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Audited condensed financial results for the year ended 29 FEBRUARY 2012
StratCorp Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2000/031842/06)
JSE code: STA ISIN ZAE 000034294
(“StratCorp” or “the company” or “the group”)
AUDITED CONDENSED FINANCIAL RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2012
Shareholders are advised that the audit of the company‘s results for the
year to 29 February 2012 has been completed and contain the
modifications set out below to the reviewed provisional results
published on SENS on 1 June 2012.
The major differences are set out in the notes below:
Notes
(1) The deferred tax assets of the company and StratFin were reduced by
R5,577 million following a review of the group’s performance over
the last year. R4,458 million of the deferred tax asset was
reversed against the taxation from Continuing Operations, and the
balance of R1,119 million was reversed against taxation in Other
Comprehensive Income.
(2) This adjustment reflects the write-off of the APMI Holdings Limited
loan held by the company to the extent that it is not recoverable.
R150 000 was moved to Financial Assets as the realisable portion
(outstanding balance from the sale of the inventory) and the balance
of R502 000 was set of against Cost of Sales and Operating Expenses.
(3) The adjustment of R1,545 million against Non-Current assets held for
sale and assets of disposal groups and the Loss from discontinuing
operations reflects the additional loss on the disposal of the
Soldonné residential units of R945 000 and the costs of R600 000
incurred to give effect to the disposal.
CONSOLIDATED GROUP STATEMENT OF FINANCIAL POSITION
2012 Change 2012
2011*
Figures in R’000 Reviewed Audited
Assets
Non-Current Assets
Property, plant and equipment 5,528 - 5,528 5,341
Goodwill 1,318 - 1,318 1,318
Intangible assets 3,425 - 3,425 3,106
Investments in associates - - - 1,794
Financial assets 57 - 57 46
Deferred tax (1) 11,479 (5,577) 5,902 11,826
Finance lease receivables 241 - 241 485
22,048 (5,577) 16,471 23,916
Current Assets
Inventories (2) 2,235 (652) 1,583 986
Financial assets (2) 1,375 150 1,525 1,033
Finance lease receivables 311 - 311 406
Trade and other receivables 1,510 - 1,510 5,550
Cash and cash equivalents 1,062 - 1,062 173
6,493 (502) 5,991 8,148
Current assets held for sale
and assets of disposal groups 30,539 (1,545) 28,994 39,310
(3)
Total Assets 59,080 (7,624) 51,456 71,374
Equity and Liabilities
Equity
Share capital 43,641 - 43,641 43,641
Reserves 33 - 33 (11)
Accumulated loss (27,806) (7,626) (35,432) (12,011)
15,868 (7,626) 8,242 31,619
Liabilities
Non-Current Liabilities
Financial liabilities 8,793 - 8,793 8,883
Finance lease obligation 1,121 - 1,121 587
Deferred tax 3,655 - 3,655 3,434
13,569 - 13,569 12,904
Current Liabilities
Financial liabilities 1,348 - 1,348 329
Finance lease obligation 593 - 593 494
Operating lease liability 756 - 756 415
Trade and other payables 7,663 - 7,663 8,817
Bank overdraft 3,325 - 3,325 5,078
13,685 - 13,685 15,133
Liabilities of disposal groups 15,958 2 15,960 11,718
Total Liabilities 43,212 - 43,212 39,755
Total Equity and Liabilities 59,080 (7,624) 51,456 71,374
CONSOLIDATED GROUP STATEMENT OF COMPREHENSIVE INCOME
2012 Change 2012
Figures in R’000 2011*
Reviewed Audited
Continuing operations
Revenue 55,252 - 55,252 72,457
Cost of sales (2) (13,985) 291 (13,694) (27,446)
Gross profit 41,267 291 41,558 45,011
Other income 635 - 635 891
Operating expenses (2) (49,051) (792) (49,843) (44,646)
Profit on sale of associate 2,391 - 2,391 -
Operating (loss) profit (4,758) (502) (5,260) 1,256
Investment revenue 213 - 213 14
Fair value adjustments - - - (4)
Income from equity accounted
-
investments 1,148 1,148 817
