| Mon 27 Sep 2004, 16:02 | | RESULTS FOR THE YEAR ENDED 30 JUNE 2004 |
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PRIMESERV - REVIEWED ANNUAL RESULTS FOR THE YEAR ENDED 30 JUNE 2004 AND FURTHER
CAUTIONARY ANNOUNCEMENT
PRIMESERV GROUP LIMITED
Incorporated in the Republic of South Africa
(Registration number 1997/013448/06)
(`Primeserv` or `The Group`)
Share code: PMV
ISIN: ZAE000039277
REVIEWED ANNUAL RESULTS FOR THE YEAR ENDED 30 JUNE 2004 AND FURTHER CAUTIONARY
ANNOUNCEMENT
Income statement
Reviewed Audited
year ended year ended
30 June 2004 30 June 2003
R`000 R`000
Revenue 397 244 464 046
EBITDA before exceptional debt 5 448 10 038
provisions and forex movements
(Loss)/profit on forex (739) 989
Depreciation 2 226 2 979
Goodwill amortisation 81 169
Exceptional debt provisions 5 875 -
Operating (loss)/profit (3 473) 7 879
Interest received (1) 3 240 4 453
Interest paid (2 915) (5 815)
Net (loss)/profit before other (3 148) 6 517
exceptional items
Other exceptional items 6 800 -
Net (loss)/profit before taxation (9 948) 6 517
Taxation (1 410) 2 143
Net (loss)/profit after taxation (8 538) 4 374
Outside shareholders` interest 2 5
Net (loss)/profit attributable to (8 540) 4 369
shareholders
Reconciliation of headline
(loss)/earnings
Net (loss)/profit attributable to (8 540) 4 369
shareholders
After tax effect of profit on sale of (98) (5)
fixed assets
Goodwill amortisation 81 169
Headline (loss)/earnings (8 557) 4 533
Weighted average number of shares 117 123 121 906
(`000)
Diluted number of shares (`000) 118 950 123 468
(Loss)/earnings per share (cents) (7,29) 3,58
Diluted (loss)/earnings per share (7,18) 3,54
(cents)
Headline (loss)/earnings per share (7,31) 3,72
(cents)
Dividend proposed after year-end per - 0.50
share (cents) (2)
(1) Included in interest received is R2,5 million arising from the applicatio
of AC133(Year ended 30 June 2003: R3,3 million).
(2) Dividend in respect of the 2003 financial year was declared in December
2003 and paid in January 2004.
Segmental analysis
Reviewed Audited
year ended year ended
30 June 2004 30 June 2003
R`000 R`000
Revenue
Outsourcing 345 069 406 455
Computer college 19 557 16 825
HR Solutions 32 618 40 766
397 244 464 046
Operating profit/(loss) before
exceptional debt provisions
Outsourcing 12 529 14 772
Computer colleges 2 755 (2 998)
HR Solutions (9 955) 61
Central services (2 927) (3 956)
2 402 7 879
Operating profit/(loss)
Outsourcing 6 654 14 772
Computer colleges 2 755 (2 998)
HR Solutions (9 955) 61
Central services (2 927) (3 956)
(3 473) 7 879
Balance sheet
Reviewed Audited
30 June 2004 30 June 2003
R`000 R`000
ASSETS
Non-current assets 14 636 20 023
Equipment and vehicles 3 297 4 749
Intangibles 576 657
Long-term receivables 1 662 5 530
Proceeds due from disposal of business - 1 523
Deferred tax asset 9 101 7 564
Current assets 60 369 78 131
Inventories 619 690
Trade receivables 47 502 55 779
Other receivables 3 196 12 124
Cash at bank 9 052 9 538
Total assets 75 005 98 154
EQUITY AND LIABILITIES
Capital and reserves 36 627 46 493
Minority interest 4 5
Non-current liabilities 1 300 1 241
Current liabilities 37 074 50 415
Trade and other payables 26 334 32 809
Short-term interest bearing borrowings 205 2 219
Taxation 495 642
Bank borrowings 10 040 14 745
Total equity and liabilities 75 005 98 154
Number of shares in issue at end of 116 691 119 730
year (`000)
Net asset value per share (cents) 31 39
Cash flow statement
Reviewed Audited
year ended year ended
30 June 2004 30 June 2003
R`000 R`000
Operating activities 6 606 17 470
Investing activities (431) (242)
Financing activities 58 402
Net increase in cash at bank and 6 233 17 630
reduction of borrowings
Borrowings net of cash at bank at (7 426) (25 056)
beginning of the year
Borrowings net of cash at bank at end (1 193) (7 426)
of the year
Statement of changes in equity
Reviewed Audited
year ended year ended
30 June 2004 30 June 2003
R`000 R`000
Balance at beginning of the year as 47 232 79 214
previously stated
Prior year adjustment - (6 915)
Adjustment for change in accounting of (739) (1 446)
share trust
Balance at beginning of the year - 46 493 70 853
restated
Deferred tax - (27 616)
Repurchase of securities (787) (1 113)
Issue of shares from share trust 43 -
Dividend paid (582) -
Net (loss)/income for the year (8 540) 4 369
Balance at the end of the year 36 627 46 493
Commentary
Profile
Primeserv is a holding company with specialised operations that meet the human
resources needs of the South African corporate, industrial and government
sectors.
