| Fri 21 Sep 2001, 0:00 | | Privest Group Limited - Audited Results For The Si |
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2001
Privest Group Limited
("Privest" or "the group")
Incorporated in the Republic of South Africa
(Registration number 1997/013448/06)
Share code: PVT
ISIN number: ZAE 0000 14643
Audited results for the sixteen months ended 30 June 2001
Income statement
Audited Restated audited
16 months 12 months
ended ended
30 June 29 February
2001 2000
R'000 R'000
Revenue 780 753 600 609
Operating profit 30 148 29 463
Depreciation 6 539 3 661
Net income before interest 23 609 25 802
Net interest paid 5 790 1 665
Net income before exceptional items 17 819 24 137
Exceptional items 3 764 -
Restructuring charges 7 664 -
Net income before taxation 6 391 24 137
SA normal taxation
- current (380) 6 330
- deferred 2 750 116
Net income attributable to
shareholders 4 021 17 691
Headline earnings excluding
restructuring
charges 12 755 17 691
Weighted average number of
shares ('000) 144 713 155 957
Headline earnings per share
excluding
restructuring charges (cents) 8,81 11,34
Headline earnings per share including
restructuring charges (cents) 5,11 11,34
Earnings per share (cents) 2,78 11,34
Balance sheet
Audited Restated audited
30 June 29 February
2001 2000
R'000 R'000
Assets
Non-current assets 47 536 53 041
Equipment and vehicles 10 217 12 953
Deferred tax asset 35 873 38 623
Advance to the share trust 1 446 1 465
Current assets 100 396 156 776
Inventories 386 384
Trade and other receivables 93 557 131 009
Taxation 192 -
Cash and cash equivalents 6 261 25 383
Total assets 147 932 209 817
Equity and liabilities
Capital and reserves 75 132 129 141
Non-current liabilities 1 934 2 697
Current liabilities 70 866 77 979
Trade and other payables 29 442 39 639
Short-term borrowings 38 242 32 010
Taxation - 6 330
Bank overdraft 3 182 -
Total equity and liabilities 147 932 209 817
Number of shares in issue at
period-end ('000) 140 610 153 159
Net asset value per share (cents) 53 84
Cash flow statement
Audited Restated audited
16 months 12 months
ended ended
30 June 29 February
2001 2000
R'000 R'000
Operating activities 17 066 (10 247)
Investing activities (44 962) (28 188)
Financing activities 5 386 42 737
Net (decrease)/increase in
cash and cash equivalents (22 510) 4 302
Cash obtained from businesses
and subsidiaries acquired 206 7 640
Cash and cash equivalents at
beginning of the period 25 383 13 441
Cash and cash equivalents at
end of the period 3 079 25 383
Statement of changes in equity
Audited Restated audited
16 months 12 months
ended ended
30 June 29 February
2001 2000
R'000 R'000
Balance at beginning of period
- as previously shown 115 455 6 673
Prior year adjustment 13 686 33 219
Balance at beginning of period
- restated 129 141 39 892
Net shares (reversed)/issued during
the period (174) 619
Net share premium
(reversed)/issued during
the period (52 399) 173 866
Intangible asset and share
issue expenses
written off (58) (102 927)
Repurchase of securities (5 399) -
Net income for the period 4 021 17 691
Balance at end of the period 75 132 129 141
Notes
Audited Restated audited
16 months 12 months
ended ended
30 June 29 February
2001 2000
R'000 R'000
Reconciliation of
headline earnings
Net income attributable
to shareholders 4 021 17 691
After tax effect of
restructuring
charges 5 365 -
After tax effect of
adjustment of
acquisition debits 920 -
Impairment of advance to share trust 2 449 -
12 755 17 691
Prior year adjustment
Debits arising from businesses
Previously
under the management
control of vendors
prior to the reorganisation
of the
group (18 826) (4 315)
Adoption of AC102 in respect of
deferred taxation 32 512 37 534
13 686 33 219
Comments
Group profile and overview
During the period under review Privest completed its re-engineering process
with a fast track approach leading to the emergence of a strengthened,
unified group true to its original focus. Privest has shed its vendor driven
structure and developed a corporate environment with an energised team, who
are expected to deliver an improved performance in the coming year.
