Adcorp’s share price lifts as it pays out special dividend

Shareholders of human resources specialist Adcorp were smiling after the company declared a special dividend in its annual results, despite a drop in its total profit.

By 11.13am the company’s share price was up 11.56% at R5.50, giving it a valuation of R627m on the JSE, despite impairments at one of its Australian subsidiaries and one of its local businesses.

The firm, which provides labour broking, training and specialised staffing services in SA and Australia, declared a total ordinary dividend for the year to end-February of 28.7c and a special dividend of 91.3c, bringing the total to 120c.

“The past year stands as a strong testament to our adaptable nature and capacity to prosper in the face of adversity,” CEO John Wentzel said.

“Our strategic acumen, unwavering commitment to customer satisfaction, and robust resilience have not only enabled us to surmount challenges but also to grasp growth opportunities.”

Adcorp is trying to redeem itself after going through a rough patch since at least 2017 when it battled to deliver consistent profit growth.

The latest results were bogged down by its Australian subsidiary allabout Xpert going into voluntary administration in December and impairment losses at IT recruiter Paracon, because of the greater cost of capital and the worsening economic outlook in SA weighting on forecasts.

“The board is cognisant of the current outlook in SA, however, the strength of Adcorp’s balance sheet and cash flow positions the group well to weather any storms and take advantage of any opportunities that arise,” Adcorp said.

THE PAST YEAR STANDS AS A STRONG TESTAMENT TO OUR ADAPTABLE NATURE AND CAPACITY TO PROSPER IN THE FACE OF ADVERSITY John Wentzel CEO

“The group is optimistic about the growth achieved in Australia and has identified additional areas to expand into and new services to launch,” it added.

Net profit from continuing operations improved 14.7% to R120.8m in its results for the year to end-February.

But total profit for the year, which also includes discontinued operations, fell close to twothirds to R40.77m.

Headline earnings, a common profit measure in SA that excludes certain items, was up 43.7% to R152.8m.

Gross profit, revenue minus the cost of sales, from continuing operations grew 6.1% to R1.28bn.