Wrap Text
Reviewed results for the 12 months ended 31 March 2013
PRIMESERV GROUP LIMITED
(ÒPrimeservÓ or Òthe GroupÓ or Òthe CompanyÓ)
Incorporated in the Republic of South Africa
Registration number 1997/013448/06
Share code: PMV
ISIN: ZAE000039277
www.primeserv.co.za
REVIEWED RESULTS FOR THE TWELVE MONTHS ENDED 31 MARCH 2013
Condensed Consolidated Statement of Comprehensive Income
Reviewed Audited
31 March 31 March
2013 2012
RÕ000 RÕ000
Revenue * 654 893 613 145
Ð Continuing operations 623 008 579 344
Ð Discontinued operations 31 885 33 801
Cost of sales (548 905) (499 352)
Gross profit 105 988 113 793
Ð Continuing operations 84 262 91 075
Ð Discontinued operations 21 726 22 718
EBITDA 887 7 058
Ð Continuing operations 5 164 9 735
Ð Discontinued operations (4 277) (2 677)
Depreciation and amortisation (2 210) (1 439)
Operating (loss)/profit (1 323) 5 619
Ð Continuing operations 4 942 8 720
Ð Discontinued operations (6 265) (3 101)
Interest received 1 723 6 255
Interest paid (3 672) (4 990)
Impairment of assets Ð discontinued
operations (1 203) Ð
Share of profit/(loss) from associate 31 (1 355)
(Loss)/profit before taxation (4 444) 5 529
Profit before taxation from
continuing operations 2 896 6 858
Loss before taxation from discontinued
operations (7 340) (1 329)
Taxation 104 1 249
Total comprehensive (loss)/income for
the year (4 340) 6 778
Ð Continuing operations 4 665 7 735
Ð Discontinued operations (9 005) (957)
Total comprehensive (loss)/income
attributable to:
Ordinary shareholders of the Company (3 991) 7 359
Ð Continuing operations 5 014 8 316
Ð Discontinued operations (9 005) (957)
Non-controlling shareholdersÕ interest (349) (581)
Total comprehensive (loss)/income (4 340) 6 778
Reconciliation of headline (loss)/earnings
Net profit attributable to shareholders (3 991) 7 359
After tax effect of profit on sale of
fixed assets Ð continuing operations (65) Ð
Impairment of assets Ð discontinued
operations 1 203 Ð
Headline (loss)/earnings (2 853) 7 359
Ð Continuing operations 4 949 8 316
Ð Discontinued operations (7 802) (957)
Weighted average number of shares (Õ000) 93 682 93 377
Diluted weighted average number
of shares (Õ000) 93 682 93 377
(Loss)/earnings per share (cents) (4,26) 7,88
Ð Continuing operations 5,35 8,90
Ð Discontinued operations (9,61) (1,02)
Diluted (loss)/earnings per share (cents) (4,26) 7,88
Ð Continuing operations 5,35 8,90
Ð Discontinued operations (9,61) (1,02)
Headline (loss)/earnings per share (cents) (3,05) 7,88
Ð Continuing operations 5,28 8,90
Ð Discontinued operations (8,33) (1,02)
Diluted headline (loss)/earnings per
share (cents) (3,05) 7,88
Ð Continuing operations 5,28 8,90
Ð Discontinued operations (8,33) (1,02)
* Revenue note: Excludes revenue of R49,8 million (2012 : R31,7
million) from Bathusi Staffing Services (Pty) Ltd, which was
deconsolidated as a result of B-BBEE transaction and has since
been accounted for as an associate.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
31 March 31 March
2013 2012
RÕ000 RÕ000
Assets
Non-current assets 45 672 47 299
Equipment and vehicles 4 022 6 878
Investment property 7 645 7 645
Goodwill 13 293 13 293
Intangible assets 2 775 2 992
Long-term receivables 1 050 1 214
Investment and loan in associate 7 321 5 815
Deferred tax asset 9 566 9 462
Current assets 104 950 104 087
Inventories 847 532
Trade receivables 92 223 86 641
Other receivables 4 082 5 419
Cash and cash equivalents 7 798 11 495
Non-current assets held for sale 1 639 Ð
Total assets 152 261 151 386
Equity and liabilities
Equity 70 017 73 530
Capital and reserves 71 213 74 377
Non-controlling interest (1 196) (847)
Current liabilities 82 244 77 856
Trade and other payables 34 272 30 400
Current portion of financial liabilities Ð 40
Taxation payable 1 166 1 202
Short-term vendor obligation 201 1 281
Short-term loan 4 830 4 388
Bank borrowings 41 775 40 545
Total equity and liabilities 152 261 151 386
Number of shares in issue at end of
year (Õ000) (net of treasury and
share trust shares) 93 682 93 682
Net asset value per share (cents) 75 78
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
31 March 31 March
2013 2012
RÕ000 RÕ000
