| Thu 28 May 2009, 15:52 | | IDE - Ideco Group Limited - Unaudited interim financial information |
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IDE
IDE
IDE - Ideco Group Limited - Unaudited interim financial information
IDECO GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number 2001/023463/06
Share Code: IDE
ISIN: ZAE000107579
("Ideco" or "the company" or "the group")
UNAUDITED INTERIM FINANCIAL INFORMATION
CONDENSED BALANCE SHEET
Unaudited Reviewed Audited
Figures in R`000 28 Feb 29 Feb 31 Aug
Notes 2009 2008 2008
Assets
Non-current assets
Property, plant and 1 6 645 11 121 6 828
equipment
Investment in associate 2 20 611 17 304 19 075
Other non-current assets 3 24 153 23 101 23 337
Deferred tax 3 226 1 508 1 829
54 635 53 034 51 069
Current assets
Inventories 11 879 4 616 11 136
Trade and other 16 274 31 502 23 576
receivables
Cash and cash 1 504 - 12
equivalents
29 657 36 118 34 724
Total assets 84 292 89 152 85 793
Equity and liabilities
Equity
Share capital and 21 287 21 287 21 287
premium
Retained income 17 361 18 027 19 585
38 648 39 314 40 872
Liabilities
Non-current liabilities
Long-term borrowings 2 541 5 772 2 639
Current liabilities
Current tax payable 319 327 392
Trade and other payables 14 776 20 237 17 687
Bank overdraft 6 416 3 411 2 804
Dividend payable - - -
Other current liability 21 592 20 091 21 399
43 103 44 066 42 282
Total liabilities 45 644 49 838 44 921
Total equity and 84 292 89 152 85 793
liabilities
Net asset value per 19,11 19,44 20,21
share (cents)
CONDENSED INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 18 months
ended ended ended
Figures in R`000 28 Feb 2009 29 Feb 2008 31 Aug 2008
Revenue 40 415 37 825 113 645
Cost of sales (26 608) (29 409) (80 954)
Gross profit 13 807 8 416 32 691
Other income 72 1 463 4 406
Operating expenses (18 713) (12 276) (37 660)
Operating loss (4 834) (2 397) (563)
Investment income 21 915 1 747
Finance costs (344) (492) (1 213)
Share of profit of 1 536 735 2 463
associate company
(Loss)/profit before tax (3 621) (1 239) 2 434
Taxation 1 397 464 562
credit/(expense)
(Loss)/profit (2 224) (775) 2 996
attributable to ordinary
shareholders
Number shares
- Issued 202 222 222 202 222 222 202 222 222
- Weighted 202 222 222 117 356 496 127 550 685
Headline loss per share (1,10) (0,66) (0,88)
(cents)
Basic (loss)/earnings (1,10) (0,66) 2,35
per share (cents)
Calculation of headline
loss
Net (loss)/profit (2 224) (775) 2 996
attributable to
shareholders
Adjusted for:
Profit on sale of assets (4 116)
Headline loss (2 224) (775) (1 120)
CONDENSED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 18 months
ended ended ended
Figures in R`000 28 Feb 2009 29 Feb 2008 31 Aug 2008
Cash 128 (10 129) (10 687)
generated/(utilised)
from operations
Investment income 21 915 1 747
Finance costs (344) (492) (1 213)
Taxation paid (92) (14 854) (16 887)
Net cash from operating (287) (24 560) (27 040)
activities
Net cash flow from (1 927) (46 495) (46 270)
investing activities
Net cash flows from 94 44 690 44 341
financing activities
Total cash movement for (2 120) (26 365) (28 969)
the year
Cash and cash (2 792) 22 954 26 177
equivalents at beginning
of period
Cash and cash (4 912) (3 411) (2 792)
equivalents at end of
period
STATEMENT OF CHANGES IN EQUITY
Share capital Retained Total
Figures in R`000 and premium income equity
Balance at 01 March 2006 - 4 376 4 376
Profit for the year - 22 213 22 213
Dividends - (10 000) (10 000)
Balance at 28 February - 16 589 16 589
2007
Balance at 1 March 2007 16 589 16 589
Issue of shares 21 287 21 287
Profit for the period 2 996 2 996
Balance at 31 August 2008 21 287 19 585 40 872
Balance at 1 September 21 287 19 585 40 872
2008
(Loss) for the period (2 224) (2 224)
Balance at 28 February 21 287 17 361 38 648
2009
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
6 months 6 months 18 months
ended ended ended
Figures in R`000 28 Feb 2009 29 Feb 2008 31 Aug 2008
Revenue
Biometric readers and 37 151 37 825 111 421
solutions
Biometric projects 3 264 - 2 224
Corporate and other - -
40 415 37 825 113 645
Operating profit/(loss)
Biometric readers and 1 341 3 475 12 812
