Peoplein Limited (PPE) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the People Infrastructure Limited 2020 Full Year Results presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Declan Sherman, Managing Director of People Infrastructure Limited. Thank you, sir. Please go ahead.

Thanks very much, operator. Thanks, everyone, for joining our annual investor call presenting our 2020 results. I'll start off with bit of a summary, and there's some new information in the presentation that was released today. So I'll spend a bit more time talking about that new information in those specific slides and then conclude talking about the financials and what the outlook is for 2021. 2020 was definitely a year that threw some challenges our way and really tested the underlying resilience in our business, I think the impact of COVID-19 on the broader economy and on workforces, as that started to flow through our business and pretty much every business around April this year, it threw up a new set of challenges. But I'm pleased to report that looking back over the last few months, the business was quite resilient and continues to be very resilient. It was able to sustain those challenges that were thrown its way. And I think the full credit to strategically how we've grown the business in sectors that we've chosen to focus on and also the people that we've got in the business that are managing day-to-day to -- they had the capabilities to deal with those challenges as they were emerging throughout the year and to be able to respond to them and to keep maintaining the business and the profitability in the business and to work very effectively with our customers through -- for a while there what was a pretty challenging period. Just on -- starting off on Page 3. The key facts to call out is our revenue grew by 34% in the year to $374 million and our EBITDA grew by 49% to $26.4 million. We're very happy with these results, especially taking into consideration that, as I indicated, the challenges that were thrown our way. The business has substantially recovered to the levels of hours, if you like, of profitability that it was producing prior to the COVID-19 virus impacting our business. And whilst conditions are a little uncertain with ongoing shutdowns and outbreaks of the virus, how -- just looking at kind of how we're sitting at the moment, the business feels like it's in a pretty good place. Moving on to Page 4 and just talking about the investment highlights. I think this -- what we saw this year was a test of the business, and our strategy of focusing on niches where we do have a point of difference over our competitors and where we are offering a critical service to our clients were somewhat tested. And I think it was very much proven that it's the right strategy. It's very much -- we can very much say that service that we provide is a critical service. And even when you had this huge workforce dislocation over the course of the last few months, our business was still very much in demand, and the services we provide were still very much in demand from our clients. The business demonstrated strong growth throughout the year. Prior to April -- so prior to the virus impacting the broader economy, we're on track for a really strong year. And I think that was demonstrated in the first half results. In the trading update that we gave around March, it looked like it was going to be a very positive year with that organic growth that we've seen historically based on the sectors that we service and our positioning in those sectors, and just this continual trend of employers seeking a more flexible workforce has continued to impact our business very positively going into that period. We then had this period through April, May, June, where there was some dislocation, but the business has well and truly bounced back, and I'm pleased to advise that the second wave of the virus in Victoria and the associated restrictions on activity that have been put in place have had a much lesser impact on our business more recently compared to the first stage. And I think in that first stage, it was such a new thing, I think, a lot of businesses sort of froze their decision making, whereas very quickly businesses have adjusted. They've realized that life must go on even if we are going to have second wave or even a third wave and potentially rolling shutdowns, you still need to be able to manage businesses and to manage them remotely. And so our business has -- the impact has been quite different with respect to the second wave. The acquisition strategy has really continued to be on time, but we had the benefit this year of earnings from -- getting the full year benefit of earnings from acquisitions that we completed at the end of the 2019 financial year. Happy to report that prior to the virus impacting the business, all of those acquisitions were performing ahead of expectations. There -- there's -- over the last couple of months, there has been a negative impact on some of those businesses. But given the recovery in those businesses, we continue to be very positive around the impact those businesses are going to have on our broader business and the strategic value that they've provided to our business. The other highlights. The industry trends continue to be very positive. I won't focus on that. It's still very much the same theme that's been coming through. It is probably worth noting where you do have periods of economic volatility and uncertainty, which is what we've got at the moment, what we had at the JFC, you do get clients who prefer to use companies like ours even more so because they don't want to lock into long-term permanent employees. They prefer to have a more flexible workforce. And so in times like this, we can get a boost to our numbers given the increased uncertainty that are out there. And we're seeing that in some discussions we're having with clients in different parts of our business, in particular, in the blue-collar part of our business, we're seeing