Wrap Text
Unaudited Group results For the six months ended 31 August 2018
Adcorp Holdings Limited
Registration number 1974/001804/06
Listed 1987
Share code: ADR ISIN: ZAE000000139
Unaudited Group results
For the six months ended 31 August 2018
Salient features
* Group revenue for the period increased by 3% to R8 billion compared to
R7,7 billion in August 2017
* Australia revenue increased by 11% in constant currency terms
* Underlying EBITDA for the period increased by 33% to R231 million
* Net profit from continuing operations of R99 million compared to a
loss of R36 million
* EPS at 90,2 cents per share compared to a loss of 120,7 cents per share
* Cash generated by operations R358 million compared to R122 million
* Gearing improved to 35% from 61% due to reduction in net debt to R646 million
from R1,3 billion
* Group operating expenses reduced by 16% to R896 million
Commentary
Financial overview
The Group has delivered a strong performance in the first half of the
year, with net profit for the period of R99 million compared to a loss
of R36 million for the same period last year.
In the South Africa operations, revenue was relatively flat compared
to August 2017. The drive to right size the business and ensure a
structure and processes that are efficient and optimal is yielding
benefits resulting in a reduction in operating expenses and improved
earnings before interest, tax, depreciation and amortisation (EBITDA)
of R212 million from R95 million in August 2017. The Group is on
track to realise the balance of the R200 million savings identified
as part of the first phase cost reduction. Both the Support Services
and Training businesses have benefited from these early interventions,
with the latter no longer trading at a loss.
The improved EBITDA position, together with the focus on liquidity
and working capital management has strengthened the cash position of
the Group. Increased focus on cash requirement forecasting is enhancing
treasury's ability to manage utilisation of the funding facility. This
is driving a reduction in the net cost of funding.
Underlying EBITDA is defined in the current period as EBITDA adjusted
for retrenchment cost and restructure cost.
Outlook and prospects
The clean-up of the Group in FY2018 enabled the leadership team to gain
an understanding of its true financial position and reset performance.
This represented the first phase of the Group's strategic transformation.
The focus in the current year is on stabilizing operations, stemming
losses from our Training business and unlocking short-term wins as we
develop a blueprint for the future of Adcorp.
Adcorp's leadership team have started developing a target operating model
which will see us double down on the work we already do in the areas of
resourcing, training, consulting and outsourced services for people-intensive
processes.
As specialists in the world of matching and placing people into jobs that
create efficient workplaces, the Group has the ability to help businesses
access the skills needed to grow their companies while making job-seeker's
dreams a reality.
We look forward to sharing this journey in more detail during our year-end
results presentation.
Changes to the board of Adcorp
The following changes to the directorate took place during the period under
review:
Resignation of JA Boggenpoel as an independent non-executive director with
effect from 20 July 2018.
* Resignation of MA Jurgens as an executive director with effect from
6 September 2018. He, however, continues in the employment of Adcorp
in his role of heading up Adcorp's Australian operations.
* Appointment of P Mnganga as an independent non-executive director with
effect from 6 September 2018.
* Appointment of H Singh as an independent non-executive director with
effect from 6 September 2018.
The board would like to thank our outgoing board members for their
contribution over the years, and welcomes the new board members.
