| Fri 31 Mar 2006, 9:00 | | IFS - Consolidated Unaudited Interim Report: Six M |
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IND
IND
IFS - Consolidated Unaudited Interim Report: Six Months Ended 31 December 2005
INDEPENDENT FINANCIAL SERVICES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1950/037061/06)
Share code: IND & ISIN: code: ZAE000025300
("IFS")
CONSOLIDATED UNAUDITED INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2005
INCOME STATEMENT
Unaudited Unaudited Audited
6 months to 6 months to 12 months
31 December 31 December 30 June
2005 2004 2005
(R"000) (R"000) (R"000)
Gross revenue - 2,222 2,783
Operating (loss) / profit
before taxation 4,450 10,392 9,440
Intangible written off - -9,729 -5,712
Profit before taxation 4,450 663 3,728
Taxation -265 -314 -1,574
Profit after taxation 4,185 349 2,154
Minority interest - - -
Net profit 4,185 349 2,154
Share in issue (millions) 34 34 34
Reconciliation of EPS to
HEPS
Earnings per share (cents) 12.3 1,0 6.3
Capital profits
eliminated (cents) -15.2 (30,7) -17.1
Intangible written off
disallowed (cents) - 28,6 16.8
Headline earnings per
share (cents) -2.9 (1,1) 6.0
Dividends per share
(cents) - declared after
period 6.3 14,0 14.0
CASH FLOW STATEMENT
Cash flows from:
Operating activities -12,405 -2,916 -9,401
Investing activities 5,028 7,652 14,629
Financing activities - -2,942 154
Change in cash and
equivalents -7,377 1,794 5,382
Opening cash and
equivalents 7,377 1,995 1,995
Closing cash and
equivalents - 3,789 7,377
STATEMENT OF CHANGES IN
EQUITY
Opening balances 11,940 14,245 14,164
Net profit 4,185 349 2,536
Share premium write off -8,698 - -
Dividends -2,125 - -4,760
Dividends in specie -2,735 - -
Closing balances 2,567 14,594 11,940
BALANCE SHEET
Assets
Non-current assets - 1,095 5,028
Tangible - 1,014 1,009
Intangible - - 4,019
Investment - 81 -
Loan receivable - - -
Current assets 3,027 13,804 7,521
Inventories - 264 -
Receivables 3,027 9,699 64
Taxation - - 80
Cash resources - 3,841 7,377
Total assets 3,027 14,899 12,549
Equity and liabilities
Capital and reserves 2,567 14,594 11,940
Share capital 340 340 339
Share premium 2 8,700 8,620
Non distributable reserve - 372 372
Retained income 2,225 5,182 2,609
Ordinary shareholder"s
interest - 14,59 4 -
Minority interest - - -
Current liabilities 460 305 609
Payables 335 59 609
Shareholders for dividend 106 - -
Taxation 19 194 -
Bank overdraft - 52 -
Total equity and
liabilities 3,027 14,899 12,549
Net asset value per share
(cents) 7.6 42. 9 35.2
Net tangible asset value
per share (cents) 7.6 42.9 3.0
Accounting policies
The group has adopted International Financial Reporting Standards (IFRS) for
the year ending 30 June 2006. The interim results have been prepared and
presented in accordance with IAS 34 - Interim financial reporting.
The financial statements for the year ending 30 June 2006 will be the group"s
first consolidated IRFS compliant financial statements and hence IFRS 1 first
time adoption of IFRS has been applied in preparing this interim report.
An explanation of how the transition of IFRS has affected the previously
reported financial position and performance of the group is provided below.
Significant changes to the group"s accounting policies as a result of the
adoption of IFRS
Goodwill
All business combinations are accounted for by applying the "purchase method".
Goodwill represents amounts arising on acquisition of subsidiaries. In respect
of business combinations that have occurred since the IFRS transition date, 1
July 2004, goodwill represents the difference between the cost of the
acquisition and the fair value of the net identifiable assets and the fair
value of the net identifiable assets and contingent liabilities acquired.
