Wrap Text
Unaudited Interim Group Results for the six months ended 31 December 2012 and change in function of a director
SILVERBRIDGE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration No. 1995/006315/06)
JSE SHARE CODE: “SVB”
ISIN CODE:ZAE000086229
(“SilverBridge” or “the Group”)
UNAUDITED CONDENSED INTERIM GROUP FINANCIAL STATEMENTS for the six
month period ended 31 December 2012 and change in function of a
director
GROUP PROFILE
SilverBridge offers clients in the insurance industry reliable
solutions that aim to simplify their operations by enabling and
improving their business processes. We achieve this by
implementing our system platforms and customising them to meet
client needs. The valuable experience we have gained through our
existing African footprint and strategic partnerships positions us
well to take advantage of opportunities while making life
insurance simpler.
Exergy is our flagship platform that enables core back office
policy administration in the life assurance industry. The broader
Exergy solution package has specific applications which can be
customised to suit the needs of a long-term insurer. We use
solution design to address more than just customisation of
existing products and contract information - it allows our clients
to drive their strategic business objectives efficiently.
Our approach is to identify and define strategic customer business
objectives, translate those to IT requirements and to implement
winning, long-term solutions. SilverBridge Holdings Limited and
SilverBridge Software Solutions (Proprietary) Limited are jointly
branded as SilverBridge.
FINANCIAL HIGHLIGHTS
SilverBridge reported a profit following the loss in the previous
financial year. Annuity revenue continues to grow well. Although
improved, the implementation area remains under pressure. Our
current complex projects are being managed well to ensure delivery
and mitigate risk, but this has been costly. Good progress has
been made in the establishment of a partnership network. A small
project has already been completed by a partner and some support
activity has been contracted out to the partner channel.
SilverBridge will support and develop this model into the future.
Research and development efforts continued on the Eco-Suite to
help partners implement and support SilverBridge?s software more
efficiently.
OPERATIONAL HIGHLIGHTS
We are pleased to report that the Nedgroup Life project is
progressing well. We are nearing the end of phase 1, at which
point the product will go live. We are also pleased that a smaller
client has gone live through a project completed by a certified
SilverBridge partner.
Our operational focus remains as follows:
- Further refining efficiency tools to make implementations less
complex
- Improving end to end implementation and support processes to
improve quality
- Further developing partner enablement capacity and capability
Unaudited Condensed Consolidated Statement of Comprehensive Income
for the six month period ended 31 December 2012
Unaudited Unaudited Audited
six six 12
months months months
ended 31 ended 31 ended 30
December December June Percentage
2012 2011 2012 Change %
Notes R'000 R'000 R'000 R'000
Revenue 41 720 47 578 82 576 (12)
Other income 126 481 590 (74)
Operating
expenses (41 019) (44 956) (87 269) (9)
Operating
profit
/(loss) 827 3 103 (4 103) (73)
Impairment
loss
recognised on
non-financial
assets - - (466)
Impairment
loss
recognised on
withholding
tax - - (2 140)
Loss on
disposal of
subsidiary - - (668)
Loss on
disposal of - (76) (76)
associate
Finance
income 44 81 156 (46)
Finance
expense (84) (36) (164) 133
Profit/(loss)
before
taxation 787 3 072 (7 461) (74)
Taxation (321) (1 012) 858 (68)
Profit/(loss)
and total
comprehensive
income for
the period 466 2 060 (6 603) (77)
Number of
shares in
issue („000) 1.4 34 781 34 781 34 781
Weighted
average
number of
shares in
issue („000) 1.4 34 675 34 675 34 675
Diluted
weighted
average
number of
shares („000) 1.4 34 675 34 675 34 675
Basic
earnings/
(loss) per
share (cents) 1.4 1.3 5.9 (19.0) (78)
Diluted
earnings/
(loss) per
