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ADAPT IT HOLDINGS LIMITED - Unaudited Condensed Consolidated Interim Group Results for the six months ended 31 December 2016

Release Date: 13/02/2017 07:20
Code(s): ADI     PDF:  
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Unaudited Condensed Consolidated Interim Group Results for the six months ended 31 December 2016

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)

Adapt IT unaudited condensed consolidated
INTERIM GROUP RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

OVERVIEW

Adapt IT is an innovative information technology (IT) services and solutions provider, delivering a
variety of specialised software solutions and services to the Manufacturing, Education, Financial
Services and Energy sectors across 40 countries.

Manufacturing
  27%
- ERP Implementation
- Human Capital Management Services
- Development and Integration Services
- SHEQ Solutions
- Operational Management Solutions
- Rostering Optimisation Software Services

Education
  18%
- Education Management Systems  
- Development and Integration Services
- Support Services

Energy
  20%
- Business Advisory Services
- Technical Advisory Services 
- SAP IS-OIL
- Fuel-FACS
- Utilities Management

Financial Services
  35% 
- Audit and Risk Management Software
- Business Intelligence and Analytics
- Project Management
- Recruitment Services

OUR BUSINESS

Adapt IT has formed strategic partnerships with the world's leading technology and business
software providers in order to provide customers with robust, reliable and enduring solutions and
services. These uniquely tailored solutions set Adapt IT apart and power the day-to-day efficiencies
within our clients' businesses in the following areas:

Consulting

- Business Consulting
  Guiding leading enterprises to achieve business transformation

- IT Consulting
  Leveraging technologies to improve business efficiencies

- Innovation
  Applying new technology solutions to exceed client requirements

Software

- Web-based Solutions
  Efficiently developed Cloud-ready proprietary software solutions

- On Premise
  Leveraging our clients' existing technology infrastructure

- Cloud Solutions
  Providing Software as a Service for maximised efficiency

- Mobile Solutions
  Ensuring accessibility to solutions from anywhere

Support

- SLA Management
  Providing both remote and on-site support, either 24/7, fixed hours or block hours, based on
  customer's needs and requirements

- ITIL Certified
  Support team processes are ITIL certified

GEOGRAPHIC TURNOVER

73%               15%                        6%              4%             1%         1%
South Africa      Other African countries    The Americas    Australasia    Europe     Asia

FINANCIAL HIGHLIGHTS

48%                   44%                    20%
Turnover              EBITDA                 Normalised HEPS
                              

FINANCIAL REVIEW
Turnover for the six months ended 31 December 2016 increased 48% to
R460,7 million (2015: R310,4 million), organic growth was 4% and
acquisitive growth was 44%. Organic growth was muted due to ongoing
pressure in several industries, particularly the higher education,
manufacturing, resources and banking segments. Acquisitive growth
was boosted in the period by the inclusion of the CQS group (CQS)
which was consolidated with effect from 31 December 2015 and had
no contribution to turnover in the prior interim results. Earnings before
interest, tax, depreciation and amortisation (EBITDA) increased 44% to
R89,9 million (2015: R62,3 million). Operating profit increased 32% to
R69,5 million (2015: R52,5 million).

Adapt IT has disclosed normalised headline earnings per share (HEPS)
for the first time as a result of the high non-cash expenses in terms of
International Financial Reporting Standards (IFRS) due to our acquisitions.
Non-cash acquisition-related expenses are mainly amortisation of
intangible assets (such as internally developed software and customer
relationships) and notional interest on deferred purchase considerations,
which is based on the achievement of profit warranties.

Non-cash amortisation costs of R13,5 million and notional interest costs of
R5,3 million, which totalled R18,8 million (2015: R7,8 million) were expensed
for the half year. As acquisitions of this nature will be an ongoing hallmark
of Adapt IT in line with its growth strategy, normalised headline earnings
will be reported on an ongoing basis, as we believe this will add value to
the reader. Normalised HEPS grew 20% to 34,74 cents (2015: 28,89 cents).
By comparison, HEPS grew 2% after taking into account the non-cash
expenses described above, together with higher bank interest paid on
the higher level of borrowings to fund the CQS acquisition.

