Wrap Text
UNAUDITED CONDENSED INTERIM FINANCIAL RESULTS
for the six months ended 30 June 2012
Workforce Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/018145/06)
JSE Code: WKF ISIN: ZAE000087847)
("Workforce" or "the group")
UNAUDITED CONDENSED INTERIM FINANCIAL RESULTS
for the six months ended 30 June 2012
Highlights
HEPS and EPS increased by 22% to 3,9 cents per share.
Revenue increased by 14% to R718 million.
Net asset value per share increased to 91 cents per share.
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2012
6 months 6 months
to to Year to 31
30 June 30 June December
2012 2011 2011
Notes R'000 R'000 R'000
Revenue 7 718 222 630 221 1 348 561
Cost of sales (559 335) (484 459) (1 039 586)
Gross profit 158 887 145 762 308 975
Operating costs (139 413) (129 271) (267 974)
Earnings before
impairment,
depreciation,
amortisation,
interest and taxation
(EBITDA) 19 474 16 491 41 001
Depreciation and
amortisation of non-
financial assets (4 375) (3 831) (7 694)
Operating profit 7 15 099 12 660 33 307
Finance income 1 006 686 3 434
Finance costs (6 287) (5 315) (10 896)
Profit before
taxation 7 9 818 8 031 25 845
Taxation 8 (687) (618) (1 916)
Profit for the period 9 131 7 413 23 929
Other comprehensive 139
income for the
period, net of tax 185 46
Fair value gains on
available-for-sale
financial assets 185 46 139
Total comprehensive
income for the period 9 316 7 459 24 068
Profit for the period
attributable to:
Owners of the parent 8 730 7 170 23 445
Non-controlling
interests 401 243 484
9 131 7 413 23 929
Total comprehensive
income attributable
to:
Owners of the parent 8 915 7 216 23 584
Non-controlling
interests 401 243 484
9 316 7 459 24 068
Earnings per share
(cents) 9
Basic and fully
diluted 3.9 3.2 10.4
Headline 3.9 3.2 10.4
Condensed Consolidated Statement of Financial Position
at 30 June 2012
6 months 6 months Year to
to to 31
30 June 30 June December
2012 2011 2011
Notes R'000 R'000 R'000
Assets
Non-current assets 78 397 72 471 76 925
Property, plant and
equipment 4 8 878 9 156 9 187
Goodwill 41 280 41 280 41 280
Other intangible
assets 5 14 368 9 972 13 165
Deferred tax assets 11 615 10 078 11 215
Other financial
assets 2 256 1 985 2 078
Current assets 376 499 325 236 371 317
Trade and other
receivables 361 998 303 187 351 136
Inventories 4 048 2 498 3 343
Taxation 767 2 862 861
Cash and cash
equivalents 6 9 686 16 689 15 977
Total assets 454 896 397 707 448 242
Equity and
liabilities
Equity 206 803 181 263 197 487
Share capital and
premium 236 867 236 867 236 867
IFRS 3 Reverse
acquisition
adjustment (125 499) (125 499) (125 499)
Treasury shares (7 616) (7 616) (7 616)
Available for sale
reserve 416 138 231
Retained earnings 102 125 77 120 93 395
Equity attributable
to owners of the
parent 206 293 181 010 197 378
Non-controlling
interests 510 253 109
Non-current
liabilities 12 430 12 983 13 091
Borrowings 9 009 9 776 9 153
Deferred tax
liabilities 3 421 3 207 3 938
Current liabilities 235 663 203 461 237 664
Trade and other
payables 68 625 56 193 62 521
Borrowings 167 031 134 418 175 139
Bank overdrafts 6 7 12 850 4
Total equity and
liabilities 454 896 397 707 448 242
Group net asset
value per share
(cents per share) 91.4 80.3 87.5
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 June 2012
Attributable to owners of the parent
Share
capital Reverse Available
and acquisition Treasury for sale
premium adjustment shares reserve
R'000 R'000 R'000 R'000
Balance at 1
January 2012 236 867 (125 499) (7 616) 231
Total
comprehensive
income for
the period - - - 185
Balance at
30 June 2012 236 867 (125 499) (7 616) 416
Balance at 1
January 2011 236 867 (125 499) (7 616) 92
Total
comprehensive
income for
the period - - - 46
Balance at
30 June 2011 236 867 (125 499) (7 616) 138
