Integrated Report 2012
Delivering innovative and diversified
employer-centric solutions
Our visionTo be the leading provider of innovative and diversifi ed employer-centric solutions
Our philosophy and values ■ Conduct our business from an ethical base; ■ encourage entrepreneurial thinking in every employee; ■ create a working environment that is stable and secure; ■ build a culture that supports innovative thinking; and ■ protect the future of the organisation by being progressive and keeping pace with the latest trends.
This is Workforce Holdings Limited’s second
integrated report and covers the activities of
Workforce Holdings Limited and its subsidiaries.
The report aims to present to shareholders,
comprehensive, balanced and understandable
information, enabling you to make a reasoned and
educated assessment of the company’s economic,
social and environmental performance for the period
ended 31 December 2012. This report follows the
report published on 26 March 2012.
There have been no signifi cant changes in the size,
structure or ownership of the group during the
current reporting period, other than through
organic growth of operations. The company
endeavours to provide a view of its performance
over time, refl ecting not only on the successes
but also the challenges it faces.
We have defi ned materiality as issues or
occurrences that have a signifi cant fi nancial,
economic, social and environmental impact on the
short- to medium-term performance or prospects
of the company.
The report framework is in line with International
Financial Reporting Standards (IFRS) and the King
report on corporate governance in South Africa
(King III). The audited fi nancial statements are
prepared in accordance with the Companies Act
of South Africa and comply with IFRS. External
assurance has not been sought for this report.
The Workforce Holdings Limited board and its
sub-committees have reviewed the report and
have satisfi ed themselves of the materiality,
accuracy and balance of disclosures in this report.
Scope and boundary of this report
1Workforce Integrated Report 2012
Scope and boundary of this report IFC
Our vision IFC
Our philosophy and values IFC
Our core value drivers 2
About Workforce
Group highlights 4
Operating structure 5
Divisional management 6
Corporate profi le 8
Strategic direction 10
Risk management 13
Report to stakeholdersBoard of directors 16
Chairman’s report 18
Chief executive offi cer’s review 20
Corporate governance 23
Sustainability review 28
Consolidated annual fi nancial statements
Directors’ responsibility 38
Directors’ approval 39
Declaration by the company secretary 39
Report of the independent auditor 40
Report of the audit and risk committee 41
Directors’ report 44
Group statement of fi nancial position 46
Group statement of comprehensive income 47
Group statement of changes in equity 48
Group statement of cash fl ows 49
Accounting policies 50
Notes to the company fi nancial statements 62
Analysis of shareholders 86
Corporate information 87
Shareholder’s diary 87
Notice of annual general meeting 88
Form of proxy 101
Notes to the form of proxy 102
Defi nitions IBC
Contents
Innovate
Diversify
Integrate
2 Workforce Integrated Report 2012
Our core value driversThe group’s code of business conduct outlines the core values we subscribe to and is a very important guide for
employees who operate in a decentralised management environment in which innovative, progressive and
entrepreneurial behaviour is encouraged.
We deliver superior customer experiences
through our products and services as well
as our actions. We strive for performance
excellence in all segments of our
business. We are entrepreneurial,
opportunistic and innovative. We are
committed to working in diverse teams
to achieve organisation goals.
It is critical that we respect
everyone at every level of our
business. We champion diversity,
embrace individuality and display
mutual respect when we interact
with others.
Integrity lies at the heart of everything
we do. We align our actions with our
words and deliver what we promise. We
are honest, ethical and upfront because
trust is the foundation upon which we
build our relationships with each other
and all our stakeholders.
We take responsibility for our actions as
individuals, as team members, and as an
organisation. We keep our commitments
to each other and our stakeholders. We
are personally accountable to other
team members to deliver on time.
Performance Excellence
Accountability
IntegrityMutual
Respect
Innovate
Group highlights 4Operating structure 5Divisional management 6Corporate profi le 8Strategic direction 10Risk management 13
About Workforce Holdings Limited
4 Workforce Integrated Report 2012
About Workforce
The Workforce brand has been entrenched at the forefront of the temporary employment services sector in South
Africa for over four decades. Today, the group has grown into a diversified group of companies offering employer-
centric solutions incorporating the supply, management and administration of the human resources requirements
of a broad range of industries, both locally and internationally.
Our niche focused business units each have the necessary expertise and service flexibility to enable the group to offer
an umbrella approach to an extended range of services solutions. Expanding the synergies between each of these
closely aligned business units, together with leading edge information technology architecture and systems, will
continue to drive the group’s success.
Group highlights
2009 2010 2011 2012
Revenue R1 billion R1,15 billion R1,35 billion R1,50 billion
EBITDA R36 million R36 million R41 million R43 million
EPS 5,1 cents 6,8 cents 10,4 cents 10,3 cents
0
0,5
1,0
1,5
2,0
1,00
(R b
illio
n)
1,15
1,50
2009
2010
2012
1,35
2011
0
10
20
30
40
50
36 36
43
EBITDA
2009
2010
2011
(R m
illio
n)
2012
41
0
3
6
9
12
15
5,1
6,8
10,3
EBITDA
2009
2010
2011
(cents)
2012
10,4
Revenue EBITDA EPS
5Workforce Integrated Report 2012
Operating structure
Financial and Lifestyle Products
Employee Health Management
Training and Consulting
Staffing and Recruitment
Process Outsourcing
The group’s integrated value proposition involves aligning
and integrating our diverse yet inter-dependent businesses
to create a seamless solution for our clients.
Our competitive advantage rests in the fact that we can
implement our employer-centric solutions seamlessly across
diverse markets utilising systems, processes and technology.
6 Workforce Integrated Report 2012
Divisional management
KwaZulu-Natal
Bruce Mackenzie Sanet Slabber Donné Nieman Barend Matthee Nolene Fuhri Tyrell Fuhri Avi Maharaj(Regional Financial Manager)
(Regional HR Manager)
(Regional Legal Advisor)
(Regional Key Accounts Manager)
(Regional Managing Director, KZN)
(Regional General Manager)
(Regional Financial Director)
Recruitment and Specialist Staffi ng
Preshene Batohi Evelyn Vanassche Raymond Strydom Jonathan Dawkins Gillian Johnson Elizabeth Reviere Donald McMillan(Regional Director) (Director, Fempower) (Business Manager
[Acting], Workforce Worldwide)
(Managing Director, Only The Best/Teleresources)
(Director, Only The Best/Teleresources)
(General Manager Finance, Only The Best/Teleresources)
(Managing Director, Albrecht Nursing Agency)
Cape
Duan Nortje Jacques Meyer Sean Momberg JB Massyn Jimmy Samuels Jacqui McDuling Terence Rosslind(General Manager Sales)
(Regional Area Manager, West Rand)
(Regional Director, Cape)
(Regional Manager, Western Cape)
(Regional Manager, Western Cape)
(Regional Sales Manager)
(Special Projects and Human Capital Development)
Training and Consulting
Adele McGlynn Mohamed Valoria Rita du Chenne Lauren Gordon Pravani Govender Dawn Halsey Mohau Radebe(Divisional Director, Accotech Interim Outsourcing)
(Finance Director, Training Force)
(Operations ETQA Manager, Training Force)
(Regional Manager Gauteng, Training Force)
(Regional Manager KZN, Training Force)
(Manager, Special Projects)
(Director, Interchange Business Consulting)
Staffi ng and Recruitment Industrial Staffi ng Gauteng
Dermot Byrne Rachel Matthews Faeeza Kennedy Raymond Strydom Elsie Smith Venesse Richards Diane Wright (Regional Director, Gauteng)
(Regional Manager, Eastern Region)
(Regional Manager, Western Region)
(Regional Manager, Northern Region)
(Regional Manager, Witbank)
(Regional Manager, North West & Free State Region)
(Regional Administration Manager)
7Workforce Integrated Report 2012
delivering innovative and diversifi ed employer-centric solutions
Financial and Lifestyle Products Employee Health Management Process Outsourcing
Jonathan Kruger Dr Richard Malkin Tonya Keating Damien McLintock Mark Robberts(Managing Director, Babereki Employee Support Services)
(Managing Director, Workforce Healthcare)
(Projects Development Director, Programmed Construction)
(Projects Director, Programmed Construction)
(Business Manager, Workforce Infotech)
Corporate Support
Cedric Mongala Paulo Marques Steven Herscovitz Carol Knoetze Frieda Hall Susan Marx Keith Thomas(Business Manager, Workforce Payrolling)
(Business Manager, Debtworx)
(Group Portfolio Manager, CEO’s desk)
(Director) (Corporate Affairs Director)
(Group Marketing Manager)
(Chief Information Offi cer)
Leon Coertzen Joanette Esterhuizen Faith Newat Rian Ferreira Ahmed Varachia(Group IT Manager) (Group Legal
Manager)(Group IR Manager) (Commercial Director) (Director)
8 Workforce Integrated Report 2012
Corporate profile
Staffing and RecruitmentTrading divisions: Workforce Staffing, Fempower, Workforce Worldwide Staffing, Accotech, Only the Best, Teleresources, Albrecht Nursing Agency
Industrial staffingThe Workforce brand has been entrenched at the forefront of the temporary employment services sector in South Africa for over four decades. The group offers an integrated solution to outsourcing staff and the related management component,
Recruitment and specialist staffingSourcing, engaging and retaining skills continue to be the
most important human resources challenge for employers.
In this regard, the group has strengthened its market position
and through its niche focused business divisions, continues
to elaborate on selected areas of specialisation to play an
increasingly important role in facilitating the search and
placement of talent on behalf of clients.
Specialisations include – permanent placement, temporary
placements, global recruitment, head hunting, ad-response
The Workforce group, established in 1972, has grown from a staff and labour provider into a large diversified group of companies offering an extensive range of integrated employer-centric solutions.
Collectively, the group’s trading divisions serve all industry sectors, both locally and internationally. The group operates primarily in Southern Africa and boasts an extensive national branch infrastructure that extends to all the provinces of the country. This footprint comprises over 130 branches.
The group’s operating structure encompasses five focus areas, comprising staffing and recruitment, process outsourcing, financial and lifestyle products, training and consulting, and employee health management. This structure is core to the sustainable growth of the organisation as it facilitates further diversification of our range of products and services, and expansion into new markets.
enabling our clients to focus on their core offerings, align manufacturing and delivery to market needs and achieve predictable costs.
With the imminent regulation of the industry, Workforce Staffing is well positioned for the outcome and will continue to grow, both in its core business and in its augmented services.
In line with government’s number one priority of creating jobs, Workforce is well positioned to continue its role of introducing thousands of workers into the job market – realising significant economic benefits from skills and youth development, as well as job creation, particularly for first time job seekers who use a-typical employment as an entry into the job market and gain from training and skills development provided. This is a crucial link in the job market and one that is followed in many markets internationally. This factor, we believe, gives our company a sustainable future business model which has evolved over 40 years.
Ag
ricu
ltur
e
2%
Min
ing
& Q
uarr
ying
2%
Man
ufac
turi
ng
27%
Ene
rgy
1%
Co
nstr
ucti
on
10%
Who
lesa
le &
Ret
ail
25%Tr
ansp
ort
& S
tora
ge
11%
Co
rpo
rate
& B
usin
ess
15%
Pub
lic S
ecto
r
7%
Industries served
9Workforce Integrated Report 2012
delivering innovative and diversified employer-centric solutions
handling, scarce skill search, contact centre staffing, interim
staffing, specialist staffing.
Financial and Lifestyle ProductsTrading divisions:Babereki Employee Support Services, Dreams Direct
The group’s wholly owned subsidiary, Babereki, a registered
member of the National Credit Regulatory Authority (NCR),
offers a range of lifestyle products and support services to
employees through employer agreements. The availability of
employee lifestyle services and products is increasingly being
sought by employers to engender staff loyalty, maintain
commitment and increase motivation. Babereki has entrenched
itself as a significant contributor to the group’s earnings.
Babereki’s product and services include: Short-term loans,
lifestyle products and services which include, mobile phones
and accessories, airtime and quality branded products
and appliances.
Services marketed to employers include loan book
management and employee debt management including
training and education.
Dreams Direct, established during 2011, focuses on the
external market and provides lifestyle products and services
through on-line direct marketing channels.
Training and ConsultingTrading divisionsTraining Force, Interchange Business Consulting
Training and skills developmentTraining and skills development is a key national priority in
South Africa and the group’s training subsidiary is well
positioned to respond to market demands.
Training Force focuses on providing industry and job specific
skills assessment and training interventions across all industry
sectors with its training programmes aligned with SAQA (South
African Qualifications Authority) standards and SETA
accredited. As an accredited company, the scope of Training
Force’s courses leads to nationally recognized qualifications.
Training Force maintains local and international skills
development partnerships focused on linking training to
industry. Its service capability includes: ■ Short courses, skills programmes and full qualifications; ■ technical trades (artisan development); ■ apprenticeships; ■ recognition of prior learning; ■ ABET; ■ skills planning and analysis; and ■ learnership management.
Consulting services
With employers continually having to keep abreast of the
ever-changing legislation in the areas of industrial relations and
human resources, the group’s Interchange Business Consulting
Services division is geared to offer an extensive range of
consulting services to employers. Services include industrial
relations consulting, human resources consulting, B-BBEE
optimisation and consulting, compliance and reporting and
skills development project management linked to employment
creation encompassing project planning, implementation
and reporting.
Employee health management
Trading division:
Workforce Healthcare
In addition to the requirement for occupational health and
safety compliance and risk management, more and more
employers are recognising the impact employee wellness
has on their business and are therefore embracing the concept
of holistic employee wellness management.
The group’s specialist healthcare division offers employers
a comprehensive range of occupational and primary health
management services, which incorporate employee wellness
and assistance programmes. All programmes can be aligned
to corporate or government strategies.
Healthcare services include, occupational healthcare,
certificates of fitness, medical screening, absenteeism
management, substance abuse screening, HIv/AIDS,
TB and chronic illness management, employee assistance
programmes, employee health and wellness management.
Process Outsourcing
Trading divisions:
Programmed Process Outsourcing, Programmed Construction,
Workforce Superdata, Workforce Payrolling, Debtworx.
Process outsourcing is increasingly being used by organisations
to achieve operational efficiencies and to enable them to focus
on their core business. The group’s niche focused business
divisions have the expertise to deliver productive and functional
business process outsourcing solutions, including the statutory
and legal elements associated therewith.
Type of processes that can be outsourced include:
manufacturing; packaging; civil and construction related
projects; payroll and human resources administration; time
and attendance; debt collection.
10 Workforce Integrated Report 2012
Strategic direction
Strategic business objectives (short- to medium-term)
Our strategic focus will continue to be on galvanising our strategy around diversification of income and risk through decentralisation
within operating business units to facilitate current and future growth. As we continue to fine-tune our journey towards the
achievement of our vision, we have set ourselves clear objectives for the year ahead. We have no doubt that we are well equipped
to achieve our key objectives and also to meet the challenges associated with operating in a highly competitive landscape which is
dragged down by the protracted depressed economic conditions.
1. Protect and grow our market share in our core segments ■ Roll-out integrated sales strategy throughout group; ■ unlock the value of our client-base; ■ increase application of employer-centric technology; ■ strengthen operational management; ■ expand stakeholder engagement; and ■ continue active participation at Nedlac (National
Economic Development and Labour Council)/BuSA
(Business unity South Africa) through CAPES
(Confederation of Associations in the Private
Employment Sector).
2. Maximise our operational profitability ■ Streamline existing operational processes; and ■ control operating expenses.
3. Cash generation ■ Reduce capital costs; ■ debt to equity ratio; and ■ reduce debtors days outstanding.
4. Advance the business by deploying employer-centric
technology and processes ■ Invest further in systems research and development; and ■ evaluate, align and accelerate our systems
development.
5. Develop and retain talent ■ Formulate formal talent management strategy; ■ drive management development programme; ■ introduce formal succession planning; and ■ increase industry related training.
6. Impact positively on society and environment ■ Formalise and extend our CSI initiatives; and ■ measure and reduce our carbon footprint.
Key strategic objectives
Material issues Our material issues were identified through interaction with a broad spectrum of stakeholders and further reviewed and refined through
engagement with divisional management and the board of Workforce Holdings Limited. The purpose of the refinement was to provide a
more focused view of economic, social, environmental and governance considerations in our various business operations. Our review
of these issues has indicated that they remain material to our business, impacting our ability to create long-term value.
Material issue Why it is important Related risk
Managing sustainability Acceptance of leadership role by
management essential to progress
sustainability within a multi-faceted
decentralised business environment.
Impact on our growth and ability to
create long-term value. Poor corporate governance;
inability to report on sustainability achievements.
Share liquidity Without liquidity the share price
remains stagnant.
Lack of shareholder value inhibits the ability to raise
capital through the equity capital market.
Transformation Employment equity commitment
promotes company values and reputation,
builds employee potential, leverages skills
development; supports government’s
national development agenda.
Inability to retain talent. Decreased staff morale.
Increased staff turnover. Inability to compete for
contracts.
11Workforce Integrated Report 2012
delivering innovative and diversifi ed employer-centric solutions
Material issue Why it is important Related risk
Quest for talent Our vision will only become a reality through the continued commitment, energy and passion of our people and their engagement and development is therefore central to the achievement of the group’s goals.
Inability to retain talent. Decreased staff morale. Increased staff turnover. Ineffective decentralised management structure.
Stakeholder engagement Active stakeholder engagement provides a platform for dialogue and identifi cation of respective value propositions which can inform our strategy, activities and reporting.
Non-alignment of strategies, goals and objectives.
Social and environmental stewardship Demonstrates responsible corporate citizenship; refl ects company values.
Lack of good corporate governance; inability to report on sustainability achievements.
Diversifi cation of income and risk
Decentralisation within operating business units to facilitate current and future growth
Integrity Mutual respect AccountabilityPerformance Excellence
Technology and systems
Diversifi ed offerings (product mix)
Established infrastructure
Stakeholder relationships
Innovative and entrepreneurial culture
Knowledge and specialisation
Decentralised management structure
Refi ne client value proposition
Achieve low cost operational excellence
Unlock the value of our client base
Attract, retain and develop superior human capital
Invest in new product and systems development
Develop effective decentralised management structure
Our values
Our strategic focus
Our key imperatives
Our growth pillars
Our vision To be the leading provider of innovative and diversifi ed employer-centric solutions
12 Workforce Integrated Report 2012
Strategic direction (continued)
The group’s integrated value proposition involves aligning and
integrating our diverse yet inter-dependent businesses to create
a seamless solution for our clients. The tactic we deploy is to
scale those businesses to respond to market demands
and opportunities.
Our competitive advantage rests in the fact that we can
implement our employer-centric solutions seamlessly across
diverse markets utilising systems, processes and technology.
The following business model shows the components upon
which the successful execution of our strategies depends.
Sta
ffin
g
Train
ing
HR/IR Legal Services/
Business Consulting
Health & Safety/Employee Wellness
Process Outsourcing
Com
pliance
Indu
strie
s se
rved
Integrated prod
ucts and services
Integrated Value Chain
Hos
pita
lity
Agr
icul
ture
Const
ruct
ion
ManufacturingCommunication
Mining & Quarrying
Wholesale & Retail
Business Services
Transport & LogisticsG
overnment &
Municipalities
Electricity, G
as
& W
ater Sup
ply
Optimising the performance of human resources management
Branch network Operational expertise Dedicated service units WAN/LAN network Technology Proprietary software
Time Zone HR Zone Paymatic Contractor Zone Worktrac Zone
Infrastructure
Our brands
Technology
Driven and enabled by
Our business model:
13Workforce Integrated Report 2012
Risk management
We are committed to effective risk management and recognise
that the management of business risk is crucial to our
continued growth and success. Our risk management strategy
is driven from the bottom to the top and visa-versa, which gives
us the opportunity to identify, assess, and build risk mitigation
strategies into all levels of our business.
Top risks
Risk Context Mitigation Link to strategy
Strategy
Not succeeding with the development and growth of the decentralised integrated value proposition.
Diversification of income and risk is a key part of the group’s long-term sustainability plan and galvanising this strategy through growth and development of our specialised business divisions to enable the delivery of diversified and integrated employer-centric solutions is a key imperative.
Appoint skilled personnel to key positions. Empower decentralised management. Invest in infrastructure and technology to support business growth. Increase training and development of staff at operational level.
Key strategic objectives 1 – 6
Human Resources
Insufficient management and operational skills.
Succession planning and sustainability to management structures.
People at various levels are at the heart of enabling the achievement of our objectives. It is essential that we are able to attract top talent by being recognised as an employer of choice and even more important that we retain talented, specialised and skilled individuals. Succession planning is critical for business continuity, not only at executive level but also to support decentralised management structure and to support the growth of the business.
Focus on embedding a culture that reflects our commitment to establishing a motivating, healthy and inclusive workplace. Introduce additional talent retention strategies. Increase job- specific training. Develop and implement formal succession plan, specifically at operational level. Introduce management development programme.
Key strategic objective 5
Operational
Inefficiencies at operational level.
Ineffective systems to assist with control of our decentralised business structures thereby leading to increased cost and inefficiency in operations. Ineffective human resources. Cost control and the threat of outsourced competitor actions on cost structures.
Advance development of new systems and speed up development and roll out of new employer-centric technology to achieve greater operational efficiency and more value for customers. Increase job specific training. Overhead consolidation, specifically at head office.
Key strategic objective 2, 4 & 5
14 Workforce Integrated Report 2012
Risk management (continued)
Risk Context Mitigation Link to strategy
Regulatory
Non-compliance with applicable laws regulations and standards.
Risk of amended regulation impacting Workforces’ operations, growth strategy and earnings.
Compliance is essential to our reputation and is in line with good corporate citizenship. There are a multitude of laws and regulations with which we need to comply and ongoing monitoring and adjustment of our systems, processes and contracts is essential. It is now clear that the protracted labour legislation amendment process will result in further regulation of the industry rather than an outright ban. The impact of the regulation, once enacted, is expected to impact some aspects of our business resulting in a marginal decrease in the levels of outsourced staff provided in some industries. However we believe, on a whole, that outsourcing activities will increase due to compliance demands placed on companies and also consolidation of the TES industry.
Workforce will continue to be an active participant in the various forums in place to influence negotiations through our membership and active involvement therein. Drive diversification strategy roll-out. Innovation and new product/service development; pro-active sales strategies incorporating consulting services. Stakeholder engagement.
Key strategic objective 1
Financial
Risk of macro and micro economic factors impacting Workforce’s ability to sustain the business and execute its growth strategy.
Protracted downturn in the global economy creating global financial instability, and impacting capital raising, capital costs and interest rates. Clients defaulting on payments; extended credit terms; cash flow risk. Socio-economic trends reflect increased levels of unemployment, continued income disparity; lower levels of trust in big businesses, including government; and high levels of social activism.
Identify access to other lines of capital; management of debt to equity ratio; cash flow management; systems development and implementation with built in alerts; negotiate better terms with clients, deliver value-added services. Improve share price rating through regular interaction with institutional investors.
Key strategic objectives 1, 2 & 3
Technology
Ineffective and
out-dated
technology.
consolidation.
To support the growth and development
of the business we need robust IT
architecture; comprehensive and effective
wide area network; flexible and efficient
applications; robust and rigorous
technology management processes.
The group will commit to investing in
innovative technology development. This
will be governed through structures such
as the IT steering committee, set up by
the board.
Key strategic
objective 1 & 4
Diversify
Board of directors 16Chairman’s report 18Chief executive offi cer’s review 20Corporate governance 23Sustainability review 28
Report to stakeholders
16 Workforce Integrated Report 2012
Board of directors
Mark Anderson
BCom (Hons), CA (SA)
Non-executive director (53)
Mark is an executive director
of vunani Limited, a
company listed on the JSE’s
Alternative Exchange. Since
vunani’s formation in 1998,
Mark has held a number of
positions with the company,
including head of corporate
fi nance. He is currently
responsible for vunani’s
investment banking
activities. Prior to joining
vunani, Mark ran a corporate
fi nance boutique and in
the 1980s and early part
of the 1990s advised and
consulted to trade unions.
He was appointed to the
board in October 2007.
Ronny Katz
BCom, LLB, MBA
Chairman (70)
Lawrence Diamond
BA (Ind psych), BA (Hons) (Bus Admin), PDM (Bus Admin)
Chief executive offi cer (43)
Willie van Wyk
BCompt (Hons), CA (SA)
Financial director (41)
After completing his legal
studies, Ronny joined City
Merchant Bank and worked
in the investment division
before completing an MBA
degree in 1968 at the
university of Cape Town,
after which he purchased
the legal practice of David
Borkum. In 1972, Ronny
started Workforce and
has concentrated on its
development since then. He
was appointed chairman in
October 2006.
Lawrence joined Workforce
in 2006, serving initially as
managing director of
Babereki Employee Support
Services, and later assuming
responsibility for
implementation of the
group’s business
development strategy and
integration of the various
businesses. Prior to that, he
worked in the corporate and
business start-up sectors
in senior management
positions. He was appointed
chief executive offi cer of
Workforce Holdings Limited
in June 2009.
Willie completed his articles
with Deloitte & Touche in
1996 and following that, held
a number of fi nancial
management positions with
Nola, a division of Foodcorp,
for 3 years and Nampak for
5 years. Willie joined the
Workforce group in 2007 and
was appointed a director of
Workforce Holdings Limited
in June 2008.
delivering innovative and diversifi ed employer-centric solutions
17Workforce Integrated Report 2012
John Macey
BBusSci (Hons), BCom (Hons), CA (SA)
Independent non-executive director (51)
Lulu Letlape
BA (Ed), MA (Public & Development Management)
Independent non-executive director (47)
Kyansambo Vundla
BCom (Accounting), HDip Acc, CA (SA)
Independent non-executive director (34)
John completed his articles
at Deloitte. He has 25 years
of experience in fi nance and
fi nancial management. He
has been fi nancial director
of manufacturing companies,
lectured fi nancial and
management accounting at
the university of Cape Town,
advised on corporate fi nance
deal structuring and acted as
an outside advisor on
technical accounting issues
to accounting and auditing
fi rms. He sits on the boards
and audit committees of
three listed groups. John was
appointed to the board
in June 2009.
Lulu is the executive director
responsible for corporate
affairs at the Sanlam Group,
where she is responsible for
key strategic functions such
as corporate communication,
sustainability management,
corporate social investment
as well as public affairs and
stakeholder management.
