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JOHANNESBURG - JSE-listed workforce solutions group Adcorp Holdings said leadership changes at its board and management in the year to end February were necessary to restore the company back to profitability.

Chief executive Innocent Dutiro said the company had needed to make some tough decisions to establish a platform for improved business performance through substantial cost reductions, improving working capital management, unlocking cash generation and strengthening the balance sheet.

Dutiro said that the first two months of the financial year 2019 look positive and in line with the company forecasts, indicating that their turnaround efforts are already bearing fruit.

The group reported a 3percent decline in revenue to R15.3billion for the year, down from R15.8bn recorded during the corresponding period last year, while earnings before interest, tax, depreciation and amortisation (Ebitda) came down 60percent dramatically at R137million from R373m last year. Adcorp said the decline in earnings was driven largely by the group’s clean-up exercise that resulted in a number of once-off costs.

“However, excluding the impact of the once-off costs, the underlying Ebitda for the year was R387m, a 4percent improvement from a year earlier,” the group said.

It said revenue in Adcorp Industrial Services remained flat during the period, while revenues declined in both the Support Services and Training Services businesses, which were down by 7percent and 29percent respectively.

The company said the decline was, however, offset by a 17percent increase in revenue in the Financial Services business and an 11percent increase in revenue in Professional Services South Africa business.

Adcorp’s subsidiary in Australia declined 8percent, largely due to shifting the business focus away from low margin clients, which resulted in an Ebitda increase of 6percent in that region.

“Our focus in the short term remains on ensuring that we stabilise and turn around Adcorp Training Services and Adcorp Support Services, optimisation of Adcorp Industrial Services through increased efficiency and reduction in costs, and growing our Adcorp Professional Services business in the emerging digital and robotic process automation space,” Dutiro said.

The group has set itself a target of achieving R1bn in Ebitda by 2022.

“We have set ourselves an ambitious but attainable target of R1bn Ebitda by 2022 which we believe we can reach through further adoption of lean processes to reduce our cost-to-serve as well as exploring the various growth options available to our business.

“In addition, the use of technology to enable efficiency will be important,” he said.

Adcorp shares declined 0.78percent on the JSE yesterday to close at R17.82.

- BUSINESS REPORT