The analyst presentation and results booklet are available on the Group's
website: www.adcorpgroup.com/Pages/Results/Interim-Results.aspx
On behalf of the Board
GT Serobe I Dutiro CJ Kujenga
Chairman Chief Executive Officer Chief Financial Officer
12 October 2018
Condensed consolidated statement of financial position
as at 31 August 2018
Restated
Unaudited Unaudited Audited
six months to six months to year to
31 August 31 August 28 February
2018 2017 2018
Notes R'000 R'000* R'000
Assets
Non-current assets 1 774 671 2 382 922 1 719 016
Property and equipment 9 65 137 89 027 65 756
Intangible assets 265 934 540 329 275 785
Goodwill 1 222 110 1 390 022 1 162 010
Investments 13 670 10 000 13 244
Investment in associate - 154 994 -
Other financial assets 10 361 31 497 10 361
Deferred taxation 197 459 167 053 191 860
Current assets 3 000 848 2 799 937 2 801 348
Trade receivables 2 170 205 2 195 886 2 272 550
Other receivables 141 732 235 856 77 208
Other financial assets - - 12 191
Taxation prepaid 89 541 44 445 79 071
Cash and cash equivalents 599 370 323 750 360 328
Assets from continuing
operations 4 775 519 5 182 859 4 520 364
Assets held-for-sale 6 - 196 691 10 434
Total assets 4 775 519 5 379 550 4 530 798
Equity and liabilities
Capital and reserves 1 851 214 2 132 843 1 602 589
Share capital and share
premium 1 740 858 1 740 858 1 740 858
Reserves 110 356 391 985 (138 269)
Interest-bearing
liabilities 1 231 757 1 617 599 1 218 559
Non-current liabilities 892 985 1 378 978 196
Long-term loans 892 985 1 378 978 196
Current liabilities 338 772 1 616 221 240 363
Short-term portion of
long-term loans 338 046 1 273 513 228 687
Bank overdraft 726 342 708 11 676
Non-interest-bearing
current liabilities 1 692 548 1 558 076 1 680 405
Non-current liabilities 91 878 107 936 100 074
Share-based payment
liability - 6 151 -
Deferred taxation 91 878 101 785 100 074
Current liabilities 1 600 670 1 450 140 1 580 331
Trade and other payables 1 242 858 1 148 928 1 225 030
Share-based payment
liability - 11 203 8 133
Provisions 309 506 257 606 287 202
Derivative financial
instruments - 3 857 -
Taxation 48 306 28 546 59 966
Equity and liabilities from
continuing operations 4 775 519 5 308 518 4 501 553
Liabilities directly
associated with assets
classified as held-for-
sale 6 - 71 032 29 245
Total equity and
liabilities 4 775 519 5 379 550 4 530 798
* Investment in associate was reclassified from assets held-for-sale to
non-current assets in August 2017. Refer to note 5.
Condensed consolidated statement of comprehensive income
for the six months ended 31 August 2018
Restated
Unaudited Unaudited Audited
six months to six months to year to
31 August 31 August 28 February
2018 2017 2018
Notes R'000 R'000 R'000
Continuing operations
Revenue 7 972 619 7 750 162 15 325 391
Cost of sales (6 892 763) (6 613 968) (13 097 630)
Gross profit 1 079 856 1 136 194 2 227 761
Other income 28 073 30 043 58 067
Operating expenses (895 504) (1 071 006) (2 149 209)
Earnings before
depreciation and
amortisation 212 425 95 231 136 619
Depreciation and
amortisation (36 864) (67 853) (128 589)
Operating profit 175 561 27 378 8 030
Interest income 7 072 4 199 16 614
Interest expense (56 424) (59 631) (140 643)
Impairment of intangible
assets, goodwill and
bonds - (22 528) (477 797)
Profits from the sale of
associate - - 184 960
Profit on disposal of
non-core assets 1 999 - -
Share of profits from
associates* - 14 186 16 476
Profit/(loss) before
taxation 128 208 (36 396) (392 360)
Taxation (29 137) 528 (28 350)
Profit/(loss) for the
period/year from
continuing operations 99 071 (35 868) (420 710)
Discontinued operations
Loss for the period/year
from discontinued
operations 6 (351) (92 585) (140 322)
Net profit/(loss) for the
period/year 98 720 (128 453) (561 032)
Other comprehensive
income/(loss)**
Exchange differences on
translating foreign
operations 72 302 6 895 (50 677)
Exchange differences arising
on the net investment of a
foreign operation 71 253 18 002 (30 964)
Fair value adjustment of - (1 603) 1 102
derivative financial instrument
Other comprehensive
income/(loss) for the
period/year, net of tax 143 555 23 294 (80 539)
Non-controlling interest (421) (3 467) (2 246)
Total comprehensive
income/(loss) for the
period/year 241 854 (108 626) (643 816)
Earnings/(loss)
attributable to:
Owners of the parent from
continuing operations 98 650 (39 335) (422 955)
Owners of the parent from
discontinued operations (351) (92 585) (140 322)
Non-controlling interest 421 3 467 2 246
Total comprehensive
earnings/(loss)
attributable to:
Owners of the parent from
continuing operations 242 626 (12 574) (501 248)
Owners of the parent from
discontinued operations (351) (92 585) (140 322)
Non-controlling interest (421) (3 467) (2 246)
Total basic
earnings/(loss) per share
(cents)
Basic earnings/(loss) per
share 90,2 (120,7) (517,0)
Diluted earnings/(loss)
per share 87,3 (118,8) (504,2)
* Share of profits from associates was reclassified from the prior period
to be consistent with year-end disclosure. Refer to note 5.
