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Preliminary audited results for the year ended 30 June 2013, final dividend declaration and notice of AGM
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 2013, FINAL DIVIDEND DECLARATION AND NOTICE OF ANNUAL GENERAL MEETING
STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2013
GROUP GROUP COMPANY COMPANY
2013 2012 2013 2012
R R R R
Revenue 306 035 046 224 768 928 12 437 997 9 990 213
Turnover 303 401 597 219 613 534
Cost of sales (171 782 171) (115 707 737)
Gross profit 131 619 426 103 905 797
Administrative, selling and other costs (102 734 945) (82 606 979) (931 743) (2 071 795)
Sundry revenue 515 031 908 304 8 652
Dividend income 3 075 051
Profit/(loss) from operations 29 399 512 22 207 122 (923 091) 1 003 256
Finance income 2 118 418 4 247 090 14 672 22
Finance costs (785 526) (706 836) (43 666)
Profit/(loss) before taxation 30 732 404 25 747 376 (908 419) 959 612
Income tax (expense)/credit (6 641 751) (7 604 224) 401 847 (282 873)
Profit/(loss) for the year 24 090 653 18 143 152 (506 572) 676 739
Attributable to:
Equity holders of the parent 24 090 653 18 143 152 (506 572) 676 739
Other comprehensive income 2 224 730 389 143
Revaluation of land and building 2 224 914
Income tax effect (622 976)
Exchange differences arising from translation
of foreign operations 622 792 389 143
Total comprehensive income/(loss) 26 315 383 18 532 295 (506 572) 676 739
Attributable to:
Equity holders of the parent 26 315 383 18 532 295 (506 572) 676 739
Basic earnings per share (cents) 22,25 17,46
Basic diluted earnings per share (cents) 22,25 17,46
STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2013
Group Group Company Company
2013 2012 2013 2012
R R R R
ASSETS
Non-current assets 86 684 069 60 049 877 54 235 229 58 625 104
Property and equipment 28 351 209 20 475 190
Intangible assets 5 772 000 1 307 944
Goodwill 38 010 030 25 657 554
Interest in subsidiaries and share trust 48 115 401 48 115 401
Loans to subsidiary 5 641 125 10 461 125
Deferred taxation asset 14 550 830 12 609 189 478 703 48 578
Current assets 92 038 482 86 828 424 2 483 204 1 063 848
Trade and other receivables 64 038 739 61 412 034 101 270 499 915
Current tax receivable 5 307 082 21 184 114 515 461 730
Cash and cash equivalents 22 692 661 25 395 206 2 267 419 102 203
Total assets 178 722 551 146 878 301 56 718 433 59 688 952
EQUITY AND LIABILITIES
Equity 92 233 683 70 161 063 15 244 386 19 823 407
Share capital 11 100 11 100 11 100 11 100
Treasury shares (277) (256)
Share premium 14 625 917 14 920 145 17 457 386 17 457 386
Other capital reserves 1 300 000 1 300 000
Foreign currency translation reserve 1 127 967 505 175
Revaluation reserve 1 601 938
Retained earnings 73 567 038 54 724 899 (3 524 100) 2 354 921
Non-current liabilities 3 746 839 4 383 546 25 518 7 284
Interest-bearing borrowings 642 519
Deferred taxation liability 3 746 839 3 741 027 25 518 7 284
Current liabilities 82 742 029 72 333 692 41 448 529 39 858 261
Trade and other payables 18 549 873 15 225 905 449 751 673 405
Provisions 14 200 079 12 730 286 1 709 655 1 443 258
Deferred income 47 979 558 42 461 565
Amounts owing to subsidiaries 39 289 123 37 741 598
Current portion of interest-bearing borrowings 642 519 1 171 156
Current portion of non-interest-bearing
borrowings 1 370 000
Bank overdraft 744 780
Total equity and liabilities 178 722 551 146 878 301 56 718 433 59 688 952
Number of ordinary shares in issue 111 001 011 111 001 011
Net asset value per share (cents) 85.18 67.52
Tangible net asset value per share (cents) 36.64 30.70
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2013
Group Group Company Company
2013 2012 2013 2012
R R R R
OPERATING ACTIVITIES
Cash generated from/(utilised in) operations 36 662 063 29 237 346 (481 703) (591 725)
