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KEL
KEL
KEL - Kelly Group - Unaudited Interim Results: six months ended 31 March 2007
KELLY GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1999/026249/06)
ISIN: ZAE000093373
Share Code: KEL
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2007
- Turnover grows by 27% to R965 million
- EBITDA up 48% to R54 million
- Operating profit increased by 58% to R44 million
- Cash generated by operations increased from R11 million to R43 million
ABRIDGED INCOME STATEMENT
R000 Unaudited Unaudited Audited
6 months 6 months 12 months
31 March 31 March 30 Sept
2007 2006 2006
TURNOVER 965 501 758 658 1 657 483
Earnings before interest, 54 474 36 932 98 172
taxation, depreciation and
amortisation (EBITDA)
Depreciation (10 113) (8 904) (19 926)
OPERATING PROFIT 44 361 28 028 78 246
Net interest paid 26 957 25 886 52 009
PROFIT BEFORE TAXATION 17 404 2 142 26 237
Taxation 6 956 937 11 480
PROFIT FOR THE PERIOD 10 448 1 205 14 757
Attributable to equity 8 929 992 14 026
holders
Attributable to minority 1 519 213 731
shareholders
Basic and fully diluted
Earnings per share (cents) 19.2 2.3 32.9
Headline earnings per share 19.2 2.4 33.0
(cents)
ABRIDGED CASH FLOW STATEMENT
R000 Unaudited Unaudited Audited
6 months 6 months 12 months
31 March 31 March 30 Sept
2007 2006 2006
Cash generated by operations 54 474 36 932 98 221
before working capital changes
Increase in working capital (11 074) (25 886) (5 632)
Cash generated by operations 43 400 11 046 92 589
Net interest paid (26 957) (25 886) (52 009)
Taxation paid (3 153) (8 088) (14 140)
Cash flows from operating 13 290 (22 928) 26 440
activities
Cash flows from investing (54 579) (23 266) (31 492)
activities
Cash flows from financing 47 594 4 303 7 856
activities
Net increase/(decrease) in 6 305 (41 891) 2 804
cash and cash equivalents
Net cash and cash equivalents 84 160 81 356 81 356
at the beginning of the period
Net cash and cash equivalents 90 465 39 465 84 160
at the end of the period
RECONCILIATION OF HEADLINE EARNINGS
R000 Unaudited Unaudited Audited
6 Months 6 Months 12 months
31 March 31 March 30 Sept
2007 2006 2006
Attributable profit for the 8 929 992 14 026
period
Loss on sale of property and 1 41 49
equipment
Headline earnings 8 930 1 034 14 075
Adjusted shareholders interest 16 134 14 496 28 854
paid after tax
Shareholder interest paid 22 724 20 416 40 639
Tax effect thereof (6 590) (5 920) (11 785)
Normalised headline earnings 25 064 15 530 42 929
(before shareholder interest)
Normalised earnings and
headline earnings per share
(cents) before shareholders`
interest
Normalised earnings per share 26.0 16.0 44.3
(cents)
Normalised headline earnings 26.0 16.0 44.3
per share (cents)
ABRIDGED BALANCE SHEET
R000 Unaudited Unaudited Audited
as at as at as at
31 March 31 March 30 Sept
2007 2006 2006
ASSETS
Non-current assets 202 856 170 388 165 389
Property and equipment 19 940 16 921 21 621
Intangible assets 135 477 101 804 93 847
Deferred taxation 47 440 51 663 49 921
Current assets 384 589 296 904 362 702
Inventories 130 124 135
Trade and other receivables * 226 627 191 638 221 299
Taxation - 4 578 1 117
Bank balances and cash 157 832 100 565 140 151
TOTAL ASSETS 587 446 467 292 528 091
EQUITY AND LIABILITIES
Capital and reserves (113 632) (168 484) (145 224)
Share capital 7 4 4
Share premium 55 790 32 324 32 324