share (cents) 1.4 1.3 5.9 (19.0) (78)
Unaudited Condensed Consolidated Statement of Financial Position
as at 31 December 2012
Unaudited as Unaudited as Audited
at 31 at 31 as at
December December 30 June
2012 2011 2012
Notes R'000 R'000 R'000
ASSETS
Non-Current
Assets
Equipment 1 715 2 722 2 195
Intangible
assets 11 705 13 293 12 496
Deferred tax
assets 1 116 - 1 437
Withholding
tax rebates
receivable 2 017 - 1 810
Total Non-
Current
Assets 16 553 16 015 17 938
Current
Assets
Income tax
receivable 833 6 122 833
Revenue
recognised
not yet
invoiced 1.2 1 540 1 316 712
Trade and
other
receivables 13 341 10 029 10 388
Cash and
cash
equivalents 874 8 130 4 521
Total
Current
Assets 16 588 25 597 16 454
Total Assets 33 141 41 612 34 392
EQUITY AND
LIABILITIES
Capital and
Reserves
Issued
capital 348 348 348
Share
premium 11 871 11 871 11 871
Treasury
shares (197) (197) (197)
Share based
payment 1 488 1 181 1 338
reserve
Retained
earnings 8 566 16 765 8 102
Total Equity 22 076 29 968 21 462
Non-Current
Liabilities
Deferred tax
liability - 40 -
Total Non-
Current
Liabilities - 40 -
Current
Liabilities
Deferred
revenue 1.2 4 478 420 5 357
Income tax
payable 75 - 248
Trade and
other
payables 1.3 6 512 11 184 7 325
Total
Current
Liabilities 11 065 11 604 12 930
Total Equity
and
Liabilities 33 141 41 612 34 392
Net asset
value per
share
(cents) 63.7 86.4 61.9
Net tangible
asset value
per share
(cents) 29.9 48.1 25.9
Unaudited Condensed Consolidated Statement of Changes in Equity
for the six month period ended 31 December 2012
Issued Share Treasury
capital premium shares
R'000 R'000 R'000
Balance at 1 July 2011 348 11 871 (197)
Total comprehensive
income for the period
Profit or loss – – –
Total comprehensive
income for the period – – –
Transactions with owners,
recorded directly in
equity
Contributions by and
distributions to owners
Equity settled share
based payment – – –
Total contributions by
and distributions to
owners – – –
Changes in ownership
interests in subsidiaries
that do not result in a
loss of control
Total transactions with
owners
– – –
Balance at 31 December
2011 348 11 871 (197)
Total comprehensive
income for the period
Profit or loss – – –
Total comprehensive
income for the period – – –
Transactions with owners,
recorded directly in
equity
Contributions by and
distributions to owners
Equity settled share
based payment – – –
Total contributions by
and distributions to
owners – – –
Changes in ownership
interests in subsidiaries
that do not result in a
loss of control
Total transactions with
owners – –
Balance at 30 June 2012 348 11 871 (197)
Total comprehensive
income for the period
Profit or loss - - -
Total comprehensive
income for the period - - -
Transactions with owners,
recorded directly in
equity
Contributions by and
distributions to owners
Equity settled share
based payment - - -
Total contributions by
and distributions to
owners - - -
Changes in ownership
interests in subsidiaries
that do not result in a
loss of control
Total transactions with
owners - - -
Balance at 31 December
2012 348 11 871 (197)
Share based Retained Total
payment earnings equity
R'000 R'000 R'000
Balance at 1 July 2011 757 14 705 27 484
Total comprehensive
income for the period
Profit or loss – 2 060 2 060
Total comprehensive
income for the period – 2 060 2 060
Transactions with owners,
recorded directly in
equity
Contributions by and
distributions to owners
Equity settled share
based payment 424 – 424
Total contributions by
and distributions to
owners 424 – 424
Changes in ownership
interests in subsidiaries
that do not result in a
loss of control
Total transactions with
owners 424 – 424
Balance at 31 December
2011 1 181 16 765 29 968
Total comprehensive
income for the period
Profit or loss – (8 665) (8 665)
Total comprehensive
income for the period – (8 665) (8 665)
Transactions with owners,
recorded directly in
equity
Contributions by and
distributions to owners
Equity settled share
based payment 157 – 157
Total contributions by
and distributions to
owners 157 – 157
Changes in ownership
interests in subsidiaries
that do not result in a
loss of control
