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IDE - Ideco Group Limited - Unaudited consolidated results for the six

Release Date: 31/05/2012 12:55
Code(s): IDE
Wrap Text

IDE - Ideco Group Limited - Unaudited consolidated results for the six months ended 29 February IDECO GROUP LIMITED (Incorporated in the Republic of South Africa) (Registration number: 2001/023463/06) ("Ideco" or "the Company" or "the Group") Share code: IDE ISIN code: ZAE000107579 Unaudited consolidated results for the six months ended 29 February 2012 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited Audited R`000 29 February 28 February 31 August 2012 2011 2011
ASSETS Non-current assets 86 500 78 912 75 806 Property, plant and equipment 9 190 9 899 9 809 Investment in associate - 533 - Intangible assets 51 421 57 535 54 752 Other long-term financial 15 788 - - asset Deferred tax 10 101 10 945 11 245 Current assets 33 300 22 015 27 368 Inventories 444 1 736 2 163 Trade and other receivables 23 458 16 130 22 146 Current portion of other long- 3 760 - - term financial asset Cash and cash equivalents 5 638 4 149 3 059 Non-current assets held for - 25 268 16 932 sale Total assets 119 800 126 195 120 106 EQUITY AND LIABILITIES Equity 26 474 20 799 20 937 Share capital 1 1 1 Share premium 21 286 21 286 21 286 Retained income/(accumulated 5 187 (488) (350) loss) Liabilities Non-current liabilities 51 078 48 817 50 030 Long-term borrowings 45 292 42 296 43 877 Deferred tax 5 786 6 521 6 153 Current liabilities 42 248 43 039 45 647 Current tax payable 245 548 568 Trade and other payables 10 717 9 002 10 188 Current portion of non-current 311 287 298 liabilities Bank overdraft 4 254 5 999 7 724 Provisions 1 358 1 840 1 506 Other financial liabilities 25 363 25 363 25 363
Liabilities associated - 13 540 3 492 directly with non-current assets held for sale Total liabilities 93 326 105 396 99 169 Total equity and liabilities 119 800 126 195 120 106 Net asset value per share 13,09 10,29 10,35 (cents) Net tangible asset value per (14,47) (20,35) (19,24) share (cents) CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited Audited R`000 Six Six Year ended months ended months ended 31 August 29 February 28 February 2011 2012 2011 Continuing operations Revenue 52 630 40 312 99 689 Cost of sales (15 973) (10 890) (35 933) Gross profit 36 657 29 422 63 756 Other income 121 36 1 067 Operating expenses (29 048) (24 278) (51 246) Earnings before interest, tax, 7 730 5 180 13 577 depreciation and amortisation Depreciation (863) (851) (1 999) Amortisation (3 338) (2 450) (5 354) Operating profit 3 529 1 879 6 224 Investment revenue 1 147 101 168 Finance costs (3 195) (3 369) (6 624) Profit on sale of discontinued 4 841 - - operation Profit/(loss) before tax 6 322 (1 389) (232) Taxation expense (2 509) (494) (2 069) Profit/(loss) for the period 3 813 (1 883) (2 301) from continuing operations Profit for the period from 1 724 787 1 343 discontinued operations Profit/(loss) for the period 5 537 (1 096) (958) Other comprehensive income - - - Total comprehensive 5 537 (1 096) (958) profit/(loss) attributable to ordinary shareholders Profit/(loss) per share Basic and diluted basic 2,74 (0,54) (0,47) profit/(loss) per share (cents) Continuing operations 1,89 (0,93) (1,14) Discontinued operations 0,85 0,39 0,67 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Unaudited Audited R`000 Six Six Year ended months ended months ended 31 August 29 February 28 February 2011
2012 2011 Cash generated by operations 10 038 4 491 7 081 Investment income 1 147 101 168 Finance costs (3 861) (3 369) (6 624) Taxation paid (2 057) (1 549) (3 771) Net cash flow from operating 5 267 (326) (3 146) activities Net cash flow from investing activities Acquisition of property, plant (459) (161) (1 413) and equipment Acquisition of intangible (6) (118) (241) assets Proceeds on disposal of 20 200 - - subsidiary Cash transferred to disposal (833) (227) (529) group Cash obtained on acquisition - - 90 Loan to finance the sale of (19 547) - - subsidiary Net cash flow from investing (645) (506) (2 093) activities Net cash flows from financing activities Repayment of long-term (144) (129) (268) borrowings Movement of other financial 1 571 1 571 3 302 liabilities Net cash flows from financing 1 427 1 442 3 034 activities Total cash movement for the 6 049 610 (2 205) period Cash at beginning of period (4 665) (2 460) (2 460) Total cash at end of period 1 384 (1 850) (4 665) CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Unaudited Audited
R`000 Six Six Year ended months ended months ended 31 August 29 February 28 February 2011 2012 2011