Balance at 1
January 2011 236 867 (125 499) (7 616) 92
Payment of
dividends - - - -
Total
comprehensive
income for
the year - - - 139
Balance at
31 December
2011 236 867 (125 499) (7 616) 231
Non-
Retained controlling Total
earnings Total interests equity
R'000 R'000 R'000 R'000
Balance at 1
January 2012 93 395 197 378 109 197 487
Total
comprehensive
income for the
period - 8 730 8 915 401 9 316
Balance at 30
June 2012 102 125 206 293 510 206 803
Balance at 1
January 2011 69 950 173 794 10 173 804
Total
comprehensive
income for the
period 7 170 7 216 243 7 459
Balance at 30
June 2011 77 120 181 010 253 181 263
Balance at 1
January 2011 69 950 173 794 10 173 804
Payment of
dividends - - (385) (385)
Total
comprehensive
income for the
year 23 445 23 584 484 24 068
Balance at 31
December 2011 93 395 197 378 109 197 487
Condensed Consolidated Statement of Cash Flows
for the six months ended 30 June 2012
6 months 6 months Year to
to to 31
30 June 30 June December
2012 2011 2011
Notes R'000 R'000 R'000
Cash generated
from operations
before net
working capital
changes 12 632 8 717 30 591
Profit before tax 9 818 8 031 25 845
Adjustments for
non-cash items 4 324 3 861 7 625
Taxes paid (1 510) (3 175) (2 879)
Decrease in net
working capital (5 463) (23 286) (65 751)
Cash flow from
operating
activities 7 169 (14 569) (35 160)
Investing
activities
Property, plant
and equipment
acquired 4 (2 212) (2 110) (4 396)
Acquisition
adjustment to
purchase price of
subsidiary
previously
acquired - (75) (75)
Proceeds on
disposal of
property, plant
and equipment 374 276 593
Intangible assets
acquired 5 (3 373) (1 615) (6 634)
Cash flow from
investing
activities (5 211) (3 524) (10 512)
Financing
activities
(Repaid)/proceeds
from borrowings (8 252) (25 513) 14 585
Dividends paid - - (385)
Cash flow from
financing
activities (8 252) (25 513) 14 200
Net change in
cash and cash
equivalents (6 294) (43 606) (31 472)
Cash and cash
equivalent at
beginning of
period 15 973 47 445 47 445
Cash and cash
equivalents at
end of the period 6 9 679 3 839 15 973
Notes to the Condensed Consolidated Interim Financial
Statements at 30 June 2012
1. Nature of operations and general information
The principle activities of Workforce Holdings Limited and its
subsidiaries are staff outsourcing, recruitment and specialist
staffing and human resources support services
(including the provision of financial and retail lending
products).
The consolidated interim financial statements are presented in
South African Rand (ZAR), which is also the functional
currency of the parent company.
The consolidated interim financial statements were approved
for issue by the Board of Directors on 20 August 2012.
2. Basis of preparation and significant accounting policies
The condensed consolidated interim financial statements have
been prepared in compliance with the Listings Requirements of
the JSE Limited, International Accounting Standard
(IAS) 34, Interim Financial Reporting and the South African
Companies Act, No 71 of 2008, as well as AC500 Standards as
issued by the Accounting Practices Board or its successor.
The condensed interim financial statements for the six months
ended 30 June 2012 were compiled under the supervision of W
van Wyk, the Chief Financial Officer. The condensed
consolidated interim financial statements have been prepared
in accordance with International Financial Reporting Standards
and have been applied consistently with the accounting
policies applied in the previous reporting period.
These condensed consolidated interim financial results have
not been audited nor reviewed by the group’s auditors.
3. Events after reporting date
No material events occurred between the reporting date and the
date of approval of these condensed financial statements.
