Wrap Text
Unaudited Group results for the six months ended 31 August 2015
Adcorp Holdings Limited
(“Adcorp” or “Adcorp Group” or “the Group”)
Registration number 1974/001804/06
Share code: ADR ISIN number: ZAE000000139
Unaudited Group results
for the six months ended 31 August 2015
Salient features
* Revenue increased by 23% to R7,8 billion
* Normalised EBITDA for the period increased by 2% to R304,6 million
* Normalised earnings per share decreased by 6% to 180,0 cents per share
* Interim dividend of 60 cents per share declared
* Cash conversion ratio at 102%
* Gearing at 31% (target 30%)
* Debtors' days improved to 43 days from previous financial year end level
of 47 days
* Kelly Group integrated
* International strategy on track
* Dare (Australia) acquisition finalised
* New South African labour law promulgated
Abridged statement of comprehensive income
for the six months ended 31 August 2015
Unaudited Unaudited
Six Six Audited
months to months to Year to
31 August 31 August 28 February
2015 2014 2015
R’000 R’000 R’000
Revenue 7 802 561 6 364 090 13 322 398
Cost of sales (6 586 178) (5 346 887) (11 126 945)
Gross profit 1 216 383 1 017 203 2 195 453
Other income 45 604 34 358 101 895
Administrative expenses (561 912) (417 854) (968 366)
Marketing and selling expenses (354 656) (311 571) (664 791)
Other operating expenses (136 952) (96 116) (209 204)
Operating profit 208 467 226 020 454 987
Interest received 12 025 2 831 12 536
Interest paid (70 150) (46 377) (103 352)
Gain on bargaining purchase 3 999 – –
Impairment of intangible assets
and goodwill (16 253) – (65 014)
Impairment of loans (300) – –
Share of profits from associates 12 740 12 248 29 778
Profit on sale of shares – 371 371
Loss on the sale of business (28 690) – –
Profit on sale of property and
equipment 129 615 1 173
Profit before taxation 121 967 195 708 330 479
Taxation (27 481) (44 976) (86 277)
Profit for the period/year 94 486 150 732 244 202
Other comprehensive income*
Exchange differences on
translating foreign operations 25 990 (1 317) (5 488)
Exchange differences arising on
the net investment of a foreign
operation 14 539 8 224 (15 122)
Fair value adjustment of
derivative financial instrument (107) 25 (2 366)
Non-controlling interest 715 526 342
Other comprehensive income for
the period/year, net of tax 41 137 7 458 (22 634)
Total comprehensive income for
the period/year 135 623 158 190 221 568
Profit attributable to:
Owners of the parent 95 201 151 258 244 544
Non-controlling interest (715) (526) (342)
Total comprehensive income
attributable to:
Owners of the parent 135 623 158 190 221 568
Non-controlling interest (715) (526) (342)
Earnings per share
Basic (cents) 87,4 151,3 236,5
Diluted (cents) 84,3 143,1 222,7
Approved dividends to
shareholders 148 140 140
Interim dividend (cents) 60 60 60
Final dividend (cents) in respect
of prior year 88 80 80
Calculation of headline earnings
Profit for the period/year 95 201 151 258 244 544
Profit on sale of property and
equipment (129) (615) (1 173)
Taxation on property and
equipment 36 172 328
Impairment of intangible assets
and goodwill 16 253 – 65 014
Gain on bargaining purchase (3 999) – –
Impairment of loans 300 – –
Loss on the sale of business 28 690 – –
Headline earnings 136 352 150 815 308 713
Headline earnings per share
Headline earnings per share
(cents) 125,2 150,9 298,5
Diluted headline earnings per
share (cents) 120,7 142,7 281,2
Weighted average number of shares
(000’s) 108 905 99 954 103 415
Diluted weighted average number
of shares (000’s) 112 933 105 698 109 788
* All items below will be reclassified to profit and loss upon
derecognition.
Abridged statement of financial position
as at 31 August 2015
Unaudited Unaudited
Six Six Audited
months to months to Year to
31 August 31 August 28 February
2015 2014 2015
R’000 R’000 R’000
Assets
Non-current assets 2 638 660 2 241 020 2 326 188
Property and equipment 120 924 82 649 112 425
Goodwill 1 452 469 1 335 166 1 304 170
Intangible assets 748 588 543 707 611 752
Investments – 77 330 7 800
Other financial assets 45 292 – 42 288
Investment in associates 114 911 92 165 102 171
Deferred taxation 156 476 110 003 145 582
Current assets 3 492 707 2 535 546 3 018 440
Trade, other receivables and
prepayments 2 578 878 1 921 163 2 315 813
Taxation prepaid 43 952 20 006 22 526
Cash resources 869 877 594 377 680 101
Total assets 6 131 367 4 776 566 5 344 628
Equity and liabilities
Capital and reserves 2 621 760 2 340 693 2 465 032
Share capital 2 748 2 563 2 733
Share premium 1 738 110 1 569 254 1 718 856
Treasury shares (12 990) (12 990) (12 990)
Share based payment reserve 118 184 110 978 114 581
Foreign currency translation
reserve 22 548 729 (3 442)
Cash flow hedging reserve (2 498) – (2 391)
Retained earnings 760 546 673 026 650 806
Equity attributable to equity
holders of the parent 2 626 648 2 343 560 2 468 153
Non-controlling interest (5 809) (3 788) (4 042)
BEE shareholders’ interest 921 921 921
Non-current liabilities 1 394 251 1 087 249 1 150 262
Other non-current liabilities –
interest bearing 791 1 395 1 210
Long-term loan – interest bearing 1 138 773 852 775 859 417
Derivative financial instruments 3 569 – 3 416
Share based payment liability 92 147 134 064 151 672
Obligation under finance lease 4 107 3 014 2 448
Deferred taxation 154 864 96 001 132 099
Current liabilities 2 115 356 1 348 624 1 729 334
Non-interest-bearing current
liabilities 1 574 189 1 061 174 1 209 818
Trade and other payables 1 207 589 768 933 933 123
Provisions 280 876 222 793 245 313
Other vendor payables 51 828 21 905 12 619
Taxation 33 896 47 543 18 763
Interest-bearing current
liabilities 541 167 287 450 519 516
Current portion of other non-
current liabilities 8 756 7 789 12 077
Short term loans 353 977 221 665 398 463
Bank overdraft 178 434 57 996 108 976
Total equity and liabilities 6 131 367 4 776 566 5 344 628
Number of ordinary shares in issue
