Wrap Text
Condensed consolidated provisional financial results
for the year ended 31 March 2017
PBT Group Limited
(Previously Prescient Limited)
Registration number: 1936/008278/06
JSE share code: PBG
ISIN: ZAE000227781
("the PBT Group" or "the Company" or "the Group")
Condensed consolidated provisional financial results for the year ended 31 March 2017
Notes to the condensed consolidated provisional financial statements
Basis of preparation and accounting policies
Statement of compliance
The condensed consolidated provisional financial statements are prepared in
accordance with the requirements of the JSE Limited Listings Requirements for
provisional reports. The Listings 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 Pronouncements as issued by Financial Reporting Standards
Council and to also, as a minimum, contain the information required by IAS 34 Interim
Financial Reporting. The accounting policies applied in the presentation of the
condensed consolidated provisional financial statements are in terms of IFRS and are
consistent with those presented in the previous consolidated financial statements.
These condensed consolidated provisional financial statements were prepared under
the supervision of the Financial Director, AM Louw. The Board of Directors approved
these financial statements on 30 June 2017.
Judgements and estimates
Preparing the financial statements requires management to 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.
In preparing these condensed consolidated provisional financial statements,
significant judgements made by management in applying the Group's accounting
policies and key sources of estimation uncertainty were the same as those that
applied to the consolidated financial statements as at and for the year ended 31 March
2016.
Related party transactions
PBT Group Limited (previously Prescient Limited) and its subsidiaries ("the Group"
or "the Company"), in the ordinary course of business, entered into various
intercompany transactions with related parties. The Company has related party
relationships with subsidiaries and with its key management personnel. There were
no significant changes to these relationships, other than those transactions between
the Prescient Holdings (Pty) Limited Group and the remaining entities in the PBT
Group. Prescient Holdings (Pty) Ltd Group no longer forms part of the PBT Group.
Subsequent events
There were no material events subsequent to the reporting date other than the special
dividend. Refer to the dividend paragraph for further information.
Review of operations
During the period under review, PBT Group Limited's shareholders approved a transaction
with Stellar Capital Partners Limited and received a distribution to an amount of
R1.428 billion from Prescient Holdings (Pty) Ltd ("Prescient Holdings") resulting in
the effective disposal of Prescient Holdings. Prescient Limited was renamed to PBT Group
Limited to better reflect the ongoing operations and strategic vision of the Company.
The pro rata income and expenses associated with Prescient Holdings is disclosed as
profits from discontinued operations in the condensed consolidated provisional
statement of profit or loss and other comprehensive income. The comparative profit
from Prescient Holdings for the prior year has been restated to reflect as profits from
discontinued operations in the comparative period. The corresponding earnings per
share and headline earnings per share have also been reflected as a split between
continuing and discontinued operations.
Total loss after tax from continuing operations after the impairment of goodwill
(R31.6 million) for the period was R23.6 million (March 2016: profit of R19.7 million)
with profit before tax for continuing operations being R1.8 million (March 2016:
profit of R40 million). Headline earnings per share was 5.93 cents per share (March
2016: 6.79 cents per share) while headline earnings per share for continuing
operations was 0.16 cents per share (March 2016: 0.98 cents per share) and headline
earnings per share for discontinued operations was 5.77 cents per share (March
2016: 5.81 cents per share).
The weighted average number of shares in issue for the 12 months ended 31 March
2017 was 1 619 927 367 (March 2016: 1 600 156 235).
South Africa and Australia
The South African and Australian operations continue to operate well despite the
general challenging environment. The demand for our services in these two segments
remain strong and resulted in satisfactory growth and profits.
Middle-East/Africa
The headwinds in the Middle-East/Africa ("MEA") segment of our business resulted
in a loss after tax of R51.8 million for the region. The negative payment culture
resulted in very high interest charges and a bad debt write-off of R18.4 million. An
implemented change in the tax law resulted in withholding tax ("WHT") of R16.86
million expensed as additional tax paid in the current financial year that resulted in
an exceptionally high tax charge. This will be a recurring expense in future periods.