4. Additions and disposals of property, plant and equipment
Motor Computer Industrial Office
vehicles equipment equipment equipment
R'000 R'000 R'000 R'000
6 months to June
2012
Carrying amount at
1 January 2012 1 861 2 926 182 1 810
Additions 583 588 11 718
Disposals (302) (11) - (3)
Depreciation (437) (856) (30) (309
Carrying amount at
30 June 2012 1 705 2 647 163 2 216
6 months to June
2011
Carrying amount at
1 January 2011 2 720 1 729 321 2 511
Additions 518 738 - 467
Disposals (220) - (80) (5)
Depreciation (559) (504) (29) (956)
Carrying amount at
30 June 2011 2 459 1 963 212 2 017
Year to 31
December 2011
Carrying amount at
1 January 2011 2 720 1 729 321 2 511
Additions 672 1 734 - 1 170
Disposals (470) (1) - (51)
Reclassifications - 594 (80) (514)
Depreciation (1 061) (1 130) (59) (1 306)
Carrying amount at
31 December 2011 1 861 2 926 182 1 810
Leasehold Training
improvements manuals Total
R'000 R'000 R'000
6 months to June 2012
Carrying amount at 1
January 2012 380 2 028 9 187
Additions 54 258 2 212
Disposals - - (316)
Depreciation (49) (524) (2 205)
Carrying amount at 30
June 2012 385 1 762 8 878
6 months to June 2011
Carrying amount at 1
January 2011 202 2 416 9 899
Additions 195 192 2 110
Disposals - - (305)
Depreciation (28) (472) (2 548)
Carrying amount at 30
June 2011 369 2 136 9 156
Year to 31 December
2011
Carrying amount at 1
January 2011 202 2 416 9 899
Additions 258 562 4 396
Disposals - (1) (523)
Reclassifications - - -
Depreciation (80) (949) (4 585)
Carrying amount at 31
December 2011 380 2 028 9 187
5. Additions and disposals of intangible assets
Computer
software Total
R'000 R'000
6 months to June 2012
Carrying amount at 1 January 2012 13 165 13 165
Additions 3 373 3 373
Amortisation (2 170) (2 170)
Carrying amount at 30 June 2012 14 368 14 368
6 months to June 2011
Carrying amount at 1 January 2011 9 640 9 640
Additions 1 615 1 615
Amortisation (1 283) (1 283)
Carrying amount at 30 June 2011 9 972 9 972
Year to 31 December 2011
Carrying amount at 1 January 2011 9 640 9 640
Additions 6 634 6 634
Amortisation (3 109) (3 109)
Carrying amount at 31 December 2011 13 165 13 165
6. Cash and cash equivalents
Cash and cash equivalents include the following components:
30 June 30 June December
2012 2011 2011
R'000 R'000 R'000
Cash at bank and in hand 9 686 16 689 15 977
Bank overdraft (7) (12 850) (4)
9 679 3 839 15 973
The carrying value of cash and cash equivalents is considered
a reasonable approximation of fair value.
7. Segment analysis
The group's segmental analysis is based on the following five
core business segments:
-Staffing and Recruitment comprises staff outsourced which
provides human resources to clients on both a short-and long-
term basis, recruitment and specialist staffing, which
includes permanent and temporary placements, ad-response
handling, executive search, call centre staffing
and importing and exporting of skills.
- Training and Consulting, which responds to market demands as
a registered Private Further Education and Training (FET)
provider.
- Financial and Lifestyle Products, which offers a range of
lifestyle products and support services to employees.
- Employee Health Management, which offers a comprehensive
range of occupational and primary health management services.
- Process Outsourcing, which focusses on delivering productive
and functional business process outsourcing solutions,
including the statutory and legal elements associated
therewith.
These operating segments are monitored and strategic decisions
are made on the basis of adjusted segment operating results.
