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WORKFORCE HOLDINGS LIMITED - Unaudited Condensed Interim Financial Results for the Six Months Ended 30 June 2018

Release Date: 23/08/2018 07:05
Code(s): WKF     PDF:  
 
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Unaudited Condensed Interim Financial Results for the Six Months Ended 30 June 2018

Workforce Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/018145/06)
JSE code: WKF
ISIN: ZAE000087847
("Workforce" or "the group")

Unaudited condensed interim financial results for the six months ended 30 June 2018
Highlights
Revenue up 4,2% to R1,4 billion
Gross profit up 6,7% to R333,9 million
Profit for the period up 10,8% to R46,0 million
Headline earnings per share up 8,1% to 20,2 cps
Net asset value per share up 13,2% to 244 cps
Tangible net asset value per share up 4,1% to 137 cps
Net interest-bearing debt to total tangible assets 42% (2017: 36%)
Acquisition of Dyna to boost Training and Consulting segment

Condensed consolidated statement of comprehensive income for the six months ended 30 June 2018
                                       Six months    Six months                   Year to
                                       to 30 June    to 30 June  Increase/    31 December
                                             2018          2017  (decrease)          2017
                                 Notes      R'000         R'000          %          R'000
Revenue                                 1 422 920     1 366 109        4,2      2 807 890
Cost of sales                          (1 089 030)   (1 053 104)       3,4     (2 172 461)
Gross profit                              333 890       313 005        6,7        635 429
Operating costs                          (265 593)     (243 945)       8,9       (511 855)
Fair value adjustments              20       (458)       (1 732)     100,0         10 365
Earnings before interest,        
taxation, depreciation           
and amortisation                           67 839        67 328        0,8        133 939
Depreciation and                 
amortisation of non-             
financial assets                          (13 681)      (12 969)       5,5        (26 080)
Operating profit                           54 158        54 359       (0,4)       107 859
Finance income                              1 235           606      103,8          1 486
Finance costs                       20    (12 358)      (11 870)       4,1        (23 360)
Profit before taxation                     43 035        43 095       (0,1)        85 985
Taxation credit/(expense)            9      2 985        (1 574)    (289,6)        10 819
Profit for the period                      46 020        41 521       10,8         96 804
Other comprehensive              
income/(loss) for the period                  (46)          375                       461
Fair value gains/(losses)                                                        
on financial assets to be                                                        
reclassified to profit or                                                        
loss in subsequent periods                    (46)          375                       461
Total comprehensive income                                                       
for the period                             45 974        41 896                    97 265
Profit for the period                                                            
attributable to:                                                                 
Owners of the parent                       45 865        42 461                    98 542
Non-controlling interests                     155          (940)                   (1 738)
                                           46 020        41 521                    96 804
Total comprehensive                                                              
income attributable to:                                                          
Owners of the parent                       45 819        42 836                    99 003
Non-controlling interests                     155          (940)                   (1 738)
                                           45 974        41 896                    97 265
Earnings per share (cents)          10                                           
Basic                                        20,2          18,7                      43,0
Diluted                                      19,7          18,3                      41,2

Condensed consolidated statement of financial position at 30 June 2018
                                                          As at      As at          As at
                                                        30 June    30 June       December
                                                           2018       2017           2017
                                            Notes         R'000      R'000          R'000
Assets                                                                         
Non-current assets                                      334 355    247 732        251 912
Property, plant and equipment                   5        22 268     19 784         23 559
Goodwill                                        6       192 889    141 166        134 480
Intangible assets                               7        69 145     48 188         44 247
Deferred tax assets                                      41 247     35 510         44 251
Other financial assets                                    8 806      3 084          5 375
Current assets                                          762 364    679 753        744 246
Trade and other receivables                             732 793    651 676        714 389
Inventories                                               4 989      3 294          3 546
Taxation                                                      -          -            763
Cash and cash equivalents                                24 582     24 783         25 548
Total assets                                          1 096 719    927 485        996 158
Equity and liabilities                                                         
Equity                                                  554 032    489 104        542 345
Share capital and premium                               234 051    241 867        234 051
Treasury shares                                         (10 369)   (12 454)       (7 658)
Available-for-sale reserve                                  877        837            923
Equity-settled employee                                                        
benefits reserve                                          5 975      5 901          6 793
Retained earnings                                       324 804    253 616        309 697
Equity attributable to owners                                                  
of the parent                                           555 338    489 767        543 806
Non-controlling interests                                (1 306)      (663)        (1 461)
Non-current liabilities                                 107 611     54 434         38 173
Financial liabilities                                    93 455     40 278         26 407
Deferred tax liabilities                                 14 156     14 156         11 766
Current liabilities                                     435 076    383 947        415 640
Trade and other payables                                167 032    145 006        136 914
Financial liabilities                                   266 431    238 224        278 726
Taxation                                                  1 613        717              -
Total equity and liabilities                          1 096 719    927 485        996 158

Condensed consolidated statement of changes in equity for the six months ended 30 June 2018
                                                     Attributable to owners of the parent
                                                                                  Equity-
                                                                                  settled
                                                                Available-       employee
                                             Share    Treasury    for-sale       benefits
                                       capital and      shares     reserve        reserve
                                           premium       R'000       R'000          R'000
For the six months ended 30 June 2018
Balance at 1 January 2018                  234 051      (7 658)        923          6 793
Recognition of share-based payments
(refer to note 14.1)                             -           -           -           (818)
Buy-back of shares (refer to note 19)            -      (2 711)          -              -
Recognition of IFRS 9 adjustment                
(refer to note 17)                               -           -           -              -
Total comprehensive income for                  
the period                                       -           -         (46)             -
Balance at 30 June 2018                    234 051     (10 369)        877          5 975
For the six months ended 30 June 2017
Balance at 1 January 2017                  241 867      (9 330)        462          2 337
Recognition of share-based payments
(refer to note 14.2)                             -           -           -          3 564
Buy-back of shares (refer to note 19)            -      (3 124)          -              -
Total comprehensive income for                  
the period                                       -           -         375              -
Balance at 30 June 2017                    241 867     (12 454)        837          5 901
For the year ended 31 December 2017     
Balance at 1 January 2017                  241 867      (9 330)        462          2 337
Recognition of share-based payments     
(refer to note 14.1)                       (7 816)           -           -          5 227
Buy-back of shares (refer to note 19)           -       (3 124)          -              -
Issue of ordinary shares under            
employee share option plan                      -        4 796           -           (771)
Total comprehensive income for            
the year                                        -            -         461              -
Balance at 31 December 2017               234 051       (7 658)        923          6 793

                                     Attributable 
                                        to owners  
                                    of the parent
                                                                        Non-
                                         Retained                controlling
                                         earnings        Total      interest        Total
                                            R'000        R'000         R'000        R'000
For the six months ended 30 June 2018                            
Balance at 1 January 2018                 309 697      543 806        (1 461)     542 345
Recognition of share-based payments
(refer to note 14.1)                            -         (818)            -         (818)
Buy-back of shares (refer to note 19)           -       (2 711)            -       (2 711)
Recognition of IFRS 9 adjustment
(refer to note 17)                        (30 758)     (30 758)            -      (30 758)
Total comprehensive income for
the period                                 45 865       45 819           155       45 974
Balance at 30 June 2018                   324 804      555 338        (1 306)     554 032
For the six months ended 30 June 2017
Balance at 1 January 2017                 211 155      446 491           277      446 768
Recognition of share-based payments
(refer to note 14.2)                            -        3 564             -        3 564
Buy-back of shares (refer to note 19)           -       (3 124)            -       (3 124)
Total comprehensive income for
the period                                 42 461       42 836          (940)      41 896
Balance at 30 June 2017                   253 616      489 767          (663)     489 104
For the year ended 31 December 2017
Balance at 1 January 2017                 211 155      446 491           277      446 768
Recognition of share-based payments
(refer to note 14.1)                            -       (2 589)            -       (2 589)
Buy-back of shares (refer to note 19)           -       (3 124)            -       (3 124)
Issue of ordinary shares under                                           
employee share option plan                      -        4 025             -        4 025
Total comprehensive income for
the year                                   98 542       99 003        (1 738)      97 265
Balance at 31 December 2017               309 697      543 806        (1 461)     542 345

