Workforce Holdings consolidates its position, generates strong cash flow albeit with reduced activity in the business


  • Revenue decreased by 16,9% to R1,3 billion (2019: R1,5 billion);
  • EBITDA, before impairments, decreased by 52,2% to R44,1 million (2019: R92,3 million);
  • Cash flow from operating activities increased to R307,6 million (2019: R48,5 million);
  • EPS decreased by 146% (including impairment) to -8,5 cents per share (2019: 18,5 cents per share);
  • EPS (excluding impairment) of 8,7 cents per share (2019: 18,5 cents per share);
  • Healthcare cluster delivering revenue growth of 4% and EBITDA growth of 31%;
  • The acquisition of Chartall Business College (“Chartall”) was successfully integrated into the training cluster; and
  • The directors elected not to declare an interim dividend in order to conserve cash resources in light of current economic circumstances.

Johannesburg, 21 August 2020 – Workforce Holdings Limited (Workforce), the human capital services company, today announced interim results for the period ended 30 June 2020.

Ronny Katz, founder and Chief Executive Officer indicated that, “Workforce was well positioned at the start of the new financial year to benefit from its diversification strategy, however it was hit by the COVID-19 pandemic. Despite this, during the interim period, a number of highlights were achieved being that the healthcare cluster performance well, Chartall was successfully integrated and a team from Transman joined the staffing and outsourcing cluster, bringing with it 37 years of industry experience, strong client relationships and a national footprint.”

The arrival of COVID-19 resulted in Workforce only operating businesses within the group that were classified as essential services. This resulted in an immediate and substantial decline in turnovers across the clusters, aside from the healthcare cluster. Katz went on to indicate that, “This continued for the months of March, April and May 2020 and in June 2020, we started to see a recovery and are now operating at a much higher level of utilisation of our services.”

The drop in turnover was successfully countered by temporary and permanent cost-saving measures, a renewed focus on debtor collections as well as fully utilising government-initiated relief measures. Management believes the pandemic triggered a chain of actions which has enabled a stronger and more sustainable Workforce business.

Management envisages that in the second half of this financial year, Workforce will return to a much higher level of utilization, which will result in a near-normalisation of the previous patterns of earnings.

“As a result of COVID-19, many contractors were unable to work, and Workforce facilitated the application and dissemination of R132 million worth of UIF Temporary Employee Relief Scheme (“TERS”) receipts and food vouchers were purchased amounting to R1,6 million,” said Katz.

He went on to specify that for the months of April, May and June 2020, Workforce made top-up payments to contractors amounting to R13,4 million.

“Penetration into certain African countries has been made with success and it remains a focus for the group,” Katz said, highlighting  that the Workforce Africa cluster succeeded in winning new clients in Mozambique, despite travel restrictions related to the pandemic being in place. “In Mauritius opportunities relating to insurance and employee benefits are being pursued. Business operations in Namibia are performing well and so too are the operations in Botswana.”

Operational performance

The staffing and outsourcing cluster had a reasonable start to the interim period, delivering a sound performance from businesses that struggled to gain traction in 2019. Cost-cutting initiatives were implemented, a new managing director with two decades of experience was appointed for Workforce Staffing and large national contracts were signed. However, the second part of the period was adversely affected by the impact of COVID-19, resulting in revenue declining to R978,3 million (2019: R1,2 billion) and operating profit reducing to R39,0 million (2019: R56,3 million).

The training cluster experienced a challenging interim period, with all industries serviced by the cluster being negatively impacted by the various lockdown levels, in particular the mining sector. Revenue declined by 15% and similarly operating profit was impacted by 77%. There was a particular focus on cash generation and collections and these were well executed.

Chartall, a higher education business offering a Bachelor of Business Administration degree as well as Sector Education and Training Authority (“SETA”) registrations and learnerships in the banking sector, which was acquired in January 2020, was able to continue delivering courses digitally throughout lockdown. In the light of synergies, this digital element was incorporated into the rest of the cluster businesses with great success. The focus for the remainder of the year will be on the effective delivery of training courses digitally or remotely and online.

The healthcare cluster was deemed to provide an essential service and as such was active throughout all lockdown levels, experiencing increased demand for services to assist clients to ensure their business operations continued smoothly. The cluster delivered a strong performance for the first six months, delivering revenue growth of 4% and EBITDA growth of 31%. The cluster continued to service existing clients, and several new clients were landed in both the private and public sectors.

The businesses in the cluster that focus on providing primary healthcare personnel solutions experienced little change in the frail care sector, but there was a reduction in demand from hospitals given that no elective procedures were performed during the lockdown and there were less trauma cases as a result of the alcohol ban. However, due to the rapid rise of COVID-19 cases, there was an increase in demand for nurses at hospitals in the latter part of the interim period.

The cluster also developed an array of new services specifically focused on responding to the pandemic, including a COVID-19 workplace risk assessment, virtual GP consultations, care centre support for suspected cases with telephonic questionnaires, counselling, tracing and laboratory testing, COVID-19 medical screening and training, as well as a COVID-19 support line.

COVID-19 online training was developed in collaboration with the training cluster.

The cluster was thus able to, during the pandemic, validate itself as a leader in this space and is now even better positioned to reap the benefits for the remainder of the financial year.

The financial services cluster experienced a difficult first six months. Overall, revenue was down 12% in part due to the shutdown of the Babereki Product Division and the effects of COVID-19. A decision was taken to write off a portion of the loan book amounting to a net R46,5 million. The impairment was based on management assertions that there would be a higher default rate as a result of the pandemic and amended the IFRS 9 default rates accordingly. “We are pleased to say that many of the previously ‘temporary laid off’ people have recommenced with work during June and July 2020”

Through the Employee Essential Benefits (“EEB”) business, the investment into the medical insurance and other financial insurance products, has proved to be very successful and has started to produce positive cash flows. Much attention is being given to the expansion of this unit based on medical insurance product lines very much needed in the country.

Cash generation and liquidity

In spite of a period that saw many of clients experiencing financial pressure as a result of the economy, Workforce substantially improved its cash flow from operating activities for the six months ended 30 June 2020 to R307,5 million (2019: R48,5 million). Management can confirm that Workforce remains a going concern, with no debt covenants in breach and with sufficient liquidity to take the group through the current crisis.


Given the continued uncertainty with regard to COVID-19, Workforce is unable to tell at this stage when the economy will operate at full capacity. “As time goes by more businesses, industry and infrastructure development will be opened,” Katz indicated, going onto point out that Workforce is well positioned to participate in the growth that comes from this. “We envisage that our training cluster will return to normal levels of profitability through existing and developed products during the pandemic onto digital online platforms.”.

Katz concluded by saying that Workforce is in the midst of evaluating other acquisitions, all of which are of a minor nature and which will be complementary to the business of existing clusters, should they be successfully concluded.


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