| Mon 31 May 2010, 14:38 | | RGT - RGT Smart - Audited results for the year ended 28 February 2010 and |
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RGT
RGT
RGT - RGT Smart - Audited results for the year ended 28 February 2010 and
renewal of cautionary announcement
RGT SMART MARKET INTELLIGENCE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2008/014367/06)
Share Code: RGT ISIN: ZAE000143715
("RGT SMART" or "the company")
AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2010 AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
The audited results of RGT SMART for the year ended 28 February 2010, as
compared to the year ended 29 February 2009, are presented below:
Condensed consolidated statement of Financial Position
Figures in Rand Audited Restated
28 February 29 February
2010 2009
R`000 R`000
Assets
NonCurrent Assets
Property, plant and equipment 400 378
Goodwill 17 449 19 439
Intangible assets 4 521 2 620
Deferred tax 283 166
Current Assets
Trade and other receivables 2 161 2 393
Cash and cash equivalents 328 223
Total Assets 25 142 25 219
Equity and Liabilities
Equity
Share capital 1 789 1
Reserves - 517
Retained earnings 10 773 13 719
Total Equity 12 562 14 237
Liabilities
Non-Current Liabilities
Other financial liabilities 3 363 2 099
Finance lease obligation 41 68
Deferred tax 960 70
Current Liabilities
Loans from shareholders 569 264
Other financial liabilities 3 656 3 499
Current tax payable 680 1 165
Finance lease obligation 49 46
Operating lease liability - 141
Trade and other payables 1 750 2 286
Revenue received in advance 590 720
Provisions 541 346
Bank overdraft 381 278
Total Liabilities 12 580 10 982
Total Equity and Liabilities 25 142 25 219
Net asset value per share (cents per share)
6.60 7.21
Net tangible asset value per share (cents per
share) 0.83 0.90
Number of shares in issue at year end (`000)
380 800 350 000
Condensed consolidated statement of comprehensive income
Figures in Rand Audited Restated
28 February 29 February
2010 2009
R`000 R`000
Revenue 25 584 21 694
Cost of sales (2 466) (3 255)
Gross profit 23 118 18 439
Operating expenses (19 066) (14 267)
Operating profit before interest 4 052 4 172
Investment revenue 3 10
Finance costs (397) (280)
Profit before taxation 3 658 3 902
Taxation (2 717) (1 313)
Profit after taxation 941 2 589
Profit for the year 941 2 589
Attributable to:
Equity holders of the parent - -
Minority interest - -
Profit for the year 941 2 589
Headline earnings reconciliation (R`000) 941
Profit attributable to owners of the parent
2 589
Adjusted for:
Loss on disposal of property, plant and equipment 9
6
Impairment of goodwill 1 433 -
Impairment of intangibles 72 -
Headline earnings for the period 2 455 2 595
Per share information
Headline earnings per share (cents)
0.70 0.74
Diluted headline earnings per share (cents) 0.60
0.74
Basic earnings per share (cents per share)
0.27 0.74
Diluted earnings per share (cents per share)
0.23 0.74
Dividend per share (cents) 1.06 -
Weighted average number of shares in issue (`000)
353 450 350 000
Condensed consolidated statement of cash flows
Figures in Rand Audited Restated
28 February 29 February
2010 2009
R R
Cash generated from operating activities 4 842 817 4 238 755
Cash used in investing activities (2 514 483) (2 456 361)
Cash used in financing activities (2 326 648) (2 427 084)
Total cash movement for the year 1 600 (644 690)
Cash at the beginning of the year (54 461) 590 229
Total cash at end of the year (52 861) (54 461)
Condensed consolidated statement of changes in equity
Figures in Rand Share Share Total share
capital premium capital
Opening balance as previously reported 1 100 - 1 100
Adjustments
Prior year adjustments - - -
Balance at 01 March 2008 1 100 - 1 100
Changes in equity
Profit for the year - - -
Share based payment - - -
Share issue expenses - - -
Balance at 01 March 2009 1 100 - 1 100
Changes in equity
Profit for the year - - -
Share based payments - - -
Share issue expenses - - -
Issue of shares 307 999 2 331 957 2 639 956
Transfer share issue costs to share
premium
- (851 654) (851 654)
Dividends - - -
Balance at 28 February 2010
309 099 1 480 303 1 789 402
Condensed consolidated statement of changes in equity
Figures in Rand Share based Retained Total equity
payment earnings
reserve
Opening balance as previously 52 342 11 945 780 11 999 222
reported
Adjustments
Prior year adjustments - (724 812) (724 812)
Balance at 01 March 2008 52 342 11 220 968 11 274 410
Changes in equity
Profit for the year - 2 588 263 2 588 263
Share based payment 464 821 - -
Share issue expenses - (89 884) (89 884)
Balance at 01 March 2009
517 163 13 719 347 14 237 610
Changes in equity
Profit for the year - 941 530 941 530
Share based payments 2 122 793 - 2 122 793
Share issue expenses - (89 569) (89 569)
Issue of shares (2 639 956) - -
Transfer share issue costs to
share premium
- 231 390 (620 264)
Dividends - (4 029 351) (4 029 351)
Balance at 28 February 2010
- 10 773 347 12 562 749
Note: Prior period errors
Annual and quarterly invoicing in Republic Computer Services (Pty) Ltd was done
in advance leading to incorrect revenue recognition being applied in the
previous years.