WHT is deducted from payments to the Company from certain MEA countries. South
Africa has Double Tax Agreements with most of these countries which disallows the
deduction of WHT. The WHT was allowed as a credit against the South African Tax in
terms of Section 6quin of the Income Tax Act. This Section has however been deleted
and for all tax years starting on or after 1 January 2016 no concession is allowed. As
of this date a deduction can't not be claimed against the income in terms of Section
6quat(1C) of the Income Tax Act. Although WHT of R14.9 million relating to previous
periods is available to be offset against future tax payable, we felt it prudent to impair
this asset and expense it through profit or loss.
Dividend
In accordance with the SENS announcement released on 26 May 2017, an excess
payout was made post year end to PBT Group by Prescient Holdings Group. The cash
portion of this excess payout amounted to R26.2 million and, will be paid out to
shareholders as a special dividend before or during the first week of August 2017
which details will be announced on SENS in due course. No dividend from normal commercial
operations has been declared for the 6 months ended 31 March 2017.
Biannually, the directors consider the payment of a dividend, taking into account
prevailing circumstances and future cash and capital requirements of the Group in
order to determine the appropriate dividend in respect of a particular financial
reporting period.
Prospects
Our South African and Australian operations continue to perform well and will in all
likelihood continue to do so. We continue to experience good cash flows in these regions.
A very small portion of revenue in these regions is based on fixed price projects resulting
in a clear cut operating environment. The demand for services is very strong and exceeds the
availability of skills.
The trading environment in the Middle-East/Africa region has deteriorated vastly
over the last two reporting periods. The change in legislation regarding the treatment
of withholding tax, the payment culture and the blatant disregarding of Double Tax
Agreements make profitable trading in some accounts in this region highly
unlikely. Accordingly, we shall downscale our operations in this region, taking into
account the reduced requirements from our clients as well as the duration of our
current contract with clients.
Changes to Management and the Board of Directors
There were a number of changes to the Board during the period and subsequent to
the end of the period under review.
KR Moloko, R van Rooyen and ZK Meyer resigned as independent non-executive
directors effective 17 March 2017. PJ De Wet was appointed as CEO and AJ Taylor and
CL Dyers were appointed as independent non-executive directors on 17 March 2017.
AJ Taylor was appointed as lead independent non-executive director. Additionally, AL
Winkler was appointed as an independent non-executive director effective 17 May
2017.
The Board wishes PJ de Wet well in his new role.
Review of the Independent Auditor
The condensed consolidated provisional financial statements of PBT Group Limited
for the year ended 31 March 2017 have been reviewed by KPMG Inc., who expressed
an unmodified review conclusion. The auditor's report does not necessarily report on
all of the information contained in this financial results. 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.
Forward-looking statements
This announcement contains certain forward-looking statements with respect to the
financial condition and results of the operations of PBT Group Limited that, by their
nature, involve risk and uncertainty because they relate to events and depend on
circumstances that may or may not occur in the future. These may relate to future
prospects, opportunities and strategies. If one or more of these risks materialise, or
should underlying assumptions prove incorrect, actual results may differ from those
anticipated. By consequence, none of the forward-looking statements have been
reviewed or reported on by the Group's auditor.
