| Thu 29 Mar 2012, 7:05 | | MVS - Mvelaserve Limited - Reviewed Condensed Consolidated Financial Results |
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MVS
MVS
MVS - Mvelaserve Limited - Reviewed Condensed Consolidated Financial Results
for the six months ended 31 December 2011
Mvelaserve Limited
(Incorporated in the Republic of South Africa)
(Registration number 1999/003610/06)
JSE Share code: MVS ISIN: ZAE000151353
("Mvelaserve" or "the company" or "the group")
Reviewed Condensed Consolidated Financial Results for the six months ended 31
December 2011
Mvelaserve is a leading, black empowered provider of outsourced business
support services across southern Africa. Mvelaserve listed independently on
the JSE Main Board in the `Business Support Services` sector on 29 November
2010.
HIGHLIGHTS
Revenue up 14%
Achieved Level 2 BEE status
Acquired 51,6% interest in new road remediation and pothole repair company
Acquired 80% of established cell mast maintenance provider
Condensed group statement of financial position
at 31 December 2011
Restated Restated Restated
Reviewed Unaudited Unaudited Audited
31 December 31 December 31 December 30 June
2011 2010 2009 2011
Notes R`000 R`000 R`000 R`000
ASSETS
Non-current 1 143 174 1 075 706 940 038 1 109 260
assets
Property, plant 3 432 920 399 442 329 384 431 915
and equipment
Intangible 4 642 037 622 592 544 561 622 547
assets
Investments in 10 252 7 899 4 126 9 095
associates
Other 10 287 20 914 28 367 11 518
investments
Deferred 47 678 24 859 33 600 34 185
taxation
Current assets 1 144 338 1 143 351 1 576 847 1 071 425
Other 11 536 5 895 2 005 11 921
investments
Other current 895 740 847 972 1 204 829 816 259
assets
Cash and cash 5 84 071 170 011 257 560 126 787
equivalents
Restricted cash 5 152 991 119 473 112 453 116 458
Assets in 102 137 - - 79 800
disposal group
held-for-sale
TOTAL ASSETS 2 389 649 2 219 057 2 516 885 2 260 485
EQUITY AND
LIABILITIES
Capital and 872 982 874 970 145 043 902 337
reserves
Owners of the 860 911 861 848 142 019 887 049
parent
Non-controlling 12 071 13 122 3 024 15 288
interest
Non-current 290 217 407 396 1 315 541 323 036
liabilities
Interest- 6 252 621 363 030 573 997 288 845
bearing
liabilities
Non-interest- - 3 750 697 651 -
bearing
liabilities
Financial 23 752 33 751 31 527 25 523
liability
Deferred 13 844 6 865 12 366 8 668
taxation
Current 1 160 881 936 691 1 056 301 980 312
liabilities
Interest- 6 141 039 77 753 162 416 137 809
bearing
liabilities
Non-interest- 4 592 21 239 22 324 3 467
bearing
liabilities
Other current 966 553 837 699 871 561 839 036
liabilities
Bank overdraft 48 697 - - -
Liabilities in 65 569 - - 54 800
disposal group
held-for-sale
TOTAL EQUITY 2 389 649 2 219 057 2 516 885 2 260 485
AND LIABILITIES
Net number of 141 562 141 562 137 076 141 562
ordinary shares
in issue (`000)
Net asset value 608,2 608,8 103,6 626,6
per ordinary
share (cents)
Net tangible 120,9 151,5 (318,2) 162,7
asset value per
ordinary share
(cents)
Condensed group statement of comprehensive income
for the six months ended 31 December 2011
Reviewed Unaudited* Audited
31 December 31 December 30 June
2011 2010 2011
R`000 R`000 R`000
Continued operations
Revenue 2 439 741 2 148 020 4 400 888
Profit from operations 89 990 62 883 296 358
Net finance costs (24 152) (30 341) (57 098)
Finance income 3 990 8 465 14 640
Finance costs (28 142) (38 806) (71 738)
Investment income (1 408) 52 220 71 422
Share of profit/(loss) from 1 157 (370) 826
associates
Dividend Income 2 860 3 485 3 800
Net fair value adjustments and (5 425) 49 105 66 796
(loss)/profit from investments
Impairment of goodwill - - (121 550)
Profit before taxation 64 430 84 762 189 132
Taxation expense (42 476) (37 848) (77 227)
