Wrap Text
Audited abridged financial results, change statement & notice of AGM
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 ABRIDGED FINANCIAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2013,
CHANGE STATEMENT AND NOTICE OF ANNUAL GENERAL MEETING
INTRODUCTION
Shareholders are advised that the annual financial statements were
distributed to shareholders today and contain the modifications set out
below to the reviewed provisional results published on SENS on 2 June
2013.
The modifications impacted on the following statements only:
The Abridged Statement of Financial Position: Deferred tax assets and
liabilities
This resulted from certain deferred tax assets and liabilities
previously offset against each other now being disclosed
separately. *This modification was also required for comparative
2012 numbers, which resulted in a re-allocation of R1.4 million
between deferred tax assets and deferred tax liabilities, with a
zero net effect.
The Abridged Statement of Financial Position: Trade and other
receivables, trade and other payables, cash and cash equivalents and
current tax receivable and payable
Upon finalising the abridged audited results for the year after
publication of the provisional results, some debtor’s receipts and
payments to creditors that were treated as outstanding deposits and
payments were reclassified. The adjustments also impacted on the
bad debt provisions and related income tax.
There was also a reclassification of some trade and other
receivables to assets of disposal groups for discontinued
operation. There was no modification for comparative 2012 numbers
as the debt only arose during the current year.
The Abridged Statement of Comprehensive Income
The reduction of the provision for bad debts and related income tax
had an effect on operating expenses and taxation.
There was also a reclassification of some revenue and expense items
that were allocated to discontinued operations. There was no
modification for comparative 2012 numbers as it only related to new
income and expense items in the current year.
The Abridged Statement of Cash Flows
This resulted from interest accrued but not received during the
year amounting to R50k being adjusted on the statement of cash
flows as well as the effect of outstanding deposits and outstanding
payments being corrected, and allocation between continuing and
discontinuing operations.
The Abridged Segmental Analysis
This resulted from the manner in which Segmental Analysis is
reported to Exco from 2013 onward.
ABRIDGED GROUP STATEMENT OF FINANCIAL POSITION
28 Feb 28 Feb 29 Feb
2013 Change 2013 2012
Figures in R’000 Audited Reviewed Audited
Assets
Non-Current Assets
Property, plant and equipment 3,485 3,485 5,528
Goodwill 1,318 1,318 1,318
Intangible assets 3,615 3,615 3,425
Other financial assets 1,286 1,286 57
Deferred tax 4,818 (191) 5,009 4,485*
Finance lease receivables 158 158 241
14,680 (191) 14,871 15,054*
Current Assets
Inventories 798 798 1,583
Other financial assets 235 235 1,525
Current tax receivable 40 (31) 71 -
Finance lease receivables 216 216 311
Trade and other receivables 886 (25) 911 1,510
Cash and cash equivalents 1,991 (332) 2,323 1,062
4,166 (388) 4,554 5,991
Non-current assets held for sale
and assets of disposal groups 14,928 35 14,893 28,994
Total Assets 33,774 (544) 34,318 50,039*
Equity and Liabilities
Equity
Share capital 43,641 43,641 43,641
Reserves 1,297 1 1,296 33
Accumulated loss (44,236) 31 (44,267) (35,432)
702 32 670 8,242
Liabilities
Non-Current Liabilities
Other financial liabilities 8,793 8,793 8,793
Finance lease obligation 346 346 1,121
Deferred tax 2,158 (191) 2,349 2,238*
11,297 (191) 11,488 12,152*
Current Liabilities
Other financial liabilities 935 935 1,348
Current tax payable 8 8 - -
Finance lease obligation 268 268 593
Operating lease liability 855 855 756
Trade and other payables 4,577 (393) 4,970 7,664
Bank overdraft 5,268 5,268 3,325
11,911 (385) 12,296 13,686
Liabilities of disposal groups 9,864 9,864 15,960
Total Liabilities 33,072 (576) 33,648 41,797*
Total Equity and Liabilities 33,774 (544) 34,318 50,039*
*Contains reclassifications
ABRIDGED GROUP STATEMENT OF COMPREHENSIVE INCOME
28 Feb 28 Feb 29 Feb
Figures in R’000 2013 2013 2012
Audited Change Reviewed Audited
Continuing operations
Revenue 42,757 62 42,695 55,252
