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PRELIMINARY CONSOLIDATED AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2012, FINAL DIVIDEND DECLARATION AND NOTICE OF A
ADAPT IT HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/017276/06)
Share code: ADI
ISIN: ZAE000113163
("Adapt IT" or "the Company" or "the Group")
PRELIMINARY CONSOLIDATED AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2012, FINAL DIVIDEND DECLARATION AND NOTICE OF ANNUAL GENERAL MEETING
Revenue increased by 24% to R224,7 million
Operating profit increased by 48% to R22,2 million
Headline Earnings per share increased by 52% to 17,46 cents
STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2012
Group Group Company Company
2012 2011 2012 2011
R R R R
Revenue 224 768 928 180 906 538 9 990 213 7 965 324
Turnover 219 613 534 173 532 636
Cost of sales (115 707 737) (90 107 278)
Gross profit 103 905 797 83 425 358
Administrative, selling and other costs (82 606 979) (71 505 256) (2 071 795) (3 436 911)
Sundry revenue 908 304 3 128 235 1 113 032
Dividend income 3 075 051 6 826 924
Profit from operations 22 207 122 15 048 337 1 003 256 4 503 045
Finance income 4 247 090 4 245 667 22 25 368
Finance costs (706 836) (1 100 654) (43 666) (4 792)
Profit before taxation 25 747 376 18 193 350 959 612 4 523 621
Income tax expense (7 604 224) (4 947 226) (282 873) (356 658)
Profit for the year 18 143 152 13 246 124 676 739 4 166 963
Attributable to:
Equity holders of the parent 18 143 152 11 044 511 676 739 4 166 963
Non-controlling interests 2 201 614
Other comprehensive income 389 143 134 548
Exchange differences arising from translation of
foreign operations 389 143 134 548
Total comprehensive income 18 532 295 13 380 672 676 739 4 166 963
Attributable to:
Equity holders of the parent 18 532 295 11 246 812 676 739 4 166 963
Non-controlling interests 2 133 860
Basic earnings per share (cents) 17,46 11,36
Basic diluted earnings per share (cents) 17,46 11,36
STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2012
Group Group Company Company
2012 2011 2012 2011
R R R R
ASSETS
Non-current assets 60 049 877 43 868 909 58 625 104 46 196 326
Property and equipment 20 475 190 21 533 510
Intangible assets 1 307 944 1 452 498
Goodwill 25 657 554 10 407 854
Interest in subsidiaries and share trust 48 115 401 30 865 201
Loans to subsidiary 10 461 125 15 331 125
Deferred taxation asset 12 609 189 10 475 047 48 578
Current assets 86 828 424 61 745 521 1 063 848 797 600
Trade and other receivables 61 412 034 43 067 695 499 915 82 981
Current tax receivable 21 184 461 730 346 861
Cash and cash equivalents 25 395 206 18 677 826 102 203 367 758
Total assets 146 878 301 105 614 430 59 688 952 46 993 926
EQUITY AND LIABILITIES
Equity 70 161 063 48 152 118 19 823 407 13 315 474
Share capital 10 844 9 835 11 100 9 881
Share premium 14 920 145 8 650 098 17 457 386 8 833 005
Foreign currency translation reserve 505 175 116 032
Retained earnings 54 724 899 39 376 153 2 354 921 4 472 588
Non-current liabilities 4 383 546 5 747 229 7 284
Interest-bearing borrowings 642 519 1 575 836
Deferred taxation liability 3 741 027 4 171 393 7 284
Current liabilities 72 333 692 51 715 083 39 858 261 33 678 452
Trade and other payables 15 225 905 9 718 636 673 405 219 659
Provisions 12 730 286 8 887 625 1 443 258
Deferred income 42 461 565 31 076 107
Amounts owing to subsidiaries 37 741 598 33 458 793
Current tax payable 799 841
Current portion of interest-bearing borrowings 1 171 156 1 232 874
Bank overdraft 744 780
Total equity and liabilities 146 878 301 105 614 430 59 688 952 46 993 926
Number of ordinary shares in issue 111 001 011 98 181 551
Net asset value per share 67.52 49.52
Tangible net asset value per share 30.70 28.04
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2012
Group Group Company Company
