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Short-Form Announcement: Abridged Audited Results For The Year Ended 28 February 2021 And Cash Dividend Declaration
ISA Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1998/009608/06)
Share code: ISA
ISIN: ZAE000067344
(“ISA” or “the company” or “the group”)
SHORT-FORM ANNOUNCEMENT: ABRIDGED SUMMARISED CONSOLIDATED AUDITED RESULTS FOR
THE YEAR ENDED 28 FEBRUARY 2021 AND CASH DIVIDEND DECLARATION.
Audited Audited
year year
ended ended
28 Feb 21 29 Feb 20
Change R'000 R'000
Highlights from Statement
of Comprehensive Income
Revenue -33% 67,316 101,219
Profit before
Other income and expenses -17% 38,505 46,248
Profit after tax -45% 12,946 23,425
Earnings and diluted earnings
Per share (cents) -45% 8.3 15.0
Highlights from Statement of
Financial Position
Total assets -8% 74,471 80,610
Cash and cash equivalents 7% 49,261 45,929
Equity 9% 62,773 57,627
Total liabilities -53% 10,628 22,802
Highlights from Statement of
Changes in Equity
Dividends paid during the year -87% 7,800 61 152
Net asset value per share
at end of period (cents) 9% 40.2 36.9
Headline earnings per
share (cents) -45% 8.3 15.0
Diluted headline earnings per
share (cents) -45% 8.3 15.0
Notes to the statements:
RECONCILIATION OF HEADLINE EARNINGS
Earnings as per statement of comprehensive income 12 946 23 425
Profit on sale of property, plant and equipment (72) -
Headline earnings 12 874 23 425
Headline earnings per share (cents) 8.3 15.0
Operational Review
I am pleased to present our results for the full year ended 28 February 2021
("the current reporting period"), which continue to be underpinned by a high
portion of recurring revenue, a robust balance sheet and strong cash flows.
Despite having to navigate the business through one of the most difficult years
in our history, I am particularly pleased with our performance, immeasurably
proud of our team’s resolve and humbled by the tremendous support that we have
received through this challenging time from our staff, customers, suppliers,
vendor partners and shareholders.
Financial
Due largely to the fallout that we had with one of our key vendor partners a
few months before entering our first COVID-19 lockdown, turnover decreased by
33% during the current reporting period to R67.3 million compared to the
R101.2 million achieved in the previous corresponding reporting period (“the
prior reporting period”), as we had to abandon most of our sales pipeline that
included their technologies, which accounted for as much as 90% of our turnover
in the financial year prior to the vendor relationship failure. Despite the
range of COVID-19 lockdowns and pandemic containment restrictions that followed,
as well as the economic meltdown that ensued, we remain encouraged by the
support that we have received from our customers for the more advanced and
competitive ‘next generation’ security technologies that we onboarded to help
protect them from the sophisticated and ever-changing IT security threat
landscape.
Profit before other income and expenses (“gross profit”) during the current
reporting period declined by 17% to R38.5 million representing a gross margin
of 57% compared to the prior reporting period’s gross margin of 46%. This
seemingly dramatic increase in gross margin is due to the strong concentration
of and continued growth in our Managed Security Service and Managed Security
Solution offerings, which feature our internally developed security
infrastructure management and monitoring framework platform, MSS Pulse.
Foreign exchange fluctuation and volatility continues to be a major factor in
our business for two main reasons. Firstly, when the Rand price of imported
goods increases rapidly due to exchange rate fluctuation or volatility, customer
budgets are negatively affected and seldom have the flexibility needed to absorb
the impact of the change, which then adds pressure on anticipated deal-flows
and margin. Secondly, as 77% of the R49.3 million cash reserves are held in
Dollars and Pounds, the revaluation of this foreign currency through the
statement of comprehensive income can have a material effect on our results, as
was the case during the current reporting period where we recorded a loss from
the revaluation of our foreign cash balances of R1.1 million compared to a
profit of R2.5 million achieved during the prior reporting period, representing
a negative change of R3.6 million between the current and previous reporting
periods.
Finance income reduced to R696 000 during the current reporting period compared
to R3.9 million during the prior reporting period, largely as a result of our
business partner no longer having to pay interest on the loan that they settled
during the prior reporting period, as well as the reduction in Rands held and
the low rate of interest earned by our foreign cash reserves.
Most welcomed was the substantial increase in our share of profits of
R2.4 million realised from our equity-accounted investment (“DataProof”) during
this reporting period, compared to the R259 000 recognised in the prior
reporting period. DataProof continues to execute their growth strategy and has
performed well in both their records management and cyber security divisions
during this reporting period.
Total comprehensive income decreased to R12.9 million during the current
reporting period, from R23.4 million, which represents a decline of 45% in
headline and earnings per share to 8.3 cents from 15.0 cents achieved in the
prior reporting period.
Dividend Declaration
During the current reporting period an interim dividend of R7.8 million for the
half year ended 31 August 2020 was declared and paid to shareholders,
representing a cash distribution of 5.0 cents per share. With the realisation
of earnings of 8.3 cents per share in the current reporting period, we are now
pleased to declare a final ordinary dividend to shareholders for the year ended
28 February 2021 of 3.3 cents per share, which will be subject to the dividend
tax legislation.
