Wrap Text
Reviewed Consolidated Preliminary Group results
for the year ended 28 February 2013
Adcorp Holdings Limited
(“Adcorp” or “Adcorp Group” or “the Group” or “the Company”)
Registration number 1974/001804/06
Share code: ADR ISIN number: ZAE000000139
Reviewed Consolidated Preliminary Group results
for the year ended 28 February 2013
Salient features
Revenue for the year increased by 34% to R8,6 billion
Operating Profit for the year increased by 40% to R286 million
Normalised* EBITDA for the year increased by 37% to R423 million
Normalised* EBITDA margin up from 4,8% to 4,9%
Normalised* earnings per share increased by 14% to 341,1 cents per share
Headline earnings per share increased by 13% to 236,7 cents per share
Earnings per share increased by 7% to 221.6 cents
Cash conversion ratio 100%
Debtors days at 41 days
Net asset value per share increased by 11% to 2 065 cents per share
Final dividend declared of 80 cents per share
Paxus acquired for R616 million
New BBBEE shareholding deal approved
Successful establishment of R2 billion Domestic Medium Term Note Programme
Reviewed consolidated and separate statement of comprehensive income
For the year ended 28 February 2013
Group Company
Reviewed Audited Reviewed Audited
2013 2012 2013 2012
R’000 R’000 R’000 R’000
Revenue 8 616 842 6 423 229 2 362 –
Cost of sales (7 056 563) (5 188 742) (2 362) –
Gross profit 1 560 279 1 234 487 – –
Other income 65 472 56 113 – 209
Administrative expenses (620 525) (423 483) (17 622) (10 476)
Marketing and selling
expenses (532 298) (506 674) – –
Other operating expenses (186 954) (156 121) – –
Operating profit 285 974 204 322 (17 622) (10 267)
Interest received 2 890 3 677 56 313 43 726
Interest paid (59 491) (43 554) (87 412) (51 899)
Dividends received – – 230 000 33 000
Share of profits from
associates 14 762 683 – –
Impairment of intangible
assets and goodwill (12 078) (1 199) – –
Impairment of loans – – (1 093) (459)
Revaluation of foreign
exchange denominated
inter-company loan – – (3 551) –
Profit on disposal of a
business – 160 – –
Profit on the sale of
shares 195 – 195 –
Profit on disposal of
property and equipment 178 673 – –
Profit before taxation 232 430 164 762 176 830 14 101
Taxation (53 069) (29 060) 261 (10 844)
Profit for the year 179 361 135 702 177 091 3 257
Other comprehensive
(loss)/income
Exchange differences on
translating foreign
operations (2 668) 414 – –
Fair value adjustment of
derivative financial
instrument 385 (955) 385 (955)
Non-controlling interest (4 350) (1 302) – –
Other comprehensive
income/(loss) for the
year, net of tax (6 633) (1 843) 385 (955)
Total comprehensive
income for the year 172 728 133 859 177 476 2 302
Profit attributable to:
Owners of the parent 175 011 134 400 177 091 3 257
Non-controlling interest 4 350 1 302 – –
Total comprehensive
income attributable to:
Owners of the parent 172 728 133 859 177 476 2 302
Non-controlling interest 4 350 1 302 – –
Earnings per share
Basic (cents) 221.6 208,0 – –
Diluted (cents) 207.0 203,7 – –
Distribution to
shareholders during the
year 140 178 – –
Interim dividend (cents) 60 57 – –
Final dividend (cents)
in respect of prior year 80 121 – –
Reconciliation of
headline earnings
Profit for the year 175 011 135 702 – –
Profit on sale of
property, plant and
equipment (178) (673) – –
Taxation 50 188 – –
Impairment of
intangibles and goodwill 12 078 1 197 – –
Headline earnings 186 961 136 414 – –
Headline earnings per
share
Headline earnings per
share – cents 236.7 209,1
Diluted headline
earnings per share –
cents 221.1 204,7
Weighted average number
of shares – 000’s 78 989 65 236
Diluted weighted average
number of shares – 000’s 84 558 66 631
Reviewed consolidated and separate statement of financial position
As at 28 February 2013
Group Company
Reviewed Audited Reviewed Audited
2013 2012 2013 2012
R’000 R’000 R’000 R’000
Assets
Non-current assets 1 860 470 1 440 639 1 517 368 1 289 768
Property and equipment 65 376 58 399 – –
Intangible assets 511 669 363 188 – –
Goodwill 1 152 762 911 570 – –
Investment in
subsidiaries – – 1 517 368 1 289 768
Investment in associates 53 236 49 708 – –
Deferred taxation 77 427 57 774 - –
Current assets 2 267 426 1 399 800 1 127 825 847 665
Trade and other
receivables and
prepayments 1 638 810 1 079 508 3 780 825
Amounts due by subsidiary
companies – – 1 119 801 846 340
Taxation prepaid 7 848 9 827 3 925 319
Cash resources 620 768 310 465 319 181
Total assets 4 127 896 2 840 439 2 645 193 2 137 433
Equity and liabilities
Capital and reserves 1 895 661 1 440 987 1 609 773 1 156 234
Share capital 2 295 1 934 2 716 2 355
Share premium 1 227 213 865 942 1 227 213 865 942
Treasury shares (12 891) (12 891) – –
Non-distributable reserve – – 119 918 119 918
Share-based payment
reserve 183 914 189 534 183 914 189 534
Foreign currency
translation reserve (4 255) (1 587) – –
