| Wed 19 Mar 2008, 12:08 | | WKF - Workforce Holdings Limited - Abridged audited results for the year ended |
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WKF
WKF
WKF - Workforce Holdings Limited - Abridged audited results for the year ended
31 December 2007
Workforce Holdings Limited
(Registration number 2006/018145/06)
("Workforce" or "the company")
(JSE code: WKF ISIN: ZAE000087847)
ABRIDGED AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007
HIGHLIGHTS
EBITDA up by 34.2%
Headline Earnings up by 38.6%
Normalised headline earnings per share up by 25.9%
Profit margin improved to 4.4% from 3.7%
Maiden dividend declared of 4,5 cents per share
INTRODUCTION
Workforce is the holding company of businesses focused on staff outsourcing,
recruitment and specialised staffing and human resources support services.
FINANCIAL REVIEW
In its second year as a listed company, Workforce continued its track record of
consistent and solid growth. The overall results were in line with the forecast
prepared by the company in its Prospectus in November 2006. The EBITDA of R53,1
million was ahead of the forecast, interest charges were R5,3 million higher
than the forecast, largely as a result of higher interest rates and slower than
anticipated collections in the debtors book, whereas taxation was R4,6 million
lower as a result of tax allowances.
The result was an increase in earnings before interest, taxation, depreciation
and amortisation ("EBITDA") of 34.2% to R53,3 million from R39,6 million in the
prior year.
Headline earnings increased by 38.6% to R33,7 million from R24,4 million.
Normalised headline earnings per share increased by 25.9% to 14.1 cents from
11.2 cents.
Particularly pleasing was the improvement in the EBITDA margin to 5.5% from
4.6%, reflecting improved overall trading margins and economies of scale.
The debtors book continues to be a large area of focus, particularly on
improving the debtors days outstanding ("DSO"). The DSO at the end of December,
traditionally the slowest collection period for the company, improved to 64.3
days compared to 67.6 days in the prior year. Excluding the Gauteng region, the
group`s DSO at 31 December 2007 was 56.8 days.
OPERATIONAL REVIEW
Staff Outsourcing, which currently accounts for the largest part of Workforce`s
turnover and profits, grew turnover by 8.3%. The second six months of the year,
traditionally a stronger trading period for Workforce, was ahead of the first
half of the year. A reduction in overheads took place at the beginning of the
fourth quarter in line with the level of resources required at current levels of
business.
Recruitment and specialised staffing grew turnover by 113.3% compared to the
2006 year. The company has taken a strategic decision to grow this business via
selected acquisitions. During the year the company acquired the business of
Albrecht Nursing Agency, a niche nurse and health worker staffing operation and
the Telebest Group, focused on the placement of office administration and call
centre staffing. The impact and benefit of these acquisitions will only be
realised for a full year during 2008. The Fempower business traded profitably
during the second half of the year after incurring a loss in the six months to
June 2007.
The human resources support services cluster showed strong organic growth,
increasing turnover by 69.9%, albeit off a relatively low base. The healthcare,
training and lifestyle products businesses all showed strong growth, with a
weaker performance from the payroll outsourcing operation.
PROSPECTS
Workforce anticipates positive growth for the 2008 year, notwithstanding the
negative economic effects of higher interest rates and higher inflation compared
to the 2007 year.
The staff outsourcing business is a stable and consistent business and should be
able to secure higher levels of business flowing from infrastructure-related
projects during the year.
Recruitment and specialised staffing will be buoyed by the recent acquisitions
in those areas and with a specific focus on geographic expansion.
The human resources support services cluster is expected to grow at a high rate
as the training business expands its client base and the lifestyle products
business launches further product offerings.
In line with its strategic focus to create a diversified group, the company
continues to explore various acquisition opportunities, particularly in areas in
which it is currently not well represented.
ISSUE OF SHARES FOR CASH
In line with the company`s policy to maintain an adequate level of gearing, the
board has resolved to proceed with an issue of shares for cash to raise
approximately R20 million in order to finance a portion of the considerations
paid for the acquisitions made in the past six months.
ACCOUNTING POLICIES
The audited results of the group for the year ended 31 December 2007, from which
these results have been extracted, have been prepared in accordance with the
group`s accounting policies, which comply with the International Financial
Reporting Standards ("IFRS") and are consistent with those of the prior year
except for the adoption of IFRS 7 Financial Instruments: Disclosures, which is
effective for annual reporting periods beginning on or after 1 January 2007, and
the consequential amendments to IAS 1 Presentation of Financial Statements. The
impact has been to expand the disclosures regarding the company`s financial
instruments and management of capital, as included in the annual financial
statements to be distributed to shareholders shortly. This abridged report
complies with International Accounting Standard 34 -Interim financial Reporting,
Schedule 4 of the Companies Act, 1973, as amended, and the disclosure
requirements of the Listings Requirements of the JSE Limited.
AUDIT REPORT
The results for the year have been audited by Horwath Leveton Boner, and their
unqualified audit report on the 31 December 2007 annual financial statements is
available for inspection at the company`s registered office.
