| Thu 8 May 2008, 9:00 | | ADI - ADAPTIT HOLDINGS LIMITED - Audited results f |
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ADI
ADI
ADI - ADAPTIT HOLDINGS LIMITED - Audited results for the year ended 29 February
2008 and final dividend declaration
ADAPTIT HOLDINGS LIMITED
(Formerly known as InfoWave Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1998/017276/06)
Share code: ADI ISIN Code: ZAE000113163
("AdaptIT" or "the group" or the company")
AUDITED RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2008 AND FINAL DIVIDEND
DECLARATION
- 17% INCREASE IN REVENUE
- 20% INCREASE IN PROFIT FROM OPERATIONS
- 20% INCREASE IN PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS
- 16% INCREASE IN EARNINGS PER SHARE
- RETURN ON EQUITY 32%
Income statement for the year ended 29 February 2008
GROUP GROUP
2008 2007
R R
REVENUE 57 650 319 49 299 739
Cost of sales (27 136 893) (23 547 499)
Gross profit 30 513 426 25 752 240
Administrative, selling and other (20 784 514) (17 667 839)
costs
Profit from operations (before 9 728 912 8 084 401
interest)
Interest income 377 007 193 771
Preference dividend received 366 894 266 988
Loss on sale/revaluation of listed
preference shares (217 102) (906 462)
Finance costs (2 839) (10 252)
Profit from associate 286 527 535 671
Profit before taxation 10 539 399 8 164 117
Taxation (3 213 836) (2 378 054)
Profit for the year after taxation 7 325 563 5 786 063
Attributable to minorities (223 715) 151 215
Profit for the year attributable to
equity shareholders of the company 7 101 848 5 937 278
Earnings per share (cents) 7,97 6,87
Fully diluted earnings per share 7,96 6,85
(Cents)
Reconciliation between earnings and
headline earnings:
Earnings attributable to ordinary
shareholders 7 101 848 5 937 278
Less profit on sale of property and
equipment - (21 157)
And loss on sale of investment in
listed preference shares 181 220 -
Headline earnings 7 283 068 5 910 121
Headline earnings per share 8.17 6.84
Balance sheet as at 29 February 2008
GROUP GROUP
2008 2008
R R
ASSETS
Non-current assets 14 152 697 4 003 777
Property and equipment 2 332 685 1 092 188
Intangible assets 586 596 1 343 566
Investment in associate company - 793 222
Goodwill 10 407 854 58 709
Deferred taxation 825 562 716 092
Current assets 21 352 691 15 748 679
Accounts receivable 13 432 836 8 099 588
Listed preference shares - 3 660 282
Current portion of loan to associate
company - 117 228
Cash resources 7 919 855 3 871 580
Total assets 35 505 388 19 752 455
EQUITY AND LIABILITIES
Equity attributable to ordinary
shareholders 27 379 771 15 942 706
Issued capital 9 745 8 621
Share premium 8 112 296 261 867
Share-based payment reserve 672 384 477 832
Accumulated profit 18 585 346 15 194 386
Minority interest 663 987 440 340
Total equity 28 043 758 16 383 046
Current liabilities 7 461 630 3 369 409
Accounts payable 4 959 137 2 095 425
Provisions 1 322 747 962 849
Taxation payable 1 179 746 311 135
Total equity and liabilities 35 505 388 19 752 455
Statement of changes in equity for the year ended 29 February 2008
ACCU-SHARE-
SHARE SHARE MULATED BASED
CAPITAL PREMIUM PROFIT PAYMENT
RESERVE
R R R R
Balance at 28 February 8 582 460 924 12 446 569 463 216
2006
Subsidiary acquired - - - -
Profit for the year - - 5 937 278 -
Total recognised income
and expense 8 582 460 924 18 383 847 463 216
Shares issued during the
year 120 247 694 - -
Shares repurchased
during the year (81) (446 - -
751)
Recognition of share-
based payment - - - 14 616
Dividend paid - - (3 189 -
461)
Balance at 28 February 8 621 261 867 15 194 386 477 832
2007
Profit for the year - - 7 101 848 -
Total recognised income
and 8 621 261 867 22 296 234 477 832
expense
Shares issued during the
year 1 124 7 850 - -
429
Shares repurchased and
cancelled during the - - - -
year
Recognition of share-
based payment - - - 194 552
Dividend paid - - (3 710 -
888)
Balance at 29 February 9 745 8 112 18 585 346 672 384
2008 296
ATTRIBUTABLE
TO EQUITY MINORITY TOTAL
HOLDERS INTEREST
R R R
Balance at 28 February 2006 13 379 291 - 13 379 291
Subsidiary acquired - 591 555 591 555
Profit for the year 5 937 278 (151 215) 5 786 063
Total recognised income and
expense 19 316 569 440 340 19 756 909
Shares issued during the year 247 814 - 247 814
Shares repurchased during the
year (446 832) - (446 832)
Recognition of share-based
payment 14 616 - 14 616
Dividend paid (3 189 461) - (3 189
461)
Balance at 28 February 2007 15 942 706 440 340 16 383 046
Profit for the year 7 101 848 223 715 7 325 563
Total recognised income and
expense 23 044 554 664 055 3 708 609
Shares issued during the year 7 851 553 - 7 851 553
Shares repurchased and
cancelled during the year - (68) (68)
Recognition of share-based
payment 194 552 - 194 552
Dividend paid (3 710 888) - (3 710
888)
