| Tue 18 Mar 2008, 7:05 | | IFC - IFCA Tech - Audited Results For The Year Ended 31 December 2007 |
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IFC
IFC
IFC - IFCA Tech - Audited Results For The Year Ended 31 December 2007
IFCA TECHNOLOGIES LIMITED
Incorporated in the Republic of South Africa)
(Registration number 2006/030759/06)
Share code: IFC & ISIN: ZAE000088555
("IFCA Tech" or "the company")
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007
The audited results of IFCA Tech for the year ended 31 December 2007, as
compared to the 10 months ended 31 December 2006, are presented below:
Balance Sheet
Figures in Rand 31 Dec 2007 31 Dec 2006
R R
Assets
Non-Current Assets
Property, plant and equipment 5 698 813 2 679 882
Intangible assets 38 050 984 36 635 407
Deferred tax 995 513 -
44 745 310 39 315 289
Current Assets
Inventories 5 000 -
Current tax receivable 241 409 -
Trade and other receivables 3 924 094 5 755 897
Cash and cash equivalents 1 313 607 4 705 639
5 484 110 10 461 536
Non-Current asset held for sale 0 740 839
Total Assets 50 229 420 50 517 664
Equity and Liabilities
Equity
Share capital 42 585 965 42 585 965
Retained income 2 119 415 3 414 923
Minority interest 9 083
44 714 463 46 000 888
Liabilities
Non-Current Liabilities
Other financial liabilities 1 755 919 511 116
Deferred tax - 651 698
1 755 919 1 162 814
Current Liabilities
Other financial liabilities 74 777 82 006
Current tax payable 151 172 320 565
Trade and other payables 2 552 578 2 014 850
Deferred income 755 240 578 957
Provisions 225 271 357 586
3 759 038 3 353 962
Total Liabilities 5 514 957 4 516 776
Total Equity and Liabilities 50 229 420 50 517 664
Net asset value per share 44.71 46.00
(cents per share)
Net tangible asset value per 6.66 9.37
share (cents per share)
Number of shares in issue at 100 000 000 100 000 000
period end
Income statements
Figures in Rand Year ended 10 months ended
31 Dec 2007 31 Dec 2006
Revenue 12 221 802 14 750 428
Cost of sales (6 696 875) (4 882 476)
Gross profit 5 524 927 9 867 952
Other income 424 662 60 399
Operating expenses (8 848 861) (5 400 134)
Operating profit (2 899 272) 4 528 157
Investment revenue 213 610 85 450
Finance costs (139 026) (145 891)
Profit before taxation (2 824 688) 4 467 716
Taxation 1 538 263 (1 052 793)
Profit for the period (1 286 425) 3 414 923
Attributable to:
Equity holders of the parent (1 295 508) 3 414 923
Minority interest 9 083
Adjustments for headline
earnings:
- Profit on disposal of asset (356 652) (461)
- Impairment of loans -- 1 277
Headline (loss)/earnings for (1 643 077) 3 415 739
the period
(Loss)/Earnings per share (1.29) 3.76
(cents per share)
Headline (loss)/earnings per (1.64) 3.76
share (cents per share)
Weighted average number of 100 000 000 90 751 634
shares in issue
Statement of Changes in Equity
Figures in Rand Share capital Share premium Total share Retained
capital income
Balance at 01 -- -- -- --
March 2006
Profit for the 3 414 923
period
Issue of shares 100 000 43 533 370 43 633 370
Share issue (1 047 405) (1 047 405)
expenses
Total changes 100 000 42 485 965 42 585 965 3 414 923
Opening balance as 100 000 42 725 099 42 825 099 3 668 807
previously
reported
Errors affecting -- (239 134) (239 134) (253 884)
equity
Balance at 01 100 000 42 485 965 42 585 965 3 414 923
January 2007 as
restated
Loss for the year (1 295 508)
Balance at 31 100 000 42 485 965 42 585 965 2 119 415
December 2007
Figures in Rand Total Minority Total equity
attributable interest
to equity
holders of
the group
Balance at 01 -- -- --
March 2006
Profit for the 3 414 923 3 414 923
period
Issue of shares 43 633 370 43 633 370
Share issue (1 047 405) (1 047 405)
expenses
Total changes 46 000 888 46 000 888
Opening balance as 46 493 906 46 493 906
previously
reported
Errors affecting (439 018) (439 018)
equity
Balance at 01 46 000 888 46 000 888
January 2007 as
restated
Loss for the year (1 295 508) 9 083 (1 286 425)
Balance at 31 44 705 380 9 083 44 714 463
December 2007
Abridged Cash Flow Statement
Figures in Rand 31 Dec 2007 31 Dec 2006
R R
Cash flows from operating activities (431 464) 1 637 887
Cash flows from investing activities (4 198 142) (1 818 137)
Cash flows from financing activities 1 237 574 2 394 761
Total cash movement for the period (3 392 032) 2 214 511
Cash at the beginning of the period 4 705 639 2 491 128
Total cash at end of the period 1 313 607 4 705 639
Prior period errors:
Accounts receivable included an amount of R239 134, which related to share
issue expenses in the prior period. The payment of the creditor was
incorrectly captured against accounts receivable and has been corrected
against the share premium account.
