| Thu 4 Oct 2007, 15:22 | | IQG - Iquad Group Limited - Interim results for th |
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IQG
IQG
IQG - Iquad Group Limited - Interim results for the 6 months ended 31
August 2007 and dividend declaration
IQUAD GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number: 2004/025177/06)
Share Code: IQG & ISIN: ZAE000101622
Interim results for the 6 months ended 31 August 2007
It is our strategy to pursue start up companies; if we strip out the costs
of these start ups, headline PAT would be 10% higher. We expect to see
positive contributions from these new operations in the next six months,
growing substantially in years to come.
Financial Highlights
* Operating profit up 27%
* Profit after tax up 15%
* HEPS up 13%
ABRIDGED CONSOLIDATED INCOME STATEMENTS
Unaudited Unaudited Audited
31 August 31 August 28 February
2007 2006 2007
R`000 R`000 R`000
REVENUE 26 431 22 136 47 636
Other operating income 1 054 34 17
Operating expenses (17 769) (13 955) (29 047)
OPERATING PROFIT 9 716 8 215 18 606
INTEREST RECEIVED 559 278 566
INTEREST PAID (366) (683) (1 163)
PROFIT before taxation 9 909 7 810 18 009
TAXATION (3 422) (2 179) (4 459)
PROFIT after taxation for the 6 487 5 631 13 550
year
Attributable as follows:
MINORITY INTEREST 338 305 716
EQUITY HOLDERS OF COMPANY 6 149 5 326 12 834
NET PROFIT for the year 6 487 5 631 13 550
Earnings per share (cents)
Basic 26,4 23,3 56,1
Headline 26,4 23,3 56,0
Dividend per share (cents)
Interim (proposed) 10,0 9,0 9,0
Final 11,0
10,0 9,0 20,0
Number of shares (in thousands)
In issue 28 937 22 937 22 937
Weighted average 23 313 22 872 17 995
ABRIDGED CONSOLIDATED BALANCE SHEETS
Unaudited Unaudited Audited
31 August 31 August 28 February
2007 2006 2007
R`000 R`000 R`000
ASSETS
NON-CURRENT ASSETS 94 193 88 333 88 643
Property, plant and equipment 4 035 856 778
Intangible assets 86 376 85 800 85 800
Investment in associates 1 784
Deferred taxation 1 998 1 677 2 065
CURRENT ASSETS 46 049 11 853 17 055
Trade and other receivables 12 218 9 589 8 746
Amounts owing by related parties 3 150
Taxation 1 262
Bank balances 33 828 2 264 6 897
TOTAL ASSETS 140 242 100 186 105 698
EQUITY AND LIABILITIES
EQUITY AND RESERVES 127 685 84 970 90 707
Issued ordinary capital 109 271 75 353 75 353
Treasury shares (357)
Foreign currency translation (20)
reserve
Accumulated profits 18 189 9 067 14 511
Attributable to equity
shareholders
of the Company 127 083 84 420 89 864
Minority shareholders 602 550 843
NON-CURRENT LIABILITIES
Long-term liabilities 1 650 82 42
CURRENT LIABILITIES 10 907 15 134 14 949
Trade and other payables 6 943 13 216 13 534
Amounts owing to related parties 695
Short-term portion of long-term 62 56 65
liabilities
Taxation 3 207 1 862 1 350
TOTAL EQUITY AND LIABILITIES 140 242 100 186 105 698
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to Minority Total
shareholders interests equity
R`000 R`000 R`000
Balance at 1 March 2006 - 23 709 298 24 007
Audited
Issue of share capital 55 385 55 385
Net profit for the period 5 326 305 5 631
Dividends - -
Additional interests in - (53) (53)
subsidiaries
Balance at 31 August 2006 - 84 420 550 84 970
Unaudited
Net profit for the period 7 509 411 7 920
Dividends (2 065) (118) (2 183)
Balance at 1 March 2007 - 89 864 843 90 707
Audited
Issue of share capital 33 918 33 918
Treasury shares (357) (357)
Net profit for the period 6 149 338 6 487
Exchange differences on (20) (27) (47)
translating foreign
operations
Dividends (2 523) (500) (3 023)
Minority interests in 204 (204) -
subsidiary losses previously
accounted for fully in Group
Additional interests in (152) 152 -
