ADCORP HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1974/001804/06
Share code: ADR & ISIN: ZAE000000139
(“Adcorp” or “the Group“)
TRADING STATEMENT AND OPERATIONAL UPDATE FOR THE TWELVE MONTHS ENDING 28 FEBRUARY 2022
In terms of the Listings Requirements of the JSE Limited, companies are required to publish a trading statement as soon as there is a reasonable degree of certainty that the financial results for the period to be reported upon next will differ by at least 20% from the financial results for the previous corresponding period.
Adcorp hereby advises that a reasonable degree of certainty exists that for the year ended 28 February 2022:
- headline earnings per share (“HEPS”) is expected to increase by a minimum of 47.5 cents compared to headline earnings per share of 2 cents reported for the year ended 28 February 2021, representing an increase of at least 139%; and
- earnings per share (“EPS”) is expected to increase by a minimum of 55.9 cents compared to earnings per share of 35.6 cents reported for the year ended 28 February 2021, representing an increase of at least 157%.
A further trading statement will be released as soon as the Company has reasonable certainty on the ranges of the HEPS and EPS for the period as required by the Listings Requirements.
Adcorp expects to release its results for the twelve months ending 28 February 2022 on or around 30 May 2022.
The financial information on which this trading statement is based has not been reviewed, or reported on, by the Group’s external auditors.
Adcorp’s objectives for the year ended 28 February 2022 were focussed on stabilising the company. The company has continued to manage costs prudently and has improved its earnings. Adcorp Group revenue is expected to be in line with the prior year on a constant currency basis. Revenue was negatively affected by the strategic exit of low margin contracts, the July KwaZulu Natal unrest in South Africa, flooding in Australia and the impact of Covid-19 in key markets. The economic recovery in South Africa remains slow and uneven, and the recovery in Australia was slowed by its Covid surge. Adcorp expects to report a further improvement in its working capital position as at 28 February 2022.
In South Africa, the Outsourcing business focussed on exiting unprofitable contracts, driving growth and enhancing margins. The FunxionO results are expected to reflect this focus. The Contingent business experienced more robust demand in the last months of the financial year, which offset weaker demand in the first months. Contingent results in BLU will reflect this improvement. Professional continues to be impacted by the slow economic recovery in South Africa. Revenue is expected to reflect this, with ICT brand Paracon continuing to experience challenges. The Quest and TalentCRU brands have benefited from some recovery in demand in South Africa, whilst Charisma has performed in line with expectations.
Training has seen a recovery at revenue and earnings level. Training brands PMI and TorqueIT have performed well and the divisional performance is expected to reflect this recovery. Australia’s second half of the year was weaker than the first half due to reduced demand from the Covid surge and flooding.
The Paxus brand performed strongly whilst LSA remained constrained on the supply side due to border closures. The division will not see the benefits of the 2021 Jobkeeper scheme repeated, but underlying performance has greatly offset the loss of this benefit.
Johannesburg 13 May 2022
Sponsor PSG Capital