Cash utilised in operations was primarily affected by an increase in trade
receivables due by slow payments to debtors due to market conditions. In December
2016, Adapt IT utilised the general authority granted by its shareholders
at the latest Annual General Meeting to issue shares for cash, raising
R84,0 million of fresh equity in support of its acquisitive growth strategy.
These funds have been temporarily offset against borrowings until they
are applied in due course.

Ordinary dividend number 14, in respect of the year ended 30 June 2016,
of 13,40 cents per share, on a four times dividend cover ratio, was paid to
shareholders on 19 September 2016. It is our policy to declare a dividend
after financial year-end and not at the interim reporting date.

ACQUISITION
Adapt IT Proprietary Limited acquired the EasyRoster group of companies
(EasyRoster) effective 1 August 2016, in line with our acquisitive growth
strategy. EasyRoster is the leading provider of rostering optimisation
software services to staffing solutions businesses in South Africa and
the rest of Africa. EasyRoster is a software-as-a-service (SaaS) solutions
business, and bolsters the manufacturing services segment of Adapt IT.
Adapt IT is pleased to welcome another very successful team to the
Group. EasyRoster's results for the five months are included in these interim
results.

POST BALANCE SHEET EVENTS
No matters have occurred between the reporting date and the date of
approval of the interim financial statements, which would have had a
material effect on these financial statements.

STRATEGY
Adapt IT continues to realise synergies between its specialised software
businesses. Further strategic business acquisitions will be pursued.

OUTLOOK
Whilst the current market conditions are challenging, our outlook remains
positive as we continue to build on the strong, well-diversified foundation
that we have established to create a sizeable, leading ICT business that
delivers above sector average growth and returns.

BOARD
Nombali Mbambo was appointed to the board as Chief Financial Officer
on 18 August 2016.Tiffany Dunsdon reverted to being Commercial Director
for the Group and Managing Director of International Operations.

APPRECIATION
We thank our customers, partners and service providers for their continued
support and members of the board and Adapt IT Group employees for
their dedication, which underpins our success.

On behalf of the board,

Craig Chambers                                            Sbu Shabalala
Independent non-executive Chairman                 Chief Executive Officer

13 February 2017

CONDENSED CONSOLIDATED STATEMENT OF
PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

                                                     Unaudited  Unaudited      Audited
                                                      6 months   6 months         Year
                                                         ended      ended        ended      Period-
                                                        31 Dec     31 Dec      30 June    on-period
                                                          2016       2015         2016     variance
                                              Notes      R'000      R'000        R'000            %

Revenue                                                462 985    314 608      803 338           47
Turnover                                               460 691    310 438      796 178           48
Cost of sales                                        (198 314)  (143 826)    (343 573)           38
Gross profit                                           262 377    166 612      452 605           57
Operating expenses                                   (172 508)  (104 359)    (287 465)           65
Earnings before interest, tax, depreciation
  and amortisation (EBITDA)                             89 869     62 253      165 140           44
Depreciation and amortisation                          (6 892)    (5 354)     (11 667)           29
Amortisation of intangible assets acquired            (13 501)    (4 390)     (17 084)          208
Profit from operations                                  69 476     52 509      136 389           32
Finance income                                    2      2 294      4 170        7 159         (45)
Finance costs                                     3   (15 292)    (7 864)     (22 298)           94
Share of profits of equity accounted
  investment after tax                                     829        460        1 636           80
Profit before taxation                                  57 307     49 275      122 886           16
Income tax expense                                    (20 251)   (17 567)     (41 929)           15
Profit for the period                                   37 056     31 708       80 957           17
Attributable to:
Equity holders of the parent                            35 489     31 708       78 357           12
Non-controlling interests                                1 567          -        2 600            -
Items that may be reclassified subsequently
   to profit and loss                                    (665)      3 841          789
Exchange differences arising from translation
  of foreign operations                                  (665)      3 841          789