that coming through with clients. Strong cash flow generation. As a business, we're always very focused on cash flow. We had very little CapEx in our business. Our CapEx tends to be the working capital in that business that is involved to grow the business. I'll talk later about what's been happening in our cash flow over the last few years because I know it came up at our first half results, but pleased to report that we generated $27 million in operating cash flow for the year. There's a few things to adjust on that, which I'll talk about later, but it's a very strong result. And then finally, the growth in our earnings. You can see from the table on Page 5. Strong growth in our earnings. Our EBITDA margin increased from 6.4% to 7.1%. And our NPATA, which is what we use as measure of profitability, increased to $18.4 million, that's a 53% increase. And our NPATA per share increased to $0.205. I'll just point out to that calculation of NPATA per share as a proxy for EPS. We take the shares on issue at the end of the year. So we don't take the weighted average number of shares, which does penalize that number if we had taken the weighted average, given we did a couple of raise throughout the year, then that EPS would be higher than that. Because of the strong cash flow generation throughout the year and also as a result of the cap raise, we completed -- we finished the year in a negative net debt or a positive cash balance situation of approximately $10 million. Our return on equity was once again over 20%, which is a good result for us. Page 6, this is a slide that we're particularly proud of. It shows a couple of things. One, just the consistency in the growth in the earnings of the business and our track record now over a number of years and being able to grow the earnings per share, in particular, at over 20% per year, which is a tremendous result by the team to be able to generate this. The other thing it shows is that it's really the decisions that we make now -- well the decisions we made 2 years ago that are producing the results that we're seeing today and the decisions we're making today, which are going to produce the results that we're going to see in the next couple of years. So when you see the numbers that are coming through right now, it's really a reflection on some really good strategic and operating decisions that we've made a couple of years ago. And it's great to see and it reflects on some of those decisions, some of the things that we've spoken about, whether they be acquisitions or growing into new businesses or how we position the business, it's good to reflect on that, and to see -- in a year that was actually quite testing to see that those decisions have been tested, and they've come up quite positive. Later on, I'll talk about what we're doing at the moment and why we feel really good around what FY '21, '22 and '23 are going to look like just based on a lot of good activity that's happened in the business and some new business lines we're pursuing and some good new hires, et cetera. Page 7, People Infrastructure ecosystem. I think it's good to sort of -- I think for us, this enables us to show to you, the shareholders, how big the opportunity is for our business and how compelling it can be. So at our core, we started off as a staffing business and -- a staffing business across a number of different sectors, healthcare, community services, information technology and general staffing and specialist services. And as a business, our vision and purpose is very much around having an extraordinary impact on harnessing the power of people, and we have done that through staffing. And from staffing, we were able to grow the business into -- having that great capability around staffing into other services, being business services and operational services. And there's a lot of growth opportunities that we're seeing in these -- in business services and operational services. And it's very much based around the capability that we have in staffing, that's enabling us to grow into these categories. So in healthcare, we now have an RTO that provides training to nurses. In the community services sector, we provide the full workforce management model. So we're doing rostering, we're doing payroll, we're doing IR advice, we've got training in there as well as obviously providing staffing. So it's a real full suite of HR-related services. And in general staffing and specialist services, we're doing payrolling, industrial relations advisory as well as HR advisory in that business. So we've been able to grow from being a very capable, but somewhat vanilla staffing business into a slightly more complicated business services and staffing business. And from there, we've been able to grow again into operational services, where we take a service which is heavily dependent on staffing capabilities and we move our business in that direction. So we've done that with direct homecare, where we're providing caring services directly to individuals either who are elderly, so in the aged care sector or with disabilities in their homes. And that's really leveraging our capabilities around staffing, where we've already got a massive workforce that we manage in those categories and in business services, where we've got the ability to roster payroll and train our employees and then just taking a step further into homecare. And in IT, we've taken that into consulting. In general staffing and specialist services, we've taken that into contract planting and facilities maintenance. So the good news is when we think about our business and the range of opportunities, we've probably got this incredible base of capabilities around staffing and business services and enables us to continue to expand into areas, which are very much consistent with our core capabilities and enables us to leverage those core capabilities to generate even higher margins and a greater point of difference from that clients. When we look at our EBITDA margins and how they compare globally