Wrap Text
Unaudited Group results For the six months ended 31 August 2017
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 2017
Salient features
Nihilent disposal completed. Net proceeds of R307 million, approximate
profit of R148 million
Refinance in place
Double-digit EBITDA growth in Australia
Decision taken to wind down Rest of Africa
Revenue decreased by 2% to R7,8 billion
Operating profit decreased to R27,6 million compared to R191,0 million
in the prior period
Headline loss per share of 40,1 cents compared to prior period headline
earnings per share of 77,5 cents
Loss per share of 120,7 cents compared to prior period earnings per share
of 78,4 cents
No dividend declared
Statement of consolidated earnings before interest, tax, depreciation
and amortisation (EBITDA) from continuing operations
for the six months ended 31 August 2017
Unaudited Unaudited Audited
Six months to Six months to Year to
31 August 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
Revenue 7 750 162 7 890 482 15 804 081
Cost of sales (6 613 969) (6 728 139) (13 454 724)
Gross profit 1 136 193 1 162 343 2 349 357
Other income 30 043 41 354 46 436
Administrative, marketing,
selling and operating
expenses (1 138 611) (1 012 687) (2 168 707)
Operating profit 27 625 191 010 227 086
Adjusted for:
Depreciation 17 211 18 228 37 311
Amortisation of intangible
assets 50 641 53 433 107 183
EBITDA 95 477 262 671 371 580
Comments
Overview
The Group’s poor performance heralded a season of unprecedented shareholder
action. A new, experienced executive leadership team is now in place.
This new leadership team has worked tirelessly to understand the challenges
the Group has faced, and has started mapping out a strategy to turn the
business around.
Despite the reported loss in the half year results, the fundamentals of the
business remain in place and the new leadership team is excited by the
potential of the Group. Adcorp has a solid core business and plays an
integral role in resolving South Africa’s employment challenges.
In June 2017, Venture Capital Partners (VCP) purchased an effective
14,55% of the Group’s shareholding. VCP is an activist shareholder whose
business model applies private equity principles to unlock value in the
listed entity space. VCP’s strategy is to identify companies with an
attractive business model, that they believe have an intrinsic value above
the share price, and work with the board and management to ensure
realisation of this value.
The Group’s performance is a culmination of a combination of legacy matters,
the most significant of which are discussed below:
Underperformance of some acquisitions
Approximately R2 billion has been spent on various forms of expansion since
2012. Some of this investment was made in regions and sectors outside of the
traditional ones where the Group had expertise and in industries that
experienced an economical downturn. In particular, the exposure to oil and
gas clients across the Rest of Africa and in DARE (Australia) resulted in
operating losses of R136 million and R86 million respectively in the prior
year due to reduced operations and impairments.
Overgeared balance sheet
The Group has a significant debt burden due to amounts borrowed to fund the
expansion strategy. This has worsened over the years due to inadequate working
capital management practices coupled with a track record for paying attractive
dividends out of borrowed funds.
Complex management structure
The Group has historically had a multi-layered top management structure,
resulting in significant employment costs. Additionally, this served to remove
line of sight of the group leadership to certain operations.
Adverse legislative environment
The 2015 amendments to the Labour Relations Act (LRA) significantly impacted
volumes in certain parts of the business. In particular, the Support services
businesses has shrunk from a R1,3 billion turnover business in FY15, to a
R800 million currently. The process to rationalise the business, in response to
this has now commenced.
Increased central costs
Despite the economic and legislative challenges faced by the Group, central
costs increased significantly and have more than doubled over the last three
years. As set out further the increase in central cost is an immediate focus
of the new management team.
Core operations
The latest unemployment rate stands at 27,7%1, which is at a 14 year high.
If one includes discouraged workseekers then the national unemployment rate
rises to 36,4%. The unemployment rate among youth under 25 years of age is a
staggering 67,4%.
Temporary Employment Services (TES) enable just short of 10% of all employment
in South Africa. The Group is the leading workforce solutions business in
South Africa and plays a key socio-economic role in providing employment and
increasing employability:
* Approximately 80% of the individuals we place into employment are labour market
“outsiders”. In other words youth, first-time jobseekers and re-entrants to
the labour market. Furthermore, we estimate that at least 20% of these
individuals secure permanent employment within three years of placement by
our businesses.
* In Australia, Labour Solutions Australia (LSA) performs strongly in the
agriculture, meat processing and logistics industries.
* The Group’s vocational training enrolls in excess of 3 500 learners per annum.
* Adcorp runs one of the largest national academies for persons with disabilities,
training more than 600 individuals per annum.
* Our technical training centres train over 1 400 artisans per annum across
13 trades. This creates a pathway to employment as qualified trade persons.
Prior to this training these youth were mostly unemployed.
* Continuous upskilling of unemployed youth through the Group’s New Venture
Creation and Agricultural Training programmes impacts the lives of more than
1 000 learners in rural areas annually.
A brief overview of each operating segment within the Group is provided below:
Industrial Services
This operating segment provides industrial staffing solutions in the ‘blue collar’
and technical areas and places assignees: engineers, project support staff,
artisans, construction workers, logistics, manufacturing and warehousing staff.
The Labour Relations dispensation over the past few years has provided an
opportunity to elevate strategic engagement with key clients across the
country, which are characterised by sustainable growth opportunities.
The industries, such as manufacturing, retail and mining, all have a need for
flexible labour solutions and we work with them to provide a comprehensive
service covering areas such as talent mobilisation and demobilisation, running
payrolls, transformation, operational workforce modelling and related functions
while ensuring governance, labour law compliance and cradle-to-grave dispute
management and resolution support through the Labour Relations Service Centre.
The Functional Outsourcing business was started in 2015. It leverages the
Group’s competencies in workforce solutions to provide clients with end-to-end
outsourced business solutions, such as warehouse, distribution and supply chain
management.
Support Services
This operating segment provides support staffing solutions in ‘white collar’
areas, such as nursing, clerical, admin, office and call centre positions.
Support Services has been the most affected by LRA, resulting in a significant
reduction in headcount placements. The executive team is working closely with
the management in Support Services to review the business model and rationalise
its structures.
Professional Services
This operating segment provides highly skilled IT and digital, focused
professionals. It also delivers consulting, project and managed services in
a number of specialist domains. The portfolio is the largest supplier of IT
and digital professionals in South Africa and one of the leading providers in
Australia. This is complemented by a SAP specialisation in South Africa and
project management, recruitment process outsourcing, managed service provider,
digital, recruitment and IT training across both geographies. Extensive long-term
partnerships with clients support the attraction of talent across the spectrum.