subsidiaries
Balance at 31 August 2007 - 127 083 602 127 685
Unaudited
ABRIDGED CASH FLOW STATEMENTS
Unaudited Unaudited Audited
31 August 31 August 28 February
2007 2006 2007
R`000 R`000 R`000
CASH FLOWS FROM OPERATING 7 825 9 037 13 356
ACTIVITIES
Cash generated from operating 7 868 6 957 20 681
activities
Interest received 559 278 566
Interest paid (366) (683) (1 163)
Taxation paid (236) 2 485 (6 728)
CASH FLOWS FROM INVESTING (3 824) 2 479 2 301
ACTIVITIES
Expenditure to maintain - -
capacity
Property, plant and equipment (363) (102) (371)
acquired
Proceeds on disposal of - - 91
property, plant and equipment
Expenditure for expansion - -
Property, plant and equipment (2 804) -
acquired
Subsidiaries acquired (110) 2 581 2 581
Associates acquired (547) -
CASH FLOWS FROM FINANCING 22 930 (12 954) (12 462)
ACTIVITIES
Capital raised 33 561 1 086 1 276
Dividends paid (3 023) (4 752) (6 522)
Loans (advanced)/repaid 147 (20) (150)
Loans raised/(repaid) (7 755) (9 268) (7 066)
INCREASE IN CASH 26 932 (1 438) 3 195
CASH at beginning of the period 6 898 3 702 3 702
CASH at end of the period 33 830 2 264 6 897
NOTES TO INTERIM RESULTS
Basis of preparation and accounting policies
This interim financial report has been compiled in accordance with
International Financial Reporting Standards (IFRS) and complies with IAS
34: Interim Financial Reporting.
The accounting policies and critical accounting estimates and judgements
applied to these financial statements are consistent with those applied for
the year ended 28 February 2007.
Issue of share capital
On 8 August the Company issued 6 000 000 ordinary shares of R0,0001 each.
The issue was by way of a private placement. The total premium on the share
issue amounted to R33 918 032.
Material subsequent events
On 7 September 2007, IQuad Technologies (Pty) Limited, a subsidiary of
IQuad Group Limited, acquired a 30% stake in Afropulse 366 (Pty) Limited,
for a total consideration of R9 203 400. Afropulse 366 (Pty) Limited, holds
100% of the share capital of Global Vision Information Technology (Pty)
Limited. The acquisition was funded from the proceeds of the private
placement and is effective 1 September 2007.
Property, plant and equipment
During the current period, property was acquired at a cost of R2,804
million which is partly financed by an Absa bond and the balance by the
Group`s cash resources.
Dividends
The directors of IQuad are pleased to announce that they have declared a
dividend of 10 cents per share on Wednesday 3 October, 2007 and wish to
ensure that shareholders receive payment thereof as expeditiously as
possible in terms of the JSE Listings Requirements.
The salient dates for the payment of this dividend are set out below:
Last day to trade cum-dividend Friday, 19 October 2007
Trading ex-dividend commences Monday, 22 October 2007
Record date Friday, 26 October 2007
Payment date Monday, 29 October 2007
Share certificates may not be dematerialised or rematerialised between
Monday, 22 October 2007 and Friday, 26 October 2007, both days included.
SEGMENT REPORT
The group is divided into four main operational segments:
- Government Investment Incentives
- Treasury risk management and Economic research
- Business development and optimisation
- Verification and audit services
Previously the investment incentives, business optimisation and
verification services segments were grouped together as a single segment,
namely `consulting`. The segment information has been restated to
correspond with the change in internal management reporting segments.
All segment revenue is derived from external customers.