Total transactions with
owners 157 – 157
Balance at 30 June 2012 1 338 8 100 21 460
Total comprehensive
income for the period
Profit or loss - 466 466
Total comprehensive
income for the period - 466 466
Transactions with owners,
recorded directly in
equity
Contributions by and
distributions to owners
Equity settled share
based payment 150 - 150
Total contributions by 150 - 150
and distributions to
owners
Changes in ownership
interests in subsidiaries
that do not result in a
loss of control
Total transactions with
owners 150 - 150
Balance at 31 December
2012 1 488 8 566 22 076
Unaudited Condensed Consolidated Statement of Cash Flows
for the six month period ended 31 December 2012
Unaudited six Unaudited six Audited 12
months ended 31 months ended 31 months ended 30
December 2012 December 2011 June 2012
R'000 R'000 R'000
Cash utilised
in operations (3 218) (6 626) (7 841)
Interest
received 44 81 127
Interest paid (84) (36) (164)
Taxation paid (172) (754) (754)
Net cash
outflow from
operating
activities (3 430) (7 335) (8 632)
Cash flows from
investing
activities
Plant and
equipment
acquired to
maintain
operations (241) (1 055) (1 232)
Proceeds from
disposal of
equipment 24 20 36
Acquisition of
Ones & Zeros
non-controlling
interest - - (1 950)
Cash effect
with sale of - - (200)
subsidiary
Net cash
outflow from
investing
activities (217) (1 035) (3 346)
Cash flows from
financing
activities
Dividends paid
to equity
holders - - (1)
Net cash
outflow from
financing
activities - - (1)
Net decrease in
cash and cash
equivalents (3 647) (8 370) (11 979)
Cash and cash
equivalents at
the beginning
of the period 4 521 16 500 16 500
Cash and cash
equivalents at
the end of the
period 874 8 130 4 521
Unaudited Condensed Segment Reports
for the six month period ended 31 December 2012
Reportable Segment Report
Implemen- Research Software
tation Support and rental and
Total services services development maintenance
R'000 R'000 R'000 R'000 R'000
Unaudited
six months
ended 31
December
2012
Revenue 41 720 13 120 11 554 - 17 046
Direct
segment
cost (26 657) (11 406) (7 596) (7 097) (558)
Cost
capitalised - - - - -
Segment
gross
profit 15 063 1 714 3 958 (7 097) 16 488
Segment
gross
profit % 36% 13% 34% 97%
Indirect
segment
cost (12 829) (5 490) (3 656) (3 415) (268)
Segment
result 2 234 (3 776) 302 (10 512) 16 220
Unallocated
expenses * (1 407)
Other
income
Operating
profit 827
Finance
income 44
Finance
expense (84)
Income tax
expense (321)
Profit for
the period 466
* Unallocated expenses relate to costs incurred at a corporate
level.
Assets and liabilities
The assets and liabilities of the Group are organised and managed
at a corporate business support level. As the assets and
liabilities contribute at a corporate level, it is not practical
to determine a reasonable allocation of the assets and liabilities
to the business segments.
Unaudited Condensed Segment Reports
for the six month period ended 31 December 2012
Implementation Support
Total services services
R'000 R'000 R'000
Unaudited six
months ended 31
December 2011
Revenue external 47 578 20 567 9 184
Direct segment cost (27 982) (14 813) (6 660)
Cost capitalised - - -
Segment gross
profit 19 596 5 754 2 524
Segment gross
profit % 41% 28% 27%
Indirect segment
cost (15 356) (8 129) (3 655)
Segment result 4 240 (2 375) (1 131)
Unallocated
expenses * (1 618)
Other income 481
Operating profit 3 103
Loss on sale of
associate (76)
Finance income 81
Finance expense (36)
Income tax expense (1 012)
Profit for the
period 2 060
Software
Research and Consulting rental and
development income maintenance
R'000 R'000 R'000
Unaudited six
months ended 31
December 2011
Revenue external - 660 17 167**
Direct segment cost (6 089) (420) -
Cost capitalised - - -
Segment gross
profit (6 089) 240 17 167
Segment gross
profit % 36% 100%
Indirect segment
cost (3 342) (230) -
Segment result (9 431) 10 17 167
Unallocated
expenses *
Other income
Operating profit
Loss on sale of
associate
Finance income
Finance expense
Income tax expense
Profit for the
period
* Unallocated expenses relate to costs incurred at a corporate
level.
