ALVIVA HOLDINGS LIMITED - Preliminary Reviewed Condensed Consolidated Financial Results For The Year Ended 30 June 2018

Release Date: 05/09/2018 15:39
Code(s): AVV
 
Wrap Text
Preliminary Reviewed Condensed Consolidated Financial Results For The Year Ended 30 June 2018

ALVIVA HOLDINGS LIMITED
(incorporated in the Republic of South Africa)
Registration number: 1986/000334/06
ISIN: ZAE000227484
Share code: AVV
“Alviva” or “the Group” or “the Company” 

PRELIMINARY REVIEWED CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR 
THE YEAR ENDED 30 JUNE 2018 
and final cash dividend
 
AT A GLANCE
REVENUE at R14 billion UP 6% 
ATTRIBUTABLE PROFIT at R422 million UP 4% 
HEPS at 273,2 cents UP 12% 
CORE EPS at 302,2 cents UP 18% 
DIVIDEND DECLARED of 27 cents UP 8% 
CASH GENERATED of R1 billion

COMMENTARY

INTRODUCTION
The Board of Directors of Alviva is pleased to present the 
preliminary reviewed condensed consolidated financial results for 
the year ended  30 June 2018.

OVERVIEW
Alviva produced a satisfactory performance for the year in spite 
of the market and economic conditions that were, and remain, 
prevalent. As we had cautioned in the interim reporting, the 
tougher trading conditions continued into the second half.

Notwithstanding, the Group has delivered reasonable returns to 
shareholders. The results are predominantly attributable to the 
performance of the ICT Distribution segment and Alviva’s recent 
investments, mainly the acquisition of the balance of Datacentrix 
Holdings Limited (“Datacentrix”) in February 2017 along with the 
investment into Alviva’s share repurchase programme. 

The Group is well diversified and most divisions performed well, 
showing encouraging growth throughout the year with the exception 
of our three infrastructure businesses namely: Datanet, Infrasol 
and Solareff. 

Further acquisitions have been finalised during the year, as 
detailed below, and these will start to contribute more 
meaningfully in the ensuing reporting periods.

FINANCIAL RESULTS

Income statement

Revenue for the year increased by 6% to R13,6 billion (2017: 
R12,8 billion), largely attributable to the additional revenue 
from growth in the ICT Distribution segment and acquired 
companies. 

The Group performed reasonably well in all areas, except for the 
businesses exposed to what we refer to as infrastructure 
businesses namely our manufacturing, cabling, contractual cabling 
and infrastructure work, and solar photovoltaic installations. 
The combined effect of the performance of these businesses was a 
reduction in net profit before tax of approximately R127 million 
from the previous year. Additionally, expenses, although well 
controlled, increased at a greater rate than revenue due to our 
diversification strategy and investment into certain key areas of 
the business from which future growth is expected. This left the 
Group’s EBITDA marginally down at R820 million (2017: R824 
million). Amortisation charges related to intangible assets 
recognised on business combinations increased by R34 million. 

The average weighted number of shares, from which earnings per 
share and headline earnings per share are derived, at the end of 
June 2018 was 154 million shares (2017: 166 million). This has 
been due to share repurchases and treasury shares purchases for 
the Group’s share incentive scheme. 

Earnings per share increased by 12% to 273,5 cents per share 
(2017: 244,2 cents per share) and headline earnings per share 
were up by the same percentage to 273,2 cents per share (2017: 
243,9 cents per share).

Statement of financial position

Intangible assets and goodwill, which includes the intangibles 
related to the business combinations, amounted to R847 million 
(2017: R463 million). Intangible assets and goodwill acquired in 
the business combinations for the financial year amounted to  
R439 million. Apart from the annual amortisation, there were no 
further impairments recognised in profit or loss.

Working capital remains a key focus and continued to be well 
controlled throughout the Group during the year and ended on 
R789 million (2017: R933 million). This ensured that the Group 
had significant cash resources of R691 million (2017: R390 
million) at its disposal. Interest-bearing liabilities 
principally comprise the asset-backed senior loan from Nedbank on 
the Centrafin receivables of R436 million and preference share 
funding from Absa of R340 million.  

Cash flow statement

Cash generated by operating activities for the year ended 30 June 
2018 was a healthy R1,0 billion (2017: R1,3 billion).

The purchase consideration paid on business combinations during 
the year was R243 million and share repurchases (including 
treasury shares acquired in support of the Group’s share 
incentive scheme) amounted to R254 million. 

SEGMENT PERFORMANCE

ICT Distribution

The ICT Distribution segment increased revenue by 9% and EBITDA 
by 8%. The segment has traded well in a difficult market. Working 
capital was well managed throughout the year, resulting in 
reduced finance costs. Margins were improved due to the improved 
deal management, optimised product mix and more consistent 
inventory management. 

Services and Solutions

The Services and Solutions segment increased revenue by 4% but 
EBITDA decreased by 13%. The segment experienced delayed projects 
and were unable to repeat some of the large projects executed in 
the prior year, even though the activity levels and quote 
registers have increased over the year. The effect of the 
infrastructure businesses of Infrasol and Solareff had a marked 
impact on its performance.

Financial Services

Centrafin (the Financial Services segment) increased revenue by 
2% and EBITDA was marginally lower by 1%. The segment  continued 
to manage its book very well in tougher market conditions. The 
recent brand refresh, combined with a move to new premises, had a 
short-term diminution in the returns of the entity, but Alviva 
remains confident that the business is being positioned for 
growth in the longer term.

CORPORATE ACTIVITY

Gridcars Proprietary Limited (“Gridcars”)

On 31 August 2017, Alviva, through its 51%-held subsidiary 
Solareff Proprietary Limited, subscribed for shares in Gridcars 
to the value of R3 million, representing 75% of the total issued 
equity. Gridcars is a Pretoria-based developer of electric 
vehicle charge-point software management systems and supplier of 
charge points. Alviva believes that growing a network of charge 
points in South Africa will be the enabler of a carbon-free 
transport system. This acquisition forms part of the Group’s 
renewable energy business strategy.

Sintrex Integration Services Proprietary Limited (“Sintrex”)

Effective 31 October 2017, Alviva, through its subsidiary company 
DCT Holdings Proprietary Limited (“DCT”), entered into an 
agreement to acquire 51% of the shareholding in Sintrex for R102 
million, and has an option to acquire a further 24% within a two-
year period following the effective date of the transaction. 
Sintrex is an infrastructure management company, based in South 
Africa, providing end-to-end IT solutions and services. Sintrex 
develops IT products, services and solutions that, along with 
global partnerships, provide clients with the visibility and 
performance insight into IT infrastructure management, network 
management and monitoring solutions.

The Sintrex acquisition will not only add a specialised products 
and services offering, but also a higher margin business to the 
Group.

VH Fibre Optics Proprietary Limited (“VH Fibre”)

Effective 30 November 2017, Alviva, through its subsidiary 
company DCT, acquired 100% of the equity of VH Fibre for a total 
purchase consideration of R110 million. VH Fibre specialises in 
supplying fibre-to-the-home and fibre-to-the-building passive 
network solutions to its customers and has the exclusive Prysmian 
Group distribution agreement for South Africa.

This acquisition will give the Group access to the fibre 
infrastructure business that it had not really addressed properly 
and will enhance the margin in these product sets.

