MVELASERVE LIMITED - Reviewed Condensed Consolidated Preliminary Financial Results for the year ended 30 June 2013

Release Date: 06/09/2013 16:00
Code(s): MVS
 
Wrap Text
Reviewed Condensed Consolidated Preliminary Financial Results for the year ended 30 June 2013

Mvelaserve 
(Incorporated in the Republic of South Africa)
(Registration number 1999/003610/06)
JSE share code: MVS     ISIN: ZAE000151315
(Mvelaserve or the group)

Reviewed Condensed Consolidated Preliminary Financial Results 
for the year ended 30 June 2013



Condensed consolidated preliminary statement of financial position  
                                                                            Restated   
                                                          Reviewed           Audited   
  As at 30 June                                               2013           2012(2)   
                                        Notes(1)             R000             R000                                                                              
  ASSETS                                                                               
  Non-current assets                                     1 143 741         1 146 062   
  Property, plant and equipment                3           428 767           440 185   
  Intangible assets                            4           554 865           626 145   
  Investments in associates                                  9 351             8 779   
  Other investments                                         16 685            17 149   
  Deferred income tax asset                                134 073            53 804   
  Current assets                                         1 504 956         1 211 334   
  Other investments                                          4 986             8 373   
  Other current assets                       6.1         1 108 045           908 438   
  Restricted cash                                          167 478           151 495   
  Cash and cash equivalents                                224 447           143 028   
                                                                                       
  Total assets                                           2 648 697         2 357 396   
  EQUITY AND LIABILITIES                                                               
  Capital and reserves                                   1 025 603           916 595   
  Owners of the parent                                   1 029 308           906 677   
  Non-controlling interest                                  (3 705)            9 918   
  Non-current liabilities                                  244 632           295 403   
  Interest bearing liabilities                 5           214 512           253 303   
  Derivative financial instrument                            9 552            19 633   
  Deferred income tax liability                             20 568            22 467   
  Current liabilities                                    1 378 462         1 145 398   
  Interest bearing liabilities                 5           159 973           159 735   
  Non-interest bearing liabilities                               -             5 414   
  Other current liabilities                  6.2         1 218 489           980 249   
                                                                               
  Total equity and liabilities                           2 648 697         2 357 396   
  (1) The notes form an integral part of the condensed consolidated preliminary 
      financial statements and should be read in conjunction with the financial 
      information.                                           
  (2) Refer to note 7 for details of restatement.                                           



Condensed consolidated preliminary statement of profit or loss 
and other comprehensive income                                                                                                                               
                                                                           Restated   
                                                          Reviewed          Audited   
  For the year ended 30 June                                  2013          2012(2)   
                                                             R000            R000                                                                                                                                      
  Continued operations                                                                
  Revenue                                                5 408 067        4 943 383   
  Profit from operations                                   205 402          193 021   
  Goodwill impaired                                        (66 909)         (18 554)  
  Net finance costs                                        (40 427)         (45 854)  
  Finance income                                             7 608            7 163   
  Finance costs                                            (48 035)         (53 017)  
  Investment income                                         15 570           10 577   
  Share of profit from associates                            4 571            3 981   
  Dividend income                                              910              700   
  Fair value adjustments and net                                         
  profit from investments                                   10 089            5 896                                                                                                                                        
  Profit before taxation                                   113 636          139 190   
  Taxation expense                                           3 903          (71 605)  
  Normal, deferred, capital gains                                        
  and foreign taxation                                       3 903          (64 821)  
  Secondary tax on companies                                     -           (6 784)                                
  Profit for the year from                                               
  continued operations                                     117 539           67 585   
  Profit from discontinued                                               
  operations                                                     -            4 662   
  Total profit for the year                                117 539           72 247   
  Other comprehensive income                                 6 808            2 538   
  Items that will be reclassified                                        
  subsequently to profit or loss                                         
  when specific conditions are met:                                      
  Currency translation differences                           6 808            2 538                                                                                                                                 
  Total comprehensive income for                                         
  the year                                                 124 347           74 785   
  Profit for the year                                                    
  attributable to:                                                       
  Owners of the parent - continued                                       
  operations                                               123 450           63 390   
  Owners of the parent - discontinued                                    
  operations                                                     -            4 662   
  Non-controlling interest                                  (5 911)           4 195   
                                                           117 539           72 247   
  Total comprehensive income 
  attributable to:                                           
  Owners of the parent - continued 
  operations                                               130 258        65 928   
  Owners of the parent - discontinued 
  operations                                                     -         4 662   
  Non-controlling interest                                  (5 911)        4 195   
                                                           124 347        74 785   
  (2)Refer to note 7 for details of restatement.                                                                                     
                                                                                                                                     

