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KEL
KEL
KEL - Kelly Group - Audited results and cash dividend declaration for
the year ended 30 September 2008
KELLY GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1999/026249/06)
Share code: KEL
ISIN: ZAE000093373
("Kelly Group" or "the company" or "the group")
AUDITED RESULTS AND CASH DIVIDEND DECLARATION FOR THE YEAR ENDED 30 SEPTEMBER
2008
* HEPS increased 30% from 78.46 cents to 102.30 cents
* Operating profit increased by 28% to R146.9m
* EBITDA grew by 24% to R158.5m
* Cash flow from operating activities improved by R42.1m to R121.0m
* Operating margin improved from 5.8% to 6.6%
* Cash dividend of 36 cents declared, up 20% on 2007
COMMENTS
Performance overview
Despite the tightening of the local economy from the beginning of the second
quarter, the Kelly Group succeeded in increasing operating profit (EBIT) by 28%
to R146.9 million and EBITDA by 24% to R158.5 million.
Overall the South African operations` revenue grew by 14.9% for the full year
although growth in the second half was slower at 12.5%. Full-year EBIT growth
for the South African operations was 33.2%, with growth in the second half still
a very strong 29% but lower than the 39.6% achieved in the first half. The
robust EBIT performance is attributable to further productivity gains,
technological advances, expansion into new market sectors and costs savings
reflected in the improvement of the operating margin to 6.58% from 5.76% last
year and 4.72% the year before that.
The group`s flagship brand Kelly (including its joint ventures) managed to show
18% growth in EBIT. The overall slowdown in the economy is however reflected in
the fact that the 22% growth which Kelly achieved in the first half of the
financial year slowed to 15% in the second half of the year. The rest of the
brands showed strong growth in EBIT with the exception of Kelly Industrial which
only showed 12% growth as a result of the high bad debts written off during the
year. If it had not been for the write off, Kelly Industrial would have shown
an increase in EBIT of at least 70%.
The US operation traded under extremely difficult conditions and produced an
EBITDA of US$2.843 million, almost identical to the figure produced last year.
However, depreciation and loss on disposal of property and equipment meant that
EBIT declined by 5% to US$2.383 million. However, the slightly weaker rand
reduced the decline to just under 2%.
Share capital and premium
During the year the group repurchased 7 125 073 shares for an aggregate price of
R59 million. These shares are accounted for as treasury shares and 3 882 920
shares are held for qualifying employees in the group in terms of the group`s
share incentive schemes and 3 242 153 are held by a subsidiary of the company in
order to take advantage of investment opportunities that may arise in future.
Post balance sheet event
The group acquired the total issued share capital of Torque Holdings (Pty)
Limited on 1 October 2008. The maximum purchase price payable is R37.85 million
and is payable over three years provided Torque IT achieves certain free cash
flows. The purchase price is payable in a combination of cash and shares, of
which a maximum of R22 million will be paid in cash by January 2009.
Basis of preparation and accounting policies
The summarised consolidated audited results have been prepared using accounting
policies compliant with International Financial Reporting Standards (IFRS) and
in accordance with IAS 34. The accounting policies are consistent with the
prior year except for the early adoption of IAS 27: Consolidated and Separate
Financial Statements. The group`s independent auditors have audited the group`s
results and their unqualified report is available for inspection at the
company`s registered office.
Declaration of cash dividend
The board has resolved to declare a final cash dividend to ordinary shareholders
of 36 cents per share (2007: 30 cents per share) on 24 November 2008 payable to
shareholders recorded in the register of the company at the close of business on
the record date appearing below. The salient dates pertaining to the final
dividend are as follows:
Last day to trade "cum" dividend Friday, 2 January 2009
First day to trade "ex" dividend Monday, 5 January 2009
Record date Friday, 9 January 2009
Date of payment Monday, 12 January 2009
No share certificates may be dematerialised or rematerialised between Monday, 5
January 2009 and Friday, 9 January 2009, both days inclusive.
Dividend cheques will be posted and electronic payments made, where applicable,
to certificated shareholders on the payment date.
Dematerialised shareholders will have their accounts with their Central
Securities Depository Participant or broker credited on the payment date.
Prospects
Looking ahead, it is clear that trading conditions will remain tough for the
foreseeable future, and that margins and volumes in certain segments will
continue to be under pressure.
Despite this challenging environment we are still positive that there are a
number of growth opportunities within our portfolio which, if successfully
exploited will help offset any slowdown we are currently experiencing in certain
segments of our business.
