Monday, 22 August 2022, Johannesburg – Workforce Holdings (JSE code: WKF), a Level 1 B-BBEE human capital services company that operates through four focused investment clusters comprising Staffing and Outsourcing, Training and Education, Healthcare and Financial Services, today released results for the interim period ended 30 June 2022.
According to CEO Ronny Katz, the group experienced a good first six months of the financial year, with good growth from Staffing and Outsourcing and Healthcare, and a solid contribution from the Training and Education investment cluster. “Despite being slightly negative at an EBITDA level, the Financial Services cluster is showing good signs of improvement,” Katz indicated.
Revenue increased by 21% increase to R1,9 billion (2021: R1,6 billion) mainly due to stabilisation in the market after the devastating impacts of the Covid-19 pandemic and previously implemented strategies that were put in place by the group to support both brand and product diversification.
Operating costs increased by 21% due to the realignment of information technology within the group, continued digitisation, and the costs associated with additional resources to improve service delivery. Katz said that these actions had been taken to ensure a robust platform for future growth.
The 19% improvement in EBITDA to R68,7 million (2021: R57,9 million) indicates a much-improved performance from the Staffing and Outsourcing and the Healthcare investment clusters and a solid contribution from the Training and Education cluster. The Financial Services cluster showed signs of improvement and was buoyed by the acquisition of GetSavvi Health, Katz said.
Total comprehensive income for the period increased by 25% to R35,4 million compared to R28,3 million in the previous period. Headline earnings per share (“HEPS”) for the period improved to 14,6 cents per share compared to 11,2 cents per share for the comparative period in 2021.
Workforce has a debt-to-equity ratio of 0,47 compared to the previous year of 0,48. The slight increase is mainly due to the increase in working capital levels as a result of the normalisation of business activities.
No interim dividend was declared considering current economic circumstances.
Investment cluster performance
The Staffing and Outsourcing investment cluster experienced a favourable period, producing results that were ahead of budgetary expectations. This performance was supported by strong cash generation, a robust order book, and multiple brands in the market able to execute on opportunities backed by experienced management.
The Workforce Staffing brand delivered a superb result, particularly in supplying technical and engineering staff to the oil and gas and power generation sectors, on the back of maintenance delayed by the pandemic now being done. The supply of staff to the e-commerce, green hydrogen and renewable energy sectors further boosted results. Revenue increased by 15% to R1,5 billion (2021: R1,3 billion), and EBITDA improved by 31% to R85,0 million (2021: R64,7 million). The cluster contributed 64% to the EBITDA of the group. Katz indicated that offices were opened in Zambia and Tanzania, taking the footprint in Africa to six countries, with plans in place to establish a presence in Uganda and Rwanda soon.
The Training and Education investment cluster performed well, producing improved revenue of 11%, although EBITDA remained somewhat flat. The cluster contributed 16% to group EBITDA. Training Force exceeded budgetary expectations as the economy opened up and Covid-19 restrictions diminished. Training in the mining sector has been buoyant. Katz said that given the ramifications of Covid-19 and general economic pressures, the Sector Education and Training Authorities (“SETAs”) are collecting fewer levies and, as a result, not spending as much on sector training. This impacted the Chartall Business College operation. He added that this spending is expected to return to normalised levels in the second part of the year.
During the interim period, the Financial Services cluster implemented remedial action in the credit-granting part of the business, including implementing new business intelligence programmes to manage the granting of credit and the collecting of debt. Katz added that this has meant that the level of growth has been somewhat restricted by being more selective on customers. “Still, stability in the operating environment resulted in a steady increase in the loan business.”
The Financial Services investment cluster delivered an increase in revenue of 69% to R70,8 million (2021: R41,8 million), and the EBITDA loss reduced to R1,0 million (2021: loss of R9,3 million). “The employee benefits part of the cluster, including health and medical insurance, benefited from the GetSavvi acquisition and cemented the service offering in the market,” said Katz.
The Healthcare investment cluster experienced revenue growth of 32% compared to the previous interim period, with EBITDA increasing by 30% to R27,5 million (2021: R21,1 million). This is an EBITDA contribution to the group of 21%. Workforce Healthcare, the part of the investment cluster that provides occupational healthcare services encompassing workplace employee health management, high-risk compliance, employee wellness programmes, primary healthcare services, and a range of healthcare personnel solutions, produced satisfactory results, despite many clients struggling with budgetary constraints.
In the part of the business dedicated to the supply of healthcare personnel, the successful appointment to supply staff to Government healthcare has assisted in establishing a solid presence in Gauteng. “Thankfully, the decline of acute infections from Covid-19 has alleviated pressure on hospitals. Elective procedures and surgeries have returned to normal, requiring the services of specialised nursing staff and doctors at pre-Covid-19 levels,” explained Katz. Towards the end of the interim period, the investment cluster was awarded an outsourcing contract with a major hospital group in South Africa. Further extension of the footprint led to the opening of an office in Gqeberha in the Eastern Cape.
Workforce remains cautious in respect of the remaining six months of the 2022 financial year as the group’s financial performance will depend on broader global and local economic factors. “Political instability and the failure of the Government to build and repair infrastructure are impacting the operating environment in South Africa. Forced power outages through persistent loadshedding impact all our clients and have a knock-on effect on our investment clusters,” said Katz.
Encouragingly, the investment into renewable energy projects and the recent announcement by President Ramaphosa to fix the energy crisis are favourable for the economy and, in turn, for Workforce.
Katz concluded by saying, “Given the size, capital strength and specialised sector knowledge built up over five decades, Workforce remains well positioned to deal with operational impacts supported largely by our diversified operating platform. Strategy and financial structures are reviewed and adapted on an ongoing basis, and we continue to assess ways to optimally structure the financial and borrowing capital of the group.”
Note to the editor:
For the full SENS announcement and detailed financial results, please visit www.workforce.co.za
About Workforce Holdings Limited (www.workforce.co.za)
Workforce Holdings and its group of companies is a leading, trusted provider of employment, functional outsourcing, training, healthcare, wellness, financial services and lifestyle benefits to individuals and their employers. Our human capital solutions include temporary employment services, permanent placement recruitment, training and skills development, healthcare and wellness, disability solutions, financial services and lifestyle benefits and business process outsourcing. Workforce Holdings Limited is listed on the AltX board of the JSE.
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Contact: Michelle K Blumenau
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JSE code: WKF