COGNITION HOLDINGS LIMITED - Unaudited Consolidated Interim Results and Interim Dividend Declaration for the six months ended 31 December 2017

Release Date: 09/03/2018 15:00
Code(s): CGN
 
Wrap Text
Unaudited Consolidated Interim Results and Interim Dividend Declaration for the six months ended 31 December 2017

COGNITION HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1997/010640/06)
Share code: CGN    ISIN: ZAE000197042
(“Cognition” or ‘the Group” or “the Company”)

UNAUDITED CONSOLIDATED INTERIM RESULTS AND INTERIM DIVIDEND DECLARATION
for the six months ended 31 December 2017

COMMENTARY

The board of directors of Cognition (“the board”) present the
unaudited condensed consolidated interim financial results for the
six months ended 31 December 2017 (“the period” or “the interim
period”), which should be read in conjunction with the audited
annual financial statements for the year ended 30 June 2017.

The unaudited condensed consolidated interim financial results are
available to be viewed on the Company’s website: www.cgn.co.za.

Group revenue for the interim period increased by 13.6% from R72.8
million to R82.6 million. This growth is due to increased business
activity within the Knowledge Creation and Management segment of
the business, which showed a growth of 28.2% from R39.9 million in
the prior period to R51.2 million during the interim period.
Revenue for Active Data Exchange Services declined by 6.5% for the
period, down from R33.6 million to R31.6 million. Due to
operational efficiencies, the Gross Profit for this segment only
showed a 2.8% decline.

Gross Profit for the Group remained flat with a 2% increase from
R48.3 million in the prior period to R49.3 million being recorded.
The Group implemented various strategies to ensure that
operational costs are kept as low as possible and has succeeded by
keeping operational expenditure down, reflecting only a 1.7%
increase when compared to the prior period. However, due to the
competitive nature of the industry, staff costs increased by 9.4%
from R24.0 million to R26.4 million.

The resulting Profit Before Tax of the Group declined by 8.1% from
R14.4 million to R13.5 million. In the prior period, the Group
benefited from a low effective tax rate (22.5%) due to assessed
tax losses in some of its subsidiaries, whereas this year, the
Group’s effective tax rate has returned to normal (29.5%). Profit
After Tax for the period is R9.3 million compared to R11.2
million, being a 16.8% decrease.

Due to the Group’s acquisition of the remaining shares in the BMi
Sport Group last year, the Group benefited from lower profit
attributed to non-controlling interests. Earnings per share for
the Group in the period declined by 11% from 7.5 cents per share
to 6.7 cents per share.

The Group’s financial position remains healthy with a 20% increase
in cash resources, up from R74 million to R89 million. This was
achieved despite payment by the Group of an 8.5 cent dividend in
the period under review. Net Asset Value per share and Net
Tangible Asset Value per share remained steady at around 104 cents
and 70 cents respectively.

OPERATIONAL OVERVIEW

The general market conditions for the period under review were
challenging, with many of our traditional clients being very cost
conscious and resistant to deploying new campaigns, or minimising
interactive services. This was compounded by political uncertainty
and the pressure on consumers’ disposable income.

Active Data Exchange Services

Our collective portfolio of services incorporating SMS, USSD,
messaging services and specialised interactive services continued
to perform well, albeit under tough trading conditions.

MediaWorx, being the divisional brand and channel to market for
these services, continues to have a strategic and operational
advantage over its competitors as it offers a multitude of
integrated services ‘under one roof’, providing clients with a
‘one-stop-shop’.

In addition, the competitive advantage is further enhanced by the
fact that MediaWorx can provide bespoke services tailored to a
client’s needs, due to our in-house software development team.

Our route to market is to service the:

•   consumer packaged goods (“CPG”) industry;
•   general Fast-Moving Consumer Goods (“FMCG”) industry;
•   digital agencies; and
•   traditional agencies.

Our market for MediaWorx is operationally segmented into the
following three core solutions:

Media Infotainment (“MI”)

The primary service offering is “call to action” by the brand, for
example Idols SA, The Voice SA, and Big Brother Africa, whereby
the viewer is asked to vote or participate in a competition.
Whilst data is collected in this process, the service is primarily
a digital channel for consumer interaction.