solutions
Biometric projects (206) (1 037) (2 067)
Corporate and other (5 969) (4 835) (15 424)
Profit on sale of fixed 4 116
property
(4 834) (2 397) (563)
NOTES TO THE BALANCE SHEET
Unaudited Reviewed Audited
Figures in R`000 28 Feb 2009 29 Feb 2008 31 Aug 2008
1. Property, plant and
equipment
Land and buildings 4 708 8 996 4 678
Furniture and fixtures 634 517 650
Motor vehicles 463 549 506
Office equipment 43 52 56
IT equipment 797 1 007 938
6 645 11 121 6 828
2. Investment in
associate
Shares at cost 16 612 16 569 16 612
Equity accounted 3 999 735 2 463
earnings of associate
20 611 17 304 19 075
3. Other non-current
assets
Computer software 6 082 1 356 4 585
Intellectual property 1 500 1 500 1 500
rights
Licence fees 16 571 20 245 17 252
24 153 23 101 23 337
COMMENTARY
INTRODUCTION
Set out above are the unaudited interim financial results of Ideco for the six
months ended 28 February 2009.
BASIS OF PREPARATION
The interim financial information has been prepared in accordance with, and
containing the information required by, IAS 34: Interim Financial Reporting,
International Financial Reporting Standards, the International Financial
Reporting Interpretations Committee interpretations adopted by the Accounting
Practices Board, the South African Companies Act and the JSE Limited Listings
Requirements. The accounting policies adopted in the preparation of the
provisional financial information are consistent with those used to prepare the
financial statements for the eighteen months ended 31 August 2008.
NATURE OF THE BUSINESS
Ideco runs its operations through wholly owned subsidiaries:
Ideco Biometric Security Solutions (Pty) Limited ("IBSS") which distributes
and supports fingerprint scanners for access control and time-and-attendance
solutions through its partner network which covers the entire country.
Ideco Technologies (Pty) Limited provides large-scale biometric and identity
management projects which typically range from 12 to 60 months in duration.
Ideco Biometrix (Pty) Limited ("Biometrix") supplies biometric equipment to the
public sector.
Ideco AFISwitch (Pty) Limited operates a system developed by Ideco to provide
automated criminal background checks to the private sector and members of the
public.
Ideco also has a 30% interest in Kroll Background Screening (Pty) Limited
("Kroll") - South Africa`s biggest background screening business.
FINANCIAL OVERVIEW
Balance sheet
Property, plant and equipment decreased from R11,1 million at 29 February 2008
to R6,6 million at 28 February 2009, mainly due to the disposal of office space
in Bryanston in order to occupy bigger rented space, also in Bryanston, to make
provision for a bigger staff complement. Details of the investment in an
associate and other non-current assets are contained in notes to the interim
financial statements. The licence fees of R16,6 million referred to in note 3 is
in respect of a liability to Sagem, which entitles Ideco AFISwitch to make use
of the South African Police Service ("SAPS") AFIS. The payment of this amount is
part of Ideco AFISwitch`s agreement with SAPS regarding the criminal background
checking service. This amount will be amortised over the remaining period of the
agreement with SAPS.
Inventories consist of biometric readers held in IBSS - the subsidiary focused
on the access control and time & attendance business and licence cards for the
Namibian drivers` licence project. The inventory increased to R11,9 million at
28 February 2009 compared to R4,6 million at 29 February 2008 due to the higher
trading activity in IBSS and the purchasing of the drivers` licence cards. Trade
and other receivables decreased from R31,5 million at 29 February 2008 to R16,3
million at 28 February 2009. The balance as at 29 February 2008 included an
amount of R15,0 million, which was receivable by Biometrix, and which was
settled subsequent to that year-end.
The non-current liability of R2,5 million is a long-term loan, which is secured
by a bond registered over the property in Centurion South Africa. The directors
estimate that the current market value of this property is in excess of R3,0
million.