The board of directors of ISA (“board”) has reasonably concluded that the
company will satisfy the solvency and liquidity requirements immediately
after distribution thereof and for the next 12 months.
The salient dates will be as follows:
Declaration date Friday, 28 May 2021
Last day to trade Tuesday, 20 July 2021
Shares trade ex-dividend Wednesday, 21 July 2021
Record date Friday, 23 July 2021
Payment date Monday, 26 July 2021
Share certificates may not be dematerialised or rematerialised between
Wednesday, 21 July 2021 and Friday, 23 July 2021, both days inclusive.
In terms of the dividend tax legislation, effective 1 April 2012, the
following additional information is disclosed:
- This is a dividend as defined in the Income Tax Act, 1962, and is payable
from income reserves.
- The South African dividend tax (DT) rate is 20%.
- The DT to be withheld by the company in respect of the ordinary dividend
amounts to 0.66 cents per share.
- The net ordinary dividend payable to shareholders who are not exempt from
DT is therefore 2.64 cents per share, while a gross ordinary dividend
of 3.3 cents per share is payable to those shareholders who are exempt
from DT.
- The issued share capital of the company at the declaration date comprises
170 592 593 ordinary shares.
- The company’s income tax reference number is 9340/150/71/4.
Market and prospects
While our journey to reaching and exceeding our former turnover and
profitability levels is likely to be somewhat tougher and longer than initially
anticipated, I am particularly encouraged by the depth and complexity of
security solutions making their way into our growing sales pipeline, especially
noting a sense of excitement within our customer base and prospects of our
recently onboarded ‘next generation’ security technologies and evolving Managed
Security Services that now include more advanced threat detection and incident
response type of service deliverables.
I continue to be optimistic about our long-term prospects as the key drivers of
the information security market remain robust. With the continued evolution and
persistence of threats and attack vectors against corporate information and IT
resources, together with the increased regulatory and legislative compliance
requirements, stakeholders continue to elevate the importance of IT security
within their organisations. By leveraging this positive sentiment towards the
information and infrastructure security market, as well as our positioning as
a thought leader in this niche market segment, we are likely to continue
delivering above average tangible returns over time.
Conclusion
On behalf of the board, I would like to take this opportunity to thank the ISA
team for their continued dedication and hard work. My appreciation is also
extended to my colleagues on the board for their wise counsel and valuable
input. Finally, I thank all stakeholders, customers and vendors for their
support, and I look forward to meeting shareholders at the Annual General
Meeting to be held on Thursday, 1 July 2021.
Integrated Annual Report
Shareholders are advised that the integrated annual report has been distributed
to shareholders and will be available on the company’s website at www.isa.co.za.
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of shareholders of ISA
(“Annual General Meeting”) will be held at 10:00 on Thursday, 1 July 2021
through electronic participation.
Shareholders who wish to participate electronically at the Annual General
Meeting are required to contact JSE Investor Services at
meetfax@jseinvestorservices.co.za; or alternatively contact JSE Investor
Services’ offices on +27 86 154 6572 as soon as possible, but in any event, for
administrative purposes only, by no later than 10:00 on Monday, 28 June 2021.
SHORT-FORM ANNOUNCEMENT
The content of this short-form announcement is the responsibility of the
directors of the company. The short-form announcement contains only a summary
of the information in the Abridged Summarised Consolidated Audited Results for
the year ended 28 February 2021 (“Full Announcement”) which is available at:
https://senspdf.jse.co.za/documents/2021/jse/isse/isa/ye21.pdf and is also
published on the company’s website at https://www.isa.co.za/sens/SENS-20210528-
01.pdf, and accordingly does not contain full or complete details. Any
investment decisions by investors or shareholders should be based on the
consideration of the Full Announcement.
The information in this short-form announcement has been extracted from the
Full Announcement, but the short-form announcement itself has not been reviewed
or audited by the company's auditors.
The abridged summarised consolidated Audited Results have been extracted from
the annual financial statements for the year ended 28 February 2021 which was
audited by Mazars, who expressed an unmodified audit opinion. The key audit
matters addressed in the auditor’s report relate to the going concern of the
group. A copy of their audit report and the group annual financial statements
are available for inspection at the company's registered office, Block 9
Pinewood Office Park, 33 Riley Road, Woodmead 2191 and on the company's website
at www.isa.co.za.
Due to the lockdown restrictions imposed as a result of the COVID-19 pandemic,
neither the short-form announcement nor the Full Announcement will be available
for inspection at the registered offices of ISA or the Designated Adviser,
Merchantec Capital, during business hours. However, copies thereof may be
obtained at no cost on request from the Company Secretary who is contactable on
+27 11 325 6363 or isa@acorim.co.za.
For and on behalf of the board,
Clifford Katz
Chief Executive Officer
Johannesburg
31 May 2021
Directors: CS Katz (Chief Executive Officer), PJG Green (Chief Technical
Officer), P Mogoboya (Financial Director), AJ Naidoo#, C. Pillay#, DC Seaton*,
N Maphothi*, O Seku*(Chairperson)
# Non-executive
* Independent non-executive
Designated Adviser: Merchantec Capital
www.isaholdings.co.za
Date: 31-05-2021 07:05:00
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