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ADCORP HOLDINGS LIMITED - Unaudited Interim Results for the six months ended 31 August 2020

Release Date: 25/11/2020 09:00
Code(s): ADR     PDF:  
Wrap Text
Unaudited Interim Results for the six months ended 31 August 2020

Adcorp Holdings Limited
Incorporated in the Republic of South Africa)
Registration number 1974/001804/06)
Share code: ADR
ISIN: ZAE000000139
("Adcorp" or "Adcorp Group" or "the Group")


Salient features
    • Earnings per share increased to 40,8 cents per share (2019: 413,3 cents loss per share)
    • Headline earnings per share increased to 41,9 cents (2019: 5,1 cents headline earnings per
    • Revenue from continuing operations decreased by 11% to R6,1 billion (2019: R6,9 billion
    • Operating profit from continuing operations increased by 30% to R71 million (2019: R54
        million restated*)
    • Profit after tax from continuing operations increased to R17 million (2019: R470 million loss
        after tax restated*)
    • Cash generated by operations increased to R861 million (2019: R110 million)
    • Days Sales Outstanding (DSO) decreased to 46 days (2019: 51 days)
    • Gearing ratio decreased to 45% (2019: 53%)

*Restated to classify Dare Holdings Proprietary Limited – Australia and Adcorp Support Services
Proprietary Limited (Adcorp Financial Services segment) as assets held for sale.

Adcorp’s financial results for the six months ended 31 August 2020 were significantly improved
notwithstanding the impact of the economic slowdown and continued trading limitations related to
COVID-19. The COVID-19 lockdown trading restrictions have had a severe effect on revenues across
all industries with a concomitant effect on the global staffing industry.

The preservation of revenue and margin under these abnormal circumstances has been challenging.
Adcorp responded appropriately by curtailing costs, significantly increasing cash collections and
extending credit terms. Resultantly, the Group’s profits are higher than in the first half of the prior year
largely due to rigorous management of operating costs to mitigate the impact of COVID-19. In addition,
shareholders are reminded that the results for the FY2020 half year period were impacted by significant
impairment of the goodwill in some of the Group’s resourcing businesses. In the current financial year,
none of the companies where goodwill exists have been found to be impaired in the first half of the year.

The liquidity management measures and interventions introduced to mitigate the impact of COVID-19
continue to remain firmly in place. Particularly pleasing was the impact of improved collections on
accounts receivable in South Africa, which resulted in cash generated from operations for the period of
R861 million (R110 million for the six months to 31 August 2019), largely driven by a decrease in trade
and other receivables of approximately R513 million. The improved collections and reduction in the
accounts receivable book has also significantly reduced the credit risk for the remaining book. Australia
net debt has improved in the last six months to a credit position of R5 million, raising the possibility of
intercompany loan repayments to the South African operations going forward.

The operational outlook for Adcorp is promising notwithstanding the precarious market conditions.
Certain parts of our business are ideally suited to a flexible staffing solution amidst market volatility. The
global staffing industry expects to see reliance on project-based terms and short-term contracts creating
market opportunities over the next few years.

The Adcorp Group remains a going concern with sufficient liquidity to continue with all operating
activities for the foreseeable future.

This short form announcement is the responsibility of the directors and is only a summary of the
information contained in the full announcement and does not contain full or complete details. The full
announcement              is         available        on           the         JSE            website and on the Group’s website at Copies of the full announcement may also be
requested from the Group’s registered office and at the office of the Group’s sponsors during office
hours 8:00 - 16:00, Monday - Friday at no cost at the contact details below. Any investment decision
should be based on the contents of the full announcement available on the JSE’s website and the
Group’s website.

These interim results have not been audited or reviewed by the Group’s auditors.

On behalf of the Board

GT Serobe                        PM Roux                                   N Prendergast
Chairman                         Chief Executive Officer                   Chief Financial Officer

25 November 2020


PSG Capital

Date: 25-11-2020 09:00:00
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