** Software rental includes a license fee of R 2.4 million
Assets and liabilities
The assets and liabilities of the Group are organised and managed
at a corporate business support level. As the assets and
liabilities contribute at a corporate level, it is not practical
to determine a reasonable allocation of the assets and liabilities
to the business segments.
Unaudited Condensed Segment Reports
for the six month period ended 31 December 2012
Implemen Research Software
tation Support and rental and
Total services services development maintenance
R'000 R'000 R'000 R'000 R'000
Audited 12
months
ended 30
June 2012
Revenue 82 576 29 171 20 081 - 33 324
Direct
segment (28
cost (54 047) 326) (13 515) (10 872) (1 334)
Segment
gross
profit 28 529 845 6 566 (10 872) 31 990
Indirect
segmen
cost (29 729) (15 581) (7 434) (5 980) (734)
Segment
result (1200) (14 736) (868) (16 852) 31 256
Unallocated
expenses * (2 903)
Operating (4 103)
loss
Impairment
loss
recognised
on
withholding
tax (2 140)
Loss on
disposal of
subsidiary (668)
Loss on
disposal of
associate (76)
Impairment
loss
recognised
on non-
financial
receivables (466)
Finance
income 156
Finance
expense (164)
Income tax
expense 858
Loss for
the period (6 603)
* Unallocated expenses relate to costs incurred at a corporate
level.
Assets and liabilities
The assets and liabilities of the Group are organised and managed
at a corporate business support level. As the assets and
liabilities contribute at a corporate level, it is not practical
to determine a reasonable allocation of the assets and liabilities
to the business segments.
COMMENTARY
1. ACCOUNTING POLICIES
1.1. Basis of preparation
The accounting policies applied in the preparation of these
condensed interim financial statements, which are based on
reasonable judgements and estimates, are in accordance with
International Financial Reporting Standards (“IFRS”) and are
consistent with those applied in the annual financial
statements for the year ended 30 June 2012. These condensed
financial statements as set out in this report have been
prepared in terms of the Financial Reporting Guides, IAS 34 –
Interim Financial Reporting, the Companies Act and the
Listings Requirements of the JSE Limited.
These condensed interim financial statements have been
prepared under the supervision of Mr Jaco Maritz, the
Financial Director.
These interim results have not been audited or reviewed by the
Group's auditors.
1.2. Deferred revenue and revenue recognised not yet invoiced
Deferred revenue and revenue recognised but not yet invoiced
refers to the timing difference between recognition of revenue
and invoicing to the client based on the contracts. The Group
is in a net liability position which means it has received
more cash than what has been recognised as income, which has a
positive impact on working capital. These current liabilities
will be converted to revenue in the short-term and are
recoverable from the current client base.
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 December 31 December 30 June
2012 2011 2012
R'000 R'000 R'000
Current asset
Revenue
recognised not
yet invoiced 1 540 1 316 712
Current liability
Deferred revenue* (4 478) (420) (5 357)
Net
(liability)/asset (2 938) 896 (4 645)
* Included in deferred revenue is a deposit of R1.9 million
received on the Ned Group Life project as well as R1.2
million delivery revenue postponed until completion of the
project.
1.3. Trade and other payables
Unaudited Unaudited Audited
six months six months 12 months
as at as at as at
31 December 31 December 30 June
2012 2011 2012
R'000 R'000 R'000
Trade payables 2 650 1 685 3 237
Withholding
tax rebate
payable 278 3 955 278
VAT payable 433 467 317
Leave accrual 1 804 1 629 2 014
Liability on
capital
reduction 30 - 30
Other payables
(accruals) 1 317 2 185 1 449
Ones & Zeros
purchase price
liability - 1 263 -
Total 6 512 11 184 7 325
1.4. Earnings/(loss) per share
BASIC AND DILUTED EARNINGS/(LOSS) PER ORDINARY SHARE
Basic and diluted earnings/(loss) per ordinary share is
calculated by dividing the earnings/(loss) for the period
attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during
the period.
