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Preliminary Summarised Consolidated Audited Results, Final Dividend Declaration and Notice of AGM
ADAPT IT HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration number 1998/017276/06
Share code: ADI
ISIN: ZAE000113163
("Adapt IT" or "the Company" or "the Group")
PRELIMINARY SUMMARISED CONSOLIDATED AND COMPANY AUDITED RESULTS
FOR THE YEAR ENDED 30 JUNE 2018
FINAL DIVIDEND DECLARATION AND NOTICE OF ANNUAL GENERAL MEETING
UP 36% TURNOVER
UP 39% EBITDA
UP 32% BASIC EARNINGS PER SHARE
UP 14% HEADLINE EARNINGS PER SHARE
UP 11% NORMALISED HEADLINE EARNINGS PER SHARE
SUMMARISED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
Group Group Company Company
2018 2017 2018 2017
R R R R
Revenue 1 353 896 440 996 425 164 25 735 304 23 134 544
Turnover 1 348 403 468 993 671 344 - -
Cost of sales (533 123 742) (420 420 024) - -
Gross profit 815 279 726 573 251 320 - -
Administrative, selling and other costs (623 426 024) (422 268 011) (3 485 175) (3 106 526)
Other income 26 350 922 - - -
Sundry revenue - - 3 500 000 3 500 000
Profit from operations 218 204 624 150 983 309 14 825 393 474
Dividend received - - 21 993 947 19 633 931
Finance income 5 492 972 2 753 820 241 357 613
Finance costs (28 559 603) (25 605 200) - -
Share of loss of equity accounted investment after tax - (88 103) - -
Profit before taxation 195 137 993 128 043 826 22 250 129 20 028 018
Income tax expense (65 526 402) (35 497 923) (34 513) (67 262)
Profit for the year 129 611 591 92 545 903 22 215 616 19 960 756
Attributable to:
Equity holders of the parent 122 020 035 88 133 237 22 215 616 19 960 756
Non-controlling interests 7 591 556 4 412 666 - -
Other comprehensive income/(loss)
Items that will not be reclassified to profit and loss (2 750 454) - - -
Devaluation of land and building (3 544 400) - - -
Income tax effect 793 946 - - -
Items that may be reclassified subsequently to profit and loss 533 692 (437 553) - -
Exchange gain/(loss) arising from translation of foreign operations 533 692 (437 553) - -
Total comprehensive income 127 394 829 92 108 350 22 215 616 19 960 756
Attributable to:
Equity holders of the parent 119 803 273 87 695 684 22 215 616 19 960 756
Non-controlling interests 7 591 556 4 412 666 - -
Basic earnings per share (cents) 77,51 58,74 - -
Basic diluted earnings per share (cents) 77,51 58,74 - -
SUMMARISED STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2018
Group Group Company Company
2018 2017 2018 2017
R R R R
ASSETS
Non-current assets 974 153 583 730 781 287 92 837 242 49 543 493
Property and equipment 96 241 640 35 285 087 - -
Intangible assets 239 365 393 180 875 370 - -
Goodwill 571 931 924 500 346 685 - -
Interest in subsidiaries and share trust - - 71 099 241 49 511 335
Loans to subsidiaries - - 21 672 542 32 158
Finance lease receivables 23 666 262 - - -
Loans receivable 15 288 798 - - -
Deferred taxation asset 27 659 566 14 274 145 65 459 -
Current assets 413 361 377 355 666 131 310 213 742 300 609 100
Inventories 21 994 177 - - -
Trade and other receivables 272 691 888 228 362 544 212 804 2 277 675
Amounts owing by subsidiaries - - 309 607 769 297 962 752
Current tax receivable 1 632 675 12 288 985 99 395 86 770
Finance lease receivables 10 986 946 - - -
Loans receivable 4 096 044 - - -
Cash and cash equivalents 86 397 659 98 048 710 293 774 281 903
Assets classified as held for sale 15 561 988 16 965 892 - -
Total assets 1 387 514 960 1 086 447 418 403 050 984 350 152 593
EQUITY AND LIABILITIES
Equity
Share capital 16 054 15 360 16 054 15 360
Treasury shares (819) - - -
Share premium 340 277 986 336 225 816 400 647 135 331 510 804