The correction of the error results in adjustments as follows:
28 February 2010 28 February 2009
Balance sheet
Revenue received in advance - (720 041)
Opening retained earnings 720 041 724 808
Income statement
Revenue - (4 767)
BASIS OF PREPARATION
The board of directors is pleased to present the company`s audited results for
the year ended 28 February 2010, which have been approved by the board on 28 May
2010. The accounting policies adopted for purposes of this report comply, and
have been consistently applied in all material respects with International
Financial Reporting Standards ("IFRS") and the abridged financial statements
have been prepared in accordance with the requirements of IAS 34 (Interim
Financial Reporting).
The same accounting policies and methods of computation have been followed as
compared to the prior year. The results have been audited by Mazars and the
unqualified and unmodified audit report is available for inspection at the
Company`s registered office.
1. INDUSTRY AND BUSINESS OVERVIEW
RGT SMART was incorporated as a public company in the Republic of South
Africa on 11 June 2008 in order to act as the holding company for the RGT
SMART Group ahead of the Group`s listing on 14 April 2010.
RGT SMART is an investment holding company engaged in market intelligence
and data analysis in all aspects and related activities and operates in
South Africa. RGT SMART has two wholly-owned subsidiaries namely; KA SMART,
currently representing approximately 41% (previously 30%) of the business
based on turnover and 49% based on profitability, which focuses on the
Group`s management consultancy portion of the business and which was
incorporated on 26 June 2001, and RGT, currently representing approximately
59% of the business based on turnover and 51% based on profitability, which
focuses on the Group`s statistical information for the automotive industry
and which was incorporated on 30 December 1969.
Established in 2001, KA SMART is primarily a specialist market research
company, providing high value market intelligence, market research and
consulting services. While the company operates across all industries,
management`s experience base and track record has tended to focus the
business on the South African motor industry.
Typical KA SMART projects involve market evaluations for new and existing
products, across all industries but with a strong focus on the motor
industry, providing advanced analysis and interpretation to assist clients
in making critical strategic decisions.
This is in direct alignment to global trends. KA SMART is also involved in
customer satisfaction and service quality systems (SQS) for a number of
clients. After a development and testing phase in 2005, KA SMART launched
an SQS program for the Motor Body Repairer (MBR) industry that has been
spectacularly successful. The system involves the integration of SMS,
Email, Internet and Call-Centre technology and has grown to a subscriber
base of over 600 subscribers. The program is now a recommended component of
MBR approvals for Citroen South Africa, Fiat/Alfa Romeo SA, General Motors
South Africa (Cadillac/Chevrolet/Hummer/Isuzu/Opel/SAAB), Great Wall
Motors, Honda South Africa, Land Rover/Jaguar South Africa, Mercedes Benz
(Chrysler/Dodge/Jeep/Mercedes Benz Mitsubishi), NISSAN South Africa,
Renault South Africa, Subaru Motor SA, TATA Motors South Africa, Toyota
South Africa - Lexus/Toyota, Volkswagen of South Africa,
(Volkswagen/Audi/Seat), Volvo South Africa.
Growth and development is ongoing. KA SMART has developed exclusive
technology and is contracted primarily through referrals and repeat
business. Long-standing relationships with major players in the motor
industry result in a flow of enquiries and contracts and ensure ongoing
business for the company.
