UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2016

Transcription

1 SILVERBRIDGE HOLDINGS LIMITED INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA (REGISTRATION NUMBER 1995/006315/06) SHARE CODE: SVB ISIN: ZAE ( SILVERBRIDGE OR THE GROUP OR THE COMPANY ) UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER GROUP PROFILE SilverBridge offers reliable solutions that support the operations of companies offering financial products and services. Our understanding of contract administration processes helps our clients to improve and simplify their business processes. We achieve this by implementing our system platforms and customising them to meet product and process needs. We have extended our services to include cloud hosted solutions. This is a result of experience gained over many years. Exergy is our flagship platform that enables core back office policy administration in the life assurance industry. The Exergy solution package can be customised to suit the needs of a life assurer s onpremise software requirements. We have extended our portfolio to include group scheme administration, pension fund administration as well as elements of medical and short-term insurance. This caters for clients wanting to offer a wider range of financial services offerings. We use a project approach to help our clients translate business objectives into IT requirements. We then implement sustainable solutions. Our software products and hosted services are rented to our customers on a usage basis.

2 UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER ended 31 December ended 31 December months ended Percentage change Notes R 000 R 000 R 000 % Revenue Other income Operating expenses (40 395) (34 657) (74 557) 17 Operating profit Finance income Finance expense - - (250) - Profit before taxation Taxation (1 982) (1 692) (3 064) 17 Profit and total comprehensive income for the period in issue ( 000) Weighted average number in issue ( 000) Diluted weighted average number of shares ( 000) Basic earnings per share (cents) Diluted earnings per share (cents)

3 UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 31 December 2015 Notes R 000 R 000 R 000 ASSETS Non-Current Assets Equipment Intangible assets Deferred tax assets Withholding tax rebates receivable Non-Current Assets Current Assets Withholding tax rebates receivables Income tax receivable Revenue recognised not yet invoiced Trade and other receivables Cash and cash equivalents Current Assets Assets EQUITY AND LIABILITIES Capital and Reserves Issued capital Share premium Treasury shares (11 948) (197) (197) Share based payment reserve Retained earnings Equity Non-Current Liabilities Deferred tax liability Non-Current Liabilities Current Liabilities Deferred revenue Income tax payable Trade and other payables Current Liabilities Liabilities Equity and Liabilities Net asset value per share (cents) Net tangible asset value per share (cents)

4 UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER Issued capital Share premium Treasury shares Share based payment reserve Retained earnings equity R'000 R'000 R'000 R'000 R'000 R'000 Balance at 1 July (197) comprehensive income for the period Profit or loss comprehensive income for the period Transactions with owners, recorded directly in equity Contributions by and distributions to owners Dividend paid (1 739) (1 739) Equity settled share based payment transactions with owners (1 739) (1 454) Balance at 31 December (197) comprehensive income for the period Profit or loss comprehensive income for the period Transactions with owners, recorded directly in equity Contributions by and

5 distributions to owners Equity settled share based payment transactions with owners Balance at 30 June (197) comprehensive income for the period Profit or loss comprehensive income for the period Transactions with owners, recorded directly in equity Contributions by and distributions to owners Dividend paid (note 2.1) (2 086) (2 086) Purchase of treasury shares by Employee Share Trust (note 3) - - (11 751) - - (11 751) Equity settled share based payment contributions by and distributions to owners - - (11 751) (8 750) transactions with owners Balance at 31 December (11 948)

6 UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 12 Ended ended 31 December 2015 months ended Notes R 000 R 000 R 000 Cash generated from operations Interest received Taxation paid (1 172) (797) (3 894) Net cash inflow from operating activities Cash flows from investing activities Equipment acquired to maintain operations (3 802) (117) (585) Proceeds from disposal of equipment Purchase of treasury shares 3 (11 751) - - Cash outflow from capitalisation of development (1 555) (909) (1 886) costs Net cash outflow from investing activities (17 043) (994) (2 448) Cash flows from financing activities Dividends paid to equity holders (2 086) (1 738) (1 738) Net cash outflow from financing activities (2 086) (1 738) (1 738) Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period (16 852)

