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MVELASERVE LIMITED - Reviewed condensed consolidated interim financial results for the six months ended 31 December 2012

Release Date: 07/03/2013 07:06
Code(s): MVS     PDF:  
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Reviewed condensed consolidated interim financial results for the six months ended 31 December 2012

Mvelaserve Limited
(Incorporated in the Republic of South Africa)
(Registration number 1999/003610/06)
JSE share code: MVS       ISIN: ZAE000151353
("Mvelaserve" or "the group")

REVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS  
for the six months ended 31 December 2012

HIGHLIGHTS
  
Revenue up 10%
to R2,676 million

Operating profit up 33%
to R118 million

EBITDA up 19%
to R196 million

HEPS of 41,8 cents
up 114%*

EPS of 42,5 cents
up 251%*

* Before restatement

Condensed consolidated interim statement of financial position
                                                                       Restated    Restated   
                                                         Reviewed      Reviewed     Audited   
                                                      31 December   31 December     30 June   
                                                             2012          2011        2012   
                                              Notes         R'000         R'000       R'000   
ASSETS                                                                                        
Non-current assets                                      1 158 219     1 144 910   1 146 062   
Property, plant and equipment                     3       441 005       432 920     440 185   
Intangible assets                                 4       625 614       643 773     626 145   
Investments in associates                                   7 995        10 252       8 779   
Other investments                                          15 031        10 287      17 149   
Deferred income tax assets                                 68 574        47 678      53 804   
Current assets                                          1 214 056     1 144 338   1 211 334   
Other investments                                           6 640        11 536       8 373   
Other current assets                            6.1       976 370       895 740     908 438   
Restricted cash                                           151 379       152 991     151 495   
Cash and cash equivalents                                  79 667        84 071     143 028   
Assets in disposal group held-for-sale                                 102 137              
TOTAL ASSETS                                            2 372 275     2 391 385   2 357 396   
EQUITY AND LIABILITIES                                                                        
Capital and reserves                                      971 586       874 718     916 595   
Owners of the parent                                      963 750       862 642     906 677   
Non-controlling interest                                    7 836        12 076       9 918   
Non-current liabilities                                   271 812       290 217     295 403   
Interest-bearing liabilities                      5       222 546       252 621     253 303   
Derivative financial instrument                            15 355        23 752      19 633   
Deferred income tax liabilities                            33 911        13 844      22 467   
Current liabilities                                     1 128 877     1 160 881   1 145 398   
Interest-bearing liabilities                      5       148 244       141 039     159 735   
Non-interest-bearing liabilities                            2 966         4 592       5 414   
Other current liabilities                       6.2       977 667       966 553     980 249   
Bank overdraft                                                          48 697              
Liabilities in disposal group held-for-sale                             65 569              
TOTAL EQUITY AND LIABILITIES                            2 372 275     2 391 385   2 357 396   

Condensed consolidated interim statement of profit or loss
and other comprehensive income
                                                                                     Restated      Restated
                                                                    Reviewed         Reviewed       Audited
                                                                  Six months       Six months          Year
                                                                       ended            ended         ended
                                                                 31 December      31 December       30 June
                                                                        2012             2011          2012
                                                         Notes         R'000            R'000         R'000
Continued operations
Revenue                                                            2 675 726        2 439 741     4 943 383
Profit from operations                                               117 832           88 926       193 021
Goodwill impaired                                                      (660)                      (18 554)
Net finance costs                                                   (21 810)         (24 152)      (45 854)
Finance income                                                         3 633            3 990         7 163
Finance costs                                                       (25 443)         (28 142)      (53 017)
Investment income                                                      6 293            5 788        10 577
Share of profit from associates                            7.3         2 015            3 317         3 981
Dividend income                                            7.3                           700           700
Fair-value adjustments and net profit from investments     7.2         4 278            1 771         5 896
Profit before taxation                                               101 655           70 562       139 190
Taxation expense                                                    (37 954)         (42 476)      (71 605)
Normal, deferred, capital gains and foreign taxation                (37 954)         (35 912)      (64 821)
Secondary Tax on Companies                                                           (6 564)       (6 784)
Profit for the period from continued operations                       63 701           28 086        67 585
Profit/(Loss) from discontinued operations                                             (961)         4 662
Total profit for the period                                7.5        63 701           27 125        72 247
Other comprehensive income
Items that will be reclassified subsequently to profit
or loss when specific conditions are met:
Currency translation differences                           7.2           684            3 263         2 538
Total comprehensive income for the period                  7.5        64 385           30 388        74 785
Profit for the period attributable to:
Owners of the parent  continued operations                           60 118           24 253        63 390
Owners of the parent  discontinued operations                                         (961)         4 662
Non-controlling interest                                               3 583            3 833         4 195
                                                                      63 701           27 125        72 247
Total comprehensive income for the period
attributable to:
Owners of the parent  continued operations                           60 802           27 516        65 928
Owners of the parent  discontinued operations                                         (961)         4 662
Non-controlling interest                                               3 583            3 833         4 195
                                                                      64 385           30 388        74 785
Ordinary share performance
                                                                                 Restated    Restated
                                                                  Reviewed       Reviewed     Audited
                                                                Six months     Six months        Year
                                                                     ended          ended       ended
                                                               31 December    31 December     30 June
                                                                      2012           2011        2012
                                                                     R'000          R'000       R'000
Weighted average number of ordinary shares
in issue ('000)                                                    141 537        141 562     141 562
Earnings per ordinary share (cents)                     7.5           42,5           16,4        48,1
Headline earnings per ordinary share (cents)            7.5           41,8           18,8        65,1
Earnings per ordinary share from
continued operations (cents)                                          42,5           17,1        44,8
Headline earnings per ordinary share from
continued operations (cents)                                          41,8           19,5        58,4
Earnings/(Loss) per ordinary share from
discontinued operations (cents)                                                    (0,7)         3,3
Headline earnings/(loss) per ordinary share from
discontinued operations (cents)                                                    (0,7)         6,7
Number of ordinary shares in issue ('000)                          141 097        141 562     141 562
Net asset value per ordinary share (cents)                           683,0          609,4       640,5
Net tangible asset value per ordinary share (cents)                  191,0          120,9       160,2

