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PMV
PMV
Primeserv - Reviewed interim results for the twelve months ended 30 June 2006
PRIMESERV GROUP LIMITED
("Primeserv" or "the Group")
Incorporated in the Republic of South Africa
Registration number 1997/013448/06
Share code: PMV
ISIN: ZAE000039277
www.primeserv.co.za
Reviewed interim results for the twelve months ended 30 June 2006
Income Statement
for the year twelve months ended 30 June 2006
Reviewed Audited
12 months 12 months
ended ended
30 June 2006 30 June 2005
R "000 R "000
Revenue (1) 336 720 374 641
EBITDA 3 851 3 665
Depreciation (1 219) (1 490)
Operating profit 2 632 2 175
Interest received 1 435 927
Interest paid (1 031) (1 704)
Capital surplus on sale of business - 4 234
Share of impairment of goodwill
in associate - (1 558)
Share of profit from associate company 13 44
Net profit before exceptional items 3 049 4 118
Exceptional items 538 (1 500)
Net profit before taxation 3 587 2 618
Taxation (1 010) 716
Net profit after taxation 2 577 3 334
Minority shareholders" interest (7) (255)
Net profit attributable to shareholders 2 570 3 079
Reconciliation of headline earnings
Net profit attributable to shareholders 2 570 3 079
After tax effect of profit on
sale of fixed assets (159) (98)
Capital surplus on sale of business - (4 234)
Share of impairment of goodwill in
associate - 1 558
Headline earnings 2 411 305
Weighted average number of shares ("000) 114 846 115 766
Diluted number of shares ("000) 116 508 117 179
Earnings per share (cents) 2,24 2,66
Diluted earnings per share (cents) 2,21 2,63
Headline earnings per share (cents) 2,10 0,26
Diluted headline earnings per share (cents) 2,07 0,26
(1) Revenue note: Excluded from revenue is R43,4 million (2005: R24,7 million)
as a result of the deconsolidation of Bathusi Staffing Services (Pty) Limited
from 29 January 2005 and since accounted for as an associate. The excluded
revenue in the twelve months as reported affected the Outsourcing division by
R42,3 million (2005: R24,3 million) and the HR Solutions division by R1,1
million (2005: R0,4 million).
Cash Flow Statement
for the twelve months ended 30 June 2006
Reviewed Audited
12 months 12 months
ended ended
30 June 2006 30 June 2005
R "000 R "000
Cash flows from operating activities 1 921 6 434
Cash flows from investing activities (419) (7)
Cash flows from financing activities 62 (369)
Net increase in cash and
cash equivalents 1 564 6 058
Cash and cash equivalents at
beginning of period 4 865 (1 193)
Cash and cash equivalents at
end of period 6 429 4 865
Balance Sheet
as at 30 June 2006
Reviewed Audited
30 June 2006 30 June 2005
R "000 R "000
Assets
Non-current assets 19 318 19 042
Equipment and vehicles 2 435 2 412
Intangibles 576 576
Investment and loan in associate 6 938 5 247
Long-term receivables - 770
Deferred tax asset 9 369 10 037
Current assets 49 356 47 346
Inventories 714 979
Trade receivables 34 443 32 419
Other receivables 2 722 2 170
Taxation receivable 173 173
Bank balances and cash 11 304 11 605
Total assets 68 674 66 388
Equity and liabilities
Equity 41 831 39 397
Capital and reserves 41 763 39 336
Minority shareholders" interest 68 61
Non-current liabilities 444 382
Current liabilities 26 399 26 609
Trade and other payables 21 292 19 818
Short-term interest-bearing borrowings 386 190
Taxation 232 51
Bank borrowings 4 489 6 550
Total equity and liabilities 68 674 66 388
Number of shares in issue at
end of period ("000) 114 417 114 859
Net asset value per share (cents) 37 34
Statement of Changes in Equity
for the twelve months ended 30 June 2006
Reviewed Audited
12 months 12 months
ended ended
30 June 2006 30 June 2005
R "000 R "000
Balance at beginning of the period 39 336 36 627
Minority shareholders" interest
- opening balance 61 6
Purchase of shares by share trust (143) (374)
Net profit for the period 2 570 3 079
Issue of shares from share trust - 4
Minority shareholders" interest
for the period 7 255
Deconsolidation of minority shareholders
interest in subsidiary when it became
an associate - (200)
Balance at end of the period 41 831 39 397
Segmental Analysis
for the twelve months ended 30 June 2006
Reviewed Audited
12 months 12 months
ended ended
30 June 2006 30 June 2005
R "000 R "000
Revenue
Outsourcing (1) 301 206 334 452
Computer Training Colleges 19 845 21 297
HR Solutions (1) 15 669 18 892
336 720 374 641
Operating profit/(loss)
Outsourcing 5 571 10 733
Computer Training Colleges 4 106 3 931
HR Solutions (3 780) (9 273)
Central Services (3 265) (3 216)
2 632 2 175
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.
Overview
The Group"s results are for the twelve months ended 30 June 2006. In order to
align its reporting with its business cycle and operational requirements,
Primeserv has changed its year-end from 30 June to 31 December, consequently
these results are reviewed interim results and audited results for the eighteen
months ending 31 December 2006 will follow in due course. The reviewed results
for the twelve months ended 30 June 2006 indicate that the Group"s profitability
and performance continue to improve.
