| Fri 30 Mar 2007, 12:46 | | PMV - Primeserv - Reviewed Results: Eighteen Month |
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PMV
PMV
PMV - Primeserv - Reviewed Results: Eighteen Months Ended 31 December 2006 And
Further Cautionary Announcement
PRIMESERV GROUP LIMITED
("Primeserv" or "the Group")
Incorporated in the Republic of South Africa
Registration number: 1997/013448/06
Share code: PMV & ISIN: ZAE000039277
www.primeserv.co.za
& e-mail: productivity@primeserv.co.za
REVIEWED RESULTS FOR THE EIGHTEEN MONTHS ENDED 31 DECEMBER 2006 AND FURTHER
CAUTIONARY ANNOUNCEMENT
INCOME STATEMENT for the eighteen months ended 31 December 2006
Reviewed Pro forma Audited
18 months 12 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2006 2006 2005
R `000 R `000 R `000
Revenue (1) 518 111 348 821 374 641
EBITDA 6 106 5 746 3 665
Depreciation (1 820) (1 225) (1 490)
Operating profit 4 286 4 521 2 175
Interest received 3 319 1 849 927
Interest paid (1 397) (787) (1 704)
Capital surplus on sale
of business - - 4 234
Share of impairment of goodwill
in associate - - (1 558)
Share of profit from
associate company 66 4 44
Net profit before exceptional
items 6 274 5 587 4 118
Exceptional items 537 (5) (1 500)
Net profit before taxation 6 811 5 582 2 618
Taxation (1 175) (865) 716
Net profit after taxation 5 636 4 717 3 334
Attributable to:
Ordinary shareholders 5 636 4 863 3 079
Minority shareholders - (146) 255
Attributable profit 5 636 4 717 3 334
Reconciliation of headline
earnings
Net profit attributable to
shareholders 5 636 4 863 3 079
After tax effect of profit on
sale of fixed assets (130) (132) (98)
Capital surplus on sale of business - - (4 234)
Share of impairment of goodwill
in associate - - 1 558
Headline earnings 5 506 4 731 305
Weighted average number of
shares (`000) 114 662 114 564 115 766
Diluted number of shares (`000) 116 382 116 384 117 179
Earnings per share (cents) 4,92 4,24 2,66
Diluted earnings per share (cents) 4,84 4,18 2,63
Headline earnings per share (cents) 4,80 4,13 0,26
Diluted headline earnings per
share (cents) 4,73 4,06 0,26
(1) Revenue note: Excludes revenue from Bathusi Staffing Services (Pty) Limited,
which was deconsolidated as a result of a BEE transaction and has since
been accounted for as an associate. The effect on the Outsourcing division
and the HR Solutions division was as follows:
Reviewed Pro forma Audited
18 months 12 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2006 2006 2005
R `000 R `000 R `000
Outsourcing 68 026 43 764 24 515
HR Solutions 1 624 1 227 161
69 650 44 991 24 676
SEGMENTAL ANALYSIS for the eighteen months ended 31 December 2006
Reviewed Pro forma Audited
18 months 12 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2006 2006 2005
R `000 R `000 R `000
Revenue (1)
Outsourcing 465 928 312 703 334 452
Computer Training Colleges 28 611 20 207 21 297
HR Solutions 23 572 15 911 18 892
518 111 348 821 374 641
Operating profit (2)
Outsourcing 19 730 16 282 17 966
Computer Training Colleges 4 281 3 488 3 931
HR Solutions (2 588) (1 485) (9 273)
Central Services (17 137) (13 764) (10 449)
4 286 4 521 2 175
Net profit before taxation
Outsourcing 20 971 16 706 17 975
Computer Training Colleges 4 283 3 490 3 928
HR Solutions (2 116) (1 399) (8 975)
Central Services (16 327) (13 215) (10 310)
6 811 5 582 2 618
(2) Operating profit note: Certain comparative values for June 2005 have been
restated to better reflect operational activities.
