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T H E P O W E R O F P O T E N T I A L

The Power of Potential

ANNUAL REPORT 2008

TOTAL TRANSPARENCY IN THE CONDUCT OFTHE AFFAIRS OF THE BUSINESS

SOUND CORPORATE GOVERNANCE

A PRIMARY FOCUS ON CASH GENERATION(AS PRIORITY OVER REPORTED PROFIT)

A FOCUS ON ORGANIC GROWTH CENTREDAROUND MARGIN MANAGEMENT AS WELL ASGROWTH ACHIEVED THROUGH STRATEGICACQUISITION

A RETURN OF EXCESS CASH RESOURCES TOSHAREHOLDERS WITHIN THE CONFINES OFMAINTAINING AN ACCEPTABLE LEVEL OFGEARING

A COMMITMENT TO BROAD-BASED BLACKECONOMIC EMPOWERMENT (BBBEE) ANDTRANSFORMATION

Group achievements

EBITDA UP BY 61%

CORE HEADLINE EARNINGS PER SHARE UP 30%

CASH CONVERSION RATIO 102%

DIVIDENDS DECLARED IN RESPECT OF 2007/08 FINANCIAL PERIOD TOTAL 215CENTS PER SHARE – UP 28%

DEBTORS DAYS REDUCED TO 30 DAYS

EBITDA MARGIN UP TO 6,4%

25,1% BBBEE TRANSACTION CONCLUDED

WINNER OF THE 2008 FINANCIAL MAIL/EMPOWERDEX TOP EMPOWERMENTCOMPANIES AWARD

HIGH GROWTH CORE BUSINESSESACQUIRED

QUALITY AND QUANTITY OF GROUPEARNINGS GREATLY ENHANCED

What shareholders can expect

CONTENTS

GROUP ACHIEVEMENTS IFC

WHAT SHAREHOLDERS CANEXPECT IFC

WHERE WE HAVE COME FROM 2

PERFORMANCE AGAINST STATED TARGETS 4

OUR FOOTPRINT 5

GROUP AT A GLANCE 7

OUR ROLE IN THE WHOLE 8

WHAT MAKES US WHO WE ARE 9

OUR PEOPLE 10

CASE STUDIES 12

GROUP STRATEGY AND VISION 16

STRATEGIC PRIORITIES 17

WHAT OUR LEADERS SAY 18

CHAIRMAN’S REPORT 20

CHIEF EXECUTIVE’S REPORT 22

BOARD OF DIRECTORS 30

CORPORATE GOVERNANCE 32

CORPORATE SOCIAL RESPONSIBILITY 35

EMPLOYMENT EQUITY – PERMANENT STAFF 38

SIX-YEAR REVIEW 40

APPROVAL OF THE ANNUALFINANCIAL STATEMENTS 42

CERTIFICATION BY COMPANY SECRETARY 43

REPORT OF THE INDEPENDENT AUDITORS 44

DIRECTORS’ REPORT 45

BALANCE SHEETS 52

INCOME STATEMENTS 53

STATEMENTS OF CHANGESIN EQUITY 54

CASH FLOW STATEMENTS 55

SEGMENT REPORT 56

NOTES TO THE ANNUALFINANCIAL STATEMENTS 57

ANNEXURE A 90

ADMINISTRATION 92

ANALYSIS OF SHAREHOLDING 94

SHAREHOLDERS DIARY 94

SHARE STATISTICS 95

NOTICE OF ANNUAL GENERAL MEETING 96

FORM OF PROXY ATTACHED

Adcorp Cover REPRO 7/21/08 3:44 PM

Company overview

Where we have come from...

2 | ADCORP Annual Report 2008 | The Power of Potential

STRA

TEGI

C M

OVEM

ENTS

ACHI

EVEM

ENTS

BUSI

NESS

AP

PROA

CH

2001199919871978

• Acquisition of Acumen concluded

• Turnaround strategy commencesfocusing on cash and marginmanagement

Acquisitive Adcorp grows to 38 companies

Initialpublicofferingon theJSE

Adcorp is ‘born’

Entrepreneurial Adcorp with informal leadership style.

Acquisitive; disfocused; product-centric and EPS driven.

Sunday Times Top100 Award for theBest PerformingCompany on theJSE

The Power of Potential | ADCORP Annual Report 2008 | 3

2004 2006 2007

Top listedEmpowermentCompany

30th year ofsuccessful trading

Consolidate nineunderlyingbusinesses toestablish AdcorpTalent Resourcingand JobVest asEmployer Brandingand RecruitmentProcessOutsourcing (RPO)specialists

• Strategy agreed to simplify theGroup and focus on core business

• Enterprise Development initiativeestablished through amanagement buy-out of Simeka TWS and Graphicor

• Acquired Employ-Rite

Continuedstrong focus onorganic growthand strategicacquisitions

• BBBEE transaction concludedwith consortium comprisingWiphold, Simeka and EmployeeShare Option Plan (ESOP)

• Acquired FMS MarketingSolutions

• Acquired Capital OutsourcingGroup

• Sale of Research Surveys toTNS (London)

• Sale of Career Junction

2008

BBBEE firstin ServicesSector

• Third year of strong organicgrowth

• BBBEE– rated first in Services Sector

• 128% of profitconverted to

Back to basics; still product focused!

Leveraging the core; focus on innovation;integrating into the client environment.

Performance against stated targets

Return on assets managed*

Perce

nt (%

)

Target0605040305

1015202530354045

08

Return on sales*

Perce

nt (%

)

Target060504030

1

2

3

4

5

6

08

Asset turnover*

Times

Target060504030

1

2

3

4

5

6

7

8

08

Cash generated to operating profit

Perce

nt (%

)

Target060504030

20

40

60

80

100

120

140

08

Debtors days

Days

Target060504030

5

10

15

20

25

30

35

40

08

Gearing

Perce

nt (%

)

Target0605040305

1015202530354045

08


* 2008 annualised.

Our footprint

Free StateKwa-Zulu Natal

Eastern Cape

Northern Cape

North West

Limpopo

Mpumalanga

AngolaMalawi

South Africa

Gauteng

Western Cape

Adcorp Accountability

Adcorp Talent Resourcing

Adcorp Talent Search Partners

Capacity

Capital Outsourcing

Charisma

DAV

Emmanuels

Employ-Rite

FMS

Grey Consulting

JobVest

PMI

Premier Personnel

Quest

Mozambique



K E Y A C C O U N T S

PERMANENT• Contingent database selection

• Talent search

• Executive search

• Internet recruitment

• Candidate assessment and selection

• Turnkey managed staffing solutions

FLEXIBLE• Temporary staffing assignments

• Contract staffing solutions

• Workforce optimisation

• Learnership implementation and administration

• Leadership and management development

• Customised, strategically aligned, corporate training solutions

• Comprehensive offering of business relevant, accredited education and

training programmes

• Brand development

• Strategic staffing advisory services

• Recruitment advertising

• Employer branding

• Role profiling

• Candidate response management

• Psychometric assessment and selection

• Talent management

• Recruitment process outsourcing (RPO)

• Tender management

• Business process outsourcing

• Payroll outsourcing

• Mass recruitment and respone handling for large scale projects

• Added value services to policy holders of insurance companies and

members of affinity groups

STAF

FING

MARKETING SOLUTIONSFMS

GREY_CONSULTING

ensuring returns on human capital

g

BUSI

NESS

PRO

CESS

OUT

SOUR

CING

SERVICE OFFERINGSBRANDS

Variety of staffing services and solutions in a number of job types and

industries, including:

• Growth in outsourcing of non-core

functions by clients

• Desire by organisations to match

labour input costs to variable

market demand

• Rapid expansion of call centres in

South Africa

• Growth in learnerships established

in terms of the Skills Development

Act

• Growth in the South African

economy, particularly the

construction and infrastructure

sectors

• Critical shortage of key skills

categories

• Demand for exclusive single

supplier, managed staffing solutions

• Growth in high volume, fast turn-around recruitment projects

• Employer branding achieves betterresults for less cost

• Growth in the employee benefit

industry

• Roll out of new products and

services to existing client base and

temporary workforce

Group at a glance


• Productivity enhancing service offerings

• Market leaders in differentiated recruitment practices

• Learning as an integrated part of a flexible workforce management solution

• Sophisticated workforce optimisation technology to unlock optimum client

benefits

• Database in excess of 250 000 candidates over all levels, skills sets and various

industries

• Measurable performance against defined service level agreements

• Employment equity record of 68% PDI (previously disadvantaged individuals)

placements

• Credible black economic empowerment profile

• Action-based training approach: learn – apply – measure

• Fully accredited training offerings

• Ability to measure efficiency of training in the working environment

• Sustainability of benefits for clients

• Ability to customise offerings

• Candidate sourcing spanning numerous leading, branded consultancies

combining unrivalled knowledge, experience, databases and advertising reach

• Intimate client relationships facilitating the development of unique human

capital strategies and resource planning

• Uniquely broad range of recruitment services enabling fully outsourced

recruitment offerings

KEY DRIVERS FOR GROWTHDIFFERENTIATORS

STAF

FING

BUSI

NESS

PRO

CESS

OUT

SOUR

CING

• Diverse talent pool uniquely positioned to match the demands of the market

• Dominant market position

• Unique, market leading product and service offerings

• A people-centred organisation with a culture of deliberate curiosity staffed by

talented professionals

• Extraordinary relationships with clients

• Cutting-edge thinking supported by technical and process excellence

• Equipped to handle high volumes and select the best candidates in quick

turn-around times

• Brands the employer thereby creating an identity which will attract employees

who will relate to the skill and culture requirements

• Unique subcontracted provider network

• Role profiling, candidate assessment and selection profiling within a

quantifiable, consistent, scientifically verified and legally compliant framework

Given these prevailingcircumstances, theAdcorp Group is wellpositioned to takeadvantage of theseconditions due to theGroup’s unrivalledability to search fortalent, our ability to traintalent and to navigatethe skills developmentand learnershiplegislative and structuralenvironments, the abilityof the Group, bolsteredby recent acquisitions,to import talent as wellas our ability to impactpositively on our clients’talent retentionstrategies.


Where we are now...Our role in the whole

R3 billionR23 billion

South Africa’s staffing industry is a highly

competitive industry with relatively low

barriers to entry and very low levels of

industry cooperation. It is a R23 billion pa

industry with an estimated 2 500 – 3 000

registered and a further 2 000 unregistered

businesses. Of the nearly 5 000 businesses

approximately 3 600 work in the temporary

employment services (“TES”) arena. The

TES is a substantial industry employing

800 000 people annually at a turnover of

about 80% of the stated R23 billion and, in

terms of contribution to GDP, bigger than

the agriculture, hunting and fisheries and

electricity, water and gas sectors. Seven of

these companies are listed on the JSE

Limited (JSE) – Main Board and AltX –

with a joint market cap of just over

R6,1 billion (as on 3 July 2008).

The current macro-level debate in the

country centres around, among other things,

the current skills shortage; particularly in

light of the unprecedented financial

commitment already made to infrastructure

development and capital projects.

The Adcorp Group currently deploys a

contract labour workforce of around

70 000 and facilitates in excess of 200 000

man-hours of training per annum to deploy

productive people into the formal sector.

These training programmes are accredited

and highly respected across a range of

industries. Adcorp has to date taken well in

excess of 2 000 people through accredited

learnership and Recognition of Prior

Learning (RPL) programmes and is

represented in various SETAs and within

Steel, Engineering and Iron Federation of

SA (SEIFSA).

US$60 billionUS$190 billion

South African staffing market size

Source: Staffing Industry Analyst Inc., 2007

Flex/Temp

International staffing market size

Permanent

What makes us who we are


REAL EMPOWERMENT. REAL CHANGE . . . REAL GROWTH

At Adcorp we believe in the power of changeand in the value of true empowerment.This is why we’ve committed ourselves to black economic empowerment – and set tangible goalsto make this a reality throughout our group.

Because BEE is a real part of who we are and what we do, we’ve incorporated it into thefollowing aspects of our business: ownership; management; employment equity; skillsdevelopment; preferential procurement; enterprise development and CSI.

We’re proud to announce that we have already made a real difference. Through our strategicapproach to transformation and empowerment, we have managed to improve our empowermentposition year-on-year (as reflected in the FM Empowerment Index) and leverage this status as anenabler for sustainable business improvement and exceptional financial results. Voted the “mostempowered listed company in South Africa” by Financial Mail for 2008, Adcorp Holdings iscommitted to building on this phenomenal achievement. Empowering our employees.Empowering our country. Enabling your company.

AWARDS• Adcorp Holdings was awarded the most empowered listed entity in South Africa in the

Financial Mail/Empowerdex Top Empowerment Companies Award 2008.

• Adcorp Holdings won the 2007 Investment Analysts Society Award for the Best

Financial Results Presentation – Companies with a market capitalisation below

R5 billion.

• Adcorp Holdings was recently awarded Microsoft gold implementation partner status

with regard to Microsoft Dynamics AX.

• Adcorp Talent Resourcing (ATR) and JobVest won 7 of the 15 categories in the Sunday

Times Business Times Careers Awards for Recruitment Advertising.

• Capacity Outsourcing recently won the Zululand Chamber of Commerce Business

Excellence Awards in the category for Best Service.

Because BEE is a real partof who we are and what wedo, we’ve incorporated it intoevery part of our business.

TRANSFORMATIONThe Group announced a broad-based black

economic empowerment (BBBEE)

transaction early in 2007 that has

significantly bolstered the empowerment

credentials of the Group, while also creating

an opportunity for all Adcorp employees to

share in the Group’s financial fortunes.

In terms of this BBBEE transaction, a

consortium comprising women’s grouping,

Women Investment Portfolio Holdings

(Wiphold), Simeka Group (Pty) Limited and

an Adcorp employee share incentive trust

now have an effective 25,1% shareholding

in Adcorp Holdings Limited.


Globalisation, new technologies, the skills

shortages and generation changes in the

labour market has resulted in Adcorp

developing a human resources strategy

based on innovation and performance.

The actual strategy focuses on talent

attraction, development, optimisation and

retention that is underpinned by life-work

values alignment.

This is facilitated by engaging in group-

wide talent forecasting, giving

consideration to the external and internal

environment in which Adcorp and its

clients operate. The Adcorp Group believes

that the currency of human capital is

competence – the sum of knowledge,

skills and values. Hence, we believe that

talent audits both internally and within the

labour market should drive talent

management strategies.

Career and succession planning is

operationalised through detailed talent

management plans comprising employment

equity and workplace skills plans.

Given the fact that the Adcorp Group is

represented either directly or indirectly on

forums such as the National Economic

Development and Labour Advisory Council

(NEDLAC), Business Unity South Africa

(BUSA), the Millennium Labour Council,

the Confederation of Associations in the

Private Employment Sector (CAPES) and

the like, the Group both influences labour

market policy and takes the lead in

developing new strategies in business and

the management of human capital.

Education, training and development takes

a central role in ensuring that business

strategy is realised, with a strong emphasis

on the alignment of values given the fact

that values drive decisions which

determines workplace conduct and the

application of knowledge and skills.

The actualstrategy focuses ontalent attraction,development,optimisation andretention that isunderpinned bylife-work valuesalignment.

PEOPLE STRATEGY

Adcorp remains committed to upholding abest practice human resource managementapproach by ensuring that the managementof human resources is effective, efficient andthat there is fair treatment of all employees.

Our people – the core of our business!


STAFFAs employers the world over grapple with

the challenge of how to engage with their

employee base, thereby strengthening the

bond between employer and employee and

increasing retention and productivity as a

result of a shared vested interest, Adcorp

has introduced Adlife to its employee base,

a brand new communications channel which

looks to raise the bar in terms of internal

stakeholder engagement within the Adcorp

Group. The format has been designed with

user ‘ease of use’ in mind, providing high

value, relevant and interesting content that

is both easy to use and fresh to look at. The

use of an electronic format enables us to

pass ‘sound-bites’ of up-to-date information

to staff regularly, thereby increasing the

flow of information and building brand

collateral among our employee base; the

lifeblood of our business!

Another important stakeholder group for

Adcorp is our clients. Where we have

managed to build strong relationships

between employees (consultants) and

clients, we are able to more effectively

partner with particular clients and their

company to deliver optimal people

solutions. The Adcorp Pro-Am has grown

in each of its six years of existence and is

an opportunity for us to thank valued

clients for their support over the

preceding year and engage with them in

a more informal and social setting.

A bad day on the golfcourse is better than areally good day in the

office.

CHAIRMAN’S AWARDSDedicated employees deserve honour and recognition for their hard work and commitment.

Annually, individual Adcorp Group employees and companies are honoured for their

exceptional achievements and contributions.

Adcorp Holdings prides itself on the phenomenal performance and sustained growth

it has experienced over the past years, which would not have been possible without the

outstanding performances of both employees and Group companies alike.

Such achievements should be celebrated, and the annual Adcorp Chairman’s Awards is

where our individual and collective ‘heroes’ are recognised and honoured.

Case studies


• Cost per compliantcall reduced by81,9%.

• Calls handledincreased by 40%with the samenumber of staffmembers.

• Cost saving of R14,3 million duringproject period.

The “100-DayAction Project” was

deployed withinMTN with the aim

of increasing theproductivity of existingemployees rather than

deploying additionalresources.

100-DAY ACTION PROJECTAlthough the primary intervention

introduced during the project was

comparatively straightforward, it amounted

to performance-based scheduling. Various

supportive interventions were required to

achieve this comparatively simple outcome.

A series of upskilling workshops were

conducted with the workforce management

team to introduce the skills necessary for

best-practice scheduling on a sustainable

basis. Moreover, a series of change

management and quantitative reporting

workshops were held with preselected

team leaders and agents to acquire

their buy-in and also the project’s

long-term sustainability.

In terms of workforce scheduling, the best

5% of performers were identified each

month and, during the subsequent month,

these employees were given a R4 per hour

wage increase and free choice of shifts,

including as many weekends off as they

chose, as many working hours as they

preferred. At the same time, the worst 5%

of performers were identified each month

and, during the subsequent month, these

employees were given mandatory shifts

that were less convenient or earned them

less money than the more desirable shifts,

including the undesirable 4,5-hour night-

time shifts.

As a result, the difference between monthly

earnings of top and bottom performers

increased from less than R100 (which

provided no material incentive for high

performance) to as much as R3 500 (which

provided an aggressive performance

incentive).

Supportive interventions introduced during

the project included:

• an intense change management process,

in which top-performing agents were

identified and selected as “change

champions;

• best-practice workforce design,

including upskilling of the client’s

workforce management team; and

• a new set of performance metrics,

including the Q-ratio, which measures

the cost (including indirect costs of staff

turnover, absenteeism and so forth) per

compliant call. This metric provided the

call centre managers, team leaders and

agents with the correct performance

incentives, to enhance performance by

increasing compliance with the call

centre’s financial and customer

service objectives.

During the course of the project, a

substantial increase in productivity was

achieved, while at the same time employee

turnover was significantly reduced.

The most remarkable achievement of the

project was that the network’s in-sourced

call centre became more cost-effective,

on a per-call basis, than the outsourced call

centre. As a result of the project’s success,

it is being rolled out into the network’s

various call centres around the country.


To date approximately 1 800 Toyota employeeshave gone through the PMI education andtraining progression oflearning.

IN THE WORDS OF TOYOTAThe Production Management Institute of

Southern Africa (Pty) Limited (PMI) and

Toyota South Africa developed a formal

training relationship in 1999. To date

approximately 1 800 Toyota employees

have gone through the PMI education and

training progression of learning. The PMI

qualifications form an integral part of

Toyota’s first-line management

programmes, namely the team leader,

group leader and study assistance

development programmes.

Significantly, the learning progression caters

for the development of appropriate literacy

and numeracy, through foundational

learning and finally into the higher

education band, to an honour’s degree level.

To their credit, the commitment to

development of the Toyota employees is so

high that they attend classes after hours at

no additional remuneration.

The partnership between PMI and Toyota

ensures that a key emphasis of the

programme is an effective transfer of

learning with a resultant quantifiable

business impact.

PMI is regarded as a keypartner in Toyota’s strategy ofdeveloping its human resources.Toyota views the integratedapplication project as the meansof promoting the transfer oflearning in the workplace. This process has yieldedsignificant benefits on the shopfloor in terms of continuousimprovement, which hascontributed largely to return oninvestment. Selvan Pillay

Manager: Toyota Academy (2007)

Case studies (continued)


In summary, the failurerate dropped radically

and the quality of work improved, onaverage we have

a 95% and moresuccess rate!

FABRICATORS SUPPLIED TO BELLEQUIPMENT, RICHARDS BAYIn November 2007 Capacity noted that Bell

was concerned regarding the quality of

work, the number of rejections and the

amount of re-work that had to be done as a

result of the calibre of fabricators that we

had supplied. Further to this it was also

noted that on average the failure rate of

each fabricator supplied by Capacity

(trained, screened and with papers) had a

failure rate on the line of 70% and more.

It was also noted that there was a skills

shortage in the market and that the current

industry training and assessments were

not suitable to the Bell standards and

work requirements.

Under the banner of the Richards Bay

Capacity People Development Academy,

our technical academy manager along with

a company, known as Arc Engineering

(suppliers of welding machines to Bell) and

the Bell’s Assessor had a meeting to

determine what needed to be in place

for the fabricators to be deemed competent

before being placed at Bell. Hence a process

flow chart covering revised training,

assessment and evaluation was developed

via the People Development Academy in

Richards Bay with the result of the

recruitment process flow being re-

engineered. In summary, the failure rate

dropped radically and the quality of work

improved, on average we have a 95% and

more success rate!

Further to this development another big

achievement and a mindshift for some of

the line managers at Bell was that female

fabricators had been supplied for the first

time ever as a result of the re-engineered

recruitment process via the People

Development Academy. Bell reported that

their attention to detail and neatness was

better than that of some of the male

fabricators. The results were much better

than had been expected and the line

managers were particularly impressed with

the female fabricators. Overall the stitching

was much neater, setting of the machines

was accurate and they had the ability to use

the cutting torch and read drawings.

Capacity has also been able to establish a

pool of accredited fabricators for Bell,

which in turn have addressed the skills

shortage in terms of critical skills needed at

Bell. The net effect has been a big win win

for both Capacity and Bell.

Capacity has also been able to establish

a pool of accreditedfabricators for Bell.


This progressivepartnership andresourcing strategywill ensure that thispublic sector entitysatisfies their strategicobjectives in sourcingand selecting theright skills, timely andcost effectively inorder to deliver ontheir challengingmandate.

A unique staffingmodel with severalinterfaces was designed to fulfil therecruitment strategy inorder to meet theirstaffing requirements.

A unique staffing model with several

interfaces was designed to fulfil the client

recruitment strategy in order to meet their

staffing requirements. The challenge has

been to integrate human resources and

financial information, optimise planning

and transactional processing, and automate

paper intensive human resource processes.

A phased-in approach has been adopted

that aligns infrastructure and technology

platforms with a slow release employer

branding campaign, supported by a multi-

channel response handling capability,

critical to their ability to access the broadest

cross-section of the population, differentiate

themselves in a congested marketplace and

attract the right people.

Vacancy requests have also been

streamlined and response handling is

managed by an off-site response

management team of approximately

40 professional staff members which has

the capacity and flexibility to manage peaks

and fluctuations in resourcing demand.

In addressing the ongoing challenges to the

HR community where business constantly

demands that more time is spent client facing

in value-adding activities it was decided to

move the ‘non-value adding’ administrative

tasks including copy writing, CV screening,

pre-employment and reference checks and

creating shortlists into the most efficient

administrative processing unit.

Standardising role profiles, behavioural and

competency-based interview guides with

evaluation scorecards have been developed

to reduce subjectivity in interviewing and

decision-making and ensure valid, reliable

and consistently fair results are achieved.

Part of the plan is to implement a

technology hub, populated over time, that

will form the basis of a talent community

for candidate searching and from which a

number of tactical staffing initiatives can be

derived:

• Candidate Relationship Management

(CRM) programmes to build brand

ambassadors.

• Communication programmes to targeted

discrete segments and inform them of

organisational successes and happenings.

• A talent chat room for like-minded

professionals to share knowledge.

• A centralised hub for value-adding

content to professional individuals.

• Events and other face-to-face activities

to further entrench their brand share with

candidates.

This progressive partnership and resourcing

strategy will ensure that this public sector

entity satisfies their strategic objectives

in sourcing and selecting the right skills,

timely and cost effectively in order to

deliver on their challenging mandate.

Critical to the success of this partnership

is the ability to reduce time-to-hire and

recruitment costs, while increasing the

accuracy of decision-making resulting from

data and predictive technology, with a

robust management reporting capability

across the full recruitment value chain that

supports the management team.


Group strategy and visionThe design and implications of this strategy are to position the Adcorp Group as:

• a major player in the global staffing industry and dominant in South Africa;

• a recognised provider of scarce skills in a globally skills-short market;

• offering significant cost and service level advantage in the Business ProcessOutsourcing space with the ability to attract a sizeable client base;

• having access to significant employees’ disposable income offeringrevolutionary, appropriate and affordable employee benefit, wellness, credit,airtime and lifestyle products to this vast employee base;

• a business able to benefit from economies of scale; and

• a business positioned superbly in a high growth sector of the market.

Where we are heading...


In order forAdcorp to obtain

operationalefficiencies werequire a new

operating system.

Whilst operational priorities remain

focused on:

• cash management;

• margin management; and

• targeted, strategic acquisitions.

The Microsoft Dynamics ERP

implementation and the Adcorp operational

efficiency initiative go hand in hand. In

order for Adcorp to obtain operational

efficiencies we require a new operating

system that will offer:

• the latest technology and technical

infrastructure;

• a single standardised operating platform;

• a shared database structure to avoid

duplicated candidate expenditure; and

• longevity and systems innovation as

development and maintenance are

in-house.

