Adcorp Holdings Limited · JSE:ADR
Adcorp — H1 FY2019 Earnings Presentation
29 slides from Adcorp's earnings presentation, Oct 15, 2018
Slide 1: FY2019 Interim results presentation
EXPLORE OUR WORLD Established 1975 I Listed JSE limited 1987 ADCORP IS A WORKPLACE SOLUTIONS COMPANY Presented by Innocent Dutiro – Chief Executive Officer Cheryl‐Jane “CJ” Kujenga – Chief Financial Officer FY2019 Interim results presentation ADCORP IS A WORKPLACE SOLUTIONS COMPANY 1
Slide 2: Forward looking statements
FORWARD LOOKING STATEMENTS The statements contained herein may contain certain forward‐looking statements relating to the Group that are based on the beliefs of the Group’s management as well as assumptions made by and information currently available to the Group’s management. These forward‐looking
Slide 3: Agenda
Agenda Business Financial Strategic Conclusion context results direction 3
Slide 4: Business context
Business context Innocent Dutiro Chief Executive Officer 4
Slide 5: Introduction
Introduction Half‐year results reflect Period under review Parts of our business face What you will hear today: early‐stage positive marked by a difficult headwinds therefore driving Detail on the business outcomes of the work trading environment a case for a strategy reset performance for the hal
Slide 6: Salient features
Salient features Group revenue for the Australia revenue Underlying EBITDA for Net profit from continuing year increased by 3% increased by 11% the period increased by operations of R99 million to R8 billion compared to R7.7 in constant currency terms 33% to R231 million (2017: Loss of R36 million)
Slide 7: Trends we are seeing in the South African labour market
South Africa macroeconomic and business environment presents unique labour market challenges Employers are largely looking for Ongoing trend of flexibility in their business cost structures retrenchments given slow hence a decline in vacancies economic growth, increased cost for permanent positions
Slide 8: Operations: South Africa
Operations: South Africa INDUSTRIAL PROFESSIONAL SUPPORT TRAINING FINANCIAL SERVICES SERVICES SERVICES SERVICES SERVICES Traditional temporary Independent contract Traditional temporary Facilitates training Affordable, pay‐as‐ W H AT W E D O employment services and permanent employment ser
Slide 9: Constitutional Court outcome
Constitutional Court outcome Highlights of the interpretation Limited interpretation of whether there are two employers or one related to the “affected employee” only for the purposes of the LRA The only Temporary Employment Services (TES) “affected employees” are those who earn below the Basic
Slide 10: The sole employer for the LRA
The sole employer for the LRA LRA Client is the sole employer Client liability arises only on breach of LRA TES is the sole employer TES is the sole employer Power of attorney to TES TES liable under agreed circumstances BCEA UIFA TES is the sole employer SDA I SDLA COIDA OHSA Client is the sole emp
Slide 11: Our TES value proposition
Our TES value proposition Recruitment Onboarding and Workforce Performance Productivity offboarding management management Industrial Payroll and benefits Learnership Skills development Cash flow management relations administration management and training and payroll 11 11
Slide 12: Workplace solutions models
Workplace solutions models 01 Temporary Employment Services Client is the sole employer Plan D Plan A for purpose of the LRA after 3 months 02 Outcomes based solutions 03 Unbundled solutions 01: Temporary Employment Services 02: Outcomes based 03: Unbundled solutions TES assignees above R205K per
Slide 13: Operations: Australia
Operations: Australia Across Australia, the industries INDUSTRIAL PROFESSIONAL SERVICES SERVICES with the greatest growth in employment opportunities were MINING, RESOURCES AND ENERGY (for the 12th consecutive month), and farming, Semi‐skilled workers in Independent contract Job ads are 8.7% hig
Slide 14: FY2019 half-year financial results
FY2019 half‐year financial results Cheryl‐Jane “CJ” Kujenga Chief Financial Officer 14
Slide 15: We are making progress against our FY2019 priorities
We are making progress against our FY2019 priorities Simplify Group Finalise Progress Migrate offshored Maintain focus on FOCUS AREAS structure in line development implementation of processes into an working capital with the strategic of the capital cost reduction appropriate cost and liquidity dire
