AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007

Transcription

1 IFCA TECHNOLOGIES LIMITED Incorporated in the epublic of South Africa) (egistration number 2006/030759/06) Share code: IFC ISIN: ZAE ( IFCA Tech or the company ) AUDITED ESULTS FO THE YEA ENDED 31 DECEMBE 2007 The audited results of IFCA Tech for the year ended 31 December 2007, as compared to the 10 months ended 31 December 2006, are presented below: Balance Sheet Figures in and 31 Dec Dec 2006 Assets Non-Current Assets Property, plant and equipment Intangible assets Deferred tax Current Assets Inventories Current tax receivable Trade and other receivables Cash and cash equivalents Non-Current asset held for sale Total Assets Equity and Liabilities Equity Share capital etained income Minority interest Liabilities Non-Current Liabilities Other financial liabilities Deferred tax Current Liabilities Other financial liabilities Current tax payable Trade and other payables Deferred income Provisions Total Liabilities Total Equity and Liabilities Net asset value per share (cents per share) Net tangible asset value per share (cents per share) Number of shares in issue at period end

2 Income statements Figures in and Year ended 31 Dec months ended 31 Dec 2006 evenue Cost of sales ( ) ( ) Gross profit Other income Operating expenses ( ) ( ) Operating profit ( ) Investment revenue Finance costs ( ) ( ) Profit before taxation ( ) Taxation ( ) Profit for the period ( ) Attributable to: Equity holders of the parent ( ) Minority interest Adjustments for headline earnings: - Profit on disposal of asset ( ) (461) - Impairment of loans Headline (loss)/earnings for the period ( ) (Loss)/Earnings per share (cents per share) (1.29) 3.76 Headline (loss)/earnings per share (cents per share) (1.64) 3.76 Weighted average number of shares in issue Statement of Changes in Equity Share capital Figures in and Share premium Total share capital etained income Total attributable to equity holders of the group Minority interest Total equity Balance at 01 March Profit for the period Issue of shares Share issue expenses ( ) ( ) ( ) ( ) Total changes Opening balance as previously reported Errors affecting equity -- ( ) ( ) ( ) ( ) ( ) Balance at 01 January as restated Loss for the year ( ) ( ) ( ) Balance at 31 December Abridged Cash Flow Statement Figures in and 31 Dec Dec 2006 Cash flows from operating activities ( ) Cash flows from investing activities ( ) ( ) Cash flows from financing activities Total cash movement for the period ( ) Cash at the beginning of the period Total cash at end of the period

3 Prior period errors: Accounts receivable included an amount of , which related to share issue expenses in the prior period. The payment of the creditor was incorrectly captured against accounts receivable and has been corrected against the share premium account. No provision had previously been made for leave pay in accordance with IAS 27 Provisions, Contingent Liabilities and Contingent Assets. The correction of the errors resulted in adjustments as follows: 31 Dec Dec 2006 Balance Sheet Accounts receivable - ( ) Share premium Provisions - ( ) Deferred tax Income Statement Employee cost Taxation expense - ( ) COMMENTAY The board of directors present the company s results for the year ended 31 December 2007 compared to the 10 month period ended 31 December 2006, reflecting the second set of results since the company s listing on 08 December The directors are disappointed to report that the results have been unsatisfactory, due to a number of factors as outlined below. These results are presented in accordance with IAS 34 Interim Financial eporting and have been prepared in accordance with accounting policies which comply with International Financial eporting Standards ( IFS ) and have been audited by AiN, whose unqualified audit report is available for inspection at the registered office of the company. Due to the decline in turnover during the past year and the valuation of intellectual property being based on future projections, the audit report contains an emphasis of matter in relation to the carrying value of the intellectual property. BACKGOUND, INCOPOATION AND NATUE OF BUSINESS IFCA Technologies Limited was registered and incorporated as a public company in the epublic of South Africa on 03 October 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 hware conducted 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 INDUSTY AND BUSINESS OVEVIEW 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 originally 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. 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 esorts+, D Hotel and D Club); and Finance & Leasing (Loans+).

4 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 customers and registered users spread across four continents. IFCA sware s customers include Blue Dot, Transnet Housing, The Country Club Johannesburg, Blair Atholl,,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 latter part of 2006 as a division of IFCA sware. As from 01 January 2007, these operations were 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 OVEVIEW The results for the year ended 31 December 2007 reflect a decline from the prior period due to a number of factors described in more detail under income statement review which resulted in a loss for the year. However, the first two months of the year have shown a return to profitability, with the problems of the prior year being substantially addressed. Losses attributable to ordinary shareholders amount to compared to a 2006 profit of Loss and headline loss per share for the year ended 31 December 2007 is 1.29 and 1.64 cents per share compared to earnings of 3.76 cents per share for the previous period. Income statement review Turnover declined from the prior year primarily due to a reduction in turnover of per month in IFCA sware. One of the company s larger contracts was reduced due to the impending sale of the customer s loan book, following which ongoing development was cancelled. In addition, the company suddenly lost a number of its Malaysian and Filipino contractors due to crime incidents in South Africa. This initially caused problems at certain customers, requiring the strengthening of the local staff complement. However, on a positive note, this will have the longer-term benefit of reducing costs through the use of local employees, and fast tracks the company s stated intention of promoting local training, expertise and hiring. Turnover in IFCA hware was much lower than anticipated at the time of listing due to a lack of uptake of international TOTalizer sales. However, during June 2007, IFCA hware signed a distribution agreement to appoint Digitot International (Proprietary) Limited ( Digitot ) as the exclusive distributor of the TOTalizer inventory control product to the hospitality industry in South Africa and 13 other countries in Europe, South America, Africa and the Middle East. Under the terms of the agreement, Digitot will be marketing the TOTalizer products through its subsidiaries and distribution channels located in these countries under the brand name, DigiTag. IFCA hware will continue to directly market the TOTalizer under its current name to the manufacturing and pharmaceutical industries in South Africa, we will also continue to seek distributors to market to these industries, as well as the hospitality industries, in countries not covered by Digitot. In the circumstances, hware is pleased to report a much improved level of turnover in the second half of the year compared to the first six months. Operating expenses increased by 64% as the group s ability to immediately reduce its operating costs in line with the reduced business was limited. However, steps were taken in the second half of the year in order to repatriate unnecessary resources and extraneous costs, which actions have resulted in a return to profitability from January In addition, operating costs were higher due to certain once-off costs as follows: During the year a provision for an amount of was raised for money that had been fraudulently transferred from the company s Standard Bank account through the internet banking system. This was provided for because the bank is disputing liability and is refusing to refund the company. ecruitment costs of were incurred due to, inter alia, a new Chief Executive Officer being head hunted. A deferred taxation asset was raised at year end against various assessed losses in the group due to the recent return to profitability and the likelihood of the tax losses being utilised in the foreseeable future.