** All items included in other comprehensive income/(loss) will be
reclassified to profit and loss upon derecognition.
Condensed consolidated statement of cash flow
for the six months ended 31 August 2018
Restated
Unaudited Unaudited Audited
six months to six months to year to
31 August 31 August 28 February
2018 2017 2018
Notes R'000 R'000 R'000
Operating activities
Profit/(loss) before
taxation 127 857 (128 565) (473 044)
From continuing operations 128 208 (36 396) (392 359)
From discontinued
operations 6 (351) (92 169) (80 684)
Adjusted for:
Depreciation 15 219 17 211 31 696
Amortisation of 21 645 50 641 96 893
intangibles
Impairment of intangible
assets, goodwill and loans - 87 866 477 797
Profit on the sale of
business (1 999) - -
Share of profits from
associates - (14 186) (16 476)
(Profit)/loss on the sale
of property and equipment (116) 248 839
Share-based payments 11 913 (4 920) 8 767
Share-based payment
expense 11 913 6 899 12 822
Revaluation of share-based
payment liability - (11 819) (4 055)
Unrealised foreign
exchange (profit)/loss (2 005) 1 902 451
Non-cash portion of
operating lease rentals 63 (531) (1 361)
Profit on the sale of
associate - - (184 960)
Net movement on assets
held-for-sale (18 811) 58 771 203 701
Fair value adjustment (427) - (3 298)
Increase in bad debt
provision (2 405) (35 967) (21 274)
Interest income (7 072) (6 281) (16 614)
Interest expense 56 424 71 266 140 643
Cash generated from operations
before working
capital changes 200 286 97 455 243 760
Decrease in trade and
other receivables 115 285 63 693 45 930
Decrease in other
financials assets - 6 919 -
Increase/(decrease) in
trade and other payables 20 170 (39 646) 56 091
Increase/(decrease) in
provisions 22 304 (5 979) 44 674
Cash generated by
operations 358 045 122 442 390 455
Interest income 7 072 6 281 16 614
Interest expense (56 424) (71 266) (140 643)
Cash settlement of share
options exercised (7 199) (17 141) (31 384)
Taxation paid (67 815) (44 257) (100 692)
Dividend paid (1 403) - (1 293)
Net cash generated/(utilised)
by operating activities 232 276 (3 941) 133 057
Investing activities
Additions to property,
equipment and intangible
assets (13 937) (24 794) (27 234)
Proceeds from sale of 1 048 962 2 133
property and equipment
Net proceeds on the sale
of business 4 051 - 858
Net cash outflow on acquisition of
subsidiaries - (5 000) (12 060)
Net cash inflow on
disposal of associate - - 305 702
Decrease/(increase) in
investment in subsidiary 2 654 (854) -
Net cash (utilised)/generated from
investing activities (6 184) (29 686) 269 399
Financing activities
Payment from the issue of
treasury shares - 12 884 13 961
Facility payment (66 444) (96 319) (1 790 664)
Drawdown of facility 91 957 - 1 626 468
Other non-current liabilities
– interest-bearing (1 613) (598) (2 271)
Net cash
generated/(utilised) by
financing activities 23 900 (84 033) (152 506)
Net increase/(decrease) in
cash and cash equivalents 249 992 (117 660) 249 950
Cash and cash equivalents
at the beginning of the
period/year 348 652 98 702 98 702
Cash and cash equivalents
at the end of the
period/year 598 644 (18 958) 348 652
Condensed consolidated statement of changes in equity
for the six months ended 31 August 2018
Share Share Treasury
capital premium shares
R'000 R'000 R'000
Balance as at 28 February 2017 (restated) 2 749 1 738 109 (36 963)
Disposal of shares - - 12 884
Movement in BEE shareholders' interest - - -
Loss for the period - - -
Other comprehensive income/(loss) for the
period - - -
Non-controlling interest - - -
Balance as at 31 August 2017 (unaudited) 2 749 1 738 109 (24 079)
Issue of treasury shares under employee
share option plan - - 1 077
Dividend distributions - - -
Recognition of BBBEE and staff share-based
payments - - -
Loss for the period - - -
Equity due to change in control
Other comprehensive (loss)/income for the
period - - -
Non-controlling interest - - -
Balance as at 28 February 2018 (audited) 2 749 1 738 109 (23 002)