(000’s) 109 955 102 585 109 371
Net asset value per share (cents) 2 384 2 282 2 254
Abridged statement of cash flows
for the six months ended 31 August 2015
Unaudited Unaudited
Six Six Audited
months to months to Year to
31 August 31 August 28 February
2015 2014 2015
R’000 R’000 R’000
Operating activities
Profit before taxation and
dividends 121 967 195 708 330 479
Adjustment for:
Depreciation 16 766 15 345 32 815
Impairment of investments,
intangible assets, goodwill and
loans 16 553 – 65 014
Amortisation of intangibles 46 945 37 350 80 815
Amortisation of intangibles –
acquired in a business combination 37 664 28 495 61 083
Amortisation of intangibles –
other than those acquired in a
business combination 9 281 8 855 19 732
Profit on disposal of property and
equipment (129) (615) (1 173)
Share-based payments 18 755 15 178 80 724
Share-based payment expense 13 495 35 283 64 801
Revaluation of share-based payment
liability 5 260 (20 105) 15 923
Cash settlement of share options
exercised (74 678) (25 548) (69 883)
Revaluation of foreign exchange
denominated inter company loan 14 539 8 224 (15 122)
Non-cash portion of operating
lease rentals (627) 661 322
Exchange differences on
translating foreign operations 25 990 (1 317) (5 488)
Foreign currency adjustment to
goodwill (9 410) – 15 389
Other movement in distributable
reserves – – (1 404)
Interest received (12 025) (2 831) (12 536)
Interest paid 70 150 46 377 103 352
Cash generated from operations
before working capital changes 234 796 288 532 603 304
(Increase)/decrease in trade and
other receivables and prepayments (115 121) 123 559 38 764
Decrease in bad debt provision (10 398) (3 653) (45 561)
Increase/(decrease) in trade and
other payables and provisions 140 607 (64 030) (58 233)
Increase in provisions 34 288 8 851 19 372
Cash generated from operations 284 172 353 259 557 646
Interest received 12 025 2 831 12 536
Interest paid (70 150) (46 377) (103 352)
Taxation paid (39 770) (41 624) (90 678)
Dividend paid – – (87 971)
Net cash generated by operating
activities 186 277 268 089 288 181
Investing activities
Additions to property, equipment
and intangible assets (54 253) (38 582) (69 390)
Proceeds on the sale of property
and equipment 3 362 469 3 852
Acquisition of businesses (297 964) – (180 027)
Acquisition of investment – (73 803) (4 270)
Conversion of investment to
subsidiary 7 800 – –
Investment in associates (12 740) (12 248) (29 778)
Deferred tax on financial
derivatives – – 1 025
Dividends received from associates – 7 037 14 561
Non controlling interest (1 052) (246) (684)
Investment available for sale – – (42 288)
Foreign currency adjustment to
investment available-for-sale (3 004) – –
Net cash utilised from investing
activities (357 851) (117 373) (306 999)
Financing activities
Issue of shares under employee
share option scheme 19 269 8 504 19 038
Issue of shares pursuant to
acquisitions – 73 687 212 925
Equity due to change in control – – (2 783)
Long term loans raised 279 356 129 019 135 662
Long term loans repaid – (40 000) –
Short term loan raised – 190 920 66 130
Short term loan repaid (47 184) (243 090) (97 117)
Other non-current liabilities –
interest bearing 1 242 592 (657)
Increase/(decrease) in other
payables 39 209 (4 894) (14 182)
Net cash generated by financing
activities 291 892 114 738 319 016
Net increase in cash and cash
equivalents 120 318 265 454 300 198
Cash and cash equivalents at the
beginning of period/year 571 125 270 927 270 927
Cash and cash equivalents at the
end of the period/year 691 443 536 381 571 125
Total interest bearing liabilities of the Group
as at 31 August 2015
Unaudited Unaudited
Six Six Audited
months to months to Year to
31 August 31 August 28 February
2015 2014 2015
R’000 R’000 R’000
Net gearing 31% 24% 28%
Net bank balances (691 443) (536 381) (571 125)
Other long term loans 791 1 395 1 210
Long term loan 1 138 773 852 775 859 417
Obligations under finance lease 4 107 3 014 2 448
Current portion of other non-
current liabilities 8 756 7 789 12 077
Short term loans 353 977 221 665 398 463
Total interest bearing liabilities
(gross of net cash set off) 1 506 404 1 086 638 1 273 615
Total long term debt 76% 79% 68%
Total short term debt 24% 21% 32%
Total 100% 100% 100%
Fair values of financial instruments
Some of the Group’s financial assets and financial liabilities are
measured at fair value at the end of each reporting period. The following
table gives information about how the fair values of these financial
assets and financial liabilities are determined (in particular, the
valuation technique(s) and inputs used).
Financial assets/financial liabilities
Fair Fair Fair
value value value
as at as at as at
31 August 31 August 28 February
2015 2014 2015
R’000 R’000 R’000
Investment available-for-sale 45 292 – 42 288
Trade and other receivables 2 578 878 1 921 163 2 315 813
Derivative financial instrument 3 569 – 3 416
Share based payment liability 92 147 134 064 151 672
Trade and other payables (excluding
VAT) 974 896 635 993 793 834
Short-term loans 353 977 221 665 398 463
Fair
Financial assets/ value Valuation technique(s)
financial liabilities hierarchy and key inputs
Investment available-for-sale Level 3 Face value – owing to recency of
investment
Trade and other receivables Level 3 Face value less specific
related provision
Derivative financial Level 2 Discounted cash flow. Future cash
instrument flows are estimated based on
forward interest rates (from
observable yield curves at the
end of the reporting period) and
contract interest rates, discounted
at a rate that reflects the credit
risk of the counterparty
Share based payment liability Level 2 Black-Scholes pricing model
Trade and other payables Level 3 Expected settlement value
(excluding VAT)
Short-term loans Level 2 Amortised cost plus accrued
interest
Relationship
Significant of unobservable
Financial assets/ unobservable inputs to
