| Mon 17 May 2010, 12:16 | | KEL -Kelly Group Limited - Kelly manages tough market conditions |
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KEL
KEL
KEL -Kelly Group Limited - Kelly manages tough market conditions
KELLY GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1999/026249/06)
(Share code: KEL)
(ISIN: ZAE000093373)
("Kelly", "the Kelly Group" or "the group")
KELLY MANAGES TOUGH MARKET CONDITIONS
Johannesburg, 17 May 2010 - The Kelly Group limited the continuing effects of an
extremely depressed trading environment to keep revenue and EBITDA reductions
for the six months to March to 7% and 51% respectively. Net profit after tax
and EPS for the six months were also down by 58% and 57%.
Chief executive Grenville Wilson attributed the containment to a rigorous
pursuit of productivity and efficiency improvements, operating expenditure
decreases of 0.6% and the introduction of new products and services which were
starting to contribute to revenue.
The group`s South African operations` combined revenue of R897 million was 2.8%
down on the comparative period despite revenue growth of 5.9% from its skills
training business Torque IT.
Revenue of a non-recurring nature derived from permanent placements and
conversions reduced by 35.4% and 28.1% for the year when compared to 2009.
Annuity revenue from outsourced business declined by 5.9% as a result of a 3.0%
reduction in the group`s managed headcount as well as hours worked. Gross
margins also decreased from 28.0% to 26.5%.
Kelly Industrial performed well in what was the least affected sector of the
economy, blue-collar recruitment. Revenue was down by 2.9% to R135.8 million
but EBIT increased by R617 000 (16.6%) to R4.3 million off the back of
significant productivity gains and cost containments.
In the US, the group`s operations increased revenue in US dollar terms by 4.1%
following nine consecutive months of growth. However, an appreciation of the
rand against the dollar of 23.5% during this period more than offset revenue
growth in rand terms and resulted in a 21.3% decrease.
On 30 April, the group settled R160 million in outstanding promissory notes
using R40 million of its own funds and the proceeds of a new R120 million
securitisation structure. The new three-year, fixed-rate securitisation
structure secures the group`s medium term funding requirements at a competitive
rate and also reduces the risk profile of the group through reduced long-term
debt and gearing.
Looking ahead, Wilson said the group`s experience that recruitment activity lags
the broader economy is no different in the current financial cycle where two
consecutive quarters of growth have not translated into real activity or
improved results. "A detailed analysis of our results for the first half of the
financial year yields no clear trend or pattern to suggest the much anticipated
recovery in employment growth. The same can be said of the domestic and global
recovery, which has been inhibited by further surprises such as the Greek crisis
and risk of global contagion. Economic uncertainty prevails, which directly
impacts economic decision-making. On the positive side, certain of our
operations have shown growth and our newly launched productivity management tool
K-log has started to generate annuity revenue."
Wilson said the group remained cautious in its outlook and did not expect any
significant changes in formal job creation in the South African economy in the
short term. "We are, however, well positioned to take advantage of any upswing
if and when it should occur," he said. "Until then, we will continue to focus
on improving efficiencies, driving costs down and aggressively pursuing new
business."
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: 17/05/2010 12:16:01 Produced by the JSE SENS Department.
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