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RGT - RGT Smart Market Intelligence Limited - Audited results for the year
ended 28 February 2011 and notice of annual general meeting
RGT SMART MARKET INTELLIGENCE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2008/014367/06)
Share Code: RGT ISIN: ZAE000143715
("RGT SMART" or "the company")
AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2011 AND NOTICE OF ANNUAL
GENERAL MEETING
The audited results of RGT SMART for the year ended 28 February 2011, as
compared to the year ended 28 February 2010, are presented below:
Financial Performance Highlights
Highlights for the period March 2010 to February 2011, RGTS`s first year in
the listed environment are as follows:
Feb 2011 Feb 2010
Revenue 27 703 937 25 583 662 8.3%
Other Income 117 953 3 404 3365.1%
Total costs 23 066 083 21 928 440 5.2%
Profit Before Tax 4 755 807 3 658 626 30.0%
Profit after Tax 3 306 466 941 530 251.2%
Headline Earnings 3 275 476 2 455 733 33.4%
Headline Earnings per 0.8287 0.6950 19.2%
Share (HEPS)
Overview:
- Revenue is up by 8.3%
- Total costs are up by 5.2%
- Headline earnings up by 33.4% and HEPS up by 19.2%
- Proceeds from listing were mainly used to repay borrowings and settle
listing costs. The group reflected a positive cash flow of R1.47m in the
period under review.
Condensed consolidated statement of Financial Position
Figures in Rand Audited Audited
28 February 28 February
2011 2010
R`000 R`000
Assets
NonCurrent Assets
Property, plant and equipment 748 400
Goodwill 17 449 17 449
Intangible assets 5 586 4 521
Deferred tax 238 283
Current Assets
Current tax receivable 1 -
Trade and other receivables 2 931 2 161
Cash and cash equivalents 1 420 328
Total Assets 28 373 25 142
Equity and Liabilities
Equity
Share capital 4 024 1 789
Retained earnings 14 080 10 773
Total Equity 18 104 12 562
Liabilities
Non-Current Liabilities
Loans from shareholders 1 365 -
Other financial liabilities - 3 363
Finance lease obligation - 41
Deferred tax 1 421 960
Current Liabilities
Loans from shareholders 978 569
Other financial liabilities 2 470 3 656
Current tax payable 1 680
Finance lease obligation - 49
Operating lease liability 31 -
Trade and other payables 2 154 1 750
Revenue received in advance 1 336 590
Provisions 513 541
Bank overdraft - 381
Total Liabilities 10 269 12 580
Total Equity and Liabilities 28 373 25 142
Figures in Rand Audited Audited
28 February 28 February
2011 2010
Asset value per share (cents per 7.09 6.60
share)
Tangible asset value per share 1.33 0.83
(cents per share)
Number of shares in issue at year 400 018 380 800
end (`000)
Condensed consolidated statement of comprehensive income
Figures in Rand Audited Audited
28 February 28 February
2011 2010
R`000 R`000
Revenue 27 704 25 584
Cost of sales (7 195) (2 466)
Gross profit 20 509 23 118
Other income 61 -
Operating expenses (15 392) (19 066)
Operating profit before interest 5 178 4 052
Investment revenue 57 3
Finance costs (479) (397)
Profit before taxation 4 756 3 658
Taxation (1 450) (2 717)
Profit after taxation 3 306 941
Profit for the year 3 306 941
Attributable to:
Equity holders of the parent 3 306 941
Minority interest - -
Profit for the year 3 306 941
Headline earnings reconciliation 3 306 941
(R`000)
Profit attributable to owners of
the parent
Adjusted for:
(Profit)/Loss on disposal of (31) 9
property, plant and equipment
Impairment of goodwill - 1 433
Impairment of intangibles - 72
Headline earnings for the period 3 275 2 455
Figures in Rand Audited Audited
28 February 28 February
2011 2010
Per share information
Headline earnings per share 0.83
(cents) 0.70
Diluted headline earnings per 0.72 0.60
share (cents)
Basic earnings per share (cents
per share) 0.84 0.27
Diluted earnings per share (cents
per share) 0.72 0.23
Dividend per share (cents) - 1.06
Weighted average number of shares 395 268 353 450
in issue (`000)
Condensed consolidated statement of cash flows
Figures in Rand Audited Audited
28 February 28 February
2011 2010
R R
Cash generated from operating
activities 3 699 209 4 842 257
Cash used in investing activities (2 031 418) (2 514 009)
Cash used in financing activities (194 534) (2 326 648)
Total cash movement for the year 1 473 257 1 600
Cash at the beginning of the year (52 861) (54 461)
Total cash at end of the year 1 420 396 (52 861)
Condensed consolidated statement of changes in equity
