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Revised reviewed condensed consolidated results for the year ended 30 June 2013 and dividend declaration
M&S Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2006/011359/06)
Share code: MSA
ISIN code: ZAE000165411
["M&S" or "the Company"]
REVISED REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2013 AND
DIVIDEND DECLARATION
Shareholders are referred to the announcement released on SENS yesterday, 17 September 2013 in
which announcement the company omitted to include the statement on material management
judgements, directors’ responsibility and review report.
The statements below is now included in this revised announcement. All other information remains the
same.
MATERIAL MANAGEMENT JUDGEMENTS
A trade receivable amounting to R6.5 million receivable from a certain debtor has been offset against an
equal amount due to a creditor regarding the same transaction. The management team of M&S believes
that they have the legal right to offset and net settle the amounts. The creditor is currently disputing this
right, but management has sought legal opinion which opinion concurs with that of management.
RESPONSIBILITY STATEMENT
The directors take full responsibility for the preparation of the reviewed condensed consolidated results
for the year ended 30 June 2013 and that the financial information has been correctly extracted from
the underlying annual financial statements.
REVIEW REPORT
The condensed consolidated preliminary results for the year ended 30 June 2013 have been reviewed by
Grant Thornton (Jhb) Inc. The external auditors’ unqualified review opinion and the reviewed condensed
consolidated results for the year ended 30 June 2013 are available for inspection at the Company’s
registered office.
M&S HOLDINGS LIMITED
(Registration number 2006/011359/06)
JSE code: MSA ISIN: ZAE000165411
["M&S Holdings" or "the Company"]
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2013
AND DIVIDEND DECLARATION
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended
R'000 30 June 30 June
2013 2012
Reviewed Audited
Revenue 386 814 340 629
Cost of sales (326 518) (287 578)
Gross profit 60 296 53 051
Net operating expenses (24 530) (22 099)
Operating profit before impairments 35 766 30 952
Loss on sale of property, plant and equipment (54) (26)
Impairment of Investments in joint ventures - (644)
Impairment of Loans to joint ventures - (1 206)
Operating profit 35 712 29 076
Interest received 799 759
Interest paid (1 931) (2 801)
Profit before taxation 34 580 27 034
Equity accounted earnings from Joint Ventures 1 401 -
Taxation (9 660) (9 488)
Profit attributable to the equity holders of the parent 26 321 17 546
Other comprehensive income - -
Comprehensive income attributable to the equity
holders of the parent from continuing operations 26 321 17 546
Comprehensive loss attributable to the equity holders
of the parent from discontinued operations - (110 906)
Total comprehensive income / (loss) attributable to
the equity holders of the parent 26 321 (93 360)
Weighted average shares in issue ('000) 155 182 188 231
Headline earnings reconciliation
Attributable earnings / (loss) 26 321 (93 360)
Profit on sale of property, plant and equipment of Joint Venture (1 291) -
(After taxation)
Impairment of assets of the disposal group - 78 922
Loss recognised on the sale of the disposal group - 11 910
Loss on sale of property, plant and equipment (after taxation) 39 19
Impairment of Investments - 644
Headline earnings 25 069 (1 865)
Earnings per share (cents)
Earnings / loss per share 17.0 (49.6)
From continuing operations 17.0 9.3
From discontinued operations - (58.9)
Headline earnings / (loss) per share 16.2 (1.0)
From continuing operations 16.2 9.7
From discontinued operations - (10.7)
Dividends per share 4.24 -
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 30 June
R'000 2013 2012
Reviewed Audited
ASSETS
Non-current assets 27 005 28 595
Property, plant and equipment 5 086 5 343
Goodwill 13 980 13 980
Investment in and loans to joint ventures 6 146 2 455
Vendor loan receivable - 5 000
Deferred taxation 1 793 1 817
Current assets 59 735 64 317
Inventories 985 1 722
Trade and other receivables 49 621 61 389
Vendor loan receivable 5 779 -
Taxation receivable 531
Bank and call deposits 2 819 1 206
