| Wed 22 Aug 2007, 9:22 | | WKF - Workforce - Consolidated financial results: |
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WKF
WKF
WKF - Workforce - Consolidated financial results: six months ended 30 June 2007
Workforce Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/018145/06)
(JSE code: WKF & ISIN: ZAE000087847)
("Workforce" or "the group")
CONSOLIDATED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
Key financial highlights:
Turnover growth of 26.1% to R468.7 million
EBITDA growth of 44.7% to R20.9 million
Normalised headline earnings per share up by 35.7%
Introduction
The directors of Workforce are pleased to present the group`s results for the
six months ended 30 June 2007.
The interim financial statements have been prepared in accordance with IAS 34:
Interim Financial Reporting. The accounting policies comply with International
Financial Reporting Standards ("IFRS") and have been applied consistently with
the policies applied in the previous year.
Results
Revenue for the six months ended 30 June 2007 was 26.1% above the same period
for the prior year. The current year, however, included an extra week`s trading
in June, which was a five week month for accounting purposes compared to a four
week month in the prior year.
Earnings before interest, taxation, depreciation and amortisation ("EBITDA")
increased to R20.9 million from R14.4 million. The EBITDA margin also increased
to 4.5% from 3.9% previously.
Headline earnings before tax increased to R15.5 million from R10.2 million,
reflecting an improved margin of 3.3% as opposed to 2.8% in the prior year.
The effective tax rate of 23.0% for the period is based on the anticipated
weighted average tax rate for the full financial year. The effective tax rate in
the prior period was 23.1%, after adjusting for the impairment of intangibles.
The group`s results are seasonal, with approximately one third of the profits
after tax being earned traditionally in the first half of the year and two
thirds in the second half of the year.
Operational review
The group`s core business of staff outsourcing performed well during the period,
reflecting the growth and strength of the South African economy. The remaining
businesses performed satisfactorily overall with the exception of the permanent
recruitment division, which incurred a loss of R 1.7 million compared to a
budgeted profit of R 2.8 million. Corrective steps were implemented in July in
order to restore that business back to profitability.
During the last quarter of 2006 and the first quarter of 2007, the group rolled
out its internally developed software across the underlying operations. This
resulted in some system difficulties which has caused certain delays in the
processing of debtors invoices, which in turn increased the debtors days
outstanding and consequently weaker cash flows for the period. These issues have
largely been resolved and a concerted focus is being made to improve the debtors
days outstanding to more acceptable levels.
During the period the group expanded its training services with the opening or
expansion of five training schools, which are expected to contribute to growth
in the second half of the year.
Prospects
The group expects to continue its track record of consistent growth in turnover
and EBITDA.
Overall demand in the economy for the group`s services remain strong. A shortage
of skilled labour is hampering growth in the area of specialised skills,
particularly in the artisan sector, and competition for those skills is
increasing prices at rates above the overall inflation rate.
The group remains optimistic about achieving its profit forecast as set out in
its prospectus in November 2006 and continues to explore acquisition
opportunities that are in line with its strategy.
