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SVB
SVB
SVB - SilverBridge - Abridged Audited Group Annual Financial Statements - For
The Year Ended 28 February 2009, Notice Of Annual General Meeting And Posting
Of The Annual Report
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")
ABRIDGED AUDITED GROUP ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2009, NOTICE OF ANNUAL GENERAL MEETING AND
POSTING OF THE ANNUAL REPORT
FINANCIAL HIGHLIGHTS
for the year ended 28 February 2009
- Revenue increased by 18% to R70.5 million
- Increased annuity income by 29%
- Profit for the year decreased by 37%
- EBITDA decreased by 19%
- Earnings per share and headline earnings per share decreased by 38%
- Cash on hand increased by 27% to R16 million with no interest bearing
debt
OUR BUSINESS
SilverBridge offers the providers of financial services integrated, flexible
and cost-effective business administration solutions. The Group operates
through two subsidiaries: SDT specialising in life and employment benefit
administration software and Ones & Zeros ("ONZ") offering consulting services
to financial service institutions. The Group`s strategy is to expand into the
other pillars of financial services and over the medium term, specifically
into short term insurance administration and loans administration software.
The Group`s vision is to enable financial services providers to offer a
portfolio of products to the man in the street at an affordable price. The
Group measures performance across five operating segments; being
implementation, support, rental and consulting as well as research and
development. The support and rental revenue segments deliver annuity revenue.
FINANCIAL REVIEW
The Group was successful with the integration of the Ones & Zeros acquisition
which contributed 25% to revenue. The annuity revenue from the rental and
support segments in SDT increased by 29% to improve the already sustainable
income base of the Group. The year proved to be challenging for SDT as the
decision cycles of clients were prolonged and projects were extended into our
new financial year. The delay in decisions decreased implementation revenue by
42%. This however created a solid order base for the new financial year. The
reduced implementation requirements helped us to limit the increase in
expenses to 4.9% (excluding costs added through the acquisition). We could
have reduced our expenses further but preferred to preserve our delivery
expertise in line with our positive outlook.
GROUP ABRIDGED AUDITED INCOME STATEMENT
for the year ended 28 February 2009
2009 2008
R`000 R`000
Revenue 70 568 59 865
Other income 797 867
Personnel expenses (43 861) (33 766)
Depreciation and amortisation (2 693) (1 357)
Impairment losses - trade receivables - (756)
Professional fees paid for services (4 387) (3 253)
Other expenses (11 156) (8 132)
Operating profit 9 268 13 468
Finance income 1 001 846
Finance expense (288) (139)
Share of profit/(loss) in associate 10 (147)
Profit before income tax expense 9 991 14 028
Income tax (2 595) (4 221)
Profit for the year 7 396 9 807
Attributable to:
Equity holders of the parent 6 200 9 807
Minority interest 1 196 -
Earnings per share
Basic earnings per ordinary share (cents) 18.70 30.18
Headline earnings per ordinary share (cents) 18.78 30.26
Diluted earnings per ordinary share (cents) 16.40 30.18
Diluted headline earnings per 16.47 30.26
ordinary share (cents)
Shares in million
Shares in issue 33 587 32 597
Weighted average number of shares 33 150 32 491
Diluted weighted average number of shares 37 816 32 491
GROUP ABRIDGED AUDITED BALANCE SHEET
at 28 February 2009
2009 2008
Note R`000 R`000
ASSETS
Non-current assets 27 301 16 382
Plant and equipment 1 643 2 040
Intangible assets 1.2 22 713 11 617
Investment in associate 101 91
Deferred tax assets 2 844 2 634
Current assets 38 727 34 099
Income tax receivable 4 512 3 164
Revenue recognised not yet invoiced 1 221 6 976
Trade and other receivables 16 896 11 328
Cash and cash equivalents 16 098 12 631
Total assets 66 028 50 481
EQUITY AND LIABILITIES
Equity 43 244 32 968
Share capital 336 326
Share premium 8 608 10 797
Acquisition shares 2 724 -
Treasury shares (197) (197)
Retained earnings 28 242 22 042