Obscure Enterprises Proprietary Limited (“Obscure”)

With effect from 1 February 2018 Alviva, through its subsidiary 
company DCT, acquired 72% of the equity of Obscure for a purchase 
consideration of R72 million based on future earnings. Obscure 
specialises in brokering best-of-breed security solutions to 
market, creating a channel for vendor and customers through its 
offering of information security products and concepts. The 
Obscure acquisition will enhance the cybersecurity product 
offering in Alviva’s distribution cluster.

DG Store (SA) Proprietary Limited (“DG”)

With effect from 1 March 2018 Alviva, through its subsidiary 
company Datacentrix Holdings Proprietary Limited, acquired 70% of 
the equity of DG for a purchase consideration of R118 million. DG 
is a leading provider of custom-made ICT business solutions, 
designed to unlock and maximise the full lifecycle value of ICT 
products, services and infrastructure for businesses in both the 
public and private sectors. Its world-class products and 
solutions range from the sourcing and supply of end-user 
equipment like mobile devices, laptops and desktop PCs to the 
provision and setup of high-end servers and networks, as well as 
comprehensive infrastructure design and implementation and full 
data centre solutions delivered on-premises, in the cloud or via 
hybrid systems. The DG acquisition will enhance the services 
offering to Alviva and adds to the Group’s exposure to enterprise 
customers. 

CHANGES TO THE BOARD 

Resignation and appointment of new Chairperson

Following the resignation of Mr AJ Fourie, the Board announced 
that Mr A Tugendhaft, the then current Deputy Chairperson, had 
been appointed as the new Non-Executive Chairperson of Alviva. 
The appointment was effective 3 October 2017. Mr Tugendhaft has 
had a long-standing association with the Company, having served 
the Board in various capacities including non-executive director, 
Deputy Chairperson and member of the Remuneration Committee. The 
Board thanks Mr Fourie for his phenomenal contribution to the 
Group over the past twenty-five years and wishes him all of the 
best in his future endeavours. The succession planning process, 
that started two years ago, has therefore been successfully 
implemented.

Appointment of a Lead Independent Director

Following the annual general meeting held on 23 November 2017, Mr 
B Sibiya, the Lead Independent Director, opted not to stand for 
re-election as a director. Ms P Natesan (38) was appointed as an 
independent non-executive director and Lead Independent Director 
with effect from 6 December 2017. Ms Natesan was also appointed 
as a member of the Audit and Risk Committee and the Social and 
Ethics Committee.

Ms Natesan holds the following qualifications – BCom (Cum Laude), 
BCom (Honours), Chartered Accountant (SA). She joined the 
Institute of Directors in Southern Africa (“IoDSA”) in 2010 as 
senior governance specialist and has served as an executive 
director of the IoDSA since September 2014. She serves on various 
committees and holds various memberships including: member of the 
South African Institute of Chartered Accountants, King Committee 
on Corporate Governance, King IVTM Task Team, the Institute of 
Directors in Southern Africa and the Institute of Directors UK.

SHARE REPURCHASES

At the AGM held on 25 November 2016, which authority was renewed 
at the AGM held on 23 November 2017, shareholders gave the Board 
general approval in terms of sections 46 and 48 of the Companies 
Act, by way of special resolution, to acquire shares in the 
Company. The Board exercised this authority and mandated the 
repurchase of issued ordinary shares of the Company, to a maximum 
of 32 993 583 shares. In the financial year, 11 020 717 ordinary 
shares have been repurchased and cancelled. 

DIVIDEND

The Company’s policy is to declare a dividend of 10% of HEPS (and 
since the introduction of Dividends Tax, a gross dividend of 10% 
of HEPS before deducting Dividends Tax). To this end, the Board 
has declared a final dividend of 27 cents (2017: 25 cents) per 
ordinary share for the financial year ended 30 June 2018.

Notice is hereby given that a final dividend of 27 cents per 
ordinary share for the year ended 30 June 2018 has been declared 
by the Board of Directors of the Company.

The salient dates applicable to the final dividend are as 
follows:
                                      DATE
Last day of trade “cum” dividend      Tuesday, 13 November 2018
First day to trade “ex” dividend      Wednesday, 14 November 2018
Record date                           Friday, 16 November 2018
Payment date                          Monday, 19 November 2018

No share certificates may be dematerialised or rematerialised 
between Wednesday, 14 November 2018 and Friday, 16 November 2018, 
both days inclusive.

Dividends are to be paid out of distributable reserves. Dividends 
Tax of 20% will be withheld in terms of the Income Tax Act for 
those shareholders who are not exempt from dividend tax. In 
accordance with paragraphs 11.17(a)(i) to (ix) and 11.17(c) of 
the JSE Listings Requirements, the following additional 
information is disclosed: 

– The gross local dividend amount is 27 cents per ordinary share 
  for shareholders exempt from Dividends Tax; 
– The net local dividend amount is 21,6 cents per ordinary share 
  for shareholders liable to pay Dividends Tax; 
– Alviva Holdings Limited has 157 217 917 ordinary shares in 
  issue (which includes 11 285 000 treasury shares of which  
  4 785 000 are FSP shares); and 
– Alviva Holdings Limited’s income tax reference number is 
  9675/146/71/7. 

Where applicable, payment in respect of certificated shareholders 
will be transferred electronically to shareholders’ bank accounts 
on the payment date. In the absence of specific mandates, payment 
cheques will be posted to certificated shareholders at their risk 
on the payment date. Shareholders who have dematerialised their 
shares will have their accounts at their Central Securities 
Depository Participant or broker credited on the payment date.

PROSPECTS

The outlook for the year to 30 June 2019 remains uncertain with 
the South African economy facing significant challenges. As the 
Group is primarily exposed to this market, it is of concern to 
us.

Notwithstanding, we are confident that we will see a positive 
impact from the recent acquisitions and the diversification 
strategies implemented throughout the year in Centrafin and 
investments made into cybersecurity, outsourcing and managed 
services. The renewable energy outlook is more positive and the 
order book in this division has improved significantly. In 
addition, market demand is providing the Fibre division with good 
opportunities and is performing ahead of expectations.

The Group is well positioned to take advantage, with sufficient 
cash resources and facilities available, of any commercial 
opportunities that may arise locally or outside the borders of 
South Africa.

For and on behalf of the Board

A Tugendhaft                           P Spies 
Chairperson                            Chief Executive Officer

5 September 2018 
Midrand

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER 
COMPREHENSIVE INCOME 
for the year ended 30 June 2018 
                                           2018           2017
                                       Reviewed        Audited
                                          R’000          R’000
Revenue                              13 628 916     12 811 498 
Cost of sales                       (11 219 810)   (10 538 710)
Gross profit                          2 409 106      2 272 788 
Operating expenses                   (1 588 623)    (1 448 670)
Selling expenses                        (95 923)      (103 738)
Employee benefit expenses            (1 273 532)    (1 156 831)
Administration expenses                (237 749)      (187 361)
Profit on disposal of property, 
 plant and equipment                        634            858
Gain on discounting of finance 
 lease agreements                         2 656          3 702 
Gain/(loss) on foreign exchange          15 291         (5 300)
EBITDA *                                820 483        824 118 
Depreciation and amortisation          (130 354)       (90 594)
Operating profit before interest        690 129        733 524 
Net finance costs                      (121 257)      (107 037)
Investment income                        39 909         39 453 
Finance costs                          (161 166)      (146 490)
Profit before tax                       568 872        626 487 
Income tax expense                     (151 548)      (182 494)
Net profit for the year                 417 324        443 993 
 – Owners of the Company                421 707        405 277 
 – Non-controlling interests             (4 383)        38 716 
Other comprehensive income      
– Items that can be reclassified to 
    profit or loss net of tax:            1 136          3 028 
Exchange differences from translating 
 foreign operations                       1 684            758 
Cash flow hedge                            (548)         2 270 
Total comprehensive income for 
 the year                               418 460        447 021 
– Owners of the Company                 422 843        408 305 
– Non-controlling interests              (4 383)        38 716 
Earnings per ordinary shares (cents)      
– Basic earnings per ordinary share       273,5          244,2
– Diluted basic earnings per 
   ordinary share                         269,4          243,5