Financial Services
The operating segment offers affordable, pay-as-you-go financial service and
lifestyle benefit solutions customised for the Group’s assignee base as well
as external clients. The Group’s ADvantage paycard ensures a safe, easy to use
payment platform that is not dependent on having a bank account. This has
assisted in differentiating Adcorp from its competitors.
Training
This operating segment facilitates training and provides solutions to external
clients and support to other Adcorp service lines. The Training business has the
capacity and accreditation to provide 44 learnership and higher education
qualifications, from NQF level 1 to 8 (B,Sc Honours). Additionally, it has
12 000 m2 of training facilities and provides artisan and mining training in
13 trades.
Legislative landscape
The focal point of the LRA that was promulgated in January 2015 related to the
“equal treatment” and “deeming” provisions contained in s198 of the said Act.
The “deeming” provision addresses whether the client and/or the TES is the
employer after three months in respect of assignees earning below R205 433 pa.
In 2017 the Labour Appeal Court overturned the Labour Court decision which had
confirmed the dual employment relationship of the TES (as primary employer)
and the client (as secondary employer) for purposes of the LRA. Our view is
that the dual employment relationship provides the best protection for our
assignees, and is also aligned to the definitions in the broad labour law and
tax spectrum. This matter will be heard by the Constitutional Court in
February 2018.
The “equal treatment” provision requires that temporary and permanent workers
be paid equally for work of equal value, only if both individuals are absolutely
comparable in all respects. The LRA therefore specifies that it is not unfair
to treat employees differently on the basis of experience, performance,
qualifications and other similar factors. Our expertise in this area has
enabled us to support our clients in implementation of the LRA requirements.
The Group is a strong advocate of ensuring the protection of employees in this
“vulnerable” category. We continue to engage our clients regarding the impact
of this legislation on their workforce solutions, and have found that this has
served to strengthen client engagement and relationships. It has also provided
us with a platform to diversify our operating model in affected parts of the
business and we have every confidence that this will translate to revenue growth.
Setting a new strategy
The immediate priorities of the new team are as follows:
1. To build a strong business that is focused on leveraging our core.
2. Ensure that the business is lean and agile.
3. Strengthen the brand.
4. Transform the culture.
These are discussed in more detail below.
1. Build a strong business that is focused on leveraging our core business
The first point of call for the new executive leadership team has been to
ensure that the senior leadership structures across the Group’s operations
are simplified and that the right people are in place to drive the businesses
forward. As a result, a mutual agreement was reached with certain executives
to exit from the business.
A comprehensive business review of each operating entity is in progress with
a view to:
* understand the key levers required to provide the relevant returns.
* identify and dispose of non-core businesses.
* realign underperforming businesses.
* address underperforming revenue streams.
2. Ensure that the business is lean and agile
The growing cost base of the business has disadvantaged the Group and made it
unable to respond effectively to economic changes. The new leadership team
has identified three key areas of focus that will enable the Group in this
regard:
A need to de-gear and strengthen the balance sheet – the proceeds from the
disposal of Nihilent will be used to pay down a portion of the Group’s debt.
Furthermore, the Group has managed to secure funding of R1 billion in South
Africa and AUD47 million in Australia. These funds will be used to refinance
the current debt, at terms that are more appropriate and suitable for the
turnaround requirements of the Group. The details of the refinance debt package
are discussed further in a separate note in this report.
Improve working capital management – the Group has trade receivables of
R2,4 billion. Working capital management is a critical part of the business
and an ongoing focus area for management to ensure we meet our weekly payroll
obligations. Historical practice resulted in a significant increase in bad debt
write-offs. To ensure that these incidents do not recur management are in the
process of embedding new treasury, credit policies and processes. The entire
structure of the relevant working capital functions is currently under review.
Reduce costs on a sustainable basis – A recent analysis of the Group indicates
that costs need to be reduced by at least R200 million on a sustainable basis.
This cost reduction will come from a combination of rationalisation of IT
infrastructure, back-office functions, simplification of senior leadership
functions and headcount reduction. Significant progress has already been made
in this regard and ongoing optimisation activities are under way.
3. Strengthen the brand
Companies with sizeable labour costs require workforce flexibility in order to
remain competitive under ever increasing economic challenges. In addition,
there is ongoing discussion about the future of work, the workplace and
workforces of the future. Adcorp is ideally positioned to take advantage of
these trends and work with our clients strategically in this regard.
The new management team is assessing the brand and market positioning of the
Group and its subsidiaries.
4. Transform the culture and re-energise our people
The Adcorp world is evolving. Over time, as the culture develops and changes,
a focus to instill shared values and common cultural characteristics will be
fostered, while remaining flexible enough to be differentiate where it makes
sense. Efficiency is a key enabler of growth at Adcorp and to this end a lean
yet effective and meaningful corporate structure will be executed.
The management team believes that these priorities will hold the Group in good
stead as we work together to develop our longer-term strategy over the next
few months. The team look forward to sharing this strategy with the release
of the year-end results FY2018.
Financial overview
Pro Forma Financial Information
The pro forma financial information below has been prepared for illustrative
purposes only to provide information on how the sustainable 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 2017.
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.
Notes R’000 R’000
Reported net (loss)/EBITDA from
continuing operations 1 (128 454) 95 477
Rest of Africa impairment (IFRA
requirement due to reclassification
to discontinuing operations) 2 65 338 —
Rest of Africa operating loss 2 27 247 —
Impairment of intangible assets 3 22 528 —
Impact of non-recurring bad debt
write-offs 4 78 400 78 400
Quality of earnings 65 059 173 877
Quality of earnings is defined as net loss/EBITDA adjusted for impairments
and bad debt write-offs.
Notes:
1. As per the consolidated statement of comprehensive income for the six
months ended 31 August 2017 and analysis of EBITDA continuing operations
respectively.
2. As per note 4 per the notes to the unaudited condensed consolidated
interim financial statements.
3. As per the consolidated statement of comprehensive income for the six
months ended 31 August 2017.
4. Non-recurring bad debt write offs specifically in the industrial space.
These are discussed in more detail below.
