| Thu 19 Aug 2010, 17:15 | | PMV - Primeserv - Unaudited results for the six months ended 30 June 2010 |
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PMV
PMV
PMV - Primeserv - Unaudited results for the six months ended 30 June 2010
PRIMESERV GROUP LIMITED
("Primeserv" or the "Group")
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
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2010
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the six months ended 30 June 2010
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 Jun 30 Jun 31 Dec
2010 2009 2009
R`000 R`000 R`000
Revenue(1) 256 211 255 375 523 501
EBITDA 6 472 7 415 19 144
Depreciation (909) (827) (1 660)
Operating profit 5 563 6 588 17 484
Interest received 2 516 1 878 4 533
Interest paid (2 474) (2 801) (6 259)
Interest paid on borrowings (2 430) (2 779) (6 233)
IAS 39 - Financial instrument
charge (44) (22) (26)
Share of loss from associate (169) - (225)
Profit before taxation 5 436 5 665 15 533
Taxation (1 647) (878) (3 745)
Total comprehensive income
for the period 3 789 4 787 11 788
Total comprehensive income
attributable to:
Equity shareholders of
the Company 3 765 4 787 11 451
Minority shareholders` interest 24 - 337
Total comprehensive income 3 789 4 787 11 788
Reconciliation of
headline earnings
Net profit attributable
to shareholders 3 765 4 787 11 451
After-tax effect of profit
on sale of fixed assets - (4) 4
Headline earnings 3 765 4 783 11 455
Weighted average number of
shares (`000) 105 163 110 702 108 980
Diluted weighted average number
of shares (`000) 105 163 111 023 108 980
Earnings per share (cents) 3,58 4,32 10,51
Diluted earnings per
share (cents) 3,58 4,31 10,51
Headline earnings per
share (cents) 3,58 4,32 10,51
Diluted headline earnings
per share (cents) 3,58 4,31 10,51
(1) Revenue note: Excludes revenue of R35,6 million (June 2009: R22,3 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 six months ended 30 June 2010
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 Jun 30 Jun 31 Dec
2010 2009 2009
R`000 R`000 R`000
Revenue
Human Capital Outsourcing 234 446 231 553 478 101
Human Capital Development 21 765 23 822 45 400
256 211 255 375 523 501
Operating profit/(loss)
Human Capital Outsourcing 8 572 7 245 19 214
Human Capital Development 1 393 4 180 2 036
Central Services (4 402) (4 837) (3 766)
5 563 6 588 17 484
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
for the six months ended 30 June 2010
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 Jun 30 Jun 31 Dec
2010 2009 2009
R`000 R`000 R`000
Cash flows from operating
activities 11 472 13 331 20 455
Cash flows from investing
activities (11 113) (5 791) (3 101)
Cash flows from financing
activities 1 969 (99) (174)
Net increase in cash and
cash equivalents 2 328 7 441 17 180
Cash and cash equivalents at
beginning of period (1 772) (18 952) (18 952)
Cash and cash equivalents at
end of period 556 (11 511) (1 772)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2010
Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2010 2009 2009
R`000 R`000 R`000
Assets
Non-current assets 32 841 29 659 24 064
Equipment and vehicles 4 823 4 832 4 229
Goodwill 12 312 9 605 10 135
Intangible assets 626 659 642
Long-term receivables 4 927 3 765 4 227
Investments and loan in
associate 5 639 5 985 334
Deferred tax asset 4 514 4 813 4 497
Current assets 103 674 114 809 110 973
Inventories 1 172 600 965
Trade receivables 71 264 88 777 78 871
Other receivables 2 661 1 414 3 362
Cash and cash equivalents 28 577 24 018 27 775
Total assets 136 515 144 468 135 037
Equity and liabilities
Equity 74 329 70 004 74 722
Capital and reserves 73 560 69 596 73 977
Minority interest 769 408 745
Non-current liabilities 564 264 184
Long-term vendor obligation 435 - -
Interest-bearing financial
liabilities 129 264 184
Current liabilities 61 622 74 200 60 131
Trade and other payables 30 472 37 281 28 930
Current portion of financial
liabilities 132 176 181
Taxation payable 1 358 714 1 473
Short-term vendor obligation 1 639 500 -
Bank borrowings 28 021 35 529 29 547
Total equity and liabilities 136 515 144 468 135 037
Number of shares in issue at
end of period (`000) (net
of treasury and share
trust shares) 102 773 109 192 105 455
Net asset value per
share (cents) 72 64 71
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the six months ended 30 June 2010
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 Jun 30 Jun 31 Dec
2010 2009 2009
R`000 R`000 R`000
Balance at beginning of
the period 74 722 68 093 68 093
Attributable earnings for
the period 3 765 4 787 11 451
Dividends paid (2 757) (2 209) (2 741)
Share trust movement (1 429) (706) (2 318)
Share-based payment reserve 4 39 (100)
Minority shareholders` interest 24 - 337
Balance at end of the period 74 329 70 004 74 722
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 can be applied
through Primeserv`s IntHRgrateTrade Mark Model in its entirety or 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
Economic activity continued to be subdued, with local business limiting
discretionary expenditure relating to skills development and training. This
affected, in particular, the Group`s Technical Training and Colleges units. The
slowdown has also led to an inevitable contraction in national employment
levels, with the Group`s Outsourcing division being impacted as clients reduce
their number of contract and temporary staff.
