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Reviewed Interim Condensed Consolidated Results, Post Period-End Events and Special Notice to Investors
SAGARMATHA TECHNOLOGIES LIMITED
(Previously African Technology and Media Holdings Proprietary Limited)
(Incorporated in the Republic of South Africa)
Registration number: 2013/181904/06
JSE share code: SGT
ISIN ZAE000252334
(“Sagarmatha Technologies” or “the Group” or “the Company”)
REVIEWED INTERIM CONDENSED CONSOLIDATED RESULTS FOR THE 12 MONTH PERIOD ENDED 31
DECEMBER 2017, POST PERIOD-END EVENTS AND SPECIAL NOTICE TO INVESTORS
Reviewed Condensed Consolidated results of Sagarmatha Technologies for the twelve
months ended 31 December 2017 has been prepared as required by section 3.15 of
the JSE Limited (“JSE”) Listings Requirements. Interim financial results for the
six-month period ending 30 June 2017 was published as part of the pre-listing
statement. The company’s year-end has subsequently changed to March 2018, which
resulted in the financial period being longer than twelve months. Pursuant to
the above, an interim report for the twelve-month period ending 31 December 2017
has been prepared accordingly.
The company is to list on the Main Board of the JSE Limited (“JSE”) on 13 April
2018 as stated in the announcement released by the Company on 5 April 2018.
These results are available on the Company’s website www.sagarmathatech.com
Condensed Group Statement of Financial Position as at 31 December 2017
Reviewed Audited
Notes 2017 2016
R’000 R’000
Assets
Non-Current Assets 75 588 66 805
Property, plant and equipment 8 855 8 221
Goodwill 6 7 233 7 233
Intangible assets 7 48 147 36 216
Deferred tax 10 11 353 15 135
Current Assets 437 493 424 180
Inventories 9 21 280 12 554
Other financial assets 8 140 545 98 171
Current tax receivable 142 96
Trade and other receivables 21 267 16 536
Cash and cash equivalents 254 259 296 823
Total Assets 513 081 490 985
Equity and Liabilities
Equity
Share capital 700 000 700 000
Accumulated loss (249 881) (217 275)
450 119 482 725
Non-controlling interest (110 959) (83 910)
339 160 398 815
Liabilities
Non-Current Liabilities 83 452 52 815
Other financial liabilities 11 83 452 52 815
Current Liabilities 90 469 39 355
Share repurchase liability 17 20 000 -
Current tax payable 279 -
Trade and other payables 12 70 190 39 355
Total Liabilities 173 921 92 170
Total Equity and Liabilities 513 081 490 985
Shares in issue at period-end 1 000 000 000 1 000 000 000
Net asset value per share (cents) 33.92 39.88
Net tangible asset value per
share (cents) 28.38 35.54
Condensed Group Statement of Comprehensive Income for the twelve months ended
31 December 2017
Reviewed Audited
Notes 2017 2016
R’000 R’000
Revenue 13 281 565 188 481
Cost of sales (236 248) (166 975)
Gross profit 45 317 21 506
Other income 24 006 23 630
Operating expenses (126 087) (99 011)
Operating loss 14 (56 764) (53 875)
Investment income 29 805 29 253
Finance costs (8 425) (11 233)
Loss before taxation
(35 384) (35 855)
Taxation (4 271) 6 115
Loss for the period (39 655) (29 740)
Other comprehensive income - -
Total comprehensive loss for the
period (39 655) (29 740)
Owners of the parent (32 606) (21 463)
Non-controlling interests (7 049) (8 277)
(39 655) (29 740)
Loss per share: 16
Shares in issue at period-end 1 000 000 000 1 000 000 000
Basic loss and diluted loss per
share (cents)* (3.261) (2.146)
Headline loss and diluted loss per
share (cents)* (3.261) (2.146)
*The company has no dilutionary instruments in issue.