Normal, deferred, capital gains (35 912) (33 890) (73 069)
and foreign taxation
Secondary tax on companies (6 564) (3 958) (4 158)
Profit for the period from 21 954 46 914 111 905
continued operations
(Loss)/profit from discontinued (961) 42 566 16 038
operations
Total profit for the period 20 993 89 480 127 943
Other comprehensive income
Currency translation differences 3 325 - (10 206)
Total comprehensive income for 24 318 89 480 117 737
the period
Profit for the period
attributable to:
Owners of the parent 17 160 87 230 122 638
Non-controlling interest 3 833 2 250 5 305
20 993 89 480 127 943
Total comprehensive income
attributable to:
Owners of the parent 20 485 87 230 112 432
Non-controlling interest 3 833 2 250 5 305
24 318 89 480 117 737
Weighted average number of 141 562 137 076 139 703
ordinary shares in issue (`000)
Earnings per ordinary share 12,1 63,6 87,8
(cents)
Headline earnings per ordinary 19,5 31,9 159,8
share (cents)
*These numbers have been re-presented in accordance with IFRS5: non-current
assets held-for-sale and discontinued operations.
Reconciliation between profit attributable to owners of the parent and
headline profit attributable to owners of the parent
Reviewed Unaudited Audited
31 December 31 December 30 June
2011 2010 2011
R`000 R`000 R`000
Profit attributable to owners of 17 160 87 230 122 638
the parent
IAS 27 - Profit on disposal of - (49 367) (44 288)
subsidiaries and investments
IAS 16 - Profit on sale of (1 299) (1 451) (3 156)
property, plant and equipment
IFRS 3 - Profit on deemed - - (10 667)
disposal of associate
IFRS 3 - Goodwill impairment - - 121 550
IFRS 5 - Impairment of disposal 4 279 - 28 631
group held-for-sale
IAS 21 - Foreign currency 7 134 - -
translation reserve reclassified
to profit or loss
Tax effect 364 7 318 8 577
Headline profit attributable to 27 638 43 730 223 285
owners of the parent
Subsequent to the SENS announcement on 13 March 2012 and in consultation with
the company auditors and the audit committee, two further adjustments were
made to headline earnings in respect of IFRS 5 and IAS 21. This had a
favourable impact on the headline earnings per ordinary share of 8 cents or
25,1%.
Condensed group statement of cash flows
31 December 2011
Restated Restated Restated
Reviewed Unaudited Unaudited Audited
31 December 31 December 31 December 30 June
2011 2010 2009 2011
R`000 R`000 R`000 R`000
Profit from 92 700 105 157 133 573 340 322
operations*
Non-cash exceptional - (39 792) - -
items
Non-cash items 73 238 62 883 49 729 (29 944)
Working capital 1 876 99 128 47 729 (16 418)
Cash generated from 167 814 227 376 231 031 293 960
operations
Net interest paid (23 850) (30 049) (29 015) (61 321)
Investment income 3 014 3 485 3 656 17 749
Normal taxation paid (48 372) (37 033) (30 726) (102 487)
Cash available from 98 606 163 779 174 946 147 901
operating activities
before the payment
of capital gains tax
Capital gains tax - (6 562) - -
paid
Cash available from 98 606 157 217 174 946 147 901
operating activities
Cash effects of (89 309) (7 439) (62 930) (133 706)
investing activities
Cash effects of (32 571) (49 658) 34 099 42 585
financing activities
Dividends paid - (50 962) (187 488) - (2 401)
owners of the parent
Dividends paid - non- (10 545) (2 401) - (187 488)
controlling interest
Net movement in cash (84 781) (89 769) 146 115 (133 109)
and cash equivalents
Cash and cash 135 466 259 780 111 445 259 780
equivalents at the
beginning of the
period
Cash held in (10 952) - - (8 679)
disposal group
Effect of exchange (4 359) - - 8 795
rate fluctuations on
cash held
Cash and cash 35 374 170 011 257 560 126 787
equivalents at the
end of the period
* Includes discontinued operations.