Other capital reserves - 17 154 720 - 17 154 720
Equity compensation reserve 19 221 006 14 585 430 - -
Foreign currency translation reserve 3 304 659 2 770 967 - -
Revaluation reserve - 3 544 400 - -
Retained earnings 388 101 858 287 281 824 1 134 074 912 405
Equity attributable to shareholders of the company 750 920 744 661 578 517 401 797 263 349 593 289
Non-controlling interests 2 283 174 6 958 535 - -
Total equity 753 203 918 668 537 052 401 797 263 349 593 289
Non-current liabilities 287 750 540 193 177 743 - 32 030
Interest-bearing borrowings 200 794 458 101 486 667 - -
Financial liabilities 33 479 340 43 814 766 - -
Finance lease liabilities 1 670 033 - - -
Deferred taxation liability 51 806 709 47 876 310 - 32 030
Current liabilities 346 560 502 224 732 623 1 253 721 527 274
Trade and other payables 133 859 490 110 667 792 1 253 721 527 274
Provisions 51 841 262 24 921 276 - -
Deferred income 105 458 045 71 222 047 - -
Current tax payable 1 453 331 1 762 369 - -
Financial liabilities 38 951 795 14 197 783 - -
Current portion of interest-bearing borrowings 13 680 725 580 894 - -
Finance lease liabilities 1 315 854 - - -
Non-interest-bearing borrowings - 1 380 462 - -
Total equity and liabilities 1 387 514 960 1 086 447 418 403 050 984 350 152 593
At 30 June 2018, the carrying values of the financial assets and financial liabilities are considered by management to approximate their fair value.
All financial assets and liabilities are carried at amortised cost and hence no fair value disclosure is necessary, in terms of the fair value hierarchy
requirements of IFRS 7 Financial Instruments: Disclosures.
SUMMARISED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2018
Group Group Company Company
2018 2017 2018 2017
R R R R
OPERATING ACTIVITIES
Cash generated from operations 257 709 547 139 325 456 2 806 143 (2 117 820)
Finance income 3 957 779 1 600 672 241 357 613
Finance costs (23 403 322) (16 248 874) - -
Dividends received - - 21 993 947 19 633 931
Dividends paid (34 970 537) (23 359 331) (21 993 947) (19 633 931)
Taxation paid (68 951 177) (42 102 157) (144 627) (67 010)
Net cash flow from/(utilised in) operating activities 134 342 290 59 215 766 2 902 873 (2 184 217)
INVESTING ACTIVITIES
Property and equipment acquired (90 683 597) (6 681 043) - -
Intangible assets acquired and developed (9 033 738) (4 913 201) - -
Proceeds on disposal of property and equipment 2 065 746 129 098 - -
Proceeds from loans receivable 5 752 936 - - -
Payments to acquire financial assets (2 160 186) - - -
Settlement of contingent purchase consideration (22 390 664) (48 000 003) - -
Net cash outflow on acquisition of subsidiaries (108 734 438) (21 696) - -
Proceeds from disposal of subsidiary 42 027 110 - - -
Increase in investment in subsidiary - - (21 587 906) -
Net cash utilised in investment activities (183 156 831) (59 486 845) (21 587 906) -
FINANCING ACTIVITIES
Proceeds from borrowings 323 000 000 313 500 041 - -
Repayment of borrowings (242 822 697) (376 596 812) - -
Proceeds from finance lease 285 291 - - -
Share repurchases (72 666 348) - - -
Issue of shares for cash 35 297 437 83 999 979 - -
Issue of company's shares - - 69 137 025 133 999 970
Increase in amounts owing by subsidiaries - - (50 440 121) (131 663 293)
Repayment of vendor loans (6 723 864) - - -
Net cash flows from financing activities 36 369 819 20 903 208 18 696 904 2 336 677
Net (decrease)/increase in cash resources (12 444 722) 20 632 129 11 871 152 460
Exchange gain/(loss) on translation 793 671 (307 787) - -
Cash and cash equivalents at beginning of year 98 048 710 77 724 368 281 903 129 443
Cash and cash equivalents at end of year 86 397 659 98 048 710 293 774 281 903