Condensed Group Statement of Changes in Equity as at 31 December 2017
Note Total
attributable
to equity Non-
holders of the controlling Total
group interests equity
R’000 R’000 R’000
Balance at 1 January 2016 298 293 (6 650) 291 643
Loss for the period (21 463) (8 277) (29 740)
Share issue 690 000 - 690 000
Purchase of additional
shares in subsidiary (484 105) (68 983) (553 087)
Total changes 184 432 (77 260) 107 173
Balance at 31 December 2016 482 725 (83 910) 398 815
Loss for the period (32 606) (7 049) (39 655)
Share buyback in subsidiary 17 - (20 000) (20 000)
Total changes (32 606) (27 049) (59 655)
Balance at 31 December 2017 450 119 (110 959) 339 160
Condensed Group Statement of Cash Flows as at 31 December 2017
Reviewed Audited
Notes 2017 2016
R’000 R’000
Cash used in operations 15 (28 357) (70 481)
Investment income 29 805 29 253
Finance costs (8 425) (11 233)
Tax (paid)/received (90) 197
Net cash utilised in operating activities (7 067) (52 264)
Cash flows from investing activities
Purchase of property, plant and equipment (1 688) (1 729)
Purchase of intangible assets 7 (22 072) (11 687)
Sale of intangible assets 7 - 447
Repayment of other financial assets 8 3 024 -
Advances to other financial assets 8 (45 398) (82 899)
Net cash utilised in investing activities (66 134) (95 868)
Cash flows from financing activities
Repayment of other financial liabilities 11 (1 368) (5 725)
Proceeds from other financial liabilities 11 32 005 77 073
Net cash generated from financing activities 30 637 71 348
Total cash movement for the period/year (42 564) (76 784)
Cash at the beginning of the period/year 296 823 373 607
Total cash at the end of the period/year 254 259 296 823
Condensed Group Segmental Report as at 31 December 2017
Syndicated Digital
Content B2B2C Media
Distribution Ecommerce Online
Reviewed Reviewed Reviewed
2017 2017 2017
R’000 R’000 R’000
Revenue (47 110) (206 690) (21 384)
External revenue (47 110) (206 690) (21 384)
Segment results
Operating (loss)/profit (17 663) (23 583) 4 045
Carrying amount of assets 407 446 44 377 22 757
Carrying amount of liabilities (54 335) (76 008) (12 545)
Classifieds Corporate Group
Reviewed Reviewed Reviewed
2017 2017 2017
R’000 R’000 R’000
Revenue (6 380) - (281 565)
External revenue (6 380) - (281 565)
Segment results
Operating profit/(loss) 246 (19 809) (56 764)
Carrying amount of assets 2 064 36 437 513 081
Carrying amount of liabilities (376) (30 657) (173 921)
Syndicated Digital
Content B2B2C Media
Distribution Ecommerce Online
2016 2016 2016
Audited Audited Audited
R’000 R’000 R’000
Revenue (13 957) (149 971) (16 671)
External revenue (13 957) (149 971) (16 671)
Segment results
Operating (loss)/profit (27 168) (14 170) (3 781)
Carrying amount of assets 391 841 36 066 24 436
Carrying amount of liabilities (44 018) (31 872) (7 013)
Classifieds Corporate Group
2016 2016 2016
Audited Audited Audited
R’000 R’000 R’000
Revenue (7 882) - (188 481)
External revenue (7 882) - (188 481)
Segment results
Operating profit/(loss) 269 (9 025) (53 875)
Carrying amount of assets 2 052 36 590 490 985
Carrying amount of liabilities (572) (8 695) (92 170)
Notes to the Reviewed Condensed Consolidated results for the period ended 31
December 2017
1. Reporting entity
These condensed consolidated reviewed financial statements for the twelve months
ended 31 December 2017 are for Sagarmatha Technologies (“the company”) and its
subsidiaries (“the group”). Sagarmatha Technologies is a holding company
incorporated and domiciled in South Africa. It has interests in technology
platforms and other ancillary support services. The Company does not trade, and
all of its activities are undertaken through its principal subsidiaries. The
group operates from South Africa with a key focus on Africa’s emerging economy.
The group's principal operations are syndicated content distribution, B2B2C e-
commerce, digital media online, classified and other related technologies.
2. Basis of preparation
The condensed consolidated reviewed financial statements for the twelve months
ended 31 December 2017 are prepared in accordance with the JSE Limited (“JSE”)
Listings Requirements and the requirements of the Companies Act of South Africa,
2008 as amended, applicable to summarised financial statements. The JSE Listings
Requirements require financial reports to be prepared in accordance with the
framework concepts, the measurement and recognition requirements of International
Financial Reporting Standards (“IFRS”), the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Pronouncements as
issued by Financial Reporting Standards Council. In addition, as a minimum, they
must contain the information required by IAS 34 ‘Interim Financial Reporting’.