TOTAL ASSETS 86 740 92 912
EQUITY AND LIABILITIES
Capital and reserves 63 960 37 639
Non-current liabilities 1 679 1 820
Interest bearing liabilities 1 679 1 820
Current liabilities 21 101 53 453
Interest bearing liabilities 354 378
Interest bearing loan from related party - 3 500
Bank overdrafts and invoice discounting 3 192 17 356
Trade and other payables 17 052 29 079
Taxation payable 503 3 140
TOTAL EQUITY AND LIABILITIES 86 740 92 912
Shares in issue ('000) 155 182 155 182
Net asset value per share (cents) 41.2 24.3
Net tangible asset value per share (cents) 32.2 15.2
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended
R'000 30 June 30 June
2013 2012
Reviewed Audited
Cash flow from operations 19 262 6 847
Cash generated by operations 33 978 18 906
Interest received 20 759
Interest paid (1 931) (4 013)
Taxation paid (12 805) (8 805)
Cash flow from investing activities (3 320) (5 088)
Increase in advances to joint ventures (2 290) (2 644)
Cash flow from disposal of subsidiary - (1 905)
Net investment in property, plant and equipment (1 030) (539)
Cash flow from financing activities
Movement in loans payable (165) (938)
Increase in cash resources 15 777 821
Cash resources at beginning of year (16 150) (16 971)
Cash resources at end of year (373) (16 150)
Cash resources (373) (16 150)
Bank and call deposits 2 819 1 206
Bank overdraft and invoice discounting (3 192) (17 356)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended
R'000 30 June 30 June
2013 2012
Reviewed Audited
Equity at beginning of period 37 639 151 639
Total comprehensive income for the period 26 321 (93 360)
Shares repurchased as per subsidiary sale agreement - (20 640)
Equity at end of period 63 960 37 639
SEGMENT REPORTING (CONTINUING OPERATIONS)
Year ended
R'000 30 June 30 June
2013 2012
Reviewed Audited
Revenue
Personnel outsourcing 375 518 328 428
Total revenue 379 735 332 776
Internal (4 217) (4 348)
Safety surveillance 11 296 12 201
Total Group 386 814 340 629
Operating profit before impairments 35 766 30 952
Personnel outsourcing 33 597 26 411
Safety surveillance 2 850 4 282
Head office (681) 259
Impairments / Loss on sale of property, plant and equipment
Personnel outsourcing (54) (1 876)
Net interest paid (1 132) (2 042)
Personnel outsourcing (1 887) (2 040)
Safety surveillance (25) (2)
Head office 780 -
Profit before taxation 34 580 27 034
Personnel outsourcing 31 032 22 495
Safety surveillance 3 449 4 280
Head office 99 259
INFORMATION ON DISPOSAL GROUPS (SCAFFOLDING)
Year ended
R'000 30 June 30 June
2013 2012
Reviewed Audited
Analysis of the results of discontinued operations
Revenue - 19 905
Expenses - (38 767)
Impairment of assets of the disposal group - (78 922)
Operating loss - (97 784)
Interest received - -
Interest paid - (1 212)
Loss before tax - (98 996)
Tax - -
Loss after tax - (98 996)
Loss recognised on the sale of the disposal group - (11 910)
Total comprehensive loss attributable to the equity
holders of the parent from discontinued operations - (110 906)
Assets of the disposal group disposed of
Non-current assets - 24 697
Property, plant and equipment - 24 624
Deferred tax asset - 73
Current assets - 21 677
Inventories - 2 061
Trade and other receivables - 17 711
Bank and call deposits - 1 905
Non-current assets held for sale
TOTAL ASSETS - 46 374
Liabilities of the disposal group disposed of
for sale
Non-current liabilities - 2 317
Interest bearing liabilities - 2 317
Current liabilities - 6 505
Interest bearing liabilities - -
Bank overdrafts and invoice discounting - -
Trade and other payables - 6 505
TOTAL LIABILITIES - 8 822
Cash flow information
Cash flow from operations - 4 206
Cash flow from investing activities - 753
Cash flow from financing activities - (1 183)
Increase in cash resources - 3 776
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2013
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
BASIS OF PREPARATION
These results have been prepared in terms of International Financial Reporting Standards and comply
with IAS 34 – Interim Financial Reporting, the Listings Requirements of the JSE Limited, the Companies
Act No. 71 of 2008, as amended and the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee. The condensed financial statements do not include all of the information required
for a full set of annual financial statements.