Lulu has vast business
experience, which includes
several executive and
non-executive roles. Among
others, she also served on
the King III sustainability
committee for the public
relations and communications
industry. Lulu was appointed
to the board in November
2010.
Kyansambo is the Chief
Financial Offi cer of
Regiments Capital having
previously held various
positions within the
Momentum Group Employee
Benefi ts Division. She also
served as Chairperson of
the Bonitas Marketing
company’s audit and risk
committee as well as a
member of the audit and
risk committee of Bonitas
Medical Aid Fund.
Kyansambo was appointed
to the Workforce Holdings
Limited board in
November 2010.
18 Workforce Integrated Report 2012
Chairman’s report
My report on the state of the group during the fi nancial year ended the 31 December 2012 focuses mainly on the strategies the group has adopted over the past few years and which it plans to adopt going forward.
OperationsWithout doubt the most signifi cant factor facing the group over the past three years has been the intended changes to South Africa’s labour legislation. These started at a level which threatened to have a serious negative effect on the group’s core business going forward. Fortunately, thanks to strong representation by the industry and BuSA, the proposed legislation has changed its objective to one where there is more regulatory control and enforcement of the affairs of registered TES providers as opposed to their total ban. In fact, it appears that this may now lead to a competitive advantage for the group as a registered compliant TES provider with the necessary systems to manage the planned TES landscape. However, we remain cautious as we do not know the full impact of the intended legislation, when it will become operative and what our numerous clients’ reactions will be. This doubt has been in the air for three years and has affected the way in which the group and its clients and potential clients have conducted business.
Consequently the strategies that have been adopted have focused on two distinct streams.
Firstly, ■ To strengthen our core business by increasing market share
wherever we could. This involved opening new physical areas
of business, with new branches, bringing our service delivery closer to our client’s place of business. This strategy was followed by some of our competitors and has unfortunately resulted in lower margins. We are continuing with the strategy with the hope of gaining greater market share when the new legislation is enacted;
■ fi nd new markets outside of South Africa which are unaffected by South Africa’s labour laws where there are large skills shortages and where we can sell our services at better margins. To this end we commenced business in Mozambique, Swaziland and Lesotho during 2012. Mozambique is a growing market but with many structural challenges. We intend commencing a joint-venture in Zimbabwe in the fi rst half of this year. During the last fi nancial year these initiatives cost the group money without any fi nancial contribution. We expect that this strategy will make a positive contribution to both profi ts and cash fl ows during the 2013 fi nancial year; and
■ continuously invest in technology to assist our clients and the group to effectively manage staff, staff services and productivity. Our technology developments are at relatively low cost when compared to our peers and are essential to retain and improve our market position.
Secondly, our strategy has been and is to diversify the group’s business so that it is not solely reliant on the core business which was under threat. The diversifi cations were based on areas of business where the group had developed some expertise by virtue of delivering the same services within the group for a number of years. These fell into the following areas:
Ronny Katz BCom, LLB, MBA Executive chairman
We anticipate an increase in
market share in all divisions
despite lower economic
prospects.
delivering innovative and diversified employer-centric solutions
19Workforce Integrated Report 2012
■ Training and learnership management, which has developed into a viable service offering for public and private clients, as well as for SETA’s;
■ employee healthcare and wellness services; ■ process outsourcing, where we undertake to complete a
process as opposed to providing staff to do the process under the client’s supervision;
■ the provision of short-term financial and insurance products as well as the sale of goods. This has been undertaken by the group for its own staff for six years during which effective systems have been developed to assess, manage and collect the debtor’s book which is created. This service has now been extended to new clients outside of the group; and
■ the provision of permanent staff recruitment services to clients through Only the Best, Teleresources, Fempower and Accotech.
These diversifications have not been without hiccups. During the year under review, management took steps to consolidate these efforts and ensure the profitability and cash flows of each segment. Other than the training division, they have all contributed to group profits but not to the extent of the previous year. The changes made in the second half of last year and which continue to be made, will enhance the contribution of each of these divisions in the coming years. They will also contribute to an increase in the group’s trading margins. Our strategy going forward is to grow these businesses and to increase their percentage contribution to the group’s profits and so to reduce the group’s overall dependence on its core business.
FundingThe growth in the group’s core business and its diversification have required outside funding as can be seen from the increase in net interest-bearing borrowings from R168 million to R203 million. The group has a flexible funding arrangement with its main bankers which is based on the value of invoicing done in its core business. The level of funding is commensurate with the level of debtors. The group is operating within the agreed ratios and limits set by its bankers. It has also procured overdraft facilities for Babereki Employee Support Services in a ring fenced arrangement secured by debtors.
Management however recognizes that further equity and or development funding is required to secure its financial ratios as it continues its ambitious development strategies. Several avenues have been looked at and management will continue to canvass all opportunities.
The economy (environment) The economic conditions in South Africa (as affected by the world economic conditions) during 2012 had a material effect on the results of the group. The level of economic activity dropped through the year as did the levels of employment, which was exacerbated by the labour unrest in the mining sectors – one of the results of which was that employers become fearful of employing additional staff or of entering
into new staff outsourcing arrangements for the management of their staff. This had a strong negative impact during the second half of the year.
The failure to implement the government’s infrastructure development plan also led to lower than expected employment levels in the construction and engineering sectors. Hopefully this will change in the current year. The management of the group did well to increase turnover within these circumstances.
Going forward, the group does not expect economic circumstances to improve during 2013.
Investor relationsA core problem for the group is the relatively low price its shares trade at on the Johannesburg Stock Exchange compared to its net asset value and the price earnings multiple of its peers. There are various reasons for this, including being listed on the Altx, the market perception of our industry and the threats to it from intended labour law amendments. One of the major factors is the lack of liquidity in the group’s shares. Management recognises these problems and is contemplating various steps to provide better value for shareholders.
Future prospectsI am confident that the strategies that the group has adopted will result in improved earnings and margins and hence improved cash flows. We anticipate an increase in market share in all divisions despite lower economic prospects. Overheads are being continuously managed. These factors together should result in continuous growth in earnings with a consequent increase in the value of the group.
ThanksI wish to thank the executive and non-executive directors for the work they have put in to the affairs of the group. Their commitment and advice are greatly valued and I look forward to continue working with them in the years to come.
Thanks and appreciation also goes to the entire management team and staff of all the divisions within the group. They are the core of all activities and successes within the group and I thank them for their efforts and contribution to the group.
The other most important contribution to the success of the group is our contractors. Their work, effort and ethics is something the group is very proud of and thankful for.
I finally would like to extend my thanks to our professional advisors for their advice and support at all times to the affairs of the group.
R S KatzExecutive chairman
20 Workforce Integrated Report 2012
Chief executive offi cer’s review
Lawrence Diamond BA (Ind psych), BA (Hons) (Bus Admin) PDM (Bus Admin) Chief executive offi cer
The group continues to make
steady progress towards
achieving transformation.
The year ended 2012 was a challenging year for Workforce and
the human resources services sector as a whole. The macro
environment proved very challenging with protracted violent
labour unrest which, at points, threatened the core of the
current labour relations and social systems.
Our industry is in a process of adapting to expected changes
emanating from various proposed amendments to labour
legislation. It has been, and continues to be our view that the
amendments will result in the further entrenchment of the staff
outsourcing value proposition – fostering greater fl exibility and
security within the three-dimensional employment relationships.
We continue to embrace these changes in the most innovative
way so as to ensure that we are able to continue providing our
clients with all the benefi ts associated with the utilisation of
fl exible staffi ng.
As reported on in our 2011 report, the restructuring of our
business into fi ve focus areas comprising staffi ng and
recruitment, fi nancial and lifestyle products, training and
consulting, process outsourcing and employee health
management, has yielded varying levels of success; and 2012
has provided us with numerous lessons learned which we will
build on and look to capitalise on during 2013.
Operational and fi nancial reviewThe year under review produced average results with some
segments performing better than expectation, while others
performed below management expectation. Group revenue
of R1,50 billion (FY2011: R1,35) was 11% ahead of the prior year while earnings per share of 10,3 cents (FY2011: 10,4 cents) was 1% down on last year.
Operating costs increased by 5%. The results saw an increase in EBITDA to R43,3 million (FY2011: R41 million) representing an increase of 5,3%.
Working capital management and debtors remained a management focus area – average DSO decreased to 56 days from 58 days in 2011. The group’s debt to equity ratio of 0,91 was slightly higher than the previous year of 0,85, which management believe is acceptable at current levels of trading.
Staffi ng and recruitmentThe staffi ng and recruitment segment of the group showed strong growth. Revenue increased by 11,4% to R1,36 billion. This was matched by a 28% increase in EBITDA to R73,3 million. This was achieved as a result of tight management of operating costs which increased marginally by 3,7%.
The staff outsourcing segment of the business showed strong market share growth specifi cally within the industrial blue collar segments. Investment in business development skills over the past three years is fuelling this growth. The group’s objective of protecting and growing market share within its core segments will continue to receive primary focus.
Workforce Staffi ng added an additional three branches during the year, bringing our national footprint to 49 branches. Further development has also taken place in Lesotho and Mozambique
delivering innovative and diversified employer-centric solutions
21Workforce Integrated Report 2012
– with established infrastructure across these territories. Plans are currently in place to establish a presence in Zimbabwe.
Skills shortages within the white collar segment of industry remained a challenge and our niche businesses within this segment were able to capitalise on these opportunities. Telebest group performed above expectation and contributed a material increase in EBITDA of R7,8 million, (FY2011: R2,3 million). Albrecht Nursing Agency extended its reach through the establishment of branches in the Gauteng and Kwazulu-Natal regions.
Training and consultingTraining and skills development is a national priority in our country and the group’s training subsidiary is well positioned to respond to market demands. Training Force has undergone a major restructure which has included a reorganisation of executive management, further decentralisation of operating units and operational cost reductions. These changes, we believe, will result in a more sustainable business model delivering greater profitability and greater focus on the client’s value proposition. The challenges experienced during 2012 resulted in negative EBITDA of R3,9 million.
Financial and lifestyle productsThe group’s wholly owned subsidiary, Babereki Employee Support Services and its trading division Dreams Direct, provides a range of lifestyle products and services to employees. Babereki has become an important contributor to the group’s earnings. The business is extremely reliant on system integration and development and 2012 saw the roll out of our third generation systems enabling more efficient control of credit granting and collection processes. The business reported a decrease in EBITDA of 23% to R14,3 million. This was primarily as a result of increased operational overheads specifically in the area of risk management and collections. Added to this, additional resources have been employed to bolster the current system development team’s capability.
Employee health managementWorkforce Healthcare is making slow progress in developing and growing its market share. Organisations are becoming more sensitised to the importance of workplace wellness and the impact that early identification and management of risk has on increasing productivity, reducing absenteeism and positively influencing the wellbeing of their employees when managed correctly. Wellness and assistance programmes are currently provided to approximately 26 500 employees nationally. In addition to this, the division also provides employers with a comprehensive range of occupational and primary health management services, with some 53 500 medicals conducted during 2012 through its network of 42 on-site clinics. Revenue increased by 10,5% to R23,5 million. This benefit associated with this increase was absorbed by an increase in operating
expenditure of 12,6% which resulted in a marginal decrease in EBITDA to R1,4 million for year ended 2012. Management believe that with continued focus, progress in gaining market share will be achieved in the forthcoming year.
Process outsourcingThe group’s process outsourcing segment, managed to increase revenue by 14,9% to R47,1 million. However gross margins fell by 6,3% as a result of increased competition, specifically in the Programmed Construction business. EBITDA decreased by R1,2 million resulting in a close to break-even result for the year. Management are currently reviewing the operations of the respective businesses in this segment and a refocused strategy will be implemented during 2013, which will see this segment return to profitability.
SustainabilityWe are committed to effective risk management and recognise the importance of this to our sustainability. Material issues and risks get identified through a rigorous process of interaction with a broad range of stakeholders across our organisation. This strategy is driven from the bottom to top and visa-versa which gives us a deep understanding of various risks across our business.
StrategyThe group’s integrated value proposition involves aligning and integrating our diverse yet inter-dependent businesses to create a seamless solution for our clients. Our competitive advantage is our ability to execute on this value proposition utilising our technology and systems. We enable this through a decentralised business model – which we believe gives us greater exposure to our various markets. This model has been deployed across all of our businesses with varying degrees of success. Key imperatives which make this model sustainable include: developing an innovative and entrepreneurial culture across the organisation; maintaining deep areas of knowledge and specialisation of and within markets; being able to offer diversified yet integrated products and services; and, developing depth in both general and operational management. These key imperatives will form the basis of delivering on our strategic objectives.
LiquidityThe group will continue to focus on its liquidity management and through various initiatives will look to enhance processes and systems that are already in place. Liquidity as measured by the current ratio is 1,55 – management believe however that this needs to improve in order to enable the group to take advantage of market opportunities as they present themselves. The group’s net financing charge increased to R9,8 million from R7,4 million the previous year. This is predominantly as a result of increased turnover and investment in debtors. In addition to this, Babereki secured its own ring fenced funding structure which has added to the cost.
22 Workforce Integrated Report 2012
Chief executive officer’s review (continued)
TechnologyTechnology is at the forefront of enabling us to provide our
clients with value over and above our competitors. Our ongoing
investment in employer-centric technology is driven through
our internal development teams who typically have a deep
understanding of the various businesses and their respective
requirements. various new developments have been piloted
for full roll out during 2013. This includes our proprietary
system, Worktrac Zone which among others, enables clients
to optimise work processes and staffing requirements across
multiple sites and categories of staff.
RegulationIndications are that government will continue to press on with
its law reforms this year with the clear intention to finalise the
amendment processes by the end of the year; this specifically
includes the amendments to the BCEA, LRA, EEA and the new
ESA. Whilst the introduction of these laws will place its own
demand on the group’s internal requirements, the reality is that
the group is awaiting the introduction of these amendments
with certain eagerness. The nature of the amendments is such
that it will create a need for the services of the group which will
give the group further development opportunities.
Workforce has over the last year continued with its
programme to develop forward thinking systems, improve
skills development and find cost effective ways to increase
production. Its current development has placed Workforce
in the lead when it comes to the ability to assist its clients
to successfully adapt to the changes that businesses will
be required to meet over the coming year.
TransformationDuring the year under review, our permanent staff complement
was reduced by 6% from 999 to 942. Sourcing and retention of
staff in several strategic positions continued to be a challenge.
Despite the reduction in staff numbers and the challenges faced
with sourcing and retention, we still managed to achieve several
significant achievements. 56% of all new appointments made
during the year were from designated groups as were 61%
of the promotions made. Of significance was the appointment
of three senior black managers as directors on subsidiary
company boards; and the promotion of several black managers
to key senior management positions in industrial relations,
human resources and organisational development. Other
key roles were filled by skilled and experienced black talent,
which was specifically sourced with a view to increasing
skills transference and mentoring of our middle and junior
management teams. In the short- to medium-term, our strategy
will be to develop talent across the ‘experience’ gap so that our
junior managers can compete more effectively for middle and
senior positions as they arise.
Workforce Holdings Limited, incorporating its various subsidiaries and divisions, retained its Level 3 B-BBEE rating. The group remains committed to the country’s various transformation initiatives but is concerned about the implications of several of the proposed amendments to the B-BBEE scorecard. We are keeping a close eye on developments and will formalise a risk analysis and revised B-BBEE strategy once there is clearer direction from the Department of Trade and Industry (DTI).
The following subsidiary company ratings were achieved: ■ Training Force Proprietary Limited – Level 2; ■ Workforce Healthcare Proprietary Limited – Level 1; and ■ Teleresources Proprietary Limited – Level 1.
OutlookThe group is confident that its current strategy will result in the achievement of its stated objectives. Continued investment in people and systems has proven to be the primary driver of success in its core business. This will continue and will be augmented by additional investment. Legislative challenges are being addressed both strategically and operationally and the group is well prepared for these changes. We look forward to a challenging yet rewarding 2013.
AppreciationI would like to take this opportunity to thank our chairman, Mr Ronny Katz, for his continued mentorship and support. I would also like to thank all directors, management, staff and contractors for their continued resilience, energy and commitment to achieving the group’s vision and stated objectives.
L H Diamond
Chief executive officer
23Workforce Integrated Report 2012
The board remains committed to complying with recommendations as set out in King III. The board and its committees made progress in embedding the appropriate principles and practices contained in King III.
During the year the group’s focus continued on identifying compliance gaps in line with the ‘apply or explain’ approach of King III. The company will continue to improve operational and corporate practices to achieve sound corporate governance, transparency and accountability at all times, underpinned by integrity (refer to the company’s website, www.workforce.co.za for the King III application table).
The impact of the new Companies Act 71 of 2008 (the Act) on the company has been a focus of the board during the last few months. Subsequently, the memorandum of incorporation will be brought to shareholders for consideration and approval.
Board of directorsThe board is based on a unitary structure and exercises full and effective control over the group. It comprises seven members, being an executive chairman, three of the four non-executive directors and two executive directors, the chief executive officer and financial director. All four non-executive directors are independent. John Macey was appointed as lead independent to the executive chairman, Ronny Katz. The responsibility of all directors is clearly divided to ensure a balance of power and authority to prevent unfettered powers of decision-making.
The board is: ■ Guided by the letter and spirit of the values expressed in
King III and the JSE Listing Requirements; ■ responsible for actively reviewing and enhancing the group’s
system of control and governance on a continuous basis to ensure that the group is managed ethically and within prudently determined risk parameters;
■ committed to sustainable value creation for all identified stakeholders; and
■ responsible for the integrity of the integrated reporting and for overseeing all sustainability issues.
The directors as at the writing of this report are:
Non-executive directors Executive directors
John Macey* Ronny Katz (Executive chairman)
Mark Anderson Lawrence Diamond (Chief executive officer)
Lulu Letlape* Willie van Wyk (Financial director)
Kyansambo vundla*
* Independent.
The board is comprised of a majority of non-executive directors, who bring specific skills and experience to the board. The composition of the board is reviewed on a regular basis to ensure on-going compliance with the requirements entailed in the Act and King III.
In terms of the memorandum of incorporation, one-third of the directors rotate at the annual general meeting. John Macey and Mark Anderson will rotate and, being eligible, offer themselves for re-election.
The strategy of the group is mapped by the board in conference with the executive team.
The board is responsible for monitoring and reporting on the effectiveness of the company’s system of internal control. It is assisted by the audit and risk committee in the discharge of this responsibility.
The non-executive directors derive no benefit from the company other than their fees and emoluments as proposed by the board through the remuneration committee and approved by shareholders at the group’s annual general meeting (AGM).
There were no changes to the board during the reporting period and a profile of each director is included on pages 16 and 17.
The chairman The chairman’s role is to set the ethical tone for the board and to ensure that the board remains efficient, focused and operates as a unit. Ronny Katz is an executive chairman and his role is separate from that of the chief executive officer.
He provides overall leadership to the board and chief executive officer without limiting the principle of collective responsibility for board decisions. He is not a member of any of the board committees. The chairman is also responsible for the annual appraisal of the chief executive officer’s performance and he oversees the formal succession plan for the board.
The chief executive officerThe chief executive officer reports to the board and is responsible for the day-to-day business of the group and implementation of policies and strategies approved by the board. The executive committee assists him with this task. Board authority conferred on management is delegated through the chief executive officer, against approved authority levels.
Non-executive directorsAll members of the board have a fiduciary responsibility to represent the best interest of the group and all of its stakeholders. The group’s non-executive directors are individuals of high calibre and credibility who make a significant contribution to the board’s deliberations and decisions. They have the necessary skill and experience to exercise judgement on areas such as strategy, performance, transformation, diversity and employment equity.
Corporate governance report
24 Workforce Integrated Report 2012
Corporate governance report (continued)
Company secretaryThe company secretary plays a vital role in the corporate governance of the group and is responsible for ensuring board compliance with procedures and regulations of a statutory nature. The company secretary ensures compliance with the JSE Listing Requirements and is responsible for the submission of the annual compliance certificate to the JSE.
The company secretary ensures that, in accordance with the pertinent laws and regulatory framework, the proceedings and affairs of the board and its members, the company itself and, where appropriate the owners of securities in the company, are properly administered. The company secretary is the secretary of all the board committees.
The board satisfied itself with Sirkien van Schalkwyk’s work experience, performance and technical skills in fulfilling her role as company secretary. She is a consultant and maintains an arms-length relationship with the board of directors.
Board processesThe directors have access to the advice and services of the company secretary. They are entitled, at the company’s expense, to seek independent professional advice about the affairs of the company regarding the execution of their duties as directors.
A board charter is in place and outlines the responsibilities of the board as follows:
■ Act as the focal point for, and custodian of, corporate governance by managing its relationship with management, the shareholders and other stakeholders of the company along sound corporate governance principles;
■ retain full and effective control of the company; ■ give strategic direction to the company, both long- and
short-term; ■ monitor management in implementing plans and strategies
as approved by the board; ■ create value through social, economic and environmental
performance; ■ appoint and evaluate the performance of the chief executive
officer; ■ ensure that succession is planned; ■ identify and regularly monitor key risk areas and key
performance indicators of the business; ■ ensure that the company complies with relevant laws,
regulations and codes of business practice; ■ ensure that the company communicates with shareholders
and relevant stakeholders openly and promptly; ■ identify and monitor relevant non-financial matters; ■ establish a formal and transparent procedure for appointment
to the board, as well as a formal orientation programme for incoming directors;
■ regularly review processes and procedures to ensure effectiveness of internal systems of control and accept responsibility for the total process of risk management;
■ assess the performance of the board, its committees and its individual members on a regular basis;
■ ensure that the company is and is seen to be a responsible corporate citizen by having regard to not only the financial aspects of the business of the company but also the impact that business operations have on the environment and the society within which it operates;
■ ensure that the company’s performance includes that of an economic, social and environmental perspective;
■ ensure that the company’s ethics are managed effectively; ■ ensure that the company has an effective and independent
audit committee; ■ be responsible for information technology (IT) governance; ■ appreciate that stakeholder’s perceptions affect the
company’s reputation; ■ ensure the integrity of the company’s integrated report; ■ monitor the company’s compliance with the above; and ■ act in the best interest of the company by ensuring that
individual directors:– Adhere to legal standards of conduct;– exercise the degree of care, skill and diligence that would
be exercised by a reasonably individual;– act in good faith and in the manner that the directors’
believe is in best interests of the company;– take independent advice in connection with their duties
following an agreed procedure;– disclose real or perceived conflicts to the board and deal
with them accordingly;– deal in securities only in accordance with the policy
adopted by the board; and– commence business rescue proceedings as soon as the
company is financially distressed.
The charter also addresses issues such as the composition and size of the board, board procedures, matters reserved for board decision and the frequency and proceedings of board meetings.
A policy detailing the procedures for appointments to the board is in place. Although the board evaluates the chairman annually, election of the chairman does not occur annually, but only when required.
Interest in contractsDuring the year ended 31 December 2012, none of the directors had a significant interest in any contract or arrangement entered into by the company or its subsidiaries, other than as disclosed in note 25 to the annual financial statements.
Directors are required to inform the board timeously of conflicts or potential conflicts of interest they may have in relation to particular items of business. Directors are obliged to excuse themselves from discussions or decisions on matters in which they have a conflict of interest. A conflict of interest policy is in place.
delivering innovative and diversified employer-centric solutions
25Workforce Integrated Report 2012
Directors’ dealings in sharesDirectors of the company and its major subsidiaries may not deal in the company’s shares without first advising and obtaining clearance from the chairman and chief executive officer. The chief executive officer and financial director may not deal in the company’s shares without first advising and obtaining clearance from the chairman. No director or executive may trade in Workforce shares during closed periods as defined in the JSE Listings Requirements. The directors of the company keep the company secretary advised of all their dealings in securities and details of dealings are placed on SENS in line with the JSE Listing Requirements.
Self-evaluation The company secretary conducted a self-evaluation exercise of the board’s performance, mix of skills and individual contributions of directors, its achievements in terms of corporate governance and the effectiveness of its board committees. The results were reviewed by the board, which was satisfied that the overall assessment did not diminish in any material respect or degree from the previous assignment. Similar evaluations were done for the audit and risk committee as well as the remuneration committee.
Board meeting attendanceThe following board meetings were held during the reporting period:
Director19 Mar 2012
2 Jul 2012
15 Aug 2012
20 Nov 2012
Mark Anderson
Lawrence Diamond
Lulu Letlape x
John Macey
Ronny Katz
Willie van Wyk
Kyansambo vundla x
Designated advisor • • • •
• By invitation.
Merchantec Capital was appointed Designated Advisor effective 1 August 2012. Representatives of Merchantec Capital attend the audit and risk committee and board meetings.
Board committeesWhile the board remains accountable and responsible for the performance and affairs of the company, it delegates to management and board committees certain functions to assist it in properly discharging its duties. The chairman of each board committee reports at each scheduled meeting of the board and minutes of board committee meetings are provided to the
board. All the members of each board committee are
non-executive directors. Each board committee functions in
accordance with the provisions of the committee charter as
approved by the board.
Both the directors and the members of the board committees
are supplied with full and timely information that enable them
to properly discharge their responsibilities. All directors have
unrestricted access to all group information.
The chairman of each board committee is required to
attend annual general meetings to answer questions raised
by shareholders.
The established board committees are:
Audit and risk committeeThe members of the audit and risk committee are
John Macey (chairman), Lulu Letlape and Kyansambo vundla,
all independent, non-executive directors. All members are
financially literate and possess business and financial acumen.
In reviewing the committee composition during the year, it was
decided that, due to the size of the company, the audit
committee and risk committee remain one committee. The
agenda is divided into two sections to be able to attend to both
audit and risk management responsibilities. The composition of
the committee meets the requirements of the Act and King III,
consisting of a minimum of three non-executive directors,
acting independently.
The committee meets quarterly and is primarily responsible
for assisting the board in carrying out the following duties: ■ Review accounting policies and procedures; ■ review internal controls; ■ financial reporting practices; ■ the appointment of and relationship with the external
auditors, including setting the principles for recommending
the use of the external auditors for non-audit services; ■ the identification and monitoring of significant risks to
the business; ■ processes are currently on-going to include the vital role in
ensuring the integrity of the group’s integrated reporting and
the adoption of combined assurance processes that will aim
to optimise and strike a balance between the reports it
receives from management and external auditors; and ■ information technology, including the monitoring of IT
systems and controls.
The committee ensures the transparency and integrity of the
group’s financial reporting though inter alia, reviewing draft
financial statements with management and external auditors,
prior to publication. The risk register is maintained by
management and reviewed by the audit and risk committee
at each of its meetings.