SUMMARISED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
Attributable to equity holders of the parent
Foreign Attributable
Other Equity Asset currency to equity Non-
Share Treasury Share capital compensation revaluation translation Retained holders of controlling
capital shares premium reserves reserve reserve reserve earnings the parent interests Total
R R R R R R R R R R R
GROUP
Balance at 30 June 2016 14 006 - 200 831 266 34 574 504 5 724 817 3 544 400 3 208 520 218 782 518 466 680 031 6 007 925 472 687 956
Total comprehensive income
for the year - - - - - - (437 553) 88 133 237 87 695 684 4 412 666 92 108 350
Profit for the year - - - - - - - 88 133 237 88 133 237 4 412 666 92 545 903
Other comprehensive loss for
the year - - - - - - (437 553) - (437 553) - (437 553)
Share-based payments - - - - 10 256 547 - - - 10 256 547 - 10 256 547
Issue of shares for business
combination 765 - 49 999 226 (34 574 504) - - - - 15 425 487 - 15 425 487
Shares issued during the year 589 - 85 395 324 - (1 395 934) - - - 83 999 979 263 344 84 263 323
Shares to be issued - - - 17 154 720 - - - - 17 154 720 - 17 154 720
Dividend paid - - - - - - - (19 633 931) (19 633 931) (3 725 400) (23 359 331)
Balance at 30 June 2017 15 360 - 336 225 816 17 154 720 14 585 430 3 544 400 2 770 967 287 281 824 661 578 517 6 958 535 668 537 052
Total comprehensive income
for the year - - - - - (3 544 400) 533 692 122 813 981 119 803 273 7 591 556 127 394 829
Profit for the year - - - - - - - 122 020 035 122 020 035 7 591 556 129 611 591
Other comprehensive income
for the year - - - - - (3 544 400) 533 692 793 946 (2 216 762) - (2 216 762)
Share-based payments - - - - 4 823 482 - - - 4 823 482 - 4 823 482
Net repurchase of shares - (927) (72 665 420) - - - - - (72 666 347) - (72 666 347)
Issue of treasury shares - 108 7 581 259 (7 581 367) - - - - - - -
Settled in cash - - - (9 573 353) - - - - (9 573 353) - (9 573 353)
Issue of shares for business
combination 337 - 33 651 345 - - - - - 33 651 682 - 33 651 682
Shares issued during the year 357 - 35 484 986 - (187 906) - - - 35 297 437 - 35 297 437
Non-controling interest
disposed - - - - - - - - - 709 673 709 673
Dividends paid - - - - - - - (21 993 947) (21 993 947) (12 976 590) (34 970 537)
Balance at 30 June 2018 16 054 (819) 340 277 986 - 19 221 006 - 3 304 659 388 101 858 750 920 744 2 283 174 753 203 918
Other
Share Share capital Retained Total
capital premium reserves earnings equity
R R R R R
COMPANY
Balance at 30 June 2016 14 006 196 116 254 34 574 504 585 580 231 290 344
Total comprehensive income for the year - - - 19 960 756 19 960 756
Issue of shares 1 354 135 394 550 (34 574 504) - 100 821 400
Shares to be issued - - 17 154 720 - 17 154 720
Dividend paid - - - (19 633 931) (19 633 931)
Balance at 30 June 2017 15 360 331 510 804 17 154 720 912 405 349 593 289
Total comprehensive profit for the year - - - 22 215 616 22 215 616
Issue of shares 694 69 136 331 - - 69 137 025
Shares issued through treasury shares and cash - - (17 154 720) - (17 154 720)
Dividend paid - - - (21 993 947) (21 993 947)
Balance at 30 June 2018 16 054 400 647 135 - 1 134 074 401 797 263
EARNINGS AND DIVIDENDS PER SHARE
EARNINGS PER SHARE
The calculation of earnings per share is based on the profit attributable to equity holders of R122 020 035 (2017: R88 133 237) and the weighted
average number of ordinary shares in issue during the year of 157 415 107 (2017: 150 028 042). The calculation of diluted earnings per share is
based on the profit of R122 020 035 (2017: R88 133 237) and the weighted average number of diluted ordinary shares in issue during the year
of 157 415 107 (2017: 150 045 972).
Group Group
2018 2017
R R
Reconciliation between earnings, headline earnings and normalised headline earnings
Earnings attributable to equity holders of the parent 122 020 035 88 133 237
Adjusted for:
- Loss on sale of property and equipment 473 160 16 276
- Scrapping of property and equipment 385 239 -
- Profit after tax on sale of businesses (17 452 763) -
Headline earnings 105 425 671 88 149 513
Adjusted for:
Amortisation of intangible assets acquired 33 895 406 29 105 008
Deferred taxation on amortisation of intangible assets acquired (9 490 714) (8 149 402)
Fair value adjustment to financial liability (imputed interest) 5 156 281 9 356 326
Fair value adjustment to financial liability (Micros underpin) 2 891 886 -
Normalised headline earnings 137 878 530 118 461 445
Basic earnings per share (cents) 77,51 58,74
Headline earnings per share (cents) 66,97 58,76
Diluted basic earnings per share (cents) 77,51 58,74
Diluted headline earnings per share (cents) 66,97 58,75
Normalised headline earnings (cents) 87,59 78,96
Normalised headline earnings are calculated by adding back to headline earnings the amortisation of
intangible assets net of deferred taxation, as a consequence of the purchase price allocations completed
in terms of IFRS 3 - Business Combinations and fair value adjustments to financial liabilities on contingent
purchase considerations.
DIVIDENDS PER SHARE
Dividends per share (cents) 13,70 13,40
EVENTS AFTER THE REPORTING DATE
On 1 July 2018, Cash Bases South Africa (Pty) Ltd merged with Adapt IT (Pty) Ltd to achieve efficiencies and savings in administrative and
operational expenditure.
No other significant transactions or events have occurred between year-end date and the date of this report.
BUSINESS COMBINATIONS
ACQUISITION OF SUBSIDIARY
On 1 July 2017, the group acquired the entire issued share capital of Micros South Africa (Pty) Ltd (Micros), a South African registered company.
Micros conducts business in the Information Technology sector, inter alia, providing software, hardware, enterprise systems integration,
consulting, support and solutions to its clients, primarily in the Hospitality industry.
The acquisition of Micros, which is a leader in its vertical market, created an entry into the Hospitality industry, a new vertical for the group,
further diversifying the group.
The purchase consideration of R134 950 940 consists of R88 889 787 in cash, paid on 19 July 2017, R33 651 703 in shares issued on 31 July 2017,
and R12 409 450 fair value of cash top-up payment.
Adapt IT agreed to provide the Micros sellers, where shares have been issued, with a one-year protection on any decrease in the value of the
shares in Adapt IT Holdings Limited on the basis that Adapt IT will become obliged to make a cash top-up payment to the applicable sellers to
place them in a similar position had they in fact been cash-settled at July 2017 in respect of their entire proceeds. In July 2017, the fair value of
the share value underpin was calculated at R12 409 450.
The fair value of the net assets acquired amounted to R56 903 617, resulting in goodwill of R78 047 323 at acquisition. The purchase consideration
paid for the combination effectively included amounts in relation to the benefit of the expected synergies, revenue growth, new market
penetration and future market development.
The fair values of the identifiable net assets and liabilities of Micros as at the date of acquisition were:
Fair value
recognised on
acquisition
R'000
Assets
Property and equipment 9 954 571
Intangible assets 46 110 344
Finance lease receivables 36 813 394
Inventories 27 989 315
Trade and other receivables 40 701 225
Cash and cash equivalents 22 955 370
Total assets 184 524 219
Liabilities
Interest-bearing borrowings 32 230 319
Finance lease liabilities 2 700 596
Deferred tax liability 7 892 784
Amounts due to vendors 6 723 864
Trade and other payables 76 378 177
Current tax payable 1 694 862
Total liabilities 127 620 602
Total identifiable net assets 56 903 617
Goodwill arising on acquisition 78 047 323
Fair value of consideration payable 134 950 940
Fair value
recognised on
acquisition
R'000
Fair value of consideration payable
Cash paid 29 575 656
Cash advanced to Micros in July 2017 59 314 152
Shares issued in July 2017 33 651 682
Fair value of share value underpin 12 409 450
Fair value of consideration payable 134 950 940
Cash outflow on acquisition
Net cash acquired with the subsidiary 22 955 370
Cash paid (88 889 808)
Net cash outflow on acquisition (65 934 438)
From the date of acquisition, Micros has contributed R17 952 100 to the profit after tax of the group. Non-cash acquisition related expenses
(amortisation of intangible assets) amounted to R3 235 918.
Cash acquisition related costs of R1 553 395 have been expensed and are included in operational expenses on the statement of profit or loss
and other comprehensive income.
ACQUISITION OF SUBSIDIARY
On 1 June 2018, the group acquired the business of CDR Live Limited (Mauritius registered), the issued share capital in its wholly-owned
subsidiary, LGR Analytics (USA registered), and the businesses of its wholly-owned subsidiaries, LGR Telecommunications (Pty) Ltd (South African
registered) and LGR Telecommunications (Pty) Ltd (Australia registered) (collectively LGR).