Retail Promotions (“RP”)

The target for RP is the CPG and FMCG markets. Our route to this
market is either directly to the CPG or FMCG brands or via their
digital or traditional agency.

The service offering is primarily aimed at enabling consumers of
the CPG or FMCG brands to participate in a promotion or
competition. The technology deployed is SMS, USSD, WhatsApp, email
or call centre.

Clients are typically charged a set-up fee, monthly management fee
and/or a “per click” fee.

RP facilitates more active data collection to provide the agencies
or CPG/FMCG client with insights and rudimentary analytics. During
the period under review, we concurrently developed, hosted and
managed in excess of 80 campaigns.

Data Investment (“DI”)

The target market and route to market is very similar to RP,
however, there is a strategic and operational imperative to
collect meaningful data for research, analytics and predictive
behaviour.

Clients using these applications include: ABInBev (all brands),
DStv, Caxton, Pep, Ackermans and over 200 other brands on an ad
hoc or campaign basis.
To provide a sense of scale, a single campaign can generate over
30 million entries in a 30-day period with incentives of R50
million (in airtime) being paid out to entrants.

This illustrates the capacity and scalability of the platform.

MediaWorx Africa

Media infotainment, retail promotions and data investment services
are offered throughout Africa, with more CPG and FMCG brands
wanting to provide promotions or competitions in countries in
Africa. Whilst it is challenging working with a multitude of
mobile networks, relationships have been established with over 60
mobile networks in over 32 countries and we anticipate the
launching of more services into Africa over the next few years.

Document Management Solutions (“DMS”)

This incorporates Fax2Email, Email2Fax and the newly deployed
SecurDox.

During the period under review, Fax2Email declined by around 30%
year on year, whilst a decline of around 18% was budgeted.

Although subscriber numbers remained relatively constant year on
year (150,000), the average rate per user and file size
diminished.

Email2Fax, being the documents sent from a personal computer to a
fax machine, was relatively flat but still a small contributor to
DMS.

SecurDox has been developed as a “new generation” document
exchange platform, enabling a subscriber to securely send a
document to a third party using blockchain and encryption.

The marketing of SecurDox has been primarily via email pushes,
which hasn’t achieved the desired outcome. We are moving into the
next phase of deploying a team to provide “face to face” sales,
particularly at a corporate and SMME level. We expect that the
uptake of this secure document exchange platform will gain more
traction as corporates become more sensitised to the need to
protect data and the transmission thereof, especially in line with
the Protection of Personal Information Act.
Knowledge Creation and Management Incorporating mibubble

The natural outcome of collecting data is to achieve insights that
brands can act on. Our Knowledge Creation and Management
philosophy is to provide clients with a “single source of truth”.
This, in essence, means defining the data that needs to be
collected and being able to obtain a 3D vision of each customer of
our client on a granular level. The journey of data being
ultimately to collect accurate data with integrity.

The linear extension of collecting data from retail promotions and
data investment strategies is to provide a platform (Knowledge
Creation and Management) to provide insightful analytics and
ultimately to provide predictable behaviour.

Good progress was made in channelling data from RP and DI to the
Knowledge Creation and Management platform to achieve these
outcomes.

mibubble is a platform designed to enable consumers to self-curate
their personal data to achieve the concept of “data with
integrity”.

Most brands need a granular or 3D view of the customer and six
basic outcomes:

•   Demographic – age, gender, income
•   Geographic – where they live/roam
•   Attention – what they concentrate on
•   Consumption – what they buy
•   Behavioural – what matters to them
•   Intentional – what they are about to do

mibubble is modular in design and whilst components like analytics
are already in use, the main platform will be launched closer to
the full enactment of the Protection of Personal Information Act.

Channel Incentive Programmes (“CIP”)

CIP is an incentive or reward-based programme aimed at providing
sales representatives or sales agents with an incentive or reward
system when selling one of our client’s products. The CIP
programme comprises a web and app-based interface which enables
staff or agents of clients to register for incentive rewards and
have these rewards paid into a branded bank card. When an agent or
sales representative sells the client’s defined product, they
qualify for an incentive or monetary reward. The web or app
platform enables them to register the claim and when this has been
moderated and approved, the funds are transferred into the bank
card which enables the owner of the card to spend the funds at any
retailer accepting Mastercard.

