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Summarised Audited Consolidated Results for the Year Ended 30 June 2016 and Notice of Annual General Meeting
SILVERBRIDGE HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 1995/006315/06)
SHARE CODE: “SVB” ISIN: ZAE000086229
(“SILVERBRIDGE” OR “THE GROUP” OR “THE COMPANY”)
SUMMARISED AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED
30 JUNE 2016 AND NOTICE OF ANNUAL GENERAL MEETING
GROUP PROFILE
SilverBridge offers reliable solutions that support the operations
of companies offering financial products and services. Our
understanding of contract administration processes helps our
clients to improve and simplify their business processes. We
achieve this by implementing our system platforms and customising
them to meet product and process needs. In the last year we have
extended our services to include cloud hosted solutions. This is a
result of experience gained over many years.
Exergy is our flagship platform that enables core back office
policy administration in the life assurance industry. The Exergy
solution package can be customised to suit the needs of a life
assurer’s on-premise software requirements. We have extended our
portfolio to include group scheme administration, pension fund
administration as well as elements of medical and short-term
insurance. This caters for clients wanting to offer a wider range
of financial services offerings.
We use a project approach to help our clients translate business
objectives into IT requirements. We then implement sustainable
solutions. Our software products and hosted services are rented to
our customers on a usage basis.
SUMMARISED AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
2016 2015
Notes R’000 R’000
Revenue 1.5 86 442 80 943
Other income 152 15
Personnel expenses (57 527) (55 161)
Depreciation and amortisation (1 395) (1 699)
Professional fees paid for services (5 666) (4 246)
Other expenses (9 969) (8 840)
Results from operating activities 12 037 11 012
Finance income 1 367 468
Finance expenses (250) (1)
Profit before income tax 13 154 11 479
Income tax (3 064) (3 136)
Profit and total comprehensive
income for the year 10 090 8 343
Earnings per share
Basic earnings per share 1.3 29.1 24.1
Diluted earnings per share 1.3 27.5 23.7
SUMMARISED AUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS
AT 30 JUNE 2016
2016 2015
Notes R’000 R’000
ASSETS
Non-current assets 15 810 14 766
Equipment 983 992
Intangible assets and goodwill 12 371 11 286
Deferred tax assets 1 266 441
Withholding tax rebates receivable 1 190 2 047
Current assets 4 7229 37 191
Withholding tax rebates receivable 1 312 1 511
Income tax receivable 802 -
Revenue recognised not yet invoiced 1.4 4 737 2 684
Trade and other receivables 13 422 14 782
Cash and cash equivalents 26 956 18 214
Total assets 63 039 51 957
EQUITY AND LIABILITIES
Equity 47 988 39 188
Share capital 348 348
Share premium 11 871 11 871
Treasury shares (197) (197)
Share based payment reserve 910 462
Retained earnings 35 056 26 704
Non-current liabilities 1 098 308
Deferred tax liabilities 1 098 308
Current liabilities 13 953 12 461
Income tax payable 1 791 1 785
Trade and other payables 1.2 11 764 10 048
Deferred revenue 1.4 398 628
Total liabilities 15 051 12 769
Total equity and liabilities 63 039 51 957
Net asset value per share (cents) 138.4 113.0
Net tangible asset value per share (cents) 102.7 80.5
SUMMARISED AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR
THE YEAR ENDED 30 JUNE 2016
Share
based
Share Share Treasury payment Retained Total
capital premium shares reserve earnings equity
R’000 R’000 R’000 R’000 R’000 R’000
Balance at 1 July
2014 348 11 871 (197) 512 17 967 30 501
Total
comprehensive
income for the
year
Profit for the
year – – – – 8 343 8 343
Total
comprehensive
income for the
year – – – – 8 343 8 343
Transactions with
owners, recorded
directly in
equity:
Contributions by
and distributions
to owners
Equity settled
share based
payment – – – 344 – 344
Transfer of
reserve of share
options that did
not vest – – – (394) 394 –
Total
transactions with
owners – – – (50) 394 344
Balance at 30
June 2015 348 11 871 (197) 462 26 704 39 188
Total
comprehensive
income for the
year
Profit for the
year – – – – 10 090 10 090
Total
comprehensive
income for the – – – – 10 090 10 090
year
Transactions with
owners, recorded
directly in
equity:
Dividend paid (1 738) (1 738)
Equity settled
share based
payment – – – 448 – 448
Total
transactions with
owners – – – 448 (1 738) (1 290)
Balance at 30
June 2016 348 11 871 (197) 910 35 056 47 988
SUMMARISED AUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR
ENDED 30 JUNE 2016
2016 2015
R’000 R’000
Cash generated from operations 15 455 12 817
Interest received 1 367 468
Interest paid - (1)
Taxation paid (3 894) (1 362)
Net cash inflow from operating activities 12 928 11 922
Cash flows from investing activities
Equipment acquired to maintain operations (585) (476)
Proceeds from sale of equipment 23 –
Cash outflow from capitalisation of
development costs (1 886) (1 166)
Net cash used in investing activities (2 448) (1 642)
Cash flows from financing activities
Dividend paid (1 738) –
Net increase in cash and cash equivalents 8 742 10 280
Cash and cash equivalents at the beginning of
the year 18 214 7 934
Cash and cash equivalents at the end of the
year 26 956 18 214
SUMMARISED AUDITED CONSOLIDATED SEGMENT REPORTS FOR THE YEAR ENDED
30 JUNE 2016
BUSINESS SEGMENTS
In the prior financial year, Connect support and Rubix support
were reported separately. This has now been consolidated in to one
Support services segment for the current and prior year since the
Rubix support segment was relatively small.
