| Mon 23 Feb 2004, 17:33 | | INTERIM REPORT FOR THE SIX MONTHS ENDED 31 |
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REBSERVE HOLDINGS LIMITED - UNAUDITED INTERIM REPORT FOR THE SIX MONTHS ENDED 31
DECEMBER 2003 AND CAUTIONARY ANNOUNCEMENT
Rebserve Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1995/004153/06)
("Rebserve")
Unaudited Interim report for the six months ended 31 December 2003 and
Cautionary Announcement
Financial Highlights
* Fully diluted headline earnings per share of 56,7 cents
* Revenue up 11% to R1 743 million
* Interim dividend of 15 cents per share declared
* Cash generated from operations up 34% to R177 million
The following are the unaudited results of Rebserve and its subsidiaries ("the
group") for the six months ended 31 December 2003 with comparative figures.
Summarised Group Income Statement
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
31 December 31 December 30 June
2003 % 2002 2003
R"000 change R"000 R"000
Revenue 1 743 467 11 1 569 583 3 189 576
Profit from operations 131 594 (9) 145 344 276 394
Net investment income 6 465 20 067 24 117
Net profit before 138 059 165 411 300 511
taxation and
exceptional items
Exceptional items (7 923) (7 042) (15 024)
Net profit before 130 136 158 369 285 487
taxation
Taxation (29 535) (38 977) (66 598)
Net profit after 100 601 119 392 218 889
taxation
Net profit (7 570) (12 368) (25 189)
attributable to
outside shareholders
Net profit 93 031 (13) 107 024 193 700
attributable to
ordinary shareholders
Number of shares in 177 615 176 720 176 209
issue (after share
buybacks) (000)
Weighted average 177 615 182 540 179 604
number of shares in
issue (000)
Earnings per share 52,4 58,6 107,8
(cents)
Headline earnings per 56,8 (9) 62,5 116,2
share (cents)
Fully diluted headline 56,7 (7) 60,8 114,0
earnings per share
(cents)
Pro forma fully 56,7 56,6 110,5
diluted headline
earnings per share
(cents)
Dividend/distribution 15,0 - 35,0
per share (cents)
Summarised Group Balance Sheet
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
31 December 31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Assets
Non-current assets 709 909 674 645 691 596
Fixed assets 636 065 567 336 590 116
Investments and loans 25 041 60 232 55 685
Deferred taxation 48 803 47 077 45 795
Current assets 1 082 866 1 157 112 1 121 579
Liquid funds 482 492 502 187 491 912
Other current assets 600 374 654 925 629 667
TOTAL ASSETS 1 792 775 1 831 757 1 813 175
EQUITY AND LIABILITIES
Capital and reserves 955 674 873 531 969 478
Share capital and reserves 916 726 792 020 875 769
Amounts due to vendors 34 993 62 940 62 467
Outside shareholders" 3 955 18 571 31 242
interest
Non-current liabilities 151 277 223 214 168 454
Interest bearing liabilities 137 667 213 868 160 211
Non-interest bearing 3 880 - -
liabilities
Deferred taxation 9 730 9 346 8 243
Current liabilities 685 824 735 012 675 243
Interest bearing liabilities 99 435 68 569 65 986
Non-interest bearing 586 389 666 443 609 257
liabilities
TOTAL EQUITY AND LIABILITIES 1 792 775 1 831 757 1 813 175
Net asset value per share 534,1 470,6 522,1
(cents)
Net tangible asset value per 356,2 305,1 355,7
share (cents)
Summarised Group Cash Flow Statement
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
31 December 31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Profit from operations 131 594 145 344 276 394
Non-cash items 53 158 38 473 88 595
Working capital changes (7 270) (50 946) (76 626)
Cash generated from 177 482 132 871 288 363
operations
Net investment income 6 465 20 067 23 987
Taxation paid (25 569) (59 919) (84 169)
Dividends paid - (55 081) (55 081)
Cash available from operating 158 378 37 938 173 100
activities
Cash effects of investing (84 680) (20 515) (90 700)
activities
Cash effects of financing (83 118) (256 665) (331 917)
activities
Net movement in liquid funds (9 420) (239 242) (249 517)
Net liquid funds at the 491 912 741 429 741 429
beginning of the period
Net liquid funds at the end 482 492 502 187 491 912
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
2003 2002 2003
R"000 R"000 R"000
Balance at the beginning of 938 236 863 017 863 017
the period
Shares acquired - (52 333) (55 260)
Acquisition of subsidiaries (17 493) (7 668) (8 140)
and businesses
Net profit attributable to 93 031 107 024 193 700
ordinary shareholders
Distribution/dividend (62 055) (55 080) (55 081)
Balance at the end of the 951 719 854 960 938 236
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
2003 % 2002 2003
R"000 change R"000 R"000
Net profit attributable 93 031 107 024 193 700
to ordinary
shareholders
Goodwill amortised 7 923 7 042 14 347
Impairment of a loan - - 677
account
Headline net profit 100 954 (11) 114 066 208 724
attributable to
ordinary shareholders
Segmental information
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