CONSOLIDATED CASH FLOW STATEMENTS
for the six month period ended 30 June 2007
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
R000`s R000`s R000`s
Cash flows from operating 2,609 7,168 (28,237)
activities
Cash generated by (utilised in) 15,978 17,020 (16,014)
operating activities
Dividend income 2,484 1,769 4,121
Interest income 1,423 143 2,448
Finance costs (7,111) (5,085) (11,460)
Taxation paid (10,165) (6,679) (7,332)
Cash utilised in investment (2,741) (1,168) (7,832)
activities
Goodwill on acquisition of business 0 (1,494)
Vehicles and equipment acquired (2,741) (1,168) (6,431)
Fixed assets proceeds on sale 0 93
Cash flows from financing 30,755 10,749 38,623
activities
Shareholders loans repaid 0 (89,000)
Long term liabilities raised 30,755 12,311 19,855
Capital raised 0 111,366
Preference dividends paid (1,562) (3,598)
(Decrease)/increase in cash and 30,623 16,749 2,554
cash equivalents
Cash and cash equivalents at (10,670) (13,224) (13,224)
beginning of year
Cash and cash equivalents at end of 19,953 3,525 (10,670)
year
CONSOLIDATED INCOME STATEMENTS
for the six month period ended 30 June 2007
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2007 2006 2006
R000`s R000`s R000`s
Revenue 468,707 371,835 860,487
Cost of sales 364,268 292,471 671,195
Gross profit 104,439 79,364 189,292
Operating costs 83,525 64,915 149,695
Earnings before interest, taxation, 20,914 14,449 39,597
depreciation and amortisation
Interest income 1,423 143 2,448
Dividend income 2,484 1,769 4,121
Finance costs 7,111 5,085 11,460
Amortisation and impairment of 6,542 13,085
goodwill and intangibles
Depreciation 2,176 1,029 2,746
Profit before taxation 15,534 3,705 18,875
Taxation 3,573 2,368 7,581
Profit after taxation 11,961 1,337 11,294
Reconciliation of Headline Earnings
Profit after taxation 11,961 1,337 11,294
Amortisation of trademark rights - 6,542 13,085
Headline earnings 11,961 7,879 24,379
Weighted average number of shares 240,000,000 125,500,000 144,640,323
Earnings per share (cents) 5.0 1.1 7.8
Headline earnings per share (cents) 5.0 6.3 16.9
*Normalised headline earnings per 5.0 3.7 11.2
share (cents)
*on the basis that the shareholders loans had been capitalised for the entire
period.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the six month period ended 30 June 2007
Share
Group capital and Retained Total
premium Income Equity
R000`s R000`s R000`s
Balance at 1 January 2005 1 2,872 2,873
Profit for the year 7,087 7,087
Balance at 31 December 2005 1 9,959 9,960
0 0
Shareholders loans capitalised 89,000 89,000
Shares issued prior to listing 125,500 125,500
Goodwill reversal in terms of IFRS (125,500) (125,500)
3
Shares issued for cash upon listing 24,000 24,000
Share issue and listing expenses (1,633) (1,633)
Preference dividends 0 (3,598) (3,598)
Profit for the year 0 11,294 11,294
Balance at 31 December 2006 111,368 17,655 129,023
Profit for the period 11,961 11,961
Balance at 30 June 2007 111,368 29,616 140,984
CONSOLIDATED BALANCE SHEETS
at 30 June 2007
30 Jun 30 Jun 31 Dec
2007 2006 2006
ASSETS R000`s R000`s R000`s
Non-current assets 17,197 19,213 17,335
Vehicles, computer and office 10,277 6,197 9,712
equipment
Goodwill 4,275 2,781 4,275
Other intangible assets 6,543
Deferred tax assets 2,645 3,692 3,348
Current assets 255,182 146,384 247,798
Trade and other receivables 219,053 142,555 210,839
Cash and bank balances 36,129 3,829 36,959
Total assets 272,379 165,597 265,133
EQUITY AND LIABILITIES
Total equity 140,984 9,734 129,023
Issued capital 111,368 1 111,368
Retained earnings 29,616 9,733 17,655
Non-current liabilities 87,767 122,468 57,012
Shareholders` loans 73,000
Borrowings 87,767 49,468 57,012
Current liabilities 43,628 33,395 79,098
Current tax liabilities 98 3,177 7,393
Trade and other payables 27,104 22,048 23,842
Borrowings 250 2,867 234
Shareholders` loans 4,999
Bank overdrafts 16,176 304 47,629
Total equity and liabilities 272,379 165,597 265,133
For and on behalf of the Board
RS Katz (Chairman and CEO)
Johannesburg
22 August 2007
Directors: R Katz (Chairman and CEO), E Dube*, C Nissen*, R Kaplan, A Taylor
*non-executive
Registered office:
11 Wellington Road, Parktown, PO Box 78333, Sandton City, 2146.
Transfer secretaries:
Link Market Services South Africa (Proprietary) Limited, 11 Diagonal Street,
Johannesburg, 2001, PO Box 4844, Johannesburg, 2000.
Company secretary:
Routledge Modise Moss Morris
Designated adviser:
Ernst & Young Sponsors (Proprietary) Limited
Date: 22/08/2007 09:22:01 Produced by the JSE SENS Department.
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