Adcorp Holdings Limited · JSE:ADR
Adcorp — FY2023 Earnings Presentation
29 slides from Adcorp's earnings presentation, May 2023
Slide 1: Annual Results
Teamwork Respect 35 Year s of r es ilience Annual Results C u s t o m e r centr icity Year ended 28 February Agility 2023 D i v e r s i t y and inclus ion
Slide 2: Disclaimer
Disclaimer The statements contained here in 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 statements are,
Slide 3: Overview
Overview Dr John Wentzel Chief Executive Officer Annual results | Year ended 28 February 2023 3
Slide 4: How did we do
How did we do Continuing Revenue Gross profit Cash HEPS & EPS up up up up Customer Employee Portfolio Dividend satisfaction score engagement optimisation declared up up started Annual results | Year ended 28 February 2023 4
Slide 5: Market and industry overview: South Africa
Market and industry overview: South Africa Load shedding and infrastructure failures High inflation Low economic growth Low labour absorption rates Staffing market is smaller than pre-Covid Annual results | Year ended 28 February 2023 5
Slide 6: SA labour market
SA labour market Formal non-agricultural industries - millions 10.4 10.2 10.0 9.968 9.8 9.6 9.4 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2018 2019 2020 2021 2022 Source: Stats SA, Business Day – mahlangua@businessdaylive.co.za Annual results | Year ended 28 February 2023 6
Slide 7: Market and industry overview: Australia
Market and industry overview: Australia Structural shortage of workers Easing of restrictions on migration High inflation Muted economic growth Staffing market fully recovered from Covid Annual results | Year ended 28 February 2023 7
Slide 8: Size of global staffing markets
Size of global staffing markets US$ billions 250 +39% 212,9 200 153,1 150 +38% 102,6 100 +14% 74,2 +3% 56,2 +14% 49,5 +19% +52% 50 38,5 39,7 27,7 31,5 27,7 23,2 23,3 -6% 15,3 3,5 3,3 0 USA Japan UK Germany Australia Netherlands China South Africa Source: SIA Global Staffing Market Estimates & Foreca
Slide 9: Performance against FY23 goals
Performance against FY23 goals Executed the Brandshift Adcorp strategy Achieved growth Deployed the capital allocation framework Lifted employee engagement Delivered higher customer satisfaction Annual results | Year ended 28 February 2023 9
Slide 10: Update on allaboutXpert
Update on allaboutXpert Small systems integration company held by AHA Suffered from poor contracting and management Placed into administration Extensive losses drove Group earnings down Evaluating holding previous management accountable Annual results | Year ended 28 February 2023 10
Slide 11: Dividend declaration
Dividend declaration Final dividend Special dividend Total dividend 16,5 91,3 120,0 Cents Cents Cents per share per share per share Interim 12,2 cents 2022 47,0 cents +155.3% Through share buybacks, ordinary and special dividends, Adcorp will have returned R208m to shareholders since 2021 Annual res
Slide 12: Financial and operational overview
Financial and operational overview Noel Prendergast Chief Financial Officer Annual results | Year ended 28 February 2023 12
Slide 13: Financial snapshot
Financial snapshot Revenue Gross profit Profit after tax Cash generated from continuing operations from continuing operations from continuing operations from operations R 12,0 bn R 1,3 bn R 121 m R 378 m 2022 R11,3bn +6.5% 2022 R1,2bn +6.1% 2022 R105m +14.7% 2022 R260m +45.2% Interest-bearing debt N
Slide 14: Summarised consolidated statement of profit and loss
Summarised consolidated statement of profit and loss Audited Audited Year end Year end Feb 2023 Feb 2022 Var % Revenue 12 048 951 11 318 048 6.5% Revenue increased by 6.5% Cost of sales (10 766 543) (10 109 805) (6.5%) Gross profit 1 282 408 1 208 243 6.1% Gross profit (GP) improved by 6.1% Gross pr
Slide 15: Operating expenses – R billion
