FINANCIAL HIGHLIGHTS
for the six month period ended 31 August 2009
GROUP PROFILE
SilverBridge offers the providers of financial services integrated, flexible and cost-effective business administration solutions. The Group currently operates through two subsidiaries: SDT, specialising in life insurance and employment benefit administration software and Ones & Zeros ("ONZ"), offering consulting services to financial services institutions.
The Group's strategy is to expand into other pillars of financial services and over the short to medium term, specifically into short term insurance administration and loans administration software.
The Group's vision is to enable financial services providers to offer a portfolio of products to the man in the street at an affordable price.
The Group measures performance across four operating segments; being implementation, support, rental and consulting as well as research and development.
The support and rental revenue segments are considered annuity revenue segments.
The Group produced excellent results in line with our expectations. The results are supported by good performance in both operating companies. ONZ contributed 29% to revenue and 14% to profit from their consulting activities in the banking environment. SDT successfully secured projects extended from the previous financial year and with its annuity revenue base delivered on expectations. The Group remains cost conscious and will only increase capacity if supported by contracts.
CONDENSED UNAUDITED GROUP STATEMENT OF COMPREHENSIVE INCOME
for the 6 month period ended 31 August 2009
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Aug 31 Aug Percentage 28 Feb
2009 2008 Change 2009
R'000 R'000 % R'000
Revenue 51 040 29 769 71% 70 568
Other income 513 1 057 807
Other expenses (43 134) (27 815) (62 097)
Finance income 702 531 1 001
Finance expense (169) - (288)
Profit before taxation 8 952 3 542 9 991
Taxation (2 761) (998) (2 595)
Net profit for the period 6 191 2 544 143% 7 396
Other comprehensive income - - - -
Total comprehensive income 6 191 2 544 143% 7 396
Net profit and total comprehensive income attributable to:
Equity holders of the parent 5 151 2 118 6 200
Non-controlling interest 1 040 426 1 196
6 191 2 544 7 396
Number of shares in issue (‘000) 34 232 33 588 33 587
Weighted average number of shares in issue (‘000) 33 773 32 927 33 150
Earnings per share (cents) 15.25 6.43 137% 18.70
Diluted earnings per share (cents) 15.02 6.37 136% 16.40
Headline earnings per share (cents) 15.02 6.43 134% 18.78
Diluted headline earnings per share (cents) 14.79 6.37 132% 16.47
Reconciliation of headline and diluted headline earnings
Basic and diluted earnings 5 151 2 118 6 200
Adjusted for (gain)/loss on disposal of equipment (79) - 26
Headline and diluted headline earnings 5 072 2118 6 226
CONDENSED UNAUDITED GROUP STATEMENT OF FINANCIAL POSITION
as at 31 August 2009
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Aug 31 Aug 28 Feb
2009 2008 2009
R'000 R'000 R'000
ASSETS
Non-current assets
Equipment 2 325 5 347 1 643
Intangible assets 20 459 20 696 22 713
Investments 38 - -
Investment in associate 101 139 101
Deferred tax assets 4 465 2 689 2 844
Total non-current assets 27 388 28 871 27 301
Current assets
Income tax receivable 6 148 3 168 4 512
Revenue recognised not yet invoiced 6 266 253 1 221
Trade and other receivables 16 096 24 266 16 896
Cash and cash equivalents 14 219 5 831 16 098
Total current assets 42 729 33 518 38 727
Total assets 70 117 62 389 66 028
EQUITY AND LIABILITIES
Capital and reserves
Issued capital 342 336 336
Share premium 9 502 8 359 8 608
Acquisition shares 1 362 - 2 724
Treasury shares (197) (197) (197)
Retained earnings 33 396 24 587 28 242
Total equity attributable to equity holders of the parent 44 405 33 085 39 713
Non-controlling interest 2 302 7 723 3 531
Total equity 46 707 40 808 43 244
Non-current liabilities
Shareholders loan - 9 -
Total non-current liabilities - 9 -
Current liabilities
Deferred revenue 2 778 1 650 1 595
Trade and other payables and provisions 20 632 19 922 21 189
Total current liabilities 23 410 21 572 22 784
Total equity and liabilities 70 117 62 389 66 028
CONDENSED UNAUDITED GROUP STATEMENT OF CHANGES IN EQUITY
for the six month period ended 31 August 2009
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Aug 31 Aug 28 Feb
2009 2008 2009
R'000 R'000 R'000
Opening balance 43 244 32 968 32 968
Profit for the period attributable to equity holders of the parent 5 151 2 118 6 200
Non-controlling interest 1 040 426 1 196
Total comprehensive income for the period 6 191 2 544 7 396