Condensed group statement of changes in equity
31 December 2011
Reviewed Unaudited Audited
31 December 31 December 30 June
2011 2010 2011
R`000 R`000 R`000
Balance at the beginning of the 902 337 233 300 233 300
period
Acquisition of subsidiaries 700 7 791 6 901
Issue of shares - 734 288 734 288
Total comprehensive income for 24 318 89 480 117 737
the period
Movement in foreign currency 7 134 - -
translation reserve
Dividends (61 507) (189 889) (189 889)
Balance at the end of the period 872 982 874 970 902 337
Segmental information
31 December 2011
Restated
Reviewed Unaudited Audited
31 December 31 December 30 June
2011 2010 2011
R`000 R`000 R`000
NET ASSETS
Facilities management services 366 989 809 813 359 256
Security services 355 273 334 762 356 862
Cleaning and catering services 196 883 154 797 215 868
Diversified services* (82 731) (424 402) (54 649)
Net assets from discontinued 36 568 - 25 000
operations
872 982 874 970 902 337
REVENUE
Facilities management services 637 005 550 863 1 145 634
Security services 1 101 829 959 020 1 966 538
Cleaning and catering services 394 461 536 989 1 037 269
Diversified services* 306 446 101 148 251 447
Revenue from discontinued 91 536 81 434 164 133
operations
2 531 277 2 229 454 4 565 021
REVENUE INCLUDING INTER-SEGMENT
TRADING
Facilities management services 639 882 553 498 1 149 200
Security services 1 111 604 961 415 1 977 502
Cleaning and catering services 520 223 577 793 1 162 200
Diversified services* 351 497 106 304 273 957
Revenue from discontinued 95 996 86 909 180 448
operations
2 719 202 2 285 919 4 743 307
PROFIT/(LOSS) FROM OPERATIONS
Facilities management services 68 128 48 150 111 905
Security services 66 326 62 467 142 966
Cleaning and catering services (16 896) 4 382 (26 650)
Diversified services* (27 568) (52 116) 68 137
Profit /(loss) from discontinued 2 710 42 274 43 964
operations
92 700 105 157 340 322
EXCEPTIONAL ITEMS
Facilities management services - (23 040) (31 355)
Security services - - (1 756)
Cleaning and catering services (22 504) - -
Diversified services* - (47 412) 80 162
Exceptional items from - 39 793 39 793
discontinued operations
(22 504) (30 659) 86 844
NET FINANCE INCOME/(COSTS)
Facilities management services 298 12 651 (4 184)
Security services (4 972) (6 888) (9 781)
Cleaning and catering services (1 271) (4 826) (2 918)
Diversified services* (18 207) (31 278) (40 215)
Net finance income from 454 292 686
discontinued operations
(23 698) (30 049) (56 412)
INVESTMENT INCOME/(EXPENSES)
Facilities management services 3 317 3 115 4 311
Security services - 49 367 49 367
Cleaning and catering services (7 196) - -
Diversified services* 2 471 (262) 17 744
Investment income from (4 125) - 20
discontinued operations
(5 533) 52 220 71 442
TAXATION
Facilities management services (20 741) (16 074) (36 885)
Security services (13 029) (13 295) (24 416)
Cleaning and catering services 4 771 92 1 271
Diversified services* (13 477) (8 571) (17 197)
Taxation from discontinued - - -
operations
(42 476) (37 848) (77 227)
TOTAL PROFIT/(LOSS) FOR THE
PERIOD
Facilities management services 51 002 47 842 75 147
Security services 48 325 91 651 155 736
Cleaning and catering services (20 592) (352) (28 297)
Diversified services* (56 781) (92 227) (90 681)
Total comprehensive income from (961) 42 566 16 038
discontinued operations
20 993 89 480 127 943
TOTAL COMPREHENSIVE INCOME/(LOSS)
FOR THE PERIOD
Facilities management services 51 002 47 842 75 147
Security services 51 650 91 651 154 179
Cleaning and catering services (20 592) (352) (36 946)
Diversified services* (56 781) (92 227) (90 681)
Total comprehensive income from (961) 42 566 16 038
discontinued operations
24 318 89 480 117 737
* Including head office.