financial liabilities input(s) fair value
Investment available-for-sale n/a n/a
Trade and other receivables n/a n/a
Derivative financial instrument n/a n/a
Share based payment liability n/a n/a
Trade and other payables
(excluding VAT) n/a n/a
Short-term loans n/a n/a
Abridged statement of changes in equity
for the six months ended 31 August 2015
Share Share Treasury
capital premium shares
R’000 R’000 R’000
Balance as at 1 March 2014 (audited) 2 502 1 487 124 (12 891)
Issue of ordinary shares pursuant to
acquisition 55 73 632 –
Issue of ordinary shares under employee
share option plan 6 8 498 –
Recognition of BBBEE and staff share-based
payments – – –
Adcorp Empowerment Share Incentive Trust
shares written-off – – (99)
Profit for the period – – –
Other comprehensive income for the period – – –
Minority distribution – – –
Balance as at 31 August 2014 (unaudited) 2 563 1 569 254 (12 990)
Issue of ordinary shares pursuant to
acquisition 111 139 623 –
Capitalisation of transaction costs – (496) –
Issue of ordinary shares under employee
share option plan 8 10 526 –
Dividend distributions – – –
Scrip distribution 51 (51) –
Recognition of BBBEE and staff share-based
payments – – –
Profit for the year – – –
Other movement in distributable reserves – – –
Other comprehensive income for the period – – –
Minority distribution – – –
Equity due to change in control – – –
Balance as at 28 February 2015 (audited) 2 733 1 718 856 (12 990)
Issue of ordinary shares under employee
share option plan 15 19 254 –
Recognition of BBBEE and staff share-based
payments – – –
Profit for the period – – –
Other comprehensive income for the period – – –
Minority distribution – – –
Balance as at 31 August 2015 (unaudited) 2 748 1 738 110 (12 990)
Share Foreign
based currency Cash flow
payment translation hedging
reserve reserve reserve
R’000 R’000 R’000
Balance as at 1 March 2014 (audited) 107 375 2 046 (25)
Issue of ordinary shares pursuant to
acquisition – – –
Issue of ordinary shares under
employee share option plan – – –
Recognition of BBBEE and staff share-
based payments 3 603 – –
Adcorp Empowerment Share Incentive
Trust shares written-off – – –
Profit for the period – – –
Other comprehensive income for the
period – (1 317) 25
Minority distribution – – –
Balance as at 31 August 2014
(unaudited) 110 978 729 –
Issue of ordinary shares pursuant to
acquisition – – –
Capitalisation of transaction costs – – –
Issue of ordinary shares under
employee share option plan – – –
Dividend distributions – – –
Scrip distribution – – –
Recognition of BBBEE and staff share-
based payments 3 603 – –
Profit for the year – – –
Other movement in distributable
reserves – – –
Other comprehensive income for the – (4 171) (2 391)
period
Minority distribution – – –
Equity due to change in control – – –
Balance as at 28 February 2015
(audited) 114 581 (3 442) (2 391)
Issue of ordinary shares under
employee share option plan – – –
Recognition of BBBEE and staff share-
based payments 3 603 – –
Profit for the period – – –
Other comprehensive income for the
period – 25 990 (107)
Minority distribution – – –
Balance as at 31 August 2015
(unaudited) 118 184 22 548 (2 498)
Attributable to Non-
Retained equity holders controlling
earnings of the parent interest
R’000 R’000 R’000
Balance as at 1 March 2014
(audited) 513 544 2 099 675 (3 016)
Issue of ordinary shares pursuant
to acquisition – 73 687 –
Issue of ordinary shares under
employee share option plan – 8 504 –
Recognition of BBBEE and staff
share-based payments – 3 603 –
Adcorp Empowerment Share
Incentive Trust shares written-
off – (99) –
Profit for the period 151 258 151 258 –
Other comprehensive income for
the period 8 224 6 932 (526)
Minority distribution – – (246)
Balance as at 31 August 2014
(unaudited) 673 026 2 343 560 (3 788)
Issue of ordinary shares pursuant
to acquisition – 139 734 –
Capitalisation of transaction
costs – (496) –
Issue of ordinary shares under
employee share option plan – 10 534 –
Dividend distributions (87 973) (87 973) –
Scrip distribution – – –
Recognition of BBBEE and staff
share-based payments – 3 603 –
Profit for the year 93 286 93 286 –
Other movement in distributable
reserves (1 404) (1 404) –
Other comprehensive income for
the period (23 346) (29 908) 184
Minority distribution – – (438)
Equity due to change in control (2 783) (2 783) –
Balance as at 28 February 2015
(audited) 650 806 2 468 153 (4 042)
Issue of ordinary shares under
employee share option plan – 19 269 –
Recognition of BBBEE and staff
share-based payments – 3 603 –
Profit for the period 95 201 95 201 –
Other comprehensive income for
the period 14 539 40 422 (715)
Minority distribution – – (1 052)
Balance as at 31 August 2015
(unaudited) 760 546 2 626 648 (5 809)
BEE
shareholders’
interest Total
R’000 R’000
Balance as at 1 March 2014 (audited) 921 2 097 580
Issue of ordinary shares pursuant to
acquisition – 73 687
Issue of ordinary shares under employee share
option plan – 8 504
Recognition of BBBEE and staff share-based
payments – 3 603
Adcorp Empowerment Share Incentive Trust
shares written-off – (99)
Profit for the period – 151 258
Other comprehensive income for the period – 6 406
Minority distribution – (246)
Balance as at 31 August 2014 (unaudited) 921 2 340 693
Issue of ordinary shares pursuant to
acquisition – 139 734
Capitalisation of transaction costs – (496)
Issue of ordinary shares under employee share
option plan – 10 534
Dividend distributions – (87 973)
Scrip distribution – –
Recognition of BBBEE and staff share-based
payments – 3 603
Profit for the year – 93 286
Other movement in distributable reserves – (1 404)
Other comprehensive income for the period – (29 724)
Minority distribution – (438)
Equity due to change in control – (2 783)
Balance as at 28 February 2015 (audited) 921 2 465 032
Issue of ordinary shares under employee share
option plan – 19 269
Recognition of BBBEE and staff share-based – 3 603