Finance income 2 118 418 4 247 090 14 672 22
Finance costs (785 526) (706 836) (43 666)
Dividends received 3 075 051
Dividends paid (5 248 514) (2 794 406) (5 372 449) (2 794 406)
Taxation (paid)/refunded (11 481 189) (12 485 448) 337 171 (439 036)
Net cash flow from/(utilised in)
operating activities 21 265 252 17 497 746 (5 502 309) (793 760)
INVESTING ACTIVITIES
Property and equipment acquired (7 902 169) (1 167 561)
Intangible assets acquired and developed (6 578 478) (841 158)
Proceeds on disposal of property and
equipment 58 723 24 343
Net cash (outflow)/inflow on acquisition
of subsidiary (7 164 718) 4 199 307
Increase in investments on acquisition of BIPS (17 250 200)
Net cash (utilised in)/flows from
investment activities (21 586 642) 2 214 931 - (17 250 200)
FINANCING ACTIVITIES
Proceeds from borrowings 28 916 920 9 046
Repayment of borrowings (30 878 076) (1 004 081)
Share repurchases (294 249) (2 377 619)
Net cash flow on disposal of
investment properties 152 525
Issue of Company's shares 8 625 600
Increase in amounts owing to subsidiaries 7 667 525 9 152 805
Repayment of vendor loans (10 909 091)
Net cash (utilised in)/flows from
financing activities (2 255 405) (14 129 220) 7 667 525 17 778 405
Net (decrease)/increase in cash resources (2 576 795) 5 583 457 2 165 216 (265 555)
Exchange differences on translation 619 030 389 143
Cash and cash equivalents at beginning
of year 24 650 426 18 677 826 102 203 367 758
Cash and cash equivalents at end of year 22 692 661 24 650 426 2 267 419 102 203
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2013
Attributable to equity holders of the parent
Foreign
Other Asset currency
Share Treasury Share capital revaluation translation Retained Total
capital shares premium reserves reserve reserve earnings equity
GROUP R R R R R R R R
Balance at 30 June 2011 9 881 (46) 8 650 098 116 032 39 376 153 48 152 118
Total comprehensive
income for the year 389 143 18 143 152 18 532 295
Profit for the year 18 143 152 18 143 152
Other comprehensive
income for the year 389 143 389 143
Shares issued during the year 1 219 8 624 381 8 625 600
Net repurchase of shares (210) (2 354 334) (2 354 544)
Dividend paid (2 794 406) (2 794 406)
Balance at 30 June 2012 11 100 (256) 14 920 145 505 175 54 724 899 70 161 063
Total comprehensive
income for the year 1 601 938 622 792 24 090 653 26 315 383
24 090 653 24 090 653
Profit for the year
Other comprehensive
1 601 938 622 792 2 224 730
income for the year
Shares to be issued 1 300 000 1 300 000
Net repurchase of shares (21) (294 228) (294 249)
Dividend paid (5 248 514) (5 248 514)
Balance at 30 June 2013 11 100 (277) 14 625 917 1 300 000 1 601 938 1 127 967 73 567 038 92 233 683
Other Retained
Share Share capital earnings/ Total
capital premium reserves (loss) equity
COMPANY R R R R R
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
Shares issued during the year 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
Total comprehensive loss
for the year (506 572) (506 572)
Issue of shares
Shares to be issued 1 300 000 1 300 000
Dividend paid (5 372 449) (5 372 449)
Balance at 30 June 2013 11 100 17 457 386 1 300 000 (3 524 100) 15 244 386
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
EARNINGS AND DIVIDENDS PER SHARE
Earnings per share
The calculation of earnings per share is based on the profit attributable to equity holders of R24 090 653
(2012: R18 143 152) and the weighted average number of ordinary shares in issue during the year of 108
286 526 (2012: 103 904 368). The calculation of fully diluted earnings per share is based on the profit of
R24 090 653 (2012: R18 143 152) and the weighted average number of ordinary shares in issue during the
year of 108 286 526 (2012: 103 904 368).
There is no effect of dilution in the current or prior year.