The CIP platform has issued over 12,000 bank cards and has, during
the period under review, moderated over 310,000 claims exceeding
over R48.6 million in value.

CIP is a new product development in the Group aimed at
substituting the declining fax revenue. Good inroads have been
made in the South African market with the opportunity to replicate
this offering in Mauritius, Reunion and Madagascar.

Research and Insights Capabilities

Research and insights are offered to the market via: BMi Research
Proprietary Limited (“BMi Research”), BMi Sport Proprietary
Limited (“BMi Sport”), Livingfacts Proprietary Limited
(“Livingfacts”) and Cognition Insights (a division of Cognition).

BMi Research offers eight defined services:

•   Advanced Analytics        •   In-store Observation Services
•   Category Quantification   •   In-store Observation Services (Africa)
•   Commissioned              •   Mystery Shopping
•   Consumer                  •   Print Ads

These collective services are aimed at delivering strategic and
tactical insights to assist clients in growing their businesses.

During the period under review, BMi Research performed well,
especially in the Consumer Services division.

In addition, good progress was made in the re-development of the
Print Ads platform which incorporates: publication and
subscription management, data collection and processing, client
management and depot delivery and an “on-line reporting portal”.
This will, on completion, provide a new dynamic to publication
management for the company.
BMi Sport provides services to a number of blue chip clients by
offering:

•   Sports tracking and sponsorship evaluation
•   Socio-economic and sporting impact valuation
•   Strategic advertising evaluation
•   PR & clippings (radio/TV/print/digital)

The period under review was challenging due to political
uncertainty and many large brands re-evaluating spend within
certain sporting codes or looking to re-align spend in different
disciplines.

BMi Sport is evaluating new sectors and codes such as soap operas
and eGaming, both of which have large followings.

BMi Sport is looking to be a leader in these new sectors and
codes. The new optimism in the political arena will slowly change
big brands’ conservative deployment of funds in sports and other
sectors and therefore we are confident that BMi Sport will see a
positive uptake.

Livingfacts develops customised market research solutions to
enable companies to develop intelligent strategies. Livingfacts’
expertise and solutions offerings are orientated around the
following:
• Quantitative
• Qualitative
• Community
• Web and digital
• Secondary data

Livingfacts has successfully differentiated itself from its
competitors by developing bespoke research. Although Livingfacts
was also exposed to constrained marketing budgets, the business
has successfully entrenched itself in high-end, strategic and
business to business market research, involving analysis of both
primary and secondary data and development of insightful outputs.
PROSPECTS

The trading conditions have, for the last 6 months, been difficult
due to constrained budgets of major brands and having to navigate
political uncertainty. The consumer has also been under pressure
with limited disposable income which has impacted on the volumes
of certain promotional campaigns.

The Group is focussing on the deployment and growth of our new
products like Channel Incentives which are progressively
substituting the anticipated decline in document management
services, in particular Fax2Email.

We believe that there is renewed optimism in the market with the
new political dispensation providing greater structural focus and
this should filter into the market over the next few months,
rejuvenating brand spending and promotional activity across all
the Group’s operating divisions.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


                                   Unaudited     Unaudited    Audited
                                       as at         as at      as at
                                 31 December   31 December    30 June
                                        2017          2016       2017
                        Growth         R’000         R’000      R’000
ASSETS
Non-current assets       -2.0%        69 519        70 949     71 976
Property, plant and
equipment                -4.6%        16 518        17 311     17 290
Intangible assets        -6.8%        15 686        16 827     17 472
Goodwill                  0.0%        30 332        30 332     30 332
Investment in
associates              -23.3%         4 321         5 633      4 132
Unlisted investment                    1 807             -      1 660
Deferred tax asset                       855           846      1 090
Current assets           -5.9%       128 334       126 390    130 548
Inventory               -90.5%            26           275         26
Current tax
receivable              -62.8%           191           514        194
Trade and other
receivables             -42.3%        39 045        51 359     49 049
Cash and cash
equivalents              20.0%        89 072        74 242     81 279