Operational review
The Group made continued progress towards its aim of providing an integrated HR
services offering to clients through its single brand driven business model.
Primeserv`s core business unit, the Outsourcing Division, continues to generate
sound profits and strong cash flows. Solid performance was delivered by the
logistics staffing units, the white-collar professional staffing operation and
the industrial services units. Management remains focused on further improving
operating margins and growing the Division by continuing to develop long term
contract based business in its specialised flexible staffing services niches.
Operating profit before exceptional debtors provisions was slightly lower
relative to the prior year but still satisfactory at R12,5 million in a highly
competitive marketplace. A once-off provision of R5,9 million was booked against
various long term debtors where contractual disputes have been outstanding and
negotiations for recovery of these debtors have been taken over by head office.
The Computer Colleges Division produced an excellent improvement in performance
over the previous year, achieving a R2,8 million operating profit on higher
revenue. Management regards the current business strategy as sustainable.
The HR Solutions Division experienced considerable difficulties with sales below
budget and expenses higher than anticipated. This was exacerbated by the
difficulties that arose from its Learnership Projects Unit in which a number of
unviable contracts (for which costs had been incurred) were identified
subsequent to the year end and have now been cancelled by the Division. Changes
to its business model and improved risk assessment procedures are being
implemented. Weak results are expected for the first half of the coming
financial year and the Division is being restructured to deliver acceptable
returns.
BEE initiatives have been successful in the form of the Group`s ventures with
black owned Bathusi Staffing Services (Pty) Limited and Empvest Outsourcing
(Pty) Limited. A further BEE venture is expected to be finalised shortly.
Financial review
The Group recorded poor results for the year mainly as a result of the
significant loss in the HR Solutions Division and the once-off provisions and
write-offs deemed prudent for the year under review. EBITDA before exceptional
debt provisions and forex movements fell to R5,4 million and an operating loss
of R3,5 million was incurred. A headline loss of 7,3 cents per share was
recorded for the year.
Exceptional items of R12,7 million relate to once-off provisions against
contracts under dispute and the impairment of long term and other receivables in
terms of AC128.
Notwithstanding the negative income statement results for the year, the Group`s
cash flow was once again strongly positive at R6,2 million which resulted in a
reduction in net borrowings to R1,2 million from R7,4 million in the previous
year. The Group`s balance sheet has strengthened materially and the Group had
virtually no net gearing at the year end.
A contingent liability has arisen in the Outsourcing Division which has received
a claim from SARS for R6,1 million, inclusive of interest and penalties. This is
being disputed by the Group.
Accounting policies and audit review
Results for the period have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice applicable to interim
financial reporting and are consistent with the prior year except for the
consolidation of the Primeserv Group Limited Share Trust. The 2003 comparatives
have been restated accordingly with net profit previously reported increasing by
R0,7 million.
The results have been reviewed by the Group`s auditors, Deloitte & Touche,
Chartered Accountants (SA), Registered Accountants and Auditors, and their
unqualified review report is available for inspection at Primeserv`s registered
offices.
Dividend
No dividend is recommended for the year ended 30 June 2004.
Change in directorate
P L Gray resigned as COO and from the board on 24 August 2004.
Prospects
Although the first half of the new financial year will be difficult, the Group
is expected to improve its performance over the financial year as a whole.
Further Cautionary Announcement
Further to the cautionary announcements dated 28 July 2004 and 8 September 2004,
shareholders are advised that Primeserv is in the final stages of BEE
negotiations, which if successfully concluded may have an effect on the price of
the company`s securities. Accordingly, shareholders are advised to continue to
exercise caution when dealing in the company`s securities until a further
announcement is made.
For and on behalf of the board
JM JUDIN
Non-Executive Chairman
M ABEL
Chief Executive Officer
27 September 2004
Sandton
Directors
JM Judin (Chairman)*, M Abel (CEO), Professor S Klein* (American), CS
Seabrooke*, DC Seaton* (*non-executive)
Company secretary
ER Goodman Secretarial Services cc
Registered address
Venture House, Peter Place Park, 54 Peter Place, Bryanston 2021(PO Box 3008,
Saxonwold 2132)
Sponsor
Deloitte & Touche Sponsor Services (Pty) Limited
Transfer secretaries
Computershare Investor Services 2004 (Pty) Ltd, 70 Marshall Street, Johannesburg
2001 (PO Box 61051, Marshalltown 2107)
e-mail: productivity@primeserv.co.za
Share code: PMV ISIN: ZAE000039277
www.primeserv.co.za
Date: 27/09/2004 03:49:40 PM
Produced by the JSE SENS Department
