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ISA - ISA Holdings Limited - Condensed group audited results for the year ended

Release Date: 24/05/2011 15:23
Code(s): ISA
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ISA - ISA Holdings Limited - Condensed group audited results for the year ended 28 February 2011 as well as the proposed dividend and the proposed capital reduction ISA Holdings Limited ("ISA") (Registration number: 1998/009608/06) JSE share code: ISA ISIN number: ZAE000067344 CONDENSED GROUP AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2011 AS WELL AS THE PROPOSED DIVIDEND AND THE PROPOSED CAPITAL REDUCTION 2011 2010 Audited Audited
R`000s R`000s CONDENSED GROUP AUDITED STATEMENTS OF COMPREHENSIVE INCOME Revenue 62,064 62,447 Turnover 59,223 57,532 Cost of sales (28,656) (27,862) Profit before other income and expenses 30,567 29,670 Other income 1,090 2,417 Selling and marketing costs (6,384) (6,918) Administrative expenses (6,454) (7,273) Finance income 1,751 2,498 Finance costs (267) (288) Profit before taxation 20,303 20,106 Taxation (6,656) (5,503) Total comprehensive income 13,647 14,603 Earnings per share (cents) 7.2 7.7 Diluted earnings per share (cents) 7.2 7.7 Ordinary dividends paid per share (cents) 6.0 2.5 Capital distribution paid per share (cents) 1.7 2.5 CONDENSED GROUP AUDITED STATEMENTS OF FINANCIAL POSITION ASSETS Non-current assets 5,765 6,472 - Property, plant and equipment 577 314 - Intangible assets 4,960 5,332 - Deferred tax 228 826 Current assets 48,862 54,703 - Cash and cash equivalents 41,243 42,707 - Equity investments - 4,565 - Trade and other receivables 7,409 7,322 - Current tax receivable 210 109 Total assets 54,627 61,175 EQUITY Equity capital and reserves 43,464 47,112 - Share capital and share premium 11,494 17,569 - Reserves 31,970 29,543 LIABILITIES Non-current liabilities - 3,544 - Interest bearing liabilities - 3,544 Current liabilities 11,163 10,519 - Interest bearing liabilities 3,810 - - Trade and other payables 6,974 9,071 - Provisions 379 897 - Current tax payable - 551 Total equity and liabilities 54,627 61,175 Net asset value per share (cents) 23.7 25.0 Number of shares in issue at year-end (`000s) 183,600 188,235 CONDENSED GROUP AUDITED STATEMENT OF CHANGES IN EQUITY Share Capital Ordinary shares Balance at beginning of the year 1,882 1,921 Shares purchased during the year (46) (39) Balance at end of the year 1,836 1,882 Share premium Balance at beginning of the year 15,687 22,070 Reduction in share premium - capital repayment (3,200) (4,791) Shares purchased during the year (2,829) (1,592) Balance at end of the year 9,658 15,687 Total share capital and share premium 11,494 17,569 Reserves Retained earnings Balance at beginning of the year 29,543 19,731 Total comprehensive income 13,647 14,603 Distributions paid during the year (11,220) (4,791) Balance at the end of the year 31,970 29,543 Total equity capital and reserves 43,464 47,112 CONDENSED GROUP AUDITED STATEMENT OF CASH FLOW Cash flows from operating activities 10,651 10,537 Cash flows from investing activities 6,436 2,527 Cash flows from financing activities (17,296) (11,217) Net increase in cash and cash equivalents (209) 1,847 Revaluation of foreign cash balances (1,255) (2,295) Cash and cash equivalents at beginning of year 42,707 43,155 Cash and cash equivalents at end of year 41,243 42,707 RECONCILIATION OF EARNINGS AND HEADLINE EARNINGS Earnings attributable to ordinary shareholders 13,647 14,603 Profit/(loss) on sale of property, plant - 2 and equipment Taxation effects of adjustment - 1 Headline earnings 13,647 14,604 ORDINARY SHARES Earnings per share (cents) 7.2 7.7 Diluted earnings per share (cents) 7.2 7.7 Headline earnings per share (cents) 7.2 7.7 Diluted headline earnings per share (cents) 7.2 7.7 Weighted average number of shares in issue (`000s) 188,918 190,213 Number of shares in issue at year-end (`000s) 183,600 188,235 Treasury shares held at year-end (`000s) 8,517 4,360 Net asset value per share (cents) 23.7 25.0 Net tangible asset value per share (cents) 21.0 22.2 BASIS OF PREPARATION The condensed annual financial statements of the Group and the Company have been prepared in accordance with the Framework concepts and the measurement and recognition requirements of the International Financial Reporting Standards (IFRS), the AC 500 Standards as issued by the Accounting Practices Board, containing the information requirements of IAS 34 - Interim Financial Reporting, the Listings Requirements of the JSE Limited and the Companies Act, 2008 (Act 71 of 2008), as amended. The condensed annual financial statements have been prepared on the historical cost basis, except as indicated below, and incorporate the principal accounting policies set out below. The policies set out below have been consistently applied to all years presented. The condensed annual financial statements have been prepared on a going-concern basis, presented in thousands of South African Rand (R`000s) and are rounded to the nearest thousand. The same accounting policies and methods of computations are followed in this report as compared with the 28 February 2011 Audited Financial Statements and must be read in conjunction with this report. AUDITED RESULTS Mazars has audited the annual financial statements (and group financial statements) for the year ended 28 February 2011 and their unqualified audit report, together with their audit report on these financial statements, is available for inspection at the company`s registered office. PROPOSED DIVIDEND AND PROPOSED CAPITAL REDUCTION Notice is hereby given that the directors propose ordinary dividend number 8, of 6.2 cents per share, to be confirmed at the Annual General Meeting. Notice is hereby given that the directors propose a capital reduction out of share premium of 1.0 cents per share, to be approved by shareholders at the Annual General Meeting. This is subject to the passing of an ordinary resolution. The