Cost of sales (11,847) - (11,847) (13,694)
Gross profit 30,910 62 30,848 41,558
Other income 375 - 375 635
Operating expenses (38,732) (9) (38,741) (49,843)
Profit on sale of associate
- - - 2,390
Operating (loss) (7,447) (71) (7,518) (5,260)
Investment revenue 109 - 109 213
Income from equity accounted
investments - - - 1,148
Finance costs (1,587) - (1,587) (1,890)
Loss before taxation (8,925) 71 (8,996) (5,789)
Taxation 386 (5) 391 (5,550)
Loss from continuing operations (8,539) 66 (8,605) (11,339)
Discontinued operations
Loss from discontinued (265) (35) (230) (10,758)
operations
Loss for the year (8,804) 31 (8,835) (22,097)
Other comprehensive income
(loss):
Fair value adjustments on
assets at fair value through
other comprehensive income 1,254 1 1,253 -
Exchange differences on
translating foreign operations 13 - 13 62
Taxation related to components
of other comprehensive income (3) - (3) (1,340)
Other comprehensive income
/(loss) for the year net of
taxation 1,264 1 1,263 (1,278)
Total comprehensive loss (7,540) 32 (7,572) (23,377)
Attributable to:
Owners of the parent:
Loss for the year from
continuing operations (8,539) 66 (8,605) (11,340)
Loss for the year from
discontinuing operations (265) (35) (230) (10,758)
Loss for the year attributable
to owners of the parent (8,804) 31 (8,835) (22,098)
Total comprehensive loss
attributable to:
Owners of the parent (7,540) 32 (7,572) (23,377)
Loss per share
From continuing and
discontinued operations
Basic and diluted loss per
share (c) (5.56) 0.02 (5.58) (13.96)
Basic and diluted loss per
share from continuing
operations (c) (5.39) 0.05 (5.44) (7.16)
Basic and diluted loss per
share from discontinued
operations (c) (0.17) (0.03) (0.14) (6.80)
Basic loss per share was based on a loss of the group of R (8,804,080)
(2012: R (22,097,927)) and a weighted average number of ordinary shares
of 158 311 597 (2012: 158 311 597).
ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY
Share Accumulat Total
FCTR FVA
Figures in R’000 capital ed loss equity
Balance at 01 March
43,641 (11) - (12,011) 31,619
2011
Changes in equity
Total comprehensive
income /(loss) for - 44 (1,323) (22,098) (23,377)
the year
Transfer between
- - 1,323 (1,323) -
reserves
Total changes - 44 - (23,421) (23,377)
Balance at 1 March
43,641 33 - (35,432) 8,242
2012
Changes in equity
Total comprehensive
income /(loss) for - 11 1,253 (8,804) (7,540)
the year
Total changes - 11 1,253 (8,804) (7,540)
Balance at 28
43,641 44 1,253 (44,236) 702
February 2013
FCTR – Foreign Currency Translation Reserve
FVA - Fair value adjustments through other comprehensive income reserve
ABRIDGED GROUP STATEMENT OF CASH FLOWS
28 Feb 28 Feb 29 Feb
Figures in R’000 2013 2013 2012
Audited Change Reviewed Audited
Cash flows from operating
activities
Cash receipts from customers 44,087 - 44,087 42,569
Cash paid to suppliers and (50,052
employees (50,300) (248) ) (45,211)
Cash used in operations (6,213) (248) (5,965) (2,642)
Interest income 59 (50) 109 213
Tax paid (120) 1 (121) (95)
Cash flows of discontinued
operations 7,778 (36) 7,814 (932)
Net cash from operating
activities 1,504 (333) 1,837 (3,456)
Cash flows from investing
activities
Purchase of property, plant and
equipment - To maintain
operating capacity (363) (1) (362) (756)
Sale of property, plant and
equipment 839 1 838 224
Purchase of other intangible
assets - To maintain operating
capacity (1,196) - (1,196) (1,045)
Sale of equity accounted
business - - - 5,333
Purchase of financial assets - - - (1,152)
Sale of financial assets 1,302 - 1,302 592
Net cash from investing
activities 582 - 582 3,196
Cash flows from financing
activities
Proceeds from other financial
liabilities - - - 5,151
Repayment of other financial
liabilities (413) - (413) -
Finance lease liability
payments (1,236) - (1,236) (466)
Finance costs (1,451) - (1,451) (1,783)
Net cash from financing
activities (3,100) - (3,100) 2,902
Total cash movement for the
year (1,014) (333) (681) 2,642
Cash at the beginning of the
year (2,263) - (2,263) (4,905)
Total cash at end of the year (3,277) (333) (2,944) (2,263)
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 3/2012 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
R8,576,522 (2012: R17,030,583) and a weighted average number of ordinary
shares of 158,311,597 (2012: 158,311,597).
