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IFC
IFC
IFC - IFCA Tech - Audited results for the 10 month period ended 31 December 2006
IFCA TECHNOLOGIES LIMITED
Incorporated in the Republic of South Africa)
(Registration number 2006/030759/06)
Share code: IFC & ISIN: ZAE000088555
("IFCA Tech" or "the company")
Revenue up 21.1%
Net profit before taxation up 87.0%
Net profit after taxation up 53.6%
EPS and HEPS up 52.4%
NTAV per share up 165.1%
AUDITED RESULTS FOR THE 10 MONTH PERIOD ENDED 31 DECEMBER 2006
The audited results set out below represent the first results of IFCA Tech since
its incorporation on 09 October 2006, whereafter it acquired 100% of the shares
in and claims against IFCA sWare (Proprietary) Limited, which is the operating
subsidiary of the IFCA Tech group for the period under review. Accordingly, the
information of IFCA sWare as detailed in the company`s prospectus dated 29
November 2006 has been included for purposes of comparison.
Balance Sheet
Figures in Rand IFCA Tech IFCA sWare
31 Dec 2006 28 Feb 2006
Assets
NonCurrent Assets
Property, plant and equipment 2 679 882 3 342 446
Intangible assets 36 635 407 35 297 160
39 315 289 38 639 606
Current Assets
Loans to directors, managers and - 4 727
employees
Current tax receivable - 79 907
Trade and other receivables 5 995 031 2 701 937
Cash and cash equivalents 4 705 639 2 491 128
10 700 670 5 277 699
Non-Current asset held for sale 740 839 -
Total Assets 50 756 798 43 917 305
Equity and Liabilities
Equity
Share capital 42 825 099 36 705 559
Retained income 3 668 807 1 936 809
46 493 906 38 642 368
Liabilities
NonCurrent Liabilities
Other financial liabilities 511 116 1 708 796
Deferred tax 755 398 156 961
1 266 514 1 865 757
Current Liabilities
Other financial liabilities 82 006 296 527
Current tax payable 320 565 16 668
Operating lease liability - 8 594
Trade and other payables 2 014 850 2 785 340
Deferred income 578 957 302 051
2 996 378 3 409 180
Total Liabilities 4 262 892 5 274 937
Total Equity and Liabilities 50 756 798 43 917 305
Net asset value per share (cents per 46.49 42.94
share)
Net tangible asset value per share 9.86 3.72
(cents per share)
Number of shares in issue at period end 100 000 000 90 000 000
Income statements
Figures in Rand IFCA Tech IFCA sWare
10 months ended 12 months ended
31 Dec 2006 28 Feb 2006
Revenue 14 750 428 12 180 643
Cost of sales (4 882 476) (4 048 325)
Gross profit 9 867 952 8 132 318
Other income 26 922 70 375
Operating expenses (5 009 133) (5 579 790)
Operating profit 4 885 741 2 622 903
Investment revenue 85 450 85 328
Finance costs (145 891) (128 219)
Profit before taxation 4 825 300 2 580 012
Taxation (1 156 493) (191 358)
Profit for the period 3 668 807 2 388 654
Adjustments for headline earnings:
- Profit on disposal of asset (461) --
- Impairment of loans 1 277 --
Headline earnings for the period 3 669 623 --
Earnings per share (cents per share) 4.04 2.65
Headline earnings per share (cents per 4.04 2.66
share)
Weighted average number of shares in 90 751 634 90 000 000
issue
Statement of Changes in Equity
Figures in Rand Share Share Total share Retained Total
capital premium capital income equity
Balance at 28 -- -- -- -- --
February 2006
Issue of shares 100 000 43 533 370 43 633 370 -- 43 633 370
Profit for the -- -- -- 3 668 807 3 668 807
period
Balance at 31 100 000 43 533 370 43 633 370 3 668 807 46 493 906
December 2006
Abridged Cash Flow Statement
Figures in Rand 31 Dec 2006
Cash flows from operating activities 1 637 887
Cash flows from investing activities (1 818 137)
Cash flows from financing activities 2 394 761
Total cash movement for the period 2 214 511
Cash at the beginning of the period 2 491 128
Total cash at end of the period 4 705 639
COMMENTARY
The board of directors presents the company`s results for the 10 month period
ended 31 December 2006, reflecting the first results since the company`s listing
on 08 December 2006. The directors are pleased to report that the profit
forecast as set out in the company`s prospectus and as published on SENS on 08
December 2006, has been exceeded for the period ended 31 December 2006, further
details of which are set out below.
These financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") and have been audited by RAiN , whose
unqualified audit report is available for inspection at the registered office of
the company.
BACKGROUND, INCORPORATION AND NATURE OF BUSINESS
IFCA Technologies Limited was registered and incorporated as a public company in
the Republic of South Africa on 03 October 2006. IFCA Tech was incorporated to
act as the investment holding company for IFCA sWare (Proprietary) Limited
("IFCA sWare"), being the main operating company of the IFCA group for the 10
months ended 31 December 2006 and IFCA hWare (Proprietary) Limited ("IFCA
hWare"), a shelf company, which company was dormant and conducted no business
from incorporation until 31 December 2006, but which company will conduct the
Computerised Business Equipment solutions enterprise from 01 January 2007
onwards.
The company listed on the Alternative Exchange of the JSE Limited on 08 December
2006.
INDUSTRY AND BUSINESS OVERVIEW
IFCA sWare first commenced business in August 1999 as MBS Software (Pty) Limited
and was founded by Andy Moolman, Brian Schultz and Chris Boshoff, who remain as
directors on the board of IFCA sWare. IFCA sWare was originally formed for the
sole purpose of marketing and supporting the IFCA MSC Berhad ("IFCA MSC")
Malaysian Group`s suite of software products in Africa under license. The
business paid 50% of its software revenue to IFCA MSC in Malaysia in terms of
its license agreement and the business grew primarily through the use of
Malaysian consultants at a very high cost to the South African business.
In September 2004, the IFCA Group in Malaysia vended in the Intellectual
Property to the suite of software products for the African continent and in
return, took up a 49.07% equity interest in IFCA sWare through its Malaysian
listed company, IFCA MSC. The company then changed its name to IFCA MBS
Software (Pty) Limited. BK Wong was relocated from Malaysia to take up the
position of Managing Director in January 2005 and the name of the company was
changed to IFCA sWare on 09 October 2006 in order to house the group`s software
solutions going forward. All of the founding shareholders remain actively
involved in the operations of the company as executive directors of IFCA sWare.
IFCA sWare is an enterprise-wide integrated business solutions provider
providing industry specific software solutions for four business segments,
namely:
- Property Development and Management (known as Property+);
- Project Management, Engineering and Construction (known as Contract+);
- Hospitality (known as Resorts+, D`Hotel and D`Club); and
- Finance & Leasing (Loans+).
IFCA sWare`s solutions encompass the functionalities and features of products
that have been nurtured and matured for almost 20 years by the IFCA group
worldwide, from meeting the business needs of more than 1 200 customers and 16
000 registered users spread across four continents. IFCA sWare`s customers
include Transnet Housing, The Country Club Johannesburg, Blair Atholl, Riviera
on Vaal Hotel & Country Club, Arivia.kom, Kopanong Hotel and Conference Centre,
Eagle International Group Holding (Eagle Canyon), Atlantic Beach Golf Club in
Cape Town, The Botswana Housing Corporation, National Housing Enterprise
(Namibia) and the Swaziland National Housing Corporation.
