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STRATCORP LIMITED - Unaudited Condensed Consolidated Interim Financial Results for the Six Months Ended 31 August 2015

Release Date: 25/11/2015 16:30
Code(s): STA     PDF:  
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Unaudited Condensed Consolidated Interim Financial Results for the Six Months Ended 31 August 2015

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”)

Unaudited Condensed Consolidated Interim Financial Results for the Six
Months Ended 31 August 2015

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                       Aug 2015 Aug 2014 Feb 2015
Figures in R’000                       Unaudited Unaudited Audited

Assets
Non-Current Assets
Property, plant and equipment              1,987     2,693     2,218
Goodwill                                   1,318     1,318     1,318
Intangible assets                            846     1,419       977
Other financial assets                     2,066     1,430     2,066
Deferred tax                               6,625     5,830     6,851
Finance lease receivables                      -        11         -
                                          12,842    12,701    13,430
Current Assets
Inventories                                  485       582       523
Other financial assets                        23        32        25
Current tax receivable                         -        10         9
Finance lease receivables                     12        49        36
Trade and other receivables                  821     1,362       545
Cash and cash equivalents                    273     1,033       136
                                           1,614     3,068     1,275
Non-current assets held for sale and
                                           7,237    14,064     7,256
assets of disposal groups
Total Assets                              21,693    29,833    21,961

Equity and Liabilities
Equity
Share capital                             44,961     44,961   44,961
Reserves                                   1,680      1,430    1,680
Accumulated loss                        (53,098)   (42,062) (50,003)
                                         (6,457)      4,329 (3,362)
Liabilities
Non-Current Liabilities
Other financial liabilities                8,541     9,772     8,541
Finance lease obligation                       -        44        12
Operating lease liability                     64        43        63
Deferred tax                               1,116     1,486     1,194
                                           9,722    11,345     9,810
Current Liabilities
Other financial liabilities                3,793     1,666     3,155
Current tax payable                           35         -         -
Loans from shareholders                    1,068         -         -
Finance lease obligation                      44       164        64
Trade and other payables                   5,114     2,718     3,557
Bank overdraft                               459     1,698       818
                                          10,513     6,246     7,593
Liabilities of disposal groups             7,914     7,913     7,918
Total Liabilities                         28,149    25,504    25,323
Total Equity and Liabilities              21,693    29,833    21,961
Number of shares in issue (‘000)         184,194   184,194   184,194
Net asset value per share (cents)         (3,50)      2.35     (1.82)
Net tangible asset value per share        (3.96)      1.57     (2.36)
(cents)

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                       Aug 2015 Aug 2014    Feb 2015
Figures in R’000                       Unaudited Unaudited   Audited

Continuing operations
Revenue                                   9,363     12,542     24,485
Cost of sales                           (2,103)    (2,002)     (4,180)
Gross profit                              7,260     10,540     20,305
Other income                                 34        196        107
Operating expenses                      (9,377)    (9,810)    (21,351)
Impairment of property, plant and
                                              -            -     (120)
equipment
Operating profit / (loss)               (2,084)       926      (1,060)
Investment revenue                           17        30           65
Finance costs                             (695)     (824)      (1,568)
Loss before taxation                    (2,762)       132      (2,562)
Taxation                                  (192)     (560)        (490)
Loss from continuing operations         (2,954)     (428)      (3,053)

Discontinued operations
Profit (loss) from discontinued           (141)     (130)      (5,446)
operations
Profit/(loss) for the period            (3,095)     (558)      (8,499)
Other comprehensive income/(loss):
Financial assets at fair value               -         -          636
through other comprehensive income
reserve
Taxation related to components of            -         -         (385)
other comprehensive income
Other comprehensive income for the
                                             -         -          250
period net of taxation
Total comprehensive loss for the
                                        (3,095)     (558)      (8,248)
period

Attributable to:
Owners of the parent:
Loss for the period from continuing      (2,954)           (428)     (3,053)
operations
Loss for the period from                   (141)           (130)     (5,446)
discontinuing operations
Loss for the period attributable to
                                         (3,095)           (558)     (8,499)
owners of the parent

Total comprehensive loss attributable
to:
Owners of the parent                     (3,095)           (558)     (8,248)

