| Mon 3 May 2004, 12:14 | | ABRIDGED REPORT RELATING TO THE AUDITED FINANCIAL |
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INFOWAVE HOLDINGS LIMITED - ABRIDGED REPORT RELATING TO THE AUDITED FINANCIAL
RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2004 AND
DETAILS OF THE NOTICE OF ANNUAL GENERAL MEETING
INFOWAVE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/017276/06)
Share code: IFW ISIN Code: ZAE000016440
("InfoWave" or "the company")
ABRIDGED REPORT RELATING TO THE AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 29
FEBRUARY 2004 AND DETAILS OF THE NOTICE OF ANNUAL GENERAL MEETING
Income Statements
for the year ended 29 February 2004
GROUP GROUP
2004 2003
R R
Revenue 30 353 101 28 790 007
Cost of sales (15 758 491) (14 581 247)
Gross profit 14 594 610 14 208 760
Administrative, selling and other
operating costs (7 751 454) (8 197 802)
Profit from operations (before interest) 6 843 156 6 010 958
Interest income 806 567 1 303 251
Finance costs (27 110) (7 792)
Profit before taxation 7 622 613 7 306 417
Taxation (2 683 092) (1 359 755)
Profit for the year 4 939 521 5 946 662
Earnings per share (cents) 5,50 6,76
Headline earnings per share (cents) 5,50 6,76
Weighted average number of ordinary shares
in issue 89 798 050 88 001 345
Fully diluted earnings per share (cents) 5,34 6,48
Reconciliation between earnings and headline
earnings:
Profit for the year 4 939 521 5 946 662
Surplus on disposal of equipment - (2 179)
Headline earnings 4 939 521 5 944
483
Balance Sheets as at 29 February 2004
GROUP GROUP
2004 2003
R R
Assets
Non-current assets 1 257 737 1 288 126
Property and equipment 712 515 818 381
Intangible assets 225 274 -
Deferred taxation asset 319 948 469 745
Current assets 11 776 072 11 894 201
Accounts receivable 3 951 173 3 394 587
Cash resources 7 824 899 8 499 614
Total assets 13 033 809 13 182 327
Equity and liabilities
Capital and reserves 10 568 065 8 248 223
Issued capital 9 061 8 910
Share premium 338 194 283 063
Accumulated profit 10 220 810 7 956 250
Non-current liabilities
Long-term borrowings 61 302
Current liabilities 2 465 744 4 872 802
Accounts payable 2 204 591 3 892 037
Taxation payable 199 851 756 573
Current portion of long-term borrowings 61 302 224 192
Total equity and liabilities 13 033 809 13 182 327
Cash Flow Statements
for the year ended 29 February 2004
GROUP GROUP
2004 2003
R R
CASH FLOWS FROM OPERATING ACTIVITIES
Profit from operations (before interest and
dividends) 6 843 156 6 010 958
Adjustment for:
Depreciation and amortisation 654 993 317 494
Surplus on disposal of equipment (2 179)
Cash generated from operations,
before working capital changes 7 498 149 6 326 273
Working capital changes
(Increase)/decrease in receivables (556 586) 211 407
(Decrease)/increase in payables (1 687 446) 1 275 419
Cash generated from operations 5 254 117 7 813 099
Taxation paid (3 090 017) (1 884 062)
Interest income 806 567 1 303 251
Finance costs (27 110) (7 792)
Dividend paid to shareholders (2 674 961)
Net cash inflow from operating activities 268 596 7 224 496
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of equipment (342 124) (475 430)
Investment in intangible assets (432 277)
Proceeds on disposal of equipment 2 179
Net cash outflow from investing activities (774 401) (473 251)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of capital reduction out of share
premium (8 909 494)
Proceeds of share issues 55 282 172 242
Long-term loan repaid (224 192) (250 000)
Net cash outflow from financing activities (168 910) (8 987 252)
Net decrease in cash resources (674 715) (2 236 007)
Cash resources at beginning of year 8 499 614 10 735 621
Cash resources at end of year 7 824 899 8 499 614
Statements of Changes in Equity for the year ended 29 February 2004
GROUP
Share Share Accumulated
capital premium profit Total
R R R R
Balance at 28 February 2002 8 746 9 020 479 1 982 582 11 011 807
Profit for the year 5 946 662 5 946 662
Shares issued during the year 164 172 078 172 242
Repayment of share premium (8 909 494) (8 909 494)
Balance at 28 February 2003
as previously stated 8 910 283 063 7 929 244 8 221 217
Adjustment on initial application
of AC 133 27 006 27
006
Balance at 28 February 2003
Restated 8 910 283 063 7 956 250 8 248 223
Profit for the year 4 939 521 4 939 521
Shares issued during the year 151 55 131 55 282
Dividend paid (2 674 961) (2 674 961)
Balance at 29 February 2004 9 061 338 194 10 220 810 10 568 065
Responsibility for annual financial statements
The annual financial statements have been prepared in accordance with South
African Statements of Generally Accepted Accounting Practice.
Appropriate accounting policies supported by reasonable and prudent judgements
have been applied consistently with those of the prior year, with the exception
of AC 133: financial instruments, which has been applied for the first time.
These financial statements have been audited and the audit report is available
for inspection at the registered office of the company.
