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SDH
SDH
SDH - SecureData Holdings Limited - Unaudited Results for the six months ended
31 January 2011
SecureData Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1998/010017/06)
Share code: SDH ISIN: ZAE000096368
("SecureData" or "the group")
Unaudited Results for the six months ended 31 January 2011
Condensed Consolidated Statement of Comprehensive Income
(for the six months ended 31 January 2011)
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 January 2011 31 January 2010 31 July 2010
R`000 R`000 R`000
Revenue 198 958 220 208 458 953
Earnings before 15 432 24 212 57 170
interest, taxation,
depreciation and
amortisation (EBITDA)
and other financial
items
Depreciation and (6 339) (8 364) (14 342)
amortisation
- Depreciation (1 486) (2 317) (4 044)
- Amortisation (4 853) (6 047) (10 298)
Profit from operations 9 093 15 848 42 828
Finance income 281 142 400
Finance costs (3 299) (11 345) (22 079)
- Interest paid (3 552) (5 377) (11 588)
- Foreign exchange 253 (5 968) (10 491)
gains/(losses) on loan
to subsidiary
Other financial items (112) (750) 2 793
Profit before taxation 5 963 3 895 23 942
Taxation (3 834) (1 852) (7 994)
- Normal taxation (2 602) (1 852) (7 994)
- Secondary Taxation on (1 232) - -
Companies
Profit for the period 2 129 2 043 15 948
Attributable to:
- owners of the parent 2 478 1 875 17 044
- minority interest (349) 168 (1 096)
Profit for the period 2 129 2 043 15 948
Total comprehensive 2 129 2 043 15 948
income for the period
Attributable to:
- owners of the parent 2 478 1 875 17 044
- minority interest (349) 168 (1 096)
Total comprehensive 2 129 2 043 15 948
income for the period
Earnings per share 1,1 0,8 7,5
(cents)
Diluted earnings per 1,1 0,8 7,5
share (cents)
Weighted average
numbers of shares on
which
- earnings per share is 230 063 227 997 228 700
based (`000)
- diluted earnings per 230 063 227 997 228 700
share is based (`000)
Number of ordinary 246 320 242 102 246 320
shares in issue (`000)
Reconciliation between
earnings and headline
earnings
Profit for the period 2 478 1 875 17 044
attributable to
ordinary shareholders
Profit on disposal of - - 26
assets
Headline earnings 2 478 1 875 17 070
Headline earnings per 1,1 0,8 7,5
share (cents)
Reconciliation between
earnings and adjusted
earnings
- Profit for the period 2 478 1 875 17 044
attributable to
ordinary shareholders
- Amortisation (after 3 494 4 151 7 414
taxation)
- Unrealised 81 540 (2 011)
losses/(profits) on
derivatives (after
taxation)
- Foreign exchange (181) 4 297 7 554
(gains)/losses on group
loans (after taxation)
Adjusted earnings 5 872 10 863 30 001
Adjusted earnings per 2,6 4,8 13,1
share (cents)
Condensed Consolidated Statement of Financial Position
(at 31 January 2011)
Unaudited at Unaudited at Audited at
31 January 2011 31 January 2010 31 July 2010
R`000 R`000 R`000
ASSETS
Non-current assets 216 437 231 790 221 607
Property, plant and 6 889 7 586 7 895
equipment
Goodwill 130 109 133 562 129 541
Intangible assets 44 879 55 373 48 645
Deferred taxation 34 560 35 269 35 526
Current assets 153 589 163 839 202 037
Inventories 4 042 3 721 3 592
Trade and other 119 806 131 649 129 775
receivables
Taxation 99 143 634
Cash and cash 29 642 28 326 68 036
equivalents
Total assets 370 026 395 629 423 644
EQUITY AND LIABILITIES
Equity 179 935 177 286 191 157
Share capital 246 242 246
Share premium 118 900 115 234 118 900
Treasury share reserve (22 478) (22 215) (19 699)
Share-based payment 4 358 3 496 3 957
equity reserve
Foreign currency (21 909) (19 464) (22 431)
translation reserve
Retained earnings 90 016 83 924 99 093
Equity attributable to 169 133 161 217 180 066
owners of the parent
Minority interest 10 802 16 069 11 091
Non-current liabilities 48 635 71 393 59 806
Long-term loans 36 581 56 829 46 664
Deferred taxation 12 054 14 564 13 142
Current liabilities 141 456 146 950 172 681
Trade and other 113 842 122 467 138 700
payables
Taxation 3 188 2 183 10 828
Derivative financial 4 394 4 939 4 282
instruments
Short-term loans 20 032 17 361 18 871
Total equity and 370 026 395 629 423 644
liabilities
Net asset value per 73,7 70,7 77,5
share net of treasury
(cents)
Tangible net asset (2,6) (12,2) (0,8)
value per share net of
treasury (cents)
Condensed Consolidated Statement of Changes in Equity
(for the six months ended 31 January 2011)
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 January 2011 31 January 2010 31 July 2010
R`000 R`000 R`000
Share capital 246 242 246
Balance at beginning of 246 242 242
the period
Issued during the - - 4
period
