Adcorp turns the corner in most convincing style
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DURBAN – Adcorp Holdings’ share price climbed by more than 11 percent on the JSE yesterday after the workforce solutions group turned the corner and produced favourable results for the six months to end August. The group turned a loss of R36 million into a R99m profit during the period. The share price closed 9.53 percent up at R18.62 on the JSE yesterday.
Chief executive Innocent Dutiro said the transitional phase had enabled the group to effect a financial turnaround, while at the same time mapping out a strategy that would stabilise and grow the business and achieve the ambitious targets the company had set for themselves in the next three years.
“We decided to focus on our core businesses and exit non-core, make the business lean and agile and reduce costs and transform the brand,” Dutiro said. The group took the decision to dispose of its African operations last year and Adcorp now has operations in South Africa and Australia.
The group has reaped the rewards and the underlying earnings before interest, tax, depreciation and amortisation (Ebitda) increased by 33 percent to R231m, up from R95m, while headline earnings per share from continuing operations rose to 88.6 cents a share, improving on last year’s loss of 15.2c.
The group also reduced its operating expenses by 16 percent to R896m and gearing improved from 61 to 35 percent.
It reduced its net debt to R646m, down from R1.3 billion a year ago.
Adcorp did not declare a dividend.
“The half-year results reflect the early-stage positive outcomes of the work performed by the new leadership team over the past year to stabilise the company in preparation for a comprehensive strategic transformation informed by our three-year targets,” Dutiro said.
The group has ambitions to grow and has set itself ambitious targets in the next four years.
“These results are not our end-point and we want to create a platform for growth. We want to grow our Ebitda to R1bn by year 2022. We have done well during the period, because initially we had planned to break-even and reverse the losses of the past financial year, but we managed to report profits,” he said.
In Australia the businesses continued to provide a strong performance with 11 percent increase in Ebitda in Australian dollars.
In South Africa operations, the group said revenue was flat during the period.
Going forward the group said as specialists in the world of matching and placing people into jobs, it sees itself as a partner with the government to reduce the country’s unemployment rate.
South Africa reported an unemployment rate of 27.2 percent during the second quarter of the year.
“We provide training and contribute to skills development, especially by helping the youth of this country to get the skills needed by the industry,” Dutiro said.