Reconciliation between profit attributable to owners of the parent and
headline profit attributable to owners of the parent
                                                                           Restated    Restated
                                                           Reviewed        Reviewed     Audited
                                                         Six months      Six months        Year
                                                              ended           ended       ended
                                                        31 December     31 December     30 June
                                                               2012            2011        2012
                                               Notes          R'000           R'000       R'000
Profit attributable to owners of the parent                  60 118          23 292      68 052
IAS 27  Loss on disposal of subsidiaries
and investments                                                                         4 806
IAS 16  Profit on sale of property,
plant and equipment                                         (2 168)         (1 299)     (6 685)
IAS 36  Goodwill impairment                                    660                     18 554
IFRS 5  Impairment of disposal group
held for sale                                                                4 279           
IAS 36  Net impairment of long lived assets                                            5 200
Tax effect of the above transactions                            607             364       2 254
Headline profit attributable to owners
 of the parent                                               59 217          26 636      92 181

Condensed consolidated interim statement of cash flows
                                                                               Restated    Restated
                                                               Reviewed        Reviewed     Audited
                                                             Six months      Six months        Year
                                                                  ended           ended       ended
                                                            31 December     31 December     30 June
                                                                   2012            2011        2012
                                                                  R'000           R'000       R'000
Profit from operations^                                         117 832          91 636     198 130
Payments under finance leases*                                  (8 360)                    (4 853)
Non-cash items                                                   91 145          74 302     161 311
Working capital                                               (105 986)           1 876      14 395
Cash generated from operations                                   94 631         167 814     368 983
Net interest paid                                              (20 090)        (23 850)    (48 507)
Investment income                                                 2 800           3 014       5 149
Taxation paid                                                  (21 877)        (48 372)    (78 936)
Cash flows from operating activities                             55 464          98 606     246 689
Cash flows from investing activities*                          (64 779)        (89 309)   (130 991)
Cash flows from financing activities*                          (49 646)        (32 571)    (46 088)
Dividends paid  owners of the parent                                         (50 962)    (50 962)
Dividends paid  non-controlling interest                       (5 665)        (10 545)    (12 738)
Net movement in cash and cash equivalents
and bank overdrafts                                            (64 626)        (84 781)       5 910
Cash and cash equivalents at the beginning of the period        143 028         135 466     126 787
Cash held in disposal group                                           
                                                                               (10 952)       8 679
Effect of exchange rate fluctuations on cash held                 1 265         (4 359)       1 652
Cash and cash equivalents at the end of the period               79 667          35 374     143 028

^ Includes discontinued operations.
* The cash effect of finance leases have been reclassified from financing and investing activities to operating activities.

