Accordant (AGC:NZC), the New Zealand-based temporary staffing provider previously known as AWF Madison, reported revenue today of NZD 105.9 million (USD 70.2 million), down 23.9% compared to last year.

On September 2020, the group had forecasted lower revenue and higher profits, adding that the impact of Covid-19 on the country, the labour markets and its businesses has been ‘significant and unpredictable’, driving both cost-saving initiatives but also some additional margin for the group.

The group said the bulk of this revenue decline was in its temp businesses in both white and blue-collar. The decline was not linear, but the group said recovery appears to be somewhat more so at this point in time.

“Our profit for the half-year of NZD 3.7 million, compares favourably to the prior first half of NZA 1.3 million,” the group stated. “Last year, however, included some one-off costs and our result is better-compared to the preceding year (HY19) result of NZD 2.1 million (USD 1.3 million), with the addition of JacksonStone & Partners. Our further diversification has certainly been rewarded.”

The group said its results were also affected by the government Wage Subsidy, which served its purpose to pay and retain the majority of Accordant’s internal and contingent workforce, including its migrant workforce.

“We were pleased to be able to fulfil the intent of the scheme which was designed to enable staff retention, inclusive of temporary and labour hire agencies,” CEO Simon Bennett said.

Accordant said the large drop in permanent fee revenue in Madison has reduced the size of the business, and it does not expect the segment to recover fully this financial year. The group predicts it may take a further 18 months.

“This recovery will likely be through the temp channel, rather than permanent recruitment,” Bennett said.

“As a generalist and low to mid-level recruiter, there is a tendency for clients to attempt this recruitment themselves in the early stages of a recession,” Bennett said. “This has reduced the carrying value of Madison with a resulting goodwill impairment. AWF too has had a fall in permanent fee revenue and its temporary business suffered considerably during the Level 4 lockdown.”

“At our current recovery rate, we expect AWF to return to normal trading in its temp business by the end of this financial year. Absolute IT has also been affected and is approximately 10% down on prior year. However, the tech sector is showing growth and we are confident of our ability to once again grow our business. Likewise, JacksonStone & Partners saw a drop, mainly in May, but is recovering well and we are confident in demand. We expect to pay the vendors of JacksonStone the maximum entitlement for the second tranche of the earnout for the purchase,” Bennett said.

The group reports in two segments: AWF and Madison, Absolute IT and JacksonStone & Partners.

The ‘AWF’ segment operates branches under the brand names AWF (throughout New Zealand) and Select (Dunedin). These brands primarily derive their revenues from temporary staffing services to industry.

The ‘Madison, Absolute IT and JacksonStone & Partners’ segment operate branches under the brand names Madison Recruitment, Madison Force, Absolute IT and JacksonStone & Partners (from 1 June 2019) throughout New Zealand. These brands derive their revenues from temporary, contract and permanent staff services to commerce.

Bennett added that the group feels it is positioned well for the uncertainty ahead.

“We are seeking business in sectors less affected by the pandemic and those where growth is possible, in either a scenario of further lockdowns or one of growth in unemployment on the back of a deepening recession,” Bennett said.

Shares in Accordant closed at NZD 1.45 (USD 0.96), down 0.68% on the day and 59.34% above the 52 week low of NZD 0.91 (USD 0.60) set on 25 March 2020. The company has a market cap of NZD 48.40 million (USD 32.1 million).