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Primeserv Group Limited - Unaudited Interim Results For The Six Months Ended 31
Release Date: 09/03/2004 17:39:25 Code(s): PMV
PRIMESERV GROUP LIMITED - UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31
DECEMBER 2003
PRIMESERV GROUP LIMITED
("Primeserv" or "the Group")
Incorporated in the Republic of South Africa
Registration number 1997/013448/06)
Share Code: PMV
ISIN: ZAE000039277
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2003
Income statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31-Dec-03 % 31-Dec-02 30-Jun-03
R"000 change R"000 R"000
Revenue* 209 879 (14,7) 246 191 464 046
Operating profit 5 068 (21,3) 6 443 10 038
(Loss)/profit on forex (510) - 989
Exceptional items - - 707
Depreciation 1 332 11,5 1 506 2 979
Goodwill amortisation 41 71 169
Net income before interest 3 185 (34,5) 4 866 7 172
Interest received* 1 437 26,8 1 133 4 453
Interest paid (1 389) (60,3) (3 496) (5 815)
Net income before taxation 3 233 29,2 2 503 5 810
Taxation 982 738 2 143
Income attributable to 29 - 5
outside shareholders
Net income attributable to 2 222 25,9 1 765 3 662
shareholders
Reconciliation of headline
earnings
Net income attributable to 2 222 25,9 1 765 3 662
shareholders
After tax effect of (25) - (5)
(profit)/loss on sale of
fixed assets
Goodwill amortisation 41 71 169
Headline earnings 2 238 21,9 1 836 3 826
Weighted average number of 123 138 129 523 127 255
shares in issue ("000)
Earnings per share (cents) 1,80 32,4 1,36 2,88
Headline earnings per share 1,82 28,2 1,42 3,01
(cents)
Diluted earnings per share 1,77 31,1 1,35 2,84
(cents)
Dividend proposed per share - - 0,50
(cents)
*Included in revenue and interest received is R1,9 million arising from the
adoption of AC133.(Six months ended December 2002: nil)Segmental analysis
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31-Dec-03 31-Dec-02 30-Jun-03
R"000 R"000 R"000
Revenue
Staffing services 182 743 215 474 406 455
Corporate and organisational 27 136 30 717 57 591
services
209 879 246 191 464 046
Net income/(loss) before
taxation
Staffing services 6 061 3 872 13 347
Corporate and organisational (1 006) 577 (3 581)
services
Central services (1 822) (1 946) (3 956)
3 233 2 503 5 810
Statement of changes in equity
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31-Dec-03 31-Dec-02 30-Jun-03
R"000 R"000 R"000
Balance at beginning of the 47 232 79 214 79 214
period - as previously stated
Prior year adjustment - - (6 915)
Balance at beginning of the 47 232 79 214 72 299
period - restated
Deferred tax - - (27 616)
Repurchase of securities (717) (1 113) (1 113)
Net income for the period 2 222 1 765 3 662
Balance at the end of the 48 737 79 866 47 232
period
Balance sheet
Unaudited Unaudited Audited
31 Dec 03 31 Dec 02 30 June 03
R"000 R"000 R"000
ASSETS
Non-current assets 16 669 48 381 20 762
Equipment and vehicles 3 844 5 646 4 749
Intangibles 616 1 207 657
Long-term receivables 5 306 4 998 5 932
Proceeds due from disposal of - 2 060 1 523
business
Deferred tax asset 6 582 33 024 7 564
Share incentive scheme 321 1 446 337
Current assets 69 122 88 674 78 131
Inventories 666 601 690
Trade receivables 50 691 66 702 55 779
Other receivables 10 378 16 040 12 124
Taxation - 96 -
Cash at bank 7 387 5 235 9 538
Total assets 85 791 137 055 98 893
EQUITY AND LIABILITIES
Capital and reserves 48 737 79 866 47 232
Non-current liabilities 1 396 1 400 1 246
Current liabilities 35 658 55 789 50 415
Trade and other payables 20 245 28 353 32 809
Short-term borrowings 200 3 220 2 219
Taxation 520 - 642
Bank borrowings 14 693 24 216 14 745
Total equity and liabilities 85 791 137 055 98 893
Number of shares in issue at 121 517 124 986 124 986
end of period ("000)
Net asset value per share 40 64 38
(cents)
Cash flow statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31-Dec-03 31-Dec-02 30-Jun-03
R"000 R"000 R"000
Operating activities 841 4 290 17 470
Investing activities (1 042) (1 415) (242)
Financing activities 121 (20) 402
Net (decrease)/increase in cash (80) 2 855 17 630
at bank and borrowings
Cash at bank and borrowings at (7 426) (25 056) (25 056)
beginning of the period
Cash at bank and borrowings at (7 506) (22 201) (7 426)
end of the period
CommentaryIntroductionPrimeserv is an investment holding company with
specialised operations that meet the human resources (HR) needs of the South
African corporate, industrial and government sectors. The Group"s products and
services are provided through a proprietary, integrated HR model with two main
focus areas: Staffing Services comprising the Outsourcing and Recruitment
divisions; and Corporate and Organisational Services, which incorporates the
Group"s Training and Solutions divisions.Operational reviewThe six months to 31
December 2003 was marked by significant progress towards the realisation of the
Group"s mission to provide an integrated HR services offering. This was
supported by substantial investment in HR product and service development, as
well as the appointment of appropriately qualified staff who can deliver the
Group"s unique service model. Recognising that Primeserv is a "people"
organisation in every sense of the word, human capital development will continue
to be a key driver of the Group into the future, ensuring it sustains its
organic growth momentum.