7 UNAUDITED CONDENSED CONSOLIDATED INTERIM SEGMENT REPORTS FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER REPORTABLE SEGMENT REPORT As reported at the year ended June, there were changes made to our segment reporting. The current unaudited interim results for the 6 months ended are consistent with these changes. The unaudited comparative period (6 months to December 2015) already reflected these changes. No further changes to the segment report have been made in the current reporting period. The following is a reminder of the changes that were made and communicated for the year ended June : Connect support and Rubix support are now reported as one Support services segment. A new segment, Hosting and outsourcing services was established. Hosting and outsourcing Research & development Software rental & main- Implementation Support services services services tenance R 000 R 000 R 000 R 000 R 000 R 000 six months ended 31 December revenue Inter-group revenue (315) - (196) (119) - - Net revenue Direct segment cost (24 494) (2 731) (11 761) (1 981) (2 756) (5 265) Cost capitalised Segment gross profit (525) (3 710) Indirect segment cost (17 022) (1 417) (6 445) (2 172) (1 671) (5 317) Segment result (2 697) (9 027) Finance income 675 Finance expense - Income tax expense (1 982) Profit for the period 4 890

8 Hosting and outsourcing Software rental & main- Research & development Implementation services Support services services tenance R 000 R 000 R 000 R 000 R 000 R 000 six months ended 31 December 2015 revenue Inter-group revenue (1 006) - (711) (175) (120) - Net revenue Direct segment cost (18 991) (2 845) (9 032) (1 013) (3 158) (2 943) Cost capitalised Segment gross profit (1 013) (2 034) Indirect segment cost (16 487) (2 372) (7 265) (212) (3 260) (3 378) Segment result (371) 708 (1 225) (5 412) Finance income 634 Finance expense - Income tax expense (1 692) Profit for the period 4 019

9 Hosting and outsourcing Software rental & main- Research & development Implementation services Support services services tenance R 000 R 000 R 000 R 000 R 000 R months ending revenue Inter-group revenue (3 007) - (1 900) (867) (240) - Net revenue Direct segment cost (42 609) (5 775) (19 775) (3 562) (6 894) (6 603) Cost capitalised Segment gross profit (1 369) (4 718) Indirect segment cost (33 681) (4 568) (14 458) (558) (7 002) (7 095) Segment result (1 927) (11 813) Finance income Finance expense (250) Income tax expense (3 064) Profit for the period

10 ASSETS AND LIABILITIES The assets and liabilities of the Group are organised and managed at a corporate business support level. As the assets and liabilities contribute at a corporate level, it is not practical to determine a reasonable allocation of the assets and liabilities to the business segments. COMMENTARY 1. NOTES TO THE CONDENSED UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 1.1. BASIS OF PREPARATION The condensed unaudited consolidated interim financial statements are prepared in accordance with International Accounting Standard 34 ( IAS 34 ), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the Listings Requirements of JSE Limited ("the Listings Requirements") and the requirements of the Companies Act of South Africa (Act 71 of 2008) as amended ( the Companies Act ). The accounting policies applied in the preparation of these condensed unaudited consolidated interim financial statements, which are based on reasonable judgment and estimates, are in accordance with International Financial Reporting Standards ( IFRS ) and are consistent with those applied in the annual audited financial statements for the year ended. These condensed unaudited consolidated interim financial statements have been prepared by Petro Mostert CA(SA), Head of Finance and Shared Services, under the supervision of the Financial Director, Lee Kuyper CA(SA). The directors take full responsibility for the preparation of these condensed unaudited consolidated interim financial statements and the financial information has been correctly extracted from the underlying financial information. These interim results have not been audited or reviewed by the Group s auditors EARNINGS PER SHARE BASIC AND DILUTED EARNINGS PER ORDINARY SHARE Basic earnings per ordinary share is calculated by dividing the earnings for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.

11 months '000 '000 '000 Reconciliation of the weighted average number in issue Shares in issue at the beginning of the period Effect of treasury shares acquired on 1 March 2007 (106) (106) (106) Effect of treasury shares acquired on 30 Nov (979) - - Weighted average number in issue at the end of the period Earnings attributable to ordinary shareholders (R'000) Basic earnings per share (cents) Diluted earnings per ordinary share is calculated by dividing the diluted earnings for the period attributable to ordinary equity holders of the parent by the diluted weighted average number of ordinary shares outstanding during the period months '000 '000 '000 Reconciliation between weighted average number in issue and weighted average number of shares in issue used for diluted earnings per share Weighted average number in issue Diluted amount due to share options in issue Weighted average number in issue used for diluted earnings per share Earnings attributable to ordinary shareholders (R'000) Diluted earnings per share (cents)

