Adcorp Holdings Limited · JSE:ADR
Adcorp — H1 FY2024 Earnings Presentation
24 slides from Adcorp's earnings presentation, Oct 30, 2023
Slide 1: Interim Results
Years of resilience Interim Results Six months ended 31 August 2023 35 Teamwork Respect Cu s to m e r c e n tr i c i ty Ag i l i ty D i v e r s i ty a n d i n c l u s i o n
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: Welcome
Welcome Dr John Wentzel Chief Executive Officer 3
Slide 4: How did we do
How did we do Revenue Gross profit Gross margin Cash EPS and HEPS Customer Satisfaction Interim results | Six months ended 31 August 2023 4
Slide 5: Market overview: South Africa
Market overview: South Africa Electricity availability factor 75 Record load shedding 70 70 67 64 65 60 58 High inflation but easing 55 50 52 45 40 Low growth 2019 2020 2021 2022 2023 Inflation rate Unemployment and a glimmer of 8% 7,6% 7,4% 7,2% 6,9% 7,0% 7,1% 6,8% hope 7% 6,3% 6% 5,4% 5,4% 5% 4,7%
Slide 6: Market overview: Australia
Market overview: Australia Australian inflation 9% Softening in labour markets, but 8% 7,3% 7,8% 7,0% 7% 6,1% stabilising 6% 5,1% 6,0% 5% 3,8% 3,5% 4% 3,0% 3% 2% 0,7% 0,9% 1,1% High inflation 1% 0% Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun 20 20 21 21 21 21 22 22 22 22 23 23 Slowing growth, bu
Slide 7: Highlights
Highlights Revenue Lifted revenue 7 000 6 898 6 800 Costs remain well controlled 6 600 6 458 6 400 Pivoted the business 6 200 6 111 6 000 5 861 Resolution of the aaX matter 5 800 5 781 5 600 Customer satisfaction reached 5 400 new highs 5 200 H1 FY20 H1 FY21 H1 FY22 H1 FY23 H1 FY24 Interim results |
Slide 8: Challenges
Challenges Constrained ability to achieve price increases Gross margin pressure Slow pipeline conversion Changes in demand mix Balancing investment and cost control Interim results | Six months ended 31 August 2023 8
Slide 9: Dividend declaration
Dividend declaration 16.1 cents per share Interim results | Six months ended 31 August 2023 9
Slide 10: Financial and Operational Overview
Financial and Operational Overview Noel Prendergast Chief Financial Officer 10
Slide 11: Financial snapshot
Financial snapshot Revenue Gross profit Profit after tax from Unrestricted cash and from continuing operations from continuing operations continuing operations cash equivalents R 6,5 bn R 627,7 m R 35,3 m R 81,8 m 2022 | R5,9bn R' +10.2% millio 2022 | R626,8m +0.2% 2021| 2022 |R118m R26,9m| +31.6% 2
Slide 12: Summarised consolidated statement of profit and loss
Summarised consolidated statement of profit and loss Unaudited Unaudited Aug 23 Aug 22 R’000 R’000 Var % Revenue 6 458 108 5 860 947 10.2% Revenue improvement of 10.2% Cost of sales (5 830 389) (5 234 175) (11.4%) • Growth in Contingent Staffing businesses Gross profit 627 719 626 772 0.2% in SA and
Slide 13: Factors influencing Adcorp's H1 Results
Factors influencing Adcorp’s H1 Results Positive Negative Tax RPO Inflation Funding Investment Permanent In Placements Contract Revenue Decline Cost Optimisation Growth Growth in existing low margin clients Loadshedding Controllable Non-controllable Interim results | Six months ended 31 August 2023
Slide 14: Contingent Staffing – SA
Contingent Staffing – SA Revenue Gross profit R’000 300 000 R’000 12,0% Robust revenue growth in BLU 1 860 192 11,7% 2 000 000 11,5% 1 734 619 11,5% 250 000 Pivot of the PMI brand 11,0% 214 655 1 500 000 203 391 10,5% 200 000 10,0% 150 000 9,5% Expansion of industry coverage to include mining, renew
Slide 15: Functional Outsourcing – SA
Functional Outsourcing – SA Revenue Gross profit R’000 700 000 80 000 R’000 11,0% Softer revenue 600 000 580 498 70 000 545 632 8,8% 9,0% ̶ Delayed contract starts 7,7% 60 000 500 000 51 060 7,0% 50 000 42 132 ̶ Impact of load shedding on clients 400 000 40 000 5,0% 300 000 30 000 Slow conversion of
Slide 16: Professional Services – SA
Professional Services – SA Revenue Gross profit R’000 1 050 000 R’000 15,0% Overall top-line performance up 150 000 14,0% 997 903 13,1% Increased revenue in most brands 1 000 000 140 000 980 079 13,0% 130 000 128 261 12,0% 950 000 11,6% 120 000 116 214 11,0% Compressed margins 10,0% 900 000 110 000
Slide 17: Professional Services – Australia
Professional Services – Australia Revenue Gross profit R’000 2 500 000 R’000 10,0% Paxus revenue slightly lower than prior period 9,3% 1 999 832 2 131 457 250 000 9,0% (AUS$) 2 000 000 8,2% 8,0% 185 817 Contraction of perm placement market 200 000 7,0% 175 474 1 500 000 6,0% 150 000 5,0% 1 000 000 4
Slide 18: Contingent Staffing – Australia
Contingent Staffing – Australia Revenue Gross profit R’000 1 000 000 922 924 120 000 R’000 Significant revenue growth (PALM) 10,3% 900 000 10,0% 100 000 8,6% Considerable underlying investment 800 000 79 244 in working capital 700 000 80 000 5,0% 600 000 565 919 500 000 60 000 58 243 0,0% 400 000 40
Slide 19: Summarised consolidated statement of financial position
Summarised consolidated statement of financial position Unaudited Unaudited Audited Interim Interim Year end Aug 23 Aug 22 Feb 23 Var R’000 R’000 R’000 % Assets Property and equipment 27 740 34 081 30 811 (10.0%) Movement in property & equipment and ROU assets Right-of-use lease assets 269 675 304 2
Slide 20: Cash flow movements
Cash flow movements R’m Significant investment in working capital Dividend payout of R111 million including special dividend Devaluation of the Angolan Kwanza (AOA) against all major currencies DSO improved to 35 days Interim results | Six months ended 31 August 2023 20
Slide 21: Net cash/(debt) trend
Net cash/(debt) trend R’m 400 - 200 - - 312 - 198 - 98 145 52 82 0 - - - - ( 49) ( 200) ( 437) ( 519) ( 668) ( 688) ( 400) Deferred payment ( 600) ( 800) Feb 2019 Aug 2019 Feb 2020 Aug 2020 Feb 2021 Aug 2021 Feb 2022 Aug 2022 Feb 2023 Aug 2023 Dividend R106m R49m R13m R111m paid Share R30m R4m R13m
Slide 22: Closing
Closing Dr John Wentzel Chief Executive Officer 22
Slide 23: H2 focus areas
H2 focus areas Margin uplift Continuing to drive profitable growth Cost containment Moving up the customer value chain Portfolio optimisation approach will be completed Interim results | Six months ended 31 August 2023 23
Slide 24: Outlook
Outlook South Africa: Cautious optimism or bearish realism? Australia: Steady progress Margins: Continued focus Balance sheet: Lever for value creation Capital allocation: Testament to our confidence Interim results | Six months ended 31 August 2023 24