28 Feb 28 Feb 29 Feb
2013 2013 2012
Audited Change Reviewed Audited
Headline and diluted headline loss
per share (c) (5.42) 0.02 (5.44) (10.76)
Reconciliation between loss and
headline loss R’000
Basic loss (8,804) 31 (8,835) (22,098)
Adjusted for:
Profit on disposal of investment in
associate - - (2,390)
After Tax Loss recognised on the
measurement to fair value less cost
tosell constituting discontinued
operations - - 7,101
Loss (profit) on disposal of
investment properties - - 14
Loss/(Profit) on disposal of
property plant and equipment 9 9 15
Impairment loss on property plant 132 132 -
and equipment
Impairment loss on Intangibles 173 173 -
Loss on disposal of investments in
subsidiaries - - (3)
Tax effect thereon (87) (87) 331
(8,577) 31 (8,608) (17,030)
Abridged Segmental Analysis
28 Feb 28 Feb 29 Feb
2013 2013 2012
Figures in R’000 Audited Change Reviewed Audited
Revenue
Continuing operations
Financial products 30,882 (111) 30,993 33,981
Health & Wellness products 11,612 314 11,298 19,245
General finance 263 - 263 365
Corporate services & other - (141) 141 1,661
42,757 62 42,695 55,252
Discontinued operations 15,718 (32) 15,750 4,992
EBITDA
Continuing operations
Financial products 7,158 (876) 8,034 4,516
Health & Wellness products (1,281) (199) (1,082) (1,733)
General finance (160) 1 (161) (42)
Corporate services & other (52) 15,344 (15,396) (6,543)
5,665 14,270 (8,605) (3,802)
Discontinued operations (265) (35) (230) (10,758)
5,400 14,235 (8,835) (14,560)
Segment assets (Excluding
unlisted investments,
deferred tax and goodwill)
Financial products 2,511 (4,322) 6,833 1,715
Health & Wellness products 823 (539) 1,362 2,106
General finance 710 (27) 737 852
Corporate services & other 7,412 (3,081) 10,493 10,567
Assets of disposal groups 14,929 36 14,893 28,994
26,385 (7,933) 34,318 44,235
Segment liabilities
(excluding Interest bearing
liabilities and deferred
tax)
Financial products 2,327 (623) 2,950 2,943
Health & Wellness products 1,196 (21) 1,217 3,239
General finance 15 (27) 42 33
Corporate services & other 7,785 (11,790) 19,575 7,242
Liabilities of disposal
groups 9,864 - 9,864 15,960
21,187 (12,461) 33,648 29,417
The Exco assesses the performance of the operating segments based on the
measure of EBITDA. This measure excludes the effects of non-recurring
expenditure from the operating segments such as restructure costs, legal
expenses and goodwill impairments when the impairment is the result of an
isolated, non-recurring event.
The measure also excludes the effects of equity-settled share-based
payments and unrealised gains/losses on financial instruments. Interest
income and expenditure are not allocated to operating segments, as this
type of activity is driven by the central treasury function. The results
of discontinued operations are not included in the measure of EBITDA.
The amounts provided to the Exco with respect to total assets are
measured in a manner consistent with that of the financial statements.
These assets are allocated based on the operations of the segment and the
physical location of the asset.
Investments in shares held by the group, intercompany loans and deferred
tax assets are not considered to be segment assets and are not allocated
to segments.
Capital expenditure reflects additions to non-current assets, other than
financial instruments, deferred tax assets, post-employment benefit
assets and rights arising under insurance contracts.
The amounts provided to the Exco with respect to total liabilities are
measured in a manner consistent with that of the financial statements.
These liabilities are allocated based on the operations of the segment.
The group's interest-bearing liabilities are not considered to be segment
liabilities but rather are managed by the group's treasury function.
BUSINESS OVERVIEW
StratCorp is an investment holding company that owns and invests in
companies with high growth potential. Its focus is on providing its
subsidiaries with infrastructural support and management services, which
include centralised information technology systems and support, legal
and human resource administration and support, and finance support and
funding facilities. StratCorp also provides its subsidiary companies
with a central client base that has been built up over the past 12
years.
The Group currently operates in three segments, namely Financial
Products through Virtus and WealthNet, Health and Wellness Products
through I-Cura, and General Finance through StratFin.