12 HEADLINE AND DILUTED HEADLINE EARNINGS PER ORDINARY SHARE Headline earnings per ordinary share is calculated by dividing the headline earnings attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period months '000 '000 '000 Weighted average number in issue R 000 R 000 R 000 Reconciliation between basic earnings and headline earnings Basic earnings Adjusted for: Profit on disposal of equipment (47) (23) (17) Headline earnings (R'000) Headline earnings per share (cents) Diluted Headline earnings per ordinary share is calculated by dividing the headline earnings attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period months '000 '000 '000 Weighted average number in issue used for diluted earnings per share R 000 R 000 R 000 Diluted headline earnings (R'000) Diluted headline earnings per share (cents)

13 1.3. DEFERRED REVENUE AND REVENUE RECOGNISED BUT NOT YET INVOICED Deferred revenue and revenue recognised but not yet invoiced refers to the timing difference between recognition of revenue and invoicing to the client contracts. Ended R 000 ended 2015 R months ended R 000 Current asset Revenue recognised not yet invoiced Current liability Deferred revenue (1 078) (1 213) (398) Net asset/(liability) (191) TRADE AND OTHER PAYABLES Trade and other payables comprised of the following: R R months R 000 Trade payables Leave accrual Incentive accrual Other payables (accruals) REVENUE PER GEOGRAPHICAL REGION Other South Africa African countries* R 000 R 000 R Months ended 31 December Months ended 31 December Months ended 30 June * Other African countries include Angola, Botswana, Kenya, Malawi, Mauritius, Ghana, Namibia, Lesotho, Swaziland and Zimbabwe

14 1.6 NET ASSET AND TANGIBLE NET ASSET VALUE PER SHARE 31 December months Shares in issue at the beginning of the period Effect of treasury shares acquired on 1 March 2007 (106) (106) (106) Effect of treasury shares acquired on 30 Nov (5 875) - - Shares at the end of the period Net asset value per share (cents) Tangible asset value per share (cents) CORPORATE ACTIVITY 2.1 DIVIDENDS AND CAPITAL DISTRIBUTION No dividend was declared for the period under review. The directors declared and approved a final gross dividend of 6 cents on 14 September for the year ended from income reserves and the payment distributions were made during the period under review. 2.2 SUBSEQUENT EVENTS No events occurred subsequent to the period end that would require the interim financial statements to be adjusted. 2.3 CHANGES TO THE BOARD OF DIRECTORS Ms. Jocobeth Chikaonda has resigned as a non-executive director of the Company with effect 24 January Her resignation is in line with disposal of Kagiso Tiso Holdings shareholding in SilverBridge. 3. PURCHASE OF TREASURY SHARES The SilverBridge Employee Share Trust concluded an agreement with C Shell 448 Proprietary Limited for the purchase during the period under review. The SilverBridge Employee Share Trust purchased and paid for ordinary shares for the consideration of R11.7m on 30 November. Although these shares remain in issue, they are treated as treasury shares resulting in the total issued number of

15 shares of R34.8 million being reduced to R28.8 million when considered net of treasury shares. The purchase of the treasury shares has been disclosed accordingly in the Condensed Consolidated Interim Statement of Financial Position, Condensed Consolidated Interim Statement of Changes in Equity and Condensed Consolidated Interim statement of Cash Flows. The effect on the weighted number in issue and the resulting Earnings per Share has been disclosed in note FINANCIAL RESULTS AND PERFORMANCE We are pleased to report a continued improvement in our results. Net profit increased by 22% compared to the comparative period. Revenue was up 16%, driven by good growth in annuity Software rental. Careful management of indirect cost helped to increase operating profit by 22%. Headline earnings per share was up 25% to 14.4 cents from 11.5 cents in the comparative period. The cash position reduced to R10.1m from R27.0m at. This was mainly a result of the treasury share purchase, mentioned in note 3. Our client relationships remain healthy. We continued with efforts into higher value-added offerings for existing clients as well as further developing our new offerings in cloud-based hosting and managed services. We are pleased with the performance and that our efforts have translated into revenue growth. We remain focused on efforts to enable ongoing growth. SEGMENTAL REVIEW Implementation services This segment implements our solutions for clients and is project based. Although revenue declined by 7%, the segment posted a small profit versus a small loss in the comparative period. The revenue decline is a result of further improvement in delivery efficiencies. We are implementing projects faster and more efficiently to enable better growth in the support and software rental segments. We are happy with our implementation delivery model and continue to secure new contracts in the small to medium sized market in South Africa and the rest of Africa. SUPPORT SERVICES Support is contracted on a monthly basis and is annuity based. Revenue increased by 9%, helped by new offerings in data analytics.

