240516 - Adcorp website. Picture : Nicholas Rama

JOHANNESBURG - Listed workplace solutions group Adcorp yesterday said that it had resumed the payment of dividends to shareholders after the group swung back to profitability in the year to end February.

The group declared a final dividend of 96.10cents per share for the period after its net profit bounced back to R262million from last year’s loss of R561m as its turnaround strategy started to bear fruit.

The group said the profits rose despite a slight 2percent drop from R15.3billion to R15bn.

The company attributed the drop in income to headcount volume reduction in the company’s Temporary Employment Services (TES) businesses, as well as the sale of its paycard solution business in the financial services segment. It said it would now ramp-up the implementation of its new growth strategy at home and provide greater focus on the Australia business after the company swung back to profitability in the year ended February.

Chief executive Innocent Dutiro said rising unemployment, shortage of critical skills and a highly regulated labour market in South Africa coupled with persistently low economic growth rates in Australia had made for a challenging environment.

“The group has achieved a positive financial performance as a result of its strategic turnaround plan and is well positioned to take advantage of any upturn in the macroeconomies of its core markets,” Dutiro said.

“We have set ourselves ambitious growth targets over the next three years that we aim to achieve through both scale and scope expansion while focusing on operational efficiencies.”

Adcorp, which is South Africa's largest labour broking firm, was last year dealt a blow as the Constitutional Court ruled in a landmark case that labour brokers could no longer be entitled to a portion of a recruit's earnings after their third month in employment.

Dutiro said TES remains relevant in the South African labour market and will continue to provide opportunities for first-time job seekers.

“Our ability to provide flexibility and enhance labour productivity means that we continue to be a key contributor to our clients’ efforts to weather South Africa’s current economic challenges, thus the response to the Constitutional Court ruling from our clients has been largely positive and there has been minimal impact on the group’s 2019 financial results.”

South Africa's unemployment rate rose to 27.6percent in the first quarter and reached a high of 38percent when those who have stopped looking for a job are included.

Adcorp said its professional services unit grew revenue by 7percent in South Africa and 4percent in its Australia operations.

Adcorp shares declined 1.59percent on the JSE yesterday to close at R23.50.