Total comprehensive income                              36 391     35 549       81 746            2
Attributable to:
Equity holders of the parent                            34 824     35 549       79 146          (2)
Non-controlling interests                                1 567          -        2 600
Headline earnings:
Profit attributable to ordinary shareholders            35 489     31 708       78 357           12
Loss/(profit) on sale of property and equipment             26       (35)         (98)        (174)
Headline earnings                                       35 515     31 673       78 259           12
Normalised headline earnings                      4     50 535     38 186       97 481           32
Number of ordinary shares in issue       (000)         152 355    139 875      140 062            9
Weighted average number of
  ordinary shares in issue               (000)         145 476    132 178      136 016           10
Diluted average number of
  ordinary shares in issue               (000)         145 476    132 178      141 752           10
Basic earnings per share               (cents)           24,40      23,99        57,61            2
Diluted basic earnings per share       (cents)           24,40      23,99        55,28            2
Headline earnings per share            (cents)           24,41      23,96        57,54            2
Diluted headline earnings per share    (cents)           24,41      23,96        55,21            2
Normalised headline earnings per share (cents)    4      34,74      28,89        71,67           20
Dividend per share                     (cents)           13,40      10,90        10,90           23

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                              Unaudited   Unaudited    Audited
                                                               6 months    6 months       Year
                                                                  ended       ended      ended
                                                                 31 Dec      31 Dec    30 June
                                                                   2016       2015*       2016
                                                       Notes      R'000       R'000      R'000

ASSETS
Non-current assets                                              771 574     707 489    705 321
Property and equipment                                           37 120      36 287     37 367
Intangible assets                                               189 123     170 437    170 032
Goodwill                                                   6    520 911     472 515    472 515
Equity accounted investment                                       2 633         628      1 804
Deferred taxation asset                                          21 787      27 622     23 603
Current assets                                                  377 959     340 293    259 556
Trade and other receivables                                     284 681     233 343    170 600
Asset held for sale                                                   -       9 733          -
Current tax receivable                                            6 854       1 624     11 232
Cash and cash equivalents                                        86 424      95 593     77 724

Total assets                                                  1 149 533   1 047 782    964 877
EQUITY AND LIABILITIES
Equity
Share capital                                                        15          14         14
Share premium                                                   319 922     198 615    200 831
Other capital reserves                                           32 580      13 734     34 574
Equity compensation reserve                                       7 207       4 030      5 725
Foreign currency translation reserve                              2 544       6 260      3 209
Revaluation reserve                                               3 544       3 544      3 544
Retained earnings                                               234 638     176 400    218 783
Equity attributable to shareholders of the company              600 450     402 597    466 680
Non-controlling interest                                          7 839       7 558      6 008
Total equity                                                    608 289     410 155    472 688
Non-current liabilities                                         251 352     282 394    190 767
Interest-bearing borrowings                                7    160 449     237 432    145 791
Financial liabilities                                            39 986           -          -
Deferred taxation liability                                      50 917      44 962     44 976
Current liabilities                                             289 892     355 233    301 422
Trade and other payables                                        103 559     105 292    105 552
Provisions                                                       17 101      26 833     42 938
Deferred income                                            8    109 116     103 661     67 271
Current tax payable                                                   -      10 423      6 811
Financial liabilities                                            38 789      72 576     59 476
Current portion of interest-free borrowings                         841           -          -
Current portion of interest-bearing borrowings             7     20 486      36 448     19 374

Total equity and liabilities                                  1 149 533   1 047 782    964 877
Net asset value per share                        (cents)         399,26      293,23     337,48
Tangible net asset value per share               (cents)          13,54     (83,41)    (34,18)
Liquidity ratio                                  (times)           1,30        0,96       0,86
Solvency ratio                                   (times)           2,12        1,64       1,96
Market price per share
   Close                                         (cents)          1 598       1 300      1 242
   High                                          (cents)          1 699       1 400      1 450
   Low                                           (cents)          1 163         820        800
Capital expenditure for the period               (R'000)          5 779       4 854     10 478
Capital commitments                              (R'000)          7 305       4 950     13 084
* Refer to note 9.2

