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KEL
KEL
KEL - Kelly Group - Unaudited Interim Results For The Six Months Ended
31 March 2009
KELLY GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registered number 1999/026249/06)
Share code: KEL
ISIN: ZAE000093373
("Kelly Group" or "the company" or "the group")
Unaudited interim results for the six months ended 31 March 2009
- Half-year revenue rises 8%
- EBITDA increases to R70 million
- Fully diluted HEPS at 37.88 cents
- Torque IT makes maiden contribution
Comments
Overview of performance
Trading conditions remained tough for the period under review as a result of the
economic slowdown which impacted most sectors of the markets in which the group
operates in South Africa and, especially, the USA. Under these circumstances,
the Kelly Group did well to increase revenue and to maintain margins and EBIT at
levels close to those of the previous year.
The group`s creditable performance is attributable to the following factors:
- Strong growth in productivity in the South African staffing division with the
average temp headcount managed per permanent employee up 10% on the previous
reporting period.
- A marginal improvement in the outsource margin.
- Torque IT`s contribution to EBIT in its first half-year reporting period.
Overall, the group`s South African operations showed a 4.5% growth in revenues
with the group`s flagship brand Kelly and PAG showing an improvement in EBIT
over the previous reporting period. In the USA, the group`s M Squared operation
felt the pinch of the recession and posted a decline in revenue of 11.3% in
dollar terms.
Average outsource headcounts for the first six months were down 6% on the same
period last year but outsource revenues showed growth of 2.6% for the first six
months due to an increase in revenue recovered per headcount employed.
Permanent placements made by the group decreased by 33.4% for the reporting
period, reflecting the trend by companies to cut back on fixed overhead. This
was, however, offset by an increase of 25% in the group`s average placement fee
resulting in a net decline of 16.7% in permanent placement revenues for the
first six months.
Acquisitions
On 2 October 2008, the acquisition of Torque Holdings (Pty) Ltd became
unconditional, whereby the Kelly Group acquired 100% of the share capital. The
purchase price has been allocated as follows:
R000
Net asset value 2 883
Trademark and goodwill 30 306
Purchase price 33 189
The purchase price is to be settled as follows:
R000
Cash 21 925
Shares 11 264
Purchase price 33 189
The cash portion has been settled and the shares are to be issued to vendors
over a three year period on the achievement of certain financial targets.
Although a recent acquisition, the business and management have integrated well
within the Kelly Group and the group looks forward to taking advantage of new
business opportunities and synergies provided by the acquisition. The operating
profit included from this entity for the period under review was R1.4 million.
Dividend
In the line with the group`s policy no dividend is declared relating to the
period under review.
Directors
Non-executive director Johan du Toit was not available for re-election at the
group`s annual general meeting. Mthunzi Mdwaba was appointed a director and
deputy chief executive in October 2008.
Basis of preparation and accounting policies
The interim financial statements have been prepared in accordance with
International Financial Reporting Standards, in a manner consistent with the
prior year and in accordance with IAS 34. The group`s independent auditors
Grant Thornton have neither reviewed nor audited the group`s results.
Prospects
With certain segments of the economy, such as tourism, hospitality, sporting
events and those related to infrastructure spend showing some growth, we can
expect to see a slight improvement in our trading environment. Internally, a
strong sustained focus on margin improvement, market share gains, the
penetration of new market sectors and the development of new services, should
help the group to counter some of the effects of the economic slowdown.
For and on behalf of the board
MM Ngoasheng GJ Wilson
Chairman Chief executive
7 May 2009
Sandton
Abridged consolidated income statement
Unaudited Unaudited
6 months 6 months
31 March 31 March
2009 2008
Notes R000 R000
REVENUE 1 1 177 086 1 089 264
Earnings before
interest, taxation,
depreciation and
amortisation (EBITDA) 70 389 66 992
Depreciation and
amortisation 2 (10 286) (5 348)
OPERATING
PROFIT (EBIT) 60 103 61 644
Interest paid (11 593) (15 543)
Interest received 4 621 8 908
PROFIT BEFORE
TAXATION 53 131 55 009
Taxation 3 16 946 17 335
PROFIT FOR
THE PERIOD 36 185 37 674
Attributable to
equity holders
in parent 34 056 36 779
Attributable to
minority interests 2 129 895
Basic
Earnings per
share (cents) 37.89 38.55
Headline
earnings per
share (cents) 37.93 38.55
Fully diluted
earnings per
share (cents) 37.84 38.55
Headline
earnings per
share (cents) 37.88 38.55
Abridged consolidated income statement (cont)
Audited
2 months
30 Sept
% 2008
change R000
REVENUE 8 2 232 929
Earnings before
interest, taxation,
depreciation and
amortisation (EBITDA) 5 158 478
Depreciation and
amortisation (11 535)
OPERATING
PROFIT (EBIT) (2) 146 943
Interest paid (31 439)
Interest received 18 518
PROFIT BEFORE
TAXATION (3) 134 022
Taxation 36 736
PROFIT FOR
THE PERIOD (4) 97 286
Attributable to
equity holders
in parent 95 525
Attributable to
minority interests 1 761
Basic
Earnings per
share (cents) (2) 102.10
Headline
earnings per
share (cents) (2) 102.30
Fully diluted
earnings per
share (cents) (2) 102.10
Headline
earnings per
share (cents) (2) 102.30
Unaudited Unaudited Audited
6 months 6 months 12 months
31 March 31 March 30 Sept
2009 2008 2008
R000 R000 R000
NOTES
1 Revenue
Placement fees 64 310 80 186 169 012
Temporary
staffing 1 060 280 992 679 2 029 647
Other revenue 52 496 16 399 34 270
1 177 086 1 089 264 2 232 929
2 Depreciation and amortisation
The increase in depreciation is mostly attributable to the purchase of new
computer software, technology improvement projects and computer hardware. This
investment in technology was strategic in enabling the group to continue
improving productivity and driving innovation.
