| Wed 7 Oct 2009, 7:30 | | SDH - SecureData Holdings Limited - Reviewed Provisional Financial Results for |
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SDH
SDH
SDH - SecureData Holdings Limited - Reviewed Provisional Financial Results for
the Year Ended 31 July 2009
SecureData Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1998/010017/06)
Share code: SDH & ISIN: ZAE000096368
("SecureData" or "the group")
REVIEWED PROVISIONAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 JULY 2009
Financial Highlights
- Group revenue up 71% to R464,6 milion (2008: R271,3 million)
- EBITDA up 57% to R57,3 million (2008: R36,5 million)
- Adjusted EPS 11,7 cents per share (2008: 10,9 cents per share)
- Effective working capital management
Dean Brazier, SecureData CEO said, "I believe this is a solid performance after
a poor first half. Although the economic operating environment remains volatile,
the company has historically proven to be resilient to the economic cycle.
SecureData is firmly positioned to exploit its advantages in its selected
markets."
CONDENSED CONSOLIDATED INCOME STATEMENT
for the year ended 31 July 2009
Reviewed Audited
31 July 31 July
2009 2008
R`000 R`000
Revenue 464 632 271 347
Earnings before interest, taxation, 57 280 36 456
depreciation and amortisation ("EBITDA")
Depreciation and amortisation (14 879) (8 732)
- Depreciation (3 391) (2 651)
- Amortisation (11 488) (6 081)
Profit from operations 42 401 27 724
Finance income 1 282 1 289
Finance costs (27 741) (13 420)
- Interest paid (17 938) (5 376)
- Foreign exchange losses on loan to (9 803) (8 044)
subsidiary
Other financial items (7 075) -
Profit before taxation 8 867 15 593
Taxation (3 172) (6 654)
Profit for the year 5 695 8 939
Attributable to:
Equity holders of the company 6 630 8 699
Minority shareholders (935) 240
Earnings per share (cents) 2,9 5,0
Diluted earnings per share (cents) 2,9 4,7
Weighted average number of shares on
which
- Earnings per share is based (`000) 227 076 173 219
- Diluted earnings per share is based 227 076 183 409
(`000)
Number of ordinary shares in issue (`000) 242 102 242 102
Reconciliation between earnings and
headline earnings
Profit for the year attributable to 6 630 8 699
ordinary shareholders
Profit on disposal of assets (30) -
Headline earnings 6 600 8 699
Headline earnings per share (cents) 2,9 5,0
Diluted headline earnings per share 2,9 4,7
(cents)
Reconciliation between earnings and
adjusted earnings
- Profit for the year attributable to 6 630 8 699
ordinary shareholders
- Amortisation (after taxation) 7 806 4 354
- Unrealised losses on derivatives 5 094 -
(after taxation)
- Foreign exchange losses on group loans 7 058 5 791
(after taxation)
Adjusted earnings 26 588 18 844
Adjusted earnings per share 11,7 10,9
Net asset value per share in issue(cents) 67,7 66,7
Net asset value per share
net of treasury (cents) 72,3 71,1
CONDENSED CONSOLIDATED BALANCE SHEET
at 31 July 2009
Reviewed Audited
31 July 31 July
2009 2008
R`000 R`000
ASSETS
Non-current assets 248 261 291 630
Property, plant and equipment 6 859 7 495
Goodwill 140 394 120 975
Intangible assets 64 418 125 587
Deferred taxation 36 590 37 573
Current assets 143 384 131 586
Inventories 4 040 6 117
Trade and other receivables 81 739 83 236
Taxation - 723
Cash and cash equivalents 57 605 41 510
Total assets 391 645 423 216
EQUITY AND LIABILITIES
Equity 181 100 183 387
Share capital 242 242
Share premium 115 234 115 234
Treasury share reserve (22 215) (23 586)
Share-based payment equity 3 096 2 482
Foreign exchange conversion reserve (14 386) (8 174)
Retained earnings 82 049 75 419
Minority interest 17 080 21 770
Non-current liabilities 89 785 127 328
Long-term loans 72 602 92 167
Deferred taxation 17 183 35 161
Current liabilities 120 760 112 501
Trade and other payables 90 605 97 401
Taxation 5 015 1 907
Derivative financial instruments 7 075 -
Short-term loans 18 065 13 193
Total equity and liabilities 391 645 423 216
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 July 2009
Reviewed Audited
31 July 31 July
2009 2008
R`000 R`000
Share capital 242 242
Balance at beginning of the period 242 180
Issued during the period - 62
Share premium 115 234 115 234
Balance at beginning of the period 115 234 12 039
Issued during the period - 105 344
Share issue expenses - (2 149)
Treasury share reserve (22 215) (23 586)
Balance at beginning of the period (23 586) (30 187)
Own shares acquired by subsidiary (838) (379)
Own shares sold by subsidiary 2 209 6 980
Share-based payment equity 3 096 2 482
Balance at beginning of the period 2 482 615
Share-based payment transactions during 614 1 867
the period
Foreign exchange conversion reserve (14 386) (8 174)
Balance at beginning of the period (8 174) -
Foreign exchange movements during the (6 212) (8 174)
period
Retained earnings 82 049 75 419
Balance at beginning of the period 75 419 66 720
Profit for the period 6 630 8 699
Minority interest 17 080 21 770
