Wrap Text
Financial Results - Interims
CSG HOLDINGS LIMITED
(Formerly M&S Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2006/011359/06)
JSE code: CSG ISIN: ZAE000184438
("CSG" or "the Company" or "the Group")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
6 months ended 31 December Year ended
2013 2012 28 February
Re-presented 2013
Unaudited Unaudited Audited
R'000 R'000 R'000
Revenue 424 528 336 268 737 919
Cost of sales (358 273) (282 850) (617 037)
Gross profit 66 255 53 418 120 883
Net operating expenses (26 244) (26 344) (67 238)
Operating profit 40 011 27 074 53 645
(Loss)/profit on sale of property, plant and equipment (136) 355 425
Interest received 85 37 558
Income from equity accounted investments - - 92
Interest paid (1 436) (739) (2 428)
Profit before taxation 38 524 26 727 52 292
Taxation (11 201) (7 615) (14 102)
Profit for the year 27 323 19 112 38 190
Other comprehensive income - - -
Total comprehensive income 27 323 19 112 38 190
Total comprehensive income attributable to:
Owners of the parent 15 854 11 935 25 328
Non-controlling interest 11 470 7 178 12 862
27 323 19 112 38 190
Weighted average shares in issue ('000) 200 605 183 015 183 015
Headline earnings reconciliation
Attributable earnings 15 854 11 935 25 328
Profit/(loss) on sale of property, plant and equipment (after taxation) 83 (54) (104)
Headline earnings 15 937 11 881 25 224
Basic and diluted earnings per share (cents)
Basic and diluted earnings per share 7.90 6.52 13.84
Headline earnings per share 7.94 6.49 13.78
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
31 December 28 February
2013 2012 2013
Re-presented
Unaudited Unaudited Audited
R'000 R'000 R'000
ASSETS
Non-current assets 133 237 46 849 39 189
Property, plant and equipment 22 070 15 928 14 487
Intangible assets 98 073 21 466 21 466
Investment in and loans to joint ventures 13 095 9 454 1 681
Other financial assets - - 1 556
Current assets 246 678 126 968 136 412
Inventories 6 005 4 647 4 397
Current income tax receivable - - 26
Trade and other receivables 233 855 122 321 113 248
Bank and call deposits 6 818 - 18 741
TOTAL ASSETS 379 915 173 817 175 601
EQUITY AND LIABILITIES
Capital and reserves 246 548 80 385 85 113
Non-current liabilities 6 368 5 127 4 741
Interest bearing liabilities 5 885 4 548 4 258
Deferred taxation 483 579 483
Current liabilities 126 999 88 305 85 747
Current portion of interest bearing liabilities 4 386 3 962 3 743
Other financial liabilities 13 845 10 362 14 891
Bank overdrafts and invoice discounting - 2 942 -
Trade and other payables 101 488 61 618 63 711
Taxation payable 7 280 9 421 3 402
TOTAL EQUITY AND LIABILITIES 379 915 173 817 175 601
Shares in issue ('000) 387 954 183 015 183 015
Net asset value per share (cents) 63.6 43.9 46.5
Net tangible asset value per share (cents) 38.3 32.2 34.8
CONDENSED GROUP STATEMENT OF CASH FLOWS
6 months ended 31 December Year ended
2013 2012 28 February
Re-presented 2013
Unaudited Unaudited Audited
R'000 R'000 R'000
Cash flow from operations (6 723) 6 143 20 138
Cash generated by operations 8 568 12 920 35 233
Interest received 85 37 558
Interest paid (1 436) (739) (2 428)
Taxation paid (13 939) (6 075) (13 225)
Cash flow from investing activities (5 358) (3 337) (1 216)
Cash flow from business combination (1 922) - -
Net investment in property, plant and equipment (3 436) (3 337) (1 216)
Cash flow from financing activities (10 925) (16 112) (12 467)
Dividends paid (10 700) (1 314) (1 332)
Movement in loans payable (225) (14 798) (11 135)
(Decrease)/increase in cash resources (23 006) (13 306) 6 455
Cash resources at beginning of period 29 824 10 364 12 286
Cash resources at end of period 6 818 (2 942) 18 741
Cash resources 6 818 (2 942) 18 741
Bank and call deposits 6 818 - 18 741
Bank overdraft and invoice discounting - (2 942) -
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Total
attributable to Non-
equity holders controlling
of the parent interest Total equity
R'000 R'000 R'000
Equity at 1 July 2012 46 814 15 773 62 587
Total comprehensive income for the period 11 935 7 178 19 112
Dividend paid (1 314) (1 314)
Equity at 31 December 2012 (Unaudited) 58 749 21 636 80 385
Total comprehensive income for the period 724 4 004 4 728
Equity at 28 February 2013 (Audited) 59 473 25 640 85 113
Total comprehensive income for the period 11 523 4 298 15 821
Dividend paid (1 362) (1 362)
Equity at 1 July 2013 70 996 28 576 99 572
Total comprehensive income for the period 15 854 11 470 27 323
