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MVS - Mvelaserve Limited - Reviewed condensed consolidated financial results
for the year ended 30 June 2011
Mvelaserve Limited
Share code: MVS ISIN: ZAE000151353
JSE sector: Business Support Services
Listing date: 29 November 2010
("Mvelaserve" or "the group" or "the company")
Reviewed condensed consolidated financial results for the year ended 30 June
2011
Successful listing on JSE Main Board
Net debt down 72% to R430 million
Revenue up 11%
Profit from operations up 16%
Operating margin of 7,5%
Normalised EPS up 17%
Maiden dividend of 36 cps
Condensed group statement of financial position
Reviewed Audited
30 June 30 June
R`000 2011 2010
Assets
Non-current assets 1 109 260 975 105
Property, plant and equipment 431 915 387 619
Intangible assets 622 547 545 335
Investment in associates 9 095 8 269
Other investments 11 518 16 362
Deferred taxation 34 185 17 520
Current assets 1 071 425 1 753 501
Other investments 11 921 15 553
Other current assets 816 259 1 363 139
Cash and cash equivalents 243 245 374 809
Assets in disposal group held-for-sale 79 800 5 045
Total assets 2 260 485 2 733 651
Equity and liabilities
Capital and reserves 902 337 233 300
Owners of the parent 887 049 227 817
Non-controlling interest 15 288 5 483
Non-current liabilities 323 036 1 367 158
Interest-bearing liabilities 288 845 605 470
Non interest-bearing liabilities - 722 117
Financial liability 25 523 36 900
Deferred taxation 8 668 2 671
Current liabilities 980 312 1 133 193
Interest-bearing liabilities 137 809 178 500
Non interest-bearing liabilities 3 467 18 136
Other current liabilities 839 036 936 557
Liabilities in disposal group held-for- 54 800 -
sale
Total equity and liabilities 2 260 485 2 733 651
Net number of ordinary shares in issue 141 562 134 711#
(`000)
Net asset value per ordinary share 626,6 169,1
(cents)
Net tangible asset value per ordinary 162,7 (248,7)
share (cents)
#For illustrative purposes only, a pro forma restatement of the net number
of shares in issue has been assumed at the current number of shares in issue
less the 6 850 937 issued in the acquisition of Zonke pre-listing in October
2010.
Condensed group statement of comprehensive income
Reviewed Audited
Year to 30 % Year to 30
June June
R`000 2011 change 2010
Continued operations
Revenue 4 400 888 12,0 3 929 854
Profit from operations 296 358 3,1 287 457
Profit from operations before 249 307 287 457
exceptional items
Exceptional items 47 051 -
Net finance costs (57 098) (53 888)
Finance income 14 640 14 146
Finance costs (71 738) (68 034)
Net profit from investments 71 422 3 349
Share of profit from associates 826 6 075
Dividend income 3 800 -
Net fair value adjustments and 66 796 (2 726)
profit/(loss) from investments
Impairment of goodwill (121 550) -
Profit before taxation from 189 132 (20,2) 236 918
continued operations
Taxation expense (77 227) (80 282)
Normal and capital gains taxation (73 069) (78 046)
(current and deferred)
Secondary tax on companies (4 158) (2 236)
Profit for the year from 111 905 (28,6) 156 636
continued operations
Profit/(loss) from discontinued 16 038 (1 621)
operations
Total profit for the year 127 943 (17,5) 155 015
Other comprehensive loss
Currency translation differences (10 206) -
Total comprehensive income for 117 737 155 015
the year
Profit for the year attributable
to:
Owners of the parent 122 637 151 798
Non-controlling interest 5 306 3 217
127 943 155 015
Total comprehensive income
attributable to:
Owners of the parent 112 431 151 798
Non-controlling interest 5 306 3 217
117 737 155 015
Weighted average number of 139 703 134 711#
ordinary shares in issue (`000)
Earnings per ordinary share 87,8 (22,1) 112,7
(cents)
Headline earnings per ordinary 159,8 42,2 112,4
share (cents)
Normalised earnings per share* 131,4 16,9 112,4
(cents)
#For illustrative purposes only, a pro forma restatement of the weighted
average net number of shares in issue has been assumed at the current number
of shares in issue less the 6 850 937 issued in the acquisition of Zonke.
