| Fri 29 Jun 2012, 13:05 | | PMV - Primeserv Group Limited - Reviewed results for the twelve months ended 31 |
|
PMV
PMV
PMV - Primeserv Group Limited - Reviewed results for the twelve months ended 31
March 2012 condensed consolidated statement of comprehensive income
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
e-mail: productivity@primeserv.co.za
www.primeserv.co.za
REVIEWED RESULTS FOR THE TWELVE MONTHS ENDED 31 MARCH 2012
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the 12 months ended 31 March 2012
Reviewed Audited *
12 months 15 months
ended ended
31 March 31 March
2012 2011
R`000 R`000
Revenue 613 145 665 281
Cost of sales (499 352) (544 467)
Gross profit 113 793 120 814
EBITDA 7 008 11 417
Depreciation (1 389) (2 572)
Operating profit 5 619 8 845
Interest received 6 255 4 720
Interest paid (4 990) (4 756)
Share of loss from associate (1 355) (202)
Profit before taxation 5 529 8 607
Taxation 1 249 (1 233)
Total comprehensive income
for the period 6 778 7 374
Total comprehensive income
attributable to:
Ordinary shareholders of the Company 7 359 8 229
Non-controlling shareholders` interest (581) (855)
Total comprehensive income 6 778 7 374
Reconciliation of headline earnings
Net profit attributable to
shareholders 7 359 8 229
Headline earnings 7 359 8 229
Weighted average number of
shares (`000) 93 377 102 174
Diluted weighted average
number of shares (`000) 93 377 103 166
Earnings per share (cents) 7,88 8,05
Diluted earnings per share (cents) 7,88 7,98
Headline earnings per share (cents) 7,88 8,05
Diluted headline earnings
per share (cents) 7,88 7,98
* Restated
SEGMENTAL ANALYSIS
for the 12 months ended 31 March 2012
Reviewed Audited *
12 months 15 months
ended ended
31 March 31 March
2012 2011
R`000 R`000
Revenue from external customers
Human Capital Outsourcing 552 609 606 007
Human Capital Development 60 536 59 274
Total 613 145 665 281
Revenue - inter-segment
Human Capital Outsourcing - -
Human Capital Development 5 424 109
Total 5 424 109
Business segment results
Human Capital Outsourcing 10 369 16 564
Human Capital Development (1 206) (2 766)
Central Services (3 544) (4 953)
Operating profit 5 619 8 845
Interest received 6 255 4 720
Interest paid (4 990) (4 756)
Share of loss from associate (1 355) (202)
Profit before taxation 5 529 8 607
Business segment total assets
Human Capital Outsourcing 103 390 85 180
Human Capital Development 31 428 25 239
Central Services 16 568 17 414
Total 151 386 127 833
* Restated
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the 12 months ended 31 March 2012
Reviewed Audited *
12 months 15 months
ended ended
31 March 31 March
2012 2011
R`000 R`000
Balance at beginning of the period
as previously reported 72 896 74 722
Prior year error - (4 062)
Balance at beginning of the
period - restated 72 896 70 660
Attributable earnings for the
period - restated 7 359 8 224
Attributable earnings for the period 7 359 9 281
Prior year error - (1 057)
Dividends paid (3 124) (2 596)
Treasury shares acquired (3 030) (2 651)
Share-based payment 10 114
Non-controlling shareholders` interest (581) (855)
Balance at end of the period 73 530 72 896
* Restated
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2012
Reviewed Restated Restated
31 March 31 March 31 Dec
2012 2011 2009
R`000 R`000 R`000
Assets
Non-current assets 47 299 30 178 25 644
Equipment and vehicles 6 878 6 072 4 229
Investment property 7 645 - -
Goodwill 13 293 12 012 10 135
Intangible assets 2 992 601 642
Long-term receivables 1 214 1 214 4 227
Investment and loan
in associate 5 815 2 874 334
Deferred tax asset 9 462 7 405 6 077