* Earnings before interest, tax, depreciation and amortisation.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2018
                                           2018           2017
                                       Reviewed        Audited
                                          R’000          R’000
ASSETS      
Non-current assets                    1 554 618      1 079 064
Property, plant and equipment           120 697        104 661
Intangible assets and goodwill          847 153        462 703
Investment in equity-accounted 
 investee                                62 077              –
Finance lease receivables               449 930        434 581
Deferred tax                             74 761         77 119
Current assets                        4 271 704      3 670 358
Inventory (Note 6)                      774 111        751 702 
Derivative financial asset                    –          3 287 
Trade and other receivables           2 537 275      2 304 629 
Finance lease receivables               230 508        210 972
Income tax receivable                    38 352         10 008 
Cash and cash equivalents               691 458        389 760 
Total assets                          5 826 322      4 749 422 
EQUITY AND LIABILITIES 
Capital and reserves                  2 227 404      2 020 223 
Stated capital                            1 584         43 359 
Treasury shares                        (129 090)       (98 492)
Other equity reserves                    54 268         41 436
Cash flow hedge reserve                       –            548 
Retained earnings                     2 211 329      2 010 921
Non-controlling interests                89 313         22 451 
Non-current liabilities                 943 016        585 642 
Interest-bearing liabilities            749 636        510 145 
Non-interest-bearing liabilities         98 635              –
Deferred revenue                         11 327         39 320
Deferred tax                             83 418         36 177
Current liabilities                   2 655 902      2 143 557 
Trade and other payables              2 364 929      1 974 752 
Interest-bearing liabilities             42 019          5 572 
Non-interest-bearing liabilities         68 850              –
Deferred revenue                        157 235        148 818 
Income tax payable                       22 869         14 415 
Total equity and liabilities          5 826 322      4 749 422 

ADDITIONAL INFORMATION      
Capital management      
Net asset value per share (cents)       1 453,6        1 251,2 
Net tangible asset value per 
 share (cents)                            877,7          961,4 
Working capital management      
Investment in working capital (R’000)   789 222        932 761 
Liquidity and solvency      
Debt to equity (%)                         37,0           25,8 
Current ratio (excluding inventory 
 in transit and work in progress)          1,64           1,74 
Acid test (excluding inventory in 
 transit and work in progress)             1,39           1,42 
This information does not form part of the statement of financial 
position but is disclosed as additional information for the user.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS  
for the year ended 30 June 2018
                                           2018           2017
                                       Reviewed        Audited
                                          R’000          R’000
Profit before tax                       568 872        626 487 
Adjusted for:      
Investment income                       (39 909)       (39 453)
Finance costs                           161 166        146 490 
Non-cash flow items                     140 087         89 845 
–  Profit on disposal of 
    fixed assets (included in EBITDA)      (634)          (858)
–  Depreciation and amortisation        130 354         90 594 
–  Equity-based share-based 
    payment expense                      11 222          4 570 
–  Other non-cash flow items               (855)        (4 461)
Changes in working capital              218 884        436 434
Cash generated by operating 
 activities                           1 049 100      1 259 803
Net finance costs                      (121 257)      (107 037)
Interest income received                 39 909         39 453 
Finance costs paid                     (161 166)      (146 490)
Tax paid                               (186 364)      (202 484)
                                        741 479        950 282 
Cash flows from investing 
 activities      
Property, plant and equipment 
 acquired                               (47 394)       (29 778)
Proceeds on disposals of property, 
 plant and equipment                      5 059          8 398
Acquisition of intangible assets        (26 447)        (9 044)
Advances of loans to equity-
 accounted investee                     (62 077)             –
Acquisition of subsidiaries            (243 069)             –
Net investment in finance leases 
 receivables                            (34 111)       (58 870)
                                       (408 039)       (89 294)
Cash flows from financing activities      
Interest-bearing liabilities raised     235 619        150 000
Interest-bearing liabilities repaid           –         (4 007)
Repurchase of shares                   (254 084)      (209 433)
Non-controlling interest acquired             –       (598 107)
Dividends paid to shareholders          (39 662)       (33 347)
                                        (58 127)      (694 894)
Increase in net cash, cash 
 equivalents and overdrafts             275 313        166 094
Net cash acquired from business 
 combinations                            24 701              –
Net cash, cash equivalents at 
 beginning of the year                  389 760        222 908
Effects of exchange rate changes on 
 the balance of cash held in  
 foreign currencies                       1 684            758
Net cash, cash equivalents at 
 end of the year                        691 458        389 760

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2018
                                           2018           2017
                                       Reviewed        Audited
                                          R’000          R’000
Opening balance                       2 020 223      2 409 517 
Ordinary shares repurchased 
 and cancelled                         (223 486)      (150 231)
Treasury shares purchased *             (30 598)       (59 201)
Net profit for the year                 417 324        443 993 
Other comprehensive income                1 136          3 028 
–  Foreign currency translation 
    reserve movements                     1 684            758 
–  Cash flow hedge reserve movements       (548)         2 270 
Net movements in non-controlling 
 interest **                             71 245       (598 106)
Equity-accounted share-based payment 
 reserve movements                       11 222          4 570 
Dividend paid                           (39 662)       (33 347)
Closing balance                       2 227 404      2 020 223 
Attributable to:      
Owners of the Company                 2 138 091      1 997 772 
Non-controlling interests                89 313         22 451 

 * These transactions include ordinary shares purchased and not 
   cancelled to service the forfeitable share plan.
** Excluding net profit attributable to non-controlling 
   interests.

SEGMENT ANALYSIS
for the year ended 30 June 2018
                                           2018           2017
                                       Reviewed        Audited
                                          R’000          R’000
Revenue      
ICT Distribution                     10 440 627      9 537 040 
Services and Solutions                3 685 842      3 539 563 
Financial Services                      175 315        172 237 
Less: Intra-segmental revenue          (672 868)      (437 342)
                                     13 628 916     12 811 498 
EBITDA *      
ICT Distribution                        458 509        422 636
Services and Solutions                  235 673        271 979
Financial Services                      115 926        116 831
Group Central Services                   10 375         12 672
                                        820 483        824 118
Reconciliation of profit      
Segment EBITDA                          820 483        824 118 
Depreciation and amortisation          (130 354)       (90 594)
Net finance costs                      (121 257)      (107 037)
Profit before tax                       568 872        626 487 
Net operating assets      
ICT Distribution                      1 144 079      1 019 142 
Services and Solutions                  611 195        499 213 
Financial Services                      193 429        197 254 
Group Central Services                  278 701        304 614 
                                      2 227 404      2 020 223 

* Earnings before interest, tax, depreciation and amortisation.