Slide 16: Statement of comprehensive income
Statement of comprehensive income Unaudited Unaudited Audited R’000 6 months to Aug 2018 6 months to Aug 2017 to 28 Feb 2018 Revenue 7 972 619 7 750 162 15 325 391 3% increase in revenue, SA relatively flat whilst Australia grew 11% in Australian dollar terms Cost of Sales (6 892 763) (6 613 968)
Slide 17: Half-year net profit has significantly improved
Half‐year net profit has significantly improved from what was reported in the prior year Underlying Profit ‐ Continuing Operations R'000 143 035* Excluding strategic initiatives costs translates to “underlying net profit” of R118m 118 079 R118m is 83% of the full prior year underlying net profit of
Slide 18: Cost reduction efforts are continuing
Cost reduction efforts are continuing Operating Expenses R'000 SA Central Costs R’000 ‐13% 1 012 687 992 606 876 496 6% ‐ 18% 174 000 184 000 151 000 Aug‐16 Aug‐17 Aug‐18 Aug‐16 Aug‐17 Aug‐18 Initiatives that are providing us with short‐term gains and positioning the Group for the ongoing strategic
Slide 19: Segmental performance – Revenue: Continuing operations
Segmental performance – Revenue: Continuing operations 36% Unaudited Unaudited Audited REVENUE R’000 6 months to Aug 2018 6 months to Aug 2017 to 28 Feb 2018 SOUTH AFRICA 64% Industrial Services 3 198 437 3 065 667 6 278 103 South Africa Australia Professional Services 961 809 904 166 1 802 508 Mo
Slide 20: Segmental performance – EBITDA: Continuing operations
Segmental performance – EBITDA: Continuing operations 31% Unaudited Unaudited Audited R’000 6 months to Aug 2018 6 months to Aug 2017 to 28 Feb 2018 EBITDA SOUTH AFRICA Industrial Services 166 503 169 702 338 347 69% Professional Services 77 898 78 893 160 860 South Africa Australia Support Services
Slide 21: Summarised statement of financial position
Summarised statement of financial position R’000 Audited Unaudited Unaudited to 28 Feb 2018 6 months to Aug 2018 6 months to Aug 2017 ASSETS Property and equipment 65 756 65 137 89 027 Intangible assets and goodwill 1 437 795 1 488 044 1 930 351 Investments and other financial assets 23 605 24 031 4
Slide 22: Net debt
Net debt Audited Unaudited Unaudited to 28 Feb 2018 6 months to Aug 2018 6 months to Aug 2017 South Africa interest‐bearing liabilities (663 129) (432 608) (978 184) Interest bearing loans (925 000) (850 000) (871 487) Net cash at bank 261 871 417 392 (106 697) Australia interest‐bearing liabilities
Slide 23: Overall improvement to debtors management, resulting in higher cash
Overall improvement to debtors management, resulting in higher cash Total Debtors R’million 2 196 2 273 2 170 23
Slide 24: Strengthening our sources of capital to enable sustainable shareholder return
We are focusing on strengthening our sources of capital to enable sustainable shareholder return Work we are doing over the next 6 months 1 SOURCES OF CAPITAL CURRENT CONSIDERATIONS Determine target capital structure and funding mechanism for CASH FROM Optimise conversion of growth OPERATIONS EBITDA
Slide 25: Strategic direction
Strategic direction Innocent Dutiro Chief Executive Officer 25
Slide 26: Transformation journey
Transformation journey R1 BILLION South Africa is our core market and our strategic focus area for the short to medium‐term EBITDA by 2022 where the emphasis has been to fix and stabilise operations, attention will turn to longer‐ term growth strategy including Australia in the next financial year F
Slide 27: Strategic priorities
Strategic priorities Build a STRONG business that is Ensure that the STRENGTHEN TRANSFORM FOCUSED on leveraging our core business is LEAN AND AGILE the brand the culture Enhancing our delivery in our key Various projects in flight that will History of acquisitive growth strategy Create a culture tha
Slide 28: Strategic capabilities on which the future Adcorp will be built
Strategic capabilities on which the future Adcorp will be built 1 Resourcing 2 Training 3 Consulting 4 Outsourcing Adcorp’s core business is the Given the skills challenges that Leverage our knowledge in HR Provide clients with outsourced recruitment and placement of South Africa faces, we s
Slide 29: Q&A Thank you
PRESENTATION BY ADCORP Q&A Thank you 29