Adcorp Trading Statement

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 AND OPERATIONAL UPDATE FOR THE HALF YEAR ENDED 31 AUGUST 2018

Trading statement

In terms of the Listings Requirements of the JSE Limited, companies are required to publish a trading statement as soon as there is a reasonable degree of certainty 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 therefore advised that the results for the period ended 31 August 2018 are expected to be as follows:

  • Total basic earnings per share of between 82 cents and 100 cents per share compared to the total basic loss per share of 120.7 cents for the period ended 30 August 2017. This amount arises from both continuing and discontinued operations as follows:
    • Basic earnings per share from continuing operations of between 88 cents and 95 cents per share compared to the prior period basic loss per share from continuing operations of 49.0 cents.
    • Basic loss per share from discontinued operations of between 0.29 cents and 0.61 cents per share compared to the prior period basic loss per share from discontinued operations of 71.7 cents which is an improvement between 100% and 99%.
  • Total headline earnings per share of between 85 cents and 93 cents compared to the total headline loss per share of 40.1 cents for the period ended 30 August 2017. This amount arises from both continuing and discontinued operations as follows:
    • Headline earnings per share from continuing operations of between 87 cents and 90 cents compared to the prior period headline loss per share from continuing operations of 28.2 cents.
    • Headline loss per share from discontinued operations of between 0.29 cents and 0.61 cents per share compared to the prior period headline loss per share from discontinued operations of 11.9 cents which is an improvement between 98% and 95%.

Operational update

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.

The Australia businesses have continued to provide a strong performance, with an 11% improvement in EBITDA in Australian Dollars. This increase was dampened by the impact of exchange rate movements resulting in a net 3% increase in South African Rand.

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 improved EBITDA. Both the Support Services and Training businesses have experienced improved performance, with the latter no longer trading at a loss.

Total EBITDA for the period to August 2018 will range between R200 million and R220 million compared to R95 million in the period to August 2017.

The improved EBITDA position, together with the focus on liquidity and working capital management has strengthened the cash position of the Group. Cash generated by operations was R360 million compared to R122 million in the period to August 2017. The closing cash at bank balance was R599 million compared to negative R19 million at 31 August 2017. This has also resulted in a reduction in the net debt position to R632 million (31 August 2017: R1.294 billion) and a net cost of funding reduction across the Group.

The financial results on which this trading statement have been based have not been reviewed or reported on by the Group`s external auditors. The financial results of the Group are expected to be published on or about 15 October 2018.

27 September 2018
Bryanston

Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd

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