to staffing businesses around the world, that's one of the reasons why we are able to generate higher EBITDA margins. Slide 8, some more information on our customer base. And I think it's been -- it's really been proven over the course of the last 3 months how resilient our customer base is and how the setup of it just enables us to maintain profitability. So the first thing is just the diversity of that customer base. So the table on the right shows how diverse that is. We've got 2 clients that produce between 2% and 5% of our gross profit. We've got 6 clients that produce between 1% and 2% of our profit. And then the other circa 80% of our profit is produced by 3,000-plus clients, all contributing less than 1%. So a really diversified customer base. The average length of relationships for our top 20 customers is 8.5 years, which is a fairly long time. A number of those customers have been with us for 12, 13 years. And then those customers, they're big customers, they've been around for a long time. On average, our top 20 customers have been operating for over 50 years. So they're big businesses, very strong, they can handle economic volatility and they're not going away. Moving on to the next section and talking about what's happening division by division. So what I've tried to do here is to pretty specifically show what the impact of the virus was. I've taken -- shown what our numbers were leading into the virus, so towards the back end of March and then how that was impacted, and in most cases, has recovered coming back through July and into the early part of August. So I've mapped that against where we've got the data -- I've mapped that against the Seek job data. So you can sort of see, I guess, how that can be, in this case, in the health and community services division can be a lead indicator as to what's happening in our business. But it also shows that, in particular, in the -- let's say, in the community services business, how resilient that business is. So even when there was a significant drop in job adds relating to community services type work, our business was still operating, the demand for our services were still there, really reinforced the critical service that we provide. Now can we take -- was there eventually a hit in May? Yes, that came through and then the business had bounced back. And you can see with respect to the nursing business, immediately, there was impact. We were impacted somewhat later, but we bounced back quite substantially. It's by no means a perfect proxy, the Seek job data. It does have a lot of noise in that. So like any proxy, it's not going to perfectly provide a great -- a perfect indicator for our business, but it's an interesting point of comparison. And I should give credit to David McFadyen of Petra Capital for providing some of that data. Just -- and then just also just talking about the second wave in Victoria and how that impacted this part of the business. So it's been very different. So on the first -- our whole nursing business was significantly impacted, you can say, in that first wave, where government came in, partnered with private hospitals to basically buy their capacity off them and then sort of put their hospitals in hibernation, and weren't used for a couple of months there. And so demand for nurses dropped like we've never seen in history before. And hopefully, we'll never see it again, as they just kept this excess capacity off to the side. When the second wave has hit in Victoria, it hasn't been the same thing. Governments and private hospitals have realized they don't need to go to that extent. They have more capacity built into the system now, and they're better set up to kind of manage it. And we've actually seen somewhat of an increase in the numbers in our nursing business around Victoria as opposed to some substantial decrease in that business in that first wave. Page 11, just talking about some more information on the direct care business or homecare. So I've alluded to this in our half yearly this is a business we launched in the first half. And we're very excited about it, continue to be very excited about it. As an industry, it is growing. It's got support from government policy, from insurance companies and from private hospital, aged care operators as well as the NDIS for people with disabilities, really providing support to people in their homes, much cheaper way of doing it and very much, in a lot of cases, it's how people want to be cared for in their own homes as opposed to being in a residential facility. Business has done very good, very well. It's -- as I said, we hired someone in that business in the first half. They really started in February, and you can see how that annual plan under management has been growing quite significantly. So that by the end of June, we're up towards $3 million on an annualized basis. The gross profit margin we derive from this business is quite strong. It's upwards of 30%. So we expect this will start to be an important contributor to our overall business. Once again, simply leveraging the capabilities that we have already in the staffing sector as one of the biggest managers of -- workforce managers of carers in Australia. The IT division was having a strong year prior to the impact of COVID-19. It was impacted, in particular, the perm part of the business was more significantly impacted. It -- and it sort of lagged, so it's -- April was not too bad, but the revenue produced in April is a reflection of the work that we were doing in February and March. So it lagged. It didn't start to be significantly negatively impacted until May. And then it's been slower to come back, but the signs have been promising coming through July and August, looking at the weekly numbers coming through, watching the rebound in that business. But that's probably the one of the parts of our overall business. It still has a way to go. The contractor part of that business has been fairly resilient. It's got some client concentration in there. It's sort of a