Wrap Text
Unaudited condensed interim financial results
Workforce Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/018145/06)
JSE Share Code: WKF ISIN: ZAE000087847)
(“Workforce” or “the group”)
UNAUDITED CONDENSED INTERIM FINANCIAL RESULTS
For the six months ended 30 June 2013
HIGHLIGHTS
Please note the below movements are based on prior period restated
results.
• Headline earnings (HEPS) from continuing operations increased by 97% to
5,9 cents per share.
• Headline earnings (HEPS) increased by 61% to 2,9 cents per share.
• Earnings per share (EPS) increased by 53% to 2,9 cents per share.
• Revenue from continuing operations increased by 12% to R 779 million
compared to June 2012.
• Net asset value per share increased by 10,3% to 96 cents per share
compared to June 2012.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2013
Restated Restated
6 months to 6 months to year to
30 June 30 June 31 December
2013 2012 2012
Notes R'000 R'000 R'000
Continuing operations
Revenue 7 779 265 695 933 1 471 744
Cost of sales (605 594) (545 087) (1 157 365)
Gross profit 173 671 150 846 314 379
Operating costs (148 198) (134 397) (270 486)
Earnings before 25 473 16 449 43 893
impairment depreciation
amortisation interest and
taxation (EBITDA)
Depreciation and (4 245) (4 249) (8 751)
amortisation of non-
financial assets
Operating profit 7 21 228 12 200 35 142
Finance and investment 877 1 007 2 670
income
Finance costs (7 442) (6 015) (12 460)
Profit before taxation 14 663 7 192 25 352
Taxation 8 (1 246) 48 (1 219)
Profit for the period from 13 417 7 240 24 133
continuing operations
Loss from discontinued 16 (6 802) (2 641) (6 086)
operations
Profit for the period 6 615 4 599 18 047
Other comprehensive income 92 185 (462)
for the period net of tax
Fair value gains on 92 185 (462)
available-for-sale
financial assets
Total comprehensive income 6 707 4 784 17 585
for the period
Profit for the period
attributable to:
Owners of the parent 6 449 4 198 17 688
Non-controlling interests 166 401 359
6 615 4 599 18 047
Total comprehensive income
attributable to:
Owners of the parent 6 541 4 383 17 226
Non-controlling interests 166 401 359
6 707 4 784 17 585
Earnings per share (cents) 9
Basic and fully diluted 2.9 1.9 7.8
Headline 2.9 1.8 7.9
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
for the six months ended 30 June 2013
Restated Restated
As at 30 at as as at
June 30 June 31 December
Notes 2013 2012 2012
R'000 R'000 R'000
Assets
Non-current assets 81 958 78 397 81 616
Property, plant and 5 6 945 8 878 7 657
equipment
Goodwill 12 41 340 41 280 41 280
Intangible assets 6 18 348 14 368 17 224
Deferred tax assets 13 617 11 615 13 839
Other financial assets 1 708 2 256 1 616
Current assets 424 012 366 421 427 834
Trade and other receivables 412 545 348 002 400 260
Inventories 3 324 4 048 3 198
Taxation 6 326 4 685 5 850
Cash and cash equivalents 10 1 817 9 686 18 526
Total assets 505 970 444 818 509 450
Equity and liabilities
Equity 216 016 196 725 209 309
Share capital and premium 236 867 236 867 236 867
Treasury shares (7 616) (7 616) (7 616)
IFRS 3 Reverse acquisition (125 499) (125 499) (125 499)
adjustment
Available for sale reserve (139) 416 (231)
Retained earnings 111 986 92 047 105 537
Equity attributable to 215 599 196 215 209 058
owners of the parent
Non-controlling interests 417 510 251
Total liabilities 289 954 248 093 300 141
Non-current liabilities 12 777 12 430 14 282
Financial liabilities 8 605 9 009 9 124
Deferred tax liabilities 4 172 3 421 5 158
Current liabilities 277 177 235 663 285 859
Trade and other payables 78 982 68 625 72 935
Financial liabilities 198 190 167 031 207 893
Taxation - - 565
Bank overdraft 10 5 7 4 466
Total equity and 505 970 444 818 509 450
liabilities
Group net asset value per 18 96 87 93
share (cents per share)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2013
Attributable to owners of the parent
Share Reverse Treasury Available
capital acquisition shares for sale
and reserve reserve interests
premium
R'000 R'000 R'000 R'000
Balance at 1 January 236 867 (125 499) (7 616) (231)
