Wrap Text
Unaudited condensed interim group financial statements for the six month period ended 31 December 2013
SILVERBRIDGE HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration NUMBER 1995/006315/06)
Share code: SVB ISIN: ZAE000086229
(“SilverBridge” or “the Group”)
UNAUDITED CONDENSED INTERIM GROUP FINANCIAL STATEMENTS
for the six month period ended 31 December 2013
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. After being implemented, our software is rented to
our clients on a usage basis. 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 and more accessible.
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 aim to
enable our clients to drive their strategic business objectives
more efficiently. Our approach is to identify and define strategic
client business objectives, translate them into IT requirements
and implement sustainable solutions.
Unaudited Condensed Consolidated Statement of Comprehensive Income
for the six month period ended 31 December 2013
Unaudited Unaudited Audited
six six 12
months months months
ended ended ended
31 31 30 Per-
December December June centage
2013 2012 2013 Change
Notes R’000 R’000 R’000 %
Revenue 39 072 41 720 82 247 (6)
Other income 33 126 316 (74)
Operating expenses (36 404) (41 019) (79 348) (11)
Operating profit 2 701 827 3 215 227
Finance income 77 44 182 75
Finance expense (26) (84) (310) (69)
Profit before
taxation 2 752 787 3 087 250
Taxation (820) (321) (765) 155
Profit and total
comprehensive
income for the
period 1 932 466 2 322 315
Number of shares
in issue (‘000) 1.2 34 781 34 781 34 781
Weighted average
number of shares
in issue (‘000) 1.2 34 675 34 675 34 675
Diluted weighted
average number of
shares (‘000) 1.2 34 675 34 675 34 675
Basic earnings per
share (cents) 1.2 5.6 1.3 6.7 331
Diluted earnings
per share (cents) 1.2 5.6 1.3 6.7 331
Unaudited Condensed Consolidated Statement of Financial Position
as at 31 December 2013
Unaudited Unaudited Audited
as at 31 as at 31 as at 30
December December June
2013 2012 2013
Notes R’000 R’000 R’000
ASSETS
Non-Current Assets
Equipment 1 069 1 715 841
Intangible assets 11 206 11 705 11 670
Deferred tax assets - 1 116 280
Withholding tax rebates
receivable 2 523 2 017 2 017
Total Non-Current Assets 14 798 16 553 14 808
Current Assets
Income tax receivable - 833 1 102
Revenue recognised not yet
invoiced 1.3 3 978 1 540 1 297
Trade and other receivables 8 058 13 341 12 308
Cash and cash equivalents 4 757 874 3 203
Total Current Assets 16 793 16 588 17 910
Total Assets 31 591 33 141 32 718
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 reserve 330 1 488 1 070
Retained earnings 13 981 8 566 11 137
Total Equity 26 333 22 076 24 229
Non-Current Liabilities
Deferred tax liability 224 - -
Total Non-Current Liabilities 224 - -
Current Liabilities
Deferred revenue 1.3 473 4 478 1 682
Income tax payable - 75 -
Trade and other payables 1.4 4 561 6 512 6 807
Total Current Liabilities 5 034 11 065 8 489
Total Liabilities 5 258 11 065 8 489
Total Equity and Liabilities 31 591 33 141 32 718
Net asset value per share
(cents) 75.9 63.7 69.9
Net tangible asset value per
share (cents) 43.6 29.9 36.2
Unaudited Condensed Consolidated Statement of Changes in Equity
for the six month period ended 31 December 2013
Issued Share Treasury
capital premium shares
R'000 R'000 R'000
Balance at 1 July 2012 348 11 871 (197)
Total comprehensive income for
the period
Profit or loss - - -
Other comprehensive income - - -
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)
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 – – –
Transfer of reserve of share
options that did not vest – – –
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 2013 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 - - -
Transfer of reserve of share
options that did not vest - - -
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 2013 348 11 871 (197)
Share
based
payment Retained Total
reserve earnings equity
R'000 R'000 R'000
Balance at 1 July 2012 1 338 8 100 21 460
Total comprehensive income for
the period
Profit or loss - 466 466
Other comprehensive income - - -
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 and
distributions to owners 150 - 150
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
Total comprehensive income for
the period
Profit or loss – 1 858 1 858
Total comprehensive income for
the period – 1 858 1 858
Transactions with owners,
recorded directly in equity
Contributions by and
distributions to owners
Equity settled share based
payment 295 – 295
Transfer of reserve of share
options that did not vest (713) 713 –
Total contributions by and
distributions to owners (418) 713 295
Changes in ownership interests
