| Mon 5 Sep 2005, 17:22 | | Primeserv Group Limited - Reviewed Group Results f |
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Primeserv Group Limited - Reviewed Group Results for the year ended 30 June 2005
Primeserv Group Limited
Incorporated in the Republic of South Africa
(Registration number 1997/013448/06)
(`Primeserv` or `the Group`)
Share code: PMV
ISIN: ZAE000039277
Income statement
Reviewed Audited
year ended year ended
30 June 2005 30 June 2004
R`000 R`000
Revenue (1) 374 641 397 244
EBITDA before exceptional debt 3 633 5 448
provisions and forex movements
Profit/(loss) on forex 32 (739)
Depreciation (1 490) (2 226)
Goodwill amortisation - (81)
Exceptional debt provisions - (5 875)
Operating profit/(loss) 2 175 (3 473)
Interest received (2) 927 3 240
Interest paid (1 704) (2 915)
Capital surplus on sale of business 4 234 -
Share of impairment of goodwill in (1 558) -
associate
Share of profits from associate 44 -
Net profit/(loss) before other 4 118 (3 148)
exceptional items
Other exceptional items (1 500) (6 800)
Net profit/(loss) before taxation 2 618 (9 948)
Taxation 716 1 410
Net profit/(loss) after taxation 3 334 (8 538)
Outside shareholders` interest (255) (2)
Net profit/(loss) attributable to 3 079 (8 540)
shareholders
Reconciliation of headline
earnings/(loss)
Net profit/(loss) attributable to 3 079 (8 540)
shareholders
After tax effect of profit on sale of (98) (98)
fixed assets
Goodwill amortisation - 81
Capital surplus on sale of business (4 234) -
Share of impairment of goodwill in 1 558 -
associate
Headline earnings/(loss) 305 (8 557)
Weighted average number of shares 115 766 117 123
(`000)
Diluted number of shares (`000) 117 179 118 744
Earnings/(loss) per share (cents) 2,66 (7,29)
Diluted earnings/(loss) per share 2,63 (7,19)
(cents)
Headline earnings/(loss) per share 0,26 (7,31)
(cents)
Diluted headline earnings/(loss) per 0,26 (7,21)
share (cents)
(1) Excluded from revenue is R24,7 million as a result of the deconsolidation of
the Outsourcing division`s Secunda branch and Bathusi Staffing Services (Pty)
Ltd (`Bathusi`) from 29 January 2005 and since accounted for as an associate.
(2) Included in interest received is R0,2 million arising from the application
of AC133 (Year ended 30 June 2004: R2,5 million).
Segmental analysis
Reviewed Audited
year ended year ended
30 June 2005 30 June 2004
R`000 R`000
Revenue
Outsourcing (1) 334 452 345 069
Computer Training Colleges 21 297 19 557
HR Solutions 18 892 32 618
374 641 397 244
Operating profit/(loss) before
exceptional debt provisions
Outsourcing 10 733 12 529
Computer Training Colleges 3 931 2 755
HR Solutions (9 273) (9 955)
Central services (3 216) (2 927)
2 175 2 402
Operating profit/(loss)
Outsourcing 10 733 6 654
Computer Training Colleges 3 931 2 755
HR Solutions (9 273) (9 955)
Central services (3 216) (2 927)
2 175 (3 473)
Balance sheet
Reviewed Audited
30 June 2005 30 June 2004
R`000 R`000
ASSETS
Non-current assets 19 042 14 636
Equipment and vehicles 2 412 3 297
Intangibles 576 576
Investment and loan in associate 5 247 -
Long-term receivables 770 1 662
Deferred tax asset 10 037 9 101
Current assets 47 346 60 369
Inventories 979 619
Trade receivables 32 419 47 502
Other receivables 2 170 3 196
Taxation receivable 173 -
Cash at bank 11 605 9 052
Total assets 66 388 75 005
EQUITY AND LIABILITIES
Capital and reserves 39 336 36 627
Minority interest 61 4
Non-current liabilities 382 1 300
Current liabilities 26 609 37 074
Trade and other payables 19 818 26 334
Short-term interest bearing borrowings 190 205
Taxation 51 495
Bank borrowings 6 550 10 040
Total equity and liabilities 66 388 75 005
Number of shares in issue at end of 114 859 116 691
year (`000)
Net asset value per share (cents) 34 31
Cash flow statement
Reviewed Audited
year ended year ended
30 June 2005 30 June 2004
R`000 R`000
Operating activities 6 434 6 605
Investing activities (7) (431)
Financing activities (369) 59
Net increase in cash at bank and 6 058 6 233
reduction of borrowings
Borrowings net of cash at bank at (1 193) (7 426)
beginning of the year
Cash at bank net of borrowings at end 4 865 (1 193)
of the year
Statement of changes in equity
Reviewed Audited
year ended year ended
30 June 2005 30 June 2004
R`000 R`000
Balance at beginning of the year as 36 627 47 232
previously stated
Adjustment for change in accounting of - (739)
share trust
Balance at beginning of the year - 36 627 46 493
restated
Purchase of shares by share trust (374) -
Repurchase of securities - (787)
Issue of shares from share trust 4 43
Dividend paid - (582)
Net profit/(loss) for the year 3 079 (8 540)
Balance at the end of the year 39 336 36 627
Commentary
Profile
Primeserv is a holding company with specialised subsidiary and associate
operations that meet the human resources (HR) needs of the South African
corporate, industrial and government sectors.
