| Tue 6 Aug 2002, 0:00 | | Idion - Unaudited Financial Results For The Six Mo |
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IDION - Unaudited financial results for the six month period ended 30 June 2002
IDION Technology Holdings Limited
1998/ 013846/ 06
("IDION" or "the Group")
Unaudited financial results for the six month period ended 30 June 2002 ("the
period")
Highlights:
* Continuing operations:
* Headline earnings per share (HEPS) of 0,5 cents, or 2,3 cents excluding non-
recurring costs (30 June 2001: Headline loss per share (HLPS) 14,9 cents)
* Revenue from continuing operations increased 20% in US$ over 6 month
comparable period (62% in Rand)
* Gross profit increased 23% in US$ over 6 month comparable period (67% in
Rand)
* Cash generated from operations was US$3,0m (R32,7m) due to improved debtors
days and operating profits
* Discontinuing operations
* Headline loss per share including discontinuing operations of 8,3 cents (30
June 2001: Headline loss per share 19,5 cents)
* Annuity-based income, representing 44% of total revenue increased 24% in US$
over comparable period (68% in Rand)
* R&D spend as a percentage of revenue is 20%
* Cash position of R47,1m (31 Dec 2001: R43,4m)
GROUP OVERVIEW
The highlight of the first six months was the marked improvement at Vision
Solutions demonstrating a real return on substantial investments that have been
made over the past two years. Vision Solutions will be 100% of the Group`s
operations going forward, following the disposal of the Group`s other
subsidiary, IDION Solutions.
Despite significant management resources and sizable costs incurred in
connection with successfully defending a hostile bid against the Company,
results for the Group (including discontinuing operations) for the first six
months of the year are in line with the forecasts provided in the 2001 Annual
Report. The results show a strong first-half performance in Vision Solutions`
seasonal business where the majority of revenues have traditionally been
recorded in the second half of the financial year.
FINANCIAL REVIEW
Subsequent to the end of the reporting period, shareholders were advised that
IDION Solutions had been sold to CS Holdings Ltd., effective 1 September 2002
and subject to the fulfilment of certain conditions. In accordance with
International Accounting Standards (IAS), the results for the first half of the
year have been divided into Continuing and Discontinuing operations and the
corresponding results for last year have been adjusted to allow comparison.
As required by IAS 35 - Discontinuing Operations, the Group`s income statement
will distinguish between Continuing Operations (Vision Solutions and IDION
Corporate) and Discontinuing Operations (IDION Solutions).
During the period under review the SA Rand: US Dollar weighted average
conversion rate decreased by 36% from ZAR7.90: US$1 to ZAR10.73: US$1, resulting
in material variances when comparing the rand results with the previous year.
As the majority of the Group`s activities are concluded in US dollars, reference
to US dollar performance is made, where relevant. Where necessary, comparative
figures have been adjusted to conform with changes in presentation in the
current year.
Continuing Operations
Continuing operations produced HEPS of 0,5 cents. Excluding non-recurring
charges related to a hostile bid by a competitor, HEPS would have been 2,3
cents, compared to a HLPS of 14,9 cents for the corresponding period last year.
Revenue from continuing operations increased 20% in US$ (62% in Rand to
R138,8m). Licence revenues increased 14% in US$ (55% in Rand to R66,1m),
maintenance revenues increased 24% in US$ (68% in Rand to R61,6m) and services
revenues increased 27% in US$ (67% in Rand to R11,1m). The increase in licence
revenues in difficult economic conditions is largely attributable to significant
improvements in product quality, resulting from two years of focused investments
by Vision Solutions, continuing improvements in the Group`s distribution model,
and the impact of the strengthened management team.
The geographical revenue breakdown per product type is illustrated in the
following table:
Revenue breakdown: Continuing Operations
Revenue type %
Americas EMEA Asia- Total
Pacific
Licences 24% 17% 7% 48%
Maintenance 31% 9% 4% 44%
Services 8% - - 8%
TOTAL 63% 26% 11% 100%
The headline earnings contribution from Vision Solutions resulted from strong
revenue growth, coupled with a continued focus on cost containment. There was a
marked improvement in performance at Vision Solutions throughout the first six
months of the year, with continued customer growth and a strengthened sales
presence in key markets. Strong licence revenue growth was recorded in EMEA and
Asia Pacific. Despite the North American market recording modest growth in
licence revenue, this was offset by the strong growth produced in both service
and maintenance revenue.