31 December 31 December 30 June
2003 % 2002 2003
R"000 change R"000 R"000
REVENUE
Facilities management 590 261 523 234 1 138 491
and professional
services
Mining and technical 357 456 351 590 696 970
services
Food services 420 231 384 188 738 087
Support services 375 519 310 571 616 028
1 743 467 11 1 569 583 3 189 576
PROFIT FROM
OPERATIONS
Facilities management 50 793 50 442 100 124
and professional
services
Mining and technical 27 718 44 027 81 400
services
Food services 24 885 27 916 47 965
Support services 28 198 22 959 46 905
131 594 (9) 145 344 276 394
Commentary
Overall Performance
Trading conditions in certain of the group"s businesses were, during the period
under review, amongst the most challenging which Rebserve has experienced. As
anticipated, the continued strength of the rand against the US dollar impacted
negatively on the group"s mining services division in particular, with severe
pressure on margins as a result of cost-cutting initiatives implemented by most
of the major mining houses in the wake of their own deteriorating financial
results. Expansion and development projects in the mining industry were also
scaled back as industry players consolidated their positions in the context of
their earnings being adversely affected by the strong rand.
TFMC continued to achieve savings in expenditure for Telkom, resulting, as
anticipated, in decreased revenue and flat profit from operations in TFMC,
relative to the comparable period.
Following the payment of the balance of the Molope purchase consideration in
December 2002 and the decrease in call interest rates, net investment income
decreased by 68% from R20 million to R6 million.
Fully diluted headline earnings per share at 56,7 cents per share was flat
compared to the pro forma fully diluted headline earnings per share for the
comparable period, and 5% up on the pro forma fully diluted headline earnings
per share for the six months ended 30 June 2003 of 53,9 cents, which pro forma
figures were calculated on the assumption that the balance of the Molope
purchase consideration had been paid on 1 July 2002 and at an assumed interest
rate of 10% per annum.
During the period under review Atkins plc disposed of its 38,25% effective
interest in TFMC, with Rebserve having acquired 13,25% of this effective
interest, and the remaining 25% having been earmarked for acquisition by a BEE
partner.
Financial Results
Revenue increased by 11% to R1 743 million. Although satisfactory growth was
achieved in profit from operations in the support services and food services
divisions, overall profit from operations decreased to R132 million as a result
of the adverse conditions experienced in the mining services division. Net
investment income, which comprises net interest and dividends received,
decreased to R6 million following the decrease in interest rates, the payment of
the balance of the Molope purchase consideration of R188 million (on which
amount interest had been earned in the comparable period), and share buybacks
concluded in the previous financial year. Net profit attributable to outside
shareholders decreased following the reduction in the minority shareholder"s
effective interest in TFMC to 25%.
Headline net profit attributable to ordinary shareholders was R101 million. The
weighted average number of shares in issue decreased to 177,6 million as a
result of share buybacks concluded during the previous financial year. Headline
earnings per share was 56,8 cents. Fully diluted headline earnings per share of
56,7 cents (which is based on 178,2 million shares after taking into account the
number of shares still to be issued pursuant to historic acquisitions) was 7%
below the fully diluted headline earnings per share for the comparable period of
60,8 cents.
Cash generated from operations of R177 million was up 34% on the comparable
period, and equates to 135% of profit from operations. Working capital
management remains a priority across all group companies and the net increase in
working capital of only R7 million in this trading environment is notable. Free
cash flow for the period was R80 million. Liquid funds decreased from R492
million at 30 June 2003, to R482 million at 31 December 2003.
Divisional Performance
Facilities Management and Professional Services
TFMC"s performance was in line with expectations, albeit flat in relation to the
comparable period. The initial evaluation of TFMC"s performance under the Telkom
contract, relating to the first three years of such contract, takes place after
March 2004. This evaluation is expected to confirm that TFMC has exceeded the
guaranteed savings levels to Telkom over this period. No account has been taken
in these results of any amount due to TFMC for having exceeded such guaranteed
savings.
