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IDE
IDE
IDE - Ideco Group Limited - Unaudited consolidated results for the six
months ended 29 February
IDECO GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2001/023463/06)
("Ideco" or "the Company" or "the Group")
Share code: IDE ISIN code: ZAE000107579
Unaudited consolidated results for the six months ended 29 February 2012
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Audited
R`000 29 February 28 February 31 August
2012 2011 2011
ASSETS
Non-current assets 86 500 78 912 75 806
Property, plant and equipment 9 190 9 899 9 809
Investment in associate - 533 -
Intangible assets 51 421 57 535 54 752
Other long-term financial 15 788 - -
asset
Deferred tax 10 101 10 945 11 245
Current assets 33 300 22 015 27 368
Inventories 444 1 736 2 163
Trade and other receivables 23 458 16 130 22 146
Current portion of other long- 3 760 - -
term financial asset
Cash and cash equivalents 5 638 4 149 3 059
Non-current assets held for - 25 268 16 932
sale
Total assets 119 800 126 195 120 106
EQUITY AND LIABILITIES
Equity 26 474 20 799 20 937
Share capital 1 1 1
Share premium 21 286 21 286 21 286
Retained income/(accumulated 5 187 (488) (350)
loss)
Liabilities
Non-current liabilities 51 078 48 817 50 030
Long-term borrowings 45 292 42 296 43 877
Deferred tax 5 786 6 521 6 153
Current liabilities 42 248 43 039 45 647
Current tax payable 245 548 568
Trade and other payables 10 717 9 002 10 188
Current portion of non-current 311 287 298
liabilities
Bank overdraft 4 254 5 999 7 724
Provisions 1 358 1 840 1 506
Other financial liabilities 25 363 25 363 25 363
Liabilities associated - 13 540 3 492
directly with non-current
assets held for sale
Total liabilities 93 326 105 396 99 169
Total equity and liabilities 119 800 126 195 120 106
Net asset value per share 13,09 10,29 10,35
(cents)
Net tangible asset value per (14,47) (20,35) (19,24)
share (cents)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Audited
R`000 Six Six Year ended
months ended months ended 31 August
29 February 28 February 2011
2012 2011
Continuing operations
Revenue 52 630 40 312 99 689
Cost of sales (15 973) (10 890) (35 933)
Gross profit 36 657 29 422 63 756
Other income 121 36 1 067
Operating expenses (29 048) (24 278) (51 246)
Earnings before interest, tax, 7 730 5 180 13 577
depreciation and amortisation
Depreciation (863) (851) (1 999)
Amortisation (3 338) (2 450) (5 354)
Operating profit 3 529 1 879 6 224
Investment revenue 1 147 101 168
Finance costs (3 195) (3 369) (6 624)
Profit on sale of discontinued 4 841 - -
operation
Profit/(loss) before tax 6 322 (1 389) (232)
Taxation expense (2 509) (494) (2 069)
Profit/(loss) for the period 3 813 (1 883) (2 301)
from continuing operations
Profit for the period from 1 724 787 1 343
discontinued operations
Profit/(loss) for the period 5 537 (1 096) (958)
Other comprehensive income - - -
Total comprehensive 5 537 (1 096) (958)
profit/(loss) attributable to
ordinary shareholders
Profit/(loss) per share
Basic and diluted basic 2,74 (0,54) (0,47)
profit/(loss) per share
(cents)
Continuing operations 1,89 (0,93) (1,14)
Discontinued operations 0,85 0,39 0,67
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Audited
R`000 Six Six Year ended
months ended months ended 31 August
29 February 28 February 2011
2012 2011
Cash generated by operations 10 038 4 491 7 081
Investment income 1 147 101 168
Finance costs (3 861) (3 369) (6 624)
Taxation paid (2 057) (1 549) (3 771)
Net cash flow from operating 5 267 (326) (3 146)
activities
Net cash flow from investing
activities
Acquisition of property, plant (459) (161) (1 413)
and equipment
Acquisition of intangible (6) (118) (241)
assets
Proceeds on disposal of 20 200 - -
subsidiary
Cash transferred to disposal (833) (227) (529)
group
Cash obtained on acquisition - - 90
Loan to finance the sale of (19 547) - -
subsidiary
Net cash flow from investing (645) (506) (2 093)
activities
Net cash flows from financing
activities
Repayment of long-term (144) (129) (268)
borrowings
Movement of other financial 1 571 1 571 3 302
liabilities
Net cash flows from financing 1 427 1 442 3 034
activities
Total cash movement for the 6 049 610 (2 205)
period
Cash at beginning of period (4 665) (2 460) (2 460)
Total cash at end of period 1 384 (1 850) (4 665)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Audited
R`000 Six Six Year ended