*For comparative purposes, calculated as headline earnings adjusted for the
after-tax effect of exceptional items.
Condensed group statement of changes in equity
Reviewed Audited
Year to 30 Year to 30
June June
R`000 2011 2010
Balance at the beginning of the year 233 300 78 898
Changes in investments in subsidiaries 6 901 -
Issue of shares 734 288 -
Total comprehensive income for the year 117 737 155 015
Dividends/distributions (189 889) (613)
Balance at the end of the year 902 337 233 300
Reconciliation between profit attributable to owners of the parent
and headline profit attributable to owners of the parent
Reviewed Audited
Year to 30 Year to 30
June June
R`000 2011 2010
Profit attributable to owners of the parent 122 637 151 798
IAS 27 - Profit on disposal of subsidiaries (44 288) -
and investments
IAS 16 - Profit on sale of property, plant (3 156) (472)
and equipment
IFRS 3 - Profit on deemed disposal of (10 667) -
investment
IFRS 3 - Goodwill impairment 121 550 -
IFRS 5 - Impairment adjustment to disposal 28 631 -
group held-for-sale
IAS 38 - Net profit on disposal of - (46)
intangible assets
Tax effect 8 577 132
Headline profit attributable to owners of 223 284 151 412
the parent
Exceptional items (47 051) -
Tax effect 7 312 -
Normalised profit attributable to owners of 183 545 151 412
the parent
Condensed group statement of cash flows
Reviewed Audited
Year to 30 Year to 30
June June
R`000 2011 2010
Profit from operations 340 322 292 442
Continued operations 296 358 287 457
Discontinued operations 43 964 4 985
Non-cash items (29 944) 108 572
Working capital (14 989) (20 785)
Cash generated from operations 295 389 380 229
Net interest paid (61 321) (60 494)
Investment income 17 749 4 108
Taxation paid (102 487) (58 659)
Cash available from operating activities 149 330 265 184
Cash effects of investing activities (133 706) (175 879)
Cash effects of financing activities 40 184 75 253
Dividends paid to holding company, pre- (187 488) -
unbundling and listing
Net movement in cash and cash equivalents (131 680) 164 558
Cash and cash equivalents at the beginning 374 809 210 251
of the year
Cash held in disposal group (8 679) -
Effect of exchange rate fluctuations on 8 795 -
cash held
Cash and cash equivalents at the end of the 243 245 374 809
year
Segmental information
Reviewed Audited
Year to 30 Year to 30
June June
R`000 2011 2010
NET ASSETS
Facilities management services 359 256 737 439
Security services 356 862 244 786
Cleaning & catering services 215 868 180 231
Diversified services (54 649) (934 201)
Net assets from disposal group held-for- 25 000 5 045
sale
902 337 233 300
REVENUE
Facilities management services 1 145 634 1 105 578
Security services 1 966 538 1 577 567
Cleaning & catering services 1 037 269 1 087 882
Diversified services 251 447 158 827
Revenue from discontinued operations 164 133 195 801
4 565 021 4 125 655
REVENUE INCLUDING INTER SEGMENT TRADING
Facilities management services 1 149 200 1 108 063
Security services 1 977 502 1 582 075
Cleaning & catering services 1 162 200 1 092 917
Diversified services 273 957 158 827
Revenue from discontinued operations 180 448 196 340
4 743 307 4 138 222
PROFIT/(LOSS) FROM OPERATIONS
Facilities management services 105 428 166 740
Security services 136 486 109 379
Cleaning & catering services (31 870) 14 896
Diversified services 86 314 (3 558)
Profit from discontinued operations 43 964 4 985
340 322 292 442
EXCEPTIONAL ITEMS
Facilities management services (31 355) -
Security services (1 756) -
Diversified services 80 162 -
Exceptional items from discontinued 39 793 -
operations
86 844 -
NET FINANCE INCOME/(COSTS)
Facilities management services (4 184) 23 777
Security services (9 781) (16 395)
Cleaning & catering services (2 918) (4 176)
Diversified services (40 215) (57 094)
Net finance income from discontinued 686 (6 606)
operations
(56 412) (60 494)
NET PROFIT FROM INVESTMENTS
Facilities management services 4 311 6 075
