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WKF - Workforce Holdings Limited - Unaudited condensed interim financial

Release Date: 12/08/2011 10:47
Code(s): WKF
Wrap Text

WKF - Workforce Holdings Limited - Unaudited condensed interim financial results for the six months ended 30 June 2011 Workforce Holdings Limited (Incorporated in the Republic of South Africa) Registration number 2006/018145/06 JSE code: WKF SIN: ZAE000087847 ("Workforce" or "the group") UNAUDITED CONDENSED INTERIM FINANCIAL RESULTS for the six months ended 30 June 2011 Highlights - HEPS increased by 78% to 3,2 cents per share. - EPS increased by 88% to 3,2 cents per share. - Revenue increased by 16% to R630 million. Condensed Consolidated Statement of Comprehensive Income for the six months ended 30 June 2011 Six months Six months Year
to to to 30 June 30 June 31 December 2011 2010 2010 Notes R`000 R`000 R`000
Revenue 7 630 221 541 081 1 153 842 Cost of sales (484 459) (412 666) (875 289) Gross profit 145 762 128 415 278 553 Operating costs (129 271) (113 137) (242 570) Earnings before impairment, 16 491 15 278 35 983 depreciation, amortisation, interest and taxation (EBITDA) Depreciation and (3 831) (3 875) (7 137) amortisation of non- financial assets Operating profit 7 12 660 11 403 28 846 Finance income 686 637 2 240 Finance costs (5 315) (6 640) (12 721) Impairment of available-for- - (231) - sale financial assets Profit before taxation 7 8 031 5 169 18 365 Taxation 8 (618) (962) (2 359) Profit for the period 7 413 4 207 16 006 Other comprehensive income 46 - 92 for the period, net of tax Fair value gains on 46 - 92 available-for-sale financial assets Total comprehensive income 7 459 4 207 16 098 for the period Profit for the period attributable to: Owners of the parent 7 170 3 899 15 342 Non-controlling interests 243 308 664 7 413 4 207 16 006 Total comprehensive income attributable to: Owners of the parent 7 216 3 899 15 434 Non-controlling interests 243 308 664 7 459 4 207 16 098
Earnings per share (cents) 9 Basic and fully diluted 3,2 1,7 6,8 Headline 3,2 1,8 6,7 Condensed Consolidated Statement of Financial Position at 30 June 2011 Six months Six months Year to to to 30 June 30 June 31 December
2011 2010 2010 Notes R`000 R`000 R`000 ASSETS Non-current assets 72 471 67 583 72 721 Property, plant and 5 9 156 9 094 9 899 equipment Goodwill 41 280 41 205 41 205 Other intangible assets 6 9 972 5 842 9 640 Deferred tax assets 10 078 9 826 10 038 Other financial assets 1 985 1 616 1 939 Current assets 325 236 330 521 320 525 Trade and other receivables 303 187 258 345 271 352 Inventories 2 498 2 202 1 271 Taxation 2 862 - 105 Cash and cash equivalents 16 689 69 974 47 797 Total assets 397 707 398 104 393 246 EQUITY AND LIABILITIES Equity 181 263 163 423 173 804 Share capital and premium 103 752 103 752 103 752 Available for sale reserve 105 - 92 Retained earnings 77 153 58 734 69 950 Equity attributable to 181 010 162 486 173 794 owners of the parent Non-controlling interests 253 937 10 Non-current liabilities 12 983 171 175 13 096 Borrowings 9 776 169 097 10 129 Deferred tax liabilities 3 207 2 078 2 967 Current liabilities 203 461 63 506 206 346 Trade and other payables 56 193 51 754 46 416 Borrowings 134 418 507 159 578 Taxation - 883 - Bank overdrafts 12 850 10 362 352 Total equity and liabilities 397 707 398 104 393 246 Condensed Consolidated Statement of Cash Flows for the six months ended 30 June 2011 Six months Six months Year
to to to 30 June 30 June 31 December 2011 2010 2010 R`000 R`000 R`000