26 Workforce Integrated Report 2012
Corporate governance report (continued)
The chief executive officer, financial director and senior audit
partner attend meetings of the committee by invitation. Both
the external and internal auditor have unrestricted access to
the chairman of the committee as well as the chairman of
the board.
A policy for reviewing non-audit services is in place which
requires that any non-audit services by the external auditors,
have to obtain prior approval from the committee.
The following meetings were held during the financial year:
Member19 Mar 2012
5 Jun 2012
15 Aug 2012
20 Nov 2012
Lulu Letlape x x
John Macey
Kyansambo vundla
Chief executive officer
• • • •
Financial director • • • •
Designated advisor • • • •
• By invitation.
During the year, the committee also reviewed and assessed
the external auditor’s effectiveness and is satisfied with the
objectivity and independence of services rendered. The
committee also satisfied itself with Willie van Wyk’s work
experience, performance and technical skills in fulfilling his
role as financial director.
A report from the chairman of the committee can be found on
page 18 of the integrated report.
IT steering committeeThe IT steering committee governs information technology (IT)
responsibilities as recommended by King III. This committee
meets formally at least twice a year to report on their duties in
accordance with its terms of reference as approved by the
board. The committee reports to the board via the audit and
risk committee.
The committee comprises of Keith Thomas, who is also the
appointed chief information officer and chairman, together with
Hannes Nell, Desmond Coertzen, Mark Robberts, Willie van
Wyk, Thomas Niendorf, Steven Johnston, Marten van der Spuy
and Leon Coertzen. The members represent all businesses of
the group to ensure consistency in IT systems and controls.
A detailed risk register, specifically relating to IT matters, was
developed and will be reviewed at each meeting and the top
risks will be incorporated in the company risk register. Meetings
were held on 4 July 2012 and 2 November 2012 and the
minutes of the meetings are also circulated to the board.
Remuneration committeeThe committee comprises of John Macey (chairman) and Mark
Anderson. The executive chairman attends by invitation.
The committee meets at least twice a year and is primarily responsible for assisting the board in carrying out the following duties:
■ Finalising the group’s remuneration structures and benefits in general;
■ finalising the specific remuneration and terms of employment of executive directors and senior management in the group;
■ the regular review of the composition of the board; ■ the nomination of potential candidates for appointment to the
board as and when deemed necessary; and ■ succession planning.
The following meetings were held during the reporting period:
Member19 Mar 2012
20 Nov 2012
Mark Anderson
John Macey
Executive chairman • •
• By invitation.
Social and ethics committeeDuring the reporting period, the board established the social and ethics committee in line with the requirements of the Act. The members comprises of Lulu Letlape (chairman), Frieda Hall, Dawn Halsey and Carol Knoetze.
The inaugural meeting was held on 24 October 2012 where the terms of reference was adopted, including the following responsibilities and duties:
■ To monitor the company’s activities, having regard to any relevant legislation, other legal requirements or prevailing codes of best practice, with regard to matters relating to social and economic development, including the company’s standing in terms of goals and purposes of the 10 principles set out in the united Nations Global Compact Principles; and
■ to promote good corporate citizenship, including the company’s:– Promotion of equality, prevention of unfair discrimination
and reduction of corruption;– contribution to development of the communities in which
its activities are predominantly conducted or within which its products or services are predominantly marketed; and
– record of sponsorship, donations and charitable giving. ■ to care for the environment, health and public safety,
including the impact of the company’s activities and of its products or services;
■ to promote consumer relationships, including the company’s advertising, public relations and compliance with consumer protection laws; and
delivering innovative and diversified employer-centric solutions
27Workforce Integrated Report 2012
■ to monitor labour and employment, including:– The company’s standing in terms of the International
Labour Organisation Protocol on decent work and working conditions;
– the company’s employment relationship and its contribution toward the educational development of its employees;
■ to review any statements on ethical standards or requirements for the company and the procedures or review systems implemented to promote and enforce compliance;
■ to review significant cases of employee conflicts of interest, misconduct or fraud, or any other unethical activity by employees or the company;
■ where requested, make recommendations on any material potential conflict of interest or questionable situations;
■ to ensure that the code of conduct and ethics-related policies are drafted and implemented;
■ reporting on and disclosing the company’s ethics performance;
■ to draw matters within its mandate to the attention of the board as the occasion requires; and
■ to report, through one of its members, to the shareholders at the company’s annual general meeting on the matters within its mandate.
The code of business conduct was reviewed and a fraud prevention system approved and is in the process of being implemented.
All members attended the inaugural meeting and the chief executive officer and financial director attended by invitation.
Accountability and auditAnnual financial statementsThe board acknowledges its responsibility for ensuring the preparation of the annual financial statements in accordance with International Financial Reporting Standards. The board is also responsible for ensuring the maintenance of adequate accounting records and effective systems of internal control and delegates the activities relating to this to the audit and risk committee.
The board is of the opinion that the auditors observe the highest level of business and professional ethics and that their independence is not in any way impaired. The group aims for efficient audit processes using its external auditors in combination with the internal audit function and management encourages unrestricted consultation between external and internal auditors. The co-ordination of efforts involves periodic meetings to discuss matters of mutual interest, management letters and reports, and a common understanding of audit techniques, methods and terminology.
External auditHorwath Leveton Boner, the external auditors, report on whether the annual financial statements are fairly represented in accordance with IFRS and the Companies Act, 2008.
Internal auditThe internal audit department continues to grow and mature at Workforce and is an independent appraisal function whose primary mandate is to examine and evaluate the effectiveness of the applicable operational activities, the attendant business risks, including those that arise subsequent to the year-end and the systems of internal financial control, so as to bring material deficiencies, instances of non-compliance and development needs to the attention of the audit and risk committee, external auditors and operational management for resolution.
The internal audit charter defines the scope of the internal audit function. This and the internal audit plan, include the assessment of the reliability and integrity of financial and operating information, new and existing systems of internal control, means of safeguarding assets and methods of confirming consistency of results with established objectives.
Risk managementThe focus of risk management in Workforce is on identifying, assessing, mitigating, managing and monitoring all known forms of risk across the group. Management is involved in a continuous process of developing and enhancing its comprehensive systems for risk identification and management. The major risks are the subject of the on-going attention of the board of directors and are given particular consideration in the annual strategic plan which is approved by the board.
28 Workforce Integrated Report 2012
Sustainability review
Our sustainability context is influenced by many factors including our vision, our values, economic, legislative, societal and environmental trends. We are cognisant of the fact that the growth and success of our business is dependent on our ability to continue to deliver value not only to our customers, but to all stakeholders, and our integrated sustainability goals can only be achieved through paying greater attention to the world in which we operate. In doing this, our business needs to remain financially viable and socially and environmentally responsible.
Sustainability focus areasStakeholder engagement
■ Engagement process
Human resources ■ People development; ■ transformative culture/diversity and inclusion; and ■ preferred employer (great place to work).
Social consciousness ■ Care for communities in which we work
Environmental responsibility ■ Reduce carbon footprint
Economic performance ■ Growth and return
Embedding sustainabilitySustainable business practice will remain a key area of focus and will increasingly influence our long-term planning. To embed the broader context of sustainability into our business, we recognise the importance of combining the responsibility for strategy, sustainable development, human resources, transformation and stakeholder engagement. However, reporting on the subject within Workforce’s multi-faceted
decentralised business continues to be an on-going challenge. Key issues in one division could be completely irrelevant in another, while material issues for a particular business unit could be perceived as immaterial from a group perspective. The following group-wide directive, we believe will accelerate our progress:
■ Incorporate sustainability into our various divisional business strategies; and in so doing;
■ establish scorecards to measure progress; which in turn must;
■ link to management’s KPI’s; and ■ put systems in place to track and measure progress.
Stakeholder engagementWhile we have always been committed to timely, consistent and transparent communication with our stakeholders, we acknowledge that the focus of our stakeholder engagement to-date has been client-centric. Emanating from our stakeholder engagement process evaluation, we recognise the need to establish structures that will facilitate and expand our stakeholder engagement to encompass a wider level of participation, with particular emphasis on active engagement with our employees and our contractors.
The group recognises that all its businesses operate in a context where economic, social, environmental and regulatory factors have a direct or indirect impact on its performance. Therefore the formalisation of our stakeholder engagement process is essential. Effective stakeholder engagement will improve the alignment between the group and our key stakeholders and will influence the crafting of our strategies and tactics as well as enable us to manage expectations and reputational risks.
Stakeholders engaged with during the year
StakeholderMethods of engagement
Frequency of engagement Key topics
Concerns raised by stakeholders
Actions to address concerns
Clients and prospective clients
Meetings, site visits, telephone, email, internet
As required: daily, weekly, monthly.
Service level agreements, availability of skilled staff; service/product quality, new product offerings, industry regulation updates, labour unrest management, staff training, learnerships/internships, discretionary grants, employee health management, regulatory compliance.
Industry regulation/labour law amendments, skills availability, services integration, productivity management, regulatory compliance.
Road shows, meetings, direct communication, labour law updates and education, customer satisfaction surveys, business consulting, project management, training.
delivering innovative and diversified employer-centric solutions
29Workforce Integrated Report 2012
StakeholderMethods of engagement
Frequency of engagement Key topics
Concerns raised by stakeholders
Actions to address concerns
Shareholders and investors
Annual report, SENS announcements, road shows
Annually, Bi-annually, or as required.
Financial results presentations.
Investment returns, industry regulation, business sustainability, share liquidity.
Alternative options to improve liquidity, communications strategy.
Employees and contractors
Meetings, newsletters, newsflashes, email, social interactions, Intranet, social media
As required: Daily, weekly, monthly.
Performance, remuneration, training, career development, learnership facilitation, new product launches.
Career development, remuneration, reward and recognition, training, management development, transformation.
HR committee, review of policies and processes, reward and recognition initiatives, talent management, communications strategy.
Government and regulators
Forum participation, meetings, reporting
As required Labour and other legislation amendment, proposals, tabling of Bills, discussion papers and passing of new legislation/Acts.
Labour practices and decent work.
Direct involvement and participation at the Confederation of Associations in the Private Employment Sector, Nedlac and BuSA. Systems and process review. Compliance and regulation actions and monitoring.
Local communities in which we operate
Face-to-face, forums, meetings
As required or as opportunities present themselves.
Job creation, recruitment of staff from local communities, skills development initiatives, identification of fund-raising initiatives and socio-economic support required.
Job creation, training and skills development, community support (CSI).
Recruitment drives to source staff from local communities in which contracts are operated. Community support through CSI initiatives and assistance in response to natural disasters.
Suppliers Meetings, telephonic, email
As required. Service levels agreements, procurement initiatives, enterprise development.
Continuity of business, pricing.
Preferential supplier agreements.
Media Media statements, meetings
Financial results, performance and achievements, product launches, event coverage, labour unrest.
Industry regulation, labour practices and decent work.
Communications strategy.
Human resourcesOur goal is to create a positive, supportive and diversity-friendly
working environment in which employees can achieve their
full potential through challenging work and development
opportunities – with the assurance of being recognised
and rewarded for excellence in performance.
Labour practices, decent work and human rightsEstablished codes, policies and procedures guide recruitment,
business conduct, non-discrimination, industrial relations,
employment equity, grievance and dispute settlement,
employee conduct, freedom of association, ethics and sexual
harassment. Policies and procedures are communicated to
30 Workforce Integrated Report 2012
Sustainability review (continued)
staff through orientation and induction programmes, notice
boards, employment agreements and other employee
engagement processes.
All our full-time employees reap the benefit of a basic salary
augmented by other benefits that include a retirement fund,
risk and medical aid benefits which are subsidised at differing
levels, dependent upon an employee’s position and selection
of benefit-type. As participation in the group’s provident fund is
compulsory, 100% of permanent employees are members.
Workforce is an active participant in various industry regulatory
associations and is compliant with South African labour and
other legislation which includes the Labour Relations, Basic
Conditions of Employment, Employment Equity, Skills
Development, broad-based black economic empowerment,
unemployment Insurance and the Occupational Health and
Safety Acts.
Workforce is guided by its Code of Conduct, the human rights
policies detailed in South Africa’s Constitution, South Africa’s
endorsement of various International Labour Organisation
principles relating to forced, compulsory or child labour, in
addition to compliance with the country’s various labour laws.
Employment equity The group continues to make steady progress towards
meeting the goals and targets of its employment equity plan.
Employment equity reports were timeously submitted and the
divisional and regional employment equity committees will
continue to be responsible for driving the achievement of
equitable representation at divisional and regional level.
During the year under review our permanent staff complement was reduced by 6% from 999 to 942. Sourcing and retention of staff in several strategic positions continued to be a challenge. The business development side of our business was one such area in which we struggled to source and retain appropriately skilled and experienced staff. Staff turnover in this area was disappointing.
Despite the reduction in staff numbers and the challenges faced with sourcing and retention we still managed to achieve several significant employment equity achievements. 56% of all new appointments made during the year were from designated groups as were 61% of the promotions made. Of significance was the appointment of three senior black managers as directors on subsidiary company boards and the promotion of several black managers to key senior management positions in IR, HR and Organisational Development. Other key roles were filled by skilled and experienced black talent which was specifically sourced with a view to increasing skills transference and mentoring of our middle and junior management teams. In the short- to medium-term our strategy will be to develop talent across the ‘experience’ gap so that our junior managers can compete more effectively for middle and senior positions as they arise.
In the year ahead our regional committees, guided by the newly established HR committee and in line with our talent management strategy, will be looking to identify solutions to overcome the source and retention barriers being experienced and we will continue to focus on developing a talent base by better aligning the workplace skills plan and the talent management strategy to our employment equity plan.
Group employment equity statistics for the year ended 31 December 2012
Males Females
Occupational Levels A C I W A C I W Total
Top management 2 3 11 2 1 11 30
Senior management 3 2 3 27 1 8 4 15 63
Prof. qualified & exp. specialists and mid management
5 6 13 53 8 11 6 40 142
Skilled tech & academic qual. workers, jnr management, supervisors, foremen
50 29 20 74 71 57 13 84 398
Semi-skilled and discretionary decision-making
55 17 14 12 56 52 16 60 282
unskilled 2 25 27
Total permanent 117 54 53 177 161 130 40 210 942
Non-permanent staff 13 344 2 252 242 199 5 303 1 146 51 77 22 614
Grand total 13 461 2 306 295 376 5 464 1 276 91 287 23 556
12% 6% 6% 19% 17% 14% 4% 22% 100%
* Due to the nature of our business, headcount statistics vary. The above statistics reflect the group’s headcount at a specific point in time.
delivering innovative and diversifi ed employer-centric solutions
31Workforce Integrated Report 2012
Broad-based black economic empowerment
(B-BBEE)
Workforce Holdings Limited, incorporating its various
subsidiaries and divisions, retained its Level 3 B-BBEE rating.
The group remains committed to the country’s various
transformation initiatives but is concerned about the
implications of several of the proposed amendments to the
B-BBEE scorecard. We are keeping a close eye on
developments and will formalise a risk analysis and revised
B-BBEE strategy once there is clearer direction from the
Department of Trade and Industry (DTI).
The following subsidiary company ratings were achieved: ■ Training Force Proprietary Limited – Level 2 ■ Workforce Healthcare Proprietary Limited – Level 1 ■ Teleresources Proprietary Limited – Level 1
Talent management
One of the group’s strategic imperatives is talent management.
The attraction and retention of top calibre employees, who not
only have expertise in a specifi c job function, but also particular
knowledge of the niche sector in which they operate, continues
to be integral to the successful execution of our business
strategies. Through the alignment and integration of various
Transformation
Diversity
Engagement Retentio
n
Com
pet
ency
Man
ag
ement
Human resourcessystem
Policies Procedur
es
Met
rics
Talent Management @ Workforce
Talent Strategy &Planning
Sourcing & Recruiting
On-boarding
Learning & Development
Succession Planning
Leadership Development
Compensation & Recognition
Performance Management
Our Talent Management Framework
Employee age groups
under 35 – 52% 35-55 – 43% Above 55 – 5%
organisational HR processes, we aim to implement an effective
talent management system which will attract, develop,
motivate, and retain productive employees.
A further focus will be on the connections between
performance management, career management, succession
management and leadership development which will be built
into the talent management framework. Our ultimate goal is to
create a high-performance, sustainable organisation with the
resources to meet our strategic and operational goals and
objectives. The HR committee will be responsible for
implementing the necessary structures and processes to give
effect to our newly developed Talent Management Framework.
Skills developmentDuring the year, emphasis continued to be placed on facilitating
transformation in the workplace through increased skills
development and skills transfer programmes. Training
interventions included on-the-job training, soft skills training and
technical skills training to a limited degree. Going forward, these
interventions will be further formalised and incorporated into our
talent management programme. Evaluation and data collection
processes will also be introduced to enable measurement
and reporting.
Workforce Industry Knowledge (WIK), a modular training
programme launched during 2011, is aimed at empowering staff
members, who work in key areas such as sales, operations and
administration, with specifi c knowledge about the group, the
Employee gender groups
Male – 56% Female – 44%
32 Workforce Integrated Report 2012
Sustainability review (continued)
industries in which we operate and the various laws that govern
our business. The WIK training programme is compulsory with
staff required to complete each module before being able to
progress to the next module. To-date, excellent results have been
achieved from this initiative. Since its launch, 167 employees have
either partially completed or completed this modular training.
LearnershipsThe group’s learnership programme forms part of our longer term
strategy of developing a pool of skilled people whose skills are
recognised and valued in terms of the National Qualifications
Framework (NQF). Our objectives include: ■ Creating opportunities for unemployed young people
(including graduates); ■ upskilling permanent staff who do not have a
formal qualification; ■ meeting our employment equity targets; and ■ participating in the country’s National Skills
Development Strategy.
The Learnership Programme is a government initiative to support
the goals of the National Skills Development Strategy III, Skills
Development Act and Human Resources Development Strategy
(HRDS); the intention being to transform, uplift and develop skills
in South Africa. It also seeks to address challenges facing the
South African labour market by linking practice and theory.
The group currently has 719 registered learners participating in
its internal learnership programme. A significant increase from
the previous year’s reported figure of 481 learnerships.
In 2012, for the first time, we introduced learnerships for our
blue collar contract staff. As the majority of our contract staff
are unskilled and semi skilled workers, we chose two
learnerships on which to enrol the interested workers.
Both learnerships are pitched NQF level 1. A careful selection
process of both the site and the learners had to be followed to
ensure a successful outcome. As with any pilot project several
challenges were encountered and valuable lessons learnt for
future consideration for the implementation of learnerships of
this nature. We are anticipating the pilot project to be complete
by mid 2013 when we will be in a better position to analyse the
CompanyNumber of
learnersRange of
qualificationsRange of
NQF levelsRange of
industry typesTotal number
completed In progress
Workforce 690 2 2 2 32 658
Albrecht Nursing 83 1 1 1 – 61
Babereki 17 1 1 1 17 –
Teleresources 6 1 1 1 6 –
Total 786 5 5 5 55 719
success of the project and plan for future learnerships of
this nature.
A strategic decision was made to register these learnerships
as unfunded learnerships with SARS and the Services SETA.
Several financial and operational benefits were realised as a
result of this decision. This initiative resulted in us being able
to upskill a large number of our contract workers at a minimal
cost. We achieved this by utilising the resources of our internal
training company, Training Force, to implement and facilitate
these training interventions.
In the year ahead we will continue to prioritise skills
development of both our permanent and temporary staff
compliment. As 52% of our permanent staff are under the age
of 35, we will ensure that significant focus is given to youth
development and will align our strategies to the goals, targets
and strategic initiatives of government and the various SETAs
to increase employment opportunities for youth in our country.
Job Pathways ProgrammeThe three year contract with the City of Johannesburg to manage the Job Pathways Programme finished in June 2012. The target of linking 13 500 unemployed residents of the City with income earning opportunities was met. The opportunities included:
■ Permanent placements; ■ contract placements; ■ expanded public works contracts; ■ learnerships/apprenticeships/internships; and ■ new venture creation.
The project was hugely successful in creating a formal and recordable process of linking opportunities to registered, unemployed citizens of the City. Although the project did not immediately continue with an outsourced service provider, we see huge benefit in this programme continuing and measuring its long-term impact on unemployment in the City.
Work and skills programme (Western Cape)The group was again successful in being awarded the Work
and Skills Programme. Launched in September 2012, the
delivering innovative and diversified employer-centric solutions
33Workforce Integrated Report 2012
# Learners per district
Mun
icip
ality
0 50 100 150 200 250 300 350 400
West Coast District
Central Karoo District
Eden District
Overberg District
Cape Winelands District
383
61
55
108
27
91
City of Cape Town Metropolitan
Western Cape Municipal Districts
Male39%
Female61%
Gender split
programme comprises the integration of job placement with
learning opportunities through host employers, delivered over a
pre-determined period of time in the Western Cape’s economic
and social sectors. The programme targets the unemployed
youth (aged between 18-35) of the Western Cape so as to
alleviate poverty, reduce unemployment and improve future
employment and self-employment prospects of participants.
Each intake comprises a six monthly roll-out, and combines
skills development in the context of variable work experience,
and includes exit strategies which guide successful participants
to growth potential in formal and informal working
environments. In this way, the on-going capacity of
beneficiaries is substantially improved in self-sustainability
as entrepreneurs, as members of co-operatives, and
as employees.
Social review
Workforce recognises its responsibility towards the families of
employees and communities influenced by its operations. Many
communities depend on the wages paid by Workforce as our
operating divisions draw the staff they need from the local
communities in which they are located. This creates jobs and
helps to build local economies through the empowerment
of individuals.
Workforce head office has encouraged and guided societal
investment by establishing a vehicle called Workforce Cares.
The group’s various business divisions have supported a
number of communities in which they are active through the
following interventions. These interventions are identified and
coordinated independently by the divisions and branches,
allowing a closer link between businesses, employees
and communities. ■ Direct donations – The group provided financial assistance to
a broad-base of applicants to address challenges relating to
poverty and community development, particularly prioritising
the needs of disadvantaged children; ■ staff volunteerism projects – we facilitated opportunities for
our employees to make a compassionate difference in their
local communities, thereby building our employee value
proposition and brand reputation. During the year, various
communities were supported through project support or
sponsoring of and participation in fund-raising activities; and ■ enterprise development – the group’s vast number of
branches, requiring transport of people to and from work has
resulted in the establishment of SMME Taxi Operators. This
on-going relationship with independent taxi operators has
matured in some areas where taxi operators have expanded
their fleet of vehicles in order to cope with demand.
Improved data collection and reporting procedures of all CSI
projects throughout the group, now needs to be established.
Environmental review
The group is in the process of establishing a formal
Environmental policy. This will provide the necessary guidelines
to effect and govern environmental sustainability within the
group. The policy will be aligned to the international and
national agenda on the environmental issues, the King III
reporting principles and corporate governance standards.
34 Workforce Integrated Report 2012
The Workforce group’s approach to environmental sustainability
focuses on reducing the negative impacts of
all its businesses. The group also recognises that it has a
responsibility to the environment beyond legal and regulatory
requirements and commits to continually seek to improve its
environmental performance. We will therefore manage our
processes, our materials and our people in order to reduce the
environmental impact of our operations. We will encourage
customers, suppliers and other stakeholders to do the same.
While environmental trends are important in the world, these
tend to impact our business indirectly rather than directly, We
have realised that the greening journey is a complex and
Sustainability review (continued)
challenging one which may result in many obstacles along the
way. The group is committed to making the necessary changes,
but also wants to be genuine and transparent about the
difficulties that we have already experienced along this journey.
Through the establishment of the environmental policy the
following key areas were immediately identified and will be
marked as priorities for 2013 and reported on. ■ Establish and implement data collection processes; ■ measure and monitor our footprint; ■ establish improvement targets; ■ implement strategies to achieve targets; ■ implement awareness, communications; and
training initiatives.
Actions already in place
Reducing business travel ■ Given the wide geographical spread of our business, extensive travel takes place to our various offices. The introduction of technology comprising voice and video calls and desktop applications has significantly reduced our business travel.
Procurement ■ Through the establishment of a centralised procurement system, the group has achieved various efficiencies and controlled costs in addition to achieving other environmental benefits.
Energy efficiency ■ Significant savings have also been achieved through energy efficiency awareness campaigns
launched throughout the group – specifically in respect of electricity usage; ■ Desk-top printers have been replaced with departmental and shared multi-function devices.
Traditional telephone rental and lines have been replaced with voIP; and ■ Data gathering processes now need to be established, followed by the establishment of targets.
Decreasing paper usage ■ By raising awareness, the response throughout the group has been impressive especially in respect of paper recycling and double-sided printing. The use of technology has also reduced in-system paper use, including the introduction of electronic payslips.
delivering innovative and diversified employer-centric solutions
35Workforce Integrated Report 2012
Economic sustainabilityThe group is in an ideal position to have a significant socio-economic impact on South African society by reducing unemployment rates, improving the quality of life of its outsourced staff base and at the same time positively impacting the productivity and competitiveness of its client base. The group’s primary objective is hence to create a sustainable business in order to create wealth for all its stakeholders.
Strategic focus Action
Company
Ensure sustainable growth in profitability Strategic focus on increasing revenue streams, increasing gross margins and improving cost efficiencies as detailed in the Chief executive officer’s report.
Strengthen balance sheet and improve cashflows Focus on debtors days, and ensuring applicable finance structures are in place.
Clients
Enabling clients to be competitive by sourcing competent temporary and permanent staff
This is our core competency, developed over 41 years.
Mitigating clients risk of non-compliance to labour laws Ensure compliance by utilising in-house legal expertise. Consulting to clients as needed.
Outsourced staff
Reduce unemployment Training and development of staff through its nine training centres, on-site training initiatives, and learnership programmes, as detailed in the social sustainability report.
Placement of staff from a comprehensive database, as and when needed. During the year, a total of 83 661 staff have been placed by the group.
Enhance the wellbeing of staff Providing certain lifestyle and financial products.
Providing workplace healthcare through a network of fixed and mobile clinics.
2012 Financial performance impactAs discussed in the chief executive officer’s report, the company remained relatively profitable during 2012, yet experienced a negative cashflow from operating activities due to an increase in net working capital. Action plans have been put in place to improve working capital levels in the coming year.