5 Balance sheet review Property, plant and equipment increased following the company s relocation to larger premises through the acquisition of Erf 235 Woodmead Extension 1 for a purchase consideration of The company acquired larger premises to accommodate an increased staff complement and relocated its operations during April 2007, which has resulted in an increase in long-term liabilities. In turn, cash and cash equivalents have reduced as capital raised from the listing has been applied towards the acquisition of the new property and reducing interest bearing bond finance, until required for expansion of the group as disclosed in the company s prospectus. 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. The intangible asset, namely Intellectual Property, was tested for impairment and, due to existing annuity income and a strong validated pipeline of business, the Intellectual Property was not impaired. Trade and other receivables decreased in line with lower turnover levels, whilst trade payables primarily relate to amounts owed to the holding company in relation to expatriate consultants. Cash and cash equivalents decreased primarily as a result of the losses being incurred by the business during the year. Deferred income relates to contracts signed and invoiced towards year end, which revenue is attributable to the following year. The non-current asset held for sale in the prior year represents the cost of the property previously occupied by IFCA Tech, which has been sold during the current year. Cash Flow Statement review Cash generated by operations declined as a direct result of the business operating at a loss for the period under review. SUBSEQUENT EVENTS Other than signing of new customers after year end, there are no subsequent events to the date of this report. DIVIDENDS The directors have decided not to declare a dividend. SEGMENTAL EPOTING The company has presented segmental information as follows: evenue 12 months ending 31 December months ending 31 December 2006 Software Solutions Computerised Business Equipment Total The Computerised Business Equipment division was transferred to IFCA hware as from 01 January AUTHOISED AND ISSUED SHAE CAPITAL There have been no changes to authorised and issued share capital during the year under review. ACQUISITIONS AND ISSUE OF SHAES FO CASH The company acquired larger premises to accommodate an increased staff complement through the acquisition of Erf 235 Woodmead Extension 1 for a purchase consideration of , which was settled though cash and bond proceeds. There were no other acquisitions or issue of shares for cash during the year under review.

6 DISPOSAL As previously announced, through its 100% subsidiary BJS (Proprietary) ( BJS ), disposed of a property known as Erf 1935 Houghton Estates for a sale consideration of A profit after taxation of was realised on the disposal of the property. DIECTO CHANGES The following director changes occurred during the period under review: Director Date appointed Date resigned Mr Craig Christensen (Chief Executive Officer) 01 December 2007 Mr Boon Kee Wong (Chief Executive Officer) 01 December 2007 The following director changes occurred subsequent to the period under review: Alternate Director to Mr KC Yong Date appointed Date resigned Mr Hiok Khiang Chan 19 February 2007 Alternate Director to Mr KK Yong Date appointed Date resigned Mr Ian Jeremy Jones 16 January 2008 Mr Nyu Kuan Leong 03 January 2008 COMPANY SECETAY Arcay Client Support (Proprietary) Limited was appointed as company secretary with effect from date of incorporation of the company. AUDITOS AiN 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 that is expected to have a material impact on the company. FUTUE POSPECTS The directors of the company believe that the company has excellent prospects based on the following: the current position of existing signed business and annuity income covering operating expenses; the expansion of product ranges into the existing client base; the expansion of the existing client base, with the signing of new contracts during January and February 2008; excellent reference clients; the continued growth of the Computerised Business Equipment business following the implementation of pilot projects with the Department of Education in Gauteng and Kwazulu Natal for the mimio XI and growing sales of the TOTalizer through Digitag; the ongoing reduction of consulting fees paid to international IFCA consultants; and the training and upliftment of local employees. 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 validated 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 Chairman C Christensen Chief Executive Officer 17 March 2008 Johannesburg egistered Office Arcay House, Number 3 Anerley oad, Parktown, Johannesburg, 2193 PO Box 62397, Marshalltown, Johannesburg, 2107 Directors Dr CT Ndlovu *(Chairman), C Christensen (CEO), CH Boshoff, M Gahagan*, KC Yong *, KK Yong * * Non-executive Designated Advisor Arcay Moela Sponsors (Proprietary) Limited Transfer Office Link Market Services (Proprietary) Limited