Dividend paid (10 700) (10 700)
Shares purchased from non-controlling shareholders 21 805 (21 805) -
Shares issued as part of business combination 130 353 130 353
Equity at 31 December 2013 (Unaudited) 228 308 18 240 246 548
SEGMENT REPORTING
6 months ended 31 December Year ended
2013 2012 28 February
Re-presented 2013
Unaudited Unaudited Audited
R'000 R'000 R'000
Revenue
Workforce management 205 836 197 057 459 620
Total revenue 206 138 197 057 459 620
Internal (302) - -
Facility management 173 631 102 481 204 632
Mining, plant & construction support 45 060 36 731 73 668
Total Group 424 528 336 268 737 919
Operating profit 40 011 27 074 53 645
Workforce management 10 022 14 092 30 398
Facility management 24 176 8 739 13 017
Mining, plant & construction support 5 881 4 244 10 261
Head office (67) - (31)
Net interest paid (1 351) (702) (1 870)
Workforce management (575) (334) (1 050)
Facility management (648) (183) (416)
Mining, plant & construction support (128) (185) (404)
Profit before taxation 38 524 26 727 52 292
Workforce management 9 446 13 758 29 400
Facility management 23 511 8 911 13 046
Mining, plant & construction support 5 633 4 059 9 857
Head office (67) - (11)
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED
31 DECEMBER 2013
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
INTRODUCTION
The merger of BDM Holdings (Pty) Ltd ("BDM") and M&S Holdings Ltd ("M&S") and the effective
reverse listing of BDM via the acquisition by M&S of the entire issued share capital of BDM through
the issue of ordinary M&S shares ("consideration shares") to the shareholders of BDM was
concluded on 27 November 2013.
In terms of IFRS 3 Business Combinations, the transaction constitutes a reverse acquisition as the
shareholders of BDM became the majority shareholders of M&S. Accordingly M&S is deemed to be
acquired by BDM, even though M&S is the legal acquirer and remains the listed entity.
These results represent the continuation of the BDM group as the accounting acquirer and therefore
the condensed consolidated statement of comprehensive income and cash flow statement for the six
months ended 31 December 2013 represent five months of BDM trading (July 2013 to November
2013) and one month of the combined group trading (December 2013). The comparative
information for the prior period represents the unaudited consolidated results of BDM for the six
months ended 31 December 2012 as well as the audited consolidated results of BDM for the year
ended 28 February 2013.
Management chose to present the audited BDM results for the year ended 28 February 2013, which
were included in the circular to shareholders in October 2013, as comparatives (instead of unaudited
BDM figures for the year ended 30 June 2013 to correspond with M&S' year-end), because we are of
the opinion that previously published, audited results would provide the most relevant and reliable
information to the shareholders of CSG.
Due to the reverse acquisition accounting as detailed above, the comparative information for the
prior period in these results differs from the interim results for the six months ended 31 December
2012 as published on 14 February 2013.
For ease of reference, the following information is provided:
- earnings and headline earnings per share for the prior comparative period (as published
on 14 February 2013), amounted to 7.7 cents per share;
- compared to the above, earnings per share has increased by 2.6% from 7.7 cents to 7.9
cents per share for the current period; and
- headline earnings per share has increased by 3.1% from 7.7 cents to 7.94 cents per share
for the current period.
BASIS OF PREPARATION
These results have been prepared in terms of International Financial Reporting Standards ("IFRS")
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 2013 and are in terms of IFRS.
The condensed financial statements have been prepared under the supervision of Ms. SL Grobler CA
(SA), Acting Financial Director.
BUSINESS COMBINATIONS
As detailed in the SENS announcement dated 2 October 2013, the group planned to acquire an
effective 100% control over BDM Holdings (Pty) Ltd via a reverse acquisition, which acquisition was
effective on 27 November 2013. The transaction has been accounted for in terms of IFRS 3 Business
Combinations. According to the agreements, 232 772 727 ordinary M&S shares were issued to the
BDM shareholders at 84 cents per share, which comprised the total purchase consideration.