The marketing and distribution of Computerised Business Equipment solutions only
commenced during the period under review as a division of IFCA sWare. As from
01 January 2007, these operations will be conducted through IFCA hWare. The two
products being marketed by IFCA hWare are the mimio Xi and the TOTalizer. The
mimio Xi is a portable interactive whiteboard system that captures and records
writing off a whiteboard and, when in use with a PC and projector, converts an
ordinary whiteboard into a touch screen interactive whiteboard. The TOTalizer
utilises both hardware and software and is a revolutionary stock taking system
that can electronically measure the quantity of items in any container in a pre-
set unit of measure by simply placing the item on the TOTalizer, such as liquor
bottles in a bar or a bottle or box of pills in a pharmacy. The TOTalizer then
uploads the electronic count directly to the TOTalizer`s proprietary software
and onwards to any other third party`s inventory software system. The TOTalizer
comes in several models for measuring the lightest of items such as pills to
items as heavy as those packed in pallets and kegs.
FINANCIAL OVERVIEW
The results for the 10 months ended 31 December 2006 reflect an improvement from
the projections included in the company`s profit forecast as detailed in the
company`s prospectus dated 29 November 2006. Profit attributable to ordinary
shareholders is R3 668 807 compared with R3 572 076 as per the prospectus.
Earnings and headline earnings per share for the 10 month period ended 31
December 2006 is 4.04 cents per share compared to 3.57 cents per share as
contained in the company`s prospectus, representing an improvement of 13.1%.
The earnings per share information has been calculated on the assumption that
the 90 000 000 shares issued for the acquisition of IFCA sWare, the main
operating company prior to the listing, were in issue for the full period
commencing 01 March 2006. Thus the weighted average shares in issue for the 10
month period ended 31 December 2006 is 90 751 634.
Income statement review
The directors have presented commentary on the income statement results in
comparison to the prior year results of IFCA sWare as effectively the results
are directly comparable. It should be noted that the current period results are
for a 10 month period compared to a 12 month period in the prior year. No
provision for annualising the results has been made for the current period.
Turnover grew 21.1% over the prior period as a result of both increased annuity
flows and through increased business levels with both existing and new
customers. Similarly cost of sales increased in line with turnover by 20.6%.
Operating expenses declined by 10.2% due to the training of local professionals
and less reliance on more expensive overseas consultants. This is further
evidenced by the percentage of operating costs to turnover, which was 34.0% for
the current period as opposed to 45.8% in the prior year.
The combined effect of the above has resulted in operating and net profit before
taxation for the 10 months ended 31 December 2006 exceeding the prior full
year`s operating and net profit before taxation by 86.3% and 87.0% respectively.
This has partly been off-set on the profit after taxation line as a result of a
substantially higher taxation charge to the income statement, which is primarily
caused by higher profitability and the tax allowance of the Intellectual
Property acquired, consequently having a lesser impact on the taxation charge.
Accordingly, net profit for the 10 month period has exceeded the prior year by
53.6%.
Balance sheet review
The balance sheet commentary has been addressed to the movement between the
prior year results of IFCA sWare as at 28 February 2006 for IFCA sWare, as this
is considered to be meaningful to shareholders.
Intangible assets increased due to the policy of capitalising development costs
and then amortising these costs over 5 years. This policy is consistent with
that of the controlling shareholder, which is listed in Malaysia.
Trade and other receivables increased due to large contracts being implemented
towards the end of the reporting period. The increased in deferred revenue is
also primarily attributed to a large contact implemented, of which more than 50%
has been deferred to the following year.
Cash and cash equivalents increased substantially due to the proceeds of the
offer on listing of the company, a portion of which has been applied to reduce
interest bearing debt at year end, until such time as funding is required for
expansion purposes as disclosed in the company`s prospectus.
The non-current asset held for sale represents the cost of the property
currently occupied by IFCA Tech, which has been sold subsequent to year end.
Share capital increased as a result of the R5 million raised on listing of the
company, which was partly off set by a write-off against share premium of issue
costs. As mentioned earlier, this has led to a decrease in non-current
liabilities as well as creditors.
Cash Flow Statement review
Cash generated by operations increased as a result of the offer in terms of the
prospectus dated 29 November 2006, which proceeds have been applied, in the
interim, to the reduction of borrowings.
DIVIDENDS
In line with information contained in the prospectus, the directors have decided
not to declare a dividend.
