|
WKF
WKF
WKF - Workforce Holdings Limited - Condensed Audited Results For The Year
Ended 31 December 2008
Workforce Holdings Limited
(Registration number 2006/018145/06)
("Workforce" or "the company")
JSE code: WKF ISIN: ZAE000087847
CONDENSED AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
INTRODUCTION
Workforce is the holding company of businesses focused on staff outsourcing,
recruitment and specialised staffing and human resources support services.
FINANCIAL REVIEW
Group turnover exceeded R1.1 billion, 20% above the previous year, at a gross
margin of 23% which is in line with the previous year. This was largely due
to the contributions of entities acquired by the group in 2007 as well as the
performance of Babereki, the group`s lifestyle products division. The gross
margin was negatively affected by a claim from the Workman`s Compensation
Commissioner, referred to in the group`s interim results. This claim is
currently being contested.
Operating expenditure increased to 19% as a percentage of sales, from 17% in
the previous year. Principal reasons for higher operating expenditure relate
to an increase in bad debts as well as a larger allowance for doubtful debts,
deemed necessary in the current economic environment.
These factors resulted in a decrease in earnings before interest, taxation,
depreciation and amortisation ("EBITDA") of 18.2% to R43,5 million from
R53.14 million in the prior year.
Net finance costs increased substantially given the increase in the debtors`
book, the higher rate of interest and the funding of acquisitions through
debt. The company intended to refinance the purchase price of these
acquisitions by issuing equity, however market conditions did not allow for
this. Collectively, these factors led to after-tax profits declining 64% to
R11,9 million.
Basic earnings per share decreased by 63.7% to 5.3 cents from 14.6 cents.
Normalised headline earnings per share decreased 60.3% to 5.8 cents from 14.6
cents.
Debtors
Management has taken concerted action to improve outstanding debtors` days.
These had increased to an unacceptable level of 78 days at the end of June
2008. By financial year end, the DSO had been reduced to 64 days. The focus
will remain on substantially reducing this measure as soon as possible, as it
clearly has a significant negative impact on the group`s results.
Operational performance
Staff outsourcing remains the primary operational area of the group. As
conveyed in the interim results, the KwaZulu-Natal and Gauteng divisions did
not contribute to profits at the same level as the prior year. This was
attributable to overheads increasing disproportionately to growth in turnover
and low gross margins. Importantly, certain large contracts in the Gauteng
region terminated and these were not replaced with new business.
Restructuring in both areas started in the second half of the year and it is
apparent that the new structures are gaining traction. The Cape region was
restructured early in the year, producing very favourable results.
In light of the prevailing economic circumstances, a number of branches have
been consolidated and further steps taken to reduce overheads wherever
possible. This process is being monitored continuously against market
conditions.
The group has focused on marketing its service offering in the field of
infrastructure development, process outsourcing and other areas of
development where economic growth is expected to continue to smooth the
effects of lower economic activity in other sectors.
Recruitment and specialist staffing produced results in line with budget. The
mix of permanent and temporary staffing did change in the second half of the
year, with permanent placements showing a better-than-expected performance.
Fempower continued with its positive performance and the companies acquired
by the group - namely Telebest Group and Albrecht Nursing Agency - performed
well, and were a welcome addition to the core business model.
Workforce Worldwide Staffing produced financial losses due to the staffing
climate internationally. As this situation is not expected to improve in the
short term, its activities have been curtailed.
Once again the human resource support services clusters showed strong growth
and have become well entrenched in their markets. Training Force and the
lifestyle products division, Babereki, should both continue to make
meaningful contributions to future profits. Both businesses have grown their
client bases significantly. The group`s training activities and lifestyle
products has engendered staff loyalty which in turn has assisted in staff
acquisition and retention which is key for the group`s broader client base.
Workforce Healthcare, in which the group has a 50% share, improved
performance on the previous year and is budgeted to show further growth this
year.
The group has continued enhancing and developing systems with the dual
objectives of improving controls and process efficiency and gaining a
competitive advantage by offering technology that assists in managing staff
at client sites. These systems are being marketed both to existing clients
and as a stand-alone product for any employer.
PROSPECTS
The group will continue to concentrate on growing all facets of its business
and restoring the core staff outsourcing business to its former level of
profitability. Efforts will be focused on more efficient and cost-effective
operations, as well as on reducing the interest burden to more acceptable
levels. No acquisitions are being considered in the year ahead.
Having regard to the above commentary, the directors are hopeful that results
will improve in the 2009 financial year.
