SILVERBRIDGE HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration NUMBER 1995/006315/06)
Share code: “SVB”
ISIN: ZAE000086229
Legal entity number (LEI): 3789001E59A77A6B9938
(“SilverBridge” or “the Group” OR “THE COMPANY”)
UNAUDITED abridged CONSOLIDATED INTERIM GROUP FINANCIAL STATEMENTS for the six month period ended 31 December 2019
GROUP PROFILE
SilverBridge offers solutions that support the operations of companies offering financial products and services. We have experience in this area for more than 20 years. Our understanding of financial services processes helps our clients improve and simplify their business. We achieve this by implementing our software and by providing services related to the software. Our offerings are also offered as cloud solutions.
Exergy is our flagship platform that enables core back office policy administration in the life assurance and pension fund industry. The Exergy solution can be customised to suit the needs of a customer. The solution also extends to offer group scheme administration, as well as elements of medical and short-term insurance. This caters for clients wanting to offer a wider range of financial services products on a single platform.
Our software products and hosted services are rented to our customers on a monthly basis.
| Unaudited abridged consolidated interim statement of comprehensive income | |||||
| for the six month period ended 31 December 2019 | |||||
| Unaudited | Unaudited | Audited | |||
| six months | six months | twelve months | |||
| ended | ended | ended | |||
| 31 December | 31 December | 30 June | Percentage | ||
| 2019 | 2018 | 2019 | change | ||
| Notes | R’000 | R’000 | R’000 | % | |
| Revenue from contracts with customers | 1.5 | 45 029 | 45 714 | 87 696 | (1) |
| Other income | 111 | 143 | 274 | (22) | |
| Operating expenses | (43 057) | (47 520) | (96 393) | (9) | |
| Results from operating activities | 2 083 | (1 663) | (8 423) | 225 | |
| Finance cost | (430) | (991) | – | 57 | |
| Finance income | 515 | 262 | 492 | 97 | |
| Profit/(Loss) before income tax | 2 168 | (2 392) | (7 931) | 191 | |
| Income tax | (623) | 560 | 392 | (211) | |
| Profit/(loss) and total comprehensive income for the period | 1 545 | (1 832) | (7 539) | 184 | |
| Earnings per share | |||||
| Number of shares in issue (‘000) | 1.2 | 34 634 | 34 781 | 34 781 | |
| Weighted average number of shares in issue (‘000) | 1.2 | 29 145 | 29 000 | 29 170 | |
| Diluted weighted average number of shares (‘000) | 1.2 | 29 206 | 29 632 | 29 170 | |
| Basic earnings per share (cents) | 1.2 | 5.30 | (6.32) | (25.85) | |
| Diluted earnings per share (cents) | 1.2 | 5.29 | (6.18) | (25.85) | |
| Unaudited abridged consolidated interim statement of financial position as at 31 December 2019 | |||||
|
|
Unaudited | Unaudited | Audited | ||
| as at | as at | as at | |||
| 31 December | 31 December | 30 June | |||
| 2019 | 2018 | 2019 | |||
| Notes | R’000 | R’000 | R’000 | ||
| ASSETS | |||||
| Non-current assets | |||||
| Property and equipment | 1 239 | 1 871 | 1 513 | ||
| Right-of-use property asset | 1.7 | 4 137 | – | – | |
| Intangible assets and goodwill | 19 737 | 20 524 | 19 874 | ||
| Deferred tax assets | 2 240 | 2 499 | 2 850 | ||
| Withholding tax rebates receivable | 1 958 | 512 | 1 952 | ||
| Total Non-current Assets | 29 311 | 25 406 | 26 189 | ||
| Current assets | |||||
| Withholding tax rebates receivables | – | 989 | 6 | ||
| Income tax receivable | 1 | 470 | 19 | ||
| Contract assets | 1.3 | 4 079 | 4 886 | 4 342 | |
| Trade and other receivables | 24 977 | 15 287 | 19 674 | ||
| Cash and cash equivalents | 3 795 | 14 460 | 7 044 | ||
| Total current assets | 32 852 | 36 092 | 31 085 | ||
| Total assets | 62 163 | 61 498 | 57 274 | ||
