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SDH
SDH
SDH - SecureData Holdings Limited - Reviewed Condensed Interim Consolidated
Financial Results for the six months ended 31 January 2012 and renewal of
cautionary announcement
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 Condensed Interim Consolidated Financial Results
for the six months ended 31 January 2012 and renewal of cautionary announcement
Condensed Consolidated Statement of Comprehensive Income
(for the six months ended 31 January 2012)
Reviewed six Unaudited six Audited twelve
months ended months ended months ended
31 January 2012 31 January 2011 31 July 2011
R`000 R`000 R`000
Revenue 235 713 198 958 406 558
Earnings before 12 239 15 432 17 563
interest, taxation,
depreciation and
amortisation (EBITDA)
and other financial
items
Depreciation and (6 130) (6 339) (12 791)
amortisation
- Depreciation (1 271) (1 486) (3 139)
- Amortisation (4 859) (4 853) (9 652)
Profit from operations 6 109 9 093 4 772
Finance income 120 281 548
Finance costs 6 071 (3 299) (10 161)
- Interest paid (2 992) (3 552) (7 197)
- Foreign exchange 9 063 253 (2 964)
gains/(losses) on loan
to subsidiary
Other financial items 2 062 (112) (90)
Profit/(Loss) before 14 362 5 963 (4 931)
taxation
Taxation (5 403) (3 834) 912
- Normal taxation (5 403) (2 602) 2 143
- Secondary Taxation on - (1 232) (1 231)
Companies
Profit/(Loss) for the 8 959 2 129 (4 019)
period
Attributable to:
- owners of the parent 8 834 2 478 (3 923)
- minority interest 125 (349) (96)
Profit/(Loss) for the 8 959 2 129 (4 019)
period
Profit/(Loss) for the 8 959 2 129 (4 019)
period
Foreign exchange 7 796 582 (2 537)
conversion movements
Total comprehensive 16 755 2 711 (6 556)
income/(loss) for the
period
Attributable to:
- owners of the parent 15 390 3 000 (6 053)
- minority interest 1 365 (289) (503)
Total comprehensive 16 755 2 711 (6 556)
income/(loss) for the
period
Earnings/(Loss) per 3,9 1,1 (1,7)
share (cents)
Diluted earnings/(loss) 3,9 1,1 (1,7)
per share (cents)
Weighted average
numbers of shares on
which:
- earnings per share is 228 395 230 063 229 900
based (`000)
- diluted earnings per 228 395 230 063 229 900
share is based (`000)
- number of ordinary 246 320 246 320 246 320
shares in issue (`000)
Reconciliation between
earnings and headline
earnings:
Profit/(Loss) for the 8 834 2 478 (3 923)
period attributable to
ordinary shareholders
(Profit)/Loss on (25) - (11)
disposal of assets
Headline earnings 8 809 2 478 (3 934)
Headline 3,9 1,1 (1,7)
earnings/(loss) per
share (cents)
Reconciliation between
earnings and adjusted
earnings:
- Profit/(Loss) for the 8 834 2 478 (3 923)
period attributable to
ordinary shareholders
- Amortisation - after 3 567 3 494 6 949
taxation
- Unrealised losses on (1 485) 81 65
derivatives - after
taxation
- Foreign exchange (6 525) (181) 2 134
losses on group loans -
after taxation
Adjusted earnings 4 391 5 872 5 225
Adjusted earnings per 1,9 2,6 2,3
share (cents)
Condensed Consolidated Statement of Financial Position
(at 31 January 2012)
Reviewed at Unaudited at Audited at
31 January 2012 31 January 2011 31 July 2011
R`000 R`000 R`000
ASSETS
Non-current assets 213 802 216 437 208 467
Property, plant and 6 420 6 889 6 016
equipment
Goodwill 135 713 130 109 126 562
Intangible assets 37 544 44 879 38 640
Deferred tax asset 34 125 34 560 37 249
Current assets 187 650 153 589 172 147
Inventories 16 026 4 042 6 088
Trade and other 146 295 119 806 128 484
receivables
Taxation pre-paid 724 99 736
Cash and cash 24 605 29 642 36 839
equivalents
Total assets 401 452 370 026 380 614
EQUITY AND LIABILITIES
Equity 185 554 179 935 168 773
Share capital 246 246 246
Share premium 118 900 118 900 118 900
Treasury share reserve (23 336) (22 478) (23 336)
Share-based payment 3 348 4 358 3 322
equity reserve
Foreign currency (18 005) (21 909) (24 561)
translation reserve