The new facilities management contract awarded by the DTI to Rebserve Facilities
Management in August 2003 is still in its initial phase of development.
Financial benefits from this contract will only accrue in the next financial
year.
The group continues to seek new large-scale facilities management and
outsourcing contracts locally and internationally. Transnet"s decision on
whether to proceed with the establishment of a joint venture facilities
management entity in relation to Propnet is still awaited.
Mining and Technical Services
The severe decline in profitability amongst all of the major clients of the
mining and technical services division has inevitably had a corresponding impact
on the profitability of this division.
The performance of the JIC Mining Services business was disappointing and
reflects the adverse impact, which the strong rand has had on the mining sector
generally. Certain unviable contracts have already been terminated and steps
have been taken to close other contracts, downsize certain contracts and
restructure this business in order to improve operating efficiencies and reduce
overhead costs.
Trollope Mining performed well in the context of an underperforming sector.
Despite strong growth in turnover, operating margins came under pressure as
clients drove down selling rates, and competition in the market increased with
the availability of surplus equipment.
Food Services
Stamford Sales performed in line with expectations and above the previous six
months ended 30 June 2003. Changes have been made to the operating structures
and methodologies in order to better equip the business to meet the challenges
it faces in continuing the good growth which it has achieved historically.
Royal Food Services performed well during the period under review, achieving
increases in turnover and operating margins. A new specialist division, which
provides catering services for large corporate and similar functions, was
successfully established. MRS performed in line with expectations despite
adverse conditions in the mining industry.
Support Services
Coin Security and Protea Security continued to deliver good performances with
all divisions contributing to the growth in these businesses. In conjunction
with international technology partners, opportunities to expand the group"s
security interests in southern and west Africa are being pursued. These are
likely to include the provision of guarding and assets in transit services
mainly to the banking sectors in these countries.
Rebserve Cleaning Services performed in line with expectations. The investment
in sales and marketing initiatives, particularly in the Gauteng region, slowed
the growth in operating profits. Benefits from these initiatives will only be
seen in the new financial year.
The performance of the freight forwarding business was below expectations as a
direct result of the stronger rand, which impacted materially on the revenue of
this business, despite volumes being maintained.
Accounting Policies
The results for the period ended 31 December 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 2003.
Dividend Policy and Declaration
Given the strongly cash generative nature of the group"s businesses, the
directors have resolved to revert to a policy of declaring an interim dividend
as well as a final dividend. The directors have accordingly resolved to declare
a cash dividend (No. 9) of 15 cents per share to shareholders. The last day to
trade "cum" the dividend in order to participate in the dividend is Thursday, 18
March 2004. The shares of Rebserve will commence trading "ex" the dividend from
the commencement of business on Friday, 19 March 2004 and the record date will
be Friday, 26 March 2004. The dividend will be paid to shareholders on Monday,
29 March 2004. Share certificates may not be dematerialised or rematerialised
between Friday, 19 March 2004 and Friday, 26 March 2004, both days inclusive.
Prospects
Rebserve expects the present difficult trading conditions in the mining services
division to continue for at least the remainder of the current financial year.
In the current environment of a strong rand and the continued underperformance
of the mining sector generally, prospects for a recovery in the performance of
the group"s mining services division, in the short term, are remote. Growth in
the facilities management division remains dependent on the winning of major new
facilities management contracts. The other group divisions continue to trade
reasonably.
Cautionary Announcement
Shareholders are advised that Rebserve is at present engaged in negotiations
aimed at finding a strategic BEE partner/s for Rebserve which, if successfully
concluded, could affect the price of Rebserve shares.
Shareholders are therefore advised to exercise caution when dealing in Rebserve
shares until a further announcement is made.
SM Levenberg WJ Paskins
Chairman Chief Executive
23 February 2004
Sandton
Directors:
SM Levenberg (Chairman), WJ Paskins (Chief Executive), MH Brodie *, KD Dlamini
*, L Mojela *, RM Patel *, 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
Transfer Secretaries:
Computershare Limited, 70 Marshall Street, Marshalltown,
Johannesburg, 2001
ISIN: ZAE000034484
Share code: RBV
A copy of these results are available on the Rebserve website at:
www.rebserve.co.za
Date: 23/02/2004 04:59:40 PM Produced by the JSE SENS Department