No provision had previously been made for leave pay in accordance with IAS
27 - Provisions, Contingent Liabilities and Contingent Assets.
The correction of the errors resulted in adjustments as follows:
31 Dec 2007 31 Dec 2006
R R
Balance Sheet
Accounts receivable - (239 134)
Share premium - 239 134
Provisions - (357 586)
Deferred tax - 103 700
Income Statement
Employee cost - 357 586
Taxation expense - (103 700)
COMMENTARY
The board of directors present the company`s results for the year ended 31
December 2007 compared to the 10 month period ended 31 December 2006,
reflecting the second set of results since the company`s listing on
08 December 2006. The directors are disappointed to report that the results
have been unsatisfactory, due to a number of factors as outlined below.
These results are presented in accordance with IAS 34 - Interim Financial
Reporting and have been prepared in accordance with accounting policies
which comply with International Financial Reporting Standards ("IFRS") and
have been audited by RAiN, whose unqualified audit report is available for
inspection at the registered office of the company. Due to the decline in
turnover during the past year and the valuation of intellectual property
being based on future projections, the audit report contains an emphasis of
matter in relation to the carrying value of the intellectual property.
BACKGROUND, INCORPORATION AND NATURE OF BUSINESS
IFCA Technologies Limited was registered and incorporated as a public
company in the Republic of South Africa on 03 October 2006. IFCA Tech was
incorporated to act as the investment holding company for IFCA sWare
(Proprietary) Limited ("IFCA sWare"), being the main operating company of
the IFCA group for the 10 months ended 31 December 2006 and IFCA hWare
(Proprietary) Limited ("IFCA hWare"), a shelf company, which company was
dormant and conducted no business from incorporation until 31 December 2006.
hWare conducted the Computerised Business Equipment solutions enterprise
from 01 January 2007 onwards. The company listed on the Alternative
Exchange of the JSE Limited on 08 December 2006.
INDUSTRY AND BUSINESS OVERVIEW
IFCA sWare was originally formed for the sole purpose of marketing and
supporting the IFCA MSC Berhad ("IFCA MSC") Malaysian Group`s suite of
software products in Africa under license. The business originally paid 50%
of its software revenue to IFCA MSC in Malaysia in terms of its license
agreement and the business grew primarily through the use of Malaysian
consultants at a very high cost to the South African business. In September
2004, the IFCA Group in Malaysia vended in the Intellectual Property to the
suite of software products for the African continent and in return, took up
a 49.07% equity interest in IFCA sWare through its Malaysian listed company,
IFCA MSC.
IFCA sWare is an enterprise-wide integrated business solutions provider
providing industry specific software solutions for four business segments,
namely:
- Property Development and Management (known as Property+);
- Project Management, Engineering and Construction (known as Contract+);
- Hospitality (known as Resorts+, D`Hotel and D`Club); and
- Finance & Leasing (Loans+).
IFCA sWare`s solutions encompass the functionalities and features of
products that have been nurtured and matured for almost 20 years by the IFCA
group worldwide, from meeting the business needs of more than 1 200
customers and 16 000 registered users spread across four continents. IFCA
sWare`s customers include Blue Dot, Transnet Housing, The Country Club
Johannesburg, Blair Atholl, Arivia.kom, Kopanong Hotel and Conference
Centre, Eagle International Group Holding (Eagle Canyon), Atlantic Beach
Golf Club in Cape Town, The Botswana Housing Corporation, National Housing
Enterprise (Namibia) and the Swaziland National Housing Corporation.
The marketing and distribution of Computerised Business Equipment solutions
only commenced during the latter part of 2006 as a division of IFCA sWare.
As from 01 January 2007, these operations were conducted through IFCA hWare.
