Segment resultsFOR THE SIX MONTHS ENDED 31 JANUARY 2022
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 period. 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. At the beginning of the current period, the People Outsourcing business was transferred from the iOCO segment to the Nextec segment and EMID Financial Solutions was transferred from the IP segment to the iOCO segment. These businesses that were transferred are now managed by different people. Results as at 31 January 2021 were restated to reflect these transfers.
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 people outsourcing solutions 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 IP businesses are all classified as discontinued operations.
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 adjusted EBITDA
| Unaudited for the six months ended 31 January 2022 |
Restated* unaudited for the six months ended 31 January 2021 |
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| Figures in Rand thousand | iOCO | NEXTEC | IP | Reconciliation^ | Total | iOCO | NEXTEC | IP | Reconciliation^ | Total | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| External | 2 304 576 | 907 154 | 299 745 | – | 3 511 475 | 2 777 557 | 1 148 330 | 449 991 | – | 4 375 878 | |
| Hardware sales | 145 009 | 172 465 | 5 124 | – | 322 598 | 151 784 | 221 059 | 11 985 | – | 384 828 | |
| Services | 1 871 874 | 709 775 | 291 268 | – | 2 872 917 | 2 294 491 | 924 733 | 436 564 | – | 3 655 788 | |
| Software/licence contracts | 270 542 | 4 784 | 3 150 | – | 278 476 | 310 448 | 15 433 | 1 425 | – | 327 306 | |
| Rentals | 17 151 | 20 130 | 203 | – | 37 484 | 20 834 | (12 895) | 17 | – | 7 956 | |
| Intersegment | 101 853 | 32 292 | 2 365 | (136 510) | – | 132 799 | 25 607 | 927 | (159 333) | – | |
| Hardware sales | 12 955 | 1 459 | – | (14 414) | – | 4 789 | 1 420 | - | (6 209) | – | |
| Services | 77 622 | 30 833 | 2 365 | (110 820) | – | 123 089 | 24 187 | 927 | (148 203) | – | |
| Software/licence contracts | 9 987 | – | – | (9 987) | – | 2 738 | – | – | (2 738) | – | |
| Rentals | 1 289 | – | – | (1 289) | – | 2 183 | – | – | (2 183) | – | |
| Gross revenue | 2 406 429 | 939 446 | 302 110 | (136 510) | 3 511 475 | 2 910 356 | 1 173 937 | 450 918 | (159 333) | 4 375 878 | |
| Gross profit | 697 596 | 271 805 | 154 686 | (75 542) | 1 048 545 | 773 185 | 269 180 | 225 769 | (60 072) | 1 208 062 | |
| Gross profit (%) | 29.0% | 28.9% | 51.2% | 29.9% | 26.6% | 22.9% | 50.1% | 27.6% | |||
| Adjusted EBITDA | 244 918 | 47 069 | 64 067 | (16 567) | 339 487 | 294 629 | (8 605) | 129 063 | (68 467) | 346 620 | |
| Adjusted EBITDA (%) | 10.2% | 5.0% | 21.2% | 9.7% | 10.1% | (0.7%) | 28.6% | 7.9% | |||
| * | Comparative figures previously reported have been restated for the correction of prior period errors. Adjusted EBITDA for the six months ended 31 January 2021 has been restated in respect of the South African Revenue Services ("SARS") VAT Voluntary Disclosure Programme liability in one of the Group's discontinued subsidiaries in the IP segment amounting to R18 million. Refer to note 6. Comparative figures were also restated to reflect the transfers between segments. 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. |
Adjusted EBITDA reconciliation
| Figures in Rand thousand | Notes | Unaudited for the six months to 31 January 2022 |
Unaudited restated* for the six months to 31 January 2021 |
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|---|---|---|---|---|---|
| Operating profit | 167 122 | 76 327 | |||
| Operating profit from continuing operations | 162 386 | 12 451 | |||
| Operating profit from discontinued operations | 10 | 4 736 | 63 876 | ||
| Depreciation | 88 445 | 124 592 | |||
| Amortisation | 26 254 | 30 634 | |||
| Impairment losses on non-financial assets | 42 567 | 72 278 | |||
| Loss on disposal of assets | 3 308 | 2 950 | |||
| Share-based payments | 9 139 | 23 951 | |||
| Changes in fair value of vendors for acquisition | – | 10 864 | |||
| Loss on disposal of subsidiaries and associates | 2 652 | 5 024 | |||
| Adjusted EBITDA | 339 487 | 346 620 | |||
| * | Comparative figures previously reported have been restated for the correction of prior period errors. Adjusted EBITDA for the six months ended 31 January 2021 has been restated in respect of the SARS VAT Voluntary Disclosure Programme liability in one of the Group's discontinued subsidiaries in the IP segment amounting to R18 million. Refer to note 6. Comparative figures have also been amended to reflect continuing operations prevailing for the six months ended 31 January 2022. |