Total equity attributable to equity 39 713 32 968
holders of the parent
Minority interests 3 531 -
Current liabilities 22 784 17 513
Trade and other payables 1.4 19 653 12 794
Deferred revenue 1 595 3 282
Provisions 1 536 1 437
Total equity and liabilities 66 028 50 481
GROUP ABRIDGED AUDITED STATEMENT OF CHANGES IN EQUITY
for the year ended 28 February 2009
Issued Share Treasury Acquisition
capital premium shares shares
R`000 R`000 R`000 R`000
Balance at 1 March 2007 326 14 872 (78) -
Total recognised income and - - - -
expense for the year
Treasury shares acquired - - (119) -
Capital distribution: 2 - (4 075) - -
July 2007
Balance at 29 February 2008 326 10 797 (197) -
Total recognised income and - - - -
expense for the year
Allotment of 990 401 shares 10 2 714 - -
Acquisition of ONZ - - - 2 724
Dividend paid by subsidiary - - - -
Capital distribution: 4 - (4 903) - -
July 2008
Balance at 28 February 2009 336 8 608 (197) 2 724
Retained Minority
earnings Total interest Total
R`000 R`000 R`000 R`000
Balance at 1 March 2007 12 235 27 355 - 27 355
Total recognised income and 9 807 9 807 - 9 807
expense for the year
Treasury shares acquired - (119) - (119)
Capital distribution: 2 - (4 075) - (4 075)
July 2007
Balance at 29 February 2008 22 042 32 968 - 32 968
Total recognised income and 6 200 6 200 1 196 7 396
expense for the year
Allotment of 990 401 shares - 2 724 - 2 724
Acquisition of ONZ - 2 724 3 683 6 407
Dividend paid by subsidiary - - (1 348) (1 348)
Capital distribution: 4 - (4 903) - (4 903)
July 2008
Balance at 28 February 2009 28 242 39 713 3 531 43 244
GROUP ABRIDGED AUDITED CASH FLOW STATEMENT
for the year ended 28 February 2009
2009 2008
R`000 R`000
Cash flows from operating activities
Cash receipts from clients 76 720 55 687
Cash paid to suppliers and employees (62 344) (45 478)
Cash generated from operations 14 376 10 209
Interest received 1 001 846
Interest paid (60) (139)
Dividend paid by subsidiary (1 348) -
Taxation paid (4 675) (8 340)
STC paid (275) -
Net cash inflow from operating activities 9 019 2 576
Cash flows from investing activities
Plant and equipment acquired to expand (737) (1 341)
operations
Proceeds from sale of equipment 98 17
Acquisition of subsidiary (3 229) -
Cash received on acquisition of subsidiary 3 344 -
Capitalisation of development costs (1 435) (822)
Net cash outflow from investing activities (1 959) (2 146)
Cash flows from financing activities
Treasury shares acquired - (119)
Capital distribution from share premium (3 593) (4 075)
Net cash outflow from financing activities (3 593) (4 194)
Net increase/(decrease) in cash and cash 3 467 (3 764)
equivalents
Cash and cash equivalents at the beginning of 12 631 16 398
the year
Effects of exchange rate translations on cash - (3)
and cash equivalents
Cash and cash equivalents at the end of the 16 098 12 631
year
GROUP ABRIDGED AUDITED SEGMENT REPORTS
for the year ended 28 February 2009
Business segments
Research
And
Implementation Support develop-
services services Ment
2009 R`000 R`000 R`000
Revenue from external clients
Segment revenue 19 977 11 003 -
Segment result 9 847 3 775 (9 410)
Unallocated expenses
Operating profit
Finance income
Finance expense
Share of profit in associate
Income tax expense
Profit for the year
Unallocated costs
Sales
Administration
Infrastructure
Marketing
Amortisation
Corporate costs
Other segment information
Tangible assets (unallocated)
*
Intangible assets 1 435
(unallocated) *
Depreciation (unallocated) *
Amortisation (unallocated) * 416
Software
rental
and Consulting
maintenance fees Total
2009 R`000 R`000 R`000
Revenue from external clients
Segment revenue 22 066 17 522 70 568
Segment result 22 066 5 005 31 283
Unallocated expenses (22 015)
Operating profit 9 268
Finance income 1 001
Finance expense (288)
Share of profit in associate 10
Income tax expense (2 595)
Profit for the year 7 396
Unallocated costs
Sales 5 755
Administration 3 714
Infrastructure 5 308
Marketing 676
Amortisation 1 647
Corporate costs 4 915
Other segment information
Tangible assets (unallocated) * 737
Intangible assets (unallocated) * 11 309 12 744
Depreciation (unallocated) * 1 046
Amortisation (unallocated) * 1 231 1 647
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.