The above will allow for:

• a true shared services environment;

• standardised re-engineered processes to

optimise operational efficiencies;

• scalability and economies of scale; and

• greater control and reduced risk.

and to further extend the range and scope ofbusiness process outsourcing activities, to buildan effective shared services capability with theability to deliver economies of scale advantagesand to build an a-typical employee focusedfinancial services capability providing relevantemployee benefit, financial, wellness and lifestyle products and services to the Group’s vastcontract labour workforce which currentlynumbers between 65 000 to 70 000 contractors.

Strategic priorities

“leverage the core”

The focus of the management team is now to


What our leaders say

As such, I believe that the Adcorp Group iswell positioned to continue on its impressivegrowth trajectory in this environment.Dr F van Zyl Slabbert

Chairman

All of these factors coupledwith the Group’s strong

BBBEE credentials positionthe Group well to take

advantage of current marketconditions and opportunities. As

such, the 2008/09 financialyear should once again be a good

one for the Adcorp Group.Richard Pike

Chief Executive Officer

Executive reports

Chairman’s report


The Adcorp Group has once again produced

an outstanding financial performance – core

headline earnings per share were 30% up

for the 14-month reporting period ended

29 February 2008 compared with the

14 months ended 28 February 2007.

Adcorp’s consistent strategy of focusing on

cash generation and margin management

has once again been rewarded with all

Group financial targets either being met

or exceeded.

At the beginning of 2006, the Adcorp Group

took the decision to focus the Group solely

in the areas of human capital management

and business process outsourcing. In

pursuing this strategy, a number of non-core

businesses were disposed of, whilst a

number of sizeable and strategic core

acquisitions have been made during the

period under review. This has had the effect

of significantly bulking the business and

positioning Adcorp as the leading staffing

provider in the South African market and a

major player in the rapidly expanding

business process outsourcing market.

Over the past 18 months, there has been

much debate in the South African context

regarding the existence or otherwise of a

skills shortage. As the debate has raged on,

it has become increasingly evident that the

country does indeed face a critical skills

shortage with regard to many scarce skills,

particularly of a technical nature which, if

not suitably addressed, could effectively

constrain economic growth, infrastructure

development and service delivery.

Ironically, this acute skills shortage exists

in an environment where there are also

massive levels of unemployment.

Clearly, there is a need in this country to

mobilise all possible means and resources to

urgently address both staggering problems

by way of intensifying the upskilling and

training of people on an unprecedented scale.

The countrydoes indeed facea critical skills

shortage.


In this regard, the Adcorp Group has played

a significant role in introducing tens of

thousands of first-time job seekers into the

formal job market whilst also providing

them with the necessary tangible skills and

workplace preparedness. In this way, the

Adcorp Group continues to play a

significant and meaningful role in the

development and deployment of South

Africa’s vast untapped human potential.

Black economic empowerment remains

one of the major challenges facing the

Group and one which Adcorp has taken

extremely seriously over the past years.

In this regard, a 25,1% empowerment

shareholding was announced by the Group

in February 2007 involving Wiphold,

Simeka and a share trust created for the

benefit of Adcorp’s staff. This, together with

the many other empowerment initiatives of

the Group, in compliance with the Codes of

Good Practice, resulted in Adcorp winning

the Financial Mail/Empowerdex Top

Empowerment Companies 2008 Award as

the most empowered company listed on

the JSE.

The recent string of global economic shocks

such as the United States’ subprime crisis,

rapidly increasing oil and food prices, rising

interest rates and weakening equity markets

will, no doubt, have a knock-on effect on

the South African economic and political

landscape.

After an extraordinary transition from

authoritarian to democratic rule, the

government is increasingly being confronted

with problems of delivery in housing,

power, community development, health, etc.

Fortunately, in the absence of a politicised

security system, there is great scope for civil

society initiatives to address some of these

problems. Also from the corporate sector

and Adcorp’s involvement in this regard,

which has been referred to.

However, despite the negative impact that

some of these events may have on the

economy and business environment in

which we operate, it is important to note

that certain areas of the economy have

never had it better.

Given the substantial infrastructure

development currently taking place in the

South African economy, industries such as

construction and engineering will continue

to be major beneficiaries of these projects.

Also, with the trend of rising international

commodity prices, mining, agriculture and

other commodity producers should benefit

greatly.

As such, whilst portions of the South

African economy may be experiencing a

downturn, other parts of the economy are

set to boom providing further opportunities

for job creation and skills development.

As such, I believe that the Adcorp Group

is well positioned to continue on its

impressive growth trajectory in this

environment.

The management team is stable, there is

clarity of purpose and the Group is

positioned better than ever to take

advantage of the numerous and exciting

opportunities that currently present

themselves.

Dr F van Zyl Slabbert

Chairman

As such, whilstportions of the South

African economy maybe experiencing a

downturn, other partsof the economy are set

to boom providingfurther opportunitiesfor job creation andskills development.

Chief Executive’s report


The philosophyof the Group

has been toplace major

emphasis on thecash generatingpotential of the

operations.

OVERVIEWOperationally, the 2007/08 financial period

once again saw strong profit growth

recorded for the Adcorp Group.

Shareholders are reminded, as announced in

March 2007, that the company has changed

its financial year-end from December to

February.

As such, the financial results presented

herewith, are for the 14-month period ended

29 February 2008.

Core headline earnings per share for the

14-month period ended 29 February 2008

of 372,7 cents (2007: 287,6 cents) were

some 29,6% ahead of core headline

earnings per share for the equivalent prior

14-month period whilst earnings before

interest, tax, depreciation and amortisation

(EBITDA) of R284,5 million were 60,7%

ahead of the R177,1 million EBITDA

reported for the prior 14-month period.

The staffing operations of the Group

performed well during the period under

review and ahead of expectation. In

particular, the permanent recruitment

businesses turned in a stellar performance on

the back of a buoyant recruitment market.

The business process outsourcing operations

of the Group also performed ahead of

expectation and contribute a high quality of

earnings to the Group.

FINANCIAL TARGETINGStrategically, the Group adopted a

philosophy of financial targeting in the

2002 financial year.

The key financial return criteria focused on

by the Group’s management team is return

on assets managed (ROAM) which is

benchmarked against a target to ensure the

achievement of superior financial returns to

shareholders well in excess of the firm’s

weighted average cost of capital (WACC).

The WACC, in turn, is calculated with

reference to an optimal capital structure

introducing an ideal mix of debt and equity

as reflected by the Group’s gearing target.

In this regard, the Group once again exceeded

its targets delivering a return on assets

managed of 42,0% against a target of 33,0%.


The staffing operationsof the Group

performed well duringthe period under

review and ahead ofexpectation.

In summary, the performance of the Group against stated financial targets was as follows:

14 months 14 months 12 months Financial to Feb to Feb to Dec

Performance criteria target 2008 2007 2006

Return on assets managed (ROAM) (%) 33,0 42,0 25,6 32,0

Return on sales (ROS) (%) 5,5 5,8 4,9 4,9

Asset turnover (ATO) (times) 6,0 6,6 5,3 6,6

Cash conversion ratio (%) 90 102 20 75

Debtors days 33 30 38 36

Interim gearing target* (%) 43 30 52 6

*Long-term gearing target set at 30%.

A summary of dividends declared in respect of the trading period under review is as

follows:

14 months 12 months to Feb to Dec %

Dividends declared 2008 2006 change

Interim dividends (cents) 55 42 31

Final dividend (cents) 160 126 27

Total dividends (cents) 215 168 28

ACQUISITIONS AND DISPOSALSThe restructuring process which

commenced in 2006 to focus the business

activities of the Group solely in the areas

of staffing and BPO has not only been

achieved in a relatively short time frame

but, the quality of the acquisitions and

the ease of integration of these businesses

into the Adcorp Group coupled with the

advantageous disposal of certain non-core

assets, has greatly added to the strong profit

growth for the year.

During the period under review, the disposal

of non-core assets, Research Surveys,

Knovation and the 25% stake in Career

Junction were concluded.

During the same period, the Group’s core

assets were bolstered by the recent

acquisitions of blue-collar staffing

businesses, Capital Outsourcing Group

and Employ-Rite as well as value added

employee benefit solutions business,

FMS Marketing Solutions.

All of these acquisitions performed in line

or ahead of expectation and are expected

to continue to make a major contribution

to Group operations in the future.

In achieving this result, the return on sales

(ROS) or operating margin achieved was

5,8% versus a target of 5,5% whilst the

asset turnover (ATO) ratio was 7,2 times

versus a target of 6,0 times.

The philosophy of the Group has been

to place major emphasis on the cash

generating potential of the operations.

As such, a cash conversion target of 90%

is the stated objective of management

whereby, the Group strives to convert 90%

of its operating profit into cash. In this

regard, the target was exceeded whereby,

102% of operating profit was converted

into cash.

This stellar cash generation performance

was achieved by reducing the number of

days’ accounts receivable or debtors’ days

outstanding to 30 days against a target of

33 days which is the lowest receivables

level ever in Adcorp’s history.

As a result of this cash performance and,

whilst remaining within the confines of the

Group’s financial period end targeted

gearing level of 43% versus an actual

gearing level of 30%, the Group was able

to declare a final dividend of 160 cents per

share (2006 final dividend: 126 cents per

share) which represented a 27% increase in

the final dividend.

Combined with the interim dividend

declared of 55 cents per share, this brought

the total dividends declared for the period

under review to 215 cents per share

(2006: 168 cents per share) which

represents a 28% increase in dividends.

Chief Executive’s report (continued)


Subsequent to the end of the financial

trading period under review, Adcorp

announced the acquisition of the combined

business of Staff U Need (Pty) Limited and

Dithomo (Pty) Limited, a business operating

under two brands which specialises in

providing labour solutions to the metals and

engineering industries. The business has a

specific focus on providing both skilled and

semi-skilled labour to the power generating

industry including Eskom and its subsidiary

operations.

These acquisitions strengthen the Group’s

position as leader in the South African

staffing and BPO industries and add to the

quality and spread of operational earnings.

In addition, they introduce new skills and

intellectual capital into the Group.

MACRO-ENVIRONMENTThe macro-environment in the staffing

industry is currently dominated by the

debate surrounding the prevailing South

African skills shortage.

Whilst the debate initially focused on the

existence or otherwise of a skills shortage,

what has become clearly apparent of late is

that there is a significant shortage of talent

across a wide spectrum of skills disciplines

ranging from a shortage of engineers,

artisans and technicians to health care

professionals, information technology (IT)

specialists and senior general managers.

The Department of Labour estimates in

terms of their National Master Scarce SkillsList published in April 2008 that the country

is currently short of one million skilled

workers.

Similarly, local financial publication,

Finweek, estimated in February 2008 that

the country was currently short of 68 000

engineers, artisans and technicians whilst an

article carried in an April 2008 edition of

the Sunday Times estimates that South

Africa will be short between 40 000 and

60 000 registered engineers by 2010.

A consequence of the prevailing skills

shortage is that the search for talent has

gone international with a number of South

African businesses in the construction, IT

and engineering sectors currently importing

scarce skills.

In her Joint Initiative on Priority Skills

Acquisition (JIPSA) briefing in respect

of that body’s 2007 activities, South African

Deputy President, Phumzile Mlambo-Ngcuka,

said that “the scale of the problem has

become bigger in the interim . . . urgentattention has to be given to foreign skillsrecruitment, because the country does not have the luxury of time for all thenecessary training”.

The problem has become exasperated due to

the significant Gross Domestic Fixed

Investment (“GDFI”) spend currently on the

go as well as being planned for South Africa

over the next years.

Old Mutual Investment Group estimates that

the extent of GDFI spend in South Africa

could top R611 billion by 2011 as Eskom

spend an estimated R200 billion on new

power stations and transmission network

upgrades, Transnet spend an estimated

R78 billion on ports, pipelines, locomotives

and rail infrastructure, the combined 2010

Soccer World Cup and Gautrain initiatives

are expected to cost in the region of

R40 billion and government is expected to

spend around R216 billion on dams, roads,

schools, hospitals and low-cost housing.

These estimated figures exclude the

significant forecast expenditure in the

mining and petro-chemicals industries

which takes the total forecast of capital and

infrastructural project expenditure planned

in the South African economy up to

R1 trillion, all of which consumes skills,

further compounding the problem.

Whilst the skills shortage is an acute

problem in the South African context, the

problem is in fact a global problem.

Accenture estimates that companies and

countries will need more than 3,5 billion

people by 2010 to fill knowledge worker

positions. By 2020 they estimate that the

number will grow to 4 billion. Other

projections indicate that by then, there will

be shortages of 32 to 39 million people to

fill such positions. The United States will

have the biggest shortfall needing as many

as an additional 14 million people.

Two recent characteristics that are evident

in the South African human capital

environment as a result of the major

infrastructural and capital projects currently

on the go, coupled with the prevalent

massive skills shortage are unprecedented

local talent searches and a resurgence in

efforts on a large scale to train local talent,

particularly with regard to technical skills.

Taken in the context of excessively high

levels of unemployment, both of these trends

bode well for skills development, job creation

and poverty alleviation in South Africa.

Given these prevailing circumstances, the

Adcorp Group is well positioned to take

advantage of these conditions due to the

Group’s unrivalled ability to search for

talent, our ability to train talent and to

navigate the skills development and

learnership legislative and structural

environments, the ability of the Group,

bolstered by recent acquisitions, to import

talent as well as our ability to impact

positively on our clients’ talent retention

strategies.

For the first time since the inception of the

staffing industry, the demand for talent

exceeds the supply thereof in a number of

disciplines.

As such, the frontiers for competition in

certain segments of the industry have shifted

away from securing job vacancies to the

identification of scarce talent in those areas

where skills are in short supply. This

arguably represents the most fundamental

shift this industry has experienced in its

history and tends to favour larger providers

such as Adcorp.

Whilst certain sectors of the South African

economy are booming such as the

construction, mining and agricultural

sectors, other sectors are in decline such as

the retail and financial services sectors due

largely to inflationary pressures triggering a

recent, marked increase in domestic interest

rates.

This phenomenon of divergent economic

and sector trends within the same economic

environment, is unusual but should bode

reasonably well for the overall economic

performance of the South African economy

despite an anticipated global economic

downturn.

Looking at the positioning of the Adcorp

portfolio, the Group should be relatively

well positioned to weather whatever

economic storm may lie ahead.

Historically, the flexible staffing or contract

labour operations of the Group have

performed well in difficult economic times

and have never failed to deliver real growth

in an economic downturn.

In times of economic downturn, there tends

to be greater reticence on the part of

employers to employ permanent workers

due to uncertainty with regard to optimal

staffing levels. As such, there is a tendency

to favour temporary or contract workers

until such time as relative economic

certainty returns.


In particular, economic downturns tend

to favour the blue-collar contracting

environment which Adcorp has strategically

positioned as the single biggest profit

contributor to the Group by way of recent

acquisitions which is now starting to pay off.

Coupled with the large scale infrastructural

and capital projects previously mentioned

which will consume large concentrations of

skilled and semi-skilled blue-collar workers

in the South African environment, this part

of the Group which contributed 45% to

Group EBITDA in the trading period under

review, should continue to perform well.

Whilst the white collar flexible staffing

operations do have a sizeable exposure to

the financial services sector which will

experience difficult market conditions,

certain other marketing initiatives and

market share gains in these operations

should mitigate against these anticipated

tough market conditions although it is

unlikely that profit growth from these

operations will be comparable with that

of the blue-collar operations.

Although the permanent recruitment

operations have historically proved

somewhat vulnerable to the economic cycle,

the acute skills shortage, affirmative action

and public sector employment should see

the continued growth of employment

opportunities in this part of the business.

In addition, given the development by the

Group of certain new channels to market,

there is significant opportunity to gain

market share in this segment of the

business.

The Group’s BPO activities should also

continue to perform well in line with global

trends where the BPO industry is now

estimated to be a US$144,2 billion industry

as estimated by Gartner Inc. in a November

2007 report. Of this, outsourced human

capital activities represent almost 20%

of all BPO activity being worth some

US$26,1 billion globally.

In summary, therefore, the Group is well

positioned given current South African

economic and environmental conditions

due to:

• the anticipated rapid growth in the blue-

collar sector;

• the prevailing skills shortage;

• recent market share gains;

• the significant GDFI and infrastructural

spend in the South African economy;

• the current existence of a number of

mass recruitment projects;

• growth in business process outsourcing;

and

• learnership and training opportunities.

GROUP STRATEGYThe strategy of the Group has evolved over

its 30-year history from being somewhat

disfocused and informal in its formative

years to being more recently focused on

building a solid core to the business with

the ability to generate strong cash flows.

This strategy has been successful to the

extent that the Group is now well

established as the leading human capital

and business process outsourcing operation

in South Africa.

The focus of the management team is now

to “leverage the core” to further extend the

range and scope of business process

outsourcing activities, to build an effective

shared services capability with the ability to

deliver economies of scale advantages and to

build an a-typical employee focused financial

services capability providing relevant

employee benefit, financial, wellness and

lifestyle products and services to the Group’s

vast contract labour workforce, which

currently numbers between 65 000 to 70 000

contractors whilst operational priorities

remain focused on:

• cash management;

• margin management; and

• targeted, strategic acquisitions.

The design and implications of this strategy

are to position the Adcorp Group as:

• a major player in the global staffing

industry and dominant in South Africa;

• a recognised provider of scarce skills in

a globally skills-short market;

• a group that offers significant cost and

service level advantages in the BPO

space with the ability to attract a

sizeable client base;

• a company which has access to

significant employees’ disposable

income offering revolutionary,

appropriate and affordable employee

benefit, wellness, credit, airtime and

lifestyle products to this vast employee

base;

• a business able to benefit from

economies of scale; and

• a business positioned superbly in a high

growth sector of the market.

Although thepermanent recruitment

operations havehistorically proved

somewhat vulnerable tothe economic cycle, the

acute skills shortage,affirmative action and

public sector employmentshould see the continued

growth of employmentopportunities in this part

of the business.



NORMALISED EARNINGSThe financial figures presented for the 14-month financial period ended 29 February 2008

have been significantly impacted by certain non-cash and mostly non-recurring adjustments

required in compliance with International Financial Reporting Standards (IFRS). These

adjustments are substantial and misrepresent the true commercial and economic reality of

the Group’s trading performance for the period under review.

The impact of these adjustments on HEPS (headline earnings per share) is as follows:

14 months 14 months to Feb to Feb2008 2007

Impact of IFRS – non-cash flow items R’000 R’000

Amortisation of intangible assets (46 808) (4 281)

Share-based payments (101 966) (6 929)

Lease smoothing (1 399) (763)

Profit on disposal of part of continuing

operations 48 633 –

Tax effects on above 14 550 1 463

Impact on headline earnings (86 990) (10 510)

Impairments (11 645) (6 256)

Profit on disposal of discontinued

operations 42 233 58 330

Impact on all earnings (56 402) 41 564

Impact on HEPS (cents) (177,1) (24,3)

Impact on EPS (cents) (114,8) 95,9

Impact on HEPS (%) (48) (8)

Excluding the impact of these IFRS adjustments, the normalised, abridged income statement

for the 14-month period ended 29 February 2008 is as follows:

14 months 14 months Normalised abridged income statement to Feb to Feb for the 14-month period ended 2008 2007 %29 February 2008 R’000 R’000 change

Revenue 4 430 105 3 077 504 44

Cost of sales (3 349 604) (2 301 903) 46

Gross profit 1 080 501 775 601 39

Other income 31 620 35 021 (10)

Admin, marketing and operating expenses (853 143) (661 268) 29

Operating profit 258 978 149 354 73

Net interest paid (21 705) (3 223)

Share of profits from associates 1 512 2 915

Profit/(loss) on sale of property and equipment 119 (114)

Profit before taxation 238 904 148 932 61

Taxation (55 405) (34 347) 61

Profit for the period from continuing operations 183 499 114 585 60

(Loss)/profit for the period from

discontinued operations (419) 7 904

Profit for the period 183 080 122 489 50

Weighted average shares (000’s) 49 122 43 330

Core headline earnings per share 372,7 287,6 30


ERP SYSTEM IMPLEMENTATIONThe Group is currently implementing a

new Microsoft Dynamics AX ERP system.

The upgrade was necessitated by the rapid

growth and changing nature of the flexible

staffing businesses, the age and complexity

of the legacy systems as well as the need

for timely, relevant operational information

given the strong focus on margin

management and the untapped potential

that can be achieved by focusing on

operational excellence.

It is anticipated that the final cost of the

project will be R64 million.

The system is now developed and roll out

of the implementation plan has commenced

in certain Group operations with positive

results. It is anticipated that the system will

be fully implemented across the Group

within the next 6 to 12 months.

BROAD-BASED BLACK ECONOMICEMPOWERMENTThe Group announced a broad-based black

economic empowerment (BBBEE)

transaction early in 2007 that has

significantly bolstered the empowerment

credentials of the Group whilst also

creating an opportunity for all Adcorp

employees to share in the Group’s financial

fortunes.

In terms of this transaction, the Adcorp

Group now has an effective 25,1%

empowerment shareholding structure in

compliance with the Department of Trade

and Industry’s BBBEE Codes of Good

Practices and Conduct.

In terms of this BBBEE transaction, a

consortium comprising women’s

grouping, Women Investment Portfolio

Holdings Limited (“Wiphold”), holds

8,75% of the shareholding in Adcorp

whilst, a 6,25% share is held by Simeka

Group (Pty) Limited and a 10% share is

held by an Adcorp employee share

incentive trust.

In order to facilitate this transaction, the

original empowerment shareholding

structures of the flexible staffing operations

and the disposed communications division

were unwound thus consolidating all of the

Group’s empowerment shareholding in the

new structure.

The BBBEE transaction has bedded down

well and has added a new and beneficial

aspect to the profile of the Group.

Combined with the Group’s many other

BBBEE initiatives in compliance with the

Codes of Good Practice and commitment

to the imperative of black economic

empowerment and transformation, the

Adcorp Group recently won the Financial

Mail/Empowerdex Top Empowerment

Companies 2008 Award as the most

empowered company listed on the JSE.

HUMAN RESOURCESBeing a people intensive business, the

need for sound human resource policies

and procedures is of paramount

importance.

The key focus of this function is around the

attraction and retention of top talent in the

Group.

In this regard, the Group remains committed

to upholding a best practice human resource

management approach ensuring that the

management of human resources is

effective, efficient and that there is fair

treatment of all employees.

In terms of this best practice approach,

particular emphasis is given to the

following areas:

• recruitment practices;

• retention policies and programmes;

• succession planning;

• performance management;

• training and development;

• employment equity and affirmative

action; and

• labour relations.

In addition, the Group human resources

function is the custodian of the Group’s

social investment activities which are

primarily focused on the development of

human potential by way of extending a

bursary scheme to disadvantaged

individuals and communities as well as

on the support of vegetable garden projects

in disadvantaged communities.

The broad-basedblack economicempowerment

transaction has beenbedded down well

and has added a newand beneficial aspect

to the profile of the Group.



OUTLOOKCurrent market conditions should see

the Group continue on its recent growth

trajectory with Adcorp’s overweight

exposure to the blue-collar flexible staffing

sector now paying off.

The Group’s innovative recruitment, talent

acquisition, workplace optimisation,

training and learnership strategies and

methodologies continue to gain acceptance

in a skills short environment with

commensurate market share gains.

The recent acquisitions are all making a

positive contribution whilst the business

process outsourcing space continues to look

attractive in terms of both its size and

growth potential.

Implementation of the Group’s new

Microsoft Dynamics AX ERP system should

offer a number of operational benefits and

should also provide economies of scale

advantage for the Group.

All of these factors coupled with the

Group’s strong BBBEE credentials position

the Group well to take advantage of current

market conditions and opportunities. As

such, the 2008/09 financial year should once

again be a good one for the Adcorp Group.

APPRECIATIONAs Adcorp’s strength has always been its

outstanding people, I would like to thank

the directors, management and staff of the

Adcorp Group for their valued contribution

over the past financial period and look

forward to their continued support in the

future.

RL Pike

Chief Executive Officer

The recentacquisitions are allmaking a positivecontribution whilstthe business processoutsourcing spacecontinues to lookattractive in termsof both its size andgrowth potential.

Corporategovernance

Corp

orat

e go

vern

ance


DR VAN ZYL SLABBERT (67)ChairmanNon-Executive Director – IndependentMA, DPhilAppointed 16 September 1994

Outside directorships heldCTP Caxton – ChairmanFirstRand; Hollard Foundation

Van Zyl graduated from StellenboschUniversity. He lectured at Stellenbosch,Rhodes, UCT and Wits from 1964 to 1974.From 1974 to 1986 he was a member ofParliament and leader of the opposition party.In 1986 he formed IDASA with A Boraine topromote internal/external dialogue. Van Zylreceived honorary doctorates from SimonFraser University in Vancouver, Canada,University of Natal and University of FreeState. He is currently involved with SorosPhilanthropy in southern Africa and nineSADC countries. Van Zyl was recently electedChancellor of the University of Stellenbosch.

RICHARD PIKE (46)Chief Executive OfficerExecutive DirectorBCom (Hons), CA(SA)Appointed 18 October 2000

No outside directorships held

After completing articles at Deloitte Haskins &Sells, he joined the Hunt Leuchars & HepburnGroup as group Financial Manager, later beingappointed as Financial Director of HL&HMining Timber. In 1995 he co-founded MorganUniversity Alliance, a private education andbusiness consulting initiative offering degree anddiploma programmes in business managementfrom the University of Warwick in the UK. In 1999, he listed Acumen Holdings Limited,a staffing and training group of companies.Acumen was acquired by Adcorp HoldingsLimited in the year 2000 when Richard assumedthe position of Deputy Chief Executive Officer.In 2001 he was appointed as Chief ExecutiveOfficer of Adcorp Holdings Limited.