Cash generated from operations 8 717 11 515 26 060 before net working capital changes Profit before tax 8 031 5 169 18 365 Adjustments for non-cash items 3 861 4 265 7 323 Taxes (paid)/refunded (3 175) 2 081 372 Increase in net working capital (23 286) (8 584) (25 999) Cash flow from operating (14 569) 2 931 61 activities Investing activities Property, plant and equipment (2 110) (2 189) (3 568) acquired Acquisition of subsidiaries - - (500) Proceeds on disposal of property, 276 - 555 plant and equipment Intangible assets acquired (1 615) (68) (4 802) Cash flow from investing (3 449) (2 257) (8 315) activities Financing activities Reduction in borrowings (25 513) 811 (866) Dividends paid - - (1 010) Amounts due to vendors (75) (11 824) (12 376) Cash flow from financing (25 588) (11 013) (14 252) activities Net change in cash and cash (43 606) (10 339) (22 506) equivalents Cash and cash equivalent at 47 445 69 951 69 951 beginning of the period Cash and cash equivalents at end 3 839 59 612 47 445 of the period The change in cash and cash equivalents has been impacted by the change in the Group`s borrowing facilities. Condensed Consolidated Statement of Changes in Equity for the six months ended 30 June 2011 Attributable to owners of the parent Share Available capital and Treasury for sale Retained
premium shares reserve earnings R`000 R`000 R`000 R`000 Balance at 1 January 111 368 (7 616) 92 69 950 2011 Total comprehensive - - 13 7 203 income for the period Balance at 30 June 2011 111 368 (7 616) 105 77 153 Attributable to owners
of the parent Non-con- trolling Total Total interests equity
R`000 R`000 R`000 Balance at 1 January 173 794 10 173 804 2011 Total comprehensive 7 216 243 7 459 income for the period Balance at 30 June 2011 181 010 253 181 263 for the six months ended 30 June 2010 Attributable to owners of the parent
Share Available capital and Treasury for sale Retained premium shares reserve earnings R`000 R`000 R`000 R`000
Balance at 1 January 111 368 (7 616) - 54 835 2010 Total comprehensive - - - 3 899 income for the period Balance at 30 June 2010 111 368 (7 616) - 58 734 Attributable to owners of the parent Non-con-
trolling Total Total interests equity R`000 R`000 R`000 Balance at 1 January 158 587 629 159 216 2010 Total comprehensive 3 899 308 4 207 income for the period Balance at 30 June 2010 162 486 937 163 423 for the year ended 31 December 2010 Attributable to owners of the parent Share Available capital and Treasury for sale Retained
premium shares reserve earnings R`000 R`000 R`000 R`000 Balance at 1 January 111 368 (7 616) - 54 835 2010 Transactions with - - - (227) owners Payment of dividends - - - - Acquisition of non- - - - (227) controlling interests Total comprehensive - - 92 15 342 income for the year Balance at 31 December 111 368 (7 616) 92 69 950 2010 Attributable to owners of the parent Non-con-
trolling Total Total interests equity R`000 R`000 R`000 Balance at 1 January 158 587 629 159 216 2010 Transactions with (227) (1 283) (1 510) owners Payment of dividends - (1 010) (1 010) Acquisition of non- (227) (273) (500) controlling interests Total comprehensive 15 434 664 16 098 income for the year Balance at 31 December 173 794 10 173 804 2010 Notes to the Condensed Consolidated Interim Financial Statements at 30 June 2011 1. Nature of operations and general information The principle activities of Workforce 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 11 August 2011. 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 ("JSE"), International Accounting Standard (IAS) 34, Interim Financial Reporting and the South African Companies Act. No 71 of 2008, as well as AC 500 Standards as issued by the Accounting Practices Board or its successor. The condensed interim financial statements for the six months ended 30 June 2011 were compiled under the supervision of W van Wyk, the Group Financial Director. The accounting policies comply with International Financial Reporting Standards and have been applied consistently with the accounting policies applied in the last annual financial statements. 3. Events after reporting date No material events occurred between the reporting date and the date of approval of these condensed interim financial statements. 4. Auditors` responsibility These condensed consolidated interim financial results have not been audited or reviewed by the group`s auditors. 5. Additions and disposals of property, plant and equipment Com- puter Industrial Office