Balance at beginning of the year 73 530 72 896
Attributable earnings (3 991) 7 359
Dividends paid Ð (3 124)
Treasury shares allocated 827 (3 030)
Share-based payment Ð 10
Non-controlling shareholdersÕ interest (349) (581)
Balance at end of the period 70 017 73 530
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
12 months 12 months
ended ended
31 March 31 March
2013 2012
RÕ000 RÕ000
(Loss)/profit before taxation (4 444) 5 529
Adjusted for non-cash items 3 317 3 202
Operating cash flows before working
capital changes (1 127) 8 731
Net working capital changes (688) (14 867)
Taxation paid (36) (1 308)
Cash flows utilised in operating activities (1 851) (7 444)
Ð Continuing operations (1 807) (7 986)
Ð Discontinued operations (44) 542
Cash flows utilised in investing activities (2 398) (16 976)
Ð Continuing operations (2 386) (16 429)
Ð Discontinued operations (12) (547)
Cash flows from financing activities (678) 2 829
Ð Continuing operations (678) 2 829
Ð Discontinued operations Ð Ð
Dividends paid Ð (3 124)
Repurchase of securities Ð (3 030)
Returned to shareholders Ð (6 154)
Net decrease in cash and cash equivalents (4 927) (27 745)
Cash and cash equivalents at
beginning of year (29 050) (1 305)
Cash and cash equivalents at end of year (33 977) (29 050)
SEGMENTAL ANALYSIS
Reviewed Audited
31 March 31 March
2013 2012
RÕ000 RÕ000
Revenue from external customers
Human Capital Outsourcing 592 841 552 309
Human Capital Development 62 052 60 836
Total 654 893 613 145
Revenue Ð inter-segment
Human Capital Outsourcing Ð Ð
Human Capital Development 4 089 5 424
Total 4 089 5 424
Business segment operating profit results
Human Capital Outsourcing 20 171 20 364
Human Capital Development (7 870) (1 206)
Ð Continuing operations (1 605) (1 895)
Ð Discontinued operations (6 265) (3 101)
Central Services (13 624) (13 539)
Operating (loss)/profit (1 323) 5 619
Interest received 1 723 6 255
Interest paid (3 672) (4 990)
Impairment of assets Ð discontinued
operations (1 203) Ð
Share of profit/(loss) from associate 31 (1 355)
(Loss) profit before taxation (4 444) 5 529
Business segment total assets
Human Capital Outsourcing 120 571 111 278
Human Capital Development 26 036 32 346
Central Services 5 654 7 762
Total 152 261 151 386
COMMENTARY
PROFILE
Primeserv Group Limited is an investment holding company focusing
on the delivery of human resources (HR) products, services and
solutions through its operating pillar, Primeserv HR Services.
This incorporates two main areas of specialisation: Human Capital
Development operating as Primeserv HR Solutions and Primeserv
Colleges; and Human Capital Outsourcing operating as Primeserv
Outsourcing.
These divisions provide a comprehensive HR value chain that can
be applied through PrimeservÕs IntHRgrateª Model in its entirety
or in modular form. These divisions encompass an extensive range
of HR consulting solutions and services, corporate and vocational
training programmes, technical skills training centres, computer
and business training colleges, as well as resourcing and
flexible staffing services, supported by wage bureaus and HR
logistics outsourcing operations.
OPERATING ENVIRONMENT
The economic environment has displayed few signs of emerging from
what has become a prolonged global recession. This, coupled with
the political and regulatory pressures facing the Temporary
Employment Services industry, resulted in challenging trading
conditions for the GroupÕs operations during the year under
review.
OVERVIEW OF RESULTS
Revenue for the year under review increased by 7% from R613,1
million to R654,9 million. When revenue from Bathusi Staffing
Services (ÒBathusiÓ), the GroupÕs associate company is included,
the aggregate revenue increased from R644,9 million to R704,7
million, growth of 9% year-on-year. Gross profit decreased by 7%
from R113,8 million to R106,0 million with the overall gross
profit percentage declining from 18.6% in the prior year to 16.2%
for the current year. This drop in the overall percentage is
attributable largely to a change in revenue levels between
clients with higher margins to those with lower margins in
differing industry segments.