2012 2011 2012 2011
R R R R
OPERATING ACTIVITIES
Cash generated from/(utilised in) operations 29 237 346 17 653 319 (591 725) (2 270 476)
Finance income 4 247 090 4 245 667 22 25 368
Finance costs (706 836) (1 100 654) (43 666) (4 792)
Dividends received 3 075 051 6 826 924
Dividends paid (2 794 406) (3 263 884) (2 794 406) (3 263 884)
Taxation paid (12 485 448) (10 666 006) (439 036) (845 658)
Other non-cash flow items 14 383
Net cash flow from/(utilised in) operating activities 17 497 746 6 882 825 (793 760) 467 482
INVESTING ACTIVITIES
Property and equipment acquired (1 167 561) (1 761 430)
Intangible assets acquired and developed (841 158) (1 506 925)
Proceeds on disposal of property and equipment 24 343 17 308
Net cash flow on acquisition of subsidiary 4 199 307
Increase in investments on acquisition
of BI Planning Services (17 250 200)
Net cash flows from investment activities 2 214 931 (3 251 047) (17 250 200)
FINANCING ACTIVITIES
Proceeds from borrowings 9 046 11 201 277
Repayment of borrowings (1 004 081) (12 633 246)
Share repurchases (2 377 619)
Net cash flow on disposal of investment properties 152 525
Issue of Company's shares 8 625 600 720 845
Increase in amounts owing to subsidiaries 9 152 805 12 312 376
Increase in investments in subsidiaries (13 201 687)
Acquisition of interest in ITS Holdings (19 126 691)
Repayment of vendor loans (10 909 091)
Repayment of shareholders' loans (3 656 539)
Net cash (outflow)/inflow from financing activities (14 129 220) (24 215 199) 17 778 405 (168 466)
Net increase/(decrease) in cash resources 5 583 457 (20 583 421) (265 555) 299 016
Exchange differences on translation 389 143 134 548
Cash and cash equivalents at beginning of the year 18 677 826 39 126 699 367 758 68 742
Cash and cash equivalents at end of the year 24 650 426 18 677 826 102 203 367 758
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2012
Attributable to equity holders of the parent
Share- Foreign Non-
based currency control-
Share Share payment translation Retained ling Total
capital premium reserve reserve earnings Total interests equity
R R R R R R R R
GROUP
Balance at 30 June 2010 9 570 7 196 322 893 020 (86 269) 34 666 074 42 678 717 7 825 266 50 503 983
Total comprehensive income
for the year 202 301 11 044 511 11 246 812 2 133 861 13 380 673
Profit for the year 11 044 511 11 044 511 2 201 614 13 246 125
Other comprehensive
income for the year 202 301 202 301 (67 753) 134 548
Transfer from share-based
payment (893 020) 893 020
Shares issued during the year 265 1 453 776 1 454 041 1 454 041
Acquisition of non-controlling
interest in subsidiaries (3 963 568) (3 963 568) (9 959 127) (13 922 695)
Dividend paid (3 263 884) (3 263 884) (3 263 884)
Balance at 30 June 2011 9 835 8 650 098 116 032 39 376 153 48 152 118 48 152 118
Total comprehensive income
for the year 389 143 18 143 152 18 532 295 18 532 295
Profit for the year 18 143 152 18 143 152 18 143 152
Other comprehensive
income for the year 389 143 389 143 389 143
Issue of shares 1 219 8 624 381 8 625 600 8 625 600
Net repurchase of shares (210) (2 354 334) (2 354 544) (2 354 544)
Dividend paid (2 794 406) (2 794 406) (2 794 406)
Balance at 30 June 2012 10 844 14 920 145 505 175 54 724 899 70 161 063 70 161 063
Share Share Retained Total
capital premium earnings equity
R R R R
COMPANY
Balance at 30 June 2010 9 745 8 112 296 3 569 509 11 691 550
Total comprehensive income for the year 4 166 963 4 166 963
Shares issued during the year 136 720 709 720 845
Dividend paid (3 263 884) (3 263 884)
Balance at 30 June 2011 9 881 8 833 005 4 472 588 13 315 474
Total comprehensive income for the year 676 739 676 739
Issue of shares 1 219 8 624 381 8 625 600
Dividend paid (2 794 406) (2 794 406)
Balance at 30 June 2012 11 100 17 457 386 2 354 921 19 823 407
Refer to note 14 for detail on share capital movement.
