Wrap Text
Short-Form Unaudited Condensed Results for the Six Months Ended 31 August 2019
ISA Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1998/009608/06)
Share code: ISA
ISIN: ZAE000067344
(“ISA” or “the Company” or “the Group”)
SHORT-FORM UNAUDITED CONDENSED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2019
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 Aug 19 31 Aug 18 28 Feb 19
Change R'000 R'000 R'000
Highlights from Statement
of Comprehensive Income
Turnover 1% 53,135 52,847 120,073
Profit before
Other income and expenses 2% 25,350 24,801 52,093
Profit after tax -10% 13,729 15,272 29,957
Earnings per share (cents) -10% 8.8 9.8 19.2
Highlights from Statement of
Financial Position
Total assets -38% 76,311 105,337 121,711
Cash and cash equivalents -51% 31,727 47,994 63,047
Equity -68% 47,925 80,666 95,354
Total liabilities 13% 28,386 24,671 26,357
Net asset value per share
at end of period (cents) -68% 30.7 51.7 61.1
Headline earnings per
share (cents)* -10% 8.8 9.8 19.2
Diluted headline earnings per
share (cents)* -10% 8.8 9.8 19.2
* There have been no reconciling items that would result in a change to the
Headline earnings per share and the Diluted headline earnings per share.
Operational Review
I am pleased to present our results for the six months ended 31 August 2019,
which continue to be underpinned by a high portion of recurring revenues, a
robust balance sheet and strong cash flows. Despite the increasingly
challenging trading conditions in which we operate, together with the immense
pressure on the local economy, overall performance remains satisfactory.
Turnover increased marginally by 1% to R53.1 million (2018: R52.8 million)
and includes a continued healthy shift in revenue composition towards our
higher margin Managed Security Service and Managed Security Solution
offerings, which are supported by our internally developed security
infrastructure management and monitoring platform, MSS Pulse. This revenue
composition perfectly offset the effect of systemic erosion of gross margin
from the sale of products and technologies, enabling us to achieve an
increase in profits before other income and expenses of 2% to R25.4 million
(2018: R24.8 million) over the previous corresponding reporting period. This
revenue composition, together with the increase of 14% in subscription
derived turnover to R37.7 million (2018: R33.0 million), now contributing 71%
(2018: 63%) of overall turnover, is well in line with our longer-term revenue
composition objectives.
Geographically, revenue was generated from the following major regions:
- South Africa 80% (2018: 76% of revenue)
- Rest of Africa 15% (2018: 22% of revenue)
- Rest of World 5% (2018: 2% of revenue)
On a less positive note, project derived turnover continued to be under
pressure, decreasing during the period under review by 22% to R15.4 million
(2018: R19.8 million) compared to the previous corresponding reporting
period. Management attributes part of this decline to the tough trading
environment in which the Group operates, as well as to its overly cautious
approach to onboarding emerging ‘next generation’ technologies and brands
that are required by their customers to address the rapidly evolving
information security threat landscape. Corrective steps have already been
taken with the successful onboarding of several new technologies and brands,
but the results of these measures have yet to return the desired results.
Operating costs during the period under review reduced by a pleasing 13% to
R11.2 million (2018: R12.9 million) and is an illustration of management’s
continued effort to contain costs and drive efficiencies throughout the
business. Share of profits from our equity-accounted investment, DataProof,
unfortunately reduced to a loss of R266 000 during the period under review,
from a profit of R1 million in the prior corresponding reporting period.
However, the overall effect on our results remained positive when viewed
together with the R500 000 dividend that was received from DataProof during
the current reporting period. Management understands that the poor
performance from DataProof during this reporting period is largely a factor
of deal timing, which should stabilise when there are greater transactional
volumes.
Profits from the revaluation of foreign cash reserves reduced substantially
by 78% during the period under review to R1.3 million (2018: R5.8 million),
which had a significant effect on our results. Earnings and headline earnings
reduced by 10% to R13.7 million (2018: R15.3 million), representing earnings
per share of 8.8 cents (2018: 9.8 cents). However, if the effect of this
reduction were to be excluded in both this and the previous corresponding
reporting periods, bottom line profit would have increased by a healthy 16%
to R12.8 million (2018: R11.1 million).
During the period under review, our business partner settled their loan,
resulting in a reduction of loan receivables by 89% to R2.5 million (2018:
R22.0 million). This substantial cash inflow was distributed to shareholders
and cash and cash equivalents decreased by the end of the reporting period by
34% to R31.7 million (2108: R48.0 million).
SHORT-FORM ANNOUNCEMENT
This short-form announcement is the responsibility of the directors of the
Company. It contains only a summary of the information in the full
announcement (“Full Announcement”) and does not contain full or complete
details. Any investment decisions by investors or shareholders should be
based on the consideration of the Full Announcement. The Full Announcement is
available at:
https://senspdf.jse.co.za/documents/2019/jse/isse/isa/ye19.pdf and is also
published on the Company’s website at
http://www.isa.co.za/includes/downloadFile.php?display=Interim_results_2019.pdf
Both the short-form announcement and the Full Announcement are also available
for inspection at the registered offices of ISA and the Designated Adviser,
Merchantec Capital, during business hours, and copies may be obtained at no
cost on request from the Company Secretary who is contactable on
+27 11 325 6363 or isa@acorim.co.za.
SPECIAL THANKS
On behalf of the board, I would like to take this opportunity to thank the
ISA team for their continued dedication and hard work. My appreciation is
also extended to my colleagues on the board for their wise counsel and
valuable input, as well as to all stakeholders, customers and vendors for
their support.
For and on behalf of the board,
Clifford Katz
Chief Executive Officer
Johannesburg
15 November 2019
Directors: CS Katz (Chief Executive Officer), PJG Green (Chief Technical
Officer), P Mogoboya (Financial Director), AJ Naidoo#, C. Pillay#, DC
Seaton*, N Maphothi*, O Seku*(Chairperson)
# Non-executive
* Independent non-executive
Designated Advisor: Merchantec Capital
www.isaholdings.co.za
Date: 15/11/2019 03:50:00
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