Wrap Text
Condensed Consolidated Results for the Six Months Ended 30 September 2018
Sebata Holdings Limited
(Previously MICROmega Holdings Limited)
Incorporated in the Republic of South Africa
(Registration number 1998/003821/06)
JSE Share code: SEB ISIN: ZAE000260493
(“Sebata” or “the company” or “the group”)
CONDENSED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018
CONDENSED GROUP STATEMENT OF PROFIT AND LOSS
Unaudited Reviewed Audited
6 months ended 6 months 12 months
ended ended
30 September 30 September 31 March
2018 2017 2018
R’000 R’000 R’000
Continuing operations
Revenue 399 943 376 368 797 957
Cost of sales (193 539) (159 783) (354 790)
Gross profit 206 404 216 585 443 167
Other net income 316 092 26 265 41 349
Distribution expenses (2 182) (2 336) (4 489)
Administration expenses (174 075) (175 532) (344 033)
Profit from operations 346 239 64 982 135 994
Finance income 3 708 886 2 073
Finance cost (2 872) (2 100) (8 210)
Share of profit of equity accounted associate 860 159 1 271
Profit before tax 347 935 63 927 131 128
Tax expense (131 489) (10 687) (37 269)
Profit for the year from continuing operations 216 446 53 240 93 859
Profit for the year from discontinued operations - 43 554 95 989
Profit for the year 216 446 96 794 189 848
Profit attributable to:
Owners of the parent - continuing 209 409 46 730 83 795
Owners of the parent - discontinued - 41 465 92 656
Non-controlling interest – continuing 7 037 6 510 10 064
Non-controlling interest - discontinued - 2 089 3 333
216 446 96 794 189 848
Attributable earnings per share (cents)
Basic 182.50 77.22 154.50
Continuing operations 182.50 40.92 73.37
Discontinued operations - 36.30 81.13
Diluted basic 182.34 76.80 154.04
Continuing operations 182.34 40.70 73.15
Discontinued operations - 36.10 80.89
Headline 20.76 78.91 153.26
Continuing operations 20.76 42.64 72.13
Discontinued operations - 36.27 81.13
Diluted headline 20.74 78.48 152.80
Continuing operations 20.74 42.41 71.91
Discontinued operations - 36.07 80.89
CONDENSED GROUP STATEMENT OF OTHER COMPREHENSIVE INCOME
Unaudited Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
R’000 R’000 R’000
Profit for the year 216 446 96 794 189 848
Other comprehensive income:
Foreign currency translation differences (32) 2 424 1 502
Disposal of subsidiaries 2 939 - (1 730)
219 353 99 218 189 620
Total comprehensive income attributable to:
Owners of the parent 212 316 90 619 176 223
Non-controlling interest 7 037 8 599 13 397
219 353 99 218 189 620
Reconciliation of headline earnings (net of tax) for
continuing operations:
Profit attributable to owners of the parent 209 409 46 730 83 795
Profit on disposal of property, plant and equipment (146) (304) (443)
(Profit)/loss on disposal of investment in subsidiaries (185 441) 2 269 (977)
Headline earnings 23 822 48 695 82 375
Reconciliation of headline earnings (net of tax) for
discontinued operations:
Profit attributable to owners of the parent - 41 465 92 656
Loss/(profit) on disposal of property, plant and equipment - (41) 5
Loss/(profit) on disposal of investment in subsidiaries - - -
Headline earnings - 41 424 92 661
Weighted average number of shares (000s) 114 742 114 211 114 209
Diluted weighted average number of shares (000s) 114 844 114 830 114 549
Total number of shares in issue (000s) 113 729 114 211 114 597
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Reviewed Audited
As at As at As at
30 September 30 September 31 March
2018 2017 2018
R’000 R’000 R’000
ASSETS
Non-current assets 687 788 613 301 664 702
Property, plant and equipment 33 374 34 983 36 245
Intangible assets 614 666 497 628 560 104
Investments in associates 18 666 50 709 17 806
Other financial assets - 548 25 000
Deferred tax assets 21 082 29 433 25 547
Current assets 555 712 439 848 434 417
Inventories 53 352 64 740 53 114
Trade and other receivables 318 436 341 400 295 571
Income tax receivable 4 045 5 052 6 335
Other financial assets 97 903 5 638 39 777
Cash and cash equivalents 81 976 23 018 39 620
Assets held for sale - 484 306 501 463
TOTAL ASSETS 1 243 500 1 537 455 1 600 582
EQUITY AND LIABILITIES
EQUITY 860 050 959 926 1 051 449
Share capital and share premium 288 161 292 452 295 937
Other reserves 8 487 11 052 7 114
Retained earnings 517 856 560 740 650 059
Non-controlling interest 45 546 95 682 98 339
LIABILITIES
Non-current liabilities 74 904 72 788 77 449
Other financial liabilities 520 3 241 1 745
Deferred vendor payments - 13 670 8 566
Deferred tax liabilities 74 384 55 877 67 138
Current liabilities 308 546 371 159 344 145
Trade and other payables 135 918 217 453 177 255
Other financial liabilities 54 559 37 155 35 320
Income tax payable 111 523 5 686 6 271
Deferred vendor payments 6 546 21 537 6 571
Bank overdraft - 89 328 118 728
Liabilities directly associated with assets held for sale - 133 582 127 539
TOTAL LIABILITIES 383 450 577 529 549 133
