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IFC - IFCA - Reviewed Provisional Results for the year ended 31 December 2011
and Renewal of Cautionary Announcement
IFCA TECHNOLOGIES LIMITED
Incorporated in the Republic of South Africa
(Registration number 2006/030759/06)
Share code: IFC ISIN: ZAE000088555
("IFCA" or "the Company")
REVIEWED PROVISIONAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2011 AND RENEWAL OF
CAUTIONARY ANNOUNCEMENT
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
as at as at
31-Dec-11 31-Dec-10
R`000 R`000
Non-current assets 19 2 783
Property, plant and equipment 19 162
Intangible assets - 2 523
Deferred tax - 98
Current assets 1 664 223
Trade and other receivables 957 146
Cash and cash equivalents 707 77
Total assets 1 683 3 006
Equity (23 932) (963)
Share capital 56 660 43 186
Accumulated loss (80 592) (44 149)
Non-current liabilities - 14
Deferred tax - 14
Current liabilities 20 929 3 955
Current tax payable - 89
Trade and other payables 20 929 3 556
Deferred income - 310
Liabilities of non-current asset 4 686 -
held for sale
Total equity and liabilities 1 683 3 006
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
year ended 31- year ended 31-
Dec-11 Dec-10
R`000 R`000
Revenue - 2 110
Cost of sales - (465)
Gross profit - 1 645
Other income - 467
Operating expenses (32 171) (3 666)
Operating loss (32 171) (1 554)
Impairment of intangible assets - (8 311)
Investment revenue - 3
Finance costs (2) (32)
Loss before taxation (32 173) (9 894)
Taxation - (163)
Loss from continuing operations (32 173) (10 057)
Loss from discontinued operations (4 270) -
Loss attributable to ordinary equity (36 443) (10 057)
shareholders
Other comprehensive income - -
Total comprehensive income (36 443) (10 057)
Loss per share information
Weighted average number of shares in 162 540 107 890
issue (`000)
Total number of shares in issue 301 875 115 000
(`000)
Basic loss per share (cents) (22.42) (9.32)
Headline loss per share (cents) (20.84) (1.61)
Reconciliation of earnings
Basic loss (36 443) (10 057)
Loss on sale of property, plant and 43 9
equipment
Impairment losses 2 523 8 311
Headline loss for the period (33 877) (1 737)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Accumulated Total
capital premium loss equity
R`000 R`000 R`000 R`000
Balance at 1 January 100 42 486 (34 161) 8 425
2010
Prior year - - 69 69
adjustment
Total comprehensive - - (10 057) (10 057)
loss for the year
Shares issued 15 585 - 600
Balance at 31 115 43 071 (44 149) (963)
December 2010
Total comprehensive - - (36 443) (36 443)
loss for the year
Shares issued 187 13 287 - 13 474
Balance at 31 302 56 358 (80 592) (23 932)
December 2011
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
year ended 31- year ended
Dec-11 31-Dec-10
R`000 R`000
Cash outflow from operating activities (12 924) (947)
Cash inflow from investing activities 79 139
Cash inflow from financing activities 13 475 600
Increase/(Decrease) in cash and cash 630 (208)
equivalents
Cash and cash equivalents at beginning 77 284
of period
Cash and cash equivalents at end of 707 77
period
COMMENTARY
Basis of preparation
The board of directors of IFCA ("Board") presents the Company`s reviewed
provisional results for the year ended 31 December 2011, which have been
prepared on a going concern basis and in accordance with IAS 34 - Interim
Financial Reporting, the Companies Act, 2008 (Act 71 of 2008) ("Companies Act"),
as amended, and the Listings Requirements of JSE Limited ("JSE"). The accounting
policies applied in the preparation of these condensed financial statements,
which are based on reasonable judgments and estimates, are in accordance with
International Financial Reporting Standards ("IFRS") and are consistent with
those applied in the annual financial statements for the year ended 31 December
2010.
The reviewed provisional results for the year ended 31 December 2011 ("year
under review") have been prepared under the supervision of A W Bruens, CA(SA),
the executive Financial Director of IFCA.
Review conclusion
The provisional results for the year under review have been reviewed by Nolands
Inc and their unmodified review report is available for inspection at the
registered office of the Company.
Financial Overview
The reviewed provisional results for the year ended 31 December 2011 reflect a
basic loss and headline loss of 22.42 and 20.84 cents per share, respectively
(31 December 2010: basic loss and headline loss of 9.32 and 1.61 cents per
share, respectively), based on 162 539 901 weighted average shares in issue
(2010: 107 890 411). The increase in the loss is as a result of the costs
incurred in the restructuring of the Company, as explained below.
