Wrap Text
Reviewed condensed consolidated results for the 13 months ended 31 March 2014.
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")
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE 13 MONTHS ENDED 31 MARCH 2014
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Period ended Year ended
31 March 28 February
2014 2013
Reviewed Audited
R'000 R'000
Revenue 1 059 876 737 919
Cost of sales (853 163) (617 036)
Gross profit 206 713 120 883
Net operating expenses (119 324) (67 238)
Operating profit 87 389 53 645
(Loss)/profit on sale of property, plant and equipment (378) 425
Gain on bargain purchase 468 -
Fair value adjustment on contingent payment (3 360) -
Interest received 676 558
Income from equity accounted investments - 92
Interest paid (2 579) (2 428)
Profit before taxation 82 216 52 292
Taxation (24 291) (14 102)
Profit for the year 57 925 38 190
Other comprehensive income (681) -
Total comprehensive income 57 244 38 190
Total comprehensive income attributable to:
Profit for the year attributable to:
Owners of the parent 38 548 25 328
Non-controlling interest 19 377 12 862
57 925 38 190
Other comprehensive income attributable to:
Owners of the parent (281) -
Non-controlling interest (400) -
(681) -
Weighted average shares in issue ('000) 238 427 183 015
Diluted weighted average shares in issue ('000) 240 963 183 015
Earnings per share (cents)
Basic earnings per share 16.17 13.84
Diluted earnings per share 16.00 13.84
Headline earnings reconciliation
Attributable earnings 38 548 25 328
Loss/(profit) on sale of property, plant and equipment (after taxation) 127 (104)
Gain on bargain purchase (468) -
Headline earnings 38 207 25 224
Headline earnings per share (cents)
Basic headline earnings per share 16.02 13.78
Diluted headline earnings per share 15.86 13.78
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
31 March 28 February
2014 2013
Reviewed Audited
R'000 R'000
ASSETS
Non-current assets 129 365 39 189
Property, plant and equipment 22 516 14 487
Goodwill 93 597 21 466
Investment in and loans to joint ventures 9 644 1 681
Deferred taxation 3 608 -
Other financial assets - 1 555
Current assets 248 966 136 412
Inventories 6 709 4 397
Current income tax receivable 119 26
Trade and other receivables 206 890 113 248
Bank and call deposits 35 248 18 741
TOTAL ASSETS 378 331 175 601
EQUITY AND LIABILITIES
Capital and reserves 261 481 85 113
Non-current liabilities 8 860 4 741
Interest bearing liabilities 8 860 4 258
Deferred taxation - 483
Current liabilities 107 990 85 747
Current portion of interest bearing liabilities 5 011 3 743
Other financial liabilities - 14 891
Bank overdrafts and invoice discounting 8 221 -
Trade and other payables 84 160 63 711
Current income tax payable 10 598 3 402
TOTAL EQUITY AND LIABILITIES 378 331 175 601
Shares in issue ('000) 387 954 183 015
Net asset value per share (cents) 67.4 46.5
Net tangible asset value per share (cents) 43.3 34.8
CONDENSED GROUP STATEMENT OF CASH FLOWS
Period ended Year ended
31 March 28 February
2014 2013
Reviewed Audited
R'000 R'000
Cash flow from operations 41 768 20 138
Cash generated by operations 67 251 35 233
Interest received 676 558
Interest paid (2 579) (2 428)
Taxation paid (23 580) (13 225)
Cash flow from investing activities (15 918) (1 216)
Cash flow from business combination (1 113) -
Business combination transaction costs (2 353) -
Contingent consideration paid (3 360) -
Net investment in property, plant and equipment (9 092) (1 216)
Cash flow from financing activities (17 564) (12 467)
Dividends paid (11 390) (1 332)
Movement in loans (6 174) (11 135)
Increase in cash resources 8 286 6 455
Cash resources at beginning of period 18 741 12 286
Cash resources at end of period 27 027 18 741
Cash resources 27 027 18 741
Bank and call deposits 35 248 18 741
Bank overdraft and invoice discounting (8 221) -
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 March 2012 34 146 14 110 48 256
Total comprehensive income for the year 25 327 12 862 38 189
Dividend paid - (1 332) (1 332)
Equity at 28 February 2013 (Audited) 59 473 25 640 85 113
Total comprehensive income for the period 38 267 18 977 57 244
Dividend paid (9 325) (2 065) (11 390)
Shares purchased from non-controlling interest 19 444 (19 283) 161
Shares issued as part of business combination 130 353 - 130 353
Equity at 31 March 2014 (Reviewed) 238 212 23 269 261 481
SEGMENT REPORTING
Period ended Year ended
31 March 28 February
2014 2013
Reviewed Audited
R'000 R'000
Revenue
Workforce management 589 508 459 620
Total revenue 593 465 459 620
Internal (3 957) -
Facility management 372 043 204 632
Mining, plant & construction support 98 325 73 667
Total Group 1 059 876 737 919
Operating profit 87 389 53 645
Workforce management 23 944 30 398
Facility management 48 111 13 017
Mining, plant & construction support 16 343 10 261
Head office (1 009) (31)
Net interest paid (1 903) (1 870)
Workforce management (901) (1 050)
Facility management (826) (416)
Mining, plant & construction support (179) (404)
Head office 3 -
Profit before taxation 82 216 52 292
Workforce management 21 404 29 400
Facility management 45 229 13 046
Mining, plant & construction support 16 121 9 857
Head office (538) (11)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
INTRODUCTION
The merger of BDM Holdings (Pty) Ltd (“BDM”) and CSG Holdings Ltd (“CSG”) and the effective reverse
listing of BDM via the acquisition by CSG of the entire issued share capital of BDM through the issue
of ordinary CSG 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 CSG. Accordingly CSG is deemed
to be acquired by BDM, even though CSG 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 thirteen
months ended 31 March 2014 represent nine months of BDM trading (March 2013 to November 2013)
and four months of the combined Group trading (December 2013 to March 2014). The comparative
information for the prior period represents the audited consolidated results of BDM for the year ended