Cash flow hedging reserve (570) (955) (570) (955)
Accumulated profit/(loss) 492 946 396 787 76 582 (20 560)
Equity attributable to
equity holders of the
parent 1 888 652 1 438 764 1 609 773 1 156 234
Non controlling interest 6 088 1 302 – –
BEE shareholders’
interest 921 921 – –
Non-current liabilities 169 575 269 833 9 000 87 659
Other non-current
liabilities 2 575 2 582 – –
Long-term loan –
interest-bearing 8 334 86 667 8 334 86 667
Redeemable preference
shares – interest-bearing 70 000 96 000 – –
Derivative financial
instrument 570 955 570 955
Obligations under finance
lease 4 292 4 957 – –
Operating lease liability 108 1 233 – –
Deferred taxation 83 696 77 439 96 37
Current liabilities 2 062 660 1 129 619 1 026 420 893 540
Non-interest-bearing
current liabilities 1 056 854 600 624 351 808 407 341
Trade and other payables 765 031 461 779 11 773 935
Amounts due to subsidiary
companies – – 340 035 406 406
Provisions 183 429 133 696 – –
Other payables 85 320 – – –
Taxation 23 074 5 149 – –
Interest-bearing current
liabilities 1 005 806 528 995 674 612 486 199
Current portion of other
non-current liabilities 9 477 8 838 – –
Short term loans 522 311 275 414 253 428 275 414
Current portion of
redeemable preference
shares 27 688 22 182 – –
Current portion of long
term loans 78 333 48 333 78 333 48 333
Bank overdrafts 367 997 174 228 342 851 162 452
Total equity and
liabilities 4 127 896 2 840 439 2 645 193 2 137 433
Reviewed consolidated and separate statement of cash flows
as at 28 February 2013
Group Company
Reviewed Audited Reviewed Audited
Note 2013 2012 2013 2012
Operating activities
Profit before taxation and
dividends 232 430 164 762 (53 169) (18 899)
Adjusted for:
Dividends received – – 230 000 33 000
Depreciation 23 436 22 692 – –
Impairment of intangible
assets, goodwill and loans 12 078 1 197 1 093 459
Amortisation of intangible
assets acquired in
business combinations 42 178 28 646 – –
Amortisation of
intangibles other than
those acquired in business
combinations 18 337 13 834 – –
Profit on disposal of
property and equipment (178) (673) – –
Profit on sale of business – (160) – –
Share-based payments
expense 36 550 34 655 – –
Cash settlement of share
options exercised (12 320) – (12 320) –
Revaluation of foreign
exchange denominated
inter-company loan – – 3 551 –
Foreign currency
translation reserve (2 668) 414 – –
Non-cash portion of
operating lease rentals 838 (696) – –
Interest received (2 890) (3 677) (56 313) (43 726)
Interest paid 59 491 43 554 87 412 51 899
Cash generated by
operating activities
before working capital
changes 407 282 304 548 200 254 22 733
Increase in trade and
other receivables and
prepayments (225 006) (204 609) (2 955) (45)
Increase/(decrease) in
trade and other payables
and provisions 197 043 115 250 10 838 (2 392)
Net movement in holding
and fellow subsidiaries’
intercompany accounts – – (184 644) 136 225
Cash generated by
operations 379 319 215 189 23 493 156 521
Interest received 2 890 3 677 56 313 43 726
Interest paid (59 491) (43 554) (87 412) (51 899)
Taxation paid (55 698) (48 955) (3 286) (11 530)
Dividend paid (108 702) (110 610) (109 799) (111 285)
Net cash
generated/(utilised) by
operating activities 158 318 15 747 (120 691) 25 533
Investing activities
Additions to property,
equipment and intangible
assets (34 543) (46 355) – –
Proceeds from sale of
business – 160 – –
Proceeds from sale of
property and equipment 1 338 1 478 – –
Acquisition of businesses (628 079) (622 565) (350 883) (636 699)
Investment in associates (3 529) (4 929) – –
Net cash utilised by
investing activities (664 813) (672 211) (350 883) (636 699)
Financing activities
Issue of shares under
employee share option
scheme 420 371 420 371
Issue of 'A' ordinary
shares – 500 – –
Issue of shares pursuant
to acquisitions 361 212 367 599 361 212 367 599
Long-term loan raised 7 500 375 414 7 500 375 414
Long-term loans repaid (97 819) (54 000) (77 819) (40 000)
Increase in other payables 85 320 – – –
Increase in other
interest-bearing
liabilities 266 396 7 515 – –
Net cash generated by
financing activities 623 029 697 399 291 313 703 384
Net increase/(decrease) in
cash and cash equivalents 116 534 40 935 (180 261) 92 218
Net cash and cash
equivalents at the
beginning of the period 136 237 95 302 (162 271) (254 489)
Net cash and cash
equivalents at the end of
the period 252 771 136 237 (342 532) (162 271)
Reviewed consolidated and separate statement of changes in equity
For the year ended 28 February 2013
Share Share Treasury
capital premium shares
R’000 R’000 R’000
Group
Audited balance as at 28 February 2011 1 546 498 696 (13 227)
Issue of ordinary shares 365 371 334 –
Capitalisation of transaction costs – (4 100) –
Issue of ordinary shares under employee
share option plan 23 12 –
Treasury shares sold – – 336
Dividend distributions – – –
