Adcorp Holdings Limited · JSE:ADR

Adcorp — FY2016 Earnings Presentation

22 slides from Adcorp's earnings presentation, May 2016

  1. Slide 1: IAS presentation – May

    IAS presentation – May For the year‐ended 29 February 2016

  2. Slide 2: Agenda

    Agenda The financial year Salient South African Macro in review features labour laws trends The business of Adcorp Strategic Opportunities/ Our International response vision advantages strategy Financial Management overview priorities Outlook and Questions and prospects discussion 2

  3. Slide 3: The business of Adcorp

    The business of Adcorp Global staffing and workforce management business Workforce Level 2 Geographic focus Services and solutions BBBEE TES Bulk and contingency >100 000 Managed Permanent employment services workforce Middle East Asia Professional IT >4 000 15% Market share services Permanent in co

  4. Slide 4: The financial year in review: Key challenges

    Key The financial year in review challenges  Substantial changes to South African labour laws  Resultant loss of business  Extensive litigation at shop floor level emanating from new laws  Relatively stagnant economic conditions  Slow growth in overall employment  Downturn in the commodity cyc

  5. Slide 5: South African labour laws

    South African labour laws • CAPES mobilised • Published From a call to (Adcorp the driving force) • Adcorp Employment Index • “The New Divide” BLSA / MLC / BUSA / ILO ban in 2009 …to mobilising • Participation at NEDLAC • National Planning • Media campaign around the Commission (NPC) visit • as majo

  6. Slide 6: The financial year in review continued: Notable successes

    Notable The financial year in review…continued successes  “ProgrammeOne – 82% (R 234 million) of lost contribution recovered  Ambiguity in new South African labour laws successfully challenged in the Labour Court  Education of clients has created a better understanding of the laws leading to more

  7. Slide 7: Salient features

    Salient features  Revenue for the year increased by 17% to R15,6 billion  Normalised earnings per share increased by 4% to 365,3 cents per share  Headline EPS increased by 0,4% to 299,6 cents per share  Operating profit for the year increased by 2% to R464,8 million  Normalised EBITDA for the y

  8. Slide 8: Macro Trends

    Macro Trends  Procurement trends changing  MSP / RPO gaining momentum globally and in South Africa, clients asking for holistic solutions  USA and Europe characterised by large players servicing MNCs  Emerging markets still hold much promise  Heightened corporate activity in the sector  High a

  9. Slide 9: Strategic response

    Strategic response  Strong client and candidate centric approach – know our candidates and clients  Focus on emerging markets where we can compete on an equal footing – Africa, the Middle East and the Asia Pacific region Middle East  These markets are characterised by: Asia – Not dominated to the

  10. Slide 10: Internal fulfilment service lines

    INTERNAL FULFILMENT SERVICE LINES Including direct sourcing, training and candidate benefits (blue) (white) Support staffing Customer centric delivery model Industrial staffing Professional services Bulk TES Contingent TES SUPPLY BASED COST EFFICIENCY Perm employment services HRO Managed services (M

  11. Slide 11: The opportunity / vision

    The opportunity / vision  To become a global workforce management solutions business of consequence focused on: – Africa – The Middle East – The Asia Pacific region  An established leader in MSP / RPO solutions  Grow into and with our key clients  Use digitization as an enabler to create smarter

  12. Slide 12: Advantages we have

    Advantages we have  Our relative size and presence in large customers  Strong pan‐African presence  Expertise in emerging markets  Increasing investment and trade flows between Africa, the Middle East, Asia Pacific region  Expertise in oil, gas, mining and resources  Globally relevant client r

  13. Slide 13: International strategy

    International strategy  International hub established in Singapore  Ownership of international assets in the process of being transferred to Singapore holding company  Discussions with international financiers significantly advanced  Strong support for internationalisation strategy  Acquisition

  14. Slide 14: Financial overview

    Financial overview Performance against stated financial targets Revised weighted Actual Actual Actual R'000 financial target FY2016 FY2015 FY2014 Return on assets managed 23.0% 21.4% 27.7% 26.8% Return on sales 4.0% 3.8% 4.8% 4.4% Asset turnover – times 5.7 5.7 5.8 6.1 Cash conversion ratio 80% 87%

  15. Slide 15: Statement of normalised earnings

    Statement of normalised earnings R'000 FY2016 FY2015 % change Revenue 15 585 751 13 322 398 17 Cost of sales (13 069 007) (11 126 945) (17) Gross profit 2 516 744 2 195 453 15 Other income 128 325 101 895 26 Admin, marketing and operating expenses (2 180 302) (1 628 880) (18) Normalised EBITDA 621 5

  16. Slide 16: Statement of normalised earnings continued

    Statement of normalised earnings continued R'000 FY2016 FY2015 % change Calculation of modified normalised earnings Total Normalised profit for the year 394 976 451 754 (13) Adjusted for: Share‐based payment expense 31 164 (80 724) Establishment costs (30 906) (8 390) Modified normalised profit for

  17. Slide 17: Abridged balance sheet

    Abridged balance sheet FY2016 FY2015 Assets Non‐current assets 2 636 416 2 326 188 ‐ Non‐current tangible assets 137 796 112 425 ‐ Non‐current intangible assets 2 498 620 2 213 763 Current assets (excluding cash) 2 895 680 2 338 339 Total assets 5 532 096 4 664 527 Equity and liabilities Capital and

  18. Slide 18: Segmental contribution – Normalised EBITDA

    Segmental contribution – Normalised EBITDA R'000 % contrib. FY2016 FY2015 % change Staffing 80,9 502 548 554 908 (9.4) Industrial (Blue‐collar) 65,6 407 406 455 478 (10.6) Administrative (White‐collar) 15,3 95 142 99 430 (4.3) Professional services 25,3 157 319 150 493 4.5 BPO, training and candidat

  19. Slide 19: Analysis

    Analysis FY2016 FY2015 Cash generated by operations (R’000) 353 306 597 750 Interest cover (times) 5.1 6.8 Dividend cover (times) 2.7 3.0 Gross profit percentage 16.1% 16.5% Expense ratio percentage 14.0% 13.8% Normalised EBITDA margin 4.0% 5.0% Return on Equity (ROE) 15.3% 19.8% Normalised effectiv

  20. Slide 20: Management priorities

    Management priorities  Conclude international funding  Finalise Singapore structure  Progress acquisitive opportunities  Drive cost and operational efficiencies further  Realise the Group’s international aspirations unlocking the potential for a value uplift  Further enhance – Cash collections

  21. Slide 21: Outlook and prospects

    Outlook and prospects  Have the advantage of a cost competitive and operationally efficient back office  South African market conditions have stabilised and sales volumes are recovering  Whilst general market conditions are not expected to improve substantially, prospects remain positive given: –

  22. Slide 22: Questions and discussion

    Questions and discussion

Adcorp Holdings — FY2016 Earnings Presentation on 6ix