During the period under review, revenue rose by 20% in US$ (62% in Rand), while
cost of sales increased by only 8% in US$ (47% in Rand). Margins have improved
as a result of an increasing customer base and consequent higher maintenance
revenues.
US dollar-based operating expenses decreased by 15% on the comparative period.
The dollar-based reduction in operating expenses was largely as a result of
realigning the sales and marketing divisions, which has resulted in more
efficient support for Vision Solutions` channel partner distribution model. The
Group continued its investment in Research and Development (R&D), enhancing its
current solutions offerings and increasing its investment in its multi-platform
managed availability initiative, ORION. The reported increase of 15% in Rand to
R107,3m is as the result of currency conversion.
Amortisation
Following the impairment charge of R193,0m to goodwill the Group accounted for
in its year-end results ending 31 December 2001, amortisation of goodwill and
intangible assets amounted to R28,0m.
Net finance costs
Net finance costs include non cash foreign currency conversion losses of R1,6m,
arising from the translation of inter company loans, due to the strengthening of
the rand to the dollar during this period.
Taxation
The effective tax rate, calculated on a basis of earnings before amortisation of
goodwill and intangible assets, was 38%. This tax rate derived mainly from
prevailing tax rates in the US.
Discontinuing Operations
Despite signs of improvement in sales opportunities for IDION Solutions
following its revised market positioning towards the end of last year, the
business continued to underperform.
The Board, after considering various options regarding the future of IDION
Solutions, decided to dispose of this business and focus on its most significant
investment, Vision Solutions. The sales price range is expected to be between
R6m to R9m. The final price is subject to performance of elements of the
business, which could continue into the next financial year.
As of 30 June 2002, the net assets of discontinued operations amounted to R20,8m
(2001: R14,3m) and cash used in discontinuing operations totalled R15,7m and
R1,2m for the six months ended 30 June 2002 and 2001, respectively. Upon
finalisation of the purchase price the Group expects to record a non-cash
accounting charge arising from the unrecoverable portion of the net assets of
IDION Solutions sold which is expected to be between R11,7m and R14,7m. In
addition to the loss reported to the end of June of 2002, IDION Solutions is
expected to record a further limited operational loss to 1 September 2002 after
which time there will be no further impact on the Group`s headline earnings.
SEGMENTAL ANALYSIS
Continuing operations recorded headline earnings of R508 000 (0,5 cents HEPS), a
marked improvement on the headline loss of R16,8m (14,9 cents per share) in the
first six months of last year. Included in the results are non-recurring
expenses of R2,5m incurred by the Group in defending the hostile bid launched
against IDION by a competitor. The Group expects to report a similar amount of
costs in the second six months of the financial year.
Discontinuing operations recorded a headline loss of R9,9m (8,8 cents HLPS),
compared to R5,2m headline loss (4,6 cents per share).
Segmental Analysis (6 Months Unaudited)
Continuing Operations Discontinuing
Operations
Vision Solutions IDION Corporate IDION Solutions
30/06/2 30/06/2 30/06/2 30/06/2 30/06/2 30/06/20
002 001 002 001 002 01
Revenue 138,822 85,227 - - 7,042 9,038
(R`000)
HEPS
contribut 2,3 -15,3 -1,8 0,4 -8,8 -4,6
ion
(cents)
Note 1: Inter-company transactions have been eliminated in the above table.
Note 2: The principal component of the 1,8 cents HLPS for IDION Corporate is
costs incurred to end June 2002 in resisting the hostile takeover bid for IDION.
FINANCIAL POSITION
Cash reserves and debtors
The Group`s cash position strengthened to R47,1 million (31 December 2001:
R43,4m). During the period, the Group generated R17,2m cash from operations
(June 2001: R6,7m) with the Group`s continuing operations generating R32,7m cash
from operations.