Figures in Rand Share capital Share Equity reserve Total share
premium capital
Balance at 01
March 2009 3 500 002 34 000 000 (37 498 902) 1 100
Changes in equity
Profit for the
year - - - -
Share based
payment - - - -
Share issue
expenses - - - -
Issue of shares 307 999 2 331 957 - 2 639 956
Dividends - - - -
Transfer share
issue costs to
share premium - (851 654) - (851 654)
Total changes 307 999 1 480 303 - 1 788 302
Balance at 01
March 2010 3 808 001 35 480 303 (37 498 902) 1 789 402
Figures in Rand Share Share premium Equity Total share
capital reserve capital
Changes in
equity
Profit for the
year - - - -
Issue of shares
in terms of the
initial public
offering 569 999 5 130 001 - 5 700 000
Transfer share
issue costs to
share premium - (438 131) - (438 131)
Treasury shares
held by
subsidiary (377 817) (2 649 363) - (3 027 180)
Total changes 192 182 2 042 507 - 2 234 689
Balance at 28
February 2011 4 000 183 37 522 810 (37 498 902) 4 024 091
Condensed consolidated statement of changes in equity
Figures in Rand Share based Retained Total equity
payment earnings
reserve
Balance at 01 March
2009 517 163 13 719 347 14 237 610
Changes in equity
Profit for the year - 941 530 941 530
Share based payment 2 122 793 - 2 122 793
Share issue expenses - (89 569) (89 569)
Issue of shares (2 639 956) - -
Dividends - (4 029 351) (4 092 351)
Transfer share issue
costs to share premium - 231 390 (620 264)
Total changes (517 163) (2 946 000) (1 674 861)
Balance at 01 March
2010 - 10 773 347 12 562 749
Changes in equity
Profit for the year - 3 306 466 3 306 466
Issue of shares in
terms of the initial
public offering - - 5 700 000
Transfer share issue
costs to share premium - - (438 131)
Treasury shares held
by subsidiary - - (3 027 180)
Total changes - 3 306 466 5 541 155
Balance at 28 February
2011 - 14 079 813 18 103 904
BASIS OF PREPARATION
The board of directors is pleased to present the company`s audited results
for the year ended 28 February 2011, which have been approved by the board on
25 May 2011. The accounting policies adopted for purposes of this report
comply, and have been consistently applied in all material respects with
International Financial Reporting Standards ("IFRS") and the abridged
financial statements have been prepared in accordance with the requirements
of IAS 34 (Interim Financial Reporting).
The same accounting policies and methods of computation have been followed as
compared to the prior year. The results have been audited by Mazars and the
unqualified and unmodified audit report is available for inspection at the
Company`s registered office.
1. INDUSTRY AND BUSINESS OVERVIEW
RGT SMART was incorporated as a public company in the Republic of South
Africa on 11 June 2008 in order to act as the holding company for the RGT
SMART Group ahead of the Group`s listing on 14 April 2010.
RGT SMART is an investment holding company engaged in business and market
intelligence and data analysis in all aspects and related activities and
operates in South Africa. RGT SMART has two wholly-owned subsidiaries namely;
KA SMART, which was incorporated on 26 June 2001, and RGT, which was
incorporated on 30 December 1969.
Profile of Republic Computer Services (Pty) Ltd (RGT)
In the 1970s, the National Association of Automobile Manufacturers of South
Africa (NAAMSA) began producing and disseminating automotive statistics.
Information was supplied by motor manufacturers and the data programmed into
reports which were distributed back to the motor manufacturers and other
interested parties. The system was maintained at a computer bureau, until
RGT offered a superior on-line enquiry version. RGT quality control,
supplement and enhance the data and provide a layer of on-line query and
advanced analytical tools that allow analysts to fully understand the markets
in which they operate.
'
The Essence of RGT
- Sole source of and supplier of new vehicles sales data to the SA motor
industry, in association with NAAMSA, for over 25 years.
- Owns a dynamic and steadily growing database of new vehicle models sold
by manufacturer, dealer and town and licensing district in SA by month
from 1980 onwards.
- NAAMSA approved supplier of new vehicle specification and pricing data.
The majority of services offering access to South African new vehicle
specifications and pricing information obtain this data from RGT.
