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Audited Condensed Provisional Group Results for the Fifteen Months ended 30 November 2014
CONVERGENET HOLDINGS LIMITED
(IN THE PROCESS OF CHANGING ITS NAME TO
STELLAR CAPITAL PARTNERS LIMITED) AND ITS SUBSIDIARIES
Incorporated in the Republic of South Africa
(Registration number 1998/015580/06)
Share code: CVN
ISIN: ZAE000182440
(“ConvergeNet” or the "Company" or the “Group”)
AUDITED CONDENSED PROVISIONAL GROUP RESULTS FOR THE FIFTEEN MONTHS ENDED 30 NOVEMBER 2014
INTRODUCTION
The Group hereby presents its audited condensed group results for the fifteen months ended 30
November 2014.
Shareholders are advised that the corporate actions announced by the Group on SENs on 8 September
2014 and 27 October 2014 (the “Announcements”), as detailed in note 17 hereto, have not been
incorporated into the results presented herein as those corporate actions only became unconditional
after the close of the financial period presented.
The Announcements detailed, inter alia, the Group’s plans to sell its remaining two operating
companies, Structured Connectivity Solutions Proprietary Limited (“SCS”) and Chrystalpine Investments
9 Proprietary Limited Group (“Chrystalpine”) (incorporating Andrews Kit Proprietary Limited
(“Contract Kitting”)) and as a result of this firm intention to dispose of those entities, the cash
generating unit of SCS and Chrystalpine have been classified as a disposal group held for sale in
terms of IFRS 5 “Non-current assets held for sale and discontinued operations” (“IFRS 5”) at 30
November 2014. In terms of the requirements of IFRS 5, the Group has presented the assets and
liabilities of the disposal group separately on the face of the statement of financial position and
have accounted for this disposal group by measuring the assets and liabilities of SCS and
Chrystalpine at the lower of their carrying values and the fair value of those assets less cost to
sell. In addition to the statement of financial position disclosures, the sum of the post-tax profit
or loss of the discontinued operations, SCS and Chrystalpine for the fifteen months ended 30 November
2014 and year ended 31 August 2013 (restated) is presented as a single amount on the face of the
statement of comprehensive income. The impact of the sale of SCS and Chrystalpine (incorporating
Contract Kitting) will be disclosed in profit and loss from discontinued operations in the
forthcoming financial year.
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CONDENSED GROUP STATEMENT OF
FINANCIAL POSITION AS AT 30 NOVEMBER 2014
Note As at As at
30 November 31 August
2014 2013
R’000 R’000
ASSETS
Non-current assets
Property, plant and equipment - 4,342
Goodwill 5 - 34,822
Intangible assets - 2,910
Deferred taxation 3,216 9,777
3,216 51,851
Current assets
Inventories - 58,688
Other financial assets 6 76,000 2,331
Current tax receivable - 883
Trade and other receivables 571 62,644
Cash and cash equivalents 3,334 14,689
79,905 139,235
Non-current assets held for sale 7 129,668 262,058
209,573 401,293
TOTAL ASSETS 212,789 453,144
EQUITY AND LIABILITIES
Total equity
Equity attributable to owners of the parent 193,329 219,113
Non-controlling interest (14,221) (8,605)
179,108 210,508
Liabilities
Non-current liabilities
Operating lease liability - 1,251
Deferred taxation - 106
- 1,357
Current liabilities
Other financial liabilities - 29,241
Current tax payable 421 490
Finance lease obligation - 126
Provisions - 1,046
Trade and other payables 3,711 56,062
Bank overdraft - 15,066
4,132 102,031
Non-current liabilities held for sale 7 29,549 139,248
33,681 241,279
Total Liabilities 33,681 242,636
TOTAL EQUITY AND LIABILITIES 212,789 453,144
Net asset value per share (cents) 191.52 22.57
Net tangible asset value per share (cents) 191.52 18.68
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CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE FIFTEEN MONTHS ENDED 30 NOVEMBER 2014
Note 15 months Restated
ended year ended
30 November 31 August
2014 2013
R’000 R’000
Continuing operations
Revenue 797 19,896
Cost of sales (490) (18,264)
Gross profit 307 1,632
Other income 8 10,853 12,407
Operating expenses (14,914) (40,308)
Impairment of goodwill and other
financial assets (2,950) (3,333)
Fair value adjustments 414 6,672
Other operating expenses (12,378) (43,647)
Operating loss (3,754) (26,269)
Investment income 10 7,913 147
