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MVS - Mvelaserve Limited - Reviewed Condensed Consolidated Financial Results

Release Date: 29/03/2012 07:05
Code(s): MVS
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MVS - Mvelaserve Limited - Reviewed Condensed Consolidated Financial Results for the six months ended 31 December 2011 Mvelaserve Limited (Incorporated in the Republic of South Africa) (Registration number 1999/003610/06) JSE Share code: MVS ISIN: ZAE000151353 ("Mvelaserve" or "the company" or "the group") Reviewed Condensed Consolidated Financial Results for the six months ended 31 December 2011 Mvelaserve is a leading, black empowered provider of outsourced business support services across southern Africa. Mvelaserve listed independently on the JSE Main Board in the `Business Support Services` sector on 29 November 2010. HIGHLIGHTS Revenue up 14% Achieved Level 2 BEE status Acquired 51,6% interest in new road remediation and pothole repair company Acquired 80% of established cell mast maintenance provider Condensed group statement of financial position at 31 December 2011 Restated Restated Restated Reviewed Unaudited Unaudited Audited 31 December 31 December 31 December 30 June 2011 2010 2009 2011
Notes R`000 R`000 R`000 R`000 ASSETS Non-current 1 143 174 1 075 706 940 038 1 109 260 assets Property, plant 3 432 920 399 442 329 384 431 915 and equipment Intangible 4 642 037 622 592 544 561 622 547 assets Investments in 10 252 7 899 4 126 9 095 associates Other 10 287 20 914 28 367 11 518 investments Deferred 47 678 24 859 33 600 34 185 taxation Current assets 1 144 338 1 143 351 1 576 847 1 071 425 Other 11 536 5 895 2 005 11 921 investments Other current 895 740 847 972 1 204 829 816 259 assets Cash and cash 5 84 071 170 011 257 560 126 787 equivalents Restricted cash 5 152 991 119 473 112 453 116 458 Assets in 102 137 - - 79 800 disposal group held-for-sale TOTAL ASSETS 2 389 649 2 219 057 2 516 885 2 260 485 EQUITY AND LIABILITIES Capital and 872 982 874 970 145 043 902 337 reserves Owners of the 860 911 861 848 142 019 887 049 parent Non-controlling 12 071 13 122 3 024 15 288 interest Non-current 290 217 407 396 1 315 541 323 036 liabilities Interest- 6 252 621 363 030 573 997 288 845 bearing liabilities Non-interest- - 3 750 697 651 - bearing liabilities Financial 23 752 33 751 31 527 25 523 liability Deferred 13 844 6 865 12 366 8 668 taxation Current 1 160 881 936 691 1 056 301 980 312 liabilities Interest- 6 141 039 77 753 162 416 137 809 bearing liabilities Non-interest- 4 592 21 239 22 324 3 467 bearing liabilities Other current 966 553 837 699 871 561 839 036 liabilities Bank overdraft 48 697 - - - Liabilities in 65 569 - - 54 800 disposal group held-for-sale TOTAL EQUITY 2 389 649 2 219 057 2 516 885 2 260 485 AND LIABILITIES Net number of 141 562 141 562 137 076 141 562 ordinary shares in issue (`000) Net asset value 608,2 608,8 103,6 626,6 per ordinary share (cents) Net tangible 120,9 151,5 (318,2) 162,7 asset value per ordinary share (cents) Condensed group statement of comprehensive income for the six months ended 31 December 2011 Reviewed Unaudited* Audited 31 December 31 December 30 June
2011 2010 2011 R`000 R`000 R`000 Continued operations Revenue 2 439 741 2 148 020 4 400 888 Profit from operations 89 990 62 883 296 358 Net finance costs (24 152) (30 341) (57 098) Finance income 3 990 8 465 14 640 Finance costs (28 142) (38 806) (71 738) Investment income (1 408) 52 220 71 422 Share of profit/(loss) from 1 157 (370) 826 associates Dividend Income 2 860 3 485 3 800 Net fair value adjustments and (5 425) 49 105 66 796 (loss)/profit from investments Impairment of goodwill - - (121 550) Profit before taxation 64 430 84 762 189 132 Taxation expense (42 476) (37 848) (77 227) Normal, deferred, capital gains (35 912) (33 890) (73 069) and foreign taxation Secondary tax on companies (6 564) (3 958) (4 158) Profit for the period from 21 954 46 914 111 905 continued operations (Loss)/profit from discontinued (961) 42 566 16 038 operations Total profit for the period 20 993 89 480 127 943 Other comprehensive income Currency translation differences 3 325 - (10 206) Total comprehensive income for 24 318 89 480 117 737 the period Profit for the period attributable to: Owners of the parent 17 160 87 230 122 638 Non-controlling interest 3 833 2 250 5 305 20 993 89 480 127 943 Total comprehensive income attributable to: Owners of the parent 20 485 87 230 112 432 Non-controlling interest 3 833 2 250 5 305 24 318 89 480 117 737 Weighted average number of 141 562 137 076 139 703 ordinary shares in issue (`000) Earnings per ordinary share 12,1 63,6 87,8 (cents) Headline earnings per ordinary 19,5 31,9 159,8 share (cents) *These numbers have been re-presented in accordance with IFRS5: non-current assets held-for-sale and discontinued operations. Reconciliation between profit attributable to owners of the parent and headline profit attributable to owners of the parent Reviewed Unaudited Audited 31 December 31 December 30 June 2011 2010 2011
