Workforce’s diversified investment structure delivers through tough trading conditions and lockdown levels

23 August 2021, Johannesburg – Workforce Holdings (JSE code: WKF), a Level 2 B-BBEE human capital services company that operates across four focused investment clusters in South Africa and other parts of Africa, today released results for the interim period to 30 June 2021. On the back of a good recovery in the second half of the previous financial year, the results for the first six months of the new financial year strongly support the continued momentum of the group.

According to CEO, Ronny Katz, Workforce experienced a recovery during this six-month period in certain of its operations, while others, which have not yet managed to completely recover, have improved their comparable results.

He went on to say that the group benefited from its diverse revenue streams, with the pandemic also forcing an evaluation and containment of costs, with cost-cutting initiatives being well implemented. “Volumes of activity have not yet returned to levels experienced pre-Covid-19, but the recovery is significant, and Workforce expects that the remaining six months will return a promising result,” he indicated.

Revenue for the period increased by 29% to R1,6 billion (2020: R1,3 billion) and EBITDA is positive at R58,0 million (2020: -R9,5 million). EPS and HEPS both increased substantially by 232% to 11,2 cents per share (2020: -8,5 cents per share).

Workforce is known to be an acquisitive company and this trend continued, with new acquisitions in the period including The GetSavvi Group and The OpenSource Group with a contingent consideration of R50 million combined. “These brands will add to the Financial Services and Recruitment investment clusters respectively,” Katz said.

Investment clusters’ performance

Katz explains that the investment cluster operations coped exceptionally well through the “new normal” operating environment brought about by the Covid-19 pandemic, with trading improving too.

The Training cluster experienced a much-improved performance compared to the same period in 2020, primarily due to the opening up of the economy. Great strides were made in terms of implementing cost-cutting initiatives, improving the blended service solutions offering, and getting to grips with operating under pandemic and lockdown conditions. This included having to deal with smaller classrooms and the need to move to online training, as well as having to combine both with live training.

The Recruitment cluster was negatively impacted by companies reducing staff and not re-employing people when lockdown levels eased. This was the result of companies not implementing policies for future growth and retaining a conservative approach to new recruits. In overseas markets a reversal of this situation is currently in play, with a sudden shortage of skilled staff due to companies gearing up again. The hope is that South Africa will start to mimic this trend in the near future.

Katz indicated that the Healthcare cluster experienced a few dynamics during the period. “Firstly, given the continued lockdown, hospital demand for elective procedures decreased; secondly, as the Covid-19 waves eased, the demand for additional nursing staff also lessened; and thirdly, as staff were required to work from home, so companies’ health monitoring and wellness programmes reduced,” he said. Despite this, the cluster was able to retain its profitability due to new clients gained.

The Financial Services cluster adopted a conservative approach by reducing the amount of lending, due to instability in the work environment, and this impacted profitability. This resulted in some difficulty in ensuring debt collection. However, during the last three months of the interim period, collections improved, allowing lending to increase. “Overall collections were slightly lower, but in line with the economic reality of the country, given increased unemployment,” Katz indicated.

The Staffing and Outsourcing investment cluster, which is the main contributing investment cluster of the group, experienced an extremely positive start to the new financial year. The results must be viewed in light of reduced income from the Employee Tax Incentive (“ETI”), which was anticipated, and an increase in the operating activities of the cluster. All the businesses in the cluster showed resilience, returned to profitability, contributed to organic growth and provided positive cash flows. The overall headcount in the cluster has returned to, if not slightly exceeded, pre-Covid-19 levels. This, combined with increased brand visibility and marketing efforts, has enabled the cluster to land new clients successfully.

Initiatives in Africa were impacted by Covid-19 as travel restrictions impeded the opening of new markets. Overall, the results achieved in the Africa cluster were in line with expectations and slightly above the previous period.


Katz is of the view that both the level 4 and the current level 3 lockdowns have affected the economy and the business and created a stop-start situation, which inevitably will affect the results of the investment clusters. Workforce believes that the third wave is being contained and as a result business activity will reach levels higher than the 2020 financial year. “We foresee a reinvigoration of the permanent placement industry, coupled with a change in emphasis in the areas in which staffing will be required. This demand should be further supported by the necessary infrastructure rollout and policies which government must follow,” he said.

“It is worth remembering that typically in the second part of our financial year, our largest investment cluster Staffing and Outsourcing tends to have a much stronger period due to seasonal factors,” Katz said.

“The week of looting and rioting that took place in the provinces of KwaZulu-Natal and Gauteng had an impact on some of our staff, which prompted Workforce to issue food vouchers to several thousand staff members. At this stage it is hard to tell what direction government is going to take to ensure that political stability will be maintained, and this makes it difficult to predict what the impact of political instability will be. We are hopeful that the stability in place will be maintained. Subject to this, we anticipate a far stronger economic environment for our diversified investments for the second six months of the year.”

In conclusion Katz indicated that the share price continues to be impacted by the insignificant appetite for small cap shares as well as by the perceived risks for the economy. “Despite this, however, our acquisition policy will continue with a view of strengthening all investments, without putting significant strain on the balance sheet.”


Your Turn To Talk

Leave a reply:

Your email address will not be published.