| Mon 24 Feb 2003, 17:23 | | Rebserve Holdings Limited - Interim report for the |
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Rebserve Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1995/004153/06)
("Rebserve")
ISIN: ZAE000034484
Share code: RBV
Interim report for the six months ended 31 December 2002
FINANCIAL HIGHLIGHTS
* Headline earnings per share up 13% to 62,5 cents
* Fully diluted headline earnings per share up 10% to 60,8 cents
* Turnover up 10% to R1 570 million
* Profit from operations up 9% to R145 million
The following are the unaudited results of Rebserve and its subsidiaries ("the
group") for the six months ended 31 December 2002 with comparative figures.
Summarised Group Income Statement
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
31 December 31 December 30 June
2002 % 2001 2002
R`000 increase R`000 R`000
Turnover 1 569 583 10 1 426 406 2 911 107
Profit from 145 344 9 133 534 255 232
operations
Net investment 20 067 23 906 48 851
income
Net profit before 165 411 157 440 304 083
taxation and
goodwill amortised
Goodwill amortised (7 042) (5 666) (13 952)
Net profit before 158 369 151 774 290 131
taxation
Taxation (38 977) (39 446) (71 947)
Net profit after 119 392 112 328 218 184
taxation
Net profit (12 368) (11 897) (23 547)
attributable to
outside shareholders
Net profit 107 024 7 100 431 194 637
attributable to
ordinary
shareholders
Number of shares in 176 720 193 730 184 583
issue (after share
buybacks) (000)
Weighted average 182 540 191 905 188 610
number of shares in
issue (000)
Earnings per share 58,6 52,3 103,2
(cents)
Headline earnings 62,5 13 55,3 110,6
per share (cents)
Diluted headline 61,4 11 55,3 110,6
earnings per share
(cents)
Fully diluted 60,8 10 55,3 109,6
headline earnings
per share (cents)
Dividend per share - - 30,0
(cents)
Summarised Group Balance Sheet
Unaudited Unaudited Audited
6 months 6 months year
ended Ended ended
31 December 31 December 30 June
2002 2001 2002
R`000 R`000 R`000
ASSETS
Non-current assets 674 645 661 991 698 622
Fixed assets 567 336 535 630 588 231
Investments and loans 60 232 85 549 64 335
Deferred taxation 47 077 40 812 46 056
Current assets 1 157 112 1 088 950 1 296 314
Liquid funds 502 187 611 671 741 429
Other current assets 654 925 477 279 554 885
TOTAL ASSETS 1 831 757 1 750 941 1 994 936
EQUITY AND LIABILITIES
Capital and reserves 873 531 818 229 882 607
Share capital and reserves 792 020 711 118 792 409
Amounts due to vendors 62 940 95 527 70 608
Outside shareholders` 18 571 11 584 19 590
interest
Non-current liabilities 223 214 90 260 219 776
Interest bearing 213 868 77 448 213 499
liabilities
Non-interest bearing 9 346 12 812 6 277
liabilities
Current liabilities 735 012 842 452 892 553
Interest bearing 68 569 96 873 60 479
liabilities
Non-interest bearing 666 443 745 579 832 074
liabilities
TOTAL EQUITY AND 1 831 757 1 750 941 1 994 936
LIABILITIES
Net asset value per share 470,6 383,9 458,0
(cents)
Net tangible asset value 305,1 252,5 295,3
per share (cents)
Summarised Group Cash Flow Statement
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
31 December 31 December 30 June
2002 2001 2002
R`000 R`000 R`000
Profit from continuing 145 344 133 534 255 232
operations
Non-cash items 38 473 33 041 70 523
Working capital changes (50 946) (53 093) (56 667)
Cash generated from 132 871 113 482 269 088
operations
Net investment income 20 067 23 906 48 851
Taxation paid (59 919) (65 816) (109 699)
Dividends paid (55 081) (39 720) (39 244)
Cash available from operating 37 938 31 852 168 996
activities
Cash effects of investing (20 515) 254 064 221 670
activities
Cash effects of financing (256 665) (331 457) (306 449)
activities
Net movement in liquid funds (239 242) (45 541) 84 217
Net liquid funds at the 741 429 657 212 657 212
beginning of the period
Net liquid funds at the end 502 187 611 671 741 429
of the period
Statement of changes in equity
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
31 December 31 December 30 June
2002 2001 2002
R`000 R`000 R`000
Balance at the beginning of 863 017 905 787 905 787
the period
Shares acquired (52 333) (56 215) (69 608)
Acquisition of subsidiaries (7 668) (103 638) (128 555)
and businesses
Net profit attributable to 107 024 100 431 194 637
ordinary shareholders
Dividends (55 080) (39 720) (39 244)
Balance at the end of the 854 960 806 645 863 017
period
Reconciliation between net profit attributable to ordinary shareholders and
headline net profit attributable to ordinary shareholders
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
31 December 31 December 30 June