months ended months ended 31 August
29 February 28 February 2011
2012 2011
Ordinary share capital
Balance at beginning of period 1 1 1
Issue of shares - - -
Balance at end of period 1 1 1
Share premium
Balance at beginning of period 21 286 21 286 21 286
Issue of shares - - -
Balance at end of period 21 286 21 286 21 286
Retained income
Balance at beginning of period (350) 608 608
Total comprehensive 5 537 (1 096) (958)
profit/(loss) for the period
Balance at end of period 5 187 (488) (350)
Total shareholders` equity at 26 474 20 799 20 937
end of period
PROFIT/(LOSS) PER SHARE
Unaudited Audited
R`000 Six Six Year ended
months ended months ended 31 August
29 February 28 February 2011
2012 2011
Calculation of headline
profit/(loss)
Total comprehensive 5 537 (1 096) (958)
profit/(loss) attributable to
ordinary shareholders
Adjusted for:
Profit on sale of subsidiary (4 841) - -
Impairment of goodwill - - 460
Loss on sale of property, - - 1
plant and equipment
Tax effect on headline 678 - -
earnings adjustments
Headline profit/(loss) 1 374 (1 096) (497)
Continuing operations (350) (1 883) (1 841)
Discontinued operations 1 724 787 1 344
Headline and diluted headline 0,68 (0,54) (0,25)
profit/(loss) per share
(cents)
Continuing operations (0,17) (0,93) (0,91)
Discontinued operations 0,85 0,39 0,67
Number of shares
- Issued and weighted 202 222 222 202 222 222 202 222 222
DISCONTINUED OPERATIONS
IDECO BIOMETRIC SECURITY SOLUTIONS (PTY) LIMITED
Date of sale: 15 December 2011
Unaudited Audited
R`000 Period Six Year
ended months ended ended
15 December 28 February 31 August
2012 2011 2011
Results of discontinued
operations
Revenue 12 439 31 510 39 176
Expenses (10 473) (30 192) (37 796)
Profit from operating 1 966 1 318 1 380
activities
Taxation expense (242) (531) (37)
Profit from discontinued 1 724 787 1 343
operations
Net cash flows attributable to
the discontinued operation:
Net cash flows from/(utilised 981 (3 508) (4 168)
in) operating activities
Net cash flows (utilised (215) (49) 4 536
in)/from investing activities
Net cash flows (utilised (462) 3 624 -
in)/from financing activities
Net increase in cash and cash 304 67 368
equivalents
Non-current assets held for
sale
Property, plant and equipment 434 134 274
Intangible assets 3 058 3 058 3 058
Deferred tax asset 31 56 272
Inventories 4 136 6 370 3 461
Trade and other receivables 19 332 15 423 9 338
Cash and cash equivalents 833 227 529
Total assets 27 824 25 268 16 932
Liabilities associated
directly with non-current
assets held for sale
Trade and other payables 13 122 13 540 3 492
Total liabilities 13 122 13 540 3 492
Effect of the disposal on the
financial position of the
Group
Proceeds on sale of subsidiary 20 200
Profit after expenses and 4 841
adjustments
Tax on sale transaction (678)
Consolidated profit net of tax 4 163
SEGMENTAL ANALYSIS
Discontinued operations
R`000 Biometric Adjustments Total
readers and and
solutions eliminations
Unaudited 29 February 2012
Revenue from external 11 946 - 11 946
customers
Intersegment revenue 493 (493) -
Total revenue 12 439 (493) 11 946
Depreciation and (55) - (55)
amortisation
Operating profit/(loss) 2 632 238 2 870
Investment income - - -
Finance costs (666) 85 (581)
Profit/(loss) before tax 1 966 323 2 289
Taxation (expense)/credit (242) - (242)
Total assets - - -
Total liabilities - - -
Unaudited 28 February 2011 -
Revenue from external 31 510 - 31 510
customers
Intersegment revenue - - -
Total revenue 31 510 - 31 510
Depreciation and (48) - (48)
amortisation
Operating profit/(loss) 1 318 1 540 2 858
Investment income - - -
Finance costs - - -
Profit/(loss) before tax 1 318 1 540 2 858
Taxation (expense)/credit (531) - (531)
Total assets 25 268 - 25 268
Total liabilities (24 608) 11 068 (13 540)
Audited 31 August 2011
Revenue from external 39 176 - 39 176
customers
Intersegment revenue - - -
Total revenue 39 176 - 39 176
Depreciation and (102) - (102)
amortisation
Operating profit/(loss) 1 380 4 604 5 984
Investment income - - -
Finance costs - - -
Profit/(loss) before tax 1 380 4 604 5 984
Taxation (expense)/credit (37) - (37)
Total assets 16 932 - 16 932
Total liabilities (15 715) 12 223 (3 492)
Continued operations
R`000 Biometric Secure Biometric
readers and credentialing projects
solutions services
Unaudited 29 February 2012
Revenue from external - 46 290 6 833
customers
Intersegment revenue - 9 134 -
Total revenue - 55 424 6 833