CONDENSED CONSOLIDATED PROVISIONAL STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Reviewed Audited
2017 2016
Notes R´000 R´000
Restated*
Total income 612 741 543 136
Services fees 572 287 538 913
Interest and dividend income 17 999 907
Other investment income 22 455 3 316
Cost of information management services (447 985) (405 573)
Operating expenses (128 899) (94 868)
Impairment of goodwill 3 (31 645) -
Share-based payment expense (462) (455)
Profit from operations 3 750 42 240
Other income 4 819 2 494
Finance costs (6 724) (4 694)
Profit before tax 1 845 40 040
Income tax expense 5 (25 449) (20 387)
(Loss)/profit from continuing operations (23 604) 19 653
Discontinued operations
Profit from discontinued operations 2 1 229 633 99 439
Profit for the year 1 206 029 119 092
Other comprehensive income
Items that are or may be reclassified to profit or loss
Foreign currency translation differences - foreign operations (8 183) 17 398
Tax on other comprehensive income - -
Other comprehensive (loss)/income for the year, net of tax (8 183) 17 398
Total comprehensive income for the year 1 197 846 136 490
Profit attributable to:
Owners of the Company 1 203 543 109 004
Non-controlling interests 2 486 10 088
Profit for the year 1 206 029 119 092
Total comprehensive income attributable to:
Owners of the Company 1 195 360 123 489
Non-controlling interests 2 486 13 001
Total comprehensive income for the year 1 197 846 136 490
Earnings per share (cents)
Continuing operations 1 (1.53) 0.88
Discontinued operations 1 76.99 5.81
Diluted earnings per share (cents)
Continuing operations 1 (1.53) 0.88
Discontinued operations 1 76.99 5.81
Headline earnings per share (cents)
Continuing operations 1 0.16 0.98
Discontinued operations 1 5.77 5.81
Diluted headline earnings per share (cents)
Continuing operations 1 0.16 0.98
Discontinued operations 1 5.77 5.81
*Refer to note 2.
CONDENSED CONSOLIDATED PROVISIONAL STATEMENT OF FINANCIAL POSITION
Reviewed Audited
2017 2016
Notes R´000 R´000
Assets
Non-current assets 385 825 11 667 621
Property and equipment 23 831 29 241
Investment property 33 430 35 728
Goodwill and intangible assets 3 286 215 397 960
Deferred tax asset 7 353 14 197
Long-term loans and other receivables 2 581 54 186
Investment in equity-accounted investees 289 9 658
Financial assets at fair value through profit or loss 32 126 151 439
Linked investments backing policyholder funds - 10 975 212
Current assets 291 547 1 077 824
Inventory 19 787 35 688
Trade and other receivables 4 227 668 214 959
Amounts owing by clearing houses -
192 777
Amounts owing by clients -
429 186
Taxation receivable -
13 623
Cash and cash equivalents 44 092 191 591
Total assets 677 372 12 745 445
Equity
Stated capital 144 015 667 660
Reserves 5 400 7 066
Retained income 410 600 152 451
Total equity attributable to owners of the Company 560 015 827 177
Non-controlling interests 12 434 24 064
Total equity 572 449 851 241
Liabilities
Non-current liabilities 48 899 11 018 427
Deferred tax liability 5 988 13 548
Policyholder investment contract liabilities - 10 974 330
Loans payable 42 911 30 549
Current liabilities 56 024 875 777
Trade and other payables 40 108 106 393
Amounts owing to clearing houses -
16 134
Amounts owing to clients -
604 668
Current tax payable 7 835 9 377
Loans payable - 44 126
Bank overdraft 8 081 95 079
Total liabilities 104 923 11 894 204
Total equity and liabilities 677 372 12 745 445
CONDENSED CONSOLIDATED PROVISIONAL STATEMENT OF CHANGES IN EQUITY
Share-
based Non-
Stated Translation Treasury payment Retained controlling Total
R´000 capital reserve shares reserve income Total interest equity
Balance at 1 April 2015 664 702 6 414 (14 502) 801 138 578 795 993 14 139 810 132
