Wrap Text
Reviewed provisional financial results for the year ended 31 July 2012
SecureData Holdings Limited
Incorporated in the Republic of South Africa (Registration number 1998/010017/06)
Share code: SDH ISIN: ZAE000096368
("SecureData" or "the group")
Reviewed Provisional
Financial Results
for the year ended 31 July 2012
Condensed Consolidated Statement of Comprehensive Income
[ for the twelve months ended 31 July 2012 ]
Reviewed Audited
twelve months twelve months
ended ended
31 July 2012 31 July 2011
R'000 R'000
Revenue 222 229 228 643
(Loss)/earnings before interest, taxation, depreciation and
amortisation (EBITDA) and other financial items (44 961) 1 550
Depreciation and amortisation (4 109) (4 981)
Depreciation (1 345) (1 467)
Amortisation (2 764) (3 514)
Loss from operations (49 070) (3 431)
Finance income 161 527
Finance costs (3 590) (2 862)
Other financial items (695) (90)
Loss before taxation (53 194) (5 856)
Taxation 5 469 15
Normal taxation 5 469 1 246
Secondary Taxation on Companies (1 231)
Loss on continuing operations (47 725) (5 841)
Discontinued operations (Note 1) 9 631 1 822
Loss for the year (38 094) (4 019)
Attributable to:
owners of the parent (39 395) (3 923)
minority interest 1 301 (96)
Loss for the year (38 094) (4 019)
Loss for the year (38 094) (4 019)
Foreign exchange conversion movements 25 440 (2 537)
Total comprehensive loss for the year (12 654) (6 556)
Attributable to:
owners of the parent (14 809) (6 053)
minority interest 2 155 (503)
Total comprehensive loss for the year (12 654) (6 556)
Loss per share (cents) (17,3) (1,7)
Continued operations (20,9) (2,5)
Discontinued operations 3,6 0,8
Diluted loss per share (cents) (17,3) (1,7)
Continued operations (20,9) (2,5)
Discontinued operations 3,6 0,8
Weighted average numbers of shares on which:
loss per share is based ('000) 228 395 229 900
diluted loss per share is based ('000) 228 395 229 900
Number of ordinary shares in issue ('000) 246 320 246 320
Reconciliation between loss and headline loss:
Loss for the year attributable to ordinary shareholders (39 395) (3 923)
Goodwill written off 2 359
Loss on disposal of subsidiary 1 112
Loss/(Profit) on disposal of assets 1 612 (11)
Headline loss (34 312) (3 934)
Headline loss per share (cents) (15,0) (1,7)
Continued operations (19,2) (2,5)
Discontinued operations 4,2 0,8
Reconciliation between loss and adjusted loss:
Loss for the year attributable to ordinary shareholders (39 395) (3 923)
Amortisation (after taxation) 6 656 6 949
Unrealised (profit)/losses on derivatives (after taxation) (1 198) 65
Goodwill written off 2 359
Loss on disposal of subsidiary 1 112
Foreign exchange (gains)/losses on group loans (after taxation) (9 082) 2 134
Adjusted (loss)/earnings (39 548) 5 225
Adjusted (loss)/earnings per share (cents) (17,3) 2,3
Continued operations (19,5) (1,4)
Discontinued operations 2,2 3,7
Note 1:
Discontinued operations
Revenue 220 317 177 915
Earnings before interest, taxation, depreciation and amortisation
(EBITDA) and other financial items 17 360 16 013
Depreciation and amortisation (7 707) (7 810)
Depreciation (1 402) (1 672)
Amortisation (6 305) (6 138)
Profit from operations 9 653 8 203
Finance income 67 21
Finance costs 9 486 (7 299)
Interest paid (3 126) (4 335)
Foreign exchange gains/(losses) on loan to subsidiary 12 612 (2 964)
Profit before taxation 19 206 925
Taxation (8 463) 897
Normal taxation (8 463) 897
Loss on sale of subsidiary (1 112)
Profit for the year 9 631 1 822
Condensed Consolidated Statement of Financial Position
[ at 31 July 2012 ]
Reviewed at Audited at
31 July 2012 31 July 2011
R'000 R'000
ASSETS
Non-current assets 65 917 208 467
Property, plant and equipment 3 836 6 016
Goodwill 37 459 126 562
Intangible assets 5 084 38 640
Deferred tax asset 19 538 37 249
Current assets 139 415 172 147
Inventories 7 482 6 088
Trade and other receivables 41 207 128 484