- Since inception, and in close association with the motor manufacturers
and importers in SA, has developed a suite of analytical systems which
are used on a daily basis by manufacturers and importers, and their
dealer organisations throughout SA.
- Systems have relevance and application opportunities in other industrial
sectors and in international markets.
- Revenue is based primarily on regular monthly annuity income from "blue
chip" customers.
- Has no competitors and is protected by significant barriers to entry for
any prospective competitor.
- Is trusted and respected by the South African motor industry.
Profile of KA SMART
KA SMART is a specialist market research company, providing high value market
intelligence, market research and consulting services. While the company
operates across all industries, management`s experience base and track record
has tended to focus the business on the South African motor industry.
KA SMART specialises in customer satisfaction and service quality systems
(SQS) for a number of clients. After a development and testing phase in
2005, KA SMART launched an SQS program that has been spectacularly
successful. The system involves the integration of SMS, Email, Internet and
Call-Centre technology and has grown to a subscriber base of over 600
subscribers.
Other KA SMART projects involve market evaluations for new and existing
products, across all industries but with a strong focus on the motor
industry, providing advanced analysis and interpretation to assist clients in
making critical strategic decisions.
2. FINANCIAL RESULTS
Income Statement
Group turnover for the year was R 27,703K compared to R 25,584K in 2010, an
increase of 8.3%. Turnover was however down on original forecast by 11.5%.
Total expenditure increased by 5.2% when compared to 2010. Profit after tax
increased to R 3,306K from R 941K in the prior year. It should however be
remembered that the prior year costs included impairments of goodwill and
intangibles of R 2,091K. Headline earnings increased to R 3,275K (HEPS
0.8287) in 2011 compared with R 2,456K (HEPS 0.6950c) in 2010. This is an
increase in HEPS of 19.2%.
Cost of sales increased from being 10% of turnover in 2010 to 26% in 2011.
This increase is largely as a result of a change in the manner in which cost
of sales is calculated in RGT. Prior to 2011 all salaries were included as
part of operating expenses. In 2011 direct employee costs were allocated to
cost of sales. Operating cost decreased from R 19,065K in 2010 to R 15,392K
in 2011, also as a result of the allocation of direct employee costs to cost
of sales.
EPS and HEPS were down on original forecast by 53.5% and 53.96% respectively.
This is within our trading update range issued in 2010. (-35% to -55%).
Cash flow and Liquidity
The group reflected a positive cash flow of R 1,473K compared with R 2K in
2010. Cash from operating activities amounted to R 3,699K, cash utilised in
investing activities and financing activities amounted to R 2,031K and R195K
respectively. Cash raised from the IPO was mainly utilised to settle debts.
Cash and cash equivalents totalled R 1,421K at year end. At year end the
group`s current liabilities were higher than its current assets (Current
ratio of 0.58). This situation has however improved significantly as a result
of the cash received from the disposal of the treasury shares and the issue
of the unissued share capital in March 2011.
Balance Sheet
Apart from the increase in retained earnings as a result of the R 3,306
profit after taxation, the most significant change to the balance sheet
resulted from the IPO and the acquisition of the treasury shares.
Share capital was increased by the shares issued in terms of the IPO and
reduced by the acquisition of the treasury shares. The proceeds from the IPO
were used to repay certain debts. A liability was raised as result of the
acquisition of the treasury shares. This resulted in a net decrease in total
liabilities.
3. SEGMENTAL REPORTING
The Group has adopted IFRS 8 Operating Segments as its segmental reporting
standard which requires an entity to report financial and descriptive
information about its reportable segments, which are operating segments or
the aggregation of operating segments that meet specified criteria.