Trade debtors were R72,1m (31 December 2001: R107,5m) which resulted in a
significant improvement in debtors days (weighted) to 87 days, compared to 98
days at 31 December 2001, and 125 days at 30 June 2001.
As a result of the increased cash flow from operations and the resulting cash
reserves and available credit facilities at 30 June 2002, the Group has adequate
cash resources to fund ongoing operations and research and development
activities for the foreseeable future.
Deferred revenue
Deferred revenue, representing contracted future maintenance revenue, continued
to increase as a result of the increasing Vision Solutions` customer base. It
amounted to R103,8m compared to R93,2m at 31 December 2001 and R68,5m at 30 June
2001.
Prospects
Economic conditions remain challenging, particularly in North America where IT
spending remains a concern. The Group`s focus for the second half of the year
will be kept on cost containment while aggressively pursuing sales in what will
continue for some time to be a difficult market.
Accounting policies
The consolidated interim financial statements have been compiled in accordance
with International Accounting Standards (IAS) 34 Interim Financial Reporting.
The accounting policies applied in the preparation of the interim financial
statements are consistent with the policies adopted with the audited financial
statements for the period ending 31 December 2001.
By order of the Board
Chairman Group CEO
P.L. Mc Donald N. Vlok
6 August 2002
IDION TECHNOLOGY HOLDINGS LIMITED
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June
2002
30/06/2002 30/06/2001
Unaudited Unaudited
CONTINUING OPERATIONS R`000 R`000
Revenue
- Licences 66 107 42 529
- Maintenance 61 568 36 683
- Services and consultation 11 142 6 679
138 817 85 890
Cost of sales
- Licences 600 960
- Maintenance, services and 26 939 18 429
consultation
27 539 19 389
Gross profit 111 278 66 501
Operating expenses
- Administrative and general 27 936 22 148
expenses
- Research and development expenses 28 333 23 342
- Distribution and marketing 51 012 47 452
expenses
107 281 92 942
Operating profit/(loss) before 3 997 -26 441
finance costs
Net finance costs 2 666 292
Operating profit/(loss) before 1 331 -26 733
amortisation
Amortisation 27 998 38 612
Net loss before taxation -26 667 -65 345
Taxation -5 186 -16 895
Net loss for the period - Continuing -21 481 - 48 450
Operations
A weighted average conversion rate of R10,73/US$1 (2001:
R7,90/US$1) was used.
IDION TECHNOLOGY HOLDINGS LIMITED
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June
2002
30/06/2002 30/06/2001
Unaudited Unaudited
DISCONTINUING OPERATIONS R`000 R`000
Revenue
- Licences - -
- Maintenance 732 -
- Services and consultation 6 310 8 470
- Third party products - 568
7 042 9 038
Cost of sales
- Licences - -
- Maintenance, services and 9 574 854
consultation
- Third party products - 521
9 574 1 375
Gross (loss)/profit - 2 532 7 663
Operating expenses
- Administrative and general 10 854 14 877
expenses
- Research and development expenses 596 329
- Distribution and marketing - 44
expenses
11 450 15 250
Operating loss before finance costs - 13 983 - 7 587
Net finance costs/(income) 108 - 4
Operating loss before amortisation - 14 090 - 7 583
Amortisation - 464
Net loss before taxation - 14 090 - 8 047
Taxation - 4 227 - 2 414
Net loss for the period - - 9 863 - 5 633
Discontinuing Operations
Net loss for the period - Continuing -21 481 - 48 450
Operations
Net loss for the period - - 9 863 - 5 633
Discontinuing Operations
Total net loss for the period -31 344 -54 083
Calculation of Headline
Earnings/(Loss):
Net loss for the period - -21 481 -48 450
continuing operations
Net loss for the period - -9 863 -5 633