In spite of this, the balance sheet remained relatively strong with a net debt to equity ratio of 0,89 (2011: 0,88) and a current ratio of 1,53 (2011: 1,56). The group’s relatively strong balance sheet has enabled it to obtain the necessary funding to grow its operations.
Economic value add and distributionThe value added statement presented hereunder, illustrates how the group’s activities generated R1 373 113 000 in economic value add during 2012 (FY2011: R1 239 375 000).
36 Workforce Integrated Report 2012
Sustainability review (continued)
Value Added Statementas at 31 December 2012
2012R’000 %
2011R’000 %
Value added during the yearRevenue 1 498 435 1 348 561Other operating income (462) 139Cost of sales and other services (127 530) (112 759)
value added from operations 1 370 443 1 235 941Interest received 2 670 3 434
Wealth created 1 373 113 1 239 375
Distributions during the yearEmployees and contractors 1 182 693 86 1 058 722 85Providers of capital 12 463 1 10 896 1Government 101 004 7 74 697 6
– SA normal income tax 2 524 2 879– Employee taxes, skills development and other levies 98 480 71 818
Re-invested in the group 76 953 6 95 060 8
Wealth distribution 1 373 113 100 1 239 375 100
37Workforce Integrated Report 2012
Integrate
Consolidated annual fi nancial statements
Directors’ responsibility 38
Directors’ approval 39
Declaration by the company secretary 39
Report of the independent auditor 40
Report of the audit and risk committee 41
Directors’ report 44
Group statement of fi nancial position 46
Group statement of comprehensive income 47
Group statement of changes in equity 48
Group statement of cash fl ows 49
Accounting policies 50
Notes to the group fi nancial statements 62
Company statement of fi nancial position 81
Company statement of comprehensive income 81
Company statement of changes in equity 82
Company statement of cash fl ows 82
Notes to the company fi nancial statements 83
Analysis of shareholders 86
Corporate information 87
Shareholders’ diary 87
Notice of annual general meeting 88
Form of proxy 101
Notes to the form of proxy 102
Defi nitions IBC
for the year ended 31 December 2012
38 Workforce Integrated Report 2012
Directors’ responsibility
The directors are responsible for the preparation and fair presentation of the company and group annual financial statements, comprising the directors’ report, statements of financial position at 31 December 2012, and the statements of comprehensive income, the statements of changes in equity and the statements of cash flows for the year then ended, a summary of significant accounting policies and the notes to the financial statements, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa.
The directors’ responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.
The directors’ responsibility also includes maintaining adequate accounting records and an effective system of risk management as well as the preparation of the supplementary schedules included in these financial statements. The directors have made an assessment of the company’s and group’s ability to continue as a going concern and have no reason to believe the business will not be a going concern in the year ahead.
The directors have reviewed the group’s cash flow forecast for the year to 31 December 2013 and, in the light of this review and the current financial position, they are satisfied that Workforce Holdings Limited and its subsidiaries have, or have access to, adequate resources to continue in operational existence for the foreseeable future and have continued to adopt the going-concern basis in preparing the financial statements.
The auditor is responsible for reporting on whether the annual financial statements are fairly presented in accordance with the applicable financial reporting framework.
39Workforce Integrated Report 2012
Directors’ approval
Declaration by the company secretary
The directors acknowledge and accept full responsibility for the preparation and integrity of the information presented in the company and group annual financial statements for the year ended 31 December 2012.
The company and group annual financial statements of Workforce Holdings Limited, which have been prepared in accordance with the Companies Act of South Africa and comply with International Financial Reporting Standards, were approved by the board of directors on 26 March 2013 and are signed on their behalf by:
R S Katz L Diamond W van WykChairman Chief executive officer Group financial director
In terms of section 58(2) of the South African Companies Act, 2008, as amended, and Companies Regulations 2011, (“the Act”), I certify that, to the best of my knowledge, Workforce Holdings Limited has lodged with the Registrar of Companies, all such returns as are required of a public company in terms of the Act and further, that such returns are true, correct and up to date.
S van SchalkwykCompany secretary
Johannesburg26 March 2013
40 Workforce Integrated Report 2012
Report of the independent auditor
To the shareholders of Workforce Holdings LimitedWe have audited the consolidated and separate financial statements of Workforce Holdings Limited set out on pages 46 to 85, which comprise the statements of financial position as at 31 December 2012, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.
Directors’ responsibility for the financial statementsThe company’s directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, 2008, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibilityOur responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Workforce Holdings Limited as at 31 December 2012, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and the requirements of the Companies Act of South Africa.
Other reports required by the Companies ActAs part of our audit of the consolidated and separate financial statements for the year ended 31 December 2012, we have read the directors’ report, the audit committee’s report and the company secretary’s certificate for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated and separate financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the audited consolidated and separate financial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.
Horwath Leveton BonerRegistered Auditor
Per: Craig GeorgeRegistered AuditorPartner
3 Sandown Valley CrescentSandown
26 March 2013
41Workforce Integrated Report 2012
Report of the audit and risk committee
The committee is pleased to present its report for the financial year ended 31 December 2012. The report is presented in accordance with the requirements of the Companies Act of 2008 and the recommendations contained in the third King Report on Governance for South Africa and the King Code of Governance for South Africa (King III, 2009).
Audit and risk committee membersThe audit and risk committee comprises of the following three independent non-executive directors: John MaceyLulu LetlapeKyansambo Vundla
The chairman of the board, chief executive officer, financial director, designated advisor, group financial manager, external auditor and other assurance providers attend meetings by invitation.
During the current year four meetings were held and attended as noted in the corporate governance report.
The board ensured that the audit and risk committee members jointly as a collective body are subject-matter specialists in the fields of finance, risk, audit, compliance and corporate governance and have sufficient qualifications, skills and experience to fulfil their obligations. In addition, all members are independent of character and their judgement is not impaired in any way. They all bring invaluable integrity and experience to the audit and risk committee’s deliberations and make positive contributions on an ongoing basis.
Roles and responsibilitiesThe audit and risk committee’s roles and responsibilities include its statutory duties in terms of Section 94(7) of the Companies Act, the JSE Listings Requirements and the responsibilities assigned to it by the board.
Statutory dutiesIn the conduct of its duties, the audit and risk committee has performed the following statutory duties:
■ Nominated for appointment as auditor of the company, a registered auditor who, in the opinion of the audit committee, is independent of the company;
■ determined the fees to be paid to the auditor and the auditor’s terms of engagement; ■ ensured that the appointment of the auditor complies with the Companies Act, 2008, and any other legislation relating to the
appointment of auditors; ■ determined the nature and extent of any non-audit services that the auditor may provide to the company; and ■ pre-approved any proposed agreement with the auditor for the provision of non-audit services to the company.
Please also refer to the corporate governance report on page 23 for a more complete list of statutory duties.
External auditorThe committee has satisfied itself that Horwath Leveton Boner and Craig George, the designated auditors, are independent as defined in terms of prescribed legislation.
The committee, in consultation with executive management, agreed to the engagement letter, terms, audit plan and budgeted audit fees for the 2012 financial year.
There is a formal procedure that governs the process whereby the auditor is considered for non-audit services. The committee approved the terms of a master service agreement for the provision of non-audit services by the external auditor, and approved the nature and extent of non-audit services that the external auditor may provide in terms of the agreed pre-approval policy.
The committee has nominated, for election at the annual general meeting, Horwath Leveton Boner as the external audit firm and Craig George as the designated auditor responsible for performing the functions of auditor, for the 2012 financial year. The audit committee has satisfied itself that the audit firm and designated auditor are accredited as such on the JSE list of auditors and their advisors.
Internal financial controlsBased on the results of the formal documented review of the design, implementation and effectiveness of the company’s system of internal financial controls conducted by the internal audit function during the 2012 year, and in addition, considering information and explanations given by management and discussions with the external auditor on the results of their audit, nothing material has come
42 Workforce Integrated Report 2012
Report of the audit and risk committee (continued)
to the attention of the audit committee that caused the committee to believe that the company’s system of internal financial controls is not effective and does not form a basis for the preparation of reliable financial statements.
Financial statementsThe audit and risk committee has reviewed interim reports, result announcements and other releases of price-sensitive information. It also reviewed the principles, policies and practices adopted in preparation of the financial statements of companies in the group to ensure that the annual financial statement of the group comply with all statutory requirements.
The audit and risk committee has evaluated the consolidated annual financial statements for the year ended 31 December 2012 and is satisfied that they comply, in all material aspects, with regulatory requirements and International Financial Reporting Standards. The committee has therefore recommended the annual financial statements for approval to the board. The board has subsequently approved the financial statements, which will be open for discussion at the forthcoming annual general meeting.
Going concernThe audit committee reviewed an assessment by management of the going- concern premise of the company before concluding to the board that the company will be a going concern in the foreseeable future.
Expertise and experience of the financial director and the finance functionThe audit committee has satisfied itself that the financial director has appropriate expertise and experience. The audit and risk committee has considered, and has satisfied itself of the appropriateness of the expertise, resources and adequacy of the finance function and experience of the senior members of management responsible for the financial function.
Duties assigned by the boardThe audit and risk committee fulfils an oversight role regarding the company’s integrated report and the reporting process, including the system of internal financial control. It is responsible for ensuring that the company’s internal audit function is independent and has the necessary resources, standing and authority within the company to enable it to discharge its duties. Furthermore, the audit committee oversees co-operation between the internal and external auditors, and serves as a link between the board of directors and these functions.
The audit and risk committee is satisfied that, in respect of the financial year, it complied with its legal, regulatory and other responsibilities.
Risk managementThe audit and risk committee fulfils an oversight role regarding financial reporting risks, internal financial controls, fraud risk as it relates to financial reporting and information technology risks as it relates to financial reporting.
The committee reviewed the management of risk and the monitoring of compliance and legal governance effectiveness within the group and ensured that the group’s existing combined assurance model addressed the significant risks facing the group.
Internal auditThe audit and risk committee considered and recommended the internal audit charter for approval by the board.
The internal audit function reports centrally with responsibility for reviewing and providing assurance on the adequacy of the internal control environment across all of the company’s operations. The internal chief audit manager is responsible for reporting the findings of the internal audit work against the agreed internal audit plan to the audit and risk committee on a regular basis.
The internal chief audit manager has direct access to the audit and risk committee, primarily through its chairman.
The audit and risk committee played an oversight role in respect of the internal audit function to ensure its effectiveness and is also responsible for the assessment of the performance of the chief audit executive and the internal audit function.
Whistle-blowingThe audit and risk committee receives and deals with any concerns or complaints, whether from within or outside the group, relating to the accounting practice and internal audit of the group, the content or auditing of the company’s financial statements, the internal financial controls of the group and related matters.
Sustainability reportingThe audit and risk committee considered the group’s sustainability information as disclosed in the integrated report and has assessed its consistency with operational and other information known to committee members, and for consistency with the annual financial statements. The committee is satisfied that the sustainability information is reliable and consistent with the financial results.
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43Workforce Integrated Report 2012
Additional duties performed during the year as required by the King III codeThe committee adopted a new formal terms of reference that has been approved by the board, and satisfied its responsibilities for the year in compliance with its terms of reference and will monitor this in line with the approved committee’s annual work plan.
Recommendation of the integrated report for approval by the boardThe audit and risk committee has recommended the integrated annual report for approval by the board of directors.
Conclusion on fulfilment of duties and obligationsGiven the above, the committee is of the opinion that it has appropriately addressed its key responsibilities in respect of internal control, financial accounting control, stakeholder reporting and statutory and regulatory requirements.
J R MaceyChairman: Audit and risk committee
26 March 2013
44 Workforce Integrated Report 2012
Directors’ report
The directors present their report for the year ended 31 December 2012. This report forms part of the audited financial statements.
Nature of businessWorkforce Holdings Limited is an investment holding company. Its subsidiaries carry on the business of staff outsourcing, recruitment and specialist staffing, training and consulting, financial and lifestyle products, employee health management and process outsourcing.
There have been no material changes to the nature of the group’s business from the prior year.
Financial resultsFinancial results are discussed in detail in the chief executive officer’s report.
SubsidiariesThe company’s directly owned subsidiaries are as follows:
Direct subsidiaries % holding
The Workforce Group Proprietary Limited 100Albrecht Nursing Agency Proprietary Limited 100Rapitrade 465 Proprietary Limited 100Telebest Holdings Proprietary Limited 100TechniChron Proprietary Limited 100
Letcolex Proprietary Limited 100Zascospex Proprietary Limited 100
Details of the subsidiaries indirectly held are set out below:
Indirect subsidiaries % holding
Babereki Employee Support Services Proprietary Limited 100Fads Proprietary Limited 100Gauteng Wage Bureau Proprietary Limited 100Khetha Staffing Services Proprietary Limited 100Only The Best Proprietary Limited 100Pha Phama Africa Staff Services Proprietary Limited 100Teleresources Proprietary Limited 100Top Level Personnel Proprietary Limited 100Training Force Proprietary Limited 100Workforce Finance Proprietary Limited 100Workforce Healthcare Proprietary Limited 50Workforce Software Proprietary Limited 100Workforce Worldwide Staffing Proprietary Limited 100
The Pha Phama Africa Employee Empowerment Trust and its subsidiary Pha Phama Africa Investments Proprietary Limited are consolidated in line with the requirements of IAS 27: Consolidated Financial Statements and Accounting for Investments in Subsidiaries and SIC 12: Special Purpose Entities issued by the International Accounting Standards Board.
The subsidiary of the share trust is the beneficial owner of 14 370 000 (2011: 14 370 000) shares in Workforce Holdings Limited. The cost of these shares amounted to R7 615 838 (2011: R7 615 838) and the loan outstanding is R9 111 761 (2011: R9 111 761).
Aggregate profits of subsidiaries attributable to the holding company is as follows:
2012 2011
R’000 R’000
Profit for the year attributable to owners of the parent 23 185 23 445
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45Workforce Integrated Report 2012
DividendsNo dividends were declared in the current financial year (2011: R Nil).
Share capitalDetails of the company’s authorised and issued share capital at 31 December 2012 are shown in note 9 to the financial statements. No changes were made to the authorised and issued ordinary share capital during the year under review.
Employee share empowerment schemeThe Pha Phama Africa Employee Empowerment Trust was formed for the purpose of providing an opportunity for previously disadvantaged employees of the group to participate in the group’s growth and success.
BorrowingsIn terms of the memorandum of incorporation, the directors have unlimited borrowing powers. Interest-bearing borrowings comprise loans secured by instalment sale agreements as well as cession of trade receivables.
Subsequent eventsNo material events occurred between the year-end date and the date of this report.
Special resolutionsThe following special resolutions were passed at the previous annual general meeting:
■ Resolved that the remuneration for non-executive directors was approved effective 17 May 2012 until the annual general meeting in 2013;
■ resolved that the Company be authorised to provide direct or indirect financial assistance to any subsidiary or inter-related company (as defined in the Companies Act) of the company by way of a general authority in favour of that category of recipients as contemplated in section 45(3)(a)(ii) of the Companies Act, on terms and conditions and for amounts that the board of directors may determine from time to time;
■ resolved that the company be authorised, as a general approval, to repurchase any of the shares issued by the company, upon such terms and conditions and in such amounts as the directors may from time to time determine, but subject to the provisions of sections 46 and 48 of the Companies Act, the Memorandum of Incorporation of the company and the Listings Requirements of the JSE; and
■ resolved that the company approves, as a general approval, and authorises the acquisition by any subsidiary of the Company (“the subsidiary” or “the acquiree”) of shares issued by such subsidiary and/or shares issued by the Company, upon such terms and conditions and in such amounts as the directors of any such subsidiary may from time to time determine, but subject to the provisions of sections 46 and 48 of the Companies Act, the Memorandum of Incorporation of the company and the Listings Requirements of the JSE.
DirectorsThe directors of the company for the financial year and up to the date of this report were as follows:
Executive directorsLawrence DiamondRonny KatzWillie van Wyk
Non-executive directorsMark AndersonJohn MaceyLulu LetlapeKyansambo Vundla
46 Workforce Integrated Report 2012
Group statement of financial position
at 31 December 2012
2012 2011Notes R’000 R’000
AssetsNon-current assets 81 534 76 925
Property, plant and equipment 1 7 657 9 187 Goodwill 2 41 280 41 280 Intangible assets 3 17 224 13 165 Deferred tax assets 4 13 757 11 215 Other financial assets 5 1 616 2 078
Current assets 438 959 371 317
Trade and other receivables 6 415 712 351 136 Inventories 7 3 198 3 343 Taxation 1 523 861Cash and cash equivalents 8 18 526 15 977
Total assets 520 493 448 242
Equity and liabilitiesEquity 220 352 197 487
Equity attributable to owners of the parent 220 101 197 378
Share capital and premium 9 236 867 236 867Treasury shares 9 (7 616) (7 616)Reverse acquisition reserve (125 499) (125 499)Available-for-sale reserve (231) 231
Retained earnings116 580 93 395
Non-controlling interests 251 109
Non-current liabilities 14 282 13 091
Financial liabilities 10 9 124 9 153 Deferred tax liabilities 4 5 158 3 938
Current liabilities 285 859 237 664
Trade and other payables 11 72 935 62 521 Financial liabilities 10 207 893 175 139Taxation 565 – Bank overdraft 12 4 466 4
Total equity and liabilities 520 493 448 242
Group net asset value per share (cents per share) 30 98 87
47Workforce Integrated Report 2012
Group statement of comprehensive income
for the year ended 31 December 2012
2012 2011Notes R’000 R’000
Revenue 13 1 498 435 1 348 561 Cost of sales (1 173 636) (1 039 586)
Gross profit 324 799 308 975 Operating costs (281 418) (267 974)
Earnings before impairment, depreciation, amortisation, interest and taxation (EBITDA) 43 381 41 001 Depreciation and amortisation of non-financial assets (8 939) (7 694)
Operating profit 34 442 33 307 Finance income 14 2 670 3 434 Finance costs 15 (12 463) (10 896)
Profit before taxation 24 649 25 845 Taxation 16 (1 105) (1 916)
Profit for the year 17 23 544 23 929 Other comprehensive income for the year, net of tax:Fair value (loss)/gain on available-for-sale financial assets (462) 139
Total comprehensive income for the year 23 082 24 068
Profit for the year attributable to:Owners of the parent 23 185 23 445 Non-controlling interests 359 484
23 544 23 929
Total comprehensive income attributable to:Owners of the parent 22 723 23 584 Non-controlling interests 359 484
23 082 24 068
Earnings per share (cents per share)Basic and fully diluted 18 10,3 10,4
48 Workforce Integrated Report 2012
Group statement of changes in equity
for the year ended 31 December 2012
Attributable to owners of the parent
Share capital
and premium
Reverse acquisition
reserveTreasury
shares
Available- for-sale reserve
Retained earnings Total
Non-controlling
interestsTotal
equityR’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Balance at 1 January 2011 236 867 (125 499) (7 616) 92 69 950 173 794 10 173 804 Payment of dividends – – – – – – (385) (385)Total comprehensive income for the year – – – 139 23 445 23 584 484 24 068
Balance at 1 January 2012 236 867 (125 499) (7 616) 231 93 395 197 378 109 197 487 Payment of dividends – – – – – – (217) (217)Total comprehensive income for the year – – – (462) 23 185 22 723 359 23 082
Balance at 31 December 2012 236 867 (125 499) (7 616) (231) 116 580 220 101 251 220 352
Notes 9 9 *
* Fair value gains on available-for-sale financial assets.
49Workforce Integrated Report 2012
Group statement of cash flows
for the year ended 31 December 2012
2012 2011Notes R’000 R’000
Cash generated from operations before net working capital changes 31 214 30 428
Cash generated from operations 19.1 43 555 40 932 Finance income 2 646 3 271 Finance costs (12 463) (10 896)Taxation paid 19.2 (2 524) (2 879)
Increase in net working capital 19.3 (54 017) (65 751)
Cash flows from operating activities (22 803) (35 323)Cash flows from investing activities (11 224) (10 349)
Acquisition adjustment to purchase price of subsidiary previously acquired 2 – (75)Dividends received 24 163 Property, plant and equipment acquired – maintaining operations 1 (2 714) (4 245)
– expanding operations 1 (321) (151)Proceeds on disposal of property, plant and equipment 381 593 Intangible assets acquired 3 (8 594) (6 634)
Cash flows from financing activities 32 114 14 200
Proceeds from borrowings 32 331 14 585 Dividends paid to shareholder in subsidiary (217) (385)
Net change in cash and cash equivalents (1 913) (31 472)Cash and cash equivalents at the beginning of the year 15 973 47 445
Cash and cash equivalents at the end of the year 19.4 14 060 15 973
50 Workforce Integrated Report 2012
Accounting policies
1. General informationWorkforce Holdings Limited (the company) is a limited company incorporated in South Africa. The address of its registered office
and principal place of business are disclosed in the corporate information in the annual report. The principal activities of the group
are staff outsourcing, recruitment and specialist staffing and human resources support services, financial and lifestyle products.
2. Summary of accounting policies The significant accounting policies that have been used in the preparation of the company and group financial statements are
summarised below. The financial statements have been prepared using the measurement bases specified by IFRS for each type
of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below.
2.1 Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB) and in the manner required by the Companies Act of South Africa as
well as the JSE Listings Requirements.
2.2 Basis of preparation The financial statements have been prepared on the historical cost basis except for certain financial and equity instruments
that have been measured at fair value.
The preparation of the annual financial statements was supervised by the group financial director, W van Wyk CA (SA).
The company and group have elected to present the “income statement” and a “statement of comprehensive income” in one
statement: the “statement of comprehensive income”.
The financial statements are presented in South African Rand (ZAR), the functional currency of the group and company and all
amounts are rounded to the nearest thousand, except when otherwise indicated.
The principal accounting policies are set out below.
2.3 Basis of consolidation The consolidated financial statements incorporate the financial statements of the group and entities (including special purpose
entities) controlled by the group (its subsidiaries). Control is achieved where the group has the power to govern the financial
and operating policies of an entity so as to obtain benefits from its activities.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Where necessary,
adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used
by other members of the group. All subsidiaries have a reporting date of 31 December. The results of subsidiaries acquired or
disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of
acquisition or up to the effective date of disposal, as appropriate.
Non-controlling interests in subsidiaries are identified separately from the group’s equity therein. The interests of non-controlling
shareholders may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the fair value
of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis.
Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition
plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to
non-controlling interests even if this results in the non-controlling interests having a deficit.
2.4 Business combinations Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The acquisition method involves
the recognition of the acquiree’s identifiable assets and liabilities, including contingent liabilities, regardless of whether they
were recorded in the financial statements prior to acquisition. On initial recognition, the assets and liabilities of the acquired
subsidiary are included in the consolidated statement of financial position at their fair values, which are also used as the basis
for subsequent measurement in accordance with the group’s accounting policies.
Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair value of the group’s share of the identifiable net assets of the acquiree at the date of acquisition, as well as portion of
for the year ended 31 December 2012
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51Workforce Integrated Report 2012
non-controlling interest if measured at fair value. Any excess of identifiable net assets over acquisition cost is recognised in profit or loss immediately after acquisition.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition, to the date the group obtains complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year.
2.5 Foreign currency translationThe individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group entity are expressed in South African Rand (ZAR), which is the functional currency of the group and the presentation currency for the consolidated financial statements.
Foreign currency transactions are translated into the functional currency of the respective group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items at year-end exchange rates, are recognised in profit or loss. Non-monetary items measured at historical cost, are translated using the exchange rates at the date of the transaction (not re-translated). Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined.
On consolidation, assets and liabilities are translated into Rand at the closing rate at the reporting date. Income and expenses are translated into the group’s presentation currency at the average rates over the reporting period. Exchange differences are charged/credited to other comprehensive income and recognised in the foreign currency translation reserve. On disposal of a foreign operation the cumulative translation differences recognised in equity are re-classified to profit or loss and recognised as part of the gain or loss on disposal.
2.6 Segment reportingIn identifying its operating segments, management generally follows the group’s service lines, which represents the main services provided by the group, and is consistent with the way these results are reviewed by the chief operating decision-maker. The group is organised into into five main operating segments, namely Staffing and Recruitment, Training and Consulting, Financial and Lifestyle Products, Employee Health Management and Process Outsourcing. Each of these operating segments is managed separately as each of these service lines requires different technologies and other resources.
Segment results include revenue and expenses directly attributable to a segment and the relevant portion of enterprise revenue and expenses that can be allocated on a reasonable basis to a segment. All inter-segment transactions are carried out at arm’s length prices. These transactions are eliminated on consolidation. Segment assets and liabilities comprise operating assets and liabilities directly attributable to the segment, or which could reasonably be assigned to the segment. Performance is measured based on profit before interest and tax. Interest and tax expenses information per segment is not provided to the chief operating decision-maker as this is impracticable.
2.7 Revenue recognition Revenue comprises revenue from the sale of goods and the rendering of services. Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
Revenue is recognised when the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity, the costs incurred or to be incurred can be measured reliably, and when the criteria for each of the group’s different activities has been met. The specific recognition criteria are based on the services or goods provided and the contract conditions are described below.
Rendering of services Revenue from outsourcing services is recognised as and when the services are provided by the temporary employees. Revenue for placement fees is recognised when the candidate commences work at the client.
52 Workforce Integrated Report 2012
Accounting policies (continued)
Sale of goodsSale of goods is recognised when the group has transferred to the buyer the significant risks and rewards of ownership of the goods supplied. Significant risks and rewards are generally considered to be transferred to the buyer when the customer has taken undisputed delivery of the goods.
Construction contracts for project outsourcingThe group provides project outsourcing services that are within the scope of IAS 11: Construction Contracts. When the outcome can be assessed reliably, contract revenue and associated costs are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the reporting date. Revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, except where this would not be representative of the stage of completion.
When the group cannot measure the outcome of a contract reliably, revenue is recognised only to the extent of contract costs incurred, where such contract costs are recoverable. Contract costs are recognised in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised immediately in profit or loss. Contract costs are recognised as expenses in the period in which they are incurred.
Interest and dividend incomeInterest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. Dividend revenue from investments is recognised when the shareholder’s right to receive payment has been established.
2.8 Government grants Government grants are not recognised until there is reasonable assurance that the group will comply with the conditions attached to them and that the grants will be received.
Government grants for staff training costs are recognised in the profit and loss over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis and are deducted in reporting the related expense.
Government grants that are receivable as compensation for expenses or losses already incurred, or for the purpose of giving immediate financial support to the group with no future-related costs, are recognised in profit or loss in the period in which they become receivable.