   
Ordinary share performance                                                                                                                     
                                                                   Restated   
  For the year ended 30 June                       Reviewed         Audited   
                                                       2013         2012(2)                                                                          
  Weighted average number of                                      
  ordinary shares in issue ('000)                   141 012         141 562   
  Diluted number of ordinary                                      
  shares (000)                                     141 562         141 562   
  Earnings per ordinary share (cents)                                         
  Basic                                                87,5            48,1   
  Diluted                                              87,2            48,1   
  Headline earnings per ordinary                                  
  share (cents)                                                   
  Basic                                               142,4            65,1   
  Diluted                                             141,8            65,1   
  Earnings per ordinary share from                                
  continued operations (cents)                                    
  Basic                                                87,5            44,8   
  Diluted                                              87,2            44,8   
  Headline earnings per ordinary                                  
  share from continued operations (cents)                         
  Basic                                               142,4            58,4   
  Diluted                                             141,8            58,4   
  Earnings per ordinary share from                                
  discontinued operations (cents)                                 
  Basic                                                   -             3,3   
  Diluted                                                 -             3,3   
  Headline earnings per ordinary share                            
  from discontinued operations (cents)                            
  Basic                                                   -             6,7   
  Diluted                                                 -             6,7   
  Number of ordinary shares in issue ('000)         139 979         141 562   
  Net asset value per ordinary share (cents)          735,3           640,5   
  Net tangible asset value per ordinary                           
  share (cents)                                       243,2           160,2   
  (2)Refer to note 7 for details of restatement.                                                 
  The diluted effect is caused by the treasury shares being designated 
  for utilisation in the executive share scheme.                               


  

Reconciliation between profit attributable to owners of the parent 
and headline profit attributable to owners of the parent                                                                                         
                                                            Restated   
                                            Reviewed         Audited   
                                                2013         2012(2)   
                                               R000           R000                                                                      
  Profit attributable to owners                            
  of the parent                              123 450          68 052   
  IAS 27 - Profit on disposal                              
  of subsidiaries and investments                  -           4 806   
  IAS 16 - Net profit on sale of                           
  property, plant and equipment               (6 523)         (6 685)  
  IAS 36 - Impairment of property,                         
  plant and equipment                         10 008           5 200   
  IAS 36 - Impairment of intangible                        
  assets                                       5 106               -   
  IAS 36 - Goodwill impairment                66 909          18 554   
  Tax effect of the above                                  
  transactions                                 1 826           2 254   
  Headline profit attributable                             
  to owners of the parent                    200 776          92 181   

 
 

Condensed consolidated preliminary statement of cash flows                                                                                      
                                                           Restated   
                                          Reviewed          Audited   
  For the year ended 30 June                  2013          2012(2)   
                                             R000            R000                                                                        
  Profit from operations(3)                205 402          198 130   
  Payments under finance leases(4)         (16 062)          (4 853)  
  Non-cash items                           188 494          161 314   
  Working capital                            6 529           14 392   
  Cash generated from operations           384 363          368 983   
  Net interest paid                        (41 989)         (48 508)  
  Dividend income from investments                      
  and associates                             4 910            5 151   
  Taxation paid                            (74 452)         (78 937)  
  Cash flows from operating                             
  activities                               272 832          246 689   
  Cash flows from investing                             
  activities                              (133 057)        (130 991)  
  Cash flows from financing                             
  activities                               (61 003)        (109 788)  
  Net movement in cash and                              
  cash equivalents and bank                             
  overdrafts                                78 772            5 910   
  Cash and cash equivalents                             
  and bank overdraft at the                             
  beginning of the year                    143 028          126 787   
  Cash held in disposal group                    -            8 679   
  Effect of exchange rate                               
  fluctuations on cash held                  2 647            1 652   
  Cash and cash equivalents           
  and bank overdraft at the           
  end of the year                          224 447      143 028   
  (2) Refer to note 7 for details of restatement.                                    
  (3) Includes discontinued operations.                                              
  (4) The cash effect of finance leases have been reclassified from financing 
      and investing activities to operating activities.                                 



Condensed consolidated preliminary segmental information                                                                                   
                                                                        Restated   
                                                          Reviewed       Audited   
  As at 30 June                                               2013       2012(2)   
                                                             R000         R000                                                                                     
  NET ASSETS                                                                       
  Facilities management services                           366 870       379 929   
  Security services                                        436 969       384 966   
  Catering services                                         78 916        74 286   
  Cleaning services                                         88 899       136 726   
  Packaging and distribution services                       47 427        61 604   
  Gambling monitoring services                              88 593        84 709   
  Diversified services(5)                                  (82 071)     (205 625)  
                                                         1 025 603       916 595   
  REVENUE INCLUDING INTER SEGMENT TRADING                                          
  Facilities management services                         1 414 225     1 281 260   
  Security services                                      2 445 224     2 267 658   
  Catering services                                        674 356       572 432   
  Cleaning services                                        492 681       484 080   
  Packaging and distribution services                      376 621       406 815   
  Gambling monitoring services                             102 137        81 291   
  Diversified services(5)                                  252 124       234 994   
  Discontinued operations                                        -       180 390   
                                                         5 757 368     5 508 920   
  REVENUE FROM EXTERNAL CLIENTS                                                    
  Facilities management services                         1 411 385     1 278 726   
  Security services                                      2 416 190     2 238 467   
  Catering services                                        572 153       456 169   
  Cleaning services                                        356 613       349 318   
  Packaging and distribution services                      313 001       326 383   
  Gambling monitoring services                             102 137        81 291   
  Diversified services(5)                                  236 588       213 029   
  Discontinued operations                                        -       173 569   
                                                         5 408 067     5 116 952   
  PROFIT/(LOSS) FROM OPERATIONS                                                    
  Facilities management services                           130 597       121 930   
  Security services                                        128 828       143 943   
  Catering services                                         20 845       (10 755)  
  Cleaning services                                         12 057         3 142   
  Packaging and distribution services                      (60 767)      (20 333)  
  Gambling monitoring services                              41 923        33 691   
  Diversified services(5)                                  (68 081)      (78 597)  
  Discontinued operations                                        -         5 109   
                                                           205 402       198 130   
                                                       