CAMPBELL BOMELA (59)Executive Director – Group ServicesBCom, MBAAppointed as a Non-Executive Director 11 March 2004Appointed as an Executive Director 1 March 2006

Outside directorships heldMatlapeng Resources – Non-ExecutiveDirectorMega Afrika – Non-Executive DirectorMasana Employee Share Trust

Campbell Bomela was the MD ofBlack Management Forum InvestmentsCompany (BMFI) until he joined Adcorpon 1 March 2006. He has been a seniorbusiness professional for over 15 years andas part of his experience, he was seconded tostart up the Department of Economic Affairsfor the Eastern Cape Government afterthe 1994 general elections. Later he wasseconded to assist with the amalgamation and rationalisation of the different economicdevelopment corporations which operated in the Eastern Cape prior to 1994. Oncompletion, he started and ran hisown businesses in this area.

FAUNCE BURD (60)Chief Financial OfficerExecutive DirectorAppointed 9 September 2002

No outside directorships held

Faunce first joined the Adcorp Groupin 1990 in the capacity of Managing Directorof Adcorp Graphics. She then left the Group in1991 to take up the position of FinancialDirector of Mono Pumps (part of Murray &Roberts) for a period of five years. Faunce re-joined Adcorp in 1997, heading upthe subsidiary Adcorp Management Servicesand was later appointed as Chief FinancialOfficer of Adcorp Holdings Limited.

NELIS SWART (45)Chief Operations OfficerExecutive Director MComAppointed 9 September 2002

Outside directorships heldDreamworld Investments – Director Magnolia Ridge Properties 360 – DirectorCilente Property Investments

Nelis lectured on the subjects of Strategic andFinancial Management at the University ofPretoria. During the same period he was also aco-founder of a consulting and marketingresearch company. Thereafter he was involvedwith Deloitte & Touche and Byrne Fleming ina management consulting capacity duringwhich period he gained significant consultingexperience in a variety of industries. Prior tohis appointment as Managing Director ofQuest Flexible Staffing Solutions, he was thecommercial director of Beier Industries inKwaZulu-Natal.

RESIGNATIONSH Barenblatt – 21 February 2007

G Negota – 21 February 2007

M Liphosa – 28 February 2007

R McGregor – 28 February 2007

S Sebotsa – 28 February 2007

S Shoniwa – 28 February 2007

F Khanyile – 21 February 2008

Board of directors


LOUISA MOJELA (54)Non-Executive DirectorBComAppointed 1 June 2007

Outside directorships heldWiphold, Distell Group, Sun International,ABB SA, ABB Powertech Transformers,African People Industrial Corporation, AfrisunGauteng, Afrisun Leisure, Ahanang Holdings,Emfuleni Resorts, Futuregrowth AssetManagement, National Casino Resort Manco,Phaphama Holdings, SA Corporate Real EstateFund Manager Limited, Skyprops 142, SAAirways, USB-ED Limited, Wiphold FinancialServices No. 1 Limited, WIP Investments andWIP Three Investments.

Louisa is one of the founders and Group CEOof Women Investment Portfolio HoldingsLimited (Wiphold). Louisa has held positionsat Standard Corporate and Merchant Bank(SCMB), The Development Bank of SouthernAfrica (during which time she was seconded tothe World Bank in Washington DC), and theLesotho National Development Corporation.Louisa has completed an Executive LeadershipProgramme at Wharton School of Business atthe University of Pennsylvania. In 2000 Louisawas selected as one of the 40 women fromdifferent continents and countries as “TheLeading Women Entrepreneur of the World”.

TRYPHOSA RAMANO (36)Non-Executive Director BCom, CA(SA)Appointed 1 June 2007

Outside directorships heldSasria, Women Investment Portfolio Holdings,Afrisun Leisure, Emfuleni Resorts, NationalCasino Resort Manco, Legae Securities,Wipcapital, USB Executive Development and DBSA.

Prior to joining Wiphold in November 2006,Tryphosa was the Chief Financial Officer andExecutive Vice-President of SAA and hasacted as President of SAA. She previouslyheaded the Asset and Liability Division of theNational Treasury where her focus was on the

restructuring of state-owned assets, ensuringlegislative compliance by public entities andmonitoring contingent liabilities ofgovernment. Tryphosa was instrumental in thelisting of Telkom on the JSE and NYSE andenforcing the payment of R10 billion individends by public entities to government.Before joining government, Tryphosa was aportfolio manager and Head of the Institute ofExcellence at RMB Asset Management.

GUGU PRIDE DUDA (31)Alternate DirectorBCom, CA(SA)Appointed 1 June 2007

Outside directorshipsABB South Africa and ABB Powertech.

Gugu recently joined Wipcapital as part of theInfrastructure Finance team. Prior to joiningWipcapital, she was Chief Financial Officerfor Internet and Telephone Banking division atFNB. Her prior experience includes positionsin finance, credit and risk at RMB andFirstRand.

PETER WARD (55)Independent DirectorBCom, CA(SA)Appointed 1 June 2007

Outside directorships held:Aveng and Hollard Holdings and The HollardInsurance Company – Independent Non-Executive Director of all these companies.

Peter joined Deloitte in January 1973 afterstudying for a Bachelor of Commerce degreein which he obtained distinctions in twomajors. He then completed his CA in 1975.In 1978 Peter was seconded to Philadelphia,USA, for 18 months. He was appointed anAudit Partner in March 1983 and GroupLeader Audit in 1993. He was responsible formany large accounts including CG Smith,Dow Chemicals, Marsh, First Link and Spar.In 1999 Peter became Business Unit Leader ofDeloitte’s Forensic & Dispute ServicesDivision. During Peter’s seven-year leadershipof this division it experienced compound

annual growth in earnings in excess of 42%.Since the early 1980s Peter has played a rolein the Deloitte Transformation Programme.He chaired the initial steering committeeleading to the formation of the Deloitte Multi-Cultural Development ProgrammeBoard, the predecessor to the current DeloitteTransformation Board. Peter retired fromDeloitte at the end of May 2007.

MUTHANYI ROBINSON RAMAITE (39)Non-Executive DirectorMasters degreeAppointed 1 June 2007

Outside directorships heldSimeka Group, Vusani Property Investments,Khullela, Verge Management Services, Fintech,Gobodo Forensic & Investigative Accounting,Majestic Silver Trading, Newshelf 669, CarbonReductions SA, Golden Pond Trading 350,MRR Management, Ramaite Brothers FamilyTrust, Ramaite Properties, Simeka BSG, SimekaManagement Services, Simeka Properties andWescoal Holdings.

Robinson studied at the University of theWitwatersrand and graduated with a mastersdegree in Public and DevelopmentManagement. He then obtained a BIuris at theUniversity of the North.

Through his directorships and interest in thedifferent areas of business, Robinson has beeninvolved in a number of investment initiativesin the property, mining, aviation and ICTsectors, to mention a few. He has also madevaluable contributions in varioustransformation and empowerment initiatives.In his term of office as Director-General forthe Department of Public Service andAdministration (1999 to 2003) he served invarious positions including Chairperson of theDirectors-General Governance andAdministration cluster of government, Boardmember of the State Information TechnologyAgency (SITA) and the Centre for PublicService Innovation (CPSI).

Corporate governance


COMPLIANCE WITH THE CODE OFCORPORATE PRACTICES ANDCONDUCTThe board of directors is fully committed to

effective corporate governance and the need

for integrity and high ethical standards in

the conduct of its business. Adcorp fully

supports the Code of Corporate Practices

and Conduct and endorses the need to

conduct its business in accordance with the

highest standards of corporate practice.

The directors have applied the

recommendations as contained in the Code

of Corporate Practices and Conduct set out

in the King II report.

The commencement date of the

Amendments to the Companies Act of 2006

was gazetted on 14 December 2007. These

amendments apply to the financial year

commencing after 14 December 2007 (year

commencing 1 March 2008 for Adcorp).

Adcorp has already taken steps to comply

with the additional governance requirements

introduced by the Amendments to the

Companies Act of 2006.

BOARD OF DIRECTORSThe board of directors as set out on

pages 30 and 31 of the annual report

consists of four executive directors and

five non-executive directors. There is

one alternate director who is black.

The non-executive directors provide the

board with independent judgement based on

their significant range of skills and

commercial experience. Four board

members are black of which three are

women. The functions of Chairman and

CEO are not performed by the same person.

The board meets quarterly and on an ad

hoc basis if considered necessary. The main

function of the board is to determine

strategy and direction and to lead the Group

in this direction with integrity and

judgement. In addition, it is responsible

for the overall sustainability of the Group

including areas such as risk management,

protection of Group assets, monitoring key

performance indicators as well as the

adequacy of policies and systems. It is

further required to ensure compliance with

all legal and statutory requirements.

Certain functions have been delegated to

subcommittees, which currently consist of

the audit committee and risk committee,

transformation committee and the

remuneration and nominations committee.

The functions of these committees are

described more fully under each of the

relevant subheadings in this report.

All new directors are given a presentation

on the Group’s strategy as well as a

document outlining the duties and

responsibilities of directors. Presentations

covering director responsibilities and

fiduciary duties are also arranged for board

directors from time to time.

Executive directors do not have service

contracts, and employment is subject to

a maximum of three months’ notice with

the exception of the CEO where the notice

period is six months. Restraint agreements

have been signed and all executive directors

hold either shares or share options or both.

A declaration of interests is submitted by all

directors annually in order to determine any

conflict of interests. No conflicts of interest

exist at present but if this were to occur it

would be resolved by the board. All board

directors have access to the advice of the

company secretary and are at liberty to

obtain external advice at the company’s cost

if necessary.

BOARD MEETINGSBoard meetings were held quarterly and all

board members attended these meetings

with the following exceptions. Apologies

were received from:

1st quarter 2007: None

2nd quarter 2007: F Khanyile

3rd quarter 2007: None

4th quarter 2007: F Khanyile

L Mojela

January 2008: None

An extraordinary board meeting was called

to consider two possible acquisitions one of

which was Staff U Need. The board

approved the acquisition of Staff U Need,

however, it was decided not to proceed with

the second acquisition. This meeting was

not attended by F Burd and T Ramano.

The board ofdirectors is fullycommitted to effective corporategovernance.


EXECUTIVE COMMITTEEThe Adcorp executive committee is the

most senior executive decision-making body

in the Group. The committee is chaired by

the Chief Executive Officer and comprises

the Chief Financial Officer, the Chief

Operations Officer and the Executive

Director – Group Services. In addition, the

Group Chairman, while not directly

involved in the day-to-day operational

issues of the Group, also attends the

executive committee meetings which are

held on a monthly basis.

The executive committee is responsible for

inter alia the following:

• Strategic planning, monitoring of market

trends and competitive activity.

• Structuring of the Group’s portfolio

of assets.

• Shaping and approving operational

strategies, budgets and forecasts.

• Measuring, monitoring and taking

proactive action on company

performances.

• Monitoring and managing cash,

cash collections and margins.

• Shaping and approving succession plans

and senior management appointments.

• Group BEE structures, initiatives and

transformation.

• Group reporting and reporting to

shareholders.

AUDIT AND RISK COMMITTEEThe audit and risk committee consists of the

following independent non-executive

directors:

Independent non-executiveP Ward (Chairperson)Appointed: 1 June 2007


Appointed: 9 May 2006

(Resigned as Chairperson 1 June 2007)

F Khanyile

Appointed: 2 October 2002

(Resigned 21 January 2008)

Non-executiveT Ramano


(ex officio)

In addition the audit committee is attended

by the following:

Executive (by invitation)P Bierman (Managing Director: Adcorp Accountability)Appointed: 18 July 2007

F Burd (Group Chief Financial Officer)Appointed: 9 September 2002

R Pike (Group Chief Executive Officer)

R Tayob (Group Financial Manager)Appointed: 2 March 2007

L Warwick (Group Financial Manager)Appointed: 25 November 2004

Resigned: 6 August 2007

Internal auditors (by invitation)Sizwe Ntsaluba vspAppointed: 28 October 2005

External auditors (by invitation)Deloitte & Touche

Appointed: 2002

Charter Financial & Auditing Inc

Appointed 1987

The membership of the audit and risk

committee was revised during the year to

comply with the Companies Act

Amendment 2006.

Executive management together with both

the external and internal auditors are in

attendance at each meeting. Other members

of staff attend as required. Executive

attendees are not present during periodic

discussions on executive openness and

co-operation.

The committee met seven times during the

period 1 January 2007 to 10 July 2008.

Apologies were received from the following

committee members in respect of meetings

listed below. The remaining members

attended all meetings.

March 2007 – None

May 2007 – F Khanyile

July 2007 – F Khanyile

October 2007 – F Khanyile

January 2008 – None

May 2008 – None

July 2008 – None

Corporate governance (continued)


The group’s audit and risk committee

charter was updated during the course of the

financial period to ensure both early

compliance with the Companies Act

Amendment 2006 and compliance with

sound corporate governance practices.

In response to the Companies Act

Amendment 2006 the charter was amended

to cater for the following:

• The appointment of the audit and risk

committee members for a financial period.

• The agreement on the nomination of the

auditors to the shareholders.

• The determination of the auditor’s

remuneration, terms of engagement and

scope of services.

• The nature and extent of non-audit

services that may be provided by the

auditors.

• The pre-approval of contracts by the

auditors to provide for non-audit services.

• To receive and deal with any complaints

relating to:

– accounting practices;

– external audit;

– internal audit; and

– the content or auditing of the financial

statements or any related matter.

The amended audit and risk committee

charter will be tabled for approval by the

board on 16 July 2008.

The committee’s main responsibility is to

provide the board with additional assurance

regarding the integrity and effectiveness of

the group’s risk management framework

and related internal controls, reporting and

compliance systems applied within the

group and the operational implementation of

corporate governance. Other duties include

a review of the accounting policies, a

recommendation to the board for the

approval of the financial statements, a

review of information systems and the

review of the level and competency of

financial management.

The external auditors have confirmed their

independence and the audit committee is

satisfied that the audit has been carried

out by independent auditors, free of any

scope restrictions.

The committee considers that it has carried

out its designated function as required by

the Code of Corporate Practice and the

Amendment to the Companies Act of 2006.

The group’s risk management framework is

still a work in progress and requires further

refinement.

PK Ward – Chairman

TRANSFORMATION COMMITTEEThe transformation committee was

established in 2004 and consists of:

Non-executiveR Ramaite (Chairman)Appointed: 22 May 2008

C Bomela

Appointed: 1 April 2004

Resigned as chairman: 21 May 2008

G Duda


D Marsden


M Liphosa


Resigned: 1 March 2007



Resigned: 22 May 2008

Executive (by invitation)A Ramsden


W Smith

Appointed: 1 June 2006

J Boonzaaier

Appointed: 1 June 2006

This committee met twice during the period

ended 29 February 2008 and all committee

members attended these meetings.

Transformation is an ongoing Group focus

and is discussed at all Adcorp board

meetings as well as at all executive

committee meetings.

The transformation committee is responsible

for monitoring transformation at all levels

within the Group as well as assisting with

formulation of Group transformation policy

and reviewing the implementation of these

policies. In addition the committee reviews

progress on employment equity and skills

development as well as corporate social

investment. Adcorp has recently been

awarded first place overall in the “Financial

Mail/Empowerdex Top Most Empowered

Companies on the JSE Limited.

REMUNERATION AND NOMINATIONSCOMMITTEEThis committee met twice during the period

and consists of:

Non-executiveR Ramaite (Chairman)Appointed: 5 March 2008

S Shonhiwa

Appointed: 2 October 2002

Resigned:1 March 2007

Dr F van Zyl Slabbert (acted as Chairmanfrom 2 March 2007 to 4 March 2008)Appointed: 20 November 1995

ExecutiveF Burd (ex officio)R Pike (ex officio)

The remuneration committee is responsible

for approving the remuneration of all board

directors as well as the allocation of share

options to employees. The committee

is also responsible for reviewing senior

management salary increases and bonuses.

Independent external consultants and market

comparisons are used to ensure that

remuneration is market related and is

linked to both individual and company

performance. Directors’ remuneration is

fully disclosed on page 84.


The Group placessignificant importance

on the use ofempowered suppliers.

INTERNAL CONTROLThe directors report that the company’s

internal controls and systems are designed

to provide reasonable assurance as to the

integrity and reliability of the financial

statements and to adequately safeguard,

verify and maintain accountability of its

assets. Such controls are based on

established written policies and procedures

and are implemented by trained personnel

with an appropriate segregation of duties.

These policies and procedures are reviewed

continually and updated as necessary. The

internal audit division conducts ongoing

audits on all Group companies and written

reports are compiled. All items raised

in these reports are addressed promptly.

The audit and risk committee evaluates

external risks to the businesses and matters

of concern are addressed on an ongoing

basis by management. The Group has a

documented and tested business continuity

plan which should enable it to recover from

a disastrous incident. Nothing has come to

the attention of the directors to indicate that

any material breakdown in the functioning

of these controls, procedures and systems

has occurred during the year under review.

GOING CONCERNThe directors are of the opinion that the

business will be a going concern for the

foreseeable future and accordingly, the

financial statements have been prepared

on the going concern basis.

SOCIAL INVESTMENTAdcorp established a formal Social

Investment Programme in January 2001.

The achievements of this programme as

well as its purpose and future direction

are covered more fully under the section on

“Corporate Social Responsibility” on

page 37.

NON-FINANCIAL MATTERSAll directors and employees are required

to maintain the highest ethical standards

in ensuring that the Group’s business

practices are conducted in a manner which

in all reasonable circumstances is beyond

reproach. There is a documented code of

conduct which is signed by all employees.

Adcorp is committed to educating and

supporting employees in the fight against

HIV/Aids and has produced a booklet and

posters on HIV/Aids awareness. The Group

has a formal HIV/Aids policy and has done

assessments on the effect HIV/Aids could

have in the workplace.

Adcorp is concerned about employee safety

and all reasonable steps are taken to ensure

their safety.

Adcorp is environmentally responsible and

aware and ensures that at all times the

Group in no way negatively impacts the

environment.

STAKEHOLDER COMMUNICATIONThe board strives to present a balanced and

understandable assessment of the Group’s

position, addressing material matters of

significant interest and concern to

stakeholders. At all times, a balance is

sought in presenting the positive and

negative aspects of activities of the Group.

The Group reports under International

Financial Reporting Standards (“IFRS”) and

accordingly, the results for the period ended

29 February 2008 have been prepared in

accordance with the Group’s accounting

policies, which comply with IFRS. Details

of the Group’s accounting policies are set

out more fully in the financial statements.

YEAR-ENDAs advised in March 2007, Adcorp changed

its year-end from December to February.

In order to facilitate this the reporting

period covers a 14-month period being

1 January 2007 to 29 February 2008.

USE OF EMPOWERED SUPPLIERSThe Group places significant importance

on the use of empowered suppliers and

sourcing of services and supplies from

empowered companies is encouraged and

monitored.

CLOSED TRADING PERIODDirectors and managerial staff are precluded

from trading in Adcorp shares from end

February until the announcement of the

annual results and again from 31 August

until the announcement of the interim

results.

Corporate governance (continued)


HUMAN RESOURCESThe board of directors has formalised a

transformation programme whereby

measurable objectives for the Adcorp Group

have been set in four areas:

• best practices in human resources;

• affirmative action;

• organisational culture; and

• black economic empowerment.

The transformation framework has followed

the strategic business plan of the Group and

its operating companies and is focused

primarily on building capacity through

focused development and skills transfer.

This is aimed at achieving sustained growth

and profitability both now and in the future.

In order to achieve strategic business

objectives, the above transformation process

is supported with a performance

measurement system focused on measuring

key objectives at all levels throughout the

Group. The system facilitates effective

planning, implementation and monitoring at

board level and reflects the individual and

collective commitment of all directors and

senior managers to the process. A table

setting out the number of employees and

the employment equity status of the Group

appears on page 38. In addition to

1 755 permanent employees the Group

will have approximately 70 000 contract

and temporary employees including Staff U

Need which is still subject to Competition

Commission approval. These temporary

employees are placed in employment across

a wide spectrum of businesses. Adcorp has

a significant number of learnership

contracts which also form part of the

Group’s training initiatives and contributes

significantly to the process of upskilling the

country’s workforce. The group’s “people

strategy” is set out on page 10.

Corporate social responsibility


Adcorp’s Corporate Social Investment (CSI)

initiatives have evolved over the years and

are currently, mainly focused in the areas of

vegetable garden projects, bursaries and

scholarships as well as supporting

educational institutions. Adcorp annually

commits an amount equivalent to 1% of its

annual profits to CSI projects.

VEGETABLE GARDEN PROJECTSThe vegetable garden projects are

predominantly situated at disadvantaged

schools and community centres. These

projects support certain school-feeding

schemes, but are also used for educational

purposes. The vegetable garden projects

also feed disabled people and people

affected by HIV/Aids.

Currently there are 13 such vegetable

garden projects in Gauteng, the Western

Cape and KwaZulu-Natal that Adcorp has

established and funded. The projects cover

some 11 700 square meters of all-weather

hydroponic tunnels which ensure

continuous year-round vegetable production

as well as a number of larger, additional

adjacent shade netting and fenced-in areas.

Also, Adcorp provides the necessary

infrastructure, equipment, training, seeds

and fertilisers to establish these projects

which in turn provide employment

opportunities for a large number of

unskilled and semi-skilled, previously

unemployed people whilst also upskilling

them with the necessary agricultural skills

to sustain these gardens.

BURSARIES/SCHOLARSHIPSAdcorp currently provides bursaries to

learners from rural areas commencing at

grade 11 and 12 levels.

Six learners from the Nourivier District in

the Northern Cape are the first beneficiaries

of this scheme which has enabled them to

study at boarding school facilities in

Springbok in the Northern Cape. The

bursaries cover tuition, accommodation as

well as sporting and academic excursions.

Selection processes and plans are currently

under way to extend this scheme to other

disadvantaged areas in other parts of the

country specifically, Gauteng, the Free

State, KwaZulu-Natal and the Eastern Cape.

OTHER PROJECTSA number of Adcorp’s subsidiaries also

participate in social upliftment projects such

as Emmanuels Advance, which provides

financial support to the Eldorado Park and

Lenasia Life Colleges, Capacity which

supports one of the Group vegetable garden

projects in Tembisa as well as supporting a

disadvantaged crèche in Richards Bay. On

the other hand, Premier Personnel supports

a brick-making project in Limpopo.

Up to now, 13 vegetable gardens

covering 11 700square metres, on

hydroponics systemsin 30 metre by

10 metre all-weathertunnels, to ensure

continuous productionthroughout the year,have been provided.

Employment equity – permanent stafffor the 12 months ended 31 March 2007*


2007 2006R’000 R’000

Total workforce 1 755 1 810

Total employees with disabilities 18 22

Workforce profile

Race and gender profile

Non-designated Group 180 187

White females 618 643

Black males 274 270

Black females 683 710

Occupational level profile

Management (top, senior, middle and junior) 1 195 1 218

Non-management 560 592

Management profile by gender (top management, senior management,

middle management, junior management)

Females 945 957

Males 250 261

Management profile by race

Black 535 538

White 660 680

Non-management profile by gender

Females 379 420

Males 181 172

Non-management profile by race

Black 422 467

White 138 125

Disability profile

Management 9 14

Non-management 9 8

People with disabilities by gender

Females 8 14

Males 10 8

Total employees before reporting cycle 1 810 1 568

Add: Recruits 1 441 693

Less: Resignations (103) (218)

(project staff) Non-renewal of contracts (contract employees) (1 022) (109)

Dismissals (10) (33)

Retirements – –

(disposal of Career Junction, Knovation) Other (348) (83

Retrenchments (13) (8)

1 755 1 810

* The skills development reporting period runs from 1 April 2006 to 31 March 2007 and the equity reporting period has been aligned to this.

Financial statements


Proof 13 - 18 July

Six-year review

IFRS* SA GAAP*2008** 2006 2005 2004 2003 2002

Income statementRevenue (R’000) 4 430 105 2 700 216 2 359 652 1 980 116 1 667 235 1 523 381

Operating profit before IFRS adjustments, depreciation and

amortisation (R’000) 284 499 149 603 131 655 99 323 85 735 79 466

Operating profit (R’000) 108 723 125 165 116 407 85 493 67 942 59 258

Profit/(loss) before taxation (R’000) 168 171 136 460 102 139 78 465 17 016 (20 246)

Effective tax rate (%) 18,3 23,5 30,5 23,0 39,2 32,4

Profit/(loss) for the period (R’000) 126 968 105 620 67 129 59 333 (9 089) (38 387)

Profit/(loss) attributable to ordinary shareholders (R’000) 126 968 107 994 65 185 56 917 (8 802) (38 577)

Core headline earnings (R’000) 183 080 108 077 65 185 56 917 (8 802) (38 577)

Balance sheetFixed and other non-current assets (R’000) 675 449 138 372 119 723 141 541 132 791 175 871

Current assets (R’000) 714 485 511 496 438 307 349 035 294 081 262 035

Total assets (R’000) 1 389 934 649 868 558 030 490 576 426 872 437 906

Ordinary shareholders’ interest (R’000) 667 750 310 703 249 706 215 945 186 707 214 309

Minority and BEE shareholders’ interest (R’000) 421 82 2 456 3 070 788 394

Interest and non-interest bearing non-current liabilities (R’000) 156 694 1 586 5 541 6 887 – 1 002

Deferred taxation (R’000) 38 540 3 424 1 777 – – –

Current liabilities (R’000) 526 529 334 073 298 550 264 674 239 377 222 201

Total equity and liabilities (R’000) 1 389 934 649 868 558 030 490 576 426 872 437 906

ProfitabilityReturn on assets managed (%) 42,0 32,0 33,4 30,7 29,6 26,3

Return on equity (%) 22,2 37,5 28,5 29,2 (4,5) (16,1)

Return on sales (operating margin) (%) 5,8 4,9 4,9 4,3 4,3 4,2

EBITDA/revenue (%) 6,4 5,5 5,6 5,0 5,1 5,2

Number of employees 1 755 1 810 1 569 1 658 1 611 1 594

LiquidityCash generated by operations to operating profit (%) 101,7 74,9 79,4 102,9 131,9 97,6

Current ratio 1,5 1,5 1,5 1,3 1,2 1,2

Gearing (%) 30,4 6,0 – 0,6 11,9 23,2

Debtors days 30 36 33 36 38 44

StatisticsWeighted average number of shares in issue (‘000) 49 122 42 882 41 730 40 302 40 031 39 936

Core headline earnings per share (cents) 372,7 252,0 195,1 158,2 96,4 106,6

Earnings/(loss) per share (cents) 258,5 251,8 156,2 141,2 (22,0) (96,6)

Total capital distribution/annual dividend per share (cents) 215 168 140 105 64 37

Dividend/capital distribution cover (times) based on core HEPS 1,7 1,4 1,4 1,5 1,5 2,9

Net asset value per share (cents) 1 315 716 592 531 466 535

* The 2005 and 2006 year results have been prepared in accordance with International Financial Reporting Standards (IFRS). The transition date to IFRS was 1 January 2004 resultingin the 2004 figures being restated to reflect IFRS adjustments. Figures prior to 2004 have been prepared in accordance with South African statements of General Accepted AccountingPractice (SA GAAP, which was effective at 31 December 2004).