Total comprehensive income for the
year
Profit for the year - - - - 109 004 109 004 10 088 119 092
Total other comprehensive income - 14 485 - - - 14 485 2 913 17 398
Total comprehensive income for the
year - 14 485 - - 109 004 123 489 13 001 136 490
Transactions with owners recognised
directly in equity
Contributions by and distributions to
owners of the Company
Treasury shares purchased - - (2 074) - - (2 074) - (2 074)
Equity-settled share-based payments - - - 1 942 - 1 942 - 1 942
Dividends declared during the year - - - - (95 131) (95 131) (2 548) (97 679)
Issue of ordinary shares 2 958 - - - - 2 958 - 2 958
Total contributions by and
distributions to owners of the
Company 2 958 - (2 074) 1 942 (95 131) (92 305) (2 548) (94 853)
Changes in ownership interests in
subsidiaries
Acquisition of NCI without a change in
control - - - - - - 5 950 5 950
Loss of control - - - - - - (6 478) (6 478)
Total changes in ownership interests
in subsidiaries - - - - - - (528) (528)
Total transactions with owners of the
Company 2 958 - (2 074) 1 942 (95 131) (92 305) (3 076) (95 381)
Balance at 31 March 2016 667 660 20 899 (16 576) 2 743 152 451 827 177 24 064 851 241
Share-
based Non-
Stated Translation Treasury payment Retained controlling Total
R´000 capital reserve shares reserve* income Total interest equity
Balance at 1 April 2016 667 660 20 899 (16 576) 2 743 152 451 827 177 24 064 851 241
Total comprehensive income for the
year
Profit for the year - - - - 1 203 543 1 203 543 2 486 1 206 029
Total other comprehensive income - (8 183) - - - (8 183) - (8 183)
Total comprehensive income for the
year - (8 183) - - 1 203 543 1 195 360 2 486 1 197 846
Transactions with owners recognised
directly in equity
Contributions by and distributions to
owners of the Company
Treasury shares sold - - 9 260 - 11 166 20 426 - 20 426
Equity-settled share based-payments - - - 1 680 - 1 680 - 1 680
Termination of forfeitable share plan* - - - (4 423) 4 423 - - -
Dividends declared during the year - - - - (69 276) (69 276) (3 430) (72 706)
Capital distribution ** (469 853) - - - (957 969) (1 427 822) - (1 427 822)
Adjustment to reflect the PBT Group
Limited share capital after disposal of
Prescient Holdings (Pty) Ltd (53 792) - - - 53 792 - - -
Total contributions by and
distributions to owners of the
Company (523 645) - 9 260 (2 743) (957 864) (1 474 992) (3 430) (1 478 422)
Changes in ownership interests in
subsidiaries
Acquisition of non-controlling interests - - - - 12 470 12 470 (12 470) -
Disposal of subsidiary - - - - - - 1 784 1 784
Total changes in ownership interests
in subsidiaries - - - - 12 470 12 470 (10 686) 1 784
Total transactions with owners of the
Company (523 645) - 9 260 (2 743) (945 394) (1 462 522) (14 116) (1 476 638)
Balance at 31 March 2017 144 015 12 716 (7 316) - 410 600 560 015 12 434 572 449
* During December 2016, the Group's forfeitable share plan had been terminated.
** Refer to note 2.
Dividend per share (cents) 2017 2016
Interim - declared 13 December 2016 (2016: 26 November 2015) 2.25 2.85
Final - (2016: 29 June 2016) - 1.90
CONDENSED CONSOLIDATED PROVISIONAL STATEMENT OF CASH FLOWS
Notes 2017 2016
R´000 R´000
Cash flows from operating activities
Profit for the year 1 206 029 119 092
Income tax expense 25 449 47 202
Non-cash movements and adjustments to profit before tax (1 318 195) (970 453)
Cash generated from policyholder activities 307 697 981 892
Contributions and investment income 3 065 617 3 495 961
Withdrawals by policyholders (2 757 920) (2 514 069)
Changes in working capital (54 288) (10 470)
Dividends received 12 641 2 946
Dividends paid (72 706) (97 679)
Interest received 5 358 19 358
