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STA
STA
Stratcorp Limited - Reviewed Abridged Consolidated Interim Financial Results
Stratcorp Limited
(Incorporated in the Republic of South Africa)
(Registration number 2000/031842/06)
Share code: STA & ISIN: ZAE000034294
("the company")
REVIEWED ABRIDGED CONSOLIDATED INTERIM FINANCIAL RESULTS
for the six months ended 31 August 2006
HIGHLIGHTS FOR THE SIX MONTHS
Revenue up R13.2 million
Client base up 68%
Operating profit up R4.1 million
Net asset value per share up 54%
Headline earnings per share up 266%
Income Statements
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2006 2005 2006
(reviewed) (unaudited) (audited)
Figures in R thousand restated
Revenue 20 251 7 030 19 670
Profit from operations 4 411 273 4 335
Other income 6 752 - 7 988
Net interest 395 248 477
Profit before taxation 11 558 521 12 800
Taxation 2 362 (739) 817
Net profit for the period 9 196 1 260 11 983
Attributable to:
- Minority shareholders - (170) -
- StratCorp equity holders 9 196 1 430 11 983
9 196 1 260 11 983
Weighted average number of:
Ordinary shares
in issue ("000) 85 710 48 814 59 762
Treasury shares
in issue ("000) 16 689 30 079 24 903
Total weighted average
number of shares in issue 102 399 78 893 84 666
Basic earnings per share (cents) 10.73 2.93 20.05
Headline earnings
per share (cents)* *10.73 *2.93 *18.66
Dividend per share (cents) - - -
Reconciliation between earnings
and headline earnings
Basic earnings 9 196 1 430 11 983
Non-recurring adjustments
(net of tax)
Profit on disposal
of subsidiary - - (834)
Fair value adjustments
- investments* -* -* -*
Headline earnings 9 196 1 430 11 149
* Restated: As per circular 7/2002 Fair value adjustments on at fair value
through profit or loss financial instruments (recorded in income statement)
must be included in headline earnings.
Balance Sheets
At At At
31 August 31 August 28 February
2006 2005 2006
(reviewed) (unaudited) (audited)
Figures in R thousand (reclassified)
Non-current assets 4 773 4 540 4 441
Property, plant and equipment 1 028 610 556
Goodwill 1 318 1 318 1 318
Intangible assets 1 440 957 1 023
Financial assets 818 1 173 1 544
Deferred tax assets 169 482 -
Current assets 53 750 15 387 26 716
Financial assets 27 937 12 517 22 731
Inventories 9 008 1 429 345
Trade and other receivables 12 480 1 224 1 200
Cash and cash equivalents 4 325 217 2 440
Total assets 58 523 19 927 31 157
Capital and reserves 37 811 16 010 26 587
Issued capital 17 866 12 811 12 805
Share repurchase reserve 9 3 182 3 042
Distributable reserves 19 936 187 10 740
Minority interest - (170) -
Non-current liabilities 14 178 1 005 1 190
Financial liabilities 10 249 1 005 -
Deferred tax liabilities 3 929 - 1 190
Current liabilities 6 534 2 912 3 380
Trade and other payables 5 308 1 412 2 327
Current portion of borrowings - 1 500 1 053
Taxation 1 226 - -
Total equity and liabilities 58 523 19 927 31 157
Statements of Changes in Equity
Share Share Retained Ordinary Minority Total
capital repurchase earnings share- interest equity
reserve holders"
Figures in
R thousand equity
Balance at
28 February 2005 10 438 - (1 242) 9 196 - 9 196
Issue of
share capital 2 374 - - 2 374 - 2 374
Profit on
disposal of
treasury shares - 3 182 - 3 182 - 3 182
Treasury shares (1) - - (1) - (1)
Attributable
earnings - - 1 430 1 430 (170) 1 260
Balance at
31 August 2005 12 811 3 182 187 16 180 (170) 16 010
Revaluation - - - - 170 170
Treasury shares (6) (140) - (146) - (146)
Attributable
earnings - - 10 553 10 553 - 10 553
Balance at
28 February 2006 12 805 3 042 10 740 26 587 - 26 587
Issue of
share capital 4 987 (3 033) - 1 954 - 1 954
Acquisition
of preference
shares through
business
combination 101 - - 101 - 101
Treasury shares (27) - - (27) - (27)
Attributable
earnings - - 9 196 9 196 - 9 196
Balance at
31 August 2006 17 866 9 19 936 37 811 - 37 811
Cash Flow Statements
Six months Six months 12 months
ended ended ended
31 August 31 August 28 February
2006 2005 2006
Figures in R thousand (reviewed) (unaudited) (audited)
Cash flows - operating activities (7 887) (4 315) 1 213
Net finance income 395 248 477
Taxation paid (156) - -
Cash flow from investing
activities 858 (2 358) (1 038)
Cash acquired through
business combinations 5 594 - -
Cash flow from
financing activities 3 081 5 485 631
Net cash flow for period 1 885 (940) 1 283
Cash and cash equivalents
at beginning of period 2 440 1 157 1 157
Cash and cash equivalents
at end of period 4 325 217 2 440
Supplementary information
Six months Six months 12 months
ended ended ended
31 August 31 August 28 February
2006 2005 2006
Number of: (reviewed) (unaudited) (audited)
Ordinary shares in issue ("000) 103 253 67 305 70 395
Treasury shares in issue ("000) 1 437 21 954 18 864
Total number of shares in issue 104 690 89 259 89 259
Ratios
Net asset value per share (cents) 37 24 38
Net tangible asset value
per share (cents) 34 20 34
Current ratio 8.2 5.3 7.9
Quick ratio 6.9 4.8 7.8
Defensive interval days 161 53 66
Altman Z score 9.5 5.3 8.5
Gross profit margin 47.7 61.8 61.9
Net profit margin (%) 45.4 20.3 60.9
Return on assets (ROA) (%)* 31.4 12.7 38.5
Return on investment (ROE) (%)* 48.6 15.7 45.1
* Annualised
Comments on results
The group as a whole is continuing to experience acceptable growth and
profitability. The operating subsidiaries are performing according to budget.