Finance costs (2,360) (528)
Profit/(loss) before taxation 1,799 (26,650)
Taxation 1,617 (4,116)
Profit/(loss) for the period/year from
continuing operations 3,416 (30,766)
Discontinued operations
Net loss for the period/year from discontinued
operations 7 (92,469) (195,501)
Loss for the period/year (89,053) (226,267)
Other comprehensive income:
Exchange gain on translation of foreign
operations net of tax - 388
Gains on revaluation of land and buildings - 99
Total comprehensive loss for
the period/year net of tax (89,053) (225,780)
Loss for the period/year attributable to:
Equity holders of the parent (94,293) (209,204)
Non-controlling interests 5,240 (17,063)
(89,053) (226,267)
Profit/(loss) for the period/year from continuing
operations attributable to:
Equity holders of the parent (1,824) (27,117)
Non-controlling interests 5,240 (3,649)
3,416 (30,766)
Loss for the period/year from discontinued
operations attributable to:
Equity holders of the parent (92,469) (182,087)
Non-controlling interests - (13,414)
(92,469) (195,501)
Total comprehensive loss for the
period/year attributable to:
Equity holders of the parent (94,293) (208,949)
Non-controlling interests 5,240 (16,831)
(89,053) (225,780)
Earnings per share
Basic and diluted basic (loss)
per share (cents)
From continuing operations (1.82) (3.05)
From discontinued operations (92.30) (20.47)
Basic loss for the period (94.12) (23.51)
Headline and diluted headline
(loss) per share (cents)
From continuing operations (1.79) (2.84)
From discontinued operations (14,48) (6.10)
Headline loss for the period (16.27) (8.94)
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Basic and diluted weighted average
number of shares 100,180,601 889,726,462
Total number of shares in issue 100,946,502 970,935,125
Reconciliation between (loss)
and headline (loss)
Continuing operations
Basic loss attributable to equity
holders of parent (1,824) (27,117)
Impairment of intangible assets 32 -
Loss on disposal of assets - 117
Loss on disposal of subsidiaries - 2,550
Tax effect of adjustments - (826)
Headline loss (1,792) (25,276)
Discontinued operations
Basic loss attributable to
equity holders of parent (92,469) (182,087)
Loss on disposal of assets 1,058 600
Loss on disposal of associates - 3,255
Loss/(profit) on disposal of subsidiaries 71,466 (15,020)
Loss recognised on the remeasurement of
disposal groups to fair value less cost to sell - 786
Impairment of goodwill 5,435 127,494
Tax effect of adjustments - (1,348)
Portion of adjustments attributable to
non-controlling interests - 12,037
Headline loss (14,510) (54,283)
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE FIFTEEN MONTHS ENDED 30 NOVEMBER 2014
As at As at
30 November 31 August
2014 2013
R’000 R’000
Balance at 01 September 2013/1 September 2012 210,508 483,188
Total comprehensive loss for the period (89,053) (226,267)
Exchange gain on translation of foreign operation - 388
Revaluation - 99
Shares issued in terms of transactions with
non-controlling shareholders - 15,888
Equity settled share based payments 3,420 476
Shares vested in terms of a forfeitable share plan 1,350 -
Own shares acquired by subsidiaries,
held as treasury shares (78) (21,211)
Own shares acquired by subsidiaries,
held as treasury shares re-issued - 23,139
Transactions with non-controlling shareholders 52,961 (65,192)
Balance at 30 November 2014/31 August 2013 179,108 210,508
CONDENSED GROUP STATEMENT OF CASH FLOWS
FOR THE FIFTEEN MONTHS ENDED 30 NOVEMBER 2014
15 months Restated
ended year ended
30 November 31 August
2014 2013
R’000 R’000
Net cash from/(utilised in) operating activities 2,258 (40,558)
Net cash from/(utilised in) investing activities 26,958 (979)
Net cash (utilised in) financing activities (26,761) (11,233)
Net increase/(decrease) in cash and cash equivalents 2,455 (52,770)
Cash at the beginning of the year (377) 66,496
Cash balances transferred to disposal group held for sale 1,256 (14,103)
Total cash at end of the period 3,334 (377)
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NOTES
1 Reporting entity
ConvergeNet (in the process of changing its name to Stellar Capital Partners Limited) is a company
domiciled in the Republic of South Africa. The condensed financial statements of the Group as at and
for the fifteen months ended 30 November 2014 comprise the Company and its subsidiaries (together
referred to as the “Group”).
