Innocent Dutiro. Picture: PUXLEY MAKGATHO
Innocent Dutiro. Picture: PUXLEY MAKGATHO

Recruitment group Adcorp had a mountain to climb to realise its 2022 target of R1bn in earnings, it announced alongside its results on Monday.

The company, under the new leadership of CEO Innocent Dutiro, recorded a headline loss of 146.1c per share for the year ended February, partly on a R478m goodwill write-off, and one-offs of a further R251m.

Stripping those out, underlying earnings before interest, tax, depreciation and amortisation came to R378m, an increase of 4% on the prior year.

Dutiro’s team, including new chief financial officer Cheryl-Jane Kujenga, has spent the past few months cleaning a "mess" left by former CEO Richard Pike, which Adcorp catalogues as underperforming acquisitions, an overgeared balance sheet, overgenerous pay to executives, governance lapses and an adverse legislative environment.

The market appeared lukewarm on the results, pushing shares 2% lower to R17.51 on Monday. Adcorp shares have flat-lined in 2018 after recovering 29% in 2017.

Dutiro has budgeted R520m in earnings for 2019 and said the boost would come from "fixing the business we have and getting more out of our business. [They] are not at full potential."

Though a key element of its clean-up has been a debt restructure — in which Adcorp repaid all outstanding debt under its domestic bond programme — Dutiro said acquisitions would be on the cards.

The company now has a working capital facility of R1bn with access to a further R150m for its key December trading period. That refinance, alongside the sale of its Nihilent business, which netted R305m, has cut annual interest charges 14%.

Though the company has just 15% market share in SA and 3% in Australia, it has been hobbled, like its peers, by SA’s stagnant economy and unemployment.

The opportunity for Adcorp would be in addressing SA’s skills gap. "It’s a travesty that our training business is underscale in terms of its performance."

Though its professional services arm grew earnings 15%, profit from support services plunged 30%, training services was more than 100% weaker and industrial services — Adcorp’s largest profit contributor at 55% of earnings — fell 9%.

Dutiro said Adcorp had effectively thrown everything at its underperforming businesses.

"We’ve done everything we can in this financial year and that’s something I aimed to do."

The group has cut R157m in costs from the business and says it is on track for R200m in savings by its 2019 financial year-end.