Wrap Text
Unaudited condensed consolidated interim results
for the six months ended 28 February 2013
MUVONI TECHNOLOGY GROUP LIMITED
Formerly Ideco Group Limited
Incorporated in the Republic of South Africa
Registration number: 2001/023463/06
Share code: MTG
ISIN code: ZAE000167268
“Muvoni” or “the group” or “the company”
www.muvoni.com
29 May 2013
Unaudited condensed consolidated interim results for the six months
ended 28 February 2013
Condensed consolidated statement of financial position
Unaudited at Audited at
28 February 29 February 31 August
R’000 2013 2012 2012
Assets
Non-current assets 74 444 86 500 70 112
Property, plant and
equipment 12 424 9 190 11 846
Intangible assets 51 981 51 421 49 208
Other long-term asset – 15 788 –
Deferred tax 10 039 10 101 9 058
Current assets 44 415 33 300 51 651
Inventories 1 042 444 1 334
Trade and other receivables 23 402 23 458 21 344
Taxation receivable 413 – 96
Current portion of other
financial asset 16 022 3 760 17 956
Cash and cash equivalents 3 536 5 638 10 921
Total assets 118 859 119 800 121 763
Equity and liabilities
Equity
Share capital 21 287 1 1
Share premium – 21 286 21 286
Retained income 2 311 2 932 3 090
Shareholders’ equity 23 598 24 219 24 377
Liabilities
Non-current liabilities 51 919 53 333 57 256
Long-term borrowings 46 476 47 547 51 421
Deferred tax 5 443 5 786 5 835
Current liabilities 43 342 42 248 40 130
Current tax payable – 245 30
Trade and other payables 11 948 10 717 12 753
Current portion of long-
term borrowings 340 311 328
Bank overdraft 3 362 4 254 –
Provisions 2 329 1 358 1 656
Other financial liabilities 25 363 25 363 25 363
Total liabilities 95 261 95 581 97 386
Total equity and
liabilities 118 859 119 800 121 763
Net asset value per share
(cents) 11,67 11,98 12,05
Net tangible asset value
per share (cents) (16,31) (15,59) (13,87)
Condensed consolidated statement of comprehensive income
Unaudited at Audited at
six months ended Year ended
28 February 29 February 31 August
R’000 2013 2012 2012
Continuing operations
Revenue 59 676 52 630 106 049
Cost of sales (17 826) (15 973) (30 738)
Gross profit 41 850 36 657 75 311
Other income 61 121 2 801
Operating expenses (32 854) (29 048) (58 429)
Earnings before interest,
tax, depreciation and
amortisation 9 057 7 730 19 683
Depreciation (1 401) (863) (2 347)
Amortisation (3 255) (3 338) (5 962)
Impairment of intangible
assets – – (348)
Operating profit 4 401 3 529 11 026
Investment revenue 775 1 147 2 563
Finance costs (4 362) (3 195) (8 564)
Profit on sale of non-
current assets – – 272
Profit on sale of
discontinued operation – 4 841 4 590
Profit before tax 814 6 322 9 887
Taxation expense (1 593) (2 509) (5 916)
(Loss)/profit for the
period from continuing
operations (779) 3 813 3 971
Profit for the period from
discontinued operations – 1 724 1 724
(Loss)/profit for the
period (779) 5 537 5 695
Other comprehensive income – – –
Total comprehensive
(loss)/profit attributable
to ordinary shareholders (779) 5 537 5 695
(Loss)/profit per share
Basic and diluted basic
(loss)/profit per share
(cents) (0,39) 2,74 2,81
Continuing operations (0,39) 1,89 1,96
Discontinued operations – 0,85 0,85
Condensed consolidated statement of cash flows
Unaudited at Audited at
six months ended Year ended
R’000 28 February 29 February 31 August
Cash generated/(utilised)
by operations 9 780 (9 509) 6 463
Investment income 775 1 147 2 563
Finance costs (4 362) (3 861) (8 564)
Taxation paid (3 312) (2 057) (4 682)
Net cash flow from
operating activities 2 881 (14 280) (4 220)
Net cash flow from
investing activities
Acquisition of property,
plant and equipment (1 979) (459) (4 391)
Acquisition of intangible
assets (6 716) (6) (766)
Proceeds from disposal of
plant and equipment – – 279
Proceeds on disposal of
subsidiary – 20 200 20 200
Cash transferred to
disposal group – (833) (833)
Net cash flow from
investing activities (8 695) 18 902 14 489
Net cash flows from
financing activities
Movement of long-term
borrowings (4 933) 1 427 5 317
Net cash flows from