Recognition of BBBEE and staff share-based
payments – – –
Share options exercised during the year – – –
Profit for the period – – –
Other comprehensive income/(loss) for the
period – – –
Audited balance as at 29 February 2012 1 934 865 942 (12 891)
Issue of ordinary shares 325 366 015 –
Capitalisation of transaction costs – (5 128) –
Issue of ordinary shares under employee
share option plan 36 384 –
Dividend distributions – – –
Recognition of BBBEE and staff share-based
payments – – –
Share options exercised during the year – – –
Share options cash settled – – –
Profit for the period – – –
Other comprehensive income/(loss) for the
period – – –
Reviewed balance as at 28 February 2013 2 295 1 227 213 (12 891)
Company
Audited balance as at 28 February 2011 1 967 498 696 –
Issue of ordinary shares 365 371 334 –
Capitalisation of transaction costs – (4 100) –
Issue of ordinary shares under employee
share option plan 23 12 –
Dividend distributions – – –
Recognition of BBBEE and staff share–
based payments – – –
Share options exercised during the year – – –
Other comprehensive income/(loss) for the
period – – –
Total comprehensive loss for the period – – –
Audited balance as at 29 February 2012 2 355 865 942 –
Issue of ordinary shares 325 366 015 –
Capitalisation of transaction costs – (5 128) –
Issue of ordinary shares under employee
share option plan 36 384 –
Dividend distributions – – –
Recognition of BBBEE and staff share-based
payments – – –
Share options exercised during the year – – –
Share options cash settled – – –
Profit for the period – – –
Other comprehensive income for the period – – –
Reviewed balance as at 28 February 2013 2 716 1 227 213 –
Share- Foreign
Non- based currency
distributable payment translation
reserve reserve reserve
R’000 R’000 R’000
Group
Audited balance as at 28 February
2011 – 165 676 (2 001)
Issue of ordinary shares – – –
Capitalisation of transaction costs – – –
Issue of ordinary shares under
employee share option plan – – –
Treasury shares sold – – –
Dividend distributions – – –
Recognition of BBBEE and staff
share-based payments – 34 655 –
Share options exercised during the
year – (10 797) –
Profit for the period – – –
Other comprehensive income/(loss)
for the period – – 414
Audited balance as at 29 February
2012 – 189 534 (1 587)
Issue of ordinary shares – – –
Capitalisation of transaction costs – – –
Issue of ordinary shares under
employee share option plan – – –
Treasury shares sold – – –
Dividend distributions – – –
Recognition of BBBEE and staff
share-based payments – 36 550 –
Share options exercised during the
year – (42 170) –
Share options cash settled – – –
Profit for the period – – –
Other comprehensive income/(loss)
for the period – – (2 668)
Reviewed balance as at 28 February
2013 – 183 914 (4 255)
Company
Audited balance as at 28 February
2011 119 918 165 676 –
Issue of ordinary shares – – –
Capitalisation of transaction costs – – –
Issue of ordinary shares under
employee share option plan – – –
Dividend distributions – – –
Recognition of BBBEE and staff
share– based payments – 34 655 –
Share options exercised during the
year – (10 797) –
Other comprehensive income/(loss)
for the period – – –
Total comprehensive loss for the
period – – –
Audited balance as at 29 February
2012 119 918 189 534 –
Issue of ordinary shares – – –
Capitalisation of transaction costs – – –
Issue of ordinary shares under
employee share option plan – – –
Dividend distributions – – –
Recognition of BBBEE and staff
share-based payments – 36 550 –
Share options exercised during the
year – (42 170) –
Share options cash settled – – –
Profit for the period – – –
Other comprehensive income for the
period – – –
Reviewed balance as at 28 February
2013 119 918 183 914 –
Attributable
to
Cash equity
flow Accumu- holders
hedging lated of the
reserve profit parent
R’000 R’000 R’000
Group
Audited balance as at 28 February 2011 – 362 200 1 012 890
Issue of ordinary shares – – 371 699
Capitalisation of transaction costs – – (4 100)
Issue of ordinary shares under employee
share option plan – – 35
Treasury shares sold – – 336
Dividend distributions – (110 610) (110 610)
Recognition of BBBEE and staff share-
based payments – – 34 655
Share options exercised during the year – 10 797 –
Profit for the period – 134 400 134 400
Other comprehensive income/(loss) for the
period (955) – (541)
Audited balance as at 29 February 2012 (955) 396 787 1 438 764
Issue of ordinary shares – – 366 340
Capitalisation of transaction costs – – (5 128)
Issue of ordinary shares under employee
share option plan – – 420
Dividend distributions – (108 702) (108 702)
Recognition of BBBEE and staff share-
based payments – - 36 550
Share options exercised during the year – 42 170 –
Share options cash settled – (12 320) (12 320)
Profit for the period – 175 011 175 011
Other comprehensive income/(loss) for the