** The 2008 year represents 14 months and not 12 months due to the fact that Adcorp changed its year-end from December to February.


Proof 13 - 18 July

Definitions

Cash generated by operating activities to operating profit Cash generated by operations as a percentage of operating profit.

Core headline earningsHeadline earnings excluding non-cash flow IFRS adjustments and profit on disposal of continuing business.

Current ratioTotal current assets divided by total current liabilities.

Debtors daysDebtors days are calculated using the peel back method, whereby the trade debtors balance is reduced by monthly sales (including VAT),

until the balance is exhausted.

Dividend/capital distribution coverHeadline earnings divided by the annual dividend/capital distribution.

EBITDA/turnoverOperating profit before IFRS adjustments, depreciation and amortisation as a percentage of revenue.

Earnings per shareProfit attributable to ordinary shareholders, divided by the weighted average number of shares in issue.

GearingTotal interest-bearing debt divided by total ordinary shareholders’ interest.

International Financial Reporting Standards (IFRS) adjustmentsIFRS adjustments include non-cash flow items such as share-based payments, amortisation of intangibles and lease smoothing.

Net asset value per shareOrdinary shareholders’ interest, divided by the number of shares in issue at the year-end.

Return on assets managedOperating profit (before goodwill amortisation prior to 2004) divided by the total of property and equipment, trade and other receivables.

Return on equityProfit for the year after IFRS adjustments divided by average equity of shareholders.

Return on sales (operating margin)Operating profit (before goodwill amortisation prior to 2004) divided by revenue.

Approval of the annual financialstatements


Proof 13 - 18 July

To the members of Adcorp Holdings LimitedThe directors of the company are responsible for the preparation, integrity, objectivity and fair presentation of the annual financial statements and

related financial information presented in this report.

The directors are also responsible for the systems of internal control. These are designed to provide reasonable but not absolute assurance as to the

reliability of the financial statements, and to adequately safeguard, verify and maintain accountability for assets and to prevent and detect material

misstatement and loss. The systems are implemented and monitored by suitably trained personnel with appropriate segregation of authority and duties.

Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning of these controls, procedures and systems

has occurred during the period under review.

The company and Group financial statements are prepared in accordance with the provisions of the South African Companies Act and comply with

International Financial Reporting Standards and incorporate full and reasonable disclosure in line with the accounting policies of the Group.

The directors are of the opinion that the business will be a going concern for the foreseeable future, and accordingly the financial statements continue

to be prepared on the going concern basis.

It is the responsibility of the independent auditors to report on the annual financial statements. Their response to the members is set out on page 44.

The annual financial statements for the 14-month period ended 29 February 2008 set out on pages 45 to 91 were approved by the board of directors on

16 July 2008 and are signed on its behalf by:

RL Pike FD Burd

Chief Executive Officer Chief Financial Officer

Johannesburg

16 July 2008

Certification by company secretary


In accordance with section 268G(d) of the Companies Act, 61 of 1973 as amended, I certify that the company has lodged with the Registrar all such

returns as are required by a public company in terms of the Act and that all such returns are true, correct and up to date.

LJ Sudbury

Company secretaryAppointed 8 March 2006

Johannesburg

16 July 2008

28 Sloane Street

Bryanston

2021

Proof 13 - 18 July

Report of the independent auditors


Proof 13 - 18 July

Independent auditor’s report to the members of Adcorp Holdings LimitedWe have audited the annual financial statements and Group annual financial statements of Adcorp Holdings Limited, which comprise the directors’

report, the balance sheet and the consolidated balance sheet as at 29 February 2008, the income statement and the consolidated income statement, the

statement of changes in equity and the consolidated statement of changes in equity and cash flow statement and the consolidated cash flow statement

for the 14-month period then ended, a summary of significant accounting policies and other explanatory notes, as set out on pages 45 to 91.

Directors’ responsibility for the financial statementsThe company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International

Financial Reporting Standards and in the manner required by the Companies Act of South Africa. This responsibility includes designing, implementing

and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,

whether due to fraud or error; selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the

circumstances.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International

Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance

whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures

selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to

fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the

financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on

the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting principles used and the

reasonableness of accounting estimates made by the directors, as well as evaluating the overall financial statement presentation.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of the company and of the Group as at

29 February 2008, and of their financial performance and their cash flows for the 14-month period then ended in accordance with International

Financial Reporting Standards and in the manner required by the Companies Act of South Africa.

Deloitte & Touche

Registered Auditors

R Campbell

Partner

21 July 2008

Buildings 1 and 2

Deloitte Place

The Woodlands

20 Woodlands Drive

Woodmead

Sandton

2146

National executive: GG Gelink – Chief Executive, AE Swiegers – Chief Operating Officer, GM Pinnock – Audit, DL Kennedy – Tax & Legal and

Financial Advisory, L Geeringh – Consulting, L Bam – Corporate Finance and Strategy, CR Beukman – Finance, TJ Brown – Clients & Markets,

NT Mtoba – Chairman of the Board, CR Qually – Deputy Chairman of the Board.

A full list of partners and directors is available on request.

Directors’ reportfor the 14 months ended 29 February 2008


The directors have pleasure in submitting their report and financial statements for the 14 months ended 29 February 2008.

Nature of businessAdcorp Holdings Limited is an investment holding company whose subsidiaries and associates carry on business mainly in South Africa, in the

permanent recruitment and flexible staffing sectors as well as business process outsourcing.

OverviewShareholders are reminded, as announced in March 2007, that the company has changed its financial year-end from December to February.

As such, the financial results presented herewith, are for the 14-month period ended 29 February 2008.

Operationally, the 2007/08 financial period saw strong profit growth recorded for the Adcorp Group.

Core headline earnings per share for the 14-month period ended 29 February 2008 of 372,7 cents – refer page 26 (2007: 287,6 cents) were some 29,6%

ahead of core headline earnings per share for the same period last year while earnings before interest, tax, depreciation and amortisation (EBITDA) of

R284,5 million were 60,7% ahead of the R177,1 million EBITDA reported for the prior 14-month period.

The restructuring process which commenced in 2006 to focus the business activities of the Group solely in the areas of staffing and business process

outsourcing (BPO) has not only been achieved in a relatively short time frame, but the quality of the acquisitions and the ease of integration of these

businesses into the Adcorp Group, coupled with the advantageous disposal of certain non-core assets, has greatly added to the strong profit growth for

the year.

In terms of recent acquisitions, the acquisition of Capital Outsourcing Group and FMS Marketing Services were concluded in the period under review

as previously advised to shareholders.

Also pleasing to note is that there were, once again, strong performances with regard to the Group’s two key financial imperatives, namely margin

management and cash generation.

With regard to margin management, the EBITDA margin for the period increased, compared to the prior year level of 5,5%, to the current level of

6,4%, while the conversion ratio of cash generated by operating activities to operating profit, excluding International Financial Reporting Standards

(IFRS) adjustments, was 102% (2007: 20%). R263 million cash was generated by operating activities.

Earlier in the year, the Group announced a broad-based black economic empowerment (BBBEE) transaction that significantly bolstered the

empowerment credentials of the Group while also creating an opportunity for all Adcorp employees to share in the Group’s financial fortunes.

The BEE transaction has bedded down well and has added a new and beneficial aspect to the profile of the Group.

In this regard, the Adcorp Group recently won the 2008 Financial Mail’s/Empowerdex Top Empowerment Companies Award.

The BEE shareholders hold 16,8 million Adcorp “A” ordinary shares of which a percentage will vest in 2017 depending on the amount of notional debt

that has been repaid at that date. Based on the amount of the notional debt that had been paid down as at 29 February 2008 and using the share price

on that date, the theoretical number of shares that would have vested is 1,7 million. This translates into 3,3% dilution which, if included in the diluted

core headline earnings per share, would reduce this figure to 353,4 cents per share.

The implementation of the new Microsoft Dynamics AX ERP system is expected to “go live” in June 2008 with the first site being Capacity.

Implementation into other Group operations will continue according to the project roll-out plan over the next months.

It is anticipated that the new ERP system will contribute positively to the extent, relevance and quality of management information as well as to

operating productivity.

While there have been a number of economic and infrastructural shocks to the South African economy recently, demand for our products and services

remains relatively strong.

The staffing operations of the Group performed well and ahead of expectation. In particular, the permanent recruitment businesses turned in a stellar

performance on the back of a buoyant recruitment market.

Although the permanent recruitment operations have historically proved somewhat vulnerable to the economic cycle, the acute skills shortage,

affirmative action and public sector employment should see the continued growth of employment opportunities in this part of the business.

In addition, given the development by the Group of certain new channels to market, there is significant opportunity to gain market share in this segment

of the business.

Proof 13 - 18 July

Directors’ report (continued)for the 14 months ended 29 February 2008


Proof 13 - 18 July

The flexible staffing operations have traditionally shown a resilience in the past to perform well in uncertain economic times and it is expected that

this trend will continue in the current economic climate.

The Business Process Outsourcing (BPO) operations of the Group performed ahead of expectation and contribute a high quality of earnings to the Group.

Accounting policiesAdcorp prepares its accounts in accordance with International Financial Reporting Standards (IFRS). The accounting policies are consistent with the

prior year annual financial statements, except for the adoption of IFRS 7 relating to disclosure of financial instruments.

Financial overviewIFRS non-cash flow adjustments have had a significant impact on the figures presented for the 14 months ended February 2008 and are mainly the

result of share-based payments arising from the BBBEE transaction concluded in May 2007 as well as the amortisation of intangibles from the new

acquisitions.

The apparent decrease in headline earnings per share from 263,3 cents per share to 195,6 cents per share is the direct result of these IFRS adjustments

and is not reflective of the performance of the Group. In order to give a true reflection of how the Group actually performed, non-cash flow IFRS

adjustments have been eliminated from core headline earnings per share. Core headline earnings for the 14 months to February 2008 amounted to 372,7

cents per share which is a 29,6% increase over the core headline earnings for the comparative period of 287,6 cents per share.

The increases in goodwill, intangible assets and share premium in the balance sheet compared with the previous period result from the acquisitions of

FMS Marketing Services and Capital Outsourcing Group both of which are performing very well.

Free cash flow amounted to 357,7 cents per share for the 14-month period under review compared with a negative 30,7 cents per share for the prior

comparative period. This significant improvement is mainly the result of an eight-day reduction in debtors days at the end of February 2008 compared

with February 2007.

The impact of major acquisitions was as follows:

• FMS Marketing Solutions was purchased with effect from 1 January 2007. The loss from this entity included in group profit for the 14 months to

February 2008 is R2,5 million. This loss has been arrived at after the deduction of the interest attributable to the borrowings required to fund the

cash portion of the purchase price as well as the amortisation charges arising from the valuation of the intangible assets acquired.

• Capital Outsourcing was purchased with effect from 1 June 2007. The profit from this entity included the Group profit for the nine months to

February 2008 is R16,1 million. This profit has been arrived at after the deduction of the interest attributable to the borrowings required to fund the

cash portion of the purchase price as well as the amortisation charges arising from the valuation of the intangible assets acquired. Had Capital

Outsourcing been acquired with effect from 1 January 2007 on the same basis as above, the amount of profit that would have been included in Group

profits would have been R15,5 million.

Broad-based black economic empowerment (BBBEE)Adcorp recognises the importance of positive transformation not only for the Group but for the country as a whole. Accordingly in May 2007 Adcorp

concluded a BBBEE deal in terms of which Adcorp issued a total of 16 822 849 “A” shares, equal to 25% plus one share of its issued share capital, to

a consortium consisting of Women Investment Portfolio Holdings Limited (Wiphold), Simeka Group (Pty) Limited and the employees of Adcorp. This

transaction will result in a meaningful percentage of Adcorp being owned by previously disadvantaged individuals.

The deal involves 25% of Adcorp’s issued share capital being owned by the BBBEE consortium in exchange for an amount referred to as the “notional

debt” which is the difference between the par value and the market value of the “A” shares. The “A” shares have full voting rights and are entitled to

dividends which will be used to reduce the notional debt. In some instances, provided certain growth hurdle rates have been met, a portion of the

dividends will be paid to the BBBEE shareholders upfront. The notional debt attracts notional interest. In 2017 the “A” shares will convert to Adcorp

ordinary shares based on the value of Adcorp shares at the time and the extent to which the notional debt has been paid down.

A circular dated 12 April 2007 was sent to shareholders giving full details of the BBBEE scheme including the rationale, structure and mechanics of

transaction. Copies of the circular are still available from Adcorp’s head office in Sloane Street, if required.

Post-balance sheets eventsAdcorp recently announced the acquisition of the business of Staff U Need (Pty) Limited and Dithomo (Pty) Limited which specialises in providing

labour solutions to the metal and engineering industries. The business has a specific focus in providing both skilled and semi-skilled labour to the power

generating industry including Eskom. This acquisition is still subject to Competition Commission approval.

OutlookGiven the resilient nature of the flexible staffing business, the unique opportunities that exist in the permanent recruitment space and the annuity base

and high quality prospects for the BPO operations, the Group expects to continue to deliver positive organic earnings growth in the financial year ahead.


Share capitalMovements in share capital during the period are shown below:

Number000’s R’000

Opening balance 1 January 2006

Issued shares 42 614 1 065

Employee share scheme (ordinary shares created) 767 720 shares at 2,5 cents 768 20

Opening balance 1 January 2007

Issued shares 43 382 1 085

Acquisitions of subsidiaries (ordinary shares created) 7 009 448 shares at 2,5 cents 7 009 175

Employee share scheme (ordinary shares created) 439 896 shares at 2,5 cents 440 11

Closing balance 29 February 2008 50 831 1 271

Share premiumMovements in share premium during the period are shown below:

2008 2006R’000 R’000

Opening balance 1 January 57 630 48 679

3 200 (2006: 1 400 shares) created at a premium of R3,225 per share 10 4

– Employee combined option/deferred payment scheme

(2006: 85 000) ordinary shares created at a premium of R6,325 per share – 537


40 000 (2006: 65 000) ordinary shares created at a premium of R8,825 per share 353 574


10 611 (2006: 36 837) ordinary shares created at a premium of R11,875 per share 126 437


93 000 (2006: 142 733) ordinary shares created at a premium of R11,975 per share 1 114 1 709


78 000 (2006: 40 670) ordinary shares created at a premium of R12,975 per share 1 012 5 278


(2006: 30 000) ordinary shares created at a premium of R13,725 per share – 412

2 790 697 ordinary shares created at a premium of R25,7750 per share to purchase FMS Marketing Solutions 71 930 –

4 000 000 ordinary shares created at a premium of R35,9750 per share to purchase Capital Outsourcing Group 143 900 –

218 750 ordinary shares created at a premium of R31,9750 per share to purchase Capital Outsourcing Group 6 995 –

Closing balance 29 February 2008/31 December 2006 283 070 57 630

DividendOn 7 May 2008, the board declared a dividend of 160 cents (2006: 126 cents) per share which, together with the interim dividend of 55 cents per share,

results in a total distribution in respect of the financial year ending 29 February 2008 of 215 cents per share.

The dividend of 160 cents per share will be paid on 1 September 2008.

STRATEAdcorp dematerialised its issued shares with effect from 9 July 2001 since time settlement of any trade on or outside of the JSE can only be done in

electronic format. All shareholders were circulated with a brochure at the time giving details of how to go about dematerialising their shares. Despite

this, a number of shares remain in certificate format and will have to be dematerialised before they can be traded. Adcorp’s company secretary may be

contacted should a shareholder require advice on the dematerialisation of their share certificates.

Proof 13 - 18 July



Proof 13 - 18 July

Adcorp Employee Share Option SchemeThe old Adcorp Employee Share Option Scheme was introduced in 1987 and expanded during 1989 to include a share purchase scheme and again in

1994 to allow for the creation of a combined option/deferred payment scheme.

Under this scheme options to purchase shares have been granted on 419 994 shares as at 29 February 2008. These options have already vested and may

therefore be paid for and converted into shares at any time at the option of the relevant employees.

As this share scheme has become expensive when considering the cost to shareholders versus the benefit to employees, Adcorp introduced a new share

scheme which was approved by shareholders in 2006.

Movements for the year in the Adcorp Employee Share Option Scheme appear below:

Opening balance 1 January 2007 Option granted/(cancelled)/(exercised) 2007/08 Closing balance 29 February 2008Date Quantity

Price Value option Quantity Quantity exer- Price Value Price ValueQuantity (R) (R) granted granted Forfeited cancelled cised (R) (R) Quantity (R) (R)

3 200 3,25 10 400 31/05/96 – – – (3 200) 3,25 (10 400) – 3,25 –

33 000 6,35 209 550 31/05/03 – – – – 6,35 – 33 000 6,35 209 550

50 000 8,85 442 500 31/05/02 – 10 000 – (40 000) 8,85 (354 000) 20 000 8,85 177 000

1 500 10,40 15 600 31/05/98 – (750) – – 10,40 – 750 10,40 7 800

39 855 11,90 474 275 31/05/01 – – – (10 611) 11,90 (126 271) 29 244 11,90 348 004

307 500 12,00 3 690 000 31/05/00 – (2 500) – (93 000) 12,00 (1 146 000) 212 000 12,00 2 544 000

201 000 13,00 2 613 000 31/05/04 – 2 000 – (78 000) 13,00 (988 000) 125 000 13,00 1 625 000

636 055 7 455 325 – 8 750 – (224 811) 13,75 (2 624 671) 419 994 4 911 354

New Adcorp Employee Share SchemeUnder the new Adcorp Employee Share Scheme eligible employees received conditional allocations of Share Appreciation Rights (SARs). The scheme

also makes provision for the allocation of performance shares (PFs).

The SARs provide employees, at the date the rights vest, with the right to receive shares equal to the appreciation in the share price since grant date.

The SARs as well as the PFs vest two years after the grant date. The vesting of the shares is subject to various non-market related performance criteria.

Such performance criteria vary between option holders. All SARs and PFs expire after six years from grant date.


Movements for the year in the Adcorp Share Appreciation Rights Scheme appear below:

Opening balance 1 January 2007 Option granted/(cancelled)/(exercised) 2007/08 Closing balance 29 February 2008Date Quantity


680 500 18,15 12 351 075 22/11/05 (109 500) (198 154) (410 000) 18,15 (7 441 500) 161 000 18,15 2 922 150

1 900 000 26,31 49 989 000 30/04/06 1 900 000 26,31 49 989 000

32,31 – 01/03/07 2 850 000 2 850 000 32,31 92 083 500

37,80 – 30/11/07 100 000 100 000 37,80 3 780 000

2 580 500 62 340 075 2 950 000 (109 500) (198 154) (410 000) (7 441 500) 5 011 000 148 774 650

There is no amount payable by participants on exercise. They will receive shares equal in value to the increase in the share price between the grant date

and the exercise date.

Adcorp Empowerment Share TrustThe trust owns 42 802 Adcorp shares of which 30 302 shares were unallocated as at 29 February 2008 as a result of employees leaving the Group.

These will be reallocated during 2008 and no further shares will be available under this scheme. These options have vested and can be paid for and the

shares transferred into the employee’s name are as follows:

2004 12 500

Unallocated 30 302

Total 42 802

Proof 13 - 18 July



Proof 13 - 18 July

Movements for the year in the Adcorp Empowerment Share Trust:

PDI opening balance 1 January 2007 Option granted/(cancelled)/(exercised) 2007/08 PDI closing balance 29 February 2008Date Quantity


5 000 6,35 31 750 – – – – (5 000) 6,35 – – 6,35 –

20 700 8,85 183 195 – – (2 000) – (6 200) 8,85 – 12 500 8,85 110 625

10 000 18,00 180 000 – – – – (10 000) 18,00 – – 18,00 –

10 000 18,15 181 500 – – – – (10 000) 18,15 – – 18,15 –

45 700 576 445 – – (2 000) – (31 200) – 12 500 110 625

28 302 2 000 30 302

74 002 576 445 – – – – (31 200) – – 42 802 110 625

Adcorp Employee Share Trust established 2007As advised in the circular to shareholders dated 12 April 2007, Adcorp concluded a BBBEE transaction which allows for up to 10% of Adcorp shares

to be owned by Adcorp employees the majority of whom are previously disadvantaged individuals.

The Employee Share Trust owns 6 729 140 Adcorp “A” shares on behalf of the employees of Adcorp. These shares are represented by units which

were allocated to all Adcorp employees in the Group at the time of the initial allocation, which was August 2007. Units which are forfeited due to

employees leaving early will be reallocated to new employees, however the total number of “A” shares will not change. In 2017 a percentage of the

“A” shares will convert to Adcorp ordinary shares depending on the amount of the notional debt that has been repaid at that time. Based on the amount

of the notional debt that has been paid down as at 29 February 2008 and using the same share price at that date, the theoretical number of shares that

would have vested is 1,7 million.

Subsidiaries and associatesDetails of the company’s operating subsidiaries and associates are set out in Annexure A on pages 90 and 91.

The summarised attributable interest of the company in the profits and losses of its subsidiary companies is as follows:

2008 2006R’000 R’000

Total profit after taxation 206 903 138 657

Total losses after taxation (5 946) (30 919)

200 957 107 738


Significant shareholdersDetails of significant shareholders are included on page 94.

Special resolutionsTwo special resolutions were passed during 2007/08 both in connection with the broad-based black economic empowerment transaction concluded by

Adcorp in May 2007. A summary of these resolutions appear below:

1. The authorised share capital of the company, now consisting of 100 000 000 (one hundred million) ordinary shares of R0,025 (two comma five

cents) each, be altered to consist of:

1.1 83 177 151 (eighty three million one hundred and seventy seven thousand one hundred and fifty one) ordinary shares of R0,025 (two

comma five cents) each; and

1.2 16 822 849 (sixteen million eight hundred and twenty two thousand eight hundred and forty nine) “A” ordinary shares of R0,025 (two

comma five cents) each; and

2. The articles of association of the company be and are hereby amended by the insertion of articles 70 to 74, which detail the rights attaching to the

Adcorp “A” ordinary shares which were issued in terms of the BBBEE transaction. Full details of these rights were communicated to shareholders

in the circular to shareholders dated 12 April 2007.

Statutory informationThe company was incorporated in the Republic of South Africa on 16 July 1974. The registration number is 1974/001804/06. For details of the

registered office, company secretary and auditors refer to inside back cover.

Directors’ remuneration and interestDetails of directors’ remuneration and interests appear in notes 46 and 47 on pages 84 and 85 of the annual financial statements.

Directorate and secretaryThe names of the directors and company secretary are set out on pages 30, 31 and 43 respectively. Changes to the directorate during 2007/08 are

detailed on pages 30 and 31.

