Picture: ISTOCK
Picture: ISTOCK

Government’s employment tax incentive helped labour broker and training group Workforce weather SA’s sluggish economy in the half-year to June.

However, the company warned that both this incentive and tax deductions for learnership allowances — which enabled Workforce to receive a tax credit of R3m in the review period — "could be deemed unsustainable".

The tax deduction helped boost headline earnings per share, which grew 8% to 20c, Workforce said on Thursday.

Net profit rose 11% to R46m.

Revenue grew a more modest 4.2%, to R1.4bn, which the company attributed to limited economic growth.

Debt increased substantially, with the ratio of net interest-bearing debt to total tangible assets rising to 42% from 36% a year earlier. That was due to the purchase of the Dyna group of companies, which it bought for about R80m in cash, to boost its training and consulting division.

The company did not declare a dividend.

"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," the company said in its results statement.

The employment tax incentive was introduced by the government in 2014 to encourage companies to employ young people.

The programme was meant to end in early 2019, but the government has proposed that it be extended for another five years.

The tax breaks for learnerships have been extended until March 31 2022.

SA’s unemployment rate worsened to 27.2% in the second quarter, from 26.7% in the first quarter, according to Stats SA data.

Addressing the recent Constitutional Court ruling on the temporary employment sector, Workforce said the ruling provided clarity to the sector, and did not ban labour brokers.