| Mon 25 Aug 2003, 17:35 | | Reviewed Results For The Year Ended 30 June 2003 |
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Rebserve Holdings Limited - Reviewed Results For The Year Ended 30 June 2003
Rebserve Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1995/004153/06)
("Rebserve" or "the company")
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2003
Financial Highlights
* Revenue up 10% to R3 190 million
* Profit from operations up 8% to R276 million
* Distribution per share up 17% to 35 cents
* Headline earnings per share up 5% to 116 cents
* Cash generated from operations up 7% to R288 million
The following are the reviewed results of Rebserve and its subsidiaries ("the
group") for the year ended 30 June 2003 with comparative figures.
Summarised Group Income Statement
Reviewed Audited
Year ended Year ended
30 June % 30 June
2003 increase 2002
R"000 R"000
Revenue 3 189 576 10 2 911 107
Profit from operations 276 394 8 255 232
Net investment income 24 117 48 851
Net profit before taxation 300 511 304 083
and exceptional items
Exceptional items (note 1) (15 024) (13 952)
Net profit before taxation 285 487 290 131
Taxation (66 598) (71 947)
Net profit after taxation 218 889 218 184
Net profit attributable to (25 189) (23 547)
outside shareholders
Net profit attributable to 193 700 194 637
ordinary shareholders
-
Number of shares in issue 176 209 184 583
(after share buybacks) (000)
Weighted average number of 179 604 188 610
shares in issue (000)
Earnings per share (cents) 107,8 5 103,2
Headline earnings per share 116,2 5 110,6
(cents)
Fully diluted headline 114,0 4 109,6
earnings per share (cents)
Distribution per share 35,0 17 30,0
(cents)
Note 1: The exceptional items in the current year comprise the amortisation of
goodwill and the impairment of a loan account.
Summarised Group balance sheet
Reviewed Audited
30 June 30 June
2003 2002
R"000 R"000
ASSETS
Non-current assets 691 596 698 622
Fixed assets 590 116 588 231
Investments and loans 55 685 64 335
Deferred taxation 45 795 46 056
Current assets 1 121 579 1 296 314
Liquid funds 491 912 741 429
Other current assets 629 667 554 885
TOTAL ASSETS 1 813 175 1 994 936
EQUITY AND LIABILITIES
Capital and reserves 969 478 882 607
Share capital and reserves 875 769 792 409
Amounts due to vendors 62 467 70 608
Outside shareholders" interest 31 242 19 590
Non-current liabilities 168 454 219 776
Interest bearing liabilities 160 211 213 499
Deferred taxation 8 243 6 277
Current liabilities 675 243 892 553
Interest bearing liabilities 65 986 60 479
Non-interest bearing liabilities 609 257 832 074
TOTAL EQUITY AND LIABILITIES 1 813 175 1 994 936
Net asset value per share (cents) 522,1 458,0
Net tangible asset value per share 355,7 295,3
(cents)
Summarised Group cash flow statement
Reviewed Audited
30 June 30 June
2003 2002
R"000 R"000
Profit from operations 276 394 255 232
Non-cash items 88 595 70 523
Working capital changes (76 626) (56 667)
Cash generated from operations 288 363 269 088
Net investment income 23 987 48 851
Taxation paid (84 169) (109 699)
Dividends paid (55 081) (39 244)
Cash available from operating activities 173 100 168 996
Cash effects of investing activities (90 700) 221 670
Cash effects of financing activities (331 917) (306 449)
Net movement in liquid funds (249 517) 84 217
Net liquid funds at the beginning of the 741 429 657 212
year
Net liquid funds at the end of the year 491 912 741 429
statement of changes in equity
Reviewed Audited
30 June 30 June
2003 2002
R"000 R"000
Balance at the beginning of the year 863 017 905 787
Shares acquired (55 260) (69 608)
Acquisition of subsidiaries and (8 140) (128 555)
businesses
Net income attributable to ordinary 193 700 194 637
shareholders
Dividends (55 081) (39 244)
Balance at the end of the year 938 236 863 017
reconciliation between net profit attributable to ordinary shareholders and
headline net profit attributable to ordinary shareholders
Reviewed Audited
30 June 30 June
2003 2002
R"000 R"000
Net profit attributable to ordinary 193 700 194 637
shareholders
Goodwill amortised 14 347 13 952
Impairment of a loan account 677 -
Headline net profit attributable
to ordinary shareholders 208 724 208 589
Segmental information
Reviewed Audited
30 June 30 June
2003 % 2002
R"000 increase R"000
Revenue
Facilities management and 1 138 491 1 128 067
professional services
Mining and technical 696 970 641 595
services
Food services 738 087 595 612
Support services 616 028 545 833
3 189 576 10 2 911 107
PROFIT FROM OPERATIONS
Facilities management and 100 124 87 750
professional services
Mining and technical 81 400 81 280
services
Food services 47 965 47 953
Support services 46 905 38 249
276 394 8 255 232
Commentary
Financial results
Rebserve achieved a reasonable overall performance in the year under review.
