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Primeserv Group Limited
(Previously Privest Group Limited)
("Primeserv" or "the Group")
Incorporated in the Republic of South Africa
(Registration number 1997/013448/06)
Share code: PMV
ISIN number: ZAE000039277
Primeserv Group Limited
Interim results for the six months ended 31 December 2002
Income statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 June
2002 2001 2002
R`000 R`000 R`000
Revenue 246 191 291 133 532 924
Operating profit 6 443 9 403 18 896
Exceptional items - - 869
Depreciation 1 506 2 267 4 111
Goodwill amortisation 71 4 132
Net income before interest 4 866 7 132 13 784
Net interest paid 2 363 3 450 5 936
Net income before taxation 2 503 3 682 7 848
SA normal taxation 738 1 204 2 137
Net income attributable to
shareholders 1 765 2 478 5 711
Reconciliation of headline
earnings
Net income attributable
to shareholders 1 765 2 478 5 711
Goodwill amortisation 71 4 132
Headline earnings 1 836 2 482 5 843
Weighted average number of
shares in issue (`000) 129 523 140 610 138 289
Earnings per share (cents) 1,36 1,76 4,13
Headline earnings per
share (cents) 1,42 1,77 4,23
Segmental analysis
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 June
2002 2001 2002
R`000 R`000 R`000
Revenue
Corporate and Organisational
Services 30 717 19 806 49 980
Staffing Services 215 474 271 327 482 944
246 191 291 133 532 924
Net income before taxation
Corporate and Organisational
Services 538 990 212
Staffing Services 1 965 2 692 7 636
2 503 3 682 7 848
Abridged cash flow statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 June
2002 2001 2002
R`000 R`000 R`000
Operating activities 4 290 1 180 14 669
Investing activities (1 415) (555) (4 049)
Financing activities (20) 13 (513)
Net increase in cash at bank and
interest-bearing borrowings 2 855 638 10 107
Cash at bank and interest-bearing
borrowings at beginning of
the period (25 056) (35 163) (35 163)
Cash at bank and interest-bearing
borrowings at end of
the period (22 201) (34 525) (25 056)
Weighted average number of
shares (`000) 129 523 140 610 138 289
Cash flow per share (cents) 2,20 0,45 7,31
Balance sheet
Unaudited Unaudited Audited
31 Dec 31 Dec 30 June
2002 2001 2002
R`000 R`000 R`000
Assets
Non-current assets 43 383 44 583 45 338
Equipment and vehicles 5 646 8 212 6 431
Intangibles 1 207 256 1 278
Proceeds due from disposal of
business 2 060 - 2 411
Deferred tax asset 33 024 34 669 33 762
Share incentive scheme 1 446 1 446 1 456
Current assets 93 672 129 582 100 200
Inventories 601 627 437
Trade and other receivables 87 740 108 260 92 790
Taxation 96 197 171
Cash at bank 5 235 20 498 6 802
Total assets 137 055 174 165 145 538
Equity and liabilities
Capital and reserves 79 866 77 610 79 214
Non-current liabilities 1 400 1 948 1 421
Current liabilities 55 789 94 607 64 903
Trade and other payables 28 353 39 584 33 045
Short-term borrowings 3 220 5 207 301
Bank borrowings 24 216 49 816 31 557
Total equity and
liabilities 137 055 174 165 145 538
Number of shares in issue at
end of period (`000) 124 986 140 610 130 523
Net tangible asset value
per share (cents) 37 31 35
Net asset value per
share (cents) 64 55 61
Statement of changes in equity
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 June
2002 2001 2002
R`000 R`000 R`000
Balance at beginning of
period - as previously
shown 79 214 75 132 75 132
Repurchase of securities (1 113) - (1 629)
Net income for the period 1 765 2 478 5 711
Balance at end of the period 79 866 77 610 79 214
Comments
Introduction
The Group`s products and services are provided through its two business
segments: Corporate and Organisational Services, comprising the Solutions and
Training divisions, and Staffing Services, which is made up of the Recruitment
and Outsourcing divisions. These house human resources solutions, skills
training centres, corporate and vocational training programmes, recruitment and
flexible staffing services as well as skills, labour, wage bureau and logistics
outsourcing operations.