R`000 R`000 R`000 Profit attributable to owners of 17 160 87 230 122 638 the parent IAS 27 - Profit on disposal of - (49 367) (44 288) subsidiaries and investments IAS 16 - Profit on sale of (1 299) (1 451) (3 156) property, plant and equipment IFRS 3 - Profit on deemed - - (10 667) disposal of associate IFRS 3 - Goodwill impairment - - 121 550 IFRS 5 - Impairment of disposal 4 279 - 28 631 group held-for-sale IAS 21 - Foreign currency 7 134 - - translation reserve reclassified to profit or loss Tax effect 364 7 318 8 577 Headline profit attributable to 27 638 43 730 223 285 owners of the parent Subsequent to the SENS announcement on 13 March 2012 and in consultation with the company auditors and the audit committee, two further adjustments were made to headline earnings in respect of IFRS 5 and IAS 21. This had a favourable impact on the headline earnings per ordinary share of 8 cents or 25,1%. Condensed group statement of cash flows 31 December 2011 Restated Restated Restated Reviewed Unaudited Unaudited Audited 31 December 31 December 31 December 30 June
2011 2010 2009 2011 R`000 R`000 R`000 R`000 Profit from 92 700 105 157 133 573 340 322 operations* Non-cash exceptional - (39 792) - - items Non-cash items 73 238 62 883 49 729 (29 944) Working capital 1 876 99 128 47 729 (16 418) Cash generated from 167 814 227 376 231 031 293 960 operations Net interest paid (23 850) (30 049) (29 015) (61 321) Investment income 3 014 3 485 3 656 17 749 Normal taxation paid (48 372) (37 033) (30 726) (102 487) Cash available from 98 606 163 779 174 946 147 901 operating activities before the payment of capital gains tax Capital gains tax - (6 562) - - paid Cash available from 98 606 157 217 174 946 147 901 operating activities Cash effects of (89 309) (7 439) (62 930) (133 706) investing activities Cash effects of (32 571) (49 658) 34 099 42 585 financing activities Dividends paid - (50 962) (187 488) - (2 401) owners of the parent Dividends paid - non- (10 545) (2 401) - (187 488) controlling interest Net movement in cash (84 781) (89 769) 146 115 (133 109) and cash equivalents Cash and cash 135 466 259 780 111 445 259 780 equivalents at the beginning of the period Cash held in (10 952) - - (8 679) disposal group Effect of exchange (4 359) - - 8 795 rate fluctuations on cash held Cash and cash 35 374 170 011 257 560 126 787 equivalents at the end of the period * Includes discontinued operations. Condensed group statement of changes in equity 31 December 2011 Reviewed Unaudited Audited 31 December 31 December 30 June
2011 2010 2011 R`000 R`000 R`000 Balance at the beginning of the 902 337 233 300 233 300 period Acquisition of subsidiaries 700 7 791 6 901 Issue of shares - 734 288 734 288 Total comprehensive income for 24 318 89 480 117 737 the period Movement in foreign currency 7 134 - - translation reserve Dividends (61 507) (189 889) (189 889) Balance at the end of the period 872 982 874 970 902 337 Segmental information 31 December 2011 Restated Reviewed Unaudited Audited
31 December 31 December 30 June 2011 2010 2011 R`000 R`000 R`000 NET ASSETS Facilities management services 366 989 809 813 359 256 Security services 355 273 334 762 356 862 Cleaning and catering services 196 883 154 797 215 868 Diversified services* (82 731) (424 402) (54 649) Net assets from discontinued 36 568 - 25 000 operations 872 982 874 970 902 337 REVENUE Facilities management services 637 005 550 863 1 145 634 Security services 1 101 829 959 020 1 966 538 Cleaning and catering services 394 461 536 989 1 037 269 Diversified services* 306 446 101 148 251 447 Revenue from discontinued 91 536 81 434 164 133 operations 2 531 277 2 229 454 4 565 021 REVENUE INCLUDING INTER-SEGMENT TRADING Facilities management services 639 882 553 498 1 149 200 Security services 1 111 604 961 415 1 977 502 Cleaning and catering services 520 223 577 793 1 162 200 Diversified services* 351 497 106 304 273 957 Revenue from discontinued 95 996 86 909 180 448 operations 2 719 202 2 285 919 4 743 307
PROFIT/(LOSS) FROM OPERATIONS Facilities management services 68 128 48 150 111 905 Security services 66 326 62 467 142 966 Cleaning and catering services (16 896) 4 382 (26 650) Diversified services* (27 568) (52 116) 68 137 Profit /(loss) from discontinued 2 710 42 274 43 964 operations 92 700 105 157 340 322
