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SNG
SNG
Synergy Holdings Limited - Abridged Audited Consolidated Financial Results
For The 12 Months Ended 28 February 2006
Synergy Holdings Limited
Incorporated in the Republic of South Africa
Registration number: 1995/006315/06
Share code: SNG & ISIN: ZAE000017760
("Synergy" or "the Company" or "the Group")
- Abridged audited consolidated financial results for the 12 months ended
28 February 2006;
- Pro forma financial effects of the acquisition of SDT Financial Software
Solutions (Pty) Ltd; and
- Withdrawal of cautionary
ABRIDGED AUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE 12 MONTHS ENDED
28 FEBRUARY 2006
Balance Sheet
28-Feb-06 28-Feb-05
(Audited) (Audited)
Rand Rand
Balance Sheet
ASSETS
Non Current Assets 181,042 1,779,710
Fixed Assets - 1,592,547
Investments 181,042 187,163
Current Assets 4,413,008 5,100,583
Non-current assets held 1,677,000 -
for sale
Inventories - 10,030
Accounts Receivable 365,766 1,912,494
Loans receivable - 775,500
Taxation - 30,394
Cash and cash 2,370,242 2,372,165
equivalents
Total Assets 4,594,050 6,880,293
EQUITY AND LIABILITIES
Capital and Reserves 4,192,136 4,921,143
Issued Capital 3,593,074 3,593,074
Accumulated Profit 599,062 1,328,069
Non-current liabilities 118,832 165,458
Long Term Liabilities - 165,458
Deferred tax 118,832 -
Current Liabilities 283,082 1,793,692
Accounts Payable 283,082 1,667,974
Current Portion of Long- - 125,718
term Liabilities
Total Equity and 4,594,050 6,880,293
Liabilities
Net asset value per 7.70 9.04
share (cents)
Net tangible asset value 7.70 9.04
per share (cents)
Income Statement
12 Months 12 Months
Ended Ended
28-Feb-06 28-Feb-05
(Audited) (Audited)
Rand Rand
Gross Revenue 10,587,018 19,157,743
Cost of Sales (2,376,980) (4,351,994)
Gross Profit 8,210,038 14,805,749
Other Income 1,451,569 430,939
Operating Costs (10,262,609) (14,995,170)
Operating Profit (601,002) 241,518
Investment Income (26,841) 142,618
Finance Costs (26,318) (98,593)
Taxation (128,528) (85,862)
Net Profit/ (Loss) for (729,007) 199,681
Year
Reconciliation of
Headline Earnings
Net Profit/ (Loss) for (729,007) 199,681
Year
Adjusted For:
Profit on asset disposal (632,040) -
Fair value adjustment (819,530) (17,363)
Headline Earnings (2,180,577) 182,318
Weighted average no of 54,409,900 54,409,900
shares in issue
Earnings per share (1.34) 0.37
(cents)
Headline Earnings per (4.01) 0.34
share (cents)
Cash Flow Statement
Net Cash from Operating (1,783,955) 235,827
Activities
Net Cash from Investing 638,160 (336,276)
Activities
Net Cash from Financing - (986,324)
Activities
Net Decrease in Cash (1,145,795) (1,086,773)
Cash at the beginning of 2,000,837 3,458,938
the year
Cash at the end of the 855,042 2,372,165
year
Statement of Changes in
Equity
Opening Balance 4,921,143 4,881,689
Net profit/(loss) for (729,007) 199,681
year
Dividends paid - (160,227)
Closing Balance 4,192,136 4,921,143
Commentary
Financial and operational comment
Shareholders are referred to the
announcements dated 3 August 2005, 11
November 2005 and 30 December 2005
detailing the disposal of the
Company"s only operating subsidiary
and properties, as well as a change of
control, which occurred during the
period under review. Shareholders are
also referred to the announcement
dated 2 May 2006 detailing the
proposed post year-end reverse-
takeover acquisition of SDT Financial
Software Solutions (Pty) Ltd ("SDT").
Accordingly, shareholders are advised
to be circumspect when making direct
comparisons with historic financial
results.
Synergy, through its wholly-owned
subsidiary, Prime Support (Pty)
Limited ("Prime Support"), focused on
providing Accpac ERP Software
solutions around software sales,
implementation, customisation and
associated networking support.
However, Prime Support was sold during
the financial year and was only
consolidated in the group income
statement up to the effective date of
the selling transaction. The land and
buildings were revalued to R1.68
million and transferred to non-current
assets held for sale. This left the
company as a cash shell at the end of
the 2006 financial year awaiting the
registration of the transfer of the
buildings.
The financial results of operations
for the year ended 28 February 2006
indicate a decline in gross revenue of
45%, which was mainly due to the
disposal of Prime Support. Operating
costs only responded with a lag, which
resulted in a loss after taxation of
R0.73 million. This translated into
an attributable loss of 1.3 cents per
share (28 February 2005: earnings of
0.4 cents) and a headline loss of 4.0
cents per share (2005: earnings of 0.3
cents) for the period ended 28
February 2006.
Subsequent events
On 2 May 2006, the terms and
conditions of the agreement between
Synergy and the SDT vendors, in terms
of which Synergy extended an offer to
the shareholders of SDT for the
acquisition of all their SDT shares,
to be settled by the consideration
shares, were announced. Upon
shareholder and regulatory approval of
the transaction, Synergy will acquire,
with effect from midnight between 1
March 2006 and 2 March 2006, the
entire authorised and issued share
capital in SDT from the SDT vendors
for a consideration amount of R50
million to be settled by the issue of
25 million consolidated Synergy shares
at 200 cps, after a 1-for-10 share
consolidation.