The segments of the entity are based on the information reported 
to the chief operating descision maker (CEO) and has not changed 
from the prior reporting period.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL RESULTS
for the year ended 30 June 2018

1.  SALIENT FEATURES OF THE PRELIMINARY REVIEWED CONDENSED 
    CONSOLIDATED FINANCIAL RESULTS
    The preliminary reviewed condensed consolidated financial 
    statements comprise the condensed consolidated statement of 
    financial position at 30 June 2018, the condensed 
    consolidated statements of profit or loss and other 
    comprehensive income, changes in equity and cash flows and 
    notes for the year then ended. When reference is made to the 
    “Group” in the accounting policies, it should be interpreted 
    as referring to the Company, where the context requires, 
    unless otherwise noted.

    RESPONSIBILITY FOR ANNUAL RESULTS
    The Board takes full responsibility for the preparation of 
    this preliminary report.

    BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE
    The preliminary reviewed condensed consolidated financial 
    statements for the year ended 30 June 2018 have been prepared 
    in accordance with the Group’s accounting policies under the 
    supervision of the Group Financial Director, Richard Lyon CA, 
    and complies with the framework concepts and the measurement 
    and recognition requirements of International Financial 
    Reporting Standards (“IFRS”), SAICA financial reporting 
    guides as issued by the Accounting Practices Committee and 
    Financial Reporting Pronouncements as issued by the Financial 
    Reporting Standards Council, the Listings Requirements for 
    preliminary reports of the JSE Limited, the requirements of 
    the Companies Act of South Africa (Act 71 of 2008), as 
    amended and to also as a minimum, contain all of the 
    information required by IAS 34: Interim Financial Reporting.

    The preliminary reviewed condensed consolidated financial 
    statements of the Group are prepared as a going concern on a 
    historical basis except for certain financial instruments, 
    which are stated at fair value as applicable.
    
    ACCOUNTING POLICIES, ESTIMATES AND JUDGEMENTS
    The accounting policies, inclusive of reasonable judgements 
    and assessments, applied in the preliminary reviewed 
    condensed consolidated financial statements, are consistent 
    with those applied in the preparation of the audited 
    consolidated annual financial statements as at and for the 
    year ended 30 June 2017. The accounting policies applied are 
    consistent to the accounting policies applied in the 
    consolidated annual financial statements for the Group and 
    comply with IFRS.
    
    The preparation of the consolidated annual financial 
    statements in conformity with IFRS requires management to 
    make judgements, estimates and assumptions that affect the 
    application of accounting policies and the reported amounts 
    of assets, liabilities, income and expenses. The estimates 
    and associated assumptions are based on historical experience 
    and various other factors that are believed to be reasonable 
    under the circumstances, the results of which form the basis 
    of making the judgements about carrying values of assets and 
    liabilities that are not readily apparent from other sources. 
    Actual results may differ from these estimates.

    Estimates and underlying assumptions are reviewed on an 
    ongoing basis. Revisions to accounting estimates are 
    recognised in the period in which the estimates are revised 
    and in any future periods affected.

    PRESENTATION CURRENCY
    The preliminary reviewed condensed consolidated financial 
    statements are presented in South African Rands, the 
    functional currency of the Group. All amounts are rounded to 
    the nearest thousand, except where another rounding measure 
    had been indicated in the condensed consolidated annual 
    financial statements.
 
    NEW STANDARDS AND INTERPRETATIONS
    All new standards and interpretations that came into effect 
    during the year were assessed and adopted with no material 
    impact to the preliminary reviewed condensed consolidated 
    financial statements.
    
    The Group embarked on an extensive review programme of the 
    impact of the adoption of new standards and interpretations 
    that become effective in the next reporting period.

    IFRS 9: Financial Instruments

    The majority of financial assets held by the Company include 
    debt instruments namely trade and other receivables.

    These debt instruments are currently classified as loans and 
    receivables and are measured at amortised cost. Trade and 
    other receivables continue to qualify for measurement at 
    amortised cost under this standard because they are held to 
    collect contractual cash flows comprising principal and 
    interest and held within the same business model, therefore 
    there is no change to the accounting for these assets. 
    Accordingly, the Company does not expect the new guidance to 
    affect the classification of these financial assets. 

    There will be no impact on the Group’s accounting for 
    financial liabilities. The new requirements only affect the 
    accounting for financial liabilities that are designated at 
    fair value through profit or loss but the nature of the 
    liabilities of the Group classified in this category, is not 
    dependent on the credit rating of the Group but represents a 
    loan commitment. The derecognition rules have been 
    transferred from IAS 39: Financial Instruments: Recognition 
    and Measurement and have not been changed.

    Simplified impairment approach

    The Group primarily holds trade and other receivables which 
    qualify for the simplified impairment approach under this 
    standard i.e. the recognition of lifetime expected credit 
    losses, as none of these items exceed 12 months under normal 
    trading conditions. The impact of the future recognition of 
    impairment losses will not change materially, in future 
    periods for the Group, in relation to trade and other 
    receivables which qualifies for the simplified impairment 
    approach. 

    Impairment matrix and forward-looking approach

    The Group is currently in the process of assessing the impact 
    of this standard using the provision matrix approach with 
    reference to all financial instruments within the scope of 
    the impairment assessment criteria of the new standard. The 
    impact of the future recognition of impairment losses will 
    not change materially in future periods as the Group’s 
    current impairment assessment includes forward-looking 
    information, as required by the new standard, in the 
    assessment models applied to all financial instruments.

    IFRS 15: Revenue from Contracts with Customers
    
    Management has extensively reviewed all revenue streams 
    within the company. Due to the nature of the business, the 
    timing of recognition is not expected to materially impact 
    the revenue number for the reporting period commencing 1 July 
    2018.

    This standard introduces expanded disclosure requirements and 
    changes in presentation. These are expected to change the 
    nature and extent of the Group’s disclosures about its 
    revenue particularly in the year of the adoption of this 
    standard. Disclosures shall include the disaggregation of 
    revenue by key categories.

    IFRS 16: Leases

    The Group has completed a detailed assessment of the 
    potential impact on its annual financial statements. The 
    detailed assessment was performed adopting an interest rate 
    implicit to the lease of 8,8% based on the incremental 
    borrowing interest rate. Furthermore, the assessment is based 
    on the active leases of the Group, the current lease amount 
    (exclusive of any variable lease elements i.e. parking, 
    cleaning and similar items) and the current assessment of the 
    reasonable certainty in relation to the lease term.

    The most significant impact identified is that the Group will 
    recognise new assets and liabilities for its operating leases 
    of premises. As at 30 June 2018, the Group’s discounted 
    future minimum lease payments under non-cancellable operating 
    leases will result in a right of use asset of R250,01 million 
    with a corresponding lease liability of R250,01 million in 
    the statement of financial position.

    The lease assessment indicated a net liability position 
    impact on the statement of financial position over the period 
    of the lease until the expiry of the lease period.

    Management assessed all the standards and interpretations and 
    is of the opinion that none of these standards and 
    interpretations will have a material impact on the results of 
    the Group in future periods.

    COMPARATIVE FIGURES
    Unless otherwise indicated, comparative figures refer to the 
    12 months ended 30 June 2017.