For and on behalf of the board
MM Ngoasheng GJ Wilson
Chairman Chief executive
26 November 2008
Sandton
CHANGES TO DIRECTORS
EXECUTIVE
* J du Toit (chief financial officer -
resigned 31 December 2007)
* VO Radebe (deputy chief executive officer -
resigned 31 March 2008)
* PM Mdwaba (deputy chief executive officer -
appointed 2 October 2008)
ALTERNATE
* K Molewa (alternate to VW Cuba -
resigned 6 May 2008)
INDEPENDENT NON-EXECUTIVE
* TM Sokutu (resigned 15 February 2008)
* Y Dladla (appointed 30 July 2008)
NON-EXECUTIVE
* VW Cuba (resigned 6 May 2008)
* J du Toit (appointed 31 December 2007)
* K Molewa (appointed 6 May 2008)
ABRIDGED CONSOLIDATED INCOME STATEMENT
Notes 2008 2007 %
R000 R000 change
REVENUE 1 2 232 929 1 994 019 12
Earnings before 158 478 128 113 24
interest,
taxation,
depreciation and
amortisation
(EBITDA)
Depreciation and (11 535) (13 308)
amortisation
OPERATING PROFIT 146 943 114 805 28
(EBIT)
Income from - 267
associates
Interest paid (31 439) (41 653)
Interest received 18 518 8 347
PROFIT BEFORE 134 022 81 766 64
TAXATION
Taxation 2 (36 736) (17 498)
PROFIT FOR THE 97 286 64 268 51
YEAR
Attributable to 95 525 62 476
equity holders
Attributable to 1 761 1 792
minority
shareholders
Basic and fully
diluted
Earnings per 102.10 78.42 30
share (cents)
Headline 102.30 78.46 30
earnings per share
(cents)
NOTES
1 Revenue
Placement fees 169 012 131 446 29
Temporary staffing 2 029 647 1 830 775 11
Other revenue 34 270 31 798 8
2 232 929 1 994 019 12
2 Taxation
The effective tax rate is 27%. Included in the current tax expense is an amount
of R3 million paid in respect of STC, excluding which, the effective rate would
be 25%. This is primarily due to the group taking advantage of substantial
learnership allowances.
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
2008 2007
R000 R000
Cash generated by operations before 158 563 128 438
working capital changes
Decrease/(increase) in working 17 577 (11 694)
capital
Cash generated by operations 176 140 116 744
Net financing costs (12 921) (33 306)
Net dividends paid (28 706) -
Taxation paid (13 546) (4 581)
Cash flows from operating activities 120 967 78 857
Cash flows from investing activities (101 248) (83 231)
Cash flows from financing activities 24 462 25 771
Net increase in cash and cash 44 181 21 397
equivalents
Foreign translation difference on 5 605 (2 346)
offshore cash
Net cash and cash equivalents at the 103 211 84 160
beginning of the year
Net cash and cash equivalents at the 152 997 103 211
end of the year
RECONCILIATION OF HEADLINE EARNINGS
2008 2007
R000 R000
Attributable profit for the year 95 525 62 476
Loss on sale of property and 186 32
equipment (net of tax)
Headline earnings 95 711 62 508
Adjusted shareholder interest paid - 16 427
after tax
Shareholder interest paid - 23 137
Tax effect thereof - (6 710)
Normalised headline earnings (before 95 711 78 935
shareholder interest)
Normalised earnings and headline
earnings per share (cents) before
shareholder interest
Normalised earnings per share 102.10 82.80
(cents)
Normalised headline earnings per 102.30 82.84
share (cents)
CONSOLIDATED BALANCE SHEET
Notes 2008 2007
R000 R000
ASSETS
Non-current assets 182 078 196 527
Property and equipment 17 502 17 802
Goodwill 56 446 56 446
Trademarks 64 730 64 730
Other intangible assets 28 550 19 039
Investments in associates - 267
Deferred taxation 14 850 38 243
Current assets 395 153 320 029
Inventories 11 135
Trade and other 240 044 214 431
receivables
Taxation 2 101 2 252
Funds on call, bank and 152 997 103 211
cash
TOTAL ASSETS 577 231 516 556
EQUITY AND LIABILITIES
Capital and reserves 201 661 206 631
Share capital and share 269 091 328 243
premium
Equity due to change in 3 (18 038) -
control of interest
Foreign currency 15 330 7 789
translation reserve
Accumulated loss (67 406) (134
450)
Attributable to equity 198 977 201 582
holders in parent
Minority interest 2 684 5 049
Interest bearing 4 160 514 132 385
borrowings
Current liabilities 215 056 177 540
Trade and other payables 110 897 71 874
Interest bearing 4 5 130 8 797
borrowings
Accruals for staff 97 186 94 395
benefits
Taxation 1 843 2 474
TOTAL EQUITY AND 577 231 516 556
LIABILITIES
NOTES
US$000 US$000
3 Equity due to change in
control of interest
Purchase price 3 092 -
Existing minority (684) -
interest
Equity due to change in
control of interest
in US$ 2 408 -
During the year, the
group repurchased the
shares held by
minorities so as to
constitute the group as
the sole shareholder of
M?.
