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STA
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STA - Stratcorp Limited - Reviewed Abridged Consolidated Interim Financial
Results For The 6 Months Ended 31 August 2008
STRATCORP LIMITED
(Registration number: 2000/031842/06)
(Incorporated in the Republic of South Africa)
JSE Code: STA & ISIN: ZAE000034294
REVIEWED ABRIDGED CONSOLIDATED INTERIM FINANCIAL RESULTS
for the 6 months ended 31 August 2008
Income Statements Six months Six months Year
ended1 August ended Ended
2008 31 August 29 February 2008
(reviewed) 2007 (audited)
(reviewed)
Figures in ZAR thousand
Revenue 37 157 42 479 82 943
Profit / (Loss) from (3 887) 15 332 9 872
operations
Impairment of loans (5 079) - -
receivable
Impairment of goodwill (2 214) - -
Other income 838 253 -
Fair value adjustments 961 (27) 892
Net interest 19 462 339
Profit / (Loss) before (9 362) 16 020 11 485
taxation
Taxation 1 101 4 624 3 541
Net profit (Loss ) for the (8 261) 11 396 7 944
period
Weighted average number
of:
Ordinary shares in issue 123 005 111 761 117 358
(`000)
Treasury shares in issue (6 988) (3 932) (6 406)
(`000)
Total weighted average 116 017 107 829 110 952
number of shares in issue
(`000)
Basic earnings (loss) per (7.12) 10.57 7.16
share (cents)
Headline earnings (loss) (5.77) 10.57 7.15
per share (cents)
Reconciliation of headline
earnings
Basic earnings / (loss) (8 261) 11 396 7 944
Non-recurring adjustments
- Impairment of goodwill 2 214 - -
- Impairment of goodwill - - -
tax effect
- Profit on disposal of (747) - -
investment properties
- Profit on disposal of 105
investment properties tax
effect
- Profit on disposal of - - (15)
property, plant &
equipment
- Profit on disposal of - - 2
property, plant &
equipment tax effect
Headline earnings (6 689) 11 396 7 931
Balance Sheets At At At
31 August 2008 31 August 2007 29 February 2008
(reviewed) (reviewed) (audited)
Figures in ZAR thousand
20 962 19 671
Non-current assets 21 526
Investment property 258 - 1 268
Property, plant & 5 613 6 021 6 140
equipment
Goodwill 1 318 3 532 3 532
Intangible assets 1 473 1 308 1 710
Investments & loans 11 475 9 798 6 531
Deferred tax assets 825 867 490
Current assets 92 837 61 684 66 187
Investments & loans 21 122 12 488 19 720
Construction contracts 48 803 20 010 30 591
Inventories 1 182 825 706
Trade & other receivables 18 957 21 276 8 455
Current tax receivable 2 299 717 4 621
Cash and cash equivalents 474 6 367 2 094
Total assets 113 799 83 210 85 858
Capital and reserves 42 919 55 576 51 190
Issued capital 25 902 26 846 25 912
Distributable reserves 17 017 28 730 25 278
Non-current liabilities 13 677 17 105 6 098
Compound instruments 11 270 10 139 101
Term loans 486 1 017 631
Finance leases 1 769 2 806 2 125
Deferred tax liabilities 152 3 143 3 241
Current liabilities 57 203 10 529 28 570
Compound instruments - 1 130 10 410
Trade finance loan 26 802 - -
Other financial 4 460 - 266
liabilities
Taxation 203 1 580 203
Finance leases 868 333 784
Trade and other payables 13 060 7 486 16 407
Bank overdrafts 11 810 - 500
Total equity and 113 799 83 210 85 858
liabilities
Ordinary shares in issue 123 005 123 005 123 005
(`000)
Treasury shares in issue (6 999) (6 097) (6 984)
(`000)
Total number of shares in 116 006 116 908 116 021
issue
Net asset value per share 37 47 44
(cents)
Net tangible asset value 35 43 40
per share (cents)
Statements of Changes in Equity
Share capital Retained Ordinary
earnings share-
holders
equity
Figures in ZAR
thousand
Balance at 28 February 17 224 17 334 34 558
2007
Issue of share capital 11 981 - 11 981
Treasury shares (2 359) - (2 359)
Attributable earnings - 11 396 11 396
Balance at 31 August 26 846 28 730 55 576
2007
Treasury shares (934) - (934)
Attributable earnings - (3 452) (3 452)
Balance at 29 February 25 912 25 278 51 190
2008
Issue of share capital - - -
Treasury shares (10) - (10)
Attributable loss - (8 261) (8 261)
Balance at 31 August 25 902 17 017 42 919
2008
Cash Flow Statements 6 Months 6 Months 12 Months ended
ended 31 ended 29 February 2008
August 2008 31 August (audited)
(reviewed) 2007
Figures in ZAR thousand (reviewed)
Cash flows - operating (7 324) 2 503 8 342
activities
Net finance income 37 474 744
Taxation paid - (5 915) (9 637)
Cash flow from investing (9 392) (15 909) (21 772)
activities
Cash flow from financing 3 749 13 573 12 277
activities
Net cash flow for period (12 930) (5 274) (10 046)
Cash and cash 1 594 11 641 11 641
equivalents at beginning
of period
Cash and cash (11 336) 6 367 1 594
equivalents at end of
period
Comments on results
The board of StratCorp is most disappointed with the financial performance of
the group during the interim period. The poor performance resulted as a
consequence of the deterioration in the economy, resulting in consumers
spending less, which had a direct impact on the revenues generated by the
various business units (most of which are consumer driven). In addition, the
infrequent revenue streams generated by the property business and the
cancellation of the Xpress Holdings (Pty) Limited acquisition contributed to
further losses. As a result of the lower revenues, the company instituted a
restructuring and retrenchment program during October 2008 which, together
with the expected contributions from the operating divisions, should result in
better results for the latter 6 months of the year. It is however not
anticipated that the group will return to profitability during this financial
year.