Foreign currency translation 13 627 6 588 15 785
reserve
Share based payment reserve - 4 077 -
Accumulated loss (187 997) (214 037) (196 926)
(118 573) (171 044) (148 813)
Minority shareholders` 4 941 2 559 3 589
interest
Non-current liabilities 458 809 440 156 432 358
Non-current borrowings 112 025 115 699 108 297
Shareholders` loans 346 784 324 457 324 061
Current liabilities 242 269 195 621 240 957
Trade creditors and other 149 033 113 860 155 822
payables
Interest bearing borrowings 1 673 1 908 6 547
Accrual for associate benefits 23 992 18 753 22 597
Taxation 204 -
Bank overdraft 67 367 61 100 55 991
TOTAL EQUITY AND LIABILITIES 587 446 467 292 528 091
* Trade and other receivables
include the following assets
Trade receivables - staffing 205 252 175 869 207 311
Trade receivables - BPO and 5 347 5 398 4 959
other businesses
Prepayments 4 779 2 426 2 027
Loans to staff trust 5 119 379 601
Sundry debtors 6 130 7 565 6 401
226 627 191 638 221 299
RECONCILIATION OF SHARES ISSUED
000 31 March 31 March 30 Sept
2007 2006 2006
Opening balance 42 670 42 670 42 670
Shares issued - current 3 179 - -
shareholders
Shares issued - Frontline 706 - -
acquisition
Weighted average shares in 46 555 42 670 42 670
issue
Shares issued on listing 34 521 34 521 34 521
New shares issued 15 486 19 630 19 630
Adjusted number of weighted 96 562 96 821 96 821
average shares
ABRIDGED STATEMENT OF CHANGES IN EQUITY
R000 Share Share Accum- Foreign Share Minority Total
capital premium ulated currency based Share
loss trans- payment holders`
lation reserve interest
reserve
Balance as 4 32 324 (215 029) 7 157 4 077 2 377 (169 090)
at 1
October
2005
Foreign (569) (569)
currency
translation
Exchange (31) (31)
differences
on
translating
foreign
operations
Profit for 992 213 1 205
the 6
months to
March 2006
Balance as 4 32 324 (214 037) 6 588 4 077 2 559 (168 485)
at 1 April
2006
Foreign 9 197 9 197
currency
translation
Exchange 299 299
differences
on
translating
foreign
operations
Profit for 13 033 731 13 764
the 6
months to
September
2006
Transfer of 4 077 (4 077) -
share based
payment to
accumulated
loss
Balance as 4 32 324 (196 926) 15 785 - 3 589 (145 224)
at 1
October
2006
Shares 3 23 466 23 469
issued
Foreign (2 158) (2 158)
currency
translation
Exchange (167) (167)
differences
on
translating
foreign
operations
Profit for 8 929 1 519 10 448
the 6
months to
March 2007
Balance as 7 55 790 (187 997) 13 627 - 4 941 (113 632)
at 31 March
2007
SEGMENT REPORT
Unaudited Turnover EBITDA Operating profit
6 months ending 6 months ending 6 months ending
31 March 31 March 31 March
R000 2007 2006 2007 2006 2007 2006
Staffing 957 756 752 043 66 764 50 843 57 203 42 369
Business 7 745 6 615 1 506 48 1 391 (37)
Process
Outsourcing
(BPO)
Central costs - - (13 797) (13 959) (14 233) (14 304)
TOTAL 965 501 758 658 54 474 36 932 44 361 28 028
SEGMENT REPORT (cont`d)
Unaudited Total assets Total liabilities Depreciation
as at as at 6 months ending
31 March 31 March 31 March
R000 2007 2006 2007 2006 2007 2006
Staffing 530 925 420 922 647 919 593 848 (9 561) (8 474)
Business 11 883 5 858 14 304 12 128 (100) (23)
Process
Outsourcing
(BPO)
Central costs 44 637 40 512 38 855 29 801 (452) (407)
TOTAL 587 446 467 293 701 078 635 777 (10 113) (8 904)
COMMENTS
The group listed on the JSE on 2 April 2007 and the results therefore presented
here are prior to the listing.
