| Tue 22 Nov 2011, 12:16 | | KEL - Kelly Group Limited - New strategy to drive Kelly Group turnaround |
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KEL
KEL
KEL - Kelly Group Limited - New strategy to drive Kelly Group turnaround
KELLY GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1999/026249/06)
(Share code: KEL)
(ISIN: ZAE000093373)
("Kelly Group" or "the group")
NEW STRATEGY TO DRIVE KELLY GROUP TURNAROUND
Johannesburg, 22 November 2011 - Comprehensive employment services provider
Kelly Group said today a new strategy of greater inter-divisional
cooperation, coupled with an aggressive sales and marketing drive, was
expected to lift the group`s results in future periods.
Reporting on the results for the year to September, recently appointed chief
executive Gareth Tindall said despite challenging trading conditions and the
significant internal changes required to position the group going forward,
the group`s substantial revenue base remains intact.
Group revenue for the year of R1 99 billion was 3% down on 2010 and
operating profit of R16.8 million was 52% down on the prior year. In
addition, the group recorded a net loss of R21.7 million), after accounting
for R33.2 million in impairment charges finance charges and taxation.
Revenue from high margin permanent placements contracted by 20% to R68.1
million and now comprises less than 4% of total group revenue compared to 8%
in 2008. The group also recorded a decline of 2% in annuity revenue derived
from outsourcing, largely due to the loss of two large contracts. The group
now manages just over 17 000 associates on average in any given month but
managed to maintain gross margins in a market where clients demand more for
less.
Skill development reflected healthy growth of 15% and is now the second
largest revenue contributor to the South African operations from a segmental
perspective. The USA subsidiaries also continued on their strong growth
path and increased revenue by 9% and operating profit by 314% in US dollar
terms, offset however by the strength of the rand which traded at the R7.00
mark against the dollar for most of the year. K-log, the group`s online
people resource planning system, doubled its revenue, albeit off a low base,
and continued on its rapid growth path.
The Kelly and PAG divisions came under strong pressure during the year with
Kelly showing a 7% decline in revenue and a 37% decrease in earnings before
interest and tax, while PAG recorded an EBIT loss of R0.9 million. Both
businesses have now been restructured with a greater focus on their
traditional areas of strength and specialisation and an acute emphasis on
client interaction. Torque IT, Kelly Industrial and InnStaff all performed
well in a challenging market.
"While trading conditions are expected to remain depressed for the
foreseeable future, our new strategy will help us to regain lost market
share. The sharpened external focus supported by operational improvements
and the continued use of enabling technologies will benefit the group going
forward and we expect to see a better performance over time," Tindall said.
For further information contact:
Gareth Tindall, chief executive, on 083 326 1203 or
Ferdie Pieterse, financial director, on 082 905 2820
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: 22/11/2011 12:16:01 Produced by the JSE SENS Department.
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