LGR is a specialist solutions provider with an exclusive focus on the global Telecommunications industry. With a track record spanning over
18 years, LGR has built a reputation for the provision and management of end-to-end data warehouse and business intelligence systems at
leading international operators.
The purchase consideration consists of R42 800 000 paid in cash on 11 June 2018, and a further R8 158 751 due in cash in September 2018.
The fair value of the net assets acquired amounted to R47 982 971, resulting in goodwill of R2 975 780 at acquisition. The purchase consideration
paid for the combination effectively included amounts in relation to the benefit of the expected synergies, revenue growth, new market
penetration and future market development.
The fair values of the identifiable net assets and liabilities of LGR as at the date of acquisition were:
Fair value
recognised on
acquisition
R'000
Assets
Property and equipment 561 359
Intangible assets 48 130 538
Trade and other receivables 8 966 464
Total assets 57 658 361
Liabilities
Deferred tax liability 119 450
Trade and other payables 9 555 940
Total liabilities 9 675 390
Total identifiable net assets 47 982 971
Goodwill arising on acquisition 2 975 780
Fair value of consideration payable 50 958 751
Fair value of consideration payable
Cash paid 42 800 000
Fair value of contingent purchase consideration owing in respect of acquisition 8 158 751
Fair value of consideration payable 50 958 751
Cash outflow on acquisition
Cash paid (42 800 000)
Net cash outflow on acquisition (42 800 000)
The acquisition is provisionally accounted for in terms of the allowance per IFRS 3 Business Combinations.
From the date of acquisition, LGR has contributed R867 833 to the profit after tax of the group. Non-cash acquisition related expenses (amortisation
of intangible assets) amounted to R54 428.
Cash acquisition related costs of R1 417 173 have been expensed and are included in operational expenses on the statement of profit or loss
and other comprehensive income.
DISPOSAL OF A SUBSIDIARY
On 31 May 2018, CQS GRC Solutions (Pty) Ltd disposed of certain assets and liabilities, for a consideration of R20 472 195.
Fair value
on disposal
R'000
The fair values of net assets and liabilities disposed:
Assets
Property and equipment (5 039 417)
Goodwill (8 057 403)
Trade and other receivables (11 692 126)
Total assets (24 788 946)
Liabilities
Trade and other payables (11 529 541)
Total liabilities (11 529 541)
Total identifiable net assets disposed of (13 259 405)
Cash received on 31 May 2018 20 472 195
Profit on disposal 7 212 790
On 1 June 2018, the group disposed of its share in CQS GRC Solutions (Pty) Ltd, for a consideration of R22 786 443.
The fair values of net assets and liabilities over which control was lost:
Assets
Intangible assets (6 887 811)
Cash and cash equivalents (1 231 528)
Total assets (8 119 339)
Liabilities
Deferred tax liabilities (1 928 587)
Other payables (507 686)
Current tax payable (2 660 320)
Total liabilities (5 096 593)
Total identifiable net assets disposed of (3 022 746)
Non-controlling interest (709 673)
Cash received on 1 June 2018 22 786 443
Profit on disposal 19 054 024
Cash inflow on disposal
Net cash disposed with the subsidiary (1 231 528)
Cash received 22 786 443
Net cash inflow on disposal 21 554 915
SEGMENT ANALYSIS
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and
performance assessment. Monthly management meetings are held to evaluate segment performance against budget and forecast.
Management does not monitor assets and liabilities by segment.
