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STA
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STA - Stratcorp Limited - Reviewed Condensed Consolidated Interim Financial
Results For The 6 Months Ended 31 August 2009
STRATCORP LIMITED
(Registration number: 2000/031842/06)
(Incorporated in the Republic of South Africa)
JSE Code: STA & ISIN ZAE000034294
REVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS
for the 6 months ended 31 August 2009
Statement of comprehensive
income
Six months Six months Year
ended ended Ended
31 August 31 August 28 February
2009 2008 2009
Figures in ZAR thousand (reviewed) (reviewed) (audited)
Revenue 30 707 37 157 74 333
Loss from operations (4 838) (3 887) (5 965)
before:
Impairment of loans (3 226) (5 079) (19 040)
receivable
Impairment of goodwill - (2 214) (2 214)
Other income 32 838 820
Fair value adjustments (10) 961 (4 406)
Operating loss (8 042) (9 381) (30 805)
Net interest (71) 19 (2 108)
Loss before taxation (8 113) (9 362) (32 913)
Taxation 2 166 1 101 8 230
Net loss for the period for (5 947) (8 261) (24 683)
continuing operations
Other comprehensive income - - -
net of tax
Total comprehensive loss (5 947) (8 261) (24 683)
for the year
Loss attributable to:
Owners of the company (5 947) (8 261) (24 683)
Total comprehensive loss
attributable to:
Owners of the company (5 947) (8 261) (24 683)
Weighted average number of:
Ordinary shares in issue 180 296 123 005 123 162
(`000)
Treasury shares in issue (7 028) (6 988) (7 001)
(`000)
Total weighted average 173 268 116 017 116 161
number of shares in issue
(`000)
Basic loss per share (3.4) (7.1) (21.3)
(cents)
Headline loss per share (3.4) (5.8) (19.3)
(cents)
Reconciliation of headline
loss
Basic loss (5 947) (8 261) (24 683)
Non-recurring adjustments
- Impairment of goodwill - 2 214 2 215
- Impairment of goodwill - - -
tax effect
- Profit on disposal of (747)
investment properties
- Profit on disposal of 105
investment properties tax
effect
- Impairment of property, - - 76
plant & equipment
- Impairment of property, - - (21)
plant & equipment tax
effect
- Profit on disposal of (1) - (36)
property, plant & equipment
- Profit on disposal of - - 5
property, plant & equipment
tax effect
Headline loss (5 948) (6 689) (22 444)
Statement of financial
position
At At At
31 August 31 August 28 February
2009 2008 2009
Figures in ZAR thousand (reviewed) (reviewed) (audited)
17 788 20 962 16 067
Non-current assets
Investment property 568 258 562
Property, plant & equipment 5 933 5 613 6 130
Goodwill 1 318 1 318 1 318
Intangible assets 887 1 473 1 184
Investments & loans 1 355 11 475 1 379
Deferred tax assets 7 727 825 5 494
Current assets 60 535 92 837 72 815
Investments & loans 10 299 21 122 12 841
Inventories 45 178 49 985 50 194
Finance lease receivables 771 2
Trade & other receivables 3 087 18 957 3 343
Current tax receivable - 2 299 4 259
Cash and cash equivalents 1 200 474 2 176
Total assets 78 323 113 799 88 882
Capital and reserves 48 038 42 919 53 985
Issued capital 53 390 25 902 53 390
Distributable reserves (5 352) 17 017 595
Non-current liabilities 11 662 13 677 11 915
Other financial liabilities 10 310 11 756 10 464
Finance lease obligations 1 284 1 769 1 451
Deferred tax liabilities 68 152 -
Current liabilities 18 623 57 203 22 982
Other financial liabilities 5 399 31 262 9 904
Current tax payable 268 203 268
Finance lease obligations 1 240 868 969
Operating lease liability 758 - 770
Trade and other payables 10 958 13 060 11 071
Bank overdrafts - 11 810 -
Total liabilities 30 285 70 880 38 663
Total equity and 78 323 113 799 88 882
liabilities
Ordinary shares in issue 180 296 123 005 180 296
(`000)
Treasury shares in issue (7 028) (6 999) (7 027)
(`000)
Total number of shares in 173 268 116 006 173 269
issue
Net asset value per share 27.7 37.0 31.1