The accounting policies applied are consistent with those applied in the annual financial statements for
30 June 2012.
The condensed financial statements have been prepared under the supervision of Ms. SL Grobler CA
(SA), Acting Financial Director.
DISCONTINUED OPERATION
As per the circular dated 23 April 2012, the M&S Holdings Group [“the Group”] disposed of the
Scaffolding Division during the previous financial year. Financial information relating to the scaffolding
business operation is set out after the Segment report. The results of the discontinued operation are
disclosed separately in the Statement of comprehensive income.
The sale consideration was partially settled through the debiting of a consideration loan of R5 million
against the purchaser. The consideration loan, bears interest at the prime rate plus 1% (one per cent)
per annum, calculated daily and compounded monthly in arrears and is repayable by no later than 30
September 2013.
As security for repayment of the consideration loan, the purchaser has pledged an additional 8 000 000
of his M&S ordinary shares to the Company until the consideration loan, plus all interest that accrues
thereon has been settled in full.
ACQUISITIONS
As detailed in the SENS announcement dated 21 June 2013, the Group is at an advanced stage of
finalising formal agreements with BDM Holdings (Pty) Ltd [“BDM”] regarding a proposed transaction in
terms of which the Group will acquire BDM and its subsidiaries [“BDM Group”]. A binding heads of
agreement has been concluded with the BDM Group, setting out the salient terms of the proposed
transaction which will effectively result in a merger of the two businesses. The heads of agreement is
conditional upon the parties concluding formal agreements and obtaining all regulatory approvals as
may be required for implementation of the transaction.
FINANCIAL PERFORMANCE
The positive results achieved during the six months ended 31 December 2012, continued throughout the
second half of the year despite ongoing uncertainties surrounding the personnel outsourcing industry.
The board and management of M&S are pleased by the strong performance from continuing operations
and return to profitability for the Group. We will continue to embrace the ongoing changes in labour
legislation in order to keep delivering an outstanding service to our clients.
Revenue from continuing operations increased by 13.6% from R340.6 million to R386.8 million in the
current year, while the gross profit percentage remained stable at 15.6%. Current headline earnings per
share from continuing operations of 16.2 cents reflect a 66.5% increase from the 9.7 cents reported for
the previous year.
Operating profit from continuing operations rose by 22.8% to R35.7 million.
Further to the SENS announcement of 13 September 2013, Group results for the year ended 30 June
2013 reflect earnings per share of 17.0 cents and headline earnings per share of 16.2 cents, compared to
a loss per share of 49.6 cents and a headline loss per share of 1.0 cent for the comparative period to 30
June 2012. The increase is mainly due to the elimination of losses previously suffered in the scaffolding
division.
Net interest charges incurred in the current year decreased to R1.1 million as compared to R3.2 million
in the comparative period.
PERSONNEL OUTSOURCING
The Personnel Outsourcing division achieved an operating profit for the year of R33.6 million,
representing an increase of 27.3% on those achieved for the year ended 30 June 2012. The spectrum of
local clients have been broadened, contracts for international personnel placements in Mozambique
have been renewed and further international placements are being actively pursued.
SAFETY SURVEILLANCE
The establishment of the Safety Surveillance division’s in-house training facility and resulting increase in
revenue did not realise in the second half of the year as expected, but accreditation should be finalised
early in 2014. Revenue decreased from R12.2 million to R11.3 million, resulting in a lower operating
profit of R2.9 million (2012 – R4.3 million) for the year. The decrease is mainly due to 1 division of a
certain client not renewing its contract with the company. Management has identified growth
opportunities and is optimistic about future prospects.
RELATED PARTY TRANSACTIONS
During the previous period the Group borrowed various amounts to assist with working capital
requirements from one of its non-executive directors on a short term basis (one month loans) at a rate
of R 50 000 per month per R 1 million borrowed. The loan and interest thereon was repaid in July 2012
as reported in the interim results for the six months ended 31 December 2012. Interest on the loan
amounted to R175 000 and is included in net interest charges for the year.
FUTURE PROSPECTS
The acquisition referred to above will result in a more substantial business, which is expected to
facilitate the accelerated growth of the combined Group. Synergies which are expected to be captured
include cross-selling of services to the larger client base, the leveraging of expertise across the combined
Group as well as capitalising on potential cost synergies. The Personnel Outsourcing division will take
advantage of the expanded client base and the resulting organic growth opportunities.
The Safety Surveillance division expects their in-house training centre to be accredited within the next
six months which should result in an increase in revenue. Current sale volumes are expected to continue
and margins are expected to remain stable.
The group is focused on securing new contract business in all divisions.
CAPITAL COMMITMENTS AND CONTINGENCIES
The group had no significant outstanding capital commitments or contingencies as at 30 June 2013.
MATERIAL MANAGEMENT JUDGEMENTS
A trade receivable amounting to R6.5 million receivable from a certain debtor has been offset against an
equal amount due to a creditor regarding the same transaction. The management team of M&S believes
that they have the legal right to offset and net settle the amounts. The creditor is currently disputing this
right, but management has sought legal opinion which opinion concurs with that of management.
DIVIDEND DECLARATION (Number 1)
Notice is hereby given that the board has declared a maiden cash dividend of 4.24 cents per ordinary
share for the year ended 30 June 2013. Shareholders are advised that the last day to trade “cum
dividend” will be Friday, 25 October 2013. The shares will trade “ex dividend” from the commencement
of business on Monday, 28 October 2013. The record date will be Friday, 1 November 2013 and the
payment date will be Monday, 4 November 2013. Share certificates may not be dematerialised or
rematerialised during the period Monday, 28 October 2013 to Friday, 1 November 2013, both days
inclusive.
The dividend has been declared from income reserves and will be subject to dividends tax that was
introduced with effect from 1 April 2012 at a rate of 15%. The gross amount per share subject to the
withholding of dividends tax is 4.24 cents per ordinary share. A net dividend of 3.604 cents per share will
apply to shareholders liable to pay dividends tax and 4.24 cents per share to shareholders that are
exempt therefrom. The issued share capital at 17 September 2013 is 151 181 818 ordinary shares and
the company’s income tax reference number is 9159/246/16/5.
In terms of the dividends tax legislation, the dividends tax due will be withheld and paid over to the
South African Revenue Services [“SARS”] by a nominee company, stockbroker or Central Security
Depository Participant [“CSDP”] [collectively “Regulated Intermediary”] on behalf of the shareholders.
However, all shareholders should declare their status to their Regulated Intermediary, as they may
qualify for a reduced dividends tax rate or they may even be exempt from dividends tax.
RESPONSIBILITY STATEMENT
The directors take full responsibility for the preparation of the reviewed condensed consolidated results
for the year ended 30 June 2013 and that the financial information has been correctly extracted from
the underlying annual financial statements.
REVIEW REPORT
The condensed consolidated preliminary results for the year ended 30 June 2013 have been reviewed by
Grant Thornton (Jhb) Inc. The external auditors’ unqualified review opinion and the reviewed condensed
consolidated results for the year ended 30 June 2013 are available for inspection at the Company’s
registered office.
For and on behalf of the Board
BT Ngcuka (Chairman) FF Goosen (Chief Executive)
Date: 18 September 2013
Directors:
BT Ngcuka* (Chairman); FF Goosen (CEO); SL Grobler (Acting Financial Director); JJ Senekal*#; NN
Sonjani*#; PN de Waal* (* - non-executive) (# - independent)
Secretary and Registered Office:
MN Hattingh, 6 Topaz Street, Littleton Manor, Centurion 0157
Transfer Secretaries:
Link Market Services South Africa (Pty) Ltd, 11 Diagonal Street, Johannesburg 2000 (PO Box 4844,
Johannesburg 2001)
Designated Advisor:
Sasfin Capital, a division of Sasfin Bank Ltd
Website:
www.msholdings.co.za
Date: 18/09/2013 05:11:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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