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ADI
ADI
ADI - Adaptit Holdings Limited - Unaudited condensed interim consolidated group
results for the six months ended 31 December 2011
ADAPTIT HOLDINGS LIMITED
Registration number 1998/017276/06
Share code: ADI
ISIN: ZAE000113163
("Adapt IT" or "the Group")
UNAUDITED CONDENSED INTERIM CONSOLIDATED GROUP RESULTS for the six months ended
31 December 2011
INTERIM REPORT TO THE STAKEHOLDERS
8% increase in revenue
12% increase in operating profit
80% increase in earnings per share
74% increase in headline eps
FINANCIAL REVIEW
Revenue increased by 8% to R92,3 million (2010: R85,1 million) and profit from
operations was 12% higher at R7,2 million (2010: R6,5 million).
Interim earnings per share (EPS) improved by 80% to 6,19 cents per share (2010:
3,43 cps) with interim headline EPS (HEPS) 74% higher at 6,19 cps (2010: 3,56
cps). The minority buyouts of the previous financial year made a significant
positive contribution to earnings growth.
ITS Holdings (Pty) Limited increased its revenue and profitability through its
focus on the higher and further education sector whilst ApplyIT (Pty) Limited
improved its performance through securing offshore clients in the resources
sector. The continued tough trading conditions in the sugar industry negatively
impacted on the profitability of Adapt IT (Pty) Limited however, the environment
is anticipated to improve going forward.
STRATEGY AND PROSPECTS
The Adapt IT Group continued to pursue its long-term strategy to deliver
sustainable above average returns to shareholders by focusing on a combination
of organic and acquisitive growth.
The acquisition of BI Planning Services (Pty) Limited ("BiPS"), effective 1
January 2012, further enhances the Group`s product offerings and provides access
to customers within the Financial Services Sector. The Group will seek further
significant earnings enhancing acquisitions.
The Group continues to grow its footprint in the broader African and
International markets and maintains its tight focus on improving profit margins,
seeking greater operational efficiencies and engaging positively with all its
stakeholders in order to meet their expectations.
We envisage the second half of the year to remain challenging, however, we are
favourably positioned to take advantage of the opportunities presented by our
markets.
APPRECIATION
We express our thanks to our long-standing and new customers, partners and
service providers for their continued support and loyalty to the Group. We also
thank the Adapt IT Group employees for their continuous dedication and hard work
in serving our customers.
Dr AB Ravno Sbu Shabalala
Independent non-executive chairman Chief executive officer
07 February 2012
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2011 2010 2011
R`000 R`000 R`000
Revenue 92 265 85 129 180 906
Turnover 88 671 80 900 173 532
Cost of sales (45 436) (43 435) (90 107)
Gross profit 43 235 37 465 83 425
Administrative, selling and other costs (37 221) (33 209) (71 505)
Other income 1 220 2 220 3 128
Profit from operations (before interest) 7 234 6 476 15 048
Interest received 2 373 2 009 4 246
Interest paid (361) (338) (1 101)
Profit before taxation 9 246 8 147 18 193
Taxation (3 160) (2 649) (4 947)
Normal taxation (2 879) (2 326) (4 624)
Secondary taxation on companies (281) (323) (323)
Profit for the period 6 086 5 498 13 246
Exchange differences on translation
of foreign operations 300 (138) 135
Other comprehensive income for the
period, net of tax 300 (138) 135
Total comprehensive income for the
period, net of tax 6 386 5 360 13 381
Profit for the period
Attributable to equity holders of
the parent 6 086 3 297 11 045
Attributable to non-controlling interests - 2 202 2 202
6 086 5 499 13 247
Total comprehensive income for the period
Attributable to equity shareholders
of the parent 6 386 3 227 11 247
Attributable to non-controlling interests - 2 133 2 133
6 386 5 360 13 380
Headline earnings
Profit attributable to ordinary
shareholders 6 086 3 297 11 045
(Profit)/Loss on sale of property and
equipment (1) 123 101
Headline earnings 6 085 3 420 11 146
Number of ordinary shares in issue (`000) 98 354 98 307 98 354
Weighted average ordinary shares in
issue (`000) 98 354 96 113 97 246
Headline earnings per ordinary share (cents) 6,19 3,56 11,46
Earnings per ordinary share (cents) 6,19 3,43 11,36
Fully diluted earnings per share (cents) 6,19 3,43 11,36
Return on equity (%) 13,28 8,87 21,87
Return on assets (%) 3,65 2,41 9,59
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 December 31 December 30 June
2011 2010 2011
R`000 R`000 R`000
ASSETS
Non-current assets
Property and equipment 20 796 22 470 21 533
Intangible assets 1 384 103 1 452
Goodwill 10 408 10 408 10 408
Deferred taxation asset 13 088 8 456 10 475
45 676 41 437 43 868
Current assets
Trade and other receivables 110 517 80 537 43 068
