| Thu 12 Feb 2009, 9:00 | | KEL - Kelly Group Limited - Chief Executive`s Newsletter |
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KEL
KEL
KEL - Kelly Group Limited - Chief Executive`s Newsletter
KELLY GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1999/026249/06)
ISIN: ZAE000093373
Share Code: KEL
("the Kelly Group")
CHIEF EXECUTIVE`S NEWSLETTER
As expected the quarter to December proved to be a tough one for the Kelly Group
as we started to feel the affects of the unprecedented global economic slow
down. However it must be said that we set our budgets accordingly for the first
quarter and we are in line with budgeted expectations.
Overall, group revenues were in line with budget and 13% up on the first quarter
last year although this growth figure is misleadingly bullish as our South
African operations revenue only grew by 4.58%. The balance of the growth came
from the acquisition of Torque IT 3.2% and the rand/dollar exchange rate which
turned a decline in our US dollar revenues into a 33% increase in rand terms.
As a whole, the South African business units fared well and came in slightly
ahead of budget while the US operation felt a much greater impact from the
negative sentiment and recessionary climate in America and consequently came in
a little behind expectations despite help from the weakening rand.
In South Africa, some of the business units were up while others were down. The
permanent placement sector showed a 27% decline in the number of permanent
placements, which was offset to a large degree by a 32% improvement in the
group`s average permanent placement fee. The temporary staffing market showed a
marginal 3.4% decline in average headcount but this was offset as the trend for
the quarter indicates that on average the temps assigned have worked 2% more
hours at an increased hourly rate of 4%, effectively showing a 10.5% increase in
revenue per temp assigned. Tight management of receivables saw Days Sales
Outstanding (DSOs) improve to 33 days at the end of December from 39 days last
December.
Employers have become extremely cautious in hiring as a result of the current
economic climate and lack of visibility which has resulted in longer hiring
cycles and decision making both here and in the USA.
We believe the first quarter will prove to be the softest of the year, due to a
longer decision making cycle and a longer than usual break during the
December/January holidays. January has also been soft. However, we believe we
will see a gradual improvement from February and are looking forward to a better
second half of the year. Interest rates coming down, development of the
Gautrain gaining momentum and other preparatory work for the 2010 World Cup
picking up speed will all help to reduce the impact of the severe downturn.
Annual report and interim results
Our 2008 annual report was published last month and may be read in its entirety
on our website www.kellygroup.co.za. Our interim results for the six months to
March will be published in May. There will be a presentation on the results in
Johannesburg and in Cape Town. If you would like to attend either of these,
please contact our investor relations office at kellygroup@dpapr.com for an
invitation.
Political pressure on temporary staffing services providers
As has been widely reported in the media, the ANC`s election manifesto includes
a provision for decent work. Post the election, we anticipate the regulation of
the staffing industry as a result of unscrupulous players. The objective of the
regulation is to compel temporary employment services to be compliant. The
industry has been engaging with various stakeholders for some time on revising
the regulations governing it.
The Confederation of Associations in the Private Employment Sector (CAPES) is in
the process of engaging with government on the issue and our executives are
playing an active role in the process.
The staffing industry is a significant facilitator of work in South Africa,
assigning around 400 000 to 500 000 jobs every year. It is also one of the
largest contributors to skills development in the country.
It`s also worth noting that temporary employment assignees are entitled to all
Bargaining Council and Basic Conditions of Employment rights as well as to fair
labour practices under the Labour Relations and other Acts.
Accolades for Kelly
Kelly was voted the best HR service provider in the national and Gauteng
category by Business Process enabling South Africa (BPeSA) and was also the
winner of BPeSA`s best non-technical innovation of the year award. It was a
runner up in the global finals of the Contact Center Awards 2008 in the "Best
Community Spirit" category at a gala event held in Las Vegas in December.
I look forward to seeing you at one of our presentations
Yours sincerely
Grenville Wilson
Chief executive
Sandton
12 February 2009
Merchant bank and sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 12/02/2009 09:00:03 Produced by the JSE SENS Department.
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