| Thu 27 Mar 2008, 17:14 | | IQG - Iquad Group Limited - Reviewed financial results for the year ended 29 |
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IQG
IQG
IQG - Iquad Group Limited - Reviewed financial results for the year ended 29
February 2008 of Iquad and its subsidiaries (Group)
Iquad Group Limited
(Incorporated in the Republic of South Africa)
(Previously Indevco Holdings (Proprietary) Limited)
Registration number: 2004/025177/06
Share code: IQG
ISIN: ZAE000101622
("Iquad" or "the Company")
Reviewed financial results for the year ended 29 February 2008 of Iquad and its
subsidiaries (Group)
Highlights and commentary
Investment incentives
The solid improvements in this division can largely be ascribed to the improved
operating efficiency achieved by the Department of Trade and Industry (DTI). The
relationship between industry consultants and the DTI has improved progressively
over the past twelve months due in part to the efforts of the Incentive
Consultants Association (ICA). Although the Small Medium Enterprise Development
Programme (SMEDP) was suspended in August 2006, there is still a strong pipeline
of future revenue through to 2012 from this programme.
We are excited about the launch of the Enterprise Growth Programme (EGP) which
has been identified as the replacement incentive scheme to the SMEDP to promote
growth and investment in general manufacture and tourism. In terms of
Government`s National Industrial Policy framework, this new scheme is due to be
launched in April 2008 and represents an excellent opportunity to expand our
marketing efforts and build a valuable pipeline of new projects and future fee
income. The EGP incentive is scheduled to run for a six year term from 2008 to
2014.
The MIDP export incentive programme has been the subject of a well publicised
review process which started in 2005. During the past financial year Government
pledged their support for a replacement incentive programme that would be World
Trade Organisation (WTO) compliant and would provide for benefits at similar
levels to those currently experienced by the industry.
Although a formal announcement on the future of the MIDP is only expected to be
made in August 2008, it is widely expected that the MIDP will continue in its
current form until the scheduled termination date of 2012. We do not foresee any
substantial change to our prospects in terms of the MIDP up to 2012, and are
confident that whatever new programme is implemented thereafter will present
opportunities for our Group.
Global trade services
Robust organic growth has led to solid growth in turnover and profits despite
some losses in a start-up operation in Australia. The improvement in turnover
can be ascribed primarily to growth of the client base. The ratio of annuity to
performance income continues to top 70%, and we expect this trend to continue.
Our duty draw-back division had solid organic growth, with an increase in the
number of clients serviced in excess of 25%. Particularly pleasing was the
diversification away from a dependence on the motor industry.
We have identified the outsourcing of global trade functions as a significant
growth opportunity for the year ahead and believe this is an area that is not
being fully exploited in many medium to large businesses. Our service offering
will involve the optimisation of the entire import/export value chain covering
areas ranging from treasury, trade finance to logistics and legislative
compliance (VAT and Customs). This service offering will be rolled out to
current as well as prospective clients active in the import and export industry
during the year ahead.
Business development
We expect recently established and newly acquired business units to
significantly increase their respective contributions in the year ahead. We have
plans to establish a specialised training company in the coming year.
Verification Services
Although growth in this division was very positive, the growth of our BEE
Verification business has been hampered by delays in the finalisation of the
process to accredit BEE Verification companies.
We are also expecting to diversify our product offerings in the audit arena, and
to extend these offerings to a broader spectrum of industries.
Impacts of current macro-economic climate
While the recent volatility and weakening of the rand will be positive for our
business, the higher interest rate environment and expected slowdown in growth
may have a negative effect in the short term. In the longer term this
environment could have a positive impact as Government may be inclined to
increase incentives to encourage businesses to invest in new ventures and expand
existing business.