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                      Unaudited    Unaudited    Audited
                                                                       6 months     6 months       Year
                                                                          ended        ended      ended
                                                                         31 Dec       31 Dec    30 June
                                                                           2016         2015       2016
                                                              Notes       R'000        R'000      R'000
OPERATING ACTIVITIES
Cash (utilised in)/generated from operations                            (8 056)       27 193    173 602
Finance income                                                    2         968        3 627      5 091
Finance costs                                                     3     (9 993)      (4 512)   (15 377)
Dividends paid                                                         (19 634)     (14 481)   (18 630)
Taxation paid                                                          (25 816)     (17 471)   (55 029)
Net cash flow (utilised in)/generated from operating activities        (62 531)      (5 644)     89 657
INVESTING ACTIVITIES
Property and equipment acquired                                         (4 044)      (3 851)    (7 934)
Intangible assets acquired and developed                                (1 735)      (1 003)    (2 544)
Proceeds on disposal of property and equipment                              138           70        178
Proceeds on disposal of asset held for sale                                   -            -      9 733
Net cash inflow/(outflow) on acquisition of subsidiaries        9.1       4 779    (129 927)  (137 791)
Net cash flows utilised in investment activities                          (862)    (134 711)  (138 358)
FINANCING ACTIVITIES
Proceeds from borrowings                                                201 500      227 478    267 431
Repayment of borrowings                                               (189 392)     (24 343)  (173 011)
Payment of financial liabilities                                       (24 860)            -          -
Issue of shares for cash                                                 84 000            -      2 216
Net cash inflow from financing activities                                71 248      203 135     96 636
Net increase in cash resources                                            7 855       62 780     47 935
Exchange differences on translation                                         845        3 841        817
Cash and cash equivalents at beginning of period                         77 724       28 972     28 972
Cash and cash equivalents at end of period                               86 424       95 593     77 724

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                                      Equity                 Foreign             Attributable
                                                           Other     compen-       Asset    currency                to equity        Non-
                                       Share     Share   capital      sation revaluation translation    Retained   holders of controlling
                                     capital   premium  reserves     reserve     reserve     reserve    earnings   the parent    interest     Total
                                       R'000     R'000     R'000       R'000       R'000       R'000       R'000        R'000       R'000     R'000
Balance at 30 June 2015 (audited)         13   128 820    26 595         530       3 544       2 419     159 173      321 094           -   321 094
Total comprehensive income
  for the period                           -         -         -           -           -       3 841      31 708       35 549           -    35 549
Profit for the period                      -         -         -           -           -           -      31 708       31 708           -    31 708
Other comprehensive income
  for the period                           -         -         -           -           -       3 841           -        3 841           -     3 841
Non-controlling interest arising on
  the acquisition of subsidiaries          -         -         -           -           -           -           -            -       7 558     7 558
Share-based payments                       -         -         -       3 500           -           -           -        3 500           -     3 500
Issue of shares for
  business combination                     1    69 795  (12 861)           -           -           -           -       56 935           -    56 935
Dividend paid                              -         -         -           -           -           -    (14 481)     (14 481)           -  (14 481)
Balance at 31 December 2015
 (unaudited)                              14   198 615    13 734       4 030       3 544       6 260     176 400      402 597       7 558   410 155
Balance at 30 June 2016 (audited)         14   200 831    34 574       5 725       3 544       3 209     218 783      466 680       6 008   472 688
Total comprehensive income
  for the period                           -         -         -           -           -       (665)      35 489       34 824       1 567    36 391
Profit for the period                      -         -         -           -           -           -      35 489       35 489       1 567    37 056
Other comprehensive income
  for the period                           -         -         -           -           -       (665)           -        (665)           -     (665)
Share-based payments                       -         -         -       2 000           -           -           -        2 000           -     2 000
Issue of shares for
  business combination                     -    34 574  (34 574)           -           -           -           -            -           -         -
Shares issued during the year              1    84 517         -       (518)           -           -           -       84 000         264    84 264
Shares to be issued                        -         -    32 580           -           -           -           -       32 580           -    32 580
Dividend paid                              -         -         -           -           -           -    (19 634)     (19 634)           -  (19 634)
Balance at 31 December 2016
 (unaudited)                              15   319 922    32 580       7 207       3 544       2 544     234 638      600 450       7 839   608 289

