| Thu 20 Sep 2007, 17:00 | | PMV - Primeserv - Unaudited Results For The Six Mo |
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PMV
PMV
PMV - Primeserv - Unaudited Results For The Six Months Ended 30 June 2007
and dividend declaration
PRIMESERV GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number: 1997/013448/06
Share code: PMV
ISIN: ZAE000039277
("Primeserv" or "the Group")
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
INCOME STATEMENT
for the six months ended 30 June 2007
Unaudited Pro forma Audited
6 months 6 months 18 months
ended ended ended
30 Jun 30 Jun 31 Dec
2007 2006 2006
R`000 R`000 R`000
Revenue(1) 215 232 167 430 518 111
EBITDA 7 105 2 997 6 106
Depreciation (850) (624) (1 820)
Operating profit 6 255 2 373 4 286
Interest received 205 459 3 319
Interest paid (932) (421) (1 397)
IFRS 3 adjustment (143) - -
Share of profit/(loss) from
associate company 45 (49) 66
Net profit before exceptional items 5 430 2 362 6 274
Exceptional items - (5) 537
Net profit before taxation 5 430 2 357 6 811
Taxation (1 114) (700) (1 175)
Net profit after taxation 4 316 1 657 5 636
Attributable to:
Ordinary shareholders 4 316 1 657 5 636
Minority shareholders - 139 -
Attributable profit 4 316 1 796 5 636
Reconciliation of headline earnings
Net profit attributable to shareholders 4 316 1 796 5 636
After-tax effect of profit on sale
of assets (7) (161) (130)
Headline earnings 4 309 1 635 5 506
Weighted average number of
shares (`000) 114 417 114 846 114 662
Diluted weighted average number of
shares (`000) 115 905 116 508 116 382
Earnings per share (cents) 3,77 1,56 4,92
Diluted earnings per share (cents) 3,72 1,54 4,84
Headline earnings per share (cents) 3,77 1,42 4,80
Diluted headline earnings
per share (cents) 3,72 1,40 4,73
(1) Revenue note: Excludes revenue from Bathusi Staffing Services (Pty) Limited
("Bathusi") 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:
Unaudited Pro forma Audited
6 months 6 months 18 months
ended ended ended
30 Jun 30 Jun 31 Dec
2007 2006 2006
R`000 R`000 R`000
Outsourcing 24 665 18 025 68 026
HR Solutions 559 739 1 624
25 224 18 764 69 650
SEGMENTAL ANALYSIS
for the six months ended 30 June 2007
Unaudited Pro forma Audited
6 months 6 months 18 months
ended ended ended
30 Jun 30 Jun 31 Dec
2007 2006 2006
R`000 R`000 R`000
Revenue
Outsourcing 194 607 147 981 465 928
Computer Training Colleges 13 244 11 441 28 611
HR Solutions 7 381 8 008 23 572
215 232 167 430 518 111
Operating profit(1)
Outsourcing 9 250 8 364 19 730
Computer Training Colleges 3 133 3 210 4 281
HR Solutions (174) (1 990) (2 588)
Central Services (5 954) (7 211) (17 137)
6 255 2 373 4 286
Net profit before taxation
Outsourcing 7 168 5 251 20 971
Computer Training Colleges 3 133 3 170 4 283
HR Solutions (183) (1 358) (2 116)
Central Services (4 688) (4 706) (16 327)
5 430 2 357 6 811
(1) Operating profit note: Certain comparative values for June 2006 have been
restated to better reflect operational activities.