financing activities (4 933) 1 427 5 317
Total cash movement for the
period (10 747) 6 049 15 586
Cash at the beginning of
the period 10 921 (4 665) (4 665)
Total cash at end of period 174 1 384 10 921
Condensed consolidated statement of changes in equity
Unaudited at Audited at
six months ended Year ended
28 February 29 February 31 August
R’000 2013 2012 2012
Ordinary share capital
Balance at beginning of
period 21 287 1 1
Share premium converted
to no par value shares – – 21 286
Balance at end of period 21 287 1 21 287
Share premium
Balance at beginning of
period – 21 286 21 286
Share premium converted
to no par value shares – – (21 286)
Balance at end of period – 21 286 –
Retained income
Balance at beginning of
period 3 090 (2 605) (2 605)
Total comprehensive
(loss)/profit for the
period (779) 5 537 5 695
Balance at end of period 2 311 2 932 3 090
Total shareholders’
equity at end of period 23 598 24 219 24 377
Reconciliation of headline (loss)/profit per share
Unaudited at Audited at
six months ended Year ended
28 February 29 February 31 August
R’000 2013 2012 2012
Calculation of headline
(loss)/profit
Total comprehensive
(loss)/profit attributable (779) 5 537 5 695
to ordinary shareholders
Adjusted for: Profit on sale of
subsidiary – (4 841) (4 590)
Impairment of intangible
asset – – 348
Profit on sale of property,
plant and equipment – – (272)
Tax effect on headline
earnings adjustments – 678 621
Headline (loss)/profit (779) 1 374 1 802
Continuing operations (779) (350) 78
Discontinued operations – 1 724 1 724
Headline and diluted headline (loss)/profit per
share (cents) (0,39) 0,68 0,89
Continuing operations (0,39) (0,17) 0,04
Discontinued operations – 0,85 0,85
Number of shares
– Issued and weighted 202 222 222 202 222 222 202 222 222
Discontinued operations
Ideco Biometric Security Solutions (Pty) Ltd
Date of sale: 15 December 2011
Unaudited
Period ended
15 December
R'000 2011
Results of discontinued operations
Revenue 12 439
Expenses (10 473)
Profit from operating activities 1 966
Taxation expense (242)
Profit from discontinued operations 1 724
Net cash flows attributable to the
discontinued operation:
Net cash flows from operating activities 981
Net cash flows utilised in investing activities (215)
Net cash flows utilised in financing activities (462)
Net increase in cash and cash equivalents 304
Non-current assets held for sale
Property, plant and equipment 434
Intangible assets 3 058
Deferred tax asset 31
Inventories 4 136
Trade and other receivables 19 332
Cash and cash equivalents 833
Total assets 27 824
Liabilities associated directly with non-
current assets held for sale
Trade and other payables 13 122
Total liabilities 13 122
Segmental analysis
Discontinued operations
Biometric Adjustments
readers and
and elimi-
R’000 solutions nations Total
Unaudited 28 February 2013
Revenue from external
customers – – –
Intersegment revenue – – –
Total revenue – – –
Depreciation and
amortisation – – –
Operating profit/(loss) – – –
Investment income – – –
Finance costs – – –
Profit/(loss) before tax – – –
Taxation (expense)/credit – – –
Total assets – – –
Total liabilities – – –
Unaudited 29 February 2012
Revenue from external
customers 11 946 – 11 946
Intersegment revenue 493 (493) –
Total revenue 12 439 (493) 11 946
Depreciation and
amortisation (55) – (55)
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 – – –
Audited 31 August 2012
Revenue from external
customers 11 946 – 11 946
Intersegment revenue 493 (493) –
Total revenue 12 439 (493) 11 946
Depreciation and
amortisation (55) – (55)
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 – – –
Continued operations
Biometric Secure
readers creden-
and tialing Biometric
R’000 solutions services projects
Unaudited 28 February 2013
Revenue from external
customers – 51 295 8 381
Intersegment revenue – 9 120 –
Total revenue – 60 415 8 381
Depreciation and – (2 950) (200)
amortisation
Operating profit/(loss) (16) 9 193 (729)
Investment income – 91 –
Finance costs – (4 248) –
Profit/(loss) before tax (16) 5 036 (730)