Security services 49 367 -
Cleaning & catering services - (1 812)
Diversified services 17 744 ( 914)
Investment income from discontinued 20 -
operations
71 442 3 349
TAXATION EXPENSE
Facilities management services (36 885) (46 758)
Security services (24 416) (25 245)
Cleaning & catering services 1 271 (1 784)
Diversified services (17 197) (6 495)
(77 227) (80 282)
TOTAL PROFIT/(LOSS) FOR THE YEAR
Facilities management services 68 670 149 834
Security services 154 057 67 739
Cleaning & catering services (33 518) 7 124
Diversified services (77 304) (68 061)
Total profit/(loss) from discontinued 16 038 (1 621)
operations
127 943 155 015
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE
YEAR
Facilities management services 68 670 149 834
Security services 152 500 67 739
Cleaning & catering services (42 167) 7 124
Diversified services (77 304) (68 061)
Total comprehensive income from 16 038 (1 621)
discontinued operations
117 737 155 015
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
Accounting policies and International Financial Reporting Standards
The consolidated annual financial statements for the year ended 30 June 2011
have been prepared in accordance with International Financial Reporting
Standards ("IFRS") including IAS 34, AC500 standards of interpretations as
issued by the Accounting Practice Board or its successor, the JSE Listings
Requirements and the requirements of the Companies Act of South Africa. The
accounting policies adopted in these reviewed condensed consolidated annual
financial statements are consistent with the accounting policies applied in
the audited annual financial statements for the previous year ended 30 June
2010.
The reviewed financial results for the year ended 30 June 2011 were compiled
under the supervision of Mr GE Roth, Chief Financial Officer.
Changes in accounting policies and disclosures
Business combinations involving entities under common control
In accordance with IAS 8 - Accounting Policies, Estimates and Errors,
management referred to
IFRS 3 - Business Combinations and accordingly adopted the acquisition
method as the group`s accounting policy for the treatment of business
combinations under common control.
The group has applied the new policy prospectively, with the result that no
adjustments were necessary to any of the amounts previously recognised in
the financial statements.
Exceptional items
Exceptional items are those which have been determined by the directors as
being material by their size, incidence or nature and are therefore required
to be disclosed separately to enable a full understanding of the group`s
financial performance.
Provisions and contingent liabilities
A provision is recognised when, and only when, the group has a present legal
or constructive obligation as a result of a past event, and it is probable
that an outflow of resources embodying economic benefits will be required to
settle the obligation, and a reliable estimate can be made of the amount of
the obligation. Provisions are reviewed at the end of each reporting period
and adjusted to reflect current best estimate. Where the effect of the time
value of money is material, the amount of a provision is the present value
of the expenditure expected to be required to settle the obligation, using a
pre-tax rate that reflects the current assessment of the time value of money
and is adjusted to reflect the risks associated with the obligation.
Where the existence of an obligation will only be confirmed by the
occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the entity, or it is not probable that an
outflow of resources embodying economic benefits will be required to settle
the obligation, or the amount of the obligation cannot be measured with
sufficient reliability, no provision is raised. Provisions are raised for
all legal claims in excess of R2 million which are highly probable to
realise a loss for the group.