A new business has been started during the year and therefore the
additional segment, Hosting and outsourcing services, was
established. This segment provides a range of complimentary
managed services to our clients. The services include cloud-based
hosting, outsourced technical services and full business process
outsourcing. This represents a new initiative for the Group. It
enables us to offer additional services to existing clients as
well as make our offerings appeal to a wider range of potential
clients. It will also help keep our offerings relevant with regard
to technology trends. There are no comparative figures since it is
a new segment.
Except for the above, the segment report has been prepared
consistently with the previous year.
Hosting Rental Research
Imple- and out- and &
mentation Support sourcing main- Develop-
services services services tenance ment Total
2016 R’000 R’000 R’000 R’000 R’000 R’000
Segment revenue 11 027 38 145 3 060 37 217 – 89 449
Segment revenue
inter-group – (1 900) (867) (240) – (3 007)
Segment revenue
external 11 027 36 245 2 193 36 977 – 86 442
Direct segment (42 609
cost (5 775) (19 775) (3 562) (6 894) (6 603) )
Cost
capitalised – – – 1 885 1 885
Segment gross
profit 5 252 16 470 (1 369) 30 083 (4 718) 45 718
Indirect (33 681
segment cost (4 568) (14 458) (558) (7 002) (7 095) )
Segment result 684 2 012 (1 927) 23 080 (11 813) 12 037
Net finance
income 1 117
Income tax (3 064)
Profit for the
year 10 090
Rental Research
Imple- and &
mentation Support main- Develop-
services services tenance pment Total
2015 R’000 R’000 R’000 R’000 R’000
Segment revenue 19 678 30 841 33 494 – 84 013
Segment revenue inter-
group – (3 019) (51) – (3 070)
Segment revenue
external 19 678 27 822 33 443 – 80 943
(39
Direct segment cost (9 862) (15 744) (8 007) (5 663) 276)
Cost capitalised – – – 1 167 1 167
Segment gross profit 9 816 12 078 25 436 (4 496) 42 834
(31
Indirect segment cost (8 934) (13 142) (5 302) (4 444) 822)
Segment result 882 (1 064) 20 134 (8 940) 11 012
Net finance income 467
Income tax (3 136)
Profit for the year 8 343
COMMENTARY
1. NOTES TO THE SUMMARISED AUDITED CONSOLIDATED FINANCIAL
STATEMENTS
1.1 BASIS OF PREPARATION
The summarised consolidated financial statements are prepared in
accordance with the requirements of the JSE Limited Listing
Requirements for abridged reports, and the requirements of the
Companies Act applicable to summary financial statements. The
listing requirements require abridged reports to be prepared in
accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting
Standards (IFRS) and the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and the Financial
Pronouncements as issued by the Financial Reporting Standards
Council and to also, as a minimum, contain the information
required by IAS 34 Interim Financial Reporting. The accounting
policies applied in the preparation of the consolidated financial
statements, from which the summary consolidated financial
statements were derived, are in terms of International Financial
Reporting Standards and are consistent with the accounting
policies applied in the preparation of the previous consolidated
annual financial statements.