Non-controlling interest in retained earnings on acquisition of subsidiary - 7 723 2 335
Allotment of shares (458) 2 476 2 724
Share Capital 6 10 10
Share Premium 898 2 466 2 714
Acquisition shares (1 362) - -
Acquisition of ONZ - - 2 724
Minority interest in dividend payment by subsidiary (2 270) - -
Capital distribution of share premium - (4 903) (4 903)
Closing Balance 46 707 40 808 43 244
CONDENSED UNAUDITED GROUP STATEMENT OF CASH FLOWS
for the six month period ended 31 August 2009
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Aug 31 Aug 28 Feb
2009 2008 2009
R'000 R'000 R'000
Cash generated from operations 6 942 1 646 14 376
Interest received 702 531 1 001
Interest paid - - (60)
Minority interest in dividends paid by subsidiary (2 270) (165) (1 348)
Taxation paid (4 727) (4 736) (4 675)
STC paid (463) - (275)
Net cash inflow/(outflow) from operating activities 184 (2 724) 9 019
Cash flows from investing activities
Plant and equipment acquired to expand operations (1 076) (558) (737)
Proceeds from sale of equipment 12 - 98
Acquisition of subsidiary - (3 230) (3 229)
Cash received on acquisition of subsidiary - 3 344 3 344
Increase in investment (38) (48) -
Capitalisation of development costs - - (1 435)
Net cash outflow from investing activities (1 102) (492) (1 959)
Cash flows from financing activities
Movement in loans (9) 9 -
Capital distribution from share premium (952) (3 593) (3 593)
Net cash outflow from financing activities (961) (3 584) (3 593)
Net (decrease)/increase in cash and cash equivalents (1 879) (6 800) 3 467
Cash and cash equivalents at the beginning of the period 16 098 12 631 12 631
Cash and cash equivalents at the end of the period 14 219 5 831 16 098
GROUP UNAUDITED SEGMENT REPORTS
for the 6 month period ended 31 August 2009
PRIMARY: BUSINESS SEGMENT REPORT
Implemen-
tation Support
Total services services
R'000 R'000 R'000
Unaudited 6 months ended 31 August 2009
Segment revenue 51 040 17 860 7 375
Segment cost (27 065) (9 146) (3 787)
Full cost (27 476) (9 146) (3 787)
Capitalised 411 - -
Segment result 23 975 8 714 3 588
Segment result margin 47% 49% 49%
Unallocated expenses (15 556)
Operating profit 8 419
Finance income 702
Finance expense (169)
Income tax expense (2 761)
Profit for the period 6 191
Unallocated cost
Sales 4 028
Administration 3 421
Infrastructure 2 762
Marketing 406
Amortisation 1 121
Corporate costs 3 818
15 556
Research Software
and Consulting rental
development income & other
R'000 R'000 R'000
Unaudited 6 months ended 31 August 2009
Segment revenue - 14 665 11 140
Segment cost (2 889) (11 243) -
Full cost (3 300) (11 243) -
Capitalised 411 - -
Segment result (2 889) 3 422 11 140
Segment result margin 23% 100%
Unallocated expenses
Operating profit
Finance income
Finance expense
Income tax expense
Profit for the period
Unallocated cost
Sales
Administration
Infrastructure
Marketing
Amortisation
Corporate costs
GROUP UNAUDITED SEGMENT REPORTS
for the 6 month period ended 31 August 2009
PRIMARY: BUSINESS SEGMENT REPORT
Implemen-
tation Support
Total services services
R'000 R'000 R'000
Audited 12 months ended 28 February 2009
Segment revenue 70 568 19 977 11 003
Segment cost (39 285) (10 130) (7 228)
Full cost (40 720) (10 130) (7 228)
Capitalised 1 435 - -
Segment result 31 283 9 847 3 775
Segment result margin 44% 49% 34%
Unallocated expenses (22 015)
Operating profit 9 268
Finance income 1 001
Finance expense (288)
Share of profit in associate 10
Income tax expense (2 595)
Profit for the period 7 396
Unallocated cost
Sales 5 755
Administration 3 714
Infrastructure 5 308
Marketing 676
Amortisation 1 647
Corporate costs 4 915
22 015
Research Software
and Consulting rental
development income & other
R'000 R'000 R'000
Audited 12 months ended 28 February 2009
Segment revenue - 17 522 22 066
Segment cost (9 410) (12 517) -
Full cost (10 845) (12 517) -
Capitalised 1 435 - -
Segment result (9 410) 5 005 22 066
Segment result margin 29% 100%
Unallocated expenses
Operating profit
Finance income
Finance expense
Share of profit in associate
Income tax expense
Profit for the period
Unallocated cost
Sales
Administration
Infrastructure
Marketing
Amortisation
Corporate costs
GROUP UNAUDITED SEGMENT REPORTS
for the 6 month period ended 31 August 2009
PRIMARY: BUSINESS SEGMENT REPORT
Implemen-
tation Support
Total services services
R'000 R'000 R'000
Unaudited 6 months ended 31 August 2008
Segment revenue 29 769 10 938 4 158
Segment cost (18 213) (10 196) (2 452)
Full cost (18 213) (10 196) (2 452)
Capitalised - - -
Segment result 11 556 742 1 706
Segment result margin 39% 7% 41%