2013
Total comprehensive - - - 92
income for the period
Balance at 30 June 2013 236 867 (125 499) (7 616) (139)
for the six months ended
30 June 2012
Balance at 1 January 236 867 (125 499) (7 616) 231
2012 as previously
stated
Adjustment (refer note - - - -
17)
Balance at 1 January 236 867 (125 499) (7 616) 231
2012 restated
Total comprehensive - - - 185
income for the period
Balance at 30 June 2012 236 867 (125 499) (7 616) 416
For the year ended 31
December 2012
Balance at 1 January 236 867 (125 499) (7 616) 231
2012 as previously
stated
Adjustment (refer note - - - -
17)
Balance at 1 January 236 867 (125 499) (7 616) 231
2012 restated
Payment of dividends - - - -
Total comprehensive - - - (462)
income for the year
Balance at 31 December 236 867 (125 499) (7 616) (231)
2012
Attributable to owners of the parent
Retained Total Non Total
earnings controlling equity
interests
R'000 R'000 R'000 R'000
Balance at 1 January 105 537 209 058 251 209 309
2013
Total comprehensive 6 449 6 541 166 6 707
income for the period
Balance at 30 June 2013 111 986 215 599 417 216 016
for the six months ended
30 June 2012
Balance at 1 January 93 395 197 378 109 197 487
2012 as previously
stated
Adjustment (refer note (5 546) (5 546) - (5 546)
17)
Balance at 1 January 87 849 191 832 109 191 941
2012 restated
Total comprehensive 4 198 4 383 401 4 784
income for the period
Balance at 30 June 2012 92 047 196 215 510 196 725
For the year ended 31
December 2012
Balance at 1 January 93 395 197 378 109 197 487
2012 as previously
stated
Adjustment (refer note (5 546) (5 546) - (5 546)
17)
Balance at 1 January 87 849 191 832 109 191 941
2012 restated
Payment of dividends - - (217) (217)
Total comprehensive 17 688 17 226 359 17 585
income for the year
Balance at 31 December 105 537 209 058 251 209 309
2012
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2013
Restated 6 Restated
6 months to months to year to
30 June 30 June 31 December
2013 2012 2012
Notes R'000 R'000 R'000
Cash generated from 9 180 6 390 23 290
operations before net
working capital changes
Cash generated from 15.1 16 151 12 907 35 629
operations
Finance income 877 1 007 2 646
Finance costs (7 442) (6 015) (12 460)
Taxation paid (406) (1 509) (2 525)
(Increase)/Decrease in 15.2 (6 364) 830 (46 268)
net working capital
Cash flows from 2 816 7 220 (22 978)
operating activities
Cash flows from (4 842) (5 261) (11 442)
investing activities
Property, plant and 5 (1 218) (2 212) (3 429)
equipment acquired
Dividends received - - 24
Acquisition of business (60) - -
Proceeds on disposal of 119 324 557
property, plant and
equipment
Intangible assets 6 (3 683) (3 373) (8 594)
acquired
Cash flows from (10 222) (8 253) 32 507
financing activities
(Repayment)/ proceeds (10 222) (8 253) 32 724
from borrowings
Dividends paid - - (217)
Net change in cash and (12 248) (6 294) (1 913)
cash equivalents
Cash and cash 14 060 15 973 15 973
equivalents at beginning
of period
Cash and cash 10 1 812 9 679 14 060
equivalents at end of
the period
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended 30 June 2013
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 21 August 2013
2. Basis of preparation and significant accounting policies
The condensed consolidated interim financial statements have been
prepared in accordance with the JSE Limited's Listing Requirements for
interim financial statements, International Accounting Standard (IAS)
34, Interim Financial Reporting and the South African Companies Act, No
71 of 2008, as well as the SAICA Financial Reporting Pronouncements as
issued by the Financial Reporting Standards Council.
The condensed interim financial statements for the six months ended 30
June 2013 were compiled under the supervision of W van Wyk, the Group
Financial Director. 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 Annual Financial Statements for the
year ended 31 December 2012.
3. Events after reporting date
No material events occurred between the reporting date and the date of
approval of these condensed financial statements.
