Johannesburg - South Africa-based workforce management group Adcorp Holdings said on Tuesday that it was hopeful it would win new financing to expand further internationally, and that expected investment returns on its foreign portfolio made it optimistic about performance in 2017 despite low economic growth prospects.
Adcorp - whose earnings were hit by uncertainty over South Africa’s new labour laws as more employers succumbed to trade union pressure to take contract workers on as permanent staff - earlier announced that it was in talks with financiers about expanding internationally and advised shareholders to exercise caution when dealing with its shares.
“The group has been active in trying to raise funding in international capital markets in order to fund its global expansion and take advantage of the potentially value enhancing opportunities this strategy presents,” Adcorp said in a statement. “Much progress has been made and the group is hopeful of concluding this shortly.”
Adcorp also said that it had recently been successful in winning important new business. Despite the continued negative impact of the new labour legislation, South Africa’s low economic growth projections, continued weak commodity markets and global economic challenges, Adcorp said it remained optimistic about next year.
Last October, the company announced that interim headline earnings fell 17 percent to 125.2 cents per share.
South Africa’s new Labour Relations Act (LRA) at first caused lots of uncertainty and confusion with a number of clients cancelling contracts. Subsequent clarification by the Labour Court returned certainty to the market and volumes have stablilised.
Adcorp said that while the gross margin impact of these lost volumes has been significant, the negative profit impact was largely contained and about 80 percent of the reduction recovered due to aggressive cost cuts. The company shed 561 jobs.
Last year, Adcorp established a Singapore office, which will serve as the hub for the group’s international expansion. It has also concluded a strategic partnership with APBA, which offers services in various human resource functions in a number of Asian countries including Singapore, Hong Kong, China, Taiwan and Japan.