RGT SMART`s other subsidiary, RGT established a relationship with the
National Association of Automobile Manufacturers of South Africa (NAAMSA)
who produce and disseminate automotive statistics. Information was supplied
by motor manufacturers, and the data programmed into reports, which were
distributed back to the motor manufacturers. The above system was
maintained at a computer bureau, until RGT offered a superior on-line
enquiry version. The system has developed from punch cards for data
capture, processing via sequential magnetic tape-driven data devices on a
mainframe computer to today`s fast and online reports.
The manufacturers are contracted directly with RGT. These agreements have
been adhered to for over 20 years. RGT was the first ever on-line computer
bureau in the Cape province. The motor manufacturers own the raw data. The
power of the RGT/NAAMSA association is that the reworked, merged, enhanced,
updated, refreshed data which emerges in the databases now belongs to
RGT/NAAMSA. This data is much sought after, worldwide and an attempt a
couple of years ago by a large international statistics company to
aggressively enter the South Africa market was successfully fended off. In
today`s times the systems start with the receipt of electronic data, video
screen auditing, and dissemination of data via both paper as well as the
widespread inter-connectivity of internet.
The systems are significantly enhanced, with the addition of new vehicle
prices and specifications, creating multi-faceted enquiry paths.
RGT is the sole source of and supplier of new vehicles sales data to the SA
motor industry, in association with NAAMSA, for the past 26 years and owns
a dynamic and steadily growing database of new vehicle models sold by
manufacturer, dealer and town and licensing district in SA by month from
1980 onwards.
Since inception, and in close association with the motor manufacturers and
importers in SA, RGT has developed a suite of analytical systems which are
used on a daily basis by manufacturers and importers, (who reports data in
detail to NAAMSA), and their dealer organisations throughout SA.
RGT`s revenue is based primarily on regular monthly annuity income from
"blue chip" customers and currently has no competitors and is protected by
significant barriers to entry for any prospective competitor.
2. FINANCIAL RESULTS
Considering the poor economic conditions that companies have been working
in during the past year, as well as once-off IFRS adjustments and
impairments that RGT SMART has adjusted for, the Company still recorded a
profit.
The profit for the year ending 28 February 2010 reflects an improvement
from the profit estimate as published in the Company`s recent prospectus
due to slightly higher turnover levels being achieved. The operating
profit of the Company was R4 051 879 before certain once off impairments of
R1 505 184 (after tax) as well as charges in the statement of comprehensive
income in accordance with IFRS 2, whereby the issue of shares prior to the
Company`s listing have been fair valued.
The IFRS 2 share based payment adjustments of R2 122 793 (for the current
year) will not have a continuing effect on the Company. Of this cost, R851
654 has been written off against share premium.
Expenses reflect the current expenditure and take into account the certain
costs related to the listing process as detailed above.
Dividends of approximately R4 million were declared in the year under
review to the existing RGT SMART shareholders prior to listing and the
respective Secondary Tax on Companies has been taken into account in the
period.
Goodwill has been impaired by R1 990 352 based on an independent valuation
performed by Moore Stephens Corporate Finance as at 28 February 2010. This
impairment has been taken into account.
3. SEGMENTAL REPORTING
The Group has adopted IFRS 8 Operating Segments as its segmental reporting
standard which requires an entity to report financial and descriptive
information about its reportable segments, which are operating segments or
the aggregation of operating segments that meet specified criteria.
Operating segments are components of an entity in respect of which separate
financial information is available is evaluated regularly by management.
For management purposes, the Group is organised into the following
segments:
For the year ended 28 Market research Statistics
February 2010
External revenue 10 588 558 15 003 541
Internal revenue - 1 197 360
Total revenue 10 588 558 16 200 901
Cost of sales (3 406 737) (256 789)
Personnel costs (2 536 308) (7 697 084)
Lease rentals (112 175) (707 968)
Other costs (1 363 569) (2 130 170)
EBITDA 3 169 769 5 408 890
Depreciation and
amortization (325 535) (162 384)
Finance income 962 2 440
Finance costs (81 213) (315 424)
Impairment loss on
goodwill - (1 990 352)
Impairment loss on
intangibles - (100 182)
Profit before tax 2 763 983 2 842 988
Segment assets 3 427 418 20 147 527
Total for All other Elimination Total RGT
reportable segments of SMART
segments intersegment
transactions
External 25 592 099 - - 25 592 099
revenue
Internal 1 197 360 5 861 270 (7 058 630) -
revenue
Total 26 789 459 5 861 270 (7 058 630) 25 592 099
revenue
Cost of (3 663 526) - 1 197 360 (2 466 166)
sales
Personnel (10 233 392) (1 748 641) - (11 982 033)
costs
Lease (820 143) - - (820 143)
rentals
Other (3 493 739) (2 248 327) 2 047 670 (3 694 396)
costs
EBITDA 8 578 659 1 864 302 (3 813 600) 6 633 619
Depreciat
ion and (487 919) (3 287) - (491 206)
amortizat
ion
Finance 3 402 2 - 3 404
income
Finance (396 637) (20) - (396 657)
costs
Impairmen (2 090 534) - - (2 090 534)
ts
Profit/(l
oss) 5 606 971 1 860 993 (3 813 600) 3 658 626
before
tax
Geographical information has not been presented as the company operates in
South Africa only.
