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Audited provisional summarised consolidated results for the year ended 29 February 2020

Adcorp Holdings Limited
Incorporated in the Republic of South Africa)
Registration number 1974/001804/06)
Share code: ADR
ISIN: ZAE000000139
(“Adcorp” or “Adcorp Group” or “the Group”)


Summarised consolidated results for the year ended 29 February 2020 and cautionary announcement

Salient features

  • Revenue from continuing operations decreased by 10% to R13 billion (2019: R14.5 billion restated*)
  • Operating profit from continuing operations decreased by 49% to R195 million (2019: R379 million restated*)
  • Cash generated by operations decreased by 57% to R213 million (2019: R500 million)
  • Days Sales Outstanding (“DSO”) deteriorated to 54 days (2019: 52 days)
  • Gearing ratio increased to 58% (2019: 27%)
  • Earnings per share decreased to 561 cents loss per share (2019: 240 cents earnings per share)
  • Headline earnings per share decreased to a loss of 6.2 cents (2019: 245 cents earnings per share)
  • No dividend declared for the year ended 29 February 2020 (2019: 96.1 cents)

*Restated to classify Dare Holdings Proprietary Limited – Australia as an asset held for sale in accordance with IFRS 5 (Discontinued operations).

Financial overview

The year ended 29 February 2020 was a particularly challenging one for the Adcorp Group given a tough trading environment, compounded by internal operational difficulties. In South Africa, the staffing industry continued to face challenges presented by a contracting economy and rising unemployment, while in Australia a series of natural disasters and political uncertainty depressed the demand for labour.

Adcorp’s revenue from continuing operations decreased across all segments including Australia which resulted in a consolidated Group revenue decline of 10% from R14.5 billion to R13 billion. In South Africa, the economic constraints experienced by clients in the Temporary Employment Services (“TES”) segment also negatively impacted margins due to downward pressure on pricing. The Professional Services division was impacted by a decline in demand as clients curtailed spending in response to macroeconomic pressures. Revenue in the Training division contracted largely by design, given the resultant focus on higher-margin business. Trading has remained stable for the Financial Services division.

Revenue in the Australia business, excluding Dare declined by 8% due to the drought, flooding and fires which materially impacted Labour Solutions Australia (“LSA”). LSA primarily provides staff to the adversely affected agricultural sector. Volumes were also impacted in the balance of the Australian portfolio due to weaker economic activity. Although placement volumes stabilised in the second half of the year, this was insufficient to recover the revenue lost in H1.

The Group EBITDA from continuing operations for the year decreased by 26% to R341 million compared to R458 million in the prior year.

In light of the deterioration in financial performance, management undertook a review of the significant goodwill and intangible assets balance. The Group has impaired R558 million of goodwill in the resourcing-based cash-generating units in both South Africa and Australia given the significant slowdown in these businesses over the past year.

Efforts to right-size the business and ensure an efficient operating structure and processes have continued to yield positive results. The implementation of phase two of the cost-optimisation programme has delivered net savings of R144 million in operating expenses for FY2020 compared to FY2019.

Cautionary announcement
A rigorous assessment of the Group’s strategic position in Australia prompted a comprehensive portfolio review, culminating in a decision by the Adcorp board of directors (the “Board”) to explore opportunities to exit this geography. Pursuant to this decision, shareholders are advised that Adcorp has entered into advanced negotiations regarding the disposal of Dare Australia, which if successfully concluded may have a material effect on the price of the Group’s securities. Accordingly, shareholders are advised to exercise caution when dealing in Adcorp’s securities until a full announcement is made.


The key focus for the Adcorp Group in the 2021 financial year will be internal stabilisation, pursuit of incremental profitable top-line growth, margin enhancement and cost vigilance. The extent of the impact of the COVID-19 pandemic (“COVID-19”) on the business and future financial results remains uncertain. The Group continues to manage liquidity judiciously and implement the necessary actions to ensure business continuity.

The TES sector has continued to grow in recent years albeit at a slower rate, given the impact of the Constitutional Court ruling on the “deeming” provision in the Labour Relations Act (“LRA”). TES remains a pillar of job creation for the South African economy particularly for first-time job seekers and the youth. In addition, flexibility and staffing solutions will be a key requirement for some industries as they look to remain operational in the year ahead, whilst navigating the unprecedented challenges arising from COVID-19.

Despite the disappointing results and the uncertainty presented by COVID-19, the Board remains optimistic about the Group’s value proposition consequent to a rigorous strategic process that has been embarked upon under new leadership. Adcorp remains South Africa’s largest workplace solutions provider and continues to use its capabilities and market position to make a positive impact on society, by increasing employability and connecting people with job opportunities.

This short form announcement is the responsibility of the directors and is only a summary of the information contained in the full announcement and does not contain full or complete details. The full announcement is available on the JSE website and on the Group’s website. Copies of the full announcement may also be requested from the Group’s registered office and at the office of the Group’s sponsors during office hours 8:00 – 16:00, Monday – Friday at no cost at the contact details below. Any investment decision should be based on the contents of the full announcement available on the JSE’s website and the Group’s website. The information in this short-form announcement has been extracted from the audited financial statements. The auditors’ unmodified report along with their key audit matters and the annual financial statements are available for inspection. This short-form announcement itself has not been reviewed or audited by Adcorp’s auditors.

29 June 2020

Nedbank Corporate and Investment Banking, a division of Nedbank Limited

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