Ordinary share capital Balance at beginning of period 1 1 1 Issue of shares - - - Balance at end of period 1 1 1 Share premium Balance at beginning of period 21 286 21 286 21 286 Issue of shares - - - Balance at end of period 21 286 21 286 21 286 Retained income Balance at beginning of period (350) 608 608 Total comprehensive 5 537 (1 096) (958) profit/(loss) for the period Balance at end of period 5 187 (488) (350) Total shareholders` equity at 26 474 20 799 20 937 end of period PROFIT/(LOSS) PER SHARE Unaudited Audited R`000 Six Six Year ended months ended months ended 31 August 29 February 28 February 2011
2012 2011 Calculation of headline profit/(loss) Total comprehensive 5 537 (1 096) (958) profit/(loss) attributable to ordinary shareholders Adjusted for: Profit on sale of subsidiary (4 841) - - Impairment of goodwill - - 460 Loss on sale of property, - - 1 plant and equipment Tax effect on headline 678 - - earnings adjustments Headline profit/(loss) 1 374 (1 096) (497) Continuing operations (350) (1 883) (1 841) Discontinued operations 1 724 787 1 344 Headline and diluted headline 0,68 (0,54) (0,25) profit/(loss) per share (cents) Continuing operations (0,17) (0,93) (0,91) Discontinued operations 0,85 0,39 0,67 Number of shares - Issued and weighted 202 222 222 202 222 222 202 222 222 DISCONTINUED OPERATIONS IDECO BIOMETRIC SECURITY SOLUTIONS (PTY) LIMITED Date of sale: 15 December 2011 Unaudited Audited R`000 Period Six Year ended months ended ended 15 December 28 February 31 August 2012 2011 2011 Results of discontinued operations Revenue 12 439 31 510 39 176 Expenses (10 473) (30 192) (37 796) Profit from operating 1 966 1 318 1 380 activities Taxation expense (242) (531) (37) Profit from discontinued 1 724 787 1 343 operations Net cash flows attributable to the discontinued operation: Net cash flows from/(utilised 981 (3 508) (4 168) in) operating activities Net cash flows (utilised (215) (49) 4 536 in)/from investing activities Net cash flows (utilised (462) 3 624 - in)/from financing activities Net increase in cash and cash 304 67 368 equivalents Non-current assets held for sale Property, plant and equipment 434 134 274 Intangible assets 3 058 3 058 3 058 Deferred tax asset 31 56 272 Inventories 4 136 6 370 3 461 Trade and other receivables 19 332 15 423 9 338 Cash and cash equivalents 833 227 529 Total assets 27 824 25 268 16 932 Liabilities associated directly with non-current assets held for sale Trade and other payables 13 122 13 540 3 492 Total liabilities 13 122 13 540 3 492 Effect of the disposal on the financial position of the Group Proceeds on sale of subsidiary 20 200 Profit after expenses and 4 841 adjustments Tax on sale transaction (678) Consolidated profit net of tax 4 163 SEGMENTAL ANALYSIS Discontinued operations R`000 Biometric Adjustments Total readers and and
solutions eliminations Unaudited 29 February 2012 Revenue from external 11 946 - 11 946 customers Intersegment revenue 493 (493) - Total revenue 12 439 (493) 11 946 Depreciation and (55) - (55) amortisation Operating profit/(loss) 2 632 238 2 870 Investment income - - - Finance costs (666) 85 (581) Profit/(loss) before tax 1 966 323 2 289 Taxation (expense)/credit (242) - (242) Total assets - - - Total liabilities - - - Unaudited 28 February 2011 - Revenue from external 31 510 - 31 510 customers Intersegment revenue - - - Total revenue 31 510 - 31 510 Depreciation and (48) - (48) amortisation Operating profit/(loss) 1 318 1 540 2 858 Investment income - - - Finance costs - - - Profit/(loss) before tax 1 318 1 540 2 858 Taxation (expense)/credit (531) - (531) Total assets 25 268 - 25 268 Total liabilities (24 608) 11 068 (13 540) Audited 31 August 2011 Revenue from external 39 176 - 39 176 customers Intersegment revenue - - - Total revenue 39 176 - 39 176 Depreciation and (102) - (102) amortisation Operating profit/(loss) 1 380 4 604 5 984 Investment income - - - Finance costs - - - Profit/(loss) before tax 1 380 4 604 5 984 Taxation (expense)/credit (37) - (37) Total assets 16 932 - 16 932 Total liabilities (15 715) 12 223 (3 492) Continued operations
R`000 Biometric Secure Biometric readers and credentialing projects solutions services Unaudited 29 February 2012 Revenue from external - 46 290 6 833 customers Intersegment revenue - 9 134 - Total revenue - 55 424 6 833 Depreciation and - (2 253) (572) amortisation Operating profit/(loss) (27) 8 968 (2 100) Investment income - 70 - Finance costs - (2 774) - Profit/(loss) before tax (27) 6 264 (2 100) Taxation (expense)/credit 8 (2 655) 588 Total assets 6 519 72 252 4 894 Total liabilities (464) (80 612) (3 567) Unaudited 28 February 2011 Revenue from external 93 34 460 5 759 customers Intersegment revenue - 544 - Total revenue 93 35 004 5 759 Depreciation and - (1 523) (320) amortisation Operating profit/(loss) (59) 8 144 (1 567) Investment income - 101 - Finance costs - (2 832) - Profit/(loss) before tax (59) 5 413 (1 567) Taxation (expense)/credit 16 (2 385) 439 Total assets 6 467 62 728 9 602 Total liabilities (9) (77 390) (5 377) Audited 31 August 2011 Revenue from external 407 78 710 20 572 customers Intersegment revenue - 9 300 - Total revenue 407 88 010 20 572 Depreciation and - (3 089) (1 091) amortisation Operating profit/(loss) 45 18 261 (3 487) Investment income - 168 - Finance costs - (5 754) - Profit/(loss) before tax 45 12 676 (3 487) Taxation (expense)/credit (13) (5 383) 974 Total assets 6 543 68 710 9 269 Total liabilities (469) (80 679) (6 429) Continued operations R`000 Corporate Adjustments Total and
