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ISA - ISA - Audited results for the year ended 28 February 2009, as well as the
proposed dividend declaration and the proposed capital repayment
ISA Holdings Limited
("ISA")
(Registration number: 1998/009608/06)
JSE share code: ISA
ISIN number: ZAE000067344
AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2009 AS WELL AS THE PROPOSED
DIVIDEND AND THE PROPOSED CAPITAL REPAYMENT
2009 2008
Audited Audited
R`000s R`000s
GROUP INCOME STATEMENT
Revenue 60,302 49,180
Turnover 53,290 45,237
Cost of sales (29,188) (23,896)
Profit before other income and expenses 24,102 21,341
Other income 3,352 818
Selling and marketing costs (6,162) (5,665)
Administrative expenses (7,756) (5,222)
Finance income 3,660 2,937
Finance costs (346) (273)
Profit before taxation 16,850 13,936
Taxation (5,484) (4,277)
Profit attributable to equity shareholders 11,366 9,659
GROUP BALANCE SHEET
ASSETS
Non-current assets 7,136 8,005
- Property, plant and equipment 416 495
- Intangible assets 6,155 7,004
- Share Trust loans - 211
- Deferred tax 565 295
Current assets 52,192 49,453
- Cash and cash equivalents 43,155 34,153
- Equity investments 2,582 4,811
- Trade and other receivables 6,128 10,415
- Inventories 18 74
- Current tax receivable 309 -
Total assets 59,328 57,458
EQUITY
Equity capital and reserves 43,722 42,084
- Share capital and share premium 23,991 30,060
- Reserves 19,731 12,024
LIABILITIES
Non-current liabilities 3,260 2,943
- Interest bearing liabilities 3,260 2,916
- Deferred tax - 27
Current liabilities 12,346 12,431
- Trade and other payables 8,055 8,480
- Provisions 961 260
- Current tax payable 3,330 3,691
Total equity and liabilities 59,328 57,458
GROUP CASH FLOW STATEMENT
Cash flows from operating activities 12,426 9,250
Cash flows from investing activities 4,028 (2,986)
Cash flows from financing activities (9,730) (9,628)
Net increase in cash and cash equivalents 6,724 (3,364)
Revaluation of foreign cash balances 2,278 (391)
Cash and cash equivalents at beginning of year 34,153 37,908
Cash and cash equivalents at end of year 43,155 34,153
GROUP STATEMENT OF CHANGES IN EQUITY
Balance at beginning of the year 42,084 42,054
Net profit for the year 11,366 9,659
Treasury shares purchased during the year (99) -
Distributions paid during the year (9,629) (9,629)
Balance at the end of the year 43,722 42,084
RECONCILIATION OF EARNINGS AND HEADLINE EARNINGS
Earnings attributable to ordinary shareholders 11,366 9,659
Loss on sale of property, plant and equipment (2) -
Taxation effects of adjustment 1 -
Headline earnings 11,365 9,659
ORDINARY SHARES
Earnings per share (cents) 5.9 5.0
Diluted earnings per share (cents) 5.9 5.0
Headline earnings per share (cents) 5.9 5.0
Diluted headline earnings per share (cents) 5.9 5.0
Weighted average number of shares in issue (`000s) 192,591 192,593
Number of shares in issue at year-end (`000s) 192,117 192,593
Treasury shares held at year-end (`000s) 476 -
Net asset value per share (cents) 22.8 21.9
Net tangible asset value per share (cents) 19.6 18.2
BASIS OF PREPARATION
The audited results of the Group have been prepared in accordance with
International Financial Reporting Standards (IFRS) and the Companies Act of
South Africa, 1973. The audited results have been prepared on a going-concern
basis, presented in thousands of South African Rand (R`000s) and have been
rounded to the nearest thousand.
AUDITED RESULTS
The results for the year ended 28 February 2009 have been audited by Mazars
Moores Rowland and their unqualified independent audit report is available for
inspection at the Group`s registered offices.
PROPOSED DIVIDEND AND PROPOSED CAPITAL REPAYMENT
Notice is hereby given that the directors propose ordinary dividend number 6, of
2.5 cents per share.
Notice is hereby given that the directors propose a capital repayment out of
share premium of 2.5 cents per share, to be approved by shareholders at the
Annual General Meeting. This is subject to the passing of a special resolution.