  GOODWILL IMPAIRMENT                                                              
  Facilities management services                           (14 000)          (73)  
  Cleaning services                                        (45 000)            -   
  Packaging and distribution services                         (200)      (11 280)  
  Gambling monitoring services                              (7 250)            -   
  Diversified services(5)                                     (459)       (7 201)  
                                                           (66 909)      (18 554)  
  NET FINANCE INCOME/(COSTS)                                                       
  Facilities management services                               385         5 075   
  Security services                                        (10 375)       (9 793)  
  Catering services                                         (1 454)       (1 591)  
  Cleaning services                                           (535)         (464)  
  Packaging and distribution services                       (1 916)       (1 431)  
  Gambling monitoring services                               1 214           755   
  Diversified services(5)                                  (27 746)      (38 405)  
  Discontinued operations                                        -         1 140   
                                                           (40 427)      (44 714)  
  INVESTMENT INCOME                                                                
  Facilities management services                             5 481         3 981   
  Diversified services(5)                                   10 089         6 596   
  Discontinued operations                                        -           153   
                                                            15 570        10 730   
  TAXATION                                                                         
  Facilities management services                           (28 894)      (34 170)  
  Security services                                        (21 809)      (30 989)  
  Catering services                                         (8 719)        6 650   
  Cleaning services                                          2 320         4 583   
  Packaging and distribution services                          679           735   
  Gambling monitoring services                             (12 397)      (12 954)  
  Diversified services(5)                                   72 723        (5 460)  
  Discontinued operations                                        -         3 065   
                                                             3 903       (68 540)  
                                                      
  TOTAL PROFIT/(LOSS) FOR THE YEAR                                                 
  Facilities management services                            93 569        96 743   
  Security services                                         96 644       103 161   
  Catering services                                         10 672        (5 696)  
  Cleaning services                                        (31 158)        7 261   
  Packaging and distribution services                      (62 204)      (32 309)  
  Gambling monitoring services                              23 490        21 492   
  Diversified services(5)                                  (13 474)     (123 067)  
  Discontinued operations                                        -         4 662   
                                                           117 539        72 247   
  TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR                                   
  Facilities management services                            93 569        96 743   
  Security services                                        103 716       106 962   
  Catering services                                         10 408        (6 759)  
  Cleaning services                                        (31 158)        7 261   
  Packaging and distribution services                      (62 204)      (32 309)  
  Gambling monitoring services                              23 490        21 492   
  Diversified services(5)                                  (13 474)     (123 267)  
  Discontinued operations                                        -         4 662   
                                                           124 347        74 785   
  (2)Refer to note 7 for details of restatement.                                 
  (5)Includes head office.                                                         
  The presentation of the segmental information has been amended since the prior 
  year to disclose the packaging and distribution and gambling monitoring services 
  businesses separately and, as such, the prior year information has been restated.                                   


  
Condensed consolidated preliminary statement of changes in equity                                                                                                                                                                                              
                                                                             Foreign                                    
                                                                            currency     Share-based                    
                                                           Share         translation    compensation    Distributable   
                                                         capital    reserve (FCTR)         reserve          reserve   
                                                           R000               R000           R000            R000   
                                                                                                                        
      Balance at 30 June 2011                            734 288             (10 206)              -          162 967   
      Transactions with non-controlling interests:                                                                      
      Acquisition of subsidiaries                              -                   -               -                -   
      Acquisition from non-controlling interest                -                   -               -                -   
      Dividends paid                                           -                   -               -                -   
      Total comprehensive income for the year                  -               2 538               -           68 052   
      Profit for the year                                      -                   -               -           68 052   
      Other comprehensive income for the year                  -               2 538               -                -   
      Transactions with owners:                                                                                         
      Dividends paid                                           -                   -               -          (50 962)  
                                                                                                                        