2002 % 2001 2002
R`000 increase R`000 R`000
Net profit 107 024 100 431 194 637
attributable to
ordinary shareholders
Goodwill amortised 7 042 5 666 13 952
Headline net profit 114 066 8 106 097 208 589
attributable to
ordinary shareholders
segmental information
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
31 December 31 December 30 June
2002 % 2001 2002
R`000 increase R`000 R`000
TURNOVER
Facilities 523 234 547 889 1 128 067
management and
professional
services
Mining and 351 590 326 537 641 595
technical
services
Food services 384 188 270 557 595 612
Support services 310 571 281 423 545 833
1 569 583 10 1 426 406 2 911 107
PROFIT FROM
OPERATIONS
Facilities 50 442 41 332 87 750
management and
professional
services
Mining and 44 027 51 471 81 280
technical
services
Food services 27 916 23 440 47 953
Support services 22 959 17 291 38 249
145 344 9 133 534 255 232
Commentary
Financial results
Rebserve achieved a steady overall performance in the period under review.
Trading conditions remain difficult, notwithstanding the more stable economic
environment and improved rand exchange rate.
Turnover increased by 10% to R1 570 million. Profit from operations increased by
9% to R145 million compared to the six month period ended 31 December 2001 ("the
comparable period"), and increased by 19% compared to the six months ended 30
June 2002. Net income attributable to minority shareholders (which relate mainly
to TFMC) increased to R12 million. Headline net profit attributable to ordinary
shareholders increased by 8% to R114 million. The weighted average number of
shares in issue decreased to 183 million shares as a result of share buybacks.
Headline earnings per share amounted to 62,5 cents, up 13% on the comparable
period. Fully diluted headline earnings per share of 60,8 cents (which is based
on 187,5 million shares after taking into account the anticipated number of
shares still to be issued pursuant to historic acquisitions) was up 10% on the
fully diluted headline earnings per share for the comparable period of 55,3
cents, and up 12% on the fully diluted headline earnings per share of 54,3 cents
for the six months ended 30 June 2002. The growth in all of these numbers was
entirely organic.
Cash generated from operations of R133 million was in line with expectations,
equating to 91% of the profit from operations, and reflects the high quality of
earnings which result from annuity-based revenue streams and long term
contracts.
Liquid funds decreased from R741 million at 30 June 2002 to R502 million at 31
December 2002 following the payment of the balance of the Molope purchase
consideration of R188 million in December 2002. Had this amount been paid on 1
July 2002, the group`s fully diluted headline earnings per share for the period
under review would, at an assumed interest rate of 12% per annum, have been 56,6
cents. Total cash returned to shareholders amounted to R107 million, in the form
of the dividend paid during the period and the investment of a further R52
million in the buyback of 7,9 million Rebserve shares.
Strategic and organisational development
Strategic and organisational development has concentrated on three areas -
continuing to seek new large scale facilities management contracts, identifying
potential acquisition targets in new market sectors to expand the group`s
services offering, and the reorganisation of certain businesses to improve the
focus on individual market sectors while maximising operational efficiencies and
cross-marketing opportunities.
In October 2002 Rebserve announced that it had been selected by Propnet, a
division of Transnet Limited, as its preferred partner to establish a joint
venture facilities management entity (FME) within Transnet. The strategic plan
and business case for the FME have been submitted to Propnet, and Transnet`s
decision on whether to proceed with the FME, and on what basis, is awaited.
Rebserve currently operates in the mining, industrial, property, commercial and
retail sectors of the services market. Certain businesses within the group have
been streamlined in order to create more focused business units which
concentrate on different segments of their respective markets. The mining and
technical services division will concentrate on seeking new opportunities and
cross-selling the complementary services of the different mining services
businesses within the group. The group`s integrated services offering was
formally launched in November 2002 and is aimed at cross-marketing the
complementary services of the cleaning, catering and security businesses.