The condensed consolidated provisional financial statements for the twelve months
ended 31 December 2017 were prepared under the supervision of the CFO, Takudzwa
Hove B.Com (Hons), CA (SA), ACMA, CGMA and were reviewed by the Group’s external
auditors, BDO Cape Inc.
3. Review report of the independent auditor
These condensed consolidated financial statements for the period ended 31
December 2017 have been reviewed by the Company's auditors, BDO Cape Inc.,
which expressed an unmodified review conclusion. A copy of the auditor's review
report is available for inspection at the Company's registered office together
with the financial statements identified in the auditor's report.
4. Post period-end events
The JSE has granted Sagarmatha Technologies a listing of all its issued ordinary
shares on the main board of the JSE (“Listing”), under the abbreviated name
“Sagarmath”, share code “SGT” and ISIN ZAE000252334, with effect from the
commencement of trade on 13 April 2018 (“Listing Date”), subject to Sagarmatha
obtaining the requisite shareholder spread as required in terms of the listings
requirements of the JSE (“JSE Listings Requirements”) and to raising a minimum
amount of R3 000 000 000 as part of the Listing. Sagarmatha Technologies will be
listed in the “Media” sector (sub-sector: Broadcasting and Entertainment) of the
main board of the JSE.
On 5 April 2017 an urgent application was initiated against African News Agency
Proprietary Limited (“ANA”), a subsidiary of the Company, to interdict the Company
from listing on the JSE. The Company was not a respondent in this urgent
application. On the same day this matter was immediately struck off the roll by
the judge and there is no pending legal matter against the group. The group’s
legal advisors have confirmed that this claim has no substance, is frivolous and
does not warrant merit.
5. Accounting policies
Accounting policies applied in the preparation of the condensed consolidated
interim financial statements are consistent with the accounting policies applied
in the preparation of the previous consolidated annual financial statements.
5.1 Significant judgements and sources of estimation uncertainty
In preparing the consolidated annual financial statements, management is required
to make estimates and assumptions that affect the amounts represented in the
consolidated annual financial statements and related disclosures. Use of
available information and the application of judgement is inherent in the
formation of estimates. Actual results in the future could differ from these
estimates which may be material to the consolidated annual financial statements.
The following significant judgements and estimates are relevant:
Trade receivables and loans and receivables
The Group assesses its trade receivables and loans and receivables for impairment
at each statement of financial position date. In determining whether an impairment
loss should be recorded in the statement of comprehensive income, the Group makes
judgements as to whether there is observable data indicating a measurable decrease
in the estimated future cash flows from a financial asset. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or
financial reorganisation, and default or delinquency in payments (more than 30
days overdue) are considered indicators that the trade receivable is impaired.
Intangible assets
The Group assesses the useful lives, amortisation rates and residual values at
each reporting date. This judgement is based on the market and trading conditions
for the Group, management's expectations and strategy for the use of the
intangible, as well as by performance indicators, sales growth rate and operating
margins of cash generating units which use the intangible.
Impairment testing
Assets are subject to regular impairment reviews as required. Impairments are
measured as the difference between the cost (or amortised cost) of a particular
asset and the recoverable amount which is the greater of the fair value less cost
to sell and value in use of the asset. Impairments are recorded in the statement
of comprehensive income in the period in which the occur. The Group's policy in
relation to impairment testing in respect of goodwill is detailed below.
The recoverable amount of the cash-generating units has been determined based on
a value-in-use calculation. Key assumptions applied to determine the recoverable
amount of the cash-generating units, using the value in-use calculation relating
to sales growth rates, working capital requirements and capital expenditure. Cash
flow projections were based on historical information and financial budgets
approved by senior management covering a five-year period.
Assumptions applied for impairment testing of goodwill:
Risk free rate: R207 Government Bonds 7.5%
Beta: 1.01 – 1.1
Discount rate: 18.66% - 24.60%
Assumptions applied for impairment testing of intangibles:
Brand Names and News Archives
General overheads growth rate: 4%
Marketing expense growth rate: 3%
Editorial expense growth rate: 4%
Advertising revenue growth rate: 8%
Discount rate: 16%
Number years: 5
Other financial liabilities and other financial assets
These include loans to and from holding companies, fellow subsidiaries and
subsidiaries and are recognised initially at fair value plus direct transaction
costs.