Recognition of BBBEE and staff share-based
payments - - -
Dividend distributions - - -
Profit for the period - - -
Other comprehensive income/(loss) for the
period - - -
Change in control - - -
Non-controlling interest - - -
Balance as at 31 August 2018 (unaudited) 2 749 1 738 109 (23 002)
Share- Foreign
based currency Cash flow
payment translation hedging
reserve reserve reserve
R'000 R'000 R'000
Balance as at 28 February 2017
(restated) 128 993 24 289 (1 102)
Disposal of shares - - -
Movement in BEE shareholders' interest 3 603 - -
Loss for the period - - -
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)
Issue of treasury shares under employee
share option plan - - -
Dividend distributions - - -
Recognition of BBBEE and staff share-
based payments 4 714 - -
Loss for the period - - -
Equity due to change in control
Other comprehensive (loss)/income for
the period - (57 572) 2 705
Non-controlling interest - - -
Balance as at 28 February 2018 (audited) 137 310 (26 388) -
Recognition of BBBEE and staff share-
based payments 11 913 - -
Dividend distributions - - -
Profit for the period - - -
Other comprehensive income/(loss) for
the period - 72 302 -
Change in control - - -
Non-controlling interest - - -
Balance as at 31 August 2018 (unaudited) 149 223 45 914 -
Attributable to Non-
Retained equity holders controlling
earnings of the parent interest
R'000 R'000 R'000
Balance as at 28 February 2017
(restated) 363 904 2 219 979 (5 249)
Disposal of shares - 12 884 -
Movement in BEE shareholders'
interest - 3 603 -
Loss for the period (131 921) (131 921) 3 467
Other comprehensive income/(loss)
for the period 18 002 23 294 -
Non-controlling interest - - 6 110
Balance as at 31 August 2017
(unaudited) 249 985 2 127 839 4 328
Issue of treasury shares under
employee share option plan - 1 077 -
Dividend distributions (1 293) (1 293) -
Recognition of BBBEE and staff
share-based payments - 4 714 -
Loss for the period (431 357) (431 357) (1 221)
Equity due to change in control 858 858 -
Other comprehensive (loss)/income
for the period (48 966) (103 833) -
Non-controlling interest - - 801
Balance as at 28 February 2018
(audited) (230 773) 1 598 005 3 908
Recognition of BBBEE and staff
share-based payments 11 913 -
Dividend distributions (1 403) (1 403) -
Profit for the period 98 299 98 299 421
Other comprehensive income/(loss)
for the period 71 253 143 555 -
Change in control (6 816) (6 816) -
Non-controlling interest - - 2 656
Balance as at 31 August 2018
(unaudited) (69 440) 1 843 553 6 985
BEE
shareholders'
interest Total
R'000 R'000
Balance as at 28 February 2017 (restated) 676 2 215 406
Disposal of shares - 12 884
Movement in BEE shareholders' interest - 3 603
Loss for the period - (128 454)
Other comprehensive income/(loss) for the
period - 23 294
Non-controlling interest - 6 110
Balance as at 31 August 2017 (unaudited) 676 2 132 843
Issue of treasury shares under employee share
option plan - 1 077
Dividend distributions - (1 293)
Recognition of BBBEE and staff share-based
payments - 4 714
Loss for the period - (432 578)
Equity due to change in control 858
Other comprehensive (loss)/income for the
period - (103 833)
Non-controlling interest - 801
Balance as at 28 February 2018 (audited) 676 1 602 589
Recognition of BBBEE and staff share-based
payments - 11 913
Dividend distributions - (1 403)
Profit for the period - 98 720
Other comprehensive income/(loss) for the
period - 143 555
Change in control - (6 816)
Non-controlling interest - 2 656
Balance as at 31 August 2018 (unaudited) 676 1 851 214
Condensed segment report of continuing operations
for the six months ended 31 August 2018
South Africa
Industrial Support Professional
Services Services Services
Revenue
– August 2018 (unaudited) 3 198 437 729 817 961 809
– August 2017 (unaudited) 3 065 667 774 207 904 166
– February 2018 (audited) 6 278 103 1 471 207 1 802 508
Internal revenue
– August 2018 (unaudited) 27 779 4 616 836
– August 2017 (unaudited) 20 002 7 081 1 298