R000 R000
Equity due to change in 18 038 -
control of interest
4 Interest bearing
borrowings
Promissory notes issued 162 787 132 195
Finance leases 2 857 8 987
165 644 141 182
A further R30 million of
promissory notes was
drawn down
at an interest rate of
12.04% per annum
and is due for repayment
on 30 April 2010.
5 Commitments
Authorised capital
expenditure
Already contracted for - -
Not yet contracted for 22 500 500
RECONCILIATION OF SHARES ISSUED
2008 2007
000 000
Opening balance 100 000 4 267
Sub-division of share 1: 10 000 - 42 670
Shares issued to current - 18 666
shareholders at par value
Issue for acquisition of Frontline - 4 144
Private placement of shares on - 34 520
listing
Number of shares in issue 100 000 100 000
Treasury shares - held in subsidiary (3 242) -
Treasury shares - Employee Share (6 879) (2 996)
Trust
Closing balance 89 879 97 004
Weighted average number of shares 100 000 80 884
before treasury shares
Weighted average treasury shares (6 443) (1 218)
Weighted average number of shares 93 557 79 666
after treasury shares
Normalisation adjustment - 15 623
Adjusted number of weighted average 93 557 95 289
shares
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY
Share Foreign Accumula
capital currency ted
and translati loss
share on R000
premium reserve
R000 R000
Balance at 30 September 32 328 15 785 (196
2006 926)
Foreign currency - (7 996) -
translation reserve
arising during the year
Share issue 323 493 - -
Acquisition of treasury (27 578) - -
shares
Profit for the year - - 62 476
Balance at 30 September 328 243 7 789 (134
2007 450)
Foreign currency - 7 541 -
translation reserve
arising during the year
Acquisition of treasury (59 152) - -
shares
Acquisition of US - - -
minorities
Net dividends paid - - (28 481)
Profit for the year - - 95 525
269 091 15 330 (67 406)
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY (CONTINUED)
Equity Attributa Minority Total
due ble interest R000
to to equity R000
change holders
in in parent
control R000
of
Interest
R000
Balance at 30 - (148 813) 3 589 (145
September 2006 224)
Foreign - (7 996) (333) (8 329)
currency
translation
reserve arising
during the year
Share issue - 323 493 - 323 493
Acquisition of - (27 578) - (27 578)
treasury shares
Profit for the - 62 476 1 792 64 268
year
Balance at 30 - 201 582 5 049 206 631
September 2007
Foreign - 7 541 - 7 541
currency
translation
reserve arising
during the year
Acquisition of - (59 152) - (59 152)
treasury shares
Acquisition of (18 038) (18 038) (3 901) (21 939)
US minorities
Net dividends - (28 481) (225) (28 706)
paid
Profit for the - 95 525 1 761 97 286
year
(18 038) 198 977 2 684 201 661
ABRIDGED CONSOLIDATED SEGMENTAL REPORT
Revenue EBITDA
2008 2007 2008 2007
R000 R000 R000 R000
Staffing and 1 814 250 1 578 728 153 612 123 766
business
process
outsourcing
(BPO)
USA 418 679 415 291 21 267 20 614
Central costs - - (16 401) (16 267)
Total 2 232 929 1 994 019 158 478 128 113
ABRIDGED CONSOLIDATED SEGMENTAL REPORT (CONTINUED)
Operating profit Total assets
2008 2007 2008 2007
R000 R000 R000 R000
Staffing and 149 454 120 138 85 165 60 278
business
process
outsourcing
(BPO)
USA 17 825 18 184 90 379 85 411
Central costs (20 336) (23 517) 401 687 370 867
Total 146 943 114 805 577 231 516 556
ABRIDGED CONSOLIDATED SEGMENTAL REPORT (CONTINUED)
Total liabilities Depreciation
and amortisation
2008 2007 2008 2007
R000 R000 R000 R000
Staffing and 99 956 84 839 (4 479) (3 629)
business
process
outsourcing
(BPO)
USA 46 069 37 738 (3 122) (2 429)
Central costs 229 545 187 348 (3 934) (7 250)
Total 375 570 309 925 (11 535) (13 308)
Registered office: 6 Protea Place, cnr Fredman Drive, Sandton
Transfer secretaries: Computershare Investor Services (Proprietary) Limited
Sponsor: Rand Merchant Bank (A division of FirstRand Bank Limited)
Directors: MM Ngoasheng (chairman), MW McCulloch (deputy chairman), GJ Wilson
(chief executive), PM Mdwaba (deputy chief executive), GP Baxter, Y Dladla, AC
Dodd+*, J du Toit, JA Gnodde, RM Hartmann, K Molewa, ME Monage, CJ Roodt and PJJ
van der Walt + United Kingdom * Alternate
Company secretary: KH Fihrer
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
www.kellygroup.co.za
Date: 26/11/2008 12:15:01 Produced by the JSE SENS Department.
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