smaller part of our overall People Infrastructure business, but it's as well that's coming back as well. And then just moving on to general staffing and specialist services. So you can see the general staffing business impacted in April, bounced back quite quickly and is putting up good hours. It's heavily focused on Queensland, and it's been quite strong over the course of the last few weeks. In particular, that business pivoted more towards food processing around 12 or probably 18 months ago and that part of the business has been quite strong, in particular, over the last 3 months. With the specialist services businesses, the 4 businesses there being childcare staffing, payrolling, facilities maintenance and contract planting. Facilities maintenance is looking quite good for FY '21. I think that will be a record year for that business. It's got some fairly good contracts. So that's looking good. Once again, just leveraging our capabilities around staffing. The contract planting business has been fairly resilient. It has its ups and downs, but it's looking to be pretty steady at the moment going into FY '21. The childcare staffing and payrolling business were significantly impacted when they shut down its service -- the payrolling business' services. Hospitality largely as well as security firms, but the hospitality part of that business was significantly impacted in the first wave. It has bounced back. It's a Queensland-focused business. And so with the relaxation of restrictions coming out of that first wave, it's bounced back quite strongly. The childcare staffing business is also recovering. It's focused predominantly on New South Wales, Queensland and Victoria in that order. It's coming back. It still got a way ahead to fully come back, but it's certainly heading in the right direction. And overall, they are the -- those 2 businesses -- well, the childcare business, which is still coming back is a fairly small percentage of our overall business. Turning to the financials. So Page 15. As I pointed out, we were on track for a very strong year prior to the virus. We're impacted in April and May and then the business has since recovered. It's been a real test. Now the demand actually coming back to -- we -- I think sometimes people think that they are a discretionary spend on behalf of clients that don't quite fathom that we are an integral part of their business. And I think this has really been testament to the fact that yes, we are, we provide a critical service and we're a key part of our clients' business. And that's really underpinned the continual earnings that have come through in the last few months. With respect to just calling out JobKeeper and talking about that. So we -- a number of businesses in our group, not all of them, but a number of them qualified for JobKeeper support over the course of the last 3 months and will continue to qualify for that going through until the end of September. It's probably unlikely that we're going to continue to qualify for the ongoing JobKeeper support for any of our businesses after that. Our business is a bit different to other businesses out there in that we receive JobKeeper for our employees, which is similar to other businesses out there in the economy. But given we are a -- an on-hire business, we also receive JobKeeper for our employees in the field. So we've broken that up, the $9.25 million, $2 million is paid to us with respect to maintaining the level of employment that we had previous to the virus in our business. We sort of had made a decision that we're probably going to stand down a number of employees and even reduce our workforce somewhat. We reversed that decision when JobKeeper came through. So it certainly achieved its mission from that respect. I think from a profitability perspective, we would have made that decision to have -- reduce the hours of those employees. So I'm not sure if there was much of a benefit from that financially for us. With respect to the $7.25 million that we received from employees, in a number of cases, where over 50% of the cases is related to hours for employees. So it was just past -- this refers to where an employee wasn't working enough hours to actually qualify to get paid for the full JobKeeper amount, so we would pass on what we call the top-up amount, where the client wasn't paying us for them because they weren't doing the hours, so we would get the money from the government and would just go straight through to the employee. A number of other cases, we worked directly with clients and worked out how that benefit of JobKeeper would work and how that would flow through to the client. But you can see there that over 50% of it related to topping up hours for employees who did not work sufficient hours. And just finally, senior management, the Board, we took a reduction in salaries through April until the end of June. We're asking our employees to make certain sacrifices and we thought that was the right thing to do in the context of everything that was going on at that time. And I thank the senior management for that. I thank the Board for that as well. And I also thank all our employees that have had to make sacrifices over the course of the last few months. So the balance sheet. Our balance sheet is really strong at the moment. A net cash position of $10 million. I think one thing that we've done over the course of the last couple of years is put in place some protections around collections. And over the last few months, we've sort of increased once again some of the sophistication around our debtor collections. And that's really -- and this is one of the things where I was talking earlier about the decisions you made a couple of years ago and how they really pay off today. So we do have debtor insurance on most of the SMEs that we service. We also received personal guarantees from the directors of clients, where they are SMEs as well. So what that means is our average write-off has been -- in average, what we've written off over the last 3 