| Imagery Source: Glassdoor |
| Information Source: JSE SENS |
| ISA Holdings Limited |
| RECONCILIATION OF HEADLINE EARNINGS |
| I am pleased to present our results for the full year ended 28 February 2025 ("the current reporting period"), which continue to be underpinned by a high proportion of recurring revenue, a robust balance sheet and strong cash flows. In the context of the exceptionally challenging trading conditions in which we operate, together with the extreme pressure on the local economy, I am satisfied with our performance and humbled by the tremendous support that we have received through this challenging time from our staff, customers, suppliers, vendor partners and shareholders. |
| Financial |
| Revenue increased by a pleasing 17% during the current reporting period to R117.7 million compared to R100.8 million in the previous corresponding reporting period (“the prior reporting period”) and continues to include a healthy mix of third-party products, technology subscriptions and our Managed Security Service offerings that feature MSS Pulse, our internally developed security infrastructure management and monitoring platform. |
| Profit before other income and expenses increased by 15% during the current reporting period to R56.1 million, from R48.9 million in the prior reporting period, representing a healthy gross margin of 48%, which is slightly lower than the 49% in the prior reporting period. With margin pressure on the sale of products and technology subscriptions continuing through the current reporting period, a reality of the IT security and IT industry as a whole, the negative impact of such was largely offset by the increase in revenue of our higher margin service offerings. |
| Operating expenditure increased by 10% to R31.9 million compared to R29.1 million in the prior reporting period, which is largely attributable to payroll-related expenses. While this modest increase may be thought of as desirable, management points out that it was somewhat lower than expected because they continue to struggle to attract and retain the required skills and human resources needed in the business to maintain their growth and service levels. Management is actively investigating the use of various artificial intelligence (AI) technologies to ease some of this pressure in both the short and long term. |
| On a less pleasing note, our share of profits from DataProof, our equity-accounted investment, decreased substantially by 51% to R6.1 million from R12.6 million in the prior reporting period. This dramatic decrease was largely due to them recognising a large deal in their cybersecurity division, which individually made up more than 40% of their total revenue, in the prior reporting period, in contrast to the current reporting period. In addition to this comparative anomaly in their cybersecurity division, DataProof’s record management division also performed poorly and hardly contributed to the bottom line during the current reporting period. |
| Earnings attributable to equity shareholders for the current reporting period, unfortunately, decreased to R26.1 million from R29.5 million in the prior reporting period, representing a 12% decrease in headline and earnings per share to 16.7 cents from 18.9 cents in the prior reporting period. Of interest, if DataProof’s share of profits from both the current and prior reporting period results were to be excluded, earnings attributable to equity shareholders for the current reporting period would have increased by a pleasing 17%. |
| Trade and other receivables decreased by 16% to R13.4 million in the current reporting period, while trade and other payables increased by 22% to R26.3 million in the current reporting period. Management points out that this does not relate to a change in cash management practices within the business but rather to the timing of deals within their respective reporting periods. |
| Cash and cash equivalents increased by 25% to R37.6 million in the current reporting period, from R30.1 million in the prior reporting period, after dividends of R17.6 million were paid to shareholders during the current reporting period. Once again, DataProof did not declare a dividend during the current reporting period as they continue to preserve their healthy cash reserves while considering several capital allocation options available to them. |
| Cash Distribution |
| During the current reporting period, a final ordinary dividend of R17.6 million for the year ended 29 February 2024 was declared and paid to shareholders, representing a cash distribution of 11.2 cents per share. With the realisation of earnings of 16.7 cents per share for the current reporting period, we are now pleased to declare a final ordinary dividend to shareholders for the year ended 28 February 2025 of 16.7 cents per share, which will be subject to 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 for the ordinary dividend will be as follows: |
| Declaration date: Friday, 23 May 2025 |
| Last day to trade: Tuesday, 15 July 2025 |
| Shares trade ex-dividend: Wednesday, 16 July 2025 |
| Record date: Friday, 18 July 2025 |
| Payment date: Monday, 21 July 2025 |
| Share certificates may not be dematerialised or rematerialised between Wednesday, 16 July 2025 and Friday, 18 July 2025, 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.
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- The South African dividend tax (DT) rate is 20%.
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- The DT to be withheld by the company in respect of the ordinary dividend amounts to 3.34 cents per share.
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- The net ordinary dividend payable to shareholders who are not exempt from DT is therefore 13.36 cents per share, while a gross ordinary dividend of 16.7 cents per share is payable to those shareholders who are exempt from DT.
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- The issued share capital of the company at the declaration date comprises 170,592,593 ordinary shares.
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- The company’s income tax reference number is 9340/150/71/4.
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| Market and prospects |
| 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 organisational information and IT resources, together with the increased regulatory and legislative compliance requirements, stakeholders continue to elevate the importance of 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 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 Wednesday, 25 June 2025. |
| Integrated Annual Report |
| Shareholders are advised that the integrated annual report for the year ended 28 February 2025 has been distributed to shareholders today, 23 May 2025 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 (“AGM”) will be held at 10:00 on Wednesday, 25 June 2025, through electronic participation. |
| For the full document, click the link below: |
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ISA Holdings Limited |
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