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STELLA VISTA TECHNOLOGIES LIMITED - Reviewed financial results summary for the year ended 31 August 2013

Release Date: 29/11/2013 16:28
Code(s): SLL     PDF:  
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Reviewed financial results summary for the year ended 31 August 2013

Stella Vista Technologies Limited
(Incorporated in the Republic of South Africa) 
Company registration number 1996/000172/06
JSE share code: SLL 
ISIN: ZAE000018198 
("Stella Vista" or "the Company" or "the Group")

Reviewed financial results summary
for the year ended 31 August 2013

Condensed Consolidated Statement of Comprehensive Income

                                                       Reviewed         Audited
                                                     Year ended      Year ended
                                                      31 Aug 13       31 Aug 12
                                            Notes         R'000           R'000

Revenue                                                  13 988          17 933
Gross profit                                              6 132          10 579
(Loss)/profit before interest and depreciation          (3 287)           (782)
Depreciation                                            (1 900)         (1 856)
Loss before interest and taxation                       (5 187)         (2 639)
Finance cost                                              (190)           (104)
Loss before taxation                                    (5 377)         (2 743)
Taxation                                                    648             677
Loss after taxation                                     (4 729)         (2 066)
Other comprehensive income/(loss):
Foreign currency translation differences on
foreign operations                                          408         (1 582)
Total comprehensive loss for the year                   (4 321)         (3 648)
Loss attributable to:
 – Equity holders of the parent company                 (4 575)         (1 980)
 – Non-controlling interests                              (154)            (87)
Loss for the year                                       (4 729)         (2 066)
Total comprehensive loss attributable to:
 – Equity holders of the parent company                 (4 188)         (3 478)
 – Non-controlling interests                              (134)           (170)
Total comprehensive loss for the year                   (4 321)         (3 648)
Loss per share (cents)                          4        (3.16)          (1.37)
Diluted loss per share (cents)                  4        (3.16)          (1.38)

Condensed Consolidated Statement of Financial Position

                                                       Reviewed         Audited
                                                     Year ended      Year ended
                                                      31 Aug 13       31 Aug 12
                                            Notes         R'000           R'000
ASSETS
Non-current assets                                       11 281          11 512
Property, plant and equipment                             8 349           9 112
Deferred taxation assets                                  2 932           2 401
Current assets                                            7 447           9 051
Inventory                                       5         4 420           5 911
Trade and other receivables                               2 267           2 331
Cash and cash equivalents                                   760             810
TOTAL ASSETS                                             18 728          20 563
EQUITY AND LIABILITIES
Equity                                                    1 256           5 578
Attributable to Stella Vista                              1 430           5 618
Non-controlling interests                                 (174)            (40)
Non-current liabilities                                     546             787
Deferred revenue                                              –             124
Deferred tax liability                                      546             663
Current liabilities                                      16 925          14 199
Trade and other payables                        6         7 921           6 974
Deferred revenue                                              –             115
Taxation payable                                             27             521
Current portion of interest-bearing
borrowings                                                8 895           6 550
Bank overdraft                                               82              38
TOTAL EQUITY AND LIABILITIES                             18 728          20 563
Net asset value per share (cents)                          0.87            3.85

Condensed Consolidated Statement of Cash Flows
                                                       Reviewed         Audited
                                                     Year ended      Year ended
                                                      31 Aug 13       31 Aug 12
                                                          R'000           R'000

Net loss before tax and separately disclosed items      (5 377)         (2 743)
Non-cash items                                            1 348           (573)
Working capital changes                                   2 262           2 708
Cash generated from operations                          (1 767)           (608)
Finance cost                                              (190)           (104)
Taxation (paid)/refunded                                  (494)              62
Cash flow from operating activities                     (2 450)           (649)
Sale of property, plant and equipment                        12             156
Purchase of property, plant and equipment                     –           (147)
Cash flow from investing activities                          12               9
Proceeds from interest bearing borrowings                 2 345             521
Cash flow from financing activities                       2 345             521
Net movement in cash and cash equivalents                  (94)           (118)
Cash and cash equivalents at beginning of year              772             891
Cash and cash equivalents at end of year                    678             772