Cash and cash equivalents 10 698 14 686 18 678
121 215 95 223 61 746
Total assets 166 891 136 660 105 614
EQUITY AND LIABILITIES
Capital reserves
Issued capital 10 10 10
Share premium 8 530 8 548 8 650
Share-based payment reserve - 893 -
Foreign currency translation reserve 416 (156) 116
Retained earnings 42 668 30 736 39 376
Total equity 51 624 40 031 48 152
Non-current liabilities
Deferred taxation liability 1 916 1 844 4 171
Interest-bearing borrowings 7 657 17 842 1 576
Current liabilities
Trade and other payables 28 489 20 110 19 406
Deferred income 70 602 51 521 31 076
Interest-bearing borrowings 6 603 5 312 1 233
Total equity and liabilities 166 891 136 660 105 614
Net asset value (`000) 51 624 40 031 48 152
Net asset value per ordinary share (cents) 52,49 40,72 48,96
Liquidity ratio (times) 1,15 1,23 1,19
Solvency ratio (times) 1,45 1,41 1,84
Market price per share
Close (cents) 99 61 70
High (cents) 100 62 79
Low (cents) 60 45 45
Capital expenditure for the period 890 1 254 1 244
Capital expenditure authorised 3 725 1 778 4 614
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 December 31 December 30 June
2011 2010 2011
R`000 R`000 R`000
Cash flows from operating activities
Profit from operations (before
interest and dividends) 7 234 6 476 15 048
Adjustment for:
Provision for leave pay and bonus 132 (317) 1 644
Non-cash flow items - - (64)
(Profit)/Loss on sale of equipment (1) 123 101
Depreciation and amortisation 1 785 1 441 2 993
Cash generated from operations,
before working capital changes 9 150 7 723 19 722
Working capital changes:
(Increase)/Decrease in receivables (67 449) (34 688) 2 781
Increase/(Decrease) in payables 44 364 14 420 (4 835)
Cash (utilised in)/generated
from operations (13 935) (12 545) 17 667
Taxation paid (4 245) (4 522) (10 666)
Net interest income 2 012 1 671 3 145
Dividend paid to shareholders (2 794) (3 264) (3 264)
Net cash (outflow)/inflow from
operating activities (18 962) (18 660) 6 882
Cash flow from investing activities
Acquisition of equipment (769) (1 254) (3 268)
Proceeds on disposal of property
and equipment - 11 17
Acquisition of subsidiary - (19 127) (19 127)
Repayment of subsidiary loan - - (3 656)
Net cash outflow from investing activities (769) (20 370) (26 034)
Cash flow from financing activities
Proceeds from borrowings 12 462 19 127 11 201
Repayment of borrowings (1 011) (4 399) (12 633)
Net cash inflow/(outflow) from
financing activities 11 451 14 728 (1 432)
Net decrease in cash resources (8 280) (24 302) (20 584)
Exchange differences on translation 300 (138) 135
Cash resources at beginning of period 18 678 39 126 39 126
Cash resources at end of period 10 698 14 686 18 6785
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
Share-based currency
Share Share payment translation
capital premium reserve reserve
R`000 R`000 R`000 R`000
Balance at 30 June 2010 10 7 196 893 (86)
Profit for the period - - - -
Other comprehensive income - - - (70)
Total comprehensive income 10 7 196 893 (156)
Issue of shares - 1 352 - -
Acquisition of
non-controlling interest
in subsidiary - - - -
Dividends - - - -
Balance at 31 December 2010 10 8 548 893 (156)
Balance at 30 June 2011 10 8 650 - 116
Profit for the period - - - -
Other comprehensive income - - - 300
Total comprehensive income 10 8 650 - 416
Issue of shares - (120) - -
Dividends - - - -
Balance at 31 December 2011 10 8 530 - 416
Attributable to
Retained equity holders Minority Total
earnings of the parent interest equity
R`000 R`000 R`000 R`000
Balance at 30 June 2010 34 666 42 679 7 825 50 504
Profit for the period 3 297 3 297 2 202 5 500
Other comprehensive income - (70) (68) (138)
Total comprehensive
income 37 963 45 906 9 959 55 866
Issue of shares - 1 352 - 1 352
Acquisition of
non-controlling
interest in subsidiary (3 963) (3 963) (9 959) (13 922)
Dividends (3 264) (3 264) - (3 264)
Balance at 31 December
2010 30 736 40 031 - 40 032
Balance at 30 June 2011 39 376 48 152 - 48 152
Profit for the period 6 086 6 086 - 6 086
Other comprehensive income - 300 - 300
Total comprehensive
income 45 462 54 538 - 54 538
Issue of shares - (120) - (120)
Dividends (2 794) (2 794) - (2 794)
Balance at 31 December
2011 42 668 51 624 - 51 624
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation and corporate information
The unaudited condensed consolidated interim financial statements of the Group
for the six months ended 31 December 2011 were prepared in accordance with IAS
34-Interim Financial Reporting, the Companies Act of South Africa and the
Listings Requirements of the JSE Limited. The accounting policies applied in the
preparation of these unaudited condensed interim consolidated financial
statements are in accordance with International Financial Reporting Standards
and are consistent with those applied in the annual financial statements for the
year ended 30 June 2011.