years is a bit less than $150,000, which -- for a company which is paying averaging over $200 million in wages is a tremendous result. And I'd say it'll be up there in terms of how we compare to our peers in the industry. We have our results this year reflect an increase in provisioning. We're taking, I think, really quite a conservative view there and a prudent view to make sure that we're not going to see any surprises. But based on our track record, I think we are being conservative, but we've decided to take that provision up in this -- in FY '20. Then on to cash flow. So we generated $27 million in operating cash flow. It is worth pointing out there are some normalization adjustments there. The biggest being GST deferral. So as part of some of the measures to help companies through the last 3 months of financial year, the ATO allows you to defer GST. We took advantage of that. Hindsight, we obviously didn't need to do that. We'll be repaying that back in this half. So you can normalize that out. I also make mention there of the $1.5 million, which I discussed at the first half, which is really purchase price consideration for acquisitions running through our cash flow. The net result being normalized cash flow of $22.5 million. There had been some questions around our conversion of NPATA into cash flow. And I think it's good to sort of look how things have been going over the course of the last 3 years. We do have big swings in our working capital. And so as I pointed out at December 31, [indiscernible] payment week, will be coming on the second of January, which can happen around December 31, and that might be $3 million or $4 million, which can have an impact on what appears to be your cash flow for that half, but over time, that obviously catches up. And in a period where you don't have that strong growth coming through in the business which has been less growth more recently, then it's not absorbing as much working capital. So I think looking back over the last 3 years, you can see that we expect our cash flow to approximate -- our operating cash flow to approximate our NPATA over time. Our debtor days reduced from 41 to 34 as a result of the change in sector mix and more healthcare and IT as well as with more focus on debtor collection. And then with respect to our dividend, we declared a dividend of $0.045, it takes the total dividend to $0.085 for the year, consistent with 2019. It is a reduction in our payout ratio. We thought that was a prudent thing to do, just given some of the broader economic uncertainty that's out there at the moment. We think that will be a temporary reduction in our payout ratio. But given the uncertainty out there in the environment, it will be in place until we decide otherwise. So then just finally turning to FY '21 and how we're thinking about things. So look, there's clearly still volatility out there. And it's hard to know exactly what's going to happen with respect to the future waves of the virus and what restrictions might be put in place. And the positive news is our business hasn't been as impacted with the second wave down in Victoria. Victoria is a small part of our business, but those businesses that do focus down there haven't been as impacted in the second wave as they were in the first wave. And I think we've seen just how resilient our business has been and the nature of the relationships we've got with our clients has really been -- and the service we provide and the necessity that has been tested and really proven how critical it is our role in our clients' businesses, which is great. So we're thinking about how we continue to grow our business. And so there's a number of things we're doing to continue to drive the organic growth in the business. There's a number of new growth-oriented positions, that we've recently hired for a Director of Strategy and Talent to source new talent and teams into our business. So we're not always thinking about buying businesses, whether they're in staffing or business services or operational services, but can we buy talent, individuals or teams to get us into those sectors. We've employed a Director of IT to support our offering to clients and support our internal staff in terms of making sure they've got the right technology to be the most efficient provider in the market, which is exciting for us. And then for the homecare business, there's multiple positions we're recruiting for. Another key point is our remuneration system. We've been working intensively on this to make sure -- look, at the end of the day, we want to be the employer of choice out there in this industry. And so it's important to us that we have a remuneration system for our employees that's highly competitive and also very aligned to shareholders, so that to the extent that our people can help grow the value in the business, grow the share price in the business, they can share in that upside. And so we're excited around what that's going to mean for our business going forward. And in future results updates, we'll have more information around that. And finally, we've got a conservative balance sheet. So our assessment is that we've got approximately $80 million to $90 million that we could fund in acquisitions through a combination of using cash flow generated by the business as well as access to debt funding and still keep our debt-to-EBITDA ratio at less than 1.5x. And so we think we can -- and we think the acquisitions are out there to do. And obviously, that would significantly grow our EPS and enable us to significantly grow our business strategically over time, which is, once again, quite exciting for us, not just in staffing, but in business services and operational services. So that concludes the presentation. Once again, thanks to everyone for their support throughout the year. I had a lot of conversations with shareholders throughout the year in this -- pretty uncertain times out there and appreciate the support that they've shown to us. I'll now hand back to the operator for Q&A.