Interest paid (6 724) (10 862)
Taxation paid (25 454) (50 998)
Net cash inflow from operating activities 79 807 30 028
Cash flows from investing activities
Acquisition of equipment (2 843) (8 040)
Disposals of equipment 789 -
Acquisition of intangible assets (1 243) (8 382)
Proceeds on loss in control of subsidiary, net of cash disposed of - 2 155
Disposal of equity-accounted investee - 3 064
Proceeds on disposal of discontinued operations, net of cash disposed of 2 1 317 935 -
(Acquisition)/disposal of financial assets at fair value through profit or loss (53 104) 6 026
Advancement of long-term loans receivable (5 704) (2 313)
Cash inflow/(outflow) from investing activities 1 255 830 (7 490)
Cash flows from financing activities
Acquisition of own shares (145) 2 074
Capital distribution (1 427 822) -
Increase in loans payable 32 899 4 499
Cash (outflow)/inflow from financing activities (1 395 068) 6 573
Net (decrease)/increase in cash and cash equivalents (59 431) 29 111
Effect of exchange rate fluctuations on cash held (1 070) 18 133
Cash and cash equivalents at beginning of the year 96 512 49 268
Cash and cash equivalents at end of the year 36 011 96 512
The calculation of basic earnings per share at 31 March 2017 was based on the profit attributable to ordinary shareholders of R1 184 580 219 (2016: R107 054 988),
and a weighted average number of ordinary shares outstanding of 1 619 927 367 (2016: 1 600 156 235), calculated as follows:
31 March 2017 31 March 2016
Profit attributable to ordinary shareholders (basic)
Continuing Discontinued
Continuing Discontinued operations operations
R'000 operations operation Total Restated* Restated* Total
(Loss)/profit for the year, attributable to owners of the
Company (29 858) 1 233 401 1 203 543 14 684 94 320 109 004
Earnings attributable to FSP Shareholders (5 129) (13 834) (18 963) (527) (1 422) (1 949)
(Loss)/profit attributable to ordinary shareholders (34 987) 1 219 567 1 184 580 14 157 92 898 107 055
* Refer to note 2.
Weighted average number of ordinary shares (basic) 2017 2016
In thousands of shares
Ordinary shares at 1 April 1 669 251 1 648 655
Effect of treasury shares held (23 022) (29 672)
Effect of FSP shares (26 302) (29 666)
Effect of shares issued and share capitalisation - 10 839
Weighted average number of ordinary shares at 31 March 1 619 927 1 600 156
1. Headline earnings per share
Headline earnings per share has been calculated in accordance with Circular 2/2015 issued by the South African Institute of Chartered Accountants.
Diluted earnings per share is equal to basic earnings per share. Diluted headline earnings per share is equal to headline earnings per share.
2017
Earnings Earnings
Non- attributable attributable
Profit before controlling to FSP to ordinary Cents per
R'000 tax Tax interests shareholders shareholders share
Continuing operations
Per the statement of comprehensive income 1 845 (25 449) (6 255) 5 129 (24 730) (1.53)
Adjustments
Impairment loss on goodwill 31 645 - - - 31 645 1.95
Change in fair value of investment property (4 179) - - - (4 179) (0.26)
Continuing operations headline earnings 29 311 (25 449) (6 255) 5 129 2 736 0.16
Discontinued operations
Per the statement of comprehensive income 1 259 744 (30 111) 3 769 13 834 1 247 236 76.99
Adjustments
Gain on sale of discontinued operations* (1 153 710) - - - (1 153 710) (71.22)
Discontinued operations headline earnings 106 034 (30 111) 3 769 13 834 93 526 5.77
Total
Per the statement of comprehensive income 1 261 589 (55 560) (2 486) 18 963 1 222 506 75.46
Total Group headline earnings 135 345 (55 560) (2 486) 18 963 96 262 5.93
* Including foreign exchange recycled from the foreign currency translation reserve.
