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Shares in labour services group Adcorp jumped more than a fifth on Monday, when it announced it was more than doubling its shareholder payout despite taking hits from SA's weak economy and from the business rescue proceedings of a subsidiary in Australia.
Group revenue from continuing operations rose 6.5% to R11.3 billion in the year to end February but total profit fell almost two thirds to R40.8 million, it reported. The company cut its final dividend to 16.5c from 47c, but also declared a 91.3c special dividend. Taken together, 2023's final and special dividend represent about a R118 million payout, from R52 million in 2022.
Even though Adcorp reported significant impairments, it said it was pleased with two years of turnaround efforts, and improved working capital management and was confident in its financial position. Cash generated from operations grew by almost half, putting in a position to allow for a special dividend.
Valued at just over R600 million on the JSE Adcorp operates in SA and Australia and assigns about 43 000 contingent or temporary staff daily for its clients. It also provides training in a number of disciplines and its brands include Quest, Paracon, Labour Solutions Australia, talentCRU, and Torque IT.
In December, the company had announced that it was placing project management group allaboutXpert Australia into voluntary administration - or business rescue - and it contributed a loss of R90 million, mostly due to writedowns to trade receivables. The group has said that business had experienced considerable losses on contracts which required significant investment to resolve, though overall it is small in group terms, making up less than 2% of revenue in the first half of its 2023 year. There was also a R34.4 million writedown to goodwill of IT resourcing group Paracon to reflect the worsening economic prospects of SA.
Adcorp said despite this, its temporary staffing and outsourcing divisions demonstrated "impressive resilience and adaptability" even though they are significantly exposed to the volatile fast-moving consumer goods and manufacturing industries.
“Our strategic shift is yielding results, affirming that even in trying times, we continue to deliver a robust performance and generate value for our shareholders,” CEO John Wentzel said in a statement.
Shares in Adcorp were up almost 12% to R5.50 in late morning trade on Monday, earlier reaching R5.99. Click here for details of its shares as well as other info.