Subsequently these loans and receivables are measured at amortised cost using
the effective interest rate method, less any impairment loss recognised to reflect
irrecoverable amounts.
On loans receivable an impairment loss is recognised in profit or loss when there
is objective evidence that it is impaired. The impairment is measured as the
difference between the loan's carrying amount and the present value of estimated
future cash flows discounted at the effective interest rate computed at initial
recognition.
Impairment losses are reversed in subsequent periods when an increase in the
recoverable amount can be related objectively to an event occurring after the
impairment was recognised, subject to the restriction that the carrying amount
of the loan at the date the impairment is reversed shall not exceed what the
amortised cost would have been had the impairment not been recognised.
Loans from Group companies are subsequently measured at amortised cost.
Normal and deferred taxation
Judgement is required in determining the provision for income taxes due to the
complexity of legislation. There are many transactions and calculations for which
the ultimate tax determination is uncertain during the ordinary course of
business. The group recognises liabilities for anticipated tax audit issues based
on estimates of whether additional taxes will be due. Where the final tax outcome
of these matters is different from the amounts that were initially recorded, such
differences will impact the income tax and deferred tax provisions in the period
in which such determination is made.
The group recognises the net future tax benefit related to deferred income tax
assets to the extent that it is probable that the deductible temporary differences
will reverse in the foreseeable future. Assessing the recoverability of deferred
income tax assets requires the group to make significant estimates related to
expectations of future taxable income. Estimates of future taxable income are
based on forecast cash flows from operations and the application of existing tax
laws in each jurisdiction. To the extent that future cash flows and taxable
income differ significantly from estimates, the ability of the group to realise
the net deferred tax assets recorded at the end of the reporting period could be
impacted.
5.2 Revenue
Revenue from the sale of goods is recognised when significant risks and rewards
of ownership have been transferred. Transfer of ownership takes place when the
sale of goods has been delivered to the customer.
Service revenue is recognised by reference to the stage of completion of the
transaction
Advertising revenue (net of agency commission) from publishing is recognised when
a newspaper or magazine is published. Online advertising revenue is recognised
over the period that the advertisement is displayed.
Royalties are recognised on the accrual basis in accordance with the substance
of the relevant agreements.
Revenue is measured at the fair value of the consideration received or receivable
and represents the amounts receivable for goods and services provided in the
normal course of business, net of trade discounts and volume rebates, and value
added tax.
5.3 Intangible assets
Intangible assets which are separately acquired are initially recognised at cost.
Intangible assets with a finite useful life are stated at cost less any
accumulated amortisation and any impairment losses.
Intangible assets with an indefinite useful life are stated at cost less any
accumulated impairment losses and are tested for impairment at every period-end.
Impairment losses are recognised in profit or loss in the statement of
comprehensive income.
The amortisation period and the amortisation method for intangible assets are
reviewed every period-end.
Amortisation is provided to write down the intangible assets, on a straight-line
basis, to their residual values as follows:
Item Useful life
Brand names Indefinite
News archives Indefinite
Computer software
3-10 Years
5.4 Tax
Current tax assets and liabilities
Current tax liabilities (assets) for the current and prior periods are measured
at the amount expected to be paid to (recovered from) the tax authorities, using
the tax rates (and tax laws) that have been enacted or substantively enacted by
the end of the reporting period.
Deferred tax assets and liabilities
A deferred tax asset is recognised for the carry forward of unused tax losses to
the extent that it is probable that future taxable profit will be available
against which the unused tax losses can be utilised. Deferred tax assets and
liabilities are measured at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax rates
(and tax laws) that have been enacted or substantively enacted by the end of the
reporting period.
Tax expenses
Current and deferred taxes are recognised as income or an expense and included
in profit or loss for the period, except to the extent that the tax arises from:
• a transaction or event which is recognised, in the same or a different
period, to other comprehensive income, or
• a business combination
5.5 Impairment of assets
The group assesses at each end of the reporting period whether there is any
indication that an asset may be impaired. If any such indication exists, the
group estimates the recoverable amount of the asset.
If there is any indication that an asset may be impaired, the recoverable amount
is estimated for the individual asset. If it is not possible to estimate the
recoverable amount of the individual asset, the recoverable amount of the cash-
generating unit to which the asset belongs is determined.
The recoverable amount of an asset or a cash-generating unit is the higher of
its fair value less costs to sell and its value in use.