The acquired business, being M&S, contributed incremental revenues of R24.6 million and earnings
of R1.4 million to the group from the period from date of control to 31 December 2013. If the
acquisition had occurred on 1 July 2013, group income would have increased by R201.4 million and
earnings by R10.5 million, excluding earnings already accounted for. These amounts have been
calculated using the group's accounting policies.
RECOGNISED AMOUNTS OF IDENTIFIABLE NET ASSETS AT 27 NOVEMBER 2013
R'000
Non-current assets 15 358
Property, plant and equipment 4 696
Investments 8 869
Deferred tax asset 1 793
Current assets 68 053
Inventories 208
Trade and other receivables 67 845
Non-current liabilities (1 558)
Interest bearing liabilities (1 558)
Current liabilities (28 107)
Taxation payable (4 189)
Trade and other payables (21 996)
Bank overdraft and invoice discounting (1 922)
IDENTIFIABLE NET ASSETS 53 746
GOODWILL ON ACQUISITION 76 607
CASH FLOW INFORMATION
Bank overdraft and invoice discounting acquired (1 922)
The goodwill that arose on the combination can be attributed to the synergies expected to be
derived from the combination. The fair values above have been provisionally determined, because
the acquisition was completed late in the period. The group is currently obtaining the information
necessary to finalise its valuation within 12 months of the acquisition date.
CHANGE OF NAME
The name of the company was changed to CSG Holdings Ltd (Contract Services Group) on
27 November 2013. The change of name was registered at the CIPC on 20 January 2014.
FINANCIAL PERFORMANCE
Notwithstanding continued uncertainties surrounding the temporary labour industry, the group saw
steady growth in revenues and earnings during the six months under review.
Revenue increased by 26.3% from R336.3 million to R424.5 million in the current period, with a slight
decrease in gross profit percentage from 15.9% to 15.6%. Current headline earnings per share of
7.94 cents reflect a 22.4% increase from the 6.49 cents for the previous period.
Operating profit of R40 million was 47.8% above the prior period, assisted by the inclusion of
R1.4 million M&S group earnings.
Net interest charges incurred in the current period increased to R1.4 million as compared to
R702 000 in the comparative period.
WORKFORCE MANAGEMENT
The Workforce Management division achieved an operating profit for the period of R10 million,
representing a decrease of 28.9% on that achieved for the period ended 31 December 2012. The
decrease is mainly due to ongoing strikes, especially in the mining industry, uncertainties as to the
potential effect of the proposed changes to labour legislation on temporary employment and the
general trend to outsource certain functions previously performed by temporary employees to a
managed outsourced service provider.
FACILITY MANAGEMENT
Facility Management revenue increased substantially from R102.5 million to R173.6 million, resulting
in a higher operating profit of R24.2 million (2012 – R8.7 million) for the six months. The division's
contribution to group operating profit increased from 32.3% in 2012 to 60.4% in the six months
ended 31 December 2013, mainly because of the growing demand for facility management services
in various African countries.
MINING, PLANT AND CONSTRUCTION SUPPORT SERVICES
This division remains small in comparison to other divisions but saw a 38.6% growth in operating
profit from R4.2 million to R5.9 million in the current period. Management is actively looking to
further expand services within this division.
FUTURE PROSPECTS
The merger has resulted in a more substantial business and increased capital raising facilities, which
are expected to facilitate the accelerated growth of the combined group through active perusal of
acquisition opportunities of opposition companies as well as other facility management companies.
Other 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.
CHANGES TO THE BOARD
The following changes to the board took place on 27 November 2013:
- Mr FF Goosen resigned and his position of Group Chief Executive has been assumed by CEO
of BDM, Mr PJJ Dry;
- Mr JG Nieuwoudt was appointed as Chief Operating Officer;
- Mr NG Thiart was appointed as Executive Director;
- Mr JJ Senekal resigned as Lead Independent Director and Ms J Malan has been appointed
as an Independent Non-executive Director. Ms Malan was appointed as Lead Independent
Director on 26 February 2014.
DIVIDEND DECLARATION
No dividend has been declared for the period under review.
CAPITAL COMMITMENTS AND CONTINGENCIES
The group had no significant outstanding capital commitments or contingencies as at 31 December
2013.
For and on behalf of the Board
BT Ngcuka (Chairman) PJJ Dry (Chief Executive)
Date: 24 March 2014
Directors:
BT Ngcuka* (Chairman)
PJJ Dry (CEO); JG Nieuwoudt (COO); SL Grobler (CFO); NG Thiart
J Malan*#; 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.csgholdings.co.za
Date: 24/03/2014 02:29:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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