– February 2018 (audited) 39 450 6 015 2 240
Gross profit
– August 2018 (unaudited) 395 100 128 989 199 650
– August 2017 (unaudited) 442 706 127 665 203 748
– February 2018 (audited) 887 350 275 944 390 355
EBITDA
– August 2018 (unaudited) 166 037 27 501 77 898
– August 2017 (unaudited) 169 702 21 390 78 893
– February 2018 (audited) 189 232 46 474 160 624
Asset carrying value from
continuing operations*
– August 2018 (unaudited) 1 238 796 231 227 769 666
– August 2017 (unaudited) 1 250 679 319 615 1 102 470
– February 2018 (audited) 1 394 421 271 762 747 752
Liabilities carrying value**
– August 2018 (unaudited) 560 470 93 286 333 759
– August 2017 (unaudited) 485 226 154 614 311 785
– February 2018 (audited) 535 976 153 232 271 081
South Africa
Financial
Training Services Subtotal
Revenue
– August 2018 (unaudited) 90 913 84 733 5 065 709
– August 2017 (unaudited) 95 083 91 685 4 930 808
– February 2018 (audited) 178 454 192 281 9 922 553
Internal revenue
– August 2018 (unaudited) 2 010 - 35 241
– August 2017 (unaudited) 4 237 - 32 618
– February 2018 (audited) 11 192 - 58 897
Gross profit
– August 2018 (unaudited) 61 839 52 110 837 688
– August 2017 (unaudited) 45 065 52 260 871 444
– February 2018 (audited) 85 618 101 128 1 740 395
EBITDA
– August 2018 (unaudited) 3 874 32 112 307 422
– August 2017 (unaudited) (12 548) 30 549 287 986
– February 2018 (audited) (51 824) 58 218 402 724
Asset carrying value from
continuing operations*
– August 2018 (unaudited) 57 181 215 095 2 511 965
– August 2017 (unaudited) 96 486 215 125 2 984 375
– February 2018 (audited) 94 961 202 951 2 711 847
Liabilities carrying value**
– August 2018 (unaudited) 120 318 25 928 1 133 761
– August 2017 (unaudited) 92 755 24 334 1 068 714
– February 2018 (audited) 149 030 24 650 1 133 969
South Africa
Central Total
Revenue
– August 2018 (unaudited) 1 024 5 066 733
– August 2017 (unaudited) 8 049 4 938 857
– February 2018 (audited) 16 034 9 938 587
Internal revenue
– August 2018 (unaudited) 2 134 37 375
– August 2017 (unaudited) 9 010 41 628
– February 2018 (audited) 20 155 79 052
Gross profit
– August 2018 (unaudited) (133) 837 555
– August 2017 (unaudited) 6 070 877 514
– February 2018 (audited) 7 327 1 747 722
EBITDA
– August 2018 (unaudited) (166 058) 141 364
– August 2017 (unaudited) (261 960) 26 026
– February 2018 (audited) (403 264) (540)
Asset carrying value from
continuing operations*
– August 2018 (unaudited) 680 536 3 192 501
– August 2017 (unaudited) 617 158 3 601 533
– February 2018 (audited) 517 306 3 229 153
Liabilities carrying value**
– August 2018 (unaudited) 932 890 2 066 651
– August 2017 (unaudited) 1 302 945 2 371 659
– February 2018 (audited) 1 065 596 2 199 565
Australia
Professional
Industrial Services Subtotal
Revenue
– August 2018 (unaudited) 889 510 2 016 376 2 905 886
– August 2017 (unaudited) 866 181 1 945 124 2 811 305
– February 2018 (audited) 1 696 419 3 690 385 5 386 804
Internal revenue
– August 2018 (unaudited) - - -
– August 2017 (unaudited) - - -
– February 2018 (audited) - - -
Gross profit
– August 2018 (unaudited) 84 534 157 767 242 301
– August 2017 (unaudited) 84 838 173 842 258 680
– February 2018 (audited) 166 318 313 721 480 039
EBITDA
– August 2018 (unaudited) 30 483 55 213 85 696
– August 2017 (unaudited) 26 953 56 419 83 372
– February 2018 (audited) 58 096 104 059 162 155
Asset carrying value from
continuing operations*
– August 2018 (unaudited) 238 925 647 093 886 018
– August 2017 (unaudited) 364 794 551 562 916 356
– February 2018 (audited) (127 230) 499 752 372 522
Liabilities carrying value**
– August 2018 (unaudited) 51 354 396 619 447 973
– August 2017 (unaudited) 72 321 297 594 369 915
– February 2018 (audited) 42 777 307 809 350 586
Australia
Central Total Total Group
Revenue
– August 2018 (unaudited) - 2 905 886 7 972 619
– August 2017 (unaudited) - 2 811 305 7 750 162
– February 2018 (audited) - 5 386 804 15 325 391
Internal revenue
– August 2018 (unaudited) - - 37 375