2016
Earnings Earnings
Non- attributable to attributable to
Profit before controlling FSP ordinary Cents per
R'000 tax Tax interests shareholders shareholders share
Continuing operations
Per the statement of comprehensive income 40 040 (20 387) (4 969) (527) 14 157 0.88
Adjustments
Change in fair value of investment property (3 403) - - 61 (3 342) (0.21)
Gain on partial sale of equity accounted investee (749) - - 13 (736) (0. 05)
Loss on loss of control of subsidiary 5 818 - - (104) 5 714 0.36
Continuing operations headline earnings 41 706 (20 387) (4 969) (557) 15 793 0.98
Discontinued operations
Per the statement of comprehensive income 126 254 (26 815) (5 119) (1 422) 92 898 5.81
Discontinued operations headline gain 126 254 (26 815) (5 119) (1 422) 92 898 5.81
Total
Per the statement of comprehensive income 166 294 (47 202) (10 088) (1 949) 107 055 6.69
Total Group headline earnings 167 960 (47 202) (10 088) (1 979) 108 691 6.79
NOTES TO THE CONDENSED CONSOLIDATED PROVISIONAL FINANCIAL STATEMENTS
2. Discontinued operations
On 10 February 2017, the final regulatory approval had been received for the Group to sell its entire investment management segment as per the Proposed Transaction
with Stellar Capital as previously communicated to shareholders in the Circular posted on 30 September 2016. The proposed transaction included a subscription of
Prescient Holding's "B" shares by Stellar Capital to an amount of R1.428 billion. Following the subscription, Prescient Limited declared a distribution of the same amount
to its shareholders. The application of the distribution was implemented by way of a scheme with the Prescient shareholders in terms of the Companies Act. The Prescient
distribution was applied on behalf of its shareholders, based on their election, to either receive the distribution in cash, subscribe for Stellar Capital shares or reinvest into
Prescient Holdings and its subsidiaries by purchasing "B" ordinary shares. The Proposed Transaction has been completed, and Prescient Holdings no longer forms part of
Prescient Limited. Prescient Limited was renamed to PBT Group Limited.
The investment management segment was not previously classified as a held-for-sale or as a discontinued operations. The comparative consolidated provisional statement
of profit or loss and OCI has been restated to present the discontinued operations separately from continuing operations.
To achieve this presentation, management has eliminated from the results of the discontinued operations the inter segment loans, receivables and interest income and
expenses.
2017 2016
Results of discontinued operations R'000 R'000
Revenue 340 687 367 264
Other income 1 735 1 453
Expenses (236 388) (242 463)
Results from operating activities 106 034 126 254
Tax (30 111) (26 815)
Results from operating activities, net of tax 75 923 99 439
Gain on sale of discontinued operations* 1 153 710 -
Profit for the year 1 229 633 99 439
Earnings per share (cents) 76.99 5.81
* Included in the gain on sale of discontinued operations is an amount of R92.4 million relating to the excess pay out as per the SENS announcement released on 26 May 2017.
Profit from discontinued operations of R1.2 billion (2016: R94.3 million) was attributable to the owners of the Company. Of the loss from continuing operations of R23.6
million (2016: profit of R19.7 million), an amount of R29.9 million was attributable to the owners of the company (2016: R14.7 million profit).
2017 2016
Cash flows from/(used in) discontinued operations R'000 R'000
Net cash from operating activities 88 180 62 309
Net cash used in investing activities (87 036) (27 932)
Net cash from financing activities 3 631 7 931
Net cash flow for the year 4 775 42 308
Major classes of assets and liabilities disposed of 2017
R'000
Property & equipment 7 705
Goodwill and intangible assets 75 262
Deferred tax asset 9 261
Long-term loans receivable 68 301
Investment in equity-accounted investee 2 382
Financial assets at fair value through profit or loss 190 692
Linked investments backing policyholder funds 11 192 166
Trade and other receivables 1 213 416
Taxation receivable 568
Cash and cash equivalents 168 366
Deferred tax liability (729)
Policyholder investment contract liabilities (11 192 166)
Long-term loans payable (74 216)
Trade and other payables (1 218 056)
Current tax payable (12 093)
Bank overdraft (58 479)
Net assets and liabilities 372 380