Motor equip- equip- equip- vehicles ment ment ment R`000 R`000 R`000 R`000 Six months to June 2011 Carrying amount at 1 January 2 720 1 729 321 2511 2011 Additions 518 738 - 467 Disposals (220) - (80) (5) Depreciation (559) (504) (29) (956) Carrying amount at 30 June 2 459 1 963 212 2 017 2011 Six months to June 2010 Carrying amount at 1 January 1 948 1 694 206 3 245 2010 Additions 601 765 121 429 Disposals (154) (4) - - Depreciation (491) (1 204) (24) (864) Carrying amount at 30 June 1 902 1 251 303 2 810 2010 Year to 31 December 2010 Carrying amount at 1 January 1 948 1 694 206 3 245 2010 Additions 1 968 1 613 165 1 082 Disposals (164) (4) - (20) Depreciation (1 032) (1 574) (50) (1 796) Carrying amount at 31 December 2 720 1 729 321 2 511 2010 Lease-
hold improve- Training ments manuals Total R`000 R`000 R`000
Six months to June 2011 Carrying amount at 1 January 202 2 416 9 899 2011 Additions 195 192 2 110 Disposals - - (305) Depreciation (28) (472) (2 548) Carrying amount at 30 June 369 2 136 9 156 2011 Six months to June 2010 Carrying amount at 1 January 56 2 938 10 087 2010 Additions 49 224 2 189 Disposals - - (160) Depreciation (8) (431) (3 022) Carrying amount at 30 June 97 2 731 9 094 2010 Year to 31 December 2010 Carrying amount at 1 January 56 2 938 10 087 2010 Additions 170 350 5 348 Disposals - - (188) Depreciation (24) (872) (5 348) Carrying amount at 31 December 202 2 416 9 899 2010 6. Additions and disposals of intangible assets Computer software Total R`000 R`000
Six months to 30 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 Six months to 30 June 2010 Carrying amount at 1 January 2010 6 627 6 627 Additions 68 68 Amortisation (853) (853) Carrying amount at 30 June 2010 5 842 5 842 Year to 31 December 2010 Carrying amount at 1 January 2010 6 627 6 627 Additions 4 802 4 802 Amortisation (1 789) (1 789) Carrying amount at 31 December 2010 9 640 9 640 7. Segment analysis The group`s segmental analysis is based on the following three core business segments: - Staff outsourcing, 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. - Human resources support services, which can be integrated with staffing solutions to optimise employee performance. 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: Recruit- Human ment and resources Staff specialist support
outsourcing staffing services R`000 R`000 R`000 Six months to 30 June 2011 Segment revenues 511 907 76 007 46 021 Cost of sales (420 070) (52 026) (12 363) Operating costs (64 644) (22 254) (22 950) Depreciation and amortisation of (1 420) (202) (1 180) non-financial assets Segment operating profit 25 773 1 525 9 528 Six months to 30 June 2010 Segment revenues 443 938 63 933 37 336 Cost of sales (361 179) (42 257) (9 230) Operating costs (51 169) (19 206) (22 163) Depreciation and amortisation of (1 485) (217) (1 204) non-financial assets Segment operating profit 30 105 2 253 4 739 Year to 31 December 2010 Segment revenues 946 751 136 020 77 149 Cost of sales (763 733) (89 811) (21 745) Operating costs (125 730) (40 561) (48 070) Depreciation and amortisation of (2 712) (438) (2 306) non-financial assets Segment operating profit 54 576 5 210 5 028
Consoli- Central dation costs entries Total R`000 R`000 R`000
Six months to 30 June 2011 Segment revenues - (3 714) 630 221 Cost of sales - - (484 459) Operating costs (23 137) 3 714 (129 271) Depreciation and amortisation of (1 029) - (3 831) non-financial assets Segment operating profit (24 166) - 12 660 Six months to 30 June 2010 Segment revenues - (4 126) 541 081 Cost of sales - - (412 666) Operating costs (24 725) 4 126 (113 137) Depreciation and amortisation of (969) - (3 875) non-financial assets Segment operating profit (25 694) - 11 403 Year to 31 December 2010 Segment revenues - (6 078) 1 153 842 Cost of sales - - (875 289) Operating costs (34 287) 6 078 (242 570) Depreciation and amortisation of (1 681) - (7 137) non-financial assets Segment operating profit (35 968) - 28 846 Most assets and liabilities are not directly attributable to individual segments and meaningful allocations to operating segments cannot be done on a reasonable basis. 