2.9 Finance costsFinance costs primarily comprise interest on the group’s borrowings. All finance costs are recognised in profit or loss in the period in which they are incurred.
2.10 Goodwill Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair value of the group’s share of the identifiable net assets of the acquiree at the date of acquisition, as well as portion of non controlling interest if measured at fair value. Any excess of identifiable net assets over acquisition cost is recognised in profit or loss immediately after acquisition.
Cash-generating units to which goodwill has been allocated are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
2.11 Investment in subsidiariesIn the company’s separate annual financial statements, investments in subsidiaries are carried at cost less accumulated impairment. The cost of an investment in a subsidiary is the aggregate of the fair value, at the date of exchange, of the acquiring company’s assets given, liabilities incurred or assumed, and equity instruments plus any costs directly attributable to the purchase of the subsidiary.
2.12 Property, plant and equipment Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
for the year ended 31 December 2012
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53Workforce Integrated Report 2012
Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using the straight-line method. The estimated useful lives, depreciation methods and residual values are reviewed at each year-end, with the effect of any changes, accounted for on a prospective basis. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately.
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment, is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
The estimated average useful lives are as follows:
Years
Motor vehicles 4Computer equipment 3Industrial equipment 4Office equipment 5Leasehold improvements 5Training manuals 5
2.13 Intangible assets Intangible assets acquired separately Intangible assets acquired separately are reported at cost less accumulated amortisation and accumulated impairment losses. Amortisation is charged on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method, are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
Internally-generated computer software – research and development expenditure Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Internally-generated computer software arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:
■ The technical feasibility of completing the computer software so that it will be available for use or sale; ■ the intention to complete the computer software and use or sell it; ■ the ability to use or sell the computer software; ■ how the computer software will generate probable future economic benefits; ■ the availability of adequate technical, financial and other resources to complete the development and to use or sell the
computer software; and ■ the ability to measure reliably the expenditure attributable to the computer software during its development.
The amount initially recognised for internally-generated computer software is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period in which it is incurred. Subsequent to initial recognition, internally-generated computer software are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately.
The following useful lives are used in the calculation of amortisation:
Years
Computer software 3 to 5
Intangible assets with a finite life are assumed to have a residual value of nil, unless there is a commitment to purchase the intangible assets by a third party or an active market exists.
Intangible assets acquired in a business combination Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date. Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately.
54 Workforce Integrated Report 2012
Accounting policies (continued)
Computer softwareComputer software is carried at cost less accumulated amortisation and any accumulated impairment losses. Amortisation is provided to write down the cost on a straight-line basis over its useful life.
2.14 Impairment of goodwill, property plant and equipment and other intangible assets For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the group at which management monitors goodwill.
Cash-generating units to which goodwill has been allocated are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount, exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the group’s latest approved budget, adjusted as necessary to exclude the effects of future re-organisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect their respective risk profiles as assessed by management. The recoverable amount is the higher of fair value less cost to sell and value in use.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro-rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised, may no longer exist. An impairment charge is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount.
2.15 Leased assetsLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The group as lessee Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
2.16 Inventories Inventories are stated at the lower of cost and net realisable value. Cost includes all expenses directly attributable to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Costs of ordinarily interchangeable items are assigned using the first in, first out cost formula. Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling expenses.
2.17 TaxationTax expense recognised in the profit and loss comprise the sum of deferred tax and current tax not recognized in the other comprehensive income or directly in equity.
Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the
consolidated statement of comprehensive income because it excludes items of income or expense that are taxable or
for the year ended 31 December 2012
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55Workforce Integrated Report 2012
deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements
and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally
recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against
which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and
associates, and interests in joint-ventures, except where the group is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with such investments and interests are only recognised to the extent that it is
probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they
are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each
reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all
or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is
settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of
the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow
from the manner in which the group expects, at the reporting date, to recover or settle the carrying amount of its assets
and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the group intends to
settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the periodCurrent and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items that are
recognised outside profit or loss (whether in other comprehensive income or directly in equity), in which case the tax is also
recognised outside profit or loss, or where they arise from the initial accounting for a business combination. In the case of a
business combination, the tax effect is included in the accounting for the business combination.
2.18 Cash and cash equivalentsCash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid
investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes
in value.
2.19 Equity, reserves and dividends paidShare capital and premiumShare capital represents the nominal value of shares that have been issued. Shares are classified as equity when there is no
obligation to transfer cash or assets. Incremental costs directly related to the issue of new shares are shown as a deduction
from equity
Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing
of shares are deducted from share premium, net of any related income tax benefits.
Treasury sharesWhere the group or other consolidated subsidiaries purchase the group’s equity share capital, the consideration paid,
including directly attributable incremental costs, is deducted from the total shareholders’ equity as treasury shares until
they are sold. Fair value changes recognised in the subsidiary’s financial statements on equity investments in the holding
group’s shares, are reversed on consolidation and dividends received are eliminated against dividends paid. Where such
56 Workforce Integrated Report 2012
Accounting policies (continued)
shares are subsequently sold, any consideration received, net of any directly attributable incremental costs, is included in
shareholders’ equity.
Empowerment trustThe group’s employee empowerment incentive scheme is operated through a trust and its subsidiary group. These entities are considered to be special purpose vehicles of the group and are therefore consolidated.
The share trust purchased shares for a share incentive scheme to benefit previously disadvantaged employees and to allow the group to meet its objective of achieving its B-BBEE scorecard requirements. The purchase of the shares by the share trust is treated as a reduction in the group’s equity. For the purpose of the earnings per share calculation, the weighted average number of shares in issue is reduced by the number of shares held by the trust.
ReservesGains and losses on certain financial instruments are included in reserves for available-for-sale financial assets and cash-flow hedges respectively. Retained earnings include all current and prior period retained profits.
Dividends paidDividends paid on ordinary shares are recognised against equity in the period in which they are approved by the group’s shareholders. Dividends declared after the reporting date are not recognised.
2.20 Provisions and onerous contracts Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that the group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Onerous contracts Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
Contingent liabilities acquired in a business combination Contingent liabilities acquired in a business combination are initially measured at fair value at the date of acquisition. At subsequent reporting dates, such contingent liabilities are measured at the higher of the amount that would be recognised in accordance with IAS 37: Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation recognised in accordance with IAS 18: Revenue.
2.21 Retirement benefit costs Contributions to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.
2.22 Financial instrumentsFinancial assets and financial liabilities are recognised when the group becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Other financial liabilities are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently
measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.
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The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.
2.22.1 Financial assetsAll financial assets are recognised and derecognised on trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.
Financial assets are classified into the following specified categories: “available-for-sale” (AFS) financial assets and “loans and receivables”. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
All financial assets are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below.
Available-for-sale (AFS) financial assets Listed shares and listed redeemable notes held by the group that are traded in an active market are classified as AFS and are stated at fair value. Investments in unlisted shares that are not traded in an active market are also classified as AFS financial assets and stated at fair value if the directors consider that fair value can be reliably measured. Fair value is determined in the manner described in note 24.2. Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in the available-for-sale reserve, with the exception of impairment losses, interest calculated using the effective interest method, and foreign exchange gains and losses on monetary assets, which are recognised in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the available-for-sale reserve is reclassified to profit or loss.
Dividends on AFS equity instruments are recognised in profit or loss when the group’s right to receive the dividends is established.
The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the balance sheet date. The change in fair value attributable to translation differences that result from a change in amortised cost of the asset is recognised in profit or loss, and other changes are recognised in equity.
Loans and receivables Trade receivables, loans, cash and cash equivalents and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as “loans and receivables”. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
AdvancesAdvances are non-derivative financial assets with fixed payments that are not quoted in the active market. The advances arise when the group provides money or goods directly to a debtor. These advances are in the form of personal unsecured loans and are paid back in fixed equal installments. Advances are measured at amortised cost using the effective interest rate method, less any impairment losses through the use of an allowance account whereby the amount of the losses are recognised in profit or loss. Origination fees and monthly service fees that are integral to the effective interest rate are capitalised to the value of the loan and amortised to profit or loss over the contractual life of the loan using the effective interest rate method.
58 Workforce Integrated Report 2012
Accounting policies (continued)
Impairment of financial assets Financial assets measured at amortised cost are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.
For listed and unlisted equity investments classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.
For all other financial assets, including redeemable notes classified as AFS and finance lease receivables, objective evidence of impairment include significant financial difficulty of the issuer or counterparty, or default or delinquency in interest or principal payments, or it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed, does not exceed what the amortised cost would have been had the impairment not been recognised.
In respect of AFS equity securities, impairment losses previously recognised through profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss, is recognised in other comprehensive income.
Impairment of advancesAdvances are regularly reviewed to determine whether there is any indication that those advances have become impaired, using objective evidence at a loan level. The primary indicator used, is a breach of contract, such as a default or delinquency in the payment of interest to the principal. Losses expected as a result of future events are not recognised.
The group estimates the recoverable amount on a portfolio basis, using statistics derived from past performance of that portfolio, taking into account any changes to collection procedures and projected future market conditions. The recoverable amount is the sum of the estimated future cashflows, discounted to their present value using a discount rate equal to the original effective interest rate. Impairment provisions raised during the year are charged to profit or loss.
Derecognition of financial assets The group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the group retains substantially all the risks and rewards of ownership of a transferred financial asset, the group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
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2.22.2 Financial liabilitiesFinancial liabilities are classified as either financial liabilities at “fair value through profit or loss” or “other financial liabilities”. The group’s financial liabilities comprise borrowings and trade and other payables.
All interest-related charges that are reported in profit and loss are included within “finance costs”.
Classification as debt or equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the group are recorded at the proceeds received, net of direct issue costs.
Derecognition of financial liabilities The group derecognises financial liabilities when, and only when, the group’s obligations are discharged, cancelled or they expire.
2.23 Share-based payment arrangementsFor cash-settled, share-based payments, a liability and corresponding employee expense is recognised for the goods and services acquired, measured initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in the profit or loss for the year.
2.24 Critical accounting judgements and key sources of estimation uncertainty In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
2.24.1 Critical judgements in applying accounting policiesThe following are the critical judgements, apart from those involving estimations described in note 2.24.2 below, that the directors have made in the process of applying the group’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
Government grantsDetermining whether training fees are recoverable from the SETA and when these amounts are recoverable, involve the exercising of judgement by management. Details of these learnerships are detailed in note 6.
Internally developed software Significant judgement is required in determining the development phase of internally developed computer software. Development costs are recognised as an asset when all the criteria are met, whereas any other expenses not directly related to the development, are expensed as incurred. In determining the development phase, it is the group’s accounting policy to also require a detailed forecast of cost savings expected to be generated by the intangible asset. The forecast is incorporated into the group’s overall budget forecast as the capitalisation of development costs commences. This ensures that managerial accounting, impairment testing procedures and accounting for internally-generated intangible assets is based on the same data. The group’s management also monitors whether the recognition requirements for development costs continue to be met. This is necessary as the economic success of any product development is uncertain and may be subject to future technical problems after recognition. Details of intangible assets are provided in note 3 of the notes to the group financial statements.
Deferred tax assetsDeferred tax assets are recognised to the extent that it is probable that taxable income will be available in the future against which these can be utilised. The raising of deferred tax assets is a process that is based on certain
60 Workforce Integrated Report 2012
Accounting policies (continued)
assumptions about the ability of the group to generate future profits in order to utilise the future tax benefits. The assessment of the probability of future taxable income is based on the group’s latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties, is assessed individually by management based on the specific facts and circumstances. Details of deferred tax assets are provided in note 4 of the notes to the group financial statements.
Allowance for doubtful debtsThe provision was measured at the group’s best estimate of future unrecoverable trade receivables, taking into account circumstances prevailing at year end. Details of provision are provided in note 6 of the notes to the group financial statements.
Contingent liabilitiesManagement applies its judgement to the fact patterns and advice it receives from its attorneys, advocates and other advisors in assessing if an obligation is probable, more likely than not, or remote. The judgement application is used to determine if the obligation is recognised as a liability, disclosed as a contingent liability or ignored for financial statement purposes.
2.24.2 Key sources of estimation uncertaintyThe following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Impairment of goodwillDetermining whether goodwill is impaired requires an estimation of the value-in-use of the cash-generating units to which goodwill is allocated. The value in-use calculation requires the entity to estimate future cash flows expected to arise from the cash-generating unit and to determine a suitable discount rate in order to calculate present value. In the process of measuring expected future cash flows management makes assumptions about future gross profits that relate to future events and circumstances. The actual results may vary, and may cause significant adjustments to the group’s assets within the next financial year. In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors. Details of the impairment of goodwill are provided in note 2 of the notes to the group financial statements.
Useful lives of depreciable assets and residual valuesManagement reviews the useful lives of depreciable assets at each reporting date. At 31 December 2012 management assesses that the useful lives represent the expected utility of the assets to the group. The carrying amounts are analysed in notes 1 and 3 of the notes to the group financial statements. Actual results, however, may vary due to technical obsolescence, particularly relating to computer software.
The estimation of residual values of assets is also based on management’s judgement whether the assets will be sold or used to the end of their useful lives, and in what condition at that time.
In making its judgement, management has assessed at each balance sheet date whether there is an indication that items of property, plant and equipment and other assets may be impaired. If any such indication exists, the recoverable amount of the asset is assessed in order to determine the extent of the impairment loss, if any. The recoverable amount is the higher of fair value less costs to sell and value in use.
3. Adoption of new and revised International Financial Reporting Standards (IFRSs) 3.1 Standards, amendments and interpretations to existing standards adopted during the financial year
The group has adopted all new and revised accounting standards that became effective during the year. No change in accounting policy was required as a result of these standards.
3.2 Standards, amendments and interpretations to existing standards that are not yet effectiveAt the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the group.
IFRS 7: Financial instruments – Disclosures Amendments require entities to disclose gross amounts subject to rights of set-off, amounts set off in accordance with the
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61Workforce Integrated Report 2012
accounting standards followed, and the related net credit exposure. This information will help investors understand the extent to which an entity has set off in its balance sheet and the effect of rights of set-off on the entity’s rights and obligations. Effective from 1 January 2013.
The adoption of this standard will result in additional disclosure for the group.
IFRS 9: Financial instrumentsNew standard that forms the first part of a three-part project to replace IAS 39: Financial Instruments – Recognition and Measurement. Effective from 1 January 2015.
The impact of the adoption of this standard still needs to be considered.
IFRS 10: Consolidated and Separate Financial StatementsNew standard that replaces the consolidation requirments in SIC 12: Consolidation – Special Purpose Entities and IAS 27: Consolidated and Separate Financial Statements. Standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent group and provides additional guidance to assist in the dermination of control where this is difficult to assess. Effective from 1 January 2013.
The amended standard is not expected to have an impact on the group.
IFRS 11: Joint ArrangementsNew standard that deals with the accounting for joint arrangements and focuses on the rights and obligations of the arrangement, rather than its legal form. Standard requires a single method for accounting for interests in jointly controlled entities. Effective from 1 January 2013.
The amended standard is not expected to have an impact on the group.
IFRS 12: Disclosure of Interests in Other EntitiesNew and comprehensive standard on disclosure requirments for all forms of interest in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. Effective from 1 January 2013.
The amended standard is not expected to have an impact on the group.
IFRS 13: Fair Value MeasurementNew guidance on fair value measurement and disclosure requirements. Effective from 1 January 2013.
The impact of the adoption of this standard still needs to be considered.
IAS 19: Employee BenefitsAmendments to the accounting for current and future obligations resulting from the provision of defined benefit plans. Effective from 1 January 2013.
The amended standard is not expected to have an impact on the group.
IAS 27: Consolidated and Separate Financial StatementsConsequential amendments resulting from the issue of IFRS 10,11 and 12. Effective from 1 January 2013.
Requirement to account for interests in “Investment Entities” at fair value under IFRS 9: Financial Instruments: Recognition and Measurement, in the separate financial statements of a parent. Effective 1 January 2014.
The amended standard is not expected to have an impact on the group.
IAS 28: Investments in AssociatesConsequential amendments resulting from the issue of IFRS 10,11 and 12. Effective from 1 January 2013.
The amended standard is not expected to have an impact on the group.
IAS 32: Financial Instruments – PresentationAmendments require entities to disclose gross amounts subject to rights of set-off, amounts set off in accordance with the accounting standards followed, and the related net credit exposure. This information will help investors understand the extent to which an entity has set off in its balance sheet and the effects of rights of set-off on the entity’s rights and obligations. Effective from 1 January 2013.
The adoption of this standard will result in additional disclosure for the group.
62 Workforce Integrated Report 2012
Notes to the group financial statements
2012 2011
Cost
Accu-mulated depre-ciation
Carrying value Cost
Accu-mulated depre-ciation
Carrying value
R’000 R’000 R’000 R’000 R’000 R’000
1. Property, plant and equipmentMotor vehicles 4 736 (3 635) 1 101 5 668 (3 807) 1 861
Computer equipment 16 857 (14 493) 2 364 15 852 (12 926) 2 926
Industrial equipment 2 148 (2 015) 133 2 137 (1 955) 182
Office equipment 10 944 (8 826) 2 118 10 029 (8 219) 1 810
Leasehold improvements 1 078 (701) 377 974 (594) 380
Training manuals 5 838 (4 274) 1 564 5 256 (3 228) 2 028
41 601 (33 944) 7 657 39 916 (30 729) 9 187
The carrying value of property, plant and equipment can be reconciled as follows:
Motorvehicles
Computer equipment
Industrial equipment
Officeequipment
Leasehold improve-
mentsTraining
manuals TotalR’000 R’000 R’000 R’000 R’000 R’000 R’000
Carrying value at 1 January 2011 2 720 1 729 321 2 511 202 2 416 9 899 Additions 672 1 734 – 1 170 258 562 4 396 Disposals (470) (1) – (51) – (1) (523)Reclassfications – 594 (80) (514) – – – Depreciation (1 061) (1 130) (59) (1 306) (80) (949) (4 585)
Carrying value at 31 December 2011 1 861 2 926 182 1 810 380 2 028 9 187 Additions 583 1 189 10 967 89 591 3 429 Disposals (535) (18) – (2) – – (555)Depreciation (808) (1 733) (59) (657) (92) (1 055) (4 404)
Carrying value at 31 December 2012 1 101 2 364 133 2 118 377 1 564 7 657
All depreciation charges are included in “Depreciation and amortisation of non-financial assets” in the statement of comprehensive income. No property, plant and equipment have been impaired during the year (2011: Nil).
The net book value of motor vehicles held under instalment sales at 31 December 2012 amounted to R595 583 (2011: R857 846). Refer to note 10 for details of the instalment sale liabilities. Motor vehicles acquired under instalment sales amounted to R394 423 (2011: R312 281).
2012 2011R’000 R’000
2. GoodwillCarrying value at the beginning of the year 41 280 41 205 Adjustment of purchase price – 75
Carrying value at the end of the year 41 280 41 280
An additional R75 000 in 2011 was paid during the 2011 year, relating to the acquisition of Telebest Holdings Proprietary Limited, as an adjustment of the purchase price. The adjusted amount falls under the previous IFRS 3, which allowed for subsequent adjustments to the purchase price under certain conditions.
Goodwill is tested on an annual basis for impairment or more frequently if there are indications that goodwill might be impaired.
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2. Goodwill (continued)For the purpose of annual impairment testing, goodwill is allocated to the following cash-generating units:
2012 2011R’000 R’000
Staff outsourcing 4 275 4 275 Recruitment and specialist staffing – Telebest 31 190 31 190 Recruitment and specialist staffing – Albrecht 5 815 5 815
41 280 41 280
The recoverable amount of the cash-generating units are determined based on value-in-use calculations. The key assumptions for the value-in-use calculations are discount rates, growth rates and expected cash flows. Management estimates discount rates using rates that reflect current market assumptions of the time value of money and the risk specific to the industry. An average discount rate of 17% (2011: 17%) was used. The growth rates and cashflow forecasts are based on approved budgets for the forthcoming financial year, as well as an estimation of growth forecasts specific to each cash-generating unit into the future. Future cashflow projections is based on a 10-year period, as it is a conservative estimation of the lifespan of the cash-generating units.
The following rates have been used:
Staffoutsourcing Telebest Albrecht
Average growth rates year 1 to 5 5,0% 6,4% 7,3%Subsequent growth rates – year 6 to 10 5,0% 5,0% 5,0%
At the end of the reporting period, the group assessed the recoverable amount of goodwill and determined no impairment was required.
Management is not aware of any probable changes that would necessitate changes in the key estimates used in determining the recoverable amounts of the cash-generating units.
2012 2011
Cost
Accu-mulated
amor-tisation
Carrying value Cost
Accu-mulated
amor-tisation
Carrying value
R’000 R’000 R’000 R’000 R’000 R’000
3. Intangible assetsComputer software 31 816 (14 592) 17 224 23 263 (10 098) 13 165
31 816 (14 592) 17 224 23 263 (10 098) 13 165
The carrying amounts of intangible assets can be reconciled as follows:
Computer software
R’000
Carrying value at 1 January 2011 9 640 Additions 6 634 Amortisation (3 109)
Carrying value at 31 December 2011 13 165 Additions 8 594 Amortisation (4 535)
Carrying value at 31 December 2012 17 224
The above amortisation expense is included in “Depreciation and amortisation of non-financial assets” in the statement of comprehensive income. No intangible assets have been impaired during the year (2011: Nil). Computer software is mostly internally generated.
64 Workforce Integrated Report 2012
Notes to the group financial statements (continued)
2012 2011R’000 R’000
4. Deferred tax assets and liabilitiesBalance at the beginning of the year 7 277 7 071
Movement per statement of comprehensive income 1 322 206
Balance at the end of the year 8 599 7 277
Deferred tax balances are presented in the statement of financial position as follows:
Deferred tax assets 13 757 11 215
Deferred tax liabilities (5 158) (3 938)
8 599 7 277
Opening balance
Recognised in profit and loss
Closing balance
R’000 R’000 R’000
2012
Deferred tax assets/(liabilities) arise from the following:
Temporary differences
Property, plant and equipment (74) – (74)
Intangible assets (3 686) (1 136) (4 822)
Doubtful debts 5 612 221 5 833
Income received in advance 175 (175) –
Provision for leave 1 909 391 2 300
Operating leases (42) 11 (31)
Prepaid expenses (136) (95) (231)
Tax losses 3 519 2 105 5 624
7 277 1 322 8 599
2011
Deferred tax assets/(liabilities) arise from the following:
Temporary differences
Property, plant and equipment (92) 18 (74)
Intangible assets (2 699) (987) (3 686)
Doubtful debts 3 589 2 023 5 612
Income received in advance – 175 175
Provision for leave 1 557 352 1 909
Operating leases (18) (24) (42)
Prepaid expenses (156) 20 (136)
Tax losses 4 890 (1 371) 3 519
7 071 206 7 277
All companies are expected to be profitable in the 2013 year, according to current foreseeable trends, as well as management approved budgets. As a result of the aforementioned management is confident that there will be sufficient taxable profits in the foreseeable future against which subsidiaries can utilise the recognised deferred tax asset.
In preparing the financial statements for the 2012 financial year, approved budgets were also assessed in determining the value recognised as a deferred tax asset.
for the year ended 31 December 2012
delivering innovative and diversified employer-centric solutions
65Workforce Integrated Report 2012
2012 2011R’000 R’000
5. Other financial assetsOther financial assets comprise of the following investment:Available-for-sale financial assetsListed shares4 616 907 (2011: 4 616 907) shares in Primeserv Limited at fair value 1 616 2 078
Fair value has been determined by reference to their quoted bid prices at reporting date.
6. Trade and other receivables Trade and other receivables can be summarised as follows:Trade receivables 379 794 321 594 Other receivables 35 087 29 053
Trade and other receivables 414 881 350 647 Pre-payments 831 489
415 712 351 136
Trade receivablesTrade receivables can be analysed as follows for the periods under review:Net trade receivables excluding advances 294 928 256 940
Gross trade receivables 303 646 269 386 Impairment provisions (8 718) (12 446)
Net advances 84 866 64 654
Gross advances 103 964 78 972 Impairment provisions (19 098) (14 318)
379 794 321 594
All amounts are short-term. The net carrying value of trade receivables is considered a reasonable approximation of fair value. Advances are shown at amortised cost which approximates fair value.
Trade and other receivables consist of a large number of customers, spread across diverse industries and geographical areas. Interest on advances are charged at rates compliant with the National Credit Act (NCA) as prescribed by the National Credit Regulator (NCR). The management of this risk is set out in note 23.4.
At year-end, trade receivables to the value of R248 827 558 (2011: R219 942 640) were ceded to the bank in terms of an invoice discounting agreement as set out in note 10.
2012 2011R’000 R’000
Other receivablesOther receivables comprise the following:Deposits 1 606 1 307 Staff debtors 4 268 1 965 Sundry debtors 29 213 26 781
35 087 29 053
Included in sundry receivables are amounts due from SETA’s (“Sectoral Education and Training Authority”), in respect of training expenses for learnership and internship agreements registered with the SETA in terms of the Skills Development Act (No. 97 of 1998). Amounts due from SETA’s can be reconciled as follows:Opening balance 4 536 5 167 Claims submitted and recognised in financial statements 18 399 5 115 Grants received (7 298) (5 746)
15 637 4 536
The R18 399 000 grants recognised has been set of against cost of sales to the amount of R12 018 000 (2011: R-) and to operating cost to the amount of R6 381 000 (2011: R5 115 000).
66 Workforce Integrated Report 2012
Notes to the group financial statements (continued)
2012 2011R’000 R’000
6. Trade and other receivables (continued)Impairment provisionsImpairment provisions can be summarised as follows:Trade receivables 8 718 12 446 Advances 19 098 14 318
27 816 26 764
Days sales outstanding (excluding advances) 56 57
All of the group’s trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables amounting to R9 074 million (2011: R13 431 million) were impaired and included in other expenses (see note 17). The impaired trade receivables are mostly due from customers in the business-to-business market that are experiencing financial difficulties.
The movement of the impairment provision can be reconciled as follows:Balance at the beginning of the year 26 764 17 592 Impairment losses raised 9 074 13 431 Amounts written off as uncollectible (8 022) (4 259)
27 816 26 764
In determining the recoverability of a trade receivable, the group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Advances are limited in duration and extent. Accordingly, the directors believe that there is no further impairment required.
