Edge2Edge, Imuniti's marketing arm and 5% shareholder, are yet to conclude a detailed agreement, investors liked the news and hence the stock's move from its record low of 6c to breach the 20c mark, before settling at 15c a few days later.
What the AltX-listed health-care player didn't disclose is that AF is yet to secure funding. It must come as a surprise that Fouché is of the view that the forum is keen to let "the product roll" as early as January.
The AF's John Tesha is more forthright. "We're still mobilising the international community. We need to get the money first," he says, implying long delays before the project gets off the ground.
In addition to the probable delay in doing business with the AF, it's the termination of talks with Geva that sticks out. Fouché ascribes the collapse of talks to "business reasons", adding: "We operate in the same space and so this contract could have led to a conflict of interests." That makes sense - but then wasn't that always the case?
And then there's Georgiou's damaging claim that the Imuniti pack is harmful, to the chagrin of Imuniti's top brass. Granted, Georgiou's claims are untested, but it would help if Fouché defended the pack rather than referring to the long-awaited Medical Research Council trials - something the market has been awaiting since early 2007.
Now a clearly peeved Georgiou berates the "unprofessional" Imuniti for negotiating in bad faith and "stringing us along for months, probably because they see us as a threat... maybe they were trying to have Geva closed down. They didn't deliver as discussed; they failed to pitch for meetings time after time. That's no way to do business."
Geva, which boasts endorsements from the UN, the US Food & Drug Administration and others, has ambitious growth plans of its own.
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