Financial Review
The Group recorded an operating profit of R2,6 million, an increase of 21% from
the R2,2 million for the comparable period. Net profit before tax increased 37%
to R3,6 million. Group revenue was R336,7 million, (this excludes Bathusi
Staffing Services (Pty) Limited ("Bathusi"), the Group"s BBBEE associate
company, see revenue note (1) to the income statement).
Headline earnings improved by 691% to R2,4 million compared to the previous
twelve-month period. The Group recorded headline earnings per share of 2,10
cents, an increase of 708% over the 0,26 cents per share for the comparable
period. Earnings per share decreased 16% to 2,24 cents (2005: 2,66 cents per
share) due to the inclusion in the previous period of the profit on sale of the
Outsourcing division"s Secunda branch to Bathusi, which had a positive impact
during that period of 2,4 cents on the earnings per share reported.
The Group continued to generate positive cash flow, resulting in a net cash
position of R6,4 million, up 32% from the R4,9 million for the comparable
period. Net interest received of R0,4 million was recorded, compared to net
interest paid of R0,8 million for the previous period.
The Group"s balance sheet once again strengthened. Debtors" days remained steady
at 30 days. The Group was in a net ungeared position at 30 June 2006. Net asset
value per share increased by 9% to 37 cents per share.
As previously reported, the exceptional item of R0,5 million 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, specialising in
flexible staffing solutions to business and heavy industry, generated revenue of
R301,2 million excluding R42,3 million of revenue attributable to Bathusi (2005:
R334,5 million excluding R24,3 million of revenue attributable to Bathusi).
Consequently, total revenue for the division was lower by 4%. Revenue for the
division did not meet expectations for the twelve months due to continued delays
in the start-up of budgeted large projects and maintenance shutdowns that were
expected during the period. The shortage of skills, particularly in
construction, engineering, and petrochemical services, has hindered revenue
growth.
As anticipated in the report on the six month results to December 2005, the
division produced weaker than budgeted results for the twelve months ended 30
June 2006. The impact of lower revenue coupled with investment in systems and
processes without the expected benefits during the period hampered the
division"s performance. Corrective action has been taken to address this revenue
shortfall. The logistics, warehousing and industrial flexible staffing unit
performed solidly and its national footprint continues to grow. The white collar
professional staffing unit had a good twelve months but remains pressured by a
lack of available skills.
The division remains focused on revenue growth, margin improvement and working
capital management, and is seeking opportunities to scale up its size through
organic and acquisitive activities.
The Computer Training Colleges division delivered a good performance for the
twelve months, recording an operating profit up 5% to R4,1 million. The
operation produced strong cash flows for the period. Continued investment in
courseware, equipment and facilities was made during the twelve months. Revenue
of R19,9 million was down slightly, due to the effect of a once-off corporate
training contract included in the results of the prior period. College learner
numbers increased year-on-year. Further investment is planned for the upgrading
of facilities and the opening of new colleges.
The strategic human capital HR Solutions division, comprising the Technical and
Corporate Training units and the HR Consulting operation, continued to reduce
its losses in line with expectations. A substantially lower loss of R3,8 million
was reported for the twelve months compared to the R9,3 million loss reported
for the comparable period. The division remains of strategic importance in
enhancing the delivery of the Group"s integrated HR services offering.
Prospects
Barring a material change in economic conditions, the Group anticipates an
improved performance.
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 2004, and also
comply with IAS 34 - Interim Financial Reporting. The adoption of IFRS did not
require any adjustments to opening reserves and no prior period adjustments were
required.
Review by Independent Auditors
The results have been reviewed by the Group"s auditors, PKF (Jhb) Inc. Their
unqualified review report is available for inspection at Primeserv"s registered
address.
On behalf of the board
JM Judin M Abel R Sack
Chairman Chief Executive Officer Chief Financial Officer
20 September 2006
Bryanston
Dividend Declaration
Notice is hereby given that Primeserv has declared an interim dividend (dividend
declaration number 3) for the twelve months ended 30 June 2006 of 1 cent per
ordinary share.
The salient dates applicable to the interim dividend are as follows:
Last day to trade "CUM" dividend Friday, 6 October 2006
First day to trade "EX" dividend Monday, 9 October 2006
Record date Friday, 13 October 2006
Payment date Monday, 16 October 2006
No share certificates may be dematerialised or rematerialised between Monday, 9
October 2006 and Friday, 13 October 2006, both days inclusive.
Directors: JM Judin (Chairman)*, M Abel (Chief Executive Officer), Prof S Klein*
(American), AT McMillan (British), C Nkosi*, DL Rose*, DS Seaton*
* Non-executive
Registered address: Venture House, 54 Peter Place Park, Peter Place, Bryanston
(PO Box 3008, Saxonwold 2132)
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited, 70
Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown 2107)
Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited, The Woodlands,
Woodlands Drive, Woodmead, Sandton 2146
Date: 20/09/2006 01:30:08 PM Produced by the JSE SENS Department