Retained earnings 92 448 90 016 83 614
- Equity attributable 173 601 169 133 158 185
to owners of the parent
- Minority interest 11 953 10 802 10 588
Non-current liabilities 13 428 48 635 13 202
Loans and borrowings 3 116 36 581 2 691
Deferred tax liability 10 312 12 054 10 511
Current liabilities 202 470 141 456 198 639
Trade and other 139 956 113 842 139 108
payables
Derivative financial 2 310 4 394 4 372
instruments
Taxation 2 211 3 188 1 264
Bank overdrafts 24 220 - 9 679
Loans and borrowings 33 773 20 032 44 216
Total equity and 401 452 370 026 380 614
liabilities
Net asset value per 70,5 73,7 64,2
share (cents)
Net asset value per 76,0 78,2 69,3
share net of treasury
shares (cents)
Condensed Consolidated Statement of Changes in Equity
(for the six months ended 31 January 2012)
Reviewed six Unaudited six Audited twelve
months ended months ended months ended
31 January 2012 31 January 2011 31 July 2011
R`000 R`000 R`000
Share capital 246 246 246
Share premium 118 900 118 900 118 900
Treasury share reserve (23 336) (22 478) (23 336)
Balance at beginning of (23 336) (19 699) (19 699)
the period
Own shares acquired by - (2 779) (3 637)
subsidiary
Share-based payment 3 348 4 358 3 322
equity reserve
Balance at beginning of 3 322 3 957 3 957
the period
Share-based payment 26 401 (635)
transactions during the
period
Foreign currency (18 005) (21 909) (24 561)
translation reserve
Balance at beginning of (24 561) (22 431) (22 431)
the period
Foreign exchange 6 556 522 (2 130)
movements during the
period
Retained earnings 92 448 90 016 83 614
Balance at beginning of 83 614 99 093 99 093
the period
Profit/(Loss) for the 8 834 2 478 (3 923)
period
Dividends paid - (11 555) (11 556)
Equity attributable to 173 601 169 133 158 185
owners of the parent
Minority interest 11 953 10 802 10 588
Balance at beginning of 10 588 11 091 11 091
the period
Recognised income for 125 (349) (96)
the period
Foreign exchange 1 240 60 (407)
movements
Total capital and 185 554 179 935 168 773
reserves
Condensed Consolidated Statement of Cash Flow
(for the six months ended 31 January 2012)
Reviewed six Unaudited six Audited twelve
months ended months ended months ended
31 January 2012 31 January 2011 31 July 2011
R`000 R`000 R`000
Cash flows from (18 800) (14 301) (3 641)
operating activities
Profit/(Loss) before 14 362 5 963 (4 931)
taxation
Adjustments not (2 584) 10 038 21 977
affecting the flow of
funds
Operating income before 11 778 16 001 17 046
working capital changes
Decrease in working (27 706) (15 431) (443)
capital
Cash (utilised (15 928) 570 16 603
in)/generated from
operations
(2 872) (14 871) (20 244)
- Finance income 120 281 548
- Finance costs (2 992) (3 552) (7 197)
- Taxation paid - (11 600) (13 595)
Cash flows from (1 440) (1 412) (2 380)
investing activities
Cash flows from (10 332) (22 690) (33 724)
financing activities
Dividends paid - (11 556) (11 556)
Own share acquired by - (2 778) (3 637)
subsidiary
Loans repaid (10 332) (8 356) (18 531)
Decrease in cash (30 572) (38 403) (39 745)
equivalents
Foreign exchange 3 797 9 (1 131)
movements in cash
balances
Cash and cash 27 160 68 036 68 036
equivalents at
beginning of the period
Cash and cash 385 29 642 27 160
equivalents at end of
the period
Commentary
General review
The period under review delivered a set of mixed results from the operations
within the group. SecureData Africa posted a significant loss during the second
half of the previous year. The corrective measures put in place to restore
profitability in the division started to filter through with a substantial
reduction in the loss from this division for this period compared to the prior
six-month period ended 31 July 2011. SensePost performed in line with
expectations and SecureData Europe performed better than expected, despite the
continued economic uncertainty in the markets in which both entities operate.
