Adcorp Holdings Limited · JSE:ADR
Adcorp — FY2019 Earnings Presentation
26 slides from Adcorp's earnings presentation, May 20, 2019
Slide 1: Financial Results Presentation
@Mandy/Nicola, ‘liven up’ template, change cover photo Financial Results Presentation For the year ended 28 February 2019 Presented by Innocent Dutiro and Cheryl-Jane (CJ) Kujenga Chief Executive Officer and Chief Financial Officer
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS The statements contained herein may contain certain forward-looking statements relating to the Group that are based on the beliefs of the Group’s management as well as assumptions made by and information currently available to the Group’s management. These forward-looking
Slide 3: Agenda
1 Delivering a platform for growth (Innocent Dutiro) 2 Financial results (CJ Kujenga) 3 Strategic direction (Innocent Dutiro)
Slide 4: Delivering a platform for growth
Delivering a platform for growth Innocent Dutiro
Slide 5: What you will hear today
Introduction What you will hear today Last eighteen months have Period under review marked by ▪ REVIEW OF OUR PERFORMANCE for the a difficult trading environment: been focused on establishing a year ended 28 February 2019 platform from which we can ▪ Rising unemployment in ▪ Our REVISED OPERATING MO
Slide 6: Performance highlights
Performance highlights Reported EBITDA Net profit after tax Revenue Cash generated by operations 242% 147% 2% 28% to R467 million to R262 million to R15.0 billion to R500 million (2018: R15.3 billion) (2018: R390 million) Earnings per share Headline earnings per share Improvement in DSO to Ge
Slide 7: South Africa macroeconomic environment presents unique labour market challenges
South Africa macroeconomic environment presents unique labour market challenges OUR CONTRIBUTION …FACILITATING JOB CREATION ▪ Adcorp helped over 73 215 South Africans achieve employment during FY2019 South African unemployment ▪ ~80% of our temporary assignees are youth rate increased to 27.6% (25 –
Slide 8: A leading workplace solutions company and market leader in human capital
A leading workplace solutions company and market leader in human capital and talent management 1 Resourcing 2 Outsourcing 3 Training 4 Consulting Adcorp’s core business is the Provide clients with outsourced We facilitate training and Leverage our knowledge in HR recruitment and placement of service
Slide 9: Transformation journey
Transformation journey Our focus over the past year has been to continue fixing and stabilising the business in preparation for growth R1 BILLION EBITDA by 2022 FIX STABILISE GROW End FY2019 End FY2020 End FY2022 ▪ Transition into new operating model STRATEGIC ▪ Fix and stabilise South Africa operat
Slide 10: Performance against our strategy
Performance against our strategy Build a STRONG business Ensure that the business STRENGTHEN TRANSFORM that is FOCUSED on is LEAN AND AGILE the brand the culture leveraging our core Defined core business areas, Various projects in flight/ Development of a client centric, Create a culture that is gro
Slide 11: Financial results
Financial results CJ Kujenga
Slide 12: Focus areas and progress
Focus areas and progress FOCUS AREAS Simplify Group structure *Finalise development Progress implementation Migrate offshored *Maintain focus on in line with the of the capital allocation of cost reduction and processes into an working capital and strategic direction framework efficiency improvement
Slide 13: Performance has improved across key metrics
Performance has improved across key metrics Underlying EBITDA and margin Earnings per share NPAT and ROIC Cash
Slide 14: Balance sheet has been de-geared providing headroom for value creation
Balance sheet has been de-geared providing headroom for value creation Commentary ▪ Diligent approach to cash and working capital management has reduced net debt to R519m ▪ Leverage measure transitioning from gearing (Debt: Equity) to Debt: EBITDA in line with how we manage the business. Debt is bas
Slide 15: Margin optimisation is tracking the trajectory required for the FY2021 target of 5%
Margin optimisation is tracking the trajectory required for the FY2021 target of 5% Concerted efforts on cost savings resulted in improved EBITDA …partially offset by a drop in gross profit margins target Ongoing focus is to further reduce costs by R100 million and improve GP % to 14.5% by FY2021
Slide 16: Summarised consolidated operating profit
Summarised consolidated operating profit 2019 2018 Var % Commentary R’000 R'000 R'000 Revenue 15 065 369 15 325 391 -2% ▪ Revenue has dropped by 2% in the current year mainly due to headcount volume reduction in both Industrial Cost of sales (13 032 499) (13 097 630) Services and Support Services an
Slide 17: Summarised consolidated statement of profit and loss
Summarised consolidated statement of profit and loss 2019 2018 Var % R’000 R'000 R'000 Commentary Operating profit 387 741 8 030 ▪ The focus to manage cash has resulted in a drop in Net cost of funding (83 593) (124 029) 33% net financing costs by 33% Impairment of intangible assets, goodwill and (6
Slide 18: Segmental performance - Revenue
Segmental performance - Revenue 2019 2018 Var % R'000 R'000 South Africa Industrial Services 5 980 971 6 278 103 -5% Professional Services 1 935 706 1 802 508 7% Support Services 1 371 072 1 471 207 -7% Training 166 005 178 454 -7% Financial Services 149 335 192 281 -22% Central costs 315 16 034 -98
Slide 19: Segmental performance – Underlying EBITDA
Segmental performance – Underlying EBITDA 2019 2018 Var % R'000 R'000 South Africa Industrial Services 359 634 338 347 6% Professional Services 174 228 160 860 8% Support Services 53 749 49 012 10% Training 7 148 (32 501) 122% Financial Services 65 196 58 218 12% Operations results before central co
Slide 20: Summarised consolidated statement of financial position
Summarised consolidated statement of financial position 2019 2018 Var % R'000 R'000 Commentary Assets Property and equipment 57 647 65 756 -12% ▪ Additional assessed losses of R98m were recognized Intangible assets and Goodwill 1 421 661 1 437 796 -1% which resulted in an additional deferred tax ass
Slide 21: Focus on delivering value through growth
We are focused on creating sustainable shareholder returns Sustainable growth in total shareholder returns Measured holistically EBITDA growth Drive profitable Improve >25% CAGR by FY2022 revenue growth margins EBITDA margin improvement Focus on delivering 5% by FY2021 value through growth Segment D
Slide 22: Strategic direction
Strategic direction Innocent Dutiro
Slide 23: Delivery of the strategy will be enabled by an integrated operating model
Delivery of the strategy will be enabled by an operating model that ensures integration, transparency and agility R1 BILLION EBITDA by 2022 1 2 3 4 Resourcing Outsourcing Training Consulting Australia Ambition Grow Training business Be a thought leader in the labour Maintain market leadership in Bec
Slide 24: Levers that enable delivery of the operating model
Levers that enable delivery of the operating model Candidate engagement Client Experience Cost Culture Build market leading New client offering to address the Optimise operational efficiency Embed a collaborative candidate experience workplace of the future to achieve low costs results driven cultur
Slide 25: Our investment case
Our investment case Clear portfolio alignment Focused strategic to enable each aspect of choices related to value An organisation that is committed to the business to be optimised accretive acquisitions using its capabilities and market position and growth initiatives to improve socio-economic condi
Slide 26: Thank you
Thank you Presented by Innocent Dutiro and CJ Kujenga Chief Executive Officer and Chief Financial Officer www.adcorpgroup.com