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Unaudited interim results for the six months ending 31 August 2012
RGT SMART MARKET INTELLIGENCE LIMITED
Incorporated in the Republic of South Africa)
(Registration number: 2008/014367/06)
Share Code: RGT ISIN: ZAE0000143715
("RGT SMART" or “the Company”)
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS
ENDING 31 AUGUST 2012.
Commentary
RGT SMART Market Intelligence Limited (RGT SMART) presents its unaudited
interim results for the six months ending 31 August 2012.
Over the past six months we have continued building on the work done so far by
consolidating the two operational companies, extracting synergies and building a
strong highly motivated team. The RGT SMART strategy for 2012 focuses on
investing for growth, recruiting and developing the company’s most significant assets:
its people, talent and knowledge base. In refining our focus and business model RGT
SMART has concentrated on securing and enhancing our databases and data
sources and we are confident that we have the most comprehensive industry data
available.
Our development team, through intensive investment in training, achieved Microsoft
Gold Development Partner Status, confirming their “best of breed” reputation. The
systems, security and software are cutting edge and the latest developments are
exploring the boundaries in touch screen, tablet and mobile interfaces.
During the period under review the RGT SMART team completed a successful roll-
out of the new AutoMSA platform; (http://www.automsa.co.za/) completed
development and launched the Go! product; (http://www.gogetsmart.co.za/), the
online Geo mapping tool; (http://www.smartmapping.co.za/), and ECHO the new
Customer Feedback Platform: (http://www.echoecho.co.za).
Recruitment of experienced experts in strategic areas have enhanced the internal
knowledge base with the addition of amongst others, a Training Specialist – to
develop and grow the training team, a Master Statistician – to bolster the already
strong analytics team, a Dealer Expert – for an improved focus on dealer markets
and a professional Vehicle Specifications Specialist.
Most significantly the appointment of the new CFO/COO has been perfectly timed.
As young fast growing entrepreneurial companies mature there is an increasing load
on day to day management and consequently less focus on the entrepreneurship
that built the company and fuelled its growth. We recognised that in order to regain
growth and expansion momentum it was necessary to bring a dynamic strong
experienced management professional on board to take on the increasingly
important operational management role.
We have continued to develop and explore synergies between RGT SMART and
sister companies and a number of new data sources and data enhancements have
been made possible. During the first six months of 2012 RGT SMART evaluated two
potential acquisition opportunities, but both were deemed to add insufficient value to
warrant pursuing further.
Financial Results
While revenue is up 12.5% against the comparative to almost R18 Million for the first
six months trading expenses are up 20.7% mainly due to significant investment in
additional personnel and product development. Once off expenses of R650 000,
related to the specific share repurchase and legal fees were also incurred during the
period. The net effect is that earnings per share and headline earnings per share for
the six months ended 31 August 2012 are 27% lower than the prior comparative
period.
The board is cognisant of the decline in performance and a number of initiatives have
been introduced to ensure the current balance between short term performance and
long term growth is maintained.
Changes to the Board
A number of important changes to the board occurred in the period under review.
Mr Pete Backwell was appointed to the board of RGT SMART as a non-executive
director with effect from 27 March 2012. Mr Backwell adds huge insight and
experience. He qualified as a Chartered Accountant at Pim Goldby and was a partner
in the Tax Division of Deloitte before joining the Nedbank Group. In 1991 Pete
headed up Nedbank’s Corporate Banking Division and was subsequently appointed
Managing Director of the Retail and Wealth Management division. Pete joined H.L.
Hall and Sons Holdings Limited in 2004, which is the indirect controlling shareholder
of RGT SMART through Lightstone (Proprietary) Limited.
From 4 July 2012, Dr Neal Bruton changed his role from Executive Director to a
Non-Executive Director on the RGT SMART Board. Although Dr Bruton no longer
plays a full time role as an employee of the Company, he remains on the RGT
SMART Board continuing to be integral to the on-going strategy, development and
growth of the company. Neal is currently used on a consulting and assignment basis
to RGT SMART.
Mr Cliff Reed the Financial Director resigned with effect from the 31 August 2012
after ensuring an effective handover to the new Financial Director. Cliff’s role in
taking the group to a successful listing, integrating IFRS, and structuring and
consolidating the group’s accounting was pivotal in setting up RGT SMART to
operate efficaciously in the listed environment.
Concurrent with this Mr Frans Botha was appointed Chief Financial Officer and
Chief Operating Officer. Frans joined RGT SMART with effect from 1 August 2012.
Mr Botha obtained a B Com degree from Nelson Mandela Metropolitan University in
1995 and a B Compt (Hons) degree from UNISA in 2000. He completed articles with
PKF (Port Elizabeth) and qualified as a Chartered Accountant in 2003. Most recently
Mr Botha was the Financial Director at IQuad Group Limited, a company listed on the
JSE.