3 Taxation
The effective tax rate as calculated above is 32%. Included in the current tax
expense is an amount of R3.7 million paid in respect of STC, excluding which the
effective rate would be 25%.
Abridged consolidated cash flow statement
Unaudited Unaudited Audited
6 months 6 months 12 months
31 March 31 March 30 Sept
2009 2008 2008
R000 R000 R000
Cash generated
by operations
before working
capital changes 70 439 66 991 158 563
(Increase)/decrease
in working capital (68 703) (36 472) 17 577
Cash generated by
operations 1 736 30 519 176 140
Net financing costs (6 972) (6 635) (12 921)
Net dividends paid (32 934) (30 223) (28 706)
Taxation paid (17 652) (10 166) (13 546)
Cash flows from
operating activities (55 822) (16 505) 120 967
Cash flows from
investing activities (42 527) (26 475) (101 248)
Cash flows from
financing activities (1 818) (5 204) 24 462
Net (decrease)/increase
in cash and cash
equivalents (100 167) (48 184) 44 181
Foreign translation
difference on
offshore cash 6 409 6 140 5 605
Net cash and cash
equivalents at the
beginning of the
period 152 997 103 212 103 211
Net cash and cash
equivalents at the
end of the period 59 239 61 168 152 997
Reconciliation of headline earnings
Unaudited Unaudited Audited
6 months 6 months 12 months
31 March 31 March 30 Sept
2009 2008 2008
R000 R000 R000
Attributable profit
for the period 34 056 36 779 95 525
Loss/(profit) on
sale of property
and equipment
(net of tax) 36 (1) 186
Headline earnings 34 092 36 778 95 711
abridged Consolidated balance sheet
Unaudited Unaudited Audited
as at as at as at
31 March 31 March 30 Sept
2009 2008 2008
Notes R000 R000 R000
ASSETS
Non-current
assets property 226 278 185 725 182 078
and equipment 26 537 15 167 17 502
Goodwill and
trademarks 152 337 121 177 121 176
Computer software 34 988 21 711 28 550
Deferred taxation 12 416 27 670 14 850
Current assets 377 898 304 582 395 153
Inventories 1 004 100 11
Trade and other
receivables 281 857 237 871 240 044
Taxation 8 559 5 443 2 101
Cash and cash
Equivalents 86 478 61 168 152 997
TOTAL ASSETS 604 176 490 307 577 231
EQUITY AND
LIABILITIES
Capital and
reserves 213 877 166 890 201 661
Share capital
and share premium 269 091 295 708 269 091
Equity due to
change in control
of interest (18 038) (17 825) (18 038)
Foreign currency
translation reserve 24 295 14 842 15 330
Accumulated loss (65 713) (127 894) (67 406)
Attributable to
equity holders
in parent 209 635 164 831 198 977
Minority interests 4 242 2 059 2 684
Non-current
Liabilities 172 292 160 171 160 514
Non-current
interest bearing
borrowings 4 161 028 160 171 160 514
Vendor liabilities 5 11 264 - -
Current liabilities 218 007 163 246 215 056
Trade and other
Payables 105 975 97 607 110 897
Interest bearing
Borrowings 4 3 790 8 342 5 130
Accruals for staff
Benefits 76 929 55 036 97 186
Taxation 4 074 2 261 1 843
Bank overdraft 27 239 - -
TOTAL EQUITY AND
LIABILITIES 604 176 490 307 577 231
NOTES
4 Interest bearing
borrowings
Promissory notes 162 820 162 741 162 787
Finance leases 1 998 5 772 2 857
164 818 168 513 165 644
Promissory notes are
due for repayment on
30 April 2010. The
group is currently
negotiating the
renewal of funding
facilities.
5 Vendor liabilities
Amounts due to vendors 11 264 - -
Amounts due to vendors
represents the balance
due to the vendors of
Torque Holdings (Pty)
Ltd and will be settled
in shares subject to
certain financial
targets being achieved.