As at 30 November 2014 the Group consisted of the Company and its subsidiary companies namely:
- ConvergeNet Management Services Proprietary Limited
- Structured Connectivity Solutions Proprietary Limited (Disposal group held for sale)
- Chrystalpine Investments 9 Proprietary Limited (holding company of Andrews Kit Proprietary Limited)
(Disposal group held for sale)
- Andrews Kit Proprietary Limited (Disposal group held for sale)
- ConvergeNet SA Proprietary Limited (dormant since 30 June 2014)
- Navix Distribution Proprietary Limited (dormant)
- Northbound Communication Solutions Proprietary Limited (dormant)
- Simat Management Company Proprietary Limited (dormant)
The audited condensed financial statements of the Group as at and for the fifteen months ended 30
November 2014 are available on request from the Group’s registered office at Level P3, Oxford Corner,
c/o Jellicoe and Oxford Road, Rosebank, Johannesburg, or at http://convergenet.com/investor-
relations.
2 Statement of compliance
These audited condensed group financial statements have been prepared in accordance with the
requirements of the JSE Limited Listings Requirements ("Listings Requirements")for provisional
reports, and the Companies Act of South Africa, 2008, as amended, applicable to summarised financial
statements. The Listing Requirements require provisional reports to be prepared in accordance with
the framework concepts and the measurement and recognition requirements of International Financial
Reporting Standards ("IFRS") and the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Reporting Pronouncements as issued by Financial Reporting Standards
Council, and include, as a minimum the information required by IAS 34 – Interim Financial Reporting.
They do not include all the information required for a complete set of International Financial
Reporting Standards financial statements. However, selected explanatory notes are included to explain
events and transactions that are significant to an understanding to the changes in the Group’s
financial position and performance since the last audited consolidated financial statements as at and
for the year ended 31 August 2013.
In preparing these audited condensed group financial statements, management make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts
of assets and liabilities, income and expense. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group’s accounting policies and the key
sources of estimation uncertainty were the same as those that applied to the audited annual financial
statements as at and for the year ended 31 August 2013.
These financial results were approved by the Board of Directors on 26 February 2014.
The audited condensed group financial statements have been prepared under the supervision of Charl de
Villiers CA(SA), who was appointed as Chief Financial Officer with effect from 1 February 2015.
3 Accounting Policies
All accounting policies applied by the Group in these audited condensed group financial statements
comply with IFRS and are consistent with those applied by the Group in the consolidated financial
statements as at and for the year ended 31 August 2013.
During the current financial period the Group has adopted all the new, revised or amended accounting
standards and interpretations as issued by the IASB, that are relevant to its operations, which were
effective for the Group from 1 September 2013.
The adoption of the new and revised accounting standards and interpretations which had no material
impact on the results of the Group, are as follows:
- Amendments to IAS 27, ‘Separate Financial Statements’
- IFRS 10, 'Consolidated Financial Statements' and IFRS 12 ‘Disclosure of Interests in Other
Entities’
- IFRS 13, ‘Fair Value Measurement’
- Annual Improvements to IFRSs 2009-2011 Cycle
- IAS 1 ‘Presentation of Financial Statements’: clarification of the requirements for comparative
information
- IAS 32 ‘Financial Instruments: Presentation’: clarification of the tax effect of distribution to
holders of equity instruments
- IAS 34 ‘Interim Financial Reporting’: clarification of interim financial reporting and segment
information for total assets and liabilities
4 Comparative figures
Unless otherwise indicated, comparative figures refer to the year ended 31 August 2013. In accordance
with the requirements of IFRS 5, the statement of comprehensive income and statement of cash flows
have been re-presented for the disclosures that relate to the operations of SCS and Chrystalpine
which have been discontinued by the end of the reporting period.