in subsidiaries that
do not result in a loss of
control
Total transactions with owners (418) 713 295
Balance at 30 June 2013 1 070 11 137 24 229
Total comprehensive income for
the period
Profit or loss - 1 932 1 932
Total comprehensive income for
the period - 1 932 1 932
Transactions with owners,
recorded directly in equity
Contributions by and
distributions to owners
Equity settled share based
payment 172 - 172
Transfer of reserve of share
options that did not vest (912) 912 -
Total contributions by and
distributions to owners (740) 912 172
Changes in ownership interests
in subsidiaries that
do not result in a loss of
control
Total transactions with owners (740) 912 172
Balance at 31 December 2013 330 13 981 26 333
Unaudited Condensed Consolidated Statement of Cash Flows
for the six month period ended 31 December 2013
Unaudited Unaudited
six six Audited
months months 12
ended ended months
31 31 ended
December December 30 June
2013 2012 2013
R’000 R’000 R’000
Cash generated from/(utilised in)
operations 1 587 (3 218) 157
Interest received 77 44 112
Interest paid (26) (84) (190)
Taxation received/(paid) 802 (172) (173)
Net cash inflow/(outflow) from
operating activities 2 440 (3 430) (94)
Cash flows from investing activities
Plant and equipment acquired to
maintain operations (535) (241) (492)
Proceeds from disposal of equipment - 24 24
Cash outflow from capitalisation of
development costs (351) - (756)
Net cash outflow from investing
activities (886) (217) (1 224)
Cash flows from financing activities
Dividends paid to equity holders - - -
Net cash outflow from financing
activities - - -
Net increase/(decrease) in cash and
cash equivalents 1 554 (3 647) (1 318)
Cash and cash equivalents at the
beginning of the period 3 203 4 521 4 521
Cash and cash equivalents at the end
of the period 4 757 874 3 203
Unaudited Condensed Segment Reports
for the six month period ended 31 December 2013
Reportable Segment Report
Owing to structural changes in the operations of the Group and the
introduction of the Connect service business, the segment reporting
was changed to align with the manner in which the operations are
measured. A new segment, SilverBridge support services, was
introduced.
Prior period segment results have not been restated owing to the
relatively small impact of the introduction of the new segment and
that a comparison between the prior period and current period is
still easily made. For comparison with prior period results, the
Connect implementation services segment relates to the previous
Implementation segment. The Connect support services segment
together with the SilverBridge support services segment relates to
the previous Support segment.
Connect
implemen- Connect
tation support
Total services services
R’000 R’000 R’000
Unaudited six months
ended 31 December 2013
Revenue 39 072 13 407 6 381
Direct segment cost (20 322) (10 375) (3 435)
Cost capitalised 351 - -
Segment gross profit 19 101 3 032 2 946
Indirect segment cost (14 780) (7 546) (2 498)
Segment result 4 321 (4 514) 448
Unallocated expenses * (1 620)
Operating profit 2 701
Finance income 77
Finance expense (26)
Income tax expense (820)
Profit for the period 1 932
SilverBridge
SilverBridge SilverBridge software
support research & rental &
services development maintenance
R’000 R’000 R’000
Unaudited six months
ended 31 December 2013
Revenue 278 - 19 006
Direct segment cost (407) (5 460) (645)
Cost capitalised - 351 -
Segment gross profit (129) (5 109) 18 361
Indirect segment cost (296) (3 971) (469)
Segment result (425) (9 080) 17 892
Unallocated expenses *
Operating profit
Finance income
Finance expense
Income tax expense
Profit for the period
* Unallocated expenses relate to costs incurred at a corporate level.
Implementation Support
Total services services
R’000 R’000 R’000
Unaudited six months
ended 31 December 2012
Revenue 41 720 13 120 11 554
Direct segment cost (26 657) (11 406) (7 596)
Cost capitalised - - -
Segment gross profit 15 063 1 714 3 958
Indirect segment cost (12 829) (5 490) (3 656)
Segment result 2 234 (3 776) 302
Unallocated expenses * (1 407)
Operating profit 827
Finance income 44
Finance expense (84)
Income tax expense (321)
Profit for the period 466
Software
Research & rental
development & maintenance
R’000 R’000
Unaudited six months ended
31 December 2012
Revenue - 17 046
Direct segment cost (7 097) (558)
Cost capitalised - -
Segment gross profit (7 097) 16 488
Indirect segment cost (3 415) (268)
Segment result (10 512) 16 220
Unallocated expenses *
Operating profit
Finance income
Finance expense
Income tax expense
Profit for the period
* Unallocated expenses relate to costs incurred at a corporate level.