Prospects
The platform we’ve established, infrastructure, technology and mostly our talented
team bodes well for the future of RGT SMART. We are excited about the prospects
of new product platforms, AutoMSA, Go and Echo and will continue with our strong
marketing effort. The team is highly focused and motivated and the new products are
starting to gain traction in the marketplace, accelerated growth rates and improved
profitability in the medium term should result.
Share Buy-back
Following shareholder approval at the AGM held on the 22nd August the company
repurchased 58 678 000 RGT SMART ordinary shares at 10 cents per share from
related parties as follows:
• 20 000 000 ordinary shares from The Bruton Primary Trust,
• 20 000 000 ordinary shares from The De Vantier Family Trust,
• 9 060 000 ordinary shares from Mr CW Reed, and
• 9 618 000 ordinary shares from The Greenhills Family Trust.
44 132 200 of the repurchased shares will be kept in treasury and could be used at a
later date by the company. The remaining 14 545 800 repurchased shares will be
cancelled and delisted in due course.
The associated costs of the share buy-back are reflected in the financial results
presented herein.
The expected positive impact on earnings and headline earnings per share from the
number of shares in issue was insignificant due to the timing of the repurchase. The
reduced shares in issue will have a positive impact on the full year performance per
share.
Dividends
No interim dividend has been declared.
Thank You
Finally we would like to extend sincere thanks to our Board who provide valuable
insight and guidance, Our Management Team, and Staff for their commitment and
motivation, our Customers, Suppliers for their on-going support and of course our
shareholders for their continued faith and commitment to our collective vision.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 August 31 August 28 February
ASSETS 2012 2011 2012
R’000 R’000 R’000
Non-Current Assets 26,534 26,226 26,119
Property, plant and equipment 2,279 2,564 2,435
Goodwill 17,449 17,449 17,449
Intangible assets 6,389 5,682 5,907
Deferred tax asset 417 531 328
Current Assets 8,574 12,973 13,526
Trade and other receivables 2,724 2,979 2,967
Operating lease asset - - 149
Current tax asset - - 530
Cash and cash equivalents 5,850 9,994 9,880
Total Assets 35,108 39,199 39,645
EQUITY AND LIABILITIES
EQUITY AND RESERVES 27,727 30,004 32,226
Share capital 7,388 13,271 13,271
Accumulated profits 20,339 16,733 18,955
LIABILITIES
Non-Current Liabilities 2,184 2,425 3,313
Loans from shareholders - 879 -
Borrowings - - 1,094
Operating lease liability 504 - 564
Deferred tax liability 1,680 1,546 1,655
Current Liabilities 5,197 6,770 4,106
Loans from shareholders - 1,035 -
Borrowings 879 - 271
Current tax liability 369 156 103
Operating lease liability - 315 -
Trade and other payables 2,170 2,729 2,301
Revenue received in advance 1,024 1,189 1,299
Provisions 755 1,346 132
Total Liabilities 7,381 9,195 7,419
Total Equity and Liabilities 35,108 39,199 39,645
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
31 August 31 August 28 February
2012 2011 2012
R’000 R’000 R’000
Revenue 17,973 15,973 32,370
Cost of Services rendered (1,833) (3,460) (6,350)
Gross profit 16,140 12,513 26,020
Other income 7 16 33
Operating expenses (14,275) (9,804) (20,811)
Operating Profit 1,872 2,725 5,242
Investment income 192 149 334
Finance costs (65) (122) (255)
Profit before taxation 1,999 2,752 5,321
Taxation (615) (850) (1,197)
Profit and total comprehensive 1,384 1,902 4,124
profit for the period
Profit and total comprehensive
profit for the period attributable to:
Owners of the parent 1,384 1,902 4,124
Basic and diluted earnings per share 0.2787 0.3803 0.8247
(cents)
HEADLINE EARNINGS RECONCILIATION
Unaudited Unaudited Audited
31 August 31 August 28 February
2012 2011 2012
R’000 R’000 R’000
Headline earnings reconciliation
Profit and total comprehensive profit 1,384 1,902 4,124
for the period
Adjusted for: Loss on disposal of 12 - 91
property, plant and equipment
Headline earnings 1,396 1,902 4,215
Weighted average shares in issue 496,811 500,000 500,000
(‘000)
Diluted weighted average shares in 496,811 500,000 500,000
issue (‘000)
Headline and diluted headline 0.2811 0.3803 0.8429
earnings per share (cents)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
31 August 31 August 28 February
2012 2011 2012
R’000 R’000 R’000
Cash Flows from operating activities 3,180 3,857 5,229
Cash Flows from investing activities (841) (2,381) (3,318)
Cash Flows from financing activities (6,369) 7,098 6,549
Net decrease/increase in cash and (4,030) 8,574 8,460
cash equivalents
Cash and cash equivalents at the 9,880 1,420 1,420
beginning of the period
Cash and cash equivalents at the 5,850 9,994 9,880
end of the period
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