eliminations Unaudited 29 February 2012 Revenue from external - - 53 123 customers Intersegment revenue - (9 134) - Total revenue - (9 134) 53 123 Depreciation and (64) (1 312) (4 201) amortisation Operating profit/(loss) (2 000) (1 550) 3 291 Investment income 1 077 - 1 147 Finance costs (421) (85) (3 280) Profit/(loss) before tax 6 437 (4 575) 5 999 Taxation (expense)/credit (817) 367 (2 509) Total assets 64 273 (28 138) 119 800 Total liabilities (49 751) 41 068 (93 326) Unaudited 28 February 2011 Revenue from external - - 40 312 customers Intersegment revenue - (544) - Total revenue - (544) 40 312 Depreciation and (146) (1 312) (3 301) amortisation Operating profit/(loss) (3 327) (2 852) 339 Investment income - - 101 Finance costs (537) - (3 369) Profit/(loss) before tax (3 864) (2 852) (2 929) Taxation (expense)/credit 1 069 367 (494) Total assets 56 997 (34 867) 100 927 Total liabilities (45 997) 36 917 (91 856) Audited 31 August 2011 Revenue from external - - 99 689 customers Intersegment revenue - (9 300) - Total revenue - (9 300) 99 689 Depreciation and (549) (2 624) (7 353) amortisation Operating profit/(loss) (5 641) (7 558) 1 620 Investment income - - 168 Finance costs (870) - (6 624) Profit/(loss) before tax (6 512) (7 558) (4 836) Taxation (expense)/credit 1 619 734 (2 069) Total assets 53 836 (35 184) 103 174 Total liabilities (44 934) 36 834 (95 677) Biometric products: this segment focuses on selling biometric products to the private and public sectors. With the sale of Ideco Biometric Security Solutions (Pty) Limited ("IBSS"), this segment was discontinued with effect from 15 December 2011; Credentialing services: this segment provides criminal record checks and background screening services to employers; and Biometric solutions and projects: this segment focuses on large biometric projects and related solutions in the public and private sectors. The accounting policies used for the above operating segments are the same as those described in the basis of preparation. Biometric products were almost exclusively sold within South Africa. The revenue of the credentialing services segment is generated by Ideco AFISwitch (Pty) Limited ("Ideco AFISwitch") and Managed Integrity Evaluation ("MIE"). Approximately a third of the revenue generated by the biometric solutions and projects segment was generated in Namibia with the Namibian drivers licence contract. COMMENTARY Introduction Set out above are the unaudited condensed consolidated interim results of Ideco in respect of the six months ended 29 February 2012. BASIS OF PREPARATION The condensed consolidated financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS"), the AC 500 standards as issued by the Accounting Practices Board and contain the information required by IAS 34: Interim Financial Reporting, the South African Companies Act No 71 of 2008, as amended and the JSE Limited Listings Requirements. The accounting policies adopted in the preparation of the unaudited financial information are consistent with those used to prepare the last annual financial statements. These interim results have not been audited or reviewed by the group`s auditors. These unaudited consolidated interim results have been compiled under the supervision of the Financial Director, HB Aucamp. FINANCIAL OVERVIEW Earnings before interest, tax, depreciation and amortisation ("EBITDA") of R7,7 million was achieved for the six months ended 29 February 2012, compared to R5,2 million for the comparative six months period ended 28 February 2011 in respect of continuing operations. This represents an increase of 49%. There was a total comprehensive profit attributable to ordinary shareholders of R5,5 million, compared to a loss of R1,1 million for the corresponding six month reporting period. The profit of R5,5 million included an after tax profit of R4,2 million on the sale of IBSS and an after tax profit of R1,7 million profit from discontinued operations. The operating profit of the secure credentialing segment increased by 10% from