payments
Profit for the period – 95 201
Other comprehensive income for the period – 39 707
Minority distribution – (1 052)
Balance as at 31 August 2015 (unaudited) 921 2 621 760
Abridged segment report (unaudited)
for the six months ended 31 August 2015
Staffing
Blue White Professional
collar collar services
Revenue
31 August 2015 (R’000) 3 641 704 1 813 797 2 143 355
31 August 2014 (R’000) 3 497 726 672 359 2 036 025
28 February 2015 (R’000) 7 230 582 1 723 567 4 026 745
Internal revenue
31 August 2015 (R’000) 29 854 16 433 –
31 August 2014 (R’000) 4 976 16 556 –
28 February 2015 (R’000) 38 624 38 614 –
Operating profit/(loss)
31 August 2015 (R’000) 170 255 80 907 46 538
31 August 2014 (R’000) 197 683 30 891 50 674
28 February 2015 (R’000) 407 156 90 346 102 760
Normalised* EBITDA excluding share-
based payments lease smoothing,
establishment and transaction costs
31 August 2015 (R’000) 179 341 95 628 82 269
31 August 2014 (R’000) 218 525 27 731 73 279
28 February 2015 (R’000) 455 478 99 430 150 493
Normalised* EBITDA margin excluding
share-based payments lease smoothing,
establishment and transaction costs
31 August 2015 (R’000) 4,9% 5,3% 3,8%
31 August 2014 (%) 6,2% 4,1% 3,6%
28 February 2015 (R’000) 6,3% 5,8% 3,7%
Normalised* EBITDA excluding share-
based payments lease smoothing,
establishment and transaction costs,
contribution % to Group normalised*
EBITDA
31 August 2015 (R’000) 58,9% 31,4% 27,0%
31 August 2014 (%) 72,9% 9,3% 24,4%
28 February 2015 (R’000) 68,1% 14,9% 22,5%
Depreciation and amortisation
31 August 2015 (R’000) 18 574 19 786 20 653
31 August 2014 (R’000) 20 580 4 638 21 560
28 February 2015 (R’000) 41 625 16 391 43 023
Interest income
31 August 2015 (R’000) 10 912 21 748 1 264
31 August 2014 (R’000) 6 644 6 314 2 999
28 February 2015 (R’000) 15 246 25 398 3 333
Interest expense
31 August 2015 (R’000) (24 569) (23 685) (5 236)
31 August 2014 (R’000) (22 339) (2 749) (8 280)
28 February 2015 (R’000) (41 815) (22 257) (12 622)
Taxation expense/(income)
31 August 2015 (R’000) 8 036 14 795 2 127
31 August 2014 (R’000) 19 998 503 7 759
28 February 2015 (R’000) 37 475 2 496 8 626
Net asset values
31 August 2015 (R’000) 1 763 162 802 261 1 450 690
31 August 2014 (R’000) 1 625 502 140 268 959 883
28 February 2015 (R’000) 1 721 199 387 531 952 499
Asset carrying value
31 August 2015 (R’000) 2 438 766 1 229 717 1 858 236
31 August 2014 (R’000) 2 196 002 264 938 1 648 324
28 February 2015 (R’000) 2 286 243 812 812 1 578 078
Liabilities carrying value
31 August 2015 (R’000) 675 604 427 456 407 546
31 August 2014 (R’000) 570 500 124 670 688 441
28 February 2015 (R’000) 565 044 425 281 625 579
Additions to property and equipment
31 August 2015 (R’000) 8 665 3 988 4 391
31 August 2014 (R’000) 8 265 555 2 930
28 February 2015 (R’000) 43 128 2 738 4 571
Property and equipment
31 August 2015 (R’000) 68 696 22 035 10 228
31 August 2014 (R’000) 39 716 9 892 12 930
28 February 2015 (R’000) 65 828 19 069 11 310
BPO,
Training and
Financial Emergent
services business*** Sub total
Revenue
31 August 2015 (R’000) 183 014 19 421 7 801 291
31 August 2014 (R’000) 139 403 11 603 6 357 116
28 February 2015 (R’000) 307 674 29 950 13 318 518
Internal revenue
31 August 2015 (R’000) 17 933 – 64 220
31 August 2014 (R’000) 13 124 3 709 38 365
28 February 2015 (R’000) 38 684 3 737 119 659
Operating profit/(loss)
31 August 2015 (R’000) 8 428 (4 315) 301 813
31 August 2014 (R’000) 19 274 (3 743) 294 779
28 February 2015 (R’000) 49 966 (12 374) 637 854
Normalised* EBITDA excluding
share-based payments lease
smoothing, establishment and
transaction costs
31 August 2015 (R’000) 14 562 (4 000) 367 800
31 August 2014 (R’000) 24 507 (2 456) 341 586
28 February 2015 (R’000) 59 324 (8 320) 756 405
Normalised* EBITDA margin
excluding share-based payments
lease smoothing,
establishment and transaction costs
31 August 2015 (R’000) 8,0% – 4,7%
31 August 2014 (%) 17,6% – 5,4%
28 February 2015 (R’000) 19,3% – 5,7%
Normalised* EBITDA excluding
share-based payments lease
smoothing, establishment and
transaction costs, contribution %
to Group normalised* EBITDA
31 August 2015 (R’000) 4,8% (1,3%) 120,8%
31 August 2014 (%) 8,2% (0,8%) 114,0%
28 February 2015 (R’000) 8,9% (1,2%) 113,2%
Depreciation and amortisation
31 August 2015 (R’000) 3 474 167 62 654
31 August 2014 (R’000) 3 254 1 525 51 557
28 February 2015 (R’000) 6 676 3 651 111 366
Interest income
31 August 2015 (R’000) 7 504 20 41 448
31 August 2014 (R’000) 6 200 18 22 175
28 February 2015 (R’000) 13 148 37 57 162
Interest expense
31 August 2015 (R’000) (3 623) (4 472) (61 585)
31 August 2014 (R’000) (3 937) (4 993) (42 298)
28 February 2015 (R’000) (6 043) (8 372) (91 109)
Taxation expense/(income)
31 August 2015 (R’000) 6 640 (51) 31 547
31 August 2014 (R’000) 3 658 (8 582) 23 336
28 February 2015 (R’000) 9 051 295 57 943
Net asset values
31 August 2015 (R’000) 262 026 2 521 4 280 660
31 August 2014 (R’000) 238 491 24 472 2 988 616
28 February 2015 (R’000) 238 773 8 659 3 308 661
Asset carrying value
31 August 2015 (R’000) 334 340 10 808 5 871 867
31 August 2014 (R’000) 271 553 30 733 4 411 550
28 February 2015 (R’000) 282 880 14 934 4 974 947
Liabilities carrying value
31 August 2015 (R’000) 72 314 8 287 1 591 207
31 August 2014 (R’000) 33 062 6 261 1 422 934
28 February 2015 (R’000) 44 107 6 275 1 666 286
Additions to property and equipment
31 August 2015 (R’000) 1 924 5 18 973
31 August 2014 (R’000) 3 192 1 274 16 216
28 February 2015 (R’000) 3 858 1 361 55 656
Property and equipment
31 August 2015 (R’000) 9 681 642 111 282
31 August 2014 (R’000) 6 390 4 834 73 762
28 February 2015 (R’000) 5 540 3 775 105 522
Group Central
Central Shared
costs services Total
Revenue
31 August 2015 (R’000) – 1 270 7 802 561
31 August 2014 (R’000) 6 974 – 6 364 090
28 February 2015 (R’000) 4 090 (210)13 322 398
Internal revenue
31 August 2015 (R’000) – – 64 220
31 August 2014 (R’000) – – 38 365
