| Tue 31 May 2005, 11:18 | | Results for the 12 months ended 28 February 2005 |
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Stratcorp - Group audited results for the twelve months ended 28 February 2005
Stratcorp Limited
(Registration number: 2000/031842/06)
(Incorporated in the Republic of South Africa)
Share Code: STA ISIN Code ZAE000034294
ANNUAL REPORT
Group audited results for the twelve months ended 28 February 2005 was as
follows:
ABBRIDGED INCOME STATEMENT
2005 2004
R R
Gross revenue 11,444,802 11,261,490
Cost of sales 1,747,994 943,204
Gross profit 9,696,808 10,318,286
Other operating income 182,724 20,853
Selling and distribution costs (3,565,250) (1,913,236)
Administrative expenses (4,323,542) (3,556,839)
Other operating expenses (2,075,366) (1,592,992)
Operating profit/(loss) (84,626) 3,276,072
Interest received 219,392 113,492
Finance costs (233,528) (207,214)
Profit/(loss) before taxation (98,762) 3,182,350
Taxation 443,702 669,996
Profit/(loss) after taxation (542,464) 2,512,354
Reconciliation of Headline Earnings
Net profit/(Loss) (542,464) 2,512,354
Adjusted for:
Impairment of investments 346,321
Amortisation of goodwill 174,950
Headline profit/(loss) (196,143) 2,687,304
Earnings per share (cents) (1.2) 6.8
Headline earnings per share (cents) (0.4) 7.3
Diluted earnings per share (cents) (1.2) 6.6
ABRRIDGED BALANCE SHEET
2005 2004
R R
Assets
Non-Current Assets 8,705,796 8,271,748
Property, plant and equipment 406,263 449,716
Intangible assets 2,162,875 1,833,731
Investments in subsidiaries - -
Investment in associates 2,933,239 2,439,892
Investments 2,070,241 1,161,605
Loans receivable 640,849 1,450,772
Deferred tax 492,329 936,032
Current assets 7,898,357 7,462,609
Trading investments 6,024,331 6,031,048
Inventories 176,823 193,265
Trade and other receivables 543,183 719,677
Cash and cash equivalents 1,154,020 518,619
Total assets 16,604,153 15,734,357
Equity and liabilities
Capital and reserves 9,195,924 9,026,860
Issued capital 10,438,086 9,726,558
Distributable reserves (1,242,162) (699,698)
Noncurrent liabilities
Borrowings 413,348 2,162,151
Current liabilities 6,994,881 4,545,346
Current portion of borrowings 2,375,114 -
Taxation 845,529 845,529
Trade and other payables 3,774,238 3,699,817
Total equity and liabilities 16,604,153 15,734,357
Net asset value per share (cents) 19.8 22.6
Net tangible asset value per share 15.1 18.0
(cents)
STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY
Share capital Accumulated loss Total
R R R
8,364,215 (3,212,052) 5,152,163
Balance at 01 March 2003
Net profit for the year 2,512,354 2,512,354
Issue of share capital 1,702,928 1,702,928
Share issue expenses (340,585) (340,585)
Balance at 01 March 2004 9,726,558 (699,698) 9,026,860
Net loss for the year (542,464) (542,464)
Issue of share capital 1,000,000 1,000,000
Share buy back (176,893) (176,893)
Treasury shares (11,580) (11,580)
Share issue expenses (100,000) (100,000)
Balance at 28 February 2005 10,438,085 (1,242,162) 9,195,923
CASH FLOW STATEMENT
2005 2004
R R
Cash flows from operating 629,026 (77,061)
activities
Cash receipts from customers 11,120,164 4,686,341
Cash paid to suppliers and (10,477,002) (4,669,680)
employees
Cash (utilised in)/generated by 643,162 16,661
operating activities
Interest received 219,392 113,492
Interest paid (233,528) (207,214)
Cash flows from investing (1,331,464) (2,364,107)
activities
Property, plant and equipment (142,444) (98,330)
acquired
Intangible assets acquired (329,144) (568,880)
Loans from subsidiaries repaid - -
Loans granted to associates (839,667) (53,892)
Other loans granted - (1,450,772)
Other loans repaid 809,923 -
Investment in associates - (250,000)
Investments (830,132) 57,767
Cash flows from financing 1,337,839 1,229,023
activities
Capital raised 711,528 1,362,343
Loans raised 626,311 1,669,921
Loans repaid - (1,803,241)
Increase/(Decrease) in cash and 635,401 (1,212,145)
cash equivalents
Cash and cash equivalents at 518,619 1,730,764
beginning of the year
Cash and cash equivalents at end 1,154,020 518,619
of the year
COMMENTS
In the 2004 Annual Report, the board stated they are satisfied that the
company`s business model was well structured and its products are well accepted
in the market and that future profitability would be imminent. The Company
successfully progressed from a start-up operation to a predictable income-
generating group now focused on its core operations. It should also be noted
that the turnover realised for the group in the 2004 financial year was largely
as a result of the sale of a single investment and not as a result of its core
operations. This year however, the board can report that turnovers were
realised from the latter.