Loss per share
From continuing and discontinued
operations
Basic and diluted loss per share (c)      (1.68)          (0.30)     (4.61)
Basic and diluted loss per share from     (1.60)          (0.23)     (1.65)
continuing operations (c)
Basic and diluted loss per share from     (0.08)          (0.07)     (2.96)
discontinued operations (c)

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                    Share                              Accumulated    Total
Figures in R’000             FCTR        FVA
                   capital                                loss        equity
Balance at
1 March 2014        44,961     44       1,430            (41,504)      4,930
Total
comprehensive
loss                     -    (44)          -               (558)       (602)
Balance at
31 Aug 2014         44,961      -       1,430            (42,062)      4,328
Total
comprehensive
profit/(loss)            -      -         250             (7,491)     (7,241)
Balance at
1 March 2015        44,961      -       1,680            (50,003)     (3,362)
Total
comprehensive
loss                     -      -           -             (3,095)     (3,095)
Balance at
31 Aug 2015         44,961      -       1,680            (53,098)     (6,457)

FCTR – Foreign Currency Translation Reserve
FVA - Fair value adjustments through other comprehensive income reserve

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                          Aug 2015        Aug 2014  Feb 2015
Figures in R’000                         Unaudited       Unaudited   Audited
Cash flows from operating activities           (353)         2,733     3,389
Cash flows from discontinued operations        (126)            62      (50)
Cash flows from investing activities             (5)          (249)    (191)
Cash flows from financing activities            980           (305)    (924)
Total cash movement for the period               96          2,241     2,225
Cash at the beginning of the period            (681)        (2,906)   (2,906)
Total cash at end of the period                (185)          (665)     (681)

HEADLINE AND DILUTED HEADLINE LOSS PER SHARE
                                           Aug 2015        Aug 2014  Feb 2015
Figures in R’000                           Unaudited      Unaudited   Audited
Headline and diluted headline loss per
share (c)                                     (1.63)          (0.30)   (1.77)


Reconciliation between loss and headline
loss R’000
Basic loss                                   (3,095)           (558)  (8,499)
Adjusted for:
(Profit)/loss recognised on the
measurement to fair value less cost to
                                                   -              -    5,160
sell constituting discontinued
operations
Profit/(loss) on disposal of property
                                                   -              -      (38)
plant and equipment
Impairment of property/plant and
                                                   -              -       120
equipment
Exchange rate losses on foreign exchange
translation                                      113              -        14
Tax effect thereon                               (32)             -      (23)
Headline loss                                 (3,014)          (558)   (3,265)
Weighted average number of shares in
issue                                         184,194        184,194   184,194
CONDENSED SEGMENTAL ANALYSIS
                                        Aug 2015 Aug 2014    Feb 2015
Figures in R’000                       Unaudited Unaudited    Audited
Revenue
Continuing operations
Financial products                         8,730    12,483    19,447
Health & Wellness products                 2,437     2,077     4,931
General finance                               25        56       106
Corporate services & other                 1,387     3,996     6,887
Inter segment eliminations               (3,216)   (6,070)   (6,887)
Revenue from external customers            9,363    12,542    24,485

Profit/(loss)
Continuing operations
Financial products                           690     1,624     2,207
Health & Wellness products                 (303)     (945)   (2,070)
General finance                              (7)        20        31
Corporate services & other               (3,348)   (1,127)   (4,523)
Inter segment eliminations                    14         -     1,303
                                         (2,954)     (428)   (3,053)
Discontinued operations                    (141)     (130)   (5,446)

Other disclosable items in Corporate
Depreciation                                 236       321       650
Amortisation                                 131       153       596
Impairment of property, plant and
equipment                                      -         -       120

Segment assets
Financial products                           606    1,884        517
Health & Wellness products                   742      696        470
General finance                               54      120         91
Corporate services & other                 3,045    4,491      3,392
Assets of disposal groups                  7,237   14,064      7,256
Reportable segment assets                 11,684   21,255     11,727
Listed investments                           232        -          -
Unlisted investments                       1,834    1,430      2,066
Deferred tax                               6,625    5,830      6,851
Goodwill                                   1,318    1,318      1,318
Total Group Assets                        21,693   29,833     21,961