Unaudited Unaudited Audited
six months six months 12 months
as at as at as at
31 December 31 December 30 June
2012 2011 2012
Number of Number of Number of
shares Shares Shares
R'000 R'000 R'000
Reconciliation
of the weighted
average number
of shares in
issue
Shares in issue
at the
beginning of
the period of
the period 34 781 34 781 34 781
Effect of
treasury shares (106) (106) (106)
acquired on 1
March 2007
Weighted
average number
of shares in
issue at the
end of the
period 34 675 34 675 34 675
Earnings/(loss)
attributable to
ordinary
shareholders
(R'000) 466 2 060 (6 603)
Basic and
diluted
earnings/
(loss) per
share (cents) 1.34 5.94 (19.04)
HEADLINE AND DILUTED HEADLINE EARNINGS/(LOSS) PER ORDINARY
SHARE
Headline and diluted headline earnings/(loss) per ordinary
share is calculated by dividing the headline earnings/(loss)
attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during
the period.
Weighted
average number
of shares in
issue 34 675 34 675 34 675
Reconciliation
between basic
earnings/(loss)
and headline
earnings/(loss)
Basic
earnings/(loss) 466 2 060 (6 603)
Adjusted for:
– Profit on
disposal of
equipment (23) (11) (11)
– Loss on
disposal of
subsidiary – – 668
– Loss on
disposal of
associate – 76 76
Headline
earnings/(loss) 443 2 125 (5 870)
Headline and
diluted
headline
earnings/(loss)
per share
(cents) 1.28 6.13 (16.93)
2. CORPORATE ACTIVITY
2.1 Changes to the board
- Ms Sandra Duetsch resigned as Non-Executive Director of
the Company with effect from November 2012
- Mr Dinga Madubela resigned as Non-Executive Director of
the Company with effect from 14 November 2012
- Mr Hasheel Govind was appointed as Non-Executive Director
of the Company with effect from 14 November 2012
2.2 Dividends and capital distribution
No dividend or capital distribution was declared for the
period under review.
2.3 Subsequent events
Mr Jaco Maritz has resigned as financial director of the
Company with effect from 28 February 2013, as announced on 18
January 2013. He has been with the Group for over eight years
and has been an instrumental part of its growth and
development. During 2012, Jaco indicated that he wished to
pursue opportunities as a consultant but that he did not want
to leave SilverBridge until we had managed to turn the Company
around. The Group has now reached a point in the SilverBridge
journey where both parties are comfortable that Jaco can
pursue his own objectives. The Board supports Jaco in his
decision to embark upon a new journey and wishes him well for
his future career. The Group CEO, Jaco Swanepoel, will be
handling the responsibilities of the Financial Director's
position with effect from 1 March 2013 until the position is
filled.
No other events occurred subsequent to the period end that
would require the interim financial statements to be adjusted.
FINANCIAL RESULTS AND PERFORMANCE
Despite making a small profit with encouraging signs of a
recovery, the Group remains under pressure. Although the
results are down from the corresponding interim period, there
has been a sequential improvement from the second half last
year.
Annuity revenue (software rental and support), excluding once-
off license fees earned in the first half last year, grew by a
pleasing 19%. Although the implementation area has shown an
improvement from the second half of last year, the margin is
still below target levels. Focused efforts to manage costs
have been successful. The total cost base is down 9% on the
corresponding period.
The cash position continues to be under pressure as a result
of the financial performance. However, the Group has adequate
overdraft facilities in place. Cash and working capital
continue to be managed carefully.
Segmental review
Implementation
This segment involves the implementation of our solutions for
clients and is project-based. Despite a sequential improvement
from the second half last year, it remains the major
contributing factor to the Group's overall financial pressure.