None of the investments have realised any significant returns. This was
envisaged as most of these investments are still in their development phases
and would only start showing positive results over the next 2 years.
As a result of the infrastructure, products and systems being established and a
positive net growth on the client base being experienced, the focus is now to
establish a sound cash flow basis and expanding the product ranges.
Subsidiary companies (Past and future prospects)
StratEquity is still the largest contributor to the Group`s earnings. The
previous year`s investment in energy and time to streamline this business model
in order to ensure a predictable future income stream, and ultimately to be
highly profitable is, has paid off. This subsidiary has posted a net profit of
R2,034 million before tax for the reporting period (2004: (R497,374). The
referral-marketing program to market StratEquity`s `Wealth Creator Subscription
Plan` product proves to be successful and the subscription client base as at 28
February 2005 was 12 004 (2004: 4,873) with a total monthly premium of R2.17
million (2004: R889,000). Subsequent to year-end this base has increased to 15
025 clients with a total monthly premium of R2.674 million.
The effect of this is that StratEquity is earning a monthly income, based on
administration and membership fees and when the accumulated investment portions
of the members are invested in developing companies, additional fees are
earned. StratEquity, through its client base, is currently in a position to
provide funding for developing companies of between R20 - R30 million during
the next financial year.
StratFund was established in 2001 and is licensed by the Financial Services
Board (FSB) to operate as a Portfolio Manager. Although this subsidiary has not
yet been activated, the board is convinced of its future contribution.
Investments and Options
Apart from the income generated from its operating subsidiaries, the Company
also holds various shareholdings and in different companies. Significant future
profits can be realised from these investments, and the board will make
decisions as and when required in this regard.
During the period under review the Company held the following shares:
Supertow International Ltd: 17% shareholding (Long Term).
Mobile Events Marketing Ltd: 48.3% shareholding. This holding was acquired in
May 2003.
StratCol (Pty) Ltd: 40% shareholding. This holding was acquired in October 2003
and the Company has a long-term dividend view on this investment.
Financial Results
The consolidated turnover of the group increased to R 11,444 million in 2005
(2004: 11,261,490). The total consolidated loss for the full year was R542,464
after tax. (2004: R 2,512,355)
Prospects
The company is in the process of establishing company owned venues in
identified growth areas in South Africa and Swaziland to further increase the
client base. Development and launching of new product ranges are currently in
progress and should have a positive impact on earnings by year-end.
The board will also address Corporate Governance issues during the next year
with the intention to be fully compliant by 28 February 2006.
Events subsequent to year-end
Mr. WA Pieters, the Group Financial Director has resigned effectively 31 March
2005. Mr. Johan de Beer was appointed as Group Financial Manager as from 03 May
2005. Mr. de Beer holds a B. Compt. degree and is currently busy with his
Bachelor of Commerce Honours (Accounting) degree. He was previously employed by
PKF Chartered Accountants SA (Pretoria) from January 1998 to April 2005, where
he held the position as Audit Manager. During his employment with PKF he
audited various listed companies and was also seconded to Telkom Properties
(Pty) Ltd and Digicore Ltd. The company also envisages doing an Issue for Cash
during July 2005.
General
On behalf of the board, I wish to thank our management team, personnel,
stakeholders and shareholders for their valuable input and support over the
past year.
Accounting policies
The financial statements have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practices and are based on approved
accounting policies, which have been consistently applied. The unqualified
audit report issued by PKF Chartered Accountants (SA) is available at the
company`s registered offices.
Dividends
No dividends have been declared.
On behalf of the board
D B Harington
CEO
23 May 2005
Date: 31/05/2005 11:13:12 AM
Produced by the JSE SENS Department