Condensed consolidated statement of cash flows for the six months ended 30 June 2018
                                                    Six months   Six months       Year to
                                                    to 30 June   to 30 June   31 December
                                                          2018         2017          2017
                                              Notes      R'000        R'000         R'000
Cash generated from operations before               
net working capital changes                             54 258       55 735       107 624
Cash generated from operations                 14.1     63 639       66 340       128 860
Finance income                                           1 235          606         1 486
Finance costs                                          (12 358)     (11 163)      (23 360)
Taxation paid                                            1 742          (48)          638
Increase in net working capital                14.2    (22 239)     (10 405)      (91 706)
Cash flows from operating activities                    32 019       45 330        15 918
Cash flows from investing activities                   (16 315)     (46 461)      (60 710)
Property, plant and equipment acquired            5     (3 160)      (3 508)      (12 068)
Proceeds on disposal of property, plant       
and equipment                                               15          565         1 109
Dividends received                                           -           -          1 032
Intangible assets acquired                        7     (2 536)     (2 989)        (7 645)
Net cash flow on acquisition of business       14.3    (10 634)    (40 529)       (43 138)
Cash flows from financing activities                   (16 670)    (49 215)        (4 789)
(Decrease) in borrowings                               (13 959)    (46 091)        (1 948)
Payment for buy-back of shares                          (2 711)     (3 124)        (3 124)
Proceeds on disposal of shares                               -           -          4 796
Settlement of equity-settled share-based                          
payments                                                     -           -         (4 513)
Net change in cash and cash equivalents                   (966)    (50 346)       (49 581)
Cash and cash equivalents at the beginning                        
of the period                                           25 548      75 129         75 129
Cash and cash equivalents at the end          
of the period                                           24 582      24 783         25 548

Notes to the condensed consolidated interim financial statements
1. Nature of operations and general information
Workforce Holdings Limited is a holding company. Its subsidiaries provide human capital solutions
that include temporary employment services, permanent placement recruitment, training and skills
development services, contractor on-boarding, health and wellness, disability solutions, financial
services, lifestyle benefits and business process outsourcing solutions.

The unaudited condensed interim financial statements are presented in South African Rand
("ZAR"), which is the functional currency of the group.

The unaudited condensed interim financial statements were approved for issue by the Board of
Directors on 22 August 2018.

2. Basis of preparation and significant accounting policies
The unaudited condensed consolidated interim financial statements have been prepared in
accordance with the Listings Requirements of JSE Limited for interim financial statements,
International Accounting Standard ("IAS") 34: Interim Financial Reporting and the South African
Companies Act, 2008 (Act 71 of 2008), as amended, the SAICA Financial Reporting Guides, as
issued by the Accounting Practice Committee, as well as the SAICA Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council.

The unaudited condensed interim financial statements for the six months ended 30 June 2018
were compiled under the supervision of W van Wyk, CA(SA), the group financial director. The
unaudited condensed consolidated interim financial statements have been prepared using the
measurement basis specified by International Financial Reporting Standards ("IFRS") for each type
of asset, liability, income and expense.

The accounting policies adopted in the preparation of the interim condensed consolidated
financial statements are consistent with those followed in the preparation of the group's annual
consolidated financial statements for the year ended 31 December 2017, except for the adoption
of new standards effective as of 1 January 2018. The group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet effective.

The group applies, for the first time, IFRS 9: Financial Instruments and IFRS 15: Revenue from
Contracts from Customers. The adoption of IFRS 9: Financial Instruments resulted in an adjustment
of the provision for doubtful debt and the opening retained income. As required by IAS 34, the
nature and effect of these changes are disclosed further in note 17.

3. Events after reporting date
No material events occurred between the reporting date and the date of approval of these
condensed financial statements.

4. Auditor's responsibility
These unaudited condensed interim financial results have not been audited nor reviewed by the
group's auditors.

5. Property, plant and equipment
                                          Motor       Computer    Industrial       Office
                                       vehicles      equipment     equipment    equipment
                                          R'000          R'000         R'000        R'000
Six months to 30 June 2018
Carrying amount at 1 January 2018         4 493          6 525         2 579        4 071
Additions                                     -          1 581           420          533
Disposals                                     -            148             -            -
Acquired through business combination         -             76             -           73
Depreciation                               (831)        (2 091)         (663)        (649)
Carrying amount at 30 June 2018           3 662          6 239         2 336        4 028
Six months to 30 June 2017
Carrying amount at 1 January 2017         3 693          4 140         1 872        2 827
Additions                                     -          1 793           568          670
Disposals                                  (281)             -             -            -
Acquired through business combination       417            719           686          985
Depreciation                               (853)        (1 584)         (607)        (729)
Carrying amount at 30 June 2017           2 976          5 068         2 519        3 753
Year to 31 December 2017
Carrying amount at 1 January 2017         3 693          4 140         1 872        2 827
Additions                                 3 137          5 128         1 060        1 177
Disposals                                  (317)           (22)            -          (24)
Acquired through business combination       421            718           686          985
Depreciation                             (2 441)        (3 439)       (1 039)        (894)
Carrying amount at 31 December 2017       4 493          6 525         2 579        4 071

                                         Leasehold       Training    Land and
                                      improvements        manuals   buildings       Total
                                             R'000          R'000       R'000       R'000
Six months to 30 June 2018
Carrying amount at 1 January 2018            561            2 630       2 700      23 559
Additions                                    242              384           -       3 160
Disposals                                      -                -           -         148
Acquired through business combination          -              344           -         493
Depreciation                                 (72)            (786)          -      (5 092)
Carrying amount at 30 June 2018              731            2 572       2 700*     22 268
Six months to 30 June 2017
Carrying amount at 1 January 2017            130            2 653       2 700      18 015
Additions                                    220              257           -       3 508
Disposals                                      -                -           -        (281)
Acquired through business combination          -                -           -       2 807
Depreciation                                 (28)            (464)          -      (4 265)
Carrying amount at 30 June 2017              322            2 446       2 700*     19 784
Year to 31 December 2017
Carrying amount at 1 January 2017            130            2 653       2 700      18 015
Additions                                    534            1 032           -      12 068
Disposals                                     (6)            (147)          -        (516)
Acquired through business combination          -                -           -       2 810
Depreciation                                 (97)            (908)          -      (8 818)
Carrying amount at 31 December 2017          561            2 630       2 700*     23 559
* The carrying value of land and buildings is immaterial hence no depreciation recognised.