Business combinations and disposals
In terms of a corporate restructure, Mvelaserve acquired the indirect 75%
interest held by Mvelaphanda Group Limited ("Mvelaphanda") in Zonke
Monitoring Systems (Proprietary) Limited ("Zonke") on 29 October 2010, for a
value of R81 million. Mvelaserve issued 6 850 937 new Mvelaserve ordinary
shares at R11,82 per share to Mvelaphanda as consideration for the
acquisition.
With effect from 1 June 2011 Mvelaserve obtained full ownership control of
Stamford Sales (Proprietary) Limited ("Stamford Sales"). This was effected
by way of a share-buy back by Stamford Sales.
Fair value of assets and liabilities acquired:
Stamford
R`000 Zonke Sales Other Total
Property, plant and 842 13 094 (2 019) 11 917
equipment
Trademarks and other 4 814 1 200 2 6 016
intangibles
Other investments 268 - - 268
Inventory 338 26 553 - 26 891
Trade and other 22 177 63 3591 (5 615) 79 921
receivables
Net cash and cash 2 090 8 569 264 10 923
equivalents
Trade and other payables (4 058) (55 736) (263) (60 057)
Non-current interest- - (126 577) - (126 577)
bearing liabilities
Asset based finance - (604) (362) (966)
Deferred taxation 363 2 880 - 3 243
Taxation (3 270) 103 - (3 167)
Net assets acquired 23 564 (67 159) (7 993) (51 588)
Non-controlling interest (7 791) - 890 (6 901)
Goodwill 57 628 130 430 7 221 195 279
Profit on disposal - (10 667) (44 288) (54 955)
Total purchase price 73 401 52 604 (44 170) 81 835
Satisfied by:
Cash (7 599) 52 604 (47 190) (2 185)
Loans - - 3 020 3 020
Shares 81 000 - - 81 000
73 401 52 604 (44 170) 81 835
1. After provision for bad debt of R6,2 million.
R`000 2011
Movement in goodwill is made up as follows:
Opening balance 414 164
Changes due to business combinations and disposals 195 279
Impairment of goodwill (121 550)
Closing balance 487 893
The following Revenue and Profit/(Loss) after taxation numbers have been
consolidated into the group results relating to business combinations
effected during the year:
Profit/(Loss)
after
R`000 Revenue taxation
Zonke - 8 months 43 915 11 995
Stamford Sales - 1 month 30 963 (250)
Group Revenue would have been R4 924 million and group Profit after taxation
R155 million had the business combination been effected at the beginning of
the year under review.
The increase in goodwill is mainly due to the acquisition of Stamford Sales,
which had a negative net asset value. R119 million of this goodwill was
impaired during the year under review.
R`000 2011 2010
Capital commitments
Capital expenditure
Contracted for 19 688 16 354
Not contracted for 11 478 9 770
31 166 26 124
Operating leases
Land and buildings 154 257 111 737
Plant and equipment 6 555 4 913
Motor vehicles 2 418 325
163 230 116 975
Review opinion
These results have been reviewed by Mvelaserve`s auditors PKF (Jhb) Inc,
Registered Auditors. Their unqualified review opinion is available for
inspection at the company`s registered office.
Commentary
Introduction
The directors of Mvelaserve are pleased to present the group`s maiden annual
results since listing for the year ended 30 June 2011 ("the year"). Despite
challenging economic conditions operations delivered solid results in line
with expectations. Mvelaserve continued to demonstrate resilience through
its
strategic focus on providing outsourced business support services.
Notably the group has declared a maiden dividend of 36 cents per share for
the year.
During the year Mvelaserve advanced its growth strategy, which included
further acquisitions and a restructuring of the catering and cleaning
businesses.
On 29 November 2010, Mvelaserve successfully listed on the JSE Main Board
with an opening share price of R14,50 per share, and found a consistent
trading level notwithstanding a volatile market to close the year at R12 per
share.
Group profile
Mvelaserve is a leading provider of outsourced business support services in
South Africa, employing in excess of 30 000 people across the country.