GEOGRAPHICAL SEGMENTS
Other African
South Africa Zimbabwe countries* Total
2009 R`000 R`000 R`000 R`000
Segment revenue 41 632 966 27 970 70 568
Assets and
liabilities
Segment assets 63 974 529 1 525 66 028
Total assets 63 974 529 1 525 66 028
Segment 22 784 - - 22 784
liabilities
Total liabilities 22 784 - - 22 784
*Other African countries include:
Kenya, Malawi, Nigeria, Ghana, Namibia, Lesotho, Swaziland and Mauritius.
GROUP ABRIDGED AUDITED SEGMENT REPORTS
for the year ended 28 February 2009
Business segments
Research
and
Implementation Support develop-
services services ment
2008 R`000 R`000 R`000
Revenue from external clients
Total external revenue 34 242 9 966 -
Inter-segment revenue - - -
34 242 9 966 -
Eliminations - - -
Segment revenue 34 242 9 966 -
Segment result 22 318 5 430 (8 171)
Unallocated expenses
Operating profit
Finance income
Finance expense
Share of loss in associate
Income tax expense
Profit for the year
Unallocated costs
Sales
Administration
Infrastructure
Marketing
Amortisation
Corporate costs
Other segment information
Tangible assets (unallocated) 822
*
Intangible assets
(unallocated) *
Depreciation (unallocated) * 396
Amortisation (unallocated) *
Software
rental
and
maintenance Total
2008 R`000 R`000
Revenue from external clients
Total external revenue 15 657 59 865
Inter-segment revenue 840 840
16 497 60 705
Eliminations (840) (840)
Segment revenue 15 657 59 865
Segment result 16 893 36 470
Unallocated expenses (23 002)
Operating profit 13 468
Finance income 846
Finance expense (139)
Share of loss in associate (147)
Income tax expense (4 221)
Profit for the year 9 807
Unallocated costs
Sales 5 140
Administration 4 006
Infrastructure 7 352
Marketing 575
Amortisation 396
Corporate costs 5 533
Other segment information
Tangible assets (unallocated) * 1 341
Intangible assets (unallocated) * 822
Depreciation (unallocated) * 961
Amortisation (unallocated) * 396
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.
GEOGRAPHICAL SEGMENTS
Other African
South Africa Zimbabwe countries* Total
2008 R`000 R`000 R`000 R`000
Segment revenue 41 093 1 225 17 547 59 865
Assets and
liabilities
Segment assets 45 769 960 3 661 50 390
Investment in 91 - - 91
associate
Total assets 45 860 960 3 661 50 481
Segment 17 513 - - 17 513
liabilities
Total liabilities 17 513 - - 17 513
* Other African countries include:
Kenya, Malawi, Nigeria, Ghana, Namibia, Lesotho, Swaziland and Mauritius.
COMMENTARY
1. ACCOUNTING POLICIES
1.1 BASIS OF PRESENTATION
The abridged Group annual financial statements are prepared in accordance with
International Accounting Standard 34 (IAS 34) and the JSE Limited Listings
Requirements. The abridged Group annual financial statements for the year
ended 28 February 2009 incorporate extracts of the Group`s unqualified audited
financial statements, which are prepared in accordance with International
Financial Reporting Standards ("IFRS"), the Listing Requirements for the JSE
Limited and the Companies Act of South Africa. The accounting policies applied
are consistent with those of the previous financial year. 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 annual financial statements for the year ended 28 February
2009 which include all disclosures required by IFRS, and which are expected to
be released on or about 2 June 2009.
1.2 GOODWILL AND INTANGIBLE ASSETS
Intangible assets and goodwill relating to the acquisition of ONZ were
identified and valued at acquisition date. Intangible assets relate to client
contracts and were valued at acquisition date at R2.8 million. The
amortisation of these contracts over the respective contract period resulted
in a charge to the income statement of R1.2 million before tax and minority
interest (2008 Nil). Goodwill of R8.6 million arose from the business
combination and was tested at year end for impairment. No impairment loss has
occurred.