6. Goodwill
                                                                                    Total
                                                                                    R'000
Six months to 30 June 2018                                                     
Carrying amount at 1 January 2018                                                 134 480
Acquired through business combination                                              58 409
Carrying amount at 30 June 2018                                                   192 889
Six months to 30 June 2017                                                     
Carrying amount at 1 January 2017                                                 102 287
Acquired through business combination                                              38 879
Carrying amount at 30 June 2017                                                   141 166
Year to 31 December 2017                                                       
Carrying amount at 1 January 2017                                                 102 287
Acquired through business combination                                              32 193
Carrying amount at 31 December 2017                                               134 480
                                                                               
7. Intangible assets
                                                                                 Training
                                                                                   course
                                                          Computer               accredi-
                                                          software    Brands      tations
                                                             R'000     R'000        R'000
Six months to 30 June 2018
Carrying amount at 1 January 2018                           17 065         -            -
Additions                                                      565         -            -
Acquired through business combination                            3         -       20 276
Amortisation                                                (2 695)        -         (344)
Carrying amount at 30 June 2018                             14 938         -       19 932
Six months to 30 June 2017
Carrying amount at 1 January 2017                           15 755       756            -
Additions                                                      965         -            -
Acquired through business combination                        2 761         -            -
Amortisation                                                (3 639)     (501)           -
Carrying amount at 30 June 2017                             15 842       255            -
Year to 31 December 2017
Carrying amount at 1 January 2017                           15 755       756            -
Additions                                                    5 277         -            -
Disposals                                                      (39)        -            -
Acquired through business combination                        2 761         -            -
Amortisation                                                (6 689)     (756)           -
Carrying amount at 31 December 2017                         17 065         -            -

                                                            Client
                                                         relation-   Work in
                                                             ships  progress        Total
                                                             R'000     R'000        R'000
Six months to 30 June 2018
Carrying amount at 1 January 2018                           16 262    10 920       44 247
Additions                                                        -     1 971        2 536
Acquired through business combination                       10 672         -       30 951
Amortisation                                                (5 550)        -       (8 589)
Carrying amount at 30 June 2018                             21 384    12 891       69 145
Six months to 30 June 2017
Carrying amount at 1 January 2017                           14 067     8 552       39 130
Additions                                                        -     2 024        2 989
Acquired through business combination                       12 012         -       14 773
Amortisation                                                (4 564)        -       (8 704)
Carrying amount at 30 June 2017                             21 515    10 576       48 188
Year to 31 December 2017
Carrying amount at 1 January 2017                           14 067     8 552       39 130
Additions                                                        -     2 368        7 645
Disposals                                                        -         -          (39)
Acquired through business combination                       12 012         -       14 773
Amortisation                                                (9 817)        -      (17 262)
Carrying amount at 31 December 2017                         16 262    10 920       44 247

8. Segment analysis
The group's segment analysis is based on the following three core business segments:
- Staffing and Outsourcing: Comprising temporary employment services, permanent recruitment,
  executive search, payroll management, HR and IR consulting services, disability solutions,
  turnkey staffing solutions and business process outsourcing solutions;
- Training and Consulting: Comprising accredited short courses, skills programmes, full
  qualifications, learnerships, apprenticeships, internships, adult education training ("AET") and
  contractor on-boarding;
- Financial and Healthcare: Comprising funeral cover, hospital cover, day-to-day medical
  insurance, lending products, primary healthcare, occupational healthcare, employee wellness
  programmes and health risk assessments.

These operating segments are monitored and strategic decisions are made on the basis of
adjusted segment operating results.

                                                    Staffing        Training    Financial
                                                    and out-             and          and
                                                    sourcing      consulting   healthcare
                                                       R'000           R'000        R'000
Six months to June 2018
Segment revenues                                   1 249 049         102 117       71 658
Inter-segment revenues                                12 057           7 463          862
Cost of sales                                     (1 016 204)        (49 672)     (26 530)
Inter-segment cost of sales                          (11 264)              -            -
Operating costs                                     (153 884)        (31 837)     (38 548)
Inter-segment operating costs                           (792)         (7 464)        (862)
Fair value adjustments                                     -            (885)         450
EBITDA                                                78 962          19 722        7 030
Depreciation and amortisation
of non-financial assets                                 (698)         (1 532)      (1 364)
Net finance costs                                       (340)            723         (978)
Segment profit/(loss) before tax                      77 924          18 913        4 688
Capital expenditure                                    1 841          32 283        1 105
Segment total assets                                 538 686         130 681      229 608
Segment total liabilities                           (124 037)        (96 867)    (274 697)
Net segment assets                                   414 649          33 814      (45 089)
Six months to June 2017
Segment revenues                                   1 229 474          96 358       40 277
Inter-segment revenues                                     -           8 566            -
Cost of sales                                     (1 005 396)        (33 388)     (13 453)
Inter-segment cost of sales                                -          (8 566)           -
Operating costs                                     (132 236)        (47 877)     (22 052)
Fair value adjustments                                     -               -            -
EBITDA                                                91 842          15 093        4 772
Depreciation and amortisation
of non-financial assets                               (1 817)         (2 308)        (968)
Net finance costs                                        197             186         (618)
Segment profit/(loss) before tax                      90 222          12 971        3 186
Capital expenditure                                    1 892          19 156          304
Segment total assets                                 447 787          87 949      211 171
Segment total liabilities                            (77 127)        (64 689)    (222 807)
Net segment assets/(liabilities)                     370 660          23 260      (11 636)
Year to 31 December 2017
Segment revenues                                   2 521 071         158 000      127 005
Inter-segment revenues                                23 085          17 681        1 474
Cost of sales                                     (2 054 073)        (70 119)     (45 254)
Inter-segment cost of sales                          (22 400)         (8 566)           -
Operating costs                                     (295 249)        (60 995)     (67 091)
Inter-segment operating costs                           (685)         (9 115)      (1 474)
Fair value adjustments                                     -          (3 464)       2 205
Other income                                               -              92          940
EBITDA                                               171 749          23 514       17 805
Depreciation and amortisation
of non-financial assets                               (3 468)         (3 372)      (2 936)
Net finance costs                                        (98)            748         (857)
Segment profit/(loss) before tax                     168 183          20 890       14 009
Capital expenditure                                    9 737           8 599        4 845
Segment total assets                                 519 019         110 711      244 849
Segment total liabilities                           (111 240)        (88 885)    (272 158)
Net segment assets/(liabilities)                     407 779          21 826      (27 309)

                                                      Shared
                                                    services        Consoli-
                                                 and central          dation
                                                       costs         entries        Total
                                                       R'000           R'000        R'000
Six months to June 2018
Segment revenues                                          96               -    1 422 920
Inter-segment revenues                                     -         (20 382)           -
Cost of sales                                          3 376               -   (1 089 030)
Inter-segment cost of sales                                -          11 264            -
Operating costs                                      (41 324)              -     (265 593)
Inter-segment operating costs                              -           9 118            -
Fair value adjustments                                   (23)              -         (458)
EBITDA                                               (37 875)              -       67 839
Depreciation and amortisation
of non-financial assets                               (4 335)         (5 752)     (13 681)
Net finance costs                                    (10 528)              -      (11 123)
Segment profit/(loss) before tax                     (52 738)         (5 752)      43 035
Capital expenditure                                    1 911               -       37 140
Segment total assets                                 401 383        (203 639)   1 096 719
Segment total liabilities                           (115 915)         68 830     (542 686)
Net segment assets                                   285 468        (134 809)     554 033
Six months to June 2017
Segment revenues                                           -               -    1 366 109
Inter-segment revenues                                     -          (8 566)           -
Cost of sales                                           (867)                  (1 053 104)
Inter-segment cost of sales                                -           8 566            -
Operating costs                                      (41 780)              -     (243 945)
Fair value adjustments                                (1 732)              -       (1 732)
EBITDA                                               (44 379)              -       67 328
Depreciation and amortisation
of non-financial assets                               (3 010)         (4 866)     (12 969)
Net finance costs                                    (11 029)              -      (11 264)
Segment profit/(loss) before tax                     (58 418)         (4 866)      43 095
Capital expenditure                                    2 725               -       24 077
Segment total assets                                 180 578               -      927 485
Segment total liabilities                            (73 758)              -     (438 381)
Net segment assets/(liabilities)                     106 820               -      489 104
Year to 31 December 2017
Segment revenues                                       1 814               -    2 807 890
Inter-segment revenues                                     -         (42 240)           -
Cost of sales                                         (3 015)              -   (2 172 461)
Inter-segment cost of sales                                -          30 966            -
Operating costs                                      (89 552)              -     (512 887)
Inter-segment operating costs                              -          11 274            -
Fair value adjustments                                11 624               -       10 365
Other income                                               -               -        1 032
EBITDA                                               (79 129)              -      133 939
Depreciation and amortisation
of non-financial assets                               (5 866)        (10 435)     (26 080)
Net finance costs                                    (21 667)              -      (21 874)
Segment profit/(loss) before tax                    (106 662)        (10 435)      85 985
Capital expenditure                                    2 103          12 012       37 296
Segment total assets                                 312 728        (191 149)     996 158
Segment total liabilities                            (21 992)         40 462     (453 813)
Net segment assets/(liabilities)                     290 736        (150 687)     542 345