The group has a diversified portfolio of defensive and growth businesses
offering a wide range of integrated services including facilities
management, security, catering, food manufacture, franchising, gambling,
cleaning, food, hygiene and ingredients packaging, information and
communications technology ("ICT") and water treatment and purification. Post
year-end this was extended to include road remediation and pothole repair, a
critical offering to customers with large road networks.
Mvelaserve`s blue-chip customer base ranges across the public and private
sectors, encompassing top banks, mining houses and retailers as well as
parastatals and provincial and local government.
Financial review
Revenue from both continued and discontinued operations increased by 11%
from R4 126 million to R4 565 million for the year under review. The
majority of growth was driven organically with R57 million of the increase,
or 13%, attributable to acquisitive growth. Profit from operations increased
by 16% from R292 million to R340 million. The combined average group
operating margin increased to 7,5% from 7,1%, due to exceptional income.
Net finance costs (after interest received of R15 million (2010: R40
million)) reduced to R56 million from R60 million mainly as a result of a
reduction in interest-bearing debt, excluding derivative financial
instrument, to R427 million from R784 million. Finance costs of R72 million
included R14 million interest on a term loan (2010: Rnil), an asset finance
cost of R16 million (2010: R16 million), interest paid in respect of a
derivative financial instrument of R16 million (2010: R17 million), and
preference dividends in the amount of R14 million (2010: R41 million).
Net profit from investments of R71 million (2010: R3 million) comprised a R5
million share of profits from associates and dividends and a net profit from
fair value adjustments and sale of investments amounting to R67 million.
This was offset by a R122 million impairment of goodwill arising from the
increased interest in Stamford Sales (in which the group`s stake was
ratcheted up to 100% in June 2011). The net profit from fair value
adjustments and sale of investments is made up mainly of the profit of R44
million on the disposal of certain non-core assets, a favourable mark-to-
market adjustment of R11 million in respect of a derivative financial
instrument included under interest-bearing liabilities, and R11 million in
respect of the increased interest in Stamford Sales.
Tax of R77 million was charged to the statement of comprehensive income,
consisting of normal tax of R73 million, Secondary Tax on Companies of R4
million on preference share dividends paid during the year, Capital Gains
Tax of R7 million relating mainly to the profit realised on the sale of non-
core assets and a Deferred Tax credit of R7 million resulting from the
reversal of deferred tax over-provided for in previous years.
Total comprehensive income for the year amounted to R118 million, of which
R16 million related to discontinued operations. Profit from discontinued
operations comprised mainly a R40 million loan forgiven, offset against an
impairment of R29 million. Total comprehensive income attributable to owners
of the parent amounted
to R112 million (2010: R152 million). Headline net profit attributable to
owners of the parent was R223 million, after adjusting mainly for the pre-
tax profit on the sale of non-core assets in the amount of R44 million, the
goodwill impairment of R122 million mentioned above, and a R29 million
impairment of
disposal group held-for-sale.
Financial position
Non-current assets increased by R130 million to R1 110 million largely due
to a net increase in property, plant and equipment of R42 million (after a
depreciation charge of R126 million for the year) and a net R75 million
increase in goodwill mainly attributable to the acquisition of Zonke and the
increase in the group`s interest in Stamford Sales. The capital expenditure
for year was applied primarily to expansion in Protea Coin`s Assets in
Transit ("AIT") division to meet current growth initiatives.
Interest-bearing debt amounted to R452 million (2010: R821 million)
resulting in a debt:equity ratio of 50,1% (2010: 351,9%).
Cash flow and gearing
Cash generated from operations remained strong. Working capital is actively
managed at all levels within the group.
Cash earnings per share amounted to 106,9 cents for the year under review.
R151 million of the R171 million capital expenditure for the year was
financed by asset-based finance liabilities.
Free cash flow from the group`s operations, after adjusting for the effects
of the increase in asset-based finance liabilities, was R59 million.
The total net cash outflow of R132 million during the year, included R187
million pre-unbundling and listing dividends paid to Mvelaphanda the holding
company, and R611 million of net loan repayments made during the unbundling
process, all offset by the proceeds of R653 million from the issue of new
shares.