Discontinuing operations
The Group’s operations across the Rest of Africa have, for a number of years,
been severely impacted by the decline in oil and gas prices and this was
exacerbated by the foreign exchange losses in the prior year. A decision has
been taken to wind down these operations. This will have the positive impact
of stemming losses from the Rest of Africa and enabling the management
team to focus on the South African and Australian businesses. We will
continue to explore the correct strategy and model of doing business
in the rest of Africa. Therefore, the Rest of Africa is disclosed as a
discontinuing operation in the results as presented.
Continuing operations
Trading across the Group has been stable for the period and revenue growth
has been relatively flat when compared to the prior period. Revenue declines
in the Support Services and Training businesses were offset by positive
contribution from the Industrial Services, Professional Services and Financial
Services businesses.
At both an Earnings before Interest, Taxation, Depreciation and Amortization
(EBITDA) and Operating Profit level, before allocation of central costs, the
Group recorded a decline of 11% from prior period.
The Professional Services business grew EBITDA by 23% from prior period,
showing double digit growth for both the South African and Australian
operations. Financial Services also recorded a solid 18% growth in
EBITDA from the prior period.
Industrial Services business showed a decline in earnings at an EBITDA level
of 13% from the prior period, largely as a result of the wind down of the
Fortress business. Excluding the Fortress business, this division grew by
6% on a like for like basis.
Fortress is a Payroll Bureau business within Industrial Services South Africa.
It contributed R20 million to the segment’s 2016 Half Year EBITDA and is
currently making a loss of approximately R22 million. Fortress is also where
a significant portion of the Group’s bad debt write offs emanated.
Management interventions in the Australian based DARE business during
2017 are starting to yield fruit, and DARE is on track to meet its 2018 budget.
Support Services business showed a decline of approximately R30 million in
EBITDA from the prior period, largely driven by loss of volume and a loss-making
contract (which has now been favorably renegotiated post the reporting period).
The Training business recorded a decline of approximately R24m in EBITDA from
the prior period, largely as a result of timing impact on its contracts.
Overall, the core of the business recorded stable to strong performance from
the prior period, and management are focused on a strategic and operational
efficiency review of the Support Services and Training businesses.
An analysis of the EBTIDA from continuing operations is set out below:
Analysis of EBITDA from continuing operations
Unaudited Unaudited
Six Six Audited
months to months to year to
31 August 31 August % 28 February
R’000 2017 2016 change 2017
Industrial Services 169 702 195 917 (13) 371 903
Support Services 21 390 51 470 (58) 66 249
Professional Services 78 893 63 934 23 118 955
Financial Services 30 549 25 963 18 46 323
Training (12 548) 12 364 (>100) 25 988
South Africa 287 986 349 648 (18) 629 418
Industrial Services 26 953 19 123 41 30 603
Professional Services 56 419 48 001 18 85 966
Australia 83 372 67 124 24 116 569
EBITDA from continuing
operations before
central costs and once
off costs 371 358 416 772 (11) 745 987
Central costs (197 481) (154 101) 28 (328 335)
EBITDA from continuing
operations before once-
off costs 173 877 262 671 (34) 417 652
Once-off costs (78 400) — (>100) (46 072)
Net EBITDA from
continuing operations 95 477 262 671 (64) 371 580
Cash generation remains a key management focus. The Group’s cash conversion
ratio is 128% which is above the Group’s target conversion ratio of 80%.
Operating expenses
One of the most significant areas that has negatively impacted the Group has
been the huge central cost base. The central costs at half-year (excluding
non-cash items once off restructuring cost) are R197 million and comprise
largely employment costs, the business process outsourcing outsourced contract
and IT costs. The new leadership team has to date:
* Reviewed the organisational structure – the significant central employment
costs arises largely due to a top-heavy structure, and in some instances
duplicated or redundant roles. The Group commenced a rationalisation process
in September that will result in a significant reduction in this cost line
on a sustainable basis.
* Commenced the exit of the business processing outsourcing contract – this
contract costs the Group R60 million per annum, and was entered into without
the requisite reduction in local costs, i.e. a number of the business
processing outsourcing processes are duplicated in-country. We believe that
we will have fully exited the contract by the end of the 2019 financial year.
* The Group has a complex IT landscape due to multiple systems and platforms
that are in use. A simplification project has commenced, and IT governance is
receiving more attention from the board.
* Implemented robust accounting principles by aligning half-year and full-year
accounting policies. This has resulted in certain provisions and costs being
accounted for in this period which was not included in the prior period.
We anticipate that the full impact of the cost saving initiatives will materialise
in FY19.
Earnings per share and headline earnings per share
The Group recorded a basic loss per share from continuing operations of
49,0 cents and headline loss per share of 28,2 cents largely due to the material
once-off costs incurred in the period. The once-off costs relate largely to two
significant debtors that went into business rescue proceedings. A full analysis
of earnings per share and headline earnings per share is included in note 6.
Interim dividend
No interim dividend is declared.
Changes to the board of Adcorp
The following changes to the directorate took place during the period under review:
* Appointment of C Maswanganyi as a non-executive director (with MR Ramaite being
his alternate) with effect from 1 March 2017.
* Appointment of CJ Kujenga as the Chief Financial Officer with effect from
1 July 2017.
* Appointment of S Sithole and N Nongogo as non-executive directors with effect
from 4 July 2017.
* Resignation of BE Bulunga, NS Ndhlazi, MJN Njeke, TDA Ross and PC Swart with effect
from 11 July 2017.
* Appointment of GT Serobe as a non-executive director and the Chairman with effect
from 11 July 2017.
* Appointment of FS Mufamadi as a non-executive director with effect from
11 July 2017.
* Resignation of RL Pike with effect from 31 July 2017.
* Appointment of MA Jurgens as the Chief Operating Officer with effect from
1 August 2017.
* Appointment of I Dutiro as the Chief Executive Officer with effect from
1 October 2017.
* Resignation of N Nongogo with effect from 13 October 2017.
We thank the outgoing board members for their contribution over the years.
Events after the reporting date
Subsequent to the closure of the interim financial period ended 31
August 2017 and the date of the approval of these unaudited interim financial
statements, namely 26 October 2017, the following events or transactions took
place:
Disposal of Nihilent
The disposal of Adcorp’s effective 34,6% equity stake in Nihilent Technologies Pvt
Limited (Nihilent) to Dimension Data Protocol BV was successfully concluded on
5 October 2017 when Competition Commission approval was obtained. As at 31 August 2017,
Adcorp’s net investment in Nihilent reflected a carrying amount of R155 million.
