Workforce Holdings skips dividend amid Covid-19 and recession
Labour-services group reports that minimum wage hike that began in March 2020 has hit some of its clients
Labour-services group Workforce Holdings said on Tuesday that the recent increase in the national minimum wage was affecting some of its clients, and it had opted not to declare a dividend as it battled the Covid-19 outbreak and SA’s recessionary economy.
SA’s minimum wage rise of 3.8% from the beginning of March affected some of its clients, the group said. CEO Ronny Katz said the group welcomed the national minimum-wage legislation, believing it would in the longer term improve the stability of labour in SA and provide fairer and more sustainable pay structures.
“Minimum-wage legislation was introduced in 2019, and we actively engaged with our clients at the time to assist with any implications and opportunities arising from this,” he said.
Group revenue rose 7.1% to R3.2bn from R3bn during the reporting period, but operating expenses increased 8.3% to R562.9m from R519.8m. Katz said, however, he was pleased with the company’s performance in the financial year to December 2019.
“I think we’ve done well overall. Our success has a lot to do with our diversification. We run various staffing services and businesses, and now we are more of a servicing company. We have been able to provide workers and also training services across the continent,” he said.
The company’s taxed profit fell 4.6% to R98.1m, which Katz said was partly because of an “ever-increasing unemployment rate”, poor consumer sentiment and a faltering economy. Workforce opted not to pay a dividend, having paid 1.5c per share in the prior matching period, saying it was focused on reducing overheads and preserving cash flow during the Covid-19 pandemic.
“Despite the national lockdown negatively impacting some of our clients and business activities, we also have a fair portion of clients and our own business clusters that are deemed to be essential services, and we anticipate good demand in these areas going forward,” the group said.
“It would be irresponsible to give projections on what we can achieve in the 2020 financial year because of the unknown effects of Covid-19 on our businesses. We should be able to cushion some losses because we do work in nursing, security and other essential services,” Katz said.