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Unaudited Condensed Consolidated Results for the six months ended 31 August 2023 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")
SHORT-FORM UNAUDITED CONDENSED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED
31 AUGUST 2023 AND CASH DIVIDEND DECLARATION
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 Aug 23 31 Aug 22 28 Feb 23
Change R'000 R'000 R'000
Highlights from Statement
of Comprehensive Income
Turnover 42% 49,137 34,715 75,581
Profit before
other income and expenses 22% 23,091 18,973 39,809
Profit after tax 27% 11,946 9,389 21,872
Earnings per share (cents) 27% 7.7 6.0 14.0
Highlights from Statement of
Financial Position
Total assets 21% 78,324 64,995 76,171
Cash and cash equivalents -11% 29,992 33,736 31,971
Equity 5% 57,280 54,466 57,814
Total liabilities 100% 21,044 10,531 18,357
Dividends and distribution
Ordinary dividend per share
declared for the period (cents) 27% 7.7 6.0 14.0
Ordinary dividend per share
Paid during the period (cents) 29% 8.0 6.2 12.2
Special dividend per share
Paid during the period (cents) -100% - 10.0 10.0
Net asset value per share
at end of period (cents) 5% 36.7 34.9 37.1
Headline earnings per
share (cents)* 27% 7.7 6.0 14.0
Diluted headline earnings per
share (cents)* 27% 7.7 6.0 14.0
* There have been no reconciling items that would result in a change to the
Headline earnings per share and the Diluted headline earnings per share.
Operational Review
I am pleased to present our results for the six months ended 31 August 2023
("the current reporting period"), which continue to be underpinned by a high
proportion of recurring revenue, a robust balance sheet and strong cash flows.
Despite the challenging trading conditions in which we operate, together with
the continued pressure on the local economy, overall performance remains
satisfactory.
Turnover increased by 42% during the current reporting period to R49.1 million
compared to R34.7 million in the previous corresponding reporting period ("the
prior reporting period"), of which 89% is subscription derived and includes a
healthy mix of products, subscriptions and our Managed Security Service
offerings that feature MSS Pulse, our internally developed security
infrastructure management and monitoring platform. The high proportion of
subscription derived turnover in the current reporting period is indicative of
the trend in terms of which customers are showing a preference for subscribing
to consumption-based security solutions which offer a heightened level of
flexibility and scalability that is difficult to achieve in the traditional
procurement model where companies would purchase hardware and software assets
complemented with an array of value-added services offered by the local reseller
community. This trend is likely to continue for the foreseeable future and we
anticipate maintaining a strong proportion of subscription derived turnover in
our revenue mix.
Profit before other income and expenses increased by 22% during the current
reporting period to R23.1 million, representing a gross margin of 47% compared
to 55% in the prior reporting period. This reduction in gross margin is largely
due to the recognition of a couple of low margin 'product sales' during the
current reporting period that excluded any higher margin services.
Operating expenditure increased by 12% to R14.1 million compared to R12.6
million in the prior reporting period, which increase is largely attributed to
recruitment, additional headcount and payroll related expenses.
Our share of profits from DataProof, our equity-accounted investment, increased
by a pleasing 25% to R4.4 million from R3.5 million in the prior reporting
period, with notable successes coming from their cybersecurity business unit.
While their records management business unit has been struggling to maintain
momentum of late, in part due to a few critical system failures and staffing
challenges, which are in the process of being addressed, they are certainly
building a formidable business and reputation around their cybersecurity service
offerings, notably those related to their 24/7 SOC incident and event
monitoring.
Total comprehensive income attributable to equity shareholders for the current
reporting period increased to R11.9 million from R9.4 million in the prior
reporting period, representing a pleasing 27% increase in headline and earnings
per share to 7.7 cents, from 6.0 cents in the prior reporting period.
Management has taken note of the higher trade receivable and trade payable
balances recorded at the close of the current reporting period, but are not
overly concerned with these high levels as they are largely a factor of customer
deal and supplier settlement timing and product mix structuring, as opposed to
any fundamental change in cash management practices of the business.
Cash and cash equivalents decreased by 11% to R30.0 million in the current
reporting period, from R33.7 million in the prior reporting period, this after
the final dividend of R12.5 million that was paid to shareholders during the
current reporting period. The reason for the decrease is largely attributable
to the higher trade receivables, as well as not having received an interim
dividend from DataProof during the current reporting period, as was the case in
the prior reporting period. DataProof are currently preserving their cash
reserves while considering several capital allocation options available to them
at this time.
Dividend Declaration
I am pleased to announce that the board of directors of ISA ("the board") has
declared an interim dividend to shareholders for the six months ended 31 August
2023 of 7.7 cents per share, which will be subject to the dividend tax
legislation.
The salient dates will be as follows:
Declaration date Friday, 10 November 2023
Last day to trade Tuesday, 5 December 2023
Shares trade ex-dividend Wednesday, 6 December 2023
Record date Friday, 8 December 2023
Payment date Monday, 11 December 2023
Share certificates may not be dematerialised or rematerialised between
Wednesday, 6 December 2023 and Friday, 8 December 2023, 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 1.54 cents per share.
- The net ordinary dividend payable to shareholders who are not exempt from
DT is therefore 6.16 cents per share, while a gross ordinary dividend
of 7.7 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.
SHORT-FORM ANNOUNCEMENT
This short-form announcement is the responsibility of the directors of the
Company. It contains only a summary of the information in the full announcement
("Full Announcement") and 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 Full Announcement is available at:
https://senspdf.jse.co.za/documents/2023/jse/isse/isa/interim23.pdf
and is also published on the Company's website at
https://www.isa.co.za/sens/SENS – 20231110-01.pdf
Both the short-form announcement and the Full Announcement are also available
for inspection at the registered offices of ISA and the Designated Adviser,
Merchantec Capital, during business hours, and copies 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
SPECIAL THANKS
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, as well as to all stakeholders, customers and vendors for their support.
For and on behalf of the board,
Clifford Katz
Chief Executive Officer
Johannesburg
10 November 2023
Directors: CS Katz (Chief Executive Officer), PJG Green (Chief Technical
Officer), P Mogoboya (Financial Director), AJ Naidoo#, DC Seaton*, N
Maphothi*, O Seku*(Chairperson)
# Non-executive
* Independent non-executive
Designated Adviser: Merchantec Capital
www.isaholdings.co.za
Date: 10-11-2023 03:46:00
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