6 Commitments
Authorised capital
expenditure
Already contracted for - 1 300 -
Not yet contracted for 5 700 250 22 500
Reconciliation of shares issued
Unaudited Unaudited Audited
6 months 6 months 12 months
31 March 31 March 30 Sept
2009 2008 2008
000 000 000
Number of shares
in issue 100 000 100 000 100 000
Treasury shares -
held by subsidiary (3 242) - (3 242)
Treasury shares -
Employee Share Trusts (6 879) (6 518) (6 879)
Closing balance 89 879 93 482 89 879
Basic
Weighted average
number of shares
before treasury
shares 100 000 100 000 100 000
Weighted average
treasury shares (10 121) (4 587) (6 443)
Weighted average
number of shares 89 879 95 413 93 557
Diluted
Weighted average number
of shares before
treasury shares 100 000 100 000 100 000
Weighted average
treasury shares (10 010) (4 587) (6 443)
Weighted average
number of shares 89 990 95 413 93 557
Statement of changes in equity
Equity
due
Foreign to change
Share currency in
capital trans- control
and lation of
premium reserve interest
R000 R000 R000
Balance as at
30 September 2007 328 243 7 789 -
Foreign currency
translation reserve
arising during the
period - 7 053 -
Acquisition of US
minorities - - (17 825)
Acquisition of
treasury shares (32 535) - -
Net dividends paid - - -
Profit for the period - - -
Balance as at
31 March 2008 295 708 14 842 (17 825)
Foreign currency
translation reserve
arising during the
period - 488 -
Acquisition of
treasury shares (26 617) - -
Acquisition of
US minorities - - (213)
Net dividends paid - - -
Profit for the period - - -
Balance as at
30 September 2008 269 091 15 330 (18 038)
Foreign currency
translation reserve
arising during the
period - 8 965 -
Net dividends paid - - -
Profit for the period - - -
Balance as at
31 March 2009 269 091 24 295 (18 038)
Statement of changes in equity (cont)
Attri-
butable
to
Accu- equity
mulated holders Minority
loss in parent interest Total
R000 R000 R000 R000
Balance as at
30 September
2007 (134 450) 201 582 5 049 206 631
Foreign
currency
translation
reserve arising
during the
period - 7 053 - 7 053
Acquisition
of US
minorities - (17 825) (3 885) (21 710)
Acquisition
of treasury
shares - (32 535) - (32 535)
Net dividends
Paid (30 223) (30 223) - (30 223)
Profit for
the period 36 779 36 779 895 37 674
Balance as
at 31 March
2008 (127 894) 164 831 2 059 166 890
Foreign
currency
translation
reserve arising
during the
period - 488 - 488
Acquisition
of treasury
shares - (26 617) - (26 617)
Acquisition
of US minorities - (213) (16) (229)
Net dividends
Paid 1 742 1 742 (225) 1 517
Profit for
the period 58 746 58 746 866 59 612
Balance as at
30 September
2008 (67 406) 198 977 2 684 201 661
Foreign
currency
translation
reserve arising
during the
period - 8 965 - 8 965
Net dividends
Paid (32 363) (32 363) (571) (32 934)
Profit for
the period 34 056 34 056 2 129 36 185
Balance as
at 31 March
2009 (65 713) 209 635 4 242 213 877
Consolidated segmental report
Revenue Revenue EBITDA EBITDA
6 months 6 months 6 months 6 months
ended ended ended ended
31 March 31 March 31 March 31 March
2009 2008 2009 2008
R000 R000 R000 R000
South Africa:
Staffing and
business process
outsourcing
(BPO) 22 993 883 081 73 994 69 608
Central costs - - (9 865) (11 673)
USA:
Staffing 254 093 206 183 6 260 9 057
Total 1 177 086 1 089 264 70 389 66 992
Consolidated segmental report (cont)
Operating Operating Total Total
profit profit assets assets
6 months 6 months 6 months 6 months
ended ended ended ended
31 March 31 March 31 March 31 March
2009 2008 2009 2008
R000 R000 R000 R000
South Africa:
Staffing and
business process
outsourcing
(BPO) 68 273 67 926 98 907 52 022
Central
costs (12 705) (14 032) 417 227 363 291
USA:
Staffing 4 535 7 750 88 042 74 994
Total 60 103 61 644 604 176 490 307
Consolidated segmental report (cont)
Depre- Depre-
ciation ciation
Total Total and and
liabi- liabi- amorti- amorti-
lities lities sation sation
6 months 6 months 6 months 6 months
ended ended ended ended
31 March 31 March 31 March 31 March
2009 2008 2009 2008
R000 R000 R000 R000
South Africa:
Staffing and
business process
outsourcing
(BPO) 123 390 70 422 (5 721) (1 681)
Central
costs 226 499 215 617 (2 840) (2 360)
USA:
Staffing 40 410 37 378 (1 725) (1 307)
Total 390 299 323 417 (10 286) (5 348)
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^*, JA Gnodde, RM Hartmann, K Molewa, ME Monage, CJ Roodt and PJJ van der
Walt
^* Alternate director in the USA
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, email: kellygroup@dpapr.com
Date: 07/05/2009 12:15:01 Produced by the JSE SENS Department.
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