| Mon 26 Aug 2002, 0:00 | | Rebserve - Reviewed Results For The Year Ended 30 |
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Rebserve - Reviewed Results For The Year Ended 30 June 2002
Rebserve Holdings Limited
(formerly Rebhold Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1995/004153/06)
(ISIN: ZAE000034484)
Share Code: RBV
("Rebserve")
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2002
FINANCIAL HIGHLIGHTS
* Diluted headline earnings per share (compared to pro forma for the
prior year) up 10% to 111 cents
* Dividend per share increased by 46% to 30 cents
* Cash generated from continuing operations up 26% to R320 million
* Turnover from continuing operations up 22% to R2 911 million
* Profit from continuing operations up 8% to R255 million
The following are the reviewed results of Rebserve and its subsidiaries
("the group") for the year ended 30 June 2002 with comparative figures.
Summarised Group Income Statement
Pro forma
Reviewed audited Audited
year year year
ended ended ended
30 June 30 June 30 June
2002 % 2001 2001
R`000 change R`000 R`000
Turnover 2 911 107 2 379 115 5 559 588
Continuing operations 2 911 107 22 2 379 115 2 379 115
Discontinued operations - - 3 180 473
Profit from operations 255 232 8 237 390 352 221
Continuing operations 255 232 8 237 390 237 390
Discontinued operations - - 114 831
Net investment income 48 851 (7) 52 366 43 653
Net income before 304 083 5 289 756 395 874
taxation and exceptional
item
Exceptional item (note 2) (13 952) (10 525) 53 311
Net income before 290 131 279 231 449 185
taxation
Taxation (71 947) (70 055) (96 072)
Net income after taxation 218 184 4 209 176 353 113
Net income attributable (23 547) (24 847) (4 314)
to outside shareholders
Net income attributable 194 637 6 184 329 348 799
to ordinary shareholders
Number of shares in issue 184 583 193 730 193 730
(after share buybacks)
(000)
Weighted average number 188 610 193 730 193 730
of shares in issue (000)
Earnings per share 103,2 9 95,1 180,0
(cents)
Headline earnings per 110,6 10 100,6 134,6
share (cents)
Diluted headline earnings 110,6 10 100,6 134,6
per share (cents)
Fully diluted headline 109,6 9 100,6 134,6
earnings per share
(cents)
Dividend per share 30,0 46 20,5 20,5
(cents)
Note:
1. The pro forma results for the year ended 30 June 2001 were prepared
on the assumption that the disposal and/or closure of the wholesale and
non-core businesses had been effective from 1 July 2000.
2. The exceptional item in the current year comprises the amortisation
of goodwill.
Summarised Group Balance Sheet
Reviewed Audited
30 June 30 June
2002 2001
R`000 R`000
Assets
Non-current assets 698 622 623 789
Fixed assets 588 231 513 026
Investments and loans 64 335 68 647
Deferred taxation 46 056 42 116
Current assets 1 296 314 1 548 528
Liquid funds 741 429 657 212
Other current assets 554 885 891 316
Total assets 1 994 936 2 172 317
Equity and liabilities
Capital and reserves 882 607 926 966
Share capital and reserves 792 409 706 624
Amounts due to vendors 70 608 199 163
Outside shareholders` interest 19 590 21 179
Non-current liabilities 219 776 264 072
Interest bearing liabilities 213 499 254 915
Deferred taxation 6 277 9 157
Current liabilities 892 553 981 279
Interest bearing liabilities 60 479 40 547
Non-interest bearing liabilities 832 074 940 732
Total equity and liabilities 1 994 936 2 172 317
Net asset value per share (cents) 458,0 381,0
Net tangible asset value per share (cents) 295,3 256,7
Summarised Group Cash Flow Statement
Reviewed Audited
30 June 30 June
2002 2001
R`000 R`000
Cash generated from continuing operations 319 906 253 899
Cash utilised in discontinued operations (50 818) 49 862
Cash generated from operations 269 088 303 761
Net investment income 48 851 43 653
Taxation paid (109 699) (80 111)
Dividends paid (39 244) (14 890)
Cash available from operating activities 168 996 252 413
Cash effects of investing activities 221 670 (160 353)
Cash effects of financing activities (306 449) 116 287