The following tables present turnover and EBITDA information (after Shared Services cost allocation) regarding the group's operating segments
for the year ended 30 June 2018 and 30 June 2017 respectively:
Financial
Education Manufacturing*** Services Energy Hospitality Other Total
R R R R R R R
2018
Turnover 177 732 748 373 022 527 332 148 564 175 259 263 290 240 366 - 1 348 403 468
Segment EBITDA 31 766 389 92 526 573 55 698 553 35 761 021 35 140 050 19 209 559 270 102 145
EBITDA margin (%) 18 25 17 20 12 20
2017
Turnover 170 741 995 284 977 932 350 040 062 187 911 355 - - 993 671 344
Segment EBITDA 29 707 360 70 573 209 53 401 161 44 113 327 - (3 469 049) 194 326 008
EBITDA margin (%) 17 25 15 23 20
The following table presents turnover by geographic area of the group's operating segments as at 30 June 2018 and 30 June 2017:
Financial
Education Manufacturing*** Services Energy Hospitality Other Total
R R R R R R R
2018
Turnover from
external customers
by geographic area* 177 732 748 373 022 527 332 148 564 175 259 263 290 240 366 - 1 348 403 468
South Africa 119 288 168 300 100 602 252 718 416 159 922 560 265 900 648 - 1 097 930 394
African Countries** 29 141 059 54 608 362 61 290 540 259 658 24 154 763 - 169 454 382
United Kingdom - - 119 221 - - - 119 221
Europe 8 136 541 15 712 71 172 1 857 845 167 875 - 10 249 145
Asia - 2 219 098 - 3 545 679 1 080 - 5 765 857
North America - 913 199 17 932 429 7 032 152 16 000 - 25 893 780
South America - - - 2 256 824 - - 2 256 824
Australasia 21 166 980 15 165 554 16 786 384 545 - - 36 733 865
2017
Turnover from
external customers
by geographic area* 170 741 995 284 977 932 350 040 062 187 911 355 - - 993 671 344
South Africa 115 308 856 231 715 589 277 355 595 135 502 240 - - 759 882 280
African Countries** 23 995 859 37 720 685 56 954 964 19 724 109 - - 138 395 617
United Kingdom - - - 671 677 - - 671 677
Europe 6 679 111 231 750 363 129 4 033 605 - - 11 307 595
Asia - - - 5 020 413 - - 5 020 413
North America - 1 217 114 15 366 374 15 569 779 - - 32 153 267
South America - - - 7 364 899 - - 7 364 899
Australasia 24 758 169 14 092 794 - 24 633 - - 38 875 596
* The turnover information above is based on the location of the customer
** African countries are: Ghana, Zambia, Tanzania, Mozambique, Namibia, Malawi, Swaziland, Lesotho, Botswana, Nigeria, Sierra Leone, Zimbabwe, Kenya, Burundi,
Congo, Rwanda, Uganda, Cameroon, Senegal, Ethiopia, Benin, Gambia, Egypt, Gabon, Angola, Guinea, Togo, Liberia, Tunisia, C�te d'Ivoire and South Sudan.
*** The manufacturing segment includes Communications, and SAP HCM Cloud Services.
COMMENTARY
BASIS OF PREPARATION
The accounting policies and methods of computation applied in the preparation of these preliminary summarised consolidated and
company audited financial statements, which are based on reasonable judgements and estimates, are in accordance with International
Financial Reporting Standards (IFRS) and are consistent with those applied in the consolidated and company annual financial statements
for the year ended 30 June 2017. All amendments to IFRS adopted in the current year were considered insignificant to the annual
financial statements. These preliminary summarised consolidated and company audited financial statements as set out in this report
have been prepared in accordance with the framework concepts and the measurement and recognition requirements of IFRS and
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by
the Financial Reporting Standards Council, and, as a minimum, contain the information required by IAS 34 Interim Financial Reporting.
The consolidated and company annual financial statements and the summarised consolidated and company financial statements have been
prepared under the historical cost method, except for certain financial instruments initially measured at fair value and property measured at fair
value. The consolidated and company annual financial statements and the summarised consolidated and company financial statements have
been prepared on the going-concern basis and have been prepared under the supervision of Ms Nombali Mbambo CA(SA), the Chief Financial Officer.
These preliminary summarised consolidated and company audited financial statements, which have been derived from the consolidated and
company annual financial statements and with which they are consistent in all material respects, have been audited by Deloitte & Touche. Their
unmodified audit opinions on the consolidated and company annual financial statements and on the preliminary summarised consolidated
and company audited financial statements (ISA 810) together with the accompanying financial information are available for inspection at the
registered office of the company. The board of directors of Adapt IT (the Board) takes full responsibility for the preparation of this report and
that the financial information has been correctly extracted from the underlying consolidated and company audited annual financial statements,
which is available for inspection at the registered office of the company.
AUDIT REPORT
The auditor's report on the summarised consolidated and company financial statements does not necessarily report on all of 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 the audit 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 or reported on by the company's auditor.
FINANCIAL REVIEW
Turnover for the year ended 30 June 2018 increased 36% to R1,348 billion (2017: R993,7 million), organic growth from continuing operations
being 13% and acquisitive growth was 30%.