The tough market conditions that the Group experienced during the 2012
financial year continued into the 2013 with a constant decline in
subscriptions from all the businesses in the Group. The disposable
income of the main client base of the Group remained under pressure and
customers cancelled their subscriptions in order to meet other, more
pressing expenses.
A restructuring plan was implemented in May 2012 to reduce the expenses
of the group and return the Group to profitability. This plan included
the reduction of staff, especially in the support functions within the
Group, renegotiating leases for the branches, sharing of certain
premises by the Group companies, reduction of directors’ remuneration
and the disposal of the Soldonné Residential complex effective from
November 2012. Although the restructuring plan reduced expenses by on
average R1 million per month, this was not sufficient to address the
continued decline in revenue over the same period.
I-Cura which distributes health and wellness products was the main
contributor to the poor performance of the Group during the financial
year, with revenue decreasing from R19.2 million for the 2012 year to
R11.6 million for the 2013 year, a decrease of 39.6% over the year.
In February 2013 the Board of Directors of the company resolved that a
second, more aggressive restructuring plan should be implemented to
return the group to profitability. This plan entailed the further
reduction of staff on managerial and support functions, the closure of
branches that were not contributing to Group revenue or profits, a
further reduction in directors’ remuneration, and renegotiation of the
Head Office lease with the landlord.
As a result of the tough market conditions, Revenue from continuing
operations decreased from R55.2 million in 2012 to R42.8 million in
2013. The net loss after tax from continuing operations decreased from
R11.3 million in 2012 to R8.5 million in 2013. The total loss from
discontinued operations for 2013 amounted to R0.2 million compared to
R10.8 million for 2012.
ASSETS AND LIABILITIES OF DISPOSAL GROUPS
Shareholders were advised in the 2012 results announcement that the
Board has taken a decision to discontinue its property development
operations, and to reflect its interests in property as part of the
discontinued operations. The Soldonné Residential complex that the
Group owned was sold with effect from November 2012. The Group still
owns two vacant properties in Karenpark and Orchards, which are for
sale, but only at reasonable prices. Management believes that the two
properties have value and will reconsider its intention with regards to
the two properties over the next six months.
While the Group still owes the vendor of the Orchards property R4,8
million, the payment terms are linked to the development of that
property, with an amount payable per stand sold and developed. There
are no time constraints imposed on the company to perform with regard to
when the development must commence or be finalised.
CASH FLOWS
A net cash outflow of R1 million was recorded for the period compared to
a net inflow of R2.6 million for 2012, but this included the repayment
of debt of R6.7 million, mainly from the proceeds of the disposal of the
Soldonné Residential complex in November 2012. Cash generated from
operations increased from an outflow of R2.6 million in 2012 to an
outflow of R6.2 million in 2013, which includes the costs of the
restructuring exercises that the Group implemented during the 2013 year.
The restructuring plan and the reduction of costs over the past twelve
months have started to produce positive results for the Group, with the
Group returning to a net positive cash flow position. Cash flow is
managed tightly, and unnecessary expenses have been eliminated to
improve efficiencies within the Group.
STRATEGY
General market conditions remain sluggish and the Group is not expecting
this to change soon. The focus of the Group is on expanding its product
range and its distribution channels to increase revenue and diversify
its exposure from the current direct marketing channels. With the costs
now under control, any new expenditure focuses on the marketing of the
products and to this extent the Telemarketing division within I-Cura has
already proven itself by delivering growing sales volumes each month.
This division will be expanded with the appointment of more agents,
mainly from the reallocation of expenses from other areas where savings
are extracted through improved efficiencies.
Consumer affordability remains a major contributor towards the revenue
of the Group, and management continues with its efforts to produce and
deliver affordable products and services to its customers that meet
their needs.
GOING CONCERN
The audited abridged group financial results 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 Group incurred a net loss of R 8,8 million for the year ended 28
February 2013, compared to a net loss of R22 million during 2012, and
the current liabilities of the Group exceed its current assets as at 28
February 2013. The losses incurred by the Group over the last financial
year have placed the cash flows of the Group under a considerable
pressure, which threatens the going concern of the group. The
restructuring plan that has been approved by the Board and implemented
to reduce costs, realise non-core assets and reduce debt to enable the
Group to continue operating as a going concern, has already resulted in
a considerable reduction in debt and expenses, as well as the cash
requirements of the Group, with the Group returning to a positive cash
flow position. While it is early days and the next few months will
determine whether the restructuring of the Group has been successful,
the Board believes that Group costs has been reduced sufficiently to
return the Group to positive cash flows to allow the management to focus
on revenue and the expansion of the revenue channels over the next
financial year and confirm the going concern of the Group. Although the
board is optimistic that the corner has been turned, the continued going
concern of the Group remains subject to the continuous successful
results due to the implementation of the restructuring plan and the
access to sufficient cash resources.