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
EARNINGS AND DIVIDENDS PER SHARE
Earnings per share
The calculation of earnings per share is based on the profit attributable to equity holders of R18 143 152 (2011: R11 044 511) and the
weighted average number of ordinary shares in issue during the year of 103 904 368 (2011: 97 245 767). The calculation of fully diluted
earnings per share is based on the profit of R18 143 152 (2011: R11 044 511) and the weighted average number of ordinary shares in issue
during the year of 103 904 368 (2011: 97 245 767).
There is no effect of dilution in the current or prior year.
Group Group
2012 2011
R R
Reconciliation between earnings and headline earnings
Earnings attributable to equity holders of the parent 18 143 152 11 044 511
Adjusted for:
(Profit)/loss on sale of property and equipment (refer note 2) (16 655) 101 467
Impairment of investment 51
Headline earnings 18 126 497 11 146 029
Basic earnings per share (cents) 17,46 11,36
Headline earnings per share (cents) 17,45 11,46
Fully diluted basic earnings per share (cents) 17,46 11,36
Fully diluted headline earnings per share (cents) 17,45 11,46
Dividends per share (cents) 2,84 3,41
EVENTS AFTER THE REPORTING DATE
No significant transactions or events have occurred between year-end and the date of this report.
SEGMENT ANALYSIS
During the current year, the Group changed the operating segments to reflect the segments reviewed by management to make strategic decisions. In
fiscal 2011 the segments reported on were based on legal entities. In light of the strategy and way forward, the Group is organised into the following
segments:
Education ITS Holdings Ltd
Manufacturing Adapt IT (Pty) Ltd and ApplyIT (Pty) Ltd;
Financial services BI Planning Services (Pty) Ltd; and
Other includes Group head office activities.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and
performance assessment. Monthly management meetings are held to evaluate segment performance against budget and forecast.
The following tables present revenue and profit information regarding the Group's operating segments for the year ended 30 June 2012 and
30 June 2011, respectively:
Adjustments
Manu- Financial and
Education facturing Services Other eliminations Total
R R R R R R
2012
Revenue* 103 963 546 97 012 112 23 938 463 22 (145 215) 224 768 928
Third party 103 963 546 96 866 897 23 938 463 22 224 768 928
Inter-segment 145 215 (145 215)
Segment profit/(loss) before taxation 14 467 573 10 947 182 3 477 336 958 291 (4 103 006) 25 747 376
2011
Revenue* 93 304 664 91 458 851 1 138 409 (4 995 386) 180 906 538
Third party 93 283 869 87 597 291 25 378 180 906 538
Inter-segment 20 795 3 861 560 1 113 031 (4 995 386)
Segment profit/(loss) before taxation 14 616 932 7 137 166 (2 304 277) (1 256 471) 18 193 350
* Revenue includes sales and services rendered to customers, interest income and dividends received
The following table presents segment assets, liabilities, revenue and trade receivables by geographic area of the Group's operating segments as at
30 June 2012 and 30 June 2011:
Adjustments
Manu- Financial and
Education facturing Services Other eliminations Total
R R R R R R
2012
Total assets 115 156 398 96 191 538 10 190 450 59 857 135 (134 517 220) 146 878 301
Total liabilities 54 900 401 59 008 049 5 687 483 39 911 786 (82 790 481) 76 717 238
Revenue from external customers
by geographic area** 103 963 546 97 012 112 23 938 463 22 (145 215) 224 768 928
South Africa 56 364 622 47 389 997 23 938 463 22 (145 215) 127 547 889
African countries*** 39 020 378 41 493 101 80 513 479
Europe 3 499 220 3 499 220
Australasia 5 079 326 6 076 808 11 156 134
North America 2 052 206 2 052 206
Non-current assets by geographic area 69 614 982 22 517 922 520 507 58 578 863 (91 182 397) 60 049 877
South Africa 69 586 384 22 517 922 520 507 58 578 863 (91 182 397) 60 021 279
African countries***
Europe 10 892 10 892
Australasia 17 706 17 706
Trade receivables by geographic area 22 354 524 31 063 614 9 797 885 473 901 (1 173 818) 62 516 106
South Africa 118 482 13 214 348 9 797 885 473 901 (1 173 818) 22 430 798
African countries*** 15 717 114 12 248 922 27 966 036
Europe 327 449 327 449
Australasia 6 191 479 1 852 767 8 044 246
