South Africa – Workforce Holdings annual revenue down 13.9% due to pandemic

March 31, 2021

South African recruitment and outsourcing firm Workforce Holdings (WKF: JSE) today reported sales for the year ending December 31, 2020 of ZAR 2.77 billion (USD 187.7 million ), down 13.9% from the previous year.

(ZAR million) FY 2020 FY 2019 Switch Fiscal year 2020 (in millions USD)
Returned 2,778.0 3,227.0 -13.9% 187.7
Gross profit 645.4 702.4 -8.1% 43.6
Gross margin 23.2% 21.7%
EBITDA 76.8 140.9 -45.5% 5.2
Profit before tax 7.6 99.0 -92.3% 0.5
Profit after taxes 35.3 98.1 -63.9% 2.3

The group said its business had been impacted by the Covid-19 pandemic, but after cutting costs, implementing technology and consolidating its operational hubs (business segments), the group experienced an improvement in the second half of the year.

According to Workforce, the group’s Staffing and Outsourcing cluster had a “ reasonable start ” for the first quarter of the fiscal year, but was affected by the impact of Covid-19 for the months of April, May and June . When the economy reopened after the brutal lockdown, business picked up dramatically. Despite a 16% reduction in overall revenue to ZAR 2.2 billion (USD 148.6 million), segment EBITDA improved by 1%. The cluster continued to help individuals with the Temporary Employer Relief Program, which was due to end in October 2020, but which the government extended until March 15, 2021.

Within the Training division, all industries, in particular the mining sector, were negatively impacted by the various levels of foreclosure during the first half of the year. Training was halted and classroom training was particularly affected, in turn affecting the cost per learner. The mining sector also stopped hiring additional workers for several months, which impacted the integration division. This resulted in an overall drop in revenues of 8%, with a decrease in EBITDA of 51%.

The Financial Services cluster had a difficult year and results were partially affected by the effects of Covid-19 as well as by the shutdown of the Babereki Products division (financial solutions for employees). The latter was due to the fact that many clients were laid off or put on short notice and therefore could not pay their installments and we also stopped making loans during this period. This led to the decision to write off a portion of the loan portfolio net of ZAR 46.5 million (USD 3.1 million), resulting in a 42% reduction in turnover to ZAR 54.6 million. (USD 3.7 million) and an EBITDA loss of ZAR 55.0. million ($ 3.7 million).

The Healthcare cluster was seen as providing an essential service and, as such, was active at all levels of lockdown. The company saw an increased demand for services to help customers ensure their business operations continued smoothly during the pandemic, which helped it achieve a strong performance. Sales growth of 14% was recorded, fully organic. EBITDA growth was 71%.

On December 10, 2020, the company announced that he would acquire OpenSource Intelligent Solutions Proprietary Limited and OpenSource International Limited, effective January 1, 2021. OpenSource places qualified SAP resources (applications and system products) on a contractual and ongoing basis with customers using SAP’s enterprise resource planning system .

Looking ahead, the company’s board of directors said: “We remain extremely encouraged by how the investment hubs were able to recover their position in the second half of the year, with a focus on debt collection, costs and cash generation. This position will continue and we look forward to a greater contribution from each of the investment clusters and a total improvement in the group’s result over the coming year.

“We will remain dedicated to our core competencies as market conditions will likely remain difficult

for the foreseeable future, ”continued the council. “However, four decades of experience, a very strong network of teams across the company, organized into investment clusters with a common goal of ensuring success and growth, constitute a force that cannot be under- taken. estimated.

Workforce shares last traded at ZAR 111.00 ($ 7.50) yesterday ahead of the company’s earnings release. Shares were down 0.89% on the day. The company has a market capitalization of ZAR 270.54 million (USD 18.2 million).

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