Segment
Segment profit Segment
before
revenue taxation assets
R`000 R`000 R`000
For the period ended 31 August
2007
- Government Investment Incentives 14 702 6 770 18 347
- Treasury risk management and
Economic research 8 232 2 076 11 846
- Business development and 402 403 1 484
optimisation
- Verification and audit services 3 360 1 943 3 580
26 696 11 192 35 258
For the period ended 31 August
2006
- Government Investment Incentives 12 252 4 830 9 990
- Treasury risk management and
Economic research 8 706 3 246 8 675
- Business development and 414 13 270
optimisation
- Verification and audit services 820 311 981
22 192 8 400 19 916
For the period ended 28 February
2007
- Government Investment Incentives 26 478 11 234 8 993
- Treasury risk management and
Economic research 17 915 6 618 10 571
- Business development and 813 9 500
optimisation
- Verification and audit services 2 430 1 117 2 028
47 636 18 978 22 093
31 August 31 August 28 February
2007 2006 2008
Reconciliation of segment profit R`000 R`000 R`000
Total segment profit 11 192 8 400 18 978
Other profits 2 067 (590) 1 968
Elimination of intersegment (3 350) - (2 937)
profits
Net profit before income tax 9 909 7 810 18 009
Government Investment Incentives
We have experienced a healthy improvement in government`s processing of
incentive claims related to the Small Medium Enterprise Development
Programme (SMEDP) resulting in substantial growth in profitability. We
continue to grow our client base for services related to the MIDP and duty
draw-back services.
We do not expect the uncertainty surrounding the MIDP to have any negative
impact on our prospects for the coming six months or until end 2009.
Government has in recent months confirmed its commitment to amend and
extend the programme, and we are confident that when the new programme is
finalised, we will be able to optimise on opportunities related thereto.
We have participated with government in the evaluation of a proposed
replacement incentive scheme for the SMEDP, which is expected to be
announced in the coming months. We expect the proposed programme to be
implemented in 2008 and will run for a six-year term till 2014.
Although we do not expect the new programmes to have an impact on our
numbers within the next period, we are looking forward to the opportunities
that will arise when government finally releases the new programmes. We
continue to expect solid returns from the SMEDP and other existing
programmes right through to 2012; we have a substantial client order book
related to the suspended SMEDP.
We will continue to pursue competitor acquisitions to increase our client
network and increase our national footprint and we are investigating
opportunities to diversify into government subsidies that are aimed at
assisting small enterprises to start or grow, in essence to develop
entrepreneurs.
Treasury Risk Management and Economic research
Despite the losses being incurred in our start up Australian operation,
this division has shown reasonable growth. Particularly pleasing is that
annuity income as a percentage of total income has increased to over 75%
where historically this has been between 60% and 70%. Prudent control of
costs has also had a positive effect.
This division is expecting an improved performance in the next six months,
due to a substantial pipeline of unrecognised income.
Specialist Audit and Verification Services
Although off a relatively small base this division has grown in line with
our expectations.
The BEE verification industry is plagued with uncertainties, resulting in
demand for verification certificates being adversely affected. We expect
these uncertainties to reduce early in the new year, but in the meantime we
are positioning ourselves to optimise on opportunities once these processes
have been finalised.
We will be considering acquisitions and/or joint ventures to broaden our
offering of audit services, more specifically customs and VAT related
services.
Business Development and Optimisation Services
The acquisition of a strategic stake in Global Vision after the interim
period is the first step to growth in this division with an expectation of
a significant contribution to earnings per share.
We are developing a suite of technology enabled global trade solutions to
be offered to our substantial client base of Importers and Exporters, and
are excited by the contribution that this area of our business will bring
in the long term.
We are also embarking on initiatives which will entail integrating some of
our related proprietary software, to create delivery efficiencies within
the Group.
General comments
Organic growth
We continue to mine the cross referral opportunities within our 2 000
strong client base, and expect organic growth to be the major contributor
to overall growth in the years to come.
Financial prospects
We remain confident that the forecasted headline earnings per share of 63,2
cents for year end February 2008 as well as the 78,5 cents for 2009 will be
achieved.
Traditionally our businesses have done substantially better in the second
half of the year, due largely to substantial numbers of our clients having
year ends in February.
By order of the Board
Frans Botha Trevor Hayter
Financial director CEO
Port Elizabeth
4 October 2007
For more information please visit www.iquad.co.za
Date: 04/10/2007 15:22:00 Produced by the JSE SENS Department.
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