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

1.   BASIS OF PREPARATION
     The unaudited condensed consolidated interim results for the six months ended 31 December 2016
     have been prepared in accordance with the requirements of the JSE Limited Listings Requirements
     for interim reports, the requirements of the Companies Act applicable to condensed financial
     statements, 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
     contain information required by IAS 34 Interim Financial Reporting. The accounting policies applied in
     preparation of these condensed consolidated interim results are in terms of IFRS and are consistent with
     those applied in the previous annual financial statements.

     The report was prepared under the supervision of the Chief Financial Officer, Ms Nombali Mbambo
     CA(SA), and has not been audited by the Group's external auditors.

     The unaudited condensed consolidated interim results were approved by the board of directors on
     10 February 2017.

                                       Unaudited   Unaudited   Audited
                                          31 Dec      31 Dec   30 June
                                            2016        2015      2016
                                           R'000       R'000     R'000
2.   FINANCE INCOME
     Imputed interest                      1 326         543     2 068
     Bank interest                           968         283     1 436
     CQS                                       -       3 344     3 344
     Other interest                            -           -       311
     Total finance income                  2 294       4 170     7 159


3.   FINANCE COSTS
     Borrowings                            9 993       4 512    15 377
     Financial liabilities (imputed)       5 299       3 352     6 921
     Total finance cost                   15 292       7 864    22 298

4.   NORMALISED HEADLINE EARNINGS
     Normalised headline earnings are calculated by adding back to headline earnings the amortisation
     of acquired intangible assets net of deferred taxation, as a consequence of the purchase price
     allocations completed in terms of IFRS 3 Business Combinations and fair value adjustments to financial
     liabilities (imputed interest) on outstanding contingent purchase considerations.

                                                                  Unaudited    Unaudited    Audited
                                                                     31 Dec       31 Dec    30 June
                                                                       2016         2015       2016
                                                                      R'000        R'000      R'000
Reconciliation between headline earnings and normalised
headline earnings for the period:
Headline earnings                                                    35 515       31 673     78 259
Amortisation of intangible assets acquired                           13 501        4 390     17 084
Deferred taxation on amortisation of intangible assets acquired     (3 780)      (1 229)    (4 783)
Fair value adjustment to financial liability (imputed interest)       5 299        3 352      6 921
Normalised headline earnings                                         50 535       38 186     97 481
Weighted average number of ordinary shares in issue   (000)         145 476      132 178    136 016
Normalised headline earnings per share              (cents)           34,74        28,89      71,67

5.   DIVIDENDS
     Ordinary dividend number 14 of 13,40 cents per share was paid to shareholders on 19 September 2016.
     It is Group policy to consider declaration of dividends at the end of the financial year and not at the
     interim reporting date.

                                                                     Unaudited   Unaudited   Audited
                                                                        31 Dec      31 Dec   30 June
                                                                          2016        2015      2016
                                                                         R'000       R'000     R'000
6.   GOODWILL
     Carrying amount at beginning of period                            472 515     276 525   276 525
     Acquisition of CQS                                                      -     195 990   195 990
     Acquisition of EasyRoster                                          48 396           -         -
     Carrying amount at end of period                                  520 911     472 515   472 515
     Comprising:
     Cost                                                              520 911     527 466   472 515
     Goodwill is allocated as follows:
     - Adapt IT Proprietary Limited                                    276 525     276 525   276 525
     - CQS                                                             195 990     195 990   195 990
     - EasyRoster                                                       48 396           -         -

     Total                                                             520 911     472 515   472 515

The recoverable amount of goodwill has been determined based on a value-in-use calculation using
cash flow projections from financial forecasts approved by senior management covering a five-year
period. Cash flow projections take into account past experience and external sources of information.
The valuation method used is consistent with the prior year. There have been no accumulated
impairment losses recognised to date.