Overview of results
Against this background, Group revenue was flat, increasing by 0,3% from R255,4
million to R256,2 million. Operating margins, however, remained under pressure.
EBITDA declined by 13% from R7,4 million to R6,5 million with operating profit
down by 16% from R6,6 million to R5,6 million. Effective working capital
management has resulted in net interest income of R0,04 million compared with a
net interest cost of R0,9 million for the prior period. The effective tax rate
has increased due in main to certain tax allowances having been fully utilised
in the prior year. Total comprehensive income has decreased by 21% from R4,8
million to R3,8 million, with headline earnings per share declining by 17% to
3,58 cents per share.
The Group continued to strengthen its balance sheet, and cash flows from
operating activities maintained a positive trend. Due to good collections, trade
receivables were reduced by R17,5 million from R88,8 million to R71,3 million.
Bank borrowings declined from R35,5 million to R28,0 million. Cash and cash
equivalents increased to R28,6 million.
Human Capital Outsourcing
This segment`s revenue increased by 1,2% from R231,6 million to R234,5 million
with operating profit increasing by 18% from R7,3 million to R8,6 million, due
primarily to improved operational efficiencies.
Trading in the various Outsourcing units, particularly in the "White Collar"
professional draughting and engineering unit and the mega-project wage bureaus,
was impacted by the completion of major infrastructure projects. The logistics,
warehousing, construction and industrial flexible staffing units continue to be
affected by stagnant trading conditions.
Whilst the issues pertaining to the temporary employment services industry
within the South African economy remain unresolved, the Group is confident that
additional regulation of the industry, as opposed to banning, will result.
Human Capital Development
This segment`s revenue declined by 9% and operating profit by 67%. Technical and
corporate training clients delayed and/or postponed training until the
conclusion of the FIFA Soccer World Cup. The Computer Training Colleges had
lower than anticipated learner registrations and less than optimal fee
remittances during the review period. While corrective action has been taken,
the benefit will not be felt in the current year. The HR Consulting unit
delivered a good performance.
Acquisition
The HR Consulting unit has acquired, as a going concern, the business of
Sincedisa Consulting cc with effect from 1 March 2010. The business is an HR
consulting business allied to the Group`s existing business. The acquisition
price is determined based upon future earnings and will not exceed R3,5 million.
The purchase price, as required by IFRS 3, is estimated at R2,07 million. The
purchase price is payable in cash in three instalments. The first payment was in
July 2010 with subsequent payments to be made in April 2011 and April 2012.
Included in the results for the current period are net profits before tax of
R484 000 attributable to this business, resulting in an increase in earnings of
0,33 cents per share. It is anticipated that the transaction will enhance the
earnings and results of the Group.
B-BBEE
The Group has continued to focus on maintaining and improving its B-BBEE
credentials, with individual Group entities achieving ratings of between Level 2
and Level 6. Many of these entities are also value added suppliers.
The Group is committed to ongoing transformation as an operational imperative.
Corporate governance
The Board and the individual directors are committed to the values of integrity,
transparency, responsibility and accountability in enforcing the highest
standards of corporate governance. King III became effective on 1 March 2010 and
accordingly the Group is in the process of reviewing and evaluating its
compliance with King III and a detailed programme will be adopted to ensure
optimal compliance on an apply or explain basis within the timeline required by
the JSE.
Post-balance sheet events
Management is not aware of any material events which have occurred subsequent to
the end of June 2010. There has been no material change in the Group`s
contingent liabilities since the period-end.
Outlook
Renewed concerns over a slower than expected economic recovery could impact
negatively on the Group, particularly given its dependence on a resumption of
hiring and training of personnel in the industrial and commercial sectors in
which it operates.
Albeit that the Group`s results for the year remain under pressure, the Board
believes that Primeserv has an appropriate sustainability strategy and that the
Group remains well placed to benefit from an economic upturn. The Group
continues to seek out strategic acquisitive opportunities that will expand the
Group`s value platform. This general forecast has not been reviewed nor reported
on by the Company`s auditors.
Accounting policies
The results for the six months 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, AC 500 standards as issued by
the Accounting Standards Board or its successor, IAS 34 - Interim Financial
Reporting, the South African Companies Act and the JSE Limited Listings
Requirements.
On behalf of the Board
JM Judin M Abel R Sack
Independent Chief Executive Financial
Non-Executive Officer Director
Chairman
19 August 2010
Bryanston
Dividend declaration
Notice is hereby given that Primeserv has declared an interim dividend (dividend
declaration number 11) for the six months ended 30 June 2010 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, 8 October 2010
First day to trade "EX" dividend Monday, 11 October 2010
Record date Friday, 15 October 2010
Payment date Monday, 18 October 2010
No share certificates may be dematerialised or rematerialised between Monday, 11
October 2010 and Friday, 15 October 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*
* 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: 19/08/2010 17:15:02 Produced by the JSE SENS Department.
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