      Balance at 30 June 2012                            734 288              (7 668)              -          180 057   
      Transactions with non-controlling interests:                                                                      
      Acquisition of subsidiaries                              -                   -               -                -   
      Acquisition from non-controlling interest                -                   -               -             (674)  
      Disposal of non-controlling interest                     -                   -               -             (991)  
      Dividends paid                                           -                   -               -                -   
      Total comprehensive income for the year                  -               6 808               -          123 450   
      Profit for the year                                      -                   -               -          123 450   
      Other comprehensive income for the year                  -               6 808               -                -   
      Share-based payments                                     -                   -           6 820                -   
      Transactions with owners:                                                                                         
      Shares repurchased                                 (12 782)                  -               -                -   
      Balance at 30 June 2013                            721 506                (860)          6 820          301 842   
	  
	  

Condensed consolidated preliminary statement of changes in equity continued                                                                                                                                                                                             
                                                                 Total                                     
                                                          attributable                                     
                                                          to owners of    Non-controlling    Capital and   
                                                            the parent           interest       reserves   
                                                                 R000              R000          R000   
                                                                                                           
      Balance at 30 June 2011                                  887 049             15 288        902 337   
      Transactions with non-controlling interests:                                                         
      Acquisition of subsidiaries                                    -              3 500          3 500   
      Acquisition from non-controlling interest                      -               (327)          (327)  
      Dividends paid                                                 -            (12 738)       (12 738)  
      Total comprehensive income for the year                   70 590              4 195         74 785   
      Profit for the year                                       68 052              4 195         72 247   
      Other comprehensive income for the year                    2 538                  -          2 538   
      Transactions with owners:                                                                            
      Dividends paid                                           (50 962)                 -        (50 962)  
                                                                                                           
      Balance at 30 June 2012                                  906 677              9 918        916 595   
      Transactions with non-controlling interests:                                                         
      Acquisition of subsidiaries                                    -                481            481   
      Acquisition from non-controlling interest                   (674)            (1 567)        (2 241)  
      Disposal of non-controlling interest                        (991)                 -           (991)  
      Dividends paid                                                 -             (6 626)        (6 626)  
      Total comprehensive income for the year                  130 258             (5 911)       124 347   
      Profit for the year                                      123 450             (5 911)       117 539   
      Other comprehensive income for the year                    6 808                  -          6 808   
      Share-based payments                                       6 820                  -          6 820   
      Transactions with owners:                                                                            
      Shares repurchased                                       (12 782)                 -        (12 782)  
      Balance at 30 June 2013                                1 029 308             (3 705)     1 025 603   
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              


Notes to the condensed consolidated preliminary financial statements
For the year ended 30 June    
  1. Accounting policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
  The reviewed condensed consolidated preliminary financial statements for the year ended 
  30 June 2013 have been prepared using the measurement and recognition requirements of 
  International Financial Reporting Standards (IFRS) and the 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 preliminary 
  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 preliminary financial statements for the year ended 
  30 June 2013 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 the acquisitions prior to 30 June 2012 were 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 was to 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 R2 553 000 was accounted for in the current period and 
  a further R2 340 000 was retrospectively adjusted for the year ended 30 June 2012 (refer to 
  restatement note 7). The remaining value of the distribution right of R5 106 000 was impaired 
  in the current year.   
  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. The goodwill arising from the acquisition was fully impaired 
  in the current year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
  Other business combinations relate to franchises bought back by Khuseti and Protea Coin.                                                                                                                                     Mast and                              
                                          Velocity      Infrastructure        Other         Total   
                                             R000               R000        R000         R000                                                              
  Fair value of assets and                                                               
  liabilities acquired:                                                                  
  Property, plant and equipment                  -               1 688        1 455         3 143   
  Intangible assets                         10 000                 120            -        10 120   
  Deferred taxation                              -                  66            -            66   
  Inventory                                      -                   -          184           184   
  Trade and other receivables                    -               4 429           26         4 455   
  Net cash and cash equivalents                  -                  86            -            86   
  Total assets                              10 000               6 389        1 665        18 054   
  Asset-based finance                            -                (855)           -          (855)  
  Trade and other payables                       -              (2 034)        (324)       (2 358)  
  Total liabilities                              -              (2 889)        (324)       (3 213)  
  Net assets acquired                       10 000               3 500        1 341        14 842   
  Goodwill                                       -              14 000        2 412        16 412   
  Total purchase price                      10 000              17 500        3 753        31 254   
  Satisfied by:                                                                                     
  Equity of wholly owned                                                                 
  subsidiary (LTP)                               -               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 transaction cost relating to the acquisitions were negligible.                                                      

  Current period acquisitions                                                                                                                                                                                                                                                                
  With effect from 1 March 2013 Protea Coin obtained the assets and liabilities of a fencing 
  business, for a consideration of R882 000. The business was purchased in anticipation of 
  expected synergies of this business with the security services as provided by Protea Coin.
   