4. Auditor's responsibility
These condensed consolidated interim financial results have not been
audited nor reviewed by the group's auditors. This is not a requirement
of the JSE Listings requirements. The auditors are responsible for
monitoring compliance with the disclosure requirements of the JSE.
5. Property, plant and equipment
Motor Computer Industrial Office
vehicles equipment equipment equipment
R'000 R'000 R'000 R'000
6 months to June 2013
Carrying amount at 1 1 101 2 364 133 2 118
January 2013
Additions 103 386 129 160
Disposals (110) (9) - -
Depreciation (259) (714) (12) (406)
Carrying amount at 30 835 2 027 250 1 872
June 2013
6 months to June 2012
Carrying amount at 1 1 861 2 926 182 1 810
January 2012
Additions 583 588 11 718
Disposals (302) (11) - (3)
Depreciation (437) (856) (30) (309)
Carrying amount at 30 1 705 2 647 163 2 216
June 2012
Year to 31 December
2012
Carrying amount at 1 1 861 2 926 182 1 810
January 2012
Additions 583 1 189 10 967
Disposals (535) (18) - (2)
Depreciation (808) (1 733) (59) (657)
Carrying amount at 31 1 101 2 364 133 2 118
December 2012
Leasehold Training Total
improvements manuals
R'000 R'000 R'000
6 months to June 2013
Carrying amount at 1 January 2013 377 1 564 7 657
Additions 34 406 1 218
Disposals - - (119)
Depreciation (45) (375) (1 811)
Carrying amount at 30 June 2013 366 1 595 6 945
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
Year to 31 December 2012
Carrying amount at 1 January 2012 380 2 028 9 187
Additions 89 591 3 429
Disposals - - (555)
Depreciation (92) (1 055) (4 404)
Carrying amount at 31 December 377 1 564 7 657
2012
6. Intangible assets
Computer Total
software
R'000 R'000
6 months to June 2013
Carrying amount at 1 January 2013 17 224 17 224
Additions 3 683 3 683
Amortisation (2 559) (2 559)
Carrying amount at 30 June 2013 18 348 18 348
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
Year to 31 December 2012
Carrying amount at 1 January 2012 13 165 13 165
Additions 8 594 8 594
Amortisation (4 535) (4 535)
Carrying amount at 31 December 2012 17 224 17 224
7. Segment analysis
The group's segment analysis is based on the following five core
business segments:
- Staffing and Recruitment comprises of 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; and
- Process Outsourcing, which focuses 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 profit assets and liabilities generated for each of the
group's business segments are summarised as follows:
Staffing Training Financial Employee
and and and health
recruitment consulting management
R'000 R'000 R'000 R'000
6 Months to June 2013
Segment revenues 724 211 16 100 26 475 12 405
Cost of sales (582 924) (6 857) (8 440) (4 682)
Operating costs (94 991) (10 446) (12 555) (7 467)
EBITDA 46 296 (1 203) 5 480 256
Depreciation and (898) (520) (1 122) (83)
amortisation of non-
financial assets
Segment operating 45 398 (1 723) 4 358 173
profit
Capital expenditure 838 567 1 539 75
Segment total assets 315 208 8 568 107 266 6 632
Segment total (45 331) (2 836) (26 048) (1 527)
liabilities
Net Segment 269 877 5 732 81 218 5 105
Assets/(Liabilities)
6 Months to June 2012
Segment revenues 641 158 14 406 23 974 12 351
Cost of sales (522 994) (4 174) (10 111) (4 959)
Operating Costs (88 572) (10 064) (8 331) (6 315)
EBITDA 29 592 168 5 532 1 077
Depreciation and (1 313) (640) (833) (78)
amortisation of non-
financial assets
Segment operating 28 279 (472) 4 699 999
profit
Capital expenditure 807 453 1 865 283
Segment total assets 246 630 15 227 85 885 5 707
Segment total (60 958) (1 297) (11 086) (1 351)
liabilities
Net Segment 185 672 13 930 74 799 4 356
Assets/(Liabilities)
Year to 31 December
2012
Segment revenues 1 363 196 39 613 50 088 23 513