Unallocated expenses (8 545)
Operating profit 3 011
Finance income 531
Finance expense -
Share of profit in associate -
Income tax expense (998)
Profit for the period 2 544
Unallocated cost
Sales 2 010
Administration 1 892
Infrastructure 1 823
Marketing 308
Amortisation 198
Corporate costs 2 314
8 545
Research Software
and Consulting rental
development income & other
R'000 R'000 R'000
Unaudited 6 months ended 31 August 2008
Segment revenue - 4 112 10 561
Segment cost (2 600) (2 965) -
Full cost (2 600) (2 965) -
Capitalised - - -
Segment result (2 600) 1 147 10 561
Segment result margin 28% 100%
Unallocated expenses
Operating profit
Finance income
Finance expense
Share of profit in associate
Income tax expense
Profit for the period
Unallocated cost
Sales
Administration
Infrastructure
Marketing
Amortisation
Corporate costs
COMMENTARY
1. ACCOUNTING POLICIES
1.1 BASIS OF PRESENTATION
The interim financial statements have been prepared in accordance with IAS34, Interim financial reporting and in compliance with the Listing Requirements of the JSE Limited.
The interim financial statements for the six months ended 31 August 2009 incorporate the condensed unaudited Group financial statements and are prepared in accordance with the Group's accounting policies which are in accordance with International Financial Reporting Standards (IFRS). The accounting policies applied are consistent with those of the previous financial year.
1.2. Deferred revenue and revenue recognised not yet invoiced
Deferred revenue and revenue recognised not yet invoiced refers to the timing difference between recognition of revenue and invoicing to the client based on the contracts. The Group was in a net asset position, increasing working capital. The asset will be converted to accounts receivable in the short term.
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Aug 31 Aug 28 Feb
2009 2008 2009
R'000 R'000 R'000
Current asset
Revenue recognised not yet invoiced 6 266 253 1 221
Current liability
Deferred revenue 2 778 1 650 1 595
Net asset (liability) 3 488 (1 397) (374)
1.3. Revenue per geographical segments
Other
South African
Total Africa countries*
R'000 R'000 R'000
Unaudited 6 months ended 31 August 2009 51 040 32 736 18 304
Audited 12 months ended 29 February 2009 70 568 41 632 28 936
Unaudited 6 months ended 31 August 2008 29 769 23 628 6 141
* Other African countries include Kenya, Malawi, Nigeria, Ghana, Namibia, Lesotho, Swaziland and Zimbabwe.
2. CORPORATE ACTIVITY
2.1 Acquisitions
The Group's growth strategy is based on organic growth and acquisitive growth supporting our expansion into the other pillars of financial services. The Group continues to pursue suitable acquisition opportunities.
2.2 Cautionary Announcement
Shareholders are advised that the Group has entered into discussions regarding a potential acquisition, which, if successfully concluded, may have a material impact on the share price of SilverBridge shares.
Accordingly shareholders are advised to exercise caution when dealing in SilverBridge shares until a further announcement is made.
2.3 Directorate
Mrs. Freda du Toit resigned from the SilverBridge and the SDT boards with effect from 1 August 2009. She remains a significant shareholder in SilverBridge.
2.4 Dividends and Capital distribution
No dividend or capital distribution was declared for the interim period under review. The policy of the Group is to only consider dividend payments or capital distributions at the end of the financial year.
3. FINANCIAL RESULTS AND PERFORMANCE
Annuity revenue provides a sustainable pillar of strength for the Group. The annuity segment of support services and software rental achieved a combined revenue growth of 26% year on year. ONZ contributed for a full 6 months to the period under review and generated a stable income stream from consulting. The Group's performance was supported by a recovery in implementation revenue in SDT from contracts postponed in the previous period. Commentary on each segment follows below:
Implementation revenue increased by 63% year on year to R17.9 million at a segment margin of 49%. This segment relates to the implementation and customisation of software at client sites. SDT has positioned itself in the market as a serious competitor especially to foreign companies as market sentiment shifts towards local skills. Its activities this period have been mainly focused in South Africa but Africa remains an important growth market. The segment results vindicate the decision made in the previous financial year to sustain capacity in order to retain skills and experience.
