| Mon 15 Mar 2010, 7:08 | | PMV - Primeserv Group - Audited Results For the year ended 31 December 2009 |
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PMV
PMV
PMV - Primeserv Group - Audited Results For the year ended 31 December 2009
PRIMESERV GROUP LIMITED
("Primeserv" or the "Group" or "the Company")
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
AUDITED RESULTS for the year ended 31 December 2009
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
for the year ended 31 December 2009
Audited Audited
year year
ended ended
31 Dec 31 Dec
2009 2008
R`000 R`000
Revenue(1) 523 501 539 878
EBITDA 19 142 23 638
Depreciation (1 658) (1 866)
Operating profit 17 484 21 772
Interest received 4 533 3 691
Interest paid (6 259) (4 552)
Interest paid on borrowings (6 233) (4 300)
IFRS 3 - Business Combination charge (26) (252)
Share of (loss)/profit from associate (225) 97
Profit before taxation 15 533 21 008
Taxation (3 745) (3 154)
Total comprehensive income
for the year 11 788 17 854
Total comprehensive income
attributable to:
Ordinary shareholders 11 451 17 507
Minority shareholders 337 347
Total comprehensive income
for the year 11 788 17 854
Reconciliation of headline earnings
Net profit attributable to shareholders 11 451 17 507
After-tax effect of profit on sale of
fixed assets 4 83
Headline earnings 11 455 17 590
Weighted average number of shares (`000) 108 980 114 134
Diluted weighted average number
of shares (`000) 108 980 116 950
Earnings per share (cents) 10,51 15,34
Diluted earnings per share (cents) 10,51 14,97
Headline earnings per share (cents) 10,51 15,41
Diluted headline earnings
per share (cents) 10,51 15,04
(1) Revenue note: Excludes revenue of R55,7 million (2008: R61,5 million)
from Bathusi Staffing Services (Proprietary) Limited, which was deconsolidated
as a result of a B-BBEE transaction and has since been accounted for as an
associate.
SEGMENTAL ANALYSIS
for the year ended 31 December 2009
Audited Audited
year year
ended ended
31 Dec 31 Dec
2009 2008
R`000 R`000
Revenue
Human Capital Outsourcing 478 101 501 715
Human Capital Development 45 400 38 163
523 501 539 878
Operating profit/(loss)
Human Capital Outsourcing 19 214 27 758
Human Capital Development 2 036 2 710
Central Services (3 766) (8 696)
17 484 21 772
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
for the year ended 31 December 2009
Audited Audited
year year
ended ended
31 Dec 31 Dec
2009 2008
R`000 R`000
Cash flows from operating activities 20 455 30
Cash flows from investing activities (3 101) (9 860)
Cash flows from financing activities (174) (1 531)
Net increase/(decrease) in cash and
cash equivalents 17 180 (11 361)
Cash and cash equivalents at
beginning of year (18 952) (7 591)
Cash and cash equivalents at end of year (1 772) (18 952)
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
as at 31 December 2009
Audited Audited
31 Dec 31 Dec
2009 2008
R`000 R`000
Assets
Non-current assets 24 064 25 322
Property, equipment and vehicles 4 229 4 416
Goodwill 10 135 9 605
Intangible assets 642 676
Investments and loan in associate 334 2 673
Long-term receivables 4 227 3 602
Deferred tax asset 4 497 4 350
Current assets 110 974 113 076
Inventories 966 863
Trade receivables 78 871 91 980
Other receivables 3 362 3 609
Taxation receivable - 264
Cash and cash equivalents 27 775 16 360
Total assets 135 038 138 398
Equity and liabilities
Equity 74 722 68 093
Capital and reserves 73 977 67 685
Minority interest 745 408
Non-current liabilities 184 363
Interest-bearing liabilities 184 363
Current liabilities 60 132 69 942
Trade and other payables 28 931 33 954
Current portion of interest-bearing
liabilities 181 176
Taxation 1 473 -
Short-term vendor obligation - 500
Bank borrowings 29 547 35 312
Total equity and liabilities 135 038 138 398
Number of shares in issue at end
of year (`000) 105 455 110 809
Net asset value per share (cents) 71 61
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY
for the year ended 31 December 2009
Audited Audited
year year
ended ended
31 Dec 31 Dec
2009 2008
R`000 R`000
Balance at beginning of the year 68 093 55 846
Share trust movement (2 318) (2 988)
Minority shareholders` interest 337 347
Share-based payment reserve (100) 250
Net profit attributable to shareholders 11 451 17 507
Dividend paid (2 741) (2 869)
Balance at end of the year 74 722 68 093
Commentary
Profile
Primeserv Group Limited is an investment holding company, focusing on delivering
human resources (HR) products, services and solutions through its operating
pillar, Primeserv HR Services. This incorporates two main areas of
specialisation: Human Capital Development operating through two divisions,
Primeserv HR Solutions and Primeserv Colleges; and Human Capital Outsourcing
operating through the Group`s largest division, Primeserv Outsourcing.