Finance costs (1,890) - (1,890) (2,084)
Loss before taxation (5,287) 2 (5,789) (1)
Taxation (1) (1,092) (4,458) (5,550) (539)
Loss from continuing operations (6,379) (4,961) (11,340) (540)
Discontinued operations
Loss from discontinued
operations (2) (9,213) (1,545) (10,758) (948)
Loss for the year (15,592) (6,506) (22,098) (1,488)
Other comprehensive loss:
Exchange differences on
62 - 62 (15)
translating foreign operations
Financial assets at fair value
through other comprehensive - - - (6,027)
income adjustments
Taxation related to components
(1,119)
of other comprehensive income (221) (1,340) 848
Other comprehensive loss for the
(159) (1,119) (1,278) (5,194)
year net of taxation (1)
Total comprehensive loss (15,751) (7,626) (23,377) (6,682)
Attributable to:
Owners of the parent:
Loss for the year from
(6,379) (4,961) (11,340) (540)
continuing operations
Loss for the year from
(9,213) (1,545) (10,758) (948)
discontinuing operations (3)
Loss for the year attributable
(15,592) (6,506) (22,098) (1,488)
to owners of the parent
Total comprehensive loss
attributable to:
Owners of the parent (15,751) (7,626) (23,377) (6,682)
Loss per share
From continuing and discontinued
operations
Basic and diluted loss per share
(9.85) (4.11) (13.96) (0.94)
(c)
Basic and diluted loss per share
(4.03) (3.13) (7.16) (0.34)
from continuing operations (c)
Basic and diluted loss per share
(5.82) (0.98) (6.80) (0.60)
from discontinued operations (c)
CONSOLIDATED GROUP STATEMENT OF CHANGES IN EQUITY
Share Accumulated Total
FCTR FVA
Figures in R’000 capital loss equity
Balance at 01 43,641 - - (5,340) 38,301
March 2010
Changes in
equity
Total
comprehensive
- (11) (5,183) (1,488) (6,682)
income for the
year
Transfer between
- - 5,183 (5,183) -
reserves
Total changes - (11) - (6,671) (6,682)
Balance at 01
43,641 (11) - (12,011) 31,619
March 2011
Changes in
equity
Total
comprehensive
- 44 (1,323) (22,098) (23,377)
income for the
year
Transfer between
- - 1,323 (1,323) -
reserves
Total changes - 44 - (23,421) (23,377)
Balance at 29
43,641 33 - (35,432) 8,242
February 2012
FCTR – Foreign Currency Translation Reserve
FVA - Fair value adjustments through other comprehensive income reserve
CONSOLIDATED GROUP STATEMENT OF CASH FLOWS
2012 Change 2012
Figures in R’000 2011*
Reviewed Audited
Cash flows from operating activities
Cash used in operations (2,792) 150 (2,642) 7,355
Interest income 213 - 213 14
Tax paid (95) - (95) -
Cash flows of discontinued
(928) (5) (933) (213)
operations
Net cash from operating activities (3,602) 145 (3,457) 7,156
Cash flows from investing activities
Purchase of property, plant and
equipment - To maintain operating (756) - (756) (1,092)
capacity
Sale of property, plant and
224 - 224 287
equipment
Purchase of other intangible
assets - To maintain operating (1,045) - (1,045) (1,692)
capacity
Sale of equity accounted business 5,333 - 5,333 -
Loans to associates repaid - - - 163
Purchase of financial assets (1,152) - (1,152) -
Sale of financial assets 737 (145) 592 220
Net cash from investing activities 3,341 (145) 3,196 (2,114)
Cash flows from financing activities
Proceeds from other financial
5,152 - 5,152 -
liabilities
Repayment of other financial
- - - (1,687)
liabilities
Finance lease liability payments (466) - (466) (1,466)
Finance costs (1,783) - (1,783) (1,929)
Net cash from financing activities 2,903 - 2,903 (5,082)
Total cash movement for the year 2,642 - 2,642 (40)
Cash at the beginning of the year (4,905) - (4,905) (4,865)
Total cash at end of the year (2,263) - (2,263) (4,905)
HEADLINE AND DILUTED HEADLINE LOSS PER SHARE
Headline loss per share and diluted headline loss per share are
determined by dividing headline loss and diluted headline loss by the
weighted average number of ordinary share outstanding during a period.