28 February 2015 (R’000) – 378 120 037
Operating profit/(loss)
31 August 2015 (R’000) (75 735) (17 611) 208 467
31 August 2014 (R’000) (56 276) (12 483) 226 020
28 February 2015 (R’000) (163 767) (19 100) 454 987
Normalised* EBITDA excluding share-
based payments lease smoothing,
establishment and transaction costs
31 August 2015 (R’000) (46 117) (17 045) 304 638
31 August 2014 (R’000) (33 478) (8 382) 299 726
28 February 2015 (R’000) (81 386) (6 551) 668 468
Normalised* EBITDA margin excluding
share-based payments lease smoothing,
establishment and transaction costs
31 August 2015 (R’000) – – 3,9%
31 August 2014 (%) – – 4,7%
28 February 2015 (R’000) – – 5,0%
Normalised* EBITDA excluding share-
based payments lease smoothing,
establishment and transaction costs,
contribution % to Group normalised*
EBITDA
31 August 2015 (R’000) (15,1%) (5,6%) 100%
31 August 2014 (%) (11,2%) (2,8%) 100%
28 February 2015 (R’000) (12,2%) (1,0%) 100%
Depreciation and amortisation
31 August 2015 (R’000) 1 057 – 63 711
31 August 2014 (R’000) 1 138 – 52 695
28 February 2015 (R’000) 2 264 – 113 630
Interest income
31 August 2015 (R’000) (29 426) 3 12 025
31 August 2014 (R’000) (19 419) 75 2 831
28 February 2015 (R’000) (44 775) 149 12 536
Interest expense
31 August 2015 (R’000) (1 669) (6 896) (70 150)
31 August 2014 (R’000) 644 (4 723) (46 377)
28 February 2015 (R’000) (3 729) (8 514) (103 352)
Taxation expense/(income)
31 August 2015 (R’000) (4 066) – 27 481
31 August 2014 (R’000) 21 640 – 44 976
28 February 2015 (R’000) 28 334 – 86 277
Net asset values
31 August 2015 (R’000) (1 621 510) (37 390) 2 621 760
31 August 2014 (R’000) (623 273) (24 650) 2 340 693
28 February 2015 (R’000) (811 200) (32 429) 2 465 032
Asset carrying value
31 August 2015 (R’000) 239 329 20 171 6 131 367
31 August 2014 (R’000) 346 032 18 984 4 776 566
28 February 2015 (R’000) 364 092 5 589 5 344 628
Liabilities carrying value
31 August 2015 (R’000) 1 860 839 57 561 3 509 607
31 August 2014 (R’000) 969 305 43 634 2 435 873
28 February 2015 (R’000) 1 175 292 38 018 2 879 596
Additions to property and equipment
31 August 2015 (R’000) – 5 682 24 655
31 August 2014 (R’000) 664 168 17 048
28 February 2015 (R’000) 760 530 56 946
Property and equipment
31 August 2015 (R’000) 3 593 6 049 120 924
31 August 2014 (R’000) 5 405 3 482 82 649
28 February 2015 (R’000) 4 545 2 358 112 425
South
International** Africa Total
Revenue
31 August 2015 (R’000) 2 494 005 5 308 556 7 802 561
31 August 2014 (R’000) 1 984 616 4 379 474 6 364 090
28 February 2015 (R’000) 3 986 797 9 335 601 13 322 398
Internal revenue
31 August 2015 (R’000) – 64 220 64 220
31 August 2014 (R’000) – 38 365 38 365
28 February 2015 (R’000) – 120 037 120 037
Operating profit/(loss)
31 August 2015 (R’000) 43 658 164 809 208 467
31 August 2014 (R’000) 58 186 167 834 226 020
28 February 2015 (R’000) 117 265 337 722 454 987
Normalised* EBITDA excluding
share-based payments lease
smoothing, establishment and
transaction costs
31 August 2015 (R’000) 65 283 239 355 304 638
31 August 2014 (R’000) 81 812 217 914 299 726
28 February 2015 (R’000) 160 348 508 120 668 468
Normalised* EBITDA margin
excluding share-based payments
lease smoothing,
establishment and transaction
costs
31 August 2015 (R’000) 2,6% 4,5% 3,9%
31 August 2014 (%) 4,1% 5,0% 4,7%
28 February 2015 (R’000) 4,0% 5,4% 5,0%
Normalised* EBITDA excluding
share-based payments lease
smoothing, establishment and
transaction costs, contribution
% to Group normalised* EBITDA
31 August 2015 (R’000) 21,4% 78,6% 100%
31 August 2014 (%) 27,3% 72,7% 100%
28 February 2015 (R’000) 24,0% 76,0% 100%
Depreciation and amortisation
31 August 2015 (R’000) 26 033 37 678 63 711
31 August 2014 (R’000) 21 879 30 816 52 695
28 February 2015 (R’000) 43 083 70 547 113 630
Interest income
31 August 2015 (R’000) 1 504 10 521 12 025
31 August 2014 (R’000) 2 158 673 2 831
28 February 2015 (R’000) 2 655 9 881 12 536
Interest expense
31 August 2015 (R’000) (10 954) (59 196) (70 150)
31 August 2014 (R’000) (7 502) (38 875) (46 377)
28 February 2015 (R’000) (17 840) (85 512) (103 352)
Taxation expense/(income)
31 August 2015 (R’000) 9 449 18 032 27 481
31 August 2014 (R’000) 6 710 38 266 44 976
28 February 2015 (R’000) 6 673 79 604 86 277
Net asset values
31 August 2015 (R’000) 921 843 1 699 917 2 621 760
31 August 2014 (R’000) 736 542 1 604 151 2 340 693
28 February 2015 (R’000) 704 235 1 760 797 2 465 032
Asset carrying value
31 August 2015 (R’000) 2 154 068 3 977 299 6 131 367
31 August 2014 (R’000) 1 358 801 3 417 765 4 776 566
28 February 2015 (R’000) 1 631 538 3 713 090 5 344 628
Liabilities carrying value
31 August 2015 (R’000) 1 232 225 2 277 382 3 509 607
31 August 2014 (R’000) 622 259 1 813 614 2 435 873
28 February 2015 (R’000) 927 303 1 952 293 2 879 596
Additions to property and equipment
31 August 2015 (R’000) 2 827 21 828 24 655
31 August 2014 (R’000) 3 907 13 141 17 048
28 February 2015 (R’000) 7 126 49 820 56 946
Property and equipment
31 August 2015 (R’000) 30 120 90 804 120 924
31 August 2014 (R’000) 19 412 63 237 82 649
28 February 2015 (R’000) 17 532 94 893 112 425
* Normalised earnings is defined as operating profit adjusted for
depreciation, amortisation of intangibles, share-based payments, lease
smoothing, business establishment and once-off transaction costs
relating to acquisitions.
** International represents operations in Africa, Australia and Asia
Pacific regions.
*** Relate to businesses being developed in order to address changing
global trends and the Group’s strategic objectives (example: ADfusion).
Pro Forma Financial Information
The 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 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 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 interim consolidated
results of the Group for the period ended 31 August 2015.
No other 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.
