| Wed 3 May 2006, 17:10 | | InfoWave - Abridged report relating to the audited |
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IFW
IFW
InfoWave - Abridged report relating to the audited financial results for the
year ended 28 February 2006
INFOWAVE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/017276/06)
Share code: IFW & ISIN Code: ZAE000016440
("InfoWave")
ABRIDGED REPORT RELATING TO THE AUDITED FINANCIAL RESULTS FOR THE YEAR
ENDED 28 FEBRUARY 2006
ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING
CONSOLIDATED INCOME STATEMENT
(RESTATED)
2006 2005
R R
REVENUE 34 397 588 31 852 965
Cost of sales (16 427 756) (15 469 372)
Gross profit 17 969 832 16 383 593
Administrative, selling and other
costs (11 208 472) (8 955 052)
Profit from operations (before
interest) 6 761 360 7 428 541
Interest income 141 889 347 888
Preference dividend received 273 309 -
Revaluation of listed preference
shares 308 074 392 070
Finance costs (1 572) (2 139)
Profit/(loss) from associate 54 783 (7 625)
Profit before taxation 7 537 843 8 158 735
Taxation (2 530 347) (3 165 680)
Profit for the year 5 007 496 4 993 055
Earnings per share (cents) 5,87 5,66
Headline earnings per share 5,87 5,66
Fully diluted earnings per share
(cents) 5,74 5,56
CONSOLIDATED BALANCE SHEET
(RESTATED)
2006 2005
R R
ASSETS
Non-current assets 1 367 199 1 203 337
Property and equipment 614 020 578 077
Intangible assets 341 681 24 340
Investment in associated company 213 702 305 000
Deferred taxation asset 197 796 295 920
Current assets 16 149 295 12 700 276
Accounts receivable 7 127 116 6 669 475
Taxation paid in advance 92 310 -
Listed preference shares 4 566 744 4 258 670
Current portion of loan to associated
company 108 950 -
Cash resources 4 254 175 1 772 131
Total assets 17 516 494 13 903 613
EQUITY AND LIABILITIES
Capital and reserves 13 379 291 10 253 622
Issued capital 8 582 8 405
Share premium 460 924 105 190
Share-based payment reserve 463 216 133 789
Accumulated profit 12 446 569 10 006 238
Non-current liabilities
Deferred taxation liability 203 042 113 700
Current liabilities 3 934 161 3 536 291
Accounts payable 3 837 253 3 268 973
Taxation payable 96 908 267 318
Total equity and liabilities 17 516 494 13 903 613
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
SHARE SHARE ACCUMULATED
CAPITAL PREMIUM PROFIT
R R R
Balance at 29 February 2004 9 061 338 194 10 220 810
Profit for the year (restated) - - 4 993 055
Shares issued during the year 234 239 243 -
Shares repurchased during the year (890) (472 247) (2 463 564)
Recognition of share-based payment
Dividend paid - - (2 744 063)
Balance at 28 February 2005 8 405 105 190 10 006 238
Profit for the year 5 007 496
Shares issued during the year 177 355 734
Recognition of share-based payment
Dividend paid (2 567 165)
Balance at 28 February 2006 8 582 460 924 12 446 569
SHARE-BASED
PAYMENT
RESERVE TOTAL
R R
Balance at 29 February 2004 10 568 065
Profit for the year (restated) 4 993 055
Shares issued during the year 239 477
Shares repurchased during the year (2 936 701)
Recognition of share-based payment 133 789 133 789
Dividend paid (2 744 063)
Balance at 28 February 2005 133 789 10 253 622
Profit for the year 5 007 496
Shares issued during the year 355 911
Recognition of share-based payment 329 427 329 427
Dividend paid (2 567 165)
Balance at 28 February 2006 463 216 13 379 291
CONSOLIDATED CASH FLOW STATEMENT
(RESTATED)
2006 2005
R R
CASH FLOWS FROM OPERATING ACTIVITIES
Profit from operations (before interest and
dividends) 6 761 360 7 428 541
Adjustment for:
Share-based payment expense 329 427 133 789
Depreciation 535 594 699 263
Cash generated from operations, before working
capital changes 7 626 381 8 261 593
Working capital changes
Increase in receivables (457 641) (2 718 302)
Increase in payables 568 280 1 064 382
Cash generated from operations 7 737 020 6 607 673
Taxation paid (2 597 794) (2 960 485)
Interest income 141 889 347 888
Finance costs (1 572) (2 139)
Preference dividend received 273 309 -
Dividend paid to shareholders (2 567 165) (2 744 063)