Financial review
The Group recorded a turnaround on the prior financial year, delivering an
operating profit of R2,2 million compared to an operating loss of R3,5 million
for the previous year. Group revenue including Bathusi Staffing Services (Pty)
Ltd (`Bathusi`) (see note (1) to the Income Statement) was flat at R399,3
million (2004: R397,2 million). As anticipated the Group`s results were
negatively affected by the loss incurred by the HR Solutions division. However,
these losses were substantially reduced in the second half of the financial
year.
The Group`s cashflow was once again strongly positive at R6,1 million, which
resulted in net cash resources of R4,9 million, up R6,1 million from R1,2
million in net borrowings in the previous year. Group debtors days improved
favourably by 11 days to 25 days (2004: 36 days). The Group`s balance sheet has
strengthened from the prior year.
The exceptional items of R1,5 million relate to the settlement of an historical
vendor related agreement and the provision for a disputed claim with SARS as
previously reported. The Group is positively engaged with SARS in resolving the
dispute.
Net profit attributable to shareholders of R3,1 million improved substantially
byR11,6 million from a net loss attributable to shareholders of R8,5 million in
the previous year. This translates into the Group recording a turnaround from a
headline loss of 7,31 cents per share for the prior financial year to headline
earnings of 0,26 cents per share for the current year.
Operational review
The Outsourcing division, the Group`s largest business unit, generated adequate
performance with sound profits and cashflows. Revenue including Bathusi (see
note (1) to the Income Statement) was up 4% to R359,1 million (2004: R345,1
million). Nationally the logistics and industrial service units performed
solidly. The engineering and blue collar staffing units maintained revenues. The
petrochemical unit was weakened by margin pressure and delays in shutdowns. The
white collar staffing unit performed poorly. The division`s key focus remains on
margin improvement, working capital management and revenue growth.
The Computer Training Colleges division once again had a good year with organic
growth in revenue and operating profit being achieved. Year on year revenue
increased by 9% from R19,6 million to R21,3 million and operating profit by 43%
from R2,8 million to R3,9 million. The division is maintaining its programme of
upgrading training facilities and equipment so as to ensure an ongoing
improvement in the learning experience offered to learners. Continual
development of course material relevant to the South African work environment
has assisted in positioning this training operation for growth.
The HR Solutions division comprising the Technical and Corporate training units
and the HR Consulting operation experienced a problematic year. As a result of
the carry over of costs related to the previous year`s difficulties, the first
half of the financial year resulted in a particularly disappointing performance.
Albeit that weak sales resulted in revenue being down at R18,9 million (2004:
R32,6 million), and with high fixed expenses and downsizing costs remaining
burdensome, the second half of the financial year saw a marked reduction in the
operating loss. Corrective management action has been implemented and the
division is positioned to improve its performance in the year ahead, with a much
smaller loss (due to ongoing lease and other commitments) being anticipated.
BEE Transaction
The sale of the business of the Secunda Branch of Primeserv ABC Recruitment
(Pty) Ltd and its related assets and liabilities to Bathusi, a Black owned
company in which Primeserv holds a significant minority interest, was
unanimously approved by Primeserv shareholders on 28 January 2005. This
transaction resulted in a capital surplus of R4,2 million. Bathusi, which was
previously accounted for as a subsidiary, became an associate with effect from
29 January 2005 and was therefore deconsolidated from the Group`s results.
Accounting policies
The Group has changed its accounting policy with regard to the amortisation of
goodwill in accordance with AC140, Business Combinations. The Group no longer
amortises goodwill and goodwill is now subject to an annual impairment test.
This has resulted in amortisation of R0,1 million not being charged against
income in the current year. The Group`s share of the impairment of goodwill in
the associate amounting to R1,6 million has been charged against income.
The effect of the new interpretation of AC105, Operating Leases, was not
sufficiently material to require an adjustment.
The Group`s results have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice. With effect from 01 July
2005, the Group will adopt International Financial Reporting Standards and the
effect of this will be disclosed in the interim results for the six months to 31
December 2005 and the 2006 financial statements.
The results have been reviewed by the Group`s auditors, PKF (Jhb) Inc, and their
unqualified review report is available for inspection at Primeserv`s registered
offices.
Dividend
No dividend has been declared for the year ended 30 June 2005.
Post balance sheet events
The Group has entered into agreements resulting in a substantial commitment for
the supply and installation of new digital office automation and IT systems with
particular emphasis on the needs of the Outsourcing division.
Prospects
The Group is committed to maximizing organic growth whilst seeking to expand its
product and service offerings. Acquisition opportunities that are in line with
the Group`s strategy will be sought and evaluated. Where appropriate, further
BEE initiatives will be considered where this provides the Group with increased
market opportunities. The Group anticipates an improved performance for the year
ahead.
For and on behalf of the board
JM JUDIN
Chairman
M ABEL
Chief Executive Officer
NN RODRIGUES
Chief Financial Officer
5 September 2005
Bryanston
Directors: JM Judin (Chairman)*, M Abel, Professor S Klein* (American), AT
McMillan (British),
C Nkosi*, NN Rodrigues, DL Rose*, DC Seaton* (*non-executive)
Company secretary: NN Rodrigues
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,
Marshalltown, Johannesburg 2001 (PO Box 61051, Marshalltown 2107)
e-mail: productivity@primeserv.co.za
www.primeserv.co.za