9. Taxation
The effective tax rate of (7%) (2017: 3,7%) for the period was based on the anticipated weighted
average tax rate for the full financial year. The low tax rate is due to the tax deductions of
learnership allowances as well as having earned tax-free employment incentive income.

10. Earnings per share
                                                     Six months   Six months      Year to
                                                     to 30 June   to 30 June  31 December
                                                           2018         2017         2017
Basic earnings per share
Profit attributable to equity shareholders
of the parent company (R'000)                            45 865       42 461       98 542
Weighted average number of shares
in issue ('000)                                         227 230      226 979      229 336
Diluted weighted average number of
shares in issue ('000)                                  232 008      232 370      238 973
Basic earnings per share (cents)                           20,2         18,7         43,0
Diluted earnings per share (cents)                         19,7         18,3         41,2
Headline earnings per share                          
The earnings used in the calculation of              
headline earnings per share are as follows:          
Profit attributable to equity shareholders           
of the parent company (R'000)                            45 865       42 461       98 542
Headline earnings adjustment (R'000)                       (125)        (202)        (400)
- Gain on disposal of property, plant and equipment        (173)        (281)        (555)
- Tax effect of adjustments                                  48           79          155
Total headline earnings (R'000)                          45 740       42 259       98 142
Weighted average number of shares in issue ('000)       227 230      226 979      229 336
Headline earnings per share (cents)                        20,1         18,6         42,8
The weighted average number of ordinary shares       
for the purpose of diluted earnings per share        
reconciles to the weighted average number of         
ordinary shares used in the calculation of basic     
earnings per share as follows:                          227 230      226 979      229 336
Shares deemed to be issued for no consideration      
in respect of:                                       
Employee options                                          4 778        5 391        9 637
Weighted average number of ordinary shares in        
the calculation of diluted earnings per share           232 008      232 370      238 973
                                                                                                   
11. Dividends
No dividend was declared relating to the period under review.

12. Changes to the board
With effect from 1 July 2018:
- Philip Froom resigned as chief executive officer of the group;
- Mr Ronald Katz, executive chairman of the group, assumed the role of chief executive officer; and
- Mr John Macey, the head independent non-executive director, assumed the role of chairman
  of the group.

Subsequent to the reporting period, Ms Inshaaf Ross was appointed as a non-executive director
with effect from 13 August 2018.

Furthermore, in compliance with paragraph 3.59 of the JSE Listings Requirements, shareholders
are advised that Mr Mark Anderson has resigned as alternate director with immediate effect due 
to other responsibilities.

13. Other significant matter
The Employment Tax Incentive introduced in January 2014 incentivises companies that employ
young job seekers. The effect of this incentive on the group's results has been substantial and has
been treated as a reduction of the relevant wage expense in terms of IAS 20: Accounting for
government grants and disclosure of government assistance. The Employment Tax Incentive
income earned in for 2018 was R33 113 000 (2017: R29 714 000) (2017 December: R66 595 000).
The ETI programme remains in place until February 2019. Early indications are that this
programme is likely to continue subsequent to this proposed period-end.

14. Notes to the condensed consolidated statement of cash flows
                                                      Six months  Six months      Year to
                                                      to 30 June  to 30 June  31 December
                                                            2018        2017         2017
                                                           R'000       R'000        R'000
14.1 Cash generated from operations
Profit before taxation                                    43 035      43 095       85 985
Finance income                                            (1 235)       (606)      (1 486)
Finance costs                                             12 358       9 431       23 360
Dividends received                                             -           -       (1 032)
Adjustment for non-cash items:
(Gain) on disposal of property, plant and equipment         (173)       (281)        (555)
Depreciation and amortisation of non-financial assets     13 681      12 969       26 080
(Loss)/gain arising on financial liability at fair
value through profit or loss                                 458       1 732      (10 385)
(Reversal)/expense recognised in respect of          
cash-settled share-based payment                          (3 667)          -        1 666
(Reversal)/expense recognised in respect of          
equity-settled share-based payment                          (818)          -        5 227
                                                          63 639      66 340      128 860
14.2 Working capital changes                         
Change in trade and other receivables                    (20 553)    (26 874)    (100 527)
Change in trade and other receivables in respect     
of IFRS 9 adjustment (refer to note 17)                  (30 758)          -            -
Change in inventories                                     (1 443)       (275)        (486)
Change in share-based payment                                  -       3 564            -
Change in trade payables                                  30 515      13 180        9 307
                                                         (22 239)    (10 405)     (91 706)
14.3 Net cash flow on acquisition of business        
Net cash inflow on the acquisition of subsidiaries   
- current year (refer to note 15.1.5)                      5 239           -            -
Net cash outflow on the acquisition of subsidiaries  
relating to contingent consideration - prior year's  
acquisition                                              (15 873)    (40 529)     (43 138)
                                                         (10 634)    (40 529)     (43 138)

15. Business combinations
15.1.1 Business acquired
                                                                   Portion of    Conside-
                                                                     business      ration
                                                          Date of    acquired transferred
                Principal activity                    acquisition           %       R'000
Dyna Training   This entity designs, conceptualises,
and Industrial  formulates and produces training
Development     programmes and related materials
(Pty) Ltd       and owns all the intellectual property
                that is licensed to the training
                providers within the Dyna group
                and Dyna franchises.                  1 June 2018         100      31 170

Dyna Training   This entity is a franchise involved
(Pty) Ltd       in marketing and selling the Dyna
                training programmes in the
                Western Cape territory.               1 June 2018         100       9 916

Dyna Training   This entity is a franchise involved
Namibia         in marketing and selling the Dyna
(Pty) Ltd       training programmes in Namibia
                and the remaining Southern African
                Development Community territory,
                excluding South Africa.               1 June 2018         100      23 300

NQ Plus         This entity undertakes all the
Networks        training assessment and moderation
(Pty) Ltd       functions for the Dyna group and
                its franchises as well as conducting
                training learnerships.                1 June 2018         100      16 632
                                                                                   81 017

Workforce has obtained control of the above mentioned entities by acquiring 100% of the equity
and voting rights in each of these entities. The Dyna group was acquired in order to grow
Workforce's training segment by providing leadership, supervisory and management training
programmes in addition to the existing training programmes currently offered.