Depreciation and - (2 253) (572)
amortisation
Operating profit/(loss) (27) 8 968 (2 100)
Investment income - 70 -
Finance costs - (2 774) -
Profit/(loss) before tax (27) 6 264 (2 100)
Taxation (expense)/credit 8 (2 655) 588
Total assets 6 519 72 252 4 894
Total liabilities (464) (80 612) (3 567)
Unaudited 28 February 2011
Revenue from external 93 34 460 5 759
customers
Intersegment revenue - 544 -
Total revenue 93 35 004 5 759
Depreciation and - (1 523) (320)
amortisation
Operating profit/(loss) (59) 8 144 (1 567)
Investment income - 101 -
Finance costs - (2 832) -
Profit/(loss) before tax (59) 5 413 (1 567)
Taxation (expense)/credit 16 (2 385) 439
Total assets 6 467 62 728 9 602
Total liabilities (9) (77 390) (5 377)
Audited 31 August 2011
Revenue from external 407 78 710 20 572
customers
Intersegment revenue - 9 300 -
Total revenue 407 88 010 20 572
Depreciation and - (3 089) (1 091)
amortisation
Operating profit/(loss) 45 18 261 (3 487)
Investment income - 168 -
Finance costs - (5 754) -
Profit/(loss) before tax 45 12 676 (3 487)
Taxation (expense)/credit (13) (5 383) 974
Total assets 6 543 68 710 9 269
Total liabilities (469) (80 679) (6 429)
Continued operations
R`000 Corporate Adjustments Total
and
eliminations
Unaudited 29 February 2012
Revenue from external - - 53 123
customers
Intersegment revenue - (9 134) -
Total revenue - (9 134) 53 123
Depreciation and (64) (1 312) (4 201)
amortisation
Operating profit/(loss) (2 000) (1 550) 3 291
Investment income 1 077 - 1 147
Finance costs (421) (85) (3 280)
Profit/(loss) before tax 6 437 (4 575) 5 999
Taxation (expense)/credit (817) 367 (2 509)
Total assets 64 273 (28 138) 119 800
Total liabilities (49 751) 41 068 (93 326)
Unaudited 28 February 2011
Revenue from external - - 40 312
customers
Intersegment revenue - (544) -
Total revenue - (544) 40 312
Depreciation and (146) (1 312) (3 301)
amortisation
Operating profit/(loss) (3 327) (2 852) 339
Investment income - - 101
Finance costs (537) - (3 369)
Profit/(loss) before tax (3 864) (2 852) (2 929)
Taxation (expense)/credit 1 069 367 (494)
Total assets 56 997 (34 867) 100 927
Total liabilities (45 997) 36 917 (91 856)
Audited 31 August 2011
Revenue from external - - 99 689
customers
Intersegment revenue - (9 300) -
Total revenue - (9 300) 99 689
Depreciation and (549) (2 624) (7 353)
amortisation
Operating profit/(loss) (5 641) (7 558) 1 620
Investment income - - 168
Finance costs (870) - (6 624)
Profit/(loss) before tax (6 512) (7 558) (4 836)
Taxation (expense)/credit 1 619 734 (2 069)
Total assets 53 836 (35 184) 103 174
Total liabilities (44 934) 36 834 (95 677)
Biometric products: this segment focuses on selling biometric products to
the private and public sectors. With the sale of Ideco Biometric Security
Solutions (Pty) Limited ("IBSS"), this segment was discontinued with effect
from 15 December 2011;
Credentialing services: this segment provides criminal record checks and
background screening services to employers; and
Biometric solutions and projects: this segment focuses on large biometric
projects and related solutions in the public and private sectors.
The accounting policies used for the above operating segments are the same
as those described in the basis of preparation. Biometric products were
almost exclusively sold within South Africa.
The revenue of the credentialing services segment is generated by Ideco
AFISwitch (Pty) Limited ("Ideco AFISwitch") and Managed Integrity Evaluation
("MIE").
Approximately a third of the revenue generated by the biometric solutions
and projects segment was generated in Namibia with the Namibian drivers
licence contract.
COMMENTARY
Introduction
Set out above are the unaudited condensed consolidated interim results of
Ideco in respect of the six months ended 29 February 2012.
BASIS OF PREPARATION
The condensed consolidated financial statements have been prepared using
accounting policies consistent with International Financial Reporting
Standards ("IFRS"), the AC 500 standards as issued by the Accounting
Practices Board and contain the information required by IAS 34: Interim
Financial Reporting, the South African Companies Act No 71 of 2008, as
amended and the JSE Limited Listings Requirements. The accounting policies
adopted in the preparation of the unaudited financial information are
consistent with those used to prepare the last annual financial statements.