EBITDA has declined from R7,1 million to R0,9 million with the
discontinued Colleges unit incurring a R4,3 million loss at
EBITDA level. Continuing operations delivered an EBITDA of R5,2
million, down from R9,7 million, in part due to a number of once-
off operational costs incurred in the latter part of the year
under review. The operating loss for the year was R1,3 million
compared to R5,6 million profit for the comparable period, with
the discontinued Colleges business accounting for R6,3 million of
the overall amount. Interest paid has shown a decrease from R5,0
million to R3,7 million. Interest received has decreased from
R6,3 million to R1,7 million with a significant portion of the
decrease being attributable to a reduction in the fair value
adjustment relating to revenue. As a consequence of the
discontinuance of the Colleges business in the year under review
the Group has impaired R1,2 million relating to goodwill and
fixed assets in that operation. The GroupÕs associate company,
Bathusi, has shown an improvement contributing a small profit
from a loss in the prior period. The total comprehensive income
from continuing operations decreased from R7,7 million to R4,7
million whilst comprehensive income from discontinued operations
increased its loss from R1,0 million to R9,0 million therefore
total comprehensive income has decreased from a profit of R6,8
million to a loss of R4,3 million for the year under review.
Costs within the GroupÕs Central Services unit were steady at
R13,6 million compared with R13,5 million in the prior year. The
current year segment cost allocations have been changed to
reflect the GroupÕs new centralised cost platform. The prior year
business segment results have accordingly been reclassified by
transferring costs of R9,9 million from Human Capital Outsourcing
to Central Services. The second half of the year was affected by
a number of debtor impairments, start-up costs along with
extraneous expenditure incurred in the reorganisation and
centralisation process of the GroupÕs back-office functions away
from the regions. A significant portion of these charges related
to the Human Capital Development segment. Earnings per share from
continuing operations decreased from 8,90 cents per share to 5,35
cents per share while the earnings per share from discontinued
operations decreased from a loss of 1,02 cents per share to a
loss of 9,61 cents per share, with the overall earnings per share
declining from 7,88 cents per share to a loss of 4,26 cents per
share. Headline earnings per share from continuing operations
decreased from 8.90 cents per share to 5,28 cents per share and
the headline earnings per share from discontinued operations
increased its loss from 1,02 cents per share to a loss of 8,33
cents per share with the aggregate headline earnings per share
decreasing from 7,88 cents per share to a loss of 3,05 cents per
share.
Albeit that there has been an increase in revenue the average
days sales outstanding (ÒDSOÓ) has remained at 45 days for the
year under review. The GroupÕs investment in trade receivables
has increased by R5,6 million to R92,2 million. Trade payables
increased by R3,9 million from R30,4 million to R34,3 million.
The Group had a net cash outflow of R4,9 million attributable in
part to the overall increase in investment in working capital,
especially trade debtors, some of whom paid just after year end.
Despite these timing delays the overall effect in terms of day-
to-day operating cash flows was minimal although it had an effect
on the GroupÕs gearing position as reflected at year end and
which was higher than optimal at 55%. A return to overall
profitability and improved working capital management during the
2014 financial year are anticipated to reduce gearing. Cash flows
in the second half of the year reflected a turnaround from the
first half of the year as DSO improved and the net investment in
working capital was reduced. The net cash outflow for the first
six months was R8,1 million which was offset by a positive cash
inflow in the second half of the year of R3,2 million. Net asset
value decreased year-on-year from 78 cents per share to 75 cents
per share.
HUMAN CAPITAL OUTSOURCING
Revenue for the division increased by 7% from R552,3 million to
R592,8 million. When revenue from Bathusi is taken into account,
the overall revenue for the year increased by 10% from R584,0
million to R642,6 million. Operating profit for the division was
consistent at R20,2 million compared to R20,4 million in the
prior year. The DSO of 42 days at year end is in line with the
prior yearÕs DSO of 40 days. As referred to above, the DSO has
been affected by delays in receipts from a few large clients who
settled soon after year end. Revenue and gross profit in the
second half of the year were adversely affected by prolonged
industrial action at a national client. This also resulted in the
incurrence of certain once-off costs specific to this action. The
performance of the Òwhite collarÓ professional draughting and
engineering staffing unit was stable but is still dependent in
the main on major infrastructure projects, as is the divisionÕs
mega-project wage bureau unit. Performance within the Òblue
collarÓ flexible staffing units which are largely involved in the
logistics, warehousing and distribution, and industrial
manufacturing and engineering sectors, has remained solid, with
some signs of growth emerging. Bathusi showed a steady
improvement across the year, but experienced a surge in revenue
in the last two months of the year with a corresponding increase
in working capital requirements and thereby an increase in the
GroupÕs investment in the business. Operating costs are expected
to moderate over the forthcoming year with most of the
reorganisation and centralisation costs having been incurred in
the financial year under review. The largest part of the
centralisation process has already been completed with only a few
other small areas to be finalised over the next few months.