5 Goodwill
R'000 2014 2013
Cost 103,773 103,773
Accumulated impairment (74,386) (68,951)
Transferred to disposal group classified as held for sale (29,387) -
Carrying value at 30 November 2014/31 August 2013 - 34,822
At 30 November 2014, Chrystalpine Investments 9 Proprietary Limited group, incorporating Andrews Kit
Proprietary Limited, and Structured Connectivity Solutions Proprietary Limited, has been classified
as a disposal group held for sale (“Disposal Group”). The Disposal Group has been measured at the
lower of its carrying amount and fair value less cost to sell and as a result, an impairment loss of
R5,435,000 has been recognised in respect of goodwill attributable to Andrews Kit Proprietary
Limited.
6 Other financial assets
2014 2013
Financial assets at fair value through profit or loss
Foreign exchange contracts - Standard Bank
of South Africa Limited - 131
Listed shares 3,267
Listed shares comprising 200,000 shares in
Goliath Gold Mining Limited at R1.58 per share
and 34,806,030 shares in Mine Restoration
Investments Limited at R0.09 per share
Total financial assets at fair value
through profit and loss 3,267 131
Other financial assets at amortised cost
Interest bearing
X-DSL Networking Solutions (Pty) Ltd 100 2,200
This loan bore interest at the prime rate
and was repaid in full on 8 December 2014.
The loan was secured by 100% of the issued
ordinary shares and 100% of the shareholder claims
of X-DSL Networking Solutions (Pty) Ltd.
Loan Participation 1 - AfrAsia Special
Opportunities Fund (Pty) Ltd 10,231 -
The Group has participated in a loan advanced
by AfrAsia Special Opportunities Fund (Pty) Ltd
to a private unrelated entity which accrues interest
at prime plus 8.5% per annum (serviced quarterly).
This loan participation is repayable on or before
30 September 2015 and is secured by corporate guarantees,
cession of book debts, insurance policies and bank accounts,
a general notarial bond over movable assets and a
subordination of all shareholder and inter-company claims.
Zaloserve (Pty) Ltd 50,000 -
The loan accrues interest at Prime Rate minus
2%, payable monthly in arrears, and is repayable
in semi-annual instalments over 4 years, ending
31 December 2017. The loan was fully settled on
31 December 2014. It was secured by a cession
and pledge of 100% of the issued shares and a general
notarial bond registered over the movable property of
Sizwe Africa IT Group (Pty) Ltd.
Loan Participation 2 - AfrAsia Special
Opportunities Fund (Pty) Ltd 12,000 -
The Group has participated in a loan advanced
by AfrAsia Special Opportunities Fund (Pty) Ltd
to a private unrelated entity which accrues
interest at 2% per month (serviced monthly).
This loan participation is repayable on or before
31 August 2015 and is secured by unlisted shares at
a minimum cover ratio of three times the face
value of the outstanding amount of debt.
Sizwe Africa IT Group (Pty) Ltd 1,867 -
This relates to expenses settled on behalf of
Sizwe Africa IT Group (Pty) Ltd. The loan is
payable on demand and does not bear any interest.
Total other financial assets at amortised cost 74,198 2,200
Impairment of loans and receivables (1,465) -
Total other financial assets at amortised
cost (net of impairments) 72,733 2,200
Total other financial assets 76,000 2,331
Non-current assets - -
Current assets 76,000 2,331
76,000 2,331
Long-outstanding aounts due from Sizwe Africa IT Group (Pty) Ltd were impaired during the current
reporting period which resulted in a charge to the statement of comprehensive income in the amount of
R1,465,000. The carrying amounts of the remaining other financial assets approximate their fair
values as the balances are neither past due nor impaired and have a low risk of default.
