South Africa-based workforce management solutions group Adcorp Holdings Ltd. (ADR: JSE) reported revenue for the six months ended 31 August 2019 of ZAR 7.18 billion (USD 485.2 million), a decrease of 9.8% when compared to the previous year.

The largest contributors to the group’s revenue decline were the Industrial Services and Support Services businesses in South Africa, and the Industrial Services business in Australia.

“A large portion of the revenue decline in the South African Industrial Services and Support Services businesses was a result of a combination of the poor macroeconomic conditions and the final effects of the July 2018 Constitutional Court ruling on the “deeming” provision in the Labour Relations Act (LRA) flowing through our client base,” the group stated.

The net loss was attributed to a combination of challenges in the company’s trading environments, unsatisfactory operating performance and impairments amounting to ZAR 452 million (USD 30.5 million).

The group had published a trading statement earlier this month citing challenging macro-economic conditions in both South Africa and Australia. Adcorp also announced last week that Innocent Dutiro had resigned as CEO, with effect from 8 October 2019. According to the company, the timing of his departure has been driven by his desire to review his own career after giving two eventful years to the group.

Revenue for the group’s operations in South Africa and Australia was broken down as follows.

In South Africa, Industrial Services reported a decline of 9.1%. All segments reported decreases during the reported period; Professional Services (-4.4%), Support Services (-28.7%), Training (-16.7%), and Financial Services (-21.7%)

The group said its Financial Services business reported a decline primarily due to the fact that prior year numbers include revenue for the FNDS 3000 business that was sold in Q1 2019. Revenue in the Financial Services division was also negatively impacted by the reduction of TES headcount which affects the Employee Benefits business.

In Australia, the group reported a decrease in its Industrial Services business (-29.6%) while it reported an increase in Professional Services (2.8%).

The revenue decline in the Australian Industrial Services division was largely as a result of drought conditions and floods that materially impacted the Labour Solutions Australia (LSA) business, which primarily provides staff to the agricultural sector.

“We have already started seeing some recovery in this business in the second half, but the events further highlight the urgent need to diversify the LSA business and this remains a key strategic focus,” the group stated.

Looking ahead the company stated, “Despite the disappointing financial and operational performance for the half year period under review, the business is fundamentally sound and will be able to meet all its commitments and deliver on its strategic plans, albeit over a longer timeframe.”

“In South Africa, our focus over the short term will be the implementation of tactical interventions to claw back on the losses incurred in the first half of this year,” Adcorp stated.

The group added that a key focus of its strategic transformation is the realignment of its Training business.

According to Businesslive, the company’s share price has fallen almost 32% so far in October. This includes a 22.5% slump on the day it issued a trading update, its worst one-day loss in 25 years.

In trading yesterday Adcorp shares closed at ZAR 1,400 (USD 94.52), up 2.8% on the day. Based on its current share price the company has a market value of ZAR 1.53 billion (USD 103.3 million).