Revenue from external customers for each product and service, or each group
of similar products and services has not been presented, as the information
is not available and the cost to develop it would be excessive. The Group
does not earn revenue in excess of 10% from one single customer, and as
such does not place reliance on a single customer or group of customer for
its continued existence.
4. ISSUES OF SHARES
During the year, the following shares were issued:
- On 4 January 2010, 17 500 000 shares were issued at a fair value issue
price of 8.57 cents to Arcay Moela Sponsors (Proprietary) Limited in
settlement of listing costs.
- On 29 January 2010, 2 699 900 shares were issued at 8.57 cents to
Jacques Magliolo, a non-executive director of RGT SMART, in settlement
of corporate advisory services rendered in connection with the merger
of RGT and KA SMART during 2008, which fees were settled in cash and
through the issue of the above shares.
- On 29 January 2010, 10 599 900 shares were issued at 8.57 cents to
Cliff Reed, the executive, financial director of RGT SMART.
In addition, shares were issued after the year ahead of the Company`s
listing on the Alternative Exchange of the JSE Limited. Shareholders are
referred to subsequent events below.
5. ACQUISITIONS AND DISPOSALS
There were no acquisitions or disposals during the year under review.
6. BEE SHAREHOLDER
Currently the Company is in negotiations with a potential BEE partner who
is interested in acquiring a 26% stake in the Company. Shareholders are
referred to the renewal of cautionary announcement below.
7. DIRECTOR CHANGES
During the year under review there were no changes to the board of
directors, which board represented the original shareholders of KA SMART
and RGT.
However, subsequent to year end, following the introduction of the latest
King Code of Governance ("King III") for all companies with year ends
commencing 01 March 2010 and the recent changes to the JSE Listings
Requirements, the Company decided to restructure the board of directors in
order to reduce the number of executive directors on the main board and
appoint additional independent non-executive directors.
Subsequent to the year end, the following director changes occurred:
Director Date appointed Date resigned
M Kruger 11 June 2008 28 April 2010
AC Calcutt 11 June 2008 28 April 2010
GJ Grundlingh 11 June 2008 28 April 2010
H Coetzee 10 March 2009 28 April 2010
CJ Moodliar 05 May 2010
The board of directors is now constituted as follows:
Director Date appointed Designation
AA da Costa* 11 June 2008 Non-executive Chairman
PB de Vantier 11 June 2008 Chief Executive
Officer
NS Bruton 11 June 2008 Director - Corporate
Strategy
CW Reed 11 June 2008 Financial Director
J Magliolo 11 June 2008 Non-executive director
CJ Moodliar* 05 May 2010 Non-executive director
* Independent
The board is considering a further appointment of an independent non-
executive director.
8. SHARE CAPITAL
As at 28 February 2010, there were 380 800 100 issued ordinary shares and
119 199 900 unissued ordinary shares.
RGT SMART`s share capital comprises of 500 000 000 authorised ordinary
shares and 437 800 000 issued ordinary shares as at the date of this
announcement.
The unissued shares are under the control of the directors until the annual
general meeting. Shareholders will be asked to approve the directors`
authority in respect of the unissued shares at the forthcoming annual
general meeting.
9. DIVIDEND
The Company does not have a formal dividend policy at present, the
directors have however declared a dividend to the value of R4 029 351
during the 28 February 2010 year end. The Board of Directors will continue
to consider the payment of dividends on an annual basis, based on
achievement of profit and cash flow requirements.
The Board intends to introduce a formal dividend payout policy of 33% of
the profit after tax after two years, unless the Board is of the opinion
that a lower dividend is to be declared because of the necessity to apply
the Group`s cash resources to planned acquisitions or that it is in the
interest of the Group to build up cash reserves for foreseeable
unfavourable market or economic conditions.