The two products being marketed by IFCA hWare are the mimio Xi and the
TOTalizer. The mimio Xi is a portable interactive whiteboard system that
captures and records writing off a whiteboard and, when in use with a PC and
projector, converts an ordinary whiteboard into a touch screen interactive
whiteboard. The TOTalizer utilises both hardware and software and is a
revolutionary stock taking system that can electronically measure the
quantity of items in any container in a pre-set unit of measure by simply
placing the item on the TOTalizer, such as liquor bottles in a bar or a
bottle or box of pills in a pharmacy. The TOTalizer then uploads the
electronic count directly to the TOTalizer`s proprietary software and
onwards to any other third party`s inventory software system. The TOTalizer
comes in several models for measuring the lightest of items such as pills to
items as heavy as those packed in pallets and kegs.
FINANCIAL OVERVIEW
The results for the year ended 31 December 2007 reflect a decline from the
prior period due to a number of factors described in more detail under
income statement review which resulted in a loss for the year. However, the
first two months of the year have shown a return to profitability, with the
problems of the prior year being substantially addressed. Losses
attributable to ordinary shareholders amount to R 1 286 425 compared to a
2006 profit of R3 414 923. Loss and headline loss per share for the year
ended 31 December 2007 is 1.29 and 1.64 cents per share compared to earnings
of 3.76 cents per share for the previous period.
Income statement review
Turnover declined from the prior year primarily due to a reduction in
turnover of R500 000 per month in IFCA sWare. One of the company`s larger
contracts was reduced due to the impending sale of the customer`s loan book,
following which ongoing development was cancelled. In addition, the company
suddenly lost a number of its Malaysian and Filipino contractors due to
crime incidents in South Africa. This initially caused problems at certain
customers, requiring the strengthening of the local staff complement.
However, on a positive note, this will have the longer-term benefit of
reducing costs through the use of local employees, and fast tracks the
company`s stated intention of promoting local training, expertise and
hiring.
Turnover in IFCA hWare was much lower than anticipated at the time of
listing due to a lack of uptake of international TOTalizer sales. However,
during June 2007, IFCA hWare signed a distribution agreement to appoint
Digitot International (Proprietary) Limited ("Digitot`) as the exclusive
distributor of the TOTalizer inventory control product to the hospitality
industry in South Africa and 13 other countries in Europe, South America,
Africa and the Middle East. Under the terms of the agreement, Digitot will
be marketing the TOTalizer products through its subsidiaries and
distribution channels located in these countries under the brand name,
`DigiTag`. IFCA hWare will continue to directly market the TOTalizer under
its current name to the manufacturing and pharmaceutical industries in South
Africa, we will also continue to seek distributors to market to these
industries, as well as the hospitality industries, in countries not covered
by Digitot. In the circumstances, hWare is pleased to report a much
improved level of turnover in the second half of the year compared to the
first six months.
Operating expenses increased by 64% as the group`s ability to immediately
reduce its operating costs in line with the reduced business was limited.
However, steps were taken in the second half of the year in order to
repatriate unnecessary resources and extraneous costs, which actions have
resulted in a return to profitability from January 2008. In addition,
operating costs were higher due to certain once-off costs as follows:
- During the year a provision for an amount of R273 165 was raised for
money that had been fraudulently transferred from the company`s
Standard Bank account through the internet banking system. This was
provided for because the bank is disputing liability and is refusing to
refund the company.
- Recruitment costs of R297 000were incurred due to, inter alia, a new
Chief Executive Officer being head hunted.
A deferred taxation asset was raised at year end against various assessed
losses in the group due to the recent return to profitability and the
likelihood of the tax losses being utilised in the foreseeable future.
Balance sheet review
Property, plant and equipment increased following the company`s relocation
to larger premises through the acquisition of Erf 235 Woodmead Extension 1
for a purchase consideration of R3 125 000. The company acquired larger
premises to accommodate an increased staff complement and relocated its
operations during April 2007, which has resulted in an increase in long-term
liabilities.
In turn, cash and cash equivalents have reduced as capital raised from the
listing has been applied towards the acquisition of the new property and
reducing interest bearing bond finance, until required for expansion of the
group as disclosed in the company`s prospectus.
Intangible assets increased due to the policy of capitalising development
costs and then amortising these costs over 5 years. This policy is
consistent with that of the controlling shareholder, which is listed in
Malaysia. The intangible asset, namely Intellectual Property, was tested
for impairment and, due to existing annuity income and a strong validated
pipeline of business, the Intellectual Property was not impaired.
