Workforce banks on essential services

Labour-services group Workforce said on Tuesday the recent increase in the national minimum wage is affecting some of its clients, and it has opted not to declare a dividend as it battles the Covid-19 outbreak and a recessionary economy.

SA’s minimum wage rose 3.8% on March 1. CEO Ronny Katz said the group welcomes national minimum wage legislation, as it will in the longer term improve the stability of labour in SA with fairer and more sustainable pay structures.

“Minimum-wage legislation was introduced in 2019, and we actively engaged with our clients at the time to assist with any implications and opportunities arising from this,” he said.

Group revenue rose 7.1% to R3.2bn from R3bn during the reporting period, but operating expenses increased 8.3% to R562.9m from R519.8m. However, he was pleased with performance in the financial year to December 2019, Katz said.

“I think we’ve done well overall. Our success has a lot to do with our diversification. We run various staffing services and businesses, and currently we are more of a servicing company. We have been able to provide workers and also training services across the continent,”

The company’s taxed profit fell 4.6% to R98.1m, which Katz said was partly due to an “everincreasing unemployment rate”, poor consumer sentiment and a faltering economy. Workforce opted not to pay a dividend, having paid 1.5c per share in the prior matching period, saying it is focused on reducing overheads and preserving cash flow during the Covid-19 pandemic.

“Despite the national lockdown negatively impacting some of our clients and business activities ... a fair portion of clients and our own business clusters are deemed ... essential services, and we anticipate good demand in these areas going forward,” the group said.

“It would be irresponsible to give projections on what we can achieve in the 2020 financial year because of the unknown effects of Covid-19 .... We should be able to cushion some losses because we do work in nursing, security and other essential services,” Katz said.