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Summarised Abridged Audited Group Financial Results for the Year Ended 29 February 2016 and notice of annual general
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”)
Summarised Abridged Audited Group Financial Results for the Year Ended 29 February 2016 and notice of
annual general meeting
Summarised group statement of financial position
Figures in R 2016 2015
Assets
Investment property 7,236,842 -
Property, plant and equipment 1,758,587 2,218,358
Intangible assets 782,551 976,835
Goodwill - 1,317,953
Other financial assets 352,899 2,065,693
Deferred taxation assets 5,924,307 6,850,700
16,055,186 13,429,539
Current Assets
Inventories 1,241,742 523,120
Current taxation asset 8,557 9,297
Finance lease receivables 9,819 35,783
Other financial assets 22,319 25,172
Trade and other receivables 928,629 545,498
Cash and cash equivalents 373,965 136,478
2,585,031 1,275,348
Discontinued operations and assets of disposal groups - 7,255,991
Total Assets 18,640,217 21,960,878
Equity and Liabilities
Equity
Issued capital 46,690,861 44,960,836
Other components of equity 273,851 1,680,483
Accumulated loss (56,960,479) (50,003,166)
(9,995,767) (3,361,847)
Non-Current Liabilities
Other financial liabilities - 8,541,454
Finance lease obligations - 12,036
Operating lease obligations - 63,228
Deferred taxation 709,138 1,194,340
709,138 9,811,058
Current Liabilities
Trade and other payables 12,003,254 3,556,613
Other financial liabilities 12,951,112 3,154,712
Finance lease obligations 11,402 64,109
Operating lease obligations 43,927 -
Bank overdraft 2,917,151 817,734
27,926,846 7,593,168
Discontinued operations and liabilities of disposal groups - 7,918,499
Total Equity and Liabilities 18,640,217 21,960,878
Summarised Group Statement of Comprehensive Income
Figures in R 2016 2015
Re-presented
Revenue 17,276,662 24,485,205
Cost of sales (4,076,893) (4,180,325)
Gross profit 13,199,769 20,304,880
Other income 252,740 106,704
Operating costs (16,733,121) (21,373,473)
Impairment of goodwill (1,317,953) -
Revaluation of investment property - (6,764,248)
Impairment of plant and equipment - (120,049)
Operating (loss) (4,598,565) (7,846,186)
Finance income 36,075 65,276
Finance costs (1,646,728) (1,832,268)
Loss before taxation (6,209,218) (9,613,196)
Taxation expense (748,095) 1,114,345
Loss for the year (6,957,313) (8,498,851)
Other comprehensive income
Items that will be reclassified into profit or loss
Fair value adjustments (1,712,794) 635,694
Income tax on items in other comprehensive income 306,162 (385,211)
Total other comprehensive (loss)/income (1,406,632) 250,483
Total comprehensive loss (8,363,945) (8,248,368)
Attributable to equity holders of StratCorp
Loss for the year (6,957,313) (8,498,851)
(6,957,313) (8,498,851)
Total comprehensive loss attributable to equity holders of StratCorp (8,363,945) (8,248,368)
Loss per share (cents)
Basic and diluted loss per share (cents) (2.22) (4.61)
Summarised Group Statement of Changes In Equity
Figures in R Share Accumulated
FVAR Total
capital loss
Balance at 1 March 2014 44,960,836 1,430,000 (41,504,315) 4,886,521
Total comprehensive loss for the
year
Loss for the year - - (8,498,851) (8,498,851)
Other comprehensive loss - 250,483 - 250,483
Total comprehensive loss for the - 250,483 (8,498,851) (8,248,368)
year
Balance at 28 February 2015 44,960,836 1,680,483 (50,003,166) (3,361,847)
Balance at 1 March 2015 44,960,836 1,680,483 (50,003,166) (3,361,847)
Total comprehensive income for
the year
Loss for the year - - (6,957,313) (6,957,313)
Other comprehensive loss (1,406,632) - (1,406,632)
Total comprehensive loss for the - (1,406,632) (6,957,313) (8,363,945)
year
Issue of share capital (Net after 1,730,025 - - 1,730,025
issue costs)
Balance at 29 February 2016 46,690,861 273,851 (56,960,479) (9,995,767)
Summarised Group Statement of Changes In Cash Flows
Figures in R 2016 2015
Re-presented
Cash flows from operating activities
Cash received from customers 17,170,148 27,100,419
Cash paid to customers (17,890,733) (23,553,193)
Cash generated from/(utilised in) operations (720,585) 3,547,226
Investment income 36,075 65,276
Income tax paid - (2,727)
Net cash from/(utilised in) operating activities (679,571) 3,609,775
Cash flows from investing activities
Property, plant and equipment acquired - (285,579)
Expenditure on product development - (33,556)