Adcorp’s share of profits from Nihilent for the period ended 31 August 2017 amounted
to R14,2 million.
Profit of approximately R148 million was realised as a result of this disposal and
will be included in the year-end financial results. Net proceeds received on Nihilent
were R307 million and the intention is to use the disposal proceeds to pay down local
debt, thereby reducing the Group interest burden and associated gearing levels. Nihilent
is disclosed as a discontinuing operation in the results presented.
Refinancing and covenants
The issuer would like to advise bondholders that as at 31 August, the Group had
R859 million of debt related to the registered domestic medium-term note (“DMTN”)
programme, which was secured in 2013. The related covenants are onerous, in particular
the EBITDA/interest cover requirement of at least 4.0 times, assumes that the Group
results would continue to trend on the 2013 upward trajectory.
As at 31 August 2017, Adcorp Holdings Limited did not meet certain financial covenants
under the DMTN Programme. Specifically, the Group was not in compliance with its
EBITDA/Interest cover ratio. Accordingly, as at 31 August 2017 the Group has returned
the classification of all outstanding debt balances as current and this classification
led to the Group’s current liabilities exceeding the current assets by approximately
R184 million as at 31 August 2017.
It has therefore been a key focus of the new management team to ensure that new debt
is secured for the Group at more favourable terms. We are pleased to announce that a
new funding facility has been secured. The facility provides the Group with R1 billion
that can be used to refinance the existing bonds and to fund working capital
requirements. The issuer intends to start a bond buy back process via a tender offer
before the end of November 2017. Further details of the tender offer will be provided
once available.
Adcorp Holdings Australia has recently come to agreement on a revised funding facility
for the Australian operations. The new funding structure is a mix between amortising
term debt, revolving credit and bank guarantee for a total amount of AUD47 million at
terms that are more favourable for the Group as a whole.
Outlook and prospects
The strong performance in Professional Services and Financial Services is expected to
continue for the remainder of the financial year, and both Industrial Services and
Support Services are expecting stronger performance in the second half of the
financial year.
There has been a tremendous amount of change in the Group in the first half of the year.
We enter the second half of the year with confidence that the early work performed by
our new executive team provides a platform for improved performance and growth.
This general forecast has not been reviewed or reported on by the Group's auditors.
By order of the board
GT Serobe I Dutiro CJ Kujenga
Chairman Chief Executive Officer Chief Financial Officer
30 October 2017
Condensed consolidated statement of comprehensive income
for the six months ended 31 August 2017
Unaudited Unaudited Audited
Six months Six months Year to
to 31 August to 31 August 28 February
2017 2016 2017
Notes R’000 R’000 R’000
Continuing operations
Revenue 7 750 162 7 890 482 15 804 081
Cost of sales (6 613 969) (6 728 139) (13 454 724)
Gross profit 1 136 193 1 162 343 2 349 357
Other income 30 043 41 354 46 436
Administration expenses (675 421) (560 656) (1 283 308)
Marketing and selling
expenses (325 007) (327 259) (636 711)
Other operating expenses (138 183) (124 772) (248 688)
Operating profit 27 625 191 010 227 086
Interest received 4 199 7 891 9 085
Interest paid (59 631) (66 051) (145 015)
Impairment of intangible
assets and loans (22 528) (139) (132 519)
(Loss)/profit on the sale
of property and
equipment (248) 1 480 940
(Loss)/profit before
taxation (50 583) 134 191 (40 423)
Taxation 528 1 669 5 462
(Loss)/profit for the
period/year from
continuing operations (50 055) 135 860 (34 961)
Discontinuing operations
Loss for the period/year
from discontinuing
operations 4 (92 585) (58 689) (148 758)
Share of profits from
associates 14 186 8 670 23 393
Net (loss)/profit for
the period/year (128 454) 85 841 (160 326)
Other comprehensive
income/(loss)*
Exchange differences on
translating foreign
operations 6 895 (55 796) (86 448)
Exchange differences
arising on the net
investment of a foreign
operation 18 002 (9 461) (41 905)
Fair value adjustment of
derivative financial
instrument (1 603) 81 1 869
Non-controlling interest (3 467) (870) (1 682)
Other comprehensive
income/(loss) for the
period/year, net of tax 19 827 (66 046) (128 166)
Total comprehensive
(loss)/income for the
period/year (108 627) 19 795 (288 492)
Profit attributable to:
Owners of the parent
Owners of the parent from
continuing operations (53 522) 134 990 (36 643)
Owners of the parent from
discontinuing operations (78 399) (50 019) (125 368)
Non-controlling interest
Non-controlling interest
from continuing operations 3 467 870 1 682
Non-controlling interest
from discontinuing
operations — — —
Total comprehensive income
attributable to:
Owners of the parent from
continuing operations (30 228) 69 814 (163 127)
Owners of the parent
from discontinuing
operations (78 399) (50 019) (125 368)
Non-controlling interest
Non-controlling interest
from continuing operations 3 467 870 1 682
Non-controlling interest from
discontinuing operations — — —
* All items included in other comprehensive income/(loss) will be
reclassified to profit and loss upon derecognition.