Net cash inflow from operating
activities 2 985 687 1 248 874
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of equipment (464 029) (356 827)
Investment in intangible assets (424 849) (7 064)
Decrease/(increase) in investment in associated
company 29 324 (312 625)
Purchase of listed preference shares - (3 866 600)
Net cash outflow from investing
activities (859 554) (4 543 116)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of share issues 355 911 239 477
Repurchase of company"s shares - (2 936 701)
Long-term loan repaid - (61 302)
Net cash inflow/(outflow) from financing
activities 355 911 (2 758 526)
Net increase/(decrease) in cash resources 2 482 044 (6 052 768)
Cash resources at beginning of year 1 772 131 7 824 899
Cash resources at end of year 4 254 175 1 772 131
Basis of presentation and accounting policies
These annual financial statements have been prepared in accordance with the
group"s accounting policies which comply in all material aspects with
International Financial Reporting Standards (IFRS). The group is reporting
under IFRS for the first time for the year ended 28 February 2006. The
transition to IFRS is accounted for in terms of IFRS 1 First-time Adoption
of International Financial Reporting Standards, with 1 March 2004 as the
date of transition. Comparative figures have accordingly been restated.
These annual financial statements have been audited by Deloitte & Touche
whose unqualified report is available for inspection at the company"s
registered office.
2. TRANSITION TO IFRS
AUDITED IFRS
YEAR TRANSITION
ENDED DATE
28 FEBRUARY 1 MARCH
2005 2004
R R
RECONCILIATION OF PREVIOUS SA GAAP TO IFRS
Balance sheet
Equity
As previously reported - SA GAAP 10 253 622 10 568 065
Equity restated - IFRS 10 253 622 10 568 065
Income statement
Net profit as previously reported 5 126 844
Effect of transition to IFRS
Recognition of share-based payments (133 789)
as an expense
Net profit for the year restated - IFRS 4 993 055
Effect of transition to IFRS on earnings
per share (cents) 2006 2005
Effect on basic earnings per share
Recognition of share-based payments as an
expense (0,39) (0,15)
Effect on diluted earnings per share
Recognition of share-based payments as an
expense (0,38) (0,15)
The transition to IFRS has resulted in the adoption of the following new and
revised standards:
IFRS 2, Share-based Payment
IFRS 2 Share-based Payment requires the recognition of equity-settled share-
based payments at fair value at the date of grant. Prior to the adoption of
IFRS 2, the Group did not recognise the financial effect of share-based
payments until such payments were settled.
In accordance with the transitional provisions of IFRS 2, the Standard has
been applied retrospectively to all grants of equity instruments after 7
November 2002 that were unvested as of 1 January 2005. The Standard
therefore applies to share options issued in 2003, 2004 and 2005.
For the current year, the impact of share-based payments is a net charge to
income of R329 427. At 28 February 2006 the share-based payment reserve
amounted to R463 216.
Annual Report and Notice of Annual General Meeting
As the annual report for the year ended 28 February 2006 ("the annual
report") will be posted to shareholders on Thursday, 4 May 2006, 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 28 February 2006("the AGM"). The AGM will be
held at Deloitte, Deloitte Place, 2 Pencarrow Crescent, Pencarrow Park, La
Lucia Ridge Office Estate, La Lucia on Friday, 26 May 2006 at 15h30.
REPORT TO STAKEHOLDERS
Financial results
Revenue increased by 8% over the prior year. Earnings per share grew by 3,7%
on the prior year to 5,87 (5,66) cents per share. The Sugar and Downstream
business unit performed well in the period under review. Operating margins
reduced due to investments in growing direct staff capacity and
transformation as well as skills development and quality assurance. The
group invested in additional sales and marketing capacity. This resulted in
notably improved CaneLab product sales.
