Torque IT performed well in the first half of the year, but not enough to offset a sluggish set of figures from its local unit, says listed staffing solutions company Kelly Group.
Kelly yesterday reported its results for the six months to March and said total revenue grew 4%, to R1.2 billion. However, earnings before interest and tax dropped to R17.8 million, from R23.9 million a year ago.
Kelly says the recruitment sector is under pressure due to the “prevailing economic climate” and uncertainty related to possible changes to labour legislation, which could see temporary staffing agencies banned. Discussions are still ongoing around this issue.
CE Grenville Wilson says the company has developed a number of proprietary workforce management software systems, which he believes will give it a competitive advantage. The systems are being marketed as value-added services geared towards saving clients time.
However, its transformation strategy, focused on supplying technology-based workforce management solutions, has impacted the group's short-term profitability, he says.
Kelly launched a workforce management tool when it released K-log, an automated time and productivity management system, last March. The unit almost doubled revenue when compared to 2010 and is now the second-largest value-added service revenue contributor. The application is used to manage 17 000 heads, a 34% increase since October.
Up and down
The group says revenue from its South African operations declined a percent, to R773 million, despite revenue growth of 18% from training business Torque IT.
Kelly's results weighed on its stock price, which lost 1.3% to close at 381c yesterday as 19 650 shares changed hands.
Torque IT, which comprises three divisions, offers Cisco, Microsoft and Novell training. It has branches in Johannesburg, Pretoria, Cape Town, Nairobi (Kenya) and Luanda (Angola), and provides training in over 24 countries in Africa.
It grew operating profit 128% in the first half of the year.
Staff moves
However, the unit is without a CEO, after Kelly removed deputy group CEO Mthunzi Mdwaba from its board in August, and subsequently reached a confidential settlement agreement with him last November, which saw him leave both entities.
Mdwaba joined the Kelly Group in October 2008 as deputy CEO, after the staffing company bought Torque IT for R38 million. At the time, the agreement included a succession plan that would see Mdwaba step into Kelly Group CEO Grenville Wilson's shoes last October.
Mdwaba's suspension was linked to a personality conflict between him and Wilson, as well as a R12 million, 2009 judgement awarded to Tarsus Technologies, against him and two other partners, in failed IT infrastructure company Sourcecom.
Wilson said last year the board was looking into the structure of the entire group, and appointing a new CEO will form part of any reorganisation. However, Wilson has also stepped down and will be replaced as head of the group by Gareth Tindall, on 1 July.
Tindall was previously an executive director of Dimension Data, CEO of Hertz SA, and the commissioner of the Southern African PGA Tour.
Wilson will remain an employee of the company until the end of the current financial year, on 30 September, to “facilitate a smooth handover”.
Share