Operating segments are components of an entity in respect of which separate
financial information is available is evaluated regularly by management. For
management purposes, the Group is organised into the following segments:
For the year ended 28 February 2011 Market research Statistics
External revenue 12 553 441 15 123 849
Internal revenue - 818 000
Total revenue 12 553 441 15 941 849
Cost of sales (3 836 394) (4 176 288)
Personnel costs (3 937 607) (4 432 634)
Lease rentals (538 369) (844 243)
Other costs (1 645 644) (2 880 579)
EBITDA 2 595 427 3 608 105
Depreciation and amortization (364 448) (280 488)
Finance income 47 964
Finance costs (54 357) (197 222)
Profit before tax 2 176 669 3 131 359
Segment assets 4 411 998 25 587 467
Total for All other Elimination of Total RGT SMART
reportable segments intersegment
segments transactions
External
revenue 27 677 290 26 647 - 27 703 937
Internal
revenue 818 000 3 058 831 (3 876 831) -
Total
revenue 28 495 290 3 085 478 (3 876 831) 27 703 937
Cost of
sales (8 012 682) - 818 000 (7 194 682)
Personnel
costs (8 370 241) (1 595 615) - (9 965 856)
Lease
rentals (1 382 612) - - (1 382 612)
Other costs (4 526 223) (1 854 803) 3 058 831 (3 322 195)
EBITDA 6 203 532 (364 940) - 5 838 592
Depreciatio
n and
amortizatio (644 936) (15 527) - (660 463)
n
Finance
income 1 011 237 146 (181 057) 57 100
Finance
costs (251 579) (408 900) 181 057 (479 422)
Profit/
(loss)
before tax 5 308 028 (552 221) - 4 755 807
Segment
assets 29 999 465 (1 626 090) - 28 373 375
Geographical information has not been presented as the company operates in
South Africa only.
Revenue from external customers for each product and service, or each group
of similar products and services has not been presented, as the information
is not available and the cost to develop it would be excessive. The Group
does not earn revenue in excess of 10% from one single customer, and as such
does not place reliance on a single customer or group of customer for its
continued existence.
4. ACQUISITIONS AND DISPOSALS
There were no acquisitions or disposals during the year under review.
5. DIRECTOR CHANGES
During the year under review, the following director changes took place:
Director Date appointed Date resigned
CJ Moodliar 05 May 2010
TB Hayter 03 September 2010
J Magliolo 12 June 2008 31 December 2010
Subsequent to the year end, the following director changes occurred:
Director Date appointed Date resigned
SG Pretorius 01 March 2011
The board of directors is now constituted as follows:
Director Date appointed Designation
AA da Costa* 12 June 2008 Non-executive Chairman
PB de Vantier 12 June 2008 Chief Executive
Officer
NS Bruton 12 June 2008 Director - Corporate
Strategy
CW Reed 12 June 2008 Financial Director
CJ Moodliar* 05 May 2010 Non-executive director
TB Hayter* 03 September 2011 Non-executive director
SG Pretorius* 01 March 2011 Non-executive director
* Independent
6. SHARE CAPITAL
As at 28 February 2011, there were 437 800 000 issued ordinary shares and 62
200 000 unissued ordinary shares.
RGT SMART`s share capital comprises of 500 000 000 authorised ordinary shares
and 500 000 000 issued ordinary shares as at the date of this announcement as
the 62 200 000 unissued ordinary shares were issued to Halls in terms of the
agreement mentioned under point 12 below.
The unissued shares are under the control of the directors until the annual
general meeting. Shareholders will be asked to approve the directors`
authority in respect of the unissued shares at the forthcoming annual general
meeting.
7. REPURCHASE AND ISSUES OF SHARES
During the year under review, the Company repurchased 37 781 700 shares from
a related party as was approved by shareholders in a general meeting on 01
February 2011 taking the total issued capital to 437 800 000.
Subsequent to year end, the Company issued 62 200 000 unissued ordinary
shares to Halls in terms of a subscription agreement. The issued share
capital at the date of this announcement is 500 000 000.
8. DIVIDEND
The Board intends to introduce a formal dividend payout policy of 33% of the
profit after tax after two years, unless the Board is of the opinion that a
lower dividend is to be declared because of the necessity to apply the
Group`s cash resources to planned acquisitions or that it is in the interest
of the Group to build up cash reserves for foreseeable unfavourable market or
economic conditions.
The Company has not determined any fixed dates on which dividends or
entitlement to dividends arises. There is no arrangement in which future
dividends are waived or agreed to be waived.
9. LITIGATION
There is no litigation pending against the company or its subsidiaries, which
is expected to have a material impact on the results of the company.
10. CONTINGENT LIABILITIES
At the balance sheet date the Group does not have any contingent liabilities
(2010: RNil).
11. ANNUAL GENERAL MEETING
Shareholders are advised that the Annual General Meeting of the Company will
be held on Tuesday, 23 August 2011 at IQuad House, 56 Mangold Street, Newton
Park, Port Elizabeth at 09h00.
12. SUBSEQUENT EVENTS
On 14 March 2011, shareholders were advised that a subscription agreement has
been concluded with H.L. Hall and Sons Investments (Proprietary) Limited
("Halls"), on 01 March 2011, whereby Halls (through one of its subsidiaries)
acquired a total of 215 512 128 shares in RGT SMART, through the issue of 62
200 000 unissued ordinary shares at 10 cents per share in RGT SMART as well
as a purchase of 37 781 700 treasury shares at 10 cents per share, and the
purchase of 115 530 428 shares from designated existing shareholders and the
Kruger Primary Trust.
