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Integrear - Interim Results for the period ended 31 December 2004
Integrear Limited
(`Integrear` or `the Group`)
Registration Number 1989/001319/06
Share Code: ITG
ISIN Number: ZAE000027231
INTERIM RESULTS FOR THE PERIOD ENDED 31 DECEMBER 2004
CONSOLIDATED INCOME STATEMENT
Unaudited Audited
Six months ended Year ended
31 December 30 June
2004 2003 2004
R`000 R`000 R`000
Revenue 3,827 4,902 9,505
Cost of sales (1,302) (1,430) (5,249)
Gross profit 2,525 3,472 4,256
Operating expenses (3,062) (2,987) (3,864)
Goodwill amortized 0 (168) (336)
(Loss) Profit from operations (537) 317 56
Finance costs (7) (12) (18)
Income from investments 65 29 72
(Loss) Profit before tax (479) 334 110
Income tax benefit (expense) 195 (150) (204)
Net (loss) profit for the period (284) 184 (94)
Weighted average number of 12,564,190 12,564,190 12,564,190
ordinary shares in issue
Basic (loss) earnings per
share (cents)* (2.26) 1.46 (0.75)
Headline (loss) earnings
per share (cents)** (2.26) 2.80 1.93
Reconciliation between basic and headline (loss) earnings
Basic (loss) earnings (284) 184 (94)
Goodwill amortization 0 168 336
Headline (loss) earnings (284) 352 242
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Audited
Six months ended Year ended
31 December 30 June
2004 2003 2004
R`000 R`000 R`000
OPERATING ACTIVITIES
Cash receipts from customers 4,320 3,241 8,122
Cash paid to suppliers and employees (3,925) (4,052) (8,359)
Cash from (used in) operations 395 (811) (237)
Interest paid (7) (12) (17)
Interest received 65 29 72
Income taxes received 117 48 48
Net cash from (used in) operating 570 (746) (134)
activities
INVESTING ACTIVITIES
Purchases of equipment (9) (19) (121)
Increase in loans receivable 0 (10) 0
Net cash used in investing activities (9) (29) (121)
FINANCING ACTIVITIES
Decrease in borrowings (34) (33) 3
Net cash (used in) from financing (34) (33) 3
activities
Net increase (decrease) in cash and 527 (808) (252)
cash equivalents
Effect of foreign exchange rate changes 0 (30) 0
Cash and cash equivalents at beginning 1,711 1,963 1,963
of the period
Cash and cash equivalents at end of the 2,238 1,125 1,711
period
CONSOLIDATED BALANCE SHEET Unaudited Unaudited Audited
31 December 2004 31 December 31 December 30 June
2004 2003 2004
R`000 R`000 R`000
ASSETS
Non-current assets 1,105 1,194 940
Equipment 92 154 122
Goodwill 0 168 0
Deffered tax asset 1,013 872 818
Current assets 4,703 4,485 4,783
Tax asset 0 113 113
Inventory 6 0 0
Loans receivable 0 17 7
Trade and other receivables 2,459 3,230 2,952
Bank balances and cash 2,238 1,125 1,711
TOTAL ASSETS 5,808 5,679 5,723
EQUITY AND LIABILITIES
Capital and reserves 1,629 2,191 1,913
Share capital 126 126 126
Share premium 686 686 686
Non-distributable reserves 828 828 828
Capital redemption fund 48 48 48
Accumulated (loss) / profits (59) 503 225
Non-current liabilities
Long-term borrowings:
interest bearing 30 37 49
Current liabilities 4,149 3,451 3,761
Trade and other payables 4,092 3,408 3,693
Tax liability 4 0 0
Short-term borrowings:
interest bearing 53 43 68
TOTAL EQUITY AND LIABILITIES 5,808 5,679 5,723
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 December 2004
Non- Capital Accu-
Share Share distri- redemption mulated
Capital Premium butable fund (loss)
reserve profits Total
R`000 R`000 R`000 R`000 R`000 R`000
Balance
at 30
June 2003 126 686 828 48 319 2,007
Net profit
for the period - - - - 184 184
Balance at
31 December
2003 126 686 828 48 503 2,191
Net loss
for the period - - - - (278) (278)
Balance at
30 June 2004 126 686 828 48 225 1,913
Net loss for - - - - (284) (284)
the period
Balance at 31
December 2004 126 686 828 48 (59) 1,629
COMMENTS
The company is extending its sales effort in all its markets and is working
closely with business partners to ensure that prospects turn into new sales.
Management believes that a number of developments in terms of its partner
relationships should result in a faster sales turnover, especially in the supply
of debt collection systems to municipalities. The company continues to identify
new prospects and all products and applications are being refined to exceed
customer expectations.
ACCOUNTING POLICIES
These provisional statements for the half year ended 31 December 2004 are
prepared in accordance with the South African Statements of Generally Accepted
Accounting Practice (SA GAAP) applicable to interim reporting. The accounting
policies used are consistent with those used in the annual financial statements
for the year ended 30 June 2004.
AUDIT REPORT
The interim consolidated financial statements are not audited.
CORPORATE GOVERNANCE
The Group subscribes to and complies with the Code on Corporate Governance
Practices and Conduct as contained in the second King Report on Corporate
Governance.
SEGMENT REPORTING
No segment reporting was prepared since the group only operated in one
geographical and business segment.
JSE SECURITIES EXCHANGE SOUTH AFRICA REQUIREMENTS
This announcement has been prepared in accordance with the listing requirements
of the JSE Securities Exchange South Africa.
FINANCIAL
The slow reaction in the market resulted in a 21.9% decrease in sales compared
to the same period in the previous year R3 827 000 (2003: R4 902 000) This
resulted in a headline loss of R284 000 (2003: Profit R352 000) and equated to a
headline loss of 2.26 cents per share (2003: Headline profit of 2.80 cents per
share).
Cost control remains a focus point of management.
Business practices have been widening to include the possibility of generating a
constant monthly income stream.
PROSPECTS
The successes achieved with the Zeus debts collection system, developed for the
municipal market, appear to have a positive influence in the interest by a
substantial number of municipalities in the product. Although the decision
process remains long winded, the company is optimistic that sales will increase
in that sector.
The company believes, based on the fact that the merger of the Tertiary
Educational Institutions are nearing closure, new opportunities will emerge for
the utilization of the timetable optimization systems.
Management is currently pursuing opportunities in the field of business agility.
This will be achieved by combining business process management and business
rules management. It is believed that these opportunities will result in future
sales.
The company is still selling the Solidus credit management system and a number
of prospects have been identified.
CONTINGENT LIBILITIY
The directors, together with the Pension Fund, are currently investigating an
arrear amount, but they are not in a position to estimate the extent of the
potential liability. At present they are of the opinion that this liability,
would not exceed R450 000
DIVIDEND
No dividend is declared for the period under review.
CAUTIONARY
The Board has committed itself to a process that should lead to a restructuring
of the business assets of the company in such a way as to ensure more
predictable profitability and growth. A cautionary notice to this effect was
circulated earlier this year. The specific transaction envisaged did not
materialize; other transactions will come under consideration during the next
two months.
By order of the Board
L du Plessis
Chairperson
22 March 2005
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