CASH FLOW STATEMENT
for the six months ended 30 June 2007
Unaudited Pro forma Audited
6 months 6 months 18 months
ended ended ended
30 Jun 30 Jun 31 Dec
2007 2006 2006
R`000 R`000 R`000
Cash flows from operating activities 558 705 (1 049)
Cash flows from investing activities (1 009) 317 (2 185)
Cash flows from acquisition of business (790) - -
Cash flows applied as working capital
to Staff Dynamix (2 083) - -
Cash flows from financing activities 451 (299) (120)
Net (decrease)/increase in cash and
cash equivalents (2 873) 723 (3 354)
Cash and cash equivalents at
beginning of period 1 511 5 706 4 865
Cash and cash equivalents at
end of period (1 362) 6 429 1 511
BALANCE SHEET
as at 30 June 2007
Unaudited Pro forma Audited
30 Jun 30 Jun 31 Dec
2007 2006 2006
R`000 R`000 R`000
Assets
Non-current assets 24 152 19 318 17 944
Equipment and vehicles 4 594 2 435 3 117
Intangible assets 6 049 576 576
Investment and loan in associate 4 206 6 938 4 725
Long-term receivables - - 451
Deferred tax asset 9 303 9 369 9 075
Current assets 89 566 49 356 69 480
Inventories 1 485 714 741
Trade receivables 60 021 34 443 48 252
Other receivables 1 967 2 722 2 254
Taxation receivable 101 173 67
Bank balances and cash 25 992 11 304 18 166
Total assets 113 718 68 674 87 424
Equity and liabilities
Equity 47 384 41 831 43 592
Capital and reserves 47 323 41 763 43 531
Minority interest 61 68 61
Non-current liabilities 83 444 262
Current liabilities 66 251 26 399 43 570
Trade and other payables 32 160 21 292 26 915
Short-term interest-bearing
borrowings* 5 860 386 387
Taxation 1 264 232 -
Bank borrowings 26 967 4 489 16 268
Total equity and liabilities 113 718 68 674 87 424
Number of shares in issue at
end of period (`000) 115 499 114 417 114 417
Net asset value per share (cents) 41 37 38
* Includes an amount of R5,473 million as determined in terms of IFRS 3 and
deemed as due to the vendor of Staff Dynamix.
STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2007
Unaudited Pro forma Audited
6 months 6 months 18 months
ended ended ended
30 Jun 30 Jun 31 Dec
2007 2006 2006
R`000 R`000 R`000
Balance at beginning of the period 43 592 40 317 39 397
Repurchase of securities - (143) (144)
Shares allocated and issued
by share trust 136 - -
Minority interest - (139) -
Net profit attributable to
Shareholders 4 316 1 796 5 636
Dividend paid (660) - (1 297)
Balance at end of the period 47 384 41 831 43 592
COMMENTARY
Profile
Primeserv is an investment holding company whose products and services meet the
human resources (HR) needs of the South African corporate, industrial and
government sectors and are provided through its specialised HR Solutions,
Computer Training Colleges and Outsourcing divisions. These offerings
incorporate HR solutions, consulting, skills training centres, corporate and
vocational training programmes, as well as resourcing and flexible staffing
services, including labour outsourcing and wage bureau operations.
Overview
Primeserv changed its financial year-end to 31 December in the prior financial
period. Consequently, the comparative results for the six months ended 30 June
2006 are pro forma.
Consolidated revenue increased by 29% from R167,4 million for the pro forma six
months ended 30 June 2006 to R215,2 million for the current review period, with
EBITDA increasing by 137% from R3 million to R7,1 million. Operating profit rose
by 164% from R2,4 million to R6,3 million, as a result of an overall improvement
in the Group`s operations. Net profit before tax increased by 130% from R2,4
million to R5,4 million. Headline earnings per share increased by 165% from 1,42
cents per share to 3,77 cents per share.
The requirements of IFRS 3 in regard to the recently acquired flexible staffing
business, Staff Dynamix, have resulted in an increase in the balance sheet
amounts for both goodwill and short-term interest-bearing borrowings, which were
both adjusted by R5,47 million. In addition, there is an IFRS 3-based deemed
interest charge of R143 000 included in the results.
The balance sheet continues to strengthen albeit that the Group has seen an
increase in bank borrowings and trade payables. A large portion of the increases
are due to the Staff Dynamix acquisition as well as the fact that various
provisions are being increased in line with pay-out expectations for December
relating to contractor bonuses and leave pay. Net asset value has increased by
11% to 41 cents per share (pro forma 2006: 37 cents per share).