Condensed consolidated statement of financial position
as at 31 August 2017
Unaudited Unaudited Audited
Six months Six months Year to
to 31 August to 31 August 28 February
2017 2016 2017
Notes R’000 R’000 R’000
Assets
Non-current assets 2 232 462 2 450 606 2 260 165
Property and equipment 89 027 93 622 80 458
Intangible assets 544 863 705 762 615 903
Goodwill 1 390 022 1 513 191 1 373 162
Investments 10 000 10 000 10 000
Other financial assets 31 497 — 30 930
Deferred taxation 167 053 128 031 149 712
Current assets 2 809 937 3 242 152 3 054 105
Trade, other receivables
and prepayments 2 441 742 2 650 462 2 472 621
Other financial assets — 16 922 931
Taxation prepaid 44 445 25 210 41 804
Cash resources 323 750 549 558 538 749
Assets from continuing
operations 5 042 399 5 692 158 5 314 270
Assets held-for-sale 4 351 685 566 038 429 801
Total assets 5 394 084 6 258 796 5 744 071
Equity and liabilities
Capital and reserves 2 219 424 2 708 943 2 301 987
Share capital 2 749 2 749 2 749
Share premium 1 738 109 1 738 109 1 738 109
Treasury shares (24 079) (36 963) (36 963)
Share-based payment
reserve 132 596 125 390 128 993
Foreign currency
translation reserve 31 184 54 941 24 289
Cash flow hedging
reserve (2 705) (2 890) (1 102)
Accumulated profit 336 566 832 873 450 485
Equity attributable to
equity holders of the
parent 2 214 420 2 714 209 2 306 560
Non-controlling interest 4 328 (5 942) (5 249)
BEE shareholders’
interest 676 676 676
Non-current liabilities 109 642 1 478 865 758 250
Other non-current liabilities –
interest-bearing 1 378 — 1 991
Long-term loan –
interest-bearing — 1 319 829 649 229
Share-based payment
liability 6 151 44 221 —
Obligation under finance
lease 328 4 388 —
Deferred taxation 101 785 110 427 107 030
Current liabilities 2 993 986 1 945 907 2 579 731
Non-interest-bearing
current liabilities 1 361 353 1 415 906 1 401 825
Trade and other payables 1 060 141 1 173 264 1 082 521
Share-based payment 11 203 — 39 067
liability
Provisions 257 606 214 303 242 526
Other vendor payables — 14 292 —
Derivative financial
instruments 3 857 4 129 1 574
Taxation 28 546 9 918 36 137
Interest-bearing current
liabilities 1 632 633 530 001 1 177 906
Leasehold liabilities 16 412 15 392 17 256
Current portion of
interest-bearing
liabilities 8 1 273 513 49 635 720 603
Bank overdraft 342 708 464 974 440 047
Liabilities from
continuing operations 5 323 052 6 133 715 5 639 968
Liabilities directly
associated with assets
classified as held-for-
sale 4 71 032 125 081 104 103
Total equity and
liabilities 5 394 084 6 258 796 5 744 071
Condensed consolidated statement of cash flow
for the six months ended 31 August 2017
Unaudited Unaudited Audited
Six months Six months Year to
to 31 August to 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
Operating activities
(Loss)/profit before taxation (128 565) 97 924 (117 365)
From continuing operations (50 583) 134 191 (40 423)
From discontinuing operations (77 982) (36 267) (76 942)
Adjusted for:
Depreciation 17 211 18 228 37 311
Impairment of intangible
assets, goodwill and loans 87 866 139 132 519
Share of profits from
associates (14 186) (8 670) (23 396)
Amortisation of intangibles 50 641 53 433 107 183
Amortisation of intangibles –
acquired in a business
combination 42 163 43 226 87 394
Amortisation of intangibles –
other than those acquired in a
business combination 8 478 10 207 19 789
Loss/(profit) on the sale of
property and equipment 248 (1 480) (1 014)
Share-based payments (4 920) 9 199 7 647
Share-based payment expense 6 899 22 002 7 206
Revaluation of share-based
payment liability (11 819) (12 803) 441
Unrealised foreign exchange
loss 1 902 18 036 30 231
Non-cash portion of operating
lease rentals (531) 1 325 2 314
Net movement on assets held-
for-sale 58 771 (267 632) (184 422)
(Increase)/decrease in bad debt
provision (35 967) 216 (26 608)
Interest received (6 281) (8 560) (12 300)
Interest paid 71 266 71 386 151 865
Cash generated/(utilised) from
operations before working
capital changes 97 455 (16 456) 103 965
Decrease/(increase) in trade and
other receivables and
prepayments 63 693 (23 007) 222 935
Decrease/(increase) in other
financials assets 6 919 12 806 (8 688)
(Decrease)/increase in trade
and other payables (39 646) 58 340 (45 088)
(Decrease)/increase in
provisions (5 979) (43 098) (17 601)
Cash generated/(utilised) by
operations 122 442 (11 415) 255 523
Interest received 6 281 8 560 12 300
Interest paid (71 266) (71 386) (151 865)
Cash settlement of share
options exercised (17 141) — —
Taxation paid (44 257) (11 564) (31 632)
Dividend paid — — (102 965)
Net cash utilised by operating
activities (3 941) (85 805) (18 639)
Investing activities
Additions to property,
equipment and intangible assets (24 794) (32 239) (81 692)
Proceeds from sale of property
and equipment 962 1 786 5 875
Acquisition of businesses (5 000) (12 198) (12 152)
Dividends received from
associates — — 7 837
Minority interest (854) (626) (745)
Net cash utilised from
investing activities (29 686) (43 277) (80 877)
Financing activities
Shares awarded to employees 12 884 — —
Loans repaid (96 319) (29 673) (300 853)
Loans raised — (225 850) 46 801
Other non-current liabilities –
interest-bearing (598) 3 071 445
Decrease in other payables — (11 785) (26 078)
Net cash utilised by financing
activities (84 033) (264 237) (279 685)
Net decrease in cash and cash
equivalents (117 660) (393 319) (379 201)
Cash and cash equivalents at
the beginning of the
period/year 98 702 477 903 477 903
Cash and cash equivalents at
the end of the period/year (18 958) 84 584 98 702
Condensed consolidated statement of changes in equity
for the six months ended 31 August 2017
Share Share Treasury
capital premium shares
R’000 R’000 R’000
Balance as at 29 February 2016
(audited) 2 749 1 738 109 (36 963)
Movement in BEE shareholders’
interest — — —
Profit for the period — — —
Other comprehensive (loss)/income
for the period — — —
Minority interest — — —
Balance as at 31 August 2016
(unaudited) 2 749 1 738 109 (36 963)
Dividend distributions — — —
Recognition of BBBEE and staff
share-based payments — — —
Loss for the year — — —
Other comprehensive (loss)/income
for the period — — —
Non-controlling interest — — —
Balance as at 28 February 2017
(audited) 2 749 1 738 109 (36 963)
Recognition of BBBEE and staff