For the six months ended 31 August 2015
Six Six
months to months to
31 August 31 August
2015 2014 %
Note R’000 R’000 Change
Revenue 1 7 802 561 6 364 090 23
Cost of sales 1 (6 586 178) (5 346 887) (23)
Gross Profit 1 1 216 383 1 017 203 20
Other income 1 45 604 34 358 33
Administrative marketing, selling 1 (1 053 520) (825 541) (28)
and operating expenses
Operating profit 1 208 467 226 020 (8)
Adjusted for:
Depreciation 2 16 766 15 345 9
Amortisation of intangible asset
acquired in business combination 2 37 664 28 495 32
Amortisation of intangibles other
than those acquired in business
combination 2 9 281 8 855 5
Share-based payments 2 18 755 15 178 24
Lease smoothing 2 (627) 661 -
Transaction costs 5 14 332 5 172 -
Normalised EBITDA (excluding
share-based payments, and lease
smoothing) 304 638 299 726 2
Adjusted for:
Depreciation 2 (16 766) (15 345) (9)
Amortisation of intangibles other
than those acquired in a business
combination 2 (9 281) (8 855) (5)
Normalised operating profit 278 591 275 526 1
Net interest paid (58 125) (43 546) (33)
Normalised profit before taxation 220 466 231 980 (5)
Normalised taxation 3 (37 852) (53 140) (29)
Normalised profit for the period 182 614 178 840 2
Share of profits from associates 12 740 12 248 4
Non-controlling interests 715 526 -
Total normalised profit for the
period 196 069 191 614 2
Normalised earnings per share
(cents) 4 180.0 191.7 (6)
Diluted normalised earnings per
share (cents) 4 173.6 181.3 (5)
Weighted average No of shares
(000’s) 1 108 905 99 954 9
Diluted weighted average No of
shares (000’s) 1 112 933 105 698 7
Notes:
1 As per the statement of comprehensive income for the six months ended
31 August 2015.
2 As per the statement of cash flows for the six months ended 31 August
2015.
3 The taxation expense has been adjusted for the adjusted items above.
4 Per share calculation is based on total normalised profit.
5 Being once-off establishment and transaction costs incurred pursuant to
the establishment of international corporate offices and the acquisition
of Dare Holdings Proprietary Limited.
Unaudited statement of consolidated normalised earnings*
for the six months ended 31 August 2015
Six Six
months to months to Year to
31 August 31 August 28 February
2015 2014 2015 %
R’000 R’000 R’000 change
Revenue 7 802 561 6 364 090 13 322 398 23
Cost of Sales (6 586 178) (5 346 887) (11 126 945) (23)
Gross profit 1 216 383 1 017 203 2 195 453 20
Other income 45 604 34 358 101 895 33
Administrative,
marketing, selling and
operating expenses (1 053 520) (825 541) (1 842 361) (28)
Operating profit 208 467 226 020 454 987 (8)
Adjusted for:
Depreciation 16 766 15 345 32 815 9
Amortisation of
intangible assets 46 945 37 350 80 815 26
Amortisation of 37 664 28 495 61 083 32
intangible assets –
acquired in a business
combination
Amortisation of
intangibles – other than
those acquired in a
business combination 9 281 8 855 19 732 5
Share-based payments 18 755 15 178 80 724 24
Share-based payment
expense 13 495 35 283 64 801 –
Revaluation of share-
based payment liability 5 260 (20 105) 15 923 –
Lease smoothing (627) 661 322 –
Transaction costs 14 332 5 172 18 805 –
Normalised EBITDA
(excluding share based
payments, lease smoothing
and transaction costs) 304 638 299 726 668 468 2
Adjusted for:
Depreciation (16 766) (15 345) (32 815) (9)
Amortisation of
intangibles other than
those acquired in a
business combination (9 281) (8 855) (19 732) (5)
Normalised operating
profit 278 591 275 526 615 921 1
Net interest paid (58 125) (43 546) (90 816) (33)
Normalised profit before
taxation 220 466 231 980 525 105 (5)
Normalised taxation (37 852) (53 140) (103 471) (29)
Normalised profit for
the period/year 182 614 178 840 421 634 2
Share of profits from
associates 12 740 12 248 29 778 4
Non controlling interest 715 526 342 –
Total normalised profit
for the period/year 196 069 191 614 451 754 2
Normalised earnings per
share – cents 180,0 191,7 436,8 (6)
Diluted normalised earnings
per share (cents) 173,6 181,3 411,5 (5)
Weighted average no of
shares (000’s) 108 905 99 954 103 415 9
Diluted weighted average
no of shares (000’s) 112 933 105 698 109 788 7
* Normalised earnings is defined as operating profit adjusted for
depreciation, amortisation of intangibles, share-based payments, lease
smoothing, business establishment and once-off transaction costs relating
to acquisitions.
Comments
Overview
The interim period ended 31 August 2015 marked the introduction of the
long awaited, sweeping changes to South African labour legislation. Of
relevance, these new laws impacted volumes negatively in Adcorp’s core
South African market.
Despite this, Group revenues for the period increased by 23% to R7,8
billion due largely to the inclusion of recent acquisitions, Kelly Group
and Dare. Despite the challenges facing the South African business, the
Group was able to post normalised earnings before interest, tax,
depreciation and amortisation (normalised EBITDA) of R304,6 million
which represented a modest 2% increase on the prior year’s comparable
figure. Normalised earnings per share of 180,0 cents were 6% down on the
prior year’s figure.
The Group’s cash performance has once again been extremely positive. In
this regard, the Group’s cash conversion ratio was a creditable 102%
compared to the Group’s target conversion ratio of 85%.
South Africa
The passing of the new Labour Relations Act (LRA) initially led to a high
degree of uncertainty in the South African market resulting in a knee jerk
reaction from a number of prominent clients.
The resultant negative impact on volumes whereby a significant number of
contract staff were either taken on as permanent employees of the client
or simply had their contracts of employment terminated, was far higher
than was anticipated.
One of the reasons for this is that initially, many prominent labour
authorities and practitioners communicated an arguably, incorrect
interpretation of the new labour laws on broad platforms which elicited a
negative response from employers and clients.
Their interpretation of these laws required that contract workers employed
by Temporary Employment Service providers (TES), earning below a certain
threshold, were deemed to be the sole and permanent employee of the client
of the TES after an initial contracting period of three months.
In an extremely positive development and in contradiction of this
interpretation, a recent judgement handed down by the Labour Court has
provided clarity with regard to the employment status of contract workers.
The judge in this case ruled that the TES retains the employment contract
after three months and that the client becomes a concurrent employer with
the TES for the purposes of the LRA. Accordingly, both parties need to
ensure compliance with the LRA in a co-employment relationship.
This judgement and the clarity it provides have been an extremely
important and stabilising factor in the market.
Importantly, it is totally in accordance with Adcorp’s original
interpretation of these laws.