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 39% to R270,1 million (2017: R194,3 million). Profit attributable to
equity shareholders grew 38% to R122,0 million (2017: R88,1 million).
Basic earnings per share increased 32% to 77,51 cents (2017: 58,74 cents) and headline earnings per share improved by 14% to 66,97 cents from
58,76 cents.
The acquisitive growth contribution of 30% comprised mainly of the Micros South Africa hospitality group acquisition, which was consolidated
with effect from 1 July 2017. Micros has a talented team of over 300 employees providing world-class solutions for the hospitality industry.
The Hospitality division supports business critical processes through providing best-of-breed software solutions to 4 200 hotel, retail and food
and beverage outlets in 18 countries.
Adapt IT also acquired the LGR group with effect from 1 June 2018. LGR is a specialist solutions provider with an exclusive focus on the global
Telecommunications industry providing and managing end-to-end data warehouse and business intelligence systems at leading international
operators, bolstering the Communications product offering.
Adapt IT received and accepted an offer to purchase its shares in CQS GRC Solutions (Pty) Ltd (CQS GRC). The transaction was concluded through
a sale of certain CQS GRC assets and liabilities, for a consideration of R20,5 million on 31 May 2018, and Adapt IT disposing of its share in CQS
GRC on 1 June 2018, for a consideration of R22,8 million. The CQS GRC disposals resulted in the group recognising a profit on disposal net of tax
amounting to R17,6 million.
SHARE REPURCHASE
Adapt IT initiated a share buyback programme to take advantage of the Adapt IT Holdings Limited (ADI) share recently having been undervalued.
Since 1 July 2017, Adapt IT repurchased 9,3 million shares, or 5.8% of the issued shares, at a weighted average price of 784 cents per share,
utilising cash of R73 million. 1,1 million of the shares repurchased were issued as consideration for the EasyRoster acquisition, with the remainder
of the shares held as treasury shares.
APPRECIATION
Sincere thanks to our customers for entrusting us with key aspects of their businesses, where we strive to add long term sustainable business
value. The Board thanks every member of the Adapt IT team for their part in what we have achieved and their commitment to pursue the goals
we have set for the business.
CHANGES TO THE BOARD DURING THE YEAR UNDER REVIEW
There were no changes to the composition of the Board since the last report.
DIVIDENDS: ORDINARY DIVIDEND NUMBER 16
The Board has set a policy of considering a dividend once annually, after the year-end. The Board has declared a dividend on a dividend cover
ratio of four times as the group wishes to retain a significant proportion of profits for future growth activities.
The group will have sufficient working capital to meet its requirements after the dividend payment. Notice is hereby given that a gross cash
dividend of 17,10 cents per share (the dividend) has been declared for the year ended 30 June 2018, payable to shareholders recorded in the
books of the company at close of business on 21 September 2018.
In terms of the Listings Requirements of the JSE Limited the following additional information is disclosed:
- This is a dividend as defined in the Income Tax Act, 1962, and is payable from income reserves;
- The South African dividend tax (DT) rate is 20%; and
- The DT to be withheld by the company amounts to 3,42 cents per share.
- Therefore, the net dividend payable to shareholders who are not exempt from DT is 13,68 cents per share, while the gross dividend of 17,10
cents per share is payable to those shareholders who are exempt from DT;
- The issued share capital of Adapt IT at the declaration date comprises 160 539 761 ordinary shares including 8 189 244 treasury shares held
by the company's subsidiary, Adapt IT (Pty) Ltd. The issued share capital, excluding treasury shares, at the declaration date is 152 350 517;
- Adapt IT's registration number is 1998/017276/06; and
- Adapt IT's income tax reference number is 9410/002/71/2.
Shareholders are advised that the last day to trade cum-dividend will be Tuesday, 18 September 2018. Shares will trade ex-dividend as from
Wednesday, 19 September 2018, and the record date will be Friday, 21 September 2018. Payment will be made on Tuesday, 25 September 2018.
Share certificates may not be dematerialised or rematerialised during the period Wednesday, 19 September 2018 to Friday, 21 September 2018,
both days inclusive. This dividend, having been declared after 30 June 2018, has not been provided for in the financial statements for the year
ended 30 June 2018.