Total assets                         197 853       197 339    202 524

EQUITY AND
LIABILITIES
Capital and reserves     -1.9%       144 471       147 247    146 849
Share capital             0.0%           137           137        137
Share premium             0.3%        55 973        55 806     55 973
Accumulated profits       6.1%       100 301        94 524    102 774
Change in ownership     110.1%      (12 892)       (6 135)   (12 892)
Attributable to the
equity holders of the
parent                   -0.6%       143 519       144 332    145 992
Non-Controlling
interests                                952         2 915        857
Non-current
liabilities             -33.3%         7 715        11 562     7 839
Interest bearing
liabilities             -99.3%             6           861       374
Other Financial
Liabilities             -33.1%         4 699         7 022     4 699
Deferred tax
liability               -18.2%         3 010         3 679     2 766

Current liabilities      -5.8%        45 667        38 530    47 836
Trade and other
payables                -11.9%        39 707        34 412    38 857
Provisions               51.0%         2 500         1 656     5 912
Tax payable                            2 425             -     1 460
Unclaimed dividends      13.4%           169           149       169
Current portion of
non-current
liabilities             -62.6%           866         2 313     1 438

Total equity and
liabilities                          197 853       197 339   202 524

Net asset value per
share (cents)           -0.63%        104.29        104.95    106.09
Net tangible asset
value per share
(cents)                  0.27%         70.85         70.66     71.35
Number of shares in                                          
issue                    0.00%   137 615 798  137 527 659  137 615 798


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


                                        Unaudited   Unaudited
                                              six         six
                                           months      months   Audited
                                            ended       ended 12 months
                                               31          31     ended
                                         December    December   30 June
                               Growth        2017        2016      2017
                             Restated       R’000       R’000     R’000
Gross Revenue                   65.5%     200 367     121 050   279 699
Less Agency Revenue                     (117 610)    (48 230) (129 193)
Revenue                         13.6%      82 757      72 820   150 506
Cost of Sales                   36.5%    (33 501)    (24 550)  (50 712)
Gross profit                               49 256      48 270    99 794
Other operating income         144.2%         955         391       479
Staff costs                      9.4%    (26 389)    (24 121)  (52 168)
Depreciation and
amortisation expense            20.2%     (3 828)     (3 186)    (6 982)
Other operating expenses         1.7%     (9 917)     (9 747)   (19 041)
Finance costs                  -51.9%       (101)       (210)      (448)
Income from associates         -56.1%         189         431        388
Investment income               18.9%       3 089       2 599      5 617
Profit before tax               -8.1%      13 254      14 427     27 639
Income tax expense              22.1%     (3 935)     (3 223)    (8 114)
Profit for the period          -16.8%       9 319      11 204     19 525
Other comprehensive income
Total comprehensive income
for the year                   -16.8%       9 319      11 204     19 525
Profit attributable to:
Non-controlling interest                       94         843        913
Owners of the parent           -11.0%       9 225      10 361     18 612
Weighted average number of                137 615     137 527    137 615
shares in issue                  0.0%         798         659        798
Basic earnings per share
(cents)                        -11.0%        6.70        7.53      13.52
Headline earnings per
share (cents)                  -11.0%        6.70        7.53      13.52
Diluted earnings per
share(cents)                   -11.0%        6.70        7.53      13.52

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

                                                          Total
                           Share     Share Change in      Share
                         Capital   Premium ownership    Capital
                           R’000     R’000      R’000     R’000
Audited balance at
1 July 2016                  137    55 806    (6 135)    49 808
Changes in equity
Total comprehensive
income for the period          -         -          -         -
Non-controlling
interest as result of
acquisition                    -         -          -         -
Dividends                      -         -          -         -
Total changes                  -         -          -         -

Audited balance at
1 January 2017               137    55 806    (6 135)    49 808
Changes in equity
Total comprehensive
income for the period          -         -          -         -
Sale of own/treasury
shares                         -       167          -       167
Change in ownership
interest in subsidiary         -         -    (6 757)   (6 757)
Dividends                      -         -          -         -
Total changes                  -       167    (6 757)   (6 590)