Segment liabilities
Financial products                         1,912    1,627      1,733
Health & Wellness products                 1,797      494      1,092
General finance                                1        1          2
Corporate services & other                 3,075    2,545      1,687
Liabilities of disposal groups             7,914    7,913      7,918
Reportable segment liabilities            14,699   12,580     12,432
Deferred tax                               1,116    1,486      1,194
Interest bearing liabilities              12,334   11,438     11,696
Total as per statement of financial
position                                  28,149   25,504     25,323

Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The chief
operating decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as
the Exco that makes strategic decisions. The Exco assesses the performance
of the operating segments on the basis of profit or loss from operations.
They are managed separately because each segment offers different products
and services to its customers, and requires different technology and
marketing strategies. Interest income and expenditure are not allocated
to operating segments, as this type of activity is undertaken by the
holding company and is reflected as part of the corporate services. The
results of discontinued operations are not included in the measure of
profit or loss from operations. This measure is consistent with all prior
periods which are presented.

These reportable segments from which each of them derives revenue are set
out below:
 Reportable     Products and services
 Segment
 Financial      Supply investment products and long term insurance
 products       products to clients in South Africa using the network
                marketing concept.

Health and      Supply of health and wellness products to consumers in
wellness        South Africa, using the network marketing concept.
products
General         Supply of credit to clients of the Financial products
finance         segment as well as structured finance leases to clients
                in South Africa.
Corporate       Supply of credit, management and information technology
service and     support services to all other segments in the group.
other


FINANCIAL ASSETS BY CATEGORY
The accounting policies for financial instruments have been applied to the
line items below:

Aug 2015 - Unaudited                  At       At fair      Non-    Total
                               amortised         value financial
Figures in R‘000                    cost   through OCI    assets
Other financial assets
 -   Micro Loans receivable           23             -        -        23

 -   Equity Investment                 -         2,066        -     2,066
Finance lease receivables             12             -        -        12
Trade and other receivables          390             -      431       821
Cash and cash equivalents            273             -                273
                                     698         2,066      431     3,195
Aug 2014 - Unaudited                  At       At fair      Non-     Total
                               amortised         value  financial
Figures in R‘000                    cost   through OCI    assets
Other financial assets
 -   Micro Loans receivable           32             -        -        32
 -   Equity Investment                 -         1,430        -     1,430
Finance lease receivables             49             -        -        49
Trade and other receivables          526             -      836     1,362
Cash and cash equivalents          1,033             -        -     1,033
                                   1,640         1,430      836     3,906



Feb 2015 - Audited                    At       At fair      Non-    Total
                               amortised         value   financial
Figures in R‘000                    cost   through OCI      assets
Other financial assets
 -   Micro Loans receivable           25             -         -       25

 -   Equity Investment                 -         2,066         -    2,066
Finance lease receivables             36             -         -       36
Trade and other receivables          156             -       389      545
Cash and cash equivalents            136             -         -      136
                                     353         2,066       389    2,808

FINANCIAL ASSETS AT AMORTISED COST
An asset is classified as ‘amortised cost’ only if both of the following
criteria are met: the objective of the Group’s business model is to hold
the asset to collect the contractual cash flows; and the contractual terms
give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal outstanding.


FINANCIAL ASSETS AT FAIR VALUE
If either of the two criteria above is not met, the financial instrument
is classified as ‘fair value through other comprehensive income’. The
Group has not designated any debt investment as measured at fair value
through profit or loss to eliminate or significantly reduce an accounting
mismatch.

All equity investments are measured at fair value. Equity investments that
are held for trading are measured at fair value through profit or loss.
For all other equity investments, the Group can make an irrevocable
election at initial recognition to recognise changes in fair value through
other comprehensive income rather than profit or loss.

FAIR VALUE MEASUREMENT AND HIERARCHY
A number of assets and liabilities included in the annual financial
statements require measurement at, and/or disclosure of fair value.
The fair value measurement of the Group’s financial and non-financial
assets and liabilities utilises market observable inputs and data as far
as possible. Inputs used in determining fair value measurements are
categorised into different levels based on how observable the inputs used
in the valuation technique utilised are (the ‘fair value hierarchy’):
  - Level 1: Quoted prices in active markets for identical items
     (unadjusted);
  - Level 2: Observable direct or indirect inputs other than Level 1
     inputs; and
  - Level 3: Unobservable inputs (i.e. not derived from market data).