SEGMENTAL REPORTING
The company has presented segmental information for the revenue relating to the
Software Solutions and Computerised Business Equipment divisions as follows:
Revenue R
Software Solutions 14 095 543
Computerised Business Equipment 654 885
Total 14 750 428
The Computerised Business Equipment division has been transferred to IFCA hWare
as from 01 January 2007.
AUTHORISED AND ISSUED SHARE CAPITAL
The company was incorporated during the year with an authorised and issued share
capital of 500 000 000 shares and 70 shares respectively, at R0.001 each.
ACQUISITIONS AND ISSUE OF SHARES FOR CASH
Details of the shares issued during the period under review are set out below:
Details Number of Date Issue
Shares Price
Acquisition of IFCA sWare 89 999 930 09 October 2006 42.926
Private placement on 10 000 000 08 December 2006 50.000
listing
SUBSEQUENT EVENTS
Subsequent to the year end and as indicated in the prospectus dated 29 November
2006, IFCA Tech, through its 100% subsidiary BJS (Proprietary) ("BJS"), disposed
of a property known as Erf 1935 Houghton Estates for a sale consideration of R1
150 000 following its acquisition of Erf 235 Woodmead Extension 1 for a purchase
consideration of R3 125 000. No commission is payable on the disposal and a
profit after taxation of R351 614 is expected on the disposal of the property.
The company acquired larger premises to accommodate an increased staff
complement and will relocate its operations during March 2007.
DIRECTOR CHANGES
IFCA Tech was a shelf company prior to its acquisition of IFCA sWare on 09
October 2006, following which the following directors were appointed.
Director Date appointed
Dr Cynthia Thandiwe Ndlovu (Chair) 03 October 2006
Mr Boon Kee Wong ? (Chief Executive Officer) 03 October 2006
Christiaan Hendrik Boshoff (Financial 03 October 2006
Director)
Kean Cheun Yong*? 03 October 2006
Kian Keong Yong*? 03 October 2006
Michael Roderick Gahagan*GBP 03 October 2006
* non-executive
? Malaysian
GBP British
COMPANY SECRETARY
Arcay Client Support (Proprietary) Limited was appointed as company secretary
with effect from date of incorporation of the company.
AUDITORS
RAiN acted as the company`s auditors for the period under review from date of
incorporation and will continue in office in accordance with section 270(2) of
the Companies Act, 1973, as amended.
LITIGATION
There is no litigation pending against the company.
FUTURE PROSPECTS
The directors of the company believe that the company has excellent prospects
based on the following:
- the current position of annuity income covering operating expenses;
- the intended roll out of branches in the Cape and Kwa-Zulu Natal regions,
- the expansion of product ranges into the existing client base;
- excellent reference clients;
- the launch of the Computerised Business Equipment business, which is
complementary to the Software Solutions of the company;
- the competitive position in terms of pricing following the injection of the
Intellectual Property into the business and removal of requirement to pay
royalties overseas;
- the ongoing reduction of consulting fees paid to international IFCA
consultants;
- the training and upliftment of local employees; and
- the positive cash flows of the company.
The directors consider that the business prospects are sound based on the above
factors as well as the existing client base, levels of annuity income and
prospects in the pipeline, which are growing as a result of the superior
integrated product offering of the company.
By order of the Board
Dr CT Ndlovu
Chairperson
BK Wong
Chief Executive Officer
23 February 2007
Johannesburg
Registered Office
Arcay House, Number 3 Anerley Road, Parktown, Johannesburg, 2193
PO Box 62397, Marshalltown, Johannesburg, 2107
Directors
Dr CT Ndlovu *(Chairman), BK Wong (CEO), CH Boshoff, MR Gahagan*, KC Yong *, KK
Yong *
* Non-executive
Designated Advisor
Transfer Office
Arcay Moela Sponsors (Proprietary) Limited
Link Market Services (Proprietary) Limited
Date: 23/02/2007 08:15:03 Produced by the JSE SENS Department.