Notes to the financial statements
1. Accounting policies and basis of preparation
The reviewed condensed consolidated financial statements for the six months
ended 31 December 2011 have been prepared in accordance with IAS 34 - Interim
Financial Reporting, AC 500 standards and the JSE Limited Listings
Requirements and in the manner required by the South African Companies Act,
2008 (Act 71 of 2008), as amended.
The accounting policies adopted in these reviewed condensed consolidated
financial statements are consistent with the accounting policies applied in
the audited annual financial statements for the year ended 30 June 2011.
The reviewed condensed consolidated financial information for the six months
ended 31 December 2011 was compiled under the supervision of Mr GE Roth, Chief
Financial Officer.
2. Business combinations
With effect from 1 August 2011 Mvelaserve obtained 51,6% of the issued share
capital of Velocity Road Rehabilitation (Pty) Limited ("Velocity"), a new
start-up company, for a consideration of R10 million.
With effect from 1 September 2011, Mvelaserve Limited obtained 80% the assets
and liabilities of LTP Mast and Infrastructure Services (Pty) Limited ("LTP")
for a consideration of R14 million.
Velocity LTP Other Total
R`000 R`000 R`000 R`000
Property, plant and equipment - 1 688 - 1 688
Intangible assets - 120 - 120
Deferred taxation - 66 - 66
Trade and other receivables - 4 429 26 4 455
Net cash and cash equivalents - 86 - 86
Total assets - 6 389 26 6 415
Asset-based finance - (855) - (855)
Trade and other payables - (2 034) (741) (2 775)
Total liabilities - (2 889) (741) (3 630)
Net assets acquired - 3 500 (715) 2 785
Non-controlling interest - (700) - (700)
Goodwill 10 000 11 200 1 077 22 277
Total purchase price 10 000 14 000 362 24 362
Satisfied by:
Cash 10 000 11 000 362 21 362
Loans - 3 000 - 3 000
10 000 14 000 362 24 362
The purchase price allocation for LTP and Velocity has not been completed as
the intangible assets have not been separately recognised and accounted for.
R0,7 million of the goodwill raised under other, relates to the finalisation
of a business combination effected in the prior year and the remainder to
acquisitions by Protea Coin.
The following revenue and profit/(loss) after taxation numbers have been
consolidated into the group results relating to business combinations effected
during the period:
Profit/(loss)
after
Revenue taxation
R`000 R`000
LTP 12 712 2 120
Velocity 1 681 (4 775)
Reviewed Unaudited
31 December 31 December
2011 2010
R`000 R`000
3. Property, plant and equipment
Opening balance 431 915 387 619
Additions 75 078 75 970
Acquired through business combinations 1 688 2 190
Disposals (4 747) (4 743)
Depreciation for the period (71 014) (61 594)
Closing balance 432 920 399 442
4. Intangible assets
Opening balance 622 547 545 335
Change due to business combinations 22 277 79 294
Additions 738 627
Amortisation (3 525) (2 664)
Closing balance 642 037 622 592
5. Restatements
A classification change on cash and cash equivalents was corrected in the
current period. As a result, restricted cash has been separately disclosed.