7 Assets and liabilities of disposal group held for sale and discontinued operations
Following a decision taken by the Board to restructure the ConvergeNet Group of companies and convert
the Group into an investment holding company, the assets and associated liabilities of Chrystalpine
Investments 9 Proprietary Limited (incorporating Andrews Kit Proprietary Limited)) and Structured
Connectivity Solutions Proprietary Limited have been presented as held for sale and discontinued
operations in the Group statement of financial position as at 30 November 2014 and statement of
comprehensive income for the period then ended. Included within these amounts are the following
items:
7.1 Disposal group classified as held for sale in the current period
7.1.1 Chrystalpine Investments 9 (Pty) Ltd group and Structured Connectivity Solutions (Pty) Ltd
On 5 September 2014, the Group concluded the terms of the sale of 100% of the Group’s interest in
Chrystalpine Investments 9 Proprietary Limited (the 100% holding company of Andrews Kit Proprietary
Limited) and Structured Connectivity Solutions Proprietary Limited for R95,119,000 and R5,000,000
respectively, to Tellumat Proprietary Limited. The criteria for classification of these entities as a
disposal group held for sale was met on 31 August 2014 as management was committed to a plan to sell
these entities which were available for immediate sale. An active programme to locate a buyer had
been initiated under the Group’s restructuring mandate and negotiations in respect thereof were in an
advanced stage resulting in management concluding that the sale was highly probable within 12 months
of classification as held for sale. The purchase consideration will be settled by Tellumat
Proprietary Limited by way of the issue of ordinary shares in Tellumat Proprietary Limited such that
the Group will hold 30% of the total issued ordinary shares of Tellumat Proprietary Limited following
the share issue.
On 16 January 2015, shareholders approved the transaction. The sale of Chrystalpine Investments 9
Proprietary Limited group and Structured Connectivity Solutions Proprietary Limited became
unconditional on 5 February 2015 and 16 January 2015 respectively.
7.2 Disposal groups classified as held for sale in the prior year and sold in the current period
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7.2.1 Sizwe Africa IT Group (Pty) Ltd
On 29 August 2013, the Group concluded a sale of shares agreement with Zaloserve Proprietary Limited
("Zaloserve"), in which Zaloserve acquired 100% of ConvergeNet's interest in Sizwe Africa IT Group
Proprietary Limited ("Sizwe") and its subsidiaries. The criteria for IFRS 5: 'Non-current assets held
for sale and discontinued operations' ("IFRS 5") were met at 31 August 2013 and as a result the
assets and liabilities of Sizwe were classified as held for sale. The disposal group met the criteria
to be classified as a discontinued operation. An impairment charge of R50,846,000 was recorded
against goodwill in the prior year and a further R 112,000 against other assets to bring the disposal
group in line with its fair value less cost to sell.
The total purchase consideration was R120,000,000 and was vendor financed at a rate of prime less 2%
per annum. The sale became unconditional on 11 December 2013. On 31 December 2014, Zaloserve paid an
amount of R50,000,000 (in addition to the amount of R50,000,000 received prior to the end of the
reporting period) in full and final settlement of the remaining R70,000,000 purchase consideration
outstanding and thereby utilised the R20,000,000 early settlement discount allowed under the terms of
the sale and purchase agreement.
Mr H van Dyk, an executive director of the Board during the prior year, had a personal financial
interest in the conclusion and implementation of the Sizwe disposal by virtue of being the sole
director and shareholder of Zaloserve.
7.2.2 Telesto Communications Proprietary Limited
On 16 August 2013, the Group concluded a sale of shares agreement with ConvergeCom Proprietary
Limited ("ConvergeCom"), in which ConvergeCom acquired 100% of the Group's interest in Telesto
Communications Proprietary Limited ("Telesto"). The criteria for IFRS 5 were met at 31 August 2013
and as a result the assets and liabilities of Telesto were classified as held for sale. The disposal
group met the criteria to be classified as a discontinued operation. An impairment charge of
R16,522,000 was recorded against goodwill in the prior year and a further R672,000 against other
assets to bring the disposal group in line with its fair value less cost to sell.