Consideration received in cash 1 427 822
Cash and cash equivalents disposed off (109 887)
Net cash inflow 1 317 935
3. Goodwill and intangible assets
Internally System
R´000 Patents and developed Computer development
Cost Goodwill trademarks software software costs Total
Opening balance - 1 April 2015 424 253 2 024 35 765 270 - 462 312
Additions - - 359 656 7 367 8 382
Disposals (17 491) - - - - (17 491)
Closing balance - 31 March 2016 406 762 2 024 36 124 926 7 367 453 203
Opening balance - 1 April 2016 406 762 2 024 36 124 926 7 367 453 203
Additions - - 485 758 - 1 243
Disposal of discontinued operations (98 468) (2 024) - - (7 367) (107 859)
Closing balance - 31 March 2017 308 294 - 36 609 1 684 - 346 587
Accumulated impairment/amortisation
Opening balance - 1 April 2015 31 143 704 16 161 256 - 48 264
Amortisation for the year - 200 6 192 37 550 6 979
Closing balance - 31 March 2016 31 143 904 22 353 293 550 55 243
Opening balance - 1 April 2016 31 143 904 22 353 293 550 55 243
Amortisation for the year - - 5 560 521 - 6 081
Impairment loss 31 645 - - - - 31 645
Disposal of discontinued operations (31 143) (904) - - (550) (32 597)
Closing balance - 31 March 2017 31 645 - 27 913 814 - 60 372
Carrying amounts
At 31 March 2016 375 619 1 120 13 771 633 6 817 397 960
At 31 March 2017 276 649 - 8 696 870 - 286 215
Impairment test of goodwill
The Group has recognised an impairment loss of R31.6 million in profit or loss relating to goodwill of the PBT Groups' CGU's based on the value in use method to determine
the recoverable amount. The value in use was determined by discounting future cash flows of the Group as a single CGU.
The key assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the key assumptions represented management's
assessment of future trends in the relevant industries and were based on historical data from both external and internal sources.
. 2017 2016
Discount rate 17% 16%
Terminal value growth rate 6% 6%
Budgeted EBITDA growth rate 8% 8%
The discount rate was a post-tax measure estimated based on the historical industry average weighted-average cost of capital.
The cash flow projections included specific estimates for five years and a terminal growth rate thereafter. The terminal growth rate was determined based on management's
estimate of the long-term compound annual EBITDA growth rate, consistent with the assumption that a market participant would make.
A sensitivity was performed to analyse the impact of increasing the forecast risk premium from 2% to 5%. This would result in a discount rate of 20%. Increasing the
forecast risk premium by this factor, results in an impairment of approximately R94 million.
2017 2016
4. Trade and other receivables R´000 R´000
Trade and other receivables include the following:
Trade receivables 132 415 208 086
Vat receivable 72 833
Deposits 1 408 1 177
Prepayments 720 3 059
Accrued income 656 708
Interest receivable - 1 096
Dividend receivable 92 397 -
227 668 214 959
5. Income tax expense
2017 2016
R'000 R'000
Tax recognized in profit or loss
Current tax expense
Current year 15 781 9 545
Adjustment to prior years (50) 3 934
15 731 13 479
Withholding tax - Section 6quat(1C) 16 584 5 272
32 315 18 751
Deferred tax expense
Origination and reversal of temporary differences (6 866) 1 636
(6 866) 1 636
Income tax expense on continuing operations 25 449 20 387
6. Fair value disclosure and hierarchy
The table below analyses financial instruments carried at fair value by valuation method. Fair values are determined according to the following hierarchy based on the
requirements in IFRS 13 Fair Value Measurement.
Level 1 Unadjusted quoted market prices: financial assets and liabilities with quoted prices for identical instruments in active markets that the company can access at
the measurement date.
Level 2 Valuation techniques using observable inputs: quoted prices (other than those included in level 1) for similar instruments in active markets or quoted prices
for identical or similar instruments in markets that are less than active and financial assets and liabilities valued using models where all significant inputs are
observable directly or indirectly from market data.
Level 3 Valuation techniques using significant unobservable inputs: financial assets and liabilities valued using valuation techniques where one or more inputs are
unobservable and have a significant effect on the instrument's valuation.