Balance at beginning of the period 21 770 -
Acquisition of subsidiary company - 21 530
Recognised income for the year (935) 240
Foreign exchange movements (3 755) -
Total capital reserves 181 100 183 387
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 July 2009
Reviewed Audited
31 July 31 July
2009 2008
R`000 R`000
Cash flow from operating activities 34 132 37 735
Profit before taxation 8 867 15 593
Adjustments not affecting the flow of 42 042 15 406
funds
Operating income before working capital 50 909 30 999
changes
(Decrease)/increase in working capital (3 222) 24 181
Cash generated from operations 47 687 55 180
(13 555) (17 445)
Finance income 1 282 1 289
Finance costs (17 938) (5 376)
Taxation (paid)/received 3 101 (13 358)
Cash flow from investing activities (4 715) (202 555)
Cash flow from financing activities (13 322) 183 789
Proceeds from issue of shares - 105 406
Share issue expenses - (2 149)
Own shares acquired by subsidiary (838) (379)
Own shares sold by subsidiary 2 209 6 980
Loans (repaid)/raised (14 693) 73 931
Increase in cash equivalents 16 095 18 969
Cash and cash equivalents at beginning of 41 510 22 541
the year
Cash and cash equivalents at end of the 57 605 41 510
year
COMMENTARY
GENERAL REVIEW
During the year under review, SecureData continued its progress towards
achieving its vision of becoming a significant provider of Information Risk
Management ("IRM") solutions and services in the geographies in which it
operates. Despite a weak first half performance, the group achieved very strong
results in the second half to achieve a solid improvement over the comparative
period of the previous financial year.
Group revenue increased 71% to R464,6 million and EBITDA grew 57% to R57,3
million. Although revenue was evenly split between the first and second halves
of the financial year, 67% of EBITDA was achieved during the second half. This
was primarily attributable to the restructuring of the South African operations
undertaken in January 2009 and its subsequent stabilisation, as well as to the
improved execution of MIS-CDS in a turbulent economic environment. Services
revenues, the bulk of which are monthly billed managed services, were in excess
of R100 million, accounting for a greater share, 23% of revenue, than any
specific technology or product. Revenue generated outside of South Africa
climbed to 40% and annuity revenue was a healthy 43%.
The calculations required to reflect earnings per share ("EPS") and headline
earnings ("HEPS") per share include the following items:
- R10,9 million charge for amortisation of intangible assets created by the
group`s acquisitions. This charge is unrealised and has no effect on group
cash flow;
- R9,8 million foreign exchange loss on inter-group loans, which reflects the
difference in Rand to Sterling exchange rate, between when the loan was
made, in order to acquire MIS-CDS, and the present exchange rate. This
expense is unrealised and has no effect on group cash flow;
- R5,5 million loss on foreign exchange forward contracts, entered into to
settle outstanding creditor payments by the group, at a time of great Rand
volatility. As at 31 July 2009 these losses were unrealised. These
contracts which relate to future periods, will be crystalised during the
course of the next financial year; and
- R1,6 million loss on interest rate swaps relating to future periods,
utilised to limit the effect of interest rate volatility on the long-term
debt of the group.
Together these non-operational and primarily, unrealised non-cash items, reduced
EPS and HEPS by 8,8 cents per share, making both EPS and HEPS poor indicators of
the groups operational performance. Adjusted EPS, which ignores these items but
includes cash expenses such as interest, would result in 11,7 cents per share.
Net borrowings at the end of the period reduced to R33 million compared to R63
million as at 31 July 2008. Working capital management continued to improve with
inventories decreasing from R6,1 million to R4,0 million and debtors days
reduced to 50 days from 73 days at the end of the previous financial year.
Management continues to place particular emphasis on effective working capital
management.
OPERATIONAL REVIEW
SecureData operates subsidiaries in three major groupings: SecureData Africa,
MIS-CDS and SensePost.
SecureData Africa
12 months to 12 months to
31 July 31 July
2009 2008 %
R`000 R`000 growth
Revenue 265 910 221 941 20
EBITDA 36 842 24 320 51
EBITDA margin (%) 13,9 11,0 27
SecureData Africa markets and distributes best of class IRM products in South
Africa and across the rest of the continent.
After a period of operational decline the company launched a number of key
initiatives in January 2009 with the view to improving performance at SecureData
Africa. Key amongst these were a senior management restructuring process, which
included the appointment of Tony Nutter as Managing Director, a detailed
analysis of operating expenses and a complete product portfolio review.
