Workforce benefits from diversification
INCECONNECT / 28 MARCH 2019 - 11.29 / STEPHEN GUNNION
The group is growing earnings from non-staffing businesses and says it's likely to continue benefitting from government incentives.
An economy that is barely growing, while shedding jobs, is a tough environment for companies that place staff. Add regulatory uncertainty to that and it becomes even more daunting. Workforce Holdings, the investment holdings company which provides 'human capital solutions' such us temporary and permanent recruitment, training and skills development, has felt it.
Fortunately, it's branched out into a number of other sectors, including financial services, micro-lending and healthcare, and says its non-staffing subsidiaries have made good progress in positioning themselves for growth. Its training cluster of businesses also benefitted from last June's acquisition of The Dyna Group, which includes a number of training businesses. The deal more than doubled earnings before interest, tax, depreciation, and amortisation (EBITDA) from the segment last year. Non-staffing now makes up more than a third of Workforce's total EBITDA.
The group's staffing and outsourcing cluster had a slower year though, due to the weak economy and uncertainty around temporary employment services under the Labour Relations Act. This resulted in a 6.2% slide in EBITDA in the year to end-December. Healthcare grew EBITDA by 22% and financial services increased EBITDA by 11%.
As usual, the group benefitted from the government's Employment Tax Incentive (ETI), which incentivises companies to give work to unemployed youth between the ages of 18 and 29. It says the government has now proposed a 10-year extension to the scheme up to February 2029, which means Workforce's tax rate should remain low as income derived from the ETI isn't taxed. A learnership allowance for companies will be in place until April 2022.
Ongoing initiatives are underway to employ more youth, as well as to train more learners," Workforce said. "Going forward, the group's tax rate will continue to be a function of our ability to utilise these two initiatives."
Revenue grew 7.4% to R3 billion in the year to end December and EBITDA rose 27% to R157 million. Net profit increased by 8% to R104 million and headline earnings per share gained 6.1% to 45.4c. It's paying a dividend of 1.5c per share.
Its shares closed 2.6% up at R1.59 yesterday.
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