Audited balance at
1 July 2017                  137    55 973   (12 892)    43 218
Changes in equity
Total comprehensive
income for the period          -         -          -         -
Dividends                      -         -          -         -
Total changes                  -         -          -         -

Unaudited balance at
31 December 2017             137    55 973   (12 892)    43 218

                                    Attribu-       Non-
                                    table to   Control-
                         Retained     Equity       ling      Total
                           Income    Holders   Interest     Equity
                            R’000      R’000      R’000      R’000
Audited balance at
1 July 2016                95 170    144 978      1 928    146 906
Changes in equity
Total comprehensive
income for the period      10 361     10 361        843     11 204
Non-controlling
interest as result of
acquisition                                -        144        144
Dividends                (11 007)   (11 007)          -   (11 007)
Total changes               (646)      (646)        987        341

Audited balance at
1 January 2017             94 524    144 332      2 915    147 247
Changes in equity
Total comprehensive
income for the period       8 250      8 250         88      8 338
Sale of own/treasury
shares                          -        167          -        167
Change in ownership
interest in subsidiary          -    (6 757)    (1 954)    (8 711)
Dividends                       -          -      (192)      (192)
Total changes               8 250      1 660    (2 058)      (398)

Audited balance at
1 July 2017               102 774    145 992        857    146 849
Changes in equity
Total comprehensive
income for the period       9 225      9 225         95      9 320
Dividends                (11 698)   (11 698)          -   (11 698)
Total changes             (2 473)    (2 473)         95    (2 378)

Unaudited balance at
31 December 2017          100 301    143 519        952    144 471

CONSOLIDATED STATEMENTS OF CASH FLOWS

                               Unaudited     Unaudited     Audited
                              six months    six months   12 months
                                   ended         ended       ended
                             31 December   31 December     30 June
                                    2017          2016        2017
                                   R’000         R’000       R’000
Cash flow from operating
activities                        21 848        12 399      26 866
Net cash generated from
operations                        21 347        13 672      29 618
Finance costs                      (101)         (210)       (448)
Investment income                  3 089         2 599       5 617
Normal tax paid                  (2 487)       (3 662)     (7 921)
Cash flow from investing
activities                       (1 418)       (5 377)    (12 319)
Purchase of property,
plant and equipment                (723)         (100)     (2 324)
Proceeds on disposal of
property, plant and
equipment                              -             -         161
Purchase of intangible
asset                              (548)       (1 385)     (2 202)
Sale of other intangible
assets                                 -             -           4
Acquisition of additional
interest in subsidiary                 -             -     (1 701)
Investment in Associate                -       (1 412)           -
Purchase of unlisted
investment                         (147)             -     (1 660)
Expenditure on product
development                            -       (2 480)     (4 597)
Cash flow from financing
activities                         (940)       (1 295)     (1 608)
Dividends paid                  (11 697)      (11 007)    (11 182)
Net increase in cash and
cash equivalents                   7 793       (5 280)       1 757
Cash and cash equivalents
at beginning of the period        81 279        79 522      79 522
Cash and cash equivalents
at end of the period              89 072        74 242      81 279

BASIS OF PREPARATION

The unaudited condensed consolidated interim results for the six
months ended 31 December 2017 have been prepared in accordance
with International Financial Reporting Standards (“IFRS”) and are
presented in terms of the disclosure requirements set out in
International Accounting Standards (“IAS”) 34, as well as the
SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and the Financial Reporting Pronouncements as
issued by the Financial Reporting Standards Council, the Listings
Requirements of the JSE Limited and the requirements of the
Companies Act 2008 (Act 71 of 2008), as amended. The unaudited
condensed consolidated interim financial information should be
read in conjunction with the audited annual financial statements
for the year ended 30 June 2017.

Accounting policies and computations are consistently applied as
in the annual financial statements for the year ended 30 June
2017.

During the interim period, the Group adopted those standards and
interpretations in issue and effective for the interim period. The
adopting of these new and amended standards and interpretations
has not had a significant impact on the Group’s adopted accounting
policies.