(cents)
Net tangible asset value 26.5 34.6 29.7
per share (cents)
Statements of Changes in Equity
Share Retained Ordinary
capital earnings share-
holders
equity
Figures in ZAR thousand
Balance at 29 February 25 912 25 278 51 190
2008
Total comprehensive loss - (8 261) (8 261)
Transactions with owners,
recorded directly in
equity:
Treasury shares (10) - (10)
Balance at 31 August 2008 25 902 17 017 42 919
Total comprehensive loss (16 422) (16 422)
Transactions with owners,
recorded directly in
equity:
Issue of share capital 27 500 - 27 500
Treasury shares (12) (12)
Total contributions by and 27 488 - 27 488
distributions to owners
Balance at 28 February 53 390 595 53 985
2009
Total comprehensive loss - ( 5 947) (5 947)
Balance at 31 August 2009 53 390 (5 352) 48 038
Statement of cash flows
6 Months 6 Months 12 Months
ended ended ended
31 August 31 August 28 February
2009 2008 2009
Figures in ZAR thousand (reviewed) (reviewed) (audited)
Cash flow from /(utilised in) - 2 041 (7 324) (21 480)
operating activities
Net finance income/(expense) 127 37 (1 706)
Taxation received 4 259 - 412
Cash flow from/(utilised in) (1 881) (9 392) (11 867)
investing activities
Cash raised from/ (repaid in) (5 522) 3 749 35 223
financing activities
Net cash flow for period (976) (12 930) 582
Cash and cash equivalents at 2 176 1 594 1 594
beginning of period
Cash and cash equivalents at end 1 200 (11 336) 2 176
of period
Information about reportable 6 Months 6 Months 12 Months
segments ended ended ended
Per market activity 31 August 31 August 28 February
2009 2008 2009
(reviewed) (reviewed) (audited)
Figures in ZAR thousand
External revenues
Health and Wellness 3 501 - -
Asset Management & Marketing 19 868 22 750 47 300
Property Development 7 286 14 035 26 783
Corporate Services 8 101 241
Other 44 271 9
Total 30 707 37 157 74 333
Reportable segment profit /
(loss) before taxation
- Health and Wellness 38 - -
Asset Management & Marketing (4 721) (231) (590)
Property Development (1 461) (2 447) (10 488)
Corporate Services (2 637) (4 194) (21 626)
Other (476) (29) (209)
Intergroup Elimination 1 144 (2 461) -
Total (8 113) (9 362) (32 913)
Reportable segment assets
Health and Wellness 1 282 - -
Asset Management & Marketing 3 037 7 782 9 470
Property Development 47 369 68 446 53 119
Corporate Services 28 344 39 887 26 102
Other 913 255 191
Intergroup Elimination (2 622) (2 571) -
Total 78 323 113 799 88 882
Information about reportable
segments
Geographical information
6 Months 6 Months 12 Months
ended ended ended
Figures in ZAR thousand 31 August 31 August 28 February
2009 2008 2009
(reviewed) (reviewed) (audited)
External revenues
South Africa 28 365 34 232 68 740
Lesotho 921 872 1 833
Swaziland 463 470 1 012
Namibia 958 1 583 2 749
Total 30 707 37 157 74 333
Reportable segment profit /
(loss) before taxation
- South Africa (9 257) (7 227) (33 290)
Lesotho - 121 103
Swaziland - 205 312
Namibia - - (38)
Intergroup Eliminations 1 144 (2 461) -
Total (8 113) (9 362) (32 913)
Reportable segment assets
South Africa 80 738 116 135 88 387
Lesotho 175 166 161
Swaziland 99 106 88
Namibia 6 (38) 245
Intergroup Eliminations (2 695) (2 570) -
Total 78 323 113 799 88 882
Comments on results
The group experienced a decrease in turnover and incurred a loss for the first 6
months of the 2010 financial year. This status is 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). A number of initiatives have been put in place by
Management to reverse this trend. The action plans together with the expected
improved contributions from the operating divisions, should see better results
for the latter 6 months of the year.
Basis of preparation and review opinion
The results of the Group for the six months ended 31 August 2009 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.