period 385 – (2 283)
Reviewed balance as at 28 February 2013 (570) 492 946 1 888 652
Company
Audited balance as at 28 February 2011 – 76 671 862 928
Issue of ordinary shares – – 371 699
Capitalisation of transaction costs – – (4 100)
Issue of ordinary shares under employee
share option plan – – 35
Dividend distributions – (111 285) (111 285)
Recognition of BBBEE and staff share–
based payments – – 34 655
Share options exercised during the year – 10 797 –
Other comprehensive loss for the period (955) – (955)
Total comprehensive loss for the period – 3 257 3 257
Audited balance as at 29 February 2012 (955) (20 560) 1 156 234
Issue of ordinary shares – – 366 340
Capitalisation of transaction costs – – (5 128)
Issue of ordinary shares under employee
share option plan – – 420
Dividend distributions – (109 799) (109 799)
Recognition of BBBEE and staff share-
based payments – – 36 550
Share options exercised during the year – 42 170 –
Share options cash settled – (12 320) (12 320)
Profit for the period – 177 091 177 091
Other comprehensive income for the period 385 – 385
Reviewed balance as at 28 February 2013 (570) 76 582 1 609 773
BEE
Non- shareholders’
controlling interest Total
interest R’000 R’000
Group
Audited balance as at 28 February
2011 – 421 1 013 311
Issue of ordinary shares – – 371 699
Capitalisation of transaction costs – – (4 100)
Issue of ordinary shares under
employee share option plan – – 35
Treasury shares sold – – 336
Dividend distributions – – (110 610)
Recognition of BBBEE and staff
share-based payments – 500 35 155
Share options exercised during the
year – – –
Profit for the period – – 134 400
Other comprehensive income/(loss)
for the period 1 302 – 761
Audited balance as at 29 February
2012 1 302 921 1 440 987
Issue of ordinary shares – – 366 340
Capitalisation of transaction costs – – (5 128)
Issue of ordinary shares under
employee share option plan – – 420
Dividend distributions – – (108 702)
Recognition of BBBEE and staff
share-based payments – – 36 550
Share options exercised during the
year – – –
Share options cash settled – – (12 320)
Profit for the period – – 175 011
Other comprehensive income/(loss)
for the period 4 786 – 2 503
Reviewed balance as at 28 February
2013 6 088 921 1 895 661
Company
Audited balance as at 28 February
2011 – – 862 928
Issue of ordinary shares – – 371 699
Capitalisation of transaction costs – – (4 100)
Issue of ordinary shares under
employee share option plan – – 35
Dividend distributions – – (111 285)
Recognition of BBBEE and staff
share– based payments – – 34 655
Share options exercised during the
year – – –
Other comprehensive income/(loss)
for the period – – (955)
Total comprehensive loss for the
period – – 3 257
Audited balance as at 29 February
2012 – – 1 156 234
Issue of ordinary shares – – 366 340
Capitalisation of transaction costs – – (5 128)
Issue of ordinary shares under
employee share option plan – – 420
Dividend distributions – – (109 799)
Recognition of BBBEE and staff
share-based payments – – 36 550
Share options exercised during the
year – – –
Share options cash settled – – (12 320)
Profit for the period – – 177 091
Other comprehensive income for the
period – – 385
Reviewed balance as at 28 February
2013 – – 1 609 773
Reviewed consolidated segment report
For the year ended 28 February 2013
Group Central
Central Shared
services
Revenue
– 2013 (R’000) 2 362 –
– 2012 (R’000) – –
Internal revenue
– 2013 (R’000) – –
– 2012 (R’000) – –
Operating profit/(loss)
– 2013 (R’000) (81 775) (15 790)
– 2012 (R’000) (62 907) (2 890)
Normalised* EBITDA excluding share-based payments,
lease smoothing and transaction costs
– 2013 (R’000) (53 638) (13 947)
– 2012 (R’000) (41 885) (184)
Normalised* EBITDA margin excluding share-based
payments, lease smoothing and transaction costs
– 2013 (%) – –
– 2012 (%) – –
Normalised* EBITDA excluding share-based payments,
lease smoothing and transaction costs contribution
% to Group Normalised* EBITDA
– 2013 (%) (12,7) (3,3)
– 2012 (%) (13,4) –
Depreciation and amortisation
– 2013 (R’000) 1 473 –
– 2012 (R’000) 1 094 –
Interest income
– 2013 (R’000) (42 093) 567
– 2012 (R’000) (17 033) 739
Interest expense
– 2013 (R’000) 21 363 (3 193)
– 2012 (R’000) 20 502 (363)
Taxation expense/(income)
– 2013 (R’000) (261) 9 161
– 2012 (R’000) 10 844 7 018
Asset carrying value
– 2013 (R’000) 20 136 21 686
– 2012 (R’000) 3 270 17 658
Liabilities carrying value
– 2013 (R’000) 427 581 43 682
– 2012 (R’000) 259 609 28 953
Additions to property, plant and equipment
– 2013 (R’000) 3 781 2 352
– 2012 (R’000) 59 7 591
+ 2013 figures are reviewed and 2012 figures are audited.
++ Interest expense has been moved from central to blue collar to better
reflect the original intent of the interest expense.
+++ Goodwill was reallocated from blue collar to the various other
segments to which it relates.