The group followed SAICA Circular 3/2009 in calculating headline loss
and diluted headline loss per share for the group and company.
Headline loss and diluted headline loss are determined by adjusting
basic earnings and diluted earnings by excluding separately identifiable
re-measurement items. Headline loss and diluted headline loss are
presented after tax and non- controlling interest.
Diluted headline loss per share is equal to headline loss per share
because there are no dilutive potential ordinary shares in issue.
Headline loss per share was based on a headline loss of the group of
R 17,030,583 (2011: R1,566,957) and a weighted average number of
ordinary shares of 158,311,597 (2011: 158,311,597).
2012 2012
Change 2011
Reviewed Audited
Headline and diluted headline loss
per share (c) (11.13) 0.37 (10.76) (0.99)
Reconciliation between loss and
headline loss R’000
Basic loss (15,592) (6,506) (22,098) (1,488)
Adjusted for:
Profit on disposal of investment
in associate (2,390) - (2,390) -
Loss recognised on the measurement
to fair value less cost to
sell constituting discontinued
operations - 7,101 7,101 -
Loss (profit) on disposal of
investment properties 14 - 14 (44)
Loss/(Profit) on disposal of
property plant and equipment 15 - 15 (48)
Loss on disposal of investments in
subsidiaries (3) - (3) -
Tax effect thereon 331 - 331 13
(17,625) 595 (17,030) (1,567)
Condensed Segmental Analysis
The condensed segmental analysis set out below reflects the revised
results after the modifications referred to above.
Audited Audited
2012 2011*
R’000 R’000
Revenue
Continuing operations
Financial products 33,981 41,804
Health & Wellness products 19,245 30,211
General finance 365 442
Corporate services & other 1,661 -
55,252 72,457
Discontinued operations 4,992 9,085
Profit / (loss)
Continuing operations
Financial products 47 3,665
Health & Wellness products (2,414) 72
General finance (583) (648)
Corporate services & other (8,390) 3,802
Inter segment eliminations - (7,431)
(11,340) (540)
Discontinued operations (10,758) (948)
(22,098) (1,488)
Segment assets
Financial products 3,579 4,199
Health & Wellness products 2,921 6,000
General finance 881 1,821
Corporate services & other 15,081 59,333
Assets of disposal groups 28,994 39,310
Inter segment eliminations - (39,289)
51,456 71,374
Segment liabilities
Financial products 3,715 3,957
Health & Wellness products 3,491 6,086
General finance 61 3,214
Corporate services & other 19,987 37,255
Liabilities of disposal groups 15,960 11,718
Inter segment eliminations - (22,475)
43,214 39,755
*Reclassified to reflect the effect of the discontinued operations.
GOING CONCERN
The consolidated financial statements have been prepared on the basis of
accounting policies applicable to a going concern. This basis presumes
that funds will be available to finance future operations and that the
realisation of assets and settlement of liabilities, contingent
obligations and commitments will occur in the ordinary course of
business. The directors constantly review the business models of the
group and its operating subsidiaries to ensure sustainability and the
ability to operate profitably and generate positive cash flows. Funding
facilities are also reviewed regularly to ensure that the group has
sufficient facilities in place to finance its operations.
The tough market conditions over the past three years resulted in
declining revenue and continued losses for the group. In May 2012
management implemented a restructuring plan in order to reduce costs and
improve efficiencies. This included reducing directors’ remuneration,
retrenchment of several senior staff, the disposal of the Soldonné
residential units and re-negotiating the leases of the branches and of
the head office in Centurion with the respective landlords. The
negotiations with the landlord for the head office are still in
progress. The continued losses placed the cash flows of the group under
serious pressure, resulting in a review of the group’s financing
facilities with its financiers. Although the proceeds from the disposal
of the Soldonné residential units will alleviate some of the group’s
cash flow requirements, the continued support of the financiers are
required to ensure that the group continue as a going concern in the
foreseeable future. The directors have taken steps to raise funds for
working capital, consisting of disposing further assets and are in the
process of restructuring the bank facilities.