TOTAL EQUITY AND LIABILITIES 1 243 500 1 537 455 1 600 582
Net asset value per share (cents) 716.19 756.71 831.71
Net tangible asset value per share (cents) 173.96 321.00 342.95
CONDENSED GROUP STATEMENT OF CASH FLOW
Unaudited Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2018 2017 2018
R’000 R’000 R’000
Cash flow from operating activities (38 677) 105 020 234 876
Cash generated from operations (26 249) 120 552 261 541
Finance income 2 211 1 180 1 968
Finance costs (2 425) (926) (324)
Income tax paid (12 214) (15 786) (28 309)
Cash flow from investing activities 540 280 (105 732) (225 935)
Property, plant and equipment acquired (6 394) (13 657) (42 506)
Intangible assets acquired (55 824) (89 797) (168 919)
Proceeds on disposal of property, plant and equipment 2 545 2 571 2 120
Acquisition of subsidiaries and businesses - (5 876) (4 376)
Acquisition of non-controlling interest without a change in control - - -
Cash (forfeited)/received on disposal of subsidiaries and businesses 585 700 925 (13 765)
Loans receivable raised 14 253 102 1 511
Cash flow from financing activities (340 519) (42 067) (60 972)
Treasury shares repurchased (7 975) - (544)
Other financial liabilities repaid (1 373) (1 670) (4 625)
Other financial liabilities raised 17 626 31 960 31 960
Deferred vendor payments repaid (2 250) (6 794) (19 497)
Dividends paid to non-controlling interest (2 755) (2 362) (5 332)
Dividends paid (343 792) (63 201) (62 934)
(Decrease)\Increase in cash and cash equivalents 161 084 (42 779) (52 031)
Cash and cash equivalents included in assets held for sale - (8 020) (19 057)
Cash and cash equivalents at the beginning of the year (79 108) (15 511) (8 020)
Cash and cash equivalents at the end of the year 81 976 (66 310) (79 108)
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Share Other Retained Non- TOTAL
Capital and Reserves Earnings Controlling
Share Interest
Premium
R’000 R’000 R’000 R’000 R’000
Balance at 1 April 2017 292 452 6 909 534 917 114 512 948 790
Profit for the year - - 88 195 8 599 96 794
Other comprehensive income
Foreign currency translation differences - 2 424 - - 2 424
Transactions with owners, recorded directly in
equity
Dividends paid - - (62 934) - (62 934)
Treasury shares purchased - - - - -
Share-based payment transactions 1 719 (267) 1 452
Disposal of subsidiaries - - - (26 600) (26 600)
Changes in ownership interest in subsidiaries - - 829 (829) -
without a change in control
Balance at 30 September 2017 292 452 11 052 560 740 95 682 959 926
Balance at 1 October 2017 292 452 11 052 560 740 95 682 959 926
Profit for the year - - 88 256 4 798 93 054
Other comprehensive income
Foreign currency translation differences - (922) - - (922)
Transactions with owners, recorded directly in
equity
Dividends paid - - - (5 332) (5 332)
Share-based payment transactions 4 023 (1 286) 1 892 - 4 629
Disposal of subsidiaries - (1 730) - 2 362 632
Treasury shares purchased (538) - - - (538)
Changes in ownership interest in subsidiaries - - (829) 829 -
without a change in control
Balance at 31 March 2018 295 937 7 114 650 059 98 339 1 051 449
Balance at 1 April 2017 295 937 7 114 650 059 98 339 1 051 449
Profit for the year - - 209 409 7 037 216 446
Other comprehensive income
Foreign currency translation differences - (32) - - (32)
Transactions with owners, recorded directly in
equity
Dividends paid - - (343 792) (2 755) (346 547)
Share-based payment transactions 199 (1 534) 2 180 - 845
Disposal of subsidiaries - 2 939 - (57 075) (54 136)
Treasury shares purchased (7 975) - - - (7 975)
Balance at 30 September 2018 288 161 8 487 517 856 45 546 860 050
NOTES TO THE GROUP FINANCIAL INFORMATION
1. Basis of preparation
These unaudited condensed interim consolidated financial statements for the six months ended 30 September 2018 are
prepared in accordance with the framework concepts and the recognition and measurement criteria of International Financial
Reporting Standards (IFRS), its interpretations adopted by the International Accounting Standards Board (IASB), the
presentation and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Reporting Pronouncements as issued by Financial Reporting Standards Council, IAS 34 – Interim Financial Reporting, the
Listings Requirements of the JSE Limited and the requirements of the Companies Act of South Africa (Act 71 of 2008), as
amended. The unaudited condensed interim consolidated financial statements are prepared in accordance with the going
concern principle under the historical cost basis as modified by the fair value accounting of certain assets and liabilities where
required or permitted by IFRS. The fair value of financial instruments approximates their carrying value. The unaudited
condensed interim consolidated financial statements have been prepared under the supervision of Pierre Van Eeden, CA (SA),
the Financial Director.