Condensed consolidated interim segmental information
                                                           Restated    Restated   
                                             Reviewed      Reviewed     Audited   
                                           Six months    Six months        Year   
                                                ended         ended       ended   
                                          31 December   31 December     30 June   
                                                 2012          2011        2012   
                                                R'000         R'000       R'000   
NET ASSETS                                                                        
Facilities management services                416 923       369 789     379 929   
Security services                             387 756       355 273     384 966   
Catering services                              61 919        78 015      74 286   
Cleaning services                             154 578       118 868     136 726   
Diversified services#                        (49 590)      (83 795)    (59 312)   
Discontinued operations                                     36 568              
                                              971 586       874 718     916 595   
REVENUE INCLUDING INTERSEGMENT TRADING                                           
Facilities management services                696 931       639 882   1 281 260   
Security services                           1 186 054     1 111 604   2 267 658   
Catering services                             322 471       287 850     572 432   
Cleaning services                             249 727       232 373     484 080   
Diversified services#                         409 903       351 497     723 100   
Discontinued operations                                     95 996     180 390   
                                            2 865 086     2 719 202   5 508 920   
REVENUE FROM EXTERNAL CLIENTS                                                     
Facilities management services                695 691       637 005   1 278 726   
Security services                           1 174 027     1 101 829   2 238 467   
Catering services                             264 091       228 477     456 169   
Cleaning services                             185 387       165 984     349 318   
Diversified services#                         356 530       306 446     620 703   
Discontinued operations                                     91 536     173 569   
                                            2 675 726     2 531 277   5 116 952   
PROFIT/(LOSS) FROM OPERATIONS                                                     
Facilities management services                 64 023        68 128     121 930   
Security services                              58 408        66 326     143 943   
Catering services                               4 478       (8 821)    (10 755)   
Cleaning services                              12 622       (8 075)       3 142   
Diversified services#                        (21 699)      (28 632)    (65 239)   
Discontinued operations                                      2 710       5 109   
                                              117 832        91 636     198 130   
EXCEPTIONAL ITEMS (INCLUDED IN                                                    
PROFIT/(LOSS) FROM OPERATIONS)                                                    
Facilities management services                                                 
Security services                                                              
Catering services                                           11 632      11 632   
Cleaning services                                           10 872      10 872   
Diversified services#                                                          
Discontinued operations                                                        
                                                            22 504      22 504   
NET FINANCE INCOME/(COSTS)                                                        
Facilities management services                    292           298       5 075   
Security services                             (5 161)       (4 972)     (9 793)   
Catering services                             (1 221)         (980)     (1 591)   
Cleaning services                               (115)         (291)       (464)   
Diversified services#                        (15 605)      (18 207)    (39 081)   
Discontinued operations                                        454       1 140   
                                             (21 810)      (23 698)    (44 714)   
INVESTMENT INCOME                                                                 
Facilities management services                  2 015         3 317       3 981   
Security services                                                              
Catering services                                                              
Cleaning services                                                              
Diversified services#                           4 278         2 471       6 596   
Discontinued operations                                    (4 125)         153   
                                                6 293         1 663      10 730   
# Includes head office.                                                       
                                                      Restated    Restated   
                                        Reviewed      Reviewed     Audited   
                                      Six months    Six months        Year   
                                           ended         ended       ended   
                                     31 December   31 December     30 June   
                                            2012          2011        2012   
                                           R'000         R'000       R'000   
TAXATION                                                                     
Facilities management services          (14 901)      (20 741)    (34 170)   
Security services                       (10 601)      (13 029)    (30 989)   
Catering services                        (3 637)           854       6 650   
Cleaning services                          (700)         3 917       4 583   
Diversified services#                    (8 115)      (13 477)    (17 679)   
Discontinued operations                                            3 065   
                                        (37 954)      (42 476)    (68 540)   
TOTAL PROFIT/(LOSS) FOR THE PERIOD                                           
Facilities management services            51 429        51 002      96 743   
Security services                         42 646        48 325     103 161   
Catering services                          (380)       (8 947)     (5 696)   
Cleaning services                         11 807       (4 449)       7 261   
Diversified services#                   (41 801)      (57 845)   (133 884)   
Discontinued operations                                 (961)       4 662   
                                          63 701        27 125      72 247   
TOTAL COMPREHENSIVE INCOME/(LOSS)                                            
FOR THE PERIOD                                                               
Facilities management services            51 429        51 002      96 743   
Security services                         43 240        51 650     106 962   
Catering services                          (290)       (9 071)     (6 759)   
Cleaning services                         11 807       (4 449)       7 261   
Diversified services#                   (41 801)      (57 783)   (134 084)   
Discontinued operations                                 (961)       4 662   
                                          64 385        30 388      74 785   
# Includes head office.

The presentation of the segmental information has been amended since the prior interim results to disclose catering and cleaning as
separate segments and, as such, the prior period and year information has been restated.

Condensed consolidated interim statement of changes in equity                                                                                            
                                                                                      Foreign                           Total                            
                                                                                     currency                    attributable          Non-    Capital   
                                                                          Share   translation   Distributable       to owners   controlling        and   
                                                                        capital       reserve         reserve   of the parent      interest   reserves   
                                                                Notes     R'000         R'000           R'000           R'000         R'000      R'000   
Balance at 30 June 2011                                                 734 288      (10 206)         162 967         887 049        15 288    902 337   
Transactions with non-controlling interests:                                                                                                             
Acquisition of subsidiaries                                                                                                       3 500      3 500   
Dividends paid                                                                                                                 (10 545)   (10 545)   
Total comprehensive income for the period                                              3 263          23 292          26 555         3 833     30 388   
Profit for the period                                                                                23 292          23 292         3 833     27 125   
Other comprehensive income for the period                                              3 263                          3 263                   3 263   
Transactions with owners:                                                                                                                                
Dividends paid                                                                                     (50 962)        (50 962)                (50 962)   
Balance at 31 December 2011                                             734 288       (6 943)         135 297         862 642        12 076    874 718   
Transactions with non-controlling interests:                                                                                                             
Acquisition from non-controlling interest                                                                                         (327)      (327)   
Dividends paid                                                                                                                  (2 193)    (2 193)   
Total comprehensive income for the period                                              (725)          44 760          44 035           362     44 397   
Profit for the period                                                                                44 760          44 760           362     45 122   
Other comprehensive income for the period                                              (725)                          (725)                   (725)   
Balance at 30 June 2012                                                 734 288       (7 668)         180 057         906 677         9 918    916 595   
Transactions with non-controlling interests:                                                                                                             
Dividends paid                                                                                                                  (5 665)    (5 665)   
Total comprehensive income for the period                                                684          60 118          60 802         3 583     64 385   
Profit for the period                                                                                60 118          60 118         3 583     63 701   
Other comprehensive income for the period                                                684                            684                     684   
Transactions with owners:                                                                                                                                
Shares repurchased                                                  7   (3 729)                                     (3 729)                 (3 729)   
Balance at the end of the period                                        730 559       (6 984)         240 175         963 750         7 836    971 586   

