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ADCORP - UNAUDITED GROUP INTERIM RESULTS FOR THE PERIOD ENDED 30 JUNE 2004
Adcorp Holdings Limited
(`Adcorp` or `the Group`)
Registration number 1974/001804/06
Share code: ADR ISIN number: ZAE000000139
UNAUDITED GROUP INTERIM RESULTS
for the period ended 30 June 2004
Salient features
- Headline earnings up by 77%
- Operating profit up by 39%
- Cash conversion ratio 141%
- Debtors days down by 4 days
- Proposed interim capital distribution of 25 cents per share
Leaders in human capital management and marketing advisory services
INCOME STATEMENT
for the six months ended 30 June 2004
Unaudited Unaudited Audited
6 months 6 months 12 months
to
to June to June December
2004 2003 2003
R`000 R`000 R`000
Turnover 933 780 798 905 1 667 235
Cost of sales (653 143) (549 176) (1 143 655)
Gross profit 280 637 249 729 523 580
Other income 9 311 6 616 14 087
Operating expenses (241 060) (218 020) (451 932)
EBITDA 48 888 38 325 85 735
Depreciation (6 618) (6 761) (13 302)
Operating Profit 42 270 31 564 72 433
before goodwill
Amortisation of (1 967) (2 510) (4 100)
goodwill
Operating Profit 40 303 29 054 68 333
Interest received - 8 836 6 129 18 331
banks
Interest received - - - 269
fair value adjustments
Interest paid - banks (11 017) (10 522) (24 435)
Share of 2 690 (2 223) (2 058)
profits/(losses) from
associates
Impairment of - (7 245) (11 362)
investment and
property
Loss on sale of (109) (433) (391)
property and equipment
Profit/(loss) on 59 (28 407) (31 671)
disposal of operations
and subsidiaries
Profit/(loss) before 40 762 (13 647) 17 016
taxation
Taxation - Current (12 753) (9 273) (24 883)
- Prior year - - (1 222)
Profit/(loss) after 28 009 (22 920) (9 089)
taxation
Minority shareholders` (509) 344 472
share of
(profits)/losses
BEE share of super (1 400) - (185)
profits
Profit/(loss) 26 100 (22 576) (8 802)
attributable to
ordinary shareholders
Reconciliation of
headline earnings
Profit/(loss) 26 100 (22 576) (8 802)
attributable to
ordinary shareholders
Amortisation of 1 967 2 510 4 100
goodwill
Impairment of - 7 245 11 362
investment and
property
Loss on sale of 76 303 274
property and equipment
(Profit)/loss on (59) 28 407 31 671
disposal of operations
and subsidiaries
Headline earnings 28 084 15 889 38 605
Headline earnings per 70,1 39,7 96,4
share - cents
Earnings/(losses) per 65,2 (56,4) (22,0)
share - cents
Diluted headline 70,0 39,6 94,4
earnings per share -
cents
Diluted 65,0 (56,3) (21,5)
earnings/(losses) per
share - cents
Capital distribution
per share (cents)
- interim prior year - 10 10
(approved 2003)
- final prior year - - 54
(approved 2004)
- proposed interim 25 - -
BALANCE SHEET
as at 30 June 2004
Audited
Unaudited Unaudited 12 months
to
30 June 30 June December
2004 2003 2003
R`000 R`000 R`000
ASSETS
Non-current assets 131 797 138 465 132 791
Property, plant and 40 369 40 200 39 055
equipment
Goodwill 66 611 68 849 68 310
Investment in associates 6 483 9 595 3 059
Vendors for sale of - - 2 148
business
Deferred taxation 18 334 19 821 20 219
Current assets 364 443 301 051 291 920
Trade receivables 216 391 182 409 187 672
Other receivables 23 152 31 584 23 098
Vendors for sale of 89 4 816 259
business
Cash resources 121 616 72 972 77 709
Taxation prepaid 3 195 9 270 3 182
496 240 439 516 424 711
EQUITY AND LIABILITIES
Capital and reserves 198 311 185 082 194 153
