| Thu 7 Oct 2010, 9:16 | | SDH - SecureData - Reviewed Provisional Financial Results for the year ended 31 |
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SDH
SDH
SDH - SecureData - Reviewed Provisional Financial Results for the year ended 31
July 2010
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 2010
Financial Highlights
- Adjusted EPS up 12% to 13,1 cents per share
- Net cash positive
- Re-instatement of dividend policy
Condensed Consolidated Statement of Comprehensive Income
for the twelve months ended 31 July 2010
Reviewed Audited
12 months 12 months
ended ended
31 July 2010 31 July 2009
R`000 R`000
Revenue 458 953 464 632
Earnings before interest, taxation, 57 170 57 280
depreciation and amortisation
("EBITDA")and other financial items
Depreciation and amortisation (14 342) (14 879)
- Depreciation (4 044) (3 391)
- Amortisation (10 298) (11 488)
Profit from operations 42 828 42 401
Finance income 400 1 282
Finance costs (22 079) (27 741)
- Interest paid (11 588) (17 938)
- Foreign exchange losses on loan to (10 491) (9 803)
subsidiary
Other financial items 2 793 (7 075)
Profit before taxation 23 942 8 867
Taxation (7 994) (3 172)
Profit for the year 15 948 5 695
Attributable to:
- owners of the parent 17 044 6 630
- minority interest (1 096) (935)
Profit for the year 15 948 5 695
Total comprehensive income for the year 15 948 5 695
Attributable to:
- owners of the parent 17 044 6 630
- minority interest (1 096) (935)
Total comprehensive income for the year 15 948 5 695
Earnings per share (cents) 7,5 2,9
Diluted earnings per share (cents) 7,5 2,9
Weighted average numbers of shares on
which
- earnings per share is based (`000) 228 700 227 076
- diluted earnings per share is based 228 700 227 076
(`000)
Number of ordinary shares in issue (`000) 246 320 242 102
Reconciliation between earnings and
headline earnings
Profit for the year attributable to 17 044 6 630
ordinary shareholders
Loss/(Profit) on disposal of assets 26 (30)
Headline earnings 17 070 6 600
Headline earnings per share (cents) 7,5 2,9
Reconciliation between earnings and
adjusted earnings
- Profit for the year attributable to 17 044 6 630
ordinary shareholders
- Amortisation (after taxation) 7 414 7 806
- Unrealised losses on derivatives (after (2 011) 5 094
taxation)
- Foreign exchange losses on group loans 7 554 7 058
(after taxation)
Adjusted earnings 30 001 26 588
Adjusted earnings per share (cents) 13,1 11,7
Condensed Consolidated Statement of Financial Position
at 31 July 2010
Reviewed as at Audited as at
31 July 2010 31 July 2009
R`000 R`000
ASSETS
Non-current assets 221 607 248 261
Property, plant and equipment 7 895 6 859
Goodwill 129 541 140 394
Intangible assets 48 645 64 418
Deferred taxation 35 526 36 590
Current assets 202 037 143 384
Inventories 3 592 4 040
Trade and other receivables 129 775 81 739
Taxation 634 -
Cash and cash equivalents 68 036 57 605
Total assets 423 644 391 645
EQUITY AND LIABILITIES
Equity 191 157 181 100
Share capital 246 242
Share premium 118 900 115 234
Treasury share reserve (19 699) (22 215)
Share-based payment equity 3 957 3 096
Foreign currency translation reserve (22 431) (14 386)
Retained earnings 99 093 82 049
Equity attributable to owners of the 180 066 164 020
parent
Minority interest 11 091 17 080
Non-current liabilities 59 806 89 785
Long-term loans 46 664 72 602
Deferred taxation 13 142 17 183
Current liabilities 172 681 120 760
Trade and other payables 138 700 90 605
Taxation 10 828 5 015
Derivative financial instruments 4 282 7 075
Short-term loans 18 871 18 065
Total equity and liabilities 423 644 391 645
Net asset value per share (cents) 73,1 67,7
Net asset value per share net of treasury 77,5 72,3
(cents)
Condensed Consolidated Statement of Changes in Equity
for the twelve months ended 31 July 2010
Reviewed Audited
12 months 12 months
ended ended
31 July 2010 31 July 2009
R`000 R`000
Share capital 246 242
Balance at beginning of the year 242 242
Issued during the year 4 -
Share premium 118 900 115 234
Balance at beginning of the year 115 234 115 234
Issued during the year 3 666 -
Treasury share reserve (19 699) (22 215)
Balance at beginning of the year (22 215) (23 586)
Own shares acquired by subsidiary - (838)
Own shares sold by subsidiary 2 516 2 209
Share based payment equity 3 957 3 096
Balance at beginning of the year 3 096 2 482
Share based payment transactions during 861 614
the year
Foreign exchange conversion reserve (22 431) (14 386)
Balance at beginning of the year (14 386) (8 174)