BASIS OF PREPARATION
Statement of compliance
The audited abridged group financial results comprise a abridged group
statement of financial position at 28 February 2013, an abridged group
statement of comprehensive income, an abridged group statement of
changes in equity and an abridged group statement of cash flow for the
year ended 28 February 2013. The audited abridged group financial
results have been prepared in accordance with the framework concepts and
the measurement and recognition requirements of International Financial
Reporting Standards (“IFRS”), SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by Financial Reporting Standards Council , the
presentation and disclosure requirements of IAS34 - Interim Financial
reporting, the JSE Listings Requirements and the South African Companies
Act 71 of 2008.
The audited abridged group financial results have been prepared on a
going concern basis.
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 non-current assets held
for sale and assets of disposal groups that are measured in terms of
IFRS 5.
AUDIT OPINION
The abridged group 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 group financial statements present fairly, in all
material respects, the group financial position of StratCorp Limited as
at 28 February 2013, 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 Directors
Report and Note 46 of the group annual financial statements which
indicates that the Group incurred a net loss of R8.8 million for the
year ended 28 February 2013, and the current liabilities of the Group
exceeded its current assets as at 28 February 2013. The Directors Report
and Note 46 also indicate that these conditions, along with other
matters, indicate the existence of a material uncertainty which may cast
significant doubt on the Group’s ability to continue as a going concern.
DIVIDENDS
No dividends were declared or paid to shareholders during the year.
LITIGATION
As reported in the SENS announcement on 20 May 2013, a major subsidiary
of the Company is being investigated by the Financial Services Board
(“FSB”). The FSB’s investigation of the Company’s subsidiary originated
from a complaint received by the FSB in 2007 of the alleged
contravention by the subsidiary of certain provisions of the Financial
Advisory and Intermediary Services Act (Act no. 37 of 2002). The matter
is receiving attention, and the Company’s subsidiary has been engaging
with the Regulator in this regard.
As reported in the SENS announcement on 16 August 2013, legal
proceedings were instituted against the Company’s wholly owned
subsidiary, Virtus Financial Services Proprietary Limited (“Virtus”) and
inter alia the current Chief Executive Officer of the Company (who was a
director in Virtus at the time), claiming payment of damages in excess
of R23 million. The claim arises from an investment made by a third
party in 2008 in a company that was liquidated in 2010. Virtus acted in
an advisory capacity to the third party. Virtus and the other defendants
intend defending the matter. Should the plaintiff succeed, it may have a
material effect on the price of the Company’s securities and the group’s
financial position in future.
Save as set out above, 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.
CHANGES TO THE BOARD
Steven Firer resigned as an independent non-executive director on 12 May
2012, and Ian Wright resigned as executive director on 28 February 2013.
Since year end Tumelo Ratau resigned as non-executive director on 17 May
2013 and Henk Engelbrecht resigned as Financial Director of the Group
with effect from 31 May 2013.
Mr JN de Beer was appointed as Group Financial Director of the Group
with effect from 1 August 2013.
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT THE THIRTEENTH ANNUAL GENERAL MEETING OF
SHAREHOLDERS OF STRATCORP LIMITED (“THE COMPANY”) WILL BE HELD AT THE
3RD FLOOR, LAKESIDE BUILDING B, 2004 GORDON HOOD DRIVE, CENTURION ON
FRIDAY, 01 NOVEMBER 2013 AT 10:00
On behalf of the board
D B Harington
Chief Executive Officer
16 September 2013
CORPORATE INFORMATION
Non executive directors: PJ de Jongh* (Chairman), M Patel*
(Chairman of Audit Committee)
*Independent
Executive directors: DB Harington (CEO), JN de Beer (FD)
Registered address: 3rd Floor, Lakeside Building A, 2004 Gordon Hood
Drive, Centurion, 0046
Postal address: PO Box 12022, Centurion, 0046
Company secretary: NW Moffatt
Telephone: 087 151 0025
Facsimile: 087 807 5061
Transfer secretaries: Computershare Investor Services (Pty) Ltd
Auditors: Nexia SAB&T
Designated Adviser: Exchange Sponsors (2008) (Pty) Ltd
Date: 16/09/2013 05:00:00 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
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