Taxation pre-paid 1 139 736
Cash and cash equivalents 89 587 36 839
Total assets 205 332 380 614
EQUITY AND LIABILITIES
Equity 143 402 168 773
Share capital 246 246
Share premium 118 900 118 900
Treasury share reserve (23 336) (23 336)
Share-based payment equity reserve 1 255 3 322
Foreign currency translation reserve 25 (24 561)
Retained earnings 46 312 83 614
Equity attributable to owners of the parent 143 402 158 185
Minority interest 10 588
Non-current liabilities 1 301 13 202
Loans and borrowings 2 691
Deferred tax liability 1 301 10 511
Current liabilities 60 629 198 639
Trade and other payables 56 459 139 108
Derivative financial instruments 2 707 4 372
Taxation 1 454 1 264
Bank overdrafts 9 9 679
Loans and borrowings 44 216
Total equity and liabilities 205 332 380 614
Net asset value per share (cents) 58,2 64,2
Net asset value per share net of treasury (cents) 62,8 69,3
Condensed Consolidated Statement of Changes in Equity
[ for the twelve months ended 31 July 2012 ]
Reviewed Audited
twelve months twelve months
ended ended
31 July 2012 31 July 2011
R'000 R'000
Share capital 246 246
Share premium 118 900 118 900
Treasury share reserve (23 336) (23 336)
Balance at beginning of the year (23 336) (19 699)
Own shares acquired by subsidiary (3 637)
Share-based payment equity reserve 1 255 3 322
Balance at beginning of the year 3 322 3 957
Share-based payment transactions during the year 26 (635)
Transfer to retained earnings (2 093)
Foreign currency translation reserve 25 (24 561)
Balance at beginning of the year (24 561) (22 431)
Foreign exchange movements during the year 24 586 (2 130)
Retained earnings 46 312 83 614
Balance at beginning of the year 83 614 99 093
Profit for the year (39 395) (3 923)
Transfer from share-based payment equity reserve 2 093
Dividends paid (11 556)
Equity attributable to owners of the parent 143 402 158 185
Minority interest 10 588
Balance at beginning of the year 10 588 11 091
Recognised income for the year 1 301 (96)
Reduction due to sale of subsidiary (12 743)
Foreign exchange movements 854 (407)
Total capital and reserves 143 402 168 773
Condensed Consolidated Statement of Cash Flow
[ for the twelve months ended 31 July 2012 ]
Reviewed Audited
twelve months twelve months
ended ended
31 July 2012 31 July 2011
R'000 R'000
Cash flows from operating activities (53 358) (3 641)
Loss before taxation (35 100) (4 931)
Adjustments not affecting the flow of funds 8 809 21 977
Operating (loss)/income before working capital changes (26 291) 17 046
Decrease in working capital (18 459) (443)
Cash generated from operations (44 750) 16 603
(8 608) (20 244)
Finance income 228 548
Finance costs (6 716) (7 197)
Taxation paid (2 120) (13 595)
Cash flows from investing activities 155 406 (2 380)
Cash flows from financing activities (44 012) (33 724)
Dividends paid (11 556)
Own shares acquired by subsidiary (3 637)
Loans repaid (44 012) (18 531)
Increase/(decrease) in cash equivalents 58 036 (39 745)
Foreign exchange movements in cash balances 4 382 (1 131)
Cash and cash equivalents at the beginning of the year 27 160 68 036
Cash and cash equivalents at the end of the year 89 578 27 160
Commentary
General review
During the 2012 financial year, SecureData was completely restructured in order to address operational and management deficiencies that
prevented the group from performing optimally, particularly in SecureData Africa, and to respond to the challenging environment in the markets
in which the group operates. The group disposed of SecureData Europe during the financial year and used some of the proceeds to settle
all debt. The financial results within the Condensed Consolidated Statement of Comprehensive Income include the results of the continuing
operations in the group, being, SecureData Africa and SensePost. The financial results of SecureData Europe are reflected within discontinued
operations.