Foreign exchange movements during the (8 045) (6 212)
year
Retained earnings 99 093 82 049
Balance at beginning of the year 82 049 75 419
Profit for the year 17 044 6 630
Equity attributable to owners of the 180 066 164 020
parent
Minority interest 11 091 17 080
Balance at beginning of the year 17 080 21 770
Recognised income for the year (1 096) (935)
Reduction due to purchase by the parent (3 054) -
Foreign exchange movements (1 839) (3 755)
Total capital and reserves 191 157 181 100
Condensed Consolidated Statement of Cash Flow
for the twelve months ended 31 July 2010
Reviewed Audited
12 months 12 months
ended ended
31 July 2010 31 July 2009
R`000 R`000
Cash flow from operating activities 40 835 35 472
Profit before taxation 23 942 8 867
Adjustments not affecting the flow of 33 963 49 603
funds
Operating income before working capital 57 905 58 470
changes
Increase/(decrease) in working capital 1 650 (2 133)
Cash generated from operations 59 555 56 337
(18 720) (20 865)
Finance income 400 1 282
Finance costs (11 588) (17 938)
Taxation paid (7 532) (4 209)
Cash flow from investing activities (8 513) (3 558)
Cash flow from financing activities (18 537) (12 923)
Proceeds from issue of shares 3 670 -
Own shares acquired by subsidiary - (838)
Own shares sold by subsidiary 2 516 2 209
Loans repaid (24 723) (14 294)
Increase in cash equivalents 13 785 18 991
Foreign exchange movements in cash (3 354) (2 896)
balances
Cash and cash equivalents at beginning of 57 605 41 510
the year
Cash and cash equivalents at end of the 68 036 57 605
year
Commentary
General Review
During the year under review, SecureData Holdings ("SDH") continued its progress
towards becoming a significant provider of Information Risk Management ("IRM")
solutions and services in the geographies in which it operates. The group
achieved solid results despite a difficult operating environment characterised
by currency uncertainty, a poor economic climate, and interruped by the FIFA
World Cup in South Africa and general elections in the United Kingdom.
Group EBITDA remained static at R57,2 million on revenues that dipped slightly
to R459,0 million reflecting an improvement in EBITDA margin to 12,5%. Rand
strength negatively impacted the group`s revenues and earnings, affecting not
only the Rand translation of the group`s Sterling based income but also reducing
the unit cost of products sold in South Africa which are foreign currency
denominated. Revenue was evenly split between the first and second halves of the
financial year, and 58% of EBITDA was achieved during the second half. This
cyclicality is normal and can be attributed to the product and annuity revenue
profile of the different periods. Services revenues, the bulk of which are
monthly billed managed services, remained strong above R90 million and account
for a greater share (20%) of revenue, than any other technology or product.
Revenue generated outside of South Africa climbed to 45% and annuity revenue
remained strong at 41%.
The calculations of earnings per share ("EPS") and headline earnings per share
("HEPS") incorporate the following items;
- a R10,3 million charge for amortisation of intangible assets created by the
group`s prior acquisitions. This charge is unrealised and has no effect on group
cash flow;
- a R10,5 million foreign exchange charge on inter-group loans reflecting the
difference in Rand to Sterling exchange rate between the previous and current
reporting closing dates. This expense is unrealised and has no effect on group
cash flow;
- The net movement in derivative financial instruments of R2,8 million profit.
This includes unrealised foreign exchange forward contracts entered into to
settle outstanding creditor payments by the group at a time of great Rand
volatility as well as 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 unrealised non-cash items reduced EPS and
HEPS by 5,6 cents per share, making both EPS and HEPS poor indicators of the
group`s operational performance. Adjusted EPS, which ignores these items but
includes cash expenses such as interest, is 13,1 cents per share.
The group was net cash positive as at 31 July 2010 with R68 million in cash and
cash equivalents and total borrowings of R65,5 million. In comparison with the
six months ended 31 January 2010, inventory remained flat around R4 million and
debtors days improved to 80 from 94. Management continues to place particular
emphasis on effective working capital management and is pleased to announce the
re-instatement of the group`s dividend policy as detailed below.
