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ZPT - Zaptronix Limited - Reviewed condensed consolidated financial statements
for the year ended 31 August 2011
ZAPTRONIX LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1997/014928/06)
(Share Code: ZPT ISIN Code: ZAE000070934)
("Zaptronix" or "the company")
REVIEWED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31
AUGUST 2011
Condensed Consolidated Statement of Comprehensive Income
Reviewed Restated
R`000 2011 2010
Revenue 27,850 33,155
Gross profit 21,278 26,728
EBITDA (6,780) 4,507
Depreciation, Amortisation and impairment (2,400) (1,992)
Investment income 431 129
Finance costs (740) (739)
Profit/(loss) before taxation (9,489) 1,905
Taxation 233 82
Profit/(loss) for the year (9,256) 1,987
Total comprehensive income/(loss)for the (9,256) 1,987
year
Total number of shares in issue (000`s) 379,319 379,319
Weighted average number of shares in issue 379,319 379,319
(000`s)
Diluted weighted average number of shares 819,319 599,319
in issue (000`s)
Earnings per share (cents) (2.44) 0.52
Diluted earnings per share (cents) (1.13) 0.33
Headline earnings reconciliation
Profit after taxation attributable to:
Ordinary shareholders (9,256) 1,987
Profit on disposal of assets
Impairment of assets 500 -
Headline earnings (8,756) 1,988
Headline earnings per share (cents) (2.31) 0.52
Diluted headline earnings per share (1.07) 0.33
(cents)
Condensed Consolidated Statement of Financial Position
Reviewed Restated Audited
R`000 2011 2010 2009
ASSETS
Non-current assets
Property, plant and 8,815 8,581 4,853
equipment
Intangible assets 4,150 1,996 1,177
Deferred taxation assets - - -
Current assets
Inventory 2,783 3,028 1,981
Trade and other receivables 9,055 13,332 4,198
Cash and cash equivalents 216 2,448 120
Other financial assets - - 257
Total assets 25,019 29,385 12,586
EQUITY AND LIABILITIES
Share capital & reserves 39,150 39,150 29,752
Accumulated loss (34,538) (25,282) (27,270)
Total equity 4,612 13,868 2,482
Non-current liabilities
Other financial liabilities 8,755 0 0
Deferred taxation - 233 387
liabilities
Current liabilities
Trade and other liabilities 9,381 8,273 6,074
Other financial liabilities 1,964 6,704 3,306
Provisions 0 103
Taxation payable 307 307 235
Total equity and 25,019 29,385 12,586
liabilities
Net asset value per share 1.21 3.66 0.76
(cents)
Net tangible asset value 0.12 3.13 0.40
per share (cents)
Condensed Consolidated Statement of Cash Flows
Reviewed Restated
R`000 2011 2010
Net cash inflow from operating activities 4,241 2,995
Net cash inflow/(outflow) from investing (4,788) (4,005)
activities
Net cash outflow from financing activities (1,685) 3,339
Net movement in cash and cash equivalents (2,232) 2,329
Cash and cash equivalents at beginning of 2,448 119
period
Cash and cash equivalents at end of period 216 2,448
Condensed Consolidated Statement of Changes in Equity
Share
capital Retained Total
and
R`000 premium Reserves Earnings Equity
Balance at 01 29,632 120 (27,269) 2,483
September 2009
Vendor shares 17,600 17,600
Common control (8,202) (8,202)
reserve
Total comprehensive 0 1,987 1,987
income for the year
Restated balance at 29,632 9,518 (25,282) 13,868
31 August 2010
Total comprehensive - - (9,256) (9,256)
loss for the year
Reviewed balance at 29,632 9,518 (34,538) 4,612
31 August 2011
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL INFORMATION
COMMENTARY
The financial results have been prepared under the supervision of the financial
director Barry Botes CA(SA.
Introduction
Restatement of 2010 Financial Statements.
Zaptronix Ltd Annual Financial Statements for 2010 was the subject of the JSE`s
Pro-Active Monitoring of Financial Statements review. The result of this review
was that instead of showing the Net Income derived from the management of I to I
assets in terms of the Agency Agreement, Zaptronix should consolidate the I to I
assets on the basis of obtaining control from the date of commencement of the
Agency Agreement. The restatement is at the request of the Financial Reporting
Investigations Panel "FRIP". There is no change to the 2010 Net Income; however
the presentation and disclosure has been accounted for in terms of IAS 27 -
Consolidated and Separate Financial Statements. The purchase consideration of R
17,6 million has been calculated as at 01 March 2010 by the future issue of 440
million shares at the share price of 4c as at 1 March 2010 (shares to be
issued). The Net assets acquired as at 01 March 2010 equated to R 9,3 million
resulting in a common control reserve of R 8,2 million. The shares to be issued
as a result of the consolidation will result in a dilution of earnings per share
of 0.33c. The net asset value per share changed to 3.66c and Net tangible asset
value per share changed to 3.13c in 2010.