Changes made to our project methodology and the adoption of an
agile approach have kept our projects on track with reduced
risk. However, the costs are higher – hence the margin is
under pressure.
Support
Support revenue is contracted on a monthly basis and is
annuity based. Revenue grew healthily and a small segment
profit was achieved. Some support activity was contracted out
to partners and this model will be supported into the future.
Software rental
Software rental is annuity based. It depends on usage and
increases with the number of contracts or policies
administered on client systems. It typically grows slowly over
time. Although the total revenue shows a small decline against
the corresponding period, excluding the unusual software
license income in the previous period of R2.4million, revenue
was up a pleasing 15%. This growth was driven by new clients
and a small growth in usage.
Research and development (“R&D”)
Our R&D efforts were focused on further development of the
Eco-Suite, a set of assests that forms a platform for
implementing more efficiently and enabling partners and
clients. It includes tools, processes, testing and training.
It also enables implementation partners to implement
SilverBridge's systems more easily using only high level
specialist services from SilverBridge. The Eco-Suite remains
important to the Group and will continue to be developed and
refined. During the period, some effort was also spent on
maintaining and improving our core software. The Group has not
capitalised any costs during this period.
Unallocated costs
Unallocated costs represent our listing and corporate costs.
These costs were down 13% from the corresponding interim
period as a result of overhead cost savings.
GROUP OUTLOOK
The ever changing environment within our target market
continues to present new opportunities as financial service
institutions search for ways to reduce costs and improve
services to their clients. We continue to see financial
service providers increasing their focus on improving
relationships with their clients, driving internal
efficiencies and differentiating their products as a means to
capture and retain market share. SilverBridge remains well
positioned to meet these needs.
The outlook for the Group remains positive. Building our
annuity revenue remains an ongoing goal that depends on how
well we and our partners understand and empower our clients.
Making implementations simpler and improving quality for us
and our partners will support this goal. We are actively
developing our partner channel and investing in the tools and
processes to enable efficient delivery. In addition, we
continue to be engaged in several major implementations and
secure new business.
On behalf of the board of directors
Robert Emslie Jaco Swanepoel
Chairman Chief Executive Officer
Pretoria
25 February 2013
CORPORATE INFORMATION
Silverbridge Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration No. 1995/006315/06)
JSE SHARE CODE: “SVB” ISIN CODE:
ZAE000086229
(“SilverBridge” or “the Group”)
Directors of Silverbridge Holdings
R. Emslie (Chairman)**,
J. Swanepoel (CEO),
J. de Villiers **,
H. Govind*,
L. Gcwabe*,
L. Kuyper,
T. Murray*,
J Maritz (FD),
(All the directors are South African citizens)
* Non-executive
** Independent non-executive
Registered Offices
First Floor, Castle View North
495 Prieska Street, Erasmuskloof,
Pretoria, 0048
(PO Box 11799, Erasmuskloof, 0048)
Company Secretary
Fusion Corporate Secretarial Services
(Proprietary) Limited
represented by Melinda Gous
43 Sovereign Road,
Route 21 Corporate Park,
Irene, Pretoria, Gauteng
(PO Box 68528, Highveld, 0169)
Legal Advisers
Gildenhuys Malatji Attorneys Inc.
(Registration number: 1997/002114/21)
GLMI House
Harlequins Office Park,
164 Totius Street,
Groenkloof
(PO Box 619, Pretoria, 0001)
Group Auditors
KPMG Inc.
(Registration number: 1999/021543/21)
KPMG Forum,
1226 Francis Baard Street,
Hatfield
(PO Box 11265, Hatfield, 0028)
Transfer Secretaries
Computershare Investor Services
(Proprietary) Limited
(Registration number: 2004/003647/07)
70 Marshall Street,
Johannesburg,
(Call centre: 0861 100 634)
(PO Box 61051, Marshalltown, 2107)
Designated Adviser
Merchantec Capital
(Registration number: 2008/027362/07)
Second Floor, North Block
Hyde Park Office Tower,
Corner 6th Road and Jan Smuts Avenue,
Hyde Park
(PO Box 41480, Craighall, 2024)
Date: 25/02/2013 05:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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