Cost of sales (1 114 208) (10 405) (17 761) (9 580)
Operating costs (178 839) (22 576) (31 452) (12 758)
EBITDA 70 148 6 632 875 1 175
Depreciation and (2 246) (1 286) (1 866) (177)
amortisation of non-
financial assets
Segment operating 67 901 5 346 (991) 998
profit
Capital expenditure 3 513 936 3 284 325
Segment total assets 277 128 4 982 97 403 5 901
Segment total (40 352) (3 009) (17 906) (1 403)
liabilities
Net Segment 236 774 1 973 79 497 4 498
Assets/(Liabilities)
Process Central Conso- Total
Outsourcing cost lidation
entries
R'000 R'000 R'000 R'000
6 Months to June 2013
Segment revenues 4 218 - (4 144) 779 265
Cost of sales (2 691) - - (605 594)
Operating costs (2 021) (24 862) 4 144 (148 198)
EBITDA (494) (24 862) - 25 473
Depreciation and (184) (1 438) - (4 245)
amortisation of non-
financial assets
Segment operating (678) (26 300) - 21 228
profit
Capital expenditure - 1 882 - 4 901
Segment total assets 602 67 694 - 505 970
Segment total (1 688) (212 524) - (289 954)
liabilities
Net Segment (1 086) (144 830) - 216 016
Assets/(Liabilities)
6 Months to June 2012
Segment revenues 8 718 - (4 674) 695 933
Cost of sales (2 849) - - (545 087)
Operating costs (2 168) (23 621) 4 674 (134 397)
EBITDA 3 701 (23 621) - 16 449
Depreciation and (41) (1 344) - (4 249)
amortisation of non-
financial assets
Segment operating 3 660 (24 965) - 12 200
profit
Capital expenditure 251 1 926 - 5 585
Segment total assets 1 835 89 534 - 444 818
Segment total (127) (173 274) - (248 093)
liabilities
Net Segment 1 708 (83 740) - 196 725
Assets/(Liabilities)
Year to 31 December
2012
Segment revenues 17 325 - (21 991) 1 471 744
Cost of sales (5 411) - - (1 157
365)
Operating costs (4 440) (42 412) 21 991 (270 486)
EBITDA 7 474 (42 412) - 43 893
Depreciation and (85) (3 091) - (8 751)
amortisation of non-
financial assets
Segment operating 7 389 (45 503) - 35 142
profit
Capital expenditure 306 3 659 - 12 023
Segment total assets 1 037 122 999 - 509 450
Segment total (598) (236 873) - (300 141)
liabilities
Net Segment 439 (113 874) - 209 309
Assets/(Liabilities)
8. Taxation
The effective tax rate of 8.5% for the period was based on the
anticipated weighted average tax rate for the full financial year.
9. Earnings per share
6 months 6 months Year
to to to
30 June 30 June 31 December
2013 2012 2012
Basic earnings per share
Profit attributable to equity 6 449 4 198 17 688
shareholders of the parent company
(R „000)
Weighted average number of shares 225 630 225 630 225 630
in issue („000)
Basic earnings per share (cents) 2.9 1.9 7.8
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) 6 449 4 198 17 688
Headline earnings adjustment
(R'000)
- Loss/(gain) on disposal of 198 (51) 174
property, plant and equipment
- Tax effect of adjustments (55) 14 (49)
Total headline earnings (R'000) 6 592 4 161 17 813
Weighted average number of shares 225 630 225 630 225 630
in issue („000)
Headline earnings per share (cents) 2.9 1.8 7.9
Headline earnings per share from
continuing operations
The earnings used in the
calculation of headline earnings
from continuing operations are as
follows:
Headline earnings (R'000) 6 592 4 161 17 813
- Loss from discontinued operation 6 802 2 641 6 086
Total headline earnings (R'000) 13 394 6 802 23 899
Weighted average number of shares 225 630 225 630 225 630
in issue („000)
Headline earnings per share (cents) 5.9 3.0 10.6
from continuing operations
10. Cash and cash equivalents
6 months 6 months Year
to to to
30 June 30 June 31 December
2013 2012 2012
R'000 R'000 R'000
Cash and cash equivalents
include the following
components:
Cash at bank and on hand 1 817 9 686 18 526
Bank overdraft (5) (7) (4 466)
1 812 9 679 14 060
11. Dividends
No dividend was declared relating to the period under review.