Balance at 29 February 2008 27 379 771 663 987 28 043
758
Cash flow statement for the year ended 29 February 2008
GROUP 2008 GROUP 2008
R R
CASH FLOWS FROM OPERATING ACTIVITIES
Profit from operations (before
interest and dividends) 9 728 912 8 084 401
Adjustment for:
Share-based payment expense 194 552 14 616
Profit on sale of equipment - (27 157)
Depreciation and amortisation 1 530 328 848 473
Cash generated from operations, before
working capital changes 11 453 792 8 920 333
Working capital changes
Increase in receivables (3 548 714) (211 702)
Increase/(decrease) in payables and
provisions 2 512 483 (1 627 602)
Cash generated from operations 10 417 561 7 081 029
Taxation paid (2 923 175) (2 792 856)
Interest income 377 007 193 771
Finance costs (2 839) (10 252)
Preference dividend received 366 894 266 988
Dividend paid to shareholders (3 710 888) (3 189 461)
Net cash inflow from operating 4 524 560 1 549 219
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of equipment on expansion (1 253 779) (751 772)
Acquisition of intangible assets (1 806) (833 826)
Proceeds on disposal of equipment - 37 522
Proceeds on sale of preference shares 3 443 180 -
Decrease/(increase) in investment in
associate 335 337 (52 127)
Acquisition of subsidiary (4 315 849) (640 691)
Proceeds on issue of subsidiary shares - 261 340
Net cash outflow from investing (1 792 917) (1 979 554)
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of company`s shares - (446 832)
Proceeds of share issues 124 075 247 814
Net cash inflow/(outflow) from
financing activities 124 075 (199 018)
Net increase/(decrease) in cash 2 855 718 (629 353)
resources
Cash resources at beginning of year 3 871 580 4 254 175
Cash resources on acquisition of
subsidiaries 1 192 557 246 758
Cash resources at end of year 7 919 855 3 871 580
Report to stakeholders for the year ended 29 February 2008
Strategy
In line with our stated acquisitive diversification and growth strategy, a
merger with associate, Adapt-IT (Pty) Limited was effected in the last quarter
of the 2008 financial year.
The listed holding company was re-named AdaptIT Holdings Limited. The
competencies of the group include Application Solutions, Outsourcing and
Consulting across Oracle, Microsoft and Open Source technologies. The
integration project is well under way with minimal disruption to normal
operations. The group is firmly focused on the health and organic growth of the
existing lines of business, whilst pursuing our vision of expanding and
diversifying into new markets now open to us.
Financial results
Revenue grew 17% over the prior year to R57,7 million. Operating profit grew by
20%. The core sugar business performed well with strong demand for project work.
A new foreign sugar client was won, extending the reach of the group beyond
Africa. The complexities of foreign language, a foreign numeric system and
foreign currencies were successfully addressed in this project.
It is very pleasing to report that our subsidiary ApplyIT (Pty) Ltd ("ApplyIT")
acquired on 1 March 2006, contributed a profit after tax of R0,7 million to the
group. ApplyIT has won some significant new clients implementing solutions in
the supply chain, safety and plant operations domains during the year. ApplyIT
as a Gold Certified partner is responsible for all Microsoft offerings of the
group. ApplyIT has excellent prospects and we are confident of its
sustainability going forward.
Adapt-IT (Pty) Limited performed well in the year under review. Three months of
its performance are consolidated in these results. The full year effect will be
reflected in the group`s results in the next financial year.
Profit attributable to ordinary shareholders grew 20% to R7,1 million (2007:
R5,9 million) while earnings per share grew by 16% to 7,97 cents per share.
Operations
Operationally the group has faced some challenges, the key one being skills
retention in the face of a severe IT skills shortage in the market.
Notwithstanding this we have a large core team of highly committed and long-
serving people who have seen us through this challenge for which we thank them
sincerely. Staff attrition has reduced and there is ongoing focus on retention
strategies.
Basis of preparation
The abridged group audited results for the year ended 29 February 2008 are
prepared in accordance with International Financial Reporting Standards
("IFRS"), IAS 34: Interim Financial Reporting, the Listing Requirements for the
JSE Limited and the Companies Act of South Africa. The accounting policies
applied are consistent with those of the previous financial year.
Audit report
An unqualified auditors` report by the company`s auditors, Deloitte and Touche
included in the annual financial statements is available for inspection at the
Company`s registered office.