share-based payments — — —
Loss for the year — — —
Disposal of shares — — 12 884
Other comprehensive income/(loss)
for the period — — —
Non-controlling interest — — —
Balance as at 31 August 2017
(unaudited) 2 749 1 738 109 (24 079)
Share- Foreign
based currency Cash flow
payment translation hedging
reserve reserve reserve
R’000 R’000 R’000
Balance as at 29 February 2016
(audited) 121 787 110 737 (2 971)
Movement in BEE shareholders’
interest 3 603 — —
Profit for the period — — —
Other comprehensive (loss)/income for
the period — (55 796) 81
Minority interest — — —
Balance as at 31 August 2016
(unaudited) 125 390 54 941 (2 890)
Dividend distributions — — —
Recognition of BBBEE and staff share-
based payments 3 603 — —
Loss for the year — — —
Other comprehensive (loss)/income for
the period — (30 652) 1 788
Non-controlling interest — — —
Balance as at 28 February 2017
(audited) 128 993 24 289 (1 102)
Recognition of BBBEE and staff share-
based payments 3 603 — —
Loss for the year — — —
Disposal of shares — — —
Other comprehensive income/(loss) for
the period — 6 895 (1 603)
Non-controlling interest — — —
Balance as at 31 August 2017
(unaudited) 132 596 31 184 (2 705)
Attributable to Non-
Retained equity holders controlling
earnings of the parent interest
R’000 R’000 R’000
Balance as at 29 February 2016
(audited) 757 363 2 690 811 (6 186)
Movement in BEE shareholders’
interest — 3 603 —
Profit for the period 84 971 84 971 870
Other comprehensive
(loss)/income for the period (9 461) (65 176) —
Minority interest — — (626)
Balance as at 31 August 2016
(unaudited) 832 873 2 714 209 (5 942)
Dividend distributions (102 965) (102 965) —
Recognition of BBBEE and staff
share-based payments 3 603 —
Loss for the year (246 979) (246 979) 812
Other comprehensive
(loss)/income for the period (32 444) (61 308) —
Non-controlling interest — — (119)
Balance as at 28 February 2017
(audited) 450 485 2 306 560 (5 249)
Recognition of BBBEE and staff
share-based payments — 3 603 —
Loss for the year (131 921) (131 921) 3 467
Disposal of shares — 12 884 —
Other comprehensive
income/(loss) for the period 18 002 23 294 —
Non-controlling interest — — 6 110
Balance as at 31 August 2017
(unaudited) 336 566 2 214 420 4 328
BEE
shareholders’
interest Total
R’000 R’000
Balance as at 29 February 2016 (audited) 676 2 685 301
Movement in BEE shareholders’ interest — 3 603
Profit for the period — 85 841
Other comprehensive (loss)/income for the
period — (65 176)
Minority interest — (626)
Balance as at 31 August 2016 (unaudited) 676 2 708 943
Dividend distributions — (102 965)
Recognition of BBBEE and staff share-based
payments — 3 603
Loss for the year — (246 167)
Other comprehensive (loss)/income for the
period — (61 308)
Non-controlling interest — (119)
Balance as at 28 February 2017 (audited) 676 2 301 987
Recognition of BBBEE and staff share-based
payments — 3 603
Loss for the year — (128 454)
Disposal of shares — 12 884
Other comprehensive income/(loss) for the
period — 23 294
Non-controlling interest — 6 110
Balance as at 31 August 2017 (unaudited) 676 2 219 424
Total interest-bearing liabilities of the Group
Unaudited Unaudited Audited
Six months Six months Year to
to 31 August to 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
Net gearing (%) 58 48 56
Net bank balances (18 958) 84 584 98 702
Other non-current liabilities 1 378 0 1 991
Long-term loans — 1 319 829 649 229
Long-term loans – South Africa — 870 653 649 229
Long-term loans – Australia — 449 176 —
Obligations under finance
lease 328 4 388 —
Leasehold liabilities 16 412 15 392 17 256
Current portion of interest-
bearing liabilities 1 273 513 49 635 720 603
Current portion of interest- 871 487 10 720 603
bearing liabilities – South
Africa
Current portion of interest-
bearing liabilities –
Australia 402 027 49 625 —
Total interest-bearing
liabilities 1 291 631 1 389 244 1 389 079
Total net interest-bearing
liabilities 1 272 673 1 473 828 1 487 781
Total long-term debt (%) 0 95 47
Total short-term debt (%) 100 5 53
Total 100 100 100
Financial instruments
Some of the Group’s financial assets and financial liabilities are measured
at fair value at the end of each reporting period/year.
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):
Unaudited Unaudited Audited
Six months Six months Year to
to 31 August to 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
Investment 10 000 10 000 10 000
Other financial assets — 16 922 —
Other financial assets 31 497 — 30 930
Derivative financial
instrument 3 857 4 129 1 574
Share-based payment liability 17 354 44 221 39 066
Fair
value Valuation technique(s)
hierarchy and key inputs
Investment Level 1 Fair value – Market valuation
Other financial assets Level 3 Fair value – Directors’ valuation
Other financial assets Level 1 Bond fair value – Market valuation
Derivative financial
instrument Level 2 Fair value – Discounted cash flow
Share-based payment
liability Level 2 Fair value – Standard present
value model
Condensed segment report of continuing operations (unaudited)
for the six months ended 31 August 2017
Unaudited Unaudited Audited
Six months Six months Year to
to 31 August to 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
Revenue
Industrial Services 3 931 848 3 897 207 7 985 842
South Africa 3 065 667 3 071 516 6 296 393
Australia 866 181 825 691 1 689 449
Support Services 774 207 857 436 1 582 604
South Africa 774 207 857 436 1 582 604
Australia — — —
Professional Services 2 849 290 2 938 442 5 818 527
South Africa 904 166 774 766 1 622 620
Australia 1 945 124 2 163 676 4 195 907
Financial Services 91 685 81 054 163 670
South Africa 91 685 81 054 163 670
Australia — — —
Training 95 083 116 334 251 323
South Africa 95 083 116 334 251 323
Australia — — —
Sub-total 7 742 113 7 890 473 15 801 966
South Africa 4 930 808 4 901 106 9 916 610
Australia 2 811 305 2 989 367 5 885 356
Central 8 049 9 2 115
South Africa 8 049 9 2 115
Australia — — —
Total 7 750 162 7 890 482 15 804 081
South Africa 4 938 857 4 901 115 9 918 725
Australia 2 811 305 2 989 367 5 885 356
Operating profit
Industrial Services 173 515 201 539 411 378
South Africa 165 370 200 345 414 011
Australia 8 145 1 194 (2 633)
Support Services 19 882 45 982 73 950
South Africa 19 882 45 982 73 950
Australia — — —
Professional Services 121 787 87 688 207 732
South Africa 66 167 49 984 113 218