7. InventoriesInventories can be analysed as follows:Consumables 233 189 Merchandise 2 965 3 154
3 198 3 343
The cost of inventories recognised as an expense during the year, was R8 059 million (2011: R10 679 million). No write-downs of inventory to net realisable value have been made.
8. Cash and cash equivalentsCash and cash equivalents include the following components:Cash at bank and in hand 17 717 8 797 Short-term deposits 809 7 180
18 526 15 977
The carrying value of cash and cash equivalents is considered a reasonable approximation of fair value.
9. Share capitalAuthorised1 000 000 000 ordinary shares of 0,001 cent each 10 10
Issued 236 867 236 867
240 000 000 fully paid ordinary shares of 0,001 cent each 2 2 Share premium 236 865 236 865
Treasury shares14 370 000 shares (7 616) (7 616)
229 251 229 251
The employee share empowerment trust and its subsidiary are consolidated and treasury shares held by the subsidiary of the trust are treated as a reduction in the group’s equity. For the purpose of the earnings per share calculation, the weighted average number of shares in issue is reduced by the number of shares held by the trust.
for the year ended 31 December 2012
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67Workforce Integrated Report 2012
Current Non-current
2012 2011 2012 2011R’000 R’000 R’000 R’000
10. Financial liabilitiesFinancial liabilities include the following:Unsecured at amortised costLoan on treasury shares, repayable on 31 December 2015 – – 9 112 9 112 Secured liabilities at amortised costInvoice discounting facility bearing interest at 1% below prime rate 192 810 174 546 – – Overdraft facility bearing interest at prime rate plus 3% 14 858 – Instalment sale liabilities 225 593 12 41
207 893 175 139 9 124 9 153
The loan on treasury shares is repayable out of dividends received by the subsidiary of the employee share empowerment trust. A preference share has been issued to the creditor of the subsidiary conferring cumulative preferential cash dividends. The treasury shares were originally repayable on 31 December 2010. The terms have however subsequently been extended until 31 December 2015, the loan does not bear interest and is secured by shares held in the trust.
Instalment sale liabilities are secured over motor vehicles with a carrying value of R595 583 (2011: R857 846) bearing interest at rates approximating the prime overdraft rate and repayable in monthly instalments of approximately R25 644 (2011: R74 855).
The group has entered into an invoice discounting agreement with ABSA for a borrowing facilty of R200 million (2011: R200 million) secured by cession of debtors. Borrowings are limited to 85% of ceded debtors. The agreement is subject to a three-month notice period. At year-end, debtors to the value of R248 827 558 (2011: R219 942 640) were ceded to the bank. A special purpose subsidiary is bound as surety and co-principal debtor to the bank for due and punctual payment of the debtors.
During 2012 Babereki Employee Support Services Proprietary Limited, a subsidiary of the group, secured a short-term overdraft facility to a limit of R15 million, secured by an unlimited pledge and cession of all present and future book debts.
All the above liabilities are carried at amortised cost. The carrying value of interest bearing liabilities approximate their fair value.
2012 2011R’000 R’000
11. Trade and other payablesTrade and other payables comprise:Trade payables 51 280 47 399 VAT payable 21 655 15 122
Total trade and other payables 72 935 62 521
Trade payablesTrade creditors 33 016 22 737 Audit fee accrual 300 270 Payroll liabilities 8 910 11 284 Accrual for paid annual leave 8 287 6 819 Cash-settled share-based payments 48 – Other payables 719 6 289
51 280 47 399
All amounts are short-term and the carrying values of trade and other payables are considered to be a reasonable approximation of fair value.
Payroll liabilities include amounts payable to provident funds, SDL and PAYE.
The credit period of trade payables ranges between seven and 90 days. No interest is charged on the trade payables for the first 90 days from the date of the invoice. The group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
68 Workforce Integrated Report 2012
Notes to the group financial statements (continued)
2012 2011R’000 R’000
12. Bank overdraftBank overdraft 4 466 4
The carrying value of the bank overdraft is considered a reasonable approximation of fair value.
The group has overdraft facilities amounting to R5 million. These facilities are repayable on demand and bear interest at rates linked to the prime overdraft rate.
13. RevenueAn analysis of the group’s revenue for the year (excluding finance income – see note 14) is as follows:Revenue from the rendering of services 1 401 615 1 266 306 Imputed interest on trade receivables 22 519 20 020 Revenue from rendering construction services 38 709 31 156 Interest income on customer loans 14 711 12 188 Sale of goods 20 881 18 891
1 498 435 1 348 561
See note 20 for an analysis of revenue by major products and services.
14. Finance incomeInterest income 2 646 3 271
Bank deposits 427 874 Other loans and receivables 2 219 2 397
Dividends received 24 163
2 670 3 434
Investment revenue earned on financial assets, analysed by category of asset, is as follows:
Loans and receivables (including cash and bank balances) 2 646 3 319 Available-for-sale financial assets 24 115
2 670 3 434
15. Finance costsTotal interest expense 12 463 10 896
Interest on short-term borrowings 11 921 10 410 Interest on bank overdrafts 542 486
12 463 10 896
16. TaxationTaxation recognised in profit and lossCurrent tax expense
Current year 2 426 1 953 Prior year – 92
Reversal of deferred taxReversal of temporary differences (1 321) (206)
Secondary tax on companiesCurrent year – 77
1 105 1 916
Estimated tax losses of subsidiaries of the group for utilisation against future taxable income:Tax losses recognised for deferred tax 20 085 12 696 Tax losses not recognised for deferred tax 688 2 455
20 773 15 151
for the year ended 31 December 2012
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69Workforce Integrated Report 2012
2012 2011% %
16. Taxation (continued)The tax rate for the year can be reconciled as follows:Standard corporate tax rate 28,00 28,00 Adjusted for:
Non-deductible expenses 0,20 0,13 Tax allowances (22,44) (23,37)Prior year tax losses now recognised (1,31) – Prior year tax adjustments – 0,36 STC – 0,29 Unused tax losses 0,03 2,00
Effective tax rate 4,48 7,41
2012 2011R’000 R’000
17. Profit for the year Profit before taxation for the year has been arrived at after charging/(crediting):Impairment losses on financial assetsImpairment loss recognised on trade receivables – refer to note 6 (9 074) (13 431)
(9 074) (13 431)
Losses/(gains) on disposal of property, plant and equipment 174 (69)
Depreciation and amortisation of non-financial assetsDepreciation on property, plant and equipment – refer to note 1 4 404 4 585 Amortisation of intangible assets – refer to note 3 4 535 3 109
8 939 7 694
Government grants received for staff training – refer to note 6 18 399 5 115
Employee benefit expenseContributions to provident fund 12 599 10 258
Staff costs 204 219 186 696
The number of employees of the group at the financial year-end was 873 (2011: 796)Auditor’s remunerationAudit fees 1 603 1 058 Consulting and other services 66 78
1 669 1 136
Operating lease rentalsPremises 18 938 17 044 Equipment 2 736 2 101
21 674 19 145
18. Earnings per shareBasic earnings per shareThe earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:Profit attributable to equity shareholders of the parent company (R’000) 23 185 23 445 Weighted average number of ordinary shares in issue (’000) 225 630 225 630
Basic earnings per share (cents) 10,3 10,4
70 Workforce Integrated Report 2012
Notes to the group financial statements (continued)
2012 2011
R’000 R’000
18. Earnings per share (continued)
Diluted earnings per shareThere are no potential dilutive shares therefore diluted earnings per share equates to basic earnings per share.
Headline earnings per shareThe earnings used in the calculation of headline earnings per share are as follows:
Profit attributable to equity shareholders of the parent company (R’000) 23 185 23 445
Headline earnings adjustment (R’000) 125 (50)
(Gain)/loss on disposal of property, plant and equipment 174 (69)
Tax effects of adjustments (49) 19
Total headline earnings (R’000) 23 310 23 395
Weighted average number of shares in issue (’000) 225 630 225 630
Headline earnings per share (cents) 10,3 10,4
19. Notes to the statement of cash flows19.1 Cash generated from operations
Profit before taxation 24 649 25 845
Interest and dividend income (2 670) (3 434)
Finance costs 12 463 10 896
Adjusted for non-cash items:Loss/(gain) on disposal of property, plant and equipment 174 (69)
Depreciation and amortisation of non-financial assets 8 939 7 694
43 555 40 932
19.2 Taxation paidCharged to income statement (1 105) (1 916)
Adjusted for deferred tax (1 322) (207)
Movement in taxation balance (97) (756)
(2 524) (2 879)
19.3 Working capital changesChange in trade and other receivables (64 576) (79 784)
Change in inventories 145 (2 072)
Change in trade and other payables 10 414 16 105
(54 017) (65 751)
19.4 Cash and cash equivalentsBank and cash balances 18 526 15 977
Bank overdraft (4 466) (4)
14 060 15 973
20. Segment reportingThe group’s segmental analysis is based on the following five core business segments:
■ Staffing and Recruitment comprises staff outsourcing which provides human resources to clients on both a short- and
long-term basis, recruitment and specialist staffing, which includes permanent and temporary placements, ad-response
handling, executive search, call centre staffing and importing and exporting of skills;
for the year ended 31 December 2012
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71Workforce Integrated Report 2012
20. Segment reporting (continued) ■ Training and Consulting, which responds to market demands as a Private Further Education and Training
(FET) provider; ■ Financial and Lifestyle Products, which offers a range of lifestyle products and support services to employees; ■ Employee Health Management, which offers a comprehensive range of occupational and primary health management
services; and ■ Process Outsourcing, which focusses on delivering productive and functional business process outsourcing solutions,
including the statutory and legal elements associated therewith.
These operating segments, as further described in note 3.6 of the accounting policies, are monitored and strategic decisions are made on the basis of adjusted segment operating results. The format in which segmental information is presented to the chief operating decision-maker was changed, hence the format of the prior period numbers was changed. Furthermore income and expenses not previously allocated have now been allocated across segments.
Segment information can be analysed as follows for the reporting periods under review:
Staffing and
Recruit- ment
Training and
Consulting
Financial and
Lifestyle Products
Employee Health
Manage-ment
Process Outsour-
cingCentral
cost
Consoli- dation entries Total
R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
2012Segment revenues 1 360 103 39 613 50 088 23 513 47 109 – (21 991) 1 498 435Cost of sales (1 102 190) (10 405) (17 761) (9 580) (33 700) – – (1 173 636)Operating costs (184 580) (33 186) (18 015) (12 449) (13 165) (42 014) 21 991 (281 418)
EBITDA 73 333 (3 978) 14 312 1 484 244 (42 014) – 43 381 Depreciation and amortisation of non-financial assets (2 247) (1 286) (1 866) (177) (272) (3 091) – (8 939)
Segment operating profit 71 086 (5 264) 12 446 1 307 (28) (45 105) – 34 442
Capital expenditure 3 513 936 3 284 325 306 3 659 – 12 023 Segment total assets 288 171 4 982 97 403 5 901 1 037 122 999 – 520 493 Segment total liabilities (40 352) (3 009) (17 906) (1 403) (598) (236 873) – (300 141)
Net segment assets 247 819 1 973 79 497 4 498 439 (113 874) – 220 352
2011Segment revenues 1 221 993 29 264 45 386 21 285 41 010 – (10 377) 1 348 561
Cost of sales (986 792) (5 479) (12 264) (8 318) (26 733) – – (1 039 586)
Operating costs (177 916) (21 458) (14 542) (11 054) (12 761) (40 620) 10 377 (267 974)
EBITDA 57 285 2 327 18 580 1 913 1 516 (40 620) – 41 001
Depreciation and amortisation of non-financial assets (2 630) (1 236) (1 334) (123) (275) (2 096) – (7 694)
Segment operating profit 54 655 1 091 17 246 1 790 1 241 (42 716) – 33 307
Capital expenditure 2 767 466 3 971 91 133 3 602 – 11 030
Segment total assets 250 444 11 112 75 194 3 992 1 527 105 973 – 448 242
Segment total liabilities (65 929) (1 693) (2 131) (897) (149) (179 956) – (250 755)
Net segment assets 184 515 9 419 73 063 3 095 1 378 (73 983) – 197 487
No segmental information is provided in respect of geographical analysis as the group operates primarily in South Africa.
72 Workforce Integrated Report 2012
Notes to the group financial statements (continued)
2012 2011
R’000 R’000
21. LeasesOperating leases as lesseeThe group’s non-cancellable operating lease commitments are as follows:
Minimum future lease payments due:
Not later than 1 year 5 249 7 201
Later than 1 year and not later than 5 years 3 716 3 176
8 965 10 377
Lease payments recognised as an expense during the year amount to R21,6 million (2011: R19,1 million). This amount consists
of minimum lease payments. No sublease income is expected as all assets held under lease agreements are used exclusively
by the group.
The group’s operating lease agreements do not contain any contingent rent clauses. None of the operating lease agreements
contain restrictions that would impose additional debt. Escalation clauses vary from contract to contract averaging 10%
(2011: 10%). Contract renewal options are assumed to be exercised by the group, unless decided otherwise by management.
2012 2011Notes R’000 R’000
22. Financial instruments22.1 Categories of financial instruments
Financial assetsAvailable-for-sale financial assetsNon-current financial assets:
Listed shares 5 1 616 2 078 Loans and receivables
Trade and other receivables 6 395 039 340 776 Cash and cash equivalents 8 18 526 15 977
415 181 358 831
Financial liabilitiesFinancial liabilities measured at amortised costNon-current:
Borrowings 10 9 124 9 153 Current:
Borrowings 10 207 893 175 139 Trade and other payables 11 34 083 29 296 Bank overdraft 12 4 466 4
255 566 213 592
A description of the group’s risk management objectives and policies for financial instruments is given in note 23.
22.2 Fair value of financial instrumentsUnless otherwise disclosed, the directors consider that the carrying amount of financial assets and liabilities recognised
at amortised cost in the financial statements, approximates their fair values. The fair values of financial assets and
liabilities and impairment losses on financial assets are presented in the related notes.
The fair values of financial assets and financial liabilities are determined as follows: ■ The fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid
markets are determined with reference to quoted market prices;
for the year ended 31 December 2012
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73Workforce Integrated Report 2012
22. Financial instruments (continued)22.2 Fair value of financial instruments (continued)
■ The fair values of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments.
Listed shares at fair value are defined as Level 1: quoted prices (unadjusted) in active markets for indentical assets or liabilities.
23. Financial risk managementThe group is exposed to various risks in relation to financial instruments. The group’s financial assets and liabilities by category are summarised in note 22.1. The main types of risks are market risk, credit risk and liquidity risk.
The group’s financial risk management is co-ordinated at its headquarters, in close co-operation with the board of directors, and focuses on actively securing the group’s short- to medium-term cash flows.
The group does not enter into or trade financial instruments for speculative purposes. Borrowings have however, been structured in such a way, as to minimise financial risks, limit borrowing costs, as well as to facilitate growth. Borrowings are by and large secured by the securitisation of the group’s debtors book.
The group is exposed to market risk through its use of financial instruments and specifically to interest rate risk, credit risk and certain other price risks, which result from both its operating and investing activities. Exposure to foreign currency risk is considered to be immaterial.
23.1 Interest rate risk managementThe group is exposed to interest rate risk as it borrows funds, at rates linked to the prime overdraft rate. The group’s ability to manage exposure to interest rate fluctuations is limited, however interest rates are constantly monitored and the group will take steps to limit its exposure if possible.
Total interest-bearing borrowings amount to R192,8 million (2011: R175,2 million). Details of the interest rates payable are set out in notes 10 and 12.
Sensitivity of profit to a reasonably possible change in interest rates of +/- 1% is illustrated by the following table:
Profit for the year
R’000 R’000
+ 1% - 1%31 December 2012 (1 092) 1 092 31 December 2011 (829) 829
Management’s expectation is that interest rates may rise in the 2013 financial year. The group’s sensitivity to interest rate fluctuations has not changed significantly from the prior year.
23.2 Other price risk sensitivityThe group is exposed to equity price risk arising from an equity investment as set out in note 5. Equity investments are considered to be long-term and held for strategic rather than trading purposes. Investments are continuously monitored and voting rights arising from these equity instruments may be utilised in the group’s favour.
The impact on profit and equity if equity prices had been 5% higher/lower is illustrated by the following table:
Profit for the year Other equity reserves
R’000 R’000 R’000 R’000
+5% -5% +5% -5%31 December 2012 81 (81) – – 31 December 2011 104 (104) – –
Given buoyant global equity markets, management’s view is that the equity investment may increase in value during the 2013 financial year. As the shares are classified as available-for-sale, no effect on profit or loss would have occurred, unless where any decline in fair value to below cost resulted from the impairment of the asset. The group’s sensitivity to equity prices has not changed significantly from the prior year.
74 Workforce Integrated Report 2012
Notes to the group financial statements (continued)
23. Financial risk management (continued)
23.3 Credit risk managementCredit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the group.
The group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The information is supplied by independent rating agencies where available and, if not available, the group uses other publicly available financial information and its own trading records to rate its major customers. The group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by management on an annual basis.
The group’s maximum exposure to credit risk, is limited to the carrying amount of financial assets recognised at reporting date, as summarised below:
2012 2011
R’000 R’000
Net trade receivables 294 928 256 940
Other receivables 35 087 29 053
Net advances 84 866 64 654
Cash and cash equivalents 18 526 15 977
433 407 366 624
All the above financial assets that are not impaired or past due for each of the reporting dates under review, are considered by management to be of good credit quality.
The credit terms on rendering of services is 30 days and interest may be charged on all overdue outstanding balances. Ongoing credit evaluation is performed on the financial condition of accounts receivable. The average term of micro loans issued is five months.
The group has performed a detailed analysis of all past due amounts, and has impaired all amounts regarded as not collectable. Overdue amounts that have not been impaired, are considered to be recoverable.
Before accepting any new customers, or increasing the credit limit allowed for an existing customer, the risk associated with the customer is assessed by the group’s credit vetting department, using generally accepted vetting techniques. The acceptance of a new customer is authorised by senior management. For micro loans, the potential customer’s credit quality, including relevant credit bureau checks, in compliance with the requirement of the National Credit Act (No. 34 of 2005) is assessed.
At the reporting date, no customers represented more than 5% of the total balance of the trade receivables.
Included in the group’s trade receivables are debtors with a carrying amount of R54,4 million (2011: R49,8 million) which are past due at the reporting date for which the group has not provided, as the amounts are still considered recoverable.
Credit risk exposure – trade debtorsAgeing of amounts included in trade receivables that are past due at the end of the reporting period but against which the group has not recognised an allowance for doubtful receivables because there has not been a significant change in credit quality and the amounts are still considered recoverable, are as follows:
2012 2011R’000 R’000
60 – 90 days 15 982 18 485 90 – 120 days 6 985 11 818
120 + days 38 696 19 497
61 663 49 800
for the year ended 31 December 2012
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75Workforce Integrated Report 2012
23. Financial risk management (continued)23.3 Credit risk management (continued)
The group does not hold any collateral or other credit enhancements over these balances nor does it have a legal right of offset against any amount owed by the group to the counterparty.
The credit risk for cash and cash equivalents is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.
Credit risk exposure – advancesIncluded in the group’s net advances are advances with a carrying amount of R48,1 million (2011: R26,7 million) which are past due at reporting date for which the group has not provided any impairment, as these amounts are considered to be recoverable.
23.4 Liquidity risk managementThe group manages liquidity risk by constantly monitoring its future commitments as well as available banking facilities and reserve borrowing facilities. Net cash requirements are compared to available borrowing facilities in order to determine headroom or any shortfalls and if available borrowing facilities are expected to be sufficient over the lookout period. The necessary remedial action is taken as and when required.
Liquidity needs are monitored on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a 180-day and a 360-day lookout period are identified monthly.
The group’s contractual maturities (including interest payments where applicable) are summarised below:
Current Non-current
within 6 6 to 12 1 to 5 later thanmonths months years 5 years
R’000 R’000 R’000 R’000
2012Loan on treasury shares – – 9 112 – Bank loans – 192 810 – – Instalment sale liabilities 129 96 12 – Trade and other payables 72 935 – – – Bank overdraft 4 466 – – –
77 530 192 906 9 124 –
2011Loan on treasury shares – – 9 112 – Bank loans – 174 546 – – Instalment sale liabilities 433 160 41 – Trade and other payables 62 521 – – – Bank overdraft 4 – – –
62 958 174 706 9 153 –
The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the liabilities at the reporting date.
24. Capital managementThe group’s capital management objectives are to ensure the group’s ability to continue as a going concern, and to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk. The group’s overall strategy remains unchanged from 2011.
The group monitors capital through the optimisation of the debt and equity balance. The capital structure of the group consists of debt (borrowings, offset by cash and bank balances) and equity (comprising issued capital, reserves, retained earnings and non-controlling interests). The directors review the capital structure on an annual basis. As part of this review the cost of capital and the risks associated with each class of capital is considered.
76 Workforce Integrated Report 2012
Notes to the group financial statements (continued)
24. Capital management (continued)The group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the
risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the group may adjust the
amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
The group’s goal in capital management is to maintain a debt equity ratio of between 0.5 and 1.1. Based on the directors’
recommendations, the group expects to decrease its gearing ratio closer to 60% through operating cash flows.
The gearing ratio for the reporting periods under review was as follows:
2012 2011
R’000 R’000
Long- and short-term borrowings 217 017 184 292
Bank overdraft 4 466 4
Cash and cash equivalents (18 526) (15 977)
Net debt 202 957 168 318
Total equity 220 352 197 487
Net debt-to-equity ratio 0,9 0,9
25. Related party transactionsNo transactions between the company and its subsidiaries have occured during 2012 except for a R 175 000 increase in the
intercompany loan amount. Unless otherwise stated, none of the transactions incorporate special terms and conditions and no
guarantees were given or received. Outstanding balances are usually settled in cash. Details of transactions between the group
and other related parties are disclosed below:
25.1 Transactions with related partiesDuring the year the group entities entered into the following trading transactions with related parties that are not members of the group:
2012 2011
R’000 R’000
11 Wellington Street Investments Proprietary Limited 4 392 4 063
Relationship: Director has significant influence
Type of transaction: Operating lease rentals paid
Vunani Capital Proprietary Limited 121 121
Relationship: Shareholder
Type of transaction: Designated advisors’ fees
Hunts Attorneys 3 031 2 391
Relationship: Director with an interest in a legal practice – R S Katz
Type of transaction: Disbursements for advocates’ fees paid
25.2 Related party loans
Amounts due from/(payable to) related parties are as follows:
Force Holdings Proprietary Limited (46) (2 047)
Relationship: Shareholder
Simgarvan Investments Proprietary Limited (9 112) (9 112)
Relationship: Company controlled by a director of the group
Hunts Attorneys 162 162
Relationship: Director with an interest in a legal practice – R S Katz
for the year ended 31 December 2012
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77Workforce Integrated Report 2012
25 Related party transactions (continued)25.2 Related party loans (continued)
SubsidiariesThe company’s directly owned subsidiaries are as follows:
Holding%
Direct subsidiariesThe Workforce Group Proprietary Limited 100
Albrecht Nursing Agency Proprietary Limited 100
Rapitrade 465 Proprietary Limited 100
Telebest Holdings Proprietary Limited 100
TechniChron Proprietary Limited trading as Interchange Process Outsourcing 100
Letcolex Proprietary Limited trading as Programmed Construction 100
Details of the subsidiaries indirectly held are set out below:Indirect subsidiariesBabereki Employee Support Services Proprietary Limited 100Fads Proprietary Limited 100Gauteng Wage Bureau Proprietary Limited 100Khetha Staffing Services Proprietary Limited 100Only The Best Proprietary Limited 100Pha Phama Africa Staff Services Proprietary Limited 100Teleresources Proprietary Limited 100Top Level Personnel Proprietary Limited 100Training Force Proprietary Limited 100Workforce Finance Proprietary Limited 100Workforce Healthcare Proprietary Limited 50Workforce Software Proprietary Limited 100Workforce Worldwide Staffing Proprietary Limited 100
The Pha Phama Africa Employee Empowerment Trust and its subsidiary Pha Phama Africa Investments Proprietary Limited are consolidated in line with the requirements of IAS 27: Consolidated Financial Statements and Accounting for Investments in Subsidiaries and SIC 12: Special Purpose Entities issued by the International Accounting Standards Board.
Basic remune-
ration
Bonus and profit
shareAllow-ances
Retirement contri-
butions
Medical contri- butions Total
R R R R R R
25.3 Compensation of key management personnelThe remuneration of directors and other members of key management during the year was as follows:2012Executive directorsRonny Katz 1 934 904 100 000 24 000 386 980 82 656 2 528 540 Lawrence Diamond 1 768 060 1 169 167 87 600 186 113 31 716 3 242 656 Willie van Wyk 1 028 943 110 000 12 000 108 311 – 1 259 254 Non-executive directorsJohn Macey 115 000 – – – – 115 000 Lulu Letlape 99 996 – – – – 99 996 Kyansambo Vundla 100 000 – – – – 100 000
78 Workforce Integrated Report 2012
Notes to the group financial statements (continued)
Basic remune-
ration
Bonus and profit
shareAllow-ances
Retirement contri-
butions
Medical contri- butions Total
R R R R R R
25. Related party transactions (continued)25.3 Compensation of key
management personnel (continued)Three highest earning employeesEmployee A 1 399 025 60 000 126 000 – 52 694 1 637 719 Employee B 760 000 415 952 269 094 80 000 86 304 1 611 350 Employee C 455 862 585 000 426 288 47 986 20 868 1 536 004
7 661 790 2 440 119 944 982 809 390 274 238 12 130 519
2011Executive directorsRonny Katz 1 789 800 60 000 24 000 346 980 75 876 2 296 656 Lawrence Diamond 1 583 880 350 000 87 600 166 726 29 946 2 218 152 Willie van Wyk 911 279 100 000 12 000 95 925 – 1 119 204 Non-executive directorsJohn Macey 100 000 – – – – 100 000 Lulu Letlape 100 000 – – – – 100 000 Kyansambo Vundla 100 000 – – – – 100 000 Three highest earning employeesEmployee A 1 248 000 107 913 72 000 – 97 068 1 524 981 Employee B 1 258 152 55 000 126 000 – 40 662 1 479 814 Employee C 509 180 785 590 73 511 49 084 24 846 1 442 211
7 600 291 1 458 503 395 111 658 715 268 398 10 381 018
Compensation paid to key management personnel has all been done through The Workforce Group Proprietary Limited.