Overall, the group did not deliver on expectation.
The board made a decision to turn all its focus and attention on its African
operations and has commenced with a process to dispose of SecureData Europe.
This will enable the group to settle all debt and provide a cash injection to
grow the African operations.
Group EBITDA reduced to R12,2 million (2011: R15,4 million) on revenues that
increased to R235,7 million (2011: R199,0 million) reflecting an EBITDA margin
of 5,2% (2011: 7,8%). The increase in revenues was driven by sales growth in
SecureData Europe and the weakening of the Rand, especially against Sterling.
Services revenues, the bulk of which are managed services, remained strong and
accounted for a greater share of revenue (26%), than any other technology or
product. Revenue generated outside of South Africa increased to 58%.
The calculation of earnings per share and headline earnings per share
incorporate the following items:
- a R4,9 million (2011: R4,9 million) charge for amortisation of intangible
assets created by the group`s prior acquisitions. This charge has no effect
on group cash flow;
- a R9,1 million (2011: R253 000) foreign exchange gain on inter-group loans
reflecting the difference in the Rand to Sterling exchange rate between the
previous and current reporting closing dates. This expense has no effect on
group cash flow; and
- the net movement in derivative financial instruments of R2,1 million profit
(2011: R112 000 loss). This includes unrealised foreign exchange forward
contracts, entered into to settle outstanding creditor payments by the
group at a time of great Rand volatility.
Together these non-operational and unrealised non-cash items increased earnings
per share and headline earnings per share by 2,0 cents. Adjusted earnings per
share, which ignores these items but includes cash expenses such as interest,
reflects 1,9 cents per share (2011: 2,6 cents per share). Earnings per share
reflects 3,9 cents (2011: 1,1 cents).
The combination of lower profits and problems with debtor collections in
SecureData Africa caused the group to remain in breach at 31 January 2012 of the
financial covenants put in place by the long-term finance provider. The group
has made arrangements with the finance provider to settle the entire outstanding
balance on the long-term loan from the expected proceeds on sale of SecureData
Europe.
The net cash position of the group reduced during the period, mainly as a result
of an increase in inventory levels to R16,0 million, increase in trade and other
receivables to R146,3 million and trade and other payable remaining constant at
R140,0 million. The inventory levels increased on the back of inventory ordered
for specific customer projects that will be delivered to customers after the
period-end. Management continues to place particular emphasis on effective
working capital management, especially debtor collections in SecureData Africa.
Operational review
SecureData operates subsidiaries in three major groupings: SecureData Africa,
SecureData Europe and SensePost.
SecureData Africa
Six months to Six months to 12 months to
31 January 31 January 31 July
2012 2011 Growth 2011
R`000 R`000 % R`000
Revenue 104 582 115 295 (9,3) 210 309
EBITDA (1 482) 8 421 (117,6) (1 087)
EBITDA margin (%) (1,4) 7,3 (119,4) (0,5)
SecureData Africa markets and distributes best of class IRM products in South
Africa and across the rest of the continent.
As previously mentioned, SecureData Africa experienced a substantial decrease in
the EBITDA losses within this division. The division posted an EBITDA loss of
R1,5 million for the period compared to an EBITDA loss of R9,5 million during
the second half of the 2011 financial year. The fall in revenue experienced in
the prior year stabilised and the corrective measures implemented by the board
are starting to bear fruit. 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.
SecureData Europe
Six months to Six months to 12 months to
31 January 31 January 31 July
2012 2011 Growth 2011
R`000 R`000 % R`000
Revenue 116 492 72 809 60,0 179 611
EBITDA 11 949 7 042 69,7 21 141
EBITDA margin (%) 10,3 9,7 6,0 11,8
Six months to Six months to 12 months to
31 January 31 January 31 July
2012 2011 Growth 2011
GBP`000 GBP`000 % GBP`000
Revenue 9 387 6 503 44,3 16 181
EBITDA 963 634 51, 9 1 905
SecureData Europe remains one of the largest and independent managed information
security solution providers in the United Kingdom.