CASH FLOW STATEMENT for the eighteen months ended 31 December 2006
Reviewed Pro forma Audited
18 months 12 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2006 2006 2005
R `000 R `000 R `000
Cash flows from operating
activities (1 049) (3 927) 6 434
Cash flows from investing
activities (2 185) (749) (7)
Cash flows from financing
activities (120) 481 (369)
Net (decrease)/increase in cash
and cash equivalents (3 354) (4 195) 6 058
Cash and cash equivalents at
beginning of period 4 865 5 706 (1 193)
Cash and cash equivalents at
end of period 1 511 1 511 4 865
BALANCE SHEET as at 31 December 2006
Reviewed Pro forma Audited
31 Dec 31 Dec 30 Jun
2006 2006 2005
R `000 R `000 R `000
Assets
Non-current assets 17 944 17 944 19 042
Equipment and vehicles 3 117 3 117 2 412
Intangible assets 576 576 576
Investment and loan in associate 4 725 4 725 5 247
Long-term receivables 451 451 770
Deferred tax asset 9 075 9 075 10 037
Current assets 69 480 69 480 47 346
Inventories 741 741 979
Trade receivables 48 252 48 252 32 419
Other receivables 2 254 2 254 2 170
Taxation receivable 67 67 173
Bank balances and cash 18 166 18 166 11 605
Total assets 87 424 87 424 66 388
Equity and liabilities
Equity 43 592 43 592 39 397
Capital and reserves 43 531 43 531 39 336
Minority shareholders` interest 61 61 61
Non-current liabilities 262 262 382
Current liabilities 43 570 43 570 26 609
Trade and other payables 26 915 26 915 19 818
Short-term interest-bearing
borrowings 387 387 190
Taxation - - 51
Bank borrowings 16 268 16 268 6 550
Total equity and liabilities 87 424 87 424 66 388
Number of shares in issue at
end of period (`000) 114 417 114 417 114 859
Net asset value per share (cents) 38 38 34
STATEMENT OF CHANGES IN EQUITY for the eighteen months ended 31 December 2006
Reviewed Pro forma Audited
18 months 12 months 12 months
ended ended ended
31 Dec 31 Dec 30 Jun
2006 2006 2005
R `000 R `000 R `000
Balance at beginning of
the period 39 397 40 316 36 627
Repurchase of securities (144) (144) (374)
Shares allocated and issued by
share trust - - 4
Minority shareholders` interest - (146) 61
Net income attributable to
shareholders 5 636 4 863 3 079
Dividend paid (1 297) (1 297) -
Balance at end of the period 43 592 43 592 39 397
COMMENTARY
PROFILE
Primeserv is a holding company with specialised subsidiary and associate
operations that focus on the human resources (HR) needs of the South
African corporate, industrial and government sectors.
OVERVIEW
These results are for an eighteen-month period and consequently certain
comparatives with the audited results for the twelve months ended 30 June
2005 are not made in the commentary below. The Group recorded revenue of
R518 million for the eighteen months ended 31 December 2006. This excludes
revenue generated by Bathusi Staffing Services (Pty) Ltd ("Bathusi"), the
Group`s BEE associate company, of R69,7 million (see Revenue note 1 to the
Income Statement).
The Group produced EBITDA of R6,1 million and operating profit of R4,3 million
for the eighteen months ended 31 December 2006. In addition the Group
earned a net R1,9 million in interest as well as recovering R0,5 million in
proceeds from the disposal of an operation which had previously been
impaired. The Group generated a net profit before tax of R6,8 million and a
net profit attributable to shareholders of R5,6 million. Headline earnings
for the period were R5,5 million resulting in headline earnings per share
of 4,8 cents (2005: 0,26 cents per share). The Group`s results reflect a
marked improvement by its operations compared to the previous period.
The Group`s balance sheet continued to strengthen, and the Group remained in a
net ungeared position at 31 December 2006, albeit that trade receivables
increased by R15,8 million as a result of stronger sales in the Outsourcing
division in the last six months of the reporting period. Net asset value
per share increased by 12% to 38 cents per share (2005: 34 cents per
share).
All Group operations showed an improved overall performance when assessed on a
period-on-period basis. The Computer Training Colleges division has a
strong January to June bias, whereas the Outsourcing and HR Solutions
divisions historically perform better in the July to December half of the
year, which is reflected in the results as reported.
The Outsourcing division, with revenue of R465,9 million for the period
(excluding R68 million from Bathusi as per Revenue note 1 to the Income
Statement) underperformed for the first twelve months of the period;
however, this was addressed and an improved operating performance was
achieved in the last six months.