This change had the following effect on the statement of financial position:
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2011
R`000 R`000 R`000
Previously stated
Cash and cash equivalents 289 484 370 013 243 245
Restated 289 484 370 013 243 245
Cash and cash equivalents 170 011 257 560 126 787
Restricted cash 119 473 112 453 116 458
A classification change in the segmental information at 30 June 2011 was
corrected in the current period. This correction had the following effect on
the presented segmental information:
Previously
Restated stated
30 June 30 June
2011 2011
R`000 R`000
Profit/(loss) from operations
Facilities management services 111 905 105 428
Security services 142 966 136 487
Cleaning and catering services (26 650) (31 871)
Diversified services 68 137 86 314
Pofit from discontinued operations 43 964 43 964
340 322 340 322
TOTAL PROFIT/(LOSS) FOR THE PERIOD
Facilities management services 75 147 68 670
Security services 155 736 149 257
Cleaning and catering services (28 297) (33 518)
Diversified services (90 681) (72 504)
Total comprehensive income from discontinued 16 038 16 038
operations
127 943 127 943
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE
PERIOD
Facilities management services 75 147 68 670
Security services 154 179 147 700
Cleaning and catering services (36 946) (42 167)
Diversified services (90 681) (72 504)
Total comprehensive income from discontinued 16 038 16 038
operations
117 737 117 737
No other periods were affected by this correction.
Reviewed Reviewed Reviewed Unaudited
31 December 31 December 31 December 31 December
2011 2011 2011 2010
R`000 R`000 R`000 R`000
Asset-based Bank loans Total Total
finance
6. Interest-bearing
liabilities
Opening balance 198 434 228 220 426 654 783 970
New loans 34 615 5 500 40 115 291 673
Acquired through 855 - 855 362
business
combinations
Amounts repaid (48 812) (25 000) (73 812) (635 222)
Accrued interest - (152) (152) -
effect
Closing balance 185 092 208 568 393 660 440 783
Disclosed as:
Non-current 252 621 363 030
interest-bearing
liabilities
Current interest- 141 039 77 753
bearing liabilities
393 660 440 783
Reviewed Unaudited Audited
31 December 31 December 30 June
2011 2010 2011
R`000 R`000 R`000
7. Capital commitments and
contingencies
Capital expenditure
Contracted for 12 127 30 446 19 688
Not contracted for 8 500 8 339 11 478
20 627 38 785 31 166
Operating leases
Land and buildings 143 344 107 477 154 257
Plant and equipment 9 046 5 525 6 555
Motor vehicles 85 374 33 260 2 418
237 764 146 262 163 230
There were no significant changes in contingencies since 30 June 2011. For
contingencies, refer to Mvelaserve`s annual report for the financial year
ended 30 June 2011.
Subsequent events
The directors are not aware of any other matters or circumstances arising
after the reporting period up to the date of this report not otherwise dealt
with in this report.
Review report
The condensed consolidated financial information has been reviewed by the
company`s independent auditors, PricewaterhouseCoopers Inc. Their unmodified
review conclusion is available for inspection at the company`s registered
office.
Commentary
Introduction
Revenue growth for the six months ended 31 December 2011 ("the period") grew
in line with expectations and, despite still challenging economic conditions,
operations for the most part performed solidly. However a weak performance in
the cleaning subsidiary and reduced margins in TFMC impacted profitability,
which was further depleted by start-up costs in the new acquisitions. During
the period the restructuring of the catering and cleaning businesses was
cemented with benefits starting to become evident in the catering operation.
The group growth strategy was furthered through the acquisitions of road
remediation company Velocity and cell mast maintenance provider, LTP.
Group profile
Mvelaserve is a leading provider of outsourced business support services in
South Africa, employing approximately 33 000 people. The group offers a wide
range of integrated services including facilities management, security,
catering, food manufacture, franchising, gambling, cleaning, food, hygiene and
ingredients packaging, information and communications technology, water
treatment and purification, road remediation and pothole repair, and mast and
infrastructure services.