R´000 Level 1 Level 2 Level 3 Total
2017
Financial assets
Financial assets at fair value through profit or loss 31 404 722 - 32 126
Investment property - 33 430 - 33 430
Total financial assets measured at fair value 31 404 34 152 - 65 556
R´000
2016
Financial assets
Financial assets at fair value through profit or loss 112 716 38 723 - 151 439
Investment property - 35 728 - 35 728
Linked investments backing policyholder funds 10 244 977 730 235 - 10 975 212
Total financial assets measured at fair value 10 357 693 804 686 - 11 162 379
Financial liabilities
Policyholder investment contract liabilities - 10 974 330 - 10 974 330
Total financial liabilities measured at fair value - 10 974 330 - 10 974 330
7. Segment report
In 2016 the Group had two reportable segments according to strategic divisions. These two segments were Financial Services and Information management services. After the disposal of the financial services group, the Group's core
operations consisted of mainly Information management services. The reportable segments for the current financial year are according geographical areas, namely South Africa, Middle-East / Africa and Australia.
- South Africa includes consulting and implementation of data, management information software and healthcare administrations services in the Republic of South Africa.
- Australia includes consulting and implementation of data, management information software and healthcare administrations services in Australia.
- Middle-East/Africa includes consulting and implementation of data, management information software in Middle-East and Africa.
CONTINUING OPERATIONS
South Africa Australia Middle-East/Africa Other Total
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
R´000 R'000 R´000 R'000 R´000 R'000 R´000 R'000 R´000 R'000
Segment external total income 330 557 279 347 79 738 82 333 159 673 173 344 47 592 10 606 617 560 545 630
Segment profit/(loss) before tax 25 746 26 142 12 061 8 738 (40 704) 8 135 36 387 (2 975) 33 490 40 040
Segment assets * 179 149 77 758 28 862 30 793 40 136 897 192 673 153 160 400 723 398 608
Segment liabilities (24 799) (102 262) (10 135) (9 724) (62 593) (47 766) (11 720) (13 292) (104 923) (173 044)
DISCONTINUED OPERATIONS
South Africa Australia Middle-East/Africa Other Total
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
R´000 R'000 R´000 R'000 R´000 R'000 R´000 R'000 R´000 R'000
Segment external total income 322 322 351 226 - - - - 20 100 17 491 342 422 368 717
Segment profit before tax 94 146 120 533 - - - - 11 888 5 721 106 034 126 254
Segment assets * - 11 940 949 - - - - - 30 269 - 11 971 218
Segment liabilities - (11 719 256) - - - - - (1 904) - (11 721 160)
GROUP
South Africa Australia Middle-East/Africa Other Total
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
R´000 R'000 R´000 R'000 R´000 R'000 R´000 R'000 R´000 R'000
Segment external total income 652 879 630 573 79 738 82 333 159 673 173 344 67 692 28 097 959 982 914 347
Segment profit/(loss) before tax 119 892 146 675 12 061 8 738 (40 704) 8 135 48 275 2 746 139 524 166 294
Segment assets * 88 039 12 018 707 28 862 30 793 91 149 136 897 192 673 183 429 400 723 12 369 826
Segment liabilities (20 475) (11 821 518) (10 135) (9 724) (62 593) (47 766) (11 720) (15 196) (104 923) (11 894 204)
*Goodwill is not managed as part of segment assets and has therefore been excluded.
2017 2016
R'000 R'000
Reconciliation of reportable segment profit or loss
Total consolidated profit before tax for reportable segments 139 524 166 294
Less impairment of goodwill (31 645) -
Elimination of discontinued operations (106 034) (126 254)
Profit before tax 1 845 40 040
Company information
Directors: PJ de Wet (CEO)
AM Louw (Chairman and Financial Director)
AJ Taylor (Lead Independent Non-executive Director)
AL Winkler (Independent Non-executive Director)
CL Dyers (Independent Non-executive Director)
HC Steyn (Non-executive Director)
Registered office: PBT House, 2 Mews Close, Waterford Mews,
Century City, 7441, South Africa
Postal address: PO Box 276, Century City 7446
Auditors KPMG Inc.
Sponsor Bridge Capital Advisors Proprietary Limited
Transfer secretaries: Link Market Services
Website: www.pbtgroup.co.za
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