Financial review
The Group`s results reflect its focus on quality business and investment in the
balance sheet and Primeserv brand.
The balance sheet shows strong improvement with interest-bearing borrowings
lowered to R22,2 million from R34,5 million in 2001. Cash flow for the period
increased to 2,2 cents per share (2001: 0,45 cents per share).
Revenue, operating profit and net income attributable to shareholders were all
reduced, as expected, in line with the efforts to streamline revenues in the
Outsourcing division so as to achieve better margins and stronger cash flows.
Tough trading conditions in the Solutions, Training and Recruitment divisions
further contributed to the decreased operating profit. Headline earnings per
share were as a result down by 19,8% on the comparable period.
Operational review
The Group`s operations are cyclic with the first half historically weaker than
the second.
Corporate and Organisational Services
The Solutions division produced poor results. Corrective measures taken have
resulted in a more effective unit capable of future profits.
The Training division made progress during the period with a satisfactory result
from its technical training unit.
Staffing Services
The Recruitment operation experienced severe trading conditions resulting in a
loss for the first half of the financial year. Whilst the unit is not expected
to make a positive contribution in the coming period, this will not have a
material impact on the Group`s second half performance.
The Outsourcing division`s ongoing improvement in performance is expected to
continue in the second half. Emphasis has remained on streamlining sales to
achieve improved margins, stronger cash collection and the entrenchment of long-
term client service contracts.
Brand strategy
Primeserv continues investment in its single brand identity and positioning
through an integrated marketing campaign aimed at creating differentiated
awareness of and preference for the Primeserv range of products and services.
Empowerment
The Group is committed to black economic empowerment (BEE) principles and has
made strides on this front. Primeserv will in the next few months be launching a
new BEE initiative aimed at delivering economic empowerment at an operational
level. This will represent true empowerment of the Group`s staff as well as
genuine skills and equity transfer.
Accounting policies
The interim financial statements have been prepared in accordance with South
African Statements of Generally Accepted Accounting Practice. The accounting
policies are consistent with those used in the previous financial year, except
the adoption of AC133 - Financial Instruments - Recognition and Measurement.
This has had no material impact and therefore no adjustments have been made.
The Group adopted Circular 7/2002 - Headline Earnings, issued by the South
African Institute of Chartered Accountants. The prior year`s earnings have been
adjusted accordingly.
Dividend
It is the Group`s practice to consider dividends at the end of the financial
year only.
Outlook
Conditions in the human resources sector remain challenging. The Group is a
leading provider of integrated HR services and remains positioned to benefit
from economic improvements. Primeserv continues to seek growth opportunities
that match the long-term, single brand strategy of the Group.
For and on behalf of the board
M Abel
Executive chairman
PL Gray
Chief operating officer
JA Sparke
Chief financial officer
Johannesburg
5 March 2003
Directors
M Abel (Executive chairman), PL Gray (Chief operating officer), JM Judin*,
Professor S Klein* (American), G Magomola*, CS Seabrooke*, JA Sparke (Chief
financial officer)
(*non-executive)
Registered address
Venture House, Peter Place Park, 54 Peter Place, Bryanston 2021
(PO Box 3008, Saxonwold 2132)
Transfer secretaries
Computershare Investor Services Limited, 70 Marshall Street, Marshalltown 2107
(PO Box 62391, Marshalltown 2107)
e-mail: productivity@primeserv.co.za
Share code: PMV
ISIN number: ZAE000039277
These results are available on the Group`s website: www.primeserv.co.za
Complete HR Services
Date: 04/03/2003 05:00:00 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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