The sale of the Group's interest in 100% of Telesto Communications Proprietary Limited became
unconditional on 29 October 2013. On the same date, payment of R6,000,000 was effected in terms of
the sale and purchase agreement. On 31 May 2014, an amount of R1,250,000 was made in full and final
settlement of the remaining R1 300 000 outstanding under the agreement. An early settlement discount
of R50,000 was recognised in profit and loss.
Mr D Bisschoff, an executive director of the Board during the prior year, had a personal financial
interest in the conclusion and implementation of the Telesto disposal by virtue of being the sole
director and shareholder of ConvergeCom.
Assets and liabilities of disposal group classified as held for sale
R’000 2014 2013
Assets of disposal group classified as held for sale
Property, plant and equipment 4,265 27,114
Goodwill and intangible assets 30,360 523
Other financial assets 1,274 28,447
Inventories 47,987 32,451
Trade and other receivables 43,831 164,211
Other assets 1,951 9,312
Investment in subsidiaries - -
129,668 262,058
Liabilities of disposal group classified held for sale
Interest bearing loans and other financial liabilities 470 7,653
Finance lease obligation 276 16,477
Trade and other payables 28,803 109,126
Other liabilities - 5,992
29,549 139,248
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Loss for the period from discontinued operations - 2014
Sizwe Telesto Disposal Total
Africa IT Communi- Group
Group cations Held
Proprietary Solutions for sale
Limited Proprietary
R’000 Limited
Revenue - - 312,451 312,451
Other income, investment
revenue and share of
profits of associates - - 2,634 2,634
Expenses - - (327,935) (327,935)
Profit before taxation of
discontinued operations - - (12,850) (12,850)
Taxation - - (5,082) (5,082)
Loss after tax of
discontinued operations - - (17,932) (17,932)
Post-tax (loss)/gain recognised
on the sale of
disposal groups (52,627) (18,839) 2,364 (69,102)
Post-tax loss recognised
on the re-measurement
of assets of disposal group - - (5,435) (5,435)
Loss from
discontinued
operations (52,627) (18,839) (21,003) (92,469)
* No deferred taxation asset has been recognised in respect of the re-measurement of the disposal
group to fair value less cost to sell as it is not expected that the Group will record future taxable
capital gains against which the deferred tax asset can be utilised.
Profit/(loss) for the year from discontinued operations - 2013
R’000 Sizwe Telesto X-DSL Simat
Africa Communi- Disposal Networking Group Total
IT Group cations Group Solutions
Proprietary Solutions Held Proprietary
Limited Proprietary for sale Limited
Limited
Revenue 613,178 16,352 263,110 15,452 14,565 922,657
Other income, investment
revenue and share
of profits of associates 11,858 (593) 461 556 2,316 14,598
Expenses (673,827) (16,857) (263,229) (21,086) (52,171) (1,027,170)
Loss/profit before
taxation of
discontinued operations (48,791) (1,098) 342 (5,078) (35,290) (89,915)
Taxation 2,849 (165) (1,865) (9) (3,348) (2,538)
(Loss)/profit after
tax of discontinued
operations (45,942) (1,263) (1,523) (5,087) (38,638) (92,453)
Post-tax (loss)/gain
recognised on the sale
of disposal groups - - - (4,131) 24,563 20,432
Post-tax loss recognised
on the re-measurement of
assets of disposal group* (50,959) (17,187) (55,334) - - (123,480)
(Loss)/profit from
discontinued operations (96,901) (18,450) (56,857) (9,218) (14,075) (195,501)
*No deferred taxation asset has been recognised in respect of the re-measurement of the disposal
group to fair value less cost to sell as it is not expected that the Group will record future taxable
capital gains against which the deferred tax asset can be utilised.
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8 Other income
Other income includes the write-back of a liabilities previously owed by Simat Management Group SA
Proprietary Limited, in the amount of R10,576,000, a wholly-owned subsidiary of the Group, to
companies no longer forming part of the Group, which are no longer due and payable in terms of the
sale agreements upon the disposal of the companies.