8. Taxation The effective tax rate of 7,7% for the period was based on the anticipated weighted average tax rate for the full financial year. 9. Earnings per share Six months to Six months to Year to 30 June 30 June 31 December 2011 2010 2010 Basic earnings per share Profit attributable to equity 7 170 3 899 15 342 shareholders (R`000) Weighted average number of 225 630 225 630 225 630 shares in issue (`000) Basic earnings per share 3,2 1,7 6,8 (cents) There are no potential dilutive shares, 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) 7 170 3 899 15 342 Headline earnings adjustment (R`000) - Loss/(gain) on disposal of 63 - (366) property, plant and equipment - Impairment loss on available- (46) 231 - for-sale financial assets - Tax effect of adjustments (13) - 102 Total headline earnings 7 174 4 130 15 078 (R`000) Weighted average number of 225 630 225 630 225 630 shares in issue (`000) Headline earnings per share 3,2 1,8 6,7 (cents) 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 Our results for the first six months of the year are very encouraging given the prevailing economic climate combined with the uncertainty brought about by the ongoing debate around proposed changes to labour legislation. Our businesses within the oursourcing and human resources support services segments are performing well and are meeting, and in some cases exceeding, management`s expectations. Our continued focus on achieving our strategic objectives has resulted in a 76,9% increase in profit after tax and a 88,2% increase in earnings per share. Group turnover increased by 16,47%. The staff outsourcing business showed steady growth with our continued focus on growing within core markets and ongoing investment in people and systems, to augment customer solutions. The group`s permanent recruitment segment is showing steady signs of recovery albeit slowly. The human resources support services segment continued to show strong growth contributing material increases in turnover and profitability, specifically from Babereki, the group`s lifestyle benefits business, Training Force and Workforce Healthcare. Our focus on diversifying our revenue streams and managing the customer and product mix resulted in EBITDA of R16,5 million, representing a 12,5% increase compared to the same period last year. Cash generated from operating activities before tax amounted to R11,9 million compared to the previous period`s R9,4 million. The group continued to take advantage of the roll-out of learnerships through its skills development initiatives which resulted in the reduction of the effective tax rate to 7,7%. Further investment in the group`s operating systems has assisted in managing both operational and financial risk. In addition to this, new developments in customer centric technology to augment existing solutions, continued to be implemented. The Group`s borrowing facility has been increased from R160 million to R200 million during the period. Prospects Based on the 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. For and on behalf of the Board RS Katz LH Diamond WP van Wyk (Chairman) (Chief Executive Officer) (Group Financial Director) Johannesburg 12 August 2011 Executive directors RS Katz, LH Diamond, WP van Wyk Non-executive directors NM Anderson, JR Macey, L Letlape, K Vundla Designated adviser Vunani Corporate Finance Company secretary Sirkien van Schalkwyk Registered office The registered office, which is also its principal place of business, is 11 Wellington Road, Parktown, 2193. Transfer secretaries Link Market Services South Africa (Proprietary) Limited, 19 Ameshoff Street, Braamfontein, 2001 Date: 12/08/2011 10:47:00 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. 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