| Wed 30 May 2001, 0:00 | | Oai Audited Group Results For The Year Ended 28 Fe |
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Omega Alpha International Information Technology Holdings Limited.
Incorporated in the Republic of South Africa
(Registration number 1993/005274/06)
("OAI")
Consolidated Income Statement for the year ended
28 February 2001
2001 2000
R000 R000
Revenue 104 236 107 183
Cost of sales 27 826 18 925
Gross profit 76 410 88 258
Other operating income 130 16
76 540 88 274
Administrative expenses 36 569 26 348
Amortisation of premium on acquisition 890 445
Listing expenses - 9 001
Profit before finance costs 39 081 52 480
Net finance costs 1 616 9
Profit on ordinary activities before
taxation 37 465 52 471
Taxation 8 532 4 157
Net profit for the year 28 933 48 314
Basic earning per share (cents) 15,2 26,8
Headline earnings per share (cents) 15,7 32,1
Weighted average number of shares in
issue (000s) 190 000 180 000
Consolidated Balance Sheet at 28 February 2001
2001 2000
R000 R000
Assets
Non-current assets
Tangible assets 1 446 4 350
Intellectual property 16 478 17 570
Premium on acquisition 16 487 17 377
Total non-current assets 34 411 39 297
Current assets
Contracts in progress 5 875 3 177
Accounts receivable 66 411 57 428
Shareholder's loan 17 476 16 847
Short term investment 24 400 -
Cash and cash equivalents 4 145 195
Total current assets 118 307 77 647
152 718 116 944
Equity and liabilities
Capital and reserves
Ordinary share capital 190 190
Non distributable reserves 65 65
Foreign currency reserve 581 1 488
Distributable reserves 98 230 69 297
Total capital and reserves 99 066 71 040
Non-current liabilities
Deferred tax 782 600
Long-term loans 5 278 1 904
Total non-current liabilities 6 060 2 504
Current liabilities
Accounts payable 34 204 19 490
Bank overdrafts 901 340
Taxation 12 487 3 556
Short term loan - 20 014
Total current liabilities 47 592 43 400
152 718 116 944
Consolidated Cash Flow Statement at 28 February 2001
2001 2000
R000 R000
Cash flow from operating activities
Cash generated by operations 45 293 18 580
Investment income 800 12
Finance costs (2 416) (21)
Net cash flow from operating activities 43 677 18 571
Cash flow from investing activities
Purchase of intellectual property - (14 000)
Proceeds on sale of fixed assets 2 920 -
(Advance)/repayment of shareholder's loan (629) 393
Purchase of fixed assets - expansion (1 540) (7 469)
Short term investment (24 400) -
Acquisition of subsidiary - (19 812)
Net cash flow from investing activities (23 649) (40 888)
Cash flow from financing activities
Proceeds on issue of shares - -
Change in net debt (16 640) 21 918
Net cash flow from financing activities (16 640) 21 918
Net change in cash and cash equivalents 3 388 (399)
Cash and cash equivalents at beginning
of year (144) 255
Cash and cash equivalents/(overdraft)
at end of year 3 244 (144)
Statement of movement in equity for the year ended
28 February 2001
All amounts R000 Share Share Translation
Capital Premium Reserve
Balance at 1 March 2000 190 - 1 488
Net gains and losses not
recognised in the income
statement - currency
translation differences - - (907)
Net profit for the year per
the income statement - - -
Balance at 28 February 2001 190 - 581
(Continued)
All amounts R000 Non
Distributable Accumulated
Reserve Profit Total
Balance at 1 March 2000 65 69 297 71 040
Net gains and losses not
recognised in the income
statement - currency
translation differences - - (907)
Net profit for the year per
the income statement - 28 933 28 933
Balance at 28 February 2001 65 98 230 99 066
Notes
1 Taxation
In terms of current South African tax legislation, taxation has been
provided at 30% on the after tax profit of the company's subsidiary in
Mauritius, which will become payable should it be necessary for the foreign
subsidiary to remit dividends to the company.
2 Accounts receivable
Some of the debtors in respect of VoiceTec products have been granted
extended terms of payment.
3 Shareholder's loan
The company is currently negotiating new terms of repayment.
4 Short term investment
The short term investment has been ceded to a banking institution as
security for the discounting of debtors referred to in note 2.
COMMENT
Group results
OAI's audited results for the year ended 28 February 2001 indicate that the
group has successfully overcome a number of unavoidable setbacks to
nevertheless return pre-tax profits of R37,5 million on revenues of R104
million and headline earnings per share of 15,7 cents.
A cautionary announcement to shareholders was published on 22 May 2001
indicating that OAI would not meet its forecasted 40% per annum compounded
organic growth during its financial year to end February 2001 due to certain
contracts being deferred as the result of recent government developments.
This is discussed in more detail below.
The unforeseen issues that OAI encountered during the year included:
* The post year-end deferment and renegotiation of several major contracts
as a result of local government restructuring prior to the elections last
year. The revenue comprising about R50 million relevant to these deferred
contracts will now accrue during the next financial year.
* The inclusion of the deferred revenue, which will now accrue to
the 2002 year, would have meant that revenue of approximately R154
million and a pre-tax profit of R74,0 million and headline earnings per
share of 30,5 cents, after full provision for taxation, would have been
achieved in the year under review.
* The global reversal of investor sentiment concerning information
technology companies, as illustrated by the extreme downturns in the Nasdaq
Exchange and JSE IT indices.
* The significant drop in retail spending during the last year, due to
various developments, which impacted on OAI's niche market sector. This has
been attributed to the growth of the cellular phone and gambling industries,
the introduction of Lotto and constantly rising fuel prices. All these
contributed to lower sales, margins and earnings; higher debt and problems
with cash flow for the retailers, resulting in reduced marketing
opportunities for OAI's retail products.