Subsequent to this judgement, volumes have stabilised albeit at a level
approximately 20% lower than prior to the introduction of these revised
labour laws.
Another reason for the sizeable decline in contractor volumes is that, in
certain sectors, a number of employers have succumbed to intense trade
union and political pressure to take contract workers on as permanent
employees.
In reaction to these lower volumes, the gross profit impact of which
literally flows directly through to the bottom line, management has
initiated a number of decisive actions to minimise the profit impact of
these volume losses.
This has involved major restructuring, significant cost cutting, intensive
consultation with clients as well as offering employers alternative
outsourced labour solutions.
These initiatives have significantly limited the bottom line impact of
this major loss in gross profits and have resulted in a far better picture
than would have been the case had these bold steps not been embarked upon.
The integration of the operations of Kelly Group (Kelly) is now
essentially complete.
The white collar operations of Kelly have been similarly negatively
affected by these changes to labour laws whilst the rest of the operations
have been successfully absorbed into the existing operations of Adcorp.
Rest of Africa, Asia and Australia
The Group’s Australian operations have been bolstered by the recent
acquisition of Dare in May 2015.
Paxus is performing largely in line with management expectations and has
settled into the Group well.
IT contracting business, Paxus, has recently won some sizeable contracts
and has seen its contractor headcount grow accordingly.
Agricultural specialist, LSA, has also recently been successful in
increasing its contractor headcount and, although behind its half year
targets, is currently on track to achieve its full year budget and growth
projections.
Oil & Gas specialist, Dare, has been a valuable addition to the Group and,
together with the Group’s African operations, positions Adcorp as a player
of consequence in this important and skills intensive industry vertical.
Whilst contractor volumes have been tracking against budget, gross
profits have been offset by margin pressure emanating from a lower oil
price.
The Group’s African operations which focus predominantly in the areas of
mining, oil, gas, exploration and related infrastructure development, have
been negatively affected by low commodity prices. Resultant lower volumes
have, however, been substantially offset by currency translation gains.
Associate profits from Indian associate IT solutions business, Nihilent,
in which the Group owns a 35% stake, were 4% ahead of the prior year.
The business has indicated its intention to seek an Initial Public Offer
(IPO) on the National Stock Exchange of India which is planned for the
second half of next year.
As previously reported, the Group has established a physical presence in
Singapore which now serves as the hub for the Group’s international
expansion.
Although not yet conclusive, much progress has been made in terms of
raising capital in the Singapore entity necessary to fund the Group’s
international growth strategy with a view to potentially listing the
Group’s international portfolio assets in three to four years’ time.
This strategy should advantage Adcorp’s existing shareholders as it has
the potential to unlock meaningful value from the Group’s non-South
African assets. These currently attract a relatively low market rating
compared to their significantly higher rated international peer group,
possibly the result of the rating’s drag associated with uncertainty
created by recent changes to labour legislation in South Africa.
This strategy is in line with the Group’s intended objective of becoming a
player of consequence, focused on emerging markets and the Southern
Hemisphere and, in particular, Africa, Asia, Australia and the Middle
East.
General
Continued progress has been achieved in developing a cost effective and
efficient shared service capability with the ability to service the
Group’s operations on the same back office platform anywhere in the world.
Whilst still investing in certain aspects of this initiative, the back
office architecture has settled down well and is starting to deliver with
regard to economies of scale, cost control, operational efficiencies, cash
management, procurement, enhanced corporate governance, better accounting
and internal controls and now offers the Group a compelling strategic
advantage.
Financial overview
Headline earnings per share of 125,2 cents are 17% lower than the 150,9
cents per share for the comparative prior period. As described above, this
is primarily due to the negative revenue impact emanating from clients’
reactions to the new legislative landscape. The first full period
inclusion of the contribution from Kelly and the four month
inclusion of the contribution from Dare, coupled with the restructuring
and cost cutting initiatives partially offset this negative impact of
significantly lower volumes.
Earnings per share of 87,4 cents per share are 43% lower than the 151,3
cents per share for the comparative period. In addition to the negative
revenue impact referred to above, this is also attributable to the
recognition in profit and loss of an impairment to goodwill and a loss
on sale of business.
Given the accounting treatment of IFRS non cash flow charges to profit and
loss, the Group has consistently disclosed that it’s primary measure of
performance is normalised earnings. In this regard, shareholders are
referred to the statement of consolidated normalised earnings contained in
this announcement.
Normalised earnings per share of 180,0 cents for the period ended
31 August 2015 were 6% lower than the 191,7 cents per share for the
comparative period. Gross profit margins declined marginally due to the
challenging market conditions and changes in business mix.
The Group’s Normalised EBITDA margin was 3,9% (2014: 4,7%). Normalised
EBITDA margins in the traditional blue and white collar staffing
businesses were affected by the lower volumes while a higher expense
ratio attributable to Kelly and a disappointing performance from our
training division also put downward pressure on margins.
The Group’s overall normalised effective tax rate reduced to 17% (2014:
23%) mainly as a result of increased utilisation of assessed losses.
Cash management remains a continuous high priority for management and as
such the cash conversion ratio was 102% (2014: 128%). Days settlement
outstanding (DSO) totalled 43 days which improved from the 47 days
reported for the previous financial year end. This result was achieved
in the context of the continued challenging collections’ environment.
Given the improved working capital management, the overall level of
gearing of 31% is considered to be manageable and within management’s
expectations. During the period under review, the Group incurred a 33%
increase in respect of net finance charges, mainly as a result of
acquisition related funding, higher prevailing interest rates and tighter
credit markets.
In light of a strengthened financial position, while remaining fully
compliant with debt covenants, the Board has resolved to declare an
interim cash dividend of 60 cents per share (2014: 60 cents per share),
the details of which appear more fully below.
Acquisition of business
As referred to above, the acquisition of Dare was concluded with effect
from 7 May 2015. As such, it has been included in Group profits for four
months of this financial period. In terms of IAS 34 Interim Financial
Reporting requirements, the profit before tax from Dare included in
Group net profit before tax for the period ended 31 August 2015 is R9,3
million after taking account of non-cash flow IFRS charges and acquisition
related transaction costs. Had the business combination been
effective from 1 March 2015, the revenue of the Group would have been R8
billion and net profit after tax would have totalled R97,5 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.