Simultaneously with the implementation
of the acquisition, the company"s name
will be changed to SilverBridge
Holdings Limited, new appointments
made to its board of directors and its
listing transferred to the Alternative
Exchange ("AltX"), subject to approval
by the JSE Limited. The vendors are
in advanced negotiations with a BEE
group to acquire 25% of the issued
share capital of the company from the
SDT vendors following the AltX
transfer.
These actions will reconstitute the
company as a black empowered
specialist software holding company,
with SDT as an operating subsidiary.
SDT focuses on the provision of
proprietary financial services
administration software solutions and
related services to the insurance
industry. The core of SilverBridge"s
corporate strategy following the
acquisition will be to build a black
empowered group of niche business
application software and related
service businesses operating on a
decentralised basis, through an
acquisitive growth strategy. The
board is confident that the prospects
of the company will be significantly
enhanced by the successful
implementation of the transaction.
In terms of the transaction, the pre-
consolidated ordinary share capital of
the company will be restructured into
new consolidated ordinary shares by
way of a 1-for-10 consolidation, a par
value reduction, the issue of the
consideration shares and an increase
in the authorised share capital of the
company. This will have the effect of
adjusting the share capital of the
company to consist of 200 000 000
authorised consolidated ordinary
shares with a nominal value of 1 cps
and 30 247 285 issued consolidated
ordinary shares with a nominal value
of 1 cps after implementation of the
transaction. Shareholders are
referred to the relevant paragraph in
this announcement for the pro forma
financial effects of the transaction.
The acquisition is subject to the
fulfilment of the normal conditions
precedent applicable to a transaction
of this nature, which conditions are
indivisible and include the following:
* approval of the ordinary and special
resolutions necessary to implement the
transactions and change of name by the
requisite majority of Synergy"s
shareholders; and
* approval by the requisite regulatory
authorities, including the JSE and the
Securities Regulation Panel ("SRP"),
to the extent required.
The first submission of the circular
to shareholders has been made to the
JSE.
Accounting policies
The financial statements have been
prepared in accordance with
International Financial Reporting
Standards for the first time. The
financial statements have been
prepared under the historical cost
convention and the accounting policies
are consistent with those of the
previous year except as modified by
International Financial Reporting
Standards for the year ending 28
February 2006. The only adjustment to
the financial statements by applying
IFRS is the transfer of land and
buildings to non-current assets held
for sale as required by IFRS5 and the
revaluation adjustment of R819 530
that is shown accordingly in the
income statement.
Auditor"s opinion
Synergy"s external auditors, Van
Sitterts Chartered Accountants, have
audited these results. Their
unqualified audit opinion is available
for inspection at Synergy"s registered
office.
Dividends
No dividends were recommended or
declared for the interim period.
PRO FORMA FINANCIAL EFFECTS OF THE
ACQUISITION OF SDT
The table below summarises the pro
forma effects of the acquisition of
SDT and related matters (per the
announcement of 2 May 2006) on the
published audited AFS of Synergy for
the 12 months ended 28 February 2006,
using the audited AFS of SDT for the
same 12-month period. The pro forma
net asset value figures illustrate the
possible financial effects if the
transaction had been effected on 28
February 2006, whereas the pro forma
earnings figures illustrate the
possible financial effects if the
transaction had been undertaken on 1
March 2005. The pro forma information
is the responsibility of the
directors. Due to their nature, the
pro forma financial effects may not
give a fair reflection of the
consolidated Synergy after the
transaction.
Note Before the Pro forma %
transaction after the change
(1) transaction
Net asset value per 77.1 (2) 49.4 -36%
share (cents)
Net tangible asset 24.8 (2) 17.9 -28%
value per share
(cents)
Earnings per share (13.4) (3,4) 9.9 na
(cents)
Headline earnings per (40.1) (3,4) 5.1 na
share (cents)
Closing and weighted (5) 5 441 (6) 30 247 +456%
average number of
consolidated shares
(`000)
Notes:
(1) Based on Synergy"s audited balance sheet and income statement
for the 12 months ended February 2006, adjusted for the equivalent
number of consolidated shares.
(2) Incorporating both Synergy"s and SDT"s February 2006 audited
balance sheets, Synergy"s share capital restructure (consolidation
and par value reduction) and the issue of the SDT consideration
shares. The value of SDT"s net assets being acquired is R4.1
million.
(3) Reflecting both Synergy"s and SDT"s audited income statements
for the 12 months ending February 2006.
(4) The SDT audited income statement for the 12 months ended
February 2006 incorporated the effect of an STC charge related to
the payment of a special dividend to the SDT vendors. If the STC
charge is adjusted to reflect the company"s stated dividend policy
of two times cover, a normalised historic earnings per share for
SDT of 16.6 cents per share is calculated (using the number of
consolidated shares in issue after the transaction and excluding
the audited "before the transaction" Synergy losses).
(5) All per share calculations are based on the number of
consolidated shares in issue.
(6) Illustrating the effect of the number of consideration shares
to be issued in terms of the transaction.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
In light of the publication of the pro
forma financial effects of the SDT
acquisition given above, the
cautionary announcement released on
SENS on 2 May 2006 is hereby
withdrawn.
1 June 2006
Pretoria
On behalf of the board
F du Toit, A Regenass, DL Smollan, JS
Swanepoel, RN Williams
Sponsor
Sasfin Capital
(a division of Sasfin Bank Limited)
Date: 01/06/2006 02:47:59 PM Produced by the JSE SENS Department
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