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PMV
PMV
Primeserv - Unaudited interim group results: six months ended 31 December 2005
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 GROUP RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2005
Income statement
Restated
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2005 2004 2005
R"000 R"000 R"000
Revenue(1) 169 290 208 362 374 641
EBITDA 854 (1 221) 3 665
Depreciation (595) (792) (1 490)
Operating profit/(loss) 259 (2 013) 2 175
Interest received 976 339 927
Interest paid (610) (751) (1 704)
Capital surplus on sale of - - 4 234
business
Share of impairment of goodwill - - (1 558)
in associate
Share of profits from associate 62 - 44
Net profit/(loss) before 687 (2 425) 4 118
exceptional items
Exceptional items 543 - (1 500)
Net profit/(loss) before 1 230 (2 425) 2 618
taxation
Taxation (310) (927) 716
Net profit/(loss) after taxation 920 (3 352) 3 334
Minority shareholders" interest (146) (201) (255)
Net profit/(loss) attributable 774 (3 553) 3 079
to shareholders
Reconciliation of headline
earnings/(loss)
Net profit/(loss) attributable 774 (3 553) 3 079
to shareholders
After tax effect of 2 (21) (98)
loss/(profit) on sale of fixed
assets
Capital surplus on sale of - - (4 234)
business
Share of impairment of goodwill - - 1 558
in associate
Headline earnings/(loss) 776 (3 574) 305
Weighted average number of 114 859 116 691 115 766
shares ("000)
Diluted number of shares (`000) 116 774 118 312 117 179
Earnings/(loss) per share 0,67 (3,04) 2,66
(cents)
Diluted earnings/(loss) per 0,66 (3,00) 2,63
share (cents)
Headline earnings/(loss) per 0,68 (3,06) 0,26
share (cents)
Diluted headline earnings/(loss) 0,66 (3,02) 0,26
per 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 from 29 January 2005 and since accounted for
as an associate. The excluded revenue in the current period affected the
Outsourcing division and the HR Solutions division by R24,3 million and
R0,4 million respectively.
Segmental analysis
Restated
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2005 2004 2005
R"000 R"000 R"000
Revenue
Outsourcing(1) 153 225 188 743 334 452
Computer Training Colleges 8 404 9 271 21 297
HR Solutions(1) 7 661 10 348 18 892
169 290 208 362 374 641
Operating profit/(loss)
Outsourcing 3 099 5 097 10 733
Computer Training Colleges 896 767 3 931
HR Solutions (1 790) (5 985) (9 273)
Central Services (1 946) (1 892) (3 216)
259 (2 013) 2 175
Balance sheet
Restated
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2005 2004 2005
R"000 R"000 R"000
ASSETS
Non-current assets 20 073 13 255 19 042
Equipment and vehicles 2 856 2 815 2 412
Intangibles 576 576 576
Investment and loan in associate 5 744 - 5 247
Long-term receivables 1 170 1 463 770
Deferred tax asset 9 727 8 401 10 037
Current assets 49 349 68 321 47 346
Inventories 852 744 979
Trade receivables 30 989 52 747 32 419
Other receivables 3 305 3 496 2 170
Taxation receivable 208 - 173
Bank balances and cash 13 995 11 334 11 605
Total assets 69 422 81 576 66 388
EQUITY AND LIABILITIES
Equity 40 317 32 908 39 397
Capital and reserves 40 110 32 701 39 336
Minority shareholders" interest 207 207 61
Non-current liabilities 744 556 382
Current liabilities 28 361 48 112 26 609
Trade and other payables 20 072 27 446 19 818
Short-term interest bearing 390 185 190
borrowings
Taxation - 460 51
Bank borrowings 7 899 20 021 6 550
Total equity and liabilities 69 422 81 576 66 388
Number of shares in issue at end 114 859 114 841 114 859
of the period ("000)
Net asset value per share 35 29 34
(cents)
Cash flow statement
Restated
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2005 2004 2005
R"000 R"000 R"000
Operating activities 1 216 (7 038) 6 434
Investing activities (736) (443) (7)
Financing activities 361 (198) (369)
Net increase/(decrease) in cash 841 (7 679) 6 058
and cash equivalents
Cash and cash equivalents at 4 865 (1 193) (1 193)
beginning of the period
Cash and cash equivalents at end 5 706 (8 872) 4 865
of the period
Statement of changes in equity
Restated
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2005 2004 2005
R"000 R"000 R"000
Balance at beginning of the 39 336 36 627 36 627
period as previously stated
Minority shareholders" interest 61 6 6
- opening balance
Purchase of shares by share - (373) (374)
trust
Issue of shares from share trust - - 4
Net profit/(loss) for the period 774 (3 553) 3 079
Minority shareholders" interest 146 201 255
for the period
Deconsolidation of minority - - (200)
shareholders" interest in
subsidiary when it became an
associate
Balance at the end of the period 40 317 32 908 39 397
Commentary
Profile
Primeserv Group Limited is a holding company with specialised subsidiary and
associate operations that meet the human resources (HR) needs of the South
African corporate, industrial and public sectors. It uses a proprietary model to
offer an integrated HR service.