Condensed Consolidated Statement of Changes in Equity
for the year ended 31 August 2013
                                                                                                 Attributable
                                                                    Foreign                         to equity
                                                        Share      currency                        holders of             Non-
                                                  capital and   translation     Accumulated        the parent      controlling       Total
R‘000s                                                premium       reserve          losses           company        interests      equity

Audited balance at 1 September 2011                    20 343       (1 703)         (9 545)             9 096              130       9 226
Total comprehensive loss for the year                       –       (1 498)         (1 980)           (3 478)            (170)     (3 648)
Audited balance at 31 August 2012                      20 343       (3 201)        (11 525)             5 618             (40)       5 578
Total comprehensive loss for the year                       –           387         (4 575)           (4 188)            (134)     (4 321)
Reviewed balance at 31 August 2013                     20 343       (2 813)        (16 100)             1 430            (174)       1 256

Notes to the Condensed Consolidated Financial Statements

1.  Basis of preparation

    The condensed consolidated financial results for the year ended 31 August 2013
    ("period under review") have been prepared in accordance with the recognition and
    measurement requirements of International Financial Reporting Standards (IFRS), the
    South African Companies Act, 2008 (Act 71 of 2008) and the JSE Listings Requirements.
    The disclosures comply with International Accounting Standard (IAS) 34.

2.  Accounting policies

    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 2013.

3.  Review opinion

    The condensed consolidated results for the year ended 31 August 2013 have been
    reviewed by the Group auditors, IAPA Johannesburg, Chartered Accountants (SA)
    and their unmodified report is available for inspection at the registered office of
    Stella Vista.

4.  Reconciliation of earnings and headline (loss)/earnings

                                                          Reviewed        Audited
                                                        Year ended     Year ended
                                                         31 Aug 13      31 Aug 12
                                                             R'000          R'000
   (Loss)/profit after taxation attributable to:
   Ordinary equity holders of the parent entity for
   the year                                                 (4 575)       (1 980)
   Loss on disposal of property, plant and equipment            (9)          (19)
   Diluted loss                                             (4 584)       (1 998)
   Headline loss                                            (4 584)       (1 998)
   Weighted average number of shares in issue ('000)        145 000       145 000
   Loss per share (cents)                                    (3.16)        (1.37)
   Diluted loss per share (cents)                            (3.16)        (1.38)
   Headline loss per share (cents)                           (3.16)        (1.38)
   Diluted headline loss per share (cents)                   (3.16)        (1.38)

5. Inventory
   Raw material components                                    1 769         2 118
   Work in progress                                             129         1 313
   Finished goods                                             2 522         2 480
                                                              4 420         5 911
6. Trade and other payables
   Trade and other payables comprise the following:
   Trade payables                                             4 110         3 737
   Deposits                                                   2 085         1 894
   Accrued expenses                                           1 298         1 045
   Payroll related liability                                    353           227
   VAT accrual                                                    -            29
   Leave pay accrual                                             75            42
                                                              7 921         6 974
7.  Segment information

    Management has determined the operating segments based on the monthly reports
    reviewed by the board of directors that are used to make strategic decisions. The chief
    operating decision-maker has been identified as the Group's chief executive officer.
    The chief executive officer considers the business from a geographical basis as the
    products and business are the same across all business segments. The chief executive
    officer assesses the performance of the operating segments based on revenue,
    operating profit and cash flow. The monthly management accounts tabled at the board
    meeting and used by the chief operating decision-maker are in line with IFRS.