The consolidated abridged report is extracted from audited
information, but is not itself audited. PricewaterhouseCoopers
Inc audited the financial statements for the year ended 30 June
2016 and expressed an unmodified opinion on those financial
statements. For a better understanding of the Group’s financial
position and results of operations, these abridged financial
statements must be read in conjunction with the Group’s audited
financial statements for the year ended 30 June 2016 which include
all disclosures required by IFRS, and which are expected to be
released on or about 19 September 2016. The Group’s integrated
report which incorporates the Annual Financial Statements can be
obtained from our website or by contacting the Company directly.
These abridged financial statements were prepared by the Head of
Finance and Shared Services, Petro Mostert CA (SA), under the
supervision of the Financial Director, Lee Kuyper CA (SA).
The directors take full responsibility for the preparation of the
abridged report and the financial information has been correctly
extracted from the underlying annual financial statements.
1.2 TRADE AND OTHER PAYABLES
Trade and other payables comprised of the following:
2016 2015
R’000 R’000
Trade payables 2 094 671
Other payables (accruals) 3 306 2 681
VAT payable 480 1 069
Incentive accrual 3 342 3 182
Leave accrual 2 542 2 445
Total trade and other payables 11 764 10 048
1.3 EARNINGS PER SHARE
BASIC EARNINGS PER ORDINARY SHARE
Basic earnings per ordinary share is calculated by dividing the
profit for the year attributable to ordinary equity holders of the
parent, of R10.1 million (2015: R8.3 million) by the weighted
average number of ordinary shares outstanding during the year of
34.7 million (2015: 34.7 million).
2016 2015
Reconciliation of the weighted average number
of shares in issue
Shares in issue at the beginning of the year
('000) 34 781 34 781
Effect of treasury shares acquired on 1 March
2007 ('000) (106) (106)
Shares in issue at the end of the year ('000) 34 675 34 675
Weighted average number of shares in issue at
the end of the year (‘000) 34 675 34 675
Earnings attributable to ordinary
shareholders (R'000) 10 090 8 343
Basic earnings per share (cents) 29.10 24.06
DILUTED EARNINGS PER ORDINARY SHARE
Diluted earnings per ordinary share is calculated by dividing the
diluted profit attributable to ordinary equity holders of the
parent of R10.1 million (2015: R8.3 million) by the diluted
average number of ordinary shares of 36.7 million (2015: 35.2
million).
2016 2015
Reconciliation between weighted average
number of shares in issue and weighted
average number of shares in issue used for
diluted earnings per share
Weighted average number of shares in issue 34 675 34 675
Effect of diluted amount of shares 1 985 577
Weighted average number of shares in issue
used for diluted earnings per share 36 660 35 252
Earnings attributable to ordinary
shareholders used for diluted earnings
(R'000) 10 090 8 343
Diluted earnings per share (cents) 27.52 23.67
The dilutive effect resulted from share options issued.
HEADLINE EARNINGS PER ORDINARY SHARE
Headline earnings per ordinary share is calculated by dividing the
headline earnings attributable to ordinary equity holders of the
parent of R10.1 million (2015: R8.3 million) by the weighted
average number of ordinary shares outstanding during the year of
34.7 million (2015: 34.7 million).
2016 2015
Weighted average number of shares in issue
('000) 34 675 34 675
Reconciliation between basic earnings and
headline earnings
Basic earnings (R'000) 10 090 8 343
Adjusted for:
– Loss/(Profit) on disposal of equipment
(R'000) (17) 14
Headline earnings (R'000) 10 073 8 357
Headline earnings per share (cents) 29.05 24.10
DILUTED HEADLINE EARNINGS PER ORDINARY SHARE
Diluted headline earnings per ordinary share is calculated by
dividing the diluted headline earnings attributable to ordinary
equity holders of the parent of R10.1 million (2015: R8.3 million)
by the diluted weighted average number of ordinary shares
outstanding during the year of R36.7 million (2014: 35.2 million).
2016 2015
Weighted average number of shares in issue
used for diluted earnings per share (‘000) 36 660 35 252
Headline earnings (R'000) 10 073 8 343
Diluted headline earnings per share (cents) 27.48 23.71
The dilutive effect resulted from share options issued.
1.4 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.
