| Tue 25 Sep 2001, 0:00 | | Rebhold Limited - Audited Results For The Year End |
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Incorporated in the Republic of South Africa)
(Registration number 1995/004153/06)
("Rebhold")
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2001
- Disposal of wholesale division and all non-core businesses
- Transformation to a focused services group
- Excellent growth in services businesses
- Profit from operations in services businesses up 56% to R237,4 million
- Strong balance sheet
Summarised Group Income Statement
Restated
Audited and audited
year year
ended ended
30 June % 30 June
2001 Increase/ 2000
R'000 (decrease) R'000
Turnover 5 559 588 24 4 496 959
Continuing operations 2 379 115 115 1 108 870
Disposed operations 3 180 473 (6) 3 388 089
Cost of sales 4 457 746 3 655 417
Profit from operations 352 221 15 307 241
Continuing operations 237 390 56 151 802
Disposed operations 114 831 (26) 155 439
Net investment income 43 653 (18) 53 360
Net income before taxation
and exceptional items 395 874 10 360 601
Exceptional items 53 311 -
Net income before taxation 449 185 360 601
Taxation (96 072) (86 333)
Net income after taxation 353 113 274 268
Net income attributable to
outside shareholders (4 314) (26 801)
Net income attributable to
ordinary shareholders 348 799 41 247 467
Number of shares in
issue (000) 193 730 180 630
Weighted average number
of shares in issue (000) 193 730 180 630
Earnings per share (cents) 180,0 137,0
Headline earnings
per share (cents) 134,6 (2) 137,0
Diluted headline earnings
per share (cents) 134,6 1 133,0
Dividend per share (cents) 20,5 20,0
Summarised Group BALANCE SHEET
Restated
Audited and audited
30 June 30 June
2001 2000
R'000 R'000
ASSETS
Non-current assets 623 789 572 557
Fixed assets 513 026 282 290
Investments and loans 68 647 154 703
Deferred taxation 42 116 135 564
Current assets 1 548 528 1 259 008
Liquid funds 657 212 571 040
Other current assets 891 316 687 968
TOTAL ASSETS 2 172 317 1 831 565
EQUITY AND LIABILITIES
Capital and reserves 926 966 685 228
Share capital and reserves 706 624 335 656
Amounts due to vendors 199 163 237 821
Outside shareholders' interest 21 179 111 751
Non-current liabilities 264 072 25 617
Interest bearing liabilities 254 915 22 187
Non-interest bearing liabilities 9 157 3 430
Current liabilities 981 279 1 120 720
Interest bearing liabilities 40 547 54 272
Non-interest bearing liabilities 940 732 1 066 448
TOTAL EQUITY AND LIABILITIES 2 172 317 1 831 565
Net asset value per share (cents) 381,0 269,4
Net tangible asset value per share (cents) 256,7 197,4
Summarised Group cash flow statement
Restated
Audited and audited
30 June 30 June
2001 2000
R'000 R'000
Cash generated from operations 303 761 240 118
Net investment income 43 653 53 360
Taxation paid (80 111) (72 878)
Dividends paid (14 890) (5 867)
Cash available from operating activities 252 413 214 733
Cash effects of investing and
financing activities (44 066) (280 366)
Net movement in liquid funds 208 347 (65 633)
Net liquid funds at the beginning
of the year and on acquisition/disposal
of businesses and subsidiaries 448 865 636 673
Net liquid funds at the end of the year 657 212 571 040
STATEMENT OF CHANGES IN EQUITY
Restated
Audited and audited
30 June 30 June
2001 2000
R'000 R'000
Balance at the beginning of the year 573 477 744 728
New shares issued 14 902 (139)
Acquisition/disposal of subsidiaries
and businesses (30 951) 48 036
Net income attributable to ordinary
shareholders 348 799 247 467
Dividends paid (440) (5 543)
Goodwill and trade marks written off - (461 072)
Balance at the end of the year 905 787 573 477
segmental information
30 June % 30 June
2001 Increase/ 2000
R'000 (decrease) R'000
TURNOVER
Services (Continuing
operations) 2 379 115 115 1 108 870
Facilities management and
professional services 898 035 75 374
Mining and technical services 574 841 342 995
Food services 472 847 387 399
Support services 433 392 303 102
Wholesale (Disposed
operations) 3 180 473 (6) 3 388 089
5 559 588 4 496 959
PROFIT FROM OPERATIONS
Services (Continuing
operations) 237 390 56 151 802
Facilities management and
professional services 61 310 11 651
Mining and technical
services 87 908 56 469
Food services 45 292 41 471
Support services 42 880 42 211
Wholesale (Disposed
operations) 114 831 (26) 155 439
352 221 307 241
COMMENTARY
Transformation into a focused services group
At the start of this financial year Rebhold had two distinct and disparate
divisions - services and wholesale. In line with the group's strategy of
establishing and maintaining its position as the leading provider of
facilities management and integrated services in South Africa, the group has
been restructured by disposing of the wholesale division in its entirety and
successfully transforming Rebhold into a focused services group.