These divisions provide a comprehensive HR value chain that is applied through
Primeserv`s IntHRgrateTrade Mark Model in its entirety or in modular form. These
divisions encompass an extensive range of HR consulting solutions and services,
corporate and vocational training programmes, technical skills training centres,
computer training colleges, as well as resourcing and flexible staffing
services, supported by wage bureaus and HR logistics outsourcing operations.
Operating environment
The global recession of 2009 had a marked impact on all levels of business and
society. Many businesses and industries were compelled to withhold discretionary
spending relating to skills development and employment. This impinged on the
results of the Group for the year under review.
Overview of results
Consolidated Group revenue for the review period declined by 3% from R539,9
million to R523,5 million as businesses continued to bear the effects of the
global economic slowdown. Group EBITDA fell by 19% from R23,6 million to R19,1
million with operating profit down by 20% from R21,8 million to R17,5 million.
The Group`s effective tax rate increased from 15% in 2008 to 24% in 2009. Profit
after tax for the year was R11,8 million, 34% lower than the R17,9 million
recorded for the prior period. Diluted headline earnings per share of 10,51
cents are 30% lower than the prior year. The total annual dividend has been
maintained at 3 cents per share.
Notwithstanding the poor trading environment, the Group`s balance sheet
continued to strengthen with cash flows from operations improving by R20,4
million, while cash flows from investing and financing activities improved by
71%. Working capital invested in trade receivables improved by R13,1 million
from R92,0 million to R78,9 million at year-end. Cash and cash equivalents
improved by 70% from R16,3 million to R27,8 million at year-end, while bank
borrowings reduced by 16% from R35,3 million to R29,5 million. The Group`s net
gearing has improved from 29% to 3% over the 12 months under review. Net asset
value per share has increased by 16% from 61 cents per share to 71 cents per
share.
Human Capital Outsourcing
Revenue in the Outsourcing division declined by 5% from R501,7 million to R478,1
million. The division`s full year operating profit declined by 31% from R27,8
million to R19,2 million. The logistics, warehousing, construction and
industrial flexible staffing units continued to experience depressed trading
conditions. The "white collar" professional draughting and engineering units
have been particularly affected by the curbing of large-scale mining and
engineering projects. The Denverdraft business has contributed to revenue for
the full year (2008: 5 months). This business, in line with its industry
segment, has a low gross margin leading to a reduction in overall gross margin
for the division. The mega-project wage bureaus continued to deliver a solid
performance due to their involvement in infrastructure projects.
There has been much speculation and debate in the press and other public media
about the role of the atypical contract labour and temporary employment services
("TES") industry within the South African economy. In line with this the Group
believes that additional regulation of the industry may be necessary. Primeserv
remains convinced of the positive role within the economy to be played by the
TES industry and is committed to the International Labour Organisation ("ILO")
concept of "decent work". The Group has been a pro-active participant in forums
where the issues of temporary employment services have been considered. These
forums include NEDLAC, CAPES, BUSA and relevant Parliamentary Portfolio
Committee hearings. Primeserv has also been active on less formal levels in
attempting to achieve a common understanding and a negotiated solution in the
best interest of all stakeholders.