Unaudited Audited
Aug 2015 Feb 2015
R’000 R’000
Total purchase consideration for all business
combinations 307 096 250 642
Less: previously held associate – (1 019)
Less: Cash and cash equivalents acquired (9 132) (69 596)
Net purchase consideration for all business
combinations 297 964 180 027
Cash outflow on acquisition of businesses 297 964 180 027
Net proceeds from issue of shares – (212 925)
Raising of equity on acquisition – (213 421)
Capitalisation of transaction costs – 496
Cash outflow/(inflow) on acquisition of businesses 297 964 (32 898)
The fair value of the assets and liabilities acquired in respect of the
various acquisitions in the year is as follows:
Aug 2015 Feb 2015
DARE Other Total Total
R’000 R’000 R’000 R’000
Property and equipment 318 3 524 3 842 10 033
Intangible assets 154 481 – 154 481 142 530
Investment in associate – – – 1 019
Deferred taxation asset – 11 283 11 283 22 554
Trade and other receivables 135 597 1 949 137 546 287 410
Doubtful debts provisions – – – (19 463)
Cash and cash equivalents 8 138 994 9 132 69 596
Interest bearing liabilities – – – (120 746)
Trade and other payables (130 454) (3 405) (133 859) (158 393)
Provisions (929) (346) (1 275) (12 000)
Deferred taxation liability (28 635) – (28 635) –
Taxation (562) – (562) 478
137 954 13 999 151 953 223 018
Resulting goodwill on
acquisition/gain on bargaining
purchase 159 142 (3 999) 155 143 27 624
Total consideration 297 096 10 000 307 096 250 642
Basis of preparation
The Group’s unaudited summary consolidated interim financial statements
(financial 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
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 financial results are in terms of IFRS and are
consistent with the accounting policies applied in the preparation of the
group’s previous consolidated interim financial statements.
The financial results have been prepared by the Group Financial Manager,
A Viljoen (B.Comm Honours) and supervised by the Chief Financial
Officer, AM Sher (CA(SA), CFA).
Contingent liabilities and commitments
The bank has guaranteed R8,1 million (2014: R8,2 million) on behalf of the
Group to creditors. As at the balance sheet date the Group has outstanding
operating lease commitments totalling R145,3 million (2014: R111,4
million) in non-cancellable property leases. The Group has IT capital
commitments contracted for of R2,3 million (2014: R2,1 million) relating
to the Microsoft Dynamix AX 2012 upgrade.
A client of the South African blue-collar business has indicated that they
believe they may not have been billed in accordance with the original
client Service Level Agreement over the past three years. The client has
indicated that they are currently conducting their own internal
investigation into the matter, the outcome of which has not been
concluded. As such, the client has not as yet initiated any claim
against Adcorp or any of its subsidiaries in this regard. Should such a
claim arise, Adcorp will defend the claim.
Changes to the board of Adcorp
There were no changes to the board during the period under review.
Declaration of interim dividend
Notice is hereby given that an interim gross cash dividend of 60 cents per
share (2014: 60 cents per share) for the interim period ended 31
August 2015 was declared on Wednesday, 21 October 2015 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 interim cash dividend are as follows:
Last date to trade “cum” dividend Friday, 27 November 2015
Date trading commences “ex” dividend Monday, 30 November 2015
Record date Friday, 4 December 2015
Date of payment Monday, 7 December 2015
Ordinary share certificates may not be dematerialised or rematerialised
between Monday, 30 November 2015 and Friday, 4 December 2015, both days
inclusive.
Shareholders who are not exempt from the dividend withholding tax of 15%
will therefore receive a net cash dividend of 51 cents per share. The
Company has 109 954 675 ordinary shares in issue and its income tax
reference number is 9233/68071/06. The source of the dividend shall be
from distributable reserves and shall be paid in cash.
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 at their risk. Ordinary shareholders who hold
dematerialised shares will have their accounts at their CSDP or broker
credited on Monday, 7 December 2015.
Events after the reporting date
Subsequent to the closure of the interim financial period ended 31
August 2015 and the date of the approval of these unaudited interim
financial statements, namely 21 October 2015, save for the payment of the
final dividend in respect of the year ended 28 February 2015 on
7 September 2015, no events or transactions took place subsequent to the
reporting date.
Outlook and prospects
In South Africa, a downturn in the commodities cycle, electricity supply
constraints, onerous immigration and visa requirements as well as
restrictive new labour laws all contribute to an extremely challenging
employment environment.
Against this background, stability seems to be creeping back into the TES
market and, all things considered, the Group has weathered an extremely
difficult storm reasonably well.
Whilst trading conditions in the core South African market are expected to
remain challenging for some time, the South African business has recently
been buoyed by a number of positive developments.
The strategy to diversify internationally has certainly paid off as has
the Group’s decisive cost, efficiency and market response to the reality
of lower volumes in the South African TES business.
Despite these headwinds, South Africa remains a key and important market
for the Group given the scale advantage it provides, the exportable
industry knowledge and competitive know-how generated in this market,
the strong position the Group commands in South Africa and the many market
opportunities that still exist despite an overall sluggish employment
market.
The recent favourable Labour Court ruling with regard to the
interpretation of the LRA has also brought much needed clarity and
stability to the South African market and has consequently improved the
Group's prospects.
The Group’s international strategy holds much promise. Significant
progress has been made in the establishment and resourcing of this
strategy which has the potential to unlock meaningful value for Adcorp’s
shareholders in future.
Management’s attention remains focused on progressing the Group’s
international strategy, bedding down the Dare acquisition, promoting
inter-Group cross-selling opportunities, further enhancing cost and
operational efficiencies. Management is also focused on minimising the
negative volume impact of the revised South African labour laws, further
enhancing cash collections and optimising margin management.
This general forecast has not been reviewed or reported on by the
Group’s auditors.
By order of the board
MJN Njeke RL Pike AM Sher
Chairman Chief Executive Officer Chief Financial Officer
21 October 2015
Corporate information
Executive directors
RL Pike (Chief Executive Officer), BE Bulunga, AM Sher, PC Swart
Non-executive directors
GP Dingaan, NS Ndhlazi, MR Ramaite
Independent non-executive directors
MJN Njeke (Chairman), SN Mabaso-Koyana, ME Mthunzi, TDA Ross, MW Spicer
Alternate non-executive directors
C Maswanganyi, N Sihlangu
Physical address
Adcorp Office Park
Nicolway Bryanston
Cnr William Nicol Drive and Wedgewood Link
Bryanston, 2021
PO Box 70635, Bryanston, 2021
Tel: 011 244 5300
Fax: 011 244 5310
Email: cfo@adcorp.co.za
Website: www.adcorp.co.za
Registration number 1974/001804/06
Company Secretary
KH Fihrer
Transfer secretaries
Link Market Services SA (Pty) Ltd
Rennie House
13th Floor
19 Ameshoff Street
Braamfontein
2001
Sponsor
Deloitte & Touche Sponsor Services (Pty) Ltd
Building 8, Deloitte Place
The Woodlands
20 Woodlands Drive
Woodmead, Sandton
2196
Date: 21/10/2015 12:46:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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