Current assets 104 087 97 655 110 973
Inventories 532 1 017 965
Trade receivables 86 641 64 922 78 871
Other receivables 5 419 6 466 3 362
Cash and cash equivalents 11 495 25 250 27 775
Total assets 151 386 127 833 136 617
Equity and liabilities
Equity 73 530 72 896 70 660
Capital and reserves 74 377 73 162 70 071
Non-controlling interest (847) (266) 589
Non-current liabilities - 632 184
Interest-bearing financial
liabilities - 632 184
Current liabilities 77 856 54 305 65 773
Trade and other payables 30 400 25 081 34 572
Current portion of financial
liabilities 40 967 181
Taxation payable 1 202 1 702 1 473
Short-term vendor obligation 1 281 - -
Short-term loan 4 388 - -
Bank borrowings 40 545 26 555 29 547
Total equity and
liabilities 151 386 127 833 136 617
Number of shares in issue
at end of period (`000)
(net of treasury and
share trust shares) 93 682 95 231 105 455
Net asset value per
share (cents) 78 77 67
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the 12 months ended 31 March 2012
Reviewed Audited *
12 months 15 months
ended ended
31 March 31 March
2012 2011
R`000 R`000
Profit before taxation 5 529 8 607
Adjusted for non-cash items 3 202 2 763
Operating cash flows before
working capital changes 8 731 11 370
Net working capital changes (14 867) 1 261
Taxation paid (1 308) (2 331)
Cash flows (utilised in)/generated
from operating activities (7 444) 10 300
Purchase of equipment and vehicles (2 245) (4 263)
Purchase of investment property (7 645) -
Acquisition of intangible assets (2 789) -
Transactions with vendors - (587)
Repayment of long-term receivable - 3 013
Movement in loan to associate (4 297) (2 540)
Cash flows utilised in investing
activities (16 976) (4 377)
Decrease in non-current financial
liabilities (1 559) (143)
Short-term loan 4 388 -
Decrease in current portion of
financial liability - (65)
Cash flows generated from/(utilised in)
financing activities 2 829 (208)
Dividends paid (3 124) (2 596)
Repurchase of securities (3 030) (2 652)
Returned to shareholders (6 154) (5 248)
Net (decrease)/increase in cash
and cash equivalents (27 745) 467
Cash and cash equivalents at
beginning of period (1 305) (1 772)
Cash and cash equivalents at
end of period (29 050) (1 305)
* Restated
COMMENTARY
PROFILE
Primeserv Group Limited is an investment holding company focusing on the
delivery of 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 as Primeserv HR Solutions
and Primeserv Colleges; and Human Capital Outsourcing operating as Primeserv
Outsourcing.
These divisions provide a comprehensive HR value chain that can be 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 and business training colleges, as well as resourcing
and flexible staffing services, supported by wage bureaus and HR
logistics outsourcing operations.
OPERATING ENVIRONMENT
The economic environment has displayed few signs of emerging from what has
become a prolonged global recession. This, coupled with the political and
regulatory pressures facing the Temporary Employment Services (TES) industry,
has resulted in challenging trading conditions for the Group`s operations, as
previously reported.
OVERVIEW OF RESULTS
The period under review is in respect of a 12-month period as compared to the
prior period of 15 months. In order to facilitate comparison, annualised values
based on applicable restated amounts, are detailed in the commentary below.
Revenue for the year under review was R613,1 million. Annualised revenue for the
prior period was R532,2 million, reflecting growth of R80,9 million for the year
under review. Annualised gross profit has increased from R96,6 million to R113,8
million.
