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Adcorp shows improved performance

JSE-listed workforce solutions provider Adcorp Holdings Limited released improved results on a continuing operations basis for the six months ended 31 August 2021.  The group reported improved operating profit on continuing operations whilst raising operating margins and lifting associated profit after tax. Covid-19 continued to weigh on its clients in both South Africa and Australia.

Revenue from continuing operations decreased by 5.4% to R5,8 billion compared to R6,1 billion in the comparative period. The group’s gross profit from continuing operations for the period increased by 6.7% to R599,4 million compared to R561,6 million in the comparative period. Operating profit from continuing operations increased by 10.3% to R71,6 million from R65,0 million. Profit before tax from continuing operations increased by 155.0% to R39.3 million from R15,4 million in the prior period. Headline earnings per share from continuing operations increased to 27,2 cents per share compared to 12,5 cents in 2020.

CEO Dr John Wentzel says: “We have focused on improving the quality of our revenue, raising gross margins and ongoing tight cost control.  The effects of these have lifted comparable profit after tax from continuing operations over the previous period by 123.2%.” The proceeds from Adcorp Support Services Proprietary Limited’s sale in March 2021 were used to further strengthen the balance sheet. The group’s net unrestricted cash was R97,6 million on 31 August 2021.

The Industrial business, comprising contingent staffing and functional outsourcing brands, largely maintained prior-period revenue and gross profits. The functional outsourcing brands saw good growth. The Professional business, which houses a broad spectrum of brands, saw both revenue and gross profit declines off the weak permanent placement recovery in South Africa. Training performed strongly with revenue up 41% compared to the prior period. Additionally, both gross profit and margins were also up sharply off the back of improved Training product mix and enhanced online delivery capability.

The Australian operations reported revenues on a par with the comparative period on a constant currency basis. The Australian government’s JobKeeper funding boosted operating profit in the prior period and was absent in this period’s results. Gross profit and margins have increased despite the ongoing closure of international borders, which have restricted its LSA brand from filling client demand.

Looking ahead, Wentzel explains that despite the softening of Australia’s economic outlook and the muted recovery in South Africa, the group’s progress in improving the quality and sustainability of its earnings have better positioned it to meet these challenges. “The past six months have seen progress in establishing a more sustainable earnings base, and we expect that in the second half of the year, such trend will continue.”

The board has decided that no dividend will be declared as the short-term focus remains on prudent working capital management.

Click here to access Adcorp’s FY2022 interim results.

 

About Adcorp

Adcorp is a workforce solutions company enabling agile, focussed and skilled workforces for its clients across two continents.

Connect with us through our website adcorpgroup.com or social channels:

Facebook: facebook.com/adcorpgroupza | LinkedIn: @adcorpgroupza | Twitter, YouTube and Instagram: @AdcorpGroup

Issued by: Singular Systems – IR

Michèle Mackey

010 003 0700 / 082 497 9827

michele@singular.co.za

On behalf of  Adcorp Holdings Limited

Dr John Wentzel, CEO

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