Net movement in liquid funds 84 217 208 347
Liquid funds at the beginning of the year and 657 212 448 865
on acquisition / disposal of businesses and
subsidiaries
Liquid funds at the end of the year 741 429 657 212
Statement of Changes in Equity
Reviewed Audited
30 June 30 June
2002 2001
R`000 R`000
Balance at the beginning of the year 905 787 573 477
Shares issued/acquired (69 608) 14 902
Acquisition of subsidiaries and businesses (128 555) (30 951)
Net income attributable to ordinary 194 637 348 799
shareholders
Dividends (39 244) (440)
Balance at the end of the year 863 017 905 787
Reconciliation between net income attributable to ordinary shareholders
and headline net income attributable to ordinary shareholders
Reviewed Pro forma
Audited
30 June 30 June
2002 % 2001
R`000 change R`000
Net income attributable to ordinary 194 637 184 329
shareholders
Goodwill amortised 13 952 10 525
Headline net income attributable to 208 589 7 194 854
ordinary shareholders
Segmental Information
30 June 30 June
2002 % 2001
R`000 change R`000
Turnover
Services (continuing operations) 2 911 107 22 2 379 115
Facilities management and 1 128 067 898 035
professional services
Mining and technical services 641 595 574 841
Food services 595 612 472 847
Support services 545 833 433 392
Wholesale (discontinued - 3 180 473
operations)
2 911 107 5 559 588
profit from operations
Services (continuing operations) 255 232 8 237 390
Facilities management and 87 750 61 310
professional services
Mining and technical services 81 280 87 908
Food services 47 953 45 292
Support services 38 249 42 880
Wholesale (discontinued operations) - 114 831
255 232 352 221
commentary
Financial results
Rebserve achieved a satisfactory overall performance in its first year
as a focused services group, despite a setback in the form of a loss
incurred by JIC Mining Services ("JIC") on the premature termination of
a contract, which reduced diluted headline earnings per share by 4 cents
to 110,6 cents.
Turnover from continuing operations increased by 22%, comprising almost
entirely organic growth. Profit from continuing operations increased by
8% to R255 million. Net investment income decreased compared to the pro
forma results for the prior year as a result of the payment of R128
million in cash to vendors, increased gearing and R70 million invested
in the buyback of 9,1 million Rebserve shares. Net income attributable
to minority shareholders (which relate mainly to TFMC) decreased as a
result of the acquisition by Rebserve of the remaining minority
interests in TFMC during the year. Headline net income attributable to
ordinary shareholders increased by 7% to R209 million. The weighted
average number of shares in issue decreased to
189 million shares as a result of share buybacks. This resulted in
diluted headline earnings per share of 110,6 cents per share for the
year, up 10% on the pro forma diluted headline earnings per share for
the year ended 30 June 2001 of 100,6 cents.
Cash generated from the continuing services operations of R320 million
was excellent, equating to 125% of the profit from continuing
operations. The payment of the remaining creditors and costs associated
with the closure of the Browns and Weirs stores (in total R51 million)
reduced the overall group cash flow. The directors remain confident that
the final costs of closing Browns and Weirs will not exceed the original
estimates and provisions therefor.
The group`s balance sheet remains strong with liquid funds of R741
million at 30 June 2002 before the deduction of the balance of the
Molope purchase consideration, interest bearing debt, the dividend
declared herewith and working capital requirements.
Strategic development
Rebserve`s strategy is to be the leading, broadly based services group
in Southern Africa, focused on delivering value to all its stakeholders,
offering good growth prospects and financial returns founded on a base
of long term annuity-based contracts, and operating in a balanced mix of
market segments.