NOTICE OF THE ANNUAL GENERAL MEETING AND POSTING OF INTEGRATED ANNUAL REPORT
The integrated annual report will be mailed to shareholders on 31 August 2018 and is available on the group's website: http://www.adaptit.co.za from
16 August 2018.
Notice is hereby given that the 19th annual general meeting of the shareholders of Adapt IT will be held on Friday, 23 November 2018 at 09:00
at the company's office situated at No. 152, 14th Road, Midrand, Johannesburg.
The Board has determined that, in terms of section 62(3)(a), as read with section 59 of the Companies Act, No 71 of 2008, the record date for
the purposes of determining which shareholders of the company are entitled to participate in and vote at the annual general meeting is Friday,
16 November 2018. Accordingly, the last date to trade in order to be registered in the register of shareholders of the company and therefore be
eligible to participate in and vote at the annual general meeting is Tuesday, 13 November 2018.
OUTLOOK
In the 2019 financial year, Adapt IT will continue to position itself for growth in targeted sectors by accelerating organic growth through further
innovation whilst supplementing same with an acquisition strategy targeted at companies that own differentiated software that could be
additive to the Adapt IT market reach. Our software reach will be extended across the Rest of Africa and International markets, extending our
reach beyond the 53 countries we service worldwide.
BROAD-BASED BLACK ECONOMIC EMPOWERMENT
Shareholders are advised that Adapt IT's annual compliance report in terms of Section 13G(2) of the Broad-based Black Economic Empowerment
Amendment Act No 46 of 2013, is available on Adapt IT's website: http://www.adaptit.co.za.
CORPORATE INFORMATION
ADAPT IT HOLDINGS DIRECTORS SPONSOR
LIMITED Craig Chambers* (Chairman) Merchantec Capital
Incorporated in the Republic of South Sbu Shabalala (Chief Executive Officer) 2nd Floor, North Block
Africa Tiffany Dunsdon (Commercial Director) Hyde Park Corner Office Towers
Registration number 1998/017276/06 Nombali Mbambo (Chief Financial Officer) Corner 6th Road and Jan Smuts Avenue
Share code: ADI Bongiwe Ntuli* Hyde Park
ISIN: ZAE000113163 Catherine Koffman* Johannesburg
Oliver Fortuin* 2196
COMPANY SECRETARY * Independent non-executive director
Statucor (Pty) Ltd CORPORATE BANKERS
22 Wellington Road TRANSFER SECRETARY The Standard Bank of South Africa Limited
Parktown Computershare Investor Services (Pty) Ltd ABSA Bank Limited
2193 PO Box 61051, Marshalltown, 2107
T +27 (0) 11 370 5000 LEGAL REPRESENTATIVES
REGISTERED OFFICE F +27 (0) 11 688 5200 Bousfield Incorporated
Adapt IT Johannesburg Campus Michalsons
152 14th Road AUDITORS
Noordwyk Deloitte & Touche ADAPT IT WEBSITE
Midrand http://www.adaptit.co.za
South Africa
SOUTH AFRICAN OFFICES
GAUTENG KWAZULU-NATAL WESTERN CAPE
Adapt IT Johannesburg Campus Rydall Vale Office Park Great Westerford
152 14th Road 5 Rydall Vale Crescent 3rd Floor
Noordwyk La Lucia Ridge 240 Main Road
Midrand Durban Rondebosch
South Africa T +27 (0) 31 514 7300 Cape Town
T +27 (0)10 494 0000 F +27 (0) 86 602 8961 T +27 (0) 21 200 0480
INTERNATIONAL OFFICES
MAURITIUS AUSTRALIA BOTSWANA
Building 10 Adapt IT Australia Fairscape Precinct
Clarens Field Business Park 5/15 Queen Street Plot 70667
Riviere Noire Road Melbourne Fairgrounds Office Park
Bambous, 90203 VIC 3000 Building 2 Floor 5
Mauritius Australia Gaborone
T +230 452 9349 T +61 38 611 5401 Botswana
T +267 316 7456
F +267 316 7457
IRELAND KENYA NEW ZEALAND
City Junction Business Park Adapt IT Solutions Limited Level 6
1st Floor, Chase House Kilimani Court Grand Annexe Tower One
Northern Cross, Malahide Rd No 8 Kilimani Road 84 Boulcott Street
Dublin 17 Nairobi Wellington, 6011
Ireland T +254 713 088 068 New Zealand
T +353 1 687 3732 T: +64 4 931 1480
Date: 16/08/2018 01:38:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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