Comprehensive employment services and outsource solutions provider the Kelly Group felt the full impact of a deepening recession throughout this year, with both its South African and US operations posting reductions in revenue and earnings.

The second-half down turn resulted in headline earnings per share for the full year decreasing by 39.8% to 61.63 cents while profit before interest, tax and depreciation was down 28% at R114.6 million. The dividend cover at 2.85 times was maintained and a cash dividend of 21.5 cents per share (2008: 36 cents) declared.

Chief executive Grenville Wilson said a tough year had not been without its positives.

"Despite the difficult trading condition, the group managed to increase revenue in rand terms marginally to R2 256 billion. While our high-margin permanent staffing business was down 32% in revenue terms, the lower margin temporary staffing business was maintained at the previous year's level.

"Productivity improvement measures and cost-saving initiatives initiated in the previous financial year produced immediate benefits and helped to improve the gross margin from 27.8% to 28.2%, while containing the increase in operating cost to a modest 3%. While new strategic investments in enabling technologies and the acquisition of Torque IT increased the depreciation charge by 39%, these will enhance efficiency and generate new revenue sources."

Wilson said the group's strong focus on cost containment as well as the development of synergistic opportunities and new revenue streams, which had offset some of the effects of the economic crunch, would also serve it well going forward.

"We expect market conditions to remain depressed for the foreseeable future, keeping up the pressure on our margins and volumes. In this environment, our priorities will be to minimise short-term risks and to maintain our commitment to stringent cost control and improved efficiencies," Wilson said.

"In the short term, we expect the FIFA 2010 World Cup™ to create new revenue-generating opportunities while some companies may start upsizing their flexible workforces in anticipation of an economic recovery. Looking towards the latter part of 2010 and beyond, we believe the Kelly Group is fundamentally in good shape to return to sustainable growth when that recovery comes."