  Khuseti bought back a number of loss making King Pie franchises throughout the year, for 
  a total consideration of R2 486 000, in order to turn the businesses around and sell them 
  in the future. This was done to protect the King Pie brand.                                             

                                                         Fencing        King Pie                 
                                                        Business      Franchises         Total   
  Fair value of assets and liabilities acquired:           R000           R000         R000                                                                                                                                                  
  Property, plant and equipment                              321           1 949         2 270   
  Intangible assets                                          636               -           636   
  Deferred taxation                                          330               -           330   
  Inventory                                                1 089               -         1 089   
  Trade and other receivables                                330              12           342   
  Net cash and cash equivalents                                4               -             4   
  Total assets                                             2 710           1 961         4 671   
  Trade and other payables                                (3 431)              -        (3 431)  
  Bank overdraft                                             (12)              -           (12)  
  Total liabilities                                       (3 443)              -        (3 443)  
  Net assets acquired                                       (733)          1 961         1 228   
  Goodwill                                                 1 615             525         2 140   
  Total purchase price                                       882           2 486         3 368   
  Satisfied by:                                                                                  
  Cash                                                         -           2 486         2 486   
  Loans                                                      882               -           882   
                                                             882           2 486         3 368   
  Net cash effect                                             (8)         (2 486)       (2 494)  


The following revenue and profit/(loss) after taxation numbers have been consolidated into the
group results relating to business combinations effected during the year:            


                                             Fencing        King Pie   
                                            Business      Franchises   
                                               R000           R000                                                                    
  Actual results consolidated                            
  for the current year:                                         
  Revenue                                      5 230          11 748   
  Profit after taxation                          457           2 895   
  Results that would have been       
  consolidated had the business      
  combination been effective         
  on 1 July 2012:                                       
  Revenue                                     14 887        18 019   
  Profit/(loss) after taxation                  (311)        4 509   
  
                                                                  Restated   
                                                     Reviewed      Audited   
                                                         2013      2012(2)   
                                                        R000        R000                                                                              
  3. Property, plant and equipment                                           
  Opening balance                                     440 185      431 915   
  Additions                                           163 352      169 685   
  Acquired through business combinations                2 270        3 143   
  Disposals                                           (17 043)     (10 486)  
  Depreciation for the year                          (147 655)    (146 798)  
  Reversal of impairment                                    -        1 364   
  Impairment of assets                                (10 008)      (6 564)  
  Reclassification to intangible assets                (2 397)      (2 199)  
  FCTR                                                     63          125   
  Closing balance                                     428 767      440 185   
  
  4. Intangible assets                                                       
  Opening balance                                     626 145      622 547   
  Acquired through business 
  combinations                                          2 776       26 532   
  Reclassified from property,
  plant and equipment                                   2 397        2 199   
  Additions                                             3 300        2 281   
  Amortisation                                         (7 684)      (8 860)  
  Impairment                                          (72 069)     (18 554)  
  Closing balance                                     554 865      626 145   
  (2)Refer to note 7 for details of restatement.     

          
                                                 Reviewed       Reviewed     Reviewed      Audited   
                                                     2013           2013         2013         2012   
                                              Asset-based                                            
                                                  finance    Other loans        Total        Total   
                                                    R000          R000        R000        R000   
                                                                                                     
  5. Interest bearing liabilities                                                                    
  Opening balance                                 229 556        183 482      413 038      426 654   
  New loans                                       144 322          1 744      146 066      135 509   
  Acquired through business combinations                -              -            -          855   
  Amounts repaid                                 (134 336)       (50 000)    (184 336)    (149 755)  
  Accrued interest effect                              (3)          (280)        (283)        (225)  
  Closing balance                                 239 539        134 946      374 485      413 038   
  Disclosed as:                                                                                      
  Non-current interest bearing 
  liabilities                                     131 929         82 583      214 512      253 303   
  Current interest bearing liabilities            107 610         52 363      159 973      159 735   
                                                  239 539        134 946      374 485      413 038   




                                            Reviewed    Audited   
                                                2013       2012   
                                               R000      R000   
                                                                  
  6. Working capital                                              
  6.1 Other current assets                                        
  Inventories                                 91 850     91 994   
  Trade receivables                          571 710    535 842   
  Other receivables                          438 288    277 965   
  Taxation receivable                          6 197      2 637   
                                           1 108 045    908 438   
  6.2 Other current liabilities                                   
  Trade payables                             198 696    182 546   
  Other payables                             955 253    755 635   
  Provisions                                  57 496     42 068   
  Taxation liabilities                         7 044          -   
                                           1 218 489    980 249   


  7. Restatements                                                                                                                                                                                                                                                                                                                                                                                                                         
  Intangible assets                                                                                                                                                                                                                                                                                                                                                                                                                       
  The purchase price allocation for Velocity was finalised in the current year. The previously 
  recognised goodwill of R10 000 000 in respect of Velocity was reclassified to distribution 
  rights and was to 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 include amortisation 
  of R2 340 000 in respect of the distribution right. 

