31 October 2022
Adcorp grows revenue and gross profit, declares a dividend
Johannesburg, 31 October 2022 – JSE-listed workforce solutions provider Adcorp Holdings Limited released interim results for the six months that ended 31 August 2022, reflecting solid results.
Group revenue from continuing operations improved by 3.2% from R5,7 billion to R5,9 billion. Further margin improvement has resulted in gross profit from continuing operations increasing by 6,3% from R589,6 million to R626,8 million while operating profit from continuing operations was similar to the comparative period. Operating expenses increased by 9,1%, most of which is attributable to an investment in people, particularly in Australia. Profit before taxation rose by 22,3% to R45,4 million compared to R37,1 million, mainly due to a reduced interest expense of R26,9 million. Earnings per share from continuing operations increased to 24,6 cents compared to 23,8 cents.
CEO Dr John Wentzel says: “The results show that our strategy of focusing Adcorp as a brand-centric staffing business is starting to pay off, notwithstanding the problems we had with aaX in Australia.”
The performance of the Contingent Staffing division was solid. BLU saw revenue and gross profit growth in H1as an enhanced sales focus paid dividends. The repositioning of Cynergy has been completed; however, delays in approving renewable energy projects in South Africa meant that revenue lost in the prior period was not replaced.
The Functional Outsourcing division performed in line with expectations as revenue and gross profit rose. While the sales cycle has lengthened, the forward-looking pipeline remains strong as customers increasingly expressed interest in its solutions. Capability performed strongly as its niche cleaning offering found willing customers.
Training had a weaker H1 than the prior year. Large clients delayed spending in Q1, but there was some recovery in PMI in Q2. Torque IT saw a slowdown in the B2B training market as demand fell and suppliers discontinued long-standing incentives. Results were, therefore, negatively affected on a comparative basis.
The Professional division produced mixed results. Quest showed excellent growth, while talentCRU demonstrated signs of recovery in the Recruitment Process Outsourcing market. Charisma showed a sharp decline as hours worked were significantly less than the prior year when we were at a COVID-19 peak. Paracon performed in line with expectations, with a lack of resource supply affecting our ability to meet demand.
The Australian operations showed strong underlying performance, although problems with the aaX brand negatively impacted overall performance. aaX is categorised as an asset that is being held for sale. Investments in Labour Solutions Australia during H1 produced excellent results, with revenue climbing substantially over the prior year. Paxus revenue was also ahead of the preceding year.
The board of directors approved and declared an interim gross dividend of 12,2 cents per ordinary share (2021: Nil) for the six months ended 31 August 2022.
Looking ahead, Wentzel commented that rising inflation in both markets and persistent infrastructure challenges in South Africa were a concern and may dampen the outlook for the year’s second half. “We believe that Adcorp is well-positioned to meet these challenges as we continue to focus on executing our strategy and deploying capital to drive growth and deliver shareholder value.”
At Adcorp, our purpose is to enable agile, focused and skilled workforces for the future of our clients across two continents. Adcorp is passionate about connecting human potential and through that, helping businesses, companies and economies grow.
Connect with us through our website adcorpgroup.com or social channels:
Issued by: Singular Systems – IR
010 003 0700 / 082 497 9827
On behalf of Adcorp Holdings Limited
Dr John Wentzel, CEO