Australia 55 620 37 704 94 514
Financial Services 29 249 25 120 52 190
South Africa 29 249 25 120 52 190
Australia — — —
Training (14 093) 8 986 29 428
South Africa (14 093) 8 986 29 428
Australia — — —
Sub-total 330 340 369 315 774 678
South Africa 266 575 330 417 682 797
Australia 63 765 38 898 91 881
Central and once off cost (302 715) (178 305) (547 592)
South Africa (275 008) (174 001) (400 265)
Australia (27 707) (4 304) (147 327)
Total 27 625 191 010 227 086
South Africa (8 433) 156 416 282 532
Australia 36 058 34 594 (55 446)
EBITDA
Industrial Services 196 655 215 040 402 506
South Africa 169 702 195 917 371 903
Australia 26 953 19 123 30 603
Support Services 21 390 51 470 66 249
South Africa 21 390 51 470 66 249
Australia — — —
Professional Services 135 312 111 935 204 921
South Africa 78 893 63 934 118 955
Australia 56 419 48 001 85 966
Financial Services 30 549 25 963 46 323
South Africa 30 549 25 963 46 323
Australia — — —
Training (12 548) 12 364 25 988
South Africa (12 548) 12 364 25 988
Australia — — —
Sub-total 292 957 416 772 745 987
South Africa 209 585 349 648 629 418
Australia 83 372 67 124 116 569
Central and once off cost (275 881) (154 101) (374 407)
South Africa (261 714) (154 413) (217 238)
Australia (14 167) 312 (157 169)
Total 95 477 262 671 371 580
South Africa 26 272 195 235 412 180
Australia 69 205 67 436 (40 600)
Net asset carrying value
Industrial Services 1 348 579 1 974 497 1 629 434
South Africa 733 641 924 964 900 734
Australia 292 473 530 840 304 113
Discontinuing operations 322 465 518 693 424 587
Support Services 165 001 229 402 178 243
South Africa 165 001 229 402 178 243
Australia — — —
Professional Services 893 659 325 067 856 311
South Africa 639 691 672 398 637 564
Australia 253 968 (347 331) 218 747
Financial Services 190 791 212 783 202 727
South Africa 190 791 212 783 202 727
Australia — — —
Training 75 778 67 247 71 795
South Africa 75 778 67 247 71 795
Australia — — —
Sub-total 2 673 808 2 808 996 2 938 510
South Africa 1 804 902 2 106 794 1 991 063
Australia 546 441 183 509 522 860
Discontinuing operations 322 465 518 693 424 587
Central cost (454 384) (100 053) (636 523)
South Africa (685 254) (772 830) (878 669)
Australia 230 870 672 777 242 146
Total 2 219 424 2 708 943 2 301 987
South Africa 1 119 648 1 333 964 1 112 394
Australia 777 311 856 286 765 006
Discontinuing operations 322 465 518 693 424 587
Unaudited Unaudited Audited
Six months Six months Year to
to 31 August to 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
Asset carrying value
Industrial Services 1 625 473 1 698 795 1 867 323
South Africa 1 260 679 1 469 106 1 455 436
Australia 364 794 229 689 411 887
Support Services 319 615 357 136 354 308
South Africa 319 615 357 136 354 308
Australia — — —
Professional Services 1 503 038 1 027 742 1 358 393
South Africa 951 476 906 079 882 698
Australia 551 562 121 663 475 695
Financial Services 215 125 268 531 220 467
South Africa 215 125 268 531 220 467
Australia — — —
Training 96 486 90 716 97 002
South Africa 96 486 90 716 97 002
Australia — — —
Sub-total 3 759 737 3 442 920 3 897 493
South Africa 2 843 381 3 091 568 3 009 911
Australia 916 356 351 352 887 582
Central cost 1 282 662 2 249 838 1 416 777
South Africa 617 691 678 498 651 761
Australia 664 971 1 571 340 765 016
Total 5 042 399 5 692 758 5 314 270
South Africa 3 419 260 3 722 917 3 516 826
Australia 1 581 327 1 922 692 1 652 598
Liabilities carrying value
Industrial Services 557 547 627 266 563 587
South Africa 485 226 466 497 455 813
Australia 72 321 (160 769) 107 774
Support Services 154 614 127 734 176 065
South Africa 154 614 127 734 176 065
Australia — — —
Professional Services 609 379 702 675 502 082
South Africa 311 785 233 681 245 134
Australia 297 594 468 994 256 948
Financial Services 24 334 55 748 17 740
South Africa 24 334 55 748 17 740
Australia — — —
Training 20 708 23 469 25 207
South Africa 20 708 23 469 25 207
Australia — — —
Sub-total 1 366 582 1 536 892 1 284 681
South Africa 996 667 907 129 919 959
Australia 369 915 629 763 364 722
Central cost 1 737 046 1 887 880 2 053 300
South Africa 1 302 945 1 451 328 1 530 430
Australia 434 101 436 552 522 870
Total 3 103 628 3 424 772 3 337 981
South Africa 2 299 612 2 358 457 2 450 389
Australia 804 016 1 066 315 887 592
In the current year there where was no allocation of central cost to the
operating segments. All central cost is disclosed under its own segment.
Comparative figures are disclosed on the same basis.
Notes to the unaudited condensed consolidated interim financial statements
for the six months ended 31 August 2017
1. Basis of preparation and significant accounting policies
The Group’s unaudited consolidated condensed 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 consolidated condensed 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
and year-end financial statements.
The unaudited condensed interim financial statement for the six months ended
31 August 2017 were compiled under the supervision of CJ Kujenga CA(SA), the
Group Chief Financial Officer.
2. Auditors’ responsibility
These unaudited condensed interim financial results have not been audited nor
reviewed by the Group’s auditors.
3. Going concern
The directors believe that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason, accounting
policies supported by judgements, estimates and assumptions in compliance with
IFRS are applied on the basis that the Group shall continue as a going concern.
4. Discontinuing operations
The Group has taken the decision to dispose of its’ African operations during
the current financial year, as such its operations is disclosed as
discontinuing.
Unaudited Unaudited Audited
Six months Six months Year to
to 31 August to 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
Profit and loss
Revenue 86 366 175 052 268 869
Cost of sales (69 620) (133 760) (211 033)
Gross profit 16 746 41 292 57 836
Other income 9 398 10 566 28 078
Operating expenses (43 421) (91 461) (179 107)
Operating loss (17 277) (39 603) (93 193)
Net interest (9 553) (5 334) (7 144)
Impairments (65 338) — —
Net loss before tax (92 168) (44 937) (100 337)
Taxation (417) (13 752) (48 421)
Net loss after tax (92 585) (58 689) (148 758)
The impairment relates to
fixed assets, debtors, cash,
sundry creditors and loans in
Africa.
