| Tue 12 Mar 2002, 0:00 | | Adcorp Holdings Limited - Audited results |
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Adcorp Holdings Limited
Registration number 1974/001804/06
Share code: ADR
ISIN number: ZAE00000139
Audited results for the year ended 31 December 2001
Consolidated income statement
2001 2000 Var
R'000 R'000 %
Turnover 1 211 287 963 443 +25,7
Operating profit 74 470 93 364 -20,2
Interest received 8 556 10 506 -18,6
Interest paid (9 882) (4 485) -120,3
Share of profits attributable
to associates 1 264 223 +466,8
Profit/(Loss) on sale of assets 394 (380) +203,7
Profit on investment 1 526 - -
Profit before taxation 76 328 99 228 -23,2
Taxation (23 358) (26 914) +13,2
Profit after taxation 52 970 72 314 -26,8
Minority shareholders'
share of profits (1 281) - -
Earnings attributable to
ordinary shareholders 51 689 72 314 -28,5
Reconciliation of
headline earnings
Attributable earnings 51 689 72 314 -28,5
Less: Profit on investment (1 526) - -
(Profit)/Loss on disposals (383) 380 -200,1
Add: Goodwill amortised 6 997 2 835 +146,8
Restructure costs 6 234 - -
Headline earnings 63 011 75 529 -16,6
Number of shares in
issue - weighted (000) 40 481* 39 338 +2,9
Headline earnings
per share - cents 156 192 -18,0
Earnings per share - cents 128 184 -30,4
Dividend per share - cents 28 28 -
Dividend cover - times 4,6 6,6 -30,3
*Excluding 2,256 million treasury shares.
Consolidated abridged balance sheet
31/12/01 31/12/00
R'000 R'000
ASSETS
Non-current assets 208 582 201 810
Fixed assets 62 336 61 938
Investments and loans 134 906 133 611
Deferred taxation 11 340 6 261
Current assets 194 914 178 409
Cash at bank - 2 647
Other current assets 194 914 175 762
Total assets 403 496 380 219
EQUITY AND LIABILITIES
Capital and reserves 279 323 242 779
Share capital and reserves 310 639 250 940
Cost price of shares held by subsidiary (31 316) (14 183)
Vendor shares - 6 022
Non-current liabilities 2 418 5 172
Minority shareholders' interest 1 281 -
Interest bearing long-term liabilities 1 137 1 810
Deferred taxation - 3 362
Current liabilities 121 755 132 268
Interest bearing current liabilities 11 518 -
Shareholders for dividend - 11 312
Cash due to vendors - 10 122
Non-interest bearing current liabilities 110 237 110 834
Total equity and liabilities 403 496 380 219
Number of ordinary
shares in issue (000) 40 117* 40 830
Net asset value per share - cents 696 595
*Excluding 2,256 million treasury shares.
Consolidated cash flow statement
2001 2000
R'000 R'000
Cash generated by operations 97 099 113 145
Increase in working capital (25 549) (35 493)
Cash generated by operating activities 71 550 77 652
Net (interest paid)/investment income (1 326) 6 021
Taxation paid (19 274) (31 932)
Dividend paid (11 312) (8 033)
Cash available from operating activities 39 638 43 708
Cash effects from investment
and financing activities (53 803) (130 597)
Net cash movement (14 165) (86 889)
Cash on hand at the beginning of the year 2 647 89 536
Net (borrowings)/cash on hand at the
end of the year (11 518) 2 647
Segment report
Annual Operating Operating Contribution
turnover profit profit to group profit
2001 2000 2001 2000 2001 2000 2001 2000
R'000 R'000 R'000 R'000 % % % %
Permanent/
Recruitment 178 003 150 320 18 104 25 548 10,2 17,0 24,3 27,4
Flexi
staffing 718 333 538 343 46 494 30 034 6,5 5,6 62,4 32,2
Training 104 871 85 097 (11 171) 13 428 (10,7) 15,8 (15,0) 14,4
Communi-
cations 144 340 110 879 10 852 12 040 7,5 10,9 14,6 12,8
Research 65 740 78 804 10 191 12 314 15,5 15,6 13,7 13,2
Total 1 211 287 963 443 74 470 93 364 6,2 9,7 100,0 100,0
COMMENTS
OVERVIEW
The 2001 financial year was a challenging one for the Adcorp Group. The year
saw the introduction of a newly formulated strategy and reporting structure,
the further development of the Group's black economic empowerment
initiatives, the appointment of a new Group Chief Executive Officer, the
restructuring of the training division and the onset of difficult trading
conditions, particularly in the areas of permanent recruitment and training,
as well as soft capital markets.