All financial information presented in South African Rand has been rounded to the nearest thousand.
2. Significant accounting policies
These unaudited condensed interim consolidated financial statements have been prepared using accounting policies that
comply with IFRS and are consistent with those used in the audited annual consolidated financial statements for the year ended
31 March 2018.
3. Disposal of subsidiaries
NOSA Group - Testing inspection and certification services segment
On 13 October 2017 the group announced the proposed disposal of NOSA Group for an aggregate cash consideration up to
R747.8 million. The group treated these operations in accordance with IFRS 5 in the 2018 financial year. There is an ongoing
dispute with the purchasers regarding the Earn Out, this dispute is expected to be finalised by year end.
4. Commitments and contingencies
Unaudited Reviewed Audited
6 months 6 months 12 months
Ended ended ended
30 September 30 September 31 March
2018 2017 2018
R’000 R’000 R’000
Operating lease commitments
The future aggregated minimum lease payments under non-
cancellable operating leases are as follows:
Not later than one year 25 614 31 682 16 257
Later than one year and not later than five years 33 591 61 274 49 583
Later than five years - - 741
59 205 92 956 66 581
Capital commitments
There was no capital expenditure contracted for at the reporting date which has not yet been incurred and recognised in the
financial statements.
Contingencies
The group has contingent liabilities in respect of bank and other guarantees and other matters arising in the ordinary course of
business. It is not anticipated that any material liabilities will arise from these contingent liabilities.
5. Segment information
Unaudited Reviewed Audited
6 months 6 months 12 months
Ended ended ended
30 September 30 September 31 March
2018 2017 2018
R’000 R’000 R’000
SEGMENT REVENUE
Consulting Services 124 621 134 155 251 309
Software Solutions 76 992 91 315 203 450
ICT Support Services 91 644 74 191 148 787
Water Technologies 120 021 90 780 226 339
Holdings and consolidated (13 335) (14 073) (31 928)
Total revenue 399 943 376 368 797 957
SEGMENT PROFIT / (LOSS)
Consulting Services 3 358 8 009 12 027
Software Solutions 7 442 30 083 74 052
ICT Support Services 8 525 8 672 11 897
Water Technologies 13 263 6 031 10 438
Holdings and consolidated 176 821 (6 065) (24 620)
Total profit 209 409 46 730 83 795
SEGMENT ASSETS
Consulting Services 183 281 225 848 188 564
Software Solutions 535 344 408 993 503 851
ICT Support Services 74 143 72 017 62 595
Water Technologies 276 139 296 470 283 679
Holdings and consolidated 174 593 534 127 561 893
Total assets 1 243 500 1 537 455 1 600 582
SEGMENT LIABILITIES
Consulting Services 45 079 66 624 56 788
Software Solutions 72 696 94 918 272 439
ICT Support Services 22 059 30 274 26 053
Water Technologies 143 388 184 177 166 076
Holdings and consolidated 100 228 201 536 27 777
Total liabilities 383 450 577 529 549 133
6. Related party disclosure
The group entered into transactions and had balances with related parties as listed below. These include associates, joint
operations, directors and members of key management. The transactions that are eliminated on consolidation are not included.
Transactions with related parties are effected on a commercial basis and related party debts are repayable on a commercial
basis.