16 The segment result decreased to a profit of R314k compared to a profit of R708k in the comparative period. The gross profit margin and segment result was impacted by the hiring of additional staff in this area to cater for the growth. We expect the margin to improve as new staff get up to speed. We continue to focus on additional higher value-added offerings in this segment. HOSTING AND OUTSOURCING SERVICES This segment provides a range of complimentary managed services to our clients. The services include cloud based hosting, outsourced technical services and full business process outsourcing. This is a relatively new initiative for the Group. It enables us to offer additional services to existing clients as well as make our offerings appeal to a wider range of potential clients. It also helps keep our offerings relevant with regard to technology trends. For the period, the segment generated revenue of R1.5 million with a loss of R2.7 million. We remain satisfied with the progress thus far and the opportunities that lie ahead. We envisage the segment becoming profitable as it achieves more scale. SOFTWARE RENTAL AND MAINTENANCE Software rental is annuity based. It depends on usage, increasing with the number of contracts or policies administered. Revenue was up 22%. New customers and complimentary products contributed to the growth. The segment made a profit of R17.2 million, compared to R11.4 million in the prior year. The overall margin increased to 80% from 64% in the comparative period. Our software and the growth of our annuity rental stream remain a core focus going forward. RESEARCH AND DEVELOPMENT ( R&D ) Our efforts have continued on developing new products that can generate future annuity revenue. Several new products have been launched and are contributing to revenue. We have also put effort into offerings for the new Hosting and outsourcing services segment. We continue with R&D efforts in order to keep our existing assets relevant in terms of technology and market trends. During the period, total direct costs were R5.3 million, of which R1.6 million was capitalised.

17 5. GROUP OUTLOOK Overall we remain positive about the outlook for the Group. We continue to build our core annuity streams and we are making progress with revenue growth. We are pleased to see that new initiatives are starting to pay off. In particular, the higher value-added offerings and the new cloud-based hosting and managed services. We remain optimistic that our efforts will help enable sustained growth. The financial services industry continues to adapt to meet its customers changing needs in an increasingly digital world. Financial services providers are driving change in their business. They are differentiating their products and services in order to remain relevant in a rapidly changing world. SilverBridge remains well positioned to meet these needs. It presents us with opportunities to create platforms that can help the industry to adapt and continues guiding our new product development initiatives. On behalf of the board of directors Robert Emslie Chairman Jaco Swanepoel Chief Executive Officer Pretoria 20 February 2017

18 CORPORATE INFORMATION SILVERBRIDGE HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration No. 1995/006315/06) JSE SHARE CODE: SVB ISIN CODE: ZAE ( SilverBridge or the Group ) DIRECTORS OF SILVERBRIDGE HOLDINGS Robert Emslie (Chairman)**, Jaco Swanepoel (CEO), Jeremy de Villiers **, Hasheel Govind *, Tyrrel Murray*, Lee Kuyper (Financial Director), Stuart Blyth. (All the directors are South African citizens). * Non-executive **Independent non-executive REGISTERED OFFICES Castle Walk Corporate Park, Block D Corner of Nossob & Swakop Street, Erasmuskloof, Pretoria, 0048 (PO Box 11799, Erasmuskloof, 0048) COMPANY SECRETARY Fusion Corporate Secretarial Services Proprietary Limited represented by Melinda Gous First Floor, The Greens Office Park Charles de Gaulle Avenue, Highveld Centurion, Gauteng (PO Box 68528, Highveld, 0169) LEGAL ADVISERS Gildenhuys Malatji Attorneys Inc. (Registration number: 1997/002114/21) GLMI House Harlequins Office Park, 164 Totius Street, Groenkloof (PO Box 619, Pretoria, 0001) GROUP AUDITORS: PricewaterhouseCoopers Incorporated (Registration number: 1998/012055/21) 2 Eglin Road, Sunninghill Johannesburg (Private Bag X36 Sunninghill, Johannesburg, 2157) TRANSFER SECRETARIES Computershare Investor Services Proprietary Limited (Registration number: 2004/003647/07) 70 Marshall Street, Johannesburg, (Call centre: )

19 (PO Box 61051, Marshalltown, 2107) DESIGNATED ADVISER PSG Capital (Registration number: 2006/015817/07) First Floor, Building 8, Inanda Greens Business Park, 54 Wierda Road West, Wierda Valley, Sandton, 2196 (PO Box , Benmore, 2010)