While the ongoing debate regarding the future of the Temporary
Employment Services industry has by and large been addressed at
Nedlac and government, there remains some pressure on government
from organised labour to impose stricter conditions on the
industry. The Group maintains the view that regulation remains
the best option for the industry and has positioned itself
accordingly.
HUMAN CAPITAL DEVELOPMENT
The segmentÕs revenue increased by 2% from R60,8 million to R62,1
million, including R31,9 million attributable to the discontinued
Colleges business. The segment recorded an increase in its
overall operating loss from R1,2 million to R7,9 million with the
discontinued Colleges business incurring R6,3 million of the
loss. Continuing operations within the segment recorded an
operating loss of R1,6 million which includes relatively
substantial start-up costs of around R1,1 million for a
specialised permanent resourcing and talent management unit, as
well as costs relating to the delivery of the various learnership
programmes which are anticipated to benefit the Group in the year
ahead. An improved performance is expected from this segmentÕs
continuing operations in the year ahead.
EVENTS AFTER THE REPORTING DATE
The Group disposed of its investment in the Colleges business
with effect from 1 May 2013 thereby mitigating the losses and
future operational risk from this unit.
Aside from the disposal of the Colleges business, management is
not aware of any material events which have occurred subsequent
to the end of March 2013. There has been no material change in
the GroupÕs contingent liabilities since the year-end.
BASIS OF PREPARATION
The reviewed results for the year ended 31 March 2013 have been
prepared in accordance with the recognition and measurement
principles of International Financial Reporting Standards
(IFRSs), the presentation and disclosure requirements of IAS 34:
Interim Financial Reporting, the Companies Act of 2008, the JSE
Listing Requirements and the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee. They should be read
in conjunction with the annual financial statements for the year
ended 31 March 2012, which have been prepared in accordance with
IFRSs as issued by the International Accounting Standards Board.
The accounting policies are consistent with those described and
applied in the annual financial statements for the year ended 31
March 2012. The results were prepared by the Group Financial
Director, Mr R Sack CA(SA).
REVIEW OPINION
The GroupÕs auditors, Baker Tilly SVG, have reviewed the GroupÕs
financial results for the year ended 31 March 2013. A copy of
their unmodified review report is available for inspection at the
CompanyÕs registered office. Any reference to future financial
performance included in this announcement, has not been reviewed
nor reported on by the auditors.
Dividend
No final dividend is proposed for the year under review. The
Group will consider the resumption of dividend payments at the
close of its next reporting period
OUTLOOK
The improved focus on the GroupÕs core business operations,
following the disposal of the Colleges business, should enable
the Group to continue to optimise working capital management,
reduce gearing and to grow its revenue streams. Opportunities to
scale up the business and diversify revenue are currently being
evaluated.
On behalf of the Board
JM Judin M Abel
Independent Non-Executive Chairman Chief Executive Officer
R Sack
Financial Director
21 June 2013
Bryanston
PRIMESERV GROUP LIMITED
(ÒPrimeservÓ or Òthe GroupÓ or Òthe CompanyÓ)
Incorporated in the Republic of South Africa
Registration number: 1997/013448/06
Share code: PMV
ISIN: ZAE000039277
www.primeserv.co.za
e-mail: productivity@primeserv.co.za
Directors: JM Judin# (Chairman), M Abel (Chief Executive
Officer), Prof S Klein# (American), LM Maisela*,
DL Rose#, R Sack (Financial Director), DC Seaton, CS Shiceka#
# Independent Non-Executive * Non-Executive
Company secretary: ER Goodman Secretarial Services cc
(represented by E Goodman)
Registered address: Venture House, Peter Place Park, 54 Peter
Place, Bryanston, 2021 (PO Box 3008, Saxonwold, 2132)
Transfer secretaries: Computershare Investor Services (Pty) Ltd,
70 Marshall Street, Johannesburg, 2001 (PO Box 61051,
Marshalltown, 2107)
Auditors: Baker Tilly SVG, Third Floor, 3 Melrose Boulevard,
Melrose Arch, 2076 (PO Box 355, Melrose Arch, 2076)
Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd, The
Woodlands, Woodlands Drive, Woodmead, 2196 (Private Bag X6, Gallo
Manor, 2052)
Date: 21/06/2013 05:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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