Operational performance
Trading conditions in most markets remained highly competitive. The performance
of the mining and technical services division improved substantially on the
previous six months. Results for the remaining businesses are in line with
management`s expectations.
Facilities management and professional services
TFMC continued to deliver a good financial performance, which was accompained by
improved service levels and an ISO 9001 accreditation. Notwithstanding the
higher inflation during the period, TFMC continues to deliver savings to Telkom
and to maintain expenditure in line with Telkom budgets.
JIC`s facilities management division was awarded a new three year contract by
the Goldfields group, with full responsibility for mining the Kloof number 9
shaft. Services commenced in October 2002 and the contract is anticipated to
reach full profitable capacity only in the new financial year.
Mining and technical services
The performance of the JIC Mining Services business was in line with
management`s expectations and delivered a strong improvement on the six month
period ended 30 June 2002. Management changes and the refocusing of the business
into specialist divisions have increased output and productivity, with a similar
improvement in operating margin.
Trollope Mining delivered a steady performance with the focus on productivity
and efficiencies. The level of prospecting work undertaken for clients increased
significantly and bodes well for increased production across the sector in the
year ahead. Opportunities to cross-sell the on surface and underground mining
services offered by the division are being pursued.
Food services
Stamford Sales performed well and benefited from the recent improvement in
consumer spending. High food inflation impacted negatively on margins with
certain cost increases having to be absorbed. Plans are in place to return
margins to their historic levels.
Royal and King Pie delivered steady performances in continuing difficult
markets. Royal was awarded the contract to operate the new student catering
facility at the Free State Technicon and is also short-listed as a catering
supplier for the new Coega development. The new Temane gas pipeline contract in
Mozambique has commenced, although the full benefit of this contract will only
be seen in the new financial year.
Support services
Rebserve Cleaning Services performed in line with expectations, with new
strategic initiatives being undertaken to grow and expand the business
nationally.
The security businesses, Coin and Protea, delivered good performances for the
period. The full impact of the restructuring and management changes which have
been implemented at Coin over the past 18 months are now being seen in the
improved performance. Good contract gains were experienced in both the guarding
and assets in transit divisions.
The freight forwarding businesses benefited from the more stable economic
environment. Progress was made in managing credit exposures and saw a reduction
in the incidence and cost of bad debts over the period.
Accounting policies
The results for the six months ended 31 December 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 2002.
Dividend policy and declaration
It is the group`s policy to declare a single annual dividend.
Black economic empowerment
Black economic empowerment remains a major strategic imperative and the group is
committed to materially increasing its BEE shareholding as soon as practical.
The group is actively pursuing new opportunities and initiatives in this regard.
Directorate
Cyril Ramaphosa has stepped down as Executive Deputy Chairman, having completed
his three year service contract with Rebserve, and he has accordingly resigned
from the board with effect from 20 February 2003 in order to pursue his personal
interests. We record our thanks for the meaningful contribution which Cyril has
made to Rebserve, particularly in the development of the businesses acquired
from Molope to the present stage where they now function efficiently within the
Rebserve group. We wish Cyril well in his future endeavours.
In line with the recommendations of the King II report, independent non-
executive directors , comprising and / or including non-executive directors from
previously disadvantaged groups, will be appointed to the Rebserve board as part
of a restructuring of the Rebserve board which will be implemented in the near
future.
Prospects
Rebserve continues to be the leading provider of facilities management and
integrated services in Southern Africa. The group remains confident about its
ability to continue to deliver organic growth from its existing operations, in
the normal course. Growth which is significantly above the current levels is
likely to be largely dependent on the winning of major new facilities management
and outsourcing contracts. Selective acquisitions will also be considered where
appropriate.
In the absence of unforeseen circumstances, Rebserve expects to deliver growth
in earnings per share and cash dividends for the current year.
SM Levenberg WJ Paskins
Chairman Chief Executive
24 February 2003
Sandton
Directors:
SM Levenberg (Chairman), WJ Paskins (Chief Executive),
MH Brodie * , F Cohen, CD Stein * , BC Till (* non-executive)
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 SA (Proprietary) Limited
Transfer Secretaries:
Computershare Investor Services Limited, 70 Marshall Street, Marshalltown,
Johannesburg, 2001
A copy of these results is available on the Rebserve website at:
www.rebserve.co.za
Date: 24/02/2003 05:15:05 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