Mvelaserve`s blue-chip customer base ranges across the public and private
sectors, encompassing top banks, mining houses and retailers as well as
parastatals and provincial and local government. The diversified portfolio of
defensive and growth businesses effectively positions Mvelaserve for
performance in any economic cycle.
Financial review
Total revenue for the period increased 14% to R2 531 million (2010: R2 229
million) with both continued and discontinued operations demonstrating growth.
Total operating profit from both continued and discontinued operations of R93
million (2010: R105 million) was lower than the comparative period mainly due
to an operating loss suffered in the cleaning subsidiary, reduced margins at
TFMC and start-up costs in the road remediation and pothole repair company.
The group operating margin declined to 4% (2010: 6%). Net profit before tax
for both continued and discontinued operations was down 51% to R64 million
(2010: R128 million), mainly as a result of the decrease in operating profit
as well as a profit on sale of investments of R49 million having been included
in the comparative period.
The difference between the actual and effective tax rates of 28% and 66%,
respectively, amounting to R24 million is due to STC paid of R7 million,
disallowable and exceptional items of R6 million and the tax effect of
assessed losses for which no deferred tax assets have been recognised of R12
million.
Financial position
Non-current assets increased to R1 143 million (2010: R1 076 million) with
property, plant and equipment of R433 million (2010: R399 million) and
intangible assets of R642 million (2010: R623 million). Capital expenditure
for the period amounted to R76 million (2010: R77 million), while goodwill of
R22 million (2010: R58 million) was acquired through acquisitions.
Interest-bearing debt at period-end reduced to R394 million (2010: R441
million), excluding the derivative financial instrument fair valued at R24
million on 31 December 2011 (2010: R34 million).
The increase in current assets to R1 144 million (2010: R1 143 million)
followed increases in trade debtors and inventory, included in other current
assets, of R76 million and R42 million, respectively. Although trade debtors
increased to R613 million (2010: R537 million), outstanding debtors` days
reduced to 46.6 days from 48.3 days. The sharp rise in inventories is
attributable to the acquisition of Stamford Sales with effect from 1 June
2011.
Total net cash reduced by R101 million to R188 million of which R49 million is
reflected as an overdraft. Net debt, excluding restricted cash, increased to
R358 million (2010: R271 million) mainly as a result of the decrease in
unrestricted cash. The debt to equity ratio reduced to 46% from 51%.
Capital and reserves
The total issued ordinary share capital remained unchanged at 141 561 673
ordinary shares. The weighted average net number of ordinary shares in issue
increased by 3% from 137 075 717 ordinary shares at 31 December 2010 following
the issue of 6 850 937 ordinary shares on 7 October 2010 for the acquisition
of Zonke.
Dividends in the amount of R62 million were paid during the period. The
related STC amounting to R7 million has been recognised in the profit and loss
for the period.
Operational review
Protea Coin continued to perform well and posted strong results with revenue
up 16% to R1 112 million (2010: R961 million) and operating profit increasing
6% to R66 million (2010: R62 million), which translated into an operating
profit margin of 6% (2010: 7%). The business had numerous contract wins and a
number of tenders submitted towards the end of the period are awaiting award.
TFMC achieved revenue growth of 13% to R627 million (2010: R553 million). As
anticipated, operating profit declined by 4% to R66 million (2010: R71
million), excluding an extraordinary operating expense in the previous period,
and margins were down. TFMC gained a number of new contracts during the
period, including a leading international consumer goods company, further
boosting its contribution from non-Telkom sources.
RoyalMnandi showed signs of recovery. Revenue of R288 million was down by 20%
on the previous period (2010: R359 million) mainly as a result of the
termination of a Mozambique contract, which accounted for around R56 million
of the decline. The subsidiary continued to report an operating loss which was
exacerbated by, inter alia, the impact of higher food prices, accounting for
the reversal of a foreign currency translation reserve of R7 million (see
`Financial Review` above) and once-off corrections amounting to R12 million
pertaining to the restructure.