The key assumptions used in the testing of goodwill are:
- Discount rate of 14% (2015: 12%) (weighted average cost of capital); and
- Projected cash flows for the five years based on a 5% (2015: 5%) growth rate.

                                                               Unaudited     Unaudited       Audited
                                                                  31 Dec        31 Dec       30 June
                                                                    2016          2015          2016
                                                                   R'000         R'000         R'000
7.   INTEREST-BEARING BORROWINGS
     Non-current borrowings                                      160 449       237 432       145 790
     - Investec Bank Limited                                     148 555       199 611       124 989
     - Sanlam Capital Markets Limited                             11 894        37 821        20 801
     Current borrowings                                           20 486        36 448        19 374
     - Investec Bank Limited                                       1 576        27 867         1 182
     - Sanlam Capital Markets Limited                             18 910         8 581        18 192
     Total                                                       180 935       273 880       165 164
     The Investec Bank Limited loan was obtained in July 2015. The loan is a 60-month credit facility.
     The interest is based on three month JIBAR plus a 3,2% margin. The interest rate during the period
     ranged between 10,508% and 10,558%.
     The loan is secured by 100% of the shares held in Adapt IT Proprietary Limited and cession of book debts
     held by Adapt IT Holdings Limited and its subsidiaries.

     Excess cash resources are used from time to time to reduce the facilities.
     CQS has a loan with Sanlam Capital Markets Limited. The interest is charged at a fixed rate of 9,22%
     over a five-year loan period.

     The loan is repayable in variable bi-annual instalments ending 28 February 2018. The loan is secured by
     a pledge of issued share capital, a cession of trade receivables and a notarial bond over all moveable
     assets of CQS.


                                                               Unaudited     Unaudited       Audited
                                                                  31 Dec        31 Dec       30 June
                                                                    2016          2015          2016
                                                                   R'000         R'000         R'000
8.   DEFERRED INCOME
     Education segment                                            91 020        90 362        52 289
     Manufacturing segment                                         7 044         9 666         4 630
     Energy segment                                                6 827         3 258         5 088
     Financial segment                                             4 225           375         5 264
     Total                                                       109 116       103 661        67 271
     The Education segment deferred income relates to annual maintenance fees invoiced in advance
     for the year and usually collected at the end of January and February, the start of the education year.
     The deferred income of other segments includes long-term software projects in progress, ongoing
     upgrades and other software-related projects for clients.

9.   BUSINESS COMBINATIONS
     9.1 Acquisition of subsidiary
         On 1 August 2016, the Group acquired the entire issued share capital of EasyRoster Proprietary
         Limited and EasyRoster Software Proprietary Limited ('EasyRoster'). EasyRoster is South African
         registered.

         EasyRoster is a leading Information Technology company with more than 20 years' experience
         and excellence in the development of software tools for operational management.

         EasyRoster has an extensive national and international customer footprint in over 25 countries.

         The purchase consideration consists of R1,6 million in cash paid on 12 January 2017,
         R17,1 million in shares to be issued in December 2017 at 1 595 cents per share, with a further
         contingent consideration of a maximum amount of R68,6 million, which is contingent upon the
         achievement by EasyRoster of EBITDA performance warranties over 48 months.

         The fair value of the net assets acquired amounted to R23,0 million, resulting in goodwill of
         R48,4 million at acquisition. The purchase consideration paid for the combination effectively
         included amounts in relation to the benefit of the expected synergies, revenue growth, new market
         penetration and future market development.

         The acquisition, which is in line with Adapt IT's strategy of targeted acquisitive growth, will augment
         the Group's Manufacturing segment.