| EQUITY AND LIABILITIES | |||||
| Equity | |||||
| Issued capital | 346 | 348 | 348 | ||
| Share premium | 11 780 | 11 871 | 11 871 | ||
| Treasury shares | (8 755) | (9 840) | (9 010) | ||
| Share based payment reserve | 3 481 | 3 620 | 3 465 | ||
| Retained earnings | 42 065 | 46 490 | 40 520 | ||
| Total Equity | 48 917 | 52 489 | 47 194 | ||
| Non-current Liabilities | |||||
| Deferred tax liability | 3 061 | 2 745 | 3 061 | ||
| Lease liability | 1.7 | 1 664 | – | – | |
| Total Non-current Liabilities | 4 725 | 2 745 | 3 061 | ||
| Current Liabilities | |||||
| Contract liabilities | 1.3 | 1 071 | 1 075 | 1 162 | |
| Lease liability | 1.7 | 2 891 | – | – | |
| Income tax payable | – | – | 55 | ||
| Trade and other payables | 1.4 | 4 559 | 5 189 | 5 802 | |
| Total current liabilities | 8 521 | 6 264 | 7 019 | ||
| Total liabilities | 13 246 | 9 009 | 10 080 | ||
| Total equity and liabilities | 62 163 | 61 498 | 57 274 | ||
| Net asset value per share (cents) | 1.6 | 167.85 | 181.00 | 162.06 | |
| Net tangible asset value per share (cents) | 1.6 | 100.12 | 110.22 | 93.93 | |
| Unaudited abridged consolidated interim statement of changes in equity | |||||||
| for the six month period ended 31 December 2019 | |||||||
| Issued capital | Share premium | Treasury shares | Share based payment reserve | Retained earnings | Total equity | ||
| R’000 | R’000 | R’000 | R’000 | R’000 | R’000 | ||
| Balance at 30 June 2018 | 348 | 11 871 | (10 476) | 3 643 | 49 740 | 55 126 | |
| Impact of initial adoption of IFRS 9 (note 26) | (31) | (31) | |||||
| Restated opening balance at 1 Jul 2018 | 348 | 11 871 | (10 476) | 3 643 | 49 709 | 55 095 | |
| Total comprehensive income for the period | |||||||
| Profit or loss | – | – | – | – | (1 832) | (1 832) | |
| Total comprehensive income for the period | – | – | – | – | (1 832) | (1 832) | |
| Transactions with owners, recorded directly in equity | |||||||
| Dividend paid | – | – | – | – | (1 650) | (1 650) | |
| Share options exercised by employees | – | – | 260 | (459) | – | (199) | |
| Repayment of share ownership programme loans | – | – | 391 | – | – | 391 | |
| Equity settled share based payment | – | – | – | 421 | – | 421 | |
| Total contributions by and distributions to owners | – | – | 651 | (38) | (3 482) | (2 869) | |
| Balance at 31 December 2018 | 348 | 11 871 | (9 825) | 3 605 | 46 227 | 52 226 | |
| Total comprehensive income for the period | |||||||
| Profit or loss | – | – | – | – | (5 707) | (5 707) | |
| Total comprehensive income for the period | – | – | – | – | (5 707) | (5 707) | |
| Transactions with owners, recorded directly in equity | |||||||
| Shares awarded under the share ownership programme | – | – | 499 | – | – | 499 | |
| Repayment of share ownership programme loans | – | – | 316 | – | – | 316 | |
| Equity settled share based payment | – | – | – | (140) | – | (140) | |
| Total contributions by and distributions to owners | – | – | 815 | (140) | (5 707) | (5 032) | |
| Balance at 30 June 2019 | 348 | 11 871 | (9 010) | 3 465 | 40 520 | 47 194 | |
| Total comprehensive income for the period | |||||||
| Profit or loss | – | – | – | – | 1 545 | 1 545 | |
| Total comprehensive income for the period | – | – | – | – | 1 545 | 1 545 | |
| Transactions with owners, recorded directly in equity | |||||||
| Repayment of share ownership programme loans | – | – | 255 | – | – | 255 | |
| Shares repurchased and cancelled | (2) | (91) | (93) | ||||
| Equity settled share based payment | – | – | – | 16 | – | 16 | |
| Total contributions by and distributions to owners | (2) | (91) | 255 | 16 | 1 545 | 1 723 | |
| Balance at 31 December 2019 | 346 | 11 780 | (8 755) | 3 481 | 42 065 | 48 917 | |
| Unaudited abridged consolidated interim statement of cash flows | ||||