Surplus cash retained for growth is invested in listed preference shares on
which a gain of R0,3 million was made.
Dividends
Dividend number 3 of 3 cents per share was paid to shareholders on 13 June
2005. The Board of Directors of the company considers that its policy of
considering a dividend once annually remains appropriate and has declared
dividend number 4 of 3.67 cents per share which will be payable to
shareholders recorded in the register of the company on Friday, 9 June 2006.
This represents an increase of 22% over the prior dividend per share and a
dividend cover of 1.6 times.
The salient dates relating to the dividend are as follows:
2006
Last day to trade in order to participate in the
dividend "cum" dividend Friday, 2 June
The shares will trade "ex" dividend from the
commencement of business on Monday, 5 June
The record date will be Friday, 9 June
The dividend will be paid on Monday, 12 June
Share certificates may not be dematerialised or rematerialised between
Monday, 5 June 2006 and Friday, 9 June 2006, both dates inclusive.
Strategy
The core business, being the Sugar and Downstream operations substantially
met its strategic objectives for the year. The custom built solutions
business delivered a sound performance. The DevMan business unit
underperformed expectations and we have consequently formed a black owned
company, InfraSoft, with strategic black partners who will add value to the
solution and be dedicated to serving the public sector market.
In line with the strategy to diversify by acquisitive growth, InfoWave made
an acquisition of a niche software and solutions business at the end of the
period. InfoWave acquired a loan account of R14 million and an effective
63,8% majority stake in the ordinary shares in ApplyIT (Pty) Limited with
effect from 1 March 2006. InfoWave purchased 73,8 % of the ordinary shares
and immediately on sold 10% to two black empowerment investors which results
in ApplyIT having 26% black ownership as a consequence of the transaction.
ApplyIT specialises in operational, health, safety, environment and quality
management systems for the manufacturing sector. It is a Microsoft certified
company which broadens the InfoWave group"s technology offerings. InfoWave
has a number of operational synergies and cross selling opportunities with
ApplyIT. The business has blue chip clients and prospects. ApplyIT has
annual revenues of R6,5 million of which approximately 50% is annuity
income. The purchase price was R0,5 million up front with a further R8,6
million contingent on meeting stringent revenue growth thresholds exceeding
40% per annum and 20% per annum in the first and second years respectively.
The group still has surplus cash available for investment in acquisitive
growth opportunities. We are currently engaged in early exploratory stage
discussions of this nature.
The board
Mr Wanda Shuenyane, was appointed in July 2005 as a non-executive director,
pursuant to a black empowerment transaction concluded by InfoWave"s largest
shareholder, the iCapital Growth Fund I. He brings strategic and sales and
marketing expertise to the board.
The listing
InfoWave"s listing was transferred from the Development Capital Market (DCM)
where it was listed in 1998 to the computer services sector of the Main
Board of the JSE in October 2005.
BEE
InfoWave remains committed to genuine broad based transformation across all
aspects of the Department of Trade and Industry"s Codes of Good Practice.
InfoWave has made progress on a number of these areas in the year under
review, notably, employment equity, where the black staff complement has
increased from 54% to 60% and skills development spend which has increased
threefold. InfoWave Holdings Limited is 25% black owned.
Post the financial year end, InfoWave supported a share repurchase by Adapt-
IT from one of its minority shareholders whereby InfoWave"s interest grew to
33%.
InfoWave remains actively involved in this enterprise development company.
InfoWave continues to dedicate its corporate social investment to education
and specifically the Ebuta Trust.
Prospects
The prospects of the core business for the financial year ahead are healthy.
We will focus on the performance of ApplyIT to ensure its success,
sustainability and contribution to the group. We will continue to pursue
acquisitive growth opportunities in line with our niche solutions strategy.
Appreciation
We would like to express our thanks to all employees of the group for their
dedication and hard work this year. We thank our customers for their
commitment to the success of our longstanding relationships with them.
R P Collis T Dunsdon
Non-executive chairman Chief executive officer
Date: 03/05/2006 05:10:10 PM Produced by the JSE SENS Department