The logistics, warehousing and industrial flexible staffing unit performed well
and it continued to expand its national footprint. The white collar
professional staffing unit was buoyant, driven by growth in infrastructural
projects, but remains challenged by the national skills shortage.
The division`s mega-project wage bureau unit experienced delays to start dates
of certain key projects, such as Coega and Gautrain, resulting in costs
being incurred without the matching budgeted revenues, however, a positive
contribution from this unit is expected in 2008.
The Bathusi operation which specialises in the provision of outsourced staffing
to the petrochemical, mining and allied industries delivered a patchy
performance due in the main to delays in planned shutdowns and
restructuring at certain key clients. Performance nevertheless improved in
the last six months of the review period. The contribution to Group results
from the operations of Bathusi is reflected largely in cost recoveries and
the interest received line. Interest received includes an amount of
approximately R1,4 million in interest, which is regarded as an operational
recovery rather than interest earned on surplus funds.
The Outsourcing division continues to focus on revenue growth, margin
improvement and working capital management.
Notwithstanding the completion of certain corporate training contracts, the
Computer Training Colleges division delivered a solid performance for the
eighteen months, recording a net profit before tax of R4,3 million on
revenue of R28,6 million. This division is more suited to being analysed on
a calendar year basis, with a large portion of its net profit before tax
being achieved in the first half of the year. Strong cash flows were
produced for the period. College learner numbers increased on a January to
December year-on-year basis. Investment was made in upgrading of
facilities, opening of new colleges, course development and equipment.
Further investment is planned.
The human capital HR Solutions division, comprising the HR Consulting, Corporate
Training and Technical Training units further reduced its losses. No
meaningful loss is expected from the division in the year ahead. The
division continues to provide a strategic value to the Group`s integrated
HR Services offering.
POST-BALANCE SHEET EVENT AND FURTHER CAUTIONARY ANNOUNCEMENT
As previously announced the Group acquired the staff outsourcing business, Staff
Dynamix, with effect from 1 March 2007 subject to the fulfilment of
conditions precedent. Consequently the impact of the Staff Dynamix business
on the Group`s results for the current year will be for a ten-month period
only.
Shareholders are advised to continue to exercise caution until a further
announcement which includes the financial effects of this transaction is
made.
PROSPECTS
The Group will continue to pursue organic growth and strategic acquisitions and
expects improved operating results in the year ahead.
ACCOUNTING POLICIES
The results for the period have been prepared in accordance with the Group`s
accounting policies. These comply with International Financial Reporting
Standards ("IFRS"), which were adopted with effect from 1 July 2004. The
adoption of IFRS did not require any adjustments to opening reserves and no
prior period adjustments were required.
REVIEW BY INDEPENDENT AUDITORS
The results have been reviewed by the Group`s auditors, PKF (Jhb) Inc. Their
unqualified review report is available for inspection at Primeserv`s
registered address.
On behalf of the board
JM Judin M Abel R Sack
Chairman Chief Executive Officer Chief Financial Officer
30 March 2007
Bryanston
Dividend Declaration
Further to a 1 cent per share interim dividend paid in October 2006, notice is
hereby given that a final dividend of 0,5 cents per share was declared on
29 March 2007 payable to shareholders recorded in the register of the
company at the close of business on the record date as set out below. The
salient dates applicable to the dividend are as follows:
Last day to trade "CUM" final dividend Friday, 4 May 2007
First day to trade "EX" final dividend Monday, 7 May 2007
Record date Friday, 11 May 2007
Payment date Monday, 14 May 2007
No share certificates may be dematerialised or rematerialised between Monday, 7
May 2007 and Friday, 11 May 2007, both days inclusive.
Directors: JM Judin (Chairman)*, M Abel (Chief Executive Officer), Prof S Klein*
(American), AT McMillan (British),
C Nkosi*, DL Rose*, DC Seaton* * Non-executive
Company Secretary: R Sack
Registered address: Venture House, Peter Place Park, 54 Peter Place, Bryanston,
(PO Box 3008, Saxonwold 2132)
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited, 70
Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown 2107)
Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited, The Woodlands,
Woodlands Drive, Woodmead, Sandton 2146
Date: 30/03/2007 12:46:53 Produced by the JSE SENS Department.