for the reporting period compared to the six months ended 28 February 2011. Biometric projects reported an operating loss of R2,1 million for the reporting period, compared to an operating loss of R1,6 million for the six months ended 28 February 2011. Group operating profit from continuing operations increased from R339 000 for the six months ended 28 February 2011 to R3,3 million for the six months ended 29 February 2012. Group revenue from continued operations increased by 32% from R40,3 million to R53,1 million. Revenue of secure credentialing services increased by R11,8 million (34,3%). Revenue of biometric projects increased from R5,8 million to R6,8 million. The gross profit percentage of continued operations decreased slightly from 73% to 69,7% because a relative higher volume of biometric readers, with a lower gross profit margin, was sold in the secure credentialing segment compared to the six months ended 28 February 2011. Non-current assets increased by R7,6 million as at 29 February 2012 compared to 28 February 2011, mainly as a result of the increase in the other long term financial asset and a reduction of intangible assets as a result of the sale of IBSS. Trade and other receivables increased by R7,4 million (46%), due to the increased sales in the secure credentialing segment. The current portion of the other long term financial asset of R3,8 million, relating to the sale of IBSS, resulted in total current assets increasing from R22 million as at 28 February 2011 to R33,3 million as at 29 February 2012. Long-term borrowings increased by R3 million mainly as a result of the provision for the dividend on the "B" cumulative preference share issued to the National Empowerment Fund ("NEF"). Trade and other payables increased by R1,7 million as a result of the increase in sales in the secure credentialing segment. The other financial liability consists of an amount of R25,4 million due to Morpho South Africa (Pty) Limited ("Morpho") which was taken over in respect of the SAPS AFIS. As reported in the 2011 annual report, this liability is currently subject to an arbitration between Ideco and Morpho. PROSPECTS Credentialing Services The criminal record checking service, conducted by Ideco AFISwitch, will continue to grow. Volumes have increased steadily since July 2011. The company is now running at full capacity of the current SAPS AFIS, but an increase in capacity is being implemented, which will allow further growth in the service. MIE has been experiencing increasing demand for its services and has also acquired new contracts that will further increase revenue during the remainder of the financial year and beyond. The company has also developed new products that are ready for market and has embarked on an expansion into neighbouring countries. Biometric Projects This segment continues to be hampered with long sales cycles and government tenders that are issued, but then are almost always postponed or cancelled. The segment has four running contracts and there are good prospects to increase it further outside the government sphere. CAPITAL COMMITMENTS There are no capital commitments that have been approved by the directors as at the date of this report. EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD A circular was mailed to shareholders on 18 May 2012 containing the proposed change of name to Muvoni Technology Group Limited, the adoption of a new Memorandum of Incorporation, the conversion of its par value shares to no par value share and the adoption of a Share Appreciation Rights Scheme. The directors are not aware of any significant events that have occurred between 29 February 2012 and the date of this report that may materially affect the results of the Group for the period under review or their financial position as at 29 February 2012 other than noted above. DIVIDEND No dividend has been declared for the period. CORPORATE GOVERNANCE The directors and senior managers of the company endorse the Code of Corporate Practices and Conduct as set out in the King III Report on Corporate Governance. By order of the board Vhonani Mufamadi HB Aucamp Chief Executive Officer Chief Financial Officer 31 May 2012 Directors: V Mufamadi (Executive Chairman), HB Aucamp (Financial Director), AX Sisulu-Dunstan*, MJ Kekana*, JA Vorster* * Independent non-executive Registered office: 267 West Street Centurion 0157. P O Box 7416, Centurion 0046. Company secretary: HB Aucamp, CA(SA). Designated advisor: Sasfin Capital (a division of Sasfin Bank Limited). Transfer secretaries: Computershare Investor Services Proprietary Limited. Date: 31/05/2012 12:55:03 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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