JSE-listed IFCA Technologies' loss for the full-year increased five-fold, raising auditors' concerns about the company's ability to continue operating.
IFCA reported a net loss of R10 million, which leapt from R2 million a year ago, off revenue of R2.1 million. A year ago, revenue was R2.7 million. The “material decline in profit” is mostly because of a write-off of R8.3 million against intellectual property, it says.
IFCA is an investment holding company with two subsidiaries: IFCA sWare focuses on the group's software solutions and services, while IFCA hWare is the group's computerised business equipment solutions unit. However, it is shifting focus and will change sectors.
Its operating loss is slightly better than last year: a year ago it made an operating loss of R2 million, which it has trimmed to R1.6 million this year. “Despite the improvement, the company is yet to return to profitability and the focus for the forthcoming year would be to ... restore profitability in the company,” it says.
Support needed
IFCA's auditor, Nolands, is concerned over the listed company's ability to continue operating in its current form. It says its viability depends on several factors, the most significant being its parent company and “significant creditor” IFCA MSC Berhad continuing to support the company.
Malaysia-based IFCA MSC is IFCA Tech's largest shareholder, with a 33.2% stake. IFCA also had an empowerment partner, Kutana, which bought 26% of the company in July 2009.
However, Kutana has since sold its entire holding to Decaweb, which also bought into two tranches of shares that IFCA issued in March. As a result, Decaweb holds more than 35% in IFCA, and will make an offer to buy out IFCA's minorities, resulting in a change of control.
Nolands adds IFCA's future also depends on it achieving group forecasts and gaining new software support agreements.
Going mining
However, IFCA is shifting focus away from the technology sector and has raised $100 million to fund the change in investment strategy. It wants to provide financial services and treasury functions to facilitate the funding and development of projects within the mining, property and construction sectors.
In February, IFCA said it was in talks with Kutana Capital and Stonewall Mining, which will see Kutana and IFCA buy 35% of Stonewall. The deal will be concluded through the creation of a special purpose vehicle, in which IFCA will have a 30% stake, with Kutana holding the balance.
However, the terms of the deal have been renegotiated due to delays, and will be announced shortly, sys IFCA. Stonewall Mining is a junior gold-mining company that has conditionally agreed to acquire two mining assets in SA's Eastern Goldfields.
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