Shareholders are referred to the announcement dated 21 September 2001
recording that the Competition Tribunal has approved of the disposal of
Jumbo Cash & Carry and certain Browns and Weirs stores to Massmart Holdings
Limited ("Massmart") with the result that such disposal has become
unconditional and will now be implemented ("the wholesale disposal").
Publication of these audited results was delayed pending the Competition
Tribunal's approval of the wholesale disposal.
The restructuring of the group extended to the disposal of the non-core
wholesale, liquor, beverages and treated timber businesses. Other highlights
of the year were the successful commencement of the Telecommunications
Facilities Management Company's ("TFMC") ten-year facilities management
contract with Telkom, and the acquisition and integration of the Berco
Cleaning businesses.
The group ended the year in a strong financial position. Rebhold intends to
apply its substantial resources to grow and expand its services offering
through selected services acquisitions, the conclusion of new facilities
management contracts and by undertaking a share buy-back programme, subject
to market circumstances. Rebhold's directors are confident that returns to
shareholders and growth will be maximised as a result of this focused
services strategy.
Disposal of wholesale, liquor, beverages, and treated timber businesses
Jumbo Cash & Carry, Browns and Weirs and Sip `n Save
Twenty-one Browns and Weirs stores were not sold to Massmart in terms of the
wholesale disposal; of these, nine stores have now been closed and twelve
stores have been sold. The closure of the Browns and Weirs head office and
regional offices is well advanced. Full provision has been made for all
Browns and Weirs closure costs, which had a significant adverse impact on
the results of the wholesale division in the year under review. No
additional expenses in respect of the Browns and Weirs closure, other than
those provided for, are expected to be incurred in future reporting periods.
Jumbo and Sip `n Save's results for the nine months ended 31 March 2001, and
Browns and Weirs results for the twelve months ended 30 June 2001, are
included in Rebhold's audited results for the year. While Jumbo's
performance was in line with expectations, the fact that Jumbo's results
were only included for nine months in the current financial year, whereas
they were included for the full twelve months in the previous financial
year, exacerbated the deterioration in the performance of the wholesale
division relative to the previous year. Browns and Weirs' results were poor
due to continued depressed trading conditions in the Eastern Cape and Kwa-
Zulu Natal rural regions as well as the negative impact of staff
retrenchments and related uncertainty prior to the completion of the
disposal process.
Liquor, beverages, and treated timber businesses ("the non-core businesses")
The liquor and beverages businesses had an unsatisfactory performance in a
particularly challenging environment given the changes in personal
consumption expenditure patterns, the uncertainty surrounding liquor
legislation and the reduced volumes of exported low grade wine. The liquor,
beverages, and treated timber businesses were non-core to Rebhold's
facilities management and services focus. Accordingly, the businesses of
Picardi Rebel, Boland Wine, Southern Superfoods, UniClinecor, Coffee Tea and
Chocolate Company and Treated Timber Products were sold with effect from 30
June 2001 to different consortia comprising in each instance mainly
management and staff, including empowerment interests. The Picardi Rebel
disposal remains subject, inter alia, to Competition Commission approval.
Earnings effect of the wholesale disposal and of the disposal of the non-
core businesses
Had the wholesale disposal and the closure of the remaining Browns and Weirs
stores been effective from 1 July 2000, Rebhold's diluted headline earnings
per share for the year ended 30 June 2001 would have decreased by 21,3 cents
(16%) from 134,6 cents to 113,3 cents. Furthermore, had the additional
disposals of the non-core businesses been effective from 1 July 2000,
Rebhold's diluted headline earnings per share for the year ended 30 June
2001 would have decreased by a further 12,7 cents (9%) to 100,6 cents.
Resultant group structure
The resultant group structure after the wholesale disposal and the disposal
of the non-core businesses is shown below.