Revenues and profit generated by each of the group's business
Segments are summarised as follows:
Financial
Staffing Training and Employee
and and Lifestyle Health
Recruitment Consulting Products Management
R'000 R'000 R'000 R'000
6 Months to
June 2012
Segment
revenues 645 791 14 406 23 974 12 351
Cost of
sales (521 365) (4 174) (10 111) (4 959)
Operating
Costs (87 907) (10 064) (8 331) (6 315)
Depreciation
and
amortisation
of non-
financial
assets (1 313) (640) (833) (78)
Segment
operating
profit 35 206 (472) 4 699 999
Capital
Expenditure 807 453 1 865 283
Segment
total assets 256 708 15 227 85 885 5 707
Segment
Total
Liabilities (60 958) (1 297) (11 086) (1 351)
Net Segment
Assets 195 750 13 930 74 799 4 356
6 Months to
June 2011
Segment
revenues 574 341 11 741 16 834 10 090
Cost of
sales (459 138) (2 687) (4 518) (4 679)
Operating
Costs (84 433) (8 341) (5 832) (4 251)
Depreciation
and
amortisation
of non-
financial
assets (1 629) (628) (446) (59)
Segment
operating
profit 29 141 85 6 038 1 101
Capital
Expenditure 1 124 581 563 16
Segment
total assets 253 935 8 645 52 779 5 052
Segment
Total
Liabilities (79 519) (434) (1 178) (1 269)
Net Segment
Assets 174 416 8 211 51 601 3 783
Year to 31
December
2011
Segment
revenues 1 227 649 23 914 45 389 21 226
Cost of
sales (1 036 997) (5 711) (12 266) (8 737)
Operating
Costs (199 052) (16 810) (14 543) (10 015)
Depreciation
and
amortisation
of non-
financial
assets (2 830) (1 235) (1 334) (123)
Segment
operating
profit (11 230) 158 17 246 2 351
Capital
Expenditure 2 767 466 3 971 91
Segment
total assets 250 444 11 112 75 194 3 992
Segment
Total
Liabilities (65 929) (1 693) (2 131) (897)
Net Segment
Assets 184 515 9 419 73 063 3 095
Process Conso-
Outsou- Central lidated
rcing cost entries Total
R'000 R'000 R'000 R'000
6 Months to June
2012
Segment revenues 26 374 - (4 674) 718 222
Cost of sales (18 726) - - (559 335)
Operating Costs (7 849) (23 621) 4 674 (139 413)
Depreciation and
amortisation of
non-financial
assets (41) (1 470) - (4 375)
Segment operating
profit (242) (25 091) - 15 099
Capital
Expenditure 251 1 926 - 5 585
Segment total
assets 1 835 89 534 - 454 896
Segment Total
Liabilities (127) (173 274) - (248 093)
Net Segment
Assets 1 708 (83 740) - 206 803
6 Months to June
2011
Segment revenues 20 929 - (3 714) 630 221
Cost of sales (13 437) - - (484 459)
Operating Costs (6 991) (23 137) 3 714 (129 271)
Depreciation and
amortisation of
non-financial
assets (40) (1 029) - (3 831)
Segment operating
profit 461 (24 166) - 12 660
Capital
Expenditure 193 1 248 - 3 725
Segment total
assets 1 965 75 331 - 397 707
Segment Total
Liabilities (409) (133 635) - (216 444)
Net Segment
Assets 1 556 (58 304) - 181 263
Year to 31
December 2011
Segment revenues 40 760 - (10 377) 1 348 561
Cost of sales 24 125 - - (1 039 586)
Operating Costs 4 481 (42 412) 10 377 (267 974)
Depreciation and
amortisation of
non-financial
assets (77) (2 095) - (7 694)
Segment operating
profit 69 289 (44 507) - 33 307
Capital
Expenditure 133 3 602 - 11 030
Segment total
assets 1 527 105 973 - 448 242
Segment Total
Liabilities (149) (179 956) - (250 755)
Net Segment
Assets 1 378 (73 983) - 197 487
8. Taxation
The effective tax rate of 7% for the period is mostly due to
learnership allowances granted.
9. Earnings per share
6 months 6 months Year to
to to 31
30 June 30 June December
2012 2011 2011
Basic earnings per share
Profit attributable to
equity shareholders
(R'000) 8 730 7 170 23 445
Weighted average number
of shares in issue ('000) 225 630 225 630 225 630
Basic earnings per share
(cents) 3.9 3.2 10.4
There are no potential
dilutive share, therefore
diluted earnings per
share equates to basic
earnings per share.
Headline earnings per
share
The earnings used in the
calculation of headline
earnings per share are as
follows:
Profit after taxation
(R'000) 8 730 7 170 23 445
Headline earnings
adjustment (R'000)
- Loss/(gain) on disposal
of property, plant and
equipment (51) 63 (69)
- Tax effect of
adjustments 14 (18) 19
Total headline earnings
(R'000) 8 693 7 215 23 395
Weighted average number
of shares in issue ('000) 225 630 225 630 225 630
Headline earnings per
share (cents) 3.9 3.2 10.4
10. Dividends
No dividend was declared relating to the period under review.
11 Business combinations
No business combinations occurred during the period under
review.
