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Voluntary operating update

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 environment

Adcorp has opted to issue a voluntary operating update to provide shareholders with insight into the Group’s trading performance for the year to date. The Group’s operating segments, without exception, have been impacted by the continued trading restrictions and the slow phased restart of the economy, albeit to varying degrees.

The Board and management remain focused on ensuring the long-term sustainability of the Group. Business continuity measures remain in place. The Group has continued to maintain a stringent focus on cost-saving and liquidity management to ensure a satisfactory cash flow position, including the successful refinance of long term borrowings until May 2022. Furthermore, we have sought to reduce all non-essential expenditure.

South African operations

Industrial Services, which comprises temporary employment services (TES) and functional outsourcing (FO), has remained operational throughout the national lockdown. The anticipated revenue reduction in this segment is largely due to lower demand for labour from clients in the hospitality, motor and beverages industries as a result of trading restrictions imposed by lockdown.

The Professional Placements segment has been negatively impacted by clients implementing hiring freezes during the lockdown period. This has impacted the recruitment process outsourcing (RPO) and permanent placements. The IT resourcing revenues in Paracon have remained stable throughout the lockdown period.

The Training segment which offers largely classroom-based learning has been most negatively affected by COVID-19 and the national lockdown. The introduction of virtual instructor led training during the COVID-19 period has had a slow uptake and will remain a key focus area. Whilst classroom-based classes resumed in July, clients have been hesitant to resume training due to the increased infection rate in the country.

Australian operations

Paxus contractor volumes in the low margin client base have remained stable with higher utilisation rates due to domestic travel restrictions. However, reduction in high margin project work, permanent placement fees and mid-range margin clients has placed pressure on margins.

Contractor volumes in LSA have declined marginally over the COVID-19 period with outbreaks occurring at several client sites, although this has been offset by the receipt of government relief income in Australia.

Despite the negative impacts of COVID-19, the Australian business’ revenue is tracking largely in line with the prior year given that Australia was affected by natural disasters in the same period last year. Operating costs have been managed effectively to mitigate the impact of COVID-19 on the bottom line.


The Group’s financial results for the six months ending 31 August 2020 will be impacted by COVID-19. Adcorp however, remains a going concern with sufficient liquidity to continue with all operating activities for the foreseeable future. To date revenue has exceeded initial COVID-19 forecasts,  and coupled with the implementation of cost-saving and liquidity management interventions has yielded a better outcome than anticipated. Cash collections have been particularly well managed during the period, and the Group’s revenue levels continue to recover as the economy opens up in the sectors in which we operate.

26 August 2020
Sponsor: PSG Capital

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