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SD Worx marks good growth results in first half of 2023

financial report

SD Worx, the leading European HR solutions provider, reports good results for the first half of the year. It achieved a consolidated revenue of EUR 524.6 million, which is 10.4% more than the first half of 2022 (EUR 475.3 million). The consolidated normalised EBITDA grew by a quarter (26.1%) from EUR 70.2 million in the first half of last year to EUR 88.5 million during the first six months of this year. The consolidated net result amounted to EUR 42.5 million.

    Continuing sustainable European growth

    On a like-for-like basis, adjusted for the acquisitions in 2022, the revenue rose 8.8% overall. Within Payroll & Reward, the revenue grew organically by 13.9%; the revenue from Workforce Management services and software increased by 16.6% compared to the first half of last year. The Staffing & Recruiting division felt the impact of the difficult market conditions in the staffing sector and recorded a decline in revenue of -6.8%. However, the gross margin of staffing & recruitment increased by 2.4%.

    Filip Dierckx, Chairman of the board of directors at SD Worx: "We are very pleased with the results of Payroll & Reward and Workforce Management. Despite the more difficult market conditions, we continue to grow at double-digit rates. The staffing & recruitment market in general continues to face challenges and SD Worx does not escape them either. However, the good news is that our gross margin and EBITDA are growing in this market too."

    The consolidated net result is EUR 42.5 million. This good result is admittedly lower than the EUR 53.7 million from the first half of 2022. However, that result was strongly influenced by the capital gain of EUR 23.6 million on the sale of real estate by SD Worx to parent company WorxInvest. 

    "We are continuing to build on our European growth strategy and are committed to reporting double-digit growth results in the second half of the year as well. With CVC as a minority shareholder of SD Worx, we are bringing knowledge and experience on board to further accelerate our growth. We will continue to invest in our technology, services and employees to help our customers, wherever they are in Europe, with their payroll and HR and build long-term sustainable relationships with them. We absolutely believe that we can make a difference with our local expertise anywhere in Europe. We are always close to our customers and can also help them internationally thanks to our presence throughout Europe," says Kobe Verdonck, CEO of SD Worx.



      Results per segment

      Organic like-for-like revenues per segment

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          Actual reported results per segment

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            Financial Results

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              Further details about the net result

              Non-recurring cost

              Restructuring cost and integration costs amount to EUR 3.2 million and mainly relate to the integration and rebranding of Aditro, HRPRO, GlobePayroll, Adessa, Intelligo and Integhro into SD Worx. Acquisition and transactions costs have increased by EUR 0.2 million and are mainly related to earn-out remeasurements.

              The cost of non-committed share plans for the group management is spread evenly over a vesting period of three years. The decrease of EUR 1.4 million compared to June 30th last year is mainly related to the employee share purchase plan issued in the first half of the financial year 2022. The employee share purchase plan provided the unique opportunity to every single employee of the group to acquire share certificates with a limited discount to its share price. As the employee share purchase programme, in contrast to the non-committed share plans for the group management, did not include a service requirement, the full cost of the plan was recognized upon issuance.

              The profit from business and asset disposal in prior year mainly results from the sale of the shares of SD Worx Real Estate NV to WorxInvest, SD Worx’ majority shareholder. SD Worx Real Estate NV is the owner of office spaces in Belgium used by the group and third parties. SD Worx subsequently entered into a leaseback agreement for most of the transferred office spaces.

              It should also be mentioned that in prior year’s interim financial statements the international celebrations of the 75-year anniversary of SD Worx (EUR 0.8 million) have been normalized as other non-operating expenses.

              Depreciations and amortizations

              Depreciations and amortizations on tangible and intangible assets of EUR 29.2 million have been recorded per 30 June 2023 and are mainly related to the group's important and continuing investments in digital solutions and the refurbishment of office spaces (EUR 13.7 million), the depreciation of leased right-of-use assets such as rented buildings and company cars (EUR 12.5 million) and the amortization of intangible assets acquired in business combinations (EUR 3.1 million). The increase in depreciations and amortizations are largely a consequence of increased investments in digital solutions and the amortization of acquired intangible assets from business combinations, such as brand names and customer relationships.

              Financial results

              The financial result per 30 June 2023 amounts to EUR +1.3 million, mainly resulting from unrealized foreign currency gains on outstanding EUR payables in subsidiaries with a different reporting currency (EUR 4.9 million). Financial expenses consist of the interest costs of the subordinated EUR 80 million bond issued in June 2019, the committed EUR 250.0 million revolving credit facility, financial charges on lease liabilities and the interest accruing on the unpaid portion of the dividend, sharebuyback and capital decrease debt towards SD Worx’ majority shareholder WorxInvest. Please do note that the full amount of shareholder payables towards WorxInvest have been repaid in June 2023. 


              Tax charges increased by EUR 10.6 million from EUR 1.9 million as per June 30, 2022 to EUR 12.5 million in the current financial period. The tax rate in prior year was strongly impacted by the tax exempted capital gain realized on the sale of the shares of SD Worx Real Estate to WorxInvest and by deferred tax assets recognized on fiscal losses carried forward in view of the positive results of the group.

              Net result

              The net result amounts to EUR 42.5 million, which is EUR 11.2 million lower compared with prior year’s interim financial period which was positively impacted by significant one-off effects such as the divestment of the real estate portfolio and the recognition of deferred tax assets. Adjusted for prior year’s one-effects, we can state with confidence that the net result is at a record level per June 30, 2023. The main drivers to mention behind these strong results are the solid and continued growth in operational performance, the positive impact of EUR 3.3 million customer fund income on the group’s operating profit and the strategic buy & build policy of the group.

              More details can be found in the report below.