                                                                      Previously   
                                                          Restated        stated   
                                                           Audited       Audited   
                                                              2012          2012   
                                                             R000         R000                                
  Intangible assets                                        626 145       628 485   
  Profit for the year attributable to:                                             
  Owners of the parent - continued operations               63 390        65 730   
  Total comprehensive income attributable to:                                      
  Owners of the parent - continued operations               65 928        68 268   
  Earnings per ordinary share (cents)                         48,1          49,7   
  Headline earnings per ordinary share (cents)                65,1          66,8   
  No statement of financial position as at 30 June 2011 and statement of profit or loss and 
  other comprehensive income for the year ended 30 June 2011 was presented as the restatement 
  had no effect on this period.                                 

                                                          Reviewed     Audited   
                                                              2013        2012   
                                                             R000       R000   
  8. Capital commitments and contingencies                                   
  Capital expenditure                                   
  Contracted for                                             7 539      13 538   
  Not contracted for                                        21 835       4 782   
                                                            29 374      18 320   
  Operating leases                                                               
  Land and buildings                                       134 209     149 789   
  Plant and equipment                                        5 534       9 178   
  Motor vehicles                                            60 324      85 290   
                                                           200 067     244 257   
  Less: Amount accrued as a result of using 
  straight-line basis                                      (10 070)     (5 439)  
                                                           189 997     238 818   

  9. Related party disclosure                                                                                                                                                                                                                            
  Security services to the value of R983 000 were provided to Mvelaphanda Holdings (Pty) Ltd 
  (Mvelaphanda Holdings) during the year of which a balance of R99 000 was still 
  outstanding at year-end.                                                   
  A further R9 240 000 was receivable at year-end from Mvelaphanda Holdings which was fully 
  provided for in 2012 and written off in the current year.                                                                                                    
  A total of R1 333 000 was paid to Palanca in respect of conferences and accommodation 
  during the current financial year. Palanca is owned by a Mvelaserve director.                                                                                    
  10. 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.     
  
  11. Reviewed report                                                                                                                                                                                                                                    
  The condensed consolidated preliminary financial information has been reviewed by the 
  companys independent auditors, PricewaterhouseCoopers Inc. Their unmodified review 
  conclusion is available for inspection at the companys registered office.   
  
                  
                
Our vision
To be the business support service provider of choice, known and respected for our ability to
consistently deliver exceptional value through service excellence. 
To become a partner to all our customers by devising and executing a distinctly effective offering
of integrated business solutions, in a culture of integrity and enthusiasm. 



Commentary
Introduction
The board presents the results for the year ended 30 June 2013 (FY13). Mvelaserve has countered
the tough economic and political challenges of the year under review with a robust financial
performance. The groups results also reflect the success of the restructuring initiatives undertaken 
at RoyalMnandi during the 2012 financial year, and the focus on improving operating margins. 

During the year, the alignment of business interests between LTP and TFMC led to LTP being
incorporated into TFMC and the Circle ICT operations were unbundled into the groups subsidiary 
companies.

Structural changes were also undertaken at Stamford Sales, including the closure of the loss making
divisions.

In FY13, Mvelaserve announced the Bidvest Groups interest in acquiring the groups entire issued
ordinary share capital not already held by Bidvest. The process is currently under way and further
announcements will be made in due course.

Attributable earnings per share (EPS) and headline earnings per share (HEPS) for the year
increased to 87,5 cents (FY12: 48,1 cents) and 142,4 cents (FY12: 65,1 cents) respectively. The 
increase in earnings was attributable primarily to the recognition of previously unrecognised 
deferred tax assets indicated above, and an improved operational performance. These increases were 
partly offset by the goodwill impairment charges, as well as tangible and intangible asset impairment 
charges detailed above, which impacted EPS but are excluded for the purpose of calculating HEPS.


Group profile
Mvelaserve is a leading diversified business support services group with operations in Southern
Africa, Ghana, Nigeria and the UAE. The group employs approximately 31 000 people, and earned 
R5 408 million in revenue during the 2013 financial year. The group was listed on the JSE Limited in
November 2010 and is a Level 2 BEE contributor.

The groups range of integrated services access multiple industries and sectors, including,
amongst others, security, facilities management, cleaning and catering. The companies under 
Mvelaserves control, cater for a wide customer base encompassing leading financial institutions, mining 
houses and retailers, as well as parastatals and government departments.


Financial results
Revenue from continued operations for the year under review increased by 9% to R5 408 million from
R4 943 million on a like-for-like basis, driven mainly by increased revenue posted by Protea Coin,
TFMC and RoyalMnandi.

Operating expenses, excluding depreciation, amortisation and impairments, increased by 9% to R5
062 million (FY12: R4 626 million), resulting in an increase in earnings before interest, tax,
depreciation and amortisation (EBITDA) of 6% to R376 million (FY12: R354 million. The EBITDA margin
remained flat at 7% for the year, mainly as a result of operating losses at Stamford Sales and Velocity.
Depreciation, amortisation and impairment charges, excluding impairment charges in respect of
goodwill, increased to R171 million (FY12: R155 million on a comparable basis), mainly as a result of 
R15 million impairment charges at Velocity in respect of vehicles (R10 million) as well as distribution
rights (R5 million). 