Proceeds on disposals of property, plant and equipment 4,939 127,936
Net cash utilised in investing activities 4,939 (191,199)
Cash flows from financing activities
Capital issued (Net after issue costs) 1,730,025 -
Proceeds from other financial liabilities - 913,901
Finance lease liability payments (64,743) (269,786)
Finance costs (391,783) (1,832,286)
Net cash (utilised in)/generated by financing activities (1,273,499) (1,188,171)
Increase/ (decrease) in cash and cash equivalents 593,928 2,230,405
Cash and cash equivalents at beginning of the year (3,137,114) (5,367,519)
Cash and cash equivalents at end of the year (2,543,186) (3,137,114)
BASIS OF PREPARATION OF THE AUDITED RESULTS
Statement of compliance
The audited summarised group financial results comprise a summarised group statement of financial position
at 29 February 2016, a summarised group statement of comprehensive income, a summarised group statement
of changes in equity and a summarised group statement of cash flow for the year ended 29 February 2016. The
audited summarised group financial results have been prepared in accordance with the framework concepts
and the measurement and recognition requirements of International Financial Reporting Standards (“IFRS”),
SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by Financial Reporting Standards Council, the presentation and disclosure
requirements of IAS 34 – Interim Financial reporting, the JSE Listings Requirements and the Companies Act of
South Africa, No 71 of 2008, as amended.
The accounting policies applied for the year, which are in terms of IFRS, are consistent with those of the prior
year. The financial statements have been prepared on the historical cost basis, except in the case of investment
properties and financial instruments which are measured using fair value and amortised cost models.
The directors take full responsibility for the preparation of the abridged financial results and the correct
extraction of the financial information included herein from the underlying annual financial statements.
COMPARATIVE FIGURES
Certain comparative figures have been re-presented in accordance with the requirements of IFRS.
The Group has re-presented the properties and their corresponding liabilities which were previously disclosed
as Discontinued operations and disposal groups under IFRS 5. The reason for this is that these re-presented
properties no longer meet the requirements as set out in IFRS 5 to be classified as Discontinued operations
and disposal groups as the Group cannot foresee that these properties will be sold within the next 12 months.
Last year the Group received an offer to purchase these properties from a third party. During this year the
potential sale fell through due to underlying issues which could not be sorted out.
The effect of this re-representation is as follows:
Statement of Comprehensive Income - 2015 Previously Currently Movement
Recognised Recognised
Operating costs (21,351,420) (21,373,473) (22,053)
Revaluation of Investment Property - (6,764,248) (6,764,248)
Operating loss (1,059,885) (7,846,186) (6,786,301)
Finance costs (1,567,839) (1,832,286) (264,447)
Loss before taxation (2,562,448) (9,613,196) (7,050,748)
Taxation expense (490,110) 1,114,345 1,604,455
Loss from continuing operations / Loss for the year (3,052,558) (8,498,851) (5,446,293)
Loss from discontinuing operations (5,446,293) - 5,446,293
Loss for the year (8,498,851) (8,498,851) -
Statement of Cash Flows - 2015 Previously Currently Movement
Recognised Recognised
Cash flows from operation activities
Cash paid generated in operations 3,327,367 3,547,226 219,859
Cash flow from discontinued operations (50,360) - 50,360
Net cash from operating activities 3,339,556 3,609,775 270,219
Cash flows from financing activities
Finance costs (1,567,839) (1,832,286) (264,447)
Net cash utilised in financing activities (923,724) (1,188,171) (264,447)
Increase/(decrease) in cash and cash equivalents 2,224,633 2,230,405 5,772
Cash and cash equivalents at the beginning of the year (2,905,889) (5,367,519) (2,461,630)
Cash and cash equivalents at the end of the year (681,256) (3,137,114) (2,455,858)
INVESTMENT PROPERTY
Figures in R 2016 2015
Opening balances - -
Transferred from IFRS 5 7,236,842 -
Closing balance 7,236,842 -
The register of investment properties is available at the registered office of the company.