Trade and other payables decreased by R5,4 million from 29 February 2008 to 28
February 2009. The trade payables on 29 February 2009 included the cost of the
sale by Biometrix referred to in the previous paragraph, but such decrease was
off-set by higher trade payables in IBSS due to the increased level of sales.
The other current liability of R21,6 million consists of the liability to Sagem
which was taken on in respect of the SAPS AFIS referred to previously. This
amount is repayable over a period of ten months from cash flows generated by the
criminal background checking service.
Income statements
The headline loss of R2,2 million for the unaudited six months ended 28 February
2009 is R1,4 million higher than in the corresponding unaudited six months ended
29 February 2008, but it is in line with expectations.
IBSS continued to show good growth. Revenue for the unaudited six months ended
28 February 2009 was 42% higher than in the corresponding unaudited six months
ended 29 February 2008. Operating profit increased by 47% for the unaudited six
months ended 28 February 2009, compared to the unaudited six months ended 29
February 2008.
Ideco Technologies and Biometrix, the two companies that mostly deal with
government departments, showed a decline of R9 million in revenue. Revenue for
Ideco AFISwitch was more than double compared to the corresponding reporting
period.
CAPITAL COMMITMENTS
There are no capital commitments that have been approved by the directors as at
the date of this report.
PROSPECTS
Ideco Biometric Security Solutions
It is expected that the strong growth in this division will continue to be
fuelled by growing demand in South Africa and sales extension in Sub-Saharan
Africa. So far, the global economic melt-down has not had a serious effect on
the business of IBSS. The new products introduced to the market which was
reported on before, are gradually adding to the company`s revenue streams.
Ideco Technologies
The issuing of drivers` licences in Namibia, a project won by Ideco in
partnership with Business Connexion and reported on previously, commenced in
December 2008. It is estimated that a total of 200 000 drivers` licences will be
issued over the initial contract period of five years. Ideco has also been
appointed as a subcontractor on a project to digitise 37 million manual records
for a government department. The project site is being prepared and the project
will be completed by the end of 2010.
Furthermore, the company is awaiting the adjudication of several large tenders
which, if awarded to Ideco, will increase the budgeted earnings for the years
ending 31 August 2010 and beyond.
Ideco Biometrix
Revenue from biometric equipment supplied to government departments is expected
to show modest growth. Ideco has been appointed as a subcontractor to supply a
large volume of biometric devices for a government project, which will commence
in the current financial year and be completed over a two-year period.
Ideco AFISwitch
The full implementation of the service has been hampered by delays, but the
directors are confident that major matters delaying the implementation have been
addressed. Once this service is fully implemented , it will provide a
predictable annuity revenue flow to the group and become the biggest contributor
to group profit. The company concluded an agreement in May 2009 for the identity
management of more than 300 000 profiles, where a monthly fee per profile will
be earned by the company.
Other
Ideco`s investment in Kroll continues to perform well, and in spite of the
economic slow-down, still performs in line with budget.
Ideco`s venture in biometric solutions for financial transactions and in the
medical field is gaining momentum and the group is confident that this business
will soon be a major contributor to group revenue and profits.
POST BALANCE SHEET EVENTS
There are no material post balance sheet events to report on.
DIVIDEND
No dividend has been declared for the period.
CORPORATE GOVERNANCE
The directors and senior managers of the company endorse the Code of Corporate
Practices and Conduct as set out in the King II Report on Corporate Governance.
By order of the board
Vhonani Mufamadi H B Aucamp
CEO CFO
CORPORATE INFORMATION
Executive directors:
V Mufamadi (CEO); H B Aucamp (CFO)
Non-executive directors:
A X Sisulu; M F Kekana; R Troester (German)
Registration number:
2001/023463/06
Registered address:
13 Wellington Road, Parktown, Johannesburg, 2193
Postal address: P O Box 130353, Bryanston, 2021
Company secretary:
H B Aucamp Telephone (011) 745 5600 Facsimile (011) 745 5615
Transfer secretaries:
Computershare Investor Services (Pty) Limited
Legal advisors:
DLA Cliffe Dekker Hofmeyr Inc
Designated advisor:
QuestCo Sponsors (Pty) Limited
www.ideco.co.za
Date: 28/05/2009 15:52:05 Produced by the JSE SENS Department.
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