Recently legislated minimum wage requirement in South Africa dented JSE-listed Workforce Holdings results, which saw it report an 8.4 percent slide in profits for the six months to end June.
The group’s profits declined to R41.22 million, down from R45m compared to last year.
The minimum wage legislation hurt Workforce’s staffing and outsourcing business, with the unit reporting a 15 percent decline in earnings before interest, tax, depreciation and amortisation (Ebitda) to R65m. Workforce Holdings is a holding company which has four core business segments that include staffing and outsourcing, training, financial services and healthcare.
South Africa’s subdued economic climate, the election effect and a general contraction in government spend on infrastructure also affected the group’s overall performance, it said.
The group reported a decline of 6.1 percent decline in earnings per share to 18.5 cents a share, however, Ebitda rose 5.2 percent to R80m.
The decline in staffing and outsourcing was offset by an increase in the training segment as it reported a 42 percent increase in Ebitda to R27.3m, with the Dyna Group, its latest acquisition, contributing R2.8m in Ebitda.
Chief executive Ronny Katz said the group was encouraged by the training segment’s performance.
“We are quite happy with our overall performance despite the decline in the staffing and outsourcing business,” Katz said.
The healthcare segment also reported a strong growth with Ebitda increasing by 54 percent to R15.9m, benefiting from investments made during the period.
The group’s revenue increased by 7.7 percent to R1.53 billion, up from R1.42bn, while cash generated from operations increased by 28.5 percent to R48.5m, up from R37.7m compared to last year. Looking ahead, Katz said the outlook for the South African economy remained constrained.
Workforce’s share price gained 14.29 percent to close at R1.60 on the JSE on Monday.