Operational Review
SDH operates subsidiaries in three major groupings: SecureData Africa, MIS-CDS
and SensePost. Both revenue and EBITDA details below are gross of R1,5 million
of inter-group sales that eliminate on consolidation.
SecureData Africa
12 months 12 months
to 31 July to 31 July
2010 2009 %
R`000 R`000 Growth
Revenue 268 350 265 910 0,9
EBITDA 37 969 36 842 3,1
EBITDA margin (%) 14,1 13,9 1,4
SecureData Africa markets and distributes best of class IRM products in South
Africa and across the rest of the continent.
SecureData Africa stood firm in a period of significant economic turmoil with
increases in revenue, EBITDA and EBITDA margin. As anticipated the second six
month performance was slightly better than the first six month period. During
the course of the year the operations of New Generation Solutions were
integrated into those of SecureData Africa.
In the coming year SecureData Africa will continue to focus on improving
existing operations as well as organic expansion into Africa outside of Southern
Africa. Management is confident that despite difficult trading conditions, the
company will be able to continue to show revenue growth, and will focus on
margin improvement into the future.
MIS-CDS
12 months 12 months
to 31 July to 31 July
2010 2009 %
R`000 R`000 Growth
Revenue 168 780 176 754 (4,5)
EBITDA 14 351 13 925 3,1
EBITDA margin (%) 8,5 7,9 7,6
12 months 12 months
to 31 July to 31 July
2010 2009 %
GBP`000 GBP`000 Growth
Revenue 14 006 12 190 14,9
EBITDA 1 191 960 24,1
MIS-CDS is one of the largest independent information security solution
providers in the United Kingdom.
In Sterling MIS-CDS posted a credible 15% increase in revenue with a 24%
improvement in EBITDA and a firming of the EBITDA margin to 8,5%. This strong
performance is not reflected in the Rand results of the company due to the
strengthening of the Rand in relation to Sterling.
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 12 months
to 31 July to 31 July
2010 2009 %
R`000 R`000 Growth
Revenue 23 281 21 968 6,0
EBITDA 6 357 6 513 (2,4)
EBITDA margin (%) 27,3 29,6 (7,8)
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 R23,3 million with a pleasing 27,3% EBITDA margin
reflecting the specialist, high value nature of the company`s service offering.
Almost a third of SensePost revenues were generated outside of South Africa.
The company has invested significant resources in its R&D arm, SensePost
Laboratories, and it continues 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 established a significant IRM presence in the Europe/Africa region. The
group remains cash generative and, having substantially reduced debt obligations
incurred in acquisitions, has re-instated its dividend policy. Working capital
management remains a key focus area.
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 of directors of SDH ("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. With
the exception of the implementation of the new and revised standards noted below
the same accounting policies, presentation and measurement principles have been
followed in the preparation of the condensed financial information as were
applied in the preparation of the group`s annual financial statements for the
year ended 31 July 2009. The group has implemented the revised IAS 1,
"Presentation of Financial Statements" and IFRS 8 "Operating segments". The
changes to both standards are of a presentation and disclosure nature only.
Comparative information has been re-presented to conform with the revised
standards.
Independent Review
Grant Thornton, SecureData`s independent auditor, have reviewed the condensed
consolidated 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 board is not aware of any material matter or circumstance arising since the
end of the financial year end up to the date of this report.
Dividend Declaration
The board has resolved to declare a final dividend of 5 cents per share for the
year ended 31 July 2010 to be paid to all ordinary shareholders recorded in the
share register on the record date. In compliance with the requirements of Strate
and Schedule 24 of the JSE Listings Requirements, the following dates are
applicable:
Last day to trade cum the dividend Friday, 12 November 2010
Date trading commences ex the dividend Monday, 15 November 2010
Record date Friday, 19 November 2010
Date of payment Monday, 22 November 2010
Share certificates may not be dematerialised or rematerialised between Monday,
15 November 2010 and Friday, 19 November 2010, both dates inclusive.
Directorate
Mr S Murray resigned as a non-executive director with effect from 21 July 2010.
For and on behalf of the board.
PR Pretorius DTK Brazier
Chairman Chief Executive Officer
7 October 2010
Directors:
PR Pretorius+ (Chairman); DTK Brazier (Chief Executive Officer); JG du Toit
(Financial Director); A Aitken+; N Mthembu+; YT Moerane*; P Sneddon*
*Independent non-executive director
+Non-executive director
Company secretary:
Merchantec Capital
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)
Sponsor:
Merchantec Capital
www.securedataholdings.com
Date: 07/10/2010 09:16:01 Produced by the JSE SENS Department.
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