We operate in the information security field, and particularly the corporate environment where the security of electronic information
is a constant and growing concern. We have some of the world's best information risk management products which address these issues,
and highly-skilled personnel to provide expert advice. Almost all of South Africa's top 100 companies purchase our products, usually multiple
products, and for many of these products we are the sole or dominant distributor. Our Africa business is growing rapidly because the same
issues are prevalent on the continent, as they are globally.
Because of the information security threats companies face, they are spending increasing amounts to counter such threats. Leading research
companies estimate that information security currently accounts for about 5% of a company's IT spend.
In these circumstances it is disappointing to say the least that in the past financial year the group's net loss of continued operations increased
to R47,7 million from a loss of R5,8 million in 2011. The substantial loss at SecureData Africa outweighed profits from SensePost.
Group EBITDA of continued operations declined to a loss of R45,0 million (2011: profit of R1,6 million) off revenues that decreased to
R222,2 million (2011: R228,6 million).
The calculation of earnings per share (EPS) and headline earnings per share (HEPS) of continued operations incorporate the following items;
a R2,0 million (2011: R2,5 million) charge for amortisation of intangible assets created by the group's prior acquisitions. This charge has no
effect on group cash flow;
the net gain in derivative financial instruments of R1,2 million (2011: R0,06 million loss). This includes unrealised foreign exchange forward
contracts, entered into to settle outstanding creditor payments by the group at a time of great Rand volatility;
a R2,4 million (2011: R nil) charge for goodwill written off. This charge has no effect on group cash flow.
Together, these non-operational non-cash items increased the loss per share of continuing operations by 1,4 cents. Adjusted loss per share
on continued operations, which ignores these items but includes cash expenses such as interest, reflects a loss of 19,5 cents per share
(2011: loss of 1,4 cents per share).
The restructuring, including the disposal of SecureData Europe, was necessary to strengthen the financial position of the group, reduce costs
and refocus the group on its fundamentals. All the long-term debt and bank overdrafts within the group were settled after the disposal
of SecureData Europe. In SecureData Africa we have gone back to our roots, as an Africa-focused distributor of world-class software in
information security, backed by engineers certified in every one of our products. In addition, we provide expert training to assist companies to
address the ever-expanding risks in information security.
We are rebuilding our relationships with the resellers, or retailers, who are the heart of our business as they are the ones who take our
products to market. Those relationships had come under strain, and trust is now being restored through a focused programme led by the
group Chief Executive Officer.
SensePost continues to perform according to expectations.
Operational review
SecureData's continuing operations will comprise SecureData Africa and SensePost. SecureData Europe was sold effective 29 June 2012, and
is reflected as a discontinued operation.
Continuing operations
SecureData Africa
SecureData Africa markets and distributes best-of-class information risk management products in South Africa and across the rest of
the continent.
12 months to 12 months to
31 July 2012 31 July 2011
R'000 R'000
Revenue 189 207 210 309
EBITDA (45 897) (1 087)
EBITDA margin (%) (24,3) (0,5)
The increased loss of R45,9 million after the R1,1 million loss in the previous financial year is attributable to a poor trading performance, as
well as once-off restructuring costs and write-offs that includes: bad debts written off and provided for of R9,0 million, stock write-downs of
R13,5 million, divisional closures of R1,0 million, onerous lease costs of R1,1 million and retrenchment costs of R2,1 million. In addition the
division experienced very tough market trading conditions.