Implementation Support
Audited 12 months ending Total services services
30 June 2013 R’000 R’000 R’000
Revenue 82 247 24 673 23 381
Direct segment cost (49 268) (21 988) (13 519)
Cost capitalised 756 - -
Segment gross profit 33 734 2 685 9 862
Indirect segment cost (28 090) (12 536) (7 708)
Segment result 5 645 (9 851) 2 154
Unallocated expenses * (2 431)
Operating profit 3 215
Finance income 182
Finance expense (310)
Income tax (765)
Profit for the period 2 322
Software
Research and rental &
Audited 12 months ending development maintenance
30 June 2013 R’000 R’000
Revenue - 34 193
Direct segment cost (12 787) (974)
Cost capitalised 756 -
Segment gross profit (12 031) 33 219
Indirect segment cost (7 290) (555)
Segment result (19 322) 32 663
Unallocated expenses *
Operating profit
Finance income
Finance expense
Income tax
Profit for the period
* 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. Notes to the abridged Group financial statements
1.1 Basis of preparation
The condensed interim financial statements are prepared in accordance
with the recognition and measurement requirements of International
Financial Reporting Standards (“IFRS”) International Accounting
Standard 34 (“IAS 34”), the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Reporting Standards
Council, the Listings Requirements of JSE Limited ("the Listings
Requirements") and the requirements of the Companies Act of South
Africa (Act 71 of 2008) as amended (“the Companies Act”).
The accounting policies applied in the preparation of these condensed
interim financial statements, which are based on reasonable judgment
and estimates, are in accordance with IFRS and are consistent with
those applied in the annual financial statements for the year ended
30 June 2013.
These condensed interim financial statements have been prepared by
Petro Mostert CA(SA), Head of Finance and Shared Services, under the
supervision of the Financial Director, Lee Kuyper CA(SA).
The directors take full responsibility for the preparation of these
interim financial statements and the financial information has been
correctly extracted from the underlying financial information. These
interim results have not been audited or reviewed by the Group’s
auditors.
1.2 Earnings per share
Basic and diluted earnings per ordinary share
Basic and diluted earnings per ordinary share is calculated by
dividing the earnings 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 six
six months months Audited
as at as at 12 months
31 31 as at
December December 30 June
2013 2012 2013
Number Number Number
of shares of shares of shares
'000 '000 '000
Reconciliation of the weighted
average number of shares in issue
Shares in issue at the beginning of
the period 34 781 34 781 34 781
Effect of treasury shares acquired
on 1 March 2007 (106) (106) (106)
Weighted average number of shares
in issue at the end of the period 34 675 34 675 34 675
Earnings attributable to ordinary
shareholders (R'000) 1 932 466 2 322
Basic and diluted earnings per
share (cents) 5.6 1.3 6.7
Headline and diluted headline earnings per ordinary share
Headline and diluted headline earnings per ordinary share is
calculated by dividing the headline earnings attributable to ordinary
equity holders of the parent by the weighted average number of
ordinary shares outstanding during the period.
Unaudited Unaudited Audited
six six 12
months months months
as at as at as at
31 31 30 June
December December 2013
2013 2012 Number
Number Number of
of shares of shares shares
'000 '000 '000
Weighted average number of shares
in issue 34 675 34 675 34 675
R’000 R’000 R’000
Reconciliation between basic
earnings and headline earnings
Basic earnings 1 932 466 2 322
Adjusted for:
– (Profit)/Loss on disposal of
equipment – (23) 298
Headline earnings/(loss) 1 932 443 2 620
Headline and diluted headline
earnings/(loss) per share (cents) 5.6 1.3 7.6
1.3 Deferred revenue and revenue recognised but 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 asset
position of R3.5m. The assets will be converted to accounts
receivable in the short-term.
Unaudited Unaudited Audited
six months six months 12
ended ended months
31 31 ended
December December 30 June
2013 2012 2013
R’000 R’000 R’000
Current asset
Revenue recognised not yet
invoiced 3 978 1 540 1 297
Current liability
Deferred revenue (473) (4 478) (1 682)
Net asset/(liability) 3 505 (2 938) (385)
1.4 Trade and other payables
Trade and other payables comprised of the following:
Unaudited Unaudited Audited
six months six months 12 months
as at as at as at
31 December 31 December 30 June
2013 2012 2013
R’000 R’000 R’000
Trade payables 1 568 2 650 2 783
Withholding tax rebate payable 278 278 278
Leave accrual 1 905 1 804 2 052
Liability on capital reduction 30 30 30
Other payables (accruals) 780 1 750 1 664
Total 4 561 6 512 6 807
2. CORPORATE ACTIVITY
2.1 Changes to the board
During the period Mr Lee Kuyper CA(SA), an Executive Director had
also assumed the role of Financial Director of the Group with effect
from 11 September 2013. As such Mr Jaco Swanepoel, the Chief
Executive Officer of the Group, is no longer fulfilling the role of
acting Financial Director.