The classification of an item into the above levels is based on the lowest
level of the inputs used that has a significant effect on the fair value
measurement of the item. Transfers of items between levels are recognised
in the period they occur.
The Group measures the following at fair value:
  - Investment in listed shares: Classified as level 1;
  - Investment in unlisted shares: Classified as level 3;
  - Discontinued operations: Classified as level 3.


FAIR VALUE INFORMATION
Financial assets at fair value through other comprehensive income are
recognised at fair value, which is therefore equal to their carrying
amount. The fair values of the financial assets were determined as follows:
-   The fair value of Ecsponent Capital (RF) Limited for were determined
    with   reference   to   the   quoted  market   price   for   similar
    investments(Level 1); and
-   The fair value of Ecsponent Limited were determined with reference to
    the quoted market price for this investment; and
-   The fair values of Ecsponent Business Finance Limited for 2014 and
    2015 and Ecsponent Capital (RF) Limited for 2014 were estimated using
    the lower of cost or net asset value (Level 3).

RECONCILIATION OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER
COMPREHENSIVE INCOME

Aug 2015 - Unaudited                      Opening Gain/(Loss)     Closing
Figures in R‘000                          balance                 balance
Level 1 – Ecsponent Ltd – 1,363,360
ordinary shares                               232           -         232
Level 3- Ecsponent Business Finance Ltd
-28,120,000 ordinary shares                 1,834           -       1,834
                                            2,066           -       2,066



Aug 2014 - Unaudited                      Opening Gain/(Loss)    Closing
Figures in R‘000                          balance                balance
Level 1 – Ecsponent Capital (RF) Ltd –
10,906,876 ordinary shares                     600            -        600
Level 3- Ecsponent Business Finance Ltd
-28,120,000 ordinary shares                    830            -        830
                                             1,430            -      1,430



Feb 2015 - Audited                         Opening    Gain/(Loss)   Closing
Figures in R‘000                           balance                  balance
Level 1 – Ecsponent Capital (RF) Ltd –
10,906,876 ordinary shares                     600         (368)       232
Level 3- Ecsponent Business Finance Ltd
-28,120,000 ordinary shares                    830         1,004     1,834
                                             1,430           636     2,066

In March 2015 the shareholders of Ecsponent Capital (RF) approved a scheme
of arrangement between the company and its shareholders in terms of which
the ordinary shares held in Ecsponent Capital (RF) were exchanged for
ordinary shares in Ecsponent Limited, a company listed on the JSE, on a
ratio of one Ecsponent ordinary share for every eight Ecsponent Capital
RF ordinary shares held at the record date. The fair value of the Ecsponent
Capital (RF) ordinary shares held by the company was determined with
reference to the number of Ecsponent Limited ordinary shares the company
holds after the scheme of arrangement and the share price of Ecsponent
Limited.


FINANCIAL LIABILITIES BY CATEGORY
The accounting policies for financial instruments have been applied to the
line items below:

Aug 2015 - Unaudited                             At          Non-    Total
                                          amortised     financial
Figures in R‘000                               cost   liabilities
Other financial liabilities
 -   Linked units                           12,334             -    12,334
Finance lease obligations                       44             -        44
Trade and other payables                     3,543         1,571     5,114
Bank overdraft                                 459             -       459
                                            16,380         1,571    17,951




Aug 2014 - Unaudited                             At          Non-    Total
                                          amortised     financial
Figures in R‘000                               cost   liabilities
Other financial liabilities
 - Linked units                              11,438             -    11,438
Finance lease obligations                       208             -       208
Trade and other payables                      1,755           963     2,718
Bank overdraft                                1,698             -     1,698
                                             15,099           963    16,062


Feb 2015 - Audited                                At          Non-     Total
                                           amortised     financial
Figures in R‘000                                cost   liabilities
Other financial liabilities
 - Linked units                               11,696             -    11,696
Finance lease obligations                         76             -        76
Trade and other payables                       2,587           970     3,557
Bank overdraft                                   818             -       818
                                              15,177           970    16,147


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 15 years.