The strong growth trends in the staffing services sector were sustained during
the review period, supporting a robust overall performance by the Kelly Group`s
businesses.
Turnover increased by 27% to R965 million, with the South African operations
growing by 31% and those in the USA by 16%.
Compared to the same period in the previous year, earnings before interest,
tax, depreciation and amortisation (EBITDA) increased by 48% to R54.5 million.
The EBITDA margin as a percentage of turnover improved from 4.87% to 5.64%,
reflecting productivity gains and improved management disciplines Earnings per
share (EPS) and headline earnings per share (HEPS) were both 19.2 cents for the
current period.
Prior to the listing of the group in April 2007, the group incurred interest on
its shareholder loans. Interest paid for the six months ended 31 March 2007
included shareholder interest of R22.7 million. (2006: R20.4 million). To
provide further information as to how the listing would have affected the
results being presented, EPS and HEPS have been recalculated adjusting for the
after tax effect of the shareholder interest and assuming that the new share
capital had been in place for the entire period under review. The recalculated
EPS and HEPS amounted to 26.0 cents per share (2006: 16.0 cents).
Core brand Kelly continued to do well, growing turnover by 41% and EBITDA by
63%. PAG, Kelly Industrial, InnStaff and Accountants On Call all posted
significant earnings increases. In the USA, M2 achieved a 27% growth in EBITDA
but is facing a slowdown in the second half of the year due to the completion
of a significant project.
Acquisitions
The assets of specialist financial recruitment company Frontline were acquired
with effect from 1 March 2007 to expand and strengthen the group`s existing
presence in the financial placement market.
Board of directors
Corrie Roodt, Thami Sokutu and Peet van der Walt joined the board as
independent non-executive directors. As set out in the prospectus relating to
Kelly`s listing, Vuyi Radebe, formerly an alternate director, and human
resource executive Elias Monage were appointed as executive directors.
Kholofelo Molewa was appointed as an alternate director in place of Marc Ber.
Post balance sheet events
The group listed on the JSE on 2 April 2007. On listing, 34 520 707 shares
were issued at R9.00 per share. The cash generated on the share issue was
applied to settle the shareholder loan to the value of R347.2 million.
Dividend
No dividend was declared during the period under review.
Basis of preparation and accounting policies
The interim financial results have been prepared in accordance with
International Financial Reporting Standards, in a manner consistent with the
prior year and in accordance with IAS 34.
Prospects
Management`s focus for the rest of the year will be on further optimising the
group`s existing businesses by driving efficiencies, engineering cost
structures down and enhancing customer and candidate acquisition channels.
Management is continually looking at new opportunities as well as adding value
to the existing businesses. Provided market conditions remain buoyant, as they
are generally expected to do, the group should continue to show strong growth
for the full year to September 2007.
For and on behalf of the board
MM Ngoasheng GJ Wilson
Chairman Chief executive
14 May 2007
Sandton
Registered office: 6 Protea Place, cnr Fredman Drive, Sandton
Transfer secretaries: Computershare Investor Services 2004 (Proprietary)
Limited
Sponsor: Rand Merchant Bank (A division of FirstRand Bank Limited)
Directors: MM Ngoasheng (chairman), MW McCulloch (deputy chairman), GJ Wilson
(chief executive), GP Baxter, VW Cuba, AC Dodd#*, J du Toit, JA Gnodde, RM
Hartmann, K Molewa*, ME Monage, VO Radebe, CJ Roodt, TM Sokutu and PJJ van der
Walt
# United Kingdom * alternate
Company secretary: K Fihrer
Website : www.kellygroup.co.za
Our website is regularly updated to supply you with the latest information on
the company. For further information contact: investor and media relations
Helen McKane on Tel: 011 728 4701, Fax: 011 728 2547, e-mail:
kellygroup@dpapr.com
Date: 14/05/2007 12:15:01 Produced by the JSE SENS Department.
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