[Operator Instructions] Your first question today comes from the line of Will Macdiarmid from Ord Minnett.

Just on the direct care business. Obviously, that's an impressive looking chart. I just want to confirm that the annual plan under management is the annual revenue that would be generated for your business specifically? And then I guess also, it's slightly different to your other businesses. Can you just comment on what kind of -- how the dedicated cost base might look different from what you are currently doing at the moment? And I guess how that scales over time? I'm sort of aware that there might be some compliance in training and client services kind of resource you might need.

Yes, yes. So yes, just on your first question, Will, confirming, that is the revenue to our business, that plan. So our margin, which was 30% plus, it's applied to that. On the -- yes, on the second component, the way we've set this business up is that our existing staffing businesses, both in the nursing sector and in the caring sector, active service provider to our homecare business. So our homecare business becomes more of a customer-facing marketing business. And then as the clients come in, the rostering and the staff management gets done by, if it's for a nurse in Sydney by our network -- nursing agency business or carer in Brisbane or [indiscernible] staffing business. So the good news is that means that, one, we're leveraging some great capabilities there and access to an existing workforce; and two, we don't need to add headcount to our business and to -- they have a rostering team or have a candidate sourcing team or recruitment team. So at the moment, we've been able to keep that business, it's really got circa -- really 3 new employees, and we're leveraging from marketing -- leveraging our marketing department and other capabilities. So I think we can keep the overhead and the headcount quite reasonable just because of the way that it's been set up.

