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Half Yearly Report and Accounts February 2012

28.2.2012

Investor Announcement


Adcorp Australia Limited
Half Year Results FY12
28 February 2012


Billings $79.06m

Revenue $14.58m

Revenue Margin 18%

Net Profit After tax attributable to the owners of Adcorp Australia Ltd $784,000

Dividend per Share Fully Franked 1 cent


Read the original 28 February 2012 announcement.

Marketing and Advertising group, Adcorp Australia Limited, is pleased to announce a first half  operating profit of $784,000 up 1.7% on the previous corresponding period.

The company has maintained a steady rate of earnings, with Earnings per Share increasing to 1.29 cents from the prior  comparative period of 1.27 cents

Consolidated billings of $79.06m are down 9.1% on the prior comparative period, primarily as a result of client movements in the real estate and retail sector. This decrease has been partially offset by the impact of a full six months of billings for the Northern Territory Government Advertising Contract (commenced October 2010).

Despite these reductions in billings, our revenue for the period of $14.58m is only 2.4% down on the prior period’s $14.94m as a result of a higher margins brought about by our continuing focus on Creative and Digital services.

During the period we undertook a major review of our digital offering and are currently in the process of implementing the  recommendations of this review with the objective of increasing our share of this rapidly growing market.

Throughout the industry, the level of new business activity and pitches is extremely high, and Adcorp is experiencing similar conditions. Pleasingly, our broader service offering is winning new business on improved margins when compared with our traditional transactional services.

Expenses have been closely managed and we are pleased to report savings in overheads of $455,000 (3.3%) over the prior comparative period. Total overheads for the current six month period of $13.38m includes savings in most categories  including legal expenses, audit fees and travel, due to implementation of additional management controls and introduction of technology-based solutions.

We have also returned to a regionally-based management structure; providing a far closer oversight and accountability for all expenses. We have reduced our advertising costs for the period, though we will be re-investing some of these savings in H2 as we strengthen our market presence and increase business development activities.

During the period, we completed the changeover to our new auditors Grant Thornton, details of which were released in our AGM announcement in October 2011. We are confident this move will secure annual cost savings while providing a highly regarded independent assurance function for stakeholders.

Our 75% subsidiary, Andrews Advertising, is continuing with legal action against a former director and former manager. The costs of this action have been expensed as incurred.

Office and communications costs are similar to prior comparative period. We have secured savings in telephony with a change in service provider; these savings are partly offset by a general increase in premises costs and outgoings.

Our Client Service expenses have increased by $196,000 (2.1%) which includes annual  salary increases in July 2011, offset by reductions in other areas.

We continue to work with our clients to improve our trade credit procedures; accordingly our trade receivables balance has reduced to $18.36m at 31 December. (30 June 2011: $28.56m; 31 December 2010: $24.41m) and our net working capital  has improved by 4.1% to $3.36m.

Our cash position remains solid with $7.18m in cash and cash equivalents at 31 December 2011 (30 June 2011: $10.27m; 31 December 2010: $5.43m).

Our outlook for the remainder of this calendar year is that the market remains ‘patchy’ both geographically and by sector, though our diversification across both these facets is supporting our results and potentially limiting the exposure to the downturn that is being experienced by others in our sector.

Furthermore, we were very pleased to announce earlier today, the extension of our Australian Government Non Campaign Master Media Agency Services contract for another 12 months. This extension, the first of two options available to Finance under the contract, will commence from 5 May 2012.

We have a dedicated and energetic team that is being supported by new training initiatives, improved systems and additional investment in digital, creative and media services which puts us in a good position to take advantage of market opportunities as they arise.

We remain committed to providing the most appropriate return to shareholders, and accordingly, have declared an interim dividend of 1 cent per share, fully franked, out of profits for the six months to 31 December 2011.

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