EXCEPTIONAL ITEMS Facilities management services - (23 040) (31 355) Security services - - (1 756) Cleaning and catering services (22 504) - - Diversified services* - (47 412) 80 162 Exceptional items from - 39 793 39 793 discontinued operations (22 504) (30 659) 86 844
NET FINANCE INCOME/(COSTS) Facilities management services 298 12 651 (4 184) Security services (4 972) (6 888) (9 781) Cleaning and catering services (1 271) (4 826) (2 918) Diversified services* (18 207) (31 278) (40 215) Net finance income from 454 292 686 discontinued operations (23 698) (30 049) (56 412)
INVESTMENT INCOME/(EXPENSES) Facilities management services 3 317 3 115 4 311 Security services - 49 367 49 367 Cleaning and catering services (7 196) - - Diversified services* 2 471 (262) 17 744 Investment income from (4 125) - 20 discontinued operations (5 533) 52 220 71 442
TAXATION Facilities management services (20 741) (16 074) (36 885) Security services (13 029) (13 295) (24 416) Cleaning and catering services 4 771 92 1 271 Diversified services* (13 477) (8 571) (17 197) Taxation from discontinued - - - operations (42 476) (37 848) (77 227)
TOTAL PROFIT/(LOSS) FOR THE PERIOD Facilities management services 51 002 47 842 75 147 Security services 48 325 91 651 155 736 Cleaning and catering services (20 592) (352) (28 297) Diversified services* (56 781) (92 227) (90 681) Total comprehensive income from (961) 42 566 16 038 discontinued operations 20 993 89 480 127 943 TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD Facilities management services 51 002 47 842 75 147 Security services 51 650 91 651 154 179 Cleaning and catering services (20 592) (352) (36 946) Diversified services* (56 781) (92 227) (90 681) Total comprehensive income from (961) 42 566 16 038 discontinued operations 24 318 89 480 117 737 * Including head office. Notes to the financial statements 1. Accounting policies and basis of preparation The reviewed condensed consolidated financial statements for the six months ended 31 December 2011 have been prepared in accordance with IAS 34 - Interim Financial Reporting, AC 500 standards and the JSE Limited Listings Requirements and in the manner required by the South African Companies Act, 2008 (Act 71 of 2008), as amended. The accounting policies adopted in these reviewed condensed consolidated financial statements are consistent with the accounting policies applied in the audited annual financial statements for the year ended 30 June 2011. The reviewed condensed consolidated financial information for the six months ended 31 December 2011 was compiled under the supervision of Mr GE Roth, Chief Financial Officer. 2. Business combinations With effect from 1 August 2011 Mvelaserve obtained 51,6% of the issued share capital of Velocity Road Rehabilitation (Pty) Limited ("Velocity"), a new start-up company, for a consideration of R10 million. With effect from 1 September 2011, Mvelaserve Limited obtained 80% the assets and liabilities of LTP Mast and Infrastructure Services (Pty) Limited ("LTP") for a consideration of R14 million. Velocity LTP Other Total
R`000 R`000 R`000 R`000 Property, plant and equipment - 1 688 - 1 688 Intangible assets - 120 - 120 Deferred taxation - 66 - 66 Trade and other receivables - 4 429 26 4 455 Net cash and cash equivalents - 86 - 86 Total assets - 6 389 26 6 415 Asset-based finance - (855) - (855) Trade and other payables - (2 034) (741) (2 775) Total liabilities - (2 889) (741) (3 630) Net assets acquired - 3 500 (715) 2 785 Non-controlling interest - (700) - (700) Goodwill 10 000 11 200 1 077 22 277 Total purchase price 10 000 14 000 362 24 362 Satisfied by: Cash 10 000 11 000 362 21 362 Loans - 3 000 - 3 000 10 000 14 000 362 24 362 The purchase price allocation for LTP and Velocity has not been completed as the intangible assets have not been separately recognised and accounted for. R0,7 million of the goodwill raised under other, relates to the finalisation of a business combination effected in the prior year and the remainder to acquisitions by Protea Coin. The following revenue and profit/(loss) after taxation numbers have been consolidated into the group results relating to business combinations effected during the period: Profit/(loss) after
Revenue taxation R`000 R`000 LTP 12 712 2 120 Velocity 1 681 (4 775) Reviewed Unaudited 31 December 31 December 2011 2010 R`000 R`000
3. Property, plant and equipment Opening balance 431 915 387 619 Additions 75 078 75 970 Acquired through business combinations 1 688 2 190 Disposals (4 747) (4 743) Depreciation for the period (71 014) (61 594) Closing balance 432 920 399 442