If the recoverable amount of an asset is less than its carrying amount, the
carrying amount of the asset is reduced to its recoverable amount. That reduction
is an impairment loss.
An impairment loss of assets carried at cost less any accumulated depreciation
or amortisation is recognised immediately in profit or loss. Any impairment loss
of a revalued asset is treated as a revaluation decrease.
Goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the cash-generating units, or groups of cash-generating
units, that are expected to benefit from the synergies of the combination.
An impairment loss is recognised for cash-generating units if the recoverable
amount of the unit is less than the carrying amount of the units. The impairment
loss is allocated to reduce the carrying amount of the assets of the unit in the
following order:
• first, to reduce the carrying amount of any goodwill allocated to the cash-
generating unit and
• then, to the other assets of the unit, pro rata on the basis of the carrying
amount of each asset in the unit.
An entity assesses at each reporting date whether there is any indication that
an impairment loss recognised in prior periods for assets other than goodwill
may no longer exist or may have decreased. If any such indication exists, the
recoverable amounts of those assets are estimated.
The increased carrying amount of an asset other than goodwill attributable to a
reversal of an impairment loss does not exceed the carrying amount that would
have been determined had no impairment loss been recognised for the asset in
prior periods.
A reversal of an impairment loss of assets carried at cost less accumulated
depreciation or amortisation other than goodwill is recognised immediately in
profit or loss. Any reversal of an impairment loss of a revalued asset is treated
as a revaluation increase.
5.6 Segmental analysis
Operating segments are reported in a manner consistent with the internal reporting
provided to the chief operating decision-maker. The chief operating decision-
maker, who is responsible for allocating resources and assessing performance of
the operating segments, has been identified as the executive management.
Segment results include revenue and expenses directly attributable to a segment
and the relevant portion of enterprise revenue and expenses that can be allocated
on a reasonable basis to a segment, whether from external transactions with other
Group segments. Segment results are determined before any adjustments for
minority interests.
Segment assets and liabilities comprise the operating assets and liabilities that
are directly attributable to the segment or can be allocated to the segment on
a reasonable basis. Segment assets are determined after deducting related
allowances that are reported as direct offsets in the Group's statement of
financial position.
Capital expenditure represents the total costs incurred during the period to
acquire segment assets that are expected to be used during more than one period,
namely, property, plant and equipment, and intangible assets other than goodwill.
Business segments comprise the following which is aggregated upon consolidation:
• Syndicated content
• B2B2C Ecommerce
• Digital Media Online
• Classifieds
• Corporate
6 Goodwill
Reviewed Audited
2017 2016
R’000 R’000
Opening balance 7 233 7 233
Accumulated impairment - -
Balance at end of year 7 233 7 233
Reconciliation of Goodwill – 2017
Additions through
Opening business
balance combination Impairment Total
Goodwill 7 233 - - 7 233
Total 7 233 - - 7 233 7
233
7
233
Reconciliation of Goodwill – 2016
Additions
through
Opening business
balance combination Impairment Total
Goodwill 7 233 - - 7 233
Total 7 233 - - 7 233
Goodwill acquired through business combinations has been allocated to the
Independent Online Property Joint Venture Proprietary Limited cash-generating
units for impairment testing.
The Group performs an annual impairment test on goodwill based on cash-generating
units (“CGU”). The recoverable amount of each of the CGUs to which goodwill is
allocated has been determined based on a value-in-use calculation which uses cash
flow projections on financial forecasts approved by the board of directors
covering a five-year term.
The cash flow projections over the five-year budget term are based on the
assumption of the same expected gross margin and price inflation over the budget
term.
The following are the principle assumptions that were used to calculate the
recoverable amounts of the CGUs:
Reviewed Audited
2017 2016
Discount rate 18.6% 18.6%
Number of years 5 5
Growth rate 6.50% 6.50%
7 Intangible assets
Reviewed Audited
2017 2016
R’000 R’000
Cost 021
642017 41 969
Brand names 19 000 19 000
2016
Software development 39 021 22 969
News Archives 6 000 -
Accumulated amortisation (15 874) (5 753)
Brand names - -
Software development (15 874) (5 753)
News Archives - -
Balance at end of year 48 147 36 216
Reconciliation of intangible assets - 2017
Opening Additions Amortisation Total
balance
Brandnames 19 000 - - 19 000
Software development 17 216 16 072 (10 141) 23 147
News Archives - 6 000 - 6 000
Total 36 216 22 072 (10 141) 48 147
Reconciliation of intangible assets - 2016
Opening Additions Disposals Amortisation Total
balance
Brandnames 19 000 - - 19 000
Software 10 827 11 687 - (5 298) 17 216
development
News Archives 447 - (447) - -
Total 30 274 11 687 (447) (5 298) 36 216
8 Other financial assets
Reviewed Audited
2017 2016
R’000 R’000
Loans and receivables
Sekunjalo Investment Holdings Proprietary Limited 114 764 95 146
The loan is unsecured and earns interest at prime
overdraft rate. The loan is repayable on demand.