         The fair values of the identifiable net assets and liabilities of EasyRoster as at the date of acquisition
         were:

                                                                                                Fair value
                                                                                                recognised
                                                                                                        on
                                                                                               acquisition
                                                                                                     R'000

         Assets
         Property and equipment                                                                         27
         Intangible assets                                                                          33 201
         Deferred taxation                                                                             256
         Trade and other receivable                                                                  1 283
         Cash and cash equivalents                                                                   4 779
         Total assets                                                                               39 546
         Liabilities
         Deferred tax liabilities                                                                    9 296
         Current portion of interest-bearing borrowings                                              4 503
         Trade and other payables                                                                    1 168
         Current tax payable                                                                         1 534
         Total liabilities                                                                          16 501
         Total identifiable net assets                                                              23 045
         Goodwill arising on acquisition                                                            48 396
         Fair value of consideration payable:                                                       71 441
         Cash payable 12 January 2017                                                                1 615
         Shares to be issued in December 2017                                                       17 155
         Fair value of contingent purchase consideration owing in respect of acquisition
         and settled through cash when relevant warranties have been fulfilled                      52 671
         Fair value of consideration payable                                                        71 441
         Cash outflow on acquisition:
         Net cash acquired with the subsidiary                                                       4 779
         Cash paid                                                                                       -
         Net cash inflow on acquisition                                                              4 779
         The acquisition is provisionally accounted for in terms of the allowance per IFRS 3 Business
         Combinations.

         From the date of acquisition, EasyRoster has contributed R4,0 million (R4,8 million if acquired with
         effect from 1 July 2016) to the profit after tax of the Group. Non-cash acquisition related expenses
         (amortisation of intangible assets and notional interest on deferred purchase consideration)
         amounted to R3,7 million after tax.

         Cash acquisition related costs of R0,5 million have been expensed and are included in operational
         expenses on the statement of profit or loss and other comprehensive income.

     9.2 Measurement period adjustment
         At 31 December 2015, the CQS acquisition was provisionally accounted for in terms of the
         allowance per IFRS 3 Business Combinations. The purchase price allocation valuation was
         completed by the year ended 30 June 2016 and included in the fair value of assets and liabilities
         recognised on acquisition.
         
         Consequently, the comparative figures for 31 December 2015 have been adjusted. The effect of
         the adjustment is disclosed in the table below. There is no impact on the profit/loss for the period.
         
         The effect on 31 December 2015 Group results is as follows:
                                                                           Measurement
                                                         As originally          period    Restated
         Condensed consolidated                               reported      adjustment      amount
         Statement of financial position                         R'000           R'000       R'000
         
         ASSETS
         Non-current assets                                    673 188          34 301     707 489
         Property and equipment                                 36 287               -      36 287
         Intangible assets                                      81 185          89 252     170 437
         Goodwill                                              527 466        (54 951)     472 515
         Equity accounted investment                               628               -         628
         Deferred taxation asset                                27 622               -      27 622
         Current assets                                        330 560           9 733     340 293
         Trade and other receivables                           233 343               -     233 343
         Asset held for sale                                         -           9 733       9 733
         Current tax receivable                                  1 624               -       1 624
         Cash and cash equivalents                              95 593               -      95 593
         
         Total assets                                        1 003 748          44 034   1 047 782
         EQUITY AND LIABILITIES
         Equity
         Share capital                                              14               -          14
         Share premium                                         198 615               -     198 615
         Other capital reserves                                 13 734               -      13 734
         Equity compensation reserve                             4 030               -       4 030
         Foreign currency translation reserve                    6 260               -       6 260
         Revaluation reserve                                     3 544               -       3 544
         Retained earnings                                     176 400               -     176 400
         Equity attributable to shareholders of the company    402 597               -     402 597
         Non-controlling interest                                    -           7 558       7 558
         Total equity                                          402 597           7 558     410 155
         Non-current liabilities                               257 403          24 991     282 394
         Interest-bearing borrowings                           237 432               -     237 432
         Deferred taxation liability                            19 971          24 991      44 962
         Current liabilities                                   343 748          11 485     355 233
         Trade and other payables                               98 985           6 307     105 292
         Provisions                                             26 833               -      26 833
         Deferred income                                       103 661               -     103 661
         Current tax payable                                     5 245           5 178      10 423
         Financial liabilities                                  72 576               -      72 576
         Current portion of interest-bearing borrowings         36 448               -      36 448
         