| for the six month period ended 31 December 2019 | ||||
| Unaudited | Unaudited | Audited | ||
| six months | six months | 12 months | ||
| Ended | Ended | ended | ||
| 31 December | 31 December | 30 June | ||
| 2019 | 2018 | 2019 | ||
| R’000 | R’000 | R’000 | ||
| Cash (used in)/generated from operations | (1 717) | 1 568 | (6 818) | |
| Interest received | 515 | 262 | 492 | |
| Finance cost | (430) | – | – | |
| Taxation received/(paid) | (50) | 410 | 713 | |
| Net cash (used in)/generated from operating activities | (1 682) | 2 240 | (5 613) | |
| Cash flows from investing activities | ||||
| Equipment acquired to maintain operations | (145) | (202) | (285) | |
| Repurchase and cancellation of share capital | (93) | |||
| Proceeds from disposal of equipment | 99 | 119 | 56 | |
| Cash outflow from capitalisation of Development costs | (513) | – | – | |
| Net cash (used in)/generated from investing activities | (652) | (83) | (229) | |
| Cash flows from financing activities | ||||
| Proceeds received from repayment of share ownership programme loans | 255 | 391 | 707 | |
| Proceeds from shares awarded under the share ownership programme | – | – | 499 | |
| Buy-back of treasury shares | – | (199) | (199) | |
| Repayment of lease liability | (1 170) | – | – | |
| Dividends paid to equity holders | – | (1 418) | (1 650) | |
| Net cash outflow from financing activities | (915) | (1 226) | (643) | |
| Net increase/(decrease) in cash and cash equivalents | (3 249) | 931 | (6 485) | |
| Cash and cash equivalents at the beginning of the period | 7 044 | 13 529 | 13 529 | |
| Cash and cash equivalents at the end of the period | 3 795 | 14 460 | 7 044 | |
| Unaudited abridged consolidated interim segment reports | |||||||
| for the six month period ended 31 December 2019 | |||||||
|
Operating Segment Report
|
|||||||
| Unaudited six months ended 31 December 2019 | Total | Implemen-
tation services |
Support services | Hosting and outsourcing services | Rental and maintenance | Research & development | |
| R’000 | R’000 | R’000 | R’000 | R’000 | R’000 | ||
| Revenue from implementation services, support services and hosting and outsourcing services recognised over time | 26 542 | 2 158 | 22 296 | 2 088 | – | – | |
| Revenue from software rental recognised at a point in time | 18 658 | – | – | – | 18 658 | – | |
| Segment revenue inter-group | (171) | (81) | (90) | ||||
| Segment revenue external | 45 029 | 2 158 | 22 215 | 2 088 | 18 568 | – | |
| Direct segment cost | (21 850) | (1 509) | (11 639) | (1 383) | (2 116) | (5 203) | |
| Cost capitalised | 513 | – | – | – | – | 513 | |
| Segment gross profit | 23 692 | 649 | 10 576 | 705 | 16 452 | (4 690) | |
| Indirect segment cost | (20 755) | (2 268) | (7 796) | (479) | (3 639) | (6 573) | |
| Provision for expected credit loss on debtors credit impaired | (854) | (93) | (321) | (19) | (150) | (271) | |
| Segment result | 2 083 | (1 712) | 2 459 | 207 | 12 663 | (11 534) | |
| Finance cost | (430) | ||||||
| Finance income | 515 | ||||||
| Income tax | (623) | ||||||
| Profit for the period | 1 545 | ||||||
| Operating segment reclassification | ||||||
| During the current period the Group reclassified the revenue and related costs from managed services, which were previously included in the hosting and outsourcing segment, under the support segment. This classification is a better representation of the nature of the work being done and the revenue earned. The comparative period results were reclassified to account for this change consistently. The amounts included in the current period are R1.6 million of revenue and R0.6 million of direct costs and the amounts included in the comparative period are R0.4m of revenue and R0.1 million of direct costs.