Independent Newspapers Proprietary Limtied 5 267 -
The loan is unsecured and earns interest at prime
overdraft rate. The loan is repayable on demand.
Independent Newspapers Proprietary Limtied 20 514 -
The loan is secured by the debtors book of
Independent Newspapers Proprietary Limited. The
loan earns interest at prime plus 2% per annum and
is subject to a once off loan raising fee of 0.25%
as well as a debt factoring fee of 0.25% per month
on the outstanding balance. The loan is repayable
on demand.
At fair value through profit or loss
Investment accounts
Short term investment account (Ned Group Core - 3 025
Income Fund) used to invest excess cash in the
Group’s ecommerce business. The asset was
liquidated during the period under review.
Total other financial assets 140 545 98 171
Fair value of loans and receivables
The carrying value of the loans approximates fair value as market-related interest
rates are charged on outstanding amounts and credit risk of the lenders has
remained unchanged.
9 Inventories
Reviewed Audited
2017 2016
R’000 R’000
Finished goods 21 280 12 554
10 Deferred tax
Reviewed Audited
2017 2016
R’000 R’000
Deferred tax asset
Leave pay provision 762 270
Bonus provision 504 302
Inventory obsolescence provision 283 40
Income received in advance 1 684 264
Prepayments (129) (50)
Provision for doubtful debts 20 39
Temporary differences on property, plant and equipment (3) (3)
Tax losses available for set off against future taxable
income 8 255 14 273
Finance lease (23) -
Total net deferred tax asset 11 353 15 135
Reconciliation of deferred tax asset
Balance at beginning of the year 15 135 8 959
Tax losses available for set off against
future taxable income (6 015) 5 516
Leave pay provision 492 101
Bonus provision 202 302
Inventory obsolescence provision 243 40
Income received in advance 1 419 246
Prepayments (79) (23)
Provision for doubtful debts (19) (3)
Temporary differences on property, plant
and equipment - (3)
Tax loss available for set off against
future taxable income (23) -
Balance at the end of the year 11 353 15 135
Recognition of deferred tax asset
The Group has recognised a deferred tax asset to the extent that management
believes that the Group will generate sufficient future taxable income to utilise
the assessed losses. During the period under review the group utilised previously
recognised assessed losses to the extent of R4 million.
Unrecognised deferred tax assets
Deductible temporary differences
25 184 11 390
not recognised as deferred tax
assets
11 Other financial liabilities
Held at amortised cost Reviewed Audited
2017 2016
R’000 R’000
ABSA Bank Limited 3 092 3 343
The Khuthaza bond is held with ABSA Bank Limited
and bears interest at 10.5% (2016: 10.5%). The
building owned by Loot Online Proprietary Limited
is held as security.
Independent Newspapers Proprietary Limited 14 153 14 113
The loan bears interest at the prime rate and is
unsecured. Independent Newspapers Proprietary
Limited has granted an unconditional right to Loot
Online SA Proprietary Limited and Sagarmatha
Technologies Limited to defer repayment of the
outstanding amounts for a period of at least 12
months from the statement of financial position
date.
Africa Community Media Proprietary Limited 38 588 34 242
The loan bears interest at the prime rate and is
unsecured. Africa Community Media has granted an
unconditional right to African News Agency
Proprietary Limited to defer repayment of the
outstanding amounts for a period of at least 12
months from the statement of financial position
date.
Insight Publishing Proprietary Limited - 1 117
The loan was unsecured and interest free. Insights
Publishing Proprietary Limited granted an
unconditional right to African News Agency
Proprietary Limited to defer repayment of the
outstanding amounts for a period of at least 12
months from the statement of financial position
date.
