Good results of SD Worx during the first half of the year, despite the Corona crisis.

25 August 2020

Payroll and HR service provider SD Worx has announced its results for the first half of 2020. SD Worx is an essential partner for its customers in an economic climate that is really suffering due to the coronavirus crisis. By adopting a strong emphasis on cost control, SD Worx has succeeded in maintaining its results.
  • Turnover is down 5.9%, yet gross margin remains stable and normalised EBITDA rose by EUR 8 million to EUR 51.9 million
  • The net result stands at EUR 10.1 million as of 30 June 2020
  • Adjusted for goodwill amortizations, the net result for the first half of the year amounts to EUR 29 million

SD Worx achieved a first half-year consolidated turnover for 2020 of EUR 363.4, which is down 5.9% as compared to the first half of last year. The normalised EBITDA for the first six months of 2020 totalled EUR 51.9 million, which is EUR 8 million more than in the same period last year. This does not include the investments in SD Worx's digital transformation project.

SD Worx People Solutions, the international provider of payroll and HR outsourcing services, software and consultancy, saw its turnover rise from EUR 257.5 million in the first half of 2019 to EUR 266.2 million in 2020, an increase of 3.4%. The normalised EBITDA increased by 27.1%: from EUR 40.3 million in the first half of 2019 to EUR 51.2 million for the first six months of this year. This does not include investments in the group's digital transformation, amounting to EUR 4.3 million.

“SD Worx People Solutions saw its income rise slightly in the first half of the year, despite the difficult macroeconomic conditions. I would like to express my sincere thanks to all our co-workers for their enormous efforts in assisting our customers throughout the corona crisis. Thanks to our strong teams, we were able to guarantee the continuity of our business and respond very quickly to the new needs of our customers", says Kobe Verdonck, CEO of SD Worx People Solutions.

SD Worx People Solutions works with long-term contracts and recurring revenues. A business model which, supplemented by an extensive, loyal and diversified customer base, ensures that SD Worx can continue to grow in its traditional core business. However, turnover growth will probably continue to feel the pressure from the crisis in the second half of the year.

The impact of the crisis has been felt very keenly at SD Worx Staffing & Career Solutions, the division specialising in flexible employment. Turnover amounted to EUR 98.3 million during the first half of 2020. This represents a decrease of 23.8% as compared to the EUR 128.9 million in the first six months of last year. The normalised EBITDA amounts to EUR 1 million for the first half of this year. That is less than the same period last year, when it amounted to EUR 4 million.

“In order to cope with the strong headwinds in the temporary employment market, we first of all got to grips with costs", said Christophe Petit, CEO of SD Worx Staffing & Career Solutions. “As with any crisis, this crisis also offers opportunities. At SD Worx Staffing & Career Solutions, we are grabbing these opportunities with both hands in order to accelerate the integration of our business with our People Solutions. Some local offices will merge, so that the client can literally go to one address for the entire HR package and so we can offer an integrated HR offer.”

The unpredictability of the coronavirus makes it difficult to make estimates for the second half of the year in the flexible employment market. Nevertheless, SD Worx Staffing & Career Solutions is quietly confident in the long-term. Turnover has been on the up again since June and recurring EBITDA in June was also higher than last year.

Fully digital

Filip Dierckx, Chairman of the Board of Directors of SD Worx: “More than ever, the importance of digitalisation and automation has become evident during the lockdown. Our strategy remains focused on a customer-orientated approach and the digital transformation of HR in order to be able to guide our customers towards the future of work as real partners. We are continuing our digital transformation plan as it supports our strategy to continue to grow sustainably. The ambition to become Europe's number one in the long run remains unchanged, despite the more difficult times. We are investing further in robotic process automation and continue to digitise our services, in order to serve our customers better and faster. Our three acquisitions over the past few months have all been in the digital sphere. Pointlogic HR, a major supplier of innovative software for reward and management solutions and associated consulting services in the Netherlands and Belgium, Adessa Group, a European technology consulting firm offering HR software in the cloud and associated services and finally GlobePayroll, a French developer of multi-country cloud-based technology for HR and payroll, are all excellent additions to the group that will bring an even greater range of services to the market. This has not gone unnoticed: Nelson Hall, the analyst company, recently stated we were the Leader in Cloud HR Transformation.”

Further details about the net result

The net result of SD Worx after tax increased from EUR 2.7 million on 30 June 2019 to EUR 10.1 million on 30 June 2020. This can be explained by the following items:

  • An increase in the normalised EBITDA of EUR 8 million as a result of a focus on cost control and a strong operational performance by SD Worx People Solutions.
  • The non-recurring investments in the digital transformation project. This dropped from EUR 8.2 million last year to EUR 4.3 million this year. Conversely, there are growing recurring investments in software and digital solutions.
  • An increase in financial income of EUR 5.3 million, mainly due to the realisation of unrealised capital gains in the group's investments under discretionary management.

This increase in the net result is partially offset by:

  • An increase in one-off integration costs of EUR 1.1 million as a result of the accelerated integration of certain building of Staffing & Career Solutions with People Solutions.
  • An increase in depreciations on tangible and intangible assets of EUR 2.6 million, mainly related to the group's recent investments in software and other digital solutions.
  • An exceptional goodwill impairment of EUR 2.2 million relating to SD Worx Staffing & Career Solutions, due to the current pressure on the temporary employment market and uncertainty about the economic climate.
  • An increase in financial costs of EUR 1.2 million, largely explained by the issuance of the subordinated bond of EUR 80 million on 11 June 2019.

The net result adjusted for goodwill amortizations and impairments amounts to EUR 29 million as compared to EUR 19.5 million in the first half of 2019

“With a cash position of EUR 166.7 million as of 30 June 2020, committed outstanding credit lines and a stable cash flow as compared to last year, SD Worx is ready to face this crisis," said Filip Dierckx, Chairman of the SD Worx Board of Directors.

More details on SD Worx's financial figures for the first half of 2020 can be found in the presentation on the page for investor relations.