| Tue 24 Nov 2009, 12:16 | | KEL - Kelly Feels Recession Pinch But Well Positioned To Ride It Out |
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KEL
KEL
KEL - Kelly Feels Recession Pinch But Well Positioned To Ride It Out
KELLY GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registered number 1999/026249/06)
Share code: KEL
ISIN: ZAE000093373
("Kelly Group" or "the group")
KELLY FEELS RECESSION PINCH BUT WELL POSITIONED TO RIDE IT OUT
Johannesburg, 24 November 2009 - Comprehensive employment services and outsource
solutions provider the Kelly Group felt the full impact of a deepening recession
in the six months to September, with both its South African and US operations
posting reductions in revenue and earnings.
The second-half down turn resulted in headline earnings per share for the full
year decreasing by 39.8% to 61.63 cents while profit before interest, tax and
depreciation was down 28% at R114.6 million. The dividend cover at 2.85 times
was maintained and a cash dividend of 21.5 cents per share (2008: 36 cents)
declared.
Chief executive Grenville Wilson said a tough year had not been without its
positives.
"Despite the difficult trading condition, the group managed to increase revenue
in rand terms marginally to R2 256 billion. While our high-margin permanent
staffing business was down 32% in revenue terms, the lower margin temporary
staffing business was maintained at the previous year`s level."
"Productivity improvement measures and cost-saving initiatives initiated in the
previous financial year produced immediate benefits and helped to improve the
gross margin from 27.8% to 28.2%, while containing the increase in operating
cost to a modest 3%. While new strategic investments in enabling technologies
and the acquisition of Torque IT increased the depreciation charge by 39%, these
will enhance efficiency and generate new revenue sources."
Wilson said the group`s strong focus on cost containment as well as the
development of synergistic opportunities and new revenue streams, which had
offset some of the effects of the economic crunch, would also serve it well
going forward.
"We expect market conditions to remain depressed for the foreseeable future,
keeping up the pressure on our margins and volumes. In this environment, our
priorities will be to minimise short-term risks and to maintain our commitment
to stringent cost control and improved efficiencies," Wilson said.
"In the short term, we expect the FIFA 2010 World Cup to create new revenue-
generating opportunities while some companies may start upsizing their flexible
workforces in anticipation of an economic recovery. Looking towards the latter
part of 2010 and beyond, we believe the Kelly Group is fundamentally in good
shape to return to sustainable growth when that recovery comes."
For further information call Grenville Wilson, CEO Kelly Group, on 011 722 8009
Issued by du Plessis Associates on behalf of Kelly Group Limited
dPA contact Helen McKane Tel : +27 11 728 4701,
Fax: +27 11 728 2547, Mobile: 082 330 2034 or e-mail: kellygroup@dpapr.com
website: www.kellygroup.co.za
Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 24/11/2009 12:16:01 Produced by the JSE SENS Department.
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