Staffing
Blue White
collar collar
Revenue
– 2013 (R’000) 5 501 998 2 878 987
– 2012 (R’000) 4 622 841 1 602 385
Internal revenue
– 2013 (R’000) 21 419 4 386
– 2012 (R’000) 30 691 97 694
Operating profit/(loss)
– 2013 (R’000) 253 423 113 727
– 2012 (R’000) 193 370 51 249
Normalised* EBITDA excluding share-based payments,
lease smoothing and transaction costs
– 2013 (R’000) 291 744 156 582
– 2012 (R’000) 226 497 73 732
Normalised* EBITDA margin excluding share-based
payments, lease smoothing and transaction costs
– 2013 (%) 5,3 5,4
– 2012 (%) 4,9 4,6
Normalised* EBITDA excluding share-based payments,
lease smoothing and transaction costs contribution
% to Group Normalised* EBITDA
– 2013 (%) 69,0 37,1
– 2012 (%) 73,2 23,8
Depreciation and amortisation
– 2013 (R’000) 20 279 42 627
– 2012 (R’000) 16 920 27 038
Interest income
– 2013 (R’000) 13 524 20 581
– 2012 (R’000) 5 652 8 267
Interest expense
– 2013 (R’000) (18 768) (54 172)
– 2012 (R’000) (20 120) (40 513)
Taxation expense/(income)
– 2013 (R’000) 23 521 21 975
– 2012 (R’000) 4 551 2 861
Asset carrying value
– 2013 (R’000) 2 212 887 1 624 400
– 2012 (R’000) 1 697 666 844 226
Liabilities carrying value
– 2013 (R’000) 573 865 1 154 794
– 2012 (R’000) 529 011 553 435
Additions to property, plant and equipment
– 2013 (R’000) 13 499 3 911
– 2012 (R’000) 9 292 10 033
+ 2013 figures are reviewed and 2012 figures are audited.
++ Interest expense has been moved from central to blue collar to better
reflect the original intent of the interest expense.
+++ Goodwill was reallocated from blue collar to the various other
segments to which it relates.
BPO,
Training and
Financial Emergent
services Business
Revenue
– 2013 (R’000) 220 389 13 106
– 2012 (R’000) 193 613 4 390
Internal revenue
– 2013 (R’000) 38 962 863
– 2012 (R’000) 44 191 –
Operating profit/(loss)
– 2013 (R’000) 34 385 (17 996)
– 2012 (R’000) 40 820 (15 320)
Normalised* EBITDA excluding share-based
payments, lease smoothing and transaction costs
– 2013 (R’000) 58 405 (16 605)
– 2012 (R’000) 65 675 (14 568)
Normalised* EBITDA margin excluding share-based
payments, lease smoothing and transaction costs
– 2013 (%) 26,5 –
– 2012 (%) 33,9 –
Normalised* EBITDA excluding share-based
payments, lease smoothing and transaction costs
contribution % to Group Normalised* EBITDA
– 2013 (%) 13,8 (3,9)
– 2012 (%) 21,2 (4,7)
Depreciation and amortisation
– 2013 (R’000) 19 496 76
– 2012 (R’000) 20 075 45
Interest income
– 2013 (R’000) 10 297 14
– 2012 (R’000) 6 047 5
Interest expense
– 2013 (R’000) (1 294) (3 427)
– 2012 (R’000) (1 622) (1 438)
Taxation expense/(income)
– 2013 (R’000) (1 511) 184
– 2012 (R’000) 2 862 924
Asset carrying value
– 2013 (R’000) 240 479 8 308
– 2012 (R’000) 274 077 3 542
Liabilities carrying value
– 2013 (R’000) 28 346 3 967
– 2012 (R’000) 25 152 3 292
Additions to property, plant and equipment
– 2013 (R’000) 2 773 103
– 2012 (R’000) 4 234 –
+ 2013 figures are reviewed and 2012 figures are audited.
++ Interest expense has been moved from central to blue collar to better
reflect the original intent of the interest expense.
+++ Goodwill was reallocated from blue collar to the various other
segments to which it relates.
Total
Revenue
– 2013 (R’000) 8 616 842
– 2012 (R’000) 6 423 229
Internal revenue
– 2013 (R’000) 65 630
– 2012 (R’000) 172 576
Operating profit/(loss)
– 2013 (R’000) 285 974
– 2012 (R’000) 204 322
Normalised* EBITDA excluding share-based
payments, lease smoothing and transaction costs
– 2013 (R’000) 422 541
– 2012 (R’000) 309 267
Normalised* EBITDA margin excluding share-based
payments, lease smoothing and transaction costs
– 2013 (%) 4,9
– 2012 (%) 4,8
Normalised* EBITDA excluding share-based
payments, lease smoothing and transaction costs
contribution % to Group Normalised* EBITDA
– 2013 (%) 100,0
– 2012 (%) 100,0
Depreciation and amortisation
– 2013 (R’000) 83 951
– 2012 (R’000) 65 172
Interest income
– 2013 (R’000) 2 890
– 2012 (R’000) 3 677
Interest expense
– 2013 (R’000) (59 491)
– 2012 (R’000) (43 554)
Taxation expense/(income)
– 2013 (R’000) 53 069
– 2012 (R’000) 29 060
Asset carrying value
– 2013 (R’000) 4 127 896
– 2012 (R’000) 2 840 439
Liabilities carrying value
– 2013 (R’000) 2 232 235
– 2012 (R’000) 1 399 452
Additions to property and equipment
– 2013 (R’000) 26 419
– 2012 (R’000) 31 209
+ 2013 figures are reviewed and 2012 figures are audited.
++ Interest expense has been moved from central to blue collar to better
reflect the original intent of the interest expense.