4. Intangible assets Opening balance 622 547 545 335 Change due to business combinations 22 277 79 294 Additions 738 627 Amortisation (3 525) (2 664) Closing balance 642 037 622 592 5. Restatements A classification change on cash and cash equivalents was corrected in the current period. As a result, restricted cash has been separately disclosed. This change had the following effect on the statement of financial position: Unaudited Unaudited Audited 31 December 31 December 30 June
2010 2009 2011 R`000 R`000 R`000 Previously stated Cash and cash equivalents 289 484 370 013 243 245 Restated 289 484 370 013 243 245 Cash and cash equivalents 170 011 257 560 126 787 Restricted cash 119 473 112 453 116 458 A classification change in the segmental information at 30 June 2011 was corrected in the current period. This correction had the following effect on the presented segmental information: Previously Restated stated
30 June 30 June 2011 2011 R`000 R`000 Profit/(loss) from operations Facilities management services 111 905 105 428 Security services 142 966 136 487 Cleaning and catering services (26 650) (31 871) Diversified services 68 137 86 314 Pofit from discontinued operations 43 964 43 964 340 322 340 322 TOTAL PROFIT/(LOSS) FOR THE PERIOD Facilities management services 75 147 68 670 Security services 155 736 149 257 Cleaning and catering services (28 297) (33 518) Diversified services (90 681) (72 504) Total comprehensive income from discontinued 16 038 16 038 operations 127 943 127 943 TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD Facilities management services 75 147 68 670 Security services 154 179 147 700 Cleaning and catering services (36 946) (42 167) Diversified services (90 681) (72 504) Total comprehensive income from discontinued 16 038 16 038 operations 117 737 117 737 No other periods were affected by this correction. Reviewed Reviewed Reviewed Unaudited 31 December 31 December 31 December 31 December 2011 2011 2011 2010
R`000 R`000 R`000 R`000 Asset-based Bank loans Total Total finance 6. Interest-bearing liabilities Opening balance 198 434 228 220 426 654 783 970 New loans 34 615 5 500 40 115 291 673 Acquired through 855 - 855 362 business combinations Amounts repaid (48 812) (25 000) (73 812) (635 222) Accrued interest - (152) (152) - effect Closing balance 185 092 208 568 393 660 440 783 Disclosed as: Non-current 252 621 363 030 interest-bearing liabilities Current interest- 141 039 77 753 bearing liabilities 393 660 440 783 Reviewed Unaudited Audited 31 December 31 December 30 June 2011 2010 2011
R`000 R`000 R`000 7. Capital commitments and contingencies Capital expenditure Contracted for 12 127 30 446 19 688 Not contracted for 8 500 8 339 11 478 20 627 38 785 31 166 Operating leases Land and buildings 143 344 107 477 154 257 Plant and equipment 9 046 5 525 6 555 Motor vehicles 85 374 33 260 2 418 237 764 146 262 163 230
There were no significant changes in contingencies since 30 June 2011. For contingencies, refer to Mvelaserve`s annual report for the financial year ended 30 June 2011. Subsequent events The directors are not aware of any other matters or circumstances arising after the reporting period up to the date of this report not otherwise dealt with in this report. Review report The condensed consolidated financial information has been reviewed by the company`s independent auditors, PricewaterhouseCoopers Inc. Their unmodified review conclusion is available for inspection at the company`s registered office. Commentary Introduction Revenue growth for the six months ended 31 December 2011 ("the period") grew in line with expectations and, despite still challenging economic conditions, operations for the most part performed solidly. However a weak performance in the cleaning subsidiary and reduced margins in TFMC impacted profitability, which was further depleted by start-up costs in the new acquisitions. During the period the restructuring of the catering and cleaning businesses was cemented with benefits starting to become evident in the catering operation. The group growth strategy was furthered through the acquisitions of road remediation company Velocity and cell mast maintenance provider, LTP. Group profile Mvelaserve is a leading provider of outsourced business support services in South Africa, employing approximately 33 000 people. The group offers 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, water treatment and purification, road remediation and pothole repair, and mast and infrastructure services. 