Capital and reserves
Mvelaserve altered its share capital by first implementing a share split of
each share of R1 into 794 560 ordinary shares of R0,00012585581957,
increasing the authorised number of ordinary shares to 794 560 000 and the
issued ordinary share capital to 79 456 000 ordinary shares of
R0,00012585581957 each. Thereafter Mvelaserve cancelled 294 560 000 ordinary
shares from the authorised share capital. The entire authorised and issued
share capital were converted from ordinary shares with a par value to
ordinary shares with no par value on 7 October 2010. A further 62 105 673
ordinary shares were issued during the year, resulting in an issued share
capital of 141 561 673 no par value ordinary shares valued at R734 287 904,
and 500 000 000 authorised no par value ordinary shares.
The weighted average net number of ordinary shares in issue increased by 4%
from 134 710 736 ordinary shares at 30 June 2010 to 139 703 474 ordinary
shares at year-end as a result of the issue of 6 850 937 ordinary shares on
7 October 2010 for the acquisition of Zonke.
Operational review
Protea Coin maintained its growth trajectory with a 20% increase in revenue.
Operating margin was up to 7,3% from 6,7% in the previous year. This is
commendable in view of severe fuel price hikes and an above-average
statutory wage increase for the AIT industry in the second half of the year.
Additional business secured from existing and new customers helped to offset
some minor contract losses due to re-tendering and pricing processes.
TFMC`s revenue was up 4% on the prior year. The Telkom contract remains the
key driver of performance and was extended for an additional five years
effective April 2011. The non-Telkom Customised Solutions division
successfully expanded the customer base to double revenue. The division is
currently finalising the terms of several Public Private Partnerships
(PPP`s). TFMC will continue striving to diversify its customer base to
reduce reliance on one major contract.
As anticipated revenue in RoyalMnandi remained constant year-on-year while
the operating margin declined. During the year RoyalServe was restructured
into two separate operations and the catering business was rebranded to
RoyalMnandi. The contract base was reviewed, loss-making/low margin projects
were terminated, executive management was replaced and the general
management team was strengthened. The services offering was aligned into
focus areas based on sector, each under new management. Processes and
systems were restructured for improved service levels and margin growth. The
review of the contract base remains ongoing.
RoyalServe Cleaning delivered pleasing revenue growth of 23% by successfully
retaining clients despite harsh trading conditions and the disruption
following the separation of the catering and cleaning operations. Almost all
divisions secured new contracts wins locally and in Africa. While operating
margin for the year improved, focus is on further optimisation to bring the
margin more in line with the group combined average, and on further skills
acquisition to continue bolstering the team.
Zonke delivered revenue ahead of budget and up 28% from the previous year,
and maintained a 39% operating margin. The total number of limited payout
machines ("LPM`s") increased from 5 500 in June 2010 to about 6 500 at year-
end. Looking ahead, the strategy is to increase the roll-out tempo in the
growth areas of Gauteng, Free State and Northwest.
Khuseti increased revenue 10% for the year although the tough economy and
inflationary pressure saw the operating margin decline year-on-year by 8%.
Pie sales volumes increased and the retail footprint almost doubled to 60
stores. The number of franchise stores remained relatively flat at 298. The
first free-standing kiosk concept was rolled-out for growth in rural areas.
Notwithstanding Khuseti`s prospects, the business (inherited from
Mvelaphanda on unbundling) is not considered a fit with Mvelaserve`s
portfolio and vision. Disposal remains a possible consideration in the year
ahead.
A new acquisition just prior to the listing, SA Water is only included in
these results from 1 December 2010. This niche supplier of water
purification services and facilities is bedding down well. New contracts in
the mining sector were secured, together with wins in other private sectors
such as food & beverage and forestry. In addition major contracts in both
the private and public sectors are ongoing.