    FINANCIAL RISK MANAGEMENT
    The Group’s financial risk management objectives and policies 
    are consistent with those disclosed in the audited 
    consolidated annual financial statements as at and for the 
    year ended 30 June 2017.

    REVIEW CONCLUSION
    The condensed consolidated financial statements and this 
    preliminary announcement have been reviewed by the Company’s 
    auditors, SizweNtsalubaGobodo Grant Thornton Incorporated. 
    The review has been conducted in terms of International 
    Standards on Review Engagements ISRE 2410: Review of Interim 
    Financial Information performed by the Independent Auditor of 
    the Entity. A copy of the unmodified review report is 
    available for inspection at the Company’s registered office.

    This auditor’s review report does not necessarily report on 
    all the information contained in this announcement. 
    Shareholders are therefore advised that in order to obtain a 
    full understanding of the nature of the auditor’s engagement, 
    they should obtain a copy of this auditor’s review report 
    together with the accompanying financial information from the 
    Company’s registered office.

    Any reference to future financial performance included in 
    this announcement has not been reviewed nor reported on by 
    the Company’s auditor.

2.  FINANCIAL REVIEW
                                           2018           2017
                                       Reviewed        Audited
    Performance per ordinary 
     share (cents)      
    Basic and diluted earnings per 
     ordinary share      
    – Basic earnings per 
       ordinary share                     273,5          244,2
    – Diluted basic earnings per 
       ordinary share                     269,4          243,5
    Headline basic and headline 
     diluted earnings per ordinary share       
    – Headline earnings per 
       ordinary share                     273,2          243,9
    – Diluted headline earnings per 
       ordinary share                     269,1          243,2
    Core and diluted core earnings 
     per ordinary share       
    – Core earnings per ordinary share    302,2          256,3
    – Diluted core earnings per 
       ordinary share                     297,7          255,6
    Dividend cover                         10,6           12,2
    Returns (%)      
    Gross profit                           17,7           17,7
    Operating expenses                    (11,7)         (11,3)
    EBITDA *                                6,0            6,4
    Operating profit before 
     interest and tax                       5,1            5,7
    Effective tax rate                     26,6           29,1
    Attributable net profit                 3,1            3,2
    Return on equity                       20,4           19,9

    * Earnings before interest, taxation, depreciation and 
      amortisation.

3.  RECONCILIATION OF HEADLINE AND CORE EARNINGS
                                           2018           2017
                                       Reviewed        Audited
                                          R’000          R’000
    Earnings attributable to 
     ordinary shareholders              421 707        405 277 
    Profit on sale of property, 
     plant and equipment net of tax        (456)          (618)
    Profit on sale of property, 
     plant and equipment                   (634)          (858)
    Less: Tax thereon                       178            240
    Headline earnings                   421 251        404 659 
    Acquisition costs net of tax          2 869          2 598 
    Amortisation of intangible assets 
     net of tax                          41 910         17 997 
    Core earnings **                    466 030        425 254 
    Number of ordinary shares 
     in issue ('000)      
    – Total number of shares 
       in issue *                       147 087        159 673 
    – Weighted average number of 
       shares in issue *                154 192        165 944 
    – Weighted average number of 
       shares in issue for purpose 
       of dilution*                     156 536        166 417

  * Adjusted for treasury shares.
 ** Core earnings per ordinary share is considered a meaningful 
    additional measure of evaluating the performance of the 
    Group’s operations. It is based on the headline earnings 
    measure and adjusted to exclude the amortisation cost of 
    intangible assets recognised in terms of business 
    combinations and related business combination acquisition 
    costs. This is not an IFRS measure.

4.  BUSINESS COMBINATIONS
  
    GridCars Proprietary Limited (“Gridcars”)      
 
    On 31 August 2017, the Group, through its 51%-held subsidiary 
    Solareff Proprietary Limited, obtained control of Gridcars by 
    acquiring a 75% interest in the issued stated capital and 
    voting rights of the company.  

    Gridcars is a developer of electric vehicle charge-point 
    software management systems and supplier of charge points. 
    The operations of Gridcars are aligned to the renewable 
    energy strategy adopted by the Group.      

    In the 10 months to the reporting date, Gridcars contributed 
    revenue of R900 000 and a loss of R1,6 million to the Group’s 
    results. Due to Gridcars being a start-up company, the 
    contributed revenue and profit would have remained unchanged 
    if the acquisition had occurred at the beginning of the 
    reporting period.      

    The total consideration was settled in cash by way of 
    electronic transfer during August 2017. 

    The transaction meets the definition of a business 
    combination as set out in IFRS 3: Business Combinations.    
  
    The fair value of the identifiable assets and liabilities 
    included in the consolidated results of Alviva Holdings 
    Limited on the date of acquisition, compared to the carrying 
    amounts of the identifiable assets and liabilities recognised 
    in the accounting records of the acquiree immediately before 
    the acquisition, were as follow:      
                                                    Previously
                                     Fair value     recognised
                                  recognised at       carrying
                                    acquisition     amounts by
                                           date       acquiree
                                          R’000          R’000
    Property, plant and equipment         1 211          1 211 
    Intangible assets: software           2 789          2 789 
    Total assets                          4 000          4 000
    Total liabilities                         –              –
    Identifiable net assets               4 000          4 000
    Non-controlling interest             (1 000)   
    Acquirer's interest                   3 000    
    Purchase consideration                3 000    
    Goodwill on acquisition                   –   

    The fair values have been determined on a provisional basis. 
    If any new information obtained within a year from the 
    acquisition date about the facts and circumstances that 
    existed at the acquisition date identifies adjustments to the 
    above amounts, or any additional provisions that existed at 
    the acquisition date then the acquisition accounting will be 
    revised.

    The goodwill of this business combination will have no impact 
    on the tax asset or liability of the acquirer or acquiree.   
    
    No contingent liabilities were recognised as a result of the 
    business combination.      

    Sintrex Integration Systems Proprietary Limited (“Sintrex”)  
    
    On 31 October 2017, the Group, through its subsidiary DCT 
    Holdings Proprietary Limited, obtained control of Sintrex by 
    acquiring a 51,03% interest in the issued stated capital and 
    voting rights of the company.      

    Sintrex is an infrastructure management company providing 
    end-to-end IT solutions and related services.       

    In terms of the strategy adopted by the Group, the Board of 
    Directors identified the solutions offering of Sintrex as a 
    complementary service line offering to current and future 
    customers as well as synergistic end-to-end solutions within 
    the current spectrum of services of the Group. 

    In the eight months to the reporting date, Sintrex 
    contributed revenue of R59,5 million and profit of R6,4 
    million to the group’s results. If the acquisition had 
    occurred at the beginning of the reporting period`, Sintrex 
    would have contributed revenue of R88,1 million and a profit 
    of R4,8 million to the Group’s results. 

    The total consideration was settled in cash by way of 
    electronic transfer during November 2017. 

    The transaction meets the definition of a business 
    combination as set out in IFRS 3: Business Combinations.   

