Adcorp Holdings Ltd. (ADR: JSE), a South Africa-based workforce management solutions group, reported revenue for the year ended 28 February 2023 from continuing operations increased by 6.5% to ZAR 12.0 billion (USD 611.3 million).

The full year revenue growth marks a significant milestone for the group, as it is the first year of annual revenue growth since the 2016 financial year.

Earlier this month, Adcorp had forecasted a revenue increase for the FY period between 5.2% and 7.7%.

Adcorp said its overall group performance was impacted by considerable contract losses at allaboutXpert Australia Proprietary Limited, a subsidiary of Adcorp Holdings Australia, ultimately held by Adcorp, which required extensive investment to remediate.

On 12 December 2022 the group announced that aaX was placed in voluntary administration. Furthermore, the group said impairment of goodwill and certain positive non-recurring tax adjustments also impacted its results.

The total operating loss for the year from aaX recognised as a discontinued operation was ZAR 90.0 million (including an impairment of trade receivables of ZAR 54.1 million (USD 2.7 million)) and a net gain on deconsolidation of ZAR 9.6 million (USD 0.5 million); and impairment of goodwill of ZAR 34.4 million (USD 1.7 million) recognised in the Paracon business (IT resourcing and business transformation solutions). The impairment was recognised as a result of increases in the cost of capital and the worsening economic outlook in South Africa, which adversely affects forward-looking forecasts, the group stated.

Despite the challenging macroeconomic landscape in South Africa, the group said the Contingent Staffing division has demonstrated ‘remarkable resilience, displaying tenacity and adaptability in the face of adversity’. BLU, the flagship brand within the division, reported 5% revenue growth.

Adcorp reported revenue in the following segments: Industrial, Professional, Training, and Australia.

Industrial provides industrial staffing solutions in the ‘blue collar’ and technical areas and places assignees such as engineers, project support staff, artisans, construction workers, logistics, manufacturing and warehousing staff.

The Professional operating segment provides highly skilled information technology (IT) and digitally focused professionals. It also delivers consulting, project and management services in a number of specialist domains as well as support staffing solutions in ‘white collar’ areas, such as nursing, clerical, administration, office and call centre positions.

The Training operating segment facilitates training and provides solutions to external clients and support to other Adcorp service lines. The Business Support segment acts as a service centre for all other operating segments in the group in order to identify efficiencies that will reduce costs and create a higher degree of strategic flexibility and support.

The Australia operating segment includes both Industrial Services and Professional Services, as well as central services combined into one segment as decisions taken relate to the Australian operating business as a whole.

Looking ahead, the company stated, “The Board is cognisant of the current outlook in South Africa, however the strength of Adcorp’s balance sheet and cash flow positions the Group well to weather any storms and take advantage of any opportunities that arise. The Group is optimistic about the growth achieved in Australia and has identified additional areas to expand into and new services to launch.”

Adcorp Holdings closed at ZAR 550.00 (USD 27.92), up 11.56% on the day and 17.66% below its 52-week high of ZAR 668.00 (USD 33.91), set on 15 June 2022. The company has a market cap of ZAR 542.08 million (USD 27.5 million).