Taxation (expense)/credit – (2 941) 204
Total assets 9 78 844 5 590
Total liabilities (466) (84 711) (3 731)
Unaudited 29 February 2012
Revenue from external
customers – 45 797 6 833
Intersegment revenue – 9 627 –
Total revenue – 55 424 6 833
Depreciation and
amortisation – (2 253) (572)
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)
Audited 31 August 2012
Revenue from external
customers – 95 109 10 940
Intersegment revenue – 17 864 –
Total revenue – 112 973 10 940
Depreciation and – (5 098) (435)
amortisation
Operating profit/(loss) (50) 19 859 (635)
Investment income – 229 –
Finance costs – (7 999) –
Profit/(loss) before tax (50) 12 344 (635)
Taxation (expense)/credit (138) (6 082) 177
Total assets 23 87 224 10 954
Total liabilities – (95 186) (9 034)
Continued operations
Adjustments
and
R’000 Corporate services Total
Unaudited 28 February 2013
Revenue from external
customers – – 59 676
Intersegment revenue – (9 120) –
Total revenue – (9 120) 59 676
Depreciation and amortisation (194) (1 312) (4 656)
Operating profit/(loss) (2 735) (1 312) 4 401
Investment income 684 – 775
Finance costs (114) – (4 362)
Profit/(loss) before tax (2 164) (1 312) 814
Taxation (expense)/credit 777 367 (1 593)
Total assets 64 567 (30 151) 118 859
Total liabilities (48 715) 42 362 (95 261)
Unaudited 29 February 2012
Revenue from external
customers – – 52 630
Intersegment revenue – (9 627) –
Total revenue – (9 627) 52 630
Depreciation and amortisation (64) (1 312) (4 201)
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)
Audited 31 August 2012
Revenue from external
customers – – 106 049
Intersegment revenue – (17 864) –
Total revenue – (17 864) 106 049
Depreciation and amortisation (152) (2 624) (8 309)
Operating profit/(loss) (6 696) (1 453) 11 025
Investment income 2 334 – 2 563
Finance costs (565) – (8 564)
Profit/(loss) before tax 2 621 (4 394) 9 886
Taxation (expense)/credit (608) 735 (5 916)
Total assets 64 348 (40 786) 121 763
Total liabilities (47 108) 53 942 (97 386)
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-makers.
These chief operating decision-makers have been identified as the
executive committee members who make strategic decisions.
The chief operating decision-makers have organised the operations
of the company based on the product lines and services and this has
resulted in the creation of the following segments:
• 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.
The revenue of the credentialing services segment is generated by
Afiswitch (Pty) Ltd (“Afiswitch”) and Managed Integrity Evaluation
(Pty) Ltd (“MIE”).
Approximately a quarter of the revenue generated by the biometric
solutions and projects segment was generated in Namibia with the
Namibian driver’s licence contract.
The interim financial results were prepared under the supervision
of the Financial Director, HB Aucamp (CA)SA.
Commentary
Introduction
Set out above are the unaudited condensed consolidated interim
results of Muvoni in respect of the six months ended 28 February
2013.
Basis of preparation
The condensed consolidated financial statements have been prepared
using accounting policies consistent with International Financial
Reporting Standards (“IFRS”), the SAICA Financial Reporting Guides
as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by Financial Reporting Standards Council
and in accordance with the requirements of IAS 34: Interim Financial
Reporting, the South African Companies Act 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 interim financial
statements for the six months ended 29 February 2012.
These interim results have not been audited or reviewed by the
group’s auditors.
Entities can choose whether to present one performance statement
(the statement of comprehensive income) or two statements (the
income statement and statement of comprehensive income).
The group has elected to present one statement of comprehensive
income. The unaudited condensed consolidated interim financial
statements have been prepared under the revised disclosure
requirements.