The group has made an election in terms of IFRS 1 that IFRS 3 will only be
applied from 1 July 2004. In respect of acquisitions prior to this date,
goodwill is included as at 1 March 2004 at the amount previously recorded under
SA GAAP. The classification and the accounting treatment of business
combinations that occurred prior to 1 March 2004 has not been reconsidered in
preparing the group"s IFRS balance sheet at 1 July 2004.
From 1 July 2004, goodwill is stated at cost less accumulated impairment
losses. Goodwill is allocated to cash-generating units and is no longer
amortised but tested annually for impairment.
Previously, goodwill arising on each acquisition was amortised over its useful
life on a straight-line basis and subjected to annual impairment testing
Comments
Introduction
During the six month period ended 31 December 2005, Independent Financial
Services ("IFS") successfully completed its stated intention of finalising the
disposals of its operating entities and declaring a cash dividend, a special
dividend and a dividend in specie of the shares in IFS Insurance brokers
(Proprietary) Limited. This strategy resulted in IFS becoming a cash shell with
a net asset value of approximately R3m represented by cash and near cash.
The majority shareholders subsequently sold their shares in IFS to a consortium
led by Des Rosen of DNR Capital resulting in the consortium controlling
approximately 78% of IFS.
Post Balance Sheet Events - Associated with the change in control
Offer to IFS Shareholders
It was announced in the press on 17 January 2006 that in terms of the circular
dated 20 December 2005, an offer to IFS shareholders by the consortium at a
price of 8,82c per share to acquire all of the ordinary shares in IFS that it
did not already own, was accepted in respect of 113 362 shares representing
0,3% of the issued share capital of IFS. Subsequent to the offer, the
consortium owns 26,753,362 shares in IFS representing 79% of the issued shares
in IFS.
Proposed Rights Offer
IFS will be undertaking a rights offer in the near future on the basis of
issuing 2,5 new ordinary shares for each share held in IFS. The rights offer
will be at 8,82c and the consortium will renounce all their rights in favour of
Zungu Investments Company (Proprietary) Limited ("ZICO"), a company controlled
by Sandile Zungu, a prominent black business leader.
ZICO and DNR Capital will jointly underwrite the rights offer and it is
anticipated that ZICO will control in excess of 50% of the ordinary shares in
issue in IFS.
The resultant effect of the rights offer will be that of IFS being a
significantly empowered listed company and the listed investment vehicle for
Sandile Zungu and ZICO.
Changes to the Board of Directors of IFS
It was announced in SENS and the press in February 2006 that the board of
directors of IFS was reconstituted.
All of the previous directors of IFS have resigned and the following directors
have been appointed in the following capacities:
Sandile Zungu - Executive Chairman
Des Rosen - Chief Executive Officer
Darryll Castle - Non Executive Director
Itumeleng Dlamini - Non Executive Director
Stan Medalie - Non Executive Director
Phillip Vallet - Non Executive Director
Cash Shell
Subsequent to the reporting period, an amount of approximately R2,35 million
reflected in accounts receivable was received by IFS and is now represented in
cash. The balance of accounts receivable being approximately R0,67m is
anticipated to be collected by no later than 30 April 2006.
Proposed change of name and main object
It is proposed that the name IFS be changed to Makadebona Holdings Limited to
better reflect the image and future activity of the group. At the same time,
the Memorandum and Articles of the company will be amended to reflect the main
business of the company in keeping with its future activity as a holding
company.
Prospects
The proposed strategy of Makadebona is to conduct business as a diversified
industrial holding company with management control in operating entities in
carefully selected sectors of the economy.
At present your directors are currently exploring opportunities with three
potential targets for acquisition.
For and on behalf of the board.
Sandile Zungu Des Rosen
Executive Chairman Chief Executive Officer
Bryanston
31 March 2006
Directors
S Zungu, D N Rosen, D Castle*, I Dlamini*, S Medalie*, P Vallet*
* Non-Executive
Registered Office
168 Eccleston Crescent Bryanston 2125
Company Secretary
J Jones (Mrs)
Transfer Secretaries
Ultra Registrars (Pty) Ltd
5th Floor, 11 Diagonal Street, Johannesburg
(P.O Box 4844, Johannesburg, 2000)
Date: 31/03/2006 09:00:28 AM Produced by the JSE SENS Department