Notes to the condensed consolidated interim financial statements

1. Accounting policies
The reviewed condensed consolidated interim financial statements for the period ended 31 December 2012 have been
prepared using the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and
the South African Institute of Chartered Accountants (SAICA) Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council
and contains information as required by IAS 34  Interim Financial Reporting. This is in accordance with the JSE Listings
Requirements and the Companies Act, 71 of 2008, as amended.

The accounting policies adopted in these reviewed condensed consolidated interim financial statements are consistent with
the accounting policies applied in the audited annual financial statements for the year ended 30 June 2012.

The reviewed condensed consolidated interim financial statements for the period ended 31 December 2012 were compiled
under the supervision of Mr GE Röth, Chief Financial Officer.

2. Business combinations
Finalisation of purchase price allocation of acquisitions done prior to 30 June 2012
The purchase price allocation for all acquisitions prior to 30 June 2012 was finalised in the current period. With effect from
1 August 2011 Mvelaserve obtained 51,6% of the issued share capital of Velocity, a new start-up company, for a consideration
of R10 000 000. The purchase price allocation finalisation resulted in the recognition of a distribution right intangible asset for
Velocity. The non-controlling interest was measured at cost at acquisition and was included in the purchase price allocation
at Rnil. The distribution right will be amortised over the term for which the right was granted being four years from date
of acquisition of Velocity. Amortisation to the value of R1 276 000 was accounted for in the current period and a further
R1 064 000 and R1 276 000 was retrospectively adjusted for the six months ended 31 December 2011 and 30 June 2012,
respectively. (Refer to restatement note 7.1)

With effect from 1 September 2011, the group obtained the assets and liabilities of a mast and infrastructure business,
for a consideration of R17 500 000. 20% of the shares of a subsidiary, LTP, was issued as part settlement of the purchase
consideration, which resulted in an increase of the non-controlling interest.
"Other" relates to franchises bought back by Khuseti and Protea Coin.

                                                 Velocity       LTP   Other     Total   
Fair value of assets and liabilities acquired:      R'000     R'000   R'000     R'000   
Property, plant and equipment                                1 688   1 455     3 143   
Trademarks and other intangibles                   10 000       120           10 120   
Deferred taxation                                               66               66   
Inventory                                                             184       184   
Trade and other receivables                                  4 429      26     4 455   
Cash and cash equivalents                                       86               86   
Total assets                                       10 000     6 389   1 665    18 054   
Trade and other payables                                   (2 034)   (324)   (2 358)   
Asset-based finance                                          (855)            (855)   
Total liabilities                                          (2 889)   (324)   (3 213)   
Net assets acquired                                10 000     3 500   1 341    14 841   
Goodwill                                                    14 000   2 412    16 412   
                                                   10 000    17 500   3 753    31 253   
Satisfied by:                                                                           
Equity of subsidiary                                         3 500            3 500   
Cash                                               10 000    11 000   3 753    24 753   
Loans                                                        3 000            3 000   
                                                   10 000    17 500   3 753    31 253   
Net cash effect                                    10 000    10 914   3 753    24 667   

The revenue and profit/(loss) after taxation numbers that were consolidated in the prior year have remained unchanged.

The goodwill arising from the acquisition of LTP is attributable to the business being well positioned in the mast maintenance
market with a highly skilled workforce and an established reputation. LTP dovetails well with the group's existing facilities
management company, TFMC. The transaction cost relating to the acquisitions was negligible.

Current period acquisitions
In the current period Khuseti bought back franchises at a total purchase price of R264 000. Property, plant and equipment to
the value of R86 000, other receivables of R11 000 and goodwill of R167 000 were recognised related to these acquisitions.