This report has been reviewed by the company`s auditors, SAB&T. Their
unqualified review report is available for inspection at the company`s
registered office. The accounting policies applied are consistent with those
applied during the comparative period.
Going concern
The going concern basis has been adopted in preparing these interim financial
statements. The directors have no reason to believe that the group or any
company within the group will not be a going concern in the foreseeable future.
Wholly owned subsidiaries
StratEquity (Pty) Ltd
StratEquity`s subscription client base decreased from 43 528 to 40 271 (-7.48%)
during the reporting period. The change in business model to that of a typical
asset manager has been fully implemented. ICI Marketing, which markets
StratEquity`s products, has been fully incorporated into StratEquity as a
division. This subsidiary continues to expand its business model across the
country as well as in neighbouring countries. The objective is that ICI
Marketing should become a focused marketing operation and only distribute the
StratEquity range of products through its distributor base of about 30 000
individuals. Certain Head Office functions have also been de-centralised to
branch level. The objective is to focus on area specific drives and initiatives
that should result in a higher level of client retention and client base growth.
I-Cura (Pty) Ltd
The I-Cura range of health and nutrition products was previously also marketed
and distributed by ICI Marketing until June 2009. With the incorporation of ICI
Marketing as a division of StratEquity (as discussed above), the name of the ICI
Marketing Company was changed to I-Cura, I-Cura has as a result created its own
marketing channel. The product range has also been expanded and is currently
being marketed in South Africa, Swaziland and Lesotho and will soon be
introduced in Botswana and Kenya.
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` activities have been negatively affected having regard to
the current economic climate. Management`s approach is cautious and operations
will be concentrated around the sale of the remaining 54 units at the Soldonne
development. Most of these units are currently being rented. In addition the
company also concentrates its efforts on the selling of building packages where
land is acquired from other developers and the sale of the vacant land which the
company owns.
StratFin (Pty) Ltd ("StratFin")
StratCorp`s asset finance division continues its focus on niche markets. It has
started to grow its book cautiously in the current climate and will accelerate
this process once the markets have recovered.
StratCorp Solutions (Pty) Ltd
This operation was established in October 2009 with the aim to source and sell
high demand - high volume consumer type products on a contract or rental basis.
To this end StratFin acts as the Finance provider.
Prospects
As evidenced from the above individual subsidiary discussion, various
initiatives have been implemented and where necessary focuses were re-aligned in
order to ensure future growth. Management anticipates that the group could
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 2010.
Financial Results
The consolidated revenue of the group decreased by 17.36% to R 30.707 million
over the reporting period (August 2008: R37.157 million). The total consolidated
loss for the reporting period decreased by 28% from a loss of R8.261 million in
August 2008 to a loss of R5.948 million in August 2009. There is a significant
decrease in finance cost paid by the group in the reporting period mainly due to
the settling of these debts as a result of the capital raising in February 2009.
Although cash flows are managed tightly in the current economic climate,
Management evaluates the business units on a constant basis and where necessary,
injects cash in operations where the opinion is that it will generate additional
revenue over the medium term.
Corporate Governance
The Group is committed to maintaining the high standards of governance as
embodied in the King II Report on Corporate Governance. The Group has through an
external auditor rotation policy appointed SAB&T as new external auditors. The
Audit, Nominations and Remuneration committees are now fully functional and
independent.
Financial liabilities
The company obtained a development loan from Standard Bank during the 2009
financial year to the value of R30.3 million in order to finalise the
development of The Orchards Ext 33. At 31 August 2009, the outstanding loan
amounted to R3.9 million. Standard Bank has a session on all sales of The
Orchards Ext. 33.
In addition the group previously issued linked units to the value of R10.310
million which are to be redeemed in December 2010.
Dividends
No interim dividend has been proposed.
On behalf of the board
DB Harington HJ van der Merwe
Chief Executive Officer Group Financial Director
24 November 2009
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 SAB&T
Directors: P J de Jongh* (Chairman); D B Harington (CEO); H J van der Merwe
(GFD); I M Wright (CIO); M M Patel**; S R Firer**
(*Non-executive; ** Independent non-executive)
Company Secretary: R Bisschoff
Date: 24/11/2009 10:36:01 Produced by the JSE SENS Department.
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