+++ Goodwill was reallocated from blue collar to the various other
segments to which it relates.
Pro Forma Financial Information
The unaudited pro forma financial information below has been prepared for
illustrative purposes only to provide information on how the normalised
earnings adjustments might have impacted on the financial results of the
Group. Because of its nature, the unaudited pro forma financial
information may not be a fair reflection of the Group’s results of
operation, financial position, changes in equity or cash flows.
The underlying information used in the preparation of the unaudited pro
forma financial information has been prepared using the accounting
policies that comply with International Financial Reporting Standards.
These are consistent with those applied in the published reviewed
consolidated preliminary group results of the Group and Company for the
year ended 28 February 2013.
Notwithstanding the events subsequent to the reporting period disclosed
below, no adjustments have been made to the pro forma financial
information.
The directors are responsible for compiling the pro forma financial
information on the basis of the applicable criteria specified in the JSE
Listings Requirements.
*The unaudited pro forma financial information as shown in the statement
of normalised earnings should be read in conjunction with the unqualified
Deloitte & Touche independent reporting accountants’ report thereon, which
is available for inspection at Adcorp’s registered office.
Statement of consolidated normalised earnings
For the year ended 28 February 2013
Note Unaudited Unaudited
year to year to
28 Feb 28 Feb
2013 2012 %
R’000 R’000 Change
Revenue 1 8 616 842 6 423 229 34
Cost of sales 1 (7 056 563) (5 188 742) 36
Gross Profit 1 1 560 279 1 234 487 26
Other income 1 65 472 56 113 17
Administrative marketing,
selling and operating expenses 1 (1 339 777) (1 086 278) 23
Operating profit 1 285 974 204 322 40
Adjusted for:
Depreciation 2 23 436 22 692 3
Amortisation of intangible asset
acquired in business combination 2 42 178 28 646 42
Amortisation of intangibles
other than those acquired in
business combination 18 337 13 834
Share-based payments 2 36 550 34 655 5
Lease smoothing 2 838 (696) –
Transaction costs 5 15 228 5 814 -
Normalised EBITDA (excluding
share-based payments, lease
smoothing and transaction costs) 422 541 309 267 37
Adjusted for:
Depreciation 2 (23 436) (22 692) 3
Amortisation of intangibles
other than those acquired in a
business combination 2 (18 337) (13 834) 33
Normalised operating profit 380 768 272 741 40
Net interest paid (56 601) (39 877) 42
Normalised profit before
taxation 324 167 232 864 39
Normalised taxation 3 (65 113) (36 887) 77
Normalised profit for the year 259 054 195 977 32
Share of profits from associates 14 762 683 –
Non-controlling interests (4 350) (1 302) –
Total normalised profit for the
year 269 466 195 358 38
Normalised effective tax rate 20% 16%
Normalised earnings per share –
cents 4 341.1 299,5 14
Diluted normalised earnings per
share – cents 4 318.7 293,2 9
Weighted average No of shares –
000’s 1 78 989 65 236 21
Diluted weighted average No of 84 558 66 631 27
shares – 000’s 1
Notes:
1 As per the reviewed statement of comprehensive income for the year
ended 28 February 2013.
2 As per the reviewed statement of cash flows for the year ended 28
February 2013.
3 The taxation expense has been adjusted for the adjusted items above.
4 Per share calculation is based on normalised earnings.
5 Being once-off transaction costs incurred pursuant to the acquisition
of Paxus Holdings Proprietary Limited(Paxus). The prior year transaction
costs refer to the acquisition of Paracon Holdings Limited (Paracon) as
per the notes to the audited annual financial statements for the year
ended 29 February 2012
Comments
Overview
The financial year ended 28 February 2013 has been an extremely positive
one for the Group from a performance, strategic and an acquisitive
perspective. Much has been achieved and the Group is particularly well
positioned for the future.
In terms of operating performance, the Group’s revenues increased by 34%
to R8,6 billion whilst normalised earnings before interest tax and
depreciation (Normalised EBITDA) of R423 million was 37% ahead of the
prior year figure and normalised earnings per share of 341.1 cents were
14% ahead of last year.
The Group’s blue collar operations continued to perform extremely well
showing both good revenue and profit growth. In this regard, normalised
EBITDA of R292 million from these operations increased by 29% compared to
the prior year. Much of this growth is attributable to market share gains
as the industry consolidates favouring the bigger players. The division
also benefited greatly from its expansion into other African markets,
specifically in the areas of exploration, mining, energy and related
infrastructural development.
The white collar operations were greatly bolstered by the acquisition of
leading specialist information technology (IT) resourcing and solutions
business, Paracon, which became effective on 1 December 2011 and which
contributed a full year of profit in these results. Paracon has
successfully integrated into the Group, has performed ahead of
expectations and has significantly transformed the Group’s delivery
capability in this area. Also contributing strongly to this performance
was Indian IT solutions associate company, Nihilent.
During the year, Adcorp acquired a leading Australian specialist IT
resourcing and solutions business, Paxus, for R616 million. The
acquisition was successfully concluded with effect 25 January 2013 and is
an important addition to the Group both in terms of tapping into an
significant new market as well as in terms of the strategic opportunities
this acquisition presents for both Paxus and Paracon.
The white collar operations of Quest also rebounded well after some
troubled years following weak trading conditions in the financial services
sector which is the major industrial sector it services. It too has gained
market share and is now hopefully back on a solid growth trajectory.