Financial Results
The group reports a satisfactory overall result for the year ended 30 June
2001, against the background of continued difficult trading and economic
conditions. Turnover increased by 24% to R5 560 million, with the inclusion
of TFMC for the first time. Profit from operations increased by 15% to
R352,2 million. Investment income declined by 18% to R43,7 million as a
result of lower interest rates than for the comparable period, and reduced
cash balances after further cash payments to vendors. The effective tax rate
at 24% is mainly as a result of the change in the deferred tax accounting
policy as detailed below and existing preference share investments.
The exceptional item of R53,3 million comprises the net capital profit
arising from the sale and closure of the wholesale division and the non-core
businesses, the write down of assets and provision for closure costs in
Browns and Weirs and the non-core businesses, and the amortisation of
goodwill. The cumulative capital profit realised on the disposal of
Rebhold's original investment in Jumbo now exceeds R300 million, of which
R253,5 million was accounted for in the financial year ended 30 June 1999
and the balance in the year under review.
To clearly demonstrate the financial performance of the group, given the
fundamental transformation and restructuring of Rebhold, the results of the
continuing services operations are disclosed separately from the results of
the disposed wholesale, liquor, beverages, and treated timber businesses.
Despite the wholesale division making a lower contribution due to the
combined effect of the inclusion of Jumbo for only nine months and worsening
trading conditions, excellent growth in the continuing services division
enabled the group to increase diluted headline earnings per share by 1% to
134,6 cents. Earnings per share decreased by 2% to 134,6 cents as a result
of the higher number of shares in issue. This increase in the number of
shares in issue is attributable to the settlement of the majority of the
amounts due to vendors which were required to be discharged by the issue of
shares. Cash generated from operations increased by 27% to R303,8 million,
and equates to 86% of the group's profit from operations.
At 30 June 2001 Rebhold's net liquid funds at the centre on a pro-forma
basis would have amounted to approximately R400 million assuming the receipt
of the wholesale disposal consideration of R320 million, and further
assuming the deduction of the cash payment of R98 million to the Jumbo
vendors, long-term treasury liabilities of R180 million, the balance of the
Molope purchase consideration of approximately R230 million, the dividend of
R40 million declared herewith and working capital requirements. The unpaid
balance of the Molope purchase consideration will be settled once the
litigation between Molope and, inter alia, the Industrial Development
Corporation has been finally resolved. While Rebhold is not a party to any
of the Molope litigation, the balance of the Molope purchase consideration
only becomes due for payment by Rebhold in terms of the relevant acquisition
agreement following the final conclusion of such litigation.
Services operations
Rebhold's subsidiaries have historically operated as autonomous stand alone
businesses. During the financial year, good progress was made in improving
day to day interaction and co-operation amongst the group companies to
optimise synergistic benefits, cross marketing of opportunities and reducing
costs through economies of scale, while retaining the decentralised
management structure. Rebhold has also combined a number of its subsidiaries
into single operating businesses with management teams focused directly on
particular market segments. To this end, the food distribution services
businesses have been integrated into Stamford Sales, the freight forwarding
operations have been integrated into Contract Forwarding and the cleaning
businesses have been integrated into Berco Cleaning.
Facilities management and professional services
TFMC has performed well in its maiden year and is on target to achieve cost
savings for Telkom as well as improvements in service levels in the
facilities management operations. New opportunities in the facilities
management, professional and support services markets continue to be
developed. Those contracts where JIC provides comprehensive mining
facilities management services performed in line with expectations.
Mining and technical services
JIC Mining performed very well in difficult conditions. Trollope Mining
performed satisfactorily and continued to diversify its client base across
various mining resource sectors. Both JIC Mining and Trollope Mining
continued to profitably expand their services in line with the global trend
towards outsourcing mining services.
Food Services
Stamford Sales achieved excellent growth as a result of improved market
share, distribution efficiencies and an expanded product offering. Royal
Food Services' performance was in line with expectations. MRS performed well
through growth in new contracts. King Pie performed in line
with expectations.
Support Services
Cleaning services
The Berco Cleaning businesses were acquired during the year under review.
Berco has performed well and increased its market share, particularly in the
leisure and private healthcare sectors. The company has also broadened its
national footprint into the KwaZulu-Natal market with the award of the
cleaning contract for the Gateway shopping centre in Umhlanga.
Security services
Protea Security and Telesafe performed well and increased their market
shares. Coin Security had a poor performance, but contributed to
profitability. Rebserve bolstered the management team at Coin Security by
appointing MC du Toit as acting managing director during June 2001. Early
indications of an improvement at Coin Security are encouraging.
Freight forwarding services
Contract Forwarding and Trans Global performed satisfactorily. Continued
weakness in the Rand has seen a decrease in import volumes and increased
competition in the clearing and forwarding market.
