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Unaudited condensed results for the six months ended 31 August 2012
ISA Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1998/009608/06)
Share code: ISA ISIN: ZAE000067344
(ISA or Group)
UNAUDITED CONDENSED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2012
31-Aug-12 31-Aug-11 29-Feb-12
6 months 6 months Year
ended ended ended
Unaudited Unaudited Audited
R'000 R'000 R'000
CONDENSED CONSOLIDATED STATEMENTS
OF COMRPEHENSIVE INCOME
Revenue 29,964 36,392 64,226
Turnover 29,576 35,660 62,946
Cost of sales (17,058) (20,238) (32,498)
Profit before other income and
expenses 12,518 15,422 30,448
Other income - 6 29
Foreign exchange profit 1,436 10 524
Operating expenses (7,032) (6,676) (12,699)
Finance income 388 695 1,251
Finance costs - (87) (127)
Profit before taxation 7,310 9,370 19,426
Taxation (2,047) (3,471) (6,566)
Profit for the period 5,263 5,899 12,860
Total comprehensive income attributable
to equity shareholders 5,263 5,899 12,860
CONDENSED CONSOLIDATED STATEMENTS
OF FINANCIAL POSITION
ASSETS
Non-current assets 16,455 5,508 5,202
- Property, plant and equipment 11,800 508 471
- Intangible assets 4,085 4,560 4,549
- Deferred tax 570 440 182
Current assets 27,907 48,643 47,240
- Cash and cash equivalents 21,916 32,059 42,733
- Current tax receivable 43 41 14
- Trade and other receivables 5,948 16,543 4,493
Total assets 44,362 54,151 52,442
EQUITY AND LIABILITIES
Equity capital and reserves 39,443 40,059 47,020
- Share capital and share premium 13,442 13,442 13,442
- Reserves 26,001 26,617 33,578
LIABILITIES
Current liabilities 4,919 14,092 5,422
- Trade and other payables 4,400 13,333 4,903
- Current tax payable 125 375 249
- Provisions 394 384 270
Total equity and liabilities 44,362 54,151 52,442
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOW
Cash flows from operating activities 1,701 3,415 13,456
Cash flows from investing activities (11,113) 635 751
Cash flows from financing activities (12,841) (13,244) (13,241)
Net (decrease)/increase in cash
and cash equivalents (22,253) (9,194) 966
Revaluation of foreign cash
balances 1,436 10 524
Cash and cash equivalents at
beginning of the period 42,733 41,243 41,243
Cash and cash equivalents at end
of the period 21,916 32,059 42,733
CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN EQUITY
Share capital and reserves
Balance at beginning of the period 47,020 43,464 43,464
Attributable profit for the period 5,263 5,899 12,860
Movement of share premium
during the period - 1,988 1,948
Dividends paid during the period (12,841) (11,292) (11,252)
Total equity capital and reserves 39,442 40,059 47,020
RECONCILIATION OF HEADLINE EARNINGS
Earnings as per statement of
comprehensive income 5,263 5,899 12,860
Profit on sale of property,
plant and equipment - 6 (4)
Tax effect on above - (3) -
Headline earnings 5,263 5,902 12,856
ORDINARY SHARES
Earnings per share (cents) 2.9 3.2 7.0
Diluted earnings per share (cents) 2.9 3.2 7.0
Headline earnings per share (cents) 2.9 3.2 7.0
Diluted headline earnings per share
(cents) 2.9 3.2 7.0
Number of shares in issue at end
of period ('000s) 183,600 183,600 183,600
Weighted average number of shares
in issue ('000s) 183,600 183,600 183,600
Treasury shares held at end of
period ('000s) 8,993 8,517 8,993
Net asset value per share at end
of period (cents) 21.5 21.8 25.6
Net tangible asset value per share
at end of period (cents) 19.3 19.3 23.1
OPERATIONAL REVIEW
We are pleased to present our results for the six month reporting cycle ended 31 August 2012, be they disappointing and short of expectation.
The highlight during the period under review has come from two external factors, both of which management unfortunately have no control over. The weakening of the Rand, which contributed R1.4 million in foreign currency revaluation gains; as well as the saving of last years R1.2 million STC charge, due to the change in dividend tax legislation.
Without these fortuitous gains, the business would have reported a substantial decline in earnings of 48%, to R3.0 million, as opposed to the actual 11% decline as reported herein.
A slowdown in new solution sales lies at the centre of the setback, which declined by 63% when viewed against the previous comparative reporting period. Although dramatic at face value, it is important to note that new solution sales tend to be bulky in value and if the realisation of only one or two are missed in a specific reporting cycle, the impact on the result would be severe, as is the current case.
On a more positive note, recurring revenue levels increased by a healthy 24% from the previous comparative reporting period, making up 79% of turnover. This growth is attributed largely to the success of our Managed Security Services strategy, underpinned by our internally developed MSS Pulse security infrastructure management and monitoring platform.
During the period under review, we moved into our newly acquired premises in Woodmead. Not only does this transfer of low-yielding cash into higher-yielding property enhance our investment structure, but it also gives us the headroom to grow the breadth and depth of our service offerings for the market. This objective is viewed by management as being their most pressing challenge for the longer-term sustainable growth of the business.
DISTRIBUTION
During the period under review, a dividend of R12.8 million was declared and paid to all shareholders, representing 7.0 cents per share. The Board has not declared an interim dividend.
PROSPECTS
We remain optimistic about our long-term prospects, but do anticipate continued pressure on the level of new solution sales and margin in the short-term.
The drivers for the Information and IT security industry continue to support our strategy and we have little doubt that the strength of the underlying business, capital structures and market positioning will continue to bode well for us in the years to come.
BASIS OF PREPARATION AND SUBSEQUENT EVENTS
These interim results to 31 August 2012 have been prepared in accordance with International Financial Reporting Standards (IFRS), the Listings Requirements of JSE Limited and the Companies Act, 2008 (Act 71 of 2008), as amended, in a manner consistent with the prior years accounting policies and in accordance with Interim Financial Reporting (IAS34). These results have not been reviewed or audited by the Groups auditors, and have been prepared by Mr Clifford Katz, the acting Financial Director of the Group.
There have not been any changes to the board of directors of ISA during the period under review nor have there been any subsequent events up to and including the date of this report.
SPECIAL THANKS
I take this opportunity to thank our customers, suppliers and staff for their loyalty and continued support.
For and on behalf of the Board.
Clifford Katz
Chief Executive Officer
5 October 2012
Directors: CS Katz (CEO and acting Financial Director), PJG Green (Chief Technical Officer), AA Maren#, AJ Naidoo#, DR Perreira*, DS Seaton*, TA Matsabu*
# Non-executive
* Independent non-executive
Designated Advisor: Merchantec Capital
www.isaholdings.co.za
Date: 05/10/2012 04:34:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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