Valuation on 28 February 2015 7,236,842 -
Karinpark X47:
-Acquired for 4,903,158 -
-Revaluation on 28 February 2015 (2,052,281) -
2,850,877 -
Karinpark X47 is located within the boundaries of the City of Tshwane Metropolitan Municipality, in the
Gauteng Province. It is situated approximately 7km west of Pretoria North along Reginald Avenue in a
suburb known as Karenpark, which is a predominantly residential area with some commercial properties.
The Orchards Development X61:
-Acquired for 9,097,932 -
-Revaluation on 28 February 2015 (4,711,967) -
4,385,965 -
The Orchards Development X61 is located within the boundaries of the City of Tshwane Metropolitan
Municipality, in the Gauteng Province. It is situated approximately 7km west of Pretoria North on the corner
of Daan De Wet Nel Drive and Jensen Street in a suburb known as The Orchards, which is a predominantly
residential area with some commercial properties.
Investment properties are annually valued by the directors. Assumptions used in the valuations are based on
current market conditions. There have been no movement between the fair value inputs and no change in
the method of valuations. Internal valuations on the land based on the Direct Comparable Sales method
include the unobservable inputs comprising price per square meter at a capitalization rate of 5%.
The investment properties are encumbered by liabilities in the amount of R5.4 million at year end.
GOODWILL
Group Carrying Accumulated 2016 Carrying Accumulated 2015
value amortisation/ Carrying value amortisation Carrying
impairment value value
Goodwill 1,317,953 (1,317,953) - 1,317,953 - 1,317,953
1,317,953 (1,317,953) - 1,317,953 - 1,317,953
The goodwill relates to the initial excess of the purchase price over the net assets value of the financial
products cash generating unit (“CGU”), of which Virtus Financial Services forms part, of R1 317 953 in 2000.
As mentioned below the FSB has withdrawn the FSP licence of Virtus Financial Services from 26 April
2016. As result the suspension of Virtus' operations the goodwill allocated thereto shows indications of
impairment which lead to management's conclusion to impair the goodwill in the current period over doubt
regarding to the subsidiary's ability to recover future cashflows.
OTHER FINANCIAL LIABILITIES
Figures in R 2016 2015
Financial liabilities at amortised cost
Linked units 12,951,112 11,696,166
12,951,112 11,696,166
The linked units consist of a redeemable preference share of one cent each and a claim portion of 99 cents
each. Holders of the linked units earn interest annually in arrears calculated at a rate of 15% on the claim
portion of the linked unit. Interest is calculated on the 1 December each year and capitalised until it become
payable on 1 December 2018. The linked units are unsecured.
The linked units have been issued by StratCorp Property Holdings Limited in 2006 to finance the property
development activities of WealthNet. In 2010 linked unit holders were given an option to either redeem the
2006 linked units or to subscribe for the new linked units. In excess of 90% of the linked unit holders chose to
subscribe for the new linked units. During the 2015 financial year the company redeemed some of the
linked units.
At the general meeting of preference shareholders held on 25 November 2014, the majority of preference
shareholders approved special resolutions in terms of which the redemption date of the linked units and the
interest thereon has been extended from 1 December 2013 to 1 December 2016 and giving the company the
option to further extend the redemption date of the linked units and accrued interest to 1 December 2018.
On 5 August 2016 the company exercised the option to extend the redemption date to 1 December 2018.
The non-current portion of the linked units includes:
Figures in R 2016 2015
Redeemable preference shares - 85,415
Claim portion - 8,456,039
Accrued Interest - -
- 8,541,454
The current portion of the linked units includes:
Figures in R 2016 2015
Redeemable preference shares 85,415 -
Claim portion 8,456,039 -
Accrued Interest 4,409,658 3,154,712
12,951,112 3,154,712
The carrying value of other financial liabilities approximates their fair values due to the short term nature of
the liability.
SEGMENT REPORTING
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.