The Company has not determined any fixed dates on which dividends or
entitlement to dividends arises. There is no arrangement in which future
dividends are waived or agreed to be waived.
10. LITIGATION
There is no litigation pending against the company or its subsidiaries,
which is expected to have a material impact on the results of the company.
11. CONTINGENT LIABILITIES
At the balance sheet date the Group does not have any contingent
liabilities (2009: RNil).
12. ANNUAL GENERAL MEETING
Shareholders will be advised of the date of the annual general meeting in
due course.
13. SUBSEQUENT EVENTS
On 14 April 2010, RGT SMART successfully listed on the Alternative Exchange
of the JSE Limited. The JSE Limited`s Listings Requirements ("Listings
Requirements") required the Company to issue a minimum of 10% of its issued
share capital, being 38 080 000 ordinary shares to the public through a
prospectus. The Company exceeded this 10% and issued a total of 57 000 000
million shares at 10 cents to the public.
The cash raised on the public offer will be used for working capital, to
settle certain interest bearing borrowings and costs related to the
listing.
Other than the above changes, there were no further subsequent events.
14. RENEWAL OF CAUTIONARY
As a result of the pending BEE deal as mentioned above and further to the
announcement released on SENS on 20 April 2010, shareholders are advised
that RGT SMART is still in negotiations with a potential BEE partner to
acquire a 26% shareholding in RGT SMART, which if successfully concluded,
may have an effect on the price of the company`s securities. Shareholders
are accordingly advised to exercise caution when dealing in the company`s
securities until a full announcement has been made.
15. FUTURE PROSPECTS AND PROFIT FORECAST
Shareholders are reminded of the profit forecasts which were contained in
the prospectus and were published on SENS on 23 March 2010. The profit
forecasts were reviewed by Mazars.
The Company`s income comprises approximately 80% of annuity income from a
broad base of clients. The increase in revenue in 2011 and 2012 is
primarily related to organic growth in respect of new vehicle clinics,
adhoc research, autoparc consulting and SQS Multidealers.
For ease of reference, the profit forecasts and related assumptions are
republished below:
28 February 2011 29 February 2012
R`000 R`000
Revenue 31 315 35 578
Cost of sales (4 616) (5 577)
Gross profit 26 699 30 001
Operating expenses (16 587) (18 091)
Operating profit before 10 112 11 910
interest
Impairment of goodwill - -
Interest received 112 119
Finance costs (42) (57)
Profit before taxation 10 182 11 972
Taxation (2 455) (2 831)
Secondary tax on companies - -
Profit after taxation 7 727 9 141
Profit attributable to 7 727 9 141
ordinary shareholders
430 434 437 800
Weighted average shares
(`000`s)
Earnings per share (cents) 1.80 2.09
Headline earnings per share 1.80 2.09
(cents)
Assumptions:
The assumptions utilised in the profit forecast and which are considered by
management to be significant or are key factors on which the results of the
Company will depend are disclosed below. The assumptions disclosed are not
intended to be an exhaustive list. There are other routine assumptions
which are not listed.
1. The current market conditions in the industry in which the business
operates are not expected to change substantially.
2. The forecast numbers have been prepared in terms of IFRS.
3. The increase in revenue in 2011 and 2012 is primarily related to
organic growth in respect of new vehicle clinics, adhoc research,
autoparc consulting and SQS Multidealers.
4. Expenses have been forecast on a line by line basis and reflect the
current budgeted expenditure and takes into account the cost of being
listed.
5. The present level of interest and tax rates will remain substantially
unchanged.
6. The cash raised on the public offer is utilised to settle interest
bearing borrowings and share issue costs.
7. Interest from cash generated from operations has not been taken into
account in the forecasts.
8. The weighted average number of shares in issue is based on the offer
for subscription being fully subscribed and a listing date of 14 April
2010.
By order of the Board
Mr AA Da Costa Mr PB De Vantier
Chairman Chief Executive Officer
31 May 2010
Johannesburg
Registered Office
Arcay House, Number 3 Anerley Road, Parktown, Johannesburg, 2193
PO Box 62397, Marshalltown, 2107
Directors
AA Da Costa*#(Chairman), PB De Vantier(CEO), CW Reed (FD), NS Bruton,
Jacques Magliolo*, CJ Moodliar*#
* Non-executive, #Independent
Designated Advisor Transfer Office
Arcay Moela Sponsors Link Market Services (Proprietary) Limited
(Proprietary) Limited
Date: 31/05/2010 14:38:01 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.