Proof 13 - 18 July

as at 29 February 2008 and 31 December 2006


AssetsNon-current assets 675 449 138 372 657 310 408 679

Property, plant and equipment 4 57 549 32 775 910 1 004

Intangible assets 5 182 270 44 218 – –

Goodwill 6 402 980 41 525 – –

Investment in subsidiaries 7 – – 653 072 404 507

Investment in associates 8 270 3 189 – 1 528

Other financial assets 9 – – 1 103 1 640

Derivative financial instrument 10 3 141 – – –

Deferred taxation 11 29 239 16 665 2 225 –

Current assets 714 485 511 496 293 225 123 890

Trade and other receivables and prepayments 12 565 002 402 404 5 912 11 725

Amounts due from vendor 13 250 – 250 –

Amounts due by subsidiary companies 14 – – 286 763 106 714

Assets classified as held-for-sale 15 845 30 408 – –

Taxation prepaid 564 3 755 – 514

Cash resources 147 824 74 929 300 4 937

Total assets 1 389 934 649 868 950 535 532 569

Equity and liabilitiesCapital and reserves 668 171 310 785 533 324 177 154

Share capital 16 1 271 1 085 1 692 1 085

Share premium 17 283 070 57 630 283 070 57 630

Treasury shares 18 (701) (1 010) – –

Non-distributable reserve 19 – – 119 918 119 918

Foreign currency translation reserve 20 (688) – – –

Accumulated profit 384 798 252 998 128 644 (1 479)

Equity attributable to equity holders of the parent 667 750 310 703 533 324 177 154

Minority shareholders’ interest – 5 – –

BEE shareholders’ interest 21 421 77 – –

Non-current liabilities 195 234 5 010 – –

Other non-current liabilities 22 4 230 1 586 – –

Redeemable preference shares – interest-bearing 23 150 000 – – –

Obligations under finance lease 24 2 464 – – –

Deferred taxation 11 38 540 3 424 – –

Current liabilities 526 529 334 073 417 211 355 415

Non-interest-bearing current liabilities 322 135 238 211 235 728 259 553

Trade and other payables 25 239 369 144 328 11 557 22 317

Amounts due to subsidiary companies 14 – – 215 263 233 481

Amounts due to vendor 26 – 709 – –

Provisions 27 74 785 51 944 7 151 3 755

Taxation 7 633 6 111 1 757 –

Liabilities classified as held-for-sale 15 348 35 119 – –

Interest-bearing current liabilities 204 394 95 862 181 483 95 862

Current portion of other – non-current liabilities 22/24 2 260 – – –

Current portion of redeemable preference shares 23 3 805 – – –

Bank overdrafts 198 329 95 862 181 483 95 862

Total equity and liabilities 1 389 934 649 868 950 535 532 569

GROUP COMPANY2008 2006 2008 2006

Notes R’000 R’000 R’000 R’000

Proof 13 - 18 July

Balance sheets

for the 14 months ended 29 February 2008 and 12 months ended 31 December 2006


GROUP COMPANY2008 2006 2008 2006

Notes R’000 R’000 R’000 R’000

Continuing operationsRevenue 28 4 430 105 2 586 280 285 78

Cost of sales 30 (3 349 604) (1 938 874) (78) –

Gross profit 1 080 501 647 406 207 78

Other income 31 31 620 31 100 47 754 28 019

Administration expenses (401 595) (205 404) (127 802) (27 164)

Marketing and selling expenses (448 173) (290 689) (4 108) (2 459)

Other operating expenses (153 548) (64 690) (3 422) (2 808)

Operating profit/(loss) 32 108 805 117 723 (87 371) (4 334)

Interest received 33 7 869 4 073 10 529 8 695

Interest paid 34 (29 574) (4 932) (19 202) (6 431)

Dividends received – – 209 988 70 659

Share of profits from associates 1 512 2 278 – –

Impairment of intangible assets – (1 155) – –

Impairment of investment – – (6 726) (3 015)

Impairment of loans (145) – (12 961) (32 887)

Profit/(loss) on disposal of property and equipment 409 (109) – (85)

Profit/(loss) on disposal of operations and subsidiaries 48 633 7 568 43 495 (17 639)

Profit before taxation 137 509 125 446 137 752 14 963

Taxation 35 (40 855) (27 730) (11 066) (8 113)

Profit for the period from continuing operations 96 654 97 716 126 686 6 850

Discontinued operationsProfit for the period from discontinued operations 36 30 314 7 904 – –

Profit for the period 126 968 105 620 126 686 6 850

Profit for the period

Attributable to:

Ordinary shareholders 126 968 107 994 126 686 6 850

Minority shareholders – (2 374) –

Profit for the period 126 968 105 620 126 686 6 850

Earnings per shareBasic (cents) 37 258,5 251,8 – –

Diluted (cents) 37 253,4 248,6 – –

Distribution to shareholders during the year 181 147 – –

Interim dividend (cents) 55 42 – –

Final dividend (cents) in respect of prior year 126 105 – –

Proof 13 - 18 July

Income statements

Statements of changes in equityfor the 14 months ended 29 February 2008 and 12 months ended 31 December 2006


GroupBalance at 31 December 2005 1 065 48 679 (2 127) – – 202 089 249 706 2 379 77 252 162

Issue of ordinary shares under

employee share option scheme 20 8 951 – – – – 8 971 – – 8 971

Treasury shares sold – – 927 – – (188) 739 – – 739

Dividend distributions – – 190 – – (62 976) (62 786) – – (62 786)

Minority shareholders’ share of profits – – – – – 2 374 2 374 (2 374) – –

Recognition of staff share-

based payments – – – – – 6 079 6 079 – – 6 079

Profit for the period – – – – – 105 620 105 620 – – 105 620

Balance as at 31 December 2006 1 085 57 630 (1 010) – – 252 998 310 703 5 77 310 785



Acquisition of BEE shareholders’

and minority interest – – – – – 3 3 (5) (77) (79)

Issue of ordinary shares for the

acquisition of subsidiaries 175 222 825 – – – – 223 000 – – 223 000

Issue of “A” ordinary shares in

terms of BBBEE transaction – – (168) – – – (168) – 421 253

Foreign currency translation reserve – – – (688) – – (688) – – (688)

Fair value adjustment of derivative

financial instrument – interest rate cap – – – – – 1 332 1 332 – – 1 332

Treasury shares sold – – 388 – – 60 448 – – 448

Recognition of BBBEE

and staff share-based payments – – – – – 95 268 95 268 – – 95 268

Dividend distributions – – 89 – – (91 831) (91 742) – – (91 742)


Balance as at 29 February 2008 1 271 283 070 (701) (688) – 384 798 667 750 – 421 668 171

CompanyBalance at 31 December 2005 1 065 48 679 – – 119 918 48 568 218 230 – – 218 230



Recognition of staff share-

based payments – – – – – 6 079 6 079 – – 6 079

Dividend distributions – – – – – (62 976) (62 976) – – (62 976)


Balance as at 31 December 2006 1 085 57 630 – – 119 918 (1 479) 177 154 – – 177 154



Issue of “A” ordinary shares in

terms of BBBEE transaction 421 – – – – – 421 – – 421

Issue of ordinary shares for the

acquisition of subsidiaries 175 222 825 – – – – 223 000 – – 223 000

Recognition of BBBEE and staff

share-based payments – – – – – 95 268 95 268 – – 95 268

Dividend distributions – – – – – (91 831) (91 831) – – (91 831)


Balance as at 29 February 2008 1 692 283 070 – – 119 918 128 644 533 324 – – 533 324

AttributableForeign Non- to equity Minority BEE

currency distri- Accumu- holders share- share-Share Share Treasury translation butable lated of the holders’ holders’

capital premium shares reserve reserve profit parent interest interest TotalR’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Proof 13 - 18 July

Cash flow statementsfor the 14 months ended 29 February 2008 and 12 months ended 31 December 2006


GROUP COMPANY2008 2006 2008 2006

Notes R’000 R’000 R’000 R’000

Operating activitiesProfit before taxation and dividends 168 170 136 460 137 752 14 963

Adjusted for:

Dividends received – – (209 988) (70 659)

Depreciation 25 603 17 492 528 462

Impairment of assets, loans and goodwill 11 645 1 256 19 687 35 902

Amortisation of intangible assets 47 738 1 724 – –

(Profit)/loss on disposal of businesses (90 866) (7 568) (43 495) 17 639

(Profit)/loss on disposal of property and equipment (409) (357) – 85

Fair value adjustments 77 (78) – –

Share of profits from associates (1 511) (5 478) – –

Share-based payments expense 101 966 6 080 92 478 3 076

Non-cash portion of operating lease rentals 1 399 679 308 391

Interest paid 29 497 4 940 19 202 6 431

Interest received (7 880) (4 088) (10 529) (8 695)

Cash generated/(utilised) by operating

activities before working capital changes 285 429 151 062 5 943 (405)

Increase in trade and other receivables and prepayments (75 540) (53 351) (538) (6 997)

Increase/(decrease) in trade and other payables and provisions 58 892 (6 891) (7 671) 942

Net movement in holding and fellow subsidiaries intercompany accounts (5 510) 2 942 (193 035) (4 322)

Cash generated/(utilised) by operations 263 271 93 762 (195 301) (10 782)

Interest paid (29 497) (4 940) (19 202) (6 431)

Interest received 7 880 4 088 10 529 8 695

Taxation paid 48 (65 956) (34 670) (11 020) (5 872)

Dividend paid 49 (91 441) (58 717) 118 247 7 683

Net cash generated/(utilised) by operating activities 84 257 (477) (96 747) (6 707)

Investing activitiesAdditions to property, equipment and intangible assets 50 (62 458) (40 940) (434) (101)

Proceeds from sale of property and equipment 6 552 1 545 – 5

Inflow/(outflow) on disposal of businesses 51 96 943 22 752 49 919 –

Acquisition of businesses 52 (447 931) (28 153) (184 365) (38 442)

BEE transactional costs (6 875) – (6 875) –

Paid to BEE shareholders (79 100) – – –

Purchase/increase in investments – (651) – –

Vendor loan repayments (36) (1 400) 750 –

Net movement in loans and advances – 383 – –

Net cash utilised by investing activities (492 905) (46 464) (141 005) (38 538)

Financing activitiesIssue of shares 226 074 9 710 147 494 9 900

Net proceeds from issue of “A” ordinary shares 252 – – –

Payment for financial instrument purchased (941) – – –

Long-term loan raised 225 000 – – –

Long-term loan repaid (75 000) – – –

Decrease in non-current interest-bearing liabilities 1 259 – – –

Net cash generated by financing activities 376 644 9 710 147 494 9 900

Net decrease in cash and cash equivalents (32 004) (37 231) (90 258) (35 345)

Net cash and cash equivalents at the beginning of the period (18 501) 18 730 (90 925) (55 580)

Net cash and cash equivalents at the end of the period 53 (50 505) (18 501) (181 183) (90 925)

Proof 13 - 18 July

Segment reportfor the 14 months ended 29 February 2008 and 12 months ended 31 December 2006


Revenue– 2008 (R’000) – 4 191 683 238 422 – 4 430 105

– 2006 (R’000) – 2 468 510 117 770 113 936 2 700 216

Operating profit/(loss)– 2008 (R’000) (118 188) 205 112 21 881 (82) 108 723

– 2006 (R’000) (18 621) 135 470 874 7 442 125 165

EBITDA– 2008 (R’000) (24 935) 253 734 55 782 (82) 284 499

– 2006 (R’000) (14 762) 147 701 6 889 9 775 149 603

EBITDA profit margin– 2008 (%) – 6,1 23,4 6,4 6,4

– 2006 (%) – 6,0 5,8 8,6 5,5

EBITDA contribution to group profit– 2008 (%) (8,8) 89,2 19,6 – 100

– 2006 (%) (9,9) 98,7 4,6 6,5 100

Asset carrying value– 2008 (R’000) 9 345 1 075 825 298 038 6 726 1 389 934

– 2006 (R’000) 22 611 545 881 43 178 38 198 649 868

Liabilities carrying value– 2008 (R’000) 201 947 291 539 227 929 348 721 763

– 2006 (R’000) 122 788 161 329 19 847 35 119 339 083

Depreciation and amortisation– 2008 (R’000) 469 40 632 31 310 – 72 411

– 2006 (R’000) 396 9 796 5 476 2 162 17 830

Additions to property and equipment– 2008 (R’000) 362 23 675 13 452 – 37 489

– 2006 (R’000) – 10 255 4 630 1 706 16 591

NoteNo segmental information is provided in respect of geographical analysis as the Group operates mainly in South Africa. Refer note 29 for further details regarding business segments.Revenue shown above is external revenue.During the year the Group identified a new business segment business process outsourcing. As a result of the new business segment the prior year figures were reclassified.

Centralcosts Staffing BPO Discontinued Total

Proof 13 - 18 July

Notes to the annual financial statementsfor the 14 months ended 29 February 2008 and 12 months ended 31 December 2006


1. Accounting frameworkThe Group applies all applicable International Financial Reporting Standards (IFRS) in preparation of the financial statements. Consequently, all

IFRS statements that were effective at 29 February 2008 and are relevant to its operations have been applied.

At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these

financial statements, were in issue but not yet effective:

New and revised standardsIFRS 3: Business Combinations – certain revisions to accounting for business combinations applicable to the Group’s financial year commencing

March 2009

IFRS 8: Operating Segments – new standard dealing with segment reporting applicable to the Group’s financial year commencing March 2009

In May 2008 the IASB released a number of improvements to a whole range of existing accounting standards. These improvements will be

applicable to the Group financial year commencing March 2009

New interpretationsIFRIC 12: Service Concession Arrangements – applicable to the Group’s financial year commencing March 2008

IFRIC 13: Customer Loyalty Programmes – applicable to the Group’s financial year commencing March 2009

IFRIC 14: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction – applicable to the Group’s financial

year commencing March 2008

The impact of the adoption of the above standards and interpretations still needs to be considered, but is not expected to have a material impact

on the financial results.

2. Significant accounting policiesThe financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments and

incorporate the following principal accounting policies. In all material respects, these policies have been followed by all companies in the Group.

The accounting policies are consistent with the prior year. The adoption of IFRS 7: Financial Instruments requires additional disclosures and this

has been dealt with in the financial statements.

Basis of consolidationThe consolidated financial statements incorporate the financial statements of the company and entities controlled by the company (its

subsidiaries). Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain

benefits from its activities.

All intergroup transactions, balances, income and expenses have been eliminated upon consolidation.

All shares and investments are held at cost and are reviewed annually to determine any impairment.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of

acquisition or up to the effective date of disposal, as is appropriate.

Business combinationsThe acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair

values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for

control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s assets, liabilities and contingent liabilities

that meet the conditions for recognition under IFRS 3 are recognised at their fair values at the acquisition date.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination

over the Group’s interest in the fair value of identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s

interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination,

the excess is recognised immediately in profit or loss.

The interest of minority shareholders in the acquiree is initially measured at the minority’s portion of the net fair value of the assets, liabilities

and contingent liabilities recognised.

Proof 13 - 18 July

Notes to the annual financial statements (continued)for the 14 months ended 29 February 2008 and 12 months ended 31 December 2006


Investment in associatesAn associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture.

Significant influence is defined as the ability to participate in the financial and operating policy decisions of the investee.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. The carrying

amounts of such investments are reduced to recognise any decline, other than a temporary decline, in the value of individual investments.

Where a Group enterprise transacts with an associate of the Group, unrealised profits and losses are eliminated to the extent of the Group’s

interest in the relevant associate, except where unrealised losses provide evidence of an impairment of the asset transferred.

TaxationIncome tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the income statement because

it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or

deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet

date.

Deferred tax is recognised on the differences between the carrying amounts of assets and liabilities in the financial statements and the

corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax

liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that

taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if

the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of the other assets and

liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of the deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that

sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax

is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also

dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and

when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a

net basis.

Property and equipmentProperty and equipment is stated at cost less accumulated depreciation and any recognised impairment losses.

Depreciation is charged so as to write off the cost or valuation of the asset over their estimated useful lives to its residual value, using the straight-

line method, on the following basis:

Computers and office equipment 20% – 33%

Furniture and fittings 10% – 16,7%

Buildings owned and occupied 2,86%

Land is not depreciated

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, over the

term of the relevant lease. Useful lives and residual values are reassessed on an annual basis.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sale proceeds and the carrying

amount of the asset and is recognised in income.

Intangible assetsIntangible assets acquired separatelyIntangible assets acquired separately are reported at cost less accumulated amortisation and accumulated impairment losses. Amortisation is

charged on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of

each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

Internally generated intangible assets – research and development expenditureExpenditure on research activities is recognised as an expense in the period in which it is incurred.

Proof 13 - 18 July


An internally generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and

only if, all of the following have been demonstrated:

• the technical feasibility of completing the intangible asset so that it will be available for use or sale;

• the intention to complete the intangible asset and use or sell it;

• the ability to use or sell the intangible asset;

• how the intangible asset will generate probable future economic benefits;

• the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

• the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible

asset first meets the recognition criteria listed above. Where no internally generated intangible asset can be recognised, development expenditure

is charged to profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and accumulated

impairment losses, on the same basis as intangible assets acquired separately.

Intangible assets acquired in a business combinationIntangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of

an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date.

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at a cost less accumulated amortisation and

accumulated impairment losses, on the same basis as intangible assets acquired separately.

GoodwillGoodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable

assets, liabilities and contingent liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition.

Goodwill is recognised as an asset and tested for impairment on an annual basis. The valuation of goodwill is done on a discounted cash flow

basis and compared to the carrying value on an annual basis. Any impairment is recognised immediately in profit or loss and is not subsequently

reversed.

On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit

or loss on disposal.

Non-current assets held-for-saleNon-current assets and disposal groups are classified as held-for-sale if their carrying amount will be recovered principally through a sale

transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal

group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify

for recognition as a completed sale within one year from the date of classification.

Non-current assets (and disposal groups) classified as held-for-sale are measured at the lower of their previous carrying amount and fair value

less costs to sell.

Impairment of assets (excluding goodwill)The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment.

If there is any indication that an asset may be impaired, its recoverable amount is estimated.

The recoverable amount is the higher of its net selling price and its value in use. An impairment loss is recognised whenever the carrying amount

of the asset exceeds its recoverable amount.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount,

to the extent that the carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been

recognised for the asset in the prior years.

Revenue recognitionRevenue comprises mainly the invoice value of services rendered to customers, as well as commission received and training course income.

Revenue excludes value-added tax.

Revenue is recognised at the date the services are rendered.

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services

provided in the normal course of business, net of discounts and sales-related taxes.

Proof 13 - 18 July



Dividend incomeDividend revenue from investment is recognised when the shareholder’s right to receive payment has been established.

Investment incomeInvestment income is recognised on the accrual basis by reference to the principal outstanding and the effective interest rates applicable.

Cost of salesCost of sales consists of direct costs of temporary assignees, advertising costs incurred in recruitment and direct expenditure in respect of public

relations, research and training courses.

LeasesLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present

value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the

remaining balance of the liability. Finance charges are charged to profit or loss, unless they are directly attributable to qualifying assets, in which

case they are capitalised in accordance with the Group’s general policy on borrowing costs.

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease.

Foreign currency transactionsTransactions in foreign currencies are accounted for at the rates of exchange ruling on the date of the transactions. Gains and losses arising from

the settlement of such transactions are recognised in the income statement.

Borrowing costsBorrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a

substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are

substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their

expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Government grantsGovernment grants towards staff training costs are recognised in profit or loss over the periods necessary to match them with the related costs

and are deducted in reporting the related expense.

Employee benefitsThe company’s contributions to defined contribution plans (either provident or pension funds) in a particular period are recognised as an expense

in that period.

Contributions to medical aid are recognised as an expense in the period during which the related services are rendered.

All employee benefits cease on termination of employment.

ProvisionsProvisions are recognised when the Group has a present obligation as a result of a past event and it is probable that this will result in an outflow

of economic benefits that can be reliably estimated.

Share-based paymentsThe Group has complied with the requirements of IFRS 2: Share-based Payments. In accordance with the transitional provisions, IFRS 2 has

been applied retrospectively to all grants of equity instruments after 7 November 2002 that were unvested as of 1 January 2005 and to all

liabilities for share-based transactions existing at 1 January 2005. The standard therefore applies to share options granted in 2004, 2005, 2006 as

well as those granted in 2008.

The Group has issued equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value

at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis

over the vesting period, based on the Group’s estimate of shares that will eventually vest.

Fair value is measured by use of the Black-Scholes model. The expected life used in this model has been adjusted, based on management’s best

estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

Proof 13 - 18 July


Financial instrumentsFinancial assets and financial liabilities are recognised in the Group’s balance sheet when the Group has become party to contractual provisions

of the instrument.

Proceeds from disposals which are not due within one year have been discounted to net present value.

Trade and other receivablesTrade and other receivables do not carry any interest and are stated at their nominal value. Trade and other receivables are reduced by appropriate

allowances for estimated irrecoverable amounts.

Trade and other payablesTrade and other payables do not carry any interest and are stated at their nominal value.

InvestmentsInvestments in securities are recognised on a trade date basis and are initially measured at cost. Investments are classified as either held for

trading or available-for-sale, and are measured at subsequent reporting dates at fair value, based on quoted market prices at the balance sheet

date. Where securities are held for trading purposes, unrealised gains and losses are included in net profit or loss for the period. For available-

for-sale investments, unrealised gains or losses are recognised directly in equity, until the security is disposed of or is determined to be impaired,

at which time the cumulative gain or loss previously recognised in equity is included in the net profit or loss for the period. Proceeds from

disposals which are not due within one year have been discounted to net present value.

Cash and cash equivalentsCash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily

convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Bank borrowingsInterest-bearing bank loans and overdrafts are recorded as the proceeds received, net of direct issue costs. Finance charges, including premiums

payable on settlement or redemption, are accounted for on an accrual basis and are added to the carrying amount of the instrument to the extent

that they are not settled in the period in which they arise.

Equity instrumentsEquity instruments are recorded at the proceeds received, net of direct issue costs.

Derivative financial instruments and hedge accountingDerivative financial instruments are initially recorded at cost and are remeasured to fair value at subsequent reporting dates. Changes in the fair

value of derivative financial instruments that are designated and effective as cash flow hedges are recognised directly in equity. Amounts deferred

in equity are recognised in the income statement in the same period in which the hedged firm commitment or forecast transaction affects net

profit or loss.

Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income statement as

they arise.

Hedge accountingThe Group designates certain hedging instruments, which includes derivatives, as either fair value hedges, cash flow hedges, or net hedges of

net investments in foreign operations. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges. At the

inception of the hedging relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its

risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and ongoing

basis, the Group documents whether the hedging instrument that is used in a hedging relationship is highly effective in offsetting changes in fair

values or cash flows of the hedged item.

Cash flow hedgesThe effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in equity. The

gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the “other gains and losses” line of

the income statement.

Amounts deferred in equity are recycled in profit or loss in the periods when the hedged item is recognised in profit or loss, in the same line of

the income statement as the recognised hedged item. However, when the forecast transaction that is hedged results in the recognition of a non-

financial asset or non-financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial

measurement of the cost of the asset or liability.

Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or

exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity at that time remains equity and is

recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur,

the cumulative gain or loss that was deferred in equity is recognised immediately in profit or loss.

Proof 13 - 18 July



3. Critical accounting judgements and key sources of estimation uncertaintyCritical judgements in applying the Group’s accounting policiesIn the process of applying the Group’s accounting policies, which are described in note 2, management has made the following judgements that

have a significant effect on the amounts recognised in the financial statements:

Provision for credit lossesThe provision was measured at the Group’s best estimate of future unrecoverable trade receivables, taking into account circumstances prevailing

at year-end. Details of the provision are provided in note 12.

Provision for leave payIn making its judgement, the provision for leave pay was measured at the Group’s best estimate of the expenditure required to settle the obligation

at balance sheet date in accordance with the Basic Conditions of Employment Act. Details of the provision for leave pay are provided in note 27.

Revenue recognitionJudgement is involved in determining an appropriate revenue recognition policy and ensuring that this is compliant with IAS 18: Revenue.

Recoverable amounts from governmentThe Group exercised judgement in determining whether these amounts are recoverable from government as well as when these amounts are

recoverable. Details of these learnerships are detailed in note 12.

Purchase price allocation relating to acquisitionsThe Group has exercised judgement in determining the purchase price allocation, intangible assets and resulting goodwill relating to the

acquisition of FMS Marketing Solutions (Pty) Limited and Capital Outsourcing Group (Pty) Limited. The free cash flow method was used and

the key estimates involved were growth rates, discount rate, as well as return on the contracts or key customer relationships.

Recognition of deferred tax assetsThe Group has exercised judgement in determining whether deferred tax assets should be recognised. Judgement is involved in determining the

extent to which it is probable that taxable profit in the various subsidiaries will be available against which the deferred tax assets will be utilised.

Details of these deferred tax assets are provided in note 11.

Key sources of estimation uncertaintyImpairment of goodwillDetermining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill is allocated.

The value-in-use calculation requires the entity to estimate future cash flows expected to arise from the cash-generating unit and to determine a

suitable discount rate in order to calculate present value. Details of the impairment of goodwill are provided in note 6.

Share-based paymentsDetermining the value of share-based payments to be expensed requires an estimation using the Black-Scholes pricing model. The model has

been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural consideration.

Details of share-based payments and assumptions used are provided in note 44.

Residual values and useful lives of assetsThe Group exercised judgement in determining the useful lives of all assets and determining the residual values of these assets.

Proof 13 - 18 July


Land, Computerbuildings and and office

leasehold equipment, Capitalisedimprove- furniture and leased

ments fittings assets Total Total2008 2008 2008 2008 2006R’000 R’000 R’000 R’000 R’000

4. Property, plant and equipmentGROUPBalance at the beginning of the period 5 426 27 349 – 32 775 34 667

Assets at cost 8 012 79 637 – 87 649 89 217

Accumulated depreciation (2 586) (52 288) – (54 874) (54 550)

Current year movements

Additions 9 840 25 445 2 204 37 489 20 851

Acquisitions through business combinations 6 140 6 822 2 833 15 795 1 323

Disposal – sale of business – (52) – (52) –

Cost – (200) – (200) –

Accumulated depreciation – 148 – 148 –

Reclassified as held-for-sale (845) – – (845) (4 081)

Cost (845) – – (845) (11 937)

Accumulated depreciation – – – – 7 856

Disposals – (1 683) (327) (2 010) (2 493)

Cost (677) (5 217) (734) (6 628) (14 206)

Accumulated depreciation 677 3 534 407 4 618 11 713

Depreciation (4 641) (20 152) (810) (25 603) (17 492)

Net book value at the end of the period 15 920 37 729 3 900 57 549 32 775

Represented by:

Assets at cost 22 470 106 487 4 303 133 260 86 975

Accumulated depreciation (6 550) (68 758) (403) (75 711) (54 200)

Net book value at the end of the period 15 920 37 729 3 900 57 549 32 775

COMPANYBalance at the beginning of the period 310 694 – 1 004 1 455

Assets at cost 422 3 609 – 4 031 4 173

Accumulated depreciation (112) (2 915) – (3 027) (2 718)

Additions – 434 – 434 101

Depreciation (81) (447) – (528) (462)

Disposals – – – – (90)

Cost – – – – (243)

Accumulated depreciation – – – – 153

Net book value at the end of the period 229 681 – 910 1 004

Represented by:

Assets at cost 422 4 043 – 4 465 4 031

Accumulated depreciation (193) (3 362) – (3 555) (3 027)

Net book value at the end of the period 229 681 – 910 1 004

The registers of land and buildings are open for inspection at the registered office of the company and its subsidiaries.

The Group’s obligations under finance lease (refer note 24) are secured by the lessor’s title to the leased assets, which have a carrying amount

of R3,9 million.

