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2011 Financial Review: Challenges, Strategies, and Outlook

This provisional review covers the financial performance for the year ended September 30, 2011, highlighting a 3% decline in group revenue and outlining the impacts of market conditions, staffing changes, and operational strategies. The document provides insights into segments such as SA Staffing, Other SA Operations, and USA Operations, along with profitability and solvency analyses. It also discusses reasons for underperformance and outlines a comprehensive turnaround strategy focusing on leadership, business model adjustments, technology enhancements, and future prospects for revenue growth and improved performance.

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2011 Financial Review: Challenges, Strategies, and Outlook

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  1. for the year ended 30 September 2011 PROVISIONAL REVIEWED YEAR END RESULTS

  2. AGENDA • 2011 Review Ferdie Pieterse • Financial Performance Ferdie Pieterse • Road Ahead Gareth Tindall • Questions

  3. REVIEW

  4. OVERVIEW • Group revenue down 3% to R1.99 billion (2010 R2.05 billion) • Operating profit down 52% to R16 million • After tax loss of R21.7 million • New CEO appointed • Business model reviewed; new strategy being formulated

  5. TRADING CONDITIONS • Markets • Continued global financial instability impacting South Africa • 2011 GDP growth of 3.1% forecasted • Unemployment averaged 25% for the last three years • Volatility of Rand • Moody’s downgrading • No clear direction • The year of the job did not materialise • Labour Law Negotiations still ongoing • Various views within Government (Finance, Labour, Planning) • Unions and wage settlements

  6. SA STAFFING • Revenue of R1.40 billion down 5% • Permanent placements • Revenue down 20% to R68.1 million • Contributes only 4% to total revenue compared to 8% in 2008 (2011 R68 million : 2008 R169 million) • Outsourced staffing • Annuity revenue down 4% to R1.30 billion • Average headcount per month of 17 000, down from 19 000 in 2010 • Gross margins maintained • Joint Ventures … • Loss of key contract – Sizano • Average headcount decreased from 3 700 to 2 500

  7. OTHER SA OPERATIONS • Skills development • Revenue growth of 15% to R93.6 million • Workforce management solutions • K-log doubled revenue, continues on rapid growth path • EBIT breakeven achieved in June 2011 • Total CAPEX investment of R17.6 million • Managed headcount grew from 12 200 to 32 400 • Internal 15 100 vs. external 17 300 split

  8. USA OPERATIONS • Revenue increased by 9% in Dollar terms, partially offset by strong Rand • Operating profit up 314% to $1.7 million in difficult market • Continues on strong growth trajectory • Class action lawsuit, way forward agreed and settlement fully provided for

  9. FINANCIAL PERFORMANCE

  10. STATEMENT OF COMPREHENSIVE INCOME

  11. SEGMENTAL ANALYSIS Revenue Operating Profit

  12. PROFITABILITY ANALYSIS

  13. SOLVENCY, LIQUIDITY AND PRODUCTIVITY ANALYSIS

  14. CONSOLIDATED STATEMENT OF FINANCIAL POSITION

  15. CONSOLIDATED STATEMENT OF CASH FLOWS

  16. ROAD AHEAD

  17. SA STAFFING PERFORMANCE OVERVIEW

  18. REASONS FOR UNDERPERFORMANCE • External • Tough trading conditions • Labour law uncertainty • Impact of additional public holiday • Internal • Too internally focused • Impact of change management • Teething problems: new technology (RMS) • Business mix • Leadership changes • Low staff morale • 47 retrenchments • New systems • Job security

  19. TURNAROUND STRATEGY • People • Restructure and strengthen senior management • Appoint COO (pending new CFO replacement) • Appointed MD – Kelly • Improve operational discipline: micro-manage • Embed new culture • Ownership, Accountability, Responsibility • Inspirational leadership

  20. TURNAROUND STRATEGY • Business model • Restore ratio of temp and perm (90/10)… • Re-engineer perm business model to enhance quality of earnings and; • Grow critical mass, improve annuity based income • Streamline Group value proposition • Build strategic partnerships with clients: consultative approach • Increase collaboration and cross-selling • Review non-performing business units • Review non-core business units • Maximise learnershipopportunities

  21. TURNAROUND STRATEGY • Technology • Complete the roll-out of RMS • Fully integrated candidate database, across all brands • Single view of all open orders • One way of doing things (versus six) • One step closer to paperless environment “He who owns the best quality candidates, will WIN!”

  22. PROSPECTS • Trading conditions to remain challenging • Improved market share and organic growth through • operational excellence; • repositioning and • collaboration • Expect improved performance

  23. DESIRED OUTCOME • Grow revenue • Enhance profitability • Improve cash flow • Retain and grow key client base • Retain and attract great people

  24. QUESTIONS

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