– August 2017 (unaudited) - - 41 628
– February 2018 (audited) - - 79 052
Gross profit
– August 2018 (unaudited) - 242 301 1 079 856
– August 2017 (unaudited) - 258 680 1 136 194
– February 2018 (audited) - 480 039 2 227 761
EBITDA
– August 2018 (unaudited) (14 635) 71 061 212 425
– August 2017 (unaudited) (14 167) 69 205 95 231
– February 2018 (audited) (24 996) 137 159 136 619
Asset carrying value from
continuing operations*
– August 2018 (unaudited) 697 000 1 583 018 4 775 519
– August 2017 (unaudited) 664 970 1 581 326 5 182 859
– February 2018 (audited) 875 544 1 248 066 4 477 219
Liabilities carrying value**
– August 2018 (unaudited) 409 681 857 654 2 924 305
– August 2017 (unaudited) 434 101 804 016 3 175 675
– February 2018 (audited) 301 382 651 968 2 851 533
* Reconciliation of assets carrying value to statement of financial
position on 28 February 2018
Assets carrying value per segment report 4 477 219
Other financial assets - relating to Capital Africa 43 145
Total per statement of financial position 4 520 364
** Reconciliation of liabilities carrying value to statement of financial
position on 28 February 2018
Liabilities carrying value per segment report 2 851 533
Deferred taxation - relating to Capital Africa 47 431
Total per statement of financial position 2 898 964
Notes to the unaudited condensed consolidated interim financial statements
for the six months ended 31 August 2018
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 interim reports, the requirements of the Companies
Act applicable to consolidated condensed financial statements, The interim
report is prepared in accordance with and containing the information required
by IAS 34: Interim Financial Reporting, as well as the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by Financial Reporting Standards Council. 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, except for the adoption of IFRS 15 and IFRS 9.
The Group adopted IFRS 15 as of 1 March 2018, and applied the modified
retrospective approach. The implementation of IFRS 15 resulted in revenue
and cost of sale being accounted for on a gross basis and not on a net margin
basis. The gross numbers are included in revenue and cost of sales as at
31 August 2018. This has no impact on equity in the prior periods and at
year-end.
The Group also adopted IFRS 9 as of 1 March 2018. An assessment was done to
determine if there should be an adjustment to equity as at 1 March 2018.
The difference between IAS 39 and IFRS 9 was immaterial for the Group,
therefore no adjustment was made. The bad debt provision for 31 August 2018
is in line with the expected IFRS 9 provision.
The Group will adopt IFRS 16 on the required date. The Group is in the process
to assess the impact on the financial statements.
The unaudited condensed interim financial statements for the six months ended
31 August 2018 were compiled under the supervision of CJ Kujenga CA(SA), MBA
(Executive), 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.
Any forward-looking statement in these results have not been reviewed or reported
on 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. Exchange rate
The average AUD/ZAR exchange rate from 1 March 2018 to 31 August 2018, is
R9,69 and the closing rate on 31 August 2018 is R10,61 (average 31 August
2017: R10,48 and closing R10,30).
5. Prior period adjustment
During the current period it has come to the Group's attention that the profit
from associates were incorrectly classified under discontinued operations as at
31 August 2017, this was corrected at 31 August 2018 and had no impact on
the Group's equity since it is a reclassification between discontinued and
continuing operations. Since there was no impact on equity, a third balance
sheet is not presented.
6. Discontinued operations
The Group took the decision to dispose of its African operations during the
previous financial year and, as such, these operations have been disclosed as
discontinued.