15.1.2 Consideration to be transferred
                                                             Dyna
                                                       Industrial                    Dyna
                                                     Training and        Dyna    Training
                                                      Development    Training     Namibia
                                                            R'000       R'000       R'000
Cash                                                       13 506       4 297      10 097
Contingent consideration arrangement                       17 661       5 619      13 203
Total                                                      31 167       9 917      23 301

                                                                      NQ Plus
                                                                     Networks       Total
                                                                        R'000       R'000
Cash                                                                    7 208      35 108
Contingent consideration arrangement                                    9 425      45 909
Total                                                                  16 633      81 017

15.1.3 Contingent consideration
                                                             Dyna
                                                       Industrial                    Dyna
                                                     Training and        Dyna    Training
                                                      Development    Training     Namibia
                                                            R'000       R'000       R'000
Legal and acquisition costs                                   199         117         159
Second payment                                              1 485         873       1 184
Third payment                                               2 659       1 563       2 120
Fourth payment                                              4 020       2 362       3 205
Top-up payment                                              5 111       3 004       4 075
Total additional amount                                    13 474       7 919      10 743
Less: Interest raised on future payments                   (4 996)     (2 936)     (3 983)
                                                            8 478       4 983       6 760
  
                                                                      NQ Plus
                                                                     Networks       Total
                                                                        R'000       R'000
Legal and acquisition costs                                               204         679
Second payment                                                          1 518       5 060
Third payment                                                           2 718       9 060
Fourth payment                                                          4 109      13 696
Top-up payment                                                          5 224      17 414
Total additional amount                                                13 773      45 909
Less: Interest raised on future payments                               (5 106)    (17 021)
                                                                        8 667      28 888

Under the contingent consideration arrangement for the Dyna group companies, Workforce is
obliged to pay an amount of up to R5 060 886 subject to the Dyna group companies achieving an
agreed upon operating profit for the 12 months ending 31 May 2019, an amount of up to R9 060 112
subject to the acquired Dyna group companies achieving an agreed upon operating profit for the
12 months ending 31 May 2020 and an amount of up to R13 695 622 subject to the acquired
Dyna group companies achieving an agreed upon operating profit for the 12 months ending
31 May 2021. In the event that the aggregate operating profit for the three-year period exceeds
R42 016 084, an additional payment of up to R17 413 968 may also be payable. All these
payments are calculated using agreed upon formulae. The directors believe that these payments
are probable.

15.1.4 Assets acquired and liabilities recognised at the date of acquisition
                                                             Dyna
                                                       Industrial                    Dyna
                                                     Training and        Dyna    Training
                                                      Development    Training     Namibia
                                                            R'000       R'000       R'000
Non-current assets                                       
Property, plant and equipment                                 377          74           9
Intangible assets                                               3       8 063       2 609
Deferred tax                                               20 279         129           -
Current assets                                                  -           -           -
Trade and other receivables                                   649         263         142
Loans and other receivables                                     -           -           -
Loans to shareholder                                            -           -           -
Taxation                                                        -           -         420
Cash and cash equivalents                                   1 769         705       1 092
Non-current liabilities                                         -           -           -
Shareholders loans                                         (1 071)       (386)     (1 641)
Operating lease liabilities                                     -         (21)          -
Deferred tax                                               (5 774)     (2 258)       (731)
Current liabilities                                             -           -           -
Trade and other payables                                     (606)       (598)        (22)
Taxation                                                     (860)       (165)          -
Provisions                                                      -           -           -
Total                                                      14 923       5 806       1 879

                                                                      NQ Plus
                                                                     Networks       Total
                                                                        R'000       R'000
Non-current assets
Property, plant and equipment                                              33         493
Intangible assets                                                           -      30 951
Deferred tax                                                               93         382
Current assets                                                              -           -
Trade and other receivables                                               271       1 324
Loans and other receivables                                                 1           1
Loans to shareholder                                                        2           2
Taxation                                                                    -         420
Cash and cash equivalents                                               1 673       5 239
Non-current liabilities                                                     -           -
Shareholders loans                                                     (1 051)     (4 149)
Operating lease liabilities                                                 -         (21)
Deferred tax                                                                -      (8 762)
Current liabilities                                                         -           -
Trade and other payables                                                 (663)     (1 890)
Taxation                                                                 (289)     (1 314)
Provisions                                                                (67)        (67)
Total                                                                       1      22 608

The receivables acquired (principally trade receivables) in this transaction with a fair value of
R1 324 000 for Dyna group is equivalent to the gross contractual amount. All contractual cash
flows are expected to be collected.

15.1.5 Net cash outflow on acquisition of subsidiaries
                                                               Dyna
                                                         Industrial
                                                           Training                  Dyna
                                                                and        Dyna  Training
                                                        Development    Training   Namibia
                                                              R'000       R'000     R'000
Consideration paid in cash                                   13 506       4 297    10 097
Less: Cash and cash equivalent balance acquired              (1 769)       (705)   (1 092)
Total                                                        11 737       3 593     9 005
Goodwill arising on acquisition
Maximum consideration transferred                            31 167       9 917    23 301
Less: Fair value of identifiable net assets                 (14 923)     (5 806)   (1 879)
Goodwill arising on acquisition                              16 245       4 111    21 422

                                                                        NQ Plus
                                                                       Networks     Total
                                                                          R'000     R'000
Consideration paid in cash                                                7 208    35 108
Less: Cash and cash equivalent balance acquired                          (1 673)   (5 239)
Total                                                                     5 535    29 869
Goodwill arising on acquisition
Maximum consideration transferred                                        16 633    81 017
Less: Fair value of identifiable net assets                                  (1)  (22 608)
Goodwill arising on acquisition                                          16 632    58 409

Goodwill arose on the acquisition of the Dyna group because the cost of the combination
included a control premium. In addition, the consideration paid for the combination effectively
included amounts in relation to the benefit of the expected synergies, revenue growth and future
market share. These benefits are not recognised separately from goodwill because they do not
meet the recognition criteria for identifiable intangible assets. None of the goodwill in the Dyna
group acquisition is expected to be deductible for tax purposes.

Impact of acquisitions on the results of the group
Revenue from the above acquisition amounted to R1 445 658 and profit before tax of R637 037.
Had these business combinations been effective at 1 January 2018, the revenue of the group
from operations would have been R10 210 785 and profit before tax would have been R3 624 541.

15.2 Contingent consideration relating to acquisitions in previous years
Refer to note 16.2.4 for details of changes in the recognised amounts of the contingent
consideration liability.

16. Financial assets and financial liabilities
16.1.1 Set out below is an overview of financial assets held by the group at 30 June 2018,
       31 December 2017 and 30 June 2017
                                                    Six months   Six months       Year to
                                                    to 30 June   to 30 June   31 December
                                                         2018          2017          2017
                                                        R'000         R'000         R'000
Financial assets at amortised cost                    757 375       676 459       739 937
Trade and other receivables                           732 793       651 676       714 389
Cash and cash equivalents                              24 582        24 783        25 848
Financial assets at fair value through other        
comprehensive income                                
Quoted equity shares                                    2 724        2 684          2 770
Financial assets at fair value through              
profit and loss                                     
Investment in cell captive                              6 082          400          2 605
Total                                                 763 154      679 543        745 312
Total current                                         757 375      676 459        739 937
Total non-current                                       8 806        3 084          5 375

16.1.2 Set out below is an overview of financial liabilities held by the group as at 30 June 2018,
       31 December 2017 and 30 June 2017
                                                    Six months   Six months       Year to
                                                    to 30 June   to 30 June   31 December
                                                          2018         2017          2017
                                                         R'000        R'000         R'000
Financial liabilities at amortised cost
Trade and other payables                               167 032      145 006       136 914
Interest-bearing borrowings                            243 266      196 753       258 037
Financial liabilities at fair value through 
profit or loss
Contingent consideration                                96 631       55 518         9 048
Loan on treasury shares                                  7 711        7 711         7 783
Total                                                  418 009      404 988       402 734
Total current                                          421 185      364 710       385 375
Total non-current                                       93 455       40 278        26 407

16.2 Fair value measurement
Fair values
All financial assets and liabilities carried at amortised costs have carrying values which
approximate their fair values.