The Group currently operates in the following segments:
-       Financial products through Virtus Financial Services Proprietary
        Limited (“Virtus”) as the registered financial services provider and
        owner of the financial products and WealthNet Proprietary Limited
        (“WealthNet”) as the distributor of the financial products and client
        services. The financial products distributed by this segment includes
        an investment plan to invest in listed companies via an unlisted
        vehicle, and insurance products that inter alia cater for funeral
        cover, commuter death cover, hospitalisation and retrenchment;

-       Wellness products through I-Cura Proprietary Limited (“I-Cura”), as
        distributor of a range of wellness products with Carbohydrate Derived
        Fulvic Acid (“CHDFA”) as its main ingredient. CHDFA is a uniquely
        South African product with worldwide patents, and I-Cura is one of a
        few licenced distributors of these products, formulated specifically
        for its market. The product range includes wellness products such as
        the 500ml I-Cura Life product, a topical cream and lifestyle products
        such as mouthwashes and system cleansing products;

-       General finance through StratFin Proprietary Limited (“StratFin”)
        providing secured micro loans to the client base of the Group. Lending
        activities for this company has been suspended since 2013 and the
        focus since then has been on the collection of the outstanding debtors
        over the remaining terms of their contracts; and

-       The Group still owns some properties it acquired in 2006 and 2007
        when its property development segment was still active, but which
        operations were ceased with the downturn of the overall market in
        2008 and 2009. The intention of management is to sell these
        properties. While various offers were considered since 2013, none of
        these offers were reasonable and acceptable to the Group.


FINANCIAL RESULTS
Revenue declined compared to the previous period. The total comprehensive
loss increased from R558 000(August 2014) to R3 095 000 (August 2015),
mainly due to a decline in revenue from R12 542 000 to R9 363 000.
Cost control remains a high priority, especially in light of the decreasing
revenue streams in the short term while the growth strategies of the Group
are being implemented.


PROSPECTS
The Financial products division remains profitable. Management has
implemented strategies to stabilise the client outflow experienced in this
division over the past three years as well as to increase revenue streams.
The client acquisition team is in the process of being expanded to grow
the subscriber base and to increase profitability.

Various strategies have been implemented to return the Health & Wellness
division to profitability. Management is looking at adapting the current
business model to include other sources of revenue to return this division
to profitability in the short term.

The Group has taken steps to raise capital with the share issue made to
Kose-Kose Investments Limited (“Kose-Kose”) which was approved by the
shareholders on 6 November 2015.


GENERAL
The growth strategy of the Group includes the diversification of the
investment base through the acquisition of businesses or the introduction
of new business models.

There are still a number of significant risks threatening the Group in its
current form. The reported summons served against a major subsidiary of
the Group need to be defended successfully and the on-going investigation
by the Financial Services Board (“FSB”) of the affairs of a major
subsidiary (refer Litigation section below) must be resolved. Management
is working towards resolving both these issues amicably and for the benefit
of all of its stakeholders.



GOING CONCERN
The consolidated annual financial statements have been prepared on the
basis of accounting policies applicable to a going concern. This basis
presumes that funds will be available to finance future operations and
that the realisation of assets and settlement of liabilities, contingent
obligations and commitments will occur in the ordinary course of business.
The directors constantly review the business models of the Group and its
operating subsidiaries to ensure sustainability and the ability to operate
profitably and generate positive cash flows. Funding facilities are also
reviewed regularly to ensure that the Group has sufficient facilities in
place to finance its operations.

The Group incurred a net loss of R 3 095 000 for the six months ended 31
August 2015, and the liabilities of the Group exceed its assets at 31
August 2015. The current liabilities of the group exceed its current assets
as at 31 August 2015, due to inter alia, the nature of the group operations
which is mostly cash based.

While the Group managed to generate a positive cash flow for the six months
to 31 August 2015, the cash flows of the Group remains under pressure due
to inter alia, the continued losses incurred by the Health & Wellness
division, the decrease in revenues in the Financial products division and
the committed repayment of the banking facilities of the Company.

On the 14th of July 2015 there has been a change in leadership in the
Group. The new management of the Group have taken the following steps in
order to address the concerns mentioned above in order to ensure that the
Company and its subsidiaries continued as a going concern:
  - The Group have cut down on its monthly salary bill by way of salary
    cuts in certain senior positions as well as restructuring within the
    Group.