discontinuing operations
Adjustments:
+ Amortisation of goodwill and 27 998 39 076
intangible assets
+ Taxation effect of amortisation -6 009 -6 935
on intangible assets
Headline loss -9 355 -21 942
Less: Headline loss from -9 863 -5 169
discontinuing operations
Headline earnings/(loss) from 508 -16 773
continuing operations
Number of shares in issue 113 050 423 112 585 423
Weighted average number of shares 112 708 627 112 585 423
Fully diluted number of shares 112 708 627 112 585 423
Loss per share (cents)
- Basic -27,8 -48,0
- Fully diluted -27,8 -48,0
Headline loss per share (cents)
- Basic -8,3 -19,5
- Fully diluted -8,3 -19,5
Continuing operations - Headline
earnings/(loss) per share (cents)
- Basic 0,5 -14,9
- Fully diluted 0,5 -14,9
Discontinuing operations - Headline
loss per share (cents)
- Basic -8,8 -4,6
- Fully diluted -8,8 -4,6
IDION TECHNOLOGY HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEET
As at 30 June 2002
30/06/2002 31/12/2001
Unaudited Audited
R`000 R`000
ASSETS
Non-current assets
Property, plant and 23 750 30 404
equipment
Goodwill and intangible 133 256 190 138
assets
Deferred taxation 54 643 58 496
Other assets 537 733
212 186 279 771
Current assets
Trade and other receivables 72 086 107 547
Prepayments and deposits 5 214 4 048
Cash and cash equivalents 48 763 43 361
126 063 154 956
Total Assets 338 245 434 727
EQUITY AND LIABILITIES
Capital and reserves
Issued share capital 422 606 422 606
Currency translation reserve 144 524 175 634
Accumulated losses - 398 040 - 366 696
169 090 231 544
Non-current liabilities
Long term liabilities 6 798 5 409
Deferred taxation 9 715 18 459
16 512 23 868
Current liabilities
Trade payables and other 39 268 66 193
provisions
Short term borrowings 6 444 17 849
Taxation 1 486 2 060
Net deferred revenue 103 769 93 213
Bank overdraft 1 676 -
152 643 179 315
Total Equity and Liabilities 338 245 434 727
A closing conversion rate of R10,1125/US$1 (2001: R8,05/US$1) was
used.
Issued number of shares 113 050 423 112 585 423
Net asset value per share 149,6 206,2
(cents)
Net tangible asset value per 31,7 36,8
share (cents)
IDION TECHNOLOGY HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2002
Share Share Accumulated Currency Total
capital Premium loss translation
reserve
R`000 R`000 R`000 R`000 R`000
Balance at 1 126 421 480 -59 879 59 191 421 918
01/01/2001
Net loss - - -306 817 - -306 817
for the
period
Currency - - - 116 443 116 443
translation
reserve
Balance at 1 126 421 480 -366 696 175 634 231 544
01/01/2002
Net loss - - -31 344 - -31 344
for the
period
Currency - - - -31 110 -31 110
translation
reserve
Balance at 1 126 421 480 -398 040 144 524 169 090
30/06/2002
IDION TECHNOLOGY HOLDINGS LIMITED
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30
June 2002
30/06/200 30/06/2001
2
Unaudited Unaudited
R`000 R`000
Operating activities
Cash generated from 17 160 6 696
operations
Taxation paid -1 164 -429
Interest paid -630 -2 220
Net cash generated from 15 366 4 047
operating activities
Investing activities
Additions to fixed assets -1 971 -7 355
Loans repaid - 29
Proceeds from sale of fixed 801 -92
assets
Acquisition of subsidiary - -4 568
Net cash used in investing -1 170 -11 986
activities
Financing activities
Repayment of/Proceeds from -331 661
long term liabilities
Repayment of short term -8 130 -
borrowings
Net cash (used in)/from -8 461 661
financing activities
Net increase/(decrease) in 5 735 -7 278
cash and cash equivalents
Cash and cash equivalents at
the beginning of the period 43 361 29 570
Effect of exchange rate -2 009 381
changes
Cash and cash equivalents at 47 087 22 673
the end of the period
Date: 06/08/2002 08:00:18 AM Produced by the JSE SENS Department