EBITDA has declined from R9,1 million (annualised) to R7,0 million with an
operating profit for the year of R5,6 million compared to R7,1 million
(annualised) for the comparable period. Interest paid has shown an increase from
R3,80 million (annualised) to R4,99 million. The share of loss from the Group`s
associate company, Bathusi Staffing Services (Pty) Ltd, has shown an increase
due to the loss of its most significant client. Various sales and other
initiatives are already underway to return the business to profitability. Total
comprehensive income has increased from R5,9 million (annualised) to R6,8
million for the year under review. The Group has developed and progressed a
number of learnership programmes. The Group has used SARS` approach in the
recognition of the taxation benefits flowing from these learnerships prior to
completion, recognising only the pro rata benefits, while absorbing the costs of
development and implementation of these learnership programmes. The tax charge
for the year is positive due to the re-recognition of a deferred tax asset in a
previously loss-making subsidiary. Costs within the Group`s Central Services
unit were strictly managed despite upward inflationary pressures. The Group has
recorded an increase in headline earnings per share from 6,44 cents (annualised)
to 7,88 cents in respect of the current year.
Upon completion of the final phase of implementation of the Group`s fully
integrated accounting and payroll platform, management identified that the
previously required manual integration of the payroll information into the
accounting system had resulted in an overstatement of gross profit margins and
hence gross profit within specific geographic regions of the Outsourcing
business in which the system had not yet been fully implemented. After
investigation, this has now required a restatement of results for prior years as
set out in these financial results. The newly implemented system has full
integration from the payroll into the accounting system and eliminates the
potential for similar error. This has resulted in a decrease in the earnings per
share and diluted earnings per share for the prior year of 1,03 cents and 1,1
cents, respectively.
Due to increased revenues and a movement in outstanding debtors days from 39 to
45 days for the year under review, the Group`s investment in trade receivables
has increased by R21,7 million. Trade payables increased by R5,3 million. As set
out in the cash flow statement the Group has further applied cash to the
purchase of fixed assets and acquired contracts, and also in regard to share
repurchases and dividends paid. Cash flows in the new
financial year are expected to reflect an improvement on the prior year.
HUMAN CAPITAL OUTSOURCING
Revenue for the division was R552,6 million, an improvement of R67,8 million on
an annualised basis. The performance of the "white collar" professional
draughting and engineering unit remains under pressure given the absence of any
major infrastructure projects. This has had a similar effect on the division`s
mega-project wage bureaus. Performance within the "blue collar" flexible
staffing units which are largely involved in the logistics, warehousing and
distribution, and industrial manufacturing and engineering sectors, was also
constrained. The introduction of value-adding products and services to both
contractors and clients is gaining traction.
The ongoing much politicised and publicised debate between government, business
and organised labour, in regard to the banning or increased regulation of the
TES/labour broking industry, has progressed and appears to have culminated in
government`s view that increased regulation and not banning is required. In
anticipation of an environment of increased labour law regulation, the Group
decided to maintain, and in some instances, increase its overhead structure in
order to uphold market-leading client centric services. The Group is of the view
that the impending labour legislation will favour the larger and reputable TES
providers who have the necessary IT and HR infrastructures capable of meeting
the demands of a strictly regulated environment.
HUMAN CAPITAL DEVELOPMENT
The segment`s revenue increased from R47,4 million (annualised) to R60,5
million. The overall operating loss for the segment of R2,2 million
(annualised), that was recorded in the prior period, has been reduced to R1,2
million for the year under review. This is largely as a result of an improved
contribution from the corporate HR consulting and training units.
Revenue within the computer training and business colleges unit was below
expectation due to less than optimal learner registrations at a number of its
FET colleges during the most recent registration period. High fixed costs and
the Group`s commitment to facilitating the successful completion of their
studies by all paying learners have resulted in the unit incurring operating
losses. Consequently the future of this unit`s current business model is under
strategic review.
GROUP STRATEGY AND OUTLOOK
As part of its response to the regulatory issues facing its TES businesses, the
Group made investments in new products and services allied to its existing
product and service range. This expenditure related to additional office
infrastructure, improved technology, new course material and the employment of
more personnel so as to provide increased capacity and capability in
anticipation of future requirements. These costs will affect short-term
earnings, particularly in the first half of the current year.