Group Group
2013 2012
R R
Reconciliation between earnings and headline earnings
Earnings attributable to equity holders of the parent 24 090 653 18 143 152
Adjusted for:
Loss/(profit) on sale of property and equipment (refer note 3) 20 852 (16 655)
Headline earnings 24 111 505 18 126 497
Basic earnings per share (cents) 22,25 17,46
Headline earnings per share (cents) 22,27 17,45
Fully diluted basic earnings per share (cents) 22,25 17,46
Fully diluted headline earnings per share (cents) 22,27 17,45
Dividends per share (cents) 4,84 2,84
EVENTS AFTER THE REPORTING DATE
On 1 July 2013, BI Planning Services (Pty) Ltd, ITS Abacus (Pty) Ltd, ITS Africa Technologies (Pty) Ltd, ITS Holdings
(Pty) Ltd, ITS Tertiary Software (Pty) Ltd and Synet (Pty) Ltd were amalgamated into Adapt IT (Pty) Ltd in
accordance with the provisions of Section 113, 115 and 116 of the Companies Act, 2008, as amended.
The reasons for the amalgamation are, inter alia:
To rationalise the Adapt IT Group;
To reduce the number of Adapt IT Group entities;
To achieve efficiencies and savings in administrative and operational expenditure; and
To simplify the Adapt IT Group structure.
SEGMENT ANALYSIS
The Group is organised into the following segments:
Education ITS Holdings (Pty) Ltd
Manufacturing (includes Mining and Energy) Adapt IT (Pty) Ltd, ApplyIT (Pty) Ltd and Swicon360 (Pty) Ltd.
Financial services BI Planning Services (Pty) Ltd
Other includes Group and shared services 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 2013 and 30 June 2012 respectively:
Adjustments
Manu- Financial and
Education facturing Services Other eliminations Total
R R R R R R
2013
Revenue* 122 044 453 135 538 369 48 622 631 23 324 (193 731) 306 035 046
Third party 121 850 723 135 538 369 48 622 631 23 324 306 035 047
Inter-segment 193 730 (193 731) (1)
Segment profit/(loss)
before taxation 15 967 843 15 852 117 3 199 272 (909 757) (3 377 071) 30 732 404
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
* Revenue includes sales and services rendered to customers, interest income and dividends received.
The following table presents segment assets, liabilities, trade receivables and revenue by geographic area of the
Group's operating segments as at 30 June 2013 and 30 June 2012:
Adjustments
Manu- Financial and
Education facturing Services Other eliminations Total
R R R R R R
2013
Total assets 125 515 856 138 424 335 11 536 119 56 885 278 (153 639 037) 178 722 551
Total liabilities 51 603 915 87 634 162 4 741 165 41 520 289 (99 010 664) 86 488 867
Revenue by
geography 122 044 453 135 662 304 48 622 631 (100 611) (193 731) 306 035 046
South Africa 95 154 461 92 247 420 48 622 631 (100 611) (193 731) 235 730 170
African countries* 19 835 429 37 658 272 57 493 701
Europe 3 453 730 3 453 730
Australasia 3 600 833 3 520 217 7 121 050
North America 2 236 395 2 236 395
Non-current assets by
geography 87 389 565 42 985 891 610 487 54 188 988 (98 490 863) 86 684 068
South Africa 86 961 316 42 985 891 610 487 54 188 988 (98 490 863) 86 255 819
African countries*
Europe 35 771 35 771
Australasia 392 478 392 478
Trade receivables by
geography 22 428 934 35 291 928 7 471 961 (149 137) 65 043 686
South Africa 14 047 692 24 419 105 7 471 961 (149 137) 45 789 621
African countries* 4 179 053 7 413 820 11 592 873
Europe 391 106 391 106
Australasia 3 811 083 1 024 710 4 835 793
North America 2 434 293 2 434 293
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
geography 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
geography 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
geography 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
* African countries are: Ghana, Zambia, Tanzania, Mozambique, Namibia, Malawi, Swaziland, Lesotho,
Botswana, Uganda, Sierra Leone, Zimbabwe and Rwanda.
Revenue of approximately R50 624 466 (2012: R58 812 016) 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 2012.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 on the going concern basis and have been prepared under the
supervision of Ms Tiffany Dunsdon, the financial director.
Audit report
The annual financial statements for the period ended 30 June 2013 have been audited by the Group's auditors, Ernst &
Young Inc. and their unqualified audit report is available for inspection at the Company's registered
office.
Financial Performance
JSE listed Adapt IT, today announced its annual results for the year ended 30 June 2013. Revenue for
the year increased by 36% to R306 million, with annuity revenue representing a healthy 40% of total turnover.
Operating profit grew by 32% to R29,4 million, maintaining the operating margin at 10%. Basic earnings per
share grew by 27%, while headline earnings per share grew by 28% on the prior year, substantially above the
average of the ICT sector.