BeneficialDirect Indirect
’000 ’000
25.4 Directors’ interest in share capitalThe directors’ interest in share capital at year-end and at the date of this report were as follows:2012Ronny Katz – 65 860 Lawrence Diamond 364 – Willie van Wyk 569 – Mark Anderson – *
933 108 760
2011Ronny Katz – 65 860 Lawrence Diamond 364 – Willie van Wyk 569 – Mark Anderson – *
933 108 760
* This director has an interest in Vunani Capital Proprietary Limited, which owns 42 900 000 shares in the company.
26. Contingent liabilitiesThird party claims Various legal claims were brought against the group during the year. Unless recognised as a liability, the directors consider these claims to be unjustified and the probability that they will require settlement at the group’s expense to be remote, since the claims are not in accordance with either the contracts with the customers or normal business practices in the industry. This evaluation is consistent with external independent legal advice.
Potential claims by third parties amount to R2 696 556 (2011: R1 739 248). The directors believe, based on past history, that the likelihood of such claims being successful are minimal.
for the year ended 31 December 2012
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79Workforce Integrated Report 2012
27. Legislative risk – outstandingWorkforce has and will continue to take an active role in the negotiations focusing on the future of the industry and will continue to encourage responsible regulation which will serve to entrench greater compliance within the industry. Indications are that government is planning to press on with the introduction of labour law reforms during this year with the clear intention to finalise the amendment processes by the end of 2013; this specifically includes amendments to the Basic Conditions of Employment Act, Labour Relations Act, Employment Equity Act and the introduction of the Employment Services Act.
Whilst these amendments and the introduction of the Employment Services Act will place greater demand on the group’s internal requirements, the reality is that the group is awaiting the introduction of these amendments with a degree of eagerness as they will also create opportunities for the group’s services. South Africa’s labour legislation is already complex, and these amendments will introduce additional regulatory burdens which many employers are not geared for. The services the group offer will therefore become even more essential.
28. Cash settled Share based payments28.1 Details of the employee share appreciation rights scheme
The company has a share appreciation right scheme for certain directors management and staff of the company and it’s subsidiaries. In accordance with the terms of the scheme, as approved by shareholders at a previous annual general meeting, key staff members with more than three years service may be granted share appreciation rights. Any cash awards received under this scheme are required to be applied exclusively towards the subscription and/or purchase of ordinary shares in the company.
Each employee share appreciation right provides the employee with a call option where the payoff is the difference between the market value of the company share and the strike price of the share on exercise date. No amounts are paid or payable by the recipient on receipt of the share appreciation right. The share appreciation rights carry neither rights to dividends or voting rights. Share appreciation rights may be exercised at any time from the date of vesting until the date of their expiry.
The following share-based payment arrangement was in existence during the current year:
NumberGrant date
Expiry date
Exercise price
Fair value at grant date
Share appreciation rights issued on 5 December 2012 9 795 000
5 Dec2012
29 Feb 2016 50 cent 9 cent
Included in the above allocation, the following have been granted to Director’s:L H Diamond 2 500 000W P Van Wyk 750 000
All share appreciation rights vest on 31 December 2015 and expire on 29 February 2016 or on resignation of the employee.
No share appreciation rights have been granted in previous years, exercised in the current year or have expired during the current year.
There are no share appreciation rights exercisable at the end of the current financial year.
Fair value of the share appreciation rights granted during the year:
The fair value of the share appreciation rights is R858 495 of which R47 694 has been recognised in the statement of has been adjusted based on management’s best estimate for the effects of non-transferability, exercise restrictions comprehensive income in the current year.
The rights were valued using the Black-Scholes-Merton model. Where relevant the expected life used in the model behavioural considerations and effects of early exercise. Expected volatility is based on the historical share price volatility over the past three years.
Inputs into the model:
Grant date share price 50 cent
Exercise price 50 cent
Expected volatility 55,58%
Share appreciation life 36 Months
Dividend yield 0
Risk free interest rate 5,5%
80 Workforce Integrated Report 2012
29. Retirement benefitsThe group operates a defined contribution provident fund. As the scheme is a defined contribution scheme, no actuarial valuation is required as no actuarial shortfall can arise in the future. It is a mandatory requirement for all new permanent employees to join the fund. Employees contribute a percentage of their salaries and contributions are expensed as incurred. (Refer to note 18)
2012 2011
R’000 R’000
30. Group net asset value per share (cents per share)The net asset value per share and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:Group net asset value 220 101 197 378Weighted average number of ordinary shares in issue (‘000) 225 630 225 630
Basic earnings per share (cents) 98 87
Notes to the group financial statements (continued)
for the year ended 31 December 2012
81Workforce Integrated Report 2012
Company statement of financial position
at 31 December 2012
Company statement of comprehensive income
for the year ended 31 December 2012
2012 2011Notes R’000 R’000
AssetsNon-current assetsInvestment in subsidiaries 1 97 832 97 832 Loans to group companies 2 – 123 233
Current assetsLoans to group companies 2 123 408 –Cash and cash equivalents 3 – 215
Total assets 221 240 221 280
Equity and liabilitiesEquity 221 239 221 279
Share capital and premium 4 236 867 236 867 Retained earnings (15 628) (15 588)
Current liabilitiesTrade and other payables 1 1
Total equity and liabilities 221 240 221 280
2012 2011Notes R’000 R’000
Administrative expenses (46) 7 910
Operating (loss)/profit (46) 7 910 Finance income 5 6 9
(Loss)/profit before taxation (40) 7 919 Taxation 6 – –
(Loss)/profit before taxation 7 (40) 7 919 Other comprehensive income for the year, net of tax – –
Total comprehensive (loss)/profit for the year (40) 7 919
82 Workforce Integrated Report 2012
Company statement of changes in equity
Company statement of cash flows
for the year ended 31 December 2012
Share capital Retained Totaland premium earnings equity
R’000 R’000 R’000
Balance at 1 January 2011 236 867 (23 507) 213 360 Total comprehensive income for the year – 7 919 7 919
Balance at 1 January 2012 236 867 (15 588) 221 279 Total comprehensive loss for the year – (40) (40)
Balance at 31 December 2012 236 867 (15 628) 221 239
2012 2011Notes R’000 R’000
Cash flows from operating activities (40) (33)
Cash generated from operations 8.1 (46) (42)Interest received 6 9 Interest paid – –
Cash flows from investing activities (175) 36
Loans to group companies (175) 36
Net change in cash and cash equivalents (215) 3 Cash and cash equivalents at the beginning of the year 215 212
Cash and cash equivalents at the end of the year 8.2 – 215
for the year ended 31 December 2012
83Workforce Integrated Report 2012
Notes to the company financial statements
for the year ended 31 December 2012
2012 2011R’000 R’000
1. Investment in subsidiariesWholly owned subsidiaries
The Workforce Group Proprietary Limited 97 832 97 832
1 000 shares 97 832 97 832
Telebest Holdings Proprietary Limited * *
100 shares* * *
Albrecht Nursing Agency Proprietary Limited * *
100 shares* * *
Rapitrade 465 Proprietary Limited * *
100 shares* * *
97 832 97 832
* Amounts below R500.
2. Loans to group companiesWholly owned subsidiaries
The Workforce Group Proprietary Limited 87 459 87 284
Telebest Holdings Proprietary Limited 33 745 33 745
Amount owing by subsidiary 37 817 37 817
Provision for impairment (4 072) (4 072)
Rapitrade 465 Proprietary Limited 2 204 2 204
Amount owing by subsidiary 3 191 3 191
Provision for impairment (987) (987)
123 408 123 233
The loans to subsidiaries are unsecured, interest-free and have no fixed terms of
repayment. Loans to subsidiaries amounting to R5 059 million (2011: R5 059 million) have
been subordinated in favour of other creditors until the assets of these subsidiaries, fairly
valued exceed their liabilities. The carrying value of loans is at amortised cost which
approximates their fair value.
The movement of the provision for impairment can be reconciled as follows:
Balance at the beginning of the year 5 059 13 011
Impairment losses (reversed)/raised – (7 952)
Balance at the end of the year 5 059 5 059
3. Cash and cash equivalentsCash and cash equivalents include the following components:
Cash at bank and in hand – –
Short-term deposits – 215
– 215
84 Workforce Integrated Report 2012
Notes to the company financial statements (continued)
2012 2011R’000 R’000
4. Share capitalAuthorised
1 000 000 000 ordinary shares of 0,001 cent each 10 10
Issued
240 000 000 fully paid ordinary shares of 0,001 cent each 2 2
Share premium 236 865 236 865
236 867 236 867
5. Finance incomeInterest revenue:
Bank deposits 6 9
6 9
6. TaxationNo provision has been made for the current year’s taxation as the company had no taxable income, and no deferred tax asset has been raised as it is unlikely that the company will be able to utilise this in future
Estimated tax losses for utilisation against future taxable income 1 629 1 590
7. Profit/(loss) for the yearProfit/(loss) for the year has been arrived at after charging/(crediting):
Impairment adjustments on financial assets
Impairment losses reversed – (7 952)
Auditor’s remuneration
Audit fees 35 30
Consulting and other services – –
35 30
8. Notes to the statement of cash flows8.1 Cash generated from operations
(Loss/(profit) before taxation (40) 7 919
Interest and dividend income (6) (9)
Interest expenses – –
(46) (42)
8.2 Cash and cash equivalentsBank and cash balances – 215
9. Related party loansThe Workforce Group Proprietary Limited 87 459 87 284
Relationship: Wholly owned subsidiary
Telebest Holdings Proprietary Limited 37 817 37 817
Relationship: Wholly owned subsidiary
Rapitrade 465 Proprietary Limited 3 191 3 191
Relationship: Wholly owned subsidiary
Details of subsidiaries are shown in the directors’ report
for the year ended 31 December 2012
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85Workforce Integrated Report 2012
10. Financial Risk MananagementThe company is exposed to a credit control risk in relation to its financial instrument, namely loans to wholly owned subsidiaries. To this effect the company acts as the controlling entity of these subsidiaries and manages the risk of non collection on a daily basis. The maximum exposure of the company is limited to the carrying amount of financial assets recognised at reporting date, being loans to group companies of R123 408 036 (2011: R123 232 530).
Liquidity needs are monitored on a day-to-day basis. The company’s contractual maturity commitments relate to trade and other payables of R1 418 (2011: R1 418) which are due in the next 6 months.
The company’s capital management objectives remain unchanged from 2011 and are in place to ensure the company’s ability to continue as a going concern.
86 Workforce Integrated Report 2012
Analysis of shareholders
Number of holders
% of total shareholders
Number of shares
% of total issued share
capital
Analysis of shareholdings 1 – 1 000 60 35,09 36 616 0,02 1 001 – 10 000 63 36,84 298 026 0,12 10 001 – 100 000 31 18,13 1 496 607 0,62 100 001 – 1000 000 12 7,02 10 168 751 4,241 000 001 – and more 5 2,92 228 000 000 95,00
Totals 171 100,00 240 000 000 100,00
Major shareholders (5% and more of the shares in issue)Force Holdings Proprietary Limited 92 870 000 38,70Little Kittens Proprietary Limited 65 860 000 27,44Vebicept Proprietary Limited* 42 900 000 17,88Pha Phama Africa Investments Proprietary Limited 14 370 000 5,99SBSA ITF Flag IP FLX Val 12 000 000 5,00
Shareholder spreadNon-public: 6 3,51 216 932 965 90,39
Directors 3 1,75 66 792 965 27,8310% or more of issued capital 2 1,17 135 770 000 56,57Treasury shares 1 0,58 14 370 000 5,99
Public 165 96,49 23 067 035 9,61
Totals 171 100,00 240 000 000 100,00
Distribution of shareholdersIndividuals 147 85,96 3 546 499 1,48Pension funds 2 1,17 605 768 0,25Other managed funds 7 4,09 743 136 0,31Other companies and corporate bodies 15 8,77 235 104 597 97,96
Totals 171 100,00 240 000 000 100, 00
* A company in which Vunani Capital owns 100% of the share capital.
shareholder information as at 31 December 2012
87Workforce Integrated Report 2012
Corporate information
Company secretarySirkien van Schalkwyk
Registered office11 Wellington RoadParktown 2193
PO Box 11137Johannesburg2000
Business address11 Wellington RoadParktown2193
PO Box 11137Johannesburg2000
Designated advisorMerchantec Capital Proprietary Limited
Transfer secretariesLink Market Services South AfricaProprietary Limited
Commercial bankersABSA Business Bank
Company registration number2006/018145/06
Website addresswww.workforce.co.za
Shareholders’ diary
Financial year-end 31 December 2012
Abridged results released on SENS 27 March 2013Integrated report posted to shareholders 28 March 2013Annual general meeting 10 May 2013Half-year interim report Mid-August 2013
88 Workforce Integrated Report 2012
Notice to the annual general meeting
WORKFORCE HOLDINGS LIMITED(Incorporated in the Republic of South Africa)(Registration number: 2006/018145/06)Share Code: WKF ISIN: ZAE000087847(“Workforce” or “the company” or “the group”)
Notice is hereby given that the annual general meeting of the company’s shareholders will be held at 11 Wellington Street, Parktown on Friday, 10 May 2013 at 10h00 (“the annual general meeting”).
PurposeThe purpose of the meeting is to transact the business set out in this notice of annual general meeting (“AGM notice”) by considering and, if deemed fit, passing, with or without modification, the ordinary and special resolutions hereunder. For the avoidance of doubt, the memorandum and articles of association of the company are referred to as the memorandum of incorporation in accordance with the terminology used in the new Companies Act 2008 (Act 71 of 2008), as amended (“the Companies Act”), which became effective on 1 May 2011.
Agenda1. Presentation and consideration of the annual financial statements of the company, including the reports of the auditors, directors
and the audit and risk committee for the year ended 31 December 2012 as set out in the company’s integrated report 2012 of which this AGM notice forms part; and
2. To consider and, if deemed fit, approve, with or without modification, the following special and ordinary resolutions:
Note: For any of the ordinary resolutions numbers 1 to 7 and 9 to be adopted, more than 50% of the voting rights exercised on each such ordinary resolution must be exercised in favour thereof.
For any of the special resolutions numbers 1 to 5 to be adopted, more than 75% of the voting rights exercised on each such ordinary resolution must be exercised in favour thereof.
For ordinary resolution number 8 to be adopted, more than 75% of the voting rights exercised on each such ordinary resolution must be exercised in favour thereof.
1. Ordinary business1.1 Re-election of directors
1.1.1 Ordinary resolution number 1: Re-election of John Macey“Resolved that John Macey, who retires by rotation in terms of the memorandum of incorporation of the company and, being eligible and offering himself for re-election, be and is hereby re-elected as director.”
An abbreviated curriculum vitae in respect of John Macey may be viewed on page 17 of the integrated report of which this notice forms part.
1.1.2 Ordinary resolution number 2: Re-election of Mark Anderson“Resolved that Mark Anderson, who retires by rotation in terms of the memorandum of incorporation of the company and, being eligible and offering himself for re-election, be and is hereby re-elected as director.”
An abbreviated curriculum vitae in respect of Mark Anderson may be viewed on page 16 of the integrated report of which this notice forms part.
Reason for ordinary resolutions numbers 1 and 2The reason for ordinary resolutions numbers 1 and 2 is that article 36 of the memorandum of incorporation of the company and, to the extent applicable, the Companies Act, requires that a component of the non-executive directors rotate at the annual general meeting and, being eligible may offer themselves for re-election as directors.
1.2 Re-appointment of auditors1.2.1 Ordinary resolution number 3: Confirmation of the re-appointment of the auditors
“Resolved that the re-appointment of Horwath Leveton Boner as independent auditors of the company for the ensuing year (the designated auditor being Mr. Craig George) on the recommendation of the company’s audit and risk committee, be and is hereby ratified.”
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89Workforce Integrated Report 2012
Reason for ordinary resolution number 3The reason for ordinary resolution number 3 is that the company, being a public listed company, must have its financial results audited and such auditor must be appointed or re-appointed each year at the annual general meeting of the company as required by the Companies Act.
1.3 Election of members to the audit and risk committee1.3.1 Ordinary resolution number 4: Appointment of John Macey as a member to the audit and risk committee
“Resolved that John Macey be elected a member of the audit and risk committee, with effect from the conclusion of this annual general meeting in terms of section 94(2) of the Companies Act.”
An abbreviated curriculum vitae in respect of John Macey may be viewed on page 17 of the integrated report of which this notice forms part.
1.3.2 Ordinary resolution number 5: Appointment of Lulu Letlape as a member to the audit and risk committee“Resolved that Lulu Letlape be elected a member of the audit and risk committee, with effect from the conclusion of this annual general meeting in terms of section 94(2) of the Companies Act.”
An abbreviated curriculum vitae in respect of Lulu Letlape may be viewed on page 17 of the integrated report of which this notice forms part.
1.3.3 Ordinary resolution number 6: Appointment of Kyansambo Vundla as a member to the audit and risk committee“Resolved that Kyansambo Vundla be elected a member of the audit and risk committee, with effect from the conclusion of this annual general meeting in terms of section 94(2) of the Companies Act.”
An abbreviated curriculum vitae in respect of Kyansambo Vundla may be viewed on page 17 of the integrated report of which this notice forms part.
Reason for ordinary resolutions number 4 to 6The reason for ordinary resolution numbers 4 to 6 (inclusive) is that the company, being a public listed company, must appoint an audit committee as prescribed by sections 66(2) and 94(2) of the Companies Act, which also requires that the members of such audit committee be appointed, or re-appointed, as the case may be, at each annual general meeting of a company.
1.4 Unissued shares placed under control of the directors1.4.1 Ordinary resolution number 7: Placing unissued shares under directors’ control
“Resolved that the unissued shares in the company, limited to 15% of the number of shares in issue at 28 March 2013, be and are hereby placed under the control of the directors until the next annual general meeting and that they be and are hereby authorised to issue any such shares as they may deem fit, subject to the Companies Act, the memorandum of incorporation of the company, and the provisions of the Listings Requirements of the JSE Limited (“JSE”), save that the aforementioned 15% limitation shall not apply to any shares issued in terms of a rights offer.”
Reason for ordinary resolution number 7The reason for ordinary resolution number 7 is that the board requires authority from shareholders in terms of article 3 of its memorandum of incorporation to issue shares in the company. This general authority, once granted, allows the board from time to time, when it is appropriate to do so, to issue ordinary shares as may be required inter alia in terms of capital raising exercises, and to maintain a healthy capital adequacy ratio that may be required from time to time. This general authority is subject to the restriction that it is limited to 15% of the number of shares in issue at 28 March 2013 on the terms more fully set out in ordinary resolution number 7 and subject to the further restrictions set out in ordinary resolution number 8 below.
1.5 General authority to issue shares for cash1.5.1 Ordinary resolution number 8: General authority to issue shares, and to sell treasure shares, for cash
“Resolved that the directors of the company be and are hereby authorised by way of a general authority, to ■ Allot and issue, or to issue any options in respect of, all or any of the authorised but unissued shares in the capital
of the company; and/or ■ sell or otherwise dispose of or transfer, or issue any options in respect of, ordinary shares in the capital of the
company purchased by subsidiaries of the company,
90 Workforce Integrated Report 2012
Notice to the annual general meeting (continued)
for cash to such person/s on such terms and conditions and at such times as the directors may from time to time in
their discretion deem fit, subject to the provisions of the Companies Act, 2008 (Act 71 of 2008), as amended, the
memorandum of incorporation of the company and its subsidiaries, the Listings Requirements of the JSE, and subject
to the provision that the aggregate number of ordinary shares able to be allotted and issued in terms of this resolution,
shall be limited to 50% of the issued share capital at 28 March 2013, provided that: ■ The approval shall be valid until the date of the next annual general meeting of the company, provided it shall not
extend beyond fifteen months from the date of this resolution; ■ an announcement giving full details, including the impact on net asset value and earnings per share, will be
published after any issue representing, on a cumulative basis within any one financial year, 5% or more of the
number of shares in issue prior to such issue; ■ the general issues of shares for cash in the aggregate in any one financial year may not exceed 50% of the
company’s issued share capital (number of securities) of that class. For purposes of determining whether the
aforementioned 50% has been or will be reached, the securities of a particular class will be aggregated with the
securities that are compulsorily convertible into securities of that class and, in the case of the issue of compulsorily
convertible securities, aggregated with the securities of that class into which they are compulsorily convertible.
The number of securities of a class which may be issued shall be based on the number of securities of that class in
issue at the date of such application less any securities of the class issued during the current financial year,
provided that any securities of that class to be issued pursuant to a rights issue (announced and irrevocable and
underwritten) or acquisition (concluded up to the date of application) may be included as though they were
securities in issue at the date of application; ■ in determining the price at which an issue of shares will be made in terms of this authority the maximum discount
permitted will be 10% of the weighted average traded price of such shares, as determined over the 30 trading
days prior to the date that the price of the issue is agreed between the company and the party subscribing for
the securities. The JSE should be consulted for a ruling if the securities have not traded in such 30 business
day period; ■ any such issue will only be made to public shareholders as defined in paragraphs 4.25 to 4.27 of the Listings
Requirements of the JSE and not to related parties; and ■ any such issue will only be securities of a class already in issue or, if this is not the case, will be limited to such
securities or rights that are convertible into a class already in issue.”
The reason for ordinary resolution number 8
For listed entities wishing to issue shares, it is necessary for the board not only to obtain the prior authority of the
shareholders as may be required in terms of their memorandum of incorporation contemplated in ordinary resolution
number 8 above but it is also necessary to obtain the prior authority of shareholders in accordance with the Listings
Requirements of the JSE. The reason for this resolution is accordingly to obtain a general authority from shareholders
to issue shares in compliance with the Listings Requirements of the JSE. The authority granted in terms of this
resolution number 8 must accordingly be read together with authority granted in terms of ordinary resolution number
8 above and any exercise thereof will be subject to the conditions contained in ordinary resolution number 8.
Note: In terms of the Listings Requirements of the JSE, this resolution requires the approval of not less than 75% of
the votes cast by shareholders present or represented by proxy and entitled to vote at this annual general meeting.
1.6 Authorised directors and/or the company secretary1.6.1 Ordinary resolution number 9: Authority to action
“Resolved that any one director of the company and/or the company secretary is hereby authorised to do all such
things and sign all such documents as deemed necessary to implement the ordinary and special resolutions as set
out in this notice convening the annual general meeting at which these resolutions will be considered.”
The reason for ordinary resolution number 9
The reason for ordinary resolution number 9 is to ensure that the resolutions voted favourably upon is duly
implemented through the delegation of powers provided for in terms of article 29 of the company’s memorandum
of incorporation.
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91Workforce Integrated Report 2012
2. Special business
2.1 Special resolution number 1: Remuneration of non-executive directors
“Resolved that the remuneration payable to the non-executive directors be approved on the following basis with effect from
this annual general meeting until the next annual general meeting held in 2014:
Category Recommended remuneration
Board member R32 100 annual retainer
R10 165 per meeting attended
Audit and risk committee
Chairman R9 630 per meeting attended
Member R8 560 per meeting attended
Remuneration committee
Chairman R8 560 per meeting attended
Member R8 560 per meeting attended
Social and ethics committee
Chairman R8 560 per meeting attended
Member R8 560 per meeting attended
Reasons for and effect of special resolution number 1
The reason for the proposed special resolution, is to comply with section 66(9) of the Companies Act, which requires the
approval of directors’ fees prior to the payment of such fees.
The effect of special resolution number 1 is that the company will be able to pay its non-executive directors for the services
they render to the company as directors without requiring further shareholder approval until the next annual general meeting.
2.2 Special resolution number 2: Financial assistance to related and inter-related companies
“Resolved that the board of directors of the group be and is hereby authorised in terms of section 45(3)(a)(ii) of the Companies
Act, as a general approval (which approval will be in place for a period of two years from the date of adoption of this special
resolution number 4), to authorise the group to provide any direct or indirect financial assistance (“financial assistance” will
herein have the meaning attributed to such term in section 45(1) of the Companies Act) that the board may deem fit to any
related or inter-related company of the group (“related” and “inter-related” will herein have the meanings attributed to those
terms in section 2 of the Companies Act), on the terms and conditions and for the amounts that the board of directors
may determine.”
Reason for and effect of special resolution number 2
The reason for and the effect of special resolution number 2 is to provide a general authority to the board of directors of the
group for the group to grant direct or indirect financial assistance to any company forming part of the group, including in the
form of loans or the guaranteeing of their debts.
For purposes of this special resolution number 2, the board of directors of the company will only utilise the general authority
bestowed upon them to provide direct or indirect financial assistance related to inter-related companies to the extent that the
directors, after considering the amount of financial assistance to be granted, are of the opinion that: ■ Immediately after providing the financial assistance, the company would satisfy the solvency and liquidity test (as defined
in the Companies Act, 2008); ■ the terms under which the financial assistance is proposed to be given are fair and reasonable to the company; ■ all conditions or restrictions regarding the granting of financial assistance as set out in the company’s memorandum of
incorporation have been satisfied and that the board of directors have passed a resolution authorising the grant of said
financial assistance (“the board resolution”) under their general authority so granted, the company which will then provide
written notice of the board resolution to all shareholders;
92 Workforce Integrated Report 2012
Notice to the annual general meeting (continued)
■ within 10 days after adoption of the board resolution, if the total value of all loans, debts, obligations or assistance
contemplated in that resolution, together with any previous such resolution(s) during the financial year, exceeds one-tenth
of 1% of the company’s net worth at the time of the board resolution; or ■ within 30 business days after the end of the financial year, in any other case.
