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ISA- Audited results: year ended 28 February 2006 and dividend declaration
ISA Holdings Limited (Formerly Y3k Group Limited)
("ISA" or "the company")
(Registration number: 1998/009608/06)
JSE share code: ISA (formerly YHK)
ISIN code: ZAE000067344 (formerly ZAE000017208
AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2006 AND DIVIDEND DECLARATION
In accordance with the AltX Listings Requirements, shareholders are advised of
the risks of investing in a company listed on AltX and are advised that the JSE
does not guarantee the viability or the success of a company listed on AltX. In
terms of JSE Listings requirements a Designated Adviser has to be retained by
the company. The Designated Adviser is required to, inter alia, attend all board
meetings held by the company to ensure that all JSE Listings Requirements and
applicable regulations are complied with, approve the financial director of the
company and guide the company in a competent, professional and impartial manner.
If the company fails to retain a Designated Adviser it must make arrangements to
appoint a new Designated Adviser within 10 business days, failing which the
company faces suspension of trading of its securities. If a Designated Adviser
is not appointed within 30 days of its suspension the company faces the
termination of its listing without an offer to minorities.
2006 2005
R"000s R"000s
GROUP INCOME STATEMENT
Revenue 37,935 31,446
Cost of goods sold (21,450) (17,778)
Gross profit 16,485 13,668
Other income 153 201
Selling and marketing costs (4,834) (4,483)
Administrative expenses (4,864) (4,957)
Operating profit 6,940 4,429
Finance income - net 472 134
Share of profit from associate 37 22
Profit before tax 7,449 4,585
Income tax reversal 30 424
Profit attributable to shareholders 7,479 5,009
GROUP BALANCE SHEET
ASSETS
Non-current assets 8,589 8,786
- Tangible assets 494 490
- Intangible assets 6,367 6,831
- Investment in associate company 0 122
- Share incentive trust 953 923
- Deferred tax asset 775 420
Current assets 20,519 14,858
- Cash and cash equivalents 11,899 4,932
- Inventories 46 36
- Loan receivable 0 2,545
- Trade and other receivables 8,574 7,345
Total assets 29,108 23,644
EQUITY
Capital and reserves 21,158 16,279
- Share capital 1,300 1,300
- Share premium 14,387 14,387
- Non-distributable reserve 3,021 3,021
- Retained earnings 2,450 (2,429)
LIABILITIES
Current liabilities 7,950 7,365
- Trade and other payables 7,649 7,160
- Provisions for other liabilities and charges 301 205
Total equity and liabilities 29,108 23,644
GROUP CASH FLOW STATEMENT
Cash flows from operating activities 6,452 4,562
Cash flows from investing activities 570 (973)