Based on the restructuring plans being successfully implemented, budgets
and cash flow forecasts for the ensuing year (which is based on the
current expected economic and market conditions) and the continued
support of the group’s financiers, the directors believe that the group
will have adequate financial resources to continue as a going concern
during the ensuing year.
BASIS OF PREPARATION
Statement of compliance
The consolidated financial results comprise a consolidated statement of
financial position at 29 February 2012, a consolidated statement of
comprehensive income, a consolidated statement of changes in equity and
a consolidated statement of cash flow for the year ended 29 February
2012. The financial results have been prepared in accordance with the
framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (“IFRS”), the AC500
standards as issued by the Accounting Practices Board, the presentation
and disclosure requirements of IAS34 - Interim Financial reporting, the
JSE Listings Requirements and the South African Companies Act 71 of
2008.
The accounting policies applied for the year, which are in terms of
IFRS, are consistent with those of the prior year.
The financial statements have been prepared on the historical cost
basis, except in the case of financial instruments which are measured
using fair value and amortised cost models, and investment properties
that are measured at fair value and non-current assets held for sale and
assets of disposal groups that are measured in terms of IFRS 5.
AUDIT OPINION
The Financial Statements of the company and group have been audited by
Nexia SAB&T. The audit opinion of the Auditors, which is available for
inspection at the company’s register office, contains an emphasis of
matter with regard to the going concern of the Group, as follows:
“Opinion
In our opinion, the financial statements present fairly, in all material
respects, the financial position of StratCorp Limited at
29 February 2012, and its financial performance and cash flows for the
year then ended in accordance with International Financial Reporting
Standards and the requirements of the Companies Act of South Africa.
Emphasis of Matter
Without qualifying our opinion, we draw attention to the Director’s
Report and Note 44 in these financial statements which indicates that
the Group incurred a net loss of R 23,3 million for the year ended 29
February 2012, and the current liabilities of the Group exceed its
current assets as at 29 February 2012. The Director’s Report and Note 44
also indicates that these conditions, along with other matters, indicate
the existence of a material uncertainty relating to the Group’s ability
to continue as a going concern.”
RECLASSIFICATION OF COMPARATIVE FIGURES
Certain comparative figures have been reclassified. All income, expenses
and taxation relating to the discontinued operations have been
reclassified to discontinued operations on the statement of
comprehensive income, all assets of the discontinued operation have been
reclassified as non-current assets held for sale and assets of disposal
groups and all liabilities of the discontinued operations have been
reclassified as liabilities of disposal groups on the statement of
financial position.
- Cash flows from operating, investing and financing activities for
discontinued operations have also been reclassified as cash flows from
discontinued operations on the statement of cash flows;
- All deferred tax assets and liabilities and taxation income and
expenses relating to discontinued operations have been reclassified
as tax from discontinued operations; and
- Earnings per share from continuing and discontinued operations have
also been reclassified.
These reclassifications of prior year comparatives were done in terms of
IFRS 5.