Recognised
Pre-acquisition Fair value values
carrying amounts adjustments on acquisition
Plant and 37 - 37
Equipment
Intangible assets - 2 845 2 845
Trade Receivables 6 317 - 6 317
Cash and cash 3 344 - 3 344
equivalents
Trade and other (4 230) - (4 230)
payables
Deferred tax - (797) (797)
liability
Net identifiable 5 468 2 048 7 516
assets and
liabilities
Minority interest - - (3 683)
@ 49%
Interest in 3 833
identifiable
assets and
liabilities
Goodwill on 8 464
acquisition
Purchase price 12 297
1.3 TRADE AND OTHER PAYABLES
Trade and other payables comprised of the following:
2009 2008
R`000 R`000
Trade payables 706 360
Withholding tax rebate payable 8 650 7 028
VAT payable 698 -
Leave accrual 1 311 845
Liability on capital reduction 1 310 -
Other payables (accruals) 3 138 4 498
ONZ purchase price liability 3 840 -
Other related party payables - 63
19 653 12 794
1.4 RECONCILIATION BETWEEN BASIC
EARNINGS AND HEADLINE EARNINGS
Basic earnings 6 200 9 807
Adjusted for:
- Loss on disposal of equipment 26 26
Headline earnings 6 226 9 833
2. CORPORATE ACTIVITY
2.1 ACQUISITION OF ONES `N ZEROS PROFESSIONAL SERVICES (SA) (PTY) LTD
Shareholders are referred to the SENS announcements dated 18 June 2008 and 3
July 2008, regarding the acquisition of 51% of the shares in ONZ. SilverBridge
acquired 51% of the equity of ONZ on 1 July 2008 for R12.3 million after
performance guarantees have been taken into account. The settlement structure
of the transaction is tabled below:
R`000 R`000 R`000
Purchase price 12 297
First settlement
Acquisition cost (456)
Cash payment (2 773)
Total cash paid (3 229) (3 229)
Plus issue of shares (990 401 shares (2 724)
at R2.75)
First settlement (5 953) (5 953)
Outstanding settlement including 6 344
warranty
To be settled as follows:
Share issue to be issued (990 401 2 724
shares to be issued 50% in May 2009
and 50% in October 2009)
Cash 2 428 2 428
- First payment in May 2009 1 195
- Second payment in October 2009 1 069
- Interest 164
Additional warranty payments in cash 1 192
and shares
6 344
2.2. CAPITAL DISTRIBUTION
A capital distribution of R4 903 500 was approved by shareholders on 4 July
2008 and paid on 8 August 2008.
Given the current economic turmoil and uncertainty of the impact thereof
together with the Group`s stated intention to expand its offering through
acquisition and investment in own software development, the board of directors
have resolved not to return any further capital to shareholders at this stage.
3. AUDIT REPORT
The annual financial statements for the year ended 28 February 2009 have been
audited by KPMG Inc. Their unmodified audit report is available for inspection
at the Company`s registered office.
4. POST BALANCE SHEET EVENTS
No adjusting events occurred subsequent to the year end.
5. FINANCIAL RESULTS AND PERFORMANCE
Revenue increased by 18% to R70.5 million, supported by the acquisition of
ONZ, which contributed R17.5 million. The Group`s operating segments performed
well with the exception of the implementation segment resulting in EBIT
decreasing by 31% to R9.2 million. The salient financial indicators are listed
below:
i. Revenue increased by 18% to R70.5 million
ii. Cash increased by 27% to R16 million with no interest bearing debt
iii. EBITDA decreased by 19%
iv. Profit for the year decreased by 37%
v. Earnings per share and headline earnings per share decreased by 38%
Implementation revenue declined 42% to R20 million and its gross profit margin
declined to 49%. This segment relates to the implementation and customisation
of software at client sites. The current economic turmoil has resulted in
longer client decision cycles and some projects were postponed into the new
financial year. Capacity was sustained in order to be able to deliver on
projects when concluded affecting the margin negatively.
A new consulting segment was added to the Group`s performance through the
acquisition of ONZ. The segment contributed R17.5 million in revenue and R5
million in profit relating to a 29% gross profit percentage. The segment`s
performance slightly exceeded expectations as formalised in the profit
warranties.
The annuity based support segment performed satisfactorily with a 10% growth
in revenue to R11 million. Its gross profit declined to 34% which is within
the profit expectations of the segment. Additional capacity was allocated to
support from the implementation segment.
The annuity based software rental segment performed strongly. Its revenue grew
by 41% to R22 million. This was a function of new customers as well as an
increase in usage from existing customers. SilverBridge remains committed to
continued growth in this segment, since it forms the core of the group and
provides financial stability, going forward.
The Group`s cash position remains strong and has improved significantly to R16
million from interim period`s reported cash position of R5.8 million. The
level of accounts receivable however increased above normal levels mainly as a
result of abnormal last month invoicing and delayed client payments but
creates an opportunity to further improve the cash position of the Group and
cash collection remains an important focus.