Share premium 118 900 115 234 118 900
Balance at beginning of 118 900 115 234 115 234
the period
Issued during the - - 3 666
period
Treasury share reserve (22 478) (22 215) (19 699)
Balance at beginning of (19 699) (22 215) (22 215)
the period
Own shares acquired by (2 779) - -
subsidiary
Own shares sold by - - 2 516
subsidiary
Share based payment 4 358 3 496 3 957
equity reserve
Balance at beginning of 3 957 3 096 3 096
the period
Share based payment 401 400 861
transactions during the
period
Foreign currency (21 909) (19 464) (22 431)
translation reserve
Balance at beginning of (22 431) (14 386) (14 386)
the period
Foreign exchange 522 (5 078) (8 045)
movements during the
period
Retained earnings 90 016 83 924 99 093
Balance at beginning of 99 093 82 049 82 049
the period
Profit for the period 2 478 1 875 17 044
Dividends paid (11 555) - -
Equity attributable to 169 133 161 217 180 066
owners of the parent
Minority interest 10 802 16 069 11 091
Balance at beginning of 11 091 17 080 17 080
the period
Recognised (349) 168 (1 096)
(loss)/income for the
period
Reduction due to - - (3 054)
purchase by the parent
Foreign exchange 60 (1 179) (1 839)
movements
Total capital and 179 935 177 286 191 157
reserves
Condensed Consolidated Statement of Cash Flow
(for the six months ended 31 January 2011)
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 January 2011 31 January 2010 31 July 2010
R`000 R`000 R`000
Cash flow from (14 301) (9 166) 40 834
operating activities
Profit before taxation 5 963 3 895 23 942
Adjustments not 10 038 17 831 33 962
affecting the flow of
funds
Operating income before 16 001 21 726 57 904
working capital changes
(Decrease)/increase in (15 431) (17 730) 1 650
working capital
Cash generated from 570 3 996 59 554
operations
(14 871) (13 162) (18 720)
Finance income 281 142 400
Finance costs (3 552) (5 377) (11 588)
Taxation paid (11 600) (7 927) (7 532)
Cash flow from (1 412) (3 044) (8 512)
investing activities
Cash flow from (22 690) (16 477) (18 537)
financing activities
Proceeds from issue of - - 3 670
shares
Dividends paid (11 555) - -
Own shares acquired by (2 779) - -
subsidiary
Own shares sold by - - 2 516
subsidiary
Loans repaid (8 356) (16 477) (24 723)
(Decrease)/increase in (38 403) (28 687) 13 785
cash and cash
equivalents
Foreign exchange 9 (592) (3 354)
movements in cash
balances
Cash and cash 68 036 57 605 57 605
equivalents at
beginning of the period
Cash and cash 29 642 28 326 68 036
equivalents at end of
the period
Commentary
General Review
The six months to January 2011 was a difficult period for the group and
particularly for SecureData Africa. Group EBITDA reduced to R15,4 million
(2010: R24,2 million) on revenues that dipped to R199,0 million (2010: R220,2
million) reflecting an EBITDA margin of 7,8% (2010: 11,0%). 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 by reducing the
selling unit cost of products sold in South Africa which are foreign currency
denominated.
Services revenues, the bulk of which are monthly billed managed services,
remained strong and accounted for a greater share of revenue (27%), than any
other technology or product. Revenue generated outside of South Africa climbed
to 44% from 37% in the prior year, and annuity revenue remained solid at 42%.
The calculation of earnings per share ("EPS") and headline earnings per share
("HEPS") incorporate the following items:
- a R4,9 million (2010: R6,0 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 R253 000 (2010: R6,0 million loss) foreign exchange gain 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; and
- a R112 000 (2010: R0,75 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 January 2011 these losses were unrealised.
Although the contracts will be crystallised during the course of 2011, these
unrealised losses could be recognised as profits, should the Rand exchange
rate weaken sufficiently at the time the contracts are recognised.
Together these non-operational and unrealised non-cash items reduced EPS and
HEPS by 1,5 cents per share. Adjusted EPS, which ignores these items but
includes cash expenses such as interest, reflects 2,6 cents per share (2010:
4,8 cents per share).
As reported in the 2010 annual report the company paid a dividend of 5 cents
per share on 22 November 2010 for a total cash outlay including STC of R12,8
million. The STC payable reduced the EPS, HEPS and Adjusted EPS by 0,5 cents
per share.
During the reporting period the group repurchased 2 870 277 shares in the
market at a cost of R2,8 million. This brings the total number of shares held
in treasury to 16 975 000.
