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KEL - Kelly Group - Transformation strategy positions Kelly Group for Growth
KELLY GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1999/026249/06)
Share code: KEL
ISIN: ZAE000093373
("Kelly Group" or "group")
TRANSFORMATION STRATEGY POSITIONS KELLY GROUP FOR GROWTH
Johannesburg, 16 May 2011 - A transformation strategy focused on supplying
technology-based workforce management solutions has started showing results and
has positioned the Kelly Group to take full advantage of growth opportunities.
Revenue from group operations for the six months ended 31 March 2011 was up 4%
on the comparable period to R1.2 billion but EBIT for the half year was down to
R17.8 million compared to R23.9 million the year before. The group`s South
African operations` combined revenue of R773 million was 1% down on the
corresponding period despite revenue growth of 18% from its skills training
business Torque IT.
The prevailing economic climate, exacerbated by labour law uncertainties,
continued to take its toll on the recruitment sector with the staffing
operations contracting by 2%. Revenue from permanent placements and conversions
reduced by 17% and 19% respectively while annuity revenue from outsourced
business declined by 4% as a result of a 3% reduction in the group`s managed
headcount and some gross margin pressure.
Kelly Industrial continued to perform well, increasing revenue and EBIT by 12%.
InnStaff managed to gain market share in the hospitality industry, increasing
its annuity revenue by 10% off the back of a managed headcount growth of 4%.
The group`s US operations posted revenue growth of 35% in dollar terms thanks to
improving economic conditions and employment gains in that country. However, an
8% appreciation in the Rand/US Dollar exchange rate eroded some of this growth
in Rand terms.
Chief executive Grenville Wilson said the group had achieved continued
productivity gains and cost curtailment, largely due to the implementation of a
company transformation effort resulting in the development of a number of
proprietary workforce management software systems. As a result of this ongoing
initiative overall operating expenditure for the six months to March 2011 only
increased by 5%.
These systems, he said, have given the group a significant competitive advantage
and a differentiated value proposition. They have since been externalised and
are being marketed as value added services geared towards saving clients time as
well as optimising their workforces.
The group`s new flagship product K-log, a people resource planning tool, almost
doubled its revenue compared to the previous year and is now the second largest
value added service revenue generator. EBITDA breakeven for this product was
achieved within 24 months of launch and it is currently used to manage 17 000
heads, a 34% increase since October 2010.
"K-log is an empowering and enabling system that allows companies to track,
manage and control their employees and outsourced workforces in real time. It
also enables them to achieve better compliance by enforcing labour legislation
and company policies through automated rules; stronger risk management by
eliminating silent corruption and fraud; and an improvement in the accuracy and
efficiency of workforce management systems. More importantly, it completely
automates workforce systems, freeing up senior resources to focus on real
management work and other value-adding activities," says Wilson.
"These benefits have resonated strongly with our existing clients who, in an
environment of tough trading conditions, escalating costs and uncertainty
regarding the implementation of proposed new labour legislation, are seeking to
contain expenses, maximise compliance and improve productivity."
Wilson said that the investment in these technologies combined with the
transformation strategy in tough trading conditions had impacted the short term
performance of the group. However, the group had made real progress in
enhancing its services, which will benefit stakeholders in the medium and long-
term. "The technologies we have developed have provided us with the
sophistication and flexibility required to cope with the increasing demands for
demonstrable compliance that are likely to emerge as a result of the proposed
labour law changes. They will also show our clients and candidates that we
don`t simply place people but add value at every link of the human capital
management chain," he said.
The group also announced that Wilson has resigned as chief executive and a
director of the board, effective 30 June, and that his position would be taken
over by Gareth Tindall the next day. Tindall was previously an executive
director of Dimension Data, CEO of Hertz SA and the commissioner of the Southern
African PGA Tour. Wilson, however, will remain an employee of the company until
the end of the current financial year on 30 September to facilitate a smooth
handover.
For further information call Grenville Wilson, CEO Kelly Group, on 011 722 8009
Issued by du Plessis Associates on behalf of Kelly Group Limited dPA contact
Helen McKane Tel : +27 11 728 4701, Fax: +27 11 728 2547, Mobile: 082 330 2034
or e-mail: kellygroup@dpapr.com website : www.kellygroup.co.za
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 16/05/2011 09:01:01 Supplied by www.sharenet.co.za
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