The Group`s operations continued to generate positive cash flows. The Group has
invested substantially in funding the working capital requirements of Staff
Dynamix. The benefits of this acquisition are anticipated to take effect from
the latter part of this financial year.
Trade receivables increased from R34,4 million to R60 million as a result of the
Staff Dynamix acquisition as well as a consequence of slightly weaker debtors
days in the Outsourcing division, due primarily to delays in finalising the
implementation of the Group`s new payroll and accounting system. This should be
resolved in the second half of the year.
The Outsourcing division, specialising in flexible staffing solutions to
business and heavy industry, increased revenue by 32% from R148 million to
R194,7 million, resulting in an improvement in operating profit of 11% from R8,4
million to R9,3 million. The logistics, warehousing and industrial flexible
staffing units continued to perform well, while the white collar professional
staffing unit remains affected by the dearth of suitably qualified and
experienced contractors.
The division, together with the Group`s other HR Services divisions, continues
to seek innovative solutions that address the constraints brought about by the
national skills shortage.
Historically, the Outsourcing division has a stronger second six months and
remains focussed on revenue growth, margin improvement and working capital
management.
The Group`s BEE associate, Bathusi, which specialises in the outsourcing of
staffing solutions to the petrochemical, mining and allied industries, grew
revenue by 37% to R24,7 million from R18 million.
The Computer Training Colleges division performed solidly for the first six
months of the year. Revenue increased by 16% to R13,2 million for the review
period (pro forma 2006: R11,4 million). Operating profit of R3,1 million
remained flat due primarily to the development of new products and courses as
well as the current programme of upgrading the infrastructure at a number of
colleges.
The human capital HR Solutions division, comprising the HR Consulting and
Technical Training units, continued to improve its performance and, in line with
expectations, delivered a small operating loss of R0,17 million compared to the
pro forma R1,99 million loss for the prior period. The division is of strategic
value to the Group and, in particular, to the delivery of its integrated HR
services model.
Directorate
Subsequent to the period-end, Connie Nkosi resigned to pursue her interests in
the mining sector, and the board thanks her for her contribution.
Prospects
Improved operating results are anticipated for the second half of the year.
Accounting Policies
The results for the period have been prepared in accordance with the Group`s
accounting policies which are consistent with the previous period. These comply
with International Financial Reporting Standards ("IFRS"), which were adopted
with effect from 1 July 2004 and also comply with IAS 34 - Interim Financial
Reporting. The adoption of IFRS did not require any adjustments to opening
reserves and no prior period adjustments were required. Certain adjustments have
been made to the results arising out of the acquisition of the business of Staff
Dynamix and which are required in terms of IFRS 3. These adjustments are
indicated on the face of the income statement as well as in notes to the results
and in the commentary above.
On behalf of the board
JM Judin M Abel R Sack
Chairman Chief Executive Officer Chief Financial Officer
20 September 2007
Bryanston
Dividend Declaration
Notice is hereby given that Primeserv has declared an interim dividend (dividend
declaration number 5) for the six months ended 30 June 2007 of 0,5 cents per
ordinary share.
The salient dates applicable to the interim dividend are as follows:
Last day to trade "CUM" dividend Friday, 5 October 2007
First day to trade "EX" dividend Monday, 8 October 2007
Record date Friday, 12 October 2007
Payment date Monday, 15 October 2007
No share certificates may be dematerialised or rematerialised between Monday, 8
October 2007 and Friday, 12 October 2007, both days inclusive.
Directors: JM Judin (Chairman)*, M Abel (Chief Executive Officer), Prof S Klein*
(American), AT McMillan (British), 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
www.primeserv.co.za
e-mail: productivity@primeserv.co.za
Date: 20/09/2007 17:00:01 Produced by the JSE SENS Department.
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