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IFW
IFW
InfoWave - Interim results for the period ended 31 August 2006
Infowave Holdings Limited
(Registration number 1998/017276/06
Share code: IFW & ISIN: ZAE000016440
("InfoWave" or "the company")
UNAUDITED GROUP RESULTS for the six months ended 31 August 2006
Ukuze uthole imphumela yesingisi uyacelwa ukuba ubheke kwi "website" ethi
www.infowave.co.za.
Abridged Consolidated Income Statement (unaudited)
6 months 6 months Year
ended ended ended
31 August 31 August 28 February
2006 2005 2006
R"000 R"000 R"000
Revenue 25 958 17 683 34 398
Profit from operations
(before interest) 3 984 3 462 6 761
Net interest income 95 60 140
Preference dividends received 134 137 273
Revaluation of listed
preference shares (436) 4 308
Share of profit from associate 422 88 55
Profit before taxation 4 199 3 751 7 537
Taxation (1 713) (1 406) (2 530)
Normal taxation (1 348) (1 102) (2 226)
Secondary taxation on companies (365) (304) (304)
Profit for the period 2 486 2 345 5 007
Attributable to minorities (155) - -
Attributable to ordinary
shareholders 2 641 2 345 5 007
Headline profit
Profit attributable to
ordinary shareholders 2 641 2 345 5 007
Headline profit 2 641 2 345 5 007
Number of ordinary
shares in issue ("000) 86 906 85 572 85 821
Weighted average ordinary
shares in issue ("000) 86 546 84 831 85 280
Headline earnings per
ordinary share (cents) 3,05 2,76 5,87
Earnings per
ordinary share (cents) 3,05 2,76 5,87
Fully diluted earnings
per share (cents) 3,02 2,70 5,74
Return on equity (%) 22,12 23,02 42,37
Return on assets (%) 13,51 16,30 31,87
Abridged Consolidated Balance Sheet (unaudited)
31 August 31 August 28 February
2006 2005 2006
R"000 R"000 R"000
Assets
Non-current assets
Property and equipment 936 518 613
Intangible assets 545 24 342
Goodwill 44 - -
Investment in associated company 647 393 214
Deferred taxation asset 215 296 198
2 387 1 231 1 367
Current assets
Trade and other receivables 10 640 7 413 7 328
Listed preference shares* 4 131 4 262 4 567
Cash resources 2 395 1 482 4 254
17 166 13 157 16 149
Total assets 19 553 14 388 17 516
Equity and liabilities
Capital reserves
Issued capital 9 9 9
Share premium 671 438 461
Share-based payment reserve 624 273 463
Accumulated profit 12 066 9 784 12 446
Equity attributable to
ordinary shareholders 13 370 10 504 13 379
Minority interest 436 - -
13 806 10 504 13 379
Non-current liabilities
Deferred taxation liability 77 114 203
Current liabilities
Trade and other payables 5 671 3 770 3 934
Total equity and liabilities 19 553 14 388 17 516
Net asset value 13 370 10 504 13 379
Net asset value per
ordinary share (cents) 15,38 12,28 15,59
Liquidity ratio (times) 3,03 3,45 4,10
Solvency ratio (times) 3,40 3,70 4,23
Market price per share
Close (cents) 55 50 65
High (cents) 72 50 65
Low (cents) 50 33 32
Capital expenditure for the period 268 174 464
Capital expenditure authorised 891 348 744
* These comprise an investment in Standard Bank preference shares and
have a coupon rate of 70% of prime.
Abridged Consolidated Cash Flow Information (unaudited)
6 months 6 months Year
ended ended ended
31 August 31 August 28 February
2006 2005 2006
R"000 R"000 R"000
Cash flows from
operating activities
Profit from operations
(before interest and dividends) 3 984 3 462 6 761
Adjustment for:
Share-based payment expense 161 139 329
Depreciation and amortisation 494 235 536
Cash generated from operations,
before working capital changes 4 639 3 836 7 626
Working capital changes
Increase in receivables (2 551) (745) (457)
Increase in payables 666 141 569
Cash generated from operations 2 754 3 232 7 738
Taxation paid (1 507) (1 312) (2 598)
Net interest income 95 60 140
Preference dividends received 134 137 273
Dividend paid to shareholders (3 021) (2 567) (2 567)
Net cash (outflow)/inflow
from operating activities (1 545) (450) 2 986
Cash flow from
investing activities
Acquisition of equipment (268) (174) (464)
Investment in intangible assets - - (425)
(Increase)/decrease in investment
in associated company (137) - 29
Acquisition of subsidiaries (626) - -
Sale of minority stake in
subsidiaries 261 - -
Net cash outflow from
investing activities (770) (174) (860)
Cash flows from
financing activities
Proceeds from share issues 210 334 356
Net cash outflow from
financial activities 210 334 356
Net (decrease)/increase
in cash resources (2 105) (290) 2 482
Cash resources at
beginning of period 4 254 1 772 1 772
Cash resources on
acquisition of subsidiaries 246 - -
Cash resources at end of period 2 395 1 482 4 254
Group Statement of Changes in Equity (unaudited)
Share-based
Share Share Accumulated payment
capital premium profit reserve
R"000 R"000 R"000 R"000
Balance at
28 February 2005 8 105 10 006 134
Net profit
for the year - - 5 007 -
Shares issued
during the year 1 356 - -
Share-based
payment reserve - - - 329
Dividend paid - - (2 567) -
Balance at
28 February 2006 9 461 12 446 463
Subsidiary
acquired
Net profit
for the period - - 2 641 -
Shares issued
during the period 210 - -
Share-based
payment reserve - - - 161
Dividend paid - - (3 021)
Balance at
31 August 2006 9 671 12 066 624
Attributable to
equity holders Minority
of InfoWave interest Total
R"000 R"000 R"000
Balance at
28 February 2005 10 253 10 253
Net profit
for the year 5 007 5 007
Shares issued
during the year 357 357
Share-based
payment reserve 329 329
Dividend paid (2 567) (2 567)
Balance at
28 February 2006 13 379 13 379
Subsidiary
acquired 591 591
Net profit
for the period 2 641 (155) 2 486
Shares issued
during the period 210 210
Share-based
payment reserve 161 161
Dividend paid (3 021) (3 021)
Balance at
31 August 2006 13 370 436 13 806
Directors" Comment
These results have been prepared in accordance with International Financial
Reporting Standards (IFRS). There have been no changes in accounting policies.