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. The diversified portfolio of defensive and growth businesses effectively positions Mvelaserve for performance in any economic cycle. Financial review Total revenue for the period increased 14% to R2 531 million (2010: R2 229 million) with both continued and discontinued operations demonstrating growth. Total operating profit from both continued and discontinued operations of R93 million (2010: R105 million) was lower than the comparative period mainly due to an operating loss suffered in the cleaning subsidiary, reduced margins at TFMC and start-up costs in the road remediation and pothole repair company. The group operating margin declined to 4% (2010: 6%). Net profit before tax for both continued and discontinued operations was down 51% to R64 million (2010: R128 million), mainly as a result of the decrease in operating profit as well as a profit on sale of investments of R49 million having been included in the comparative period. The difference between the actual and effective tax rates of 28% and 66%, respectively, amounting to R24 million is due to STC paid of R7 million, disallowable and exceptional items of R6 million and the tax effect of assessed losses for which no deferred tax assets have been recognised of R12 million. Financial position Non-current assets increased to R1 143 million (2010: R1 076 million) with property, plant and equipment of R433 million (2010: R399 million) and intangible assets of R642 million (2010: R623 million). Capital expenditure for the period amounted to R76 million (2010: R77 million), while goodwill of R22 million (2010: R58 million) was acquired through acquisitions. Interest-bearing debt at period-end reduced to R394 million (2010: R441 million), excluding the derivative financial instrument fair valued at R24 million on 31 December 2011 (2010: R34 million). The increase in current assets to R1 144 million (2010: R1 143 million) followed increases in trade debtors and inventory, included in other current assets, of R76 million and R42 million, respectively. Although trade debtors increased to R613 million (2010: R537 million), outstanding debtors` days reduced to 46.6 days from 48.3 days. The sharp rise in inventories is attributable to the acquisition of Stamford Sales with effect from 1 June 2011. Total net cash reduced by R101 million to R188 million of which R49 million is reflected as an overdraft. Net debt, excluding restricted cash, increased to R358 million (2010: R271 million) mainly as a result of the decrease in unrestricted cash. The debt to equity ratio reduced to 46% from 51%. Capital and reserves The total issued ordinary share capital remained unchanged at 141 561 673 ordinary shares. The weighted average net number of ordinary shares in issue increased by 3% from 137 075 717 ordinary shares at 31 December 2010 following the issue of 6 850 937 ordinary shares on 7 October 2010 for the acquisition of Zonke. Dividends in the amount of R62 million were paid during the period. The related STC amounting to R7 million has been recognised in the profit and loss for the period. Operational review Protea Coin continued to perform well and posted strong results with revenue up 16% to R1 112 million (2010: R961 million) and operating profit increasing 6% to R66 million (2010: R62 million), which translated into an operating profit margin of 6% (2010: 7%). The business had numerous contract wins and a number of tenders submitted towards the end of the period are awaiting award. TFMC achieved revenue growth of 13% to R627 million (2010: R553 million). As anticipated, operating profit declined by 4% to R66 million (2010: R71 million), excluding an extraordinary operating expense in the previous period, and margins were down. TFMC gained a number of new contracts during the period, including a leading international consumer goods company, further boosting its contribution from non-Telkom sources. RoyalMnandi showed signs of recovery. Revenue of R288 million was down by 20% on the previous period (2010: R359 million) mainly as a result of the termination of a Mozambique contract, which accounted for around R56 million of the decline. The subsidiary continued to report an operating loss which was exacerbated by, inter alia, the impact of higher food prices, accounting for the reversal of a foreign currency translation reserve of R7 million (see `Financial Review` above) and once-off corrections amounting to R12 million pertaining to the restructure. RoyalServe Cleaning suffered a tough period. Revenue rose 6% to R232 million (2010: R219 million), but an operating loss of R8 million (2010: R11 million profit) resulted mainly from once-off corrections of R11 million relating to the