These interim results have not been audited or reviewed by the group`s
auditors.
These unaudited consolidated interim results have been compiled under the
supervision of the Financial Director, HB Aucamp.
FINANCIAL OVERVIEW
Earnings before interest, tax, depreciation and amortisation ("EBITDA") of
R7,7 million was achieved for the six months ended 29 February 2012,
compared to R5,2 million for the comparative six months period ended 28
February 2011 in respect of continuing operations. This represents an
increase of 49%. There was a total comprehensive profit attributable to
ordinary shareholders of R5,5 million, compared to a loss of R1,1 million
for the corresponding six month reporting period. The profit of R5,5 million
included an after tax profit of R4,2 million on the sale of IBSS and an
after tax profit of R1,7 million profit from discontinued operations.
The operating profit of the secure credentialing segment increased by 10%
from for the reporting period compared to the six months ended 28 February
2011. Biometric projects reported an operating loss of R2,1 million for the
reporting period, compared to an operating loss of R1,6 million for the six
months ended 28 February 2011. Group operating profit from continuing
operations increased from R339 000 for the six months ended 28 February 2011
to R3,3 million for the six months ended 29 February 2012.
Group revenue from continued operations increased by 32% from R40,3 million
to R53,1 million. Revenue of secure credentialing services increased by
R11,8 million (34,3%). Revenue of biometric projects increased from R5,8
million to R6,8 million.
The gross profit percentage of continued operations decreased slightly from
73% to 69,7% because a relative higher volume of biometric readers, with a
lower gross profit margin, was sold in the secure credentialing segment
compared to the six months ended 28 February 2011.
Non-current assets increased by R7,6 million as at 29 February 2012 compared
to 28 February 2011, mainly as a result of the increase in the other long
term financial asset and a reduction of intangible assets as a result of the
sale of IBSS.
Trade and other receivables increased by R7,4 million (46%), due to the
increased sales in the secure credentialing segment. The current portion of
the other long term financial asset of R3,8 million, relating to the sale of
IBSS, resulted in total current assets increasing from R22 million as at 28
February 2011 to R33,3 million as at 29 February 2012.
Long-term borrowings increased by R3 million mainly as a result of the
provision for the dividend on the "B" cumulative preference share issued to
the National Empowerment Fund ("NEF").
Trade and other payables increased by R1,7 million as a result of the
increase in sales in the secure credentialing segment.
The other financial liability consists of an amount of R25,4 million due to
Morpho South Africa (Pty) Limited ("Morpho") which was taken over in respect
of the SAPS AFIS. As reported in the 2011 annual report, this liability is
currently subject to an arbitration between Ideco and Morpho.
PROSPECTS
Credentialing Services
The criminal record checking service, conducted by Ideco AFISwitch, will
continue to grow. Volumes have increased steadily since July 2011. The
company is now running at full capacity of the current SAPS AFIS, but an
increase in capacity is being implemented, which will allow further growth
in the service.
MIE has been experiencing increasing demand for its services and has also
acquired new contracts that will further increase revenue during the
remainder of the financial year and beyond. The company has also developed
new products that are ready for market and has embarked on an expansion into
neighbouring countries.
Biometric Projects
This segment continues to be hampered with long sales cycles and government
tenders that are issued, but then are almost always postponed or cancelled.
The segment has four running contracts and there are good prospects to
increase it further outside the government sphere.
CAPITAL COMMITMENTS
There are no capital commitments that have been approved by the directors as
at the date of this report.
EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD
A circular was mailed to shareholders on 18 May 2012 containing the proposed
change of name to Muvoni Technology Group Limited, the adoption of a new
Memorandum of Incorporation, the conversion of its par value shares to no
par value share and the adoption of a Share Appreciation Rights Scheme.
The directors are not aware of any significant events that have occurred
between 29 February 2012 and the date of this report that may materially
affect the results of the Group for the period under review or their
financial position as at 29 February 2012 other than noted above.
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 III Report on
Corporate Governance.
By order of the board
Vhonani Mufamadi HB Aucamp
Chief Executive Officer Chief Financial Officer
31 May 2012
Directors: V Mufamadi (Executive Chairman), HB Aucamp (Financial Director),
AX Sisulu-Dunstan*, MJ Kekana*, JA Vorster*
* Independent non-executive
Registered office: 267 West Street Centurion 0157. P O Box 7416, Centurion
0046.
Company secretary: HB Aucamp, CA(SA).
Designated advisor: Sasfin Capital (a division of Sasfin Bank Limited).
Transfer secretaries: Computershare Investor Services Proprietary Limited.
Date: 31/05/2012 12:55:03 Produced by the JSE SENS Department.
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