Acquisitions boost revenue growth for Adcorp
According to the company’s financial results, the long anticipated revised Labour Relations Act (LRA), which has now been passed into law, has created an element of ambiguity in the labour market. Employers have grappled with their interpretation of these laws and are developing appropriate responses to dealing with their requirements.
In some instances, this has advantaged Adcorp as it has been able to assist clients and gain volumes accordingly. In others, particularly in the white-collar contracting space, volumes have been negatively impacted as clients have opted to take contract workers on permanently.
The company breaks down revenue between four reporting segments: Blue-collar staffing White-collar staffing Professional Services and BPO, Training, and Financial Services (BTFS).
During the year, Adcorp acquired rival South African staffing firm Kelly Group, for a total consideration of ZAR 248 million (USD 20.6 million). The company has subsequently delisted and consolidated with the group’s results effective from 1 December 2014. Management is now focused on the integration of Kelly’s operations with those of Adcorp, completion of which is expected by the end of August 2015.
The group’s international operations now contribute a third of normalised profit, with a target to increase that to 45% in the new financial year.
The Group’s African operations which focus predominantly in the areas of mining, oil, gas, exploration, and related infrastructure development, continued to show good operational growth.
Australian independent IT contracting business, Paxus, performed in line with expectations and is currently benefitting from an improved IT employment market.
Included in the results for the year are the results of Labour Solutions Australia (LSA), which was acquired in December 2013. The business is performing in line with expectations and has achieved good growth for the year. LSA is an important component of the Group’s Asia Pacific portfolio and is positioned as the launch pad for the Group’s blue-collar ambitions in Australia.
During the year, the also Group registered a company and established a physical presence in Singapore, which will serve as the hub for the Adcorp’s international expansion. A project is currently underway to establish the implications and means by which, the Group’s non-South African assets could be held via this Singapore entity
In March 2015, the company advised that it is launching its RPO and MSP business ADfusion in the Australian market and in April 2015 Adcorp announced that it had acquired Australian oil & gas recruitment firm Dare Holdings.
In trading today, the company’s share price rose by 1.4% to ZAR 32 (USD 2.66), an increase of 0.1% compared with a year ago. Based on its current share price, the company has a market value of ZAR 3.5 billion (USD 287.8 million).