STATEMENT OF COMPLIANCE
The condensed financial statements comprise a consolidated balance sheet at
31 December 2008, a consolidated income statement, consolidated statement of
changes in equity and summarised consolidated cash flow statement for the
year ended 31 December 2008. The condensed financial statements have been
prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards ("IFRS") and the presentation and
disclosure requirements of IAS 34, Interim Financial Reporting, JSE Listings
Requirements and the South African Companies Act.
The accounting policies applied for the year are consistent with those of the
prior year.
Basis of measurement
The condensed financial statements have been prepared on the historical cost
basis except for certain financial instruments measured at fair value.
AUDIT REPORT
The annual financial statements for the year ended 31 December 2008 have been
audited by Horwath Leveton Boner and their unqualified audit report thereon
is available for inspection at the company`s registered office.
STATEMENT ON GOING CONCERN
The condensed financial statements have been prepared on the going-concern
basis since the directors have every reason to believe that the company has
adequate resources in place to continue in operation for the foreseeable
future.
CONSOLIDATED INCOME STATEMENTS
for the year ended 31 December 2008
Group Group Company Company
2008 2007 2008 2007
R`000 R`000 R`000 R`000
Revenue 1 161 302 968 980 - -
Cost of sales (895 256) (745 450) - -
Gross margin 266 046 223 530 - -
Operating expenses (222 596) (170 392) (225) (95)
Depreciation and (6 617) (4 549) - -
amortisation
Investment revenue 2 747 8 740 3 395 116
Finance costs (25 272) (15 331) (2 438) -
Profit before 14 308 41 998 732 21
taxation
Taxation charge (2 398) (8 530) - -
Profit for the year 11 910 33 468 732 21
Attributable to:
Equity holders of 11 949 33 243
parent
Minority interest (39) 225
11 910 33 468
Earnings per share
(cents)
Basic and fully 5,3 14,6
diluted
Headline 5,8 14,6
CONSOLIDATED BALANCE SHEETS
at 31 December 2008
Group Group Company Company
2008 2007 2008 2007
R`000 R`000 R`000 R`000
Assets
Non-current assets 70 385 68 652 241 901 262 015
Property, plant and 12 915 12 940 - -
equipment
Goodwill 45 681 44 293 - -
Other intangible 4 056 4 386 - -
assets
Investments in - - 241 901 262 015
subsidiaries
Deferred tax assets 5 148 2 450 - -
Other financial 2 585 4 583 - -
assets
Current assets 306 713 308 398 191 19 790
Trade and other 269 487 258 252 - -
receivables
Inventories 874 917 - -
Taxation 3 453 - - -
Cash and bank 32 899 49 229 191 19 790
balances
Total assets 377 098 377 050 242 092 281 805
Equity and
liabilities
Capital and reserves 148 459 148 798 226 906 236 974
Share capital 104 674 106 759 236 867 236 867
Revaluation reserve - 68 - -
Retained earnings 43 414 41 686 (9 961) 107
Ordinary 148 088 148 513 226 906 236 974
shareholders` equity
Minority interest 371 285 - -
Non-current 183 136 135 400 15 183 13 318
liabilities
Borrowings 166 622 122 071 - -
Amounts due to 15 183 13 318 15 183 13 318
vendors
Deferred tax 1 331 11 - -
liabilities
Current liabilities 45 503 92 852 3 31 513
Trade and other 43 046 44 526 3 380
payables
Borrowings 925 952 - -
Amounts due to - 31 133 - 31 133
vendors
Taxation - 585 - -
Bank overdrafts 1 532 15 656 - -
Total equity and 377 098 377 050 242 092 281 805
liabilities
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the year ended 31 December 2008
Share capital Treasury Revaluation
and premium shares reserve
R`000 R`000 R`000
Company
Balance at 1 January 2007 236 867 - -
Profit for the year
Balance at 1 January 2008 236 867 - -
Profit for the year
Payment of dividends
Balance at 31 December 2008 236 867 - -
Group
Balance at 1 January 2007 as 111 368 - -
previously stated
Restated balance at 1 111 368 (4 609) -
January 2007
Profit for the year
Minority shareholders` share
of business combinations
acquired
Fair value adjustment on 68
available-for-sale financial
assets
Dividend declared to
minority shareholders of
subsidiaries
Balance at 1 January 2008 111 368 (4 609) 68
Prior year errors
Restated balance at 1 111 368 (4 609) 68
January 2008
Profit for the year
Purchase of treasury shares (2 085)
Prior year adjustment of
minority shareholding
Minority shareholders` share
of business combinations
acquired
Impairment of available-for- (68)
sale financial assets