The report able segments from which the Group derives revenue are set out below:
Reportable Segment Products and services
Financial products Supply investment products and long
term insurance products to clients in
Health and wellness products General South Africa using the network marketing
concept.
finance Supply of health and wellness products to
consumers in South Africa, using the
Corporate service and other network marketing concept.
Supply of credit to clients of the Financial
products segment as well as structured
finance leases to clients in South Africa.
Supply of credit, management and
information technology support services
to all other segments in the Group. This
segment also includes The StratCorp
Share Incentive Trust.
Inter segment transaction are accounted for at arm’s length and is not eliminated when segment
information is presented. Inter segment transactions are however eliminated in presenting
consolidated results for the Group.
Revenue 2016 2015
Continuing operations
• Financial products 12,845,38 19,447,146
• Health and Wellness products 4,443,868 9 4,931,368
• General finance 25,386 106,421
• Corporate services and other 2,916,674 6,886,833
Inter segment eliminations (2,954,655 (6,886,833)
Revenue from operations 17,276,66 ) 24,485,205
Profit/(Loss)
Continuing operations
• Financial products (354,076) (3,238,084)
• Health and Wellness products (376,392) (2,070,257)
• General finance (3,190) 17,989
• Corporate services and other (6,194,210 (4,524,321)
Inter segment eliminations (29,445) 1,315,822
Profit/(loss) from operations (6,957,313) (8,498,851)
Total group profit/(loss) after tax (6,957,313) (8,498,851)
Other disclosure items in Corporate
Depreciation 459,771 649,823
Amortisation 194,284 595,717
Impairment of property, plant and equipment - 120,049
Impairment of goodwill 1,317,953 -
Segment assets
Financial products 9,883,767 516,550
Health and Wellness products 1,328,131 470,177
General finance 56,809 91,461
Corporate services and other 1,094,304 3,392,353
Assets of disposal groups - 7,255,991
Report able segment assets 12,363,01 11,726,532
Unlisted investments 352,899 2,065,693
Deferred tax 5,924,307 6,850,700
Goodwill - 1,317,953
Total group assets 18,640,21 21,960,878
Segment liabilities
Financial products 9,330,930 1,732,509
Health and Wellness products 1,977,918 1,092,178
General finance - 1,664
Corporate services and other 3,666,886 1,687,369
Liabilities of disposal groups - 7,918,499
Reportable segment liabilities 14,975,73 12,432,219
Deferred tax 709,138 1,194,340
Interest bearing liabilities 12,951,112 11,696,166
Total Group Liabilities 28,635,984 25,322,725
The underlying businesses within the Group derive its revenue solely from customers within South Africa,
and no single customer of any of the underlying businesses contribute more than 1% of the revenue of the
respective businesses or Group.
HEADLINE LOSS AND DILUTED HEADLINE LOSS PER SHARE
Headline loss per share and diluted headline loss per share are determined by dividing the headline loss and
diluted headline loss by the weighted average number of ordinary share outstanding during a period. Headline
loss and diluted headline loss are determined by adjusting the loss and diluted loss by excluding separately
identifiable re measurement items. Headline loss and diluted headline loss are presented after tax. Diluted
headline loss per share is equal to headline loss per share because there are no dilutive potential ordinary shares
in issue.
RECONCILIATION BETWEEN LOSS AND HEADLINE LOSS
2016 2015
Loss for the year (6,957,313) (8,498,851)
Adjusted for
Loss after tax recognised on the measurement to
fair value less cost to sell constituting discontinued operations - 5,159,793
Profit on disposal of property, plant and equipment (4,939) (38,148)
Impairment loss on property, plant and equipment - 120,049
Impairment loss on goodwill 1,317,953 -
Reclassification of foreign currency translation reserve - -
Exchange rate losses on foreign exchange translation - 14,606
Tax effect thereon - (22,932)
(5,644,299) (3,265,483)
Weighted average number of shares in issue 313,001,809 184,193,950
Loss per share (c) (2.22) (4.61)
Headline loss / Diluted Headline loss per share (c) (1.80) (1.77)
ADJUSTMENT OF FINANCIAL RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2016
The provisional results previously published on 1 June 2016 for the year ended 29 February 2016 have been
adjusted due to:
• impairment of goodwill;
• impairment of deferred tax asset;
• reclassification and impairment of debtors and cash equivalents;
• reclassification of other financial liabilities and finance lease obligations from non-current to current
liabilities;
• income tax corrections;
As mentioned below the Financial Services Board (FSB) withdrew the Financial Services Provider license
(FSP licence) of Virtus Financial Services (Pty) Ltd. and management arranged the temporary carryover of
Virtus Financial Services (Pty) Ltd.’s clients to a business partner separate from the Group in order to keep
the business going until a new company within the group is registered as an FSP. According to this arrangement
one of the companies within the Group would operate as a juristic representative of the new business partner
and receive income from the business partner for services rendered. Originally it was intended that Virtus
Financial Services (Pty) Ltd would operate as the juristic representative of the new business partner but after
thorough consideration by management it was decided that Virtus Financial Services (Pty) Ltd will not operate
as the juristic representative of the new business partner.