A summary of the impact on the statement of comprehensive income is as follows:
Restated As previously
2010 reported
2010
Revenue 33,155 20,721
EBITDA 4,507 4,518
Total comprehensive income 1,988 1,988
A summary of the impact on the statement of financial positioned is as follows:
Restated As previously
2010 reported
2010
Non-current assets 10,577 9,092
Current assets 18,808 9,055
29,385 18,147
Equity 13,868 4,469
Non Current liabilities 233 232
Current liabilities 15,284 13,446
15,517 13,678
A summary of the impact on the statement of cash flows is as follows:
Restated As previously
2010 reported
2010
Net cash inflow from operating 2,995 3,458
activities
Net cash inflow/(outflow) from (4,005) (4,684)
investing activities
Net cash outflow from financing 3,339 1,214
activities
The I to I transaction
The completion of the circular was placed on hold whilst the Pro-Active
Monitoring of Financial Statements review was under way. The change in the
presentation of the 2010 Annual Financial Statements influences the Financial
Statements in the circular. The circular will be completed with the new restated
results. Shareholders must bear in mind that shareholders still need to approve
the transaction at a special general meeting the date of which will be advised.
Financial Results
The trading conditions in both the Fleet Management and Site Risk Solutions
sectors deteriorated significantly during the latter part of the reporting
period. This resulted in both a loss of existing customers, customers that
reduced their operations as well as the drying up of potential business
opportunities. The process of cost control with the reduction in trading
conditions and resulted in a loss of R9,6 million suffered for the year under
review.
During the year the company suffered losses based on the cost of communication
contracts that could not be recovered. These contracts have run its course and
the cost is no longer present. The company further implemented improved
financial controls which resulted in cost savings and recoveries of expenses.
The company implemented a cost cutting exercise and the benefits will be
realised in the next financial year overheads were reduced by more than R400 000
per month
The loss placed great strains on cash resources and certain statutory
liabilities remain unpaid as at 31 August 2011. The Auditors as detailed below
have reported the irregularity to the Independent Board for Auditors. Management
is addressing this and will be resolved.
An injection of Shareholder and shareholder associated company loans of R2.85
million post balance sheet date has alleviated the matter to a certain extent.
The group`s debtors and other assets are unencumbered and place the group in a
position to improve the funding position. The group is dependent on obtaining
funding for the next reporting period to settle the short term liabilities.
The focus on cost reduction has highlighted opportunities of improving pricing
and has resulted in an improvement in converting business opportunities into
transactions. Management has placed the focus on marketing and sales and
increases in both prospects and sales can be reported. Orders for the next 5
months amount to R16 million.
The Zaptronix Metering division`s contribute was low during the review period as
the utilities and other customers deferred purchase decisions in an anticipation
of the implementation of Electricity Regulation Act.
Basis of preparation
The reviewed condensed consolidated results have been prepared in accordance
with International Financial Reporting Standards, the requirements of IAS 34
Interim Financial Reporting, the AC 500 series of interpretations as issued by
the Accounting Practices Board or its successor, the South African Companies Act
2008 (Act 71 of 2008) and the JSE Limited Listings Requirements. These results
must be read in conjunction with the most recently issued annual financial
statements.
Significant accounting policies
The reviewed condensed consolidated annual financial statements have been
prepared under the historical cost convention other than financial instruments
accounted for in terms of IAS 39 at fair value.
The accounting policies and methods of computation applied in the preparation of
the results for the year under review are consistent with those applied in the
preparation of the group`s annual financial statements for the year ended 31
August 2010.
The preparation of the results required the use of estimates and assumptions
that affect the values of assets and liabilities at the reporting date. Although
these estimates are based on management`s best knowledge of current events and
actions that the group may undertake in the future, actual results may differ
from those estimates.
Notes
Segment report
The Fleet Management division contributed 63% of group revenue, RMS Technology
division contributed 10% and Metering and Corporate division contributed the
balance of 27% of group revenue. Previously the Duo SP and Zaptronix Systems
were reported on separately, however the two segments are interlinked in that
Zaptronix Systems holds the rental assets utilised by the Duo SP tracking
service and consequently from 2010 the two units have been combined.