Trade and other receivables decreased in line with lower turnover levels,
whilst trade payables primarily relate to amounts owed to the holding
company in relation to expatriate consultants.
Cash and cash equivalents decreased primarily as a result of the losses
being incurred by the business during the year.
Deferred income relates to contracts signed and invoiced towards year end,
which revenue is attributable to the following year.
The non-current asset held for sale in the prior year represents the cost of
the property previously occupied by IFCA Tech, which has been sold during
the current year.
Cash Flow Statement review
Cash generated by operations declined as a direct result of the business
operating at a loss for the period under review.
SUBSEQUENT EVENTS
Other than signing of new customers after year end, there are no subsequent
events to the date of this report.
DIVIDENDS
The directors have decided not to declare a dividend.
SEGMENTAL REPORTING
The company has presented segmental information as follows:
Revenue 12 months 10 months
ending ending
31 December 31 December
2007 2006
R R
Software Solutions 10 256 231 14 095 543
Computerised Business Equipment 2 035 571 654 885
Total 12 291 802 14 750 428
The Computerised Business Equipment division was transferred to IFCA hWare
as from 01 January 2007.
AUTHORISED AND ISSUED SHARE CAPITAL
There have been no changes to authorised and issued share capital during the
year under review.
ACQUISITIONS AND ISSUE OF SHARES FOR CASH
The company acquired larger premises to accommodate an increased staff
complement through the acquisition of Erf 235 Woodmead Extension 1 for a
purchase consideration of R3 125 000, which was settled though cash and bond
proceeds. There were no other acquisitions or issue of shares for cash
during the year under review.
DISPOSAL
As previously announced, through its 100% subsidiary BJS (Proprietary)
("BJS"), disposed of a property known as Erf 1935 Houghton Estates for a
sale consideration of R1 150 000. A profit after taxation of R354 526 was
realised on the disposal of the property.
DIRECTOR CHANGES
The following director changes occurred during the period under review:
Director Date Date
appointed resigned
Mr Craig Christensen (Chief 01 December
Executive Officer) 2007
Mr Boon Kee Wong ? (Chief 01 December
Executive Officer) 2007
The following director changes occurred subsequent to the period under
review:
Alternate Director to Mr KC Date appointed Date resigned
Yong
Mr Hiok Khiang Chan 19 February 2007
Alternate Director to Mr KK Date appointed Date resigned
Yong
Mr Ian Jeremy Jones 16 January 2008
Mr Nyu Kuan Leong 03 January 2008
COMPANY SECRETARY
Arcay Client Support (Proprietary) Limited was appointed as company
secretary with effect from date of incorporation of the company.
AUDITORS
RAiN acted as the company`s auditors for the period under review from date
of incorporation and will continue in office in accordance with section
270(2) of the Companies Act, 1973, as amended.
LITIGATION
There is no litigation pending against the company that is expected to have
a material impact on the company.
FUTURE PROSPECTS
The directors of the company believe that the company has excellent
prospects based on the following:
- the current position of existing signed business and annuity income
covering operating expenses;
- the expansion of product ranges into the existing client base;
- the expansion of the existing client base, with the signing of new
contracts during January and February 2008;
- excellent reference clients;
- the continued growth of the Computerised Business Equipment business
following the implementation of pilot projects with the Department of
Education in Gauteng and Kwazulu Natal for the mimio XI and growing
sales of the TOTalizer through Digitag;
- the ongoing reduction of consulting fees paid to international IFCA
consultants; and
- the training and upliftment of local employees.
The directors consider that the business prospects are sound based on the
above factors as well as the existing client base, levels of annuity income
and validated prospects in the pipeline, which are growing as a result of
the superior integrated product offering of the company.
By order of the Board
Dr CT Ndlovu C Christensen
Chairman Chief Executive Officer
17 March 2008
Johannesburg
Registered Office
Arcay House, Number 3 Anerley Road, Parktown, Johannesburg, 2193
PO Box 62397, Marshalltown, Johannesburg, 2107
Directors
Dr CT Ndlovu *(Chairman), C Christensen (CEO), CH Boshoff, MR
Gahagan*, KC Yong *, KK Yong *
* Non-executive
Designated Advisor Transfer Office
Arcay Moela Sponsors Link Market Services (Proprietary) Limited
(Proprietary) Limited
Date: 18/03/2008 07:05:02 Produced by the JSE SENS Department.
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