No other changes occurred during the period.
2.2 Dividends and capital distribution
No dividend or capital distribution was declared for the period under
review.
2.3 Subsequent events
Mr Litha Gcwabe has resigned from the board with effect from 13
February 2014, following his resignation from Kagiso Tiso Holdings
Ltd., a major shareholder in SilverBridge.
No other events occurred subsequent to the period end that would
require the interim financial statements to be adjusted.
3. FINANCIAL RESULTS AND PERFORMANCE
The Group’s recovery has continued with improved results for this 6-
month period. Although we are in a better position than before, we
continue to aim for further improvement to get the business
performing at an optimal level.
The general state of our client engagements is positive. Our projects
are being well executed and we remain focused on careful management
of our largest current implementation project.
Group revenue was slightly down on a comparative basis but the
composition has changed to a more favourable contribution from our
growing annuity-based software rental stream. This is in line with
our strategy and remains a focus area.
We continued to reduce our overall cost base and are pleased with the
ongoing improvement in our gross and EBIT margin as a result.
A net profit after tax of R1.9 million was generated, significantly
more than the comparative period. The business has moved into a
position of producing monthly profits on a consistent basis.
Our cash flow and cash position has improved significantly. We
continue to manage cash and working capital carefully.
Segmental review
Connect implementation services
This segment implements our solutions for clients and is project
based.
Revenue was slightly up by 2%. The gross profit margin improved to
23% as a result of careful project management and improvements in our
project methodology. We remained focused on our largest
implementation project, which from a margin perspective, still weighs
heavily on the Group. We also have a number of smaller projects with
shorter timeframes and healthier margins.
We intend making further improvements in this segment over time
through further refinement of our project methodology and sharing
implementation risk with implementation partners on larger projects.
Connect support services
Support is contracted on a monthly basis and is annuity based.
Revenue declined significantly as a result of our strategic decision
to enable our clients and partners to implement and support our
software in two of our large support clients. The decision is in line
with our overall strategy to focus on the software rental. The gross
margin remained healthy and after indirect costs, support made a
small profit.
The remainder of our support contracts relate to smaller clients
throughout Africa and will continue to be a focus and a source of
margin to the Group.
SilverBridge support services
This is a new segment that was created from the separation of
SilverBridge’s software activities (SilverBridge) from its
implementation and support activities (Connect). The segment provides
expert level software support and training services to clients and
implementation partners.
The segment is still small and posted a small loss for the period.
SilverBridge software rental
Software rental is annuity based. It depends on usage, increasing
with the number of contracts or policies administered.
We are pleased to report an improved 11% growth in software rental
revenue. This was driven mainly by increased usage from the existing
client base. We saw reasonable increases in the number of policies
administered this period – a positive change from being flat for some
time.
Our software and the growth of our annuity rental stream remain a
core focus and a priority going forward.
SilverBridge research and development (R&D)
Although we continue to keep our core software relevant, the bulk of
our R&D efforts remained on further development of the Eco-Suite, a
set of assets that forms a platform for implementing more efficiently
and enabling partners and clients. It includes tools, processes,
testing and training.
It 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 refined. It helped us internally with our own improved
methodology and continues to be actively used in the engagement with
new implementation partners.
4. GROUP OUTLOOK
The changing environment within our target market continues to
present new opportunities as financial service institutions search
for ways to reduce costs and improve service to their clients. We
continue to see financial service providers driving internal
efficiencies and differentiating their products as a means to capture
and retain market share. SilverBridge remains well positioned to meet
these needs.
In our own business we have challenges and risks which we will
continue to focus on, manage and mitigate. We continue with the
challenge of gearing up an implementation partner to carry out large
implementations of our software. We are also carefully managing the
risks of our own current large implementation.
Nevertheless, the outlook for the Group remains positive. Building
our annuity revenue remains an ongoing goal. Making implementations
simpler and improving quality for us and our partners will support
this goal. We continue to actively develop our partner channel and
refine the tools and processes to enable efficient delivery. In
addition, we are engaged in several implementations and we remain
active in securing new business.
On behalf of the board of directors
Robert Emslie Jaco Swanepoel
Chairman Chief Executive Officer
Pretoria
25 February 2014
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
Robert Emslie (Chairman)**, Jaco Swanepoel (CEO), Jeremy de Villiers
**, Litha Gcwabe*, Hasheel Govind *, Tyrrel Murray*, Lee Kuyper
(Financial Director).
(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
First Floor, The Greens Office Park
Charles de Gaulle Avenue, Highveld
Centurion, 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: 25/02/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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