12. Business combinations
A small business acquisition was made during the period, towards which
an initial payment of R 60 000, has been made. No disclosure has been
made in terms of IFRS 3 as the total purchase consideration for the
acquired business is not material.
13. 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.
14. Changes to the Board
There have been no changes to the Board in the current period.
15. Notes to the Condensed Consolidated Statement of cash flows
6 months 6 months Year
to to to
30 June 30 June 31 December
2013 2012 2012
R'000 R'000 R'000
15.1 Cash generated from
operations
Profit/(Loss) before taxation 14 663 7 192 25 352
from continuing operations
Profit/(Loss) before taxation (9 447) (3 668) (8 452)
from discontinued operations
Interest and dividend income (877) (1 007) (2 670)
Finance costs 7 442 6 015 12 460
Adjustment for non-cash items:
Depreciation and amortisation 4 370 4 375 8 939
16 151 12 907 35 629
15.2 Working capital changes
Change in trade and other (12 287) (4 568) (56 824)
receivables
Change in inventories (126) (705) 145
Change in trade payables 6 049 6 103 10 411
(6 364) 830 (46 268)
16. Discontinued Operations
As previously communicated to shareholders, Workforce discovered that an
act of fraud has been perpetrated by senior members of management in the
Programmed Construction business. Accordingly, the board has decided to
discontinue the affected business. The net effect on the financial
results are shown below:
Restated 6 Restated Restated
months 6 months year
to to to
30 June 30 June 31 December
2013 2012 2012
R'000 R'000 R'000
Analysis of profit/(loss) for
the year from discontinued
operations
The comparative profit and cash
flows from discontinued
operations have been
represented to include those
operations classified in the
current year
Condensed Consolidated
Statement of comprehensive
income
Revenue 3 219 17 656 29 785
Cost of sales (7 785) (15 877) (28 288)
Gross profit (4 566) 1 779 1 497
Operating costs (4 756) (5 321) (9 757)
Earnings before impairment, (9 322) (3 543) (8 260)
depreciation, amortization,
interest and taxation (EBITDA)
Depreciation and amortisation (125) (125) (188)
of non-financial assets
Operating profit/(loss) (9 447) (3 668) (8 448)
Finance costs - (3) (4)
Profit before taxation (9 447) (3 671) (8 452)
Taxation 2 645 1 030 2 366
Profit/(loss) for the period (6 802) (2 641) (6 086)
from discontinued operations
Condensed Consolidated
Statement of financial position
Total assets 17 019 17 039 24 050
Trade and other receivables 11 911 14 630 20 155
Taxation 4 722 1 853 2 818
Property, plant and equipment 362 230 455
Cash and cash equivalents 24 20 30
Inventory - 306 592
Total Equity and liabilities 17 019 17 039 24 050
Retained earnings (16 866) (6 619) (10 064)
Loan from group companies 32 713 21 863 31 978
Trade and other payables 1 172 1 795 2 136
Restated Restated
6 months to 6 months to Year to
30 June 2013 30 June 2012 31 Dec 2012
R'000 R'000 R'000
Condensed Consolidated Statement
Cash flows
Net cash flows from operating (709) (2 003) (11 820)
activities
Net cash flows from investing (32) (355) (643)
activities
Net cash flows from financing 735 2 378 12 493
activities
17. Prior Period Adjustments
Due to the fraud as detailed in note 16 the financial results had to be
adjusted as detailed below.