North America 3 747 577 3 747 577
2011
Total assets 102 382 428 84 578 620 46 816 571 (128 163 189) 105 614 430
Total liabilities 52 726 861 53 172 684 33 378 227 (81 815 460) 57 462 312
Revenue from external customers
by geographic area** 93 304 664 91 458 851 1 138 409 (4 995 386) 180 906 538
South Africa 49 469 160 53 184 736 1 138 409 (4 995 386) 98 796 919
African countries*** 32 569 179 28 551 336 61 120 515
Europe 3 232 901 3 232 901
Australasia 8 033 424 2 079 719 10 113 143
North America 7 643 060 7 643 060
Non-current assets by geographic area 66 777 118 23 034 579 46 150 085 (92 092 873) 43 868 909
South Africa 66 709 553 23 034 579 46 150 085 (92 092 873) 43 801 344
African countries***
Europe 21 754 21 754
Australasia 45 811 45 811
Trade receivables by geographic area 20 201 232 21 774 126 45 057 (884 834) 41 135 581
South Africa 3 170 618 8 536 489 45 057 (884 834) 10 867 330
African countries*** 9 429 218 8 480 533 17 909 751
Europe 287 260 287 260
Australasia 7 314 136 1 323 585 8 637 721
North America 3 433 519 3 433 519
** The revenue information above is based on the location of the customer
*** Africa countries: Ghana, Zambia, Tanzania, Mozambique, Namibia, Malawi, Swaziland, Uganda, Sierra Leone, Zimbabwe and Rwanda
Revenue of approximately R58 812 016 (2011: R40 475 309) is derived from a single external group customer. These revenues are attributable to
the Manufacturing segment.
Basis of preparation
The accounting policies applied in the preparation of these preliminary consolidated audited financial
statements, which are based on reasonable judgments and estimates, are in accordance with
International Financial Reporting Standards ("IFRS") and are consistent with those applied in the
annual financial statements for the year ended 30 June 2011.All amendments to IFRS were considered
insignificant to current year. These financial statements as set out
in this report have been prepared in terms of, the Companies Act, 2008, as amended, and the JSE
Listings Requirements. The financial statements have been prepared under the historical cost
method, except in the case of property measured at fair value. The financial statements have been
prepared as a going concern.
Audit report
The annual financial statements for the period ended 30 June 2012 have been audited by Ernst &
Young Inc. and their unqualified audit report is available for inspection at the Company`s registered
office.
Events subsequent to reporting date
There are no material events between the period end and the date of this report.
Financial performance
Revenue increased by 24% to R224,8 million against R180,9 million, the annual equivalent of the last
financial year. Operating profit increased by 48% to R22,2 million (2011: R15.0 million). The Basic
Earnings Per Share (EPS) were 54% higher than the comparable period at 17.46 cents per share(cps)
(2011: 11.36 cps), with Headline Earning Per Share (HEPS) 52% higher at 17.45 cps (2011: 11.46 cps).
Over the past five years the Group's revenue has increased fourfold from R58,1 million to R224,8
million, operating profit from R8,5 million to R22,2 million and HEPS from 8,17 cps to 17,45 cps. The
staff complement has more than doubled from 121 to 277 employees at the end of June 2012.
The Adapt IT Group operates as a Group of business divisions led by a core team of executives under
a single Adapt IT Group brand. In the reporting period, the Adapt IT Group operating segments
provided a variety of specialised turnkey IT solutions and services to the education, manufacturing
and financial services sectors.
The Group delivered a sterling financial performance under challenging market conditions, through
the implementation of the sustainable growth and diversification strategy adopted by the board.
The strategy aims to deliver revenue and profits higher than average returns for the South African
ICT market. Some of the key strategic achievements for the year under review included: increasing
education sector market penetration; improving the manufacturing sector operational efficiency;
introducing the financial services sector competence through the BI Planning Services ("BiPS")
acquisition; improving customer service; and maintaining the level 3 BBBEE rating.