  - The Group have introduced three more products to its current product
    lines in order to increase the base from which income is generated
    within the group. Some of these products have specifically been chosen
    to reach a wider market than the Group’s current subscription client
    base.

  - The Group have successfully raised capital with the issue of StratCorp
    Ltd shares to Kose-Kose which was approved by the Company’s
    shareholders on 6 November 2015. As result of this share issue Kose-
    Kose are now the major shareholder of the Company.

Adding to the steps mentioned above the new management continues to focus
on cost management by way of eliminating non-essential costs as well as
revenue generation by way of the expansion of business channels which will
add to the bottom line of the Group.

The directors are also looking at disposing of non-core assets, such as
the vacant land the Group owns as part of its strategy to reduce debt.
There is however still a number of significant risks still threatening the
Group in its current form, which results in material uncertainty relating
to the Group’s ability to continue as a going concern. The FSB’s
longstanding investigation into Virtus’ affairs needs to be finalised. The
strained relationship between the Group and the SEI Companies must also
be resolved in order to ensure a continuing mutually beneficial
relationship where the Group and Selective Empowerment Investments 1
Limited and Selective Empowerment Investments 2 Limited (the “SEI
Companies”) could exist independently in future and the shareholders of
the SEI Companies (which are mostly clients of Virtus) do not suffer. It
is management’s intentions to resolve these issues amicably and to the
benefit of all stakeholders.

The continued going concern of the Group therefore remains subject to the
successful resolve of the abovementioned pending litigation matters as
well as the successful implementation of the growth strategy of the Group
and access to sufficient cash resources to enable the Group to implement
the growth strategy.

BASIS OF PREPARATION
The unaudited condensed consolidated interim results for the six months
ended 31 August 2015 have been prepared in accordance with the framework
concepts and recognition and measurement principles of International
Financial Reporting Standards (“IFRS”) and Financial Pronouncements as
issued by the Financial Reporting Standards Council. The unaudited
condensed consolidated interim results have been presented in accordance
with the minimum content, including disclosures, prescribed by IAS 34
Interim Financial Reporting applied to year end reporting, the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee
and Financial Pronouncements as issued by the Financial Reporting
Standards Council, the Listings Requirements of the JSE Limited and the
requirements of the Companies Act of South Africa.

The accounting policies as set out in the audited financial statements for
the year ended 28 February 2015 are in terms of IFRS and have been
consistently applied in preparation of the 31 August 2015 results. The
unaudited condensed consolidated interim results have been presented on
the historical cost basis, except for other investments and other financial
liabilities, which are fair valued. These condensed consolidated financial
statements are presented in South African Rand, rounded to the nearest
thousand, which is the group’s functional and presentation currency.

These unaudited condensed consolidated interim results incorporate the
financial statements of the company, its subsidiaries and entities that,
in substance, are controlled by the group and the group’s interest in
associates. Results of subsidiaries and associates are included from the
effective date of acquisition up to the effective date of disposal. All
significant transactions and balances between group enterprises are
eliminated on consolidation.

Comparatives on the statement of comprehensive income have been re-
presented to show the effect of the discontinued operations

ASSETS AND LIABILITIES OF DISPOSAL GROUPS AND DISCONTINUED OPERATIONS
Certain of the remaining liabilities amounting to approximately R5.438
million are linked to the sale of the two remaining vacant properties for
development. The Group is still actively marketing the sale of these
properties.

BANKING FACILITIES
There was no further reduction on the overdraft facilities of the Company
with Absa Bank since 28 February 2015. The company is in discussions with
the bank to renegotiate the repayment terms of the overdraft facilities.

DIVIDENDS
No dividends were declared or paid to shareholders during the period.

POST REPORTING PERIOD EVENTS
Annual General Meeting
At the annual general meeting of the company held on 16 October 2015, all
the ordinary and special resolutions were passed by the requisite
majorities of votes of shareholders present.