|
||||||
| Assets and liabilities | ||||||
| The Group controls and manages all assets and liabilities on a central basis and recovers these costs as well as corporate overheads through a recovery model based on income generation. Segment results include only cost items directly or indirectly attributable to a segment. | ||||||
| Unaudited six months ended 31 December 2018 | Total | Implemen-tation
Services |
Support services | Hosting and outsourcing services | Rental and maintenance | Research & development |
| R’000 | R’000 | R’000 | R’000 | R’000 | R’000 | |
| Revenue from implementation services, support services and hosting and outsourcing services recognised over time | 23 383 | 1 179 | 20 458 | 1 746 | – | – |
| Revenue from software rental recognised at a point in time | 23 536 | – | – | – | 23 536 | – |
| Segment revenue inter-group | (1 205) | – | (1 155) | – | (50) | – |
| Segment revenue external | 45 714 | 1 179 | 19 303 | 1 746 | 23 486 | – |
| Direct segment cost | (25 306) | (908) | (15 092) | (2 357) | (3 027) | (3 922) |
| Segment gross profit | 20 408 | 271 | 4 211 | (611) | 20 459 | (3 922) |
| Indirect segment cost | (22 071) | (2 650) | (8 390) | (662) | (3 087) | (7 282) |
| Provision for expected credit loss on debtors credit impaired | (991) | (119) | (377) | (30) | (139) | (327) |
| Segment result | (2 654) | (2 498) | (4 556) | (1 303) | 17 233 | (11 531) |
| Finance income | 262 | |||||
| Income tax | 560 | |||||
| Profit for the period | (1 832) | |||||
| Audited twelve months ended 30 June 2019 | Total | Implemen-tation
Services |
Support services | Hosting and outsourcing services | Rental and maintenance | Research & development |
| R’000 | R’000 | R’000 | R’000 | R’000 | R’000 | |
| Revenue from implementation services, support services and hosting and outsourcing services recognised over time | 44 194 | 1 868 | 38 310 | 4 016 | – | – |
| Revenue from software rental recognised at a point in time | 45 119 | – | – | – | 45 119 | – |
| Segment revenue inter-group | (1 617) | – | (1 475) | – | (142) | – |
| Segment revenue external | 87 696 | 1 868 | 36 835 | 4 016 | 44 977 | – |
| Direct segment cost | (50 217) | (1 155) | (28 437) | (4 961) | (7 588) | (8 076) |
| Segment gross profit | 37 479 | 713 | 8 398 | (945) | 37 389 | (8 076) |
| Indirect segment cost | (42 219) | (4 913) | (15 900) | (1 518) | (5 819) | (14 069) |
| Provision for expected credit loss on debtors not credit impaired | (26) | (3) | (10) | (1) | (4) | (8) |
| Provision for expected credit loss on debtors credit impaired | (3 657) | (100) | (1 333) | – | (2 224) | – |
| Segment result | (8 423) | (4 303) | (8 845) | (2 464) | 29 342 | (22 153) |
| Finance income | 492 | |||||
| Income tax | 392 | |||||
| Profit for the period | (7 539) | |||||
commentary
- Notes to the ABRIDGED UNAUDITED Consolidated INTERIM financial statements For the period ended 31 December 2019
- Basis of preparation
The abridged unaudited consolidated interim financial statements are prepared in accordance with the requirements of the JSE Limited Listing Requirements for abridged reports, and the requirements of the Companies Act applicable to summary financial statements. The listing requirements require abridged reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting.
The accounting policies applied in the preparation of these abridged unaudited consolidated interim financial statements, which are based on reasonable judgment and estimates, are in accordance with International Financial Reporting Standards (“IFRS”). The accounting policies, with the exception of the new standards and amendments adopted during the current period, have been applied consistently with those applied in the annual audited financial statements for the year ended 30 June 2019. The new accounting policies adopted and applied in the preparation of the abridged unaudited consolidated interim financial statements is IFRS 16 Leases.
These abridged unaudited consolidated interim financial statements have been prepared by Freddie van Heerden, Group Financial Manager, under the supervision of the Group Financial Director, Lee Kuyper CA(SA).