Share capital 1 007 1 007 1 007
Share premium 34 805 60 761 56 747
Treasury shares (4 454) (4 578) (4 454)
Accumulated profits 166 953 127 892 140 853
Minority shareholders` 927 919 603
interest
BEE shareholders 1 585 - 185
interest
Non-current liabilities
Non-current interest- 640 - -
bearing liabilities
Current liabilities 294 777 253 515 229 770
Current non-interest- 187 890 159 169 129 929
bearing liabilities
Current non-interest- 152 767 130 343 110 962
bearing liabilities
Shareholders` for 21 942 14 908 -
capital distribution
Provisions 12 186 13 615 14 340
Taxation 995 303 4 627
Current interest-bearing 106 887 94 346 99 841
liabilities
Current portion of 66 15 -
interest-bearing non-
current liabilities
Bank overdraft 106 821 94 331 99 841
Total equity and 496 240 439 516 424 711
liabilities
Number of ordinary 40 369 40 030 40 035
shares in issue
Net asset value per 491 462 485
share
CASH FLOW STATEMENT
for the 6 months ended 30 June 2004
Unaudited Unaudited 12 months
6 months 6 months to
to to December
June 2004 June 2003 2003
R`000 R`000 R`000
Cash flows from
operating activities
Cash generated by 48 888 36 793 86 987
operations
Decrease/(increase) in 10 693 22 989 8 537
working capital
Cash generated by 59 581 59 782 95 524
operating activities
Net interest paid (2 181) (4 393) (6 104)
Taxation paid (14 513) (19 265) (25 757)
Capital distribution - - (18 668)
paid
Net cash inflow from 36 124 44 995
operating activities42
887
Cash flows from (6 666) (7 009) (16 491)
investing activities
Cash flows from 706 (824) (986)
financing activities
Net cash movement 36 927 28 291 27 518
Cash and cash (22 132) (49 650) (49 650)
equivalents at the
beginning of the period
Cash and cash 14 795 (21 359) (22 132)
equivalents at the end
of the period
SEGMENTAL REPORT
6 months to June 2004
Turnover Operating profit Operating
before goodwill profit
margin
2004 2003 2004 2003 2004 2003
R`000 R`000 R`000 R`000 % %
Central costs 2 276 2 000 (7 680) (7 327) - -
Permanent 119 351 124 512 11 003 7 683 9,2 6,2
recruitment
Flexible 692 244 534 945 29 974 22 036 4,3 4,1
staffing
Education and 11 174 28 338 (1) (2 002) - (7,1)
training
Corporate 65 316 64 906 3 789 5 200 5,8 8,0
communications
Marketing 43 419 44 204 5 185 5 974 11,9 13,5
research
Total 933 780 798 905 42 270 31 564 4,5 4,0
6 months to June 2004
Contribution to Net
group profit asset value
2004 2003 June 2004 Dec 2003
% % R`000 R`000
Central costs (18,2) (23,2) 80 396 106 071
Permanent 26,0 24,3 14 544 7 885
recruitment
Flexible 70,9 69,8 104 879 87 607
staffing
Education and - (6,3) (18 219) (16 542)
training
Corporate 9,0 16,5 6 655 4 548
communications
Marketing 12,3 18,9 10 056 4 584
research
Total 100,0 100,0 198 311 194 153
ABRIDGED STATEMENT OF CHANGES IN EQUITY
for the 6 months ended 30 June 2004
Distri-
Share Share Treasury butable
capital premium shares reserves Total
R`000 R`000 R`000 R`000 R`000
Balance as 1 007 56 747 (4 454) 140 853 194 153
at 31
December
2003
Capital - (21 942) - - (21 942)
distribution
approved -
paid 26 July
2004
Net profit - - - 26 100 26 100
for the 6
months to
June 2004
Balance as 1 007 34 805 (4 454) 166 953 198 311
at 30 June
2004
COMMENTS
Trading overview
The Group`s trading performance for the period under review is most pleasing and
the culmination of a process of significant restructure and repositioning which
is now bearing fruit.