Permanent recruitment business, DAV, also put in a strong performance
being well diversified across industry sectors and different job types in
the South African jobs’ market.
The Business Process Outsourcing and Training operations both experienced
a difficult trading environment whilst the financial services business
which offers relevant financial, wellbeing and lifestyle products and
services to the Group’s contractor base, performed well.
In particular, the training operations delivered far fewer learnerships
than in prior years due to major problems experienced with the relevant
Seta administration. As such, the training operations reflected a far
lower level of profitability than in prior years and the Group received
far lower learnership tax benefits resulting in a substantial increase in
the Group’s overall normalised effective tax rate.
During the year, the Group created a common back office shared service
capability and outsourced a significant component of its back office
operations to outsourcing specialist, Genpact. This strategy will ensure
that the Group remains cost competitive, delivers an efficient back office
service, achieves the benefits of scalability and is able to achieve
administrative savings from future acquisitions.
It is still relatively early to determine the exact extent of the long
term benefits this initiative will yield whilst certain teething problems
are still being ironed out. The transition to the new back office process
is on track and no major disruption to the business has been experienced
as a result of its implementation.
The Group is also in the process of upgrading its ERP system to the latest
version of Microsoft Dynamics AX which should offer further opportunities
for cost savings and efficiencies in the back office.
Subsequent to the balance sheet date and as reported to shareholders, the
Group has put in place a new Broad Based Black Economic Empowerment
(BBBEE) shareholding structure which will re-entrench Adcorp’s status as a
Level 2 contributor and secure this advantageous position for the next ten
years to come.
Proposed legislation aimed at further regulating labour broking in South
Africa continues to be held up in the parliamentary process. It now
appears unlikely that such legislation will be promulgated much before the
end of the year.
Financial overview
Normalised earnings per share of 341,1 cents for the year ended 28
February 2013 was 14% ahead of the 299,5 cents per share for the
comparative period as a result of increased contributions from the blue
and white collar segments. Whilst gross profit margins are lower than the
prior year due mainly to changes in business mix, Normalised EBITDA
margins improved to 4,9% (FY2012: 4,8%) given robust operating cost
control as evidenced by an improvement in the expense ratio to 15,5%
(FY2012: 16,9%).
Debt collection remains a critical part of the business and an ongoing
focus area for management. Cash management remains a high priority and in
this regard, the days settlement outstanding (DSO) totalled 41 days
(FY2012: 36 days). This result was achieved in the context of the
continued challenging collections environment.
Cash generated from operations before working capital increased by 34%
mainly due to the higher level of profitability year on year. Management
of working capital resulted in R28 million being consumed when compared to
the R89 million being consumed in the prior year. This contributed to R379
million of net cash being generated by operations being 76% higher when
compared to the R215 million generated for the prior year. During the
current year, the Group incurred increased finance charges mainly as a
result of the first full year annualised effect of the interest arising on
the Paracon acquisition debt. The Group also recorded a significantly
higher normalised effective tax rate of 20% (FY2012: 16%) as a result of
the inclusion of Paracon as well as fewer learnership deductions as
reported above.
Acquisition of business
As referred to above, the acquisition of Paxus was concluded with effect
from 25 January 2013. As such, it has been included in Group profits for
one month of this financial year. In terms of IAS 34 Interim Financial
Reporting requirements, the loss before tax from Paxus included in Group
net profit before tax for the year ended February 2013 is R3 million after
taking account of non-cash flow IFRS charges and acquisition related
transaction costs. Had the business combination been effective from 1
March 2012, the revenue of the Group would have been R11 billion and net
profit after tax would have totalled R224 million. The directors of the
Group consider these numbers to represent an approximate measure of the
performance of the combined Group on an annualised basis and to provide a
reference point for comparison in future periods. In addition, the Group
undertook the acquisitions of Resources for Africa Limited (RFA),
Kanimambo, Staffline and made an increased investment in Envisionme
previously an associate of the group. All of these transactions were
funded out of working capital and their contributions to Group revenues
and profits are considered immaterial.
2013 2012
Total Total
R’000 Reviewed Audited
Total purchase consideration 680 608 667 406
Less: Cash and cash equivalents acquired (52 529) (44 841)
Cash outflow on acquisition of business 628 079 622 565
Net purchase consideration for all business
combinations 628 079 622 565
Issue of shares – Acquisitions (366 340) (371 699)
Capitalisation of transaction costs – raising of
equity on acquisition 5 128 4 100
Cash outflow on acquisition of business 266 867 254 966
In complying with the IFRS 3, Business Combinations, the Group determined
the fair value of the assets and liabilities acquired on the acquisition
of the business as follows:
2013 2012
Reviewed Audited
R’000 Paxus Other Total Total
Property, plant and equipment 5 104 51 5 155 6 768
Intangible assets 205 038 – 205 038 247 503
Investment in associate – – – 44 777
Trade and other receivables 334 157 812 334 969 134 689
Doubtful debts provisions (673) - (673) –
Cash and cash equivalents 47 416 5 113 52 529 44 841
Non-controlling interest - (436) (436) -
Trade and other payables (131 736) (3 771) (135 507) (90 218)
Provisions (20 380) (52) (20 432) (11 440)
Taxation – – – (8 360)
Deferred taxation (10 214) 1 078 (9 136) (59 523)
428 712 2 795 431 507 309 037
Resulting goodwill on acquisition 187 702 61 399 249 101 358 369
Total consideration 616 414 64 194 680 608 667 406
Changes to the board of Adcorp
Ms SN Mabaso-Koyana was appointed as a non-executive independent director
on Monday, 17 September 2012.