The directors take full responsibility for the preparation of these abridged 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/(loss) per ordinary share
Basic earnings/(loss) per ordinary share is calculated by dividing the earnings/(loss) for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.
| Unaudited
six months as at 31 December 2019 |
Unaudited
six months as at 31 December 2018 |
Audited
12 months as at 30 June 2019 |
|
| Reconciliation of the weighted average number of shares in issue | |||
| Shares in issue at the beginning of the period (‘000) | 34 781 | 34 781 | 34 781 |
| Shares repurchased and cancelled during the period | (25) | – | – |
| Effect of treasury shares acquired | (5 612) | (5 781) | (5 611) |
| Weighted average number of shares in issue during the period (‘000) | 29 144 | 29 000 | 29 170 |
| Earnings/(loss) attributable to ordinary shareholders (R’000) | 1 545 | (1 832) | (7 539) |
| Basic earnings/(loss) per share (cents) | 5.30 | (6.32) | (25.85) |
Diluted earnings/(loss) per ordinary share is calculated by dividing the diluted earnings/(loss) for the period attributable to ordinary equity holders of the parent by the diluted weighted average number of ordinary shares outstanding during the period.
| Unaudited
six months as at 31 December 2019 |
Unaudited
six months as at 31 December 2018 |
Audited
12 months as at 30 June |
|
| Reconciliation between weighted average number of shares in issue and weighted average number of shares in issue used for diluted earnings/(loss) per share | |||
| Weighted average number of shares in issue (‘000) | 29 144 | 29 000 | 29 170 |
| Diluted number of shares due to share options in issue (‘000) | 60 | 632 | – |
| Weighted average number of shares in issue used for diluted earnings per share (‘000) | 29 204 | 29 632 | 29 170 |
| Earnings/(loss) attributable to ordinary shareholders (R’000) | 1 545 | (1 832) | (7 539) |
| Diluted earnings/(loss) per share (cents) | 5.29 | (6.18) | (25.85) |
Headline and diluted headline earnings/(loss) per ordinary share
Headline earnings/(loss) per ordinary share is calculated by dividing the headline earnings/(loss) attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.
| Unaudited
six months as at 31 December 2019 |
Unaudited
six months as at 31 December 2018 |
Audited
12 months as at 30 June 2019 |
|
| Weighted average number of shares in issue | 29 144 | 29 170 | |
| Reconciliation between basic earnings/(loss) and headline earnings/(loss) | |||
| Basic earnings/(loss) (R’000) | 1 545 | (1 832) | (7 539) |
| Adjusted for: | |||
| – Profit on disposal of equipment (R’000) | (99) | (13) | 10 |
| Headline earnings/(loss) (R’000) | 1 446 | (1 845) | (7 529) |
| Headline earnings/(loss) per share (cents) | 4.96 | (6.36) | (25.81) |
Diluted Headline earnings/(loss) per ordinary share is calculated by dividing the headline earnings/(loss) attributable to ordinary equity holders of the parent by the diluted weighted average number of ordinary shares outstanding during the period.
| Unaudited
six months as at 31 December 2019 |
Unaudited
six months as at 31 December 2018 |
Audited
12 months as at 30 June 2019 |
|
| Weighted average number of shares in issue used for diluted earnings/(loss) per share (‘000) | 29 204 | 29 632 | 29 170 |
| Diluted headline earnings/(loss) (R’000) | 1 446 | (1 845) | (7 529) |
| Diluted headline earnings/(loss) per share (cents) | 4.95 | (6.23) | (25.81) |
- Assets and liabilities related to contracts with customers
Contract liabilities (Deferred revenue) and contract assets (revenue recognised but not yet invoiced) refers to the timing difference between recognition of revenue and invoicing to the client contracts.