Wholly owned subsidiaries
StratEquity (Pty) Ltd
StratEquity`s subscription client base has decreased from 53 595 to 43 855 (-
18.17%) during the reporting period. The change in business model to that of a
typical asset manager has been fully implemented.
ICI Marketing (Pty) Ltd
ICI Marketing, inter alia, markets StratEquity`s products. This subsidiary
continues to expand its business model across the country as well as in
neighbouring countries and has included a range of health and nutrition
products to its product basket. The objective is that ICI Marketing should
become a multi-dimensional marketing operation and distribute a range of
products through its distributor base of about 36 000 individuals.
StratCorp Property Holdings Ltd ("StratCorp Properties")
StratCorp Properties is involved in residential property development and
concentrates its activities in the lower to middle end of the buyers market.
StratCorp Properties is currently finalising its development in Orchards Ext.
33. StratCorp Properties` activities have been negatively affected having
regard to the current economic climate. Management`s approach is cautious and
operations will be concentrated around the finalisation of the current
development and the sale of the vacant land.
StratCorp Financing Company (Pty) Ltd ("StratFin")
Shareholders are referred to the recent announcement wherein the acquisition
of Xpress Holdings (Pty) Limited was declared void. This action negatively
affected the group over the last 6 months, however the potential loss of
R5.011 million has been provided for. StratCorp is in the process of taking
legal action against the vendors of Xpress Holdings.
Despite this loss, StratCorp`s asset finance division continues its strong
focus on niche markets.
Prospects
In addition to the extensive cost cutting initiative implemented, the group
will de-gear over the next couple of months. The gearing resulted mainly from
its property development activities. This action is expected to place the
group on a sound financial footing to support growth in its underlying
subsidiaries.
Management is optimistic that the group will return to profitability over the
next 12 months as a result of the above initiatives and the inclusion of niche
products. It is also expected that the economic downturn will "bottom out"
during 2009.
Financial Results
The consolidated turnover of the group decreased by 12.53% to R 37,157 million
over the reporting period (August 2007: R42,479 million). The total
consolidated profits after tax for the reporting period decreased by 173% to a
loss of R8.261 million. (August 2006: Profit of R 11.396 million).
Basis of preparation and review opinion
The results of the Group for the six months ended 31 August 2008 have been
prepared in accordance with the Group`s accounting policies which comply with
International Financial Reporting Standards (IFRS) and IAS 34 - Interim
Financial Reporting. The standards are subject to ongoing review and may
change.
The accounting policies applied are consistent with those applied during the
comparative period.
This report has been reviewed by the company`s auditors, PKF (Pretoria) Inc.
Their review report is available for inspection at the company`s registered
office.
Corporate Governance
The Group is committed to maintaining the high standards of governance as
embodied in the King II Report on Corporate Governance.
Financial liabilities
The company obtained a development loan from Standard Bank in order to
finalise the development of Orchards Ext 33. At 31 August 2008, the loan
amounted to R26.8m. Standard Bank has cession on all sales of Orchards Ext.
33.
The compound instruments relate to linked units issued by StratCorp Properties
in 2005. At a special meeting of linked unit holders held on 7 November 2008,
it was decided that the linked units, together with interest, be extended for
another 2 years until 30 November 2010.
Other matters
Mr. JN de Beer resigned as Chief Financial Officer on 15 October 2008 and Mr.
HJ van der Merwe was appointed as the new Group Financial Director.
The company will pursue its claim against the vendors of Xpress Holdings (Pty)
Ltd.
Dividends
No interim dividend has been proposed.
On behalf of the board
DB Harington HJ van der Merwe
Chief Executive Officer Group Financial Director
17 November 2008
Registered Offices Transfer Secretaries
3rd Floor, Lakeside Building A Computershare Investor Services (Pty) Ltd
2004 Gordon Hood Drive Ground Floor, 70 Marshall Street,
Centurion Johannesburg, 2001
Pretoria
Designated Adviser Auditors
Vunani Corporate Finance PKF (Pretoria) Inc.
Directors: P J de Jongh* (Chairman); D B Harington (CEO); HJ van der Merwe
(FD); IM Wright (CIO); MM Patel*
(*Non-executive)
Company Secretary: R Bisschoff
Date: 17/11/2008 10:14:12 Produced by the JSE SENS Department.
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