Human Capital Development
The Human Capital Development segment, consisting of the HR Solutions division`s
HR Consulting and Technical Training units and the Computer Training Colleges
division increased revenue by 19% from R38,2 million to R45,4 million. Due to
increased bad debt adjustments made as a result of the difficulties experienced
by the Computer Training Colleges learners in meeting financial commitments,
operating profit reduced from R2,7 million to R2,0 million.
Directorate
Ms CS Shiceka was appointed to the Board as an Independent Non-Executive
Director with effect from 21 August 2009.
B-BBEE
Primeserv has maintained its Level 3 B-BBEE value added supplier rating. The
Group improved its empowerment rating from number 55 to number 12 in the
authoritative Financial Mail/Empowerdex 2009 survey. Ongoing commitment to
further transformation remains a Group imperative.
Corporate governance
The Board and individual directors are committed to the values of transparency,
integrity, responsibility and accountability in enforcing the highest standards
of corporate governance. The Group is currently in the process of reviewing and
evaluating its compliance with King III and a detailed programme will be adopted
to ensure optimal compliance within an acceptable time frame.
Post-balance sheet events
Management is not aware of any material events which occurred subsequent to the
year ended 31 December 2009. There has been no material change in the Group`s
contingent liabilities since the year-end.
Outlook
The pace of South Africa`s economic recovery remains uncertain. It is
anticipated that a period of at least 18 months of further restrictive trading
conditions will prevail. Consequentially, the Group remains cautious in regard
to anticipated future results. Group operations remain well placed to benefit
when the upturn occurs. The Group`s low gearing and strong balance sheet,
position it well to seek out strategic acquisitive opportunities that will
broaden the business base and provide further impetus for growth.
Accounting policies
The results for the year have been prepared in accordance with the Group`s
accounting policies which are consistent with the previous period, with the
exception of the adoption of IAS 1 Revised - Presentation of Financial
Statements and IFRS 8 - Segmental Reporting. These comply with International
Financial Reporting Standards, IAS 34 - Interim Financial Reporting, the South
African Companies Act and the JSE Limited Listings Requirements.
Audit opinion
The Company`s auditors, PKF (Jhb) Inc, have issued an unmodified audit opinion.
A copy of the audit report is available for inspection at the registered office
of the Company.
On behalf of the Board
JM Judin M Abel
Independent Non-Executive Chairman Chief Executive Officer
12 March 2010
Bryanston
Dividend Declaration
Further to a 0,5 cent per share interim dividend paid in October 2009, notice is
hereby given that a final dividend of 2,5 cents per share is declared, 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 Wednesday, 31 March 2010
First day to trade "ex" final dividend Thursday, 1 April 2010
Record date Friday, 9 April 2010
Payment date Monday, 12 April 2010
No share certificates may be dematerialised or rematerialised between Thursday,
1 April 2010 and Friday, 9 April 2010, both days inclusive.
Directors: JM Judin (Chairman)#, M Abel (Chief Executive Officer), Prof S Klein#
(American), LM Maisela#, AT McMillan (British), DL Rose#, R Sack (Financial
Director), DC Seaton*, CS Shiceka#
# Independent Non-Executive
* Non-Executive
Company secretary: ER Goodman Secretarial Services cc (represented by E Goodman)
Registered address: Venture House, Peter Place Park, 54 Peter Place, Bryanston,
2021 (PO Box 3008, Saxonwold, 2132)
Transfer secretaries: Computershare Investor Services (Pty) Limited, 70 Marshall
Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
Auditors: PKF (Jhb) Inc., 42 Wierda Road West, Wierda Valley, Sandton, 2196
(PostNet Suite 200, Private Bag X30500, Houghton, 2041)
Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited, The Woodlands,
Woodlands Drive, Woodmead, 2196
(Private Bag X6, Gallo Manor, 2052)
Date: 15/03/2010 07:08:43 Produced by the JSE SENS Department.
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