Revenue from continued operations has decreased to Rnil year on year as a result
of a transition phase during which the revenue model is being completely
restructured. Operating expenses have also increased substantially, primarily as
a result of the corporate actions required to restructure the business model.
The restructuring of the business model is as a direct result of the Board`s
change in strategy for the Company, which is more fully detailed under
paragraphs 11 and 12 below `Future prospects` and `Subsequent events`,
respectively. It should be noted that approximately 40% to 50% of the operating
expenses are non-recurring in relation to future Group operational expenses.
The reviewed provisional results include the accrual of a commitment fee of USD2
million in respect of the Special Private Placement Agreement ("SPPA") for
USD100 million, announced on SENS on 17 February 2011, which is more fully
detailed under paragraph 11 `Future prospects` below. It is intended that the
commitment fee will be settled to Singapore based investment fund, Equity
Partners Fund SPC ("Equity Partners "), as the funds are drawn down. The draw
down of funds will take place from time to time as and when required.
In view of the intended disposal of the Company`s subsidiary, IFCA Software
Proprietary Limited ("IFCA sWare"), detailed in paragraph 7 below `Acquisitions
and disposals`, the value of the intangible asset has been impaired in its
entirety, the provisions of IFRS 5 (Non-current asset held for sale) have been
applied and the results of the subsidiary are separately disclosed.
Prior period error
The Company has become aware of an error that occurred in calculating the
headline loss per share for the year ended 31 December 2010. The headline loss
per share was incorrectly stated as 1.43 cents and should have been 1.61 cents.
Segmental analysis
The Company does not operate in distinct operating segments and accordingly, no
segmental analysis has been prepared.
Dividends
No dividends were paid or declared during the year under review, and none are
recommended at this stage.
Acquisitions and disposals
On 5 August 2011, and following the subsequent update on 21 February 2012, it
was announced on SENS that IFCA had entered into:
a Sale of Shares Agreement with Contisource Proprietary Limited ("Contisource")
in terms of which Contisource will acquire 100% of the IFCA sWare Sale Shares
and the IFCA sWare Sale Claims for a total consideration of R1 000.00 ("IFCA
sWare Disposal"). The circular containing full details of, inter alia, the IFCA
sWare Disposal as well as a notice to convene a general meeting of IFCA
shareholders in order to consider and, if deemed fit to pass, with or without
modification, the resolutions necessary to approve and implement, inter alia,
the IFCA sWare Disposal ("Circular"), has been distributed to shareholders on
Friday, 23 March 2012.
On 5 August 2011, it was announced on SENS that IFCA had entered into:
a Sale of Shares and Claims Agreement with the Trustees of The Birdie Trust
("The Birdie Trust") in terms of which IFCA will acquire 100% of the entire
issued share capital in, and claims against Third Wave Proprietary Limited
("Third Wave") from The Birdie Trust ("Third Wave Acquisition"). However, on 23
January 2012 it was announced on SENS that certain conditions of the Third Wave
Acquisition are being finalised. Accordingly, a resolution pertaining to the
Third Wave Acquisition would not be included in the Circular distributed to
shareholders on Friday, 23 March 2012;
a Sale of Shares and Claims Agreement with RHB Holdings Proprietary Limited as
Trustees for the time being of the RHB Investment Trust ("RHB Trust"), Devoran
Trustees Limited as Trustees for the Jade Trust ("Jade Trust") and E&J Abbott
(Proprietary) Limited as Trustees for the E&J Abbott Family Trust ("AFT Trust"),
collectively referred to hereinafter as "the Seller of OAMM", in terms of which
IFCA will acquire 45% of the entire issued share capital in Out & About
Marketing and Media Proprietary Limited ("OAMM"), a company incorporated in
Australia, from the Seller of OAMM, for a total purchase consideration of A$11
175 033 ("the OAMM Acquisition"). However, on 21 September 2011 it was
announced on SENS that the OAMM Acquisition is in the process of being
restructured. Accordingly, a resolution pertaining to the Third Wave Acquisition
would not be included in the Circular distributed to shareholders on Friday, 23
March 2012.
Both of these acquisitions are subject to board and shareholder approval.
Shareholders are referred to paragraphs 11 and 12 below `Future prospects` and
`Subsequent events`, respectively for details on acquisitions that are currently
being negotiated.
Share capital
During the year under review, a total of 186 875 000 shares were issued for cash
for a net total consideration of R13 473 693. The issues of shares for cash were
effected under the Company`s general authority, which was approved by
shareholders at the Company`s annual general meeting on 21 July 2011. The
proceeds from the general issues of shares for cash were utilised to settle
creditors, operating costs, corporate action fees and to fund future growth
opportunities.