Sekunjalo Investment Holdings Proprietary Limited 1 460 -
The loan bears interest at prime rate and is
unsecured. Sekunjalo Investment Holdings
Proprietary Limited has granted an unconditional
right to ANA Publishing Proprietary Limited to
defer repayment of the outstanding amounts for a
period of at least 12 months from the statement of
financial position date.
26 158 -
Sekunjalo Investment Holdings Proprietary Limited
The loan bears interest at the prime plus 5% per
annum. Sekunjalo Investment Holdings Proprietary
Limited has granted an unconditional right to Loot
Online SA Proprietary Limited to defer repayment
of the outstanding amounts for a period of at
least 12 months from the statement of financial
position date.
Total other financial liabilities 83 451 52 815
12 Trade and other payables
Reviewed Audited
2017 2016
R’000 R’000
Trade payables 59 292 24 880
Amounts received in advance 152 194
Value added taxation 1 129 6095
Other payables 4 513 3 510
Accrued leave pay 2 721 1 260
Accrued expenses 2 383 3 418
Total 70 190 39 355
13 Revenue
Reviewed Audited
2017 2016
R’000 R’000
Sale of goods 206 690 149 970
Advertising revenue 32 967 23 185
Syndication revenue 40 591 13 958
Royalty income 1 317 1 368
Total 281 565 188 481
14 Operating loss
Operating loss for the period is stated after accounting for the following:
Reviewed Audited
2017 2016
R’000 R’000
Operating lease charges – smoothed amounts 6 572 1 143
Amortisation of intangible assets 10 141 5 299
Depreciation on property, plant and equipment 1 053 893
Employee costs 54 961 37 934
15 Cash used in operations
Reviewed Audited
2017 2016
R’000 R’000
Loss before taxation (35 384) (35 854)
Adjustments for:
Depreciation 1 053 893
Amortisation 10 141 5 299
Loss on foreign exchange 17 -
Interest received (29 805) (29 253)
Finance costs 8 425 11 233
Changes in working capital:
Inventories (8 726) (4 334)
Trade and other receivables (4 741) (6 848)
Trade and other payables 30 663 (11 617)
Total (28 357) (70 481)
16 Headline loss
There are no adjusting items therefore loss attributable to owners of
Sagarmatha Technologes Limited is the same as headline loss.
Reviewed Audited
2017 2016
R’000 R’000
Headline loss attributable to owners of
Sagarmatha Technologies Limited (32 606) (21 463)
Shares in issue at period-end 1 000 000 000 1 000 000 000
Headline loss per share (cents) (3.261) (2.146)
17 Share buyback in subsidiary
On 15 December 2017, a share buyback occurred in Loot Online Proprietary Limited
which resulted in an increase in Sagarmatha Technologies Limited's shareholding
from 75% to 83.34%.
18 Related party transactions and balances
The Group, in the ordinary course of business entered into various sales and
purchases transactions on an arms’ length basis with related parties. This
included loan advances to Sekunjalo Investments Holdings Proprietary Limited and
certain loans received from Sekunjalo Investment Holdings Proprietary Limited by
subsidiaries of the group.
During the period under review, African News Agency acquired African News Agency
Pictures who entered into the following transactions with a related party:
Reviewed Audited
2017 2016
R’000 R’000
Sales made to related party
Independent Newspapers Proprietary Limited 16 881 -
Commentary to the Reviewed Condensed Consolidated results for the period ended
31 December 2017
Financial results
The operating results and the state of affairs of the Group for and as at the
period ended 31 December 2017 are set out in the condensed consolidated Group
statement of financial position, condensed consolidated Group statement of
comprehensive income, condensed consolidated Group statement of changes in equity
and condensed consolidated Group statement of cash flows and notes thereto.
Group revenues for the period ended was R281 million. Revenue was mainly from
its e-commerce platform and the start of the Syndicated Content Distribution.
Refer to the Group Segmental Report for more information on the revenue breakdown.
Operating losses were primarily driven by the Syndicated Content Distribution,
B2C E-commerce and the corporate office. Refer to the Group Segmental Report for
more details.
Dividends
No dividends were declared or paid to the shareholders during the period under
review.
Highlights compared to the prior year
- Revenue increased by 49% from R188 million to R281 million.
- Total assets increased by 4.5% from R491 million to R513 million.