Okay. Great. So I mean, on the outlook, you mentioned recruiting multiple positions in homecare. Is that sort of sales staffing fundamentally? Is that really about growing your business?

Yes. Yes, exactly, marketing and salespeople.

Okay. Great. And then I guess, this is, I'm sure, partly responsible for it. But the chart showing the hours worked in community services had a noticeable pickup in July. How much of that was the growth out of direct care? And I guess, is there anything else in that you're starting to win market share or benefit in other ways?

It's -- yes. So part of that is the -- it's coming through from the direct care business. That's sort of the primary -- that's the main driver. I mean it has -- the core business has also had a pickup, that's one of the key drivers there.

Okay. And then on the IT business, you spoke about client concentration and it lagging just a little bit. How much is that related to the fact that Melbourne is still very much locked down. And so once restrictions are eased, you'll actually see that start to rebound a little bit more, reflecting on [indiscernible] investment or spending decisions by customers?

Yes, it's -- I mean it is -- no doubt it is -- Melbourne has been more impacted by virus. So -- but even looking at the numbers coming through in the last couple of weeks, once again in the perm part of the business, it reflects work that we've done 6 or 7 weeks ago, it's starting to come through. The work done 6 and 7 weeks ago is starting to come through. And just the commentary is even on the second wave with IT, with perm IT placements, people are saying -- like in the first wave, they said, "Oh, maybe let's put a break on this." They're not saying that this time. They're saying, "No, we need to keep going. We're just going to learn to cope in this new environment."

Okay. Great. And then just last one from me. Just in terms of that JobKeeper that's going to be paid out to the field employees, can you just give us an example of the benefit you worked out with the clients? And was that all sort of going in FY '20? I'm just -- I guess the question I'm asking is, if we get to FY '21, will that try to -- will your clients try to call that back in your charge rates, so you might see some margin compression? Or how should we think about that for the next year?

Let me answer the second question first, then I answer the first question. So in terms of this year, no, there won't be a change because we're nearly -- there's only another 4 or 5 weeks left to go with respect to getting JobKeeper this year. And that just hasn't -- that hasn't -- those discussions haven't happened. An example of how it's going to happen. Look, it's really -- it's really variable, and it's really on a client-by-client basis. So in some cases, we might have had an employee that worked 5 hours a fortnight that they qualified for JobKeeper. So client would pay us for those 5 hours. But for the other 30 hours which is required for JobKeeper, we would get that money from the government, and that money would just get passed through to them, to the employee. In other circumstances, the clients, we gave them -- give them the full benefit. So if we were getting JobKeeper for -- which equivalent to 40 hours for 2 weeks with respect to an employee, we just passed that all on to the client. And if we can get any benefit [indiscernible] straight to the client. There's a whole lot of things going on really across the business at that point in time. But there are 2 examples of how are things operated.

So I suppose, I guess, the direct benefit that your business got was around that $2 million, the rest of it was passed through in some way?

Yes, exactly.

Your next question comes from the line of David McFadyen from Petra.

Obviously, congratulations to you and the team on a very strong result in a very difficult period. Just a couple of questions from me. Given Will has already touched on direct care and JobKeeper. In terms of the EBITDA margin, obviously, it's ticking a little over 7% there. Are you able to sort of count -- sort of almost looking through what I imagine is a lot of noise and sort of point out one particular fact that has driven that. And presumably, we're going to be [ driven up ] sitting here in a year with a [ 7 handle ] on that number. I imagine it drops back underneath that level.

Yes. Yes. Look, I think that's right. It's hard to point to one particular thing. There was so much that went on during the year, right, including the business mix in our business, obviously changed substantially -- not substantially, but a fair bit during the year with the acquisition of Halcyon Knights, First Choice and Carestaff, which -- they're all higher EBITDA margin businesses. So they definitely were responsible for a fair piece of that improvement in the margins. And that small benefit from JobKeeper would have helped as well. They're probably the main drivers of that increase in margin. I expect it's going to come down to product mix going forward. So that's going to, I should say, also the dropoff in Payrolling during the last 3 months, that's a low-margin business. So that dropping off also would have led to higher EBITDA margin. Yes. So next year, it's sort of hard to say. I sort of always say to people we aspire to get to the high 6s on a -- when life's normal. So I think we still think we can generate EBITDA margins in the high 6s going forward.

Perfect. And then only other question from me is, obviously, previously, you've flagged that some of those core business lines, in particular, the healthcare and community services business, they've got an organic growth forecast or a sort of an indicative organic growth outlook of about 10% plus. Appreciate it's very, very difficult to talk to that. But if you sort of assume no major changes from here in terms of statewide lockdowns, anything like that, presumably for that core part of the business, that's not an outrageous figure to sort of be working off, is it the 10%?