    At 31 August 2013, the Group was made up of the following operating segments:
      
    - South African operations, which earns revenue from the sale of the screens     
    - United Kingdom operations, which earns revenue from the sale and maintenance of
      the screens as well as rental income from screens

                                   South     United
R‘000                             Africa    Kingdom    Total
Reviewed at 31 August 2013
Total segment revenue              7 616      6 372   13 988
Inter-segment revenue                  –          –        –
Revenue from external customers    7 616      6 372   13 988
Cost of sales                      5 306      2 550    7 856
Depreciation and amortisation        144      1 756    1 900
Income tax credit                    648          –      648
Loss after tax                     2 265      2 464    4 729
Inventory                          4 420          –    4 420
Total assets                       9 300      9 423   18 728
Total liabilities                 16 718        753   17 471

                                   South     United
R‘000                             Africa    Kingdom    Total
Audited at 31 August 2012
Total segment revenue             11 420      6 639   18 059
Inter-segment revenue                126          –      126
Revenue from external customers   11 294      6 639   17 933
Cost of sales                      6 442        912    7 354
Depreciation and amortisation        343      1 513    1 856
Income tax credit                    677          –      677
Loss/(profit) after tax            1 077        989    2 066
Inventory                          5 911          –    5 911
Total assets                      10 021     10 542   20 563
Total liabilities                 13 767      1 219   14 986

Directors' commentary

Introduction

The Company

Stella Vista Technologies Limited (Stella Vista) was established in February 1994 and has
over the years been a leader in design and provision of information solutions based on
LED electronic displays in South Africa, the Middle East, the Indian sub-continent, the
Caribbean and the UK and Ireland. In addition to the head office and factory situated in
Kyalami, South Africa the company owns Stella Vista International Ltd, with offices and
warehouse in Hampton, England. Stella Vista is one of the frontrunners in the visual mass
communications industry worldwide. Driven by the pursuit of excellence, the Company
prides itself on reliability and superior service made possible by its vision, creativity,
ambition and integrity.

The market and prospects

The economic climate and the continued entry of imported lower standard displays
has resulted in tougher competition and increased pressure on margins. This is further
complicated as the South African regulations do not require any import duties on these
products. The end result is a significant reduction of sales income and diminishing
workforce. Local buyers believe they are safer if they import products regardless of price
competitiveness and lack of local support.

We continue to promote the benefit of procurement through a local manufacturer offering
guidance on product design solutions and the benefits of local back-up and technical
support thus ensuring an improved ROI for our customers.

Management is of the opinion that Stella Vista is in need of a serious capital investment.
This would allow for much needed R&D, an upgrade of rental stock and funding of new
marketing strategies.

Products and services

FaceUp remains a key component in our product development and the first licencing
arrangement has been made with an original equipment manufacturer, allowing both
the Company and its customers to benefit from a larger pool of suppliers, and resulting
economies of scale.

A new line of products geared for the commercial market has been introduced. This will
allow more cost effective displays for the developing markets, lowering the bar for the
entry of many customers.

Financial results

Stella Vista is operating in a difficult environment for the LED industry worldwide.
When comparing the results of 2013 to 2012 there is a reduction in revenue of 21.98%,
a reduction in gross profit of 42.04%, and an increase in net loss after tax of 128.86% from
R2,066 for 2012 to R4,729 for 2013.

Subsequent events and capital commitments

Shareholders are reminded of the offer to purchase all of the Stella Vista Shares not already
held by the Offerors, as detailed in the Circular issued 11 November 2013. The Scheme
Meeting will be held at the Company's registered office at 10:00 on 10 December 2013.
The approval of this offer will then result in the subsequent delisting of the Company.
There was no significant capital expenditure authorised as at 31 August 2013.

Going concern

The going concern of the Company is subject to the continued support of the major
shareholders. Management believe that with the continued support of the major
shareholders the Company will remain a going concern and therefore believe the deferred
tax asset should continue to be recognised.

Dividends

The Board has resolved not to declare dividends until the Group's liquidity position has
improved.

On behalf of the directors

M Tabakovic
Chief Executive Officer

29 November 2013

Registered office
62 Kyalami Boulevard, Kyalami Business Park, Kyalami
Tel: (0ll) 466 2020
Website: www.stellavista.com
E-mail: muris@stellavista.com

Directors
M Tabakovic (Chief Executive Officer)
C Livingstone (Chairman, Independent non-executive)
C Newman (Independent non-executive)
M Cizek (Independent non-executive), D Tabakovic, L Kerr

Company secretary
L Kerr

Preparer
D Mailich CA(SA)

Sponsor
ARCAY MOELA SPONSORS

Auditors
IAPA Johannesburg
Chartered Accountants (SA)
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