This decision, which was made after 31 May 2016, confirmed that the goodwill asset linked to the initial purchase
of Virtus Financial Services (Pty) Ltd had to be impaired as it became uncertain that the company will be able to
generate future net cash inflows. Virtus Financial Services (Pty) Ltd furthermore impaired the deferred tax asset
as well as its debtors as it became uncertain how the company would realize these assets without being
operational.
StratCorp Ltd incorrectly classified the capital portion of other financial liabilities as a non-current liability.
Although the company exercised an option to extend the redemption date of the linked units and the interest
on the linked units until 1 December 2018 the option was not exercised before year end which meant that at
yearend this liability were still current.
StratCorp Ltd furthermore:
- incorrectly classified the finance lease obligation was as a non-current liability
- incorrectly allocated debtors and cash equivalents originating from the Financial Services segment with
creditors from that segment
- incorrectly understated the loss on the fair value adjustments of financial assets through other
comprehensive income
- incorrectly understated the deferred tax asset on leave pay provisions within the group
The effect of these errors has been corrected.
The effect of the restatement, when applied to the 29 February 2016 financial year, had the following impact:
Previously Adjustment Restated
Reported
GOODWILL IMPAIRMENT
Statement of financial position
Goodwill 1,317,953 (1,317,953) -
Statement of comprehensive income
Impairment of goodwill - 1,317,953 1,317,953
DEFERRED TAX ASSET IMPAIRMENT AND CORRECTION
Statement of financial position
Deferred taxation assets 6,227,997 (303,690) 5,924,307
Statement of comprehensive income
Taxation expense 497,964 303,690 801,654
DEBTORS and CASH EQUIVALENTS RECLASSIFICATION
AND IMPAIRMENT
Statement of financial position
Trade and other receivables 1,209,112 (302,558) 906,554
Cash and cash equivalents 238,805 135,160 373,965
Trade and other payables (11,710,797) (292,457) (12,003,254)
Statement of comprehensive income
Revenue (17,248,046) (28,616) (17,276,662)
Other income (125,467) (127,273) (252,740)
Operating costs 16,077,377 655,744 16,733,121
Taxation expense 801,654 (40,000) 761,654
OTHER FINANCIAL LIABILITIES RECLASSIFICATION
Statement of financial position – Non-Current Liabilities
Other financial liabilities (8,541,454) 8,541,454 -
Statement of financial position –Current Liabilities
Other financial liabilities (4,409,658) (8,541,454) (12,951,112)
FINANCE LEASE OBLIGATIONS RECLASSIFICATION
Statement of financial position – Non-Current Liabilities
Finance lease obligations (43,927) 43,927 -
Statement of financial position –Current Liabilities
Finance lease obligations - (43,927) (43,927)
FAIR VALUE ADJUSTMENT THROUGH OTHER
COMPREHENSIVE INCOME
Statement of financial position
Trade and other receivables 906,554 22,076 928,629
Statement of comprehensive income
Fair value adjustments 1,734,870 (22,076) 1,712,794
Income tax on items in other comprehensive income (319,722) 13,560 (306,162)
Taxation expense 761,654 (13,560) 748,095
DIVIDENDS
No dividends were declared or paid to shareholders during the year.
LITIGATION
As there has been no change in litigation matters please refer to the publication of the provisional report on 1
June 2016 for full details on the litigation concerning the company.