    The fair value of the identifiable assets and liabilities 
    included in the consolidated results of Alviva Holdings 
    Limited on the date of acquisition, compared to the carrying 
    amounts of the identifiable assets and liabilities recognised 
    in the accounting records of the acquiree immediately before 
    the acquisition, were as follow:
                                                    Previously
                                     Fair value     recognised
                                  recognised at       carrying
                                    acquisition     amounts by
                                           date       acquiree
                                          R’000          R’000
    Property, plant and equipment         5 443          5 443 
    Intangible assets                    87 531          1 395 
    Investments                             774            774 
    Inventories on hand                      74             74 
    Deferred tax                          2 008          2 008 
    Trade and other receivables           9 273          9 273 
    Cash and cash equivalents            12 190         12 190 
    Total assets                        117 293         31 157 
    Loan payable                           (380)          (380)
    Deferred tax on intangible 
     assets: customer relationship      (24 429)             –
    Trade and other payables             (9 821)        (9 821)
    Current tax liabilities                (332)          (332)
    Deferred tax                         (2 708)        (2 708)
    Total liabilities                   (37 670)       (13 241)
    Identifiable net assets              79 623         17 916
    Non-controlling interest            (38 991)   
    Acquirer's interest                  40 632    
    Purchase consideration              102 058    
    Goodwill on acquisition              61 426    
    Cash flow information      
    Cash and cash equivalents 
     acquired                            12 190

    The total intangible assets acquired are classified as 
    customer relationships due to the fact that the Sinteligent 
    system, although being separately identifiable, has no 
    reliable determinable fair value. The customised software is 
    continuously updated to meet the requirements of specific 
    customers which is indicative of a close relationship between 
    the customer relationship intangible asset and the software. 
    Due to the fact that no active market exists for the 
    customised internally developed software, no reliable basis 
    for the separate measurement of the components could be 
    determined by management.

    The fair values have been determined on a provisional basis. 
    If any new information obtained within a year from the 
    acquisition date about the facts and circumstances that 
    existed at the acquisition date identifies adjustments to the 
    above amounts, or any additional provisions that existed at 
    the acquisition date then the acquisition accounting will be 
    revised.

    The fair value of the trade and other receivables acquired 
    represents the future contractual amounts receivable due to 
    the fact that none of the trade and other receivables extends 
    beyond the contract term. Management is of the opinion that 
    all outstanding trade and other receivables are recoverable. 
     
    The non-controlling interest related to the business 
    combination was measured at the proportionate share of the 
    recognised amounts of the acquiree’s net identifiable assets.  
    
    The goodwill of this business combination will have no impact 
    on the tax asset or liability of the acquirer or acquiree.   
 
    No contingent liabilities were recognised as a result of the 
    business combination.   

    DCT Holdings Proprietary Limited has a call option to 
    purchase an additional 24,28% interest in the issued share 
    capital of Sintrex. The intrinsic value of the call option 
    was determined at 30 June 2018 in terms of a discounted cash 
    flow model of which the following inputs were used:

    – Discount rate:        13,20%
    – Risk factor:              2%
    – Growth rate:           5,37%
    – Terminal growth rate:     6%.

    The determined intrinsic value approximates the purchase 
    consideration to be paid in terms of the option agreement.

    VH Fibre Optics Proprietary Limited (“VH Fibre”)   

    On 30 November 2017, the Group, through its subsidiary DCT 
    Holdings Proprietary Limited, obtained control of VH Fibre by 
    acquiring a 100% interest in the issued stated capital and 
    voting rights of the company.      

    VH Fibre is an infrastructure management company providing 
    end-to-end IT solutions and related services. In terms of the 
    strategy adopted by the Group, the Board of Directors 
    identified the solutions offering of VH Fibre as a 
    complementary service line offering to current and future 
    customers as well as synergistic end-to-end solutions within 
    the current spectrum of services of the Group.     
  
    In the seven months to the reporting date, VH Fibre 
    contributed revenue of R157,9 million and profit of R18,2 
    million to the Group’s results. If the acquisition had 
    occurred at the beginning of the reporting period, VH Fibre 
    would have contributed revenue of R256,8 million and profit 
    of R27 million to the Group’s results.

    R46 million of the total consideration was settled in cash by 
    way of electronic transfer in December 2017, with the 
    remaining consideration payable over the next two years based 
    on the audited results of the company for the 2018 and 2019 
    reporting periods. The consideration due has been recorded as 
    a loan payable. The portion of the contingent consideration 
    based on the 2018 financial results will be settled within 
    the next 12 months and the portion relating to the 2019 
    financial results will be settled during the 2020 financial 
    period. These amounts have been recognised as a current and 
    non-current liability, respectively, in the statement of 
    financial position.   

    The transaction meets the definition of a business 
    combination as set out in IFRS 3: Business Combinations.   

    The fair value of the identifiable assets and liabilities 
    included in the consolidated results of Alviva Holdings 
    Limited on the date of acquisition, compared to the carrying 
    amounts of the identifiable assets and liabilities recognised 
    in the accounting records of the acquiree immediately before 
    the acquisition, were as follow:
                                                    Previously
                                     Fair value     recognised
                                  recognised at       carrying
                                    acquisition     amounts by
                                           date       acquiree
                                          R’000          R’000
    Property, plant and equipment         3 305          3 305 
    Intangible assets                    44 535              –
    Deferred tax                            130            130 
    Trade and other receivables          46 053         46 053 
    Inventory                            20 836         20 836 
    Cash and cash equivalents                14             14 
    Total assets                        114 873         70 338 
    Other financial liabilities          (5 649)        (5 649)
    Deferred tax on intangible 
     assets: customer relationship      (12 470)             –
    Trade and other payables            (29 758)       (29 758)
    Bank overdraft                       (2 202)        (2 202)
    Current tax                          (3 635)        (3 635)
    Total liabilities                   (53 714)       (41 244)
    Identifiable net assets              61 159         29 094
    Non-controlling interest                  –   
    Acquirer's interest                  61 159    
    Purchase consideration              110 000    
    Goodwill on acquisition              48 841    
    Cash flow information      
    Cash and cash equivalents 
     acquired                            (2 189)   

    The fair values have been determined on a provisional basis. 
    If any new information obtained within a year from the 
    acquisition date about the facts and circumstances that 
    existed at the acquisition date identifies adjustments to the 
    above amounts, or any additional provisions that existed at 
    the acquisition date then the acquisition accounting will be 
    revised.   

    The fair value of the trade and other receivables acquired 
    represents the future contractual amounts receivable due to 
    the fact that none of the trade and other receivables extends 
    beyond the contract term. Management is of the opinion that 
    all outstanding trade and other receivables are recoverable.

    The goodwill of this business combination will have no impact 
    on the tax asset or liability of the acquirer or acquiree.   

    No contingent liabilities were recognised as a result of the 
    business combination.

    Obscure Enterprises Proprietary Limited (“Obscure”)   

    With effect from 1 February 2018, the Group, through its 
    subsidiary DCT Holdings Proprietary Limited, obtained control 
    of Obscure by acquiring a 72% interest in the issued stated 
    capital and voting rights of the company.   

    Obscure serves as a valued channel for vendors and customers 
    through the promotion and distribution of information 
    security products. In terms of the strategy adopted by the 
    Group, the Board of Directors identified the solutions 
    offering of Obscure as a complementary distribution line 
    offering to current and future customers as well as 
    synergistic end-to-end solutions within the current spectrum 
    of services of the Group.    

    In the five months to the reporting date, Obscure contributed 
    revenue of R73,5 million and profit of R500 000 to the 
    Group’s results. If the acquisition had occurred at the 
    beginning of the reporting period, Obscure would have 
    contributed revenue of R138 million and profit of R1,1 
    million to the Group’s results.