Challenging trading and market conditions persisted throughout the year, with
volatility being experienced especially in the group"s mining services division,
as a result of declining profitability and margins in the mining industry.
Revenue increased by 10% to R3 190 million, notwithstanding a decrease in the
revenue of TFMC as that company continued to deliver decreased costs to Telkom.
Profit from operations increased by 8% to R276 million. Net investment income,
which comprises net interest and dividends received, decreased from R49 million
to R24 million following the investment of a further R55 million in share
buybacks, the settlement of the balance of the Molope purchase consideration of
R188 million in December 2002 and the payment of the dividend for the year ended
30 June 2002. Headline net income attributable to ordinary shareholders was R209
million, with the satisfactory increase in profit from operations being offset
by the substantial decrease in investment income. The weighted average number of
shares in issue decreased to 180 million as a result of share buybacks. Headline
earnings per share amounted to 116,2 cents, up 5% on the previous year. The
result comprises purely organic growth, with no material acquisitions concluded
during the period. Fully diluted headline earnings per share of 114,0 cents
(which is based on 183 million shares after taking into account the number of
shares still to be issued pursuant to historic acquisitions) was up 4% on the
fully diluted headline earnings per share for the prior year of 109,6 cents.
Cash generated from operations was R288 million, up 7% on the prior year,
reflecting the continuing emphasis on cash generation throughout the group. Free
cash flow for the year was R138 million, before taking into account the
settlement of the balance of the Molope purchase consideration of R188 million
and the additional investment of R55 million in share buybacks. Liquid funds
decreased from R741 million at 30 June 2002 to R492 million at 30 June 2003, as
a result of these capital outflows. Total cash returned to shareholders over the
past two years amounted to R219 million comprising dividends paid and share buy
backs.
Strategic and organisational development
The group continues to seek new large scale facilities management contracts.
Transnet"s decision on whether to proceed with the establishment of a joint
venture facilities management entity within Transnet in partnership with
Rebserve, and on what basis, is still awaited. Rebserve was declared the
preferred partner by Transnet in respect of this process in October 2002.
In August 2003 Rebserve Facilities Management (as part of a consortium)
concluded a 25 year contract to provide facilities management services to the
new Department of Trade and Industry complex being constructed in Tshwane.
Benefits are being derived from the cross-selling of the group"s integrated
services (mainly catering, cleaning and security). Sales and marketing efforts
in all of these areas have been increased and will include selling integrated
services solutions for clients in the future.
Following changes in senior management, certain divisions have been restructured
in order to create more focused business units which concentrate on different
segments of their respective markets. Management training and development has
been increased at all levels within the group in order to ensure that executives
are adequately prepared for the challenges that lie ahead in growing and
developing sustainable businesses across the group.
Black economic empowerment remains a strategic imperative and the group remains
committed to materially increasing its BEE shareholding. The group has been, and
continues to actively pursue new opportunities in this regard.
Operational performance
Trading conditions in most markets remained difficult. Customer retention
programmes and/or client satisfaction rating systems have been implemented in
all divisions, with up to 95% of existing clients being retained. New contracts
were also won in all divisions.
Facilities Management and Professional Services
TFMC delivered a good performance, increasing its profitability over the
previous year, while still remaining on target to achieve the savings guaranteed
to Telkom for the three years ending in March 2004.
JIC"s facilities management division, which was awarded a three year contract by
the Goldfields group with full responsibility for mining the Kloof number 9
shaft, performed below expectations, largely as a result of larger than
anticipated start-up costs being incurred (and expensed) on this contract.