IFRS 8, ‘Operating segments’: IFRS 8 replaces IAS 14, ‘Segment
reporting’ and extends the scope of segmental reporting, requiring
additional disclosure. This Standard requires the company to adopt
the ‘management approach’ to reporting segment information under
which segment information is presented on the same basis as that
used for internal reporting purposes.
Financial overview
Earnings before interest, tax, depreciation and amortisation
(“EBITDA”) of R9,1 million was achieved for the six months ended
28 February 2013, compared to R7,7 million for the comparative six
months period ended 29 February 2012 in respect of continuing
operations. This represents an increase of 17%. There was a total
comprehensive loss of R779 000 attributable to ordinary shareholders,
compared to a profit of R5,5 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 R1,7 million profit
after tax from discontinued operations.
The operating profit of the secure credentialing segment increased
by 2,5% for the reporting period compared to the six months ended
29 February 2012. Biometric projects reported an operating loss of
R729 000 for the reporting period, compared to an operating loss of
R2,1 million for the six months ended 29 February 2012. Group
operating profit from continuing operations increased from R3,3
million for the six months ended 29 February 2012 to R4,4 million for
the six months ended 28 February 2013.
Group revenue from continued operations increased by 13% from R52,6
million to R59,7 million. Revenue of secure credentialing services
increased by R5,5 million (12%). Revenue of biometric projects
increased from R6,8 million to R8,4 million.
The gross profit percentage of continued operations was almost
unchanged at 70,1% compared to 69,6% for the corresponding reporting
period.
Non-current assets decreased by R12,1 million as at 28 February
2013 compared to 29 February 2012, mainly as a result of the decrease
in the other long-term financial asset of R15,8 million, which was
set off by an increase of R3,2 million in property, plant and
equipment.
Trade and other receivables remained constant. Total current assets
increased by R11,1 million, which is mainly due to the increase in
the current portion of the other financial asset.
Long-term borrowings decreased by R1,4 million mainly as a result of
the provision for the dividend on the “B” cumulative preference share
issued to the National Empowerment Fund (“NEF”), which was off-set by
a capital redemption.
Trade and other payables increased by R1,2 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 2012 annual
report, this liability is currently subject to an arbitration between
Muvoni and Morpho. The arbitration hearing has been set down to
commence on 10 September 2013.
Prospects
Credentialing Services
The criminal record checking service, conducted by Afiswitch, has
reached maturity and lower growth is expected. The company is now
running at full capacity of the current SAPS AFIS, but an increase in
capacity is being implemented, which will allow the company to pursue
further growth opportunities 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 is
also opening branches in other African countries, which will be a
further avenue for growth.
Biometric Projects
This segment has made in-roads in the financial sector with the
provision of biometric readers for client verification. In the
government sphere, the company continues to be hampered with long
sales cycles and government tenders that are issued, but then are
almost always postponed or cancelled. The company has recently been
awarded a three-year contract by ICASA for the supply of monitoring
equipment.
Capital commitments
There is a capital commitment to spend R4 million on Muvoni’s own
AFIS to increase the capacity of the Afiswitch service in respect of
fingerprint criminal record checks.
Events subsequent to the end of the reporting period
A circular was mailed to shareholders on 14 May 2013 containing the
proposed scheme of arrangement in terms of section 114 of the
Companies Act, which, if approved, will result in the delisting of
Muvoni from the JSE.
The directors are not aware of any other significant events that have
occurred between 28 February 2013 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 28 February 2013 other than
as 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
Chief Executive Officer
HB Aucamp
Chief Financial Officer
30 May 2013
Executive directors: V Mufamadi (CEO); HB Aucamp (CFO)
Non-executive directors: MF Kekana; JA Vorster
Registration number: 2001/023463/06
Registered address: 267 West Street, Centurion, 0157
Postal address: PO Box 7416, Centurion, 0046
Company secretary: HB Aucamp
Telephone (011) 447 4895
Facsimile(011) 447 4918
Transfer secretaries: Computershare Investor Services (Pty) Ltd
Legal advisors: DLA Cliffe Dekker Hofmeyr Inc
Designated advisor: Sasfin Capital, a division of Sasfin Bank Limited
30 May 2013
Johannesburg
Date: 30/05/2013 10:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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