    The purchase price is capped at R72 million and, due to 
    Obscure still being in its infancy stages, it is payable in 
    three tranches, based on the company’s audited results for 
    the years ending from 2019 to 2022. The consideration due has 
    been recorded as a non-current loan payable and has been 
    valued at fair value.   

    The transaction meets the definition of a business 
    combination as set out in IFRS 3: Business Combinations.   

    The fair value of the identifiable assets and liabilities 
    included in the consolidated results of Alviva Holdings 
    Limited on the date of acquisition, compared to the carrying 
    amounts of the identifiable assets and liabilities recognised 
    in the accounting records of the acquiree immediately before 
    the acquisition, were as follow:   
                                                    Previously
                                     Fair value     recognised
                                  recognised at       carrying
                                    acquisition     amounts by
                                           date       acquiree
                                          R’000          R’000
    Property, plant and equipment         1 175          1 175 
    Intangible assets: customer 
     relationship                        42 302              –
    Trade and other receivables           9 978          9 978 
    Inventory                               142            142 
    Other financial assets                  403            403 
    Cash and cash equivalents               311            311 
    Total assets                         54 311         12 008 
    Deferred tax on intangible 
     assets: customer relationship      (11 845)             –
    Other financial liabilities          (4 906)        (4 906)
    Trade and other payables             (7 560)        (7 560)
    Bank overdraft                         (589)          (589)
    Total liabilities                   (24 900)       (13 055)
    Identifiable net assets              29 411         (1 047)
    Non-controlling interest             (8 235)   
    Acquirer's interest                  21 176    
    Purchase consideration               60 872   
    Goodwill on acquisition              39 696   
    Cash flow information      
    Cash and cash equivalents 
     acquired                              (278)   

    The fair values have been determined on a provisional basis. 
    If any new information obtained within a year from the 
    acquisition date about the facts and circumstances that 
    existed at the acquisition date identifies adjustments to the 
    above amounts, or any additional provisions that existed at 
    the acquisition date then the acquisition accounting will be 
    revised.

    The fair value of the trade and other receivables acquired 
    represents the future contractual amounts receivable due to 
    the fact that none of the trade and other receivables extends 
    beyond the contract term. Management is of the opinion that 
    all outstanding trade and other receivables are recoverable.  
 
    The non-controlling interest related to the business 
    combination was measured at the proportionate share of the 
    recognised amounts of the acquiree’s net identifiable assets.   

    The goodwill of this business combination will have no impact 
    on the tax asset or liability of the acquirer or acquiree.   

    No contingent liabilities were recognised as a result of the 
    business combination.

    DG Stores (SA) Proprietary Limited (“DG”)
   
    With effect from 1 March 2018, the Group, through its 
    subsidiary Datacentrix Holdings Proprietary Limited, obtained 
    control of DG by acquiring a 70% interest in the issued 
    stated capital and voting rights of the company.      

    DG is a provider of custom-made and highly specified ICT 
    equipment and business models, according to specific customer 
    requirements. The company sells and distributes to major 
    players within the financial services provider industry, such 
    as major banks, as well as major retailers, the telecoms 
    industry, South African municipalities and government 
    institutions. In terms of the strategy adopted by the Group, 
    the Board of Directors identified the solutions offering of 
    DG as a complementary service line offering to current and 
    future customers as well as synergistic end-to-end solutions 
    within the current spectrum of services of the Group.   

    In the four months to the reporting date, DG contributed 
    revenue of R326 million and profit of R6,6 million to the 
    Group’s results. If the acquisition had occurred at the 
    beginning of the reporting period, DG would have contributed 
    revenue of R893,7 million and profit of R14,2 million to the 
    Group’s results.     
 
    The total purchase consideration amounted to R117,9 million. 
    R92,4 million was settled in cash via electronic transfer in 
    March 2018, and the balance of R25,5 million will be settled 
    during the 2019 reporting period. The consideration due has 
    been recognised as a current loan in the statement of 
    financial position.      

    The transaction meets the definition of a business 
    combination as set out in IFRS 3: Business Combinations.   

    The fair value of the identifiable assets and liabilities 
    included in the consolidated results of Alviva Holdings 
    Limited on the date of acquisition, compared to the carrying 
    amounts of the identifiable assets and liabilities recognised 
    in the accounting records of the acquiree immediately before 
    the acquisition, were as follow:
                                                    Previously
                                     Fair value     recognised
                                  recognised at       carrying
                                    acquisition     amounts by
                                           date       acquiree
                                          R’000          R’000
    Property, plant and equipment         7 995          7 995 
    Intangible assets: customer 
     relationship                        49 163              –
    Tax receivable                           58             58 
    Trade and other receivables         118 079        120 189 
    Inventory                            23 285         23 285 
    Cash and cash equivalents            14 978         14 978 
    Total assets                        213 558        166 505 
    Other financial liabilities         (13 700)       (13 700)
    Deferred tax                           (237)          (237)
    Deferred tax on intangible 
     assets: customer relationship      (13 766)             –
    Trade and other payables           (107 474)      (107 474)
    Dividend withholding taxation        (4 000)        (4 000)
    Current tax                            (847)          (847)
    Total liabilities                  (140 023)      (126 258)
    Identifiable net assets              73 535         40 247 
    Non-controlling interest            (22 060)   
    Acquirer's interest                  51 474    
    Purchase consideration              117 900    
    Goodwill on acquisition              66 426    
    Cash flow information      
    Cash and cash equivalents 
     acquired                            14 978   

    The fair values have been determined on a provisional basis. 
    If any new information obtained within a year from the 
    acquisition date about the facts and circumstances that 
    existed at the acquisition date identifies adjustments to the 
    above amounts, or any additional provisions that existed at 
    the acquisition date then the acquisition accounting will be 
    revised.   

    The fair value of the trade and other receivables acquired 
    represents the future contractual amounts receivable due to 
    the fact that none of the trade and other receivables extends 
    beyond the contract term. Management is of the opinion that 
    all outstanding trade and other receivables are recoverable.  
 
    The non-controlling interest related to the business 
    combination was measured at the proportionate share of the 
    recognised amounts of the acquiree’s net identifiable assets.    
  
    The goodwill of this business combination will have no impact 
    on the tax asset or liability of the acquirer or acquiree. 

    No contingent liabilities were recognised as a result of the 
    business combination.
 
5.  ANALYSIS OF GOODWILL
                                           2018           2017
                                       Reviewed        Audited
                                          R’000          R’000
    Opening balance                     347 846        347 846 
    Business combinations               216 389              –
    Impairments                               –              –
    Closing balance                     564 235        347 846 
    Analysis of goodwill per 
     business combination      
    Sintrex                              61 426              –
    VH Fibre                             48 841              –
    Obscure                              39 696              –
    DG Store                             66 426              –
                                        216 389              –
 
6.  INVENTORY ANALYSIS
                                           2018           2017
                                       Reviewed        Audited
                                          R’000          R’000
    Inventory on hand                   635 285        669 125 
    Inventory in transit                112 729         58 119 
    Work in progress                     26 097         24 458 
                                        774 111        751 702 

7.  FAIR VALUE ESTIMATION

    Financial instruments measured in the statement of financial 
    position at fair value require disclosure. The following is 
    the fair value measurement hierarchy:

    Level 1 –  fair value is determined from quoted prices 
    (unadjusted) in active markets for identical assets or 
    liabilities. 

