South Africa-based workforce management solutions group Adcorp Holdings Ltd. reported revenue yesterday for the year ending 28 February 2017 of ZAR 16.1 billion (USD 1.2 billion), an increase of 3.2% compared with a year ago.

According to the group, trading profits were significantly impacted as a result of a sizeable trading loss of ZAR 71 million (USD 5.4 million) incurred in the group's African operations outside of South Africa. This was the result of a cut back in oil and gas related projects on which the group was heavily reliant in the region due to a slump in global oil prices.

“On the back of these trading pressures, also presenting a major drag on earnings was a material year-on-year swing from a ZAR 59 million (USD 4.5 million) foreign exchange translation gain recorded in the prior year to a ZAR 30 million (USD 2.3 million) loss recorded in the current financial year,” the company stated.

These foreign exchange accounting translation gains and losses also emanate from the group's African operations whereby the South African Rand reporting currency of the group has strengthened in the current financial year against many of the underlying currencies of those African countries where Adcorp has operations.

As a result of this, the group stated that it has significantly scaled back its operations in Africa outside of South Africa in order to prevent a recurrence of these losses.

According to Adcorp, as a result of the foreign exchange factors together with other accounting charges to income, restructuring costs and a 20% decline in South African contractor volumes due to recent changes in labour laws, normalised EBITDA of ZAR 304 million (USD 23.3 million) was 51% lower than reported in the previous year.

"On the back of a tough year, the economic environment remains challenging particularly in the core South African market,” Adcorp Holdings group CEO, Richard Pike said. "Despite this, the specific trading conditions related to changes in South African labour laws that contributed to a decline in earnings have improved and stability has crept back into the South African labour market following the initial uncertainty created by these new laws.”

"In addition, the group has scaled back its African operations in order to stem losses in that part of the business," Pike said. "We have embarked on a new strategic path known as 'Adcorp 2.0' which is starting to benefit the group as evidenced by increased volumes and margins whilst there is still scope to reduce the group's cost base further which management is committed to achieving. The need to reduce debt and to de-gear the balance sheet is also seen as an imperative. In this regard, the group is looking to shed non-core assets in order to free up cash resources.”

Earlier this year, Adcorp announced that it had appointed Cheryl-Jane Kujenga as chief financial officer and an executive director of Adcorp with effect from 1 July 2017.

In trading yesterday, Adcorp traded at ZAR 1,125 (USD 86.3) down 4.17% on the day. Based on its current share price the company has a market value of ZAR 1.23 billion (USD 94.4 million).