16.2.2 The following table provides the fair value measurement hierarchy of the group's financial
       assets and financial liabilities as at 30 June 2018, 30 June 2017 and 31 December 2017
                                                                                   Quoted
                                                                                   prices
                                                                                in active
                                                                                  markets
                                                       Date of       Total        Level 1
                                                     valuation       R'000          R'000
As at 30 June 2018                            
Financial assets                              
Quoted equity shares                              30 June 2018       2 724          2 724
Cell captive                                      30 June 2018       3 055              -
Financial liabilities                         
Loan on treasury shares                           30 June 2018       7 711              -
Contingent consideration relating to          
business combination                              30 June 2018      96 631              -
As at 30 June 2017                            
Financial assets                              
Quoted equity shares                              30 June 2017       2 684          2 684
Cell captive                                      30 June 2017         400              -
Financial liabilities                         
Loan on treasury shares                           30 June 2017       7 711              -
Contingent consideration relating to          
business combination                              30 June 2017      55 518              -
As at 31 December 2017                        
Financial assets                              
Quoted equity shares                          31 December 2017       2 770          2 770
Cell captive                                  31 December 2017       2 605              -
Financial liabilities                                               
Loan on treasury shares                       31 December 2017       7 783              -
Contingent consideration relating to                                                 
business combination                          31 December 2017       9 048              -
                                                            
                                                                              Significant
                                                               Significant       unobser-
                                                                observable          vable
                                                                    inputs         inputs
                                                                   Level 2        Level 3
                                                                     R'000          R'000
As at 30 June 2018                                          
Financial assets                                            
Quoted equity shares                                                     -              -
Cell captive                                                             -          3 055
Financial liabilities                                       
Loan on treasury shares                                                  -          7 711
Contingent consideration relating to                        
business combination                                                     -         96 631
As at 30 June 2017                                          
Financial assets                                            
Quoted equity shares                                                     -              -
Cell captive                                                             -            400
Financial liabilities                                       
Loan on treasury shares                                                  -          7 711
Contingent consideration relating to                        
business combination                                                     -         55 518
As at 31 December 2017                                      
Financial assets                                            
Quoted equity shares                                                     -              -
Cell captive                                                             -          2 604
Financial liabilities                                       
Loan on treasury shares                                                  -          7 783
Contingent consideration relating to                        
business combination                                                     -          9 048

16.2.3 Description of significant unobservable inputs to valuation
The significant unobservable inputs used in the fair value measurements of financial instruments
within level 3 of the fair value hierarchy, together with a quantitative sensitivity analysis as at
30 June 2018 and 2017 are shown below:

Financial assets
Investment in cell captive
Valuation technique
Net asset value is used as a valuation where the underlying assets and liabilities have been
assessed to represent the fair value of the investment. Due to the nature of the investment,
specifically the significant composition of liquid assets and liabilities, the net value is seen 
to be the most appropriate representation of fair value.

Significant unobservable inputs
Fair values of the cell captive's underlying assets and liabilities.

Sensitivity of the input to fair value
A 2% increase or decrease in the fair value of the underlying assets and liabilities should not
result in a change in the fair value.

Financial liabilities
Contingent consideration relating to business combination
Valuation technique
Discounted cash flow method was used to capture the present value of the expected future
economic benefits that will flow out of the group. Discount rate of 17,5% determined using the
capital asset pricing model.

Significant unobservable inputs
Discount rate of 17,5% determined using the capital asset pricing model.
Probability adjusted profits with ranges of R13 500 000 to R40 500 000 and R100 000 000
respectively.

Sensitivity of the input to fair value
A 2% increase or decrease in the discount rate used while holding all other variables constant
would decrease/increase the fair value of the loan by R72 800 (2017: R66 600).

A slight change in the probability adjusted profits in isolation would not result in a significant
change in the fair value.

Treasury share loan
Valuation technique
Discounted cash flow method was used to capture the present value of the expected future economic 
benefits that will flow out of the group.

Significant unobservable inputs
A risk adjusted discount rate of 8,2%.

Sensitivity of the input to fair value
A 2% increase in the discount rate used while holding all other variables constant would 
decrease/increase the fair value of the loan by R200 000 (2017: R275 000).

16.2.4 Reconciliation of level 3 fair value measurements
                                       Investment
                                          in cell     Treasury      Contingent
                                          captive   share loan   consideration      Total
                                            R'000        R'000           R'000      R'000
As at 30 June 2018
Opening balance                             2 605       (7 783)         (9 048)   (14 226)
Unrealised gain in profit or loss             450           72           3 066      3 588
Additions                                       -            -         (45 909)   (45 909)
Payments                                        -            -         (44 740)   (44 740)
Closing balance                             3 055       (7 711)        (96 631)  (101 287)
As at 30 June 2017
Opening balance                               400       (7 711)        (17 406)   (24 717)
Unrealised gain in profit or loss               -            -           6 844      6 844
Additions                                       -            -               -          -
Payments                                        -            -          66 080     66 080
Closing balance                               400       (7 711)         55 518     48 207
As at 31 December 2017
Opening balance                               400       (7 711)        (17 406)   (24 717)
Unrealised gain/(loss) in profit 
or loss                                     2 205          (72)          6 844      8 977
Additions                                       -            -         (21 326)   (21 326)
Payments                                        -            -          22 840     22 840
Closing balance                             2 605       (7 783)         (9 048)   (14 226)

17. Changes to the group's accounting policies
IFRS 9: Financial Instruments
IFRS 9: Financial Instruments replaces IAS 39: Financial Instruments: Recognition and
Measurement for annual periods beginning on or after 1 January 2018, bringing together all three
aspects of the accounting for financial instruments: classification and measurement; impairment;
and hedge accounting.

The group applied prospectively, with the initial application date of 1 January 2018. The group
has recognised the difference between the previous carrying amount of financial instruments at
amortised cost after applying IFRS 9 at the carrying amount of financial assets at amortised cost
at the beginning of the annual reporting period that includes the date of initial application in the
opening retained earnings.

The effect of adopting IFRS 9 is as follows:

Impact on the statement of financial position (increase/(decrease) as at 1 January 2018:

                                                                                    R'000
Assets
Current assets
Trade and other receivables                                                       (30 758)
Equity
Retained earnings                                                                  30 758

Except for certain trade receivables, under IFRS 9, the group initially measures a financial asset
at its fair value plus, in the case of a financial asset not at fair value through profit or loss,
transaction costs. Under IFRS 9, debt financial instruments are subsequently measured at fair
value through profit or loss ("FVPL"), amortised cost, or fair value through other comprehensive
income ("FVOCI"). The classification is based on two criteria: the group's business model for
managing the assets; and whether the instruments' contractual cash flows represent "solely
payments of principal and interest" on the principal amount outstanding (the "SPPI criterion").

The new classification and measurement of the group's debt financial assets are as follows:
Debt instruments at amortised cost for financial assets that are held within a business model
with the objective to hold the financial assets in order to collect contractual cash flows that
meet the SPPI criterion. This category includes the group's trade and other receivables, and
loans included under other non-current financial assets.

