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South Africa – Workforce Holdings revenue up

22 August 2013

Recruitment and outsourcing company Workforce Holdings Limited (WKF: JNB) reported improved revenue during the first half of the year, ending 30 June 2013. Revenue during H1 2013 was ZAR 779.3 million (USD 76.3 million), compared with ZAR 695.9 million (USD 68.1 million) for the same period last year, an increase of +12%. Gross profit for the period also grew during the first six months of the year, rising to ZAR 173.7 million (USD 17 million) from ZAR 150.8 million (USD 14.8 million) last year. 

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 ZAR 25.5 million (USD 2.5 million), an increase of +55% compared with ZAR 16.4 million (USD 1.6 million) in June 2012.

The directors of the company commented: “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.”   

Four of the company’s main business segments reported increased revenue. In Staffing and Recruitment, Workforce’s largest business segment, revenue during the first half of the year rose to ZAR 724.2 million (USD 70.9 million) from ZAR 641.2 million (USD 62.8 million), up +13%. Staffing and Recruitment provides permanent and temporary placements, executive search, call centre staffing, and specialist recruitment.

The Training and Consulting business segment, which provides private further education and training, reported increased revenue rising from ZAR 14.4 million (USD 1.4 million) for H1 2012 to ZAR 16.1 million (USD 1.6 million) in H1 2013, an increase of +12%.

The Financial and Lifestyle business, which provides products and support services to employees, reported revenue growth of +10%; rising from ZAR 24 million (USD 2.3 million) for the first six months of 2012 to ZAR 26.5 million (USD 2.6 million) for the same period this year.   

A more marginal revenue growth was reported in the Employee Health business segment. Revenue for the first six months of the year was ZAR 12.4 million (USD 1.21 million) a +0.4% rise of the ZAR 12.35 million (USD 1.2 million) reported last year.

Process Outsourcing was the only business segment to report declining revenue year-on-year. Revenue fell by more than half from ZAR 8.7 million (USD 851,647) to ZAR 4.2 million (USD 411,140). 

The group’s blue collar operations showed 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. White collar operations performed below expectation. The group’s Training and Consulting businesses experienced tough trading conditions and failed to perform to expectation.

Looking forward the company is confident that turnover in all divisions will increase in the second half of the year. Combined with increased operational efficiencies and tighter working capital management, Workforce Holdings Limited predicts increased profitability in the coming six months.    


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