Despite these challenges, the Group remained profitable and cash generative
albeit, the reduced level of earnings compared to the previous trading year
was disappointing with headline earnings per share of 156 cents (2000: 192
cents) reflecting an 18% decline compared to the prior year.
Whilst certain of the Adcorp Group operations reported exceptional results
for the 2001 financial year, the overall financial performance of the Group
was adversely affected by the performances of the permanent recruitment,
training and financial communications business units.
Whilst still profitable, the permanent recruitment companies had a difficult
year with certain key market segments feeling the pressure of a weak economy
coupled with the negative impact of fallout in the information technology
and financial services sectors which traditionally have shown significant
net growth in employment. This trend was much in line with the trend
experienced by major international recruitment companies who all experienced
a significant slowdown in placements, particularly in the latter part of the
year.
The training companies were negatively impacted as a result of difficult
trading conditions and the delayed implementation of a number of sizeable
contracts for which a significant amount of work had already been performed.
As such, the benefits of these contracts may only be realised in the 2002
financial year. This resulted in the training division reporting a loss for
the 2001 financial year.
The financial communications operations also experienced difficult trading
conditions due to a significant cut back in corporate finance activity in
the South African economy.
The flexible staffing or contract employment companies produced exceptional
results with record profit growth. It is expected that this trend will
continue into the new financial year proving these businesses to be
resilient to difficult trading conditions as well as reflective of growth in
the global outsourcing market.
The public relations and recruitment advertising companies also produced
exceptional trading results whilst the market research operation performed
according to expectation in particularly difficult trading conditions.
The performance of these companies effectively justified the sound balance
of assets the Group has in its portfolio.
FINANCIAL
Whilst turnover for the year increased by 25,7%, operating profit reflected
a 20,2% decrease compared to the prior year profit levels.
Cash generated by operations during the financial year amounted to R97,099
million of which R25,549 million was required to fund working capital. The
Group's continued focus on working capital management resulted in a
reduction of debtors days outstanding from 55 days reported at the interim
reporting stage to 49 days at year-end.
Costs of R6,2 million were incurred relating to the restructuring of the
training operations as well as some restructuring in the permanent
recruitment division. These costs have been excluded for the purposes of
calculating headline earnings per share.
OUTLOOK
The economic outlook for the 2002 year is cause for some concern given the
volatility of the South African Rand as well as an increase in domestic
interest rates in an already cooled off economy.
It is often in this kind of environment, however, that sound businesses get
to prove their true worth. As such, Adcorp's performance is expected to be
solid during the 2002 financial year effectively retracing some of the lost
ground of 2001. Management remain confident that the Group will return to
positive, real profit growth in the year.
The Group's key focus remains to capitalise on niche market opportunities,
to focus strongly on working capital and cash management, to further enhance
the Group's black economic empowerment credentials, to encourage inter-
company synergies and to unlock internal productivity.
DIVIDEND
The directors have declared a dividend of 28 cents per share which is in
line with the dividend of the same amount declared in the prior year. This
represents a dividend cover of 4,6 times (2000: 6,6 times).The last day to
trade "cum" the dividend in order to participate in the dividend will be
Thursday, 25 April 2002. Adcorp shares will commence trading "ex" dividend
from the commencement of business on Friday, 26 April 2002 and the record
date for such dividend will be Friday, 3 May 2002. Payment in respect of the
dividend will be made to Adcorp shareholders on Monday, 6 May 2002.
No dematerialisation and rematerialisation of Adcorp share certificates may
take place between Friday, 19 April 2002 and Friday, 3 May 2002, both dates
inclusive.
By order of the board
Dr F van Zyl Slabbert RL Pike FD Burd
Chairman Chief Executive Officer Financial Director
12 March 2002
Directors: RL Pike (Chief Executive Officer), VC Baker, HW Barenblatt,
FD Burd, M Liphosa, Dr RD Marcus, RB McGregor, LM Rouillard,
A Rubinstein, PC Swart
Non-executive Directors: Dr F van Zyl Slabbert (Chairman), S Shonhiwa
(Deputy Chairman), Dr DE Baloyi, Dr FP Jacobsz, MH Lekota, Dr P Ngwenya
Visit our website at http://www.adcorp.co.za
Date: 12/03/2002 12:00:00 PM Produced by the JSE SENS Department