Assets and liabilities
Non-current assets held for sale
Property and equipment 2 206 36 433 31 492
Intangible assets — 96 59
Other financial assets — — 6 555
Current assets held for sale
Trade and other receivables 62 072 115 837 65 560
Cash 127 050 268 887 184 422
Tax prepaid 5 363 10 867 905
Total 196 691 432 120 288 993
Non-current liabilities
associated with assets
classified as held-for-sale
Trade and other payables 40 747 77 055 64 745
Bank overdraft 338 1 255 —
Provisions 18 741 24 270 21 057
Tax payable 11 206 22 500 18 301
Total 71 032 125 081 104 103
125 659 307 039 184 890
The Group disposed of its
34,6% equity stake in Nihilent
on 5 October 2017. At 31 August
2017 the investment was
disclosed as an asset
held-for-sale
Investment in associates 154 994 133 918 140 808
Total 351 685 566 038 429 801
5. Acquisition of businesses
On 1 March 2017, a subsidiary of Adcorp Holdings Limited bought I-CAN,
a division of CS Hentiq 1005 Proprietary Limited, for R5 million from
CS Hentiq 1005 Proprietary Limited.
Adcorp’s Holdings Australia acquired 80% of Razzbri on 1 August 2017 for
AUD1 and a deferred payment for the acquisition of the outstanding
shareholding based on a 4 x multiple of earnings for FY 20 and FY 21.
These acquisitions were not material to the Group.
Unaudited Unaudited Audited
Six months Six months Year to
to 31 August to 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
6. Earnings per share
The calculation of earnings
per share is based on
(losses)/profits out of:
continuing operations (53 522) 134 990 (36 643)
discontinued operations (78 399) (50 019) (125 368)
Weighted average number of
shares – 000’s 109 332 108 383 108 383
Diluted weighted average
number of shares – 000’s 111 001 112 201 111 468
Basic (loss)/earnings per
share from continuing
operations (cents) (49,0) 124,5 (33,8)
Diluted (loss)/basic earnings
per share from continuing
operations (cents) (48,2) 120,3 (32,9)
Basic (loss)/earnings per
share from total operations
(cents) (120,7) 78,4 (149,5)
Diluted basic (loss)/earnings
per share from total
operations (cents) (118,9) 75,7 (145,3)
Calculation of headline
(loss)/earnings per share
(Loss)/profit for the
period/year from continuing
operations (53 522) 131 652 (36 643)
Loss/(profit) on sale of
property and equipment 248 (1 480) (940)
Taxation (charged)/recovered
on the sale of property and
equipment (69) 414 263
Impairment of investments and
loans 22 528 139 132 519
Headline (loss)/earnings from
continuing operations (30 815) 130 725 95 199
Loss for the period/year from
discontinuing operations (78 399) (58 688) (148 761)
Impairment of investments and
loans 65 338 — —
Headline loss from
discontinuing operations (13 061) (58 688) (148 761)
(Loss)/profit for the
period/year from total
operations (131 921) 72 964 (185 404)
Loss/(profit) on sale of
property and equipment 248 (1 480) (940)
Taxation (charged)/recovered
on the sale of property and
equipment (69) 414 263
Impairment of investments and
loans 87 866 139 132 519
Headline (loss)/earnings from
total operations (43 876) 72 037 (53 562)
Headline (loss)/earnings per
share from continuing
operations (cents) (28,2) 123,7 87,8
Diluted headline (loss)/
earnings per share from
continuing operations
(cents) (27,8) 119,5 85,4
Headline (loss)/earnings per
share from total operations
(cents) (40,1) 77,5 (27,9)
Diluted headline
(loss)/earnings per share
from total operations (cents) (39,5) 74,9 (27,1)
7. Property and equipment
During the current period, the Group purchased assets of R24,7 million
(August 2016: R32,2 million).
8. Current portion of interest-bearing liabilities
As at 31 August 2017, Adcorp Holdings Limited did not meet certain
financial covenants under the DMTN Programme. Specifically, the Group
was not in compliance with its EBITDA interest cover ratio and the net
interest-bearing debt/EBITDA ratio. Accordingly, as at 31 August 2017,
the Group classified all outstanding balances of such corporate bonds as
current.
9. Related parties
The Group did not enter into any transactions with Group parties other
than those with subsidiaries which were eliminated on consolidation. All
transactions took place on an arm’s length basis.
Unaudited Unaudited Audited
Six months Six months Year to
to 31 August to 31 August 28 February
2017 2016 2017
R’000 R’000 R’000
Trading transactions
Sales of services 41 628 92 293 246 327
Management fee from Holding
entity 61 954 64 936 155 95
Accounting and information
technology fees 62 255 93 159 183 545
Interest was charged to and received from Group companies from the
holding entity.
10. Contingent liabilities and commitments
The bank has guaranteed R5,6 million (August 2016: R7,5 million) on
behalf of the Group to creditors, As at balance sheet date, the Group
has outstanding operating lease commitments totalling R104,1 million
(August 2016: R162,1 million) in non-cancellable property leases.
11. Events after the reporting date
For events after the reporting date, refer to page 7 of the commentary.
Corporate information
Executive directors
I Dutiro (Chief Executive Officer), MA Jurgens (Chief Operating
Officer), CJ Kujenga (Chief Financial Officer)
Non-executive directors
GT Serobe (Chairman), GP Dingaan, C Maswanganyi, S Sithole
Independent non-executive directors
JA Boggenpoel, SN Mabaso-Koyana, FS Mufamadi, ME Mthunzi, MW Spicer
(Lead Independent)
Alternate non-executive directors
MR Ramaite
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
Website: www.adcorpgroup.com
Registration number 1974/001804/06
Company secretary
KH Fihrer
Transfer secretaries
Terbium Financial Services (Pty) Ltd
Beacon House
31 Beacon Road
Florida North
1709
Sponsor
Deloitte & Touche Sponsor Services (Pty) Ltd
Building 8, Deloitte Place
The Woodlands
20 Woodlands Drive
Woodmead, Sandton
2196
Date: 30/10/2017 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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