The group is applying its philosophy to diversify its operations into other
industries in order to maintain growth and profitability and to protect the
group against fluctuations from cyclical industry factors.
Wholly owned subsidiaries
StratEquity (Pty) Limited
StratEquity"s subscription client base has increased from 17 151 to 28 808
(68%) over the reporting period. The monthly premium has increased from R2.994
million to R4.998 million (82%). StratEquity Namibia (Pty) Limited (a subsidiary
of StratEquity) has applied with NAMFISA (Namibia Financial Institutions
Supervisory Authority) as an investment manager in order to expand its client
base into this region.
Funds available for investment under management
SEE PRESS ANNOUNCEMENT
*2006 forecast reviewed by PKF (Pta) Inc.
ICI Marketing (Pty) Limited
ICI is the marketing company for StratEquity"s products. This subsidiary is
continuing to expand its business model across the country and neighbouring
countries and is directly responsible for StratEquity"s growth in client base.
Various other income streams are being investigated and implemented to
increase the profitability of ICI Marketing.
Citadin Holdings Limited ("Citadin")
StratCorp Limited acquired the remaining 49% shareholding in Citadin for a
consideration of R1 633 500 through an issue of 4 950 000 ordinary shares at
33 cents per share on 19 September 2006. The effective date of the transaction
was 1 March 2006.
Citadin is a residential property development group and concentrates its
activities in the lower to middle end of the buyers market. Citadin is
currently engaged in a R54 million development in the Northern suburbs of
Pretoria. At 31 August 2006, the first phase of the development was sold out
and the directors are of the opinion that the second phase (totalling an
estimated R44 million) will be sold out by year end.
Other land and development opportunities have been identified to ensure
continuity in the operations of Citadin and its subsidiaries.
Prospects
Traditionally the operations from StratEquity and ICI Marketing perform much
better in the 2nd half of the year. By adding the prospects of the newly
acquired Citadin Holdings Limited for the remainder of the year, the group
should post excellent results by year end.
Basis of preparation
The results of the Group for the six months ending 31 August 2006 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 is consistent with those applied during the
comparative periods.
Abridged segmental analysis
Six months Six months Year
ended ended ended
31 August 31 August 28 February
Figures in R"000 2006 % 2005 % 2006 %
Revenue
Property development 9 632 48 - - - -
Capital placement 2 600 13 1 499 21 5 266 27
Investment management 3 301 16 1 814 26 5 188 26
Direct selling 4 718 23 3 717 53 9 216 47
20 251 100 7 030 100 19 670 100
Operating profit
Property development 3 351 76
Capital placement 1 206 27
Investment management 1 475 33
Direct selling 1 161 27
Corporate (2 782) (63)
4 411 100
Corporate Governance
The Group is committed to maintaining the high standards of governance as
embodied in the King Report on Corporate Governance.
The 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.
Financial liabilities
Citadin Holdings Limited issued linked units, being a 1% preference share and
99% debenture in December 2005 of R10 140 million. The shares together with
the claims (linked units) will be redeemed at 100% of the face value by no
later than 1 December 2008. Holders of the linked units will be paid interest
of 15% per annum on the claim portion of the linked unit, i.e. 99 cents of
each 100 cents linked unit. Interest is payable on 1 December each year.
Citadin Holdings Limited and its subsidiaries Citadin Projects (Pty) Limited
and Citadin Property Developers (Pty) Limited was effectively consolidated
from 1 March 2006.
Financial assets
At At At
31 August 31 August 28 February
2006 2005 2006
(reviewed) (unaudited) (audited)
Figures in R thousand (reclassified)
Non-current financial assets 818 1 173 1 544
Investments - held till maturity 789 746 732
Loans receivable 29 427 812
Current financial assets 27 937 12 517 22 731
Investments - held for trading 24 688 10 472 17 966
Loans receivable 3 249 2 045 4 765
Fair value adjustments - investments
held for trading 6 750 346 7 975
Other matters
StratCorp issued 10 480 744 shares for cash at 32 cents per share to independent
shareholders in April 2006.
Cautionary announcement
The company issued a Cautionary Announcement on 18 September 2006 stating that
it is in negotiations and if concluded successfully can have a material effect
on the company. The transaction was the acquisition of the remaining 49% of
Citadin Holdings Limited.
Dividends
It is the group"s usual policy for dividends to be declared after the financial
year. Special dividends can be declared on an ad hoc basis.
On behalf of the board
D B Harington
CEO
4 October 2006
Date: 05/10/2006 10:50:11 AM Produced by the JSE SENS Department
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