Debt instruments at FVOCI, with gains or losses recycled to profit or loss on derecognition.
Financial assets in this category are the group's quoted debt instruments that meet the SPPI
criterion and are held within a business model both to collect cash flows and to sell. Under
IAS 39, the group's quoted debt instruments were classified as available-for-sale ("AFS")
financial assets.

Other financial assets are classified and subsequently measured, as follows:
Equity instruments at FVOCI, with no recycling of gains or losses to profit or loss on
derecognition. This category only includes equity instruments, which the group intends to hold
for the foreseeable future and which the group has irrevocably elected to so classify upon initial
recognition or transition. The group classified its unquoted equity instruments as equity
instruments at FVOCI. Equity instruments at FVOCI are not subject to an impairment assessment
under IFRS 9. Under IAS 39, the group's unquoted equity instruments were classified as
AFS financial assets.

Financial assets at FVPL comprise derivative instruments and quoted equity instruments which
the group had not irrevocably elected, at initial recognition or transition, to classify at FVOCI. This
category would also include debt instruments whose cash flow characteristics fail the SPPI
criterion or are not held within a business model whose objective is either to collect contractual
cash flows, or to both collect contractual cash flows and sell. Under IAS 39, the group's quoted
equity securities were classified as AFS financial assets. Upon transition the AFS reserve
relating to quoted equity securities, which had been previously recognised under accumulated
OCI, was reclassified to retained earnings.

The assessment of the group's business models was made as of the date of initial application,
1 January 2018, and then applied retrospectively to those financial assets that were not
derecognised before 1 January 2018. The assessment of whether contractual cash flows on
debt instruments are solely comprised of principal and interest was made based on the facts
and circumstances as at the initial recognition of the assets.

The accounting for the group's financial liabilities remains largely the same as it was under
IAS 39. Similar to the requirements of IAS 39, IFRS 9 requires contingent consideration liabilities
to be treated as financial instruments measured at fair value, with the changes in fair value
recognised in the statement of profit or loss.

The adoption of IFRS 9 has fundamentally changed the group's accounting for impairment
losses for financial assets by replacing IAS 39's incurred loss approach with a forward-looking
expected credit loss ("ECL") approach.

ECLs are based on the difference between the contractual cash flows due in accordance with
the contract and all the cash flows that the group expects to receive. The shortfall is then
discounted at an approximation to the asset's original effective interest rate.

For contract assets and trade and other receivables, the group has applied the standards
simplified approach and has calculated ECLs based on lifetime expected credit losses. The
group has established a provision matrix that is based on the group's historical credit loss
experience, adjusted for forward-looking factors specific to the debtors and the economic
environment.

The group considers a financial asset in default when contractual payments are 30 days past due.
However, in certain cases, the group may also consider a financial asset to be in default when
internal or external information indicates that the group is unlikely to receive the outstanding
contractual amounts in full before taking into account any credit enhancements held by the
group. The adoption of the ECL requirements of IFRS 9 resulted in increases in impairment
allowances of the group's debt financial assets. The increase in allowance resulted in
adjustment to retained earnings.

There is no impact on the statement of comprehensive income and statement of cash flows and
the basic and diluted EPS.

18. Related parties
During the period, the group entered into related-party transactions in the ordinary course of
business, the substance of which are similar to those disclosed in the group's annual financial
statements for the year ended 31 December 2017.

19. Treasury shares
                                                  Six months   Six months       Year to
                                                  to 30 June   to 30 June   31 December
                                                        2018         2017          2017
                                                       R'000        R'000         R'000
Balance at the beginning of the year                  (7 658)      (9 330)       (9 330)
Share buy-back                                        (2 711)      (3 124)       (3 124)
Shares distributed                                         -            -         4 796
                                                     (10 369)     (12 454)       (7 658)

20. Reclassification of prior year presentation
Certain reclassifications have been made to the prior period's condensed consolidated statement
of comprehensive income in order to enhance the comparability to the current period's financial
results. The recognition of fair value adjustments have subsequently been disclosed separately in
the condensed consolidated statement of comprehensive income, resulting in certain line items
being reclassified.
                                                      Previously
                                                        reported   Restated
                                                         30 June    30 June
                                                            2017       2017   Adjustment
                                                           R'000      R'000        R'000
Condensed consolidated statement of
comprehensive income
Fair value adjustments                                         -      1 732       (1 732)
Earnings before interest, taxation, depreciation
and amortisation                                          69 060     67 328        1 732
Finance costs                                             13 602     11 870        1 732
Profit before taxation                                    43 095     43 095            -

Directors' commentary
Background and purpose
Workforce Holdings Limited is a diversified services group. Its subsidiaries provide human capital
solutions to employers, covering all industry sectors. The group's services include temporary
employment services, training and skills development, business process outsourcing, contractor
on-boarding, permanent placement recruitment, healthcare, wellness, disability solutions, financial
services and lifestyle benefits.

The six months under review
Our review of the group's trading in the first half of 2018 must be seen against the backdrop of
very challenging factors that affected the macro, political and economic climate in South Africa.

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 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.

Nonetheless, we are pleased to report that despite these difficult circumstances, the group has
been able to grow its earnings, albeit at a lower rate. 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.

At a macro and micro level, the Constitutional Court ruling in the "Assign" case which was delivered
in July 2018 was a landmark event for the temporary employment services ("TES") industry in
South Africa. It clarified legislation which came into effect in 2015 and has given direction to all
the stakeholders as to their respective rights and obligations in terms of the Labour Relations Act.
It is our view that the Constitutional Court enunciated on the following key principles:
(a) The affected worker becomes the deemed employee of the client after three months'
    employment through a TES for the purposes of the Labour Relations Act only. (This does not
    mean that employees become permanent or that there is a transfer of employment.);
(b) Fixed term contracts are still legitimate;
(c) The tripartite relationship between TES, client and employee continues to exist, as long as
    the client and the TES have an ongoing contractual relationship; and
(d) The court recognised the importance of and the continued existence of the TES. There was no
    ban on labour brokers.

The results of this we believe to be a much more certain environment for all parties, and as a
result of this certainty, we hope that there will be an increase of the use of our diversified service
offering.

Two other factors in the make-up of our earnings which could be deemed to be unsustainable
are the employment tax incentive ("ETI") and the tax breaks in terms of section 12H which is
derived from learnerships.

The ETI is due to come to an end on 28 February 2019. In mitigation thereof, we can report that
there is currently a draft bill before parliament, which must still be debated on, for the extension of
the ETI for several years going forward.

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

Going forward we recognise that our group is an important employer of youth and a provider of
training interventions with strong abilities and experience in this field. As such, we should be in a
position to utilise the various government incentives that are aimed at enabling historically
disadvantaged individuals to access the economy.

We are developing a revised organisational structure which is aimed at improving our depth of
management and ensuring we recognise and develop the talent employed in our group and more
fully utilise the skills that are not only within the group but also in the companies that we have
acquired.

The structure consists of the appointment of an executive committee ("EXCO") reporting to the
Chief Executive Officer and to the board. This EXCO will be responsible for strategies and their
execution.

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. We are appointing cluster heads who will, together with their
own executive committees, be fully responsible for the running and development of their cluster.
They will report to the group CEO and the group EXCO.

This restructuring should be completed over the next few months.

A number of other highlights to mention relate to some of these clusters.

As outlined above, 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. We anticipate further strong performance
going forward.

We concluded a new acquisition effective 1 June 2018, namely the Dyna Training Group. We will
continue to look at other opportunities which have been offered to us. The Prisma and KBC
acquisitions have been bedded down and are proving to be areas of continued growth and good
investments.