Mining and Technical Services
The performance of the JIC Mining Services business reflected the difficulties
experienced in the mining sector following the decrease in production volumes
and the lower rand prices of gold and platinum during the year. Margins came
under severe pressure as a result of mining clients seeking to drive down costs
in the light of materially lower rand-denominated resource prices.
Trollope Mining performed well, achieving good growth in revenue and maintaining
operating margins with productivity levels remaining above industry norms.
Food Services
Stamford Sales performed in line with expectations. Growing competition in
Stamford"s niche market resulted in certain national contracts going to tender
and impacted negatively on margins. The investment in, and roll out of, a new
operating system for all branches will only start to yield results in the new
financial year.
The contract catering market remains one of the most challenging in the services
industry with increasing transfer of risk from the clients to the service
providers, pressure on margins and relatively low self-regulation by the
industry. Royal Foods and MRS performed reasonably in the context of these
conditions, winning new contracts, while King Pie performed in line with
expectations.
Support Services
Coin Security and Protea Security both delivered good performances during the
year. Their ability to develop innovative solutions for clients and the greater
use of improved technology, resulted in several high profile contracts being won
by both companies in their respective market segments. This confirms that the
group is amongst the foremost providers of security services in South Africa.
Rebserve Cleaning Services performed in line with expectations. The business has
been successfully transformed post the vendor profit warranty period, with
additional investments in people and systems to position the business for
further growth on a national basis.
Increased gross margins and improved credit control procedures resulted in
growth in profit from operations for the freight forwarding businesses.
Accounting policies
The results for the year ended 30 June 2003 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.
Review by independent auditors
The results have been reviewed by the group"s auditors Fisher Hoffman PKF (JHB)
Inc. Their unqualified review report is avaliable for inspection at the
company"s registered office.
Distribution out of share premium
Notice is hereby given that the board of directors has proposed a distribution
out of share premium of 35 cents per share in lieu of a dividend for the year
ended 30 June 2003, subject to approval being obtained from shareholders for the
distribution at a general meeting of shareholders to be held on Friday 10
October 2003. A circular and notice of general meeting of shareholders regarding
the distribution will be posted to shareholders on or before Friday 19 September
2003. Subject to the approval by shareholders of the company being obtained, the
last day to trade "cum" the distribution in order to participate in the
distribution is Friday, 17 October 2003. The shares of Rebserve will commence
trading "ex" the distribution from the commencement of business on Monday, 20
October 2003 and the record date will be Friday, 24 October 2003. The
distribution will be paid to shareholders on Monday, 27 October 2003. Share
certificates may not be dematerialised or rematerialised between, Monday, 20
October 2003 and Friday, 24 October, 2003, both days inclusive.
Changes to the board of directors
Following the changes to the board of directors announced on SENS on 12 and 21
August 2003, and in line with the recommendations of the King II report, the
board now comprises the following persons:
Executive directors:
SM Levenberg (Chairman), WJ Paskins (Chief Executive), BC Till (Financial
Director)
Independent non-executive directors:
MH Brodie , KD Dlamini, L Majola, RM Patel
Non-executive director:
CD Stein
Prospects
Rebserve expects the present difficult trading conditions to continue in the new
financial year. With the prospect of a continued strong rand/dollar exchange
rate, the outlook for the mining services business remains challenging. As a
consequence of the growth in operating profit from TFMC having reached its
likely plateau in terms of the structure of the Telkom contract, sustainable
growth in the facilities management division remains dependent on the winning of
major new facilities management contracts. Although the other group divisions
continue to trade in highly competitive environments, the group"s cash flows
remain strong and Rebserve is well-positioned to meet these challenges.
SM Levenberg WJ Paskins
Chairman Chief Executive
25 August 2003
Sandton
Registered Office:
Rebserve House, Hunts End, 36 Wierda Road West, Wierda Valley, Sandton, 2196
Telephone 27 11 290-4200Telefax 27 11 783-0027
ISIN: ZAE000034484 Share Code: RBV
Sponsor: Deutsche Securities S.A. (Proprietary) Limited
Transfer Secretaries: Computershare Limited,70 Marshall Street, Johannesburg,
2001
A copy of these results is available on the Rebserve website at:
www.rebserve.co.za
Date: 25/08/2003 05:22:12 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
