South African recruitment and outsourcing company Workforce Holdings (WKF: JSE) reported revenue today for the six months ended 30 June 2018 of ZAR 1.42 billion (USD 99.4 million), up 4.2% compared to last year.

Revenue grew by 4.2%, mostly from organic growth. The group said the relatively low growth in revenue can be attributed to limited economic growth across the country.

The increase in gross profit is mainly due to the higher margin training segment, which now carries a more substantial weighting relative to the overall group results.

In June, the group acquired the South Africa-based Dyna Group, a specialist training company comprising of a number of training businesses, with effect from 1 June 2018. The maximum purchase consideration is ZAR 79 million, depending on profits achieved over a three-year period. The company said the Dyna Group was acquired in order to grow Workforce’s training segment by providing leadership, supervisory and management training programmes in addition to the existing training programmes currently offered.

In July 2018, Philip Froom resigned as CEO of the group. Ronald Katz, executive chairman of the group, assumed the role of CEO, and John Macey, the head independent non-executive director, assumed the role of chairman of the group.

During the period, the group pointed to a landmark ruling in July in South Africa which ruled that labour brokers (formerly known as Temporary Employment Services) can no longer be entitled to a portion of a recruit’s earnings after their third month in employment.

“The results of this we believe to be a much more certain environment for all parties, and as a result of this certainty, we hope that there will be an increase of the use of our diversified service offering,” the group stated.

The group operates in three segments: Staffing and Outsourcing, Training and Consulting, and Financial and Healthcare. Revenue was broken down by segment as follows.

The group stated that the staff outsourcing business experienced a difficult six months as result of legislative, political and economic factors and produced results that were “disappointing.”

It added that the segment was negatively affected by the uncertainty regarding the Constitutional Court judgment and overall poor economic growth.

Looking ahead, the group said its businesses in permanent recruitment and the white-collar arena, continues to struggle and the company hopes the changes it has made “hopefully will bear fruit in the second half of the year.”

The group’s Training and Consulting business showed a significant contribution to the group profits, as a result of both acquisitions and organic growth with good margins. The group said it anticipates further strong performance going forward. In addition the Dyna Group acquisition, the company said it will continue to look at other opportunities.

The group said its financial services segment has shown improved results with much more stability in collections.

“The medical and healthcare cluster returned good results in the group and we anticipate that their business model, which focuses on the provision of outsourced medical and nursing staff, employee health and wellness programmes and occupational healthcare and screening, could show significant growth over the next number of years,” the company stated.

The group last traded on the market yesterday, 22 August, before the publication of its H1 2018 financial results.