Two non-core loss-making divisions, Managed Services and Content, were sold to management and staff. The former Managed Services
division has already done its first deal with SecureData as a customer.
SecureData Africa is now a smaller and more focused division, with plans to return to profitability in 2013. Staff reductions and
15 retrenchments reduced staff numbers by 34 to a year-end complement of 76 resulting in significant on-going cost savings.
As we rebuild the business in South Africa with our reseller partners, we are also experiencing good growth in Africa outside of South Africa.
We have a presence in Kenya and Nigeria, and service 11 African countries. This market comprises 10% of SecureData Africa's business and
we expect to double the revenue from it in the next financial year.
Another area of growth is the public sector, where sales had declined significantly. We are busy rebuilding our public sector team and have
established a new sales pipeline.
SensePost
SensePost provides independent information security assessment services. Based in South Africa, the company is a recognised global leader in
its niche market, and boasts a blue-chip client base internationally.
12 months to 12 months to
31 July 2012 31 July 2011
R'000 R'000
Revenue 33 576 26 136
EBITDA 8 075 7 707
EBITDA margin (%) 24,0 29,5
The company continues to show growth in revenue and profits. Revenue increased by 28,5% to R33,6 million and EBITDA was up to
R8,1 million from R7,7 million the previous year, and we are budgeting for a further increase in 2013.The decline in EBITDA margin percentage
is a result of investments in leadership and systems.
Its international standing was illustrated in July 2012 at the Black Hat conference in Las Vegas. This is the world's largest information security
conference, and SensePost was invited to present six sessions, or papers, twice the number of its nearest competitor. SensePost has been
Black Hat's preferred trainer for more than a decade.
Discontinued operations
SecureData Europe
SecureData Europe is one of the largest independently managed information security solution providers in the United Kingdom.
11 months to 12 months to
29 June 2012 31 July 2011
R'000 R'000
Revenue 221 314 179 611
EBITDA 20 482 21 141
EBITDA margin (%) 9,3 11,8
The company remained profitable, recording EBITDA of R20,5 million in the 11 months before its disposal.
SecureData Europe was owned by SDH UK Limited, in which the group had an 80.8% shareholding.The shareholding was sold in June 2012 for
GBP14,5 million, or approximately R180 million, which was repatriated to South Africa. The sale was necessary because, although SecureData
Europe was performing satisfactorily, the board had approved the 2008 acquisition on condition that management's primary focus would
remain the Africa operations, through SecureData Africa. The board resolved to dispose of its interest in SDH UK Limited in order to focus
once again on the Africa operations.
The table below reconciles the divisional results back to the consolidated group results:
12 months to 31 July 2012 12 months to 31 July 2011
Revenue EBITDA Revenue EBITDA
R'000 R'000 R'000 R'000
SecureData Africa 189 207 (45 897) 210 309 (1 087)
SensePost 33 576 8 075 26 136 7 707
Consolidation entries (554) (7 802)
Head office costs (7 139) (5 070)
Continued operations 222 229 (44 961) 228 643 1 550
SecureData Europe 221 314 20 482 179 611 21 141
Consolidation entries (997) (1 696)
Head office costs (3 122) (5 128)
Discontinued operations 220 317 17 360 177 915 16 013
Group results 442 546 (27 601) 406 558 17 563
Going concern
Despite the substantial losses incurred during the 2012 financial year, and trading conditions remaining challenging, we believe the prospects
for the group to be good and based on detailed cash flow forecasts prepared for the next twelve months ahead, these provisional condensed
consolidated financial statements have been prepared on a going concern basis.
Prospects
The restructuring, now nearly complete, is designed to achieve a smaller but profitable group with growth prospects in the two remaining
operating divisions, SecureData Africa and SensePost.
We retained all our distributorships during the past financial year and are adding to them, with a forensic information security solution rejoining
our suite of products after the financial year-end, and other distributorships are under discussion.
While information security is a highly competitive market, SecureData is the only company in South Africa with end-to-end security products.