Outlook and prospects
Against the background of a volatile labour environment, legislative
uncertainty relating to labour broking as well as an uncertain global
economy, the Group has been able to achieve double digit profit growth.
This bears testimony to its strong and considered strategic positioning.
In addition, the Group is better diversified across different geographies
than ever before and is far less reliant on the proportion of its profit
derived solely from labour broking as defined.
Given Adcorp’s positioning, the various market trends that currently
favour it as well as its ability to service high growth industries and
developing geographical areas, the Group is well positioned for the
future.
Basis of preparation
The Group’s reviewed consolidated preliminary results are prepared in
accordance with the requirements of the JSE Limited Listings Requirements
for provisional reports, the requirements of the Companies Act applicable
to summary financial statements, the framework, measurement and
recognition requirements of International Financial Reporting Standards
(IFRS), the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee, the Financial Reporting Pronouncements as issued by
the Financial Reporting Standards Council and the requirements of IAS 34
Interim Financial Reporting. The accounting policies applied in the
preparation of the results are in terms of IFRS and are consistent with
the accounting policies applied in the preparation of the group’s previous
consolidated annual financial statements.
Contingent liabilities and commitments
The bank has guaranteed R9,3 million (FY2012: R11,7 million) on behalf of
the Group to creditors. As at the balance sheet date the Group has
outstanding operating lease commitments totalling R152,2 million (FY2012:
R100,3 million) in non-cancellable property leases. The Group has IT
capital commitments contracted for of R15,5 million (FY2012: R7,9 million)
relating to the Microsoft Dynamix AX 2012 upgrade.
Events after the reporting period
Subsequent to the closure of the financial year ended 28 February 2013 and
prior to the approval of these reviewed Consolidated Preliminary Group
results, namely 22 May 2013, the Group undertook three significant
transactions. On 5 March 2013, the Paracon acquisition bridge loan debt,
included in short term loans above, was repaid in full using internally
generated cash resources. On 8 March 2013 the Group successfully issued
R500 million secured notes under its registered Domestic Medium Term Note
(“DMTN”) programme and on 25 March 2013 the Group announced the terms of
the new 10 year Broad Based Black Economic Empowerment (BBBEE) transaction
which was approved by shareholders at the general meeting held on 20 May
2013. Whilst the importance of each transaction differs, their individual
financial impacts are significant and shall be experienced in the
financial year ending 28 February 2014.
Change of Company Secretary
Premium Corporate Consulting Services Proprietary Limited has resigned as
Company Secretary with effect from 31 May 2013. As of 1 June 2013, AM
Sher, the Company’s Chief Financial Officer, shall assume the
responsibilities of acting Company Secretary until a suitable replacement
is found.
Declaration of Final Dividend
Notice is hereby given that a final gross dividend of 80 cents per share
for the year ended 28 February 2013 (FY2012: 80 cents per share) was
declared on Wednesday, 22 May 2013 payable to shareholders recorded in the
share register of the Company at the close of business on the record date
appearing below. The salient dates pertaining to the final dividend are as
follows:
Last date to trade “cum” dividend Friday, 23 August 2013
Date trading commences “ex” dividend Monday, 26 August 2013
Record date Friday, 30 August 2013
Date of payment Monday, 2 September 2013
Ordinary share certificates may not be dematerialised or rematerialised
between Monday, 26 August 2013 and Friday, 30 August 2013, both days
inclusive.
In determining the dividends tax (DT) of 15% to withhold in terms of the
Income Tax Act for those shareholders who are not exempt from the DT, no
secondary tax on companies (STC) credits have been utilized. Shareholders
who are not exempt from the DT will therefore receive a net dividend of 68
cents per share. The Company has 91 811 776 ordinary shares in issue and
its income tax reference number is 9233/68071/0.
The above dates are subject to change. Any changes will be released on
SENS and published in the South African press.
Where applicable, dividends in respect of certificated shares will be
transferred electronically to shareholders’ bank accounts on the payment
date. In the absence of specific mandates, dividend cheques will be posted
to shareholders. Ordinary shareholders who hold dematerialised shares will
have their accounts at their CSDP or broker credited/updated on Monday, 2
September 2013.
Preparation
The financial results have been prepared by the Group Financial Manager, A
Viljoen (B.Comm Honours) and supervised by the Group Chief Financial
Officer, AM Sher (CA(SA)), CFA.
Auditor’s Report
The results have been reviewed by the independent auditors, Deloitte &
Touche and a copy of their unmodified review report is available for
inspection at the registered office of the Company, Adcorp Office Park,
corner William Nicol and Wedgewood Link, Bryanston. The review was
performed in accordance with ISRE 2410 Review of Interim Financial
Information Performed by the Independent Auditor of the Entity. Any
reference to future financial performance included in this announcement,
has not been reviewed or reported on by the Company’s auditors.
By order of the board
MJN Njeke RL Pike AM Sher
Chairman Chief Executive Officer Chief Financial Officer
22 May 2013
Date: 22/05/2013 12:33:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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