These financial statements have been compiled under the
supervision of the Financial Director, Pieter Scholtz.

The unaudited condensed consolidated interim results for the six
months ended 31 December 2017 have not been reviewed by the
Group’s auditor.

CASH GENERATED (USED IN) OPERATIONS
                               Unaudited        Unaudited     Audited
                              six months       six months   12 months
                                   ended            ended       ended
                             31 December      31 December     30 June
                                    2017             2016        2017
                                   R’000            R’000       R’000
A RECONCILIATION OF PROFIT
BEFORE TAXATION TO CASH
GENERATED FROM OPERATIONS
Profit before taxation            13 254           14 427      27 639
Adjustments for:                 (2 761)               25       1 725
Depreciation                       3 828            3 186       6 982
Provisions                       (3 412)            (341)           -
Finance costs                        101              210         448
(Profit) / Loss on
disposal of property,
plant and equipment                    -                -        (10)
Contingent consideration               -                -         310
Income in associates               (189)            (431)       (388)
Investment income                (3 089)          (2 599)     (5 617)

Operating profit before
working capital changes
Working capital changes           10 854            (780)         254

Decrease in inventory                  -               25         274
Decrease / (increase) in
trade and other
receivables                       10 004         (10 858)     (8 549)
(Decrease) / Increase in
trade and other payables             850           10 053       8 529

Cash generated from
operations                        21 347           13 672      29 618

SEGMENTAL REPORTING

Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision makers
(the “CODM”). The CODM have been identified as the executive
committee members who make strategic decisions. The CODM have
organised the operations of the Company based on its brands and
this has resulted in the creation of the following reportable
segments:

• Active Data Exchange Services
• Knowledge Creation and Management

                           Unaudited     Unaudited     Audited
                          six months    six months   12 months
                               ended         ended       ended
                         31 December   31 December     30 June
                                2017          2016        2017
                               R’000         R’000       R’000
Gross Revenue
Active Data Exchange
Services                     106 411        38 394     122 715
Knowledge Creation and
Management                    93 956        82 656     156 984
                             200 367       121 050     279 699
Revenue Generated as
agency service
Active Data Exchange
Services                    (74 835)       (4 776)    (55 489)
Knowledge Creation and
Management                  (42 775)      (43 454)    (73 704)
                           (117 610)      (48 230)   (129 193)
Revenue
Active Data Exchange
Services                      31 576        33 618      67 226
Knowledge Creation and
Management                    51 181        39 202      83 280
                              82 757        72 820     150 506
Cost of sales
Active Data Exchange
Services                    (11 175)      (12 618)    (23 380)
Knowledge Creation and
Management                  (22 326)      (11 932)    (27 332)
                            (33 501)      (24 550)    (50 712)
Gross profit
Active Data Exchange
Services                      20 401        21 000      43 846
Knowledge Creation and
Management                    28 855        27 270      55 948
                              49 256        48 270      99 794

The accounting policies applied to the operating segments are the
same as those described in the basis of preparation paragraph
above. Active Data Exchange Services are provided within South
Africa as well as in 36 African countries (“Africa sales”). Within
the period under review, 1.8% (2016: 5.5%) of the Company’s
revenue can be attributed to Africa sales. The Company allocates
revenue to each country based on the relevant domicile of the
client. All of the Company’s assets are located in South Africa.

Active Data Exchange Services currently generates 27.2% (2016:
62.5%) of its revenue through three large network service
providers. The reconciliation of the Gross Profit to Profit before
Taxation is provided in the Statement of Comprehensive Income. The
CODM reviews these income and expense items on a Group basis and
not per individual segment. All assets and liabilities are
reviewed on a Group basis by the CODM.

RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS

                               Unaudited     Unaudited       Audited
                              six months    six months     12 months
                                   ended         ended         ended
                             31 December   31 December       30 June
                                    2017          2016          2017
                                   R’000         R’000         R’000
The calculation of
earnings per share is
based on profits of R9.2
million attributable to
equity holders of the
parent (2016: R10.3
million) and a weighted
average of 137 615 798
(2016: 137 615 798)
ordinary shares in issue
during the period.            6.70 Cents    7.53 Cents   13.52 Cents

The calculation of
headline earnings per
share is based on profits
of R9.2 million with no
adjustments in the current
period (2016 adjusted:
R10.3 million) and a
weighted average of 137
615 798 (2016:137 615 798)
ordinary shares in issue
during the period.            6.70 Cents   7.53 Cents   13.52 Cents

Reconciliation between
earnings and headline
earnings
Profit attributable to
equity holders of parent           9 225       10 361        18 612
After Tax effect on profit
on disposal of property,
plant and equipment:                   -            -             -
Headline earnings                  9 225       10 361        18 612

The calculation of diluted
earnings per share is
based on profits of R9.2
million attributable to
equity holders of the
parent (2016: R10.3
million) and a weighted
average of 137 615 798
(2017: 137 615 798)
ordinary shares in issue
during the period.            6.70 Cents   7.53 Cents   13.52 Cents

There were no instruments issued during the current period that
have a dilutive impact.

RECLASSIFICATION OF COMPARITIVES

During the past two years the Group started offering services that
are classified as agency revenue in terms of IAS18 and as such the
Group reclassified revenue generated through these services
separately in the Statement of Profit and Loss and Other
Comprehensive Income for enhanced disclosure purposes. The
reclassification has not resulted in any changes to the reported
Gross Profit for the previous year.

DIVIDEND POLICY

The Group has traditionally only paid dividends annually, however
the board has for the first time considered and declared an
interim dividend.

INTERIM DIVIDEND DECLARATION

Notice is hereby given that the directors have declared a gross
interim dividend of 4 cents per share for the six months ended 31
December 2017, which is adjusted for withholding tax. The interim
dividend has not been included as a liability in these audited
financial statements as it was declared subsequent to the period
end. The interim dividend for December 2017 is payable to all
shareholders on the Register of Members on Friday, 6 April 2018.
In terms of the dividends tax, effective 1 April 2012, the
following additional information is disclosed:

- the local dividend tax rate is 20%;

- the dividends will be payable from income reserves;

- the dividend tax to be withheld by the Company amounts to 0,8
  cents per share;

- therefore the net dividend payable to shareholders who are not
  exempt from dividends tax amounts to 3.2 cents per share, while
  the gross dividend payable to shareholders who are exempt from
  dividend tax amounts to 4 cents per share;

- the issued share capital of the Company at the declaration date
  comprises 137 615 798 ordinary shares; and

- the Group’s income tax reference number is 9087/450/84/8.
Declaration date:                             Friday, 9 March 2018
Last day to trade cum dividend                Tuesday, 3 April 2018
Date trading commences ex the dividend        Wednesday, 4 April 2018
Record date                                   Friday, 6 April 2018
Date of payment                               Monday, 9 April 2018

Share certificates may not be dematerialised or rematerialised
between Wednesday, 4 April 2018 and Friday, 6 April 2018, both
dates inclusive.

DIRECTORATE

There were no changes to the board during the interim period.

SUBSEQUENT EVENTS

The board is not aware of any material events that have occurred
between the end of the interim period and the date of this report.

APPRECIATION

We would like to thank our customers, partners, dealers, staff and
other service providers for their continued support, loyalty and
dedication.

For and on behalf of the board

Ashvin Mancha       Mark Smith                   Pieter Scholtz
Chairman            Chief Executive Officer      Financial Director

Johannesburg
9 March 2018
Directors:
Ashvin Mancha#* - Chairman,
Mark Smith – Chief Executive Officer, Pieter Scholtz - Financial
Director, Gaurang Mooney* (Botswana), Graham Groenewaldt – Sales
Director, Paul Jenkins#*, Roger Pitt#*, Marc du Plessis#, Piet
Greyling#

# Non-executive
* Independent

Website: www.cgn.co.za

Company Secretary:
Stefan Kleynhans

Sponsor:
Merchantec Capital

Transfer Secretaries:
Computershare Investor Services Proprietary Limited

Date: 09/03/2018 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Email this JSE Sens Item to a Friend.

Share This Story