No, no, I think that's okay.

[Operator Instructions] Your next question comes from the line of Wayne Sanderson from Sequoia Financial Group.

Congratulations on a very solid result. Just wondering on COVID itself, have you had any instances within your business where you have employees who have [indiscernible] there is a fair chance who would have had a [indiscernible] and how did you handle it?

Yes. So yes, you're right, [indiscernible] with the number of nurses and carers, in particular, they come into day-to-day contact with people that could be carrying the virus, we were incredibly concerned at the outset, but we had the right education, and we're following the right protocols and we're working very closely with our clients to make sure that our employees were benefiting from the same protective measures that were put in place with their own employees. Look, unfortunately, we had 1 employee that contracted the virus. And -- but they have -- and they've obviously had all the support going into it, they had all the benefit of all the preventative measures that everyone on-site had and then pass that -- they've had all the support that everyone gets out there. So we wish them a speedy recovery. But it's -- at the outset, it was just such a critical thing for us to make sure that every work site that our employees were working on made sure that they were actually complying with whatever regulations the state health department was putting out with respect to that site was being complied with and that's -- those steps made back then, I think, is one of the clear reasons why we haven't had perhaps more people having infected with the virus.

Right. Okay. And also just generally, is this always disruption going to be a major opportunity for you to win market share, lasting market shares and [indiscernible] entire businesses. Because I imagine they would have been struggling in time to how to handle those regulatory challenge, handle JobKeeper work hours, how that affects all the payrolling and payment systems, whereas you've obviously got the size and depth that it would have been challenging to you, but it would have been massively challenging for a small [indiscernible] business.

Yes. Look, I think so. I think like our business is -- the benefit in the last few months in some respects was we really focused in on our business, making it stronger. And it's -- there's so much good stuff happening in our business going to the heart of our business to make it stronger at the moment. It's really quite something. So virus or no virus. So it's kind of expecting the next couple of years, we would come out of it very strongly. Yes, without a doubt. Unfortunately or fortunately, some of our competitors have been massively impacted and don't have the resources to deal with it. So I think we're certainly going to be in a pretty strong position, I think, for the next -- certainly for the foreseeable future. And we hope to grow our market share over the course of '21 because we do have such a strong and stable footing across our business.

Right. And also just another follow-up question on that homecare. So does -- if you're putting [indiscernible] through the nursing business investment, does that mean when someone rings up and wants to move their appointment from 3:00 afternoon to 5:00 or something like that, you're getting involved in that [indiscernible] level because that sounds like it would be very inefficient to do it?

Yes. Look, that's the nature of the business way. So yes, unfortunately. We are -- we're on the front line dealing with customers and meeting those needs. But I'd say, your ability to meet those needs, right, is what wins you the business. And because we've got capabilities around managing a really flexible workforce, being able to respond to those demands, like we do already all day every day. Hospital needs a nurse in an hour, we can get them a nurse in an hour. If someone needs a carer, we can get them a carer. So we've already got that infrastructure in our business. We've got the niche. We've got 24-hour desk and we -- any time of day, we can bring people in for anyone. So we've got all that and that's our point of difference. So being able to roll that into the homecare business immediately gives us a point of difference. It's a new market for us, but we're already beating our competitors who don't have the same infrastructure setup to service their customers. So yes, that is one of the challenges, but that's sort of what makes us excited because we think we can do it better than anyone else in the space.

Right. [indiscernible], do you do security guards?

No. We do, do some payrolling of security guards, but we don't do any recruiting or placing of security guards.

[indiscernible]

Yes.

[Operator Instructions] There are no further questions from the phone at this time. I would like to hand the conference back to today's presenters. Please continue.

Yes. Once again, thanks, everyone. I know it's been a difficult year. Thanks for your support throughout the year. And we're looking forward to FY '21. So look, if anyone's got any other questions or things to talk about, please don't hesitate to give me a call. Thanks very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.