CONDENSED SEGMENT REPORT
31 August 2011 31 August 2010
R`000 (Reviewed) (Audited)
(Restated)
Segment Revenue:
Fleet management (Duo SP and Zaptronix 29,953 29,024
Systems)
RMS Technology 323 5,961
Zaptronix (Metering and Corporate) 1,113 1,708
Internal segment revenue (1,769) (3 538)
External revenue total 29,620 33,155
Operating (loss)/profit segment results (before interest
and taxation):
Fleet management (Duo SP and Zaptronix
Systems) (1,906) 5,756
RMS Technology 91 (419)
Zaptronix (Metering and Corporate) (7,674) (2,822)
Total (9489) 2,515
Segment assets
Fleet management (Duo SP and Zaptronix 7,467 17,548
Systems)
RMS Technology 5,008 4,057
Zaptronix (Metering and Corporate)* 11,510 722
23,985 24 747
Related parties
Zaptronix will purchase selected assets from the I to I group, as announced on
SENS on 6 September 2010. The transaction is a related party transaction as I to
I was owned at the time by the Gandalf Trust. Jan Nel and Karl Gribnitz, who are
major shareholders and directors of Zaptronix, are also trustees of the Gandalf
Trust.
Dividend
No dividend is proposed.
Post Balance sheet events
The re-stated annual financial results will pave the way for the completion of
the circular and in turn the purchase of the I to I assets. The transaction can
be summarised as follows. The transaction is to buy assets from I to I for R
6.6 million to be payable in shares and is subject to shareholders` approval.
The transaction includes the purchase of certain assets for the issue of
Zaptronix ordinary shares at a price of 1.5 cent per share as well as the
capitalisation of the shareholder loans amounting to R 3 771 425 at a price of 3
cents per share. The impact of the purchase of the assets is already shown in
the restated results. The capitalising of the shareholder loan will have the
effect of reducing the long term liabilities with R3,8 million and the increase
in Equity with the same amount.
Prospects
Although the group has experienced some improvements the conditions remain
unpredictable. The group will pursue the available business opportunities and
at the same time cut costs to remain competitive with the service offerings to
current and future customers. The improved DuoIV system addresses customer
needs and maintains its position as the reliable innovative solution to fleet
management.
The Electricity Regulation Act is set to be implemented from 1 January 2012. The
act empowers Utilities to apply different rates to users whilst the current
meters in use will not be able to provide the correct readings to users.
Zaptronix Metering division stand to gain from this prospective demand for smart
meters which will provide users with different rate readings. Zaptronix needs
to strengthen its BBBEE rating to fully utilise the opportunities presented by
the implementation of the Act.
The Site Risk business, created out of the assets bought form I to I, will
remain competitive as the high crime rate will continue to drive the demand for
access, surveillance and fire detection systems. In recent months an increase
in inquiries for these systems was identified, some of which were awarded to the
business unit. The business unit have also been down sized to remain
competitive.
EXTRACTS FROM AUDITOR`S REVIEW REPORT
Modified reviewed opinion
The Group`s condensed annual financial statements for the year ended 31 August
2011 have been reviewed by the group`s auditors, PKF (Gauteng) Inc. The
auditors` modified review report on the Group`s condensed annual financial
statements is available for inspection at the Group`s registered office. The
modification is extracted below:
Emphasis of Matter
Without qualifying our conclusion, we draw attention to the reviewed condensed
results which indicates that the Group incurred a loss of R9.256 million in
2011. We further wish to draw attention to the commentary as disclosed in the
results which indicate the Group is dependent on obtaining financial support to
settle liabilities, the improvement of profits and cash flows over the next
twelve months and the successful completion of the I to I transaction. These
conditions indicate the existence of a material uncertainty that may cast doubt
about the Group`s ability to continue as a going concern.
Reportable Irregularity
In accordance with our responsibilities in terms of sections 44(2) and 44(3) of
the Auditing Profession Act, we report that in the current year, we identified
certain unlawful acts or omissions by persons responsible for the management of
Zaptronix Limited which constituted a reportable irregularity in terms of the
Auditing Professions Act, and we have reported such matters to the Independent
Regulatory Board for Auditors. The matter pertaining to the reportable
irregularity have been described in the condensed financial information.
By order of the Board
19 December 2011
Jan Nel; Barry Botes
Chief Executive Officer Chief Financial Officer
CORPORATE INFORMATION
Non executive directors: N Melville (Chairman) and
K J Gribnitz
Executive directors: J P Nel (CEO), A J Botes (CFO),
Registration number: 1997/014928/06
Registered address: Gazelle Close, Corporate Park South
Old Johannesburg Road, Midrand
Postal address: PO Box 8291, Midrand, 1685
Company secretary: Sylvan CSI (Pty) Ltd
Telephone: +27 11 238 2000
Facsimile: +27 11 238 2075
Transfer secretaries: Computershare Investor Services (Pty) Limited
Designated Adviser: Exchange Sponsors (2008) (Pty) Limited
Date: 20/12/2011 09:12:29 Supplied by www.sharenet.co.za
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