                                                     Reviewed      Reviewed     Audited   
                                                  31 December   31 December     30 June   
                                                         2012          2011        2012   
                                                        R'000         R'000       R'000   
3.  Property, plant and equipment                                                         
Opening balance                                       440 185       431 915     431 915   
Additions                                              83 642        75 078     169 685   
Acquired through business combinations                     86         1 688       3 143   
Disposals                                             (5 979)       (4 747)    (10 486)   
Depreciation for the period                          (74 539)      (71 014)   (146 798)   
Reversal of impairment                                                          1 364   
Impairment of assets                                                          (6 564)   
Reclassification to intangible assets                 (2 397)                  (2 199)   
Foreign currency translation reserve                        7                      125   
Closing balance                                       441 005       432 920     440 185
   
                                                                   Restated    Restated   
                                                     Reviewed      Reviewed     Audited   
                                                  31 December   31 December     30 June   
                                                         2012          2011        2012   
4.  Intangible assets                                   R'000         R'000       R'000   
Opening balance(1)                                    626 145       622 547     622 547   
Acquired through business combinations1                   167        25 077      26 532   
Reclassified from property, plant and equipment         2 397                    2 199   
Additions                                               1 159           738       2 281   
Amortisation(1)                                       (3 594)       (4 589)     (8 860)   
Impairment                                              (660)                 (18 554)   
Closing balance                                       625 614       643 773     626 145   

(1) Prior period balances have been restated as per note 7.1.

5. Interest-bearing liabilities
                                 Reviewed        Reviewed        Reviewed        Reviewed     Audited
                              31 December     31 December     31 December     31 December     30 June
                                     2012            2012            2012            2011        2011
                              Asset-based
                                  finance      Bank loans           Total           Total       Total
                                    R'000           R'000           R'000           R'000       R'000
Opening balance                   229 556         183 482         413 038         426 654     426 654
New loans                          43 217                         43 217          40 115     135 509
Acquired through
business
combinations                                                                       855         855
Amounts repaid                   (60 272)        (25 000)        (85 272)        (73 812)   (149 755)
Accrued interest
effect                                             (193)           (193)           (152)       (225)
Closing balance                   212 501         158 289         370 790         393 660     413 038
Disclosed as:
Non-current interest-
bearing liabilities               116 308         106 238         222 546         252 621     253 303
Current interest-
bearing liabilities                96 193          52 051         148 244         141 039     159 735
                                  212 501         158 289         370 790         393 660     413 038
6.  Working capital                                                     
                                                  Restated   Restated   
                                    Reviewed      Reviewed    Audited   
                                 31 December   31 December    30 June   
                                        2012          2011       2012   
                                       R'000         R'000      R'000   
6.1  Other current assets                                               
Inventories                          108 431        89 238     91 994   
Trade receivables                    558 047       522 892    535 842   
Other receivables                    309 703       283 610    277 965   
Taxation assets                          189                   2 637   
                                     976 370       895 740    908 438   
6.2  Other current liabilities                                          
Trade payables                       117 550       191 782    182 546   
Other payables                       810 478       746 078    755 635   
Provisions                            31 910        22 051     42 068   
Taxation liabilities                  17 729         6 642             
                                     977 667       966 553    980 249   
7. Restatements
7.1 Intangible assets
The purchase price allocation for Velocity was finalised in the current period. The previously recognised goodwill of
R10 000 000 in respect of Velocity was reclassified to distribution rights and will be amortised over the term for which
the right was granted, being four years from date of acquisition. The prior year numbers were represented to reflect the
amortisation on the distribution right since acquisition.

                                              Restated   Restated   
                                              Reviewed    Audited   
                                            Six months       Year   
                                                 ended      ended   
                                           31 December    30 June   
                                                  2011       2012   
                                                 R'000      R'000   
Previously stated profit from operations        89 990    195 361   
Amortisation of distribution right             (1 064)    (2 340)   
Restated profit from operations                 88 926    193 021   

As part of the finalisation of the purchase price allocation of LTP additional goodwill of R2 800 000 was recognised.

7.2 Currency translation differences ("FCTR")
At 31 December 2011, the FCTR relating to RoyalMnandi's operations in Mozambique was reversed to the statement of
profit or loss as a result of the termination of the existing contract in that country. Since the incorporated entity still exists
in Mozambique and is currently procuring new work, the FCTR can be utilised in future and has therefore been restated.

                                                                                                   Previously   
                                                                                       Restated        stated   
                                                                                       Reviewed      Reviewed   
                                                                                     Six months    Six months   
                                                                                          ended         ended   
                                                                                    31 December   31 December   
                                                                                           2011          2011   
                                                                                          R'000         R000   
Fair-value adjustments and net profit/(loss) from investments                             1 771       (5 425)   

7.3  Investment income                                                                                          
At 31 December 2011, R2 160 000 income received from associates were                                             
misallocated to dividend income and not reflected as part of share of profit from                               
associate. This allocation was corrected in the comparatives.                                                   
Share of profit from associate                                                            3 317         1 157   
Dividend income                                                                             700         2 860   

7.4 Non-controlling interest
At 31 December 2011, a dividend of R2 795 000 paid to the non-controlling interest was misallocated to owners of the
parent. This was corrected in the current period.