Unaudited Unaudited Audited
six months to six months to year to
31 August 31 August 28 February
2018 2017 2018
R'000 R'000 R'000
Profit and loss
Revenue - 86 366 117 798
Cost of sales - (69 620) (91 837)
Gross profit - 16 746 25 961
Other income - 9 398 10 915
Operating expenses (351) (43 421) (42 260)
Operating loss (351) (17 277) (5 384)
Net interest - (9 554) -
Impairments - (65 338) (75 300)
Net loss before tax (351) (92 169) (80 684)
Taxation - (416) (59 638)
Net loss after tax (351) (92 585) (140 322)
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 -
Intangible assets - - -
Other financial assets - - -
Trade and other receivables - 62 072 10 077
Cash - 127 050 -
Tax prepaid - 5 363 357
Total - 196 691 10 434
Non-current liabilities associated
with assets classified as held-for-sale
Trade and other payables - 40 747 11 306
Bank overdraft - 338 -
Provisions - 18 741 4 756
Tax payable - 11 206 13 183
Total - 71 032 29 245
7. Earnings and headline earnings per share
The calculation of earnings per share is based on profits/(losses) out of:
Unaudited Unaudited Audited
six months to six months to year to
31 August 31 August 28 February
2018 2017 2018
R'000 R'000 R'000
Continuing operations 98 650 (39 335) (422 955)
Discontinued operations (351) (92 585) (140 322)
Weighted average number of
shares – 000's 108 946 109 332 108 946
Diluted weighted average
number of shares – 000's 112 643 111 001 111 720
Continuing operations (cents)
Basic earnings/(loss) per
share 90,5 (36,0) (388,2)
Diluted earnings/(loss) per
share 87,6 (35,4) (378,6)
Discontinued operations
(cents)
Basic loss per share (0,3) (84,7) (128,8)
Diluted loss per share (0,3) (83,4) (125,6)
Total basic earnings/(loss)
per share (cents)
Basic earnings/(loss) per
share 90,2 (120,7) (517,0)
Diluted earnings/(loss) per
share 87,3 (118,8) (504,2)
Reconciliation of headline
earnings/(loss) from continuing
operations
Profit/(loss) for the period/year
from continuing operations 98 650 (39 336) (422 956)
(Profit)/loss on sale of
property and equipment (116) 248 (839)
Taxation recovered/(charged)
on the sale of property and
equipment 32 (69) 235
Impairment of intangible
assets, goodwill and bonds - 22 528 477 797
Profit on the sale of
business (1 999) - -
Profit from the sale of
associate - - (184 960)
Taxation charged on the sale
of associate - - 36 542
Headline earnings/(loss) 96 567 (16 629) (94 181)
Headline earnings/(loss) per
share – cents 88,6 (15,2) (86,4)
Diluted headline earnings/(loss)
per share – cents 85,7 (15,0) (84,3)
Reconciliation of headline
earnings/(loss) from discontinued
operations
Loss for the period/year from
discontinued operations (351) (92 585) (140 322)
Impairment of intangible
assets, goodwill and bonds - 65 388 75 300
Headline loss (351) (27 197) (65 022)
Headline loss per share –
cents (0,3) (24,9) (59,7)
Diluted headline loss per
share – cents (0,3) (24,5) (58,2)
Reconciliation of headline
earnings/(loss) from total
operations
Profit/(loss) for the period/year
from total
operations 98 299 (131 921) (563 278)
(Profit)/loss on sale of
property and equipment (116) 248 (839)
Taxation recovered/(charged)
on the sale of property
and equipment 32 (69) 235
Impairment of intangible
assets, goodwill and bonds - 87 866 553 097
Profit on the sale of
business (1 999) - -
Profit from the sale of
associate - - (184 960)
Taxation charged on the sale
of associate - - 36 542
Headline earnings/(loss) 96 216 (43 876) (159 203)
Headline earnings/(loss) per
share – cents 88,3 (40,1) (146,1)
Diluted headline earnings/(loss)
per share – cents 85,4 (39,5) (142,5)
8. Disposal of business
During the period the Group sold one of its subsidiaries in the financial
segment. The carrying value of the assets and liabilities disposed of is
as follows:
Unaudited
six months to
31 August
2018
R'000
Analysis of assets and liabilities
disposed of:
Property and equipment 2 587
Trade and other receivables 2 139
Intangible assets 1 195
Goodwill 7 444
Trade and other payables (2 947)
Deferred taxation (117)
Net asset value of subsidiary disposed of 10 301
Loss on disposal of subsidiary:
Net asset value of subsidiary disposed of
by a major subsidiary of the Group 10 301
Proceeds on disposal (7 250)
