Australian training and labour hire firm Ashley Services (ASH: ASX) reported revenue today of AUD 290.8 million (USD 190.6 million), an increase of 10.8% on the prior year period. Revenue includes AUD 28.4 million (USD 18.6 million) from Owen Pacific Pty Limited, acquired on 6 February 2023.

Revenue excluding the Owen Pacific acquisition was AUD 262.4 million (USD 172.0 million), flat when compared to the prior year.

Ross Shrimpton, managing director, said "The first half result has been challenging.  The outcome of the Linc acquisition is disappointing. As with all acquisitions, there was risk associated with the purchase of Linc. We had 18 months to renew the major customer contract or secure new customers and expand within the higher margin oil and gas sector. As of today, the business is ongoing, but with minor contracts in hand.”

“Earnings from Linc in FY24 will be negligible. The value of acquired customer relationships (originally AUD 2.5 million (USD 1.6 million)) have been written off in full throughout FY23 and H1 FY24. Goodwill has also been impaired, with its value reduced to AUD 0.35 million (USD 0.2 million) during H1 of FY24,” Shrimpton added.

Linc was acquired in 2022.

EBITDA on a reported basis stood at AUD 5.1 million (USD 3.3 million), down 50.5% over the prior year period while reported EBIT stood at AUD 3.1 million (USD 2.0 million), down 64.0%.

Statutory after-tax profit from continuing operations stood at AUD 1.0 million (USD 0.6 million) for the half year to 31 December 2023, a decrease of 83.4% on the prior corresponding period. The result includes impairment expenses of AUD 3 million (USD 1.9 million) within EBITDA and Net Profit after Tax, primarily relating to the write-down of customer relationships and goodwill associated with the purchase of Linc Personnel Pty Ltd.

Meanwhile, revenue for Owen Pacific remained solid, Shrimpton added.

“The business is working well with customers to adapt to operating changes required following the introduction of a new deed governing the Seasonal Worker Programme. Short-term results have been impacted by increasing flight and accommodation costs, not fully recoverable from workers,” Shrimpton continued.

“Results from the construction related traffic management and labour hire business in Victoria fell short of expectations and the prior period, with project delays and industrial relation challenges impacting equipment utilisation, labour utilisation and margin,” Shrimpton said.

Revenue by division

The group said the Labour Hire division faced challenges in the H1 period.

Within the Training division, growth continued across both the Ashley and The Instruction Company training businesses, as new courses were added to scope and both businesses increased geographic coverage.

Ashley Services Group set a new 52-week low during today's trading session when it reached AUD 0.25 (USD 0.16). Over this period, the share price is down 69.14%. The company last traded at AUD 0.25 (USD 0.16), down 27.54% on the day. The company has a market cap of AUD 49.67 million (USD 32.5 million).