9 Operating segments
As the Group have no continuing operations at 30 November 2014, pending completion of the corporate
actions noted in the Announcements which became unconditional after the financial reporting period,
no segmental reporting has been presented for the current reporting period as the key operating
decision maker, Peter van Zyl, manages the continuing operations of the Group as a single segment.
The Group did not manage the discontinuing operations, Structured Connectivity Solutions Proprietary
Limited and the Chrystalpine Investments 9 Proprietary Limited group (incorporating Andrews Kit
Proprietary Limited), as segments during the interim period between the date of the release of the
Announcements and the effective date of the corporate actions contained therein, as such segments
were managed by Tellumat Proprietary Limited.
Segmental comparative information is presented based in respect of the Group’s organisational
structure and reporting framework for the year ended 31 August 2013 as follows:
R’000 IT Telecom
Infra- Infra- Africa
structure structure Site
Technology Technology Mainte- Consoli-
solutions solutions nance dation
Solutions Corporate and other Total
Year ending
31 August 2013
From continuing
operations
Total revenue 11,431 12,048 1,068 20,293 - 44,840
Inter-segment sales (3,134) - - (20,293) (1,518) (24,945)
Reported revenue 8,297 12,048 1,068 - (1,518) 19,895
Segmental result
Core operating
loss for the year (10,928) 9,620 (6,863) (30,465) 15,700 (22,936)
Impairment of
goodwill and
loans and receivables (3,333)
Investment income 147
Share of profits
of associates -
Finance costs (528)
Taxation (4,116)
Net loss for the
year after taxation (30,766)
10 Investment income
2014 2013
Finance Income
Continuing operations
Loans and other receivables 7,615 -
Cash and cash equivalents 298 147
7,913 147
11 Financial risk management
The Group’s financial risk management objectives and policies are consistent with those disclosed in
the consolidated financial statements as at and for the year ended 31 August 2013.
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12 Change in Board of Directors
Mr. DF Bisschoff resigned as Chief Financial Officer on 31 October 2013 and was subsequently
appointed as interim Chief Financial Officer and CEO on a contract basis. This interim agreement
terminated on 31 December 2013. Mr. P van Zyl was appointed as a director on 21 November 2013 and
replaced Mr. Bisschoff as Chief Financial Officer from 1 January 2014. Janine de Bruyn was appointed
as independent non-executive on 25 July 2014. On 8 September 2014, Christina Wiese and Clare Wiese
were appointed as independent non-executive directors. Messrs. Peter van Zyl and Charl de Villiers
were appointed as permanent chief executive officer and chief financial officer respectively with
effect from 1 February 2015.
13 Corporate Governance
Mr. Warwick van Breda was appointed as company secretary to ConvergeNet and its subsidiaries with
effect from 1 December 2013, prior to which date the role was fulfilled by Juba Statutory Services
Proprietary Limited.
14 Share Capital
The Group issued 38,529,866 shares at 9 cents per share during November 2013 under the general
authority to issue shares for cash. The shares were issued to settle operating expenses of the Group.
The Group completed the repurchase of 34,447 shares at 12 cents per share on 9 December 2013 under
the Specific and Odd-lot Offers announced previously. The consolidation of the shares in issue on a
10-for-1 basis was completed on 23 December 2013 (“Share Consolidation”).
As a result of the share consolidation, the authorised share capital of the Company was reduced to
200,000,000 ordinary shares of no par value. With effect from 20 January 2015, the authorised share
capital of the Company was increased from 200,000,000 ordinary shares of no par value to
1,000,000,000 ordinary shares of no par value.
15 Forfeitable share plan
During the period under review, 4,420,000 shares (pre-consolidation) vested under the Group’s
forfeitable share plan at 10 cents per share and a further 145,000 (post-consolidation) shares at
R2.40 per share (post-consolidation).
16 Dividend
No dividend has been proposed for the period under review.