Abridged consolidated income statements
Reviewed Audited
29 Feb 08 28 Feb 07
R`000 R`000
Revenue 62 353 47 636
Other operating income 12 17
Operating expenses (39 712) (29 047)
Income from associates 1 396 -
Operating profit 24 049 18 606
Interest received 1 748 566
Interest paid (778) (1 163)
Profit before taxation 25 019 18 009
Taxation 7 797 4 459
Profit after taxation for the year 17 222 13 550
Attributable as follows:
Minority interest 305 716
Equity holders of company 16 917 12 834
17 222 13 550
Earnings per share (cents)
Basic 65,5 56,1
Headline 65,5 56,0
Dividends per share (cents)
Interim 10,0 9,0
Final (proposed) 20,0 11,0
30,0 20,0
Number of shares (in thousands)
In issue 27 396 22 937
Weighted average 25 842 22 872
Abridged consolidated balance sheets
Reviewed Audited
29 Feb 08 28 Feb 07
R`000 R`000
Assets
Non-current assets 111 898 88 643
Property, plant and equipment 5 920 778
Goodwill 88 892 85 761
Intangible assets 281 39
Investment in associates 14 474 -
Investments 1 -
Deferred taxation 2 217 2 065
Amounts owing by related parties 113 -
Current assets 36 787 17 055
Work in progress 3 498 -
Trade and other receivables 15 887 8 746
Amounts owing by related parties 412 150
Taxation 575 1 262
Bank balances 16 415 6 897
Total assets 148 685 105 698
Equity and liabilities
Equity and reserves 127 105 90 707
Issued ordinary capital 100 832 75 353
Foreign currency translation reserve (168)
Accumulated profits 25 746 14 511
Attributable to equity shareholders of the 126 410 89 864
Company
Minority shareholders 695 843
Non-current liabilities 3 562 42
Shareholders` loans 3 262 -
Long-term liabilities - 42
Deferred taxation 300 -
Current liabilities 18 018 14 949
Trade and other payables 12 589 13 534
Amounts owing to related parties 1 595 -
Current portion of long-term borrowings 49 65
Taxation 2 790 1 350
Provisions 995 -
Total equity and liabilities 148 685 105 698
Abridged consolidated cash flow statements
Reviewed Audited
29 Feb 08 28 Feb 07
R`000 R`000
Cash flows from operating activities 16 493 13 356
Cash generated from operating activities 21 507 20 681
Interest received 1 492 566
Interest paid (587) (1 163)
Taxation paid (5 919) (6 728)
Cash flows from investing activities (30 242) 2 301
Expenditure to maintain operating capacity
Property, plant and equipment acquired (713) (371)
Proceeds of disposals of property, plant and 12 91
equipment
Expenditure for expansion
Property, plant and equipment acquired (4 752) -
Intangible assets acquired (68) -
Subsidiaries acquired (11 643) 2 581
Investment in associates (13 078) -
Cash flows from financing activities 23 267 (12 462)
Capital raised 29 062 1 276
Dividends paid (6 181) (6 522)
Shareholder loans repaid/(advanced) 3 457 (150)
Outside loans repaid (3 071) (7 066)
Increase in cash and cash equivalents 9 518 3 195
Cash and cash equivalents at beginning of the 6 897 3 702
year
Cash and cash equivalents at end of the year 16 415 6 897
Abridged consolidated statement of changes in equity
Attribu- Minority Total
table to share- equity
equity share- holders
holders of
the Company
R`000 R`000 R`000
Balance 1 March 2006 - Audited 23 709 299 24 008
Issue of share capital 55 385 - 55 385
Net profit for the year 12 834 716 13 550
Dividends (2 064) (118) (2 182)
Additional interest in subsidiaries - (54) (54)
Balance 1 March 2007 - Audited 89 864 843 90 707
Issue of share capital 33 667 - 33 667
Treasury shares (3 584) - (3 584)
Share buy-back (4 605) - (4 605)
Net profit for the year 16 917 305 17 222
Dividends (5 681) (500) (6 181)
Exchange differences on foreign (168) (263) (431)
subsidiaries
Acquisitions of subsidiaries - 310 310
Balance 29 February 2008 - Reviewed 126 410 695 127 105
Notes to annual reviewed results
Basis of preparation and accounting policies
These annual financial results have been compiled in accordance with
International Financial Reporting Standards (IFRS), and the disclosure
requirements in terms of IAS 34. 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, unless
stated otherwise.
Independent review
The Company`s auditors, PKF (PE) Inc, have reviewed the preliminary condensed
financial statements for the year ended 29 February 2008. Their unqualified
review report is available for inspection at the registered office of the
Company.
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,
less share issue expenses, amounted to R33 667 284.
Material subsequent events
On 1 March 2008 the company purchased a 60% interest in Entrepreneurs
Survival Solutions (Pty) Ltd (ESS). The acquisition was done by way of a
subscription for shares (13%) and by way of a sale of share (47%) from the
existing shareholders. The total consideration payable is R7,8 million. The
transaction is subject to certain conditions being met in respect of the
audited annual financial statements of ESS, which at the date of publication
of this report had not yet been finalised.