Dividends
Ordinary dividend number 5 of 4,29 (2007: 3,67) cents per share was paid to
shareholders on 11 June 2007.
The company has declared a sixth annual ordinary dividend of 4,43 cents per
share which will be payable to shareholders on Tuesday, 17 June 2008. This
represents a dividend cover of 1,8 times.
The board intends to increase the dividend cover in the forthcoming year in
order to retain a greater proportion of retained income for future growth
initiatives.
The board
Pursuant to the transaction with Adapt-IT (Pty) Limited, Sbu Shabalala was
appointed to the board as CEO on 31 January 2008 and Tiffany Dunsdon became
Commercial Director.
BEE
The group is firmly committed to genuine broad-based transformation across all
aspects of the Department of Trade and Industry`s Codes of Good Practice. We
obtained an independent broad-based rating from Empowerdex, in which we were
rated as a Level 4 contributor to broad-based black economic empowerment which
allows our customers to recognise 100% of their spend with us for their BEE
procurement measurement purposes. We are rated in the top 20 most empowered
companies on the JSE according to the Financial Mail`s Top Empowerment Companies
survey in April 2008.
Directors` report and approval of the annual financial statements
Responsibility for annual financial statements
The directors are responsible for the preparation, integrity and objectivity of
the annual financial statements and other information contained in the annual
report. The annual report is expected to be distributed to shareholders on 8 May
2008.
In discharging this responsibility, the group maintains suitable internal
control systems and adequate accounting records to provide reasonable assurance
that assets are safeguarded and that transactions are executed and recorded in
accordance with group policies. Appropriate accounting policies supported by
reasonable and prudent judgements have been applied consistently with those of
the prior year.
To the best of their knowledge and belief, based on the above, the directors are
satisfied that no material breakdown in the operating of the systems of internal
control has occurred during the year under review, and the directors believe
that the business will be a going concern for the year ahead.
Post balance sheet events
There are no material events between the balance sheet date and the date of
these results.
Share capital
357 514 shares were issued in respect of share options exercised by current
employees in the year under review. The merger with Adapt-IT (Pty) Limited
resulted in a further 10 883 772 shares being issued.
The number of issued shares consequently increased, as a result of the above
transactions, from 86 217 180 to 97 458 466 shares.
Investment in subsidiaries and associates
As announced on 21 November 2007, the company acquired 100% interest in
Microzone Investment Holdings (Pty) Limited which holds the remaining 67% of
Adapt-IT (Pty) Ltd, making it a 100% subsidiary, for a purchase consideration of
R12 043 327 and a further 7.5% in ApplyIT, for a nominal consideration,
resulting in an effective interest of 74.4%.
Aggregate profit before tax from subsidiaries is R10 478 043 (2007: R8 020 373).
Prospects
The prospects of the group for the year ahead are good. We will focus on adding
value to our existing clients by broadening our service and product offerings to
them. We will selectively expand into new markets where we have a competitive
advantage and the required competencies to succeed.
Appreciation
We express our appreciation to our customers for the success of our committed
long-standing relationships with them. We remain fervently committed to serving
them. We also pay tribute to all of our employees for their dedication and hard
work. We thank them for their spirit of determination to succeed in delivery to
our customers.
RP Collis
Non-executive chairman
S Shabalala
Chief executive officer
Ordinary dividend number 6
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 1,8
times as the group will have sufficient working capital to meet its requirements
after the dividend payment. Notice is hereby given that a cash Dividend of 4.43
cents per share ("the dividend") has been declared, payable to shareholders
recorded in the books of the company at close of business on Friday, 13 June
2008.
The salient dates relating to the cash dividend are as follows:
2008
Last day to trade cum dividend Friday, 6 June
Shares commence trading ex dividend Monday, 9 June
Record date Friday, 13 June
Payment of the dividend Tuesday, 17 June
Share certificates may not be dematerialised or rematerialised during the period
Monday, 9 June 2008 to Friday, 13 June 2008, both days inclusive. This dividend,
having been declared after the year-end, has not been provided for in the
financial statements.
Mount Edgecombe
8 May 2008
Registered office
Gleneagles Park
10 Flanders Drive
Mount Edgecombe
4300
Postal address
PO Box 2225
MECC
Mount Edgecombe
4301
Transfer secretaries
Computershare Investor Services (Pty) Limited
PO Box 61051
Marshalltown
2107
Sponsor
Sasfin Capital
A division of Sasfin Bank Limited
Sasfin Place
13 - 15 Scott Street
Waverley
2090
Directors:
RP Collis (Chairman), S Shabalala (CEO), T Dunsdon, BR Carrilho, MCB Lionnet, CL
von Pannier, P Aposporis, Dr AB Ravno, W Shuenyane
Date: 08/05/2008 09:00:01 Produced by the JSE SENS Department.
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