Payment of dividends
Dividends on treasury shares
Balance at 31 December 2008 111 368 (6 694) -
Retained Minority Total
earnings interest equity
R`000 R`000 R`000
Company
Balance at 1 January 2007 86 - 236 953
Profit for the year 21 21
Balance at 1 January 2008 107 - 236 974
Profit for the year 732 732
Payment of dividends (10 800) (10 800)
Balance at 31 December 2008 (9 961) - 226 906
Group
Balance at 1 January 2007 as 17 655 - 129 023
previously stated
Restated balance at 1 8 443 - 115 202
January 2007
Profit for the year 33 243 225 33 468
Minority shareholders` share 60 60
of business combinations
acquired
Fair value adjustment on 68
available-for-sale financial
assets
Dividend declared to (90) (90)
minority shareholders of
subsidiaries
Balance at 1 January 2008 41 686 195 148 708
Prior year errors 90 90
Restated balance at 1 41 686 285 148 798
January 2008
Profit for the year 11 949 (39) 11 910
Purchase of treasury shares (2 085)
Prior year adjustment of 194 194
minority shareholding
Minority shareholders` share (69) (69)
of business combinations
acquired
Impairment of available-for- (68)
sale financial assets
Payment of dividends (10 800) (10 800)
Dividends on treasury shares 579 579
Balance at 31 December 2008 43 414 371 148 459
CONSOLIDATED CASH FLOW STATEMENTS
for the year ended 31 December 2008
Group Group Company Company
2008 2007 2008 2007
R`000 R`000 R`000 R`000
Cash flows from 1 216 6 881 355 104
operating activities
Cash generated 31 544 28 047 (602) 23
from/(utilised in)
operations
Interest received 1 144 3 542 16 116
Dividends received 1 603 5 198 3 379 -
Interest paid (25 272) (15 331) (2 438) -
Taxation paid (7 803) (14 575) - (35)
Cash flows from (6 373) (67 674) 20 114 (48 886)
investing activities
Financial assets (111) (4 504) - -
acquired
Proceeds on sale of 1 268 - - -
financial assets
Proceeds from - - 21 578 -
repayment of related
party loans
Acquisition of (1 262) (51 824) - -
subsidiaries
Property, plant and (5 594) (7 212) - -
equipment acquired
Proceeds on disposal 96 191 - -
of property, plant and
equipment
Intangible assets (770) (4 325) - -
acquired
Investment in - - (1 464) (48 886)
subsidiaries
Cash flows from 2 951 105 030 (40 068) 44 451
financing activities
Payment for treasury (2 085) (4 609) - -
shares
Proceeds from 44 525 65 188 - -
borrowings
Amounts due to vendors (29 268) 44 451 (29 268) 44 451
Dividends paid (10 221) - (10 800) -
Net (2 206) 44 237 (19 599) (4 331)
(decrease)/increase in
cash and cash
equivalents
Cash and cash 33 573 (10 664) 19 790 24 121
equivalents at the
beginning of the
financial year
Cash and cash 31 367 33 573 191 19 790
equivalents at the end
of the financial year
DIVIDEND
No dividend will be paid in respect of the year ended 31 December 2008 in
order to to preserve liquidity and assist in reducing debt.
ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING
Shareholders are advised that the Annual Report for the year ended 31
December 2008 will be posted to them on 31 March 2009.
Notice is hereby given that the Annual General Meeting of shareholders will
be held at 12:00 on Wednesday, 13 May 2009 at the company`s offices, 11
Wellington Road, Parktown, Johannesburg, to transact the business as stated
in the notice of annual general meeting forming part of the Annual Report.
APPRECIATION
The directors would like to commend and thank the management and staff of the
group for their commitment, loyalty and support during a difficult period.
Their contribution is paramount to the group`s success. The non-executive
directors and professional advisers have provided important counsel to the
group and their continuous support is valued and appreciated.
For and on behalf of the Board
RS Katz (Chairman and CEO) W van Wyk (Group Financial Director)
Johannesburg
27 March 2009
Directors: R Katz (Chairman and CEO), E Dube*, R Kaplan,
W Van Wyk, NM Anderson* *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
Designated Adviser:
Vunani Corporate Finance
Date: 27/03/2009 09:45:04 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
| Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information. | |||||||||||||
| Other Profile Group sites: FundsData Online (unit trust data) | Profile Group corporate site | |||||||||||||
| [ Terms of Use | Privacy Policy | PAIA manual | FAQs/Help | Site Map | © Copyright Reserved 2026 ] | |||||||||||||
|
|||||||||||||