The Group"s Staffing Services operation turned in satisfactory results for the
review period. This was led by a solid performance by the Outsourcing division
which successfully completed its strategy of streamlining sales to improve
margins and cash flows. During the review period this division also launched its
national flexible staffing operation into higher margin niche markets and this
is expected to contribute meaningfully to earnings in the next period. The
division is now well placed to resume sales growth. The Recruitment division
substantially reduced the loss experienced in the second half of the previous
financial year.
There was also an improved performance by the Group"s Corporate and
Organisational Services operations. Within the Training division, the Colleges
experienced a profitable turnaround as a result of a strong student intake. The
Technical and Corporate training units however, came under temporary downward
revenue pressure, which is expected to reverse in the coming months. Previous
losses experienced by the Group"s strategic Solutions division have been brought
under control as a result of steps taken to reduce expenditure while maintaining
infrastructural delivery capability. This segment of the business is positioned
to improve its performance in the short term.Financial reviewHeadline earnings
per share increased by 28,2% from 1,42 cents to 1,82 cents for the half-year to
end December 2003. Net income attributable to shareholders rose by 25,9% to R2,2
million (2002: R1,8 million). This result was aided by AC133 income assessed as
applicable for the current six month period.
The Group"s focus on working capital management, improved operating margins and
cost containment, coupled with strategically streamlined income sources and
effective management of difficult and at times erratic trading conditions, has
resulted in a strengthened balance sheet, despite the fact that revenue for the
review period declined by 14,7% to R209,9 million (2002: R246,1 million).
The Group"s interest bill declined by 60,3% to R1,4 million (2002: R3,5 million)
and net finance costs were reduced by R2,4 million which was also aided by the
inclusion of interest received arising from the application of AC133.
Net borrowings declined by 66,2% or R14,7 million from R22,2 million at end
December 2002 to R7,5 million at current half year end. This is indicative of
the Group"s continued improvement in working capital management and cash
generation.Accounting policies and reviewThe accounting policies used in
preparing the half-year financial results are in accordance with South African
Statements of Generally Accepted Accounting Practice and have been prepared on
the basis consistent with those used in the Financial Statements for the year
ended 30 June 2003.Changes in directorateIn terms of the listings requirements
of the JSE Securities Exchange South Africa, the positions of chairman and chief
executive officer have been separated with effect 23 December 2003, through the
appointment of J.M. Judin as non-executive chairman of the Group and with M.
Abel remaining in the position of CEO. G. Magomola resigned effective 08 March
2004 and the Group thanks him for his valuable contribution.DividendIt is the
Group"s policy to consider an annual dividend after the year end relative to the
financial year"s result.ProspectsPrimeserv expects its integrated HR services
operations to report improved performance for the second half of the year. The
finalisation of the Group"s BEE programme should further enhance Group
opportunities. The Group will also seek complementary acquisitions aimed at
enhancing its critical mass.For and on behalf of the board
JM Judin M Abel Non-Executive Chairman
Chief Executive Officer
Sandton
9 March 2004DirectorsJM Judin (Chairman)*, M Abel (CEO), PL Gray (COO),
Professor S Klein* (American), CS Seabrooke*, DC Seaton* (*non-executive)
Company secretaryER Goodman Secretarial Services cc
Registered addressVenture House, Peter Place Park, 54 Peter Place, Bryanston
2021(PO Box 3008, Saxonwold 2132)
Transfer secretariesComputershare Limited, 70 Marshall Street, Marshalltown,
Johannesburg 2001(PO Box 61051, Marshalltown 2107)
Sponsor
Deloitte & Touche Sponsor Services (Pty) Limited
e-mail: productivity@primeserv.co.zaShare code: PMV ISIN:
ZAE000039277www.primeserv.co.za
