Adcorp Holdings, the JSE-listed human capital management group, today announced group revenue of R 2,6 billion for the six-months to August – 7% ahead of last year’s comparative period.
Headline earnings rose by 4% to 94,9cents per share (2009: 91,2cents per share), while normalised earnings of 147,8cents per share (2009: 157,8 cents per share) were 6% down.
Richard Pike, Adcorp’s CEO, said that “trading results for the six-month interim period ended 31 August 2010 continue to reflect a relatively sluggish trading environment”.
Cash generated by operations topped an impressive R225,2 million (2009: R114,8 million), resulting in a cash conversion ratio of cash generated by operations to operating profit of 199% (2009: 88%).
Debtors’ days outstanding were significantly reduced from the February 2010 year-end of 38 days to the interim level of 33 days.
Pike said Adcorp’s stellar cash performance, coupled with the February 2010 capital raising of R112,5 million and a better than expected uptake of August 2010’s scrip distribution, had reduced gearing dramatically – from a high of 46% at 31 August 2009 to the current interim gearing level of 10%.
“I regard this as highly commendable, given the relatively tough collections environment,” said Pike. “The marked de-gearing has substantially strengthened the balance sheet, placing us in an extremely strong position to take advantage of strategic opportunities in the future.”
The white collar flexible staffing and permanent recruitment businesses showed a healthy recovery during the period, albeit off a relatively low base, while the business process outsourcing operations continued to show solid growth.
Reported profits from the blue collar flexible staffing businesses were slightly down compared to the prior year – largely in line with expectations.
The nursing and recruitment advertising businesses encountered particularly difficult trading conditions, necessitating cost-cutting and restructuring initiatives.
Adcorp’s 5,1% EBITDA was similar to that achieved in the second half of last year.
“Operating expenses were held flat compared to the prior year comparative period – a pleasing result given our cost-cutting initiatives,” said Pike.
As previously reported, the group acquired Gold Fields External Training Services (GFETS) for an amount of R5 million during the period under review. GFETS has a specific focus in artisan and mining-related training. Although a relatively small acquisition in financial terms, Adcorp’s directors regard it as significant in strategic terms, given the group’s focus on bolstering its training capabilities.
The interim report notes that the ongoing public debate over the future of labour broking remains unresolved. “While the Parliamentary Portfolio Committee on labour announced earlier in the year that there would be no ban on the practice of labour broking but, rather, certain additional laws would be introduced to regulate the industry, still no draft legislation has been tabled.”
Pike said that although employment trends had tended to lag the slow recovery in the South African economy, there were, however, some encouraging signs that employment was starting to pick up, albeit in a relatively modest fashion.
“Strategically, the group is focused on managing its costs, driving economies of scale, delivering value for its clients and increasing the level of sophistication and technology advancement it applies in its day to day operations. In addition, the group has a strong and robust balance sheet.
“As such, we are well positioned to take advantage of a future upswing in employment trends.”
Download Unaudited Group Results Booklet
Issued by:
Meropa Communications
Alex van Essche
Tel: 011 506 7300
Email: alexve@meropa.co.za
Cel: 082 321 1167
On behalf of:
Adcorp Holdings
Group Marketing Manager
Mandy Jones