Consolidated segment results

FOR THE YEAR ENDED 31 JULY 2021

The reportable segments of the Group have been identified based on the nature of the business activities. The business is managed in three major segments and this remains consistent with the prior year. This basis is representative of the internal structure of the Group for management purposes. The Chief Operating Decision Maker ("CODM") is the Group Executive Committee.

iOCO is an ICT business focused on traditional and cutting-edge technology system integration with a range of solutions, products and services across the ICT value chain.

NEXTEC consists of various businesses focused on business process outsourcing and intelligent infrastructure at various stages of incubation for growth and scaling.

IP comprises a group of high potential intellectual property companies with scaled technology ready to take to market with partners.

The CODM is not presented with secondary information in the form of geographic information and as a result, geographic information is not disclosed in the segment results. Liabilities and assets are also not regularly provided to the CODM and are not disclosed in the segment results.

Adjusted EBITDA is defined as profit/loss before depreciation, amortisation, share-based payment expense, gain/loss on disposal of subsidiaries and equity-accounted investments, impairments of non-financial assets, share of profit/loss of equity-accounted investments, remeasurement gain/losses on vendors for acquisition liability, interest income, interest expense and current and deferred tax.

Revenue, gross profit and core normalised EBITDA


	2021							Restated* 2020
Figures in Rand thousand	iOCO	NEXTEC	IP	Recon- ciliation^	Total	iOCO	NEXTEC	IP	Recon- ciliation^	Total
External	4 944 066	1 898 114	1 040 243	–	7 882 423	6 699 614	3 375 968	1 201 121	–	11 276 703

Hardware sales	259 522	471 627	15 666	–	746 815	585 615	424 430	65 586	–	1 075 631
Services	4 302 457	1 342 858	1 007 164	–	6 652 479	5 314 543	2 879 843	1 117 557	–	9 311 943
Software/licence contracts	340 469	25 919	17 169	–	383 557	768 026	30 606	17 744	–	816 376
Rentals	41 618	57 710	244	–	99 572	31 430	41 089	234	–	72 753

Intersegment	268 545	52 497	2 239	(323 281)	–	222 948	154 442	11 180	(388 570)	–

Hardware sales	52 303	2 055	–	(54 358)	–	37 702	1 854	481	(40 037)	–
Services	207 471	50 442	2 239	(260 152)	–	182 722	152 588	10 699	(346 009)	–
Software/licence
contracts	5 037	–	–	(5 037)	–	–	–	–	–	–
Rentals	3 734	–	–	(3 734)	–	2 524	–	–	(2 524)	–

Gross revenue	5 212 611	1 950 611	1 042 482	(323 281)	7 882 423	6 922 562	3 530 410	1 212 301	(388 570)	11 276 703
Gross profit	1 386 820	355 557	603 851	(145 775)	2 200 453	1 684 352	527 266	480 722	(223 441)	2 468 899
Gross profit (%)	26.6%	18.2%	57.9%	–	27.9%	24.3%	14.9%	39.7%	–	21.9%

*	Comparative revenue amounts have been disaggregated to better reflect the relationship between the revenue streams and the reportable segments.
^	Reconciliation comprises elimination of intersegment transactions and includes head office expenses.


			2021					Restated^* 2020
Figures in Rand thousand	iOCO	NEXTEC	IP	Recon- ciliation^{^}	Total	iOCO	NEXTEC	IP	Recon- ciliation^{^}	Total
Adjusted EBITDA	524 274	(35 408)	266 876	(88 537)	667 205	391 651	(111 128)	267 133	(528 480)	19 176
Normalisation adjustments	(3 166)	1 573	(1 769)	(21 091)	(24 453)	104 608	27 116	67	233 131	364 922
Normalised EBITDA^**	521 108	(33 835)	265 107	(109 628)	642 752	496 259	(84 012)	267 200	(295 349)	384 098
Non-core business lines to be closed~	2 966	45 692	–	–	48 658	323 016	172 980	–	–	495 996
Core normalised EBITDA^***	524 074	11 857	265 107	(109 628)	691 410	819 275	88 968	267 200	(295 349)	880 094
Core normalised EBITDA(%)	10.1%	0.6%	25.4%	–	8.8%	11.8%	2.5%	22.0%	–	7.8%

Adjusted EBITDA reconciliation


Figures in Rand thousand		Notes	2021	Restated^* 2020
Operating profit/(loss)			146 955	(1 319 124)
	Operating profit/(loss) from continuing operations		36 337	(936 525)
	Operating profit/(loss) from discontinued operations		110 618	(382 599)
Depreciation			227 516	335 924
Amortisation			47 151	162 079
Impairment losses on non-financial assets			182 941	522 475
Loss on disposal of assets			46 524	263 675
Share-based payments			4 705	48 285
Interest allocation			549	–
Changes in fair value of vendors for acquisition		17	10 864	3 685
Income from joint venture			–	2 177
Adjusted EBITDA			667 205	19 176
Normalisation adjustments			(24 453)	364 922
Write-off of inventories^#			–	20 396
Other financial assets write-off and specific provisions			45 964	149 245
Advisory and other^##			20 315	106 605
Retrenchment and settlement costs			9 351	49 744
Provisions (released)/raised			(10 083)	38 932

Normalised EBITDA**			642 752	384 098
Non-core business lines to be closed~			48 658	495 996
Core normalised EBITDA***			691 410	880 094

*	Comparative figures previously reported have been restated for the correction of prior period errors. Refer to note 6. Comparative figures have also been amended to reflect continuing operations prevailing for the year ended 31 July 2021.
**	Normalised EBITDA is defined as adjusted EBITDA adjusted for write-off of inventories, other financial assets write-off and specific provisions, advisory and other, retrenchment and settlement costs, and provisions (released)/raised.
***	Core normalised EBITDA is defined as normalised EBITDA adjusted for non-core business lines to be closed.
^#	Write-off of inventories relates to inventory licences that were previously purchased and capitalised as inventory and subsequently written off as there were no customers for such inventory licences.
^##	Advisory and other consists mainly of costs related to the ENSafrica investigation, costs related to internal restructuring of the businesses, adviser costs related to disposals of businesses and also includes the JSE fine referred to in note 21.
~	Non-core business lines to be closed reflect normalised EBITDA relating to businesses that management intends to close which have not yet met the IFRS 5 requirements to be classified as discontinued and non-profitable business lines or arrangements that are not expected to continue going forward.
^	Reconciliation comprises elimination of intersegment transactions and includes head office expenses.