2016 2015
R'000 R'000
Current asset
Revenue recognised not yet invoiced 4 737 2 684
Current liability
Deferred revenue (398) (628)
Net asset/(liability) 4 339 2 056
1.5 REVENUE PER GEOGRAPHICAL SEGMENT
Group
2016 2015
R’000 R’000
South Africa 45 542 36 153
Swaziland 8 232 3 114
Zimbabwe 7 860 6 769
Namibia 7 346 18 553
Lesotho 6 242 1 430
Kenya 3 022 3 505
Other African countries* 8 198 11 419
86 442 80 943
* Other African countries include Angola, Botswana, Malawi,
Mauritius, Ghana,
1.6 FAIR VALUES
The carrying amounts of all financial assets and liabilities are a
reasonable approximation of their fair value.
2. CORPORATE ACTIVITY
2.1. DIVIDEND
The directors have declared and approved a final gross dividend of
6 cents per share for the year ended 30 June 2016 from income
reserves.
The following dates will apply to the abovementioned final
dividend:
Last day to trade cum dividend: Tuesday, 11 October 2016
Trading ex-dividend commences: Wednesday, 12 October 2016
Record date: Friday, 14 October 2016
Dividend payment date: Monday, 17 October 2016
Share certificates may not be dematerialised or rematerialised
between Wednesday, 12 October 2016 and Friday, 14 October 2016,
both days inclusive.
In determining the dividends tax (DT) of 15% to withhold in terms
of the Income Tax Act (No. 58 of 1962) for those shareholders who
are not exempt from the DT. Shareholders who are not exempt from
the DT will therefore receive a dividend of 5.1 cents per share
(dividend multiplied by 85%) net of DT. The company has 34 781 471
ordinary shares in issue as at 30 June 2016 and its income tax
reference number is 9841087647.
Where applicable, dividends in respect of certificated shares will
be transferred electronically to shareholders` bank accounts on
the payment date. In the absence of specific mandates, dividend
cheques will be posted to shareholders. Ordinary shareholders who
hold dematerialised shares will have their accounts at their CSDP
or broker credited/updated on Monday, 17 October 2016.
3. AUDIT REPORT
The financial statements for the year ended 30 June 2016 have been
audited by PricewaterhouseCoopers Inc. with Deon Storm as the
designated partner. Their unmodified audit report is available for
inspection at the Company’s registered office.
4. NOTIFICATION OF A CHANGE IN AUDITORS
The board of directors recommend the re-appointment of PWC
Incorporated, as the independent external auditors for the
2016/2017 financial year.
5. SUBSEQUENT EVENTS
No events occurred subsequent to the year end that would require
the summarised consolidated financial statements to be adjusted or
disclosure thereof in the summarised consolidated financial
statements.
6. FINANCIAL RESULTS AND PERFORMANCE
We are pleased with the continued improvement in our results and
the ability to declare another dividend. Net profit increased by
21% compared to the prior year. Revenue was up 7% (an improvement
over last year’s small decline) with good growth in the annuity
areas of support and software rental making up for a decline in
implementation revenue. Total costs increased by 7% leading to a
9% increase in operating profit. Net profit was assisted by higher
finance income from healthier cash balances. HEPS was up 21% to
29.1 cents from 24.1 cents in the prior year.
Cash flow from operations improved to R12.9 million from R11.9
million in the prior year. This was a function of the operating
performance. We maintained good working capital control during the
year and this continues to be a focus. The cash position of the
Group improved to R27.0 million compared to R18.2 million at the
previous year end. The balance sheet remains healthy and debt
free.
Our client relationships remain healthy. Our efforts into higher
value-added offerings for existing clients have been successful.
We have also launched new products in adjacent industry verticals
as well as offerings in cloud-based hosting and managed services.
Overall, we are pleased with the performance and we are starting
to see revenue growth from our efforts. We remain focused on
efforts to enable ongoing growth.
SEGMENTAL REVIEW
Implementation services
This segment implements our solutions for clients and is project
based.
Although revenue declined by 44%, the segment result margin
improved to 6%.
The revenue decline is a function of the intended strategic
transition toward smaller and mid-sized projects as well as an
improvement in delivery efficiencies. We have implemented projects
faster and more efficiently to enable better growth in the support
and software rental segments.
We are happy with our implementation delivery model and continue
to secure new contracts in the small to medium sized market in
South Africa and the rest of Africa.
Support services
Support is contracted on a monthly basis and is annuity based.
Revenue increased by 30% demonstrating good progress in our
transition toward higher value-added support offerings. The gross
profit margin improved and the segment result improved
significantly to a profit of R2 million compared to a loss of R1.1
million in the prior year.
We are pleased with the result and continue to drive additional
higher value-added offerings in this segment.
Hosting and outsourcing services
This is a new segment, which provides a range of complimentary
managed services to our clients. The services include cloud based
hosting, outsourced technical services and full business process
outsourcing.
This segment represents a new initiative for the Group. It enables
us to offer additional services to existing clients as well as
make our offerings appeal to a wider range of potential clients.
It will also help keep our offerings relevant with regard to
technology trends.
For the year, the segment generated revenue of R2.2 million with a
loss of R1.9 million. There was an investment to set up this
business within the first 6 months without any associated revenue.
We are satisfied with the progress thus far and envisage the
segment becoming profitable as it achieves more scale.
Software rental and maintenance
Software rental is annuity based. It depends on usage, increasing
with the number of contracts or policies administered.
We are pleased with the 11% revenue growth. We have introduced
complimentary products which contributed to the growth. Price
increases also played a role. After the allocation of direct costs
related to warranty and maintenance as well as indirect costs, the
segment made a profit of R23.1 million, compared to R20.1 million
in the prior year. The overall margin increased to 62% from 60% in
the prior year.
Our software and the growth of our annuity rental stream remain a
core focus going forward.
Research and development (“R&D”)
Over the past year there has been an increased focus on developing
new products that can generate future annuity revenue. We have
developed and launched several new products and will continue in
this regard.
We still continue with R&D efforts on the Eco-Suite and keeping
our existing assets relevant in terms of technology and market
trends.
During the period, total direct costs were R6.6 million, of which
R1.9 million was capitalised.
7. GROUP OUTLOOK
Overall we remain positive about the outlook for the Group. We
continue to build our core annuity streams and we are improving
our revenue growth.
We have made good progress with higher value-added offerings in
our support area. We have developed products for adjacent vertical
market segments and have launched new offerings in the cloud-based
hosting and managed services. We are optimistic that our efforts
will help improve future growth.
The financial services industry continues to adapt to meet its
customers’ changing needs in an increasingly digital world.
Financial services providers are driving change in their business.
They are differentiating their products and services in order to
remain relevant in a rapidly changing world. SilverBridge remains
well positioned to meet these needs. It presents us with
opportunities to create platforms that can help the industry to
adapt and continues guiding our new product development
initiatives.
8. NOTICE OF THE ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of the
Company will be held at 11:00 on Wednesday 26 October 2016 at the
registered office of SilverBridge, 495 Prieska Street,
Erasmuskloof, Pretoria, to transact the business as stated in the
notice of the Annual General Meeting, which is contained in the
Integrated Annual Report to be distributed on or about 19
September 2016.
The board of directors of SilverBridge (“the Board”) has
determined that, in terms of section 62(3)(a), as read with
section 59 of the Companies Act, 2008 (Act 71 of 2008), the record
date for the purposes of determining which shareholders of the
Company are entitled to participate in and vote at the Annual
General Meeting is Friday, 16 October 2015. Accordingly, the last
day to trade in SilverBridge shares in order to be recorded in the
Register to be entitled to vote at the Annual General Meeting will
be Friday, 14 October 2016.
9. DIRECTORATE
No changes to the Board for the period under review.
On behalf of the Board
Robert Emslie Jaco Swanepoel
Chairman Chief Executive Officer
Pretoria
19 September 2016
CORPORATE INFORMATION
DIRECTORS OF SILVERBRIDGE:
Robert Emslie (Chairman)**, Jaco Swanepoel (CEO), Jeremy de
Villiers**, J Chikaonda*, Hasheel Govind*, Tyrrel Murray*, Lee
Kuyper (Financial Director), Stuart Blyth.
(All the directors are South African citizens).
* Non-executive
**Independent non-executive
SILVERBRIDGE 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
Unit 2, Corporate Corner, Marco Polo Street, 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:
PricewaterhouseCoopers Inc.
(Registration number: 1998/012055/21)
Eglin Road, Sunninghill, Johannesburg
(Private Bag X36, Sunninghill, Johannesburg, 2157)
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:
PSG Capital
(Registration number: 2006/015817/07)
First Floor, Building 8,
Inanda Greens Business Park,
54 Wierda Road West, Wierda Valley, Sandton, 2196
(PO Box 650957, Benmore, 2010)
www.silverbridge.co.za
Date: 19/09/2016 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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