17 Events after the Reporting Period
On 16 January 2015, shareholders approved the:
- Transfer of the Company’s listing from the “Computer Services” sub-sector of the JSE to the
“Investment Companies” sub-sector which is expected to reflect on the JSE trading system by 23 March
2015;
- Disposal by ConvergeNet of 100% of ConvergeNet’s interest in Chrystalpine Investments 9 Proprietary
Limited (incorporating Andrews Kit Proprietary Limited) and Structured Connectivity Solutions
Proprietary Limited to Tellumat Proprietary Limited for R95,119,000 and R5,000,000 respectively. The
transactions became unconditional on 5 February 2015;
- Acquisition by ConvergeNet of 30% of Tellumat Proprietary Limited as a result of the settlement of
the Chrystalpine Investments 9 Proprietary Limited and Structured Connectivity Solutions Proprietary
sale consideration which became effective on 5 February 2015;
- Acquisition by ConvergeNet of 19.26% of Digicore Holdings Limited for an aggregate amount of
R119,231,925 which became unconditional on 16 January 2015 and was completed on 6 February 2015;
- Acquisition by ConvergeNet of an additional 30.32% of Mine Restoration Investments Limited for an
aggregate amount of R25,272,664 which became unconditional on 16 January 2015 and was completed on 3
February 2015;
- Acquisition by ConvergeNet of an additional 21.77% of Goliath Gold Mining Limited for an aggregate
amount of R64,169,742 which became unconditional on 16 January 2015 and was completed on 13 February
2013;
- Specific issue of 75 million ConvergeNet shares for cash at a subscription price of R2.00 per
share, amounting to an aggregate total consideration of R150 million which became unconditional on 16
January 2015 and was completed on 23 January 2015;
- Specific issue of 1 385 000 ConvergeNet shares at a subscription price of R2.00 per share in lieu
of the private placement underwriting fees which became unconditional on 16 January 2015 and was
completed on 23 January 2015;
- Specific issue of 1 140 000 ConvergeNet shares at a subscription price of R2.00 per share in lieu
of private placement commitment fees which became unconditional on 16 January 2015 and was completed
on 23 January 2015; and
- The change of name of ConvergeNet to “Stellar Capital Partners Limited” and resulting amendment to
the Memorandum of Incorporation which is expected to reflect on the JSE trading system from 16 March
2015.
The directors are not aware of any subsequent events, not already disclosed above and in the
Announcements that require further disclosure in this announcement.
18 Audit opinion
This summarised report is extracted from audited information, but is not audited itself. The annual
financial statements were audited by Grant Thornton Cape Inc., who expressed an unmodified opinion
thereon. The audited annual financial statements and the auditor’s report thereon are available for
inspection at the Company’s registered office. The auditor’s report does not necessarily report on
all of the information contained in this announcement. Shareholders are therefore advised that in
order to obtain a full understanding of the nature of the auditor’s engagement they should obtain a
copy of the auditor’s report together with the accompanying financial information from the issuer’s
registered office.
The directors take full responsibility for the preparation of the audited condensed consolidated
financial results and that the financial information has been correctly extracted from the underlying
annual financial statements. This financial information has been prepared under the supervision of
Charl de Villiers CA (SA), the Group Chief Financial Officer. The Group's auditors have not reviewed
nor reported on any of the comments in this announcement relating to future forecasts.
19 Group outlook
The Group is positive about entering into a new phase as investment holding company and the
implementation of its stated investment strategy.
For and on behalf of the board
D Tabata CB de Villiers
Chairman Chief Financial Officer 27 February 2015
Directors
D Tabata*^ (Chairman), P van Zyl, CB de Villiers, L Mangope*^,
C Pettit*^, CC Wiese*^, CH Wiese*^, J de Bruyn*^
(* Non-Executive, ^ Independent)
Company secretary
Warwick van Breda,
7 Killara Road, Bedfordview, 2007
Registered office
Level P3, Oxford Corner, c/o Jellicoe and Oxford,
Rosebank, Johannesburg
Postal Address
P.O. Box 10709, Centurion, 0046
Transfer Secretaries
Computershare Investor Services Proprietary Limited,
70 Marshall Street, Johannesburg, 2001
Sponsor and Corporate Adviser
AfrAsia Corporate Finance Proprietary Limited
Office 202, Cape Quarter, The Square, 27 Somerset Road,
Green Point, Cape Town
Web
www.convergenet.co.za
Date: 27/02/2015 11:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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