The effects of the reclassifications on the 2011 financial results were
as follows:
Statement of comprehensive income
R’000 Previously Reclassified
stated
Continuing operations
Revenue 81,271 72,457
Cost of sales (31,516) (27,446)
Gross profit 49,755 45,011
Other income 924 891
Operating expenses (50,403) (44,646)
Operating profit 654 1,256
Investment revenue 301 14
Fair value adjustments (4) (4)
Finance cost (3,169) (2,084)
Loss before taxation (1,400) (1)
Taxation 148 (539)
Loss from continuing operations (1,252) (540)
Discontinued operations
Loss from discontinued operations (236) (948)
Loss for the year (1,488) (1,488)
Loss per share
Basic and diluted loss per share (c) (0.94) (0.94)
From continuing operations (c) (0.80) (0.34)
From discontinued operations (c) (0.14) (0.60)
Statement of financial position
R’000 Previously Reclassified
stated
Assets
Non-current assets
Investment property 395 -
Property, plant and equipment 5,688 5,341
Goodwill 1,318 1,318
Intangible assets 3,106 3,106
Investment in associates 1 794 1,794
Other financial assets 46 46
Deferred tax 11,588 11,826
Finance lease receivables 484 485
24 419 23,916
Current assets
Inventories 37,526 986
Other financial assets 1,033 1,033
Finance lease receivables 406 406
Trade and other receivables 6,566 5,550
Cash and cash equivalents 362 173
45,893 8,148
Non-current assets held for sales and
assets of disposal groups 23 39,310
Total assets 70,335 71,374
Equity and Liabilities
Equity
Share capital 43,641 43,641
Reserves (11) (11)
Accumulated loss (12,011) (12,011)
31,619 31,619
Liabilities
Non-Current Liabilities
Other financial liabilities 10,633 8,883
Finance lease obligation 587 587
Deferred tax 2,392 3,434
13,612 12,904
Current Liabilities
Other financial liabilities 328 329
Current tax payable 23
Finance lease obligation 494 494
Operating lease liability 449 415
Trade and other payables 14,680 8,817
Bank overdraft 9,054 5,078
25,028 15,133
Liabilities of disposal groups 76 11,718
Total Liabilities 38,716 39,755
Total Equity and Liabilities 70,335 71,374
Statement of cash flows
R’000 Previously Reclassified
stated
Cash flows from operating activities
Cash used in operations 4,864 7,355
Interest income 103 14
Finance cost (3,014) -
Tax paid (461) -
Cash flows of discontinued operations (114) (213)
Net cash from operating activities 1,379 7,156
Cash flows from investing activities
Purchase of property, plant and
equipment - To maintain operating
capacity (1,348) (1,092)
Sale of property, plant and equipment 294 287
Sale of investment property 439 -
Purchase of other intangible
assets - To maintain operating
capacity (1,692) (1,692)
Loans to associates repaid 163 163
Purchase of financial assets - -
Sale of financial assets 336 220
Net cash from investing activities (1,809) (2,114)
Cash flows from financing activities
Proceeds from other financial
liabilities -
Repayment of other financial
liabilities (1,687) (1,687)
Finance lease liability payments (1,209) (1,466)
Finance lease assets receipts 68 -
Finance costs - (1,929)
Net cash from financing activities (2,828) (5,082)
Total cash movement for the year (3,258) (40)
Cash at the beginning of the year (5,433) (4,865)
Total cash at end of the year (8,691) (4,905)
DIVIDENDS
No dividends were declared or paid to shareholders during the year.
LITIGATION
There is a potential dispute between a subsidiary of the company and
regulators. The outcome is uncertain and therefore the impact on the
company, if any, cannot be determined at this time. Depending on how
matters develop, it may have a material effect on the company’s
securities.
The directors are not aware of any other legal or arbitration
proceedings, pending or threatened against the group, which may have or
have had, in the 12 months preceding the date of this report, a material
effect on the group’s financial position.
ANNUAL REPORT
The Annual Report for the year ended 29 February 2012 will be posted to
shareholders on or about 26 September 2012.
On behalf of the board.
D B Harington
Chief Executive Officer
JHP Engelbrecht
Group Financial Director
18 September 2012
CORPORATE INFORMATION
Non executive directors: PJ de Jongh (Chairman), M Patel*
(Chairman of Audit Committee), TG Ratau
*Independent
Executive directors: DB Harington (CEO), JHP Engelbrecht (GFD), IM
Wright (CIO)
Registered address: 3rd Floor, Lakeside Building A, 2004 Gordon Hood
Drive, Centurion, 0046
Postal address: PO Box 12022, Centurion, 0046
Company secretary: JPJ Louw
Telephone: (012) 643 7400
Facsimile: (012) 663 2914
Transfer secretaries: Computershare Investor Services (Pty) Limited
Auditors: Nexia SAB&T
Designated Adviser: Exchange Sponsors
Date: 18/09/2012 11:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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