| Unaudited | Unaudited | Audited | ||
| six months | six months | 12 months | ||
| Ended | Ended | ended | ||
| 31 December | 31 December | 30 June | ||
| 2019 | 2018 | 2019 | ||
| R’000 | R’000 | R’000 | ||
| Contract assets | ||||
| Revenue recognised not yet invoiced | 4 079 | 4 886 | 4 342 | |
| Contract liability | ||||
| Deferred revenue | (1 071) | (1 075) | (1 162) | |
| Net asset | 3 008 | 3 811 | 3 180 |
- Trade and other payables
Trade and other payables comprised of the following:
| Unaudited | Unaudited | Audited | ||
| six months | six months | 12 months | ||
| as at | as at | as at | ||
| 31 December | 31 December | 30 June | ||
| 2019 | 2018 | 2019 | ||
| R’000 | R’000 | R’000 | ||
| Trade payables | 481 | 881 | 474 | |
| Incentive accrual | 1 500 | – | – | |
| Other payables (accruals) | 2 578 | 4 308 | 5 328 | |
| Total | 4 559 | 5 189 | 5 802 |
- Revenue per geographical region
| Unaudited 6 months ending 31 Dec 2019 | Unaudited 6 months ending 31 Dec 2018 | Audited 12 months ending 30 Jun 2019 | |
| R’000 | R’000 | R’000 | |
| South Africa | 16 403 | 17 177 | 33 194 |
| Namibia | 12 037 | 11 489 | 23 258 |
| Kenya | 3 695 | 2 450 | 5 309 |
| Zimbabwe | 2 836 | 4 202 | 6 569 |
| Ghana | 2 304 | 2 420 | 3 989 |
| Botswana | 1 986 | 2 185 | 4 365 |
| Lesotho | 1 981 | 1 975 | 3 873 |
| Mauritius | 1 613 | 1 278 | 2 680 |
| Nigeria | 1 005 | 457 | 912 |
| Zambia | 751 | 675 | 1 330 |
| Mozambique | 418 | – | 447 |
| Malawi | – | 1 368 | 1 762 |
| Tanzania | – | 38 | 8 |
| Total | 45 029 | 45 714 | 87 696 |
- Net asset and tangible net asset value per share
| Unaudited | Unaudited | Audited | ||
| six months | six months | 12 months | ||
| as at | as at | as at | ||
| 31 December | 31 December | 30 June | ||
| 2019 | 2018 | 2019 | ||
| Number
of shares |
Number
of shares |
Number
of shares |
||
| ’000 | ’000 | |||
| Shares in issue at the beginning of the period | 34 781 | 34 781 | 34 781 | |
| Shares repurchased and cancelled during the period | (25) | – | – | |
| Effect of treasury shares acquired | (5 612) | (5 781) | (5 611) | |
| Shares at the end of the period | 29 144 | 29 000 | 29 170 | |
| Net asset value per share (cents) | 167.85 | 181.00 | 162.06 | |
| Tangible asset value per share (cents) | 100.12 | 110.22 | 93.93 |
- Recognition of assets and liabilities for long term leases
The new standard has been applied for the first time in the current financial period, as a result of the adoption of IFRS 16. The Group has recognised a right-of-use asset of R5.3 million representing its right to use the underlying leased asset and a lease liability of R6 million representing its obligation to make lease payments.
In accordance with this, depreciation of R1.2 million has been recognised on the right-of-use asset and interest of R0.3 million has been recognised on the lease liability. Cash repayments of the lease liability have also been classified into a principal portion and an interest portion and have been presented in the statement of cash flows by applying IAS 7 Statement of Cash Flows.
- Fair values
The carrying amounts of all financial assets and liabilities are a reasonable approximation of their fair value.
- CORPORATE ACTIVITY
- Dividends and capital distribution
The directors have resolved that there would be no gross dividend declared for the year ended 30 June 2019, on 11 September 2019. The directors approved a final dividend of 4.5 cents per share on 10 September 2018 for the year ended 30 June 2018 and these distributions were paid out during the previous year.
- Subsequent events
No events occurred subsequent to the period end that would require the interim financial statements to be adjusted.
- Changes to the board of directors
There were no changes to the board of directors during the period under review.
- FINANCIAL RESULTS AND PERFORMANCE
The past six months remained challenging, with continued uncertainty in our markets. We are however pleased with a return to profitability as a result of actions taken in the prior year and some progress made from new initiatives. We continue to strengthen our relationships with our existing customers with broader value being added to their business. We have also secured three new customers during the period. This has been assisted by strong relationships with key partners, such as Microsoft.
Despite our contract with Nedbank Insurance coming to an end in the prior year, which resulted in a drop in software rental revenue, we managed to replace most of the revenue with growth in the other revenue segments. This was from both growth in existing client contracts and the addition of new contracts. Our overall revenue was down by 1% when compared with the comparative period.
Profit increased by 184% from a prior year loss of R1.8 million to a profit of R1.5 million. This was achieved from a reduction in direct costs related to the exit of our FSCA registered outsourcing business, as well as the restructuring of our insurtech investment to a minority stake. Indirect costs were also decreased to align with the decrease in direct costs and revenue in the business.
Our cash position decreased to R3.8 million from R7 million at year end. This was as a direct result of the R5 million increase in our debtors’ balance at the end of the period. This increase was driven by a number of large South African debtors paying in the two weeks after period end as opposed to by the last day of the month, which is normally the case. The balance sheet remains healthy and debt free.