EVENTS AFTER THE REPORTING PERIOD
Since 29 February 2016, the financial year end of the Group, the following material events occurred:
On 26 April 2016 the Financial Services Board (FSB) withdrew the Financial Services Provider license
(FSP licence) of Virtus Financial Services (Pty) Ltd. Management corresponded with the FSB on the matter
and was granted extension up to 31 July 2016 to hand over its clients to another FSP. Management in
correspondence with the FSB have lodged an application for an FSP licence for a new company in the
Group in order to move its clients over to this company once it is registered as an FSP. Management also
arranged the temporary carryover of Virtus Financial Services (Pty) Ltd.’s clients to a business partner
separate from the Group in order to keep the business going until the new company have been registered
as an FSP. According to this arrangement one of the companies within the Group will operate as a juristic
representative of the new business partner and receive income for services rendered.
On 5 August 2016 the directors of StratCorp Property Holdings Ltd exercised an option to extend the
redemption of the linked units and interest on the linked units to 1 December 2018. This option was provided
to the directors by the linked unit holders with a vote on a special resolution on 25 November 2014.
Summons was served on WealthNet (Pty) Ltd by Mr PJ Vos for a summary judgement regarding settlement of
the amount due to him. The dispute is regarding the date on which the due amount becomes payable to Mr
Vos. The application for summary judgement has been dismissed by the court and the matter is due to go on
trial.
Summons was served on StratCorp Ltd by Mr DB Harington for a summary judgement regarding settlement of
the amount due to him. The case was withdrawn by Mr Harington after the company lodged its opposing
papers.
On 31 August 2016 Mr. A Kissoonduth resigned as CEO and was appointed as a non-executive director.
On 1 September 2016 Mr. RD Botha was appointed as Interim CEO of the company.
Except for the matters listed above, the directors are not aware of any matter or circumstances arising
since the end of the financial year that could have a material effect on the consolidated and separate annual
group financial statements.
GOING CONCERN
The Summarised Abridged Audited Group Financial Results have been prepared on the basis of accounting
policies applicable to a going concern. This basis presumes that funds will be available to finance future
operations and that the realisation of assets and settlement of liabilities, contingent obligations and
commitments will occur in the ordinary course of business.
The directors constantly review the business models of the Group and its operating subsidiaries to ensure
sustainability and the ability to operate profitably and generate positive cash flows. Funding facilities are also
reviewed regularly to ensure that the Group has sufficient facilities in place to finance its operations.
The group incurred a net loss of R6,9 million for the year ended 29 February 2016, compared to a net loss of
R8, 5 million for 2015. The continued decline in market conditions lead to the a additional losses in the current
financial year, which resulted in the group results reflecting a negative net asset value of R9,97 million as at 29
February 2016. The current liabilities of the group exceed its current assets as at 29 February 2016, due to
inter alia, the nature of the group operations which is mostly cash based.
As disclosed in the subsequent events after reporting date, the withdrawal of Virtus' license to act as an
accredited FSP is one of the principle conditions casting significant doubt on the Group's ability to continue as
a going concern as the Group’s main source of cash receipts stem from Virtus’ operations. Additionally the
Group does not have sufficient cash resources available to cover its immediately payable liabilities over the
foreseeable future. Furthermore various legal matters which remain unresolved, are straining the Group’s
ability to continue as a going concern.
Managements plan to deal with these events revolve around the Group entering into a juristic representative
agreement with external financial services providers where the risk business previously overseen by Virtus
would be undertaken by external parties, to which the Group would pay a management fee for their
representation. Additionally the Group is focussing on eliminating all non-essential costs, as well as the
expansion of market share to further increase turnover, and the realisation of the properties to further reduce
the debt strain on the Group. Management is further pursuing various new business models to enhance the
Group's performance and is in the process of discussing revised settlement terms with financial institutions to
alleviate the repayment requirements and additional funding facilities. Management have continued
discussions with external parties to raise funds through equity injections.
These conditions indicate significant risks still exists pertaining to the Groups ability to continue as a going
concern in its current form, which results in material uncertainty relating to the Group's ability to continue as a
going concern. These conditions may result in the Group being unable to realise its assets and discharge its
liabilities in the normal course of business.