Other than the above changes, there were no further subsequent events.
13. CHANGE IN CONTROL AND MANADTORY OFFER TO MINORITY SHAREHOLDERS
As a result of the above mentioned subscription agreement, Halls, a wholly-
owned subsidiary of H.L. Hall and Sons Holdings Limited, a fourth generation
family-owned business based in Mpumalanga, now holds 43% in RGT SMART which
shareholding resulted in a change in control of RGT SMART.
This change in control constitutes an "affected transaction" for RGT SMART in
terms of the Takeover Regulation Panel and Halls is required to make a
mandatory offer to all RGT SMART shareholders which offer document to
shareholders has been distributed on 03 June 2011.
The Halls Holdings group of companies carries on business mainly in the
agriculture, property development and private investment sectors. Halls owns
a portfolio of investments, mainly involved in the technology and
pharmaceutical industries.
14. FUTURE PROSPECTS
The motor industry continues to experience a revival and evidence of this is
currently reflected in increased activity in terms of enquires and new
projects. The "pipeline" of project proposals and quotations has improved in
recent weeks. Because RGT is a well-established mature business with many of
its products nearing saturation new product development is the key to
accelerated growth. There is significant potential to develop and launch new
products and innovations and re-vamp some existing ones. To manage and drive
this process, an Innovation Unit was established this year. The Innovation
Unit will evaluate new product concepts and once assessed viable the unit
will ensure implementation of the development and marketing of these
initiatives. Key innovations currently underway include:
New AutoMSA: RGT`s Market Segment Analyser (Auto MSA), the third biggest
revenue generator for the company had become a little dated. The new online
version is scheduled for launch in July.
Parts Pricing System: With data from multiple sources including the RGT
NAAMSA systems the team is developing an online comparative parts pricing
system. There is significant demand for this service and expect the new
system to attract a significant number of subscribers.
Public Access AutoSpecs: For many years RGT has provided most major
automotive media with a system underpinning comparative vehicle specification
segments to their respective Web Sites. RGT will be developing our own
Public Access web site providing consumers with state-of-the-art comparative
capability.
Auto GreenFleet: Taking advantage of the current topical focus on Green
Issues - and in particular the CO2 emissions tax Auto GreenFleet has been
developed in partnership with Mobiltas to provide fleet users with month-by-
month accurate measurement and tracking of the carbon footprint of every
vehicle in their fleets - this will allow for driver efficiency management
and feed neatly into carbon offset activity.
The SQS product still has enormous growth potential and the focus here will
be to continue expansion into other segments and wider markets that began
during 2010. A number of opportunities with Motor Dealer networks and the
Fast Fit industries are currently being pursued.
It is also logical to leverage our acknowledged expertise in the Motor
Industry as much as possible, in 2010 the focus was on ensuring stability and
continuity and strengthening already strong ties with industry bodies such as
NAAMSA, NADA, RMI, SAAMA, SAMBRA and NAACAM and directly with the
manufacturers, importers and dealers.
RGT SMART is investing heavily in dramatically improved software and hardware
infrastructure. The new RGT BI (Business Intelligence) Engine - in
development for many months now - will take over from legacy mainframe
systems by mid-year and a complete update of the hardware platform to take
advantage of the latest technology is currently being deployed. Importantly
the BI Engine has been designed to be industry neutral and RGT is now
capable, without further development, to incorporate market data relating to
any industry and any market, opening up a range of expansion possibilities to
be explored in the future.
By order of the Board
Mr AA Da Costa Mr PB De Vantier
Chairman Chief Executive Officer
31 May 2011
Johannesburg
Registered Office
Arcay House, Number 3 Anerley Road, Parktown,
Johannesburg, 2193
PO Box 62397, Marshalltown, 2107
Directors
AA Da Costa*#(Chairman), PB De Vantier(CEO), CW Reed (FD),
NS Bruton, CJ Moodliar*#, TB Hayter*#, SG Pretorius*#,
* Non-executive, #Independent
Designated Advisor Transfer Office
Arcay Moela Sponsors Link Market Services
(Proprietary) Limited (Proprietary) Limited
Date: 31/05/2011 11:35:04 Supplied by www.sharenet.co.za
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