Cash flows from financing activities (55) 656
Net increase in cash and cash equivalents 6,967 4,245
Cash and cash equivalents at beginning of the year 4,932 687
Cash and cash equivalents at end of the year 11,899 4,932
GROUP STATEMENT OF CHANGES IN EQUITY
Balance at beginning of the year 16,279 1,079
Net profit for the year 7,479 5,009
New shares issued during the year 0 10,191
Dividends paid during the year (2,600) 0
Balance at the end of the year 21,158 16,279
RECONCILIATION OF EARNINGS AND HEADLINE EARNINGS
Earnings as per income statement 7,479 5,009
Impairment of goodwill 464 152
Headline earnings 7,943 5,161
RECONCILIATION OF PREVIOUS SA GAAP TO IFRS
RECONCILIATION OF GROUP BALANCE SHEET
EQUITY
Shareholders" equity as previously reported 0 14,459
Restatement of IFRS 0 1,820
- Revaluation of tangible assets 0 127
- Revaluation of intangible assets 0 1,273
- Deferred tax on the above 0 420
Restated equity - IFRS 0 16,279
RECONCILIATION OF GROUP INCOME STATEMENT
Net income as previously reported - SA GAAP 0 3,189
Restatement of IFRS 0 1,820
- Reversal of depreciation of tangible assets 0 127
- Reversal of amortisation of intangible assets 0 1,273
- Deferred tax on the above 0 420
Restated net income - IFRS 0 5,009
ORDINARY SHARES
Earnings per share (cents) 5.8 3.9
Headline earnings per share (cents) 6.1 4.0
Number of shares in issue ("000s) 130,000 130,000
Net asset value per share (cents) 16.3 12.5
Net tangible asset value per share (cents) 11.4 7.3
DIVIDEND DECLARATION
Notice is hereby given that the directors declare ordinary dividend number 2, of
4 cents per share, to be ratified at the Annual General Meeting, to be held on
23 June 2006. The salient dates are as follows:
Dividend declaration date: Monday, 29 May 2006
Dividend finalisation date: Friday, 23 June 2006
Last day to trade "cum" the dividend: Friday, 30 June 2006
Date trading commences "ex" the dividend: Monday, 3 July 2006
Record date: Friday, 7 July 2006
Date of payment: Monday, 10 July 2006
Shareholders may not dematerialise or rematerialise their shares between Monday
3 July 2006 and Friday 7 July 2006, both days inclusive.
In terms of the requirements of the Companies Act No. 61 of 1973, the directors
confirm that, after the cash distribution, ISA Holdings Limited will be able to
pay its debts as they become due in the ordinary course of business, and that
its consolidated assets, fairly valued, will exceed its consolidated
liabilities.
COMMENTS
The financial year under review signified the end of another successful year for
both ISA and the information security industry. Positive momentum in corporate
governance and related legislative frameworks as well as a general upswing in
spending in the Information and Communication Technology market, continue to
provide stimulus for above-average growth. ISA"s ability to convert these
opportunities into tangible and distributable profits, illustrates the value of
a sustainable strategy, which has been successfully implemented by a team of
focused and experienced specialists.
The board is pleased with ISA"s performance and is proud to announce that all of
its key performance indicators were achieved. Going into the new financial year
with a streamlined service model, underpinned by their recently implemented
Customer Relationship Management system, ISA is able to achieve a level of
agility and responsiveness, which are fundamental ingredients to the delivery of
world-class proactive security solutions.
ISA has adopted IFRS in the preparation of the audited annual financial results,
which includes the restatement for the year ending 28 February 2005.
One of the most challenging financial objectives set by the directors for the
period was to grow revenue organically by 20%, whilst maintaining gross margin
levels above 40%. This objective was attained with revenue of R38 million (2005:
R31 million). The quality of revenue further improved during the period with an
increase in annuity derived revenue to 58% (2005: 50%), which sets a solid
foundation for sustainable revenue into the future. Headline earnings of R7.9
million and earnings of R7.5 million were substantially generated in cash,
allowing ISA to close the financial year with cash resources amounting to R11.9
million.
ISA should be able to sustain its organic growth objectives with little impact
to its capital structures. In this light and in support of the directors"
opinion that surplus cash should be distributed to shareholders, the board
declare an ordinary dividend of 4 cents per share, to be ratified at the Annual
General Meeting on 23 June 2006. During the period an ordinary dividend of 1
cent per share, together with a special dividend of 1 cent per share, was
declared and paid.
To capitalise on the opportunities in the greater sub-Saharan African region,
ISA launched a focused business development initiative aimed at achieving 10% of
its revenue from outside of South Africa. The success of this initiative has
resulted in a revenue contribution of 12% for the period. Going forward, ISA
remains cautiously optimistic about their prospects in this region and
anticipate increased spending on information security, specifically in Nigeria,
Kenya and Botswana.
ISA"s BEE objective remains a high priority and management are confident that a
transaction will be concluded in 2006. The cautionary announcement dated 4 May
2006, relating to an anticipated empowerment deal, will hopefully culminate in
the success of this objective. Despite a concerted effort to find a BEE partner
during the period under review, management was unsuccessful. The announcement to
shareholders relating to a possible empowerment transaction, published in August
2005, was withdrawn in November 2005 due to the difficulties encountered in
securing appropriate funding.
Corporate governance remains a key focus for ISA and the board strives to adhere
to all the fundamental requirements of the King Reports. In the spirit of
transparency, ISA strives towards presenting their results in a clear and
succinct manner in order for all stakeholders to gain a comprehensive
understanding of the Group"s performance.
ISA is well positioned to capitalise on opportunities within the security market
and intends to continue achieving above average organic growth, by further
developing their coverage and competencies within the information security
sector. The fundamental industry drivers, including the recent focus on
legislative compliance and corporate governance issues, continue to support
ISA"s value proposition.
ISA remains focused on building a trusted information security brand thereby
creating tangible value for all stakeholders. By embracing a culture of teamwork
and learning, ISA is able to nurture strong high-level relationships with their
partners.
On behalf of the board, I thank all of our stakeholders, customers and vendors
for their contribution to another successful and exciting year. A special thanks
is extended to our management and staff for a year of excellent performance and
outstanding results. I look forward to meeting all shareholders at the Annual
General Meeting on 23 June 2006.
For and on behalf of the board:
Clifford Katz
Chairman and Chief Executive Officer
Randburg
29 May 2006
Designated advisor: Exchange Sponsors (Pty) Ltd
Date: 29/05/2006 11:24:10 AM Supplied by www.sharenet.co.za
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