The Group is progressing with its initiative to attract new customers, led by operational
management who are implementing the organisations organic growth strategy. The Group continues
to seek earnings enhancing acquisitions.
In spite of the global economy not being expected to experience a dramatic turnaround in the next
financial year, we continue to seek growth prudently and explore diversification into higher growth
sectors to hedge against any downturn. We believe that the Adapt IT Group is well placed to
continue its performance and that it is fast becoming a compelling investment in shareholder
portfolios.
There were no changes to the Board during the year under review.
Appreciation
The Board extends its sincere thanks to the Group`s long-standing and new customers, suppliers,
partners, shareholders and service providers for their ongoing support of Adapt IT. In addition, the
Board thanks Adapt IT`s staff, without whose dedication, hard work, enthusiasm, team spirit, skills
and appetite for growth and change, the Group would not be the industry leader it is today.
Ordinary dividend number 10
The Board has set a policy of considering a dividend once annually, after the year-end. The board has
declared a dividend on a dividend cover ratio of four times as the Group wishes to retain a significant
proportion of profits for future growth activities. The Group will have sufficient working capital to
meet its requirements after the dividend payment. Notice is hereby given that a cash dividend of
4,84 cents per share ("the dividend") has been declared for the year ended 30 June 2012, payable to
shareholders recorded in the books of the Company at close of business on 14 September 2012.
This dividend, having been declared after 30 June 2012, has not been provided for in the financial statements.
The salient dates relating to the cash dividend are as follows:
Last day to trade shares cum dividend Friday, 7 September 2012
Shares trade ex-dividend Monday, 10 September 2012
Record date Friday, 14 September 2012
Payment date Monday, 17 September 2012
Share certificates may not be dematerialised or rematerialised during the period 10 September 2012 to 14 September 2012, both days inclusive.
In terms of the Listings Requirements of the JSE Limited regarding the new Dividends Tax effective 1 April 2012, the following additional information is disclosed:
1. The dividend should be treated as an income payment;
2. The local dividend tax rate is 15%;
3. There are no Secondary Tax on Companies credits utilised against the dividend;
4. The gross local dividend amount is 4.840 cents per share for shareholders exempt from paying the new Dividends Tax;
5. The net local dividend amount is 4.114 cents per share for shareholders liable to pay the new DividendsTax;
6. The issued share capital of Adapt IT is 111 001 011 shares; and
7. Adapt IT's tax reference number is 9410/002/71/2.
Notice of the Annual General meeting and posting of Annual Report
The integrated annual report will be mailed to shareholders on 3 September 2012.
Notice is hereby given that the 13th Annual General Meeting of shareholders of Adapt IT will be held
at 09:00 am on Friday, 26 October 2012 at 4 & 5 Rydall Office Park, Rydall Vale Crescent, La Lucia Ridge.
The board of directors of the Company determined that, in terms of section 62(3)(a), as read with
section 59 of the Companies Act, 2008 (Act 71 of 2008), the record date for the purposes of
determining which shareholders of the Company are entitled to participate in and vote at the Annual
General Meeting is Friday, 19 October 2012. Accordingly, the last day to trade Adapt IT shares in
order to be recorded in the register to be entitled to vote will be Friday, 12 October 2012.
Directors
Dr Bernard Ravnö* (Chairman), Sbu Shabalala (Chief Executive Officer),
Siboniso Shabalala (Financial Director), Tiffany Dunsdon (Commercial Director), Bongiwe Ntuli*,
Mandla Nhlapo*, Tembisa Dingaan*, Craig Chambers*
*Independent non-executive director
Registered office
4/5 Rydall Vale Office Park
Rydall Vale Crescent
La Lucia Ridge
KwaZulu-Natal
Postal address
PO Box 5207
Rydall Vale Park
La Lucia Ridge Office Estate
Durban, 4019
Transfer secretary
Computershare Investor Services (Proprietary) limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Sponsor
Merchantec Capital
Company secretary
Statucor (Proprietary) Limited
Auditors
Ernst & Young Inc.
Durban
Durban
21 August 2012
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