This means we are able to provide a complete range of solutions, from device and software audits to data loss prevention and recovery,
secure network engineering and the prevention and detection of hostile attacks on a database or network.
Information risk management products are in demand as information security presents companies with a constant array of new challenges.
Two current priorities are security of information stored in "the cloud" or remote servers often in a foreign country, and the challenges posed
by software applications, personal tablet computers and smartphones linked to corporate databases and email systems.
Our reseller partners have responded positively to SecureData's rededication to the channel model of distribution and these partnerships
will be an important factor in future expansion. This includes the 1 700 smaller resellers, who are serviced by a much improved telesales
operation.
The changes in SecureData should enable us to rebuild market share in South Africa, expand operations in the increasingly significant
African market and continue to profit from the local and international demand for the niche security assessment services from SensePost.
With the group being debt free and holding surplus cash following the disposal of SecureData Europe, the board is finalising options to return
surplus cash to shareholders after taking account of working capital needs. A further announcement will be made shortly.
BASIS OF PREPARATION
These provisional condensed consolidated financial statements have been prepared in accordance with the recognition and measurement
requirements of International Financial Reporting Standards, the AC 500 series as issued by the Accounting Practices Board and the presentation
and disclosure requirements of IAS 34 Interim Financial Reporting, the Companies Act, 2008 (Act 71 of 2008), as amended, and with the
Listings Requirements of the JSE Limited. The accounting policies applied in the preparation of these condensed financial statements conform
with the requirements of International Financial Reporting Standards, and are consistent with those applied in the prior year. These financial
results have been prepared under the supervision of Johan du Toit, the Financial Director.
INDEPENDENT REVIEW
Grant Thornton, SecureData's independent auditor, have reviewed the condensed financial statements contained in this provisional report
and have expressed an unmodified conclusion on the provisional statements. Their review report is available for inspection at the company's
registered office.
The auditor's report does not necessarily cover all of the information contained in this announcement/ financial report. Shareholders are
therefore advised that in order to obtain a full understanding of the nature of the auditor's work they should obtain a copy of that report
together with the accompanying financial information from the registered office of the company.
POST-BALANCE SHEET EVENTS
The directors are not aware of any material matter or circumstance arising since the financial year-end and up to the date of this report.
DIRECTORATE
Jake Archer and Tsediso Gcabashe were appointed to the board on 9 January 2012 as independent non-executive directors. The group was
saddened by the untimely death of Tsediso Gcabashe on 24 February 2012. Miles Crisp was appointed as Chief Executive Officer of the
group on 1 August 2012 and took over the position from Johan du Toit who had acted as Interim Chief Executive Officer from 21 June 2011
to 31 July 2012. Two further additions were made after the financial year-end, with Steve Midgley and Lwazi Koyana appointed to the board
on 8 October 2012.
Johan du Toit will be leaving the group on 31 October 2012 and we thank him for his contribution as Financial Director and Interim Chief
Executive Officer during his tenure. Carlo Venter will take over as Financial Director from 1 November 2012.
For and on behalf of the board
PR Pretorius M Crisp
Chairman Chief Executive Officer
25 October 2012
SecureData Holdings Limited
Incorporated in the Republic of South Africa (Registration number 1998/010017/06)
Share code: SDH ISIN: ZAE000096368
("SecureData" or "the group")
Directors: PR Pretorius (Chairman), M Crisp (Chief Executive Officer), JG du Toit (Financial Director), A Aitken, N Mthembu
P Sneddon*, VJ Archer*, L Koyana*, S Midgley* Non-executive *Independent non-executive
Registered office: SecureData Holdings Limited, Nicol Main Office Park, 4 Bruton Road, Bryanston, 2021 (PO Box 4673, Rivonia, 2128)
Company secretary: Merchantec Proprietary Limited
Transfer secretaries: Computershare Investor Services Proprietary Limited (Registration number 2004/003647/07)
70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
Sponsor: Merchantec Capital
www.securedataholdings.com
Date: 25/10/2012 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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