The past year has been one of consolidation for the group. Following the
disposal of the wholesale and non-core businesses during the 2001
financial year, Rebserve has concentrated on seeking new opportunities
for large scale facilities management contracts, developing its
integrated services offering, improving the management and information
systems in the businesses and implementing new management and corporate
governance disciplines.
There has also been an increased emphasis on all issues relating to
Black Economic Empowerment and Employment Equity. The group has
increased supply chain expenditure through BEE companies, assisted in
job creation schemes, continued with initiatives to educate and qualify
black artisans and has made positive steps in improving the
representation of previously disadvantaged groups in management
positions.
In accordance with its strategy, Rebserve will continue to evaluate
acquisition prospects which would give rise to additional service
capabilities and entrance into new markets.
Operational performance
Trading conditions in most markets remained highly competitive. The
anticipated increase in activity in the mining sector failed to
materialise and had a negative impact on the group`s results for the
second six months. Results for the remaining businesses are in line
with management expectations and reflect the sound mix of service
business within the group, the dependability which generally comes with
certain annuity-based service contracts and the strong management
expertise within the group.
Facilities management and professional services
TFMC delivered a good performance. Having completed its first full year
of operation it is on track to meet the targeted savings for Telkom.
Additional services were outsourced by Telkom to TFMC and TFMC was also
awarded responsibility for managing and advising on certain Telkom
capital projects.
The group, individually and in conjunction with WS Atkins plc
(Rebserve`s partner in TFMC), continues to explore opportunities for and
has tendered on new large scale facilities management contracts in
Southern Africa. While no major facilities management contracts were
awarded in South Africa during the year, the board remains optimistic
about the group`s potential to win such contracts in the foreseeable
future.
Mining and technical services
In June 2002 JIC`s gold mining contract at the Randfontein number 4
shaft was unexpectedly terminated, resulting in a loss of R11,5 million,
which figure includes the costs of retrenchments and the write-off of
development expenditure. This loss has been accounted for in the profit
from operations.
Notwithstanding the increase in the Rand price of both gold and
platinum, output in the South African mining sector declined over the
year. This decline in output and mining volumes impacted negatively on
JIC`s performance, particularly in the second half of the year. In the
light of these lower production levels, contracts with clients have been
renegotiated and margins restored to historic levels as evidenced by
trading results after the year end. JIC remains the dominant player in
the outsourced mining services sector, and in conjunction with other
group companies is one of only a few companies which is able to provide
a full range of outsourced services to the mining sector.
Trollope Mining delivered a good performance. Improvements in equipment
utilisation and replacement resulted in significant increases in
productivity and profitability, notwithstanding increases of up to 40%
in the major input costs which are US Dollar denominated.
Food services
Stamford Sales performed well and continues to gain market share as a
result of high service levels, innovative purchasing and mutually
beneficial relationships with both customers and suppliers.
Royal and King Pie have delivered steady performances in line with
expectations. Food price inflation increased substantially during the
year, resulting in pressure on margins. Although certain of these
increases were passed on to clients, others had to be absorbed as a
result of the greater number of full risk contracts which are being
awarded in the catering industry. New contracts were won in various
neighboring countries and Royal, through its empowerment joint venture
with Sechaba Afrika, is growing its reputation throughout the region.
Support services
Berco Cleaning performed in line with expectations. The former Rebserve
Cleaning business has been fully integrated into the Berco structures
with resultant efficiencies and savings. Growth in the KwaZulu-Natal and
Gauteng regions continued.
Protea Security delivered a good performance and won several high
profile contracts during the year. Coin Security`s performance in the
second half of the year represented a significant improvement on the
first half. With most of the management changes and restructuring now
completed, Coin is expected to benefit from growth in the security
industry and its dominant brand and market positioning in certain
sectors.
