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Voluntary Operating Update
Adcorp Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1974/001804/06)
Share code: ADR & ISIN: ZAE000000139
("Adcorp" or "the Group")
VOLUNTARY OPERATING UPDATE
Trading environment
Adcorp has opted to issue a voluntary operating update to provide shareholders with insight into the
Group’s trading performance for the year to date. The Group’s operating segments, without
exception, have been impacted by the continued trading restrictions and the slow phased restart of
the economy, albeit to varying degrees.
The Board and management remain focused on ensuring the long-term sustainability of the Group.
Business continuity measures remain in place. The Group has continued to maintain a stringent focus
on cost saving and liquidity management to ensure a satisfactory cashflow position, including the
successful refinance of long term borrowings until May 2022. Furthermore, we have sought to reduce
all non-essential expenditure.
South African operations
Industrial Services, which comprises temporary employment services (TES) and functional
outsourcing (FO), has remained operational throughout the national lockdown. The anticipated
revenue reduction in this segment is largely due to lower demand for labour from clients in the
hospitality, motor and beverages industries as a result of trading restrictions imposed by lockdown.
The Professional Placements segment has been negatively impacted by clients implementing hiring
freezes during the lockdown period. This has impacted recruitment process outsourcing (RPO) and
permanent placements. The IT resourcing revenues in Paracon have remained stable throughout the
lockdown period.
The Training segment which offers largely classroom based learning has been most negatively
affected by COVID-19 and the national lockdown. The introduction of virtual instructor led training
during the COVID-19 period has had a slow uptake and will remain a key focus area. Whilst classroom
based classes resumed in July, clients have been hesitant to resume training due to the increased
infection rate in the country.
Australian operations
Paxus contractor volumes in the low margin client base have remained stable with higher utilisation
rates due to domestic travel restrictions. However, reduction in high margin project work, permanent
placement fees and mid-range margin clients has placed pressure on margins.
Contractor volumes in LSA have declined marginally over the COVID-19 period with outbreaks
occurring at several client sites, although this has been offset by the receipt of government relief
income in Australia.
Despite the negative impacts of COVID-19, the Australian business’ revenue is tracking largely in line
with the prior year given that Australia was affected by natural disasters in the same period last year.
Operating costs have been managed effectively to mitigate the impact of COVID-19 on the bottom
line.
Conclusion
The Group’s financial results for the six months ending 31 August 2020 will be impacted by COVID-
19. Adcorp however, remains a going concern with sufficient liquidity to continue with all operating
activities for the foreseeable future. To date revenue has exceeded initial COVID-19 forecasts, and
coupled with the implementation of cost-saving and liquidity management interventions has yielded
a better outcome than anticipated. Cash collections have been particularly well managed during the
period, and the Group’s revenue levels continue to recover as the economy opens up in the sectors
in which we operate.
26 August 2020
Johannesburg
Sponsor
PSG Capital
Date: 26-08-2020 02:05:00
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