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WKF
WKF
WKF - Workforce - Maiden audited listed abridged results for the year ended 31
December 2006
Workforce Holdings Limited
(Formerly Hidden Riches Trading 72 Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2006/018145/06)
JSE share Code: WKF & ISIN: ZAE000087847
MAIDEN AUDITED ABRIDGED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006
Turnover growth of 29.3% to R860 million
EBITDA growth of 30.5% to R39,6 million
Normalised HEPS up by 29.4%
Introduction
The directors of Workforce are pleased to present the group`s maiden results
as a listed entity for the year ended 31 December 2006.
Workforce listed on the Altx board of the JSE Limited on 21 November 2006
after embarking on a successful capital raising road show which was 24 times
oversubscribed.
The results have been prepared in terms of International Financial Reporting
Standards ("IFRS"). In particular, the application of the requirements of IFRS
3 have resulted in the accounting of the results for a full year as opposed to
6 months as set out in the prospectus.
The directors are pleased to confirm that the headline earnings for the year
ended 31 December 2006 have exceeded the forecast included in the prospectus.
CONSOLIDATED INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
2006 2005
R000 R000
Revenue 860 487 665 671
Cost of sales 671 195 515 344
Gross profit 189 292 150 327
Operating costs 149 695 119 954
Interest income 2 448 1 249
Dividend income 4 121 3 521
Finance costs 11 460 7 426
Amortisation and impairment of 13 085 14 749
Trademark rights
Depreciation 2 746 2 084
Profit before taxation 18 875 10 884
Taxation 7 581 3 796
Profit after taxation 11 294 7 088
2006 2005 2006 per
prospectus
Reconciliation of headline earnings R000 R000 R000
Profit after taxation 11 294 7 088 16 702
Amortisation of trademark rights 13 085 14 749 6 542
Headline earnings 24 379 21 837 23 244
Weighted average number of shares (000) 144 640 125 500 220 000
Earnings per share (cents) 7.8 5.6 7.6
Headline earnings per share (cents) 16.9 17.4 10.6
*Normalised headline earnings per
share (cents) 11.2 8.7 n/a
*on the basis that the shareholders loans had been capitalised for the entire
period and excluding the effects of the deferred tax credit of R3,2m in 2005
CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER 2006
2006 2005
ASSETS R000 R000
Non-current assets 17 335 25 174
Vehicles, computer and office equipment 9 712 6 058
Goodwill 4 275 2 781
Other intangible assets - 13 085
Deferred tax assets 3 348 3 250
Current assets 247 798 163 280
Trade and other receivables 210 839 158 391
Cash and bank balances 36 959 4 889
Total assets 265 133 188 454
EQUITY AND LIABILITIES
Total equity 129 023 9 960
Issued capital 111 368 1
Retained earnings 17 655 9 959
Non-current liabilities 57 012 126 157
Shareholders` loans - 89 000
Borrowings 57 012 37 157
Current liabilities 79 097 52 337
Current tax liabilities 7 393 7 046
Trade and other payables 23 842 21 624
Borrowings 234 229
Shareholders` loans 5 325
Bank overdrafts 47 629 18 113
Total equity and liabilities 265 133 188 454
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR
ENDED 31 DECEMBER 2006
Share
capital Retained Total
and
premium Income Equity
R000 R000 R000
Balance at 1 January 1 2 872 2 873
2005
Profit for the year 7 087 7 087
Balance at 31 1 9 959 9 960
December 2005
Shareholders loans 89 000 89 000
capitalised
Shares issued prior 125 500 125 500
to listing
Goodwill reversal in (125 500) (125 500)
terms of IFRS 3
Shares issued for 24 000 24 000
cash upon listing
Share issue and (1 633) (1 633)
listing expenses
Preference dividends (3 598) (3 598)
Profit for the year 11 294 11 294
Balance at 31 111 368 17 655 129 023
December 2006
CONSOLIDATED CASH FLOW STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006
2006 2005
R000 R000
Cash flows from operating (28 237) 7 227
activities
Cash (utilised in) generated by (11 893) 13 870
operating activities
Net finance costs (9 012) (2 656)
Taxation paid (7 332) (3 987)
Cash utilised in investment (7 832) (3 728)
activities
Goodwill acquired (1 494) (759)
Vehicles computer and office (6 431) (3 089)
equipment acquired
Fixed assets proceeds on sale 93 120
Investments in subsidiaries
Cash flows from financing 38 624 (10 011)
activities
Shareholders loans repaid (89 000)
Long term liabilities raised / 19 855 (10 011)
(repaid)
Capital raised 111 367
Preference dividends paid (3 598)
Increase/(decrease)in cash and 2 554 (6 511)
cash equivalents
Cash and cash equivalents at (13 224) (6 713)
beginning of year
Cash and cash equivalents at end (10 670) (13 224)
of year
Results
Workforce increased its turnover by 29.3% compared to the prior year on the
back of robust demand for staff outsourcing services.
The earnings before interest, taxation, depreciation and amortisation
("EBITDA") increased by 30.5%, with a slight increase in the EBITDA margin.
Net profit after taxation was impacted by the amortisation of trademarks of
R6,5million for the second six months of the year, which was necessitated by
the application of the reverse acquisition accounting in terms of IFRS 3.
However, this has not had any effect on headline earnings.
Headline earnings of R24,4 million were ahead of the forecast of R23,2 million
as set out in the prospectus. This was also 31.2% higher than the previous
year`s headline earnings if the effects of the deferred tax credit of R3,2
million, which was raised for the first time in 2005, are removed.
Headline earnings per share of 16.9 cents was higher than the forecast of 10.6
cents per share, calculated on a weighted average number of shares of 144,6
million.
On the basis that the shareholders loan accounts had been capitalised for the
whole period this would increase the weighted average number of shares to
217,8 million. Accordingly, headline earnings per share would have been 11.2
cents, which is ahead of the forecast of 10.6 cents per share, and 29.4% ahead
of the prior year of 8.7 cents per share taking into account the deferred tax
credit referred to above.
Prospects
The current economic environment bodes well for continued growth in the
economy and the demand for the group`s services is anticipated to continue to
benefit therefrom.
The group is on target to meet its forecast as set out in the prospectus.
Dividends
The group is committed to implementing its stated dividend policy. The board
of directors have decided it will be appropriate to commence dividend payments
in the following financial year.
Audit opinion
Horwath Leveton Boner has signed an unqualified audit opinion on the annual
financial statements. These have been approved by the board and abridged for
the purposes of this report. Both the auditors` opinion and the annual
financial statements are available for inspection at the company`s registered
office.
For and on behalf of the Board
RS Katz (Chairman and CEO)
28 February 2007
Registered office and postal address
11 Wellington Road, Parktown, Johannesburg, 2193
P O Box 78333, Sandton City, 2146
Directors
RS Katz (Chairman and CEO), R Kaplan (Financial Director), A Taylor, E Dube*, AC
Nissen* (*Non-executive)
Company secretary
Routledge Modise Moss Morris
Transfer secretaries
Link Market Services South Africa (Proprietary) Limited
Auditors
Horwath Leveton Boner, Chartered Accountants (SA)
Designated advisor
Ernst & Young Sponsors (Proprietary) Limited
Date: 28/02/2007 07:00:11 Produced by the JSE SENS Department.
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