AUDIT OPINION
These abridged financial results are extracted from audited information, but is not itself audited. The
consolidated annual financial statements were audited by Nexia SAB&T, who expressed a disclaimer of opinion
thereon as they were unable to obtain sufficient appropriate audit evidence to support the going concern
assumption as to whether: the negotiations for the raising of additional share capital will be successful; the
successful application of a new FSP licence; the legal matters have been resolved. The audited financial
statements and the auditor’s report are available for inspection at the company’s registered office, which
contains a disclaimer of opinion with regard to the going concern, as follows:
“Basis for disclaimer of opinion
The continued decline in market conditions lead to additional losses for the Group of R6,9 million for the year
ended 29 February 2016, which resulted in the Group reflecting a negative net asset value of R9,99 million as at
29 February 2016. The current liabilities of the Group also exceed its current assets as at 29 February 2016.
Accordingly the Group does not have sufficient cash resources available to cover its immediately payable
liabilities over the foreseeable future.
As disclosed in the Note 40, subsequent events after reporting date, the withdrawal of Virtus' license to act as
an accredited Financial Services Provider (FSP), is one of the principle conditions casting significant doubt on the
Group's ability to continue as a going concern as the Group’s main source of cash receipts stem from Virtus’
operations.
Furthermore, various legal matters which remain unresolved, disclosed in Note 35 to the Annual Financial
Statements, are also straining the Group’s ability to continue as a going concern.
The directors of the Group believe that the Group will be able to raise the necessary funds through a share issue,
to enable the Group to repay their debts and fund their operations for the foreseeable future. The directors
have determined that it is appropriate for the Group to adopt the going concern assumption in preparing the
accompanying consolidated and separate annual financial statements.
The ability of the Group to continue as a going concern is dependent on the successful share issue, the return of
the entity to profitability, and the successful application of a new FSP licence. These conditions indicate
significant risks exist pertaining to the Group’s ability to continue as a going concern.
We were unable to obtain sufficient appropriate audit evidence to support the going concern assumption as to
whether: the negotiations for the raising of additional share capital will be successful; the successful application
of a new FSP licence; the legal matters have been resolved, to conclude on the appropriateness of the use of
the going concern assumption for the preparation of the consolidated and separate annual financial statements.
These conditions result in us being unable to determine whether the Group will be able to realise its assets and
discharge its liabilities in the normal course of business.
Disclaimer of Opinion
Because of the significance of the matters described in the Basis of Disclaimer of Opinion paragraph, we have
not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly
we do not express an opinion on these consolidated and separate annual financial statements.”
Furthermore, the auditor’s report contained the following paragraph with respect to reportable irregularities:
“in accordance with our responsibilities in terms of Sections 44(2) and 44(3) of the Auditing Profession Act, we
report that we have identified certain unlawful acts or omissions committed by persons responsible for the
management of StratCorp Limited and its subsidiaries which constitute reportable irregularities in terms of the
Auditing Profession Act, and have reported such matters to the Independent Regulatory Board for Auditors. The
unlawful act pertains to the annual financial statements of the company and subsidiary entities not being
prepared within six months from year end, as required by the Companies Act of South Africa”
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting of the shareholders of Stratcorp will be held in the
Stratcorp boardroom on the 3rd Floor, Lakeside Buidling B, Heuwel Avenue, Centurion on Friday, 25 November
2016 at 10:00 to deal with the business as set out in the notice of annual general meeting in the annual report.
ANNUAL REPORT FOR THE YEAR ENDED 29 FEBRUARY 2016
The annual report for the year ended 29 February 2016 containing the full group and separate financial
statements is available for inspection at the Company’s registered address and is also available for download
from the Company’s website at www.stratcorp.co.za.
On behalf of the board
RD Botha HJ Le Grange
Interim Chief Executive Officer Group Financial Director
30 September 2016 30 September 2016
CORPORATE INFORMATION
Directors: RD Botha#, HJ Le Grange#, GT Ratau, A Kissoonduth, M Ramabulana, K Pillay
#Executive
Registered address: 3rd Floor, Lakeside Building B, Heuwel Avenue, Centurion, 0157
Postal address: PO Box 12022, Centurion, 0046
Company Secretary: HJ Le Grange
Telephone: 087 151 0025
Facsimile: 087 807 5061
Email: info@stratcorp.co.za
Website: www.stratcorp.co.za
Transfer secretaries: Computershare
External Auditors: Nexia SAB&T
Designated Advisor: Exchange Sponsors
Date: 30/09/2016 05:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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