2.3 Special resolution number 3: Authority to repurchase shares by the company“Resolved that as a special resolution that the company and its subsidiaries be and is hereby authorised, as a general
approval, to repurchase any of the shares issued by the company, upon such terms and conditions and in such amounts as the
directors may from time to time determine, but subject to the provisions of section 46 and 48 of the Companies Act, the
memorandum of incorporation of the company, the Listings Requirements of the JSE and the requirements of any other stock
exchange on which the shares of the company may be quoted or listed, namely that: ■ The general repurchase of the shares may only be effected through the order book operated by the JSE trading system
and done without any prior understanding or arrangement between the company and the counterparty; ■ this general authority shall only be valid until the next annual general meeting of the company, provided that it shall not
extend beyond fifteen months from the date of this resolution; ■ an announcement must be published as soon as the company has acquired shares constituting, on a cumulative basis,
3% of the number of shares in issue prior to the acquisition, pursuant to which the aforesaid 3% threshold
is reached, containing full details thereof, as well as for each 3% in aggregate of the initial number of shares acquired
thereafter; ■ the general authority to repurchase is limited to a maximum of 20% in the aggregate in any one financial year of the
company’s issued share capital at the time the authority is granted; ■ a resolution has been passed by the board of directors approving the purchase, that the company has satisfied the
solvency and liquidity test as defined in the Companies Act and that since the solvency and liquidity test was applied
there have been no material changes to the financial position or required shareholder spread of the group; ■ the general repurchase is authorised by the company’s memorandum of incorporation; ■ repurchases must not be made at a price more than 10% above the weighted average of the market value of the shares
for five business days immediately preceding the date that the transaction is effected. The JSE should be consulted for a
ruling if the applicants securities have not traded in such five business day period; ■ the company may at any point in time only appoint one agent to effect any repurchase(s) on the company’s behalf; ■ the company and its subsidiaries may not effect a repurchase during any prohibited period as defined in terms of the
Listings Requirements of the JSE unless there is a repurchase programme in place as contemplated in terms of 5.72(g) of
the Listings Requirements of the JSE; and ■ the company must ensure that its Designated Adviser provides the JSE with the required working capital letters before it
commences the repurchase of any shares.”
Reason and effect of special resolution number 3
The reason for and effect of special resolution number 3 is to grant the directors a general authority in terms of its
memorandum of incorporation and the Listings Requirements of the JSE for the acquisition by the company and/or its
subsidiaries of shares issued by it on the basis reflected in the special resolution.
In terms of the Listings Requirements of the JSE any general repurchase by the company and/or its subsidiaries must, inter
alia, be limited to a maximum of 20% of the company’s issued share capital in any one financial year of that class at the time
the authority is granted.
The directors of the company or its subsidiaries will only utilise the general authority to purchase shares of the company and/or
the subsidiary as set out in this special resolution numbers 3 to the extent that the directors, after considering the maximum
shares to be purchased, are of the opinion that the group position would not be compromised as to the following: ■ The group’s ability in the ordinary course of business to pay its debts for a period of 12 months after the date of this
annual general meeting and for a period of 12 months after the purchase; ■ the consolidated assets of the group will at the time of the annual general meeting and at the time of making such
determination be in excess of the consolidated liabilities of the group. The assets and liabilities should be recognised and
measured in accordance with the accounting policies used in the latest audited annual financial statements of the group;
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93Workforce Integrated Report 2012
■ the ordinary capital and reserves of the group after the purchase will remain adequate for the purpose of the business of
the group for a period of 12 months after the annual general meeting and after the date of the share purchase; and ■ the working capital available to the group after the purchase will be sufficient for the group’s requirements for a period of
12 months after the date of the notice of the annual general meeting
and the directors have passed a resolution authorising the repurchase, resolving that the company has satisfied the solvency
and liquidity test as defined in the Companies Act and resolving that since the solvency and liquidity test had been applied,
there have been no material changes to the financial position of the group.
Other disclosure in terms of Section 11.26 of the JSE Listings Requirements For the purposes of considering special resolution number 3, and in compliance with paragraph 11.26 of the Listings
Requirements, the information listed below has been included in the integrated report, in which this notice of annual general
meeting is included, at the places indicated: ■ Directors and management (page 6 to 7, and 16 to 17); ■ major shareholders (page 86); ■ directors’ interests in securities (page 78); ■ share capital of the company (page 86); and ■ contingent liabilities (page 78).
Litigation StatementThe company is not involved in any legal or arbitration proceedings, nor are any proceedings pending or threatened of
which the company is aware that may have or have had in the previous 12 months, a material effect on the company’s
financial position.
Responsibility StatementThe directors, whose names are reflected in this integrated report of which this notice forms part, collectively and individually
accept full responsibility for the accuracy of the information given and certify that to the best of their knowledge and belief
there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable
enquiries to ascertain such facts that have been made and that the notice contains all information required by
the Listings Requirements of the JSE.
Material ChangesOther than the facts and developments reported on in the integrated report, there have been no material changes in the
financial or trading position of the company and its subsidiaries since the date of signature of the audit report up to the date
of this notice.
2.4 Special resolution number 4: Conversion of authorised share capital“Resolved that, in terms of regulation 31 of the Companies Act Regulations 2011, all the ordinary shares in the share capital of
the company, comprising 1 000 000 000 authorised and 240 000 000 issued ordinary shares having a par value of 0,001 cent
each, are without altering the substance of the specific rights and privileges associated therewith, converted into ordinary
shares having no par value on the basis that each ordinary no par value share shall have the same value, rights and privileges
as the value, rights and privileges which attached to such shares immediately prior to the passing of this special resolution
number 4 and that the whole of the amounts standing to the credit of the share capital account and the share premium account
of the company be transferred to the stated capital account of the company.”
Note: The Companies Act has abolished with the maintenance of capital rule and prescribes that all shares to be issued
henceforth shall have no par value. In order to bring the company’s share capital structure into harmony with the provisions of
the Companies Act the board proposes a conversion of the current authorised shares into shares of no par value. The
preferences, rights, limitations and other terms attaching to the no par value shares in the company will be the same as the
preferences, rights, limitations and other terms which are attached to the current authorised shares, immediately prior to their
conversion into no par value shares.
In accordance with regulation 31(7) of the Companies Act Regulations 2011, the board has prepared a report as set out in
Appendix 1 forming part of and attached to this AGM notice which will be submitted to the Companies and Intellectual
Property Commission (CIPC) and the South African Revenue Services (SARS) prior to the annual general meeting.
94 Workforce Integrated Report 2012
Notice to the annual general meeting (continued)
Reason for and effect of special resolution number 4The reason for special resolution number 4 is to convert the ordinary shares in the company’s authorised share capital from ordinary par value shares into ordinary shares of no par value.
The effect of special resolution number 4 is that the authorised and issued ordinary share capital of the company shall be converted to shares of no par value.
2.5 Special resolution number 5: Adoption of new memorandum of incorporation“Resolved that, subject to the passing of special resolution number 4 and in terms of section 16(1)(c)(ii) of the Companies Act, and item 4(2) of Schedule 5 to the Companies Act, the existing memorandum and articles of association of the group be and are hereby amended and substituted in its entirety by the new memorandum of incorporation signed by the chairman of the annual general meeting on the first page thereof for identification purposes, with effect from the date of filing of the required notice of amendment with CIPC.”
Reason for and effect of special resolution number 5Special resolution number 5 is proposed in order to adopt a new memorandum of incorporation in substitution for the existing memorandum and articles of association of the group which contains provisions which are in conflict with the provisions of the Companies Act, but which conflicting provisions generally override the provisions of the Companies Act, which became effective on 1 May 2011, for a period of two years after the effective date of the Companies Act, in order to bring the group’s constitutional documents in harmony with the provisions of the Companies Act. In terms of Item 4(2) of Schedule 5 to the Companies Act, a company that existed prior to the effective date of the Companies Act may at any time within two years immediately following the effective date file, without charge, make an amendment to its memorandum and articles of association to bring it in harmony with the Companies Act.
Copies of the new memorandum of incorporation will be available for inspection by any person who has a beneficial interest in any securities of the group at the registered office of the group at 11 Wellington Road, Parktown, during normal office hours from the date of issue of this AGM notice up to and including the date of the annual general meeting or any adjourned meeting. Alternatively shareholders may view or download the new memorandum of incorporation at the company’s website address www.workforce.co.za. The salient features of the company’s memorandum of incorporation is set out on pages 98 to 99 as an annexure to this notice of annual general meeting.
3. Other businessTo transact such other business as may be transacted at an annual general meeting or raised by shareholders with or without advance notice to the company.
Record date, attendance and voting1. The date on which shareholders must be recorded as such in the share register maintained by the transfer secretaries of the
company (“the Share Register”) for purposes of being entitled to receive this notice is Friday, 22 March 2013.2. The date on which shareholders must be recorded in the Share Register for purposes of being entitled to attend and vote at this
meeting is Friday, 3 May 2013 with the last day to trade being Friday, 26 April 2013.3. Meeting participants will be required to provide proof of identification to the reasonable satisfaction of the chairman of the annual
general meeting and must accordingly bring a copy of their identity document, passport or drivers’ license. If in doubt as to whether any document will be regarded as satisfactory proof of identification, meeting participants should contact the transfer secretaries for guidance.
4. Shareholders entitled to attend and vote at the annual general meeting may appoint one or more proxies to attend, speak and vote thereat in their stead. A proxy need not be a member of the company. A form of proxy, in which are set out the relevant instructions for its completion, is enclosed for the use of a certificated shareholder or own-name registered dematerialised shareholder who wishes to be represented at the annual general meeting. Completion of a form of proxy will not preclude such shareholder from attending and voting (in preference to that shareholder’s proxy) at the annual general meeting.
5. The instrument appointing a proxy and the authority (if any) under which it is signed must reach the transfer secretaries of the company at the address given below by not later than 10h00 on Wednesday, 8 May 2013.
6. Dematerialised shareholders, other than own-name registered dematerialised shareholders, who wish to attend the annual general meeting in person will need to request their Central Securities Depository Participant (CSDP) or broker to provide them with the necessary authority in terms of the custody agreement entered into between such shareholders and the CSDP or broker.
delivering innovative and diversified employer-centric solutions
95Workforce Integrated Report 2012
7. Dematerialised shareholders, other than own-name registered dematerialised shareholders, who are unable to attend the annual general meeting and who wish to be represented thereat, must provide their CSDP or broker with their voting instructions in terms of the custody agreement entered into between them and the CSDP or broker in the manner and time stipulated therein.
8. Shareholders present in person, by proxy or by authorised representative shall, on a show of hands, have one vote each and, on a poll, will have one vote in respect of each share held.
9. In terms of the Companies Act, any shareholder or proxy who intends to attend or participate at the annual general meeting must be able to present reasonably satisfactory identification at the meeting for such shareholder or proxy to attend and participate at the annual general meeting. A green bar-coded identification document issued by the South African Department of Home Affairs, a driver’s license or a valid passport will be accepted at the annual general meeting as sufficient identification.
By order of the board
S van SchalkwykCompany secretary
26 March 2013
96 Workforce Integrated Report 2012
Appendix 1
Report in terms of regulation 31(7) of the companies regulations, 2011In accordance with Regulation 31(7), it is the opinion of the board of directors of Workforce Holdings Limited (“Workforce” or “the company”) that:a) The value of the Workforce shareholders will be unaffected by the conversion of its ordinary share capital to shares of no par value;b) The company’s issued share capital consists of one class of ordinary shares and would therefore be unaffected;c) There will be no material effect on the rights of Workforce shareholders;d) There will be no material adverse effects of the proposed arrangement due to any compensations.
97Workforce Integrated Report 2012
Appendix 2
Salient dates and times in respect of the conversion of the authorised share capital
2013
Salient dates and times
Record date in order to be eligible to receive the Notice of AGM Friday, 22 March
Notice of AGM posted to shareholders Thursday, 28 March
Last date to trade in order to be eligible to vote at the annual general meeting Friday, 26 April
Record date in order to be eligible to vote at the annual general meeting Friday, 3 May
Last day to lodge forms of proxy for the annual general meeting (by 10h00) Wednesday, 8 May
Annual general meeting (at 10h00) Friday, 10 May
Results of the annual general meeting released on SENS Friday, 10 May
Submission of Special resolutions to CIPC Monday, 13 May
Anticipated date for registration of the Special resolutions by the CIPC by no later than Friday, 28 June
Publication of date that shares will trade as no par value shares on or about Monday, 1 July
Notes: ■ All times indicated above and below are local times in South Africa. ■ The dates and times indicated in the table above are subject to change. Any such changes will be released on SENS and
published in the press.
98 Workforce Integrated Report 2012
Appendix 3
Salient features of the memorandum of incorporation 1. The new Companies Act, 2008 (“the Companies Act” or “the new Companies Act”) became effective on 1 May 2011. The
Companies Act differs substantially from the Companies Act, 1973 (“the 1973 Companies Act”) and the memorandum and articles of association of companies need to be amended to bring it into harmony with the new Companies Act. In future a company will only have one constitutional document, being a memorandum of incorporation. In terms of the transitional provisions of the new Companies Act, a company has until 30 April 2013 to bring its memorandum and articles of association into harmony with the new Companies Act. In this transitional two year period, provisions of a company’s existing memorandum and articles of association that are in conflict with the provision of the new Companies Act, will, to the extent of the conflict, prevail, subject however to a few exceptions. A company that existed prior to the effective date of the new Companies Act may at any time within the two year transitional period file, without charge, an amendment to its memorandum and articles of association to bring it in harmony with the new Companies Act.
2. The new memorandum of incorporation of Workforce Holdings Limited (“Workforce” or “the company”) to be considered and if, approved, adopted at the annual general meeting to be held on 10 May 2013, is consistent with the provisions of the new Companies Act and is proposed to replace the existing memorandum and articles of association of Workforce.
3. The approach adopted in preparing the memorandum of incorporation, was to, as far as possible, retain the provisions of the existing articles of association of Workforce that are not inconsistent with the new Companies Act (and to the extent that there were material deviations from this approach, details of such deviations are set out below). The memorandum of incorporation was prepared with a view to such document serving as a manual to the officers of Workforce and others when dealing with the day to day corporate issues affecting the company, without the need to consult the Companies Act and Regulations to the Companies Act on each and every point.
4. The following matters contained in the proposed memorandum of incorporation should be noted in particular: 4.1 The share capital of Workforce is not affected by the new memorandum of incorporation and in particular its shares will remain
no par value shares [clause 4.1].4.2 The power to amend the authorisation (including increasing or decreasing the number) and classification of shares (including
determining rights, limitations, preferences and other terms), is subject to the approval of the shareholders by way of a special resolution [clause 4.1.5].
4.3 Subject to the provisions of the Companies Act and the JSE Listings Requirements where a special resolution is required for the approval of an issue of shares, the board may issue shares at any time, and/or grant options to subscribe for shares but only to the extent that such issue or option has been approved by an ordinary resolution of shareholders, either by way of a general or specific authority. Such authority shall endure for the period provided in the resolution in question but may be revoked by ordinary resolution at any time [clause 4.1.6].
4.3 The board may authorise the company to issue secured or unsecured debt instruments [e.g. debentures], but no special privileges associated with any such debt instruments, such as voting rights or right to appoint directors may be granted [clause 4.8].
4.4 The company may by special resolution and subject to the JSE Listings Requirements buy back its share capital, [clause 4.1.16].
4.5 The company may provide financial assistance to any person for the purpose of the subscription of any option, or any securities, issued or to be issued by the company, or for the purchase of any such securities, subject to a general or specific approval by special resolution [clause 7.7.4].
4.6 The quorum for a shareholders’ meeting to begin or for a matter to be considered, will be at least three shareholders entitled to attend and vote and present at the meeting, and in addition, a shareholders’ meeting may not begin until persons are present at the meeting to exercise, in aggregate, at least 25% of the voting rights, and a matter to be decided at a shareholders’ meeting may not begin to be considered unless sufficient persons are present at the meeting to exercise, in aggregate, at least 25% of all of the voting rights [clause 6.8].
4.7 Subject to the provisions of the JSE Listings Requirements, if determined by the board in its discretion, the company may conduct a shareholders’ meeting entirely by electronic communication or provide for participation in a meeting by electronic communication [clause 6.11.3].
4.8 The minimum number of directors will be four and the maximum twelve, and the composition of the board will be subject to the provisions of the Listings Requirements [clause 7.1.1].
4.9 There are no general qualifications prescribed by the company for a person to serve as a director in addition to the requirements of the Companies Act.
delivering innovative and diversified employer-centric solutions
99Workforce Integrated Report 2012
4.10 The appointment and retirement of directors by rotation are as provided for in [clause 7.2].
4.11 Subject to the provisions of the JSE Listings Requirements, the board may elect a chairman of their meetings and determine
the period for which he is to hold office. [clause 7.5.11].
4.12 A director authorised by the board may, at any time, call a meeting of the board, and must call a meeting of the board if
required to do so by at least two directors and in any other case any director may call a meeting if there is good reason to do
so [clauses 5.4.1 and 7.5.2].
4.13 A round robin board resolution will be as valid and effectual as if it had been passed at a meeting of the board duly called and
constituted, provided that each director who is able to receive notice, has received notice of the matter to be decided upon
[clause 7.5.5].
4.14 The board may determine the period of notice to be given of meetings of the board and may determine the means of giving
such notice [clause 7.5.7].
4.15 The quorum necessary for the transaction of the business of the directors will be a majority of the then appointed directors
and each director has one vote on a matter before the board [clause 7.5.8].
4.16 A majority of the votes cast in favour of a board resolution is sufficient to approve that resolution. In the case of a tied vote the
chairman will not have a second or casting vote and the resolution will fail [clauses 5.3.3 and 5.3.5].
4.17 The company may pay remuneration to the directors for their services as directors in accordance with a special resolution
approved by the shareholders within the previous two years [clause 7.7.1]. This approval is not required for the salaries of
executive directors.
4.18 Subject to any limitation placed on the company in this regard in terms of the Companies Act and/or the JSE Listings
Requirements, the company will be entitled to indemnify any director against any liability which such director may incur in
exercising his duties, to advance expenses to a director in the circumstances contemplated in section 78(4) of the Companies
Act, and to purchase insurance in this regard in accordance with section 78(7). The company is entitled to claim restitution
from a director or of a related company for any money paid directly or indirectly by the company to or on behalf of that
director in any manner inconsistent with section 75 [clause 7.8.3].
4.19 The business and affairs of the company will be managed by the board, which has the authority to exercise all of the
powers and perform any of the functions of the company, except to the extent that the Companies Act provides otherwise
[clause 7.4].
4.20 Subject to the provisions of the Companies Act, the board may, from time to time, at its discretion, raise or borrow or secure
the payment of any sum or sums of money for the purposes of the company [clause 7.6.1]. This provision is required in terms
of the JSE Listings Requirements.
4.21 The board may appoint any number of board committees and delegate to such committees any authority of the board [clause
7.10.1]. The board must appoint an audit committee and a social and ethics committee [clauses 7.11 and 7.12].
4.22 The board must appoint a company secretary [clause 7.13].
4.23 The company may make distributions from time to time, provided that it will comply with section 46 of the Companies Act
and the JSE Listings Requirements (to the extent applicable) in respect of each distribution to be made. A dividend may be
declared by the board or by the company in general meeting, provided that the company in general meeting will not be
entitled to declare a dividend greater that that recommended by the board [clause 8.1].
4.24 All unclaimed dividends or other distributions must be held by the company in trust until claimed, provided that any dividend
(but not any other distribution which shall be held by the company until lawfully claimed) remaining unclaimed for a period of
not less than three years from the date on which it became payable may be forfeited by resolution of the board for the benefit
of the company [clause 8.1.4].
4.25 Save for correcting errors substantiated as such from objective evidence or which are self-evident errors in the memorandum
of incorporation, which the board is empowered to do, all amendments of the memorandum of incorporation should be
effected by a special resolution of shareholders [clause 3.4.3].
4.26 In terms of the JSE Listings Requirements the company is prohibited from making rules [clause 3.3.9].
100 Workforce Integrated Report 2012
Notes
101Workforce Integrated Report 2012
Form of proxy
WORKFORCE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2006/018145/06)
Share Code: WKF ISIN: ZAE000087847
(“Workforce” or “the company” or “the group”)
FORM OF PROXY – for use by certificated and “own name” dematerialised shareholders only or ordinary shareholders who have dematerialised their
ordinary shares (“dematerialised ordinary shareholders”) and are registered with “own-name” registration at the annual general meeting of shareholders
to be held at 11 Wellington Street, Parktown on Friday, 10 May 2013 at 10h00 (“the annual general meeting”) and any adjournment thereof.
Dematerialised ordinary shareholders holding ordinary shares other than with “own-name” registration who wish to attend the annual general meeting
must inform their Central Securities Depository Participant (CSDP) or broker of their intention to attend the annual general meeting and request their
CSDP or broker to issue them with the relevant Letter of Representation to attend the annual general meeting in person or by proxy and vote. If they do
not wish to attend the annual general meeting in person or by proxy, they must provide their CSDP or broker with their voting instructions in terms of the
relevant custody agreement entered into between them and the CSDP or broker. These ordinary shareholders must not use this form of proxy.
Name of beneficial shareholder
Name of registered shareholder
of (address)
Telephone work ( ) Telephone home ( ) Cell:
being a shareholder/s of Workforce Holdings Limited, holding shares in the company hereby appoint:
1.
or, failing him/her,
2.
or, failing him/her,
3.
or failing him/her,
4. the chairman of the annual general meeting,
as my proxy to vote for me/us and on my/our behalf at the annual general meeting and at any adjournment thereof and to speak and act for me/us
and, on a poll, vote on my/our behalf.Number of shares
My/our proxy shall vote as follows: In favour of Against Abstain
To consider the presentation of the Annual Financial Statements for the year ended 31 December 2012
Ordinary resolution number 1: To re-elect John Macey as director
Ordinary resolution number 2: To re-elect Mark Anderson as director
Ordinary resolution number 3: Confirmation of auditor’s re-appointment
Ordinary resolution number 4: Appointment of John Macey to audit and risk committee
Ordinary resolution number 5: Appointment of Lulu Letlape to audit and risk committee
Ordinary resolution number 6: Appointment of Kyansambo Vundla to audit and risk committee
Ordinary resolution number 7: Placing of shares under the directors’ control
Ordinary resolution number 8: General authority to issue shares for cash
Ordinary resolution number 9: Authority to action
Special resolution number 1: Remuneration of non-executive directors
Special resolution number 2: Financial assistance to related and inter-related companies
Special resolution number 3: General authority to the company to repurchase shares
Special resolution number 4: Conversion of share capital
Special resolution number 5: Approval of memorandum of incorporation
(indicate instruction to proxy by way of a cross in the space provided above)
Unless otherwise instructed, my/our proxy may vote as he/she thinks fit.
Signed this day of 2013
Signature
Please read the notes on the reverse side hereof.
102 Workforce Integrated Report 2012
Notes to the form of proxy
1. This form or proxy should only be used by certificated shareholders or shareholders who have dematerialised their shares with own name
registration.
2. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space/s provided, with or
without deleting “the chairman of the meeting”, but any such deletion must be initialed by the shareholder. The person whose name stands first on
the form of proxy and who is present at the meeting will be entitled to act as proxy to those whose names follow. Should this space be left blank, the
proxy will be exercised by the chairman of the meeting.
3. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by that shareholder in the
appropriate space provided. Failure to comply with the above will be deemed to authorise the proxy to vote or to abstain from voting at the meeting
as he/she deemed fit in respect of all of the shareholder’s votes exercisable thereat. A shareholder or his/her proxy is not obliged to use all the votes
exercisable by the shareholder or his/her proxy, but the total of the votes cast and in respect of which abstention is recorded may not exceed the
total of the votes exercisable by the shareholder or by his/her proxy.
4. Dematerialised shareholders who wish to attend the meeting or to vote by way of proxy, must contact their CSDP or broker who will furnish them
with the necessary authority to attend the meeting or to be represented thereat by proxy. This must be done in terms of the agreement between the
member and his/her CSDP or broker.
5. Forms of proxy must be lodged at the company’s Transfer Secretaries, Link Market Services South Africa Proprietary Limited, 13th floor, Rennie
House, 19 Ameshoff Street, corner Biccard, Braamfontein so as to be received by not later than 10h00 on Wednesday, 8 May 2013.
6. The completion and lodging of this form of proxy shall not preclude the relevant shareholder from attending the meeting and speaking and voting in
person thereat to the exclusion of any proxy appointed in terms hereof.
7. Documentary evidence establishing the authority of the person signing this form of proxy in a representative or other legal capacity must be attached
to this form of proxy unless previously recorded by the Transfer Secretaries of the company or waived by the chairman of the meeting.
8. Any alteration or correction made to this form of proxy must be initialed by the signatory/ies.
9. The chairman shall be entitled to reject the authority of a person signing the form of proxy: ■ Under a power of attorney; ■ on behalf of a company; and ■ unless that person’s power of attorney or authority is deposited at the registered office of the Transfer Secretaries not less than 48 hours before
the meeting.
10. Where shares are held jointly: ■ any one holder may sign the form of proxy; and ■ the vote(s) of the senior ordinary shareholders (for that purpose seniority will be determined by the order in which the names of ordinary
shareholders appear in the company’s register of ordinary shareholders) who tenders a vote (whether in person or by proxy) will be accepted to
the exclusion of the vote(s) of the other joint shareholder(s).
11. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity are produced or have been
registered by the Transfer Secretaries.
12. On a show of hands, every shareholder present in person or represented by proxy shall have only one vote, irrespective of the number of shares he/
she holds or represents.
13. On a poll, every shareholder present in person or represented by proxy shall have one vote for every share held by such shareholder.
14. A resolution put to the vote shall be decided by a show of hands, unless, before or on the declaration of the results of the show of hands, a poll shall
be demanded by any person entitled to vote at the annual general meeting.
15. A deletion of any printed matter and the completion of any blank space need not be signed or initialled. Any alteration or correction must be signed
and not merely initialled.
Definitions
ABET Adult Basic Education and Training
B-BBEE Broad-based Black Economic Empowerment
Code King Code and Report on corporate governance for South Africa 2009 (King III)
Companies Act or the Act The South African Companies Act 2008 (Act 71 of 2008), as amended
EBITDA Earnings before interest, taxation, depreciation and amortisation
Group Workforce and its subsidiaries
JSE JSE Limited (Registration number 2005/022939/06) a company duly registered and incorporated with limited liability, licensed as an exchange in terms of the Securities Services Act No 36 of 2004
SENS The Securities Exchange News Service of the JSE
SETA Sector Education and Training Authority
Telebest Telebest Holdings Proprietary Limited
TES Temporary Employment Services
The Workforce Group The Workforce Group Proprietary Limited(Registration number 1999/006358/07) a company incorporated in terms of the company laws of South Africa, a wholly owned subsidiary of Workforce
Workforce orthe company
Workforce Holdings Limited(Registration number 2006/018145/06) a company incorporated in terms of the company laws of South Africa, and listed on the ALTx exchange of the JSE
Workforce Holdings LimitedRegistered offi ce
11 Wellington Road Parktown 2193
PO Box 11137 Johannesburg2000
www.workforce.co.za
Use your QR code reader on your smartphone
to scan this barcode. The link will take you directly
to http://www.workforce.co.za/reports
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