Proof 13 - 18 July



5. Intangible assetsGROUPBalance at the beginning of the period 24 906 5 000 463 11 965 1 884 44 218 13 708

Assets at cost 24 906 5 000 549 12 347 3 140 45 942 13 708

Accumulated amortisation – – (86) (382) (1 256) (1 724) –

Additions – – 773 – – 773 5 556

Additions from internal developments 20 193 – – – – 20 193 14 533

Acquisitions through business combinations – 5 178 – 164 914 – 170 092 12 145

Cost – 5 178 – 164 914 – 170 092 12 145

Accumulated amortisation – – – – – – –

Disposals – – (268) – – (268) –

Cost – – (354) – – (354) –

Accumulated amortisation – – 86 – – 86 –

Amortisation expense – (1 030) (93) (45 935) (680) (47 738) (1 724)

Impairment – (5 000) – – – (5 000) –

Net book value at the end of the period 45 099 4 148 875 130 944 1 204 182 270 44 218

Represented by:

Assets at cost 45 099 10 178 968 177 261 3 140 236 646 45 942

Accumulated amortisation – (6 030) (93) (46 317) (1 936) (54 376) (1 724)

Net book value at the end of the period 45 099 4 148 875 130 944 1 204 182 270 44 218

The capitalised development represents costs incurred to date on the development of the Dynamix AX ERP System. The system is currently in

the process of development and is not available for use. No amortisation has been recorded for the current year. Once the asset is available for

use, it is intended to amortise the software over its estimated useful life of 10 years. R2,3 million interest was capitalised on this project during

the 14 months to February 2008.

The trademark in respect of Simeka and Graphicor which was purchased in 2006 has been impaired as the recoverable amount is less than the

carrying value (R5 million). In the current year, trademarks were acquired in the purchase of FMS Marketing Solutions (Pty) Limited and Capital

Outsourcing Group (Pty) Limited. These new trademarks are amortised over their estimated useful lives which are from three to seven years.

Accreditation of programmes represent costs incurred to date on accrediting training programmes with the relevant training authorities. Once the

asset is available for use, it is amortised over its estimated useful life of four years.

Customer base represents the customer bases purchased on acquisition of businesses. The various customer bases acquired are amortised over

their estimated useful life which ranges from three to seven years.

Other intangible assets are recognised on the acquisition of Margie Middleton and Associates being learning programmes, NQF accreditations,

methodologies and tool development. The asset is amortised over its estimated useful life of five years.

Amortisation of intangible assets is disclosed in operating profit (refer note 32).

Capitalised Accredi-develop- Trade- tation of Customer

ment marks programmes base Other Total Total2008 2008 2008 2008 2008 2008 2006R’000 R’000 R’000 R’000 R’000 R’000 R’000

Proof 13 - 18 July


GROUP COMPANY2008 2006 2008 2006R’000 R’000 R’000 R’000

6. GoodwillCost

Opening balance 67 606 66 941 – –

Additional amounts recognised from business combinations

during the period 362 518 13 749 – –

Derecognised on disposal of subsidiaries (1 063) (13 084) – –

Closing balance 429 061 67 606 – –

Impairment

Opening balance (26 081) (24 926) – –

Impairment of goodwill during the period – (1 155) – –

Closing balance (26 081) (26 081) – –

Carrying amount

At the end of the period 402 980 41 525 – –

Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from

that business combination. After recognition of impairment losses, the carrying amount of goodwill is attributable to the following material

CGUs:

GROUP2008 2006R’000 R’000

Staffing 240 341 39 833

Business Process Outsourcing 162 639 629

Marketing Research – 1 063

402 980 41 525

The Group tests goodwill annually for impairment.

The recoverable amounts of the CGUs are determined based on the value-in-use calculation which uses the cash flow projections based on

financial budgets approved by management covering a five-year period assuming a growth of 10% per annum. The key assumptions for the

discounted cash flow valuation method are those regarding the discount rate, growth rate and expected changes to selling prices and direct costs

during the period.

The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management. The rate used to discount the

forecast cash flows is 13,02% (2006: 12,57%).

During the year Adcorp acquired its interests in FMS Marketing Solutions (Pty) Limited and Capital Outsourcing Group (Pty) Limited. Adcorp

also acquired the 25% empowerment shareholding in Adcorp Flexible Staffing Solutions (Pty) Limited from the minority shareholders. As a

result of these acquisitions an amount of R362,518 million was recognised as goodwill. This goodwill was allocated to the Staffing CGU

(R200,507 million) and Business Process Outsourcing CGU (R162,011 million).

During the year the company disposed of its Marketing Research CGU. As a result of this, the goodwill relating to this CGU, amounted to

R1 063 million was also disposed.

Proof 13 - 18 July



7. Investment in subsidiaries(for details refer Annexure A)

Shares at cost less amounts written off – – 653 072 404 507

Shares at cost – – 659 798 404 507

Less: Provision for impairment of investment – – (6 726) –

Directors’ valuation – – 1 807 042 1 301 460

The investment in Research Surveys has been impaired as the

business was sold and the company is now dormant.

The directors’ valuation is determined by reference to the market

capitalisation of the Group at the financial reporting date.

8. Investment in associates(for details of the Group refer Annexure A)

Carrying values at the beginning of the period 3 189 4 092 1 528 1 528

Increase in investment 368 – – –

Impairment – (101) – –

Included in non-current assets classified as held-for-sale – 51 – –

Share of current period earnings (net of dividends received) 1 212 1 409 – –

Investment disposed (4 499) (1 879) (1 528) –

270 3 572 – 1 528

Decrease in loans from associates – (383) – –

Total investment in associates 270 3 189 – 1 528

Directors’ valuation 270 3 189 – 1 528

9. Other financial assetsPDI (previously disadvantaged individuals) Share Trust – – 1 103 1 640

Adcorp shares

42 802 shares at R7 965 (2006: 74 002 shares at R7 965) – – 341 589

Loan to PDI Share Trust – – 762 3 388

Impairment provision – – – (2 337)

10. Derivative financial instrumentDerivatives designated and effective as hedging

instruments carried at fair value

Interest rate cap 3 141 – – –

Details are shown below:

Inception date: 25 May 2007

Termination date: 31 May 2010

Nominal cost of cap: R941 351

The financial instrument is a designated hedge, which was purchased to cover R100 million of the redeemable preference shares. The current

effective interest rate on the cap is 13%. The fair value of the financial instrument was determined by an independent party using market data

and the effective interest rate method.


Proof 13 - 18 July


As at Allocation of Charged to Arising on As at31 Dec deferred tax the income business 29 Feb

2006 disposed of Total statement combination 2008R’000 R’000 R’000 R’000 R’000 R’000

11. Deferred taxationGROUPTax effect of:

Deferred tax raised on provisions 12 509 (1 325) 11 184 9 381 4 873 25 438

Excess tax allowances and depreciation charge (46) – (46) 40 187 181

Expenditure incurred but not allowable for tax

purposes in the period in which it is incurred (3 424) – (3 424) 13 272 (48 645) (38 797)

Rate change adjustment (19) 13 (6) 2 180 – 2 174

Operating lease timing adjustments 896 (179) 717 180 – 897

Computed losses 5 483 (865) 4 618 (3 303) – 1 315

Other (64) 186 122 (631) – (509)

15 335 (2 170) 13 165 21 119 (43 585) (9 301)

Deferred tax disposed of – 2 170 2 170 – – –

15 335 – 15 335 21 119 (43 585) (9 301)

29 February 31 December2008 2006R’000 R’000

Analysed as:

Deferred tax assets 29 239 16 665

Deferred tax liabilities (38 540) (3 424)

Deferred tax asset held-for-sale – 2 094

(9 301) 15 335

As at Allocation of Charged to Arising on As at31 Dec deferred tax the income business 29 Feb

2006 disposed of Total statement combination 2008R’000 R’000 R’000 R’000 R’000 R’000

COMPANYTax effect of:

Deferred tax raised on provisions – – – 2 074 – 2 074

Rate change adjustment – – – (79) – (79)

Operating lease timing adjustments – – – 236 – 236

Other – – – (6) – (6)

– – – 2 225 – 2 225

29 February 31 December2008 2006R’000 R’000

Analysed as:

Deferred tax assets 2 225 –

Deferred tax liabilities – –

2 225 –

Proof 13 - 18 July



12. Trade and other receivables and prepayments 565 002 402 404 5 912 11 725

Trade debtors 498 732 352 411 – –

Provision for credit losses (12 822) (3 763) – –

Deposits and staff loans 3 327 1 867 72 47

Other 75 765 51 889 5 840 11 678

The Group partakes in learnerships that are registered with the

Services Seta and receives government grants in order to develop

its employees.

During the current period the Group incurred training expenses of

R5 799 198 (2006: R1 245 028) that have been claimed from the

Services Seta.

Included in other receivables are amounts due from the Services Seta

in respect of learnerships that the group has engaged in: 5 896 9 797 – –

Opening balance 9 797 14 735 – –

Acquired through business combination 598 – – –

Claims submitted 5 799 1 245 – –

Grants received (10 298) (6 183) – –

The maximum exposure to credit risk for trade receivables at the

reporting date by geographic region was: 498 732 352 411 – –

Domestic 475 711 352 080 – –

Foreign 23 021 331 – –

The maximum exposure to credit risk for trade receivables at

the reporting date by type of customer was:

498 732 352 411 – –

Agriculture, hunting, forestry and fishing 7 830 5 533 – –

Community, social and personal services 89 223 63 046 – –

Construction 2 992 2 114 – –

Manufacturing 143 884 101 671 – –

Financial intermediation, insurance, real estate

and business services 134 408 94 975 – –

Electricity, gas and water supply 9 675 6 837 – –

Transport, storage and communication 41 495 29 321 – –

Mining and quarrying 9 675 6 837 – –

Wholesale and retail, repair of motor vehicles, motor

cycles and personal and household goods and

hotels and restaurants 59 549 42 078 – –

Debtors days outstanding at end February 2008 was 30 days. No interest is charged on the trade receivables for the first 60 days from the date

of the invoice, thereafter interest may be charged on the outstanding balance. The Group has provided for all receivables that are considered to

be doubtful.

Before accepting any new customer, the Group uses an external credit bureau to assess the potential customers credit quality and defines credit

limit by customer.

Trade receivables are provided as security for the redeemable preference share loan.


Proof 13 - 18 July


GROUP COMPANYGross Impairment Gross Impairment Gross Impairment Gross Impairment

2008 2006 2008 2006R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

12. Trade and other receivables and prepayments continuedThe ageing of trade receivables at

the reporting date was: 498 732 12 822 352 411 3 763 – – – –

Not past due 392 119 633 229 996 – – – – –

Past due 0 – 30 days 72 204 924 93 107 85 – – – –

Past due 31 – 60 days 15 058 967 18 941 693 – – – –

Past due 61 – 120 days 13 136 4 781 9 952 2 827 – – – –

Past due 121 – 365 days 6 038 5 340 415 158 – – – –

More than one year 177 177 – – – – – –

Movement in the provision for

credit losses during the period

under review was as follows:

Closing balance 12 822 3 763 – –

Balance at beginning of period 3 763 5 094 – –

Acquisition through

business combination 2 523 – – –

Impairment loss/(gain) recognised 6 536 (1 331) – –

GROUP COMPANYFair value of

Maximum maximum payments payments

2008 2006 2008 2006R’000 R’000 R’000 R’000

13. Amounts due from vendorGROUPAmounts receivable

Within one year 250 – 250 –

In the second to fifth year inclusive – – – –

250 – 250 –

Fair value adjustments – – – –

Fair value of maximum payments 250 – 250 –

The above represents the payments that are to be received from LR Resources in respect of the sale of Knovation (Pty) Limited.

Proof 13 - 18 July



14. Amounts due to/(by) subsidiary companies 71 500 (126 767)

(for details refer Annexure A)

286 763 106 714

Amounts due by subsidiary companies 323 751 139 601

Less: Provision for impairment of loans (36 988) (32 887)

Amounts due to subsidiary companies (215 263) (233 481)

Included in the above is a provision for the impairment of inter-

company loans amounting R36 988 (2006: R32 887).

15. Assets/liabilities classified as held-for-saleAssets 845 30 408 – –

Liabilities (348) (35 119) – –

15.1 Property held-for-saleThe Group intends to dispose of one of its properties situated

at 22 Swart Street, Kempton Park. The property was

previously used in the Group’s staffing operations.

Property, plant and equipment 845 – – –

15.2 Marketing businessThe Group disposed of Research Surveys

marketing business in January 2007.

Assets held-for-sale – 30 408 – –

Property, plant and equipment – 4 081 – –

Loan to associate – (51) – –

Deferred taxation – 2 094 – –

Trade and other receivables and prepayments – 16 465 – –

Taxation – 5 387 – –

Cash resources – 2 432 – –

Liabilities held-for-sale: (348) (35 119) – –

Trade and other payables – (31 160) – –

Taxation (348) – – –

Provisions – (3 959) – –

Net assets/(liabilities) classified as

held-for-sale 497 (4 711) – –


Proof 13 - 18 July



16. Share capitalAuthorised83 177 151 ordinary shares of 2,5 cents each (2006: 100 000 000) 2 079 2 500 2 079 2 500

16 822 849 “A” ordinary shares of 2,5 cents each (2006: Nil) 421 – 421 –

2 500 2 500 2 500 2 500

Issued50 831 439 ordinary shares of 2,5 cents each (2006: 43 382 095) 1 271 1 085 1 271 1 085

16 822 849 “A” ordinary shares of 2,5 cents each (2006: Nil) – – 421 –

1 271 1 085 1 692 1 085

The unissued shares are under the control of the directors until

the next annual general meeting subject to limitations.

Number of shares (’000) 50 788 43 308 50 831 43 382

Opening balance 43 382 42 614 43 382 42 614

Issue of ordinary shares under employee share option plan 440 768 440 768

Issue of ordinary shares for the acquisition of subsidiaries 7 009 – 7 009 –

Shares in issue 50 831 43 382 50 831 43 382

Share Trust consolidated (43) (74) – –

17. Share premium 283 070 57 630 283 070 57 630

Balance at 1 January 2007 57 630 48 679 57 630 48 679

Arising from the issue of 439 896 ordinary shares under

employee share option plan (2006: 767 220) 2 615 8 951 2 615 8 951

Arising from the issue of 7 009 448 ordinary shares for

the acquisition of subsidiaries (2006: Nil) 222 825 – 222 825 –

18. Treasury shares (701) (1 010) – –

Adcorp Empowerment Share Trust consolidated 42 803 shares

(2006: 74 002 shares) (1 010) (2 127) – –

Dividends on treasury shares 89 190 – –

31 200 shares redeemed (2006: 67 918) 388 927 – –

(533) (1 010) – –

Adcorp Employee Benefit Trust consolidated 6 729 140

shares (2006: Nil) (168) – – –

Proof 13 - 18 July

Proof 13 - 18 July



19. Non-distributable reserve – – 119 918 119 918

Unrealised profit arising on sale of BEE companies into new

entity during 2004 – – 119 918 119 918

20. Foreign currency translation reserve (688) –

Balance at 1 January 2007 – –

Arising from business combination 30 –

Arising on translation of foreign operation (718) –

Exchange differences relating to the translation from the functional

currencies of the Group’s foreign subsidiaries into rand amounts are

brought to account by entries made directly to the foreign currency

translation reserve.

21. BEE shareholders’ interestAdcorp previously had two empowerment shareholding structures at operational level in its Adcorp Communication Solutions (Pty) Limited

(ACS) subsidiary and its Adcorp Flexible Staffing Solutions (Pty) Limited (AFSS) subsidiary. The operations of ACS were disposed of in March

2006. The 25% empowerment shareholding in AFSS previously owned by a consortium comprising the Black Management Forum Investment

Company Limited, Zungu Investments Company (Pty) Limited and Vunani Capital Holdings (Pty) Limited was reacquired by Adcorp in January

2007 for an amount or R22,8 million. As such, the direct empowerment shareholding in AFSS is no longer in existence.

In terms of the new BEE transaction, Adcorp will have created and issued a total of 16 822 849 “A” ordinary shares to its new empowerment

shareholders at a par value of 2,5 cents per share, of which 6 729 140 are owned by a company called Moody Blue Trade and Investment

93 (Pty) Limited (Moody Blue) which, in turn, is wholly owned by the Adcorp Employee Benefit Trust. The remaining “A” ordinary shares are

held by BBBEE enterprises.

These shares carry full voting rights and have been funded by a notional debt based on the 90-day VWAP at the time of issue plus interest and

reduced by dividends.

In terms of this structure, a 10% shareholding has been made available for the benefit of all full-time Adcorp Group employees, an 8,25% stake

has been allocated to women’s empowerment grouping, Wiphold, and 6,25% has been allocated to empowerment business, Simeka Group.

At the end of 10 years the “A” shares will convert to Adcorp ordinary shares based on the value of the national debt that will have been paid out

at that date.




21. BEE shareholders’ interest continuedIssued16 822 849 “A” ordinary shares of 2,5 cents each (2006: Nil) 421 77 – –

The fair value of the option in terms of the new BBBEE deal was

calculated using the Black-Scholes option pricing model. The inputs

into the model are set out below:

The total value of the option is R133 million. Details of amounts

to be expensed over the 10-year period are as follows:

R’000

Current year 84 233

Year 2 – year 9 47 880 (Expense of R5,985 million per annum)

Year 10 887

Basis of option valuation

Weighted average share price (R) 38,10 –

Weighted average exercise price (R) 29,91 –

Expected volatility (%) 31,98 –

Expected life (years) 9,83 –

Risk-free rate (%) 8,15 –

Expected dividend yield (%) 6,22 –

WeightedNumber average

of exerciseshares price

2008 2008Adcorp Employee Benefit Trust R

Outstanding at the beginning of the period – –

Issued during the period 6 729 140 29,91

Exercised during the period – –

Outstanding at the end of the period 6 729 140 29,91

Exercisable at the end of the period – –


22. Other non-current liabilitiesOperating lease timing adjustment 4 875 1 586 – –

Current portion 645 – – –

Non-current-portion 4 230 1 586 – –

Proof 13 - 18 July



23. Redeemable preference shares – interest-bearingRedeemable preference shares issued 225 000 – – –

Redeemable preference shares redeemed (75 000) – – –

150 000 – – –

Interest accrued – current 3 805 – – –

153 805 – – –

225 000 redeemable cumulative variable rate preference shares were issued on 10 July 2007. The shares are redeemable on 30 June 2012 or

earlier at Adcorp’s option.

The Group has designated its redeemable cumulative preference shares as financial liabilities as required by IAS 39: Financial Instruments:

Recognition and Measurement. The preference shares have a fixed interest payment and mature on 30 June 2012. To reduce the fair value risk

of changing interest rates, the Group has entered into an interest rate cap. An interest rate cap economically hedges the fair value interest rate

risk of redeemable cumulative preference shares. The cap’s notional cost is R941 351 and fixes the interest cost on R100 million of the

cumulative redeemable preference shares. The cap matures on 31 May 2010.

24. Obligations under finance leasesFinance leases relate to equipment and vehicles with a lease term of five years. The Group has options to purchase the equipment for a nominal

amount at the conclusion of the lease agreements. The Group’s obligations under finance leases are secured by the lessor’s title to the leased

assets.

Minimum lease Present value of minimumpayments lease payments

2008 2006 2008 2006R’000 R’000 R’000 R’000

Within one year 2 012 – 1 615 –

Later than one year and not later than five years 2 789 – 2 464 –

4 801 – 4 079 –

Less: Future finance charges (722) – – –

Present value of finance lease obligations 4 079 – 4 079 –

Current portion 1 615 – 1 615 –

Non-current-portion 2 464 – 2 464 –

4 079 – 4 079 –


Proof 13 - 18 July



25. Trade and other payables 239 369 144 328 11 557 22 317

Trade creditors 42 623 20 722 – 15 062

VAT 45 049 29 586 5 728 2 510

Accruals 88 652 41 804 2 849 2 143

Other 63 045 52 216 2 980 2 602

The average credit period on trade and other payables is 30 days. No interest is incurred on trade and other payables unless payment is

effected timeously. The Group has financial risk management policies in place to ensure that all payables are paid within the credit time frame.

Maximum Fair value of payments maximum payments

R’000 R’000 R’000 R’000

26. Amounts due to/from vendorGROUPAmounts receivable/payable:

Within one year – 850 – 850

In the second to fifth year inclusive – – – –

– 850 – 850

Fair value adjustments – – – (141)

Fair value of maximum payments – 850 – 709

As at Provisions Provisions Provisions Provisions As at31 Dec acquired raised utilised disposed 29 Feb

2006 2008 2008 2008 2008 2008R’000 R’000 R’000 R’000 R’000 R’000

27. ProvisionsGROUPLeave pay 30 776 7 080 115 769 (109 550) (97) 43 978

Bonuses 18 743 13 274 67 703 (70 687) – 29 033

Other 2 425 (796) 49 318 (49 173) – 1 774

Total 51 944 19 558 232 790 (229 410) (97) 74 785

COMPANYLeave pay 226 – 58 – – 284

Bonuses 3 529 – 6 867 (3 529) – 6 867

Total 3 755 – 6 925 (3 529) – 7 151

Leave payLeave pay is provided based on leave days due to employees at balance sheet date, at rates prevailing at that date.

BonusesBonuses are provided to employees based on operating entity performance management criteria and are in respect of the current year earnings.


28. RevenueContinuing operations

Revenue from the rendering of services 4 430 105 2 586 280 285 78

Discontinued operations

Revenue from the rendering of services – 113 936 – –

4 430 105 2 700 216 285 78

Proof 13 - 18 July

Proof 13 - 18 July



29. Business and geographical segmentsFor management purposes, the Group is currently organised into three operating divisions – central costs, staffing and business process

outsourcing. These divisions are the basis on which the Group reports its primary segment information.

The principal activities are as follows:

• Central costs – Holding company and head office function including Group research and tendering services, as well as human resources.

• Staffing – Permanent recruitment, flexible staffing both temporary and contract work, advertising and response handling.

• Business process outsourcing – Outsourcing of certain non-core specialised business functions.

• Discontinued operations consists of the communication and marketing businesses.

• No segmental information is provided in respect of geographical analysis as the Group operates primarily in South Africa.


30. Cost of salesThe analysis of cost of sales is as follows: (3 349 604) (1 973 819) (78) –

Cost of buyouts – (2 440) – –

Course material (1 753) (1 281) – –

Lecturing (5 047) (6 091) – –

Criminal and credit checks (9 350) (6 606) – –

Media (108 445) (92 637) – –

Placements (6 912) (1 713) – –

Production (1 737) (2 213) – –

Project costs (39 478) (15 857) – –

Protective clothing (9 887) (5 488) – –

Royalties – (3 030) – –

Temporary employee costs (3 104 269) (1 826 798) – –

Transportation costs (24 936) – – –

Other (37 790) (9 665) (78) –

Attributable to: (3 349 604) (1 973 819) (78) –

Continuing operations (3 349 604) (1 938 874) (78) –

Discontinued operations – (34 945) – –

31. Other income 31 622 31 390 47 754 28 019

Corporate management fee – – 45 000 21 000

Bad debts recovered 52 437 – 435

Media rebates and commissions received – 3 154 – 3 154

Royalties received – 3 199 – –

Training levies recorded – 10 380 – 161

Other 31 570 14 220 2 754 3 269

Attributable to: 31 622 31 390 47 754 28 019

Continuing operations 31 620 31 100 47 754 28 019

Discontinued operations 2 290 – –

Proof 13 - 18 July



32. Operating profit/(loss)Operating profit/(loss) is determined after allowing for the following

items requiring separate disclosure:

Amortisation (refer note 5) (47 738) (1 724) – –

Auditors’ remuneration (5 599) (5 513) (2 270) (2 204)

– fee for audit (3 972) (3 416) (1 045) (800)

– fee for audit (prior year underprovision) (725) (1 161) (323) (567)

– fee for other services (902) (936) (902) (837)

Consulting fees (25 094) (26 514) (647) (818)

Depreciation (refer note 4) (25 603) (17 492) (528) (462)

Foreign exchange gains 4 056 791 – –

Government grants in respect of learnerships 5 799 1 245 – –

Directors’ emoluments – executive directors (18 380) (15 618) (11 603) (8 610)

– non-executive directors (2 402) (1 981) (2 402) (1 981)

Leasing and rentals – properties and premises (38 446) (27 397) (2 290) (2 170)

– office furniture and equipment (12 535) (7 930) (137) (126)

– motor vehicles (569) (298) – –

Staff costs (546 133) (406 566) (12 508) (6 200)

Share-based payments expense* (101 966) (6 080) (92 478) (3 076)

33. Interest received 7 880 4 088 10 529 8 695

Group loans – – 10 529 8 419

Bank deposits 5 856 2 816 – –

Other 2 024 1 195 – 276

Fair value adjustments – 77 – –

Attributable to: 7 880 4 088 10 529 8 695


Discontinued operations 11 15 – –

34. Interest paid (29 574) (4 940) (19 202) (6 431)

Group loans – – – –

Bank overdrafts (12 450) (4 940) (11 027) (6 431)

Interest on preference share loan (10 224) – – –

Other (6 823) – (8 175) –

Fair value adjustments (77) – – –

Attributable to: (29 574) (4 940) (19 202) (6 431)

Continuing operations (29 574) (4 932) (19 202) (6 431)

Discontinued operations – (8) – –

* The share-based payments expense recorded in the company is net of amounts charged to subsidiaries.