Volume growth within existing operations and the continual review of operating
expenditure to achieve optimal efficiencies remain Group imperatives. The
introduction of new products and services in the spheres of business process
outsourcing and permanent recruitment has been undertaken.
The Group remains focussed on further developing its marketing and sales
capability. All of these, taken together, are intended to enhance profitable
sustainability for the Group. Nevertheless, the prevailing business and
operating environment dictates that the Group`s performance outlook remains
conservative.
B-BBEE/TRANSFORMATION
As part of the Group`s ongoing BEE initiatives, and in order to address the
issues relating to the ownership element of the balanced scorecard, the Group is
in the process of completing the first phase of a broad-based BEE ownership
participation structure.
CANCELLATION OF SHARES
The Group is in the process of attending to the cancellation of certain of its
shares held in the Group. A circular will shortly be issued in this regard.
CORPORATE GOVERNANCE
The Board and the individual directors are committed to the highest values of
integrity, transparency, responsibility and accountability in enforcing the best
standards of corporate governance and have taken regard of the requirements and
spirit of the King III report. The Group`s annual report for the period ended 31
March 2011 was its first integrated report and detailed the various initiatives
and statistics relating to the governance of the Group.
CHANGES IN BOARD MEMBERSHIP
Resignation of Allan McMillan
Allan McMillan has been with the Group since its listing. In 2003 he was
appointed Managing Director of the Group`s Outsourcing division and was
appointed to the Board as an executive director in 2004.
Due to health and other personal reasons, Allan is no longer in a position to
fulfil his role and function within the Group`s operations and has elected to
resign as a director of the Board of Primeserv Group Limited and all relevant
Group companies with immediate effect.
The Group thanks Allan for his valued contribution and wishes him well in his
recovery and future endeavours.
The Group CEO has assumed operational control over the Group`s Outsourcing
division.
Executive Appointment of Desmond Seaton
Des has been appointed with immediate effect as an executive director with
responsibility inter alia for legal, risk and related commercial activities and
will no longer serve as a non-executive director on the Board.
EVENTS AFTER THE REPORTING DATE
Management is not aware of any material events which have occurred subsequent to
the end of March 2012. There has been no material change in the Group`s
contingent liabilities since the year-end.
BASIS OF PREPARATION
The results for the year have been prepared in accordance with the framework
concepts and the measurement and recognition requirements of International
Financial Reporting Standards (IFRS) of the International Accounting Standards
Board, the AC 500 standards as issued by the Accounting Practices Board, the
information as required by IAS 34 - Interim Financial Reporting, the JSE Limited
Listings Requirements and the South African Companies Act, (Act 71 of 2008). The
results have been prepared using the Group`s accounting policies that comply
with IFRS which are consistent with those applied in the financial statements
for the period ended 31 March 2011 and have been prepared by the Group Financial
Director, Mr R Sack.
REVIEW OPINION
The Group`s auditors, Charles Orbach & Company, have reviewed the Group`s
financial results for the year ended 31 March 2012. A copy of their unmodified
review report is available for inspection at the Company`s registered office.
Any reference to future financial performance included in this announcement, has
not been reviewed nor reported on by the auditors.
DIVIDEND
No final dividend is proposed for the year under review. The Group will consider
the resumption of dividend payments at the close of its next reporting period.
On behalf of the Board
JM Judin M Abel
Independent Non-Executive Chairman Chief Executive Officer
R Sack
Financial Director
Bryanston
29 June 2012
Directors: JM Judin# (Chairman), M Abel (Chief Executive Officer), Prof S Klein#
(American), LM Maisela*, 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: Charles Orbach & Company, Third Floor, 3 Melrose Boulevard, Melrose
Arch, 2076, (PO Box 355, Melrose Arch, 2076)
Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited, The Woodlands,
Woodlands Drive, Woodmead, 2196, (Private Bag X6, Gallo Manor, 2052)
Date: 29/06/2012 13:05:01 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.