As part of the purchase price allocation of LTP a further R2 800 000 was allocated to non-controlling interest at
31 December 2011. This was corrected in the current period

                                                              Restated        Restated   Restated    stated   
                                                              Reviewed        Reviewed    Audited   Audited   
                                                            Six months      Six months       Year      Year   
                                                                 ended           ended      ended     ended   
                                                           31 December     31 December    30 June   30 June   
                                                                  2011            2011       2012      2012   
                                                                 R'000           R000      R'000     R000   
7.5  Effect of restatements on profit                                                                                 
or loss for the period and other                                                                                      
comprehensive income earnings                                                                                        
per share, headline earnings per                                                                                      
share and the statement of                                                                                            
financial position                                                                                                    
Profit for the period                                           27 125          20 993     72 247    74 587   
Total comprehensive income                                      30 388          24 318     74 785    77 125 
  
The restatement only affected continued operations attributable to owners of the parent.             
Earnings per share and headline                                                                                       
earnings per share                                                                                                    
Earnings per ordinary share (cents)                               16,4            12,1       48,1      49,7   
Headline earnings per ordinary                                                                                        
share (cents)                                                     18,8            19,5       65,1      66,8   
Statement of financial position                                                                                       
Non-current assets                                                                                                    
Intangible assets                                              643 773         642 037    626 145   628 485   
Capital and reserves                                           874 718         872 982    916 595   918 935   
Owners of the parent                                           862 642         860 911    906 677   909 017   
Non-controlling interest                                        12 076          12 071      9 918     9 918   

Except for the Velocity purchase price allocation all restatements were adjusted for in the 30 June 2012 financial statements.

8. Share repurchase
During the period the group bought back 464 563 of its issued ordinary shares at a cost of R3 729 000. The shares were
bought back for utilisation by the Mvelaserve Executive share scheme and will be held as treasury shares.



                                                                        Reviewed            Reviewed             Audited
                                                                     31 December         31 December             30 June
                                                                            2012                2011                2012
                                                                           R'000               R'000               R'000
9. Capital commitments and contingencies
Capital expenditure
Contracted for                                                             7 293              12 127              13 538
Not contracted for                                                         7 248               8 500               4 782
                                                                          14 541              20 627              18 320
Operating leases
Land and buildings                                                       132 459             143 344             149 789
Plant and equipment                                                        7 284               9 046               9 178
Motor vehicles                                                            62 930              85 374              85 290
                                                                         202 673             237 764             244 257
Less: Amount accrued as a result of using straight-line basis            (10 266)             (4 672)             (5 439)
                                                                         192 407             233 092             238 818

Contingent liabilities
As disclosed in the notes to the 30 June 2012 annual financial statements SARS issued a request for information and
explanations relating to one of the group subsidiaries. Additional tax of R2 922 000 and interest of R773 000 was levied
which are incorporated in the results for the current period.

10. Related party disclosure
Security services to the value of R2 600 000 were provided to Mvelaphanda Holdings (Pty) Limited during the period.
At period end a balance of R1 200 000 was still outstanding in this respect.

11. Events subsequent to balance sheet date
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 that requires an adjustment to the financial results at reporting date.
On 31 December 2012 the group was in breach of its debt service cover ratio covenant in respect to its Nedbank funding.
Nedbank has issued a condonation in respect of the breach on 5 March 2013. A breach of the debt covenant, giving Nedbank
the right to demand repayment at a future compliance date within one year of the reporting date, is not likely and therefore
amounts not expected to be paid within one year have been classified as non-current.

12. Reviewed report
The condensed consolidated interim 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
The results for the six months ended 31 December 2012 ("the period") reflect the positive impact of successful
restructuring initiatives at RoyalMnandi and Royalserve Cleaning and the introduction of effective measures
in underperforming businesses such as Khuseti, to contain costs and realise future growth potential. These
were supported by improved cost awareness and strict cost controls throughout the organisation. Furthermore,
restructuring measures have commenced at Stamford Sales since period-end. Whilst these have contributed
to increased costs we expect a positive impact in the next 12 months.

Revenue for the period grew in line with expectations, while strong operating profit growth reflects the
results of our efforts described above.

Group profile
Mvelaserve is a leading diversified business support services group spanning Southern Africa, Ghana, Nigeria
and the UAE, employing approximately 32 000 people. The group offers a wide range of integrated services
which include amongst others, facilities management, security, catering and cleaning.

Mvelaserve's blue-chip customer base ranges across the public and private sectors encompassing leading
banks, mining houses and retailers as well as parastatals, provincial and local government departments.

Financial results
Total revenue for the period from continued operations increased 10% to R2 676 million (2011: R2 440 million).
Protea Coin and TFMC accounted for R131 million of the revenue growth, with a further R55 million
contribution from Royalserve Cleaning and RoyalMnandi.

EBITDA grew to R196 million from R164 million, while operating profit increased by 33% to R118 million
from R89 million in the comparative period. The improved results were attributable mainly to the successful
turnaround in RoyalMnandi and Royalserve Cleaning. The group operating margin increased to 4,4% from
3,6%.