31 August 31 August 28 February
2012 2011 2012
R’000 R’000 R’000
Opening Totals shareholders’ 32,226 18,104 18,104
equity
Total Comprehensive income for the 1,384 1,902 4,124
period
Transactions with owners recorded
directly in equity
Issue of shares - 6,220 6,220
Treasury shares acquired (4,424) - -
Treasury shares cancelled (1,459) - -
Treasury shares sold - 3,778 3,778
Closing balances 27,727 30,004 32,226
BASIS OF PREPARATION
The condensed unaudited interim consolidated financial statements for the six
months ended 31 August 2012, have been prepared in accordance with IAS 34 –
“Interim Financial Reporting”, the requirements of the Companies Act 71 of 2008 and
in compliance with the JSE Listings Requirements. The condensed unaudited interim
consolidated financial statements should be read in conjunction with the annual
financial statements for the year ended 29 February 2012, which have been prepared
in accordance with IFRSs and the AC500 series. The same accounting policies and
methods of computation are followed in the interim financial statements as compared
to the 2012 annual financial statements.
In terms of S29(1)(e)(ii) of the Companies Act, it is confirmed that the preparation of
these financial statements is done under the supervision of Frans Botha CA(SA),
financial director of the Group.
The results have not been audited or reviewed.
1. NATURE OF BUS INESS
RGT SMART is an investment holding company engaged in market intelligence and
data analysis in all aspects and related activities and operates in South Africa.
2. SEGMENTAL RE PORT ING
Management has determined the operating segments based on the reports reviewed
by the strategic committee. Prior to the merger of the separate legal operating
entities during the preceding financial year, the Group reported its results under two
segments namely Market Research and Statistics. As part of the restructuring the
Groups operations were rearranged into three reportable segments with distinct
product offerings.
Motor Data
Provides clients’ online subscription based access to detailed motor industry sales
volumes, vehicle specifications and sophisticated market segmentation and analysis
tools.
Market Research
Provides qualitative and quantitative market research to clients through the
implementation of world class data collection, analysis and interpretation tools and
methodologies.
Service Quality Systems
Delivers real-time consistent and accurate measurement of customer experience
combined with corrective action and improvement support.
Due to the change in the Groups operational structure, the segmentation below has
been amended and comparative figures has been restated, where practically
possible
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
31 August 31 August 28 February
2012 2011 2012
R’000 R’000 R’000
Segment Revenue
Motor Data 5,386 4,910 9,060
Research and Analytics 5,551 4,568 10,299
Service Quality Systems 6,901 6,363 12,834
Group 135 132 177
Total revenue 17,973 15,973 32,370
Segment Operating profit
Motor Data 3,432 2,701 6,350
Research and Analytics 3,702 3,631 6,300
Service Quality Systems 4,428 4,237 8,901
Other segments
Group and inter segment eliminations (9,563) (7,817) (16,230)
Profit before taxation 1,999 2,752 5,321
Transactions with individual clients did not amount to 10% or more of the Group’s
total revenue.
3. SHARE CAPITAL
On 22 August the Company increased its authorised share capital from 500 000 000
shares to 1 000 000 000 shares and converted it’s share capital to shares of no par
value. No shares were issued during the period.
The group acquired 58 678 000 of its own shares on the JSE in terms of a specific
repurchase utilising its cash resources. The total amount paid to acquire the shares
was R5 883 028, which has been deducted from shareholders equity. A portion of the
shares repurchased amounting to 14 545 800 shares will be delisted and cancelled,
the balance of the shares will be held as treasury shares in a subsidiary of RGT
SMART.
4. 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.
5. CONTINGENT LIABILITIES
At the balance sheet date the Group does not have any contingent liabilities.
6. SUBSEQUENT EVENTS
There are no material events subsequent to the period end that require reporting.
By order of the Board
AA Da Costa
CHAIRMAN
PB De Vantier
CHIEF EXECUTIVE OFFICER
FJ Botha
FINANCIAL DIRECTOR
09 November 2012
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), FJ Botha (FD), NS Bruton*, CJ
Moodliar*#, TB Hayter*#, S Pretorius*#, A Miller*, P Backwell*
* Non-executive, #Independent
Designated Advisor
Arcay Moela Sponsors (Proprietary) Limited
Transfer Office
Link Market Services (Proprietary) Limited
Date: 09/11/2012 02:42:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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