    Level 2 –  fair value is determined through the use of 
    valuation techniques based on observable inputs, either 
    directly or indirectly. 

    Level 3 –  fair value is determined through the unobservable  
    inputs for the asset or liability.

    The following table presents the Group’s assets and 
    liabilities that are measured at fair value:

                                           2018           2017
                                       Reviewed        Audited
                              Level       R’000          R’000
    Financial assets: 
    Derivative financial 
     asset                        2           –          3 287
    Financial liabilities: 
    Contingent consideration *    3     161 889              –

    * The contingent consideration is classified as part of the 
      non-interest-bearing liabilities in the statement of 
      financial position.

    The fair value of financial instruments traded in active 
    markets is based on quoted market prices, which represent 
    actual and regularly occurring market transactions between 
    market participants at the reporting date. A market is 
    regarded as active if quoted prices are readily and regularly 
    available from an exchange, dealer, broker or industry group, 
    pricing market transactions on an arm’s length basis, while 
    transactions occur regularly.

    The fair value of financial instruments that are not traded 
    in an active market (for example, over-the-counter 
    derivatives) is determined by using valuation techniques. 
    These valuation techniques maximise the use of observable 
    market data where it is available and rely as little as 
    possible on entity-specific estimates. If all significant 
    inputs required to fair value an instrument are observable, 
    the instrument is included in level 2.

    If one or more of the significant inputs are not based on 
    observable market data, the instrument is included in level 
    3. The fair value of the contingent consideration was 
    determined at the reporting date in terms of the discounted 
    cash flow method. The inputs into the model included the 
    expected cash flows in terms of the performance conditions of 
    the acquirees, based on internally prepared budget and 
    forecasted estimates, discounted at a rate of 8,8%, which 
    represents the intrinsic borrowing rate of the treasury 
    function of the Group. Based on the expected timing of the 
    cash flows related to the contingent consideration and the 
    respective acquisition dates of the respective entities, the 
    fair value at the reporting date approximates the contingent 
    consideration recognised on the acquisition dates of the 
    business combinations. 
    
    For all other financial assets and liabilities, the carrying 
    value approximates the fair value.
  
    There were no other financial instruments measured at fair 
    value that were individually material at the end of the 
    current reporting period.

8.  EVENTS AFTER THE REPORTING DATE

    Specific Repurchase Tranche 2

    Shareholders are referred to the announcement released on 
    SENS on 29 August 2018 relating to the specific repurchase of 
    treasury shares (“the Tranche 2 Shares”) by Alviva from 
    Alviva Treasury Services Proprietary Limited (“Alviva 
    Treasury Services”), to be implemented in terms of the JSE 
    Listings Requirements and sections 48(8)(b), 114 and 115 of 
    the Companies act and the subsequent delisting of the Tranche 
    2 Shares from the JSE and the cancellation thereof.

    The impact of the Specific Repurchase Tranche 2 on the issued 
    share capital of the Company is that the ordinary shares in 
    issue will be reduced by 6 500 000 to 150 717 917. The 
    Company’s share capital account will be reduced by 
    R65 000,00, being the 6 500 000 ordinary shares with a par 
    value of 1 (one) cent per ordinary share. The Company’s 
    reserves will be reduced by the difference between the 
    purchase price and the par value of the ordinary shares, 
    being 1 (one) cent per ordinary share, as the Company will 
    elect to make payment of the Specific Repurchase Tranche 2 
    considerations out of distributable reserves, which will 
    constitute a “dividend” as per the Income Tax Act no 58 of 
    1962.

    The Specific Repurchase Tranche 2 consideration will be paid, 
    in full, in accordance with the terms of the Specific 
    Repurchase Tranche 2 without regard to any lien, right of 
    set-off, counterclaim or other analogous right to which 
    Alviva may otherwise be, or claim to be, entitled against any 
    Alviva Treasury Services.

    The Board resolved to repurchase, delist and cancel the 
    specific repurchase shares in order to:

    – simplify the Group structure;
    – eliminate accounting and regulatory complexities arising 
      from treasury shares in general; and
    – save additional costs of administration.

    The circular, containing full details of the Specific 
    Repurchase Tranche 2, as well as the salient dates and times 
    of the AGM, will be incorporated in the 2018 integrated 
    annual report. The notice of AGM, to form part of the 2018 
    integrated annual report, will include a special resolution 
    relating to the Specific Repurchase Tranche 2 and will be 
    posted to shareholders on or about Friday, 28 September 2018.

    General repurchase of shares

    Subsequent to the year-end, the Company repurchased and 
    cancelled an additional 1 153 937 shares under the authority 
    granted by shareholders at the AGM on 23 November 2017.

    Forfeitable Share Plan (“FSP 3”)

    FSP 3, along with its participants and share allocation, was 
    approved by the Board of Directors on 12 June 2018. A total 
    of  1 610 000 shares were allocated to FSP 3 and all 
    participants accepted the shares granted to them. FSP 3 
    became effective after the end of the reporting period. 

    Acquisition of Tricon Services

    Alviva has completed the acquisition of the Services Division 
    of Tri Continental Limited (“Tri Continental”) on 3 September 
    2018 for a cash consideration of approximately R70 million. 
    Tri Continental is an IT-based company in London and has 
    operated in the African market for over 30 years. Alviva has 
    been granted the right to use the naming rights to “Tricon 
    Services” and it will operate as a division within the Group. 
   
    Tricon Services has developed a services operation, with a 
    resource complement of 200 multi-disciplined certified IT 
    resources, that spans 37 countries in Central, East and West 
    Africa (CEWA) and Southern Africa. It services an extensive 
    network of IT partners, customers and integrators through its 
    long-term relationship with a number of major international 
    IT vendors and suppliers. 

    The transaction meets the definition of a business 
    combination as set out in IFRS 3: Business Combinations.

    Management is in the process of finalising the acquisition 
    method of recognition in terms of the business combination as 
    the transaction still falls within the allowable measurement 
    period as permitted by IFRS 3: Business Combinations.

5 September 2018 
Midrand

ALVIVA HOLDINGS LIMITED
(incorporated in the Republic of South Africa)
Registration number: 1986/000334/06
ISIN: ZAE000227484
Share code: AVV
“Alviva” or “the Group” or “the Company” 

DIRECTORS:
A Tugendhaft * (Chairman), P Spies (Chief Executive Officer), 
SH Chaba *^, RD Lyon (Chief Financial Officer),  N Medupe *^, 
P Natesan *^ (Lead Independent Director)
 * Non-executive     ^ Independent       

REGISTERED OFFICE: 
The Summit, 269 16th Road, Randjespark, Midrand, 1685

PREPARER OF RESULTS: RD Lyon CA

COMPANY SECRETARY: Ms SL Grobler CA(SA)

TRANSFER SECRETARIES: 
Computershare Investor Services (Pty) Ltd, Rosebank Towers, 15 
Biermann Avenue, Rosebank, 2196

AUDITORS: 
SizweNtsalubaGobodo Grant Thornton Incorporated, Registered 
Auditors, Summit Place Office Park, Building 4, Garstfontein Road 
221, Menlyn, 0081

SPONSOR: 
Deloitte & Touche Sponsor Services (Pty) Ltd,  Building 8, 
Deloitte Place, The Woodlands,  20 Woodlands Drive, Woodmead, 
2196

www.alvivaholdings.com


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