Previously Restated Adjustment
reported
6 months to 6 months to
30 June 2012 30 June 2012
R'000 R'000 R'000
Condensed Consolidated
Statement of Comprehensive
Income
Profit/(loss) from discontinued 1 891 (2 641) 4 532
operations
Condensed Consolidated
Statement of Financial Position
Non-Current assets
Deffered tax assets 11 615 11 615 -
Current Assets
Trade and other receivables 361 998 348 002 13 996
Taxation 767 4 685 (3 918)
Equity and liabilities
Equity
Retained earnings 102 125 92 047 10 078
Condensed Consolidated
Statement of Cash Flows
Net cash flows from operating 7 169 7 220 (51)
activities
Net cash flows from investing (5 211) (5 261) 50
activities
Net cash flows from financing (8 252) (8 253) 1
activities
Net change in cash and cash (6 294) (6 294) -
equivalents
Earnings per share
Basic earnings per share 3.9 1.9 2.0
(cents)
Headline earnings per share 3.9 1.8 2.1
(cents)
Previously Restated Adjustment
reported
31 Dec 2012 31 Dec 2012
R'000 R'000 R'000
Condensed Consolidated
Statement of Comprehensive
Income
Profit/(Loss) from discontinued (540) (6 086) 5 546
operations
Condensed Consolidated
Statement of Financial Position
Non-Current Assets
Deffered tax assets 13 757 13 839 (82)
Current Assets
Trade and other receivables 415 712 400 260 15 452
Taxation 1 523 5 850 (4 327)
Equity and liabilities
Equity
Retained Earnings 116 580 105 537 11 043
Condensed Consolidated
Statement of Cash Flows
Net cash flows from operating (22 803) (22 978) 175
activities
Net cash flows from investing (11 224) (11 442) 218
activities
Net cash flows from financing 32 114 32 507 (393)
activities
Net change in cash and cash (1 913) (1 913) -
equivalents
Earnings per share
Basic earnings per share 10.3 7.8 2.5
(cents)
Headline earnings per share 10.3 7.9 2.4
(cents)
18. Group net asset value per share (cents per share)
The net asset value per share and weighted average number of ordinary
shares used in the calculation of basic earnings per share are as
follows:
Previously Restated Adjustment
reported
6 months to 6 months to
30 June 2012 30 June 2012
R'000 R'000 R'000
Group net asset value (R'000) 206 293 196 215 10 078
Weighted average number of 225 630 225 630 -
ordinary shares in issue („000)
91 87 4
Previously Restated Adjustment
reported
31 Dec 2012 31 Dec 2012
R'000 R'000 R'000
Group net asset value 220 101 209 058 11 043
Weighted average number of 225 630 225 630 -
ordinary shares in issue („000)
98 93 5
DIRECTORS' COMMENTARY
Operational Review
The financial results of our group for the first six months of the year
2013 are pleasing and show continued sustainable growth in all of our core
businesses. Earlier in the year, a fraud perpetuated by senior management
of a subsidiary was uncovered which necessitated that the business of
Programmed Construction be discontinued. This business did not form part
of the group's core business and as a result will not affect the
continuing operations. The full effects of the losses incurred were
reported on SENS on 28 June 2013. Please refer to note 16 and 17 in this
regard.
Group revenue from continued operations increased to R779 million, up by
12% compared to June 2012. Gross margins from continuing operations
remained largely unchanged at 22.3% despite aggressive competition and
increasing client demands. EBITDA from continuing operations showed
positive growth to R25.5 million – an increase of 55% on June 2012.
Headline earnings per share increased by 61% to 2.9 cents per share.
Basic and fully diluted earnings per share, taking into account the losses
incurred from discontinued operations, increased to 2.9 cents per share,
an increase of 53% on June 2012.
Cash generated from operating activities of R2.8 million represented a
substantial turnaround on the 2012 year end deficit of R23 million. Group
debtors days outstanding improved to 51 days from 56 days in December
2012.
The group's blue collar operations continued to perform extremely well,
showing very positive revenue and profit growth. Most of this growth is
attributable to market share gains resulting from an aggressive sales
strategy in existing and new markets. Consolidation in favour of the
dominant providers of outsourced staffing services is also playing its
role in this growth. Whit collar operations performed slightly below
budget. However, management expects these results to improve in the next
six months. The group's training and consulting businesses experienced
tough trading conditions and failed to perform to expectation. Management
action had been taken to restructure these operations which we believe
will result in increased growth and profitability. The group's employee
benefits and credit provider performed to expectation. Continued steps are
being taken to mitigate credit risk within this segment, which includes
ongoing system development and investment in debt collection methodology.
Management believes that turnover in all divisions of the group will
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 of directors has occurred during the period under
review.
For and on behalf of the board
RS Katz LH Diamond WP van Wyk
(Chairman) (Chief Executive Officer) (Group Financial Director)
Johannesburg
21 August 2013
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, which is also its principal place of business, is
11 Wellington Road, Parktown, 2193.
Transfer secretaries
Link Market Services South Africa Proprietary Limited
11 Diagonal Street, Johannesburg, 2001
Date: 21/08/2013 05:25:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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