The directors endorse the aims of the King Report on Corporate Governance in
conducting the affairs of the company with integrity and in accordance with the
highest standards of corporate practice. The company is committed to the
principles of openness, integrity and accountability in its dealings with all
its stakeholders.
Report to the Stakeholders
Financial results
Revenue grew 46,8% over the comparative period in the prior year to
R26 million. ApplyIT which was acquired with effect from 1 March 2006,
contributed R4,1 million to revenue during the period, which accounted for half
of the growth in revenue.
InfoWave (Pty) Limited and InfoWave Internet Solutions (Pty) Limited performed
well in the period under review growing revenue by 23,6% and profit after tax
by 21,7% due to strong demand for project work. Although ApplyIT contributed a
loss of R0,15 million to the group, this represents a significant improvement
over its historic performance prior to its acquisition. This improved
performance is in line with the group"s projection on which the investment was
based. The start up company InfraSoft which markets the DevMan product in the
public sector underperformed against expectations due to longer than expected
sales cycles and contributed a loss of R0,2 million. The market has expressed
very positive sentiments about the product and increased focus is being placed
on closing the sales opportunities. The share of profits before tax from the
associated company, Adapt-IT, which focuses in the public sector grew by 480%
to R0,5 million, exceeding expectations.
Cash resources reduced by R1,9 million since year end primarily due to the
investment in ApplyIT and the improved annual dividend. Surplus cash of
R4,1 million is invested in listed preference shares which devalued by
R0,4 million during the interim period.
Profit attributable to ordinary shareholders grew 12,6% to R2,6 million
(R2,3 million) while earnings per share grew by 10,5% to 3,05 (2,76) cents per
share on the comparative period in the prior year.
The group has a strong balance sheet and has surplus cash retained for
investment in acquisitive growth opportunities.
Dividend
Ordinary dividend number 4 of 3,67 cents per share was paid to shareholders on
12 June 2006. This represented a dividend cover of 1,6 times. The company has a
policy to declare dividends at the end of the financial year and not at the
interim reporting date.
Strategy
In parallel with driving organic growth of the core business, it is the group"s
strategy to diversify by acquisitive growth in the niche software products
space. InfoWave acquired a 63,8% stake in niche software and solutions business
Apply-IT (Pty) Limited with effect from 1 March 2006. ApplyIT specialises in
operational, health, safety, environment and quality management systems.
The Board
There have been no changes in the board"s composition since 28 February 2006.
BEE
InfoWave Holdings Limited is 25% black-owned and a total of 61% of employees
across all group companies are black. InfoWave remains committed to genuine
broad based transformation across all aspects of the Department of Trade and
Industry"s Codes of Good Practice.
Prospects
The prospects of the core business for the remainder of the financial year are
sound. Focus is being placed on the performance of ApplyIT and InfraSoft to
ensure their success, sustainability and positive contribution to the group.
InfoWave will continue to pursue acquisitive growth opportunities in line with
our strategy.
Appreciation
InfoWave marked its tenth anniversary on 1 June 2006 and expressed thanks to
its customers for the success of the longstanding relationships with them. The
group also recognises all employees for their dedication and hard work, and in
particular those who have served the company since its founding.
On behalf of the board
RP Collis
Non-executive chairman
T Dunsdon
Chief executive officer
Durban
6 October 2006
Directors
RP Collis (Non-executive Chairman)
T Dunsdon (Chief Executive Officer), MCB Lionnet, CL von Pannier
C Jessop, BR Carrilho, WK Shuenyane (non-executive director)
P Aposporis*, Dr AB Ravno*
(*Independent non-executive directors)
Registered office
Gleneagles Park, 10 Flanders Drive
Mount Edgecombe, 4300
PO Box 2225
M.E.C.C.
Mount Edgecombe, 4301
Transfer secretaries
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street
Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Sponsor
Sasfin Capital
Sasfin Place, North Block
13-15 Scott Street
Waverley, 2090
Date: 05/10/2006 05:00:09 PM Produced by the JSE SENS Department
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