salient dates for the capital reduction and ordinary dividend distributions ("distributions") are as follows: Distributions finalisation date: Wednesday, 22 June 2011 Last day to trade "cum" the distributions: Friday, 8 July 2011 Date trading commences "ex" the distributions: Monday, 11 July 2011 Record date: Friday, 15 July 2011 Date of payment: Monday, 18 July 2011 Shareholders may not dematerialise or rematerialise their shares between Monday 11 July 2011 and Friday 15 July 2011, 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 I am pleased to present our results for the year ending 28 February 2011. Overall performance fairly reflects the hard work and devotion demonstrated by the ISA team, despite the challenging economic landscape in which we operate. Our robust financial position and healthy cash flows continue to underpin the business framework, whilst a satisfactory mix of recurring income and service derived revenue provides the impetus for steady growth into the future. Financial A nominal increase in turnover of 3% was disappointing and fell short of our anticipated double digit growth for the period. The unexpected strengthening of the Rand dampened what could have been a satisfactory sales performance, as a substantial part of our revenue is derived from the Dollar price of goods converted to Rands at the time of sale. The effect of the strong Rand further impacted our results with a charge of R1.3 million resulting from the revaluation of our US$1.5 million foreign currency reserve. The Group sold its equity investments in the current financial period for an amount of R 5.1 million. Receipts from the sale of higher margin services through the period grew by a healthy 18%, which adequately compensated for lower margins received on the sale of products. Gross profit margin remained constant at 52%. Most pleasing is that we have developed a steady recurring revenue stream from MSSRegistered Pulse, our internally developed security infrastructure monitoring and management products. This encouraging momentum early in the product lifecycle has given us the confidence needed to increase our investment in this part of the business and accelerate the development cycle further. Net asset value and net tangible asset value of 23.7 and 21.0 cents per share respectively is derived predominantly from our strong cash holding of R41.2 million. This result was achieved after taking into account the R2.9 million spent on buying back company shares, as well as the cash distribution to shareholders of R14.4 million which was paid during the period. Pre-tax profit growth of 1% and EBITDA growth of 4% was impacted by our comparatively high tax bill, resulting in a decline in earnings and headline earnings of 6.5% to 7.2 cents per share. This result was slightly lower than expectation. Distribution ISA will be able to sustain its strategic business 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 recommends a distribution to shareholders of 7.2 cents per share, comprising of an ordinary dividend of 6.2 cents per share and a capital distribution of 1.0 cents per share. During the period under review distributions totaling 7.7 cents per share were declared and paid to all shareholders on the 19th of July 2010, comprising of an ordinary dividend of 6.0 cents per share and a capital distribution of 1.7 cents per share. Market and prospects We are of the view that the economic recovery is underway, although it is likely to play itself out over a longer timeframe than was initially anticipated. It is with this view in mind that we remain cautiously optimistic about the year ahead. The strength of our underlying business, together with its healthy capital structures and market positioning, bodes well for ISA and we remain confident that we have the tools at our disposal to outperform our peers in the years to come. The key drivers of the IT security market remain robust and we are well positioned to benefit from this. The continued evolution of threats and attacks against organisations, together with the increased regulatory and legislative compliance requirements, continue to elevate the importance of IT security within organisations. In addition, IT security remains a cornerstone for business enablement, which we believe should create opportunities for us in other areas of the ICT market, as customers are giving more priority to their need for a secure converged information and communication framework. Conclusion On behalf of the Board, I would like to take this opportunity to thank the ISA team for their continued dedication and hard work. My appreciation is also extended to my colleagues on the Board for their wise counsel 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 22nd of June 2011. For and on behalf of the board: Clifford Katz Chief Executive Officer Randburg 24 May 2011 DIRECTORS: Clifford Katz (Chief Executive Officer) Tarryn Brits (Chief Financial Officer) Philip Green (Chief Technical Officer) Andrew Maren (Non-executive Director) Alan Naidoo (Non-executive Director) Desmond Seaton (Independent Non-executive Director) Denzil Perreira (Independent Non-executive Director) REGISTERED OFFICE: Unit 12, 152 Bram Fischer Drive, Randburg, 2194, South Africa (P O Box 142, Randburg, 2125, South Africa) DESIGNATED ADVISOR: Exchange Sponsors (2008) (Proprietary) Limited 44a Boundary Road, Inanda, 2196, South Africa (P O Box 411216, Craighall, 2024, South Africa) TRANSFER SECRETARIES: Link Market Services South Africa (Proprietary) Limited 5th Floor, 11 Diagonal Street, Johannesburg, 2001, South Africa (P O Box 4844, Johannesburg, 2000, South Africa) COMPANY SECRETARY: Clifford Katz Unit 12, 152 Bram Fischer Drive, Randburg, 2194, South Africa (P O Box 142, Randburg, 2125, South Africa) WEBSITE AND EMAIL ADDRESS: www.isaholdings.co.za ir@isaholdings.co.za Date: 24/05/2011 15:23:02 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. 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