Operating expenses – R billion 3,00 2,50 2,43 2,28 2,15 2,20 2,09 2,00 2,03 1,69 1,50 1,40 1,12 1,11 1,00 1,04 0,50 Reported operating expenses Inflation adjusted from 2018 0,00 2018 2019 2020 2021 2022 2023 Annual results | Year ended 28 February 2022 15
Slide 16: Contingent Staffing
Contingent Staffing Revenue – Rm Demonstrated remarkable resilience 3 502 3 206 3 459 BLU’s revenue increased by 5.0% Brand refresh FY2022 FY2022 FY2023 High client retention and satisfaction Normalised Cynergy consolidated into BLU Gross profit – Rm Normalised divisional revenue growth of 6.9% 341
Slide 17: Functional Outsourcing
Functional Outsourcing Revenue – Rm Core brands exhibited year-on-year revenue growth 1 208 1 130 FunxionO revenue growth of 0.8% 1 079 Capability revenue growth of 18.6% ACMS revenue growth of 5.0% FY2022 FY2022 FY2023 Normalised Improved client retention Closing of the CoStars brand Gross profit –
Slide 18: Professional Services
Professional Services Revenue – Rm Strategic turning point Stabilised core operations 1 855 1 845 Revenue growth in Quest, RPO business in talentCRU, and Permanent Placements Charisma remains in decline FY2022 FY2023 Economic headwinds resulting in flat revenue and gross profit growth Gross profit –
Slide 19: Training
Training Revenue – Rm Substantial challenges 240 235 Decline in both revenue and gross profit Repositioning Training brands FY2022 FY2023 Closure of ATT Gross profit – Rm 168 142 FY2022 FY2023 Annual results | Year ended 28 February 2023 19
Slide 20: Australia
Australia Revenue – Rm Delivered impressive results 5 381 4 514 Invested in growth Paxus gross profit increased by 6.3%, despite flat revenue growth FY2022 FY2023 Exceptional growth in LSA, 101% and 71% increase Gross profit – Rm in revenue and gross profit respectively 498 417 FY2022 FY2023 Annual
Slide 21: Summarised statement of financial position
Summarised statement of financial position Audited Audited Year end Year end R'000 Feb 2023 Feb 2022 Goodwill and intangible assets were flat year- Assets on-year Property and equipment 30 811 37 171 Right-of-use lease assets 291 785 323 432 ‒ Impairment of R34 million goodwill in Paracon Intangible
Slide 22: Cash flow movements – Rm
Cash flow movements – Rm 103 12 274 (255) (73) (45) (32) 420 416 Debt reduced by R133 million to Rnil Net dividend of R62 million paid to external shareholders (2022 final plus 2023 interim) Share-buyback programme of R19.6 million Group continues to be cash generative with a cash conversion ratio o
Slide 23: Net unrestricted cash – Rm
Net unrestricted cash – Rm 400 312 198 200 0 (49) ( 200) ( 400) ( 600) (519) (688) ( 800) (858) (1 000) (1 200) (1 271) (1 400) Feb Feb Feb Feb Feb Feb Feb 2017 2018 2019 2020 2021 2022 2023 Annual results | Year ended 28 February 2022 23
Slide 24: Closing
Closing Dr John Wentzel Chief Executive Officer Annual results | Year ended 28 February 2023 24
Slide 25: Adcorp investment case
Adcorp investment case Established a sustainable earnings base Reduced volatility in earnings High cash conversion rates leading to the payment of dividends Strong balance sheet Trading at a discount to NAV Annual results | Year ended 28 February 2023 25
Slide 26: Outlook
Outlook We are pessimistic about South African outlook ‒ Weak economic growth ‒ Rising infrastructure failures ‒ High interest rates ‒ Low labour absorption rates We are optimistic about Australian outlook ‒ Persistent shortage of workers ‒ Moderate economic growth ‒ Falling inflation We are optimis
Slide 27: Strategic priorities and growth plans
Strategic priorities and growth plans Portfolio optimisation Pivoting the business Revenue growth Continued deployment of the Capital Allocation Framework Returning value to shareholders Annual results | Year ended 28 February 2023 27
Slide 28: Q&A
Q&A Annual results | Year ended 28 February 2023 28
Slide 29: QOcorp
QOcorp Connecting Human Potential