Group performance
The Group’s revenue of R281 million (2016: R188 million) demonstrated positive
revenue growth driven by solid performance in the ecommerce business in line with
expectations. Syndicated Content Distribution which is still at an early stage
also delivered performance in line with expectations. Operating expenses
increased by 27% from R99 million to R126 million. This was due to its efforts
to grow the revenue base.
Operating losses of the Group amounted to R-56 million for the period ended 31
December 2017, while it amounted to R-54 million in 2016. These results were in
line with expectations as the Group managed to contain its cost base in a
difficult trading environment. Loss before tax for the period of R-40 million
was after investment income of R30 million and finance costs of R8 million.
Net asset value (“NAV”) of the Group was R339 million (2016: R399 million). This
is after accumulated losses of R-250 million (2016: R-217 million) and losses
attributable to non-controlling interests of R-111 million (2016: R-84 million).
The NAV per share was 33.92 cents per share (2016: 39.88 cents per share) and
tangible NAV 28.38 cents per share (2016: 35.54 cents per share).
Loss per share and headline loss per share were both -3.261 cents, for the period
under review.
Cash used in operations was R-29 million (2016: R-70 million). After finance
costs net cash from operating activities was a negative R-37 million (2016: R-
82 million). After taking into account cashflows from investing activities and
cash flows from financing activities, total cash movement was a net outflow of
R43 million (2016: R76 million).
Syndicated Content Distribution
This division focuses of the syndication of African content for distribution
globally. The division though still in its early stages performed well during
the period under review in line with expectations. The division is still on track
with its strategy to tie up media partnerships across the African continent.
B2C Ecommerce
This division focuses of the online retail sales in South Africa. This division
has performed extremely well during the period under review and its performance
is consistent with the general increase in the sector. This unit has performed
in line with expectations and the trend is expected to continue.
Digital Media Online
This unit focuses on our digital media offerings. The revenue for this unit has
been under pressure in line with the industry. However, it has experienced growth
in the number of users. The unit is expected to continue experiencing growth in
the future.
Classifieds
This unit is responsible for our niche classified offerings for property. The
unit has performed admirably in a very challenging environment. The unit is
expected to continue doing well into the future.
Prospects
The Group will continue its focus on growing the underlying business and improving
operational efficiencies so that it improves the value of the underlying
investments and create value.
Sagarmatha Technologies has built solid scalable technology platforms and is well
positioned to expand through organic growth or through acquisitions. Management
is focused on its strategic plan to become the largest technology platform company
on the African continent.
The Group’s auditors have not reviewed nor reported on any comments relating to
future prospects.
Special notice to investors
The above results of the Company do not include the latest annual financial
results of Sekunjalo Independent Media (Pty) Ltd. (“SIM”) as the effective date
of the acquisition of SIM is the date of listing of the Company as set out in
the Pre Listing Statement (“PLS”) issued by the Company and subsequent SENS
announcements.
The Company is of the opinion that, as per the latest management reports and
results of SIM, such results will not result in any material changes to the Pro
Forma statement of comprehensive income set out in the PLS and will not impact
on the Company meeting the Listing Requirements, including meeting the minimum
capital requirement. In this regard the Company has taken all latest available
information into account up to the date of this announcement.
The Sponsor to the Company has made such enquiries to satisfy itself on the above
statement.
Appreciation
We wish to thank our staff, Group executives, management, our board of directors
as well as our strategic partners, stakeholders and business partners for their
loyalty and dedication in contributing to the success of the Group.
Paul Lamontagne Grant Fredericks and Gary Hadfield
Non-executive chairman Joint Chief Executive Officers
Cape Town
10 April 2018
Directors
*Grant Fredericks (Joint Chief Executive Officer); *Gary Hadfield (Joint Chief
Executive Officer); Paul Lamontagne (Non-Executive Chairman); *Takudzwa Hove
(Chief Financial Officer); Rosemary Mosia (Deputy Chairperson); *Valentine
Dzvova; Harold E Doley III; Arthur Jonson; Alan Ipp; Dr Aisha Pandor; Dr
Sibongiseni Tunzelane.
*Executive director
Transaction Advisor and Sponsor: Vunani Capital Proprietary Limited
Independent Reporting Accountant and Auditor: BDO Cape Inc.
Legal Advisor: Tshisevhe Gwina Ratshimbilani Inc
Date: 10/04/2018 12:27:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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