Segmental review
Implementation services
This segment implements our solutions for clients and is project based.
Revenue increased by 83% due to an increase in the number of new implementations when compared to the comparative period. This included two implementations for our new AI offering in banking and fraud management, which contributed 55% of the revenue. The segment incurred a gross profit of 30%, compared to a gross profit of 23% in the comparative period, due to the more efficient delivery of the implementation projects in the current period. After the allocation of indirect costs, the segment posted a loss.
We remain happy with our implementation delivery model, with it proving valuable not only in the implementation of our own software but also those of third parties.
Support services
Support is contracted on a monthly basis and is annuity based.
Revenue increased by 15% from increased demand from existing clients. These have resulted in higher renegotiated contracts. The segment posted a profit of R2.5 million compared to a loss of R4.6 million in the comparative period. The comparative period included excess unutilised capacity which in this period was either used to execute on the increased amount of support or the increased implementation revenue.
Hosting and outsourcing services
This segment provides cloud-based hosting and full business process outsourcing services to our customers.
Revenue increased by 20% from R1.7 million to R2.1 million as a result of the addition of new hosting contracts. The segment posted a profit of R0.2 million compared to a loss of R1.3 million as a result of the increase in hosting revenue but also the reduction of costs related to the business process outsourcing part of the segment.
We decided to close our FSCA registered business process outsourcing business in the prior year given the lack of progress in growing revenue.
We remain satisfied with the cloud-based hosting part of the segment where we expect growth in the future.
Software rental and maintenance
Software rental is annuity based.
Revenue was down 21% due to our Nedbank Insurance contract coming to an end in the prior year. The segment posted a profit of R12.7 million compared to R17.2 million in the comparative period. While we continued to invest in the maintenance of our products, we were able to do so at a comparatively lower cost in this period.
Our software and the growth of our annuity rental stream remain a core focus going forward.
Research and development (“R&D”)
Total direct costs were R5.2 million compared to R3.9 million in the comparative period. The increase is as a result of the research and development being done on our new AI offering. Costs of R0.5 million related to the development of a digital onboarding portal, which has already been implemented at a few customers, has been capitalised.
The investment into new products remains an important part of our business for the future.
- GROUP OUTLOOK
We remain positive about the future despite the challenges in our environment still largely being present. By consolidating our focus, we have ensured a healthy core business, and are well positioned to use this as a basis to grow.
This growth will come by delivering value in the context of our clients’ digital transformation objectives. Our software assets and solutions are well positioned to enable the digital objectives of an insurer, but also have relevance in other industries.
Our clients continue to face significant challenges and increased competition to meet their customers’ changing needs in an increasingly digital world. This results in many of our existing and potential clients searching for solutions to enable them to adapt quickly and more effectively. SilverBridge remains well positioned to meet these needs.
Although we expect decision-makers to remain wary of making too many significant moves until conditions stabilise, we can see and expect positive opportunities in the future.
On behalf of the board of directors
Robert Emslie Jaco Swanepoel
Chairman Chief Executive Officer
Pretoria
17 February 2020
CORPORATE INFORMATION
SILVERBRIDGE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration No. 1995/006315/06)
JSE SHARE CODE: “SVB” ISIN CODE: ZAE000086229
Legal entity number (LEI): 3789001E59A77A6B9938
(“SilverBridge” or “the Group”)
Directors of SilverBridge holdings
Robert Emslie (Chairman)**, Jaco Swanepoel (CEO), Jeremy de Villiers **, Hasheel Govind *, Tyrrel Murray**, Lee Kuyper (Group Financial Director), Lulama Booi*.
(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
Unit 7, Block C, Southdowns Office Park, 22 Karee Street
Irene, 0062
(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)
4 Lisbon Lane, Waterfall City, Jukskei View, 2090
(Private Bag X36, Sunninghill, 2157, South Africa)
TRANSFER SECRETARIES
Computershare Investor Services Proprietary Limited
(Registration number: 2004/003647/07)
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2107
(Call centre: 0861 100 634)
(PO Box 61051, Marshalltown, 2107)
Designated Adviser
PSG Capital
(Registration number: 2006/015817/07)
Second Floor, Building 3, 11 Alice Lane, Sandton, 2196
(PO Box 650957, Benmore, 2010)