Workforce’s investment clusters drive good recovery in second half

31 March 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 year ended 31 December 2020. The Group reported a good recovery in the second half of the year, which, according to CEO, Ronny Katz, actively confirms Workforce’s resilience and agility, cornerstones of the Group’s culture.

Katz said that he was pleased with the results, despite the Group posting revenue of R2.8 billion compared to R3.2 billion for the year ended 2019. “While the impact of Covid-19 is visible during the first six months of 2020, the good recovery post July is reflected in the much-improved second half.”

He added that during the first half of the year, the Group’s investment clusters – Staffing and Outsourcing, Training, Recruitment, and Financial Services – were particularly impacted by Covid-19. “There was, however, a visible step change after July 2020, as lockdown levels eased, and our clients reopened for business. This was carried through the results in the last six months of our financial year.”

Katz went on to say that the improved second half performance also tangibly demonstrated the progress the Group has made on the strategic development of the investment clusters. “The clusters performed remarkably well in this half, once they were able to assess the ‘new normal’ and effectively mitigate risks while at the same time positioning themselves strongly for the future.”

He added that the Group was “hugely encouraged” by way the investment clusters were able to regain their positions, with a stringent focus on debt collection, costs and on cash generation also resulting in a dramatic turn in cash generated from operations in the second half. “This focus will continue, and we look forward to a greater contribution from each of the investment clusters and a total improved Group result in the coming year.”

In terms of EBITDA, the second six months of the year under review delivered an increase of 77% compared to the interim period in 2019. “The numbers are indicative of our cost saving measures, the strong results from the Healthcare, Staffing and Outsourcing and Training investment clusters in the second six months of the year. The claw back in headline earning per share in the second half also clearly reflects the return of volumes within the business to near-normal levels.”

The Group’s debt to equity ratio improved to 0,35 from 0,45 as at the end of the 2019 financial year.

Investment clusters’ performance

Katz explains that one of the reasons for the good second half recovery was that the Staffing and Outsourcing investment cluster was able to pivot quickly and seek new opportunities for business. “A significant boost to performance from July 2020 onwards was due to diversification into sectors such as transport, warehousing, power generation, oil and gas, e-commerce, distribution, renewable energy, and technical mining.”

In the Training investment cluster, where training was previously provided in person and in classrooms, the accelerated adoption of technology by the Group enabled a range of training, education and development options to be delivered through facilitated classroom-style learning, digital learning or a blended option of both.

It must be noted that the Healthcare cluster, being classified as an essential service, delivered exceptional results throughout the reported period. “Covid-19 has had a critical impact on both the South African economy and the health of the nation, and this investment cluster was able to validate itself as a leader in the healthcare space, with brands able to withstand a recessionary environment and deliver vital services to assist in safeguarding South Africans against the pandemic.”

The acquisition of OpenSource, which operates in the SAP space, and which was effective post year-end, further supported the ability of the Recruitment investment cluster to provide services to specialised areas within the recruitment market.

The Financial Services cluster experienced a difficult year, and the results were affected in part due to the effects of Covid-19, as well as the shutdown of the Babereki product division. “The latter was due to many clients being laid off or put on short time and accordingly not able to afford their instalments. We also stopped issuing loans during that period.” Katz added that this had led to a decision to write off a portion of the loan book amounting to a net R46,5 million.

“The businesses focussed on Africa were particular badly impacted by Covid-19 being unable to travel between South Africa and the countries where we started businesses, so the anticipated results from this investment cluster did not materialise”, Katz indicated.


In terms of the outlook, Katz said that the recent Budget Speech had been encouraging and business-friendly rather than heavily weighted towards ideology. “We eagerly await the rollout of infrastructure projects as a growth driver for the economy, understanding that although South Africa will only reach pedestrian growth in the coming years, the country still needs infrastructure spend to achieve a higher economic growth path into the future. We keep a watchful eye on similar large projects being developed in the geographies we operate in outside of South Africa where Workforce can add tremendous value as a relevant and significant supplier.”

Additional growth opportunities are present in the mining sector, given the increased demand for commodities.

Katz concluded by saying that the Group would remain dedicated to its core competencies as market conditions will likely remain challenging for the foreseeable future. “However, four decades of experience, a very strong network of teams across the business, organised into investment clusters with a common purpose to ensure success and growth, makes for a force that cannot be underestimated.”


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