35. TaxationSA normal tax – current 50 779 18 161 3 369 –

– (over)/underprovision prior year (4 484) (228) (858) 5

Deferred taxation (18 939) 4 610 (2 304) 239

Rate change 2 180 – 79 –

Secondary tax on companies 11 451 7 869 10 780 7 869

Capital gains tax 216 428 – –

41 203 30 840 11 066 8 113

Attributable to:


Discontinued operation 348 3 110 – –

41 203 30 840 11 066 8 113

Standard tax rate (%) 29 29 29 29

Normal tax at standard rate 48 961 39 574 39 948 4 339

Adjustment for the tax effect at the standard

rate of the following items:

Exempt income:

– Dividends received – – (60 897) (20 491)

– Capital profit on disposal of businesses (27 467) (6 896) (12 612) –

– Associated company profit already subject to tax (438) (940) – –

Non-deductible items charged against income:

– Capital losses/(profits) 1 607 (8 286) – 1 251

– Dividend on preference share loan 2 908 – – –

– Interest on bridging loan 2 371 – 2 371 –

– Impairment of assets and investments 3 377 4 232 5 709 4 738

– Share-based payments 29 570 1 763 26 819 892

Special allowances claimed:

– Learnerships (21 738) (14 534) – –

Tax losses not recognised 671 39 (1 244) (393)

Capital gains tax 216 428 – –

Other permanent differences (12 466) 7 591 113 9 908

Rate change adjustment 2 180 – 79 –

Secondary tax on companies 11 451 7 869 10 780 7 869

Actual tax charge for the period 41 203 30 840 11 066 8 113

Reconciliation of estimated tax losses

available in the Group:

Estimated losses at beginning of period 46 762 62 307 – –

Tax losses raised – current period 702 358 – –

– prior period – 5 673 – –

Net tax losses utilised (27 217) (14 059) – –

Tax loss disposed (1 685) (4 807) – –

Tax loss revised on assessment (2 121) (2 710) – –

16 441 46 762 – –

Which consists of:

Losses recognised 12 511 8 897 – –

Losses not recognised 3 930 37 865 – –

16 441 46 762 – –


Proof 13 - 18 July



36. Discontinued operationsThe Group disposed of its marketing research business at the

beginning of the current period, as was disclosed in the previous

year’s annual report.

Revenue – 113 936 – –

Cost of sales – (34 945) – –

Gross profit – 78 991 – –

Other income 42 235 290 – –

Expenses (11 573) (68 267) – –

Profit before taxation 30 662 11 014 – –

Taxation (348) (3 110) – –

Profit for the period from discontinued operations 30 314 7 904 – –

Cash flows from discontinued operations

Net cash flows from operating activities (48 708) (7 799) – –

Net cash flows from investing activities 46 275 5 424 – –

Net cash flows from financing activities – – – –

Net cash flows (2 433) (2 375) – –

37. Earnings per shareThe calculation of earnings per share is based on earnings of

R126 967 830 (2006: R107 993 969) and ordinary shares of

49 122 217 (2006: 42 882 085) being the weighted average

number of shares relative to the above earnings.

Profit per share 258,5 251,8 – –

Continuing operations 196,8 233,4 – –

Discontinued operations 61,7 18,4 – –

Diluted earnings per share is based on 50 108 585

(2006: 43 444 179) weighted diluted number of shares

Profit per share 253,4 248,6 – –

Continuing operations 192,9 230,4 – –

Discontinued operations 60,5 18,2 – –

Reconciliation of diluted number of sharesOrdinary shares 49 122 217 42 882 085 – –

Adcorp Employee Share Scheme – shares matured 986 368 562 094 – –

Diluted number of shares 50 108 585 43 444 179 – –

Proof 13 - 18 July

Proof 13 - 18 July



37. Earnings per share continued

Reconciliation of headline earningsContinuing operationsProfit for the period 96 654 97 716 – –

Impairment of goodwill and investments 145 1 155 – –

Minority shareholders’ share of profits – 2 374 – –

Loss/(profit) on sale of property, plant and equipment (net of taxation) (290) 78 – –

(Profit)/loss on disposal of operations and subsidiaries – (7 568) – –

Discontinued operationsProfit for the period 30 314 7 904 – –

Impairment of investments, intangible assets and loans 11 500 101 – –

Profit on sale of property and equipment (net of taxation) (42 233) (332) – –

Headline earnings 96 090 101 428 – –

Reconciliation of core headline earningsAdjusted for:

Amortisation of intangible assets 46 808 337 – –

Share-based payments and transaction costs 101 966 5 928 – –

Lease smoothing 1 399 679 – –

Profit on disposal of continuing operations (48 633) – – –

Tax effects on above (14 550) (295) – –

Core headline earnings 183 080 108 077 – –

Headline earnings per share – cents 195,6 236,5 – –

Diluted headline earnings per share – cents 191,8 233,5 – –

Core headline earnings per share – cents 372,7 252,0 – –

Diluted core headline earnings per share – cents 365,4 248,8 – –

Note:– The dilution of shares results from the exercise of options in the Employee Share Scheme and Empowerment Share Trust which are below the year-end market price.– Headline earnings per share is based on earnings adjusted for impairment costs, loss on sale of asset, and loss on disposal of operations.

38. Contingent liabilities – Group and Company38.1 The bank has guaranteed payment to creditors on behalf of the Company amounting to R3,827 million (2006: R0,992 million).

38.2 The bank has guaranteed payments to creditors on behalf of the Group amounting to R8,977 million (2006: R2,177 million).


39. CommitmentsComputer software (refer note 5) 15 225 16 000 – –

Property 1 939 – – –

Total commitments 17 164 16 000 – –

The commitment in respect of the software will be funded out of Group resources. Capital Outsourcing Group (Pty) Limited signed a purchase

and sale agreement to acquire Suite E202, Hampden Court on 6 September 2007. The property was only transferred on 13 May 2008.




40. Retirement benefitsThe Group makes contributions on behalf of all permanent

employees to defined contribution schemes which are governed

by the Pension Funds Act of 1956 on behalf of its employees.

These costs are charged to the income statement as they occur.

Total contribution by the Group for the period 33 337 23 203 2 390 1 776

41. Operating lease arrangementsThe Group as lesseeMinimum lease payments under operating leases recognised as an

expense in the year 23 717 30 834 2 596 2 023

At the balance sheet date, the Group has outstanding commitments

under non-cancellable operating leases which fall due as follows: 106 015 94 574 12 845 13 213

Within one year 36 243 29 032 2 287 2 263

In the second to fifth years inclusive 69 772 63 858 10 558 9 266

After five years – 1 684 – 1 684

Average lease terms (months) 58 68 54 68

42. Financial risk managementLiquidity riskThis is the risk of not being able to generate sufficient cash to meet

commitments to borrowers, depositors and other creditors at any

point in time.

The Group manages liquidity risk by monitoring forecast cash flows

and ensuring that adequate unutilised borrowing facilities are

maintained. Borrowing facilities are reflected in note 55.

Credit riskThe Group maintains cash, cash equivalents and short-term

investments with various financial institutions. The Group’s policy

is designed to limit exposure with any one institution and ensure a

high credit standing for the financial institution with which such

transactions are executed.

Credit risk with respect to trade accounts receivable is limited due

to the blue chip nature of the Group’s client base. Credit assessments

are done and continually updated on all the Group’s clients.

Other financial assets/liabilitiesThe directors consider that the carrying amount of trade and other

receivables and payables approximates their fair value.

43. Dividend paidAn interim dividend of 42 cents per share was declared on

16 August 2006 and was paid to shareholders on 16 October 2006 – 18 341 – 18 341

A final dividend of 126 cents per share was declared on

7 March 2007 and will be paid to shareholders on 16 July 2007 – 58 275 – 58 275

An interim dividend of 55 cents per share was declared on

17 October 2007 and was paid to shareholders on 10 December 2007 27 953 – 27 953 –

A final dividend of 160 cents per share was declared on 7 May 2008

and will be paid to shareholders on 1 September 2008 81 346 – 81 346 –

(Dividend paid based on 50 841 439 shares in issue

at 30 May 2008)

Proof 13 - 18 July



44. Share-based paymentsEmployee share option planThe Group operates three employee share option plans of which two have been discontinued and are in the process of winding down.

The original employee share schemes were replaced by a new share scheme in 2006 as changes in tax, accounting and regulatory treatment of

share-based payments has rendered the old schemes suboptimal.

1. Adcorp original employee share option scheme and Adcorp empowerment trustThe Group has two equity-settled share option schemes for employees of the Group. Options are exercisable at a price equal to the average

quoted market price of the company’s shares on the date of grant. The vesting period is two years. If the options remain unexercised after a

period of 10 years from the date of grant, the options will expire. Options are forfeited if the employee leaves the Group before the options

vest.

2. New Adcorp employee share schemeUnder the new scheme, eligible employees receive conditional allocations of share appreciation rights (SARs) or performances shares (PFs).

The SARs provide employees, at the date the right vests, with the right to receive shares equal to the appreciation in the share price since

grant date while the PFs vest depending on performance.

Both SARs and PFs vest two years after the grant date. The vesting of the shares is subject to various non-market-related performance criteria

and may vary between option holders. All SARs and PFs expire after six years from grant date.

The following share-based payment arrangements were in existence during the current and comparative reporting periods:

Grant Expiry Exercise Fair value atNumber date date price (R) grant date

Issued 31 May 2003 128 000 20/01/03 31/05/13 6,35 1,89

Issued 31 May 2004 699 500 24/06/04 31/05/14 13,00 3,28

Issued 31 May 2005 760 000* 22/11/05 31/05/11 18,15 6,78

Issued 31 May 2005 10 000 22/11/05 31/05/15 18,00 6,78

Issued 31 May 2005 10 000 22/11/05 31/05/15 18,15 6,78

Issued 31 May 2006 1 900 000* 30/04/06 31/05/12 26,31 4,30

Issued 01 March 2007 2 850 000* 01/04/07 31/03/13 32,31 4,04

Issued 01 December 2007 100 000* 01/12/07 30/11/13 37,80 5,98

* Share appreciation rights.

This fair value was calculated using the Black-Scholes option pricing model. The inputs into the model were as follows:

2008 2006

Weighted average share price (R) 32,50 26,70

Weighted average exercise price (R) 32,31 26,31

Expected volatility (%) 21,15 25,06

Expected life (years) 2 000 3 005

Risk-free rate (%) 8,02 7,16

Expected dividend yield (%) 6,00 6,00

Expected volatility was determined by calculating the historical volatility of the company’s share price on the expected life of the option.

The following reconciles the outstanding share options granted under the employee share schemes at the beginning and end of the financial

period:

Number Weighted Number Weightedof average of average

share exercise share exerciseoptions price options price

2008 2008 2006 2006Adcorp Employee Share Option scheme (R) (R)

Outstanding at the beginning of the period 234 000 12,10 770 750 11,98

Forfeited during the period 2 000 13,00 (35 000) 13,00

Exercised during the period (118 000) 11,31 (491 750) 11,85

Adjustment prior period – – (10 000) 13,00

Outstanding at the end of the period 118 000 12,14 234 000 12,10

Exercisable at the end of the period 118 000 12,14 234 000 12,10

Proof 13 - 18 July


Number Weighted Number Weightedof average of average

share exercise share exerciseoptions price options price

2008 2008 2006 2006Adcorp Employee Share Option scheme (R) (R)

44. Share-based payments continued

2. New Adcorp employee share scheme continuedOutstanding at the beginning of the period 25 000 15,73 81 750 13,02

Forfeited during the period – – (7 500) 13,00

Exercised during the period (25 000) 15,73 (49 250) 11,65

Granted during the period – – – –

Outstanding at the end of the period – – 25 000 15,73

Exercisable at the end of the period – – 5 000 6,35

Adcorp Share Appreciation Rights Share TrustOutstanding balance at the beginning of the period 2 580 500 24,16 760 000 18,15

Forfeited during the period (30 000) 18,15 (79 500) 18,15

Granted during the period 2 950 000 32,31 1 900 000 26,31

Exercised during the period (41 000) 18,15 – –

Outstanding at the end of the period 5 459 500 21,21 2 580 500 24,16

Exercisable at the end of the period 2 509 500 21,21 – –

3. Adcorp Employee Benefit Trust (arising from the BBBEE – refer note 21)Outstanding balance at the beginning of the period – – – –

Granted during the period 6 729 140 29,91 – –

Outstanding at the end of the period 6 729 140 29,91 – –

Exercisable at the end of the period – – – –

The following share options granted under the employee

share option plans were exercised during the financial year:

Option series Number exercised

2008Issued 31 May 1996 3 200

Issued 31 May 2000 93 000

Issued 31 May 2001 10 611

Issued 31 May 2002 40 000

Issued 31 May 2004 78 000

Issued 31 May 2005 410 000

634 811

2006Issued 31 May 2003 95 000

Issued 31 May 2004 446 000

541 000

Staff members were permitted to exercise their shares at the end of January, April, July, October and January of this financial year and the

average share price for the period was R36,73 (2006: R24,37).

The Group recognised a total expense of R101 965 545 (including the BBBEE transaction (refer note 21) during the year)) (2006: R6 079 271)

related to equity-settled share-based payment transactions.

Proof 13 - 18 July

Proof 13 - 18 July



Holding company Accounting andSale of services management fees marketing fees Rental2008 2006 2008 2006 2008 2006 2008 2006R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

45. Related partiesThe Group did not enter into any

transactions with Group parties other

than those with subsidiaries which

were eliminated on consolidation.

45.1 Trading transactionsDuring the period, Group entities

entered into the following

transactions:

Adcorp Holdings Limited – – (45 000) (21 000) 976 86 – 68

Subsidiaries of Adcorp

Holdings Limited 47 348 49 010 45 000 21 000 60 824 36 793 – (68)

GROUP2008 2006R’000 R’000

45.2 Compensation paid to key management (which excludes payments to directors set

out in note 46 below)

Short-term employment benefits 18 679 9 441

Share-based payments 552 194

Total 19 231 9 635

Medical Total Total Profit on Profit on Total TotalBonus/ aid/ Direc- cost to cost to share share remu- remu-

profit provident Allow- tors’ company company options options neration nerationSalary share fund ances Sundry fees 2008 2006 2008 2006 2008 2006R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

46. Directors’ emolumentsExecutiveH Barenblatt* – 2 500 – – – – 2 500 2 676 565 310 3 065 2 986

F Burd 1 497 1 483 338 5 – – 3 323 2 852 – 830 3 323 3 682

M Liphosa* 527 630 118 29 – – 1 304 2 084 566 291 1 870 2 375

R McGregor* 1 172 2 556 288 96 – – 4 112 2 813 572 877 4 684 3 690

R Pike 1 946 2 205 500 307 – – 4 958 4 278 – 525 4 958 4 803

T Ratshitanga – – – – – – – 1 266 – 231 – 1 497

PC Swart 1 483 2 000 333 148 – – 3 964 3 361 148 – 4 112 3 361

C Bomela 1 264 499 235 – – – 1 998 1 000 – – 1 998 1 000

S Zungu –

(alternate) – – – – – – – 894 – – – 894

7 889 11 873 1 812 585 – – 22 159 21 224 1 851 3 064 24 010 24 288

Non-executive directorsF Khanyile* – – – – – 102 102 88 172 – 274 88

G Negota* – – – – – 16 16 49 – – 16 49

S Sebotsa* – – – – – 16 16 78 – 99 16 177

S Shonhiwa* – – – – – 11 11 90 – 201 11 291

MR Ramaite – – – – – 51 51 – – – 51 –

PK Ward – – – – 40 94 134 – – – 134 –

T Ramano – – – – – 51 51 – – – 51 –

GP Dudu – – – – – 17 17 – – – 17 –

LM Mojela – – – – – 41 41 – – – 41 –

F van Zyl Slabbert 1 060 559 200 134 – – 1 953 1 900 566 310 2 519 2 210

1 060 559 200 134 40 399 2 264 2 205 738 610 3 130 2 815

*Resigned: S Sebotsa resigned 28 February 2007. R McGregor resigned 28 February 2007.H Barenblatt resigned 21 February 2007. S Shonhiwa resigned 28 February 2007. F Khanyile resigned 21 February 2008.G Negota resigned 28 February 2007. M Liphosa resigned 28 February 2007.


Number Number Numberof un- of of Number

exercised options options of Dateoptions granted exercised options Option from

Directors’ shareholding as at in during as at price whichat 29 February 2008 31/12/06 2008 2008 29/02/08 (R) exercisable

47. Directors’ shareholdingHW Barenblatt** 30 000 – (30 000) – 18,15 31/05/07

C Bomela 250 000 – – 250 000* 26,31 31/05/08

– 150 000 – 150 000* 32,31 28/02/09

FD Burd 30 000 – – 30 000* 18,15 31/05/07

250 000 – – 250 000* 26,31 31/05/08

300 000 – 300 000* 32,31 28/02/08

F Khanyile** 15 000 – (7 500) 7 500 13,00 31/05/06

RB McGregor** 30 000 – (30 000) – 18,15 31/05/05

250 000 – – 250 000* 26,31 31/05/08

– 200 000 – 200 000* 32,31 31/05/06

RL Pike 50 000 – – 50 000* 18,15 31/05/07

350 000 – – 350 000* 26,31 31/05/08

– 350 000 – 350 000* 32.31 28/02/08

T Ratshitanga (alternate)** 7 000 – (7 000) – 13,00 31/05/06

30 000 – (30 000) – 18,15 31/05/07

PC Swart 55 000 – (55 000) – 12,00 31/05/02

30 000 – (30 000) – 8,85 31/05/04

30 000 – – 30 000 6,35 31/05/05

30 000 – – 30 000 13,00 31/05/06

30 000 – – 30 000* 18,15 31/05/07

250 000 – – 250 000* 26,31 31/05/08

– 300 000 – 300 000* 32,31 28/02/09

F van Zyl Slabbert 30 000 – (30 000) – 18,15 31/05/07

200 000 – – 200 000* 26,31 31/05/08

– 200 000 – 200 000* 32,31 28/02/08

Number of Number ofshares shares

held as at held as atBeneficially Non- Beneficially Non-

held beneficially held beneficiallyDirectors’ interest in shares 31/12/06 held 29/02/08 held

FD Burd – – 100 –

M Liphosa** 26 – – –

RL Pike 249 630 – 249 630 –

MR Ramaite – – 15 000 –

S Sebotsa** 3 050 – – –

* Share appreciation rights (SARs).** Resigned during the period.

Proof 13 - 18 July



48. Taxation paid Amount (unpaid)/prepaid at the beginning of the period 3 032 (3 312) 514 2 516

Amount charged to income statement (41 203) (30 840) (11 066) (8 113)

Adjustment for deferred tax charged to income statement (19 893) 4 610 (2 225) 239

Taxation liability disposed (3 860) (2 519) – –

Taxation acquired (11 449) 423 – –

Amount (prepaid)/unpaid at the end of the period 7 417 (3 032) 1 757 (514)

Net cash payment (65 956) (34 670) (11 020) (5 872)

49. Dividend paidAmounts declared and paid (91 831) (62 976) (91 831) (62 976)

Received on treasury shares 89 190 90 –

Received from subsidiaries – – 209 988 70 659

Net cash (payments)/receipts before cash from associates (91 742) (62 786) 118 247 7 683

Received from associates 301 4 069 – –

Net cash (payments)/receipts (91 441) (58 717) 118 247 7 683

50. Additions to property, equipment and intangible assetsLand and buildings – replacement (9 840) (6 114) – (19)

Furniture and computer equipment – replacement (31 772) (14 737) (434) (82)

Trademark – (5 000) – –

Accreditation of programmes (653) (549) – –

Customer lists – (202) – –

Computer software (in progress) – expansion (20 193) (14 338) – –

(62 458) (40 940) (434) (101)

51. Net cash flow on disposal of businessesGoodwill 1 063 13 084 – –

Property and equipment 4 133 1 304 – –

Intangibles 268 – – –

Trade, other receivables and prepayments 20 081 6 444 – –

Investment in associate 4 536 1 879 – –

Trade and other payables (26 933) (8 297) – –

Provisions (2 908) (1 749) – –

Long-term liabilities (7) – – –

Loans 13 441 – – –

Deferred taxation 76 507 – –

Taxation 3 860 2 012 – –

Cash and cash equivalents 2 774 5 447 – –

Book value of net assets sold 20 384 20 631 – –

Profit on disposal of operations and subsidiaries 90 866 7 568 – –

Consideration 99 717 28 199 – –

Less: Cash and cash equivalents disposed of (2 774) (5 447) – –

Net cash inflow on disposal 96 943 22 752 – –


Proof 13 - 18 July


Proportionof shares Cost of

Principal Date of acquired acquisitionSubsidiary acquired activity acquisition (%) R’000

52. Acquisition of businesses2008Employ-Rite (Pty) Limited – final transaction costs Flexible staffing 01/12/06 – 95

Adcorp Flexible Staffing Solutions (Pty) Limited Flexible staffing 01/01/07 25 24 729

JobVest (Pty) Limited Permanent staffing various 5 2

FMS Marketing Solutions (Pty) Limited Business process outsourcing 01/01/07 100 231 363

Capital Outsourcing Group (Pty) Limited Flexible staffing 01/06/07 100 258 699

514 888

2006Employ-Rite (Pty) Limited Flexible staffing 01/12/06 100 41 383


Total purchase consideration for all businesses combinations 514 888 41 383 256 365 41 383

Less: Non-cash consideration for Employ-Rite (Pty) Limited – – – (2 941)

Less: Shares issued in respect of FMS Marketing Solutions

(Pty) Limited and Capital Outsourcing Group (Pty) Limited (79 000) – (72 000) –

Less: Cash and cash equivalents acquired 12 043 (13 230) – –

Cash outflow on acquisition of businesses 447 931 28 153 184 365 38 442

Adcorp FMS Capital Flexible

Marketing Outsourcing Staffing Employ-Solutions Group Solutions JobVest Rite

(Pty) Limited (Pty) Limited (Pty) Limited (Pty) Limited (Pty) Limited TotalR’000 R’000 R’000 R’000 R’000 R’000

The fair value of the assets and

liabilities acquired in respect of

the various acquisitions in the

period are as follows:

Property, plant and equipment 3 016 12 779 – – – 15 795

Goodwill – 33 543 – – – 33 543

Investment in associate – 368 – – – 368

Trade and other receivables 5 224 92 792 – – – 98 016

Cash and cash equivalents 7 590 (19 633) – – – (12 043)

Trade and other payables (4 785) (53 905) – – – (58 690)

Deferred taxation (242) 5 216 – – – 4 974

Taxation (7 688) (3 761) – – – (11 449)

Non-current liabilities – (6 117) – – – (6 117)

3 115 61 282 – – – 64 397

Identified intangibles arising on

acquisition through valuation 93 292 76 800 – – – 170 092

Deferred taxation arising on

intangibles required (27 055) (21 504) – – – (48 559)

Resulting goodwill arising

on acquisition 162 011 142 121 24 729 2 95 328 958

Total consideration 231 363 258 699 24 729 2 95 514 888

Proof 13 - 18 July



52. Acquisition of businesses continued

In complying with purchase accounting IFRS 3, the Group determined the fair value of the assets and liabilities acquired on the acquisition of

businesses. Valuations were performed, using the excess earning method and relief from royalty method to determine the value of the intangibles.

The resulting difference between the identified tangible assets, intangible assets and liabilities was attributable to goodwill. Details of the amount

of intangible assets and resulting goodwill arising on each business combination is set out in the table on page 87.

The cost of the acquisition of FMS Marketing Solutions Limited was paid in cash and through the issue of shares. In the acquisition of FMS

(Pty) Limited the Group has paid a premium for the acquisition as it believes the acquisition will create synergistic benefits to its existing

operations. Included in net profit for the period is R28 194 million attributable to the additional business generated by FMS Marketing Solutions

Limited.

The cost of the acquisition of Capital Outsourcing Group (Pty) Limited was paid in cash and through the issue of shares. In the acquisition of

Capital Outsourcing Group (Pty) Limited the Group has paid a premium for the acquisition as it believes the acquisition will create synergistic

benefits to its existing operations. Included in net profit for the period is R28 029 million attributable to the additional business generated by

Capital Outsourcing Group (Pty) Limited. Had this business combination been effected 1 January 2007, the revenue of the Group would be

R4 709 million and net profit of R175 million. The directors of the Group consider these pro forma numbers to represent an approximate measure

of the performance of the combined Group on annualised basis and to provide a reference point for comparison in future periods.


53. Cash and cash equivalentsCash and cash equivalents included in the cash flow statement

comprise the following balance sheet amounts:

Cash resources 147 824 74 929 300 4 937

Included in non-current assets classified as held-for-sale – 2 432 – –

Bank overdrafts (198 329) (95 862) (181 483) (95 862)

(50 505) (18 501) (181 183) (90 925)

Bank overdrafts are considered as part of cash and cash equivalents as they form part of the cash management system.

54. Financial instrumentsThe Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to

stakeholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from 2006. The capital

structure of the Group consists of debt, which includes the borrowings disclosed in notes 22 to 24, cash and cash equivalents and equity

attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in the notes. The Group’s

Executive management committee reviews the capital structure on an annual basis. As part of this review, the committee considers the cost of

capital and the risks associated with each class of capital. The Group has a target gearing ratio of 30 % determined as the proportion of net debt

to equity. The current higher gearing ratio target of 43% results from the acquisitions made in the financial period.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis

on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed

in the accounting policies on page 57 to 62.

Proof 13 - 18 July



54. Financial instruments continued

54.1 Categories of financial instruments

Financial assets

Derivative instruments in designated hedge

accounting relationships 3 141 – – –

Loans and receivables (including cash resources) 713 076 477 333 293 225 123 376

Financial liabilities

Amortised cost (including bank overdraft) 600 457 242 485 408 303 351 660

54.2 Financial risk management objectivesThe Group’s executive and head office treasury function provides services to the business, coordinates access to domestic financial

markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports, which analyse

exposures by degree and magnitude of risks. These risks include market risk (including fair value interest rate risk and price risk), credit

risk, liquidity risk and cash flow interest rate risk. The Group seeks to minimise the effects of these risks by using derivative financial

instruments to hedge these risk exposures. The use of financial derivatives is governed by the Group’s policies approved by the board of

directors. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative

purposes. The head office treasury function reports regularly to the executive, which monitors risks and policies implemented to mitigate

risk exposures.

54.3 Interest rate risk managementThe Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates. The risk is

managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings and by the use of interest rate cap

contracts. Hedging activities are evaluated to align with interest rate views and defined risk appetite; ensuring optimal hedging strategies

are applied, by either positioning the balance sheet or protecting interest expense through different interest rate cycles.

The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative

instruments at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at

the balance sheet date was outstanding for the whole year.