Circle ICT (originally a Protea Coin in-house function) achieved
satisfactory revenue and operating margin in its first year of operating
independently. The primary objective for the year was the roll-out of the
group-wide internal ICT function. Nonetheless the medium-term intention to
broaden the client base was achieved ahead of schedule, with new clients
starting to come on board and a new product successfully launched.
Stamford Sales, a wholly-owned subsidiary of the group from 1 June 2011 (see
`Acquisition` below), achieved good revenue growth year-on-year. The company
specialises in procurement, warehousing, sales and distribution of groceries
and packaging and towards the end of 2010, expanded into the frozen food
market. A new executive has been appointed and a new facility commissioned
since the acquisition. The intention in the year ahead is to replace and
modernise the fleet.
Contract Forwarding posted revenue of R164 million. The business experienced
a difficult year which culminated in a potential management buy-out post
year-end (see `Post year-end events`).
Acquisitions
Effective 1 June 2011, the group increased its holding in Stamford Sales
from 40% to 100%. Stamford Sales is a distribution business operating mainly
in the retail and catering environments, offering good vertical integration
opportunities with RoyalMnandi and Royalserve Cleaning. Refer to Business
Combinations note for detail on other acquisitions.
Dividend
The directors of Mvelaserve have resolved to declare a final dividend of 36
cents per ordinary share for the year.
The salient dates in respect of the dividend are as follows:
2011
Last day to trade cum dividend on Friday, 11 November
Shares will trade ex dividend from Monday, 14 November
Record date Friday, 18 November
Payment date Monday, 21 November
Shareholders may not dematerialise or rematerialise their shares between
Monday, 14 November 2011 and Friday 18 November 2011, both dates inclusive.
Post year-end events
Acquisition
In August 2011 the group acquired a 51,6% stake in road remediation
specialist Velocity Road Repair Systems ("Velocity") for R10 million.
Mvelaserve will now be the exclusive distributor in sub-Saharan Africa of
the Velocity system which includes a proprietary fleet and product
technology. The acquisition will allow the group to leverage existing client
relationships in the parastatal and private sectors, where road remediation
is essential to productivity and general public safety, as well as to
capitalise on general demand for high quality, faster pothole and road
repair. Mvelaserve is considering local manufacture of the fleet.
Disposal
The group is in the process of concluding the sale of existing business
Contract Forwarding to its management for R25 million, in line with strategy
to focus on higher margin sectors. The disposal remains subject to a number
of conditions precedent.
Prospects
Mvelaserve remains cautiously optimistic notwithstanding weak and uncertain
recovery in local and international markets. The group is confident that the
mix of businesses and the strategic business model should continue to
sustain Mvelaserve`s resilience and deliver growth across its operations.
The group will maintain focus on organic growth, margins, cost control and
capital expenditure, while also capitalising further on economies of scale
wherever viable.
Key to organic growth remains Mvelaserve`s cross-selling capability,
supported by the critical mass which will help generate further efficiencies
in areas such as procurement.
Management continue to explore expansion opportunities in new growth markets
locally and with select partners in Africa, the latter specifically where
existing clients have requested the group`s presence.
M S M Xayiya
Chairman
J M S Ferreira
Chief Executive Officer
GE Roth
Chief Financial Officer
15 September 2011
Executive Directors
M S M Xayiya (Chairman), J M S Ferreira (Chief Executive Officer),
G E Roth (Chief Financial Officer)
Independent Non-executive Directors
GD Harlow, OA Mabandla*, FN Mantashe, S Masinga, N Mbalula
*Lead Independent director
Registered Office
28 Eddington Crescent, Highveld Technopark, Centurion, 0169
Sponsor
Investec Bank Limited
Auditors
PKF (JHB) Inc.
Transfer Secretaries
Computershare Investor Services (Proprietary) Limited,
70 Marshall Street, Johannesburg, 2001
A copy of these results is available on the
Mvelaserve website:www.mvelaserve.co.za
Date: 15/09/2011 08:00:02 Supplied by www.sharenet.co.za
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