Chairman"s Report
Results
Trading conditions throughout the year have been difficult in the key industry,
which we serve. Revenue increased marginally by 5,4% from R28,8 million to R30,3
million for the year ended 29 February 2004. Headline earnings decreased by 17%
from R5,9 million to R4,9 million in spite of operating profitability being
maintained.
The effect of lower cash balances due to the payment of the capital reduction in
December 2002 and the dividend in June 2003, combined with the reduction in
interest rates has decreased interest income by 38%. The effective taxation rate
increased from 19% to 35% as anticipated due to the recognition of a deferred
taxation asset not previously recognised at 28 February 2003, as well as the
payment of secondary taxation on companies on InfoWave"s first dividend paid to
shareholders on 23 June 2003.
Dividend
Shareholders are referred to the dividend declaration announcement published on
SENS today, prior to this announcement. Despite the drop in headline earnings
per share from 6,76 cents to 5,50 cents and having regard to the cash reserves
of the group, the board is pleased to declare a dividend of 3 cents per share
payable to shareholders on 14 June 2004. The dividend is covered 1,83 times by
earnings per share.
Strategy
During the year new niche products were added to our existing Tranquility ERP
suite. These products have not only presented the company with opportunities of
new prospects within the sugar industry, but also within a new industry, being
property development. Although the contribution to the company"s turnover is
still small, we have secured new business by successfully selling and
implementing our new products: CaneLab, laboratory software specific to sugar
factories, and DevMan, a software tool which facilitates the management of
property development. All new business has an element of software license
revenue to complement our services revenue.
Strengthening the board and management
During the year Dr Bernard Ravno and Paris Aposporis were appointed to the board
as independent non-executive directors. The roles of chairman and managing
director were also separated. Ralph Collis is now the executive chairman, and
Tiffany Dunsdon was appointed CEO. Tiffany will retain her financial director
portfolio for the time being. The board implemented committees to effectively
address the remuneration, audit and risk management process required by the
company and in line with good corporate governance.
Performance and reward
Due to the company"s results not meeting expectations, the board decided not to
award bonuses in order to maintain operating profitability, and also deferred
annual increases, due to the market pressure faced in the coming year.
Broad based black economic empowerment
The board appointed a committee comprising three directors to implement and
drive its broad based black economic empowerment initiatives. Ahead of the
implementation of the industry sector"s BEE ICT charter, InfoWave has set its
own goals to address employment equity, management and board representation,
procurement, social and enterprise contribution, and ownership. Our achievements
to date were rewarded by attaining "Impumelelo"s top 300 empowerment" status.
The board is actively seeking black partners who are prepared to take on a
shareholding of at least 30%. This, together with the existing 23% black
ownership, will transform InfoWave into a black-owned company. We expect a
partnership of this nature to play a key role in board representation, cross
culture growth as well as strategic business development.
The company has recently become a 25% stakeholder in Adapt-IT, a newly formed
black owned ICT company. One of InfoWave"s employees was instrumental in its
creation. InfoWave has provided the finance required for the initial period, and
will be represented on the board of Adapt-IT.
Marketing
InfoWave changed its corporate image to better reflect its identity and products
independently. The new corporate InfoWave logo and product logos were
implemented, with a revamped website, stationery and marketing collateral. Our
new look reflects a fresh, dynamic IT organisation. This year, the company will
continue to invest in marketing our products and the company as a sought-after
applications service provider.
Social activities
The company and its employees continue to contribute towards its "adopted"
school that requires financial assistance to build additional classrooms,
acquire necessary equipment and provide its learners with an environment
conducive to learning. During the year the company also hosted university and
technikon students from previously disadvantaged backgrounds. The company"s
management and employees impart their knowledge and insights from an IT business
perspective, which assists the students to make informed career decisions in the
IT sector.
Future plans and prospects
Our plans and prospects for the next financial year remain constrained due to
reduced IT spend from a large percentage of the company"s customer base. We have
undertaken some limited cost restructuring to better position ourselves for
these circumstances.
We intend to:
Accelerate the development of new business through sales of our new
products
Continue to look for growth in the sugar industry sector, emphasising
new customers
Increase annuity revenue based on our principle of long-term
partnerships with our customers
Continue to review strategies for the retention of our people
Transform into a black-owned company, including increased
representation on the board and in the operational management structures
Pursue further social projects.
Appreciation
On behalf of the board, I wish to extend my appreciation to all InfoWavers for
their commitment during this difficult year, and to our customers for their
continued support. Our plans to complement our existing services by diversifying
into new niche offerings and our BEE initiatives will certainly provide the
company with new and exciting challenges in the coming year.
Annual Report and Notice of Annual General Meeting
As the annual report for the year ended 29 February 2004 ("the annual report")
will be posted to shareholders today, within 3 months of InfoWave"s year end,
this announcement is not required to appear in the press and will not be sent to
shareholders.
The annual report contains a notice convening the annual general meeting of
InfoWave shareholders for the year ended 29 February 2004("the AGM"). The AGM
will be held at Deloitte & Touche, Deloitte Place, 2 Pencarrow Crescent,
Pencarrow Park, La Lucia Ridge Office Estate, La Lucia on Friday, 28 May 2004 at
15h30.
R P Collis
Executive Chairman
3 May 2003
Date: 03/05/2004 12:00:09 PM Produced by the JSE SENS Department