6. GROUP OUTLOOK
The structural adjustments and economic pressures in the local and
international financial services industry continue to create a sound market
for the Group. The pressure on costs creates a demand for quality niche
software applications that support companies in driving down cost structures
and increase their ability to be competitive. The economic development in
Africa and resultant evolution of financial services still presents an
exciting opportunity for well positioned solution providers like SilverBridge.
The Group will continue to conservatively explore new business opportunities
and opportunities for expansion. A strong income led approach is being
followed and capacity and costs will only increase once there is a reasonable
certainty that contracts are going to be concluded. This will however not be
done to the detriment of the intellectual capability, delivery capability and
sustainability of the Group. Client service and retention will remain a key
focus for the Group.
7. CORPORATE GOVERNANCE
The board is committed to the promotion of good corporate governance as set
out in the King II report on Corporate Governance in South Africa. The board
confirms that, during the financial year under review, the Group has complied
with the material aspects of the principles of the Code of Corporate Practices
and Conduct contained in the 2002 King Committee Report on Corporate
Governance (King II) except for:
i. Internal audit function due to the size of the Group.
ii. Board composition consisting of only one independent non-executive
director also affecting the composition of the audit committee and
remuneration committee.
8. NOTICE OF THE ANNUAL GENERAL MEETING AND POSTING OF THE ANNUAL REPORT
The annual report will be posted to shareholders on or about 2 June 2009.
The Annual General Meeting of SilverBridge will be held at First floor, Castle
View North, 495 Prieska Street, Erasmuskloof, Pretoria, on 3 July 2009 at
10:00.
9. DIRECTORATE
During the year under review the board changed as follows:
i. Ms Nthabiseng Mokone was appointed as a non-executive director on 23
April 2008.
ii. Ms Sandra Duetsch was appointed as an executive director on 24 July 2008.
iii. Mr Rowan Williams resigned from the board as a non-executive director on
23 April 2008, but remains on the board as the alternate director to Mr
David Smollan.
iv. Mr Jeremy de Villiers was appointed as an independent non-executive
director on 2 October 2008.
v. Ms Sphelele Sangweni was appointed as an alternate director to the
chairman, Mr Andile Sangqu on 2 October 2008.
vi. The role of Ms Freda du Toit changed from that of an executive director
to a non-executive director effective 2 October 2008.
vii. Mr Justin van der Hooven resigned from the board as a non-executive
director on 23 January 2009.
Viii Mr Tyrrel Murray was appointed as a non-executive director on 25 February
2009.
On behalf of the Board
Jaco Swanepoel Andile Sangqu
Chief Executive Officer Chairman
Pretoria
5 May 2009
CORPORATE INFORMATION
Directors of SilverBridge:
Andile Sangqu (Chairman)*, Jaco Swanepoel (CEO), Jeremy de Villiers **, Freda
du Toit*, Nthabiseng Mokone*, Tyrrel Murray*,
David Smollan*, Sandra Duetsch,
Jaco Maritz, Rowan Williams***,
Sphelele Sangweni***.
(All the directors are South African citizens).
* Non-executive
**Independent non-executive
***Alternate directors
DIRECTORS OF SDT:
Jaco Swanepoel, Freda du Toit*,
Jaco Maritz, David Smollan*,
Johan Reyneke*, Leon du Rand*
(All the directors are South African citizens).
* Non-executive
DIRECTORS OF ONZ:
Sandra Duetsch, Amanda Newell, Jaco Swanepoel*, Jaco Maritz*.
(All the directors are South African citizens).
* 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 (Pty) Ltd,
represented by Melinda van den Berg
GROUP AUDITORS:
KPMG Incorporated
(Registration number: 4530188665)
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
(Registration number: 2004/003647/07)
70 Marshall Street, Johannesburg, 2001
(PO Box 61051 Marshalltown, 2107)
DESIGNATED ADVISERS:
Sasfin Capital (a division of Sasfin Bank Limited)
(Registration number: 1951/002280/06)
GROUP COMPANIES:
SDT Financial Software Solutions (Pty) Ltd
(Registration number 1995/005860/07)
Ones `n Zeros Professional Services (SA) (Pty) Ltd
(Registration number 2001/023270/07)
www.silverbridge.co.za
Date: 05/05/2009 07:30:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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