Adcorp in a stronger position as it reduces debt, ups collection |
ADCORP, the South African-based employment services group, generated more cash than a year ago and reduced its debt during the year ended February 2021, following liquidity management measures to stave off the persistent impact of the Covid-19 pandemic.
Adcorp, whose revenue declined by 9.3 percent to R12.9 billion during the year under review, reported a 337.3 percent increase in cash generation from continuing operations to R914 million from R209m a year earlier.
The group's net debt position improved to R49m from R688m a year earlier, while debt excluding finance leases more than halved to R456m from R1bn in 2020. Adcorp attributed the lower group debt to enhanced collections and other cash positive initiatives and said both the South African and Australian segments played a part in the degearing of the business.
The completion of the Dare disposal also enabled the Australian business to repatriate R33m to South Africa, Adcorp said.
As part of a policy to focus on core business initiatives, Adcorp sold Dare, the specialist gas workforce recruitment entity which it bought in 2015 and Adcorp Singapore, which sources highly skilled employees for temporary and permanent contracts.
Adcorp also sold FMS Marketing Solutions and the Employee Benefits divisions which were deemed as noncore assets. New chief executive John Wentzel said despite a challenging year, the group was in a stronger position than a year ago with significantly lower debt, improved earnings and empowerment credentials.
Revenue declined by 9.3 percent from R12.9bn to R11.7bn a year earlier and the group recorded a 124.4 percent increase in operating profit from continuing operations before finance income and finance costs surged to R118m, from a R486m loss a year earlier.
Adcorp said revenue and gross profit from its industrial services business had shrunk by 17.2 percent and 22.1 percent, respectively, with contingency staffing accounting for the majority of the decline.
The group said the hospitality and automotive sectors within Blu, and the loss of a large sector client within Cynergy, had weighed heavily on the industrial services segment. However, functional outsourcing revenues increased by 9 percent due to organic growth and new sales on the back of operating sectors that were more resilient to the negative impact of Covid-19 trading conditions.
In Australia, revenue from the continuing operations increased by 8.4 percent in the group's reporting currency, but declined by an aggregate 6.5 percent in its functional currency.
Adcorp's share price closed 1.41 percent higher at R6.49 on the Johannesburg Stock Exchange yesterday.