Our financial services cluster has shown improved results with much more stability in collections.
We also introduced new bespoke software programmes with good results. Because of the stability
that we have attained we are looking forward to improved contributions to the group profits.

Our cluster of businesses in permanent recruitment and the white-collar arena, continues to
struggle. The changes we have made hopefully will bear fruit in the second half of the year.

The medical and healthcare cluster returned good results in the group and we anticipate that their
business model, which focuses on the provision of outsourced medical and nursing staff, employee
health and wellness programmes and occupational healthcare and screening, could show
significant growth over the next number of years.

Africa development
We strongly believe that our product range across all the clusters will find significant market share
in a number of southern African countries and Mauritius. With this in mind, we have in the last few
years commenced operations in Mozambique, Botswana, Namibia, Zimbabwe and Mauritius.
Whilst to date we have not shown any return on this investment, we are seeing several orders
coming through which we are confident will turn into tangible results in the short term.

Finally, we are also looking at the structure of our group support services and to achieve a more
streamlined, efficient and cost-effective solution.

Financial performance
Revenue grew by a modest 4,2%, mostly from organic growth. The relatively low growth can be
attributed to limited economic growth across the country. Gross profit margin increased by 6,7%,
representing gross profit of 23,5% (2017: 22,9%). The increase is mainly due to the higher margin
training segment, which now carries a more substantial weighting relative to the overall group
results.

Operating costs increased by 8,9% to R265,6 million (2017: R243,9 million). The difference is
largely the result of a substantial increase in the doubtful debt provision charge to the income
statement due primarily to IAS 36, which was an incurred loss model, being replaced by IFRS 9,
which is a forward-looking expected credit loss approach. The bad debt charge in 2017 was
unusually low. Normalising for the doubtful debt effect, operating costs grew by 4,2%.

EBITDA increased slightly by 0,8% to R67,8 million (2017: R67,3 million).

Depreciation and amortisation increased by 5,5% to R13,7 million (2017: R12,9 million),
R6,2 million (2017: R5,6 million) of which is attributable to the amortisation of intangible assets
created as a result of the seven acquisitions made since the 2015 financial year.

Net finance cost remained relatively flat at R11,1 million (2017: R11,3 million).

Taxation
The group continued to benefit from the government's employment tax incentive programme
("ETI") as well as from learnership allowances in terms of section 12H of the Income Tax Act, 1962
(Act 58 of 1962). The employment tax incentive remains a significant contributor to the financial
results. The ETI programme, which focuses on employment of youth for new projects, remains in
place until February 2019. Early indications are that this programme is likely to continue subsequent
to this proposed period end. These two items are the reason for the taxation credit of R3,0 million,
as published.

Net result
The net result is an increase of 8% in earnings per share to 20,2 cents per share (2017: 18,7 cents
per share).

Cash
Cash flows from operating activities for the period under review amounted to R32,0 million (2017:
R45,3 million). The difference to the comparative period is due to timing differences in cash flows.
Days sales outstanding ("DSO") is calculated at 52 days compared to the December 2017 DSO
of 53 days.

Balance sheet and gearing
The substantial increase in goodwill and property, plant and equipment as well as non-current
liabilities is mainly attributed to the acquisition of the Dyna group of companies as described in
the condensed consolidated interim financial statements. The increase in the net interest-bearing
debt to total asset ratio of 32% (2017: 28%) is also attributable to this event.

Segmental review
Staffing and Outsourcing segment
Turnover in this segment increased by 2,6%, with EBITDA decreasing 14,1% to R78,9 million
(2017: R91,8 million). The segment was negatively affected by the uncertainty regarding the
Constitutional Court judgment and overall poor economic growth. It was further impacted by an
increased debtors' impairment due to the implementation of IFRS 9, as well as having had a low
base in the preceding year.

The outlook for the segment is that with clarity now provided on the legislative front, real efforts
are currently being made to invigorate sales.

Training and Consulting segment
This segment experienced good improvement, with turnover increasing by 4,5% and EBITDA by
29,11% to R19,7 million (2017: R15,1 million). This growth was almost exclusively organic as Dyna
was only acquired on 1 June 2018, and thus had a limited impact on the results.

Our outlook is very bullish on this segment and Workforce endeavours to further enhance it through
organic and acquisitive growth.

Financial and Healthcare segment
This segment experienced excellent growth, with revenue increasing by 80,1%. EBITDA increased
by 47,3% to R7,0 million (2017: R4,7 million) during the six months under review.

The outlook for the segment remains positive with a few significant contracts having been closed.
The operationalisation of potentially lucrative deals recently closed in the rest of Africa is a key
priority for the coming six months.

Business combinations
Effective 1 June 2018, Workforce obtained control of the Dyna group of companies ("Dyna"), an
award-winning provider of management and supervisory skills development programmes and
learnerships throughout southern Africa. The maximum purchase price for the acquisition was a
cash amount of R79,4 million.

The effect on basic earnings per share of all acquisitions made since 2015 is still limited, due to
IFRS entries necessitated by the acquisition events. This effect will start dissipating as from 2019
and start contributing significantly to basic earnings per share as well as net cash flows.

Workforce is endeavouring to acquire more businesses in the foreseeable future, expanding its
core value offering and contributing further to its diversification efforts. The entrepreneurs who join
Workforce because of these acquisitions are having a significantly positive impact on our culture
and talent pool.

Post balance sheet events
During August 2018, our existing bankers granted a R30 million loan towards the acquisition of
Dyna, as well as an additional amount of R30 million to fund the expansion of our financial loan
business.

Board of directors
The group and Mr Philip Froom, reached an amicable separation agreement effective 30 June
2018. We wish to thank Mr Froom for his valued contribution to the group and wish him every
success with his future endeavours.

With effect from 1 July 2018, Mr Ronald (Ronny) Katz, the previous executive chairman of the
group, assumed the role of chief executive officer.

Accordingly, Mr John Macey, the previous lead independent non-executive director, became
chairman effective 1 July 2018 and Ms Kyansambo Vundla then became chairperson of the audit
and risk committee effective 1 July 2018. With effect from 13 August 2018, Ms Inshaaf Ross was
appointed as a non-executive director and a member of the social and ethics committee on
13 August 2018, representing a major shareholder on the board.

In compliance with paragraph 3.59 of the Listings Requirements on JSE Limited, the board of
directors of Workforce ("the board"), hereby notifies its shareholders that Mr Mark Anderson
resigned as alternate director with immediate effect due to other responsibilities.

Appreciation
We take this opportunity to extend our appreciation to all our stakeholders, including our
shareholders, clients and suppliers.

We thank the executive and non-executive directors for the work they have put in to the affairs of
the group. We greatly value their commitment and advice.

Appreciation is also extended to the entire management team and staff of all the operating
divisions as well as their contractors. They are the core of all activities and successes within
Workforce Holdings and we thank them for their ongoing resilience and dedication in making
Workforce a great place to be.

Finally, we thank our professional advisors for their advice and support to the affairs of the group.

For and on behalf of the board

John Macey
Chairman

Ronny Katz
CEO

Willie van Wyk
Financial Director

Johannesburg
22 August 2018

Executive directors
RS Katz, WP van Wyk

Non-executive directors
J Macey (chairman)
K Vundla
S Thomas
S Naidoo
I Ross

Designated adviser
Merchantec Capital

Company secretary
S van Schalkwyk

Registered office
The registered office, which is also its principal place of business, is 11 Wellington Road, Parktown, 2193

Transfer secretaries
Link Market Services South Africa Proprietary Limited
11 Diagonal Street, Johannesburg, 2001
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