The consulting segment added through the acquisition of ONZ contributed for the full 6 months period under review. ONZ's performance was well supported by contracts in place. The current economic climate is proving challenging for consulting firms as financial services providers are reducing discretionary spend. The segment contributed R14.7 million in revenue and R3.4 million in profit at a segment margin of 23%.
The annuity based support segment performed excellently with revenue growth with 77% year on year. This is mainly as a result of an improved focus on revenue generation in the first half of the year. Support revenue typically increases with growth in the client base of SDT. The Group also experienced an increase in support requests and special projects in the existing client base which resulted in improved margins.
The annuity based software rental segment performed steadily in a difficult market. Revenue grew 5% year on year to R11.1 million. Growth was primarily driven by an increase in policies administered clients. The Group expects improved growth in rental income as current implementations go live.
SilverBridge continues to reinvest in its products and processes through research and development. SDT has made good progress with the planned product enhancements for Exergy. The Group continuously reviews this roadmap to ensure alignment with client needs, market trends, legislative requirements and value-creating functionality.
Although the Group's cash reserves remains strong on R14 million, debtors collection continues to be an important focus.
4. GROUP OUTLOOK
The Group expects that pressure in the local and international financial services industry will continue to present opportunities. The pressure on financial institutions to reduce costs creates a demand for niche software applications that enables lower administration costs for the client. At the same time the evolution of financial services in Africa still presents an exciting opportunity for SilverBridge.
The board of directors remains positive in its outlook for SilverBridge. The Group's fundamentals are sound and are supported by products and services that are well positioned to capitalise on market conditions. The Group's annuity revenue provides a foundation for future growth.
The Group will continue to explore new business opportunities and prospects for expansion. We follow an income led approach where we only increase capacity and related costs once there is reasonable certainty that new contracts will be concluded. This will, however, not be done to the detriment of the delivery capability and sustainability of the Group. Client service and retention will remain key focus areas.
On behalf of the Board
Jaco Swanepoel Andile Sangqu
Chief Executive Officer Chairman
Pretoria
27 October 2009
CORPORATE INFORMATION
Directors of SilverBridge
Andile Sangqu (Chairman)*,
Jaco Swanepoel (CEO),
Jeremy de Villiers**,Nthabiseng Mokone*,
Tyrrel Murray*, David Smollan*, Sandra Duetsch, Jaco Maritz, Rowan Williams***,
Sphelele Sangweni***.
(All the directors are South African citizens).
* Non-executive
**Independent non-executive
***Alternate directors
DIRECTORS OF ONZ
Jaco Swanepoel (Chairman)*,
Sandra Duetsch (CEO), Amanda Newell,
Jaco Maritz*, Leon du Rand*
(All the directors are South African citizens).
* Non-executive
DIRECTORS OF SDT
Jaco Swanepoel (Chairman), Gawie Erasmus (CEO), Jaco Maritz, Johan Reyneke*, Leon du Rand*
(All the directors are South African citizens).
* Non-executive
SILVERBRIDGE REGISTERED OFFICES
First Floor, Castle View North
495 Prieska Street, Erasmuskloof,
Pretoria, 0048
(PO Box 11799, Erasmuskloof, 0048)
COMPANY SECRETARY
Fusion Corporate Secretarial Services (Pty) Ltd,
represented by Melinda van den Berg
GROUP AUDITORS
KPMG Incorporated
(Registration number: 4530188665)
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
(Registration number: 2004/003647/07)
70 Marshall Street, Johannesburg, 2001
(PO Box 61051Marshalltown, 2107)
DESIGNATED ADVISERS
Sasfin Capital (a division of Sasfin Bank Limited)
(Registration number: 1951/002280/06)
GROUP COMPANIES
SDT Financial Software Solutions (Pty) Ltd
(Registration number 1995/005860/07)
Ones `n Zeros Professional Services (SA) (Pty) Ltd
(Registration number 2001/023270/07)
Pretoria:
First Floor,
Castle View North
495 Prieska Street
Erasmuskloof, 0048
Tel: +27 12 360 0100
Fax: +27 12 360 0110
Johannesburg:
Block E, Ground floor
Sandhurst Office Park
Corner Katherine & Rivonia, Sandton
Tel: +27 11 783 3749
Fax: +27 11 783 3622
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