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Staffing solutions provider Adcorp Holdings Results

Staffing solutions provider Adcorp Holdings [JSE:ADR] on Wednesday announced diluted headline earnings per share of 110.2 cents for the six months ended August, from 92.2 cents previously.

The group noted diluted earnings per share of 110.3c, from 92.5c in 2010.

Revenue climbed to R2.85bn, from R2.58bn, while operating profit improved to R93.2m, from R76.1m earlier.

Adcorp declared an interim dividend of 57c per share, from 54c in 2010.

"Various prevailing staffing industry trends have contributed positively to this growth trend and Adcorp's overall performance," the group said.

A persistent shortage of certain scarce skills had resulted in relatively robust profit growth within the permanent recruitment operations of Adcorp while the group said its contract staffing operations saw centralised procurement departments playing a far greater role in the acquisition of people skills with many clients rationalising the number of vendors they currently used and requiring the adoption of more sophistication and technology in the procurement process.

"Whilst this trend has put margins under pressure as reflected in the slight decline in gross margins from 20.7% in 2010 to the current 19.5% margin for the period under review, it has also resulted in market share gains for the group due to our unique positioning and ability to meet these more onerous and sophisticated procurement requirements," Adcorp said.

Also contributing to a further consolidation in the industry was the ongoing debate regarding further regulation of the temporary employment services (labour broking) industry.

"As much of the debate has been centred on reputed exploitative practices of temporary workers by some rogue operators in the industry, procurers of these services have tended now to favour the well-established, reputable operators within the industry," Adcorp said.

In terms of progress with regard to the resolution of this debate around labour broking, the group said that negotiations were ongoing at Nedlac between government, business and organised labour. "Whilst some progress has been made in terms of finding common ground with regard to developing an appropriate regulatory framework for the industry, the process is still inconclusive and will, in all likelihood, spill over into next year," the group said.

Adcorp said its training operations continued to perform well, growing the number of internal and external candidates registered on learnerships. In addition, the training operations had extended their capacity with regard to artisan training whereby the group had the capacity to train up to 2 500 artisans annually. "Given the country's imperative to rapidly increase the skills base of the workforce, the group's training operations are particularly well positioned for the future," Adcorp said.

Looking ahead, Adcorp said that while overall employment trends in the South African economy were generally weak, it was well placed due to its unique position in the market.

It said that the greater introduction of sophistication, adoption of technology and centralisation of the procurement of staffing services by clients, all favoured Adcorp, because of this positioning.

"Should the acquisition of Paracon succeed, this will strengthen the group's positioning even further.

"The national imperative to rapidly address the acute backlog in skills development should also favour the group's training operations.

"Strategically, the group is focused on managing its costs, driving economies of scale, delivering value for its clients and increasing the level of sophistication and technological advancement it applies in its day to day operations. In addition, the group has a strong and robust balance sheet. As such, the group is well positioned for the future," it concluded.


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