Litigation
No litigation is pending against the Company.
Director changes
The following changes in directors have taken place during the year under review
and up to the date of this announcement:
Directors Appointed Resigned
M W Palmer 14 January 2011
Z J van Niekerk** 14 January 2011
T Mokgosi-Mwantembe 26 January 2011
C W Clarke 26 January 2011
I J Jones 1 February 2011
K K Yong 5 April 2011
M Shaw 11 May 2011
N P Doyle* 30 June 2011
M Gahagan 30 June 2011
K B Motshabi 5 July 2011
A M Barnard 12 July 2011
A W Bruens 16 January 2012
*Irish
**On 15 July 2011, Z J van Niekerk was appointed as an executive director and
the Chief Executive Officer of the Company.
Future Prospects
As announced on SENS and detailed in the Circular, it is the intention of the
Board to transform IFCA from a technology provider into a diversified investment
holding company. The Company intends to achieve this by selectively investing in
well-managed businesses with future growth potential. The Company will apply its
expertise, networks and capital, thereby assisting these companies in taking the
next step up the value curve.
As set out in paragraph 7 above `Acquisitions and disposals`, the Company
intends finalising, amongst others, the Third Wave Acquisition and the OAMM
Acquisition. Accordingly, a circular containing full details of these proposed
transactions will be distributed to IFCA shareholders in due course.
As reported previously, IFCA has successfully negotiated and signed a USD100
million SPPA with Equity Partners. Shareholders are referred to the SENS
announcement issued on 17 February 2011 which provides additional detail with
regards to the SPPA. The issue of shares pursuant to the SPPA will be subject
to, inter alia, shareholder approval and the JSE Listings Requirements.
The funds drawn down on the SPPA are intended to fund future acquisitions, and
will be combined with other sources of funding, thereby ensuring the most
optimal capital structure for the Group. To date, no funds have been drawn down
from this facility. However, should the need to utilse these funds arise, all
conditions and terms of the SPPA will be communicated to shareholders.
Subsequent events
On 24 January 2012, the Company received JSE approval to issue
150 000 000 ordinary shares at an issue price of 7.48 cents at no discount or
premium to the 30 day volume weighted average traded price of such securities.
As set out in paragraph 7 above `Acquisitions and disposals`, on 23 March 2012,
the Company posted the Circular to shareholders regarding:
the change in control and resultant mandatory offer by Decaweb to IFCA
shareholders to acquire all of their IFCA shares for a cash consideration of
8.00 cents per share, plus interest payable thereon at a rate of 15.5% per
annum;
the disposal by IFCA to Contisource of 100% of the IFCA sWare Sale Shares and
the IFCA sWare Sale Claims for a total consideration of R1 000.00, which
disposal constitutes a disposal of IFCA`s entire undertaking in terms of section
112 of the Companies Act;
the conversion of the Company`s par value shares into no par value shares and an
increase in the authorised no par value share capital of the Company and the
consequential amendments to the Memorandum of Incorporation of the Company; and
a change of name of the Company to Sherbourne Capital Limited.
The general meeting, at which the resolutions necessary to approve and implement
the corporate actions set out above, is scheduled to take place on Monday, 4
June 2012.
Renewal of cautionary announcement
Further to the cautionary announcement dated 3 March 2011, and the subsequent
renewal of cautionary announcements (the most recent of which was dated 21
February 2012) shareholders are advised that negotiations are still in progress.
These negotiations, if successfully concluded, may have a material effect on the
price of the Company`s securities. Shareholders should therefore continue to
exercise caution when dealing in the Company`s securities, until a further
announcement is made.
By order of the Board
Z J van Niekerk
Chief Executive Officer
30 March 2012
Johannesburg
Directors
C W Clarke* (Chairman), Z J van Niekerk (Chief Executive Officer),
A W Bruens (Financial Director), N P Doyle*, K B Motshabi*, M W
Palmer*
(*Independent non-executive)
Company Secretary and Registered Office
Merchantec Proprietary Limited
(Registration number 2008/027362/07)
2nd Floor, North Block, Hyde Park Office Tower
Corner 6th Road and Jan Smuts Avenue
Hyde Park, Johannesburg, 2196
(PO Box 41480, Craighall, 2024)
Transfer Office
Link Market Services South Africa Proprietary Limited
Designated Adviser
Merchantec Capital
Date: 30/03/2012 17:30:03 Supplied by www.sharenet.co.za
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