Stronger Workforce outlines plans to finish restructure

WORKFORCE Holdings aims to complete restructuring over the next few months as it consolidates in the wake of recent acquisitions made in line with its efforts to diversify due to the stagnant local economy.

The Workforce Solutions group explained its new structure as it released its results for the year to June, which showed annual profit increasing by roughly 11 percent to R46 million.

It said that the structure would consist of the appointment of an executive committee, Exco, reporting to the chief executive and the board.

“To reflect the changed nature of the group resulting from the diversification policies we have adopted over the past four years, we are forming clusters to manage the different business segments as well as their support,” the group said.

“The staff outsourcing cluster experienced a difficult six months as result of legislative, political and economic factors and produced results that were disappointing.

“Our training cluster showed a significant contribution to the group profits, as a result of both acquisitions and organic growth with good margins.”

Workforce concluded the new acquisition in June 2018 of the Dyna Training Group.

“We will continue to look at other opportunities which have been offered to us. The Prisma and KBC acquisitions had been bedded down, it said.

Workforce was concerned about the government’s failure to follow up on some of its own initiatives or sustain them, which has had a ripple effect on its industry.

“The economy remained very strained in the post-Zuma era, with low economic growth, lack of foreign and local capital investments and the continued failure by the government to proceed with investment in terms of the national development plan. These factors, accompanied by extremely low levels of business confidence, impacted our business results.”

However, the group got a leg-up from the government’s employment tax incentive (ETI) and tax breaks in terms of Section 12H of the Income Tax Act, which allows an employer to claim a “learnership allowance”. This enabled Workforce to receive a tax credit of R3m in the review period.

The ETI is due to come to an end in February, though there is a glimmer of hope in the form of a draft bill before Parliament, which must still be debated on for the extension of the ETI for several years going forward.

Workforce’s revenue rose by 4.2 percent to R1.4 billion, while gross profit was up 6.7 percent to R333.9m.

The group noted that in so far as the learnerships and their benefits under section 12H Income Tax Act were concerned, these were extended during the year for a further period of three years until March 31, 2022, opening up a number of long-term opportunities for the training division.

The group’s headline earnings per share were up 8.1 percent to 20.2 cents per share (c/s) and net asset value per share up 13.2 percent to 244 c/s.

“We don’t anticipate much change until such time as the 2019 election has taken place, after which we foresee greater investment in the economy and a revival of investment in infrastructure projects, to which our group is quite sensitive,” it said.

The group has forecast bright opportunities on the continent as it makes forays into southern Africa and Mauritius.

“We have in the last few years commenced operations in Mozambique, Botswana, Namibia, Zimbabwe and Mauritius.

“While to date we have not shown any return on this investment, we are seeing several good orders coming through,” the group said.

Workforce shares closed flat at R1.20 on the JSE yesterday.