The statement of financial position remained comfortable at end January 2011
with R29,6 million in cash and cash equivalents, after the dividend payment
and share-buy-back, and total borrowing of R56,6 million. In comparison with
the six months ended 31 January 2010 inventory and debtors days remained flat
around R4 million and 79 days respectively. Management continues to place
particular emphasis on effective working capital management.
Operational Review
SDH operates subsidiaries in three major groupings: SecureData Africa,
SecureData Europe (previously MIS-CDS) and SensePost.
SecureData Africa
Six months to Six months to 12 months to
31 January 31 January 31 July
2011 2010 % 2010
R`000 R`000 Growth R`000
Revenue 115 295 131 868 (12,6) 268 350
EBITDA 6 970 16 322 (57,3) 37 969
EBITDA margin (%) 6,0 12,4 (51,2) 14,1
SecureData Africa markets and distributes best of class IRM products in South
Africa and across the rest of the continent.
Revenue declined almost 13% with the concomitant decline in EBITDA and EBITDA
margin. In particular the Public Sector and Financial Services business units
underperformed as government departments delayed transactions and financial
institutions cut back on expenditure for new security projects. There is
current evidence that the Financial Services unit will return to normal in the
near future but the timing of Public Sector recovery remains uncertain.
In the year to come SecureData Africa will continue to focus on improving
existing operations as well as continued organic expansion into the rest of
Africa.
SecureData Europe
Six months to Six months to 12 months to
31 January 31 January 31 July
2011 2010 % 2010
R`000 R`000 Growth R`000
Revenue 72 809 78 561 (7,3) 168 780
EBITDA 5 828 5 539 5,2 14 351
EBITDA margin (%) 8,0 7,1 13,5 8,5
Six months to Six months to 12 months to
31 January 31 January 31 July
2011 2010 % 2010
GBP`000 GBP`000 Growth GBP`000
Revenue 6 503 6 285 3,5 14 006
EBITDA 525 443 18,4 1 191
During the period MIS CDS changed its name to SecureData Europe. The name
change was well received by all stakeholders. We believe this will strengthen
the group brand amongst customers and suppliers. SecureData Europe remains one
of the largest information security solution providers in the United Kingdom.
In sterling SecureData Europe posted a creditable 3,5% increase in revenue
with a strong 18% improvement in EBITDA and a firming of the first half EBITDA
margin to 8,0%. This strong performance was achieved by increasing the managed
services portion of the product mix and a strong focus on customer retention.
The Sterling improvement is not reflected in the Rand results of the company
due to the strengthening of the Rand.
Management is confident that the company will continue to show improving
margin and earnings performance in the coming period.
SensePost
Six months to Six months to 12 months to
31 January 31 January 31 July
2011 2010 % 2010
R`000 R`000 Growth R`000
Revenue 12 155 9 779 24,3 23 281
EBITDA 2 634 2 351 12,1 6 357
EBITDA margin (%) 21,7 24,0 (9,9) 27,3
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 internationally.
SensePost boosted revenue to R12,2 million and EBITDA to R2,6 million with a
slightly reduced EBITDA margin of 21,7% reflecting the specialist, high value
nature of the company`s service offering. Approximately a quarter of SensePost
revenues were generated outside of South Africa and we continue to invest in
the UK operations.
The table below reconciles the divisional results back to the consolidated
group results.
Six months to Six months to 12 months to
31 January 2011 31 January 2010 31 July 2010
Revenue EBITDA Revenue EBITDA Revenue EBITDA
R`000 R`000 R`000 R`000 R`000 R`000
SecureData 115 295 6 970 131 868 16 322 268 350 37 969
Africa
SecureData 72 809 5 828 78 561 5 539 168 780 14 351
Europe
SensePost 12 155 2 634 9 779 2 351 23 281 6 357
Consolidation (1 301) - - - (1 458) (1 507)
entries
Group results 198 958 15 432 220 208 24 212 458 953 57 170
Strategic Review
Historically the second half of the year has proven to be stronger than the
first half for the group. Despite current difficulties in SecureData Africa
the group remains a significant player in the information risk management
market. The group`s operations are cash generative and continue to reduce the
debt obligations incurred in acquisitions three years ago. Working capital
management remains a key focus area.
Basis of Preparation
These condensed interim 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
JSE Limited. The accounting policies applied in the preparation of these
condensed interim financial statements conform to the requirements of
International Financial Reporting Standards, and are consistent with those
applied in the prior year. These interim financial statements have not been
audited or reviewed by the group`s auditors.
Subsequent Events
The directors are not aware of any material matter or circumstance arising
since the end of the interim period and up to the date of this report.
Directorate
There has been no change to the board of directors during the period under
review.
For and on behalf of the board.
PR Pretorius DTK Brazier
Chairman Chief Executive Officer
17 March 2011
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 (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)
Sponsor:
Merchantec Capital
www.securedataholdings.com
Date: 17/03/2011 09:00:01 Produced by the JSE SENS Department.
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