The net interest charge for the period decreased to R22 million from the comparative period (December 2011:
R24 million) mainly as a result of reduced debt levels. This, together with the improved operating results,
resulted in an improved interest cover ratio of 4,6 times (December 2011: 3,2 times).

The upswing in investment income was derived from a positive net fair value adjustment of R4 million in
respect of the marked-to-market value of the derivative financial instrument.

Net profit before tax rose by 44% to R102 million (December 2011: R71 million), driven primarily by the
increase in operating profit.

Taxation decreased by 11% to R38 million (2011: R42 million), which represents a decrease in the effective
tax rate to 37% from 50%, excluding STC of R7 million paid in the comparative period.

Attributable earnings per share ("EPS") and headline earnings per share ("HEPS") increased 251% to
42,5 cents (December 2011: 12,1 cents) and 114% to 41,8, cents (December 2011: 19,5 cents), respectively.

Financial position
Total non-current assets increased to R1 158 million (December 2011: R1 145 million). Property, plant and
equipment increased to R441 million (December 2011: R433 million) while intangible assets decreased to
R626 million (December 2011: R644 million). Depreciation of R75 million was provided for in the period
(December 2011: R71 million), while capital expenditure ("capex") increased to R85 million (December 2011:
R75 million), of which R51 million was for expansion (December 2011: R52 million) and R34 million was
for replacement (December 2011: R24 million). The overall capex-to-depreciation remained flat at 1,1 times
which is within the group's capital investment programme targets. R51 million of the capex for the period was
for Protea Coin, R10 million for Royalserve Cleaning, R9 million for Stamford Sales, R5 million for Velocity and
R3 million each for TFMC, RoyalMnandi and Khuseti.

R10 million previously classified as goodwill at Velocity, was reclassified in line with the finalisation of the
IFRS purchase price allocation adjustment, to distribution rights, with effect from the acquisition date of
Velocity, and amortised over the contract period of these acquired distribution rights. Consequently, an
amortisation charge of R1,3 million was debited to the profit or loss statement for the period, R1 million for
the comparative period, and R1,3 million for the six months ended 30 June 2012.

Interest-bearing debt at period-end, including the derivative financial instrument fair valued at R15 million on
that date, reduced to R386 million (December 2011: R417 million), which resulted in the debt:equity ratio
reducing to 40% (December 2011: 48%).

Operating working capital increased to R247 million (December 2011: R124 million) with increases
in receivables to R868 million (December 2011: R807 million), inventory to R108 million (December 2011:
R89 million), cash and cash equivalents to R231 million (December 2011: R188 million) and accounts payable
remained flat at R960 million. Outstanding debtor's days remained flat at 38 days.

The net cash increase includes a decrease in restricted cash to R151 million (December 2011: R153 million).

Net asset value and tangible net asset value increased to 683 cents (December 2011: 609 cents) and
191 cents (December 2011: 121 cents), respectively.

Capital and reserves
The total issued ordinary share capital reduced to 141 097 110 from 141 561 673 ordinary shares following
a share buyback of 464 563 ordinary shares during the period, resulting in a marginal reduction of the
weighted number of ordinary shares for the period to 141 537 463 from 141 561 673 ordinary shares.

Operational review
Protea Coin delivered good growth in revenue of 7%, amounting to R1 186 million (December 2011: R1 112 million).
Operating profit for the period decreased by 12% to R58 million (December 2011: R R66 million), due to
the combination of a number of adverse factors: industrial action in the transport sector in September
and October 2012; higher fuel costs and wage increases, both of which are not immediately passed on to
customers; the loss of parastatal contracts; and start-up costs in respect of operations in Ghana. However,
the mining division and cameo and cash management environment experienced significant growth. Inroads
into the rest of Africa continued successfully, with a second contract win in Ghana effective February 2013.

TFMC's revenue for the period increased 9% to R697 million (December 2011: R640 million), driven by new
non-Telkom contract awards, the incorporation of the results of LTP for the full six months (three months
at December 2011), and the increase in operational spend within the Telkom contract. Total operating profit
remained stable at R64 million (December 2011: R68 million), the slight variance being attributable to a
weaker performance by LTP. The operating margin declined slightly to 9.2% (December 2011: 10.6%) as a
result of operating losses on a contract which has since been terminated effective end February 2013.

RoyalMnandi's revenue increased 12% to R322 million (December 2011: R288 million) on the back of new
contracts secured and organic growth in existing contracts. Profit from operations improved to R4 million
(December 2011: R9 million loss). The company obtained ISO9000 certification as part of an initiative to
improve the quality associated with the brand. Key contracts were also retained during the period with good
prospects for the next six months. Furthermore, material contract wins led to the successful turnaround
of the central production facility in Centurion. Going forward, food price inflation is expected to become
increasingly substantial, with resultant heavier pressure on the producers of commodities to increase costs.
Focus on productivity and minimal wastage remains key to restricting this inflationary pressure on margins
to a minimum.

