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ISA - ISA Holdings - Reviewed results for the year ended 29 February 2008,
dividend declaration and a capital repayment
ISA Holdings Limited
(Registration number: 1998/009608/06)
JSE share code: ISA
ISIN code: ZAE000067344
("ISA")
REVIEWED RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2008 AS WELL AS A DIVIDEND
DECLARATION AND CAPITAL REPAYMENT
2008 2007
Reviewed Audited
R`000s R`000s
GROUP INCOME STATEMENT
Revenue 45,237 43,934
Cost of goods sold (23,896) (23,186)
Gross profit 21,341 20,748
Other income 660 859
Selling and marketing costs (5,665) (5,352)
Administrative expenses (5,252) (5,093)
Operating profit 11,084 11,162
Net finance income 2,852 2,320
Profit before taxation 13,936 13,482
Taxation (4,277) (2,914)
Profit attributable to shareholders 9,659 10,568
GROUP BALANCE SHEET
ASSETS
Non-current assets 8,005 8,024
- Tangible assets 495 533
- Intangible assets 7,004 6,367
- Share trust 211 498
- Deferred tax 295 626
Current assets 49,453 46,644
- Cash and cash equivalents 34,153 37,908
- Investments 4,811 -
- Trade and other receivables 10,415 8,687
- Inventories 74 49
Total assets 57,458 54,668
EQUITY
Capital and reserves 42,084 42,054
- Share capital and share premium 30,060 37,571
- Non-distributable reserve 3,021 3,021
- Retained earnings 9,003 1,462
LIABILITIES
Long term liabilities 2,943 2,679
- Shareholders loans 2,916 2,642
- Deferred tax 27 37
Current liabilities 12,431 9,935
- Trade and other payables 8,480 7,267
- Current tax payable 3,691 1,283
- Provisions 260 1,385
Total equity and liabilities 57,458 54,668
GROUP CASH FLOW STATEMENT
Cash flows from operating activities 8,669 10,187
Cash flows from investing activities (3,069) 2,852
Cash flows from financing activities (9,355) 12,970
Net increase in cash and cash equivalents (3,755) 26,009
Cash and cash equivalents at beginning of year 37,908 11,899
Cash and cash equivalents at end of year 34,153 37,908
GROUP STATEMENT OF CHANGES IN EQUITY
Balance at beginning of the year 42,054 21,158
Net profit for the year 9,659 10,568
New shares issued during the year - 21,884
Distributions paid during the year (9,629) (11,556)
Balance at the end of the year 42,084 42,054
RECONCILIATION OF EARNINGS AND HEADLINE EARNINGS
Earnings as per income statement 9,659 10,568
Capital profit on disposal of investment (191) (355)
Revaluation of tangible assets 26 -
Headline earnings 9,494 10,213
ORDINARY SHARES
Earnings per share (cents) 5.0 6.2
Headline earnings per share (cents) 4.9 5.9
Weighted average number of shares in issue (`000s) 192,593 171,728
Net asset value per share (cents) 21.9 21.8
Net tangible asset value per share (cents) 18.2 18.5
Number of shares in issue at year end (`000s) 192,593 192,593
BASIS OF PREPARATION
The results for the year ended 29 February 2008 have been prepared in
accordance with International Financial Reporting Standards (IFRS), the
presentation requirements of IAS34 (Interim Financial Reporting), the
accounting policies of the Group and the South African Companies Act.
REVIEW REPORT
The results for the year ended 29 February 2008 have been reviewed by
Levenstein and Partners and their unqualified review report is available for
inspection at the Group`s registered office.
DIVIDEND DECLARATION AND CAPITAL REPAYMENT
Notice is hereby given that the directors propose an ordinary dividend number
5, of 1.9 cents per share, to be ratified at the Annual General Meeting.
Notice is hereby given that the directors propose a capital repayment out of
share premium of 3.1 cents per share, to be approved by shareholders at the
Annual General Meeting.
The salient dates for the capital and dividend distributions ("distributions")
are as follows:
Distributions proposed date: Friday, 30 May 2008
Distributions finalisation date: Friday, 1 August 2008
Last day to trade "cum" the distributions: Friday, 8 August 2008
Date trading commences "ex" the distributions: Monday, 11 August 2008
Record date: Friday, 15 August 2008
Date of payment: Monday, 18 August 2008
Shareholders may not dematerialise or rematerialise their shares between
Monday 11 August 2008 and Friday 15 August 2008, both days inclusive.
The directors confirm that, after the capital and dividend distributions, ISA
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
ISA delivered a reasonable trading performance for the financial year ending
29 February 2008. We are encouraged by our increase in annuity based income to
60% of revenue, although modest turnover growth of 3% to R45 million was
somewhat disappointing. Our focus on improving value to our clients has also
resulted in a pleasing 18% growth from our support, integration and managed
services division.
Financial
As anticipated, the consequence of being levied the full income tax rate of
29% for the first time impacted these results. This increase in taxation, from
an effective income tax rate of 11% in the previous year, together with an
increase in the number of weighted average shares in issue, affected both
earnings and headline earnings per share of 5.0 cents and 4.9 cents
respectively.
Gross margin of 47% remained steady as a result of increased service based
revenue compensating for margin pressure on product sales. Unfortunately the
income statement was negatively affected by unbudgeted expenses arising from
foreign exchange and investment revaluation losses amounting to R1.7 million,
thereby reducing earnings to R9.7 million.
Our strong balance sheet, including a cash holding of R34.2 million, is
represented by a net asset value and a net tangible asset value of 21.9 and
18.2 cents per share respectively. These results were achieved after
accounting for distributions to shareholders of 5.0 cents per share during
this reporting period.
Market and prospects
The skills shortage experienced during the period continues to concern
management and the cost of attracting and retaining specialised IT security
skills is expected to hamper growth and profitability in the medium term. To
enable the Group to capitalise on growth prospects in the years to come,
management remains committed to investing time and resources in addressing and
resolving this challenge.
The convergence, consolidation and commoditisation of technologies in the ICT
sector present both opportunities and threats to the IT security industry.
Management continues to monitor these market conditions in order to adapt
timeously to the changing landscape.
With the sustained importance on the need to protect the confidentiality,
integrity and availability of corporate information, together with the
widespread adherence to legislative frameworks and corporate governance
guidelines, ISA`s security solutions and services continue to offer a
compelling proposition.
Conclusion
Despite the current skills shortage, management believes that the business is
fundamentally healthy and well positioned to capitalise on opportunities
within the IT security market. By further developing coverage and competencies
within this sector, above average growth should return in the longer term.
Fundamental industry drivers continue to support the Group`s value proposition
and management remain focused on building a trusted information security
brand, thereby creating tangible value for stakeholders.
For and on behalf of the board:
Clifford Katz
Chief Executive Officer
Randburg
30 May 2008
Designated advisor: Exchange Sponsors (Pty) Ltd
Date: 30/05/2008 14:35:01 Supplied by www.sharenet.co.za
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