Headline earnings per share of 70,1 cents are some 77% above the 39,7 cents for
the same period last year whilst operating profit before goodwill of R42,3
million is 34% up on earnings for the prior comparative period.
The Group`s continued focus on margin management and cash management also
contributed positively to the result with operating margins improving by a
factor of 13% to a level of 4,5% versus 4,0% for the corresponding period.
Debtors days reduced to a level of 33 days compared to 37 days at the
comparative date last year. This reduction coupled with the effective management
of current liabilities has had a marked impact on the Group`s cash generated.
The conversion ratio of cash generated by operating activities to operating
profit before goodwill of 141% resulted in the Group`s prior year borrowed
position moving into a net cash position of R14,8 million.
As a result of this pleasing cash generation performance, the Group is in a
position to recommend a capital distribution of 25 cents per share which is 150%
above the capital distribution proposed for the same period last year.
The Group`s financial results were buoyed by strong performances in the
Permanent Recruitment and Flexible Staffing divisions. Previous losses in the
Education and Training division were reversed to a break-even position. The
performance of the Marketing Research division was satisfactory coming off a
high base whilst the Corporate Communications division reflected a decline in
profitability mainly due to an exceptional previous year.
FINANCIAL OVERVIEW
Profit attributable to ordinary shareholders amounted to R26,1 million for the
six months under review compared with a loss of R22,5 million for the same
period last year. The loss in the previous period resulted primarily from the
finalisation of the Group`s restructure, however the R26,1 million attributable
profit achieved in the current period compares favourably with the R12,9 million
recorded by ongoing operations for the similar period last year.
Net cash generated during the period under review amounted to R36,9 million
which is 31% higher than the R28,3 million achieved in the same period last
year. This positive position is mainly attributable to the improvement in profit
margin as well as the ongoing management of working capital. It should be noted
that the second six months will show a reduction in cash resources due to the
payment of the final capital distribution in respect of 2003 as well as the
proposed interim capital distribution for 2004. Collectively these payments will
amount to R32,1 million.
Trade and other receivables have been separated in order to provide greater
clarity on these components. Items included under provisions have been revisited
and the provisions now consist primarily of leave pay. Comparatives for these
line items have been restated however, the net current assets remain unchanged.
OUTLOOK
The strong performance of the Group is expected to continue into the second half
of the year. The focus on margin management and cash generation remains which
potentially could provide further inherent opportunities for the Group.
DISTRIBUTION OF CAPITAL
The board has proposed an interim capital distribution of 25 cents per share
subject to shareholder approval. A circular will be sent to shareholders shortly
requesting the necessary approval.
ACCOUNTING POLICIES AND PRESENTATION
This report has been prepared in accordance with South African Statements of
Generally Accepted Accounting Practice. The accounting policies and methods of
computation are consistent with those applied in the annual financial statements
for the year ended 31 December 2003.
By order of the board
Dr F van Zyl Slabbert RL Pike FD Burd
Chairman Chief Executive Group Financial
Officer Director
25 August 2004
Executive directors RL Pike, FD Burd, VC Baker, M
Liphosa
Non-executive directors HW Barenblatt, RB McGregor, PC
Swart
Independent non-executive Dr F van Zyl Slabbert, SO
directors Shonhiwa, C Bomela, F Khanyile,
GM Negota, S Sebotsa
Alternate directors TEM Ratshitanga, SE Zungu
Company secretary MC Millar
Transfer secretaries Ultra Registrars (Pty) Limited
11 Diagonal Street,
Johannesburg, 2001
Sponsor Deloitte & Touche Sponsor
Services (Pty) Limited
Date: 25/08/2004 11:40:19 AM
Produced by the JSE SENS Department
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