Sbu Shabalala, CEO of Adapt IT says: "Under challenging market conditions, Adapt IT has delivered another
strong financial performance in 2013 through the continued implementation of a sustainable growth and
diversification strategy. As of 1 July 2013 we are better positioned to enhance operational efficiencies
through an amalgamation of the Company's subsidiaries into the main operating subsidiary. This enables us
to do business under one Adapt IT brand and contributes to improving our value proposition and service to
customers."
Other achievements in the review period include: increasing the Education sector's market penetration into
the African market; improving the Manufacturing segment's operational efficiency; and introducing SAP® and
Cloud Services (Powered by SAP®) through the Swicon360 (Pty) Ltd acquisition in October 2012.
Shabalala says Adapt IT continues to enjoy the benefits of a strong financial position, a recurring revenue
model and low capital expenditure, all of which position the company for long-term success. "We are committed
to enhancing stakeholder value."
"Business in developing markets is improving for all sectors and the expectation is that more companies will
reinvest in Information Technology. This improvement will definitely filter through in the next year to the
African markets within which we operate," says Shabalala.
"During 2013, we have significantly improved our service and product portfolio and are strategically positioned
to grow business in differentiated sectors, markets and geographies. Adapt IT therefore continues to be a
compelling investment for shareholders," concludes Shabalala.
Changes to the Board during the year under review
Dr Bernard Ravnö resigned as chairman on 26 October 2012 due to King III best practice guidelines and Craig
Chambers, the lead independent non-executive director of the Group was appointed as chairman with effect
from 26 October 2013.
Mandla Nhlapo resigned on 8 February 2013 and Oliver Fortuin was appointed on this day as an independent
non-executive Board member.
Siboniso Shabalala resigned as financial director on 31 March 2013 and Tiffany Dunsdon was appointed as
financial director with effect from 1 April 2013.
Appreciation
The Board extends its sincere thanks to Adapt IT'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.
Dividends: Ordinary dividend number 11
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 5,56 cents per share (the dividend) has been declared for the
year ended 30 June 2013, payable to shareholders recorded in the books of the Company at close of
business on 13 September 2013.
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:
- This is a dividend as defined in the Income Tax Act, 1962, and is payable from income reserves;
- The South African dividend tax (DT) rate is 15%;
- No credits in terms of secondary tax on companies have been utilised. Accordingly, the dividend to
utilise in determining the DT is 5,56 cents per share;
- The DT to be withheld by the company amounts to 0,834 cents per share;
- Therefore, the net dividend payable to shareholders who are not exempt from DT is 4,726 cents per
share, while the gross dividend of 5,56 cents per share is payable to those shareholders who are
exempt from DT;
- The issued share capital of Adapt IT at the declaration date comprises 111 001 011 ordinary
shares including 2 774 647 Treasury Shares held by the Company's subsidiary, Adapt IT (Pty) Ltd. The
issued share capital, excluding Treasury Shares, at the declaration date is 108 226 364 ordinary
shares;
- Adapt IT's registration number is 1998/017276/06; and
- Adapt IT's income tax reference number is 9410/002/71/2.
Shareholders are advised that the last day to trade cum-dividend will be Friday, 6 September 2013.
Shares will trade ex-dividend as from Monday, 9 September 2013, and the record date will be
Friday, 13 September 2013. Payment will be made on Monday, 16 September 2013. Share certificates
may not be dematerialised or rematerialised during the period Monday, 9 September 2013 to Friday, 13 September 2013,
both days inclusive. This dividend, having been declared after 30 June 2013, has not been provided for in the financial statements.
Notice of the Annual General meeting and posting of Annual Report
The integrated annual report is available on the Company's website and will be mailed to shareholders on or about
3 September 2013.
Notice is hereby given that the 14th Annual General Meeting of shareholders of Adapt IT will be held
at 09:00 am on Friday, 8 November 2013 at the office of the Company at 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, 1 November 2013. 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, 25 October 2013.
Directors
Craig Chambers* (Chairman), Sbu Shabalala (Chief Executive Officer),
Tiffany Dunsdon (Financial Director), Bongiwe Ntuli*,
Thembisa Dingaan*, Oliver Fortuin*
*Independent non-executive director
Registered office
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
www.adaptit.co.za
Transfer Secretary
Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Sponsor
Merchantec Capital
Company Secretary
Statucor (Pty) Ltd
Auditors
Ernst & Young Inc.
Durban
Durban
19 August 2013
Date: 19/08/2013 01:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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