The high levels of volatility experienced by the Rand during the year
impacted negatively on import volumes and the performance of the freight
forwarding businesses. Increased credit risks and associated costs
arising from the difficult economic conditions also impacted on
performance and cash generation. The businesses remain optimistic about
prospects for the new year in a more stable exchange rate environment.
Balance of the Molope purchase consideration
On 18 August 2002 it was announced in the press that Rebserve had
concluded a settlement agreement with, inter alia, Molope Group Limited,
Nedcor Bank Limited and certain other banks, and anticipated discharging
the remaining net balance of the Molope purchase consideration of R188
million during or about August 2002. Had Rebserve settled and paid such
amount on 1 July 2001 and had Rebserve not received interest on such
amount, the group`s diluted headline earnings per share for the year
under review would, at an assumed interest rate of 10% per annum, have
been 103,6 cents.
Accounting policies
The results for the year ended 30 June 2002 have been prepared in
accordance with South African statements of Generally Accepted
Accounting Practice. The accounting policies used are consistent in all
respects with the accounting policies applied in the financial
statements for the year ended 30 June 2001.
Review by independent auditors
The results have been reviewed by the group`s auditors, Fisher Hoffman
PKF (JHB) Inc. Their unqualified review report is available for
inspection at the company`s registered office.
Share transactions totally electronic
Rebserve is aware that many Rebserve shareholders continue to hold
Rebserve share certificates and have not dematerialised their Rebserve
shares. All shareholders are advised to dematerialise their shares and
surrender all share certificates to their CSDP bank or broker prior to
29 September 2002, from which date the insurance cover provided to the
Dispossessed Member`s Fund (DMF) terminates. The DMF, which was
established by all listed South African companies and shareholders, the
JSE/brokers, the Central Securities Depository Participants (CSDPs) and
STRATE, was established to cover losses or claims arising from any
tainted certificates (tainted scrip) that may exist in the market place.
Shareholders might therefore place themselves at risk, should they not
dematerialise their share certificates prior to 29 September 2002 and
they are later found to be invalid or tainted.
Dividend policy and declaration
Having regard to the strongly cash generative nature of the services
businesses, Rebserve intends to progressively reduce its dividend cover
to the extent that circumstances permit.
The directors of Rebserve have resolved to declare a cash dividend of 30
cents per share to all shareholders. The last day to trade "cum" the
dividend in order to participate in the dividend will be Friday 18
October 2002. The shares of Rebserve will commence trading "ex" the
dividend from the commencement of business on Monday 21 October 2002 and
the record date will be Friday 25 October 2002. The dividend will be
paid to shareholders on Monday, 28 October 2002.
Prospects
Rebserve has completed a period of consolidation and refocusing, to
establish itself as the leading provider of facilities management and
integrated services in Southern Africa. The group is well positioned to
benefit from any general upturn in the economy and, more specifically,
from any acceleration in the process of awarding major facilities
management contracts in South Africa.
In the absence of unforeseen circumstances, Rebserve expects to deliver
growth in earnings per share and cash dividends for the ensuing year.
SM Levenberg WJ Paskins
Chairman Chief Executive
26 August 2002
Sandton
Registered Office:
Rebserve House, Hunts End, 36 Wierda Road West, Wierda Valley, Sandton,
2196
Telephone 27 11 290-4200
Telefax 27 11 783-0027
Sponsor: Deutsche Securities S.A. (Proprietary) Limited
Transfer Secretaries: Computershare Investor Services Limited, 4th Floor
Edura, 41 Fox Street, Johannesburg, 2001
Directors:
SM Levenberg (Chairman), MC Ramaphosa (Deputy Chairman), WJ Paskins
(Chief Executive), MH Brodie*, F Cohen, AP Nkuna*, CD Stein*, BC
Till
*Non-executive
A copy of these results is available on the Rebserve website at:
www.rebserve.co.za
Date: 26/08/2002 05:29:21 PM Produced by the JSE SENS Department
