Adcorp Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1974/001804/06)
Share code: ADR & ISIN: ZAE000000139
("Adcorp" or "the Company" or "the Group")
TRADING STATEMENT FOR THE HALF YEAR ENDED 31 AUGUST 2016
In terms of the Listings Requirements of the JSE Limited, companies are required to publish a trading statement as soon as they are reasonably certain that the financial results for the period to be reported upon next will differ by at least 20% from the financial results for the previous corresponding period.
Adcorp shareholders are advised that for the half year ended 31 August 2016 earnings per share ("EPS") are expected to decrease by 8% to 12% and headline earnings per share ("HEPS") are expected to decrease by 36% to 40%, compared to the corresponding period. EPS and HEPS are therefore expected to be between 77 cents and 80 cents per share and between 75 cents and 80 cents per share, respectively, compared to EPS of 87.4 cents and HEPS of 125.2 cents in the corresponding period.
The expected decrease in EPS and HEPS is primarily due to the negative affect of an unrealised foreign exchange year-on-year swing from gains to losses of R40 million as well as the impact of once-off transaction costs.
Foreign exchange gains and losses emanate primarily from the Group's African operations whereby the Group's South African Rand reporting currency has strengthened against many of the underlying currencies of those African countries where the Group has operations.
The first full period inclusion of the lower than expected contribution from Dare and the underperformance from the group's African operations (excluding South Africa) also contributed to the lower year-on-year performance.
On a normalised trading position normalised earnings per share for the half year ended 31 August 2016 are expected to be between 17% and 20% lower compared to the corresponding, comparative reporting period. As a result, normalised earnings per share are expected to be between 126 cents and 131 cents, compared to 157.3 cents in the corresponding period.
Excluding the negative impact of the unrealised foreign exchange swing from gains to losses described above, with the exception of those businesses directly impacted by depressed global oil prices namely, the Group's African operations (excluding South Africa) as well as Dare, general trading conditions have improved compared to the prior financial year whereby previous volume losses resulting from major changes to South African labour laws continue to recover well. Strong performances have also been achieved by the Group's Australian subsidiaries, Paxus and LSA.
Accordingly, excluding the negative impact of the unrealised foreign exchange swing from gains to losses, the Group's normalised trading profits are expected to reflect modest year-on-year growth compared to the corresponding, comparative reporting period.
The Group's cash generative performance remains sound. In this regard, the Group has been able to de-gear its net debt position compared to the previous financial year end's debt to equity ratio.
The financial results on which this trading statement have been based have not been reviewed or reported on by the Company`s auditors. The financial results of the Company will be published on or about 20 October 2016.
For further information, please contact:
Chief Financial Officer
Tel: (011) 244-5316
14 October 2016
Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd