South Africa – Workforce Holdings H1 revenue increases 21% on rising profits

August 22, 2022

South African recruitment and outsourcing company Workforce Holdings (WKF: JSE) today announced revenue for the six months ended June 30, 2022 of ZAR 1.99 billion ($116.8 million ), up 21% year-on-year.

The revenue growth is mainly due to market stabilization after the impact of the pandemic and previously implemented brand and product diversification support strategies.

The 19% EBITDA improvement of 19% indicates improved performance from the Recruitment & Outsourcing and Healthcare investment hubs and a strong contribution from the Training & Education hub. The Financial Services division showed signs of improvement and was boosted by the acquisition of GetSavvi Health.

(million ZAR) H1 2022 H1 2021 To change H1 2022 (USD million)
Revenue 1,994.2 1,645.0 21% 116.8
Gross profit 424.7 351.4 21% 24.8
EBITDA 68.7 57.9 19% 4.0
Total comprehensive income for the period 35.4 28.2 25% 2.0

The group said a special statutory employment tax incentive (ETI) rate was increased on March 1, 2022, which generated an additional 13.5 million rand ($0.7 million) in profit. overall total. The previous year, an additional ETI of ZAR 40 million was claimable under the 2021 emergency tax relief measures in the second half of the year, which will not be repeated in 2022 but will be partly recovered by the aforementioned increase in the ETI rate.

Revenue by segment

(million ZAR) H1 2022 H1 2020 To change H1 2022 (million USD) as above
Staffing and outsourcing 1,541.5 1,287.9 20% 90.3
Coaching 175.4 158.3 11% 10.3
Financial services 70.8 41.8 69% 4.1
Health care 206.4 156.9 31% 12.1

Workforce said the recruiting and outsourcing investment arm had a favorable period, ahead of budget expectations, supported by strong cash generation, a strong backlog and multiple brands in the market capable seize opportunities supported by experienced management. He added that blue-collar and temporary employment service companies have landed major projects in the oil and gas and mining sectors.

The Training and Education division is growing. Training Force exceeded budget expectations as the economy opened up and Covid-19 restrictions eased. Training in the mining sector has been dynamic. The company added that the remaining six months of the fiscal year are expected to be challenging, but the cluster is expected to perform better than in the first six months of the fiscal year.

In financial services, during the period, the cluster implemented corrective measures in the credit granting part of the business, including the implementation of new economic intelligence programs to manage credit granting and debt collection. This means that the level of growth has been somewhat limited by being more selective about customers. Nevertheless, the stable operating environment has resulted in a steady increase in credit activity.

Meanwhile, in healthcare, Workforce Healthcare, the part of the investment cluster that provides occupational health services encompassing workplace employee health management, high-risk compliance, wellness programs -being employees, primary health care services and a range of solutions for health personnel, produced satisfactory results, despite many clients struggling with budgetary constraints.

Looking ahead, Workforce said it remains cautious regarding the remaining six months of fiscal 2022, as financial results will depend on the impact of broader global economic factors.

“Political instability and the government’s inability to put in place infrastructure are impacting the operating environment in South Africa,” the company said. “Forced power outages due to persistent load shedding are impacting all of our customers and having a ripple effect on Workforce investment clusters.”

“Encouragingly, investment in renewable energy projects and President Ramaphosa’s recent announcement to resolve the energy crisis are good for the economy and, therefore, for the workforce. scale, capital strength and specialized industry knowledge accumulated over five decades, Workforce remains well positioned to address operational impacts supported in large part by a diverse operating platform.

Shares of Workforce Holdings have not traded since August 19, 2022. The company has a market capitalization of ZAR 411.91 million (USD 24.14 million).