Royalserve Cleaning revenue increased 8% to R250 million (December 2011: R232 million) which, as
anticipated, generated notable growth in operating profit to R13 million (December 2011: R8 million loss). This
was made possible mainly by improved manpower and consumable controls to reduce inefficiencies as part
of the restructuring process. Material contracts which were out on tender during the period, were retained,
and a new laundry was opened in response to a demand from new as well as existing clients.

Zonke continued to perform strongly. Revenue increased by 30% to R51 million (December 2011: R39 million)
in light of the continued roll-out of new machines, together with an increase in the gross gambling revenue
per machine. Operating profit grew by 51% to R23 million (December 2011: R15 million). Expansion into
the rest of Africa continued, with a new contract to monitor gambling machines outside of South Africa
concluded. Pilot projects are currently underway in Zimbabwe and Swaziland.

Khuseti increased revenue by 22% to R117 million (December 2011: R96 million) mainly due to higher sales to
the retail sector combined with an increase in franchises converted to corporate stores. Operating profit rose
by 10% to R12 million (December 2011: R11 million). The first semi-mobile unit is showing promising results.
The corporate stores strategy  taking on corporate stores and making the necessary operational changes
in-store  is yielding positive results with an average increase of 15% in sales volumes from these stores.
Sales volumes overall to the local market have shown a small improvement, highlighting the start of a market
recovery in Quick Service Restaurants and brighter prospects.

Revenue at SA Water rose by 158% to R6 million (December 2011: R2 million). The operating loss increased
by 27% to R2,0 million (December 2011: R1,5 million). With the Water Treatment Plants operating at a 99.8%
uptime for the first time in the period, the business was able to generate new annuity-based revenue which
is contractually dependent on efficiency. In addition, services were expanded; specifically waste water
treatment capabilities were added to potable water treatment services, to enable the delivery of a total water
treatment solution. SA Water further introduced two exclusive offerings, namely "SepTimax" a packaged
waste water treatment solution; and "MoBimax" a mobile water treatment plant to target the military
market and the rest of Africa.

Stamford Sales increased turnover by 11% to R221 million (December 2011: R199 million). The increase in the
operating loss was disappointing at R20 million (December 2011: R5 million loss) on the back of a deteriorated
gross profit margin of 13% (December 2011: 20%). Operating losses of R8 million were incurred in the food
service and frozen food divisions, with a further R2 million operating loss incurred at the branches currently
being closed. The key issues impacting the results, were the loss of certain major profitable contracts and the
unsuccessful expansion into the frozen food services business. A decision has been taken to close the food
services and frozen food division and non-profitable branches, and focus in the future on building profitable
divisions, namely packaging and ingredients for the major retail stores.

Velocity's turnover and operating loss remained flat at R2 million and R6 million, respectively. Nine contracts
were completed during the period. Although penetration into the road repair market appears to be slow, the
overall response to the quality of Velocity's process has been encouraging.

Directorate
As previously announced OA Mabandla resigned as director with effect from 23 November 2012. S Masinga
was appointed as lead independent non-executive director in his place, effective 28 November 2012, and as
chairperson of the Remuneration and Nomination Committee effective 29 November 2012. She has served
as independent non-executive director since listing on 29 November 2010. Z Vokwana has been appointed
as an independent non-executive director to the board and as a member of the Audit, Risk and Compliance
Committee of Mvelaserve with effect from 5 March 2013.

Dividend
No interim dividend was declared.

Prospects
The group has laid the foundation for ongoing improvement in a number of operations. RoyalMnandi and
Royalserve Cleaning are continuing to improve operating margins, resulting from the successful restructuring
initiatives in the prior year. New contract wins during the period at SA Water enhance its future potential
to contribute the group earnings. TFMC and Protea Coin, the cornerstones of the group operations, face
challenging trading conditions with fuel and labour increases. Operating performance however, is expected to
maintain its current momentum. Present initiatives at Khuseti should see an improved operating margin. The
restructuring process at Stamford Sales is only likely to improve performance in the next financial year.

Expansion in the rest of Africa is continuing in line with strategy.

MSM Xayiya                               JMS Ferreira                             GE Röth
Chairman                                 Chief Executive Officer                  Chief Financial Officer

7 March 2013

Mvelaserve Limited
(Incorporated in the Republic of South Africa)
(Registration number 1999/003610/06)
JSE share code: MVS       ISIN: ZAE000151353
("Mvelaserve" or "the group")

Executive Directors:
MSM Xayiya (Executive Chairman)
JMS Ferreira (Chief Executive Officer)
GE Röth (Chief Financial Officer)

Independent Non-Executive Directors:
FN Mantashe
S Masinga*
N Mbalula
GD Harlow
* Lead Independent

Registered Office:
28 Eddington Crescent
Highveld Techno Technopark
Centurion, 0169

Sponsor:
Rand Merchant Bank
(A division of FirstRand Bank Limited)

Auditors:
PricewaterhouseCooper 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 at
www.mvelaserve.co.za
Date: 07/03/2013 07:06:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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