Workforce Holdings Limited (“Workforce”) (JSE: WKF), today announced a promising set of interim results for the half year ended June 2015. The group is reaping the rewards of its diversification strategy, led by its chairman Ronny Katz and chief executive officer Lawrence Diamond.
Half year results for June 2015 highlighted the following:
- NAV up 22% to 127c per share
- Diluted earnings per share increased up 21% to 11,6c per share
- HEPS and EPS up 27% to 12,2 cents per share
- Cash conversion ratio up to 96%
- Group DSO improved to 44 days
“We have been at the forefront of industrial permanent and contract staffing solutions in Southern Africa since 1972, helping organizations find ways to reduce their operating costs, streamline their manpower processes, and improve operational efficiencies,” says Diamond. “Furthermore, we have been consistently committed to fostering job creation and skills development for our assignees.”
Workforce currently has close to 3 600 clients in both the private and public sectors, and over 32 000 assignees benefiting from permanent and temporary staffing contracts.
“Over the past decade the group has expanded its business offering to include training, lifestyle products, healthcare and project capabilities. In so doing, we have grown our portfolio of businesses and ensured that contract workers receive fair remuneration for their work, are adequately trained and continuously upskilled, and are offered benefits such as financial services, funeral policies, medical aid and life cover that are normally only associated with permanent employment,” states Diamond.
Workforce is now the holding company to 23 brands, all core to its business proposition: to offer more than just staffing.
“Our continued growth during 2015 is built on the diversification strategy that we have had in place for some time now, which has equipped Workforce to offer its clients a customised turnkey solution. Our core business remains that of staffing solutions, and we expect this business to continue to grow as a result of the customised solutions we have developed to assist both our clients and our assignees in the face of changing labour legislation,” Diamond says.
Staffing and Recruitment
The Group’s blue-collar businesses performed well in difficult conditions, while the white collar businesses were up compared to the prior period, delivering consolidated EBITDA for this segment of business of R6.4 million (2014: R800k).Turnover reflected was flat on the previous year, primarily as a result of the changes to the labour legislation and the uncertainty that surrounded these changes. However, management is confident that its customised solutions to the labour legislation amendments, together with the Group’s maturing diversification strategy will pay off, and our focus will remain on protecting current market share and positioning the business for growth over the next period. The implementation of the new labour legislations has impacted buyer behaviour as many clients have stalled decisions on their flexible staffing requirements in anticipation of declarators. The Group continues to engage with the market on its solutions which have been developed over the past few years, enabling clients to mitigate any risk that the amendments may pose. On the upside, new labour laws will continue to benefit the Group’s blue collar businesses as employers tend to favour larger, more reputable providers with a proven track record, who are better positioned to advise employers on regulatory and legislative compliance.
Training and Consulting
Our training business, Training Force, continued to be an area of growth and investment and accordingly, delivered an increase in earnings of 50% on the previous year. The Group believes that with additional focus this segment of the business will become more of a material contributor to earnings in the coming periods.
Financial services and lifestyle products
The Group’s financial and lifestyle services segment contributed earnings of R5.5 million (2014: R2.2 million). Continued focus on collection methodology and systems within Babereki has resulted in better collection rates. However, cash flow from this segment is still expected to be negative for the better part of the year, with an anticipated recovery towards the end of the financial year. Our Essential Employee Benefits business has been well received in the market and we are excited about the opportunities in this space.
Employee Health Management
Workforce Healthcare, provider of occupational health and wellness services, increased revenue by 29% on the previous year by securing major national contracts. The roll out of these contracts will deliver increased profitability over the next reporting period. Process Outsourcing
Programmed Process Outsourcing
the Group’s project capabilities segment continued to be challenged by its exposure to tough trading conditions within the steel industry. This is expected to continue for the balance of the 2015 fiscal year. The segment is focussing on securing contract wins in other industries where its value proposition is relevant.
Workforce is delivering on its stated growth and diversification strategy with the expansion of its African business, Workforce Africa. This business focuses on providing staffing, recruitment, training, healthcare and project capability solutions for employers needing turnkey people solutions in any location on the African continent, from artisans to knowledge workers. With the African continent currently acting as the hub of mining, oil and gas, construction and renewable energy projects, the time is right to grow this business, and will be a strong focus for management going forward.
Management is confident that its strategy of focused growth in its core business and product diversification will result in sustained future profits and cash generation. Numerous acquisition opportunities are currently being explored which will augment its current solid base of businesses. These acquisition opportunities fall across the group’s portfolio of businesses, with a view to extending its share of the market and increasing its profitability.
In addition, the group continues to strengthen its geographic presence and aims to seek out further opportunities across Africa where it is currently growing its footprint. Management believes that the group is well positioned for this growth phase beyond the South African borders.
Operationally, the focus on managing costs and operational efficiencies is of primary importance to leverage profitable growth, and management expects material progress in this area over the coming months.
“Workforce has demonstrated robust growth in revenue over the past six months and is considered a significant competitor in the staffing, training and employee health management industries. We believe the group is only at the beginning of this growth trajectory and that there are multiple opportunities to capture significant commercial value from Workforce and its diverse business portfolio in the future,” adds Diamond.
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