The salient dates for the capital repayment and ordinary dividend distributions
("distributions") are as follows:
Distributions proposed date: Friday, 26 May 2009
Distributions finalisation date: Wednesday, 24 June 2009
Last day to trade "cum" the distributions: Friday, 10 July 2009
Date trading commences "ex" the distributions: Monday, 13 July 2009
Record date: Friday, 17 July 2009
Date of payment: Monday, 20 July 2009
Shareholders may not dematerialise or rematerialise their shares between Monday
13 July 2009 and Friday 17 July 2009, both days inclusive.
The directors confirm that, after the 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 has delivered a set of good results, underpinned by a high proportion of
recurring income, together with a robust balance sheet and healthy cash flows.
The Group has achieved all of its key performance indicators during the period
and has taken yet another step towards becoming Africa`s premier IT security
solution provider.
A notable achievement during the year includes Check Point`s elevation of ISA`s
partnership level to Platinum status, being the first and only on the African
continent. This prestigious commendation from one of the most influential
security vendors in the industry, has further solidified the ISA brand.
Financial
Earnings and turnover for the period grew by 18% to R11.4 million and R53.3
million respectively. The anticipated margin pressure on the sale of products
was largely offset by an increase in sales of higher margin services and
proprietary software.
Stringent risk and financial control processes within the Group bolstered cash
levels to R43.2 million, even after accounting for distributions to shareholders
of R9.6 million during the current reporting period. This strong cash reserve
helped translate net tangible asset value and net asset value to 19.6 and 22.8
cents per share respectively, giving ISA`s balance sheet the strength needed to
take advantage of growth opportunities and potential acquisitions in the market.
Earnings and headline earnings of 5.9 cents per share were achieved after taking
into account substantial adjustments to the income statement, including a R2.2
million expense as a result of the mark-to-market revaluation of the Group`s
blue chip equity investments, as well as a profit of R2.8 million as a result of
foreign exchange gains accrued during the period. Management remains confident
that the losses accrued to the Group from the revaluation of their equity
investments will be reversed in the longer term.
During the period under review, management changed their view of the useful life
of the Group`s trademarks, from an indefinite period to a ten year lifespan. It
is management`s opinion that this change in estimate, together with the
resulting amortization of the trademarks, fairly and conservatively represents
the realisable value of the Group`s intangible assets.
Distribution
ISA should be able to sustain its strategic 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 proposes an
ordinary dividend of 2.5 cents per share, as well as a capital distribution of
2.5 cents per share.
During the period under review distributions totalling 5.0 cents per share were
declared and paid to all shareholders on the 18th of August 2008. This
distribution was made up of a capital repayment of 3.1 cents per ordinary share,
as well as an ordinary dividend of 1.9 cents per share.
Market and prospects
Management is unable to predict the full effect of the current uncertain market
conditions on the Group, but remain cautiously optimistic about the financial
year ahead. The strength of the underlying business together with its healthy
capital structures provides management with the confidence needed to monitor and
adapt to the changing industry conditions. These factors bode well for ISA and
should result in a positive outcome relative to its peers.
The principle market drivers for the IT security industry remain robust.
Enterprise adoption of secure mobile solutions is set to become commonplace as a
result of affordable broadband access and the need to create a more effective
distributed workforce. Viewed together with a maturing corporate governance and
legislative framework in South Africa, ISA`s solutions and services continue to
offer a compelling proposition to the market.
Comparative figures
Certain comparative figures have been reclassified in order to provide users of
the audited results with more meaningful information. The reclassifications have
no impact on the prior year`s profits of the Group. Reclassification figures
include:
- other income was changed from R660,000 to R818,000
- finance income was changed from R3,125,000 to R2,937,000
- profit on sale of property, plant and equipment was changed
from R25,000 to zero.
The above changes have also had an impact on the relevant figures in the prior
year`s cash flow statement.
The calculation of headline earnings and headline earnings per share were
incorrectly calculated in the prior year, due to the erroneous inclusion of
capital profit on disposal of investments in the calculations. Profit on
disposal of property, plant and equipment also changed from R25,000 to zero (see
above). Headline earnings in the prior year changed from R9,493,000 to
R9,659,000 and headline earnings per share in the prior year changed from 4.9
cents per share to 5.0 cents per share.
Other
The audit committee has executed its responsibility in satisfying itself of the
appropriateness, of the expertise and experience of the financial director of
the Group, being Ryan Price.
Conclusion
I take this opportunity to thank the ISA team for their continued dedication and
hard work that has significantly contributed to this year`s good results. My
appreciation is also extended to my colleagues on the Board for their wise
council and valuable input. Finally, I thank all stakeholders, customers and
vendors for their support and I look forward to meeting shareholders at the
Annual General Meeting to be held on the 24th of June 2009.
For and on behalf of the board:
Clifford Katz
Chief Executive Officer
Randburg
29 May 2009
Designated advisor: Grindrod Bank Limited
Date: 29/05/2009 16:49:02 Supplied by www.sharenet.co.za
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