General Meeting – Specific Issue of shares for Cash
At the general meeting of the company held on 6 November 2015, all the
resolutions as set out in the notice of general meeting were passed by the
requisite majority of shareholders, pertaining to:
-     the specific issue of 408 824 944 ordinary shares in StratCorp to a
      related party, at 0.5 cents per shares, for an aggregate amount of
      R2 044 124.72, triggering a mandatory offer to all shareholders;
-     a waiver of the mandatory offer by shareholders;
-     an increase in the company’s authorised share capital to 3 000 000 000
      ordinary shares of no par value; and
-     the amendment to the company’s Memorandum of Incorporation recording
      the increased consolidated authorised share capital to 3 000 000 000
      ordinary shares of no par value and other amendments thereto.

LITIGATION
As reported in the annual report of the Company for 2015 the Company and
some of its subsidiaries are involved in a number of litigation matters.
On the following matters there have been no further developments on which
the Company could report on:
    - the investigation against Virtus Financial Services (Pty) Ltd
      (Virtus) who is a wholly owned subsidiary of the Company by the FSB,
    - the summons served on Virtus by Selective Empowerment Investments 1
      claiming damages in excess of R23 million,
    - the investigation against StratCorp Property Holdings Ltd (Stratprop)
      by the CIPC regarding a complaint laid with them by a preference
      shareholder in Stratprop,
    - the motion delivered against Virtus and StratCorp by the SEI Companies
      regarding the disclosure, handover and debatement of certain
      information,
    - the motion handed in by the SEI Companies at the CIPC to investigate
      the affairs of Virtus with relation to the sale of shares in the SEI
      Companies and the purchasing of shares in other investments.

On the matters listed below there have been some further developments on
which the Company could report on:
    - regarding the application to place StratCorp under supervision and
      business rescue the directors of Kose-Kose have indicated that they
      were going to withdraw the said application after taking over the
      controlling shareholding of StratCorp,
    - regarding the dispute lodged by the major service provider against
      one of the subsidiaries within the Group the Company can report that
      the dispute was resolved with the said service provider.

Except for the 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.

DIRECTORS
The StratCorp Board comprised of three directors on 31 August 2015, of
which one was a non-executive director and two were executive directors.
Richard Botha and Krishni Pillay were appointed to the board as independent
non-executive directors on 18 September 2015. On 28 September 2015 Masala
Ramabulana was also appointed to the board as an independent non-executive
director.

The Group had to bid farewell to Henk Engelbrecht who resigned as an
executive director and the Group Financial Director with effect from 30
September 2015.

On 20 November 2015 Anniruth Kissoonduth was appointed as full time Chief
Executive Officer and Jaco le Grange was appointed by the current directors
as executive director and Group Financial Director with effect from 20
November 2015.

The appointments of all the directors appointed since 18 September 2015
will be approved at the next annual general meeting of the company.


FORWARD-LOOKING STATEMENTS AND DIRECTORS’ RESPONSIBILITY
Statements made throughout this announcement regarding the future
financial performance of StratCorp have not been reviewed or audited by
the company’s external auditors. The company cannot guarantee that any
forward-looking statement will materialise and accordingly, readers are
cautioned not to place undue reliance on any forward-looking statements.
The company disclaims any intention and assumes no obligation to update
or revise any forward-looking statement even if new information becomes
available as a result of future events or for any other reason, other than
as required by the JSE Listings Requirements.

The interim financial results have been prepared under the supervision of
the Group Financial Director, Mr HJ Le Grange. These condensed consolidated
interim financial results have not been audited or reviewed by the group’s
auditors.

The directors take full responsibility for the preparation of the condensed
consolidated interim financial results.

Signed on behalf of the board of directors by A Kissoonduth and HJ Le
Grange on 24 November 2015.




A Kissoonduth                            HJ Le Grange
Chief Executive Officer                  Group Financial Director
CORPORATE INFORMATION
Non-executive directors: TG Ratau, RD Botha*, K Pillay*,
MK Ramabulana*
*Independent
Executive directors: A Kissoonduth (CEO);    HJ Le Grange (GFD)
Registered address: 3rd Floor, Lakeside Building B, Heuwel Avenue,
Centurion, 0157
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) Limited
Auditors: SAB&T Chartered Accountants Inc.
Designated Adviser: Exchange Sponsors (2008) (Pty) Ltd


Centurion

24 November 2015


Designated Adviser
Exchange Sponsors

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