         Total equity and liabilities                        1 003 748          44 034   1 047 782
         

10. SEGMENT ANALYSIS
    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.

    Management does not monitor assets and liabilities by segment.

    The following tables present turnover and EBITDA information regarding the Group's operating segments
    for the six months ended 31 December 2016 and 31 December 2015, respectively:

                                         Manu-   Financial
                          Education  facturing    Services    Energy   Other       Total
                              R'000      R'000       R'000     R'000   R'000       R'000
    Six months ended
    31 December 2016
    Turnover                 84 655    122 315     162 472    91 249       -     460 691
    Segment EBITDA           14 591     29 889      23 648    22 486   (745)      89 869
    EBITDA margin   (%)          17         24          15        25       -          20
    Six months ended
    31 December 2015
    Turnover                 87 753    112 533      42 725    67 427       -     310 438
    Segment EBITDA           16 663     22 666       7 493    18 893 (3 462)      62 253
    EBITDA margin   (%)          19         20          18        28       -          20

CORPORATE INFORMATION

ADAPT IT HOLDINGS LIMITED                                TRANSFER SECRETARY
Incorporated in the Republic of South Africa             Computershare Investor Services Proprietary Limited
Registration number 1998/017276/06                       PO Box 61051, Marshalltown, 2107
Share code: ADI                                          T +27 (0) 11 370 5000
ISIN: ZAE000113163                                       F +27 (0) 11 688 5200


COMPANY SECRETARY                                        AUDITORS
Statucor Proprietary Limited                             Deloitte & Touche
22 Wellington Road
Parktown                                                 SPONSOR
                                                         Merchantec Capital
2193
                                                         2nd Floor, North Block
                                                         Hyde Park Corner Office Towers
REGISTERED OFFICE
                                                         Corner 6th Road and Jan Smuts Avenue
5 Rydall Vale Office Park                                Johannesburg
Rydall Vale Crescent                                     2196
La Lucia Ridge
4019                                                     CORPORATE BANKERS
KwaZulu-Natal                                            The Standard Bank of South Africa Limited
South Africa                                             ABSA Bank 
                                                         
DIRECTORS                                                LEGAL REPRESENTATIVES
Craig Chambers* (Chairman)                               Garlicke & Bousfield
Sbu Shabalala (Chief Executive Officer)                  Eversheds
Tiffany Dunsdon (Commercial Director)                    Shepstone & Wylie
Nombali Mbambo (Chief Financial Officer)                 Michalsons
Bongiwe Ntuli*                                           Read Hope Phillips Thomas Cadman Incorporated
Catherine Koffman*
Oliver Fortuin*                                          ADAPT IT WEBSITE
* Independent non-executive director                     www.adaptit.co.za

REGIONAL OFFICES

DURBAN                           JOHANNESBURG             PRETORIA                          CAPE TOWN
5 Rydall Vale Office Park        The Braes                50 Bushbuck Lane                  Great Westerford
Rydall Vale Crescent             Adapt IT House           Monument Park                     3rd Floor
La Lucia Ridge                   I93 Bryanston Drive      0181                              240 Main Road
4019                             Bryanston                Pretoria                          Rondebosch
KwaZulu-Natal                    Johannesburg                                               Cape Town

T +27 (0) 31 514 7300            T +27 (0) 11 460 5300    T +27 (0) 12 425 5600             T +27 (0) 21 200 0480
F +27 (0) 86 602 8961            F +27 (0) 11 460 5301    F +27 (0) 12 460 5377





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