Unaudited Reviewed Audited
6 months 6 months 12 months
Ended ended ended
30 September 30 September 31 March
2018 2017 2018
R’000 R’000 R’000
Kyostax Proprietary Limited
Associate
Revenue 6 500 7 579 15 718
Other financial assets 4 640 4 640 4 640
Kamberg Investment Holdings Proprietary Limited
Trade receivables - 5 176 104
Shareholders for dividend - - 1 370
Interest paid - - 298
Laird Investments Proprietary Limited
Shareholders for dividend - - 26 934
Interest paid - - 2 641
Talacar Holdings Proprietary Limited
Consulting fees 2 538 2 538 2 538
7. Corporate Governance and changes to the board of directors of Sebata (“board”)
Sebata has embraced the recommendations of the King IV Report on governance and strives to provide reports to shareholders
that are timely, accurate, consistent and informative.
Changes to the board which occurred subsequent to the period end were as follows:
• Cornelia Kemp resigned as the Financial Director with effect from 31 October 2018.
• Pierre van Eeden was appointed as Financial Director with effect from 1 November 2018.
• Grant Jacobs has resigned as Independent Non-Executive Director with effect from 12 October 2018.
• Ruan Viljoen resigned as the Company Secretary with effect from 31 October 2018.
• Reegan Smith was appointed as the Company Secretary with effect from 1 November 2018.
8. Subsequent events
No other significant events have occurred in the period between the reporting date and the date of this report.
9. Commentary on results
During the six months under review, Sebata was restructured into four distinct operating divisions. These have been classified
under continuing operations in the results and disclosed in the segmental reporting note. The first six months of the year were
tough, particularly for the Software Solutions division which is historically the biggest earnings contributor to the group. The
volatile political landscape within which we have been operating has resulted in a slower than expected uptake of our software
solutions within local government which has contributed to the poor performance of that business. This is a reflected in the
decrease of 51.3% in the HEPS from continuing operations from 42.64 cents as at 30 September 2017 to 20.76 cents. The
decrease in continued HEPS is a direct result of a key municipal client failing to pay approximately R88 million that is due to
the Company. While we are confident that we will receive the funds the Company has decided, due to the prolonged difficulty
in receiving payment, to exclude this amount from the period’s earnings. Without this adjustment, continued HEPS would have
been approximately 20% up on a normalised basis.
While EPS from continuing operations of 182.5 cents reflected a 346% increase from 40.92 cents as at 30 September 2017,
this is largely attributable to the profit recognised on the sale of the NOSA Group of Companies.
Outlook
Sebata has now, for the first time since its listing in 2000, rationalised its portfolio of businesses into a single focused portfolio
and has reclassified its FTSE sector classification with the JSE from the business support services to the computer services
sector. In line with this rationalisation, the group has been reorganised into four distinct divisions; Software Solutions, Water
Technologies, ICT Support Services and Consulting Services allowing for a clear focus and strategy underpinned by proprietary
intellectual property.
The Water Technologies division continues to perform well as the demand for our water management devices and solutions
grows both locally and internationally.
The investment in the Software Solutions division is largely behind us. The rewrites were in line with changing legislation to the
functionality of Local Government’s financial management systems. To date, we have successfully implemented the new
software at 39 clients. We believe that our superior product and reduced competition will yield strong returns on this investment.
We anticipate that the dispute with the Purchasers on the Earn Out relating to the disposal of the NOSA Group of Companies
will be resolved by financial year end. Once this has been resolved we will be in a better position to finalise a further dividend
in relation to the sale, as previously communicated.
Financial Results
Revenue has increased by 6.1% compared to the previous corresponding period. This has however not been translated to
attributable earnings at the same rate due to the tough trading conditions described above. The net asset value per share of
the group has decreased by 5.3% from 756.71 cents as at 30 September 2017 to 716.19 cents. This is due to the disposal of
the NOSA Group of companies. The Board is confident that the group will be able to generate the expected returns for
shareholders going forward that it has consistently done in the past.
By order of the Board
20 December 2018
Directors: DA Di Siena (Independent Non-Executive Chairperson); IG Morris (Chief Executive Officer); P van Eeden (Financial
Director); CA King (Director – Strategic Finance); PH Duvenhage (Non-Executive Director); TW Hamill (Non–Executive
Director); RC Lewin (Independent Non–Executive Director); and D Passmore (Independent Non-Executive Director)
Company Secretary: RB Smith
Auditors: Nexia SAB&T
Transfer Secretaries: Singular Systems Proprietary Limited
Sponsor: Merchantec Capital
Attorneys: Di Siena Attorneys
Note: No forward looking statements in this announcement have been reviewed or reported on by Sebata’s auditors.
Date: 20/12/2018 04:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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