RoyalServe Cleaning suffered a tough period. Revenue rose 6% to R232 million
(2010: R219 million), but an operating loss of R8 million (2010: R11 million
profit) resulted mainly from once-off corrections of R11 million relating to
the restructuring of the business which were reflected during the period. The
latter half of the period saw the award of a number of key contracts. The
restructuring is nearing completion and improved profitability is expected
going forward.
Zonke posted revenue up 30% to R39 million (2010: R30 million) and operating
profit up 25% to R15 million (2010: R12 million) with an operating profit
margin of 38%. The weighted average number of limited pay-out machines
("LPMs") in operation for the review period increased to 6 661 from 5 735 in
the comparative period. The number of LPMs in operation at 31 December 2011
totalled 6 856 (2010: 5 992) with the average gross gaming revenue per LPM
increasing to R3 495 from R3 082 in the comparative period.
Khuseti was impacted by escalating food prices, the general slump in the food
industry and decreased consumer spending. Operating profit was accordingly
down 15% to R11 million (2010: R13 million) off revenue which was 8% higher at
R96 million (2010: R89 million). New strategies are being investigated to
mitigate further anticipated food price hikes. After identifying a number of
growth opportunities, the group is no longer considering a disposal of this
business and will focus on boosting the retail component going forward.
Within SA Water project delays impacted negatively on turnover and hence on
operating margins. Nonetheless, the business has a strong order book in place
for the next six months.
Circle ICT increased revenue 86% to R13 million (2010: R7 million). Although
the bulk of its business was generated from within the group, the operation
continues to assess new avenues of growing its external client-base. Circle
ICT took over the payroll administration for a number of group businesses from
January 2012.
Stamford Sales posted satisfactory results. Revenue for the period amounted to
R199 million. Margins remained under pressure from cost increases and client
demand to delay price increases. Early teething problems in the newly acquired
business were successfully resolved and the focus remains on enhanced client
relationship management. New offerings within hygiene and healthcare are also
set to be launched in the next few months.
The group acquired an interest in road rehabilitation and pothole repair
company Velocity during the period, with limited operations due to the start-
up nature of the business. Performance during the period was therefore muted.
Post-period, the fleet has been increased from one operational vehicle to
three and a total of seven vehicles are expected by June, which will enable
the business to further boost growth.
Results of the recent 80% LTP acquisition have been included for four months
with revenue of R13 million and an operating profit of R2 million. The company
is demonstrating signs of promising growth on the back of a proven track
record.
Disposal
The sale of Contract Forwarding to its management for R35 million, in line
with strategy, to focus on higher margin businesses, was concluded during the
period, with certain conditions precedent still to be finalised.
Dividend
No interim dividend was declared in line with group policy.
Prospects
Notwithstanding difficult conditions in certain markets, namely increases in
food and fuel prices which impact a number of group operations, Mvelaserve
remains cautiously positive regarding growth. The diversified nature of the
group positions it well for resilience, with the ability to leverage cross-
selling opportunities and economies of scale. The focus for the next six
months to year-end remains organic growth, margins, cost control and
controlled capital expenditure. The group will continue to assess expansion
opportunities in new growth markets within South Africa as well as the rest of
Africa, where its strategy is to follow existing clients.
MSM Xayiya JMS Ferreira GE Roth
Chairman Chief Executive Chief Financial
Officer Officer
29 March 2012
Executive Directors:
MSM Xayiya (Executive Chairman)
JMS Ferreira (Chief Executive Officer)
GE Roth (Chief Financial Officer)
Independent Non-Executive Directors:
FN Mantashe
OA Mabandla*
S Masinga
N Mbalula
GD Harlow
* Lead Independent
Registered Office:
28 Eddington Crescent
Highveld Technopark, Centurion, 0169
Sponsor:
Investec Bank Limited
Auditors:
PricewaterhouseCoopers Inc.
Transfer Secretaries:
Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
A copy of these results is available on the Mvelaserve Limited website:
www.mvelaserve.co.za
Date: 29/03/2012 07:05:14 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