12 Related party transactions
The group, in the ordinary course of business, entered into
various sale and purchase transactions on an arm’s length
basis at market rates with related parties.
DIRECTORS' COMMENTARY
Operational Review
The financial results of our group for the first six months of
the year 2012 are pleasing given the tough trading environment
and the legislative uncertainty that the group has been
exposed to with regard to the proposed amendments to the
Labour Relations Act. Management continued to focus on
strategic objectives with emphasis being placed on
diversification of revenue streams within core niche markets
thereby enabling the group’s vision of being the leading
provider of innovative and diversified employer-centric
solutions.
Group revenue of R718 million for the 6 months ending June
2012 was 14% ahead of revenue generated in the prior year.
This translated into an increase in EBITDA of 18%, whilst
earnings of 3,9 cents per share (2011:3,2 cents) was 21,8%
ahead of those reported for the prior year.
The group’s staffing and recruitment segment has on the whole
performed well, with material progress being made in the white
collar specialist recruitment divisions. This we believe is
being driven predominantly by a shortage of skills,
particularly in the engineering, trades and information
technology sectors. The group’s blue collar staffing
businesses continued to show strong growth in market share.
Aggressive growth has resulted in softer gross margins (22,1%
- 2012 as compared to 23,1% - 2011).
The group’s training and consulting segment started the year
slowly, with most of the emphasis being placed on ensuring
operational readiness for what we believe will be a
significant increase in demand for this segment’s services.
This is being driven by amongst others South Africa’s shortage
of artisan and trade skills. Training Force has been
instrumental in delivering on the group’s various skills
development initiatives which has contributed to a lower
effective tax rate for the period.
Financial and lifestyle products and services provided through
the group’s brands, Babereki and Dreams Direct continued to
show steady growth in earnings. This diversification
contributes approximately 28% of the group’s EBITDA. New
markets are currently being explored, with a strong focus on
ensuring sustainability through the ongoing development of
credit vetting, granting and collection systems.
Employee health and wellness management has been identified as
a major contributor toward ensuring increased productivity
within the workplace across all categories of employees.
Workforce Healthcare is making steady progress in capturing
new market share with a 22,4% increase in revenue. Further
investment has been made in people and systems which have
resulted in increased operational costs, the benefits of which
we believe should be realised in 2013.
Increased demand from customers requiring more complex end-to-
end outsourced services is driving the growth within our
process outsourcing business segment. Our ability to integrate
the various operating segments and value propositions across
our group and provide this in a seamless format to our clients
is proving to be a key differentiator for us.
Overhead costs were kept in line with inflationary trends
despite continuing upward cost pressure.
The collections environment remained challenging. Debtors days
outstanding at June 2012 reduced to 57 days, down from 58 days
as at year end December 2011. The focus on cash generation
remains key to our strategy which has resulted in R7.2 million
cash flow from operations as compared to a R14.6 million
deficit as at June 2011.
The currently debated amendments to the Labour Relations Act
will bring more complexity to an already complex labour
environment. Organisations will require more than ever the
expertise and value that we as a group can offer. It is
therefore anticipated that the impact of the proposed bills on
our business will be minimal and will result in consolidation
opportunities which we are well positioned to take full
advantage of. Prospects based on the positive trends reflected
in these interim results, the
directors believe that turnover in all divisions of the group
may further increase in the second half of the year, which
together with a continued focus on achieving operational
efficiencies and tight working capital management, should
result in increased profitability. The group’s liquidity is
expected to improve, which places it in a strong position to
take advantage of any market-based opportunities.
No changes to the Board have occurred during the period under
review.
For and on behalf of the board
RS Katz LH Diamond WP van Wyk
(Chairman) (Chief Executive (Group Financial
Officer) Director)
Johannesburg
21 August 2012
Executive directors
RS Katz, LH Diamond, WP van Wyk
Non-executive directors
NM Anderson, JR Macey, L Letlape, K Vundla
Designated adviser
Merchantec Capital
Company secretary
S. van Schalkwyk
Registered office
The registered office is 3 Sandown Valley Cresent,
Sandown,2196
Transfer secretaries
Link Market Services South Africa (Proprietary) Limited
11 Diagonal Street, Johannesburg, 2001
Date: 21/08/2012 11:51:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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