Changes in accounting policies
The audited results for the year ended 30 June 2001 have been prepared in
accordance with South African Statements of Generally Accepted Accounting
Practice. The accounting policies are consistent in all respects with the
accounting policies applied for the year ended 30 June 2000, except as noted
below.
Deferred tax
The accounting policy with regard to deferred tax has been changed to
recognise deferred tax assets in accordance with the new accounting
statement AC102. The change resulted in a reduction in headline earnings per
share for the twelve months ended 30 June 2000 from 144,6 cents to 137,0
cents. Diluted headline earnings per share for the twelve months ended 30
June 2000 was reduced from 140,6 cents to 133,0 cents. Comparative amounts
have been restated accordingly.
Intangible assets
In accordance with the new accounting standard for intangible assets, the
group's accounting policy for intangible assets has been changed for the
current financial year to amortise goodwill and intangibles over their
estimated useful lives. Intangible assets were previously written off
against share premium and reserves.
Turnover
Under certain service contracts the group manages customer expenditure and
is obliged to purchase goods and services from third party contractors and
recharge them on to the customer at cost. These "flow through" amounts
charged by contractors and recharged to customers at cost are now excluded
from turnover and cost of sales. Debtor and creditor balances relating to
these transactions are recorded in the balance sheet. Comparative amounts
have been restated accordingly.
Share Transactions Totally Electronic (strate)
The company's shares were dematerialised on 10 September 2001. Electronic
trading will commence on 1 October 2001 and the first electronic settlement
will be on 8 October 2001. A circular providing
full details of the company's dematerialisation in terms of STRATE was
posted to shareholders on 3 August 2001.
Dividend
The directors of Rebhold have resolved to declare a cash dividend of 20,5
cents per share to all shareholders. The last day to trade "cum" the
dividend in order to participate in the dividend will be Friday, 19 October
2001. The shares of Rebhold will commence trading "ex" the dividend from the
commencement of business on Monday, 22 October 2001 and the record date will
be Friday, 26 October 2001. Dividend cheques will be posted or electronic
dividend payments made to shareholders on 30 October 2001.
Change of company name to Rebserve Holdings Limited and reconstitution of
the board of directors
As announced on 30 May 2001 and in order to reflect the focused services
nature of the group, Rebhold:
- intends to change its name to Rebserve Holdings Limited; and
- has reconstituted the board of directors.
Accordingly, Messrs Anthony Haggie, Jacques Kempen, Brian McIntyre and Steve
Seetha have stepped down as directors. We thank them for their valuable role
and commitment in establishing Rebhold. Will Paskins joins the board as
chief executive of Rebserve. We look forward to his valuable insights and
the extensive international facilities management experience he brings to
the group. Cyril Ramaphosa becomes deputy chairman. The reconstituted board
accordingly comprises SM Levenberg (Chairman), MC Ramaphosa (Deputy
Chairman), W Paskins (Chief Executive), MH Brodie, F Cohen, AP Nkuna, PL
Schlebusch, CD Stein, and BC Till. A circular convening a general meeting to
authorise the change of name will be sent to shareholders in due course.
Prospects
The group has created a sound platform for growth in the services sector
with a strong financial position and good operational management expertise.
Rebserve is expected to capitalise on promising organic growth prospects
arising from the increasing trend towards outsourcing non-core services and
activities as well as its existing position as the leading supplier of
integrated services in South Africa. The group will continue to focus on
maximising the synergistic benefits between it subsidiaries in order to
ensure excellent service levels and cost savings to Rebserve's customers in
relation to outsourced services. Acquisitions of focused services companies
will be pursued to enhance the group's strategic position as the leading
provider of integrated facilities management and services in South Africa.
In the absence of unforeseen circumstances, the group expects to deliver
real earnings growth in the year ahead off the base which has been
established of 100,6 cents pro-forma diluted headline earnings per share
from the continuing operations (including investment income) for the year
ended 30 June 2001.
For and on behalf of the Board
S M Levenberg B C Till
Chairman Financial Director 25 September 2001
A copy of these audited results are available on the Rebhold website at
www.rebhold.com
Registered office: Hunts End, 36 Wierda Road West, Wierda Valley, Sandton,
2196, PO Box 1639, Rivonia, 2128. Telephone (011) 290-4200, Telefax (011)
783-0027
Sponsor: Deutsche Bank Securities (Pty) Ltd
Share Code: RBH
ISIN Code: ZAE 000011631
Transfer secretaries: Computershare Services Limited, 4th Floor, Edura
House, 41 Fox Street, Johannesburg 2001