3 051
9. Total interest-bearing liabilities of the Group
Unaudited Unaudited Audited
six months to six months to year to
31 August 31 August 28 February
2018 2017 2018
R'000 R'000 R'000
Net gearing (%) 35 61 54
Net bank balances 598 644 (18 958) 348 652
Other non-current liabilities - 1 378 -
Long-term loans 892 985 - 978 196
Long-term loans – South Africa 850 000 - 925 000
Long-term loans – Australia 42 985 - 53 196
Obligations under finance lease 111 328 (280)
Leasehold liabilities 13 925 16 412 14 647
Current portion of interest-
bearing liabilities 338 046 1 273 513 228 687
Current portion of interest-
bearing liabilities – South
Africa - 871 486 -
Current portion of interest-
bearing liabilities – Australia 338 046 402 027 228 687
Total interest-bearing
liabilities 1 245 067 1 291 631 1 221 250
Total net interest-bearing
liabilities 646 423 1 310 589 872 598
Total long-term debt (%) 72 – 80
Total short-term debt (%) 28 100 20
Total 100 100 100
10. 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 to six months to year to
31 August 31 August 28 February
2018 2017 2018
R'000 R'000 R'000
Investment 13 670 10 000 13 244
Other financial assets 10 361 31 497 10 361
Fair value Valuation technique(s)
hierarchy and key inputs
Investment Level 2 Fair value based on insurance payments
Other financial
assets Level 2 Market valuation subject to management
assessment for impairments
11. Property and equipment
During the current period the Group purchased assets of R13,9 million
(August 2017: R24,7 million). At 31 August 2018 the Group has no capital
commitments to purchase property and equipment.
12. Contingent liabilities and commitments
The bank has guaranteed R5,5 million (August 2017: R5,6 million) on behalf
of the Group to creditors. As at balance sheet date the Group has outstanding
operating lease commitments totalling R187 million (August 2017: R104,1 million)
in non-cancellable property leases.
The nature of the Group's business may result in certain employment cost that
is not provided for.
13. Related parties
No other related parties than those disclosed in the segment report were
identified.
14. Events after the reporting date
No material transactions or events took place subsequent to the end of the interim
financial period and prior to the approval of these unaudited financial statements.
15. Dividends paid
No dividend was paid by the holding company during the period under review. One of
the Group's subsidiaries in Australia paid a dividend to its minority shareholders.
Corporate information
Registered office
Adcorp Holdings Limited
Adcorp Office Park
Nicolway East, Bryanston
Cnr William Nicol Drive and Wedgewood Link
Bryanston, 2021
PO Box 70635, Bryanston, 2021
Tel: 011 244 5300
Email: info@adcorpgroup.com
Executive directors
I Dutiro (Chief Executive Officer), CJ Kujenga (Chief Financial Officer)
Non-executive directors
GT Serobe (Chairman), GP Dingaan, C Maswanganyi, TP Moeketsi, S Sithole
Independent non-executive directors
SN Mabaso-Koyana, P Mnganga, FS Mufamadi, ME Mthunzi, H Singh, MW Spicer
(Lead Independent)
Company Secretary
Kevin Fihrer
Adcorp Office Park
Nicolway East, Bryanston
Cnr William Nicol Drive and Wedgewood Link
Bryanston, 2021
PO Box 70635, Bryanston, 2021
Tel: 011 244 5300
Email: kevin.fihrer@adcorpgroup.com
Investor relations
Nomonde Xulu
Tel: 011 244 5300
Direct: 011 244 5609
Email: nomonde.xulu@adcorpgroup.com
Auditors
Deloitte & Touche
The Woodlands, 20 Woodlands Drive
Woodmead, Sandton, 2146
Private Bag X6, Gallo Manor, 2052
Tel: 011 806 5000
Fax: 011 806 5111
Legal advisers
Eversheds Sutherland SA
3rd Floor, 54 Melrose Boulevard Melrose Arch, Melrose North Johannesburg, 2196
PO Box 782244, Sandton City, 2146
Tel: 087 358 9857
Transfer secretaries
4 Africa Exchange Registry (Pty) Ltd
Cedar Woods House
Ballywoods Office Park
33 Ballyclare Drive
Bryanston, 2191
Tel: 011 100 8352 admin@4aregistry.co.za
Sponsors
Deloitte & Touche Sponsor Services Proprietary Limited
Building 8, Deloitte Place
The Woodlands
20 Woodlands Drive
Woodmead, Sandton, 2146
Private Bag X6, Gallo Manor, 2052
Tel: 011 806 5000
Website: www.adcorpgroup.com
Date: 15/10/2018 07:12:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