All operations were restructured into a single brand platform to maximise
operational efficiencies. The organisation is now able to provide a fully-
fledged, multi-disciplinary business-to-business range of outsourced
services, encompassing human resource management solutions, human resource
skills development and human resource staffing solutions.
Operational overview
Privest had a difficult period due to pressure on margins and the effects of
certain irregular vendor activities.
The Solutions and Training divisions performed below expectation as a result
of delays and cutbacks on training contracts arising from poor economic
conditions and legislative uncertainties.
The Recruitment division was rationalised into a single, brand-driven
division, and although its performance was inconsistent, it is well
positioned for the coming year.
The Outsourcing division undertook a complete reorganisation during which
there was a reduction in operational performance. The division has, however,
maintained the substantial infrastructure required to fulfil large
contracts, the benefits of which should be felt in the second half of the
coming year.
The group uncovered problems from certain vendors who, by aggressively
targeting profits in order to achieve warranties, may have misrepresented
their financial positions and made reckless trading decisions. Due to the
autonomous vendor management control inherent in the acquisition agreements,
these irregularities were not uncovered until the group terminated
outstanding vendor warrants as part of the group restructuring.
Financial review
The restructuring resulted in the detection of some doubtful assets
including debtors, sundry assets and prepaid expenses relating to acquired
businesses. The adjustments have been accounted for in the financial years
to which they relate.
Changes made to vendor and divisional management and new head office
financial controls will ensure that such irregularities do not recur. The
group has also instituted legal action where appropriate.
During the sixteen-month period, the group achieved revenue of R780 million
and improved operating cash flow by some R27,3 million, underlining the
group's continued focus on positive cash generation.
The settlement of final vendor payments and the write off of uncollected
assets resulted in high interest costs. Headline earnings per share,
excluding restructuring costs, of 8,81 cents (annualised for twelve months
at 6,61 cents per share) decreased by 41,7% from the previous year's
restated headline earnings of 11,34 cents per share.
The group has taken a conservative approach to the quality of its assets and
is comfortable that the balance sheet is a sound financial platform from
which to grow the business.
Prospects
The outlook for the international economy and consequently the South African
business environment is cause for concern and the year ahead will be
challenging. Privest, however, has developed a solid foundation for its
business-to-business services and its aggressive focus on rightsizing should
result in improved profits in the year ahead. The second six months of the
coming year are expected to be stronger than the first half.
Privest aims to manage and optimise its resources around a shared, single
brand platform. The group has formulated a defined and measurable three year
strategy, which maintains its original focus, but remains flexible to meet
the continually changing environment within which it operates.
Thanks must be extended to the board, the group's management and its
dedicated team of people for their effort and commitment during a most
trying period, as well as to other stakeholders for their continued support.
STRATE
Privest shares dematerialised under the STRATE system on Monday, 10
September 2001, with the first day of electronic trading to be on Monday, 1
October 2001 for settlement on Monday, 8 October 2001.
Accounting policies
The accounting policies, as set out in the group's annual report, have been
consistently applied throughout the period under review, with the exception
of deferred tax, where the requirements of AC102 were adopted. The
comparative periods have, therefore, been restated. These policies are in
accordance with South African Statements of Generally Accepted Accounting
Practice.
Share buy-back
The group completed the buy-back of 10% of its issued share capital in the
latter half of the sixteen-month period and will continue to repurchase its
shares in the coming year at appropriate price levels, subject to the
necessary approvals.
Dividend
The group will not declare a dividend this year. However, the board hopes to
resume an annual year-end dividend in the coming year.
For and on behalf of the board
M Abel RS Scott
Executive chairman Chief financial officer
Johannesburg
21 September 2001
e-mail: productivity@privest.co.za
Web site: www.privest.co.za
Directors
M Abel (Executive chairman), PL Gray (Chief operating officer), JM Judin*,
Professor S Klein* (American), G Magomola*, S Meltzer*, CS Seabrooke*, RS
Scott (Chief financial officer)
(*Non-executive)
Registered address
Suite 321, The Firs, Cnr Cradock and Biermann Avenues, Rosebank 2196 (PO Box
3008, Saxonwold 2132)
Transfer secretaries
Computershare Services Limited, Edura House, 41 Fox Street, Johannesburg
2001 (PO Box 62391, Marshalltown 2107)