The operating profit for the year increased to R205 million from R198 million. This modest growth,
apart from the abovementioned impairment charges, was mainly attributable to operating losses of
R61 million at Stamford Sales (FY12: R20 million loss) and R27 million at Velocity (FY12: R11 million
loss). The low growth in operating profit was also impacted by a share-based payment charge of R7
million (FY12: Rnil) to the income statement in respect of an executive share scheme approved during
February 2012 and R6 million additional costs incurred in respect of corporate action activities.
Combined, these factors resulted in the operating margin remaining flat at 4%.

During the year goodwill of R67 million was impaired, comprising R45 million at RoyalServe
Cleaning, R14 million at LTP and R7 million at Zonke. The impairments at RoyalServe Cleaning and LTP 
are a result of lower-than-expected results affecting the value-in-use calculations for these
subsidiaries. The impairment at Zonke was based on a conservative approach regarding the likelihood 
of the renewal of the companys contract with the National Gambling Board due in 2015.

Net interest cost declined to R40 million (FY12: R46 million) due to reduced interest bearing debt
levels, as well as increased treasury efficiency at group level. Consequently, interest cover based
on EBITDA improved to 7,8 times from 6,7 times.

Net income from investments of R16 million (FY12: R11 million) comprised mainly the share of
profits from associates of R5 million and a favourable fair value adjustment of R10 million (FY12: 
R6 million) in respect of a derivative financial instrument. 

The groups taxation charge for the year amounted to a R4 million credit (FY12: R72 million debit
charge) due to a net debit deferred tax provision of R82 million. This was a result of the
recognition of a deferred tax asset of R75 million in respect of previously unrecognised tax losses at 
head office level. Excluding the deferred tax asset raised, as well as permanent differences in respect 
of intangible impairment charges of R72 million, the comparable effective tax rate amounted to 37% for
FY13 compared to 42% in FY12 (excluding STC). The major portion of the tax rate leakage (28% to
37%) was due to the losses incurred at Stamford Sales and Velocity for which deferred tax assets were
not recognised.


Financial position
Property, plant and equipment (PPE) decreased by R11 million to R429 million from R440 million
on the back of net disposals and write downs at cost of R32 million (FY12: R118 million),
depreciation and impairments of R158 million (FY12: R152 million), and the reversal of accumulated 
depreciation of R178 million in respect of the disposals.

Capital expenditure of R163 million (FY12: R170 million) comprised R110 million (FY12: R127
million) for expansion to meet current growth initiatives and replacements of R53 million (FY12: 
R43 million). The overall capital expenditure to depreciation reduced to 1,1 times (FY12: 1,2 times)
indicating a continued slowdown in the groups capital investment phase as reported for the previous 
year.

Interest bearing debt, excluding the derivative financial instrument fair valued at R10 million on
30 June 2013 (FY12: R20 million), decreased to R374 million (FY12: R413 million), implying a
debt:equity ratio of 36% (FY12: 46%). Asset-based finance liabilities directly associated with the
financing of PPE increased by R10 million to R240 million (FY12: R230 million), which comprised new 
finance acquired of R144 million and finance repaid of R134 million.


Cash flow
Cash generated from operations improved by 4% to R384 million (FY12: R369 million). The increase
was partly achieved by decreasing the relative working capital level in relation to turnover,
resulting in R7 million cash generated from working capital (FY12: R14 million). This, together 
with reductions of R7 million in respect of net interest paid and R4 million in respect of tax 
payments, resulted in an 11% improvement in cash generated from operating activities to R273 million 
(FY12: R247 million). This translates into cash earnings per share of 193 cents (FY12: 174 cents).

Cash utilised in investments increased by R2 million to R133 million in FY13 mainly as a result of
PPE acquisitions of R163 million, including finance leased acquisitions of R10 million. Of the R163
million spent on PPE acquisitions, R19 million was met by cash resources, with the balance of R144
million funded by asset-based finance. Proceeds from the sale of assets amounted to R24 million.
Cash utilised in financing activities amounted to R61 million (FY12: R110 million). The reduction
is mainly as a result of the R51 million dividend paid to shareholders during the 2012 financial
year. Of the total R146 million debt raised during the year, R134 million relate to instalment sale
agreements and R10 million to finance leases. Total debt of R184 million was repaid, consisting of 
R134 million in respect of asset-based finance, of which R16 million was in respect of finance leases
and R50 million in respect of the long-term loan facility. A further R13 million was spent on the
repurchase of shares for the executive share scheme.

The net result of the above cash flows amounted to an increase in cash and cash equivalents of R79
million and a cash conversion margin of 78% (FY12: 76%). The cash conversion margin was based on
free cash flow to equity as a percentage of net headline profit after tax, adjusted for the 
non-current utilisation of the deferred tax asset created in the current year.