Overview
These results are for Primeserv"s interim period ending December 2005. The Group
has recorded another operating profit, indicating that the remedial action
specifically implemented in the HR Solutions division over the last 12 months is
proving effective.
Financial review
The Group recorded an operating profit of R0,3 million compared to a restated
operating loss of R2,0 million for the comparable previous period ("previous
period"). Group revenue including Bathusi Staffing Services (Pty) Ltd
("Bathusi") (see note (1) to the income statement) was R194,0 million (2004:
R208,4 million). As indicated at year-end, the Group continued to be affected by
the loss incurred by the HR Solutions division. This loss is substantially lower
than the previous period and in line with expectations.
Net profit attributable to shareholders of R0,8 million improved by R4,3 million
from a restated net loss attributable to shareholders of R3,6 million in the
previous period. The Group recorded headline earnings of 0,68 cents per share
compared to a headline loss of 3,06 cents per share for the previous period.
The Group continued to generate positive cash flow of R0,8 million for the
period; and R14,6 million since the previous period resulting in a net cash
position of R5,7 million versus net borrowings of R8,8 million at 31 December
2004.
Group debtors" days remained under 30 days and the Group balance sheet has been
further strengthened.
Interest received includes R0,6 million (2004: nil) on the loan for the sale of
the Outsourcing division"s Secunda branch to Bathusi. Interest paid continued to
decline as a result of improved working capital management.
The exceptional item relates to a recovery of proceeds due on the disposal of an
operation, which was previously impaired.
Operational review
The Outsourcing division, the Group"s largest business unit, generated revenue
of R177,5 million (includes Bathusi revenue of R24,3 million - see note (1) to
the Income Statement) (2004: R188,7 million). The lower revenue was due to
client delays in the start-up of certain large projects, a key client changing
its strategy for outsourcing its staffing requirements, and the implementation
of the Group"s client-risk management policy. As referred to in the 2005 Annual
Report, the division has invested in new IT infrastructure and the enhancement
of its sales processes and operational capacity. Returns on these new
investments have been slower to materialise than were anticipated and, as a
consequence of which, the profitability of the division in the second half of
the financial year will be adversely affected.
The Computer Training Colleges division delivered an operating profit of R0,9
million, which was higher than the previous period by R0,1 million. This was
despite its revenue of R8,4 million for the period being lower than the previous
period by R0,9 million. This was due to a large external training contract which
was completed in the 2005 financial year. Learner numbers remain strong and
higher intakes are expected in the second half. A solid performance for the full
year is anticipated.
The strategic human capital HR Solutions division, comprising the Technical and
Corporate training units and the HR Consulting operation, recorded an operating
loss of R1,8 million. This was substantially less than the operating loss of
R6,0 million for the previous period. Lower sales, and remaining high fixed
expenses due to ongoing lease and other commitments, continue to affect this
division.
Accounting policies
The results for the period have been prepared in accordance with the Group"s
accounting policies. These comply with International Financial Reporting
Standards (IFRS) which were adopted with effect from 1 July 2005.
Due to the adoption of IFRS, the comparative figures for the period ended 31
December 2004 have been restated, resulting in goodwill amortisation of R41 000
not being charged to the income statement for that period. The effects of the
restatement on the results of 31 December 2004 are as follows:
Previously
Reported Restated Adjustment
R"000 R"000 R"000
Income Statement
Net loss attributable to (3 594) (3 553) 41
shareholders
Balance Sheet
Intangibles 535 576 41
Capital and reserves 32 660 32 701 41
Dividend
In line with Group policy, dividends will be considered at the end of the
financial year.
Directorate and Company Secretary
The Group"s Chief Financial Officer and Company Secretary, NN Rodrigues, will be
leaving the Group with effect from 25 April 2006 to take up a position outside
of South Africa. The Board thanks him for his contribution and wishes him well
in his new position.
For and on behalf of the Board
JM Judin M Abel NN Rodrigues
Chairman Chief Executive Officer Chief Financial Officer
Bryanston
23 March 2006
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
Share code: PMV
ISIN: ZAE000039277
www.primeserv.co.za
Date: 23/03/2006 01:52:11 PM Produced by the JSE SENS Department
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