A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents

management’s assessment of the reasonably possible change in interest rates. If interest rates had been 100 basis points higher/lower and

all other variables were held constant, the Group’s profit for a year would decrease/increase by R885 000 after tax.

The Group has used an interest rate cap contract for fixing the interest cost on R100 million of the redeemable preference share loan of

R150 million, which was owing at 29 February 2008. This contract enabled the Group to mitigate the risk of cash flow exposures on the

issued variable rate debt. The fair value of the interest rate cap at the reporting date was determined by discounting the future cash flows

at the applicable market rates.

55. Group overdraft facilitiesThe Group had the following overdraft facilities as at 29 February 2008:

ABSA R130 million

First National Bank R100 million

Total overdraft facility R230 million

These facilities are repayable on demand and bear interest at rates linked to the prime overdraft rate.

56. Subsequent eventsThe following events have taken place since 29 February 2008, none of which has resulted in changes to the financial position as of that date:

– Acquisition of Staff U Need (Pty) Limited for R210 million – effective from 1 July 2008 subject to Competition Commission approval.

– Standard Bank long-term loan facility raised for part acquisition of Staff U Need (Pty) Limited – R120 million.

– Reduction in ABSA facilities from R130 million to R80 million as facility no longer required.

Proof 13 - 18 July

Proof 13 - 18 July

Annexure A: DETAILS OF SUBSIDIARIES AND ASSOCIATES


Adcorp Accountability (Pty) Limited* Accounting 4 000 4 000 200 200

Adcorp Communication Solutions (Pty) Limited Holding company 10 000 10 000 10 000 10 000

Adcorp Flexible Staffing Solutions (Pty) Limited Holding company 10 000 10 000 10 000 10 000

Adcorp Grey Consulting (Pty) Limited Recruitment 10 000 10 000 9 000 9 000

Adcorp Management Services (Pty) Limited Accounting 4 000 4 000 400 400

Adcorp Staffing (Pty) Limited* Flexible staffing 4 000 4 000 1 1

Adcorp Staffing Solutions (Pty) Limited Recruitment 4 000 4 000 100 100

Adcorp UK Limited Dormant 3 384 3 384 308 308

Business Employee and Management

Training (Pty) Limited* Training 1 000 – 100 –

Capacity Outsourcing (Pty) Limited* Flexible staffing 4 000 4 000 200 200

Capital Outsourcing Group (Pty) Limited* Flexible staffing 100 000 – 10 600 –

Capital Outsourcing Group (Pty) Limited – Australia* Flexible staffing 100 – 100 –

Capital Outsourcing Group – Malawi* Flexible staffing 10 000 – 10 000 –

Capital Outsourcing Group Limitada – Mozambique* Flexible staffing – – – –

Capital Outsourcing Group (UK) Limited

– United Kingdom* Flexible staffing 1000 – 1 –

Charisma Healthcare Solutions (Pty) Limited* Flexible staffing 1 000 1 000 100 100

D/@bility (Pty) Limited Deregistered – 1 000 – 100

DAV Professional Placement Group (Pty) Limited Recruitment 1 000 1 000 100 100

Emmanuels Staffing Services (Pty) Limited* Flexible staffing 1 000 1 000 100 100

Employ-Rite (Pty) Limited Flexible staffing 1 000 1 000 100 100

FMS Marketing Solutions

(Pty) Limited Business Process Outsourcing 1 000 – 1 000 –

Graphicor (Pty) Limited Sold – 100 – 100

Ikhwezi Staffing Solutions (Pty) Limited* Dormant 1 000 1 000 100 100

International Centre for Management

Development (Pty) Limited Liquidation 1 000 1 000 200 200

JobVest (Pty) Limited (70% owned) Recruitment – 4 000 – 2 000

Knovation (Pty) Limited Sold – 200 000 – 200 000

Premier Personnel (Pty) Limited Dormant 100 100 100 100

PMI of South Africa (Pty) Limited Training 100 100 100 100

Quest Flexible Staffing Solutions (Pty) Limited* Flexible staffing 100 100 100 100

Quest Holdings (Pty) Limited Holding company 10 000 10 000 10 000 10 000

Research Surveys (Pty) Limited Dormant 20 000 20 000 200 200

Sibanye Staffing (Pty) Limited Dormant 1 000 1 000 1 000 –

Simeka TWS Communications

(Pty) Limited Sold – – – 4 000

Stand 948, Melville (Pty) Limited Deregistered 1 000 1 000 100 100

The Design and Media

Company (Pty) Limited Deregistered – 4 000 – 4 000

Subtotal negative

Subtotal positive

Total subsidiaries

Name of associateCareer Junction (Pty) Limited Sold – 400 000 – 50 000

The Customer Equity Company (Pty) Limited Sold – 1 000 – 400

Private Sector Finance Financial services** – – – –

Klatrade 200074 (Pty) Limited Training 1 000 1 000 1 000 1 000

Shopper Behaviour Research (Pty) Limited Sold – 1 000 – 100

Sishayele Contact Centre Solutions (Pty) Limited Sold – 1 000 – 100

Thetha Call Centre Staffing (Pty) Limited Sold – 4 000 – 1 000

Subtotal negative

Subtotal positive

Total associates

* Owned by subsidiary companies.** Joint venture operation between Capital Outsourcing Group (Pty) Limited and PSF Sector Finance.

Authorised Issuedshare capital share capital

Name of subsidiary Nature of business/status Feb 2008 Dec 2006 Feb 2008 Dec 2006


Proof 13 - 18 July

200 200 – – 14 845 (523) (1 875) (134)

7 500 7 500 – 10 – 6 105 (2 706) (21 484)

7 500 7 500 357 469 332 564 – – – –

9 000 9 000 59 59 6 840 6 980 1 014 885

400 400 – – 6 814 5 973 1 328 (28)

1 1 – – 2 880 3 181 8 050 4 002

100 100 12 855 12 855 154 217 (9 674) 6 538 5 907

308 308 – – – – – –

100 – – – – – 2 139 –

200 200 – – 60 220 38 111 21 948 16 993

10 600 – – – 5 895 – 19 893 –

100 – – – – – (312) –

10 000 – – – – – 2 –

– – – – – – 9 –

1 – – – – – (189) –

100 100 – – 6 993 10 460 5 591 7 537

– 100 – – – 1 913 1 920 –

100 100 7 270 7 270 15 104 2 080 6 604 6 889

100 100 – – 4 260 6 543 21 701 22 478

100 100 41 478 41 383 2 124 (2 942) 4 777 1 406

1 000 – 231 363 – 2 684 – 20 715 –

– 100 – – – – – (2 471)

100 100 – – – – – –

200 200 – – – – – 15

– 1 400 3 1 8 230 14 725 465 (3 720)

– 200 000 – – – 31 332 (842) (425)

100 100 1 946 1 946 – – – –

100 100 629 629 2 082 2 850 2 603 1 934

100 100 – – 30 563 9 348 32 874 33 564

10 000 10 000 – – (197 031) (197 031) – –

200 200 6 726 7 790 (18 232) (23 140) 48 732 37 020

650 – – – – – – –

– 4 000 – – – – – (2 657)

100 100 – – – (171) (22) 232

– 4 000 – – – – – 27

– – (215 263) (233 481) (5 946) (30 919)

659 798 404 507 323 751 139 601 206 903 138 657

659 798 404 507 108 488 (93 880) 200 957 107 738

– 12 500 – 3 045 – – 813 2 284

– 100 – – – (51) – 3 185

– – 222 – – – 54 –

750 500 48 103 – – 45 12

– 35 – – – – – 14

– 30 – 67 – – 600 16

– 500 – (26) – – – (34)

– (26) – (51) 1 512 (34)

270 3 215 – – – 5 511

270 3 189 – (51) 1 512 5 477

Cost of investment Indebtedness (to)/ AttributableNumber of (before write-downs) by the subsidiary profit/(loss)shares held R’000 R’000 R’000 R’000 R’000 R’000

Feb 2008 Dec 2006 Feb 2008 Dec 2006 Feb 2008 Dec 2006 Feb 2008 Dec 2006


Administration

Adcorp Holdings Limited Registration number 1974/001804/06

Founded 1968, listed 1987

Secretary and registered office L Sudbury

Block A, 28 on Sloane

Sloane Street

Bryanston, 2021

PO Box 7156, Johannesburg, 2000

Tel 011 244 5300

Fax 011 244 5310

Email [email protected]

Legal advisorsRoodt Inc Attorneys

Registration number 2003/016254/21

Block A, Eton Road Office Park

7 Eton Road

Sandhurst, 2196

PO Box 78894, Sandton, 2146

Auditors Deloitte & Touche

The Woodlands

20 Woodlands Drive

Woodmead

Sandton

2146

Private Bag X6

Gallo Manor, 2052

Tel 011 806 5000

Fax 011 806 5111

Transfer secretaries Link Market Services SA (Pty) Limited


11 Diagonal Street

Johannesburg, 2001

PO Box 4844

Johannesburg, 2000

Tel 011 834 2266

Fax 011 834 4398

Commercial bankers FirstRand of Southern Africa Limited


ABSA Bank Limited


The Standard Bank of South Africa Limited


Sponsors Deloitte & Touche Sponsor Services (Pty) Limited

The Woodlands

20 Woodlands Drive

Woodmead

Sandton

2146

Private Bag X6

Gallo Manor, 2052

Tel 011 806 5616

Fax 011 806 5666

Shareholders’information


Proof 13 - 18 July

Shareholder analysis and diary

Number of % of total Number of % of shareholders shareholders shares shares

1. Analysis of shareholdings1 – 1 000 807 46,30 332 116 0,651 001 – 10 000 665 38,15 2 322 034 4,5710 001 – 100 000 184 10,56 5 877 212 11,56100 001 – 1 000 000 80 4,59 26 763 995 52,651 000 001 – and above 7 0,40 15 536 082 30,57

Totals 1 743 100,00 50 831 439 100,00

2. Distribution of shareholdersBanks 7 0,40 1 988 567 3,91Close corporations 13 0,75 120 533 0,24Individuals 1 416 81,24 3 735 934 7,35Insurance companies 33 1,89 8 349 558 16,43Collective investment schemes and mutual funds 78 4,47 19 998 780 39,34Nominees and trusts 91 5,22 3 298 206 6,49Pension funds and medical schemes 87 4,99 9 996 987 19,67Private companies 16 0,92 3 280 784 6,45Adcorp share trust 1 0,06 19 288 0,04The company 1 0,06 42 802 0,08

Totals 1 743 100,00 50 831 439 100,00

3. Shareholder spreadShare trust 1 0,06 19 288 0,04Directors 3 0,17 264 730 0,52PDI trust 1 0,06 42 802 0,08

Non-public 5 0,29 326 820 0,64

Public 1 738 99,71 50 504 619 99,36

Totals 1 743 100,00 50 831 439 100,00

4. Major shareholders (5% and more of the shares in issue)Investec Asset Management 7 645 875 15,04Allan Gray Asset Management 4 500 777 8,85JP Morgan 3 977 463 7,82RMB Asset Management 3 825 718 7,53Sanlam Asset Management 3 494 005 6,87Fuman Investments (Pty) Limited 2 631 628 5,18

Shareholders’ diary for 2008Financial year-end February

Annual general meeting 09:00 Wednesday, 27 August 2008

ReportsInterim results October

Reviewed annual results May

Audited annual financial statements July

Final dividendFinal dividend of 160 cents per share (2006: 126 cents per share) was declared on 7 May 2008 payable to shareholders recorded in the register of the

company at the close of business on the record date appearing below. The salient dates pertaining to the final dividend are as follows:

Last day to trade cum final dividend Friday, 22 August 2008

First day to trade ex final dividend Monday, 25 August 2008

Record date Friday, 29 August 2008

Payment date Monday, 1 September 2008

No share certificates may be dematerialised or rematerialised between Monday, 25 August and Friday, 29 August 2008 both days inclusive.

Dividend cheques will be posted and electronic payments made, where applicable, to certificated shareholders on the payment date. Dematerialised

shareholders will have their account with Central Securities Depository Participant or broker credited on the payment date.

Proof 13 - 18 July

Adcorp Holdings stats from 2 January 2007 to 29 February 2008 2008 2006

Closing price of Adcorp Holdings (at 29 February) (cents) 3 555 3 000

Total number of trades (million) 25,0 19,6

Total value traded (million rands) 917,2 477,6

Price of shares traded – highest (cents) 4 500 3 000

Price of shares traded – lowest (cents) 2 900 2 100

Total value traded as % of year-end market cap 50,8 36,7

Total value traded as % of average market cap 51,5 44,9

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

1 JAN2003

1 JAN2004

1 JAN2005

1 JAN2006

29 FEB2008

1 JAN2007

cents

Five-year share price performance

2 800

3 000

3 200

3 400

3 600

3 800

4 000

4 200

4 400

JAN2007

FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN2008

FEB

cents

0100 000200 000300 000400 000500 000600 000700 000800 0009 00000

1 000 0001 100 000

JAN2007

FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN2008

FEB

Numb

er of

share

s

Adcorp price chart – daily closing price

Adcorp volume chart – 2 January 2007 to 29 February 2008


Notice of annual general meeting


Proof 13 - 18 July

ADCORP HOLDINGS LIMITED(Incorporated in the Republic of South Africa)

(Registration number 1974/001804/06)

Share code: ADR

ISIN: ZAE000000139

(Adcorp or the company)

Notice is hereby given that the annual general meeting of the shareholders of Adcorp Holdings Limited will be held at Block A, 28 on Sloane, Sloane

Street, Bryanston, Johannesburg, on Wednesday, 27 August 2008 at 09:00 to consider and, if deemed fit, to pass, with or without modification, the

following resolutions:

As ordinary resolutions1. To receive, approve and adopt the audited annual financial statements for the period ended 29 February 2008.

2. To elect Robinson Ramaite as a director of the company (CV on page 31).

3. To elect Peter Ward as a director of the company (CV on page 31).

4. To elect Tryphosa Ramano as a director of the company (CV on page 31).

5. To elect Louisa Mojela as a director of the company (CV on page 31).

6. To resolve that 1 500 000 shares in the authorised but unissued share capital of the company be and are hereby placed under the control of the

directors of the company as a specific authority in terms of section 221(2) of the Act. These shares are specifically for the issue of shares in order

to meet Adcorp’s commitment in terms of the Adcorp Employee Share Trust.

7. To resolve that 10% of the ordinary shares in the authorised but unissued share capital of the company be and are hereby placed under the control

of the directors of the company as a specific authority in terms of section 221(2) of the Companies Act, 61 of 1973, as amended (the Act).

8. To transact such other business as may be transacted at an annual general meeting.

9. To resolve that Deloitte & Touche be reappointed as auditors of the Group until the next annual general meeting.

Special resolutions 1Resolved that the directors of the company be and are hereby authorised by way of a general authority to facilitate the repurchase by the company, or

any of its subsidiaries, of shares in the capital of the company, as they in their discretion, from time to time, deem fit. The repurchase will be in

accordance with the provisions of the Act, the JSE Listings Requirements and the articles of association of Adcorp, from time to time, which are:

• the repurchase of securities being affected through the order book operated by the JSE trading system and done without any prior understanding or

arrangement between the company and the counterparty;

• this general authority shall be valid only until the company’s next annual general meeting, or for 15 months from the date of this special resolution,

whichever period is shorter;

• an announcement will be published as soon as the company has acquired ordinary shares constituting, on a cumulative basis 3% or every 3%

thereafter, of the number of ordinary shares in issue prior to the acquisition pursuant to which the aforesaid, 3% threshold is reached, containing full

details of such shares;

• any general repurchase shall not in the aggregate in any one financial year exceed 20% of the company’s ordinary issued share capital;

• in determining the price at which ordinary shares issued by the company will be acquired by the company and/or its subsidiaries in terms of this

general authority, the maximum premium at which such ordinary shares may be acquired will be no more than 10% above the weighted average of

the market value at which such ordinary shares are traded on the JSE, as determined over the five trading days immediately preceding the date of

repurchase of such ordinary shares by the company and/or its subsidiaries; and

• the sponsor of the company provides a letter to the JSE on the adequacy of working capital in terms of section 2.12 of the JSE Listings Requirements,

before the share repurchase commences.

Having considered the effect of the maximum repurchase of 20% of the company’s issued share capital in any one financial year, the directors are of

the opinion that:

• the company and the Group will, after payment for such ordinary course of business for a period of 12 months following the date of the annual general

meeting;

• the company’s and the Group’s consolidated assets, fairly valued according to generally accepted accounting practice and on a basis consistent with

the last financial year of the company, will, after such payment, exceed their consolidated liabilities for a period of 12 months following the date of

the annual general meeting;

• the company’s and the Group’s ordinary share capital and reserves will, after such payment, be sufficient to meet their needs for a period of

12 months following the date of the annual general meeting;

• the company and the Group will, after such payment, have sufficient working capital to meet its needs for a period of 12 months following the date

of the annual general meeting;

• at any point in time, may only appoint one agent to effect any repurchase on the company’s behalf;


• the company may only undertake a repurchase of securities if, after such repurchase, it still complies with the shareholder spread requirements as set

out in the JSE Listings Requirements; and

• the company or its subsidiaries may not repurchase securities during a prohibited period, as defined in the JSE Listings Requirements.

The board of directors of Adcorp will use this authority as and when opportunities arise.

The effect of this special resolution and the reason therefore is to grant the company and its subsidiaries a general approval in terms of the Companies

Act No 61 of 1973, as amended, for the acquisition by the company of its own shares and/or acquisition by a subsidiary of shares in the company,

which general approval shall be valid until the next annual general meeting of the company, provided that this general authority shall be valid only

until the company’s next annual general meeting or for 15 months from the date of special resolution number 1, whichever period is shorter. Such

general authority will provide the board with the flexibility to repurchase shares should same be in the interest of the company at the time while the

general authority subsists.

Special resolutions 2Resolved that the authorised share capital of Adcorp be increased from R2 500 000, consisting of 100 000 000 ordinary shares of

2,5 cents each to R5 000 000, consisting of 200 000 000 ordinary shares of 2,5 cents each, by the creation of 100 000 000 new ordinary share of

2,5 cents each. The new ordinary shares shall rank pari passu in all respects with the other shares in the authorised ordinary share capital of Adcorp.

The reason for the proposed increase in the authorised share capital is that the board believes it is prudent to increase the authorised share capital of

Adcorp in order to provide Adcorp with adequate unissued shares for the future.

The effect of the proposed increase in the authorised share capital is illustrated below:

The share capital of Adcorp prior to the proposed increase is:

R

Authorised

83 177 151 ordinary shares of 2,5 cents each 2 079 428,78

16 822 849 “A” shares of 2,5 cents each 420 571,22

Total authorised share capital 2 500 000,00

Issued: Adcorp ordinary shares


Share premium 283 158 541,41

Total ordinary shares 284 429 577,39

Issued: “A” shares


Total “A” shares 420 571,23

The share capital of Adcorp after the proposed increase is:

R

Authorised



Total authorised share capital 5 000 000,00

Issued: Adcorp ordinary shares


Share premium 283 158 541,41

Total ordinary shares 284 429 577,39


Total “A” shares 420 571,23

Proof 13 - 18 July


Proof 13 - 18 July

Other disclosures in terms of section 11.26 of the JSE Listings Requirements• Directors and management (page 30 and 31)

• Major shareholders of Adcorp (page 94)

• Directors’ interests in securities (page 85)

• Share capital of Adcorp (page 71)

Material changeOther than the facts and developments as referred to on page 89 of the annual report, there have been no material changes in the affairs or financial

position of Adcorp and its subsidiaries since the date of signature of the audit report and the date of this notice.

Directors’ responsibility statementThe directors, whose names are given on pages 30 and 31 of the annual report, collectively and individually accept full responsibility for the accuracy

of the information pertaining to the special resolution and certify that to the best of their knowledge and belief there are no facts that have been omitted

which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that this resolution

contains all such information.

Litigation statementIn terms of section 11.26 of the Listings Requirements of the JSE, the directors, whose names are given on pages 30 and 31 of the annual report of

which this notice forms part, are not aware of any legal or arbitration proceedings, including proceedings that are pending or threatened, that may have

or have had in the recent past, being at least the previous 14 months, a material effect on the Group’s financial position.

VOTING AND PROXIESIf you are a certificated or own name dematerialised shareholder and unable to attend the annual general meeting of ordinary shareholders to be held

on Wednesday, 27 August 2008 at 09:00 at the premises of the company on Block A, 28 on Sloane, Sloane Street, Bryanston, Johannesburg, and wish

to be represented thereat, you must complete and return the attached forms of proxy in accordance with the instructions therein to be received by the

transfer secretaries by not later than 09:00 on Tuesday, 26 August 2008.

If you have dematerialised your shares with a Central Securities Depository Participant (CSDP) or broker, other than with own name registration, you

must arrange with them to provide you with the necessary letter of representation to attend the annual general meeting or you must instruct them as to

how you wish to vote in this regard. This must be done in terms of the agreement entered into between you and the CSDP or broker, in the manner and

cut-off time stipulated therein.

Additional proxy forms are obtainable from the company secretary and must be deposited at the transfer secretaries not less than 24 hours before the

meeting.

By order of the board

LJ Sudbury

Company secretary

16 July 2008

Proof 13 - 18 July


Form of proxy

ADCORP HOLDINGS LIMITED (Incorporated in the Republic of South Africa)

(Registration number 1974/001804/06)

Share code: ADR

ISIN: ZAE000000139

(Adcorp or the company)

For use at the annual general meeting of shareholders of Adcorp Holdings Limited to be held at 09:00 on Wednesday, 27 August 2008.

For use by the certificated holders or holders of dematerialised shares in their own name at the annual general meeting to be held at 09:00 on

Wednesday, 27 August 2008 at the premises of the company on Block A, 28 on Sloane, Sloane Street, Bryanston, Johannesburg.

If shareholders have dematerialised their shares with a Central Securities Depository Participant (CSDP) or broker, other than with own name

registration, they must arrange with the CSDP or broker to provide them with the necessary letter of representation to attend the annual general meeting

or the shareholder must instruct them as to how they wish to vote in this regard. This must be done in terms of the agreement entered into between the

shareholder and the CSDP or broker, in the manner and cut-off time stipulated therein.

For the annual general meeting

I/We

(Name/s in block letters)

of

(Address in block letters)

being a member/s of the abovementioned company and holding shares in Adcorp Holdings Limited, and entitled

to vote, do hereby appoint (refer to note 1 on page 100):

or, failing him/her,

Dr F van Zyl Slabbert of Block A, 28 on Sloane, Sloane Street, Bryanston, Johannesburg, or failing him, the Chairman of the meeting as my/our

proxy(ies) to vote on a poll on my/our behalf at the annual general meeting of the company to be held at 09:00 on Wednesday, 27 August 2008 and at

any adjournment thereof.

Please indicate with an “X” in the spaces below how you wish your proxy to vote in respect of the resolutions to be proposed, as contained in the notice

of the abovementioned annual general meeting.

*I/We desire my/our proxy to vote on the resolutions to be proposed, as follows:

For Against Abstain

Ordinary resolution 1 (Adopt audited financial statements)

Ordinary resolution 2 (Elect Robinson Ramaite)

Ordinary resolution 3 (Elect Peter Ward)

Ordinary resolution 4 (Elect Tryphosa Ramano)

Ordinary resolution 5 (Elect Louisa Mojela)

Ordinary resolution 6 (Employee share scheme shares

placed under control of directors)

Ordinary resolution 7 (10% of unissued shares placed under

the control of directors)

Ordinary resolution 8 (Transact other business)

Ordinary resolution 9 (Appointment of auditors)

Special resolution 1 (General authority to repurchase shares)

Special resolution 2 (Increase share capital)

Signed by me/us this day of 2008

Signature

Assisted by me (where applicable) (see note 4 on reverse of proxy form)

Full name/s of signatory if signing in a representative capacity (see note 5 on reverse of proxy form)

* If this form of proxy is returned without any indication of how the proxy should vote, the proxy will exercise his/her discretion both as to how he/she votes and as to whether or nothe/she abstains from voting.

Notes


Proof 13 - 18 July

1. A member entitled to attend and vote at the abovementioned meeting is entitled to appoint one or more proxies to attend, speak and, on a poll, vote

in his/her stead or abstain from voting. The proxy need not be a member of the company.

2. To be valid, this form of proxy must be completed and returned to the company’s transfer secretaries, Link Market Services (SA) (Pty) Limited,

11 Diagonal Street, Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000), to be received by not later than 09:00 on Tuesday, 26 August 2008.

3. In the case of a joint holding, the first-named only need sign.

4. The authority of a person signing a proxy in a representative capacity must be attached to the proxy unless that authority has already been recorded

by the company.

5. A minor or any other person under legal incapacity must be assisted by his/her parent or guardian as applicable, unless the relevant documents

establishing capacity are produced or have been registered with the transfer secretaries.



The Power of Potential

www.adcorp.co.za

po•ten•tialHaving or showing the capacity to become

or develop into something in the future.

From late Latin potentialis, from potentia‘power,’ from potent –‘being able’

ANNUAL REPORT 2008

The

Pow

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lANNUAL REPORT 2008

TH

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OW

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O

F P

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G R A P H I C O R 3 8 0 0 1

FSC – The FSC (Forest Stewardship Council) is a system of forest

certification and product labelling. It identifies wood and wood-based

products from well-managed forests. It is applicable to suppliers of

wood products from certified forests who wish to label as FSC. For

more information visit http://www.fsc.org

PEFC – The PEFC (Programme for the Endorsement of Forest

Certification schemes) provides a framework for the development of

and mutual recognition of national or sub-national forest certification

schemes that have been developed locally according to international

recognised requirements for sustainable forest managements. For

more information visit http://www.pefc.org

Adcorp Cover REPRO 7/21/08 3:43 PM Page 1


www.adcorp.co.za

po•ten•tialHaving or showing the capacity to become

or develop into something in the future.

From late Latin potentialis, from potentia‘power,’ from potent –‘being able’

The Power of Potential - ShareData · group strategy and vision 16 strategic priorities 17 what our...

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