The unaudited condensed interim consolidated financial statements do not include
all the information and disclosures required in the annual financial statements
and should be read in conjunction with the Group`s annual financial statements
as at 30 June 2011.
The interim results have not been audited or reviewed by the Group auditors.
The Adapt IT Group is incorporated and domiciled in South Africa.
2. Subsequent events
On 1 January 2012, the Group acquired 100% of the issued share capital of BI
Planning Services (Pty) Limited ("BiPS"). The purchase consideration of R17,25m
comprised R8,63 million settled in Adapt IT Holdings Limited shares (12 182 460
shares issued at the 30 day volume weighted average traded price of 70,8 cents
per share) and cash of R8,62 million.
BiPS develops and implements tailored business intelligence solutions for the
financial services, healthcare and other sectors.
The fair value of the total identifiable net assets of BiPS on the acquisition
date is R2 million and the difference of R15,25 million between purchase
consideration and the fair value of the interest acquired will be recognised in
goodwill.
3. Dividends
Ordinary dividend number 9 of 2,84 cents per share was paid to shareholders on
24 October 2011. It is group policy to consider declaration of dividends at the
end of the financial year and not at the interim reporting date.
4. Interest-bearing borrowings
Non-current and current liabilities
Included under non-current and current liabilities are interest-bearing
borrowings from Investec Private Bank and IBM Global Finance that were initially
obtained in prior periods to fund the purchase of the remaining 49% interest in
ITS and to fund certain capital expenditure respectively.
At the end of the previous financial year, excess cash resources were used to
reduce the facilities and in the current period, these facilities have been used
to drawn down funds.
5. Segment information
For management purposes, the group is organised into the following segments:
Adapt IT - implementation and maintenance of ERP and niche software, systems
integration and information management solutions;
ITS - design, development and implementation of higher education and further
education and generic software solutions;
ApplyIT - design, development and implementation of safety, health, environment,
quality and plant operations management software solutions; and
Other - includes group head office activities.
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.
The following tables present revenue and profit information regarding the
group`s operating segments for the six months ended 31 December 2011 and 31
December 2010 respectively:
Adapt IT ITS ApplyIT
R`000 R`000 R`000
Six months ended
31 December 2011
Revenue
Third party 36 187 48 946 7 132
Intersegment 117 - -
Total revenue 36 304 48 946 7 132
Revenue includes sales to customers,
hardware and software sales.
Segment profit/(loss) before tax 1 747 6 905 884
Six months ended
31 December 2010
Revenue
Third party 34 756 43 552 6 285
Intersegment - - (345)
Total revenue 34 756 43 552 5 941
Segment profit/(Loss) before tax 2 834 6 529 203
Adjust-
ments
and
elim-
Other inations Total
R`000 R`000 R`000
Six months ended
31 December 2011
Revenue
Third party - - 92 265
Intersegment 2 580 (2 697) -
Total revenue 2 580 (2 697) 92 265
Segment profit/(loss) before tax (186) (104) 9 246
Six months ended
31 December 2010
Revenue
Third party 983 (102) 85 474
Intersegment - - (345)
Total revenue 983 (102) 85 129
Revenue includes sales to customers,
hardware and software sales.
Segment profit before tax (1 317) (102) 8 147
Adapt IT ITS ApplyIT
R`000 R`000 R`000
Segment assets
31 December 2011 75 280 144 642 8 491
31 December 2010 67 548 125 874 2 589
Adjust-
ments
and
elim-
Other inations Total
R`000 R`000 R`000
Segment assets
31 December 2011 44 000 (105 522) 166 891
31 December 2010 48 601 (107 952) 136 660
The Condensed Interim Consolidated Group Results were prepared by:
Siboniso Shabablala
Financial Director
Adapt IT Holdings
CORPORATE INFORMATION
Directors
Dr A B Ravno* (Chairman)
Sbu Shabalala (Chief executive officer)
T Dunsdon (Commercial director)
Siboniso Shabalala (Financial director)
C Chambers*
B Ntuli*
T Dingaan*
M Nhlapo*
*Independent non-executive director
Registered office
5 Rydall Vale Office Park,Rydall Vale Crescent, La Lucia Ridge, Durban, 4051
PO Box 5207, Rydall Vale Office Park, La Lucia Ridge, 4019
Transfer secretary
Computershare Investor Services (Proprietary) Limited, 70 Marshall Street,
Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Sponsor
Merchantec (Proprietary) Limited, 2nd Floor, North Block, Hyde Park Office
Tower, Johannesburg, 2196
PO Box 41480, Craighall, 2024
Auditors
Ernst & Young Inc.
1 Pencarrow Crescent, Pencarrow Park, La Lucia Ridge, Durban North, 4051
PO Box 859, Durban, 4000
Company Secretary
Statucor (Proprietary) Limited
Website
www.adaptit.co.za
Date: 08/02/2012 16:32:02 Produced by the JSE SENS Department.
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