In sterling, SecureData Europe posted a credible 44,3% increase in revenue with
a strong 51,9% improvement in EBITDA withthe EBITDA margin at 10,3%. The effect
of this strong performance is increased in Rand due to the weakening of the Rand
against Sterling.
Management is confident that the company will continue to show sustainable
margin and earnings performance in the coming period.
SensePost
Six months to Six months to 12 months to
31 January 31 January 31 July
2012 2011 Growth 2011
R`000 R`000 % R`000
Revenue 15 289 12 155 25,8 26 136
EBITDA 4 001 3 183 25,7 7 707
EBITDA margin (%) 26,2 26,2 - 29,5
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 kept the EBITDA margin constant at 26,2% while increasing revenues by
25,8% to R15,3 million for the period. This reflects 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
31 January 2012
Revenue EBITDA
R`000 R`000
SecureData Africa 104 582 (1 482)
SecureData Europe 116 492 11 949
SensePost 15 289 4 001
Head office costs - (2 229)
Consolidation entries (650) -
Group results 235 713 12 239
Six months to
31 January 2011
Revenue EBITDA
R`000 R`000
SecureData Africa 115 295 8 421
SecureData Europe 72 809 7 042
SensePost 12 155 3 183
Head office costs - (3 214)
Consolidation entries (1 301) -
Group results 198 958 15 432
12 months to
31 July 2011
Revenue EBITDA
R`000 R`000
SecureData Africa 210 309 (1 087)
SecureData Europe 179 611 21 141
SensePost 26 136 7 707
Head office costs - (10 198)
Consolidation entries (9 498) -
Group results 406 558 17 563
Strategic review
Despite current difficulties in SecureData Africa, the group remains a
significant player in the information risk management market. The group
continues to reduce the debt obligations incurred in acquisitions undertaken
three years ago. Working capital management remains a key focus area.
Renewal of cautionary announcement
The board has commenced with a process to dispose of SecureData Europe and is
examining proposals to return excess cash to shareholders. The securities of the
group are currently trading under cautionary and shareholders are advised to
continue to exercise caution when dealing in SecureData`s securities, until a
further announcement is made.
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, 2008 (Act 71 of
2008), as amended, and with the JSE Listings Requirements. The accounting
policies applied in the preparation of these reviewed condensed interim
consolidated financial statements conform with the requirements of International
Financial Reporting Standards, and are consistent with those applied in the
prior year. The results have been prepared on the going concern basis.
Independent review
Grant Thornton, SecureData`s independent auditor, has reviewed the condensed
interim consolidated financial statements contained in this report and have
expressed an unqualified opinion on the interim financial statements. Their
review report is available for inspection at SecureData`s registered office.
Subsequent events
The directors are not aware of any material matter or circumstance arising since
the end of the financial period under review to the date of this report.
Directorate
Tsediso Gcabashe and Jake Archer were appointed as directors on 9 January 2012.
The group was shocked to learn of the untimely passing of Tsediso Gcabashe on 24
February 2012.
For and on behalf of the board
PR Pretorius JG du Toit
Chairman Interim Chief Executive Officer and Financial
Director
19 April 2012
Directors:
PR Pretorius+ (Chairman)
JG du Toit (Financial Director and Interim Chief Executive Officer)
A Aitken+
N Mthembu+
P Sneddon*
VJ Archer*
+Non-executive
*Independent non-executive
Registered office:
SecureData Holdings Limited
Nicol Main Office Park, 4 Bruton Road, Bryanston, 2021
(PO Box 4673, Rivonia, 2128)
Company secretary:
Merchantec Proprietary Limited
Transfer secretaries:
Computershare Investor Services Proprietary Limited
Registration number 2004/003647/07
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Sponsor:
Merchantec Proprietary Limited
www.securedataholdings.com
Date: 19/04/2012 17:43:00 Produced by the JSE SENS Department.
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