* Changes in taxation legislation that resulted in income from OAI's
offshore holdings and activities possibly becoming liable for full South
African taxes.
Despite these setbacks, OAI achieved revenue of more than R100 million for
the second successive year (compared to R43 million in the 1999 financial
year, prior to its listing on the JSE) and the group continues to show
growth based on its historical performance over the last seven years. The
2001 results, despite being below the achievements of 2000, exceeded those
of the 1999 financial year in all major respects.
The group also maintained its high operating margins, mainly due to the
ongoing development of its own proprietary software, backed by a growing
global network of resellers, which now includes the Benelux countries and
the USA.
The inclusion of the additional revenue and profits from the deferred
contracts mentioned above is expected to give a substantial boost to the
2002 results.
History
Omega Alpha International Information Technology Holdings Limited, OAI, was
converted to a public company on 25 November 1998 and listed by introduction
without raising capital on the then Johannesburg Stock Exchange on 26 August
1999. OAI is the holding company of a group of international companies, the
first of which was established in Australia in 1982.
Nature of business
The group's operations are primarily focused on the development and supply
of its own integrated, highly functional software to all sectors of the
global retail and hospitality industries, catering for retailers in every
sphere and ranging from small independents to the giant international
chains. OAI is also recognised as a regional leader in voice technology,
including biometric voice authentication, and a major supplier and
integrator of enterprise resource planning and business intelligence
solutions.
OAI's product range and niche market positioning allows it to take full
advantage of the rapidly growing eBusiness (as opposed to eCommerce)
practices and policies and an evolved range of integrated products is being
developed to meet these market needs. This helped the group to combat the
downturn in the retail sector by entering into several other markets. A
variety of supplementary and related products and services cater for
middleware, engineering, specialist and maintenance applications.
Sources of revenue
The group operates locally and internationally through wholly owned
subsidiaries in Southern Africa, Australia, Singapore and Mauritius as well
as several global technological and marketing partners. Established value-
added dealer networks cover the United Kingdom, Europe, the Far East and the
Gulf States.
Operational activities
During the course of the 2001 financial year OAI and its subsidiaries made
substantial progress in the development of a sustainable penetration model
for each of its product ranges. These included:
* MerchantWise - The development of a Java based, platform independent,
merchandising, decision management and profiling planning tool has been
completed, integrating to the underlying databases of a wide range of ERP
solutions in use by retailers worldwide through ODBC drivers. The product
provides a further differentiation of OAI products from competitors'
offerings, providing OAI and its resellers with an ability to attack the
retail market from the top down rather than be restricted to the more
competitive entry-level point of sale approach.
* New Harare airport contract - OAI won a tender to provide
commercialisation and related services to the new Harare International
Airport terminal. This opens the area to further successes in this
specialised, highly profitable area. On-going revenue follows from this
tender (which has been successfully completed) and opens up extensive new
markets for the group.
* Voice technology developments - OAI has undertaken research and
development into the provision of both software and hardware for the
collection of a predictive clean voice print in conjunction with low quality
microphones, such as those found in cell phones and used in internet
activities. This is a mass-market activity with enormous potential returns
to OAI.
* Global relationships - Relationships have been established or
consolidated during the 2001 financial year with a variety of international
associates, including Oracle, eGM (electronic systems arm of General
Motors), SITA (Aviation Systems providers to airports globally), Macola (mid
range ERP systems providers world wide), BrookSoft, Veritel and TEC. A
distributor has been appointed for the USA with access to 1,700 resellers
and a Benelux country reseller has been appointed to market co-operatively
with OAI to the cellular industry and other corporates in the Netherlands
and Belgium.
Future prospects
Prospects amounting to R288 million domestically and R156 million
internationally are being targeted for the current financial year. This puts
OAI in a strong position to achieve the expected growth in its revenues in
the forthcoming financial year.
The R50 million of revenue from the deferred contracts will also accrue to
the 2002 financial year.
Dividend policy
No dividend has been declared for the year ended 28 February 2001. In
accordance with our published policy, all earnings will be retained for the
immediate future to finance the further growth and development of the
business.
Annual Report
The annual report and annual financial statements of OAI will be posted to
shareholders on or about 30 June 2001.
Annual General Meeting
The Annual general meeting of OAI shareholders will take place at 10:00 on
Tuesday 24 July 2001 in the Main Board Room, OAI Building, George Street,
Midrand.
In conclusion
The directors of OAI wish to thank all our employees and associates for
their loyalty, hard work and enthusiasm in all our activities. We also wish
to extend our thanks to our clients and shareholders for their valued
support.
For and on behalf of the Board of Directors
Dr Konstant Bruinette Dr John Flanagan
Non-Executive Chairman Chief Executive Officer
Directors: Dr KE Bruinette* (Chairman), Dr JT Flanagan# (CEO), JJ Griessel
(COO), JG Altman*, WC Annandale, S Leggat*+, J van der Merwe*. Company
Secretary - RS Gordon
* Non-executive directors. # Australian. + British.
Registered name and office: Omega Alpha International Information Technology
Holdings Limited, OAI Building, George Street, Erand Gardens, Midrand 1685,
Gauteng, South Africa. PO Box 50782, Randjiesfontein 1683, South Africa.
Transfer secretaries: Computershare Services Ltd, Edura House, 41 Fox
street, Johannesburg 2001.
Sponsor: Whistler Lambda Sponsor Services (Pty) Ltd, Corner Duncan and Brook
Streets, Brooklyn, Pretoria
Auditors: BDO Spencer Steward (Jhb) Inc, 13 Wellington Road, Parktown 2193.
