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Johannesburg - Adcorp CEO Richard Pike says the group aims to take full control of Kelly after it recorded a 37% revenue increase for the year ending February 28 2014.
“I’m pleased to report that Adcorp had another very good set of results”, said Pike.
Group revenues increased by 37% to R11.8bn, normalised earnings before interest, tax and depreciation (EBITDA) increased by 29% to R544.4m and normalised earnings per share increased by 13% to 384.3c.
At home the blue-collar operations continued to perform well, said Pike.
“We had 20% organic growth from our blue-collar business and that’s been a good performer for the last number of years and been very resilient, despite relatively tough economic conditions.”
He also pointed out that the white-collar contracting and permanent recruitment businesses were generally flat year-on-year (y/y), while business process outsourcing (BPO) operations reflected an overall y/y decline in profits - partially offset by the solid performance of the financial services business.
Watch the interview
The group’s African operations, which focus predominantly on mining, oil, gas, exploration and related infrastructure development, achieved significant growth in profitability to the extent of now being a material contributor to overall group profit.
“Our African business has come through very strongly for us, it’s a geography we entered some years back, and in the last 2-3 years we’ve really done exceptionally well in that geography and expect to continue to do well in that geography in the future,” said Pike.
Pike said the group’s Australian IT contracting business; Paxus has done well in a relatively tough IT and labour contracting department in Australia.
Paxus, which was acquired in January 2013 and included in the figures for the full year, for the first time performed in line with expectations in a relatively flat employment market.
“Recent blue-collar acquisition, Labour Solutions Australia (LSA), which is included in the results for three months has also settled in well,” said Group CEO Richard Pike.
LSA is focused on the buoyant Australian agricultural sector, which should stand it in good stead for the future.
Indian associate IT solutions business, Nihilent, in which the group owns
a 35% stake through subsidiary, Paracon, also made a meaningful contribution to overall profitability.
Cash generated from operations before working capital increased 32% mainly due to the higher level of profitability and other non-cash flow adjustments. However, there was a net cash outflow from operations of R89.6m as compared to the net inflow of R158.3m in the previous year.
Net cash and cash equivalents increased by R18.2m during the year to R270.9m.
“While the group’s cash position would support a cash dividend,” said Pike, “the group
is in a growth cycle and, as such, the board believes it appropriate to retain cash resources so as to take advantage of opportunities.”
He said the board has therefore opted to issue a scrip distribution that allows for an incremental increase in capital. “This scrip distribution provides shareholders with the flexibility to opt for a cash dividend alternative.”
The group incurred a 21% increase in net finance charges, mainly as a result of the higher levels of business activity and the first full-year effect of the interest arising on the Paxus acquisition-related debt.
A 10% y/y increase in profit before tax was negated by a 16% increase in taxation to R93.6m, resulting in a 10% decrease in net profit for the year to R162.5m.
This, together with an increase in the number of issued shares, resulted in a 20% decline in earnings per share from 221.6c last year to 176.9c this year. Headline earnings per share also fell by 20% to 188.6c.
Turning to the future, Pike said that Adcorp is positive about South Africa.
“We will continue to look for acquisitions in the Asia-Pacific region, whereas organically we will focus in South Africa which we think we’ve got a lot of runway still.”
“Also recently we announced that we acquired a 29% stake in South African rival company Kelly and we’ve submitted a formal letter of interest to acquire the balance of the 71% that we don’t own and that process is in place.”
“So if I look to the future, I think our strategy is right,” he said.
Watch
- Fin24
“I’m pleased to report that Adcorp had another very good set of results”, said Pike.
Group revenues increased by 37% to R11.8bn, normalised earnings before interest, tax and depreciation (EBITDA) increased by 29% to R544.4m and normalised earnings per share increased by 13% to 384.3c.
At home the blue-collar operations continued to perform well, said Pike.
“We had 20% organic growth from our blue-collar business and that’s been a good performer for the last number of years and been very resilient, despite relatively tough economic conditions.”
He also pointed out that the white-collar contracting and permanent recruitment businesses were generally flat year-on-year (y/y), while business process outsourcing (BPO) operations reflected an overall y/y decline in profits - partially offset by the solid performance of the financial services business.
Watch the interview
The group’s African operations, which focus predominantly on mining, oil, gas, exploration and related infrastructure development, achieved significant growth in profitability to the extent of now being a material contributor to overall group profit.
“Our African business has come through very strongly for us, it’s a geography we entered some years back, and in the last 2-3 years we’ve really done exceptionally well in that geography and expect to continue to do well in that geography in the future,” said Pike.
Pike said the group’s Australian IT contracting business; Paxus has done well in a relatively tough IT and labour contracting department in Australia.
Paxus, which was acquired in January 2013 and included in the figures for the full year, for the first time performed in line with expectations in a relatively flat employment market.
“Recent blue-collar acquisition, Labour Solutions Australia (LSA), which is included in the results for three months has also settled in well,” said Group CEO Richard Pike.
LSA is focused on the buoyant Australian agricultural sector, which should stand it in good stead for the future.
Indian associate IT solutions business, Nihilent, in which the group owns
a 35% stake through subsidiary, Paracon, also made a meaningful contribution to overall profitability.
Cash generated from operations before working capital increased 32% mainly due to the higher level of profitability and other non-cash flow adjustments. However, there was a net cash outflow from operations of R89.6m as compared to the net inflow of R158.3m in the previous year.
Net cash and cash equivalents increased by R18.2m during the year to R270.9m.
“While the group’s cash position would support a cash dividend,” said Pike, “the group
is in a growth cycle and, as such, the board believes it appropriate to retain cash resources so as to take advantage of opportunities.”
He said the board has therefore opted to issue a scrip distribution that allows for an incremental increase in capital. “This scrip distribution provides shareholders with the flexibility to opt for a cash dividend alternative.”
The group incurred a 21% increase in net finance charges, mainly as a result of the higher levels of business activity and the first full-year effect of the interest arising on the Paxus acquisition-related debt.
A 10% y/y increase in profit before tax was negated by a 16% increase in taxation to R93.6m, resulting in a 10% decrease in net profit for the year to R162.5m.
This, together with an increase in the number of issued shares, resulted in a 20% decline in earnings per share from 221.6c last year to 176.9c this year. Headline earnings per share also fell by 20% to 188.6c.
Turning to the future, Pike said that Adcorp is positive about South Africa.
“We will continue to look for acquisitions in the Asia-Pacific region, whereas organically we will focus in South Africa which we think we’ve got a lot of runway still.”
“Also recently we announced that we acquired a 29% stake in South African rival company Kelly and we’ve submitted a formal letter of interest to acquire the balance of the 71% that we don’t own and that process is in place.”
“So if I look to the future, I think our strategy is right,” he said.
Watch
- Fin24