restructuring of the business which were reflected during the period. The latter half of the period saw the award of a number of key contracts. The restructuring is nearing completion and improved profitability is expected going forward. Zonke posted revenue up 30% to R39 million (2010: R30 million) and operating profit up 25% to R15 million (2010: R12 million) with an operating profit margin of 38%. The weighted average number of limited pay-out machines ("LPMs") in operation for the review period increased to 6 661 from 5 735 in the comparative period. The number of LPMs in operation at 31 December 2011 totalled 6 856 (2010: 5 992) with the average gross gaming revenue per LPM increasing to R3 495 from R3 082 in the comparative period. Khuseti was impacted by escalating food prices, the general slump in the food industry and decreased consumer spending. Operating profit was accordingly down 15% to R11 million (2010: R13 million) off revenue which was 8% higher at R96 million (2010: R89 million). New strategies are being investigated to mitigate further anticipated food price hikes. After identifying a number of growth opportunities, the group is no longer considering a disposal of this business and will focus on boosting the retail component going forward. Within SA Water project delays impacted negatively on turnover and hence on operating margins. Nonetheless, the business has a strong order book in place for the next six months. Circle ICT increased revenue 86% to R13 million (2010: R7 million). Although the bulk of its business was generated from within the group, the operation continues to assess new avenues of growing its external client-base. Circle ICT took over the payroll administration for a number of group businesses from January 2012. Stamford Sales posted satisfactory results. Revenue for the period amounted to R199 million. Margins remained under pressure from cost increases and client demand to delay price increases. Early teething problems in the newly acquired business were successfully resolved and the focus remains on enhanced client relationship management. New offerings within hygiene and healthcare are also set to be launched in the next few months. The group acquired an interest in road rehabilitation and pothole repair company Velocity during the period, with limited operations due to the start- up nature of the business. Performance during the period was therefore muted. Post-period, the fleet has been increased from one operational vehicle to three and a total of seven vehicles are expected by June, which will enable the business to further boost growth. Results of the recent 80% LTP acquisition have been included for four months with revenue of R13 million and an operating profit of R2 million. The company is demonstrating signs of promising growth on the back of a proven track record. Disposal The sale of Contract Forwarding to its management for R35 million, in line with strategy, to focus on higher margin businesses, was concluded during the period, with certain conditions precedent still to be finalised. Dividend No interim dividend was declared in line with group policy. Prospects Notwithstanding difficult conditions in certain markets, namely increases in food and fuel prices which impact a number of group operations, Mvelaserve remains cautiously positive regarding growth. The diversified nature of the group positions it well for resilience, with the ability to leverage cross- selling opportunities and economies of scale. The focus for the next six months to year-end remains organic growth, margins, cost control and controlled capital expenditure. The group will continue to assess expansion opportunities in new growth markets within South Africa as well as the rest of Africa, where its strategy is to follow existing clients. MSM Xayiya JMS Ferreira GE Roth Chairman Chief Executive Chief Financial Officer Officer 29 March 2012 Executive Directors: MSM Xayiya (Executive Chairman) JMS Ferreira (Chief Executive Officer) GE Roth (Chief Financial Officer) Independent Non-Executive Directors: FN Mantashe OA Mabandla* S Masinga N Mbalula GD Harlow * Lead Independent Registered Office: 28 Eddington Crescent Highveld Technopark, Centurion, 0169 Sponsor: Investec Bank Limited Auditors: PricewaterhouseCoopers Inc. Transfer Secretaries: Computershare Investor Services (Proprietary) Limited 70 Marshall Street, Johannesburg, 2001 A copy of these results is available on the Mvelaserve Limited website: www.mvelaserve.co.za Date: 29/03/2012 07:05:14 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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