Capital and reserves
During FY13, the total issued ordinary share capital decreased by 1 582 492 ordinary shares to 139
979 181 shares (FY12: 141 561 673 ordinary shares), following share buybacks during the year at an
average R8,037 per share. The weighted average net number of ordinary shares in issue decreased
marginally to 141 011 954 from 141 561 673. 

Operational review
Protea Coin delivered a solid set of results with revenue increasing by 8% to R2 445 million
(FY12: R2 268 million). Despite difficult market conditions, contracts were gained in both the mining 
and guarding divisions, which compensated for parastatal contract losses in the first half of FY13.
However, operating margins decreased from 6,3% to 5,3% due to higher operational costs that have been
absorbed. The company was also affected by industrial action in the transport sector in September and
October 2012. Protea Coin has continued with its strategy to increase its foothold in the rest of
Africa and successfully secured a second contract in Ghana in February 2013. 

TFMCs revenue increased by 10% to R1 414 million (FY12: R1 281 million), although the companys
operating profit remained flat. This is indicative of the difficult market conditions in the
facilities management industry as well as the economic pressures TFMCs customers are currently facing.
TFMCs operating margin remains comparable with the rest of the industry. The company secured
significant inroads into the financial services sector during the year, delivering maintenance 
engineering, call centre and project-related services. The mast services division is performing well 
and continued growth is expected.

RoyalServe Cleaning delivered below expected results during FY13, in spite of the operating margin
improving from 0,6% to 2,4%. The results, however, come off a low base in FY12 and systems are
being implemented to ensure that the operating margin increases to the average levels achieved in the
cleaning industry. The companys commercial division revenue was negatively impacted by the loss of
high-revenue clients. Fortunately, this was negated by the retention of contracts with higher margins.
The expansion in the laundry facility and strong growth in the hygiene division should, further add
to improved margins in the future.

RoyalMnandis revenue increased by 18% during the year, up from R572 million in FY12 to R674
million in FY13. The companys EBITDA increased 480% to R29 million (FY12: R5 million). Debtor days and
stock days both decreased by 15% and 22% respectively. The company has seen significant growth in new
blue chip clients in the financial, industrial, telecommunications, retail and educational sectors.
Zonkes revenue increased by 26% to R102 million (FY12: R81 million), with operating profit
increasing by 24% to R42 million. The company has also implemented monitoring services in Swaziland and
Zimbabwe, so expanding the groups African footprint and has added the monitoring of an additional 681
limited pay-out machines to its portfolio in South Africa.

SA Waters revenue for FY13 increased 83% to R11 million in FY13, from R6 million in FY12.
Although operating losses remained, positive results are expected for FY14 with an order cover of R18
million as at 30 June 2013. The company secured 13 contracts during the year, including two South African
National Defence Force waste water projects.

Khusetis turnover increased by 15% to R222 million in FY13 from R193 million in FY12 and
operating profit of R23 million was 28% higher than the R18 million achieved in FY12. The companys
operating margin was higher at 10.4%, compared to 9,5% in FY12.

Stamford Saless revenue of R377 million in FY13 (FY12: R407 million) was lower as a result of the
restructuring during the year. The FY13 operating loss of R61 million (FY12: R20 million) included
R2,5 million for retrenchments, R600 000 for the settlement of vehicle leases and R2,5 million for
the accelerated depreciation of freezers that are no longer in use. The gross profit margin of 16%
was also considerably lower than the 23% reported in the previous year. This was negatively affected
by low gross profit margins in the frozen and food services divisions that have been closed. Other
factors affecting profitability in FY13 included a R9,4 million provision for bad debts and higher
than expected distribution costs, which were influenced by the high and continuously increasing fuel
price.  

Velocitys revenue decreased by 8% during the year to R3 million (FY12: R4 million). While
operating profit decreased by 142%, EBITDA decreased by only 33% as a result of a R10 million impairment of
its vehicles due to weak prospects. Velocity, as a start-up operation, is not gaining the traction
originally envisaged and the board will have to evaluate its future as a subsidiary within the
group.


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 was
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
The directors of Mvelaserve have resolved not to declare a dividend for the year.


Prospects
Current trading conditions are not expected to abate in the year ahead. In particular, the
challenges facing Protea Coin and TFMC, the cornerstones of the groups operations, are likely to 
continue going forward, with the pressure placed on fuel prices and wages showing no signs of 
dissipating.

The current labour relations situation in South Africa also remains a concern, especially as the
country readies itself for a general election in 2014.

That said, management remains confident in its ability to weather these times, and to continue to
manage and control costs vigilantly and to assess expansion opportunities in new growth markets 
both within South Africa and beyond its borders.

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

6 September 2013



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
Z Vokwana
* Lead Independent

Registered Office:
28 Eddington Crescent
Highveld Technopark
Centurion, 0169

Sponsor:
Rand Merchant Bank
(A division of FirstRand 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 at www.mvelaserve.co.za
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