It is evident from the full analysis of available data and subsequent results
that these initiatives were both necessary and implemented at the appropriate
time. Of the full twelve month EBITDA of R37 million only R10 million was
recorded for the first six months ended 31 January 2009 with R27 million (or
73%) occurring in the second six month period. The strong second half segment
result is testament to the tenacity of the staff of the company, the successful
restructuring and the robustness of the business model. A special mention should
also be made of New Generation Solutions (NGS), a subsidiary of SecureData
Africa, for achieving in excess of 200% EBITDA growth in the period under
review.
Management is confident that with the restructure significantly advanced and
having consequently achieved good earnings growth, SecureData Africa has the
staff and management required to sustain its solid performance into the future.
MIS-CDS
12 months to 2 months to
31 July 31 July
2009 2008
R`000 R`000
Revenue 176 754 28 857
EBITDA 13 925 5 335
EBITDA margin (%) 7,9 18,5
MIS-CDS is one of the largest and longest established independent information
security solution providers in the United Kingdom.
As a result of the significant deterioration of the economic environment in the
United Kingdom in 2008 and, partly as a result of events at SecureData Africa,
MIS-CDS underperformed in the first six months of the financial year. With
relatively minor adjustments to the company`s business model and a reinvigorated
`go-to-market` strategy, the company achieved a significantly stronger
performance in the second half of the financial year with EBITDA margins
improving from 5,9% to 9,9% in first and second half comparison.
Last year`s results included only two months of MIS-CDS performance compared
with the full year in 2009. Although the stronger Rand prevented MIS-CDS from
contributing to the group`s results in the anticipated manner in the period
under review, management is confident that the company will continue to show
improving margin and earnings performance in the coming period despite ongoing
economic uncertainty in the United Kingdom.
SensePost
12 months to 12 months to
31 July 31 July
2009 2008 %
R`000 R`000 growth
Revenue 21 968 20 549 7
EBITDA 6 513 6 801 (4)
EBITDA margin (%) 29,6 33,1 (11)
SensePost provides independent information security assessment services. Based
in South Africa, the company is a recognised leader in this niche market and
boasts a blue-chip client base spanning five continents.
SensePost posted revenue of R22 million with a pleasing 29.6% EBITDA margin
reflecting the specialist, high value nature of the company`s service offering.
The year-on-year EBITDA margin was slightly down due to the strength of the
Rand. Approximately a quarter of SensePost revenues were generated outside of
South Africa. The company has invested significant resources in its R&D arm
SensePost Laboratories and it has continued to invest in its offshore expansion
programme.
STRATEGIC REVIEW
The group continues to gain market share in the markets in which it trades, and
has become a significant IRM presence in the Europe/Africa region. Debt levels
have decreased to more comfortable levels and operating margins are improving.
Cash and working capital management continue to be focus areas and the group
remains cash generative.
Although the economic and competitive landscape remains challenging the IRM
market has historically proved to be resilient in the face of market turbulence.
The board believes the group is well positioned to take advantage of attractive
opportunities within the IRM sector well into the future.
BASIS OF PREPARATION
These provisional condensed consolidated financial statements have been prepared
in accordance with the recognition and measurement requirements of International
Financial Reporting Standards and the presentation and disclosure requirements
of IAS 34 - Interim Financial Reporting, the Companies Act, 1973 (Act 61 of
1973, as amended), and with the Listings Requirements of the JSE Limited. The
accounting policies applied in the preparation of these condensed financial
statements conform with the requirements of International Financial Reporting
Standards, and are consistent with those applied in the prior year.
INDEPENDENT REVIEW
Grant Thornton, SecureData`s independent auditor, have reviewed the condensed
financial statements contained in this provisional report and have expressed an
unmodified conclusion on the provisional statements. Their review report is
available for inspection at the company`s registered office.
POST BALANCE SHEET EVENTS
The directors are not aware of any material matter or circumstance arising since
the end of the financial year end up to the date of this report.
DIRECTORATE
Dr TN Mali resigned as a non-executive director with effect from 31 March 2009.
Mr A Aitken and Mr N Mthembu have been appointed as non-executive directors with
effect from 2 April 2009.
For and on behalf of the board.
PR Pretorius DTK Brazier
Chairman Chief Executive Officer
7 October 2009
Directors:
PR Pretorius+ (Chairman), DTK Brazier (Chief Executive Officer), JG du Toit
(Financial Director), A Aitken+, N Mthembu+, YT Moerane*, S Murray+, P Sneddon*
*Independent non-executive director +Non-executive director
Company secretary:
Merchantec (Proprietary) Limited
Registered office:
Medscheme Building South
10 Muswell Road South
Bryanston, 2021
(PO Box 4673, Rivonia, 2128)
Transfer secretaries:
Computershare Investor Services (Proprietary) Limited
Registration number 2004/003647/07
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Sponsors:
Merchantec (Proprietary) Limited
www.securedataholdings.co.za
Date: 07/10/2009 07:30:01 Produced by the JSE SENS Department.
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