CONSOLIDATED INCOME STATEMENTS
for the year ended 31 December 2007
2007 2006
R000`s R000`s
Revenue 968,980 860,487
Cost of sales 745,450 671,195
Gross profit 223,530 189,292
Operating costs 170,392 149,695
Earnings before interest, taxation, 53,138 39,597
depreciation and amortisation
Interest income 3,542 2,448
Dividend income 5,198 4,121
Finance costs 14,796 11,460
Amortisation and impairment of - 13,085
goodwill and intangibles
Depreciation 4,549 2,746
Profit before taxation 42,533 18,875
Taxation 8,530 7,581
Profit after taxation 34,003 11,294
Attributable to equity holders 33,778 11,294
Attributable to outside shareholders 225
34,003 11,294
Reconciliation of Headline Earnings
Profit after taxation 33,778 11,294
Amortisation of trademark rights - 13,085
Headline earnings 33,778 24,379
Weighted average number of shares 240,000,000 144,640,323
Earnings per share (cents) 14.1 7.8
Headline earnings per share (cents) 14.1 16.9
*Normalised headline earnings per 14.1 11.2
share (cents)
*on the basis that the shareholders loans had been capitalised for the entire
period.
CONSOLIDATED BALANCE SHEETS
at 31 December 2007
2007 2006
ASSETS R000`s R000`s
Non-current assets 64,069 17,335
Vehicles and equipment 10,878 9,712
Goodwill 44,293 4,275
Other intangible assets 6,448
Deferred tax 2,450 3,348
Current assets 309,982 247,798
Trade and other receivables 260,104 210,839
Inventories 917
Other financial assets 4,583
Cash and bank balances 44,378 36,959
Total assets 374,051 265,133
EQUITY AND LIABILITIES
Total equity 163,064 129,023
Issued capital 111,368 111,368
Outside shareholders` interest 195
Revaluation reserve 68
Retained earnings 51,433 17,655
Non-current liabilities 129,772 57,012
Borrowings 116,443 57,012
Deferred tax 11
Amounts due to vendors 13,318
Current liabilities 81,215 79,098
Tax 585 7,393
Trade and other payables 32,889 23,842
Amounts due to vendors 31,133
Borrowings 952 234
Bank overdrafts 15,656 47,629
Total equity and liabilities 374,051 265,133
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the year ended 31 December 2007
Share
Group capital and Retained Outside
premium Income Shareholders
R000`s R000`s R000`s
Balance at 1 January 2005 1 2,871
Profit for the year 7,088
Balance at 31 December 2005 1 9,959
Shareholders loans capitalised 89,000
Shares issued prior to listing 125,500
Goodwill reversal in terms of (125,500)
IFRS 3
Shares issued for cash upon 24,000
listing
Share issue and listing (1,633)
expenses
Preference dividends (3,598)
Profit for the year 11,294
Balance at 31 December 2006 111,368 17,655
Profit for the year 33,778
Outside shareholders
share acquired through
business combinations 60
Outside shareholders share of 225
profits
Dividends declared (90)
Reserve arising on
revaluation of available
for sale financial
assets
Balance at 30 June 2007 111,368 51,433 195
Group Revaluation Total
Reserve Equity
R000`s R000`s
Balance at 1 January 2005 2,872
Profit for the year 7,088
Balance at 31 December 2005 9,960
Shareholders loans capitalised 89,000
Shares issued prior to listing 125,500
Goodwill reversal in terms of (125,500)
IFRS 3
Shares issued for cash upon 24,000
listing
Share issue and listing (1,633)
expenses
Preference dividends (3,598)
Profit for the year 11,294
Balance at 31 December 2006 129,023
Profit for the year 33,778
Outside shareholders
share acquired through
business combinations 60
Outside shareholders share of 225
profits
Dividends declared (90)
Reserve arising on
revaluation of available
for sale financial
assets 68 68
Balance at 30 June 2007 68 163,064
CONSOLIDATED CASH FLOW STATEMENTS
for the year ended 31 December 2007
2007 2006
R000`s R000`s
Cash flows from operating (447) (28,237)
activities
Cash generated by (utilised in) operating 20,184 (16,014)
activities
Dividend income 5,198 4,121
Interest income 3,542 2,448
Finance costs (14,796) (11,460)
Taxation paid (14,575) (7,332)
Cash utilised in investment activities (63,848) (7,832)
Goodwill acquired (336) (1,494)
Vehicles and equipment acquired (5,042) (6,431)
Other intangible assets acquired (6,495)
Acquisition of subsidiaries (47,662)
Fixed assets proceeds on sale 191 93
Financial assets acquired (4,504)
Cash flows from financing 103,687 38,623
activities
Shareholders loans repaid (89,000)
Borrowings raised 59,326 19,855
Amounts due to vendors 44,451
Capital raised 111,366
Dividends paid (90) (3,598)
Increase in cash and cash equivalents 39,392 2,554
Cash and cash equivalents at beginning of (10,670) (13,224)
year
Cash and cash equivalents at end of year 28,722 (10,670)
DIVIDEND
The board has resolved to declare the company`s maiden dividend to shareholders,
of 4,5 cents per share for the year ended 31 December 2007.
Set out below are the salient times and dates applicable to the dividend
declaration:
Last day to trade cum dividend Friday 9 May, 2008
Trading commences ex dividend on Monday 12 May, 2008
Record date on Friday 16 May, 2008
Payment date on Monday 19 May, 2008
Share certificates may not be dematerialised or rematerialised between Monday,
12 May and Friday, 16 May 2008, both days inclusive.
APPRECIATION
The company expresses its appreciation to all the group divisional directors,
members of staff and customers for their ongoing loyalty and support during the
year, as well as to its non-executive board members and professional advisers.
For and on behalf of the Board
RS Katz (Chairman and CEO)
Johannesburg
19 March 2008
Directors: R Katz (Chairman and CEO), E Dube*, R Kaplan,
A Taylor*, NM Anderson* (alternate to E Dube)
*non-executive
Registered office:
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
(Reg. No. 2000/031843/07)
Date: 19/03/2008 12:08:01 Produced by the JSE SENS Department.
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