Property, plant and equipment
During the current period, property was acquired at a cost of R4,8 million
which has been partly financed by an Absa bond and the balance by the
Company`s cash resources.
Inventory
During the year the Group adopted a new accounting policy for the measurement
of work in progress. The Group has implemented a new customer management
system, which enables management to measure the extent of deferred cost.
Dividends
The directors of IQuad are pleased to announce that they have declared a final
dividend of 20 cents per share (interim 10 cents) on 27 March 2008.
The salient dates for the payment of this dividend are set out below:
Last day to trade cum dividend Friday 11 April 2008
Trading ex dividend commences Monday 14 April 2008
Record date Friday 18 April 2008
Payment date Monday 21 April 2008
Share certificates may not be dematerialised or rematerialised between
Monday, 14 April 2008, and Friday, 18 April 2008, both dates included.
Segment report
The group is divided into five main operational segments:
- Holding Company
- Investment Incentives
- Global Trade Services (previously Treasury Risk Management)
- Business Development (previously Business Optimisation)
- Verification Services
Segment Segment Segment
revenue profit assets
before
taxation
Segment reports: R`000 R`000 R`000
For the period ended 29
February 2008
Holding company - internal 5 260 16 215 121 151
customers
Holding company - external - - -
customers
Investment incentives 34 809 16 632 17 569
Global trade services - 211 - -
internal customers
Global trade services - 20 262 6 378 19 028
external customers
Business development - 85 - -
internal customers
Business development - 1 141 (611) 12 329
external customers
Verification services - - - -
internal customers
Verification services - 5 867 2 887 4 774
external customers
67 635 41 501 174 851
For the period ended 28
February 2007
Holding company - internal 3 459 1 969 90 058
customers
Holding company - external - - -
customers
Investment incentives 26 478 11 234 8 993
Global trade services 17 915 6 618 10 571
Business development - - - -
internal customers
Business development - 813 9 500
external customers
Verification services - - - -
internal customers
Verification services - 2 430 1 117 2 028
external customers
51 095 20 947 112 150
29 Feb 08 28 Feb 07
Reconciliation of segment R`000 R`000
profit
Total segment profit 41 501 20 947
Other profits 118 (1)
Elimination of intersegment (16 600) (2 937)
profits
Net profit before income tax 25 019 18 009
Business combinations
During the year the Group acquired a controlling interest in a number of
companies as follows:
On 1 May the Company acquired a 94,9% interest in the company IQuad
Technologies (Pty) Ltd for R9 318 610 in cash to facilitate a 30% acquisition
in Global Vision Information Technologies (Pty) Ltd.
On 1 January 2008, the Company purchased a 50% interest in IDEC (Pty) Ltd for
a cash consideration of R2 640 422.
Acquisitions of subsi- IDEC (Pty) IQuad Other Total
diaries Ltd Techno-
logies
(Pty) Ltd
R`000 R`000 R`000 R`000
Property plant and 58 - 217 275
equipment
Intangible asset - 158 158
Investments - 9 809 79 9 888
Trade and other 58 - 1 589 1 647
receivables
Cash and cash equivalents 412 - 49 461
Outside shareholders - (500) 191 (309)
Deferred taxation - - - -
Long-term liabilities (528) - (2 308) (2 836)
Trade and other payables - - (233) (233)
Taxation - - - -
Assets acquired - 9 309 (258) 9 051
Goodwill 2 640 10 403 3 053
Purchase consideration 2 640 9 319 145 12 104
Cash and cash equivalents (412) - (49) (461)
Paid by issue of shares - - - -
Cash out/(in)flow on 2 228 9 319 96 11 643
acquisition
For and behalf of the board
Trevor Hayter Frans Botha
(Chief Executive Officer) (Financial Director)
27 March 2008
Port Elizabeth
Registered Office: 5 Mangold Street, Newton Park, Port Elizabeth, 6045
Directors: TB Hayter (CEO), A Da Costa (Chairman)# *, P Malan #, DM Edwards,
JM Whittle, FJ Botha, S Cassiem #, PAG Wiese #
# Non executive * Independent Alternate to DE Edwards
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Ltd
Auditors: PKF PE Inc.
Designated Advisor: PSG Capital (Pty) Ltd
Date: 27/03/2008 17:14:09 Produced by the JSE SENS Department.
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