28 February 2013.
Due to the reverse acquisition accounting as detailed above, the comparative information in
these results differs from the preliminary results for the year ended 30 June 2013 as published
on 18 September 2013.
For ease of reference, the following information is provided:
- earnings per share for the prior comparative period (as published on 18 September 2013),
amounted to 17.0 cents per share;
- compared to the above, earnings per share has decreased by 4.88% from 17.0 cents
to 16.17 cents per share for the current period; and
- headline earnings per share for the prior comparative period (as published on 18 September
2013), amounted to 16.2 cents per share;
- headline earnings per share have decreased by 1.11% from 16.2 cents to 16.02 cents
per share for the current period;
- dividends per share for the prior comparative period (as published on 18 September 2013),
amounted to 4.24 cents per share;
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
28 February 2013 and are in terms of IFRS.
The condensed financial statements have been prepared under the supervision of Ms SL Grobler
CA(SA), Chief Financial Officer.
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 CSG shares and 5 250 000 share options were issued
to the BDM shareholders at 84 cents per share. The calculated cost of the business combination in terms
of the IFRS 3 reverse acquisition guidance was determined to be R130.4 million.
The acquired business, being CSG, contributed incremental revenues of R95.8 million and earnings
of R5.1 million to the group for the period from date of control to 31 March 2014. If the acquisition had
occurred on 1 March 2013, Group revenue would have increased by R317.8 million and earnings
by R20.8 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 17 633
Property, plant and equipment 4 771
Investments and loans 11 092
Deferred tax asset 1 770
Current assets 69 785
Inventories 208
Trade and other receivables 69 577
Non-current liabilities 1 779
Interest-bearing liabilities 1 779
Current liabilities 27 418
Taxation payable 3 818
Trade and other payables 21 769
Bank overdraft and invoice discounting 1 831
IDENTIFIABLE NET ASSETS 58 221
PURCHASE CONSIDERATION 130 353
GOODWILL ON ACQUISITION 72 132
CASH FLOW INFORMATION
Bank overdraft and invoice discounting acquired 1 831
The goodwill that arose on the combination can be attributed to the synergies expected to be derived
from the combination.
On 26 February 2014, the Group acquired 49% of the shares of Northern Jungle Projects (Pty) Ltd for a
total purchase consideration of R49 which was settled in cash. The directors are of the opinion that the
relevant activities of this entity are controlled by CSG and the results of this entity have
been consolidated into the group results from the acquisition date.
RECOGNISED AMOUNTS OF IDENTIFIABLE NET ASSETS AT 26 FEBRUARY 2014 R'000
Non-current assets 36
Property, plant and equipment 36
Current assets 14 668
Taxation receivable 7
Trade and other receivables 13 943
Bank accounts 718
Non-current liabilities 58
Interest-bearing liabilities 58
Current liabilities 13 690
Trade and other payables 13 690
IDENTIFIABLE NET ASSETS 956
NON-CONTROLLING INTEREST (488)
IDENTIFIABLE NET ASSETS ATTRIBUTABLE TO THE GROUP 468
GAIN ON BARGAIN PURCHASE (468)
CASH FLOW INFORMATION
Bank accounts acquired 718
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.
CHANGE OF YEAR-END
The Company has changed its financial year-end from 30 June to 31 March with effect from 31 March
2014. The reason for the change of the financial year-end is to align with the financial year-end of BDM
Holdings (Pty) Ltd.
FINANCIAL PERFORMANCE
The commentary below compares the current thirteen month period to the previous twelve month
period. Notwithstanding continued uncertainties surrounding the temporary labour industry, the
group saw steady growth in revenues and earnings during the thirteen months under review.
Revenue increased by 43.6% from R737.9 million to R1.06 billion in the current period, with an increase
in gross profit percentage from 16.4% to 19.5%. Current headline earnings per share of
16.02 cents reflect a 16.26% increase from the 13.78 cents for the previous period.
Operating profit of R87.4 million was 62.9% above the prior period, assisted by the inclusion of R5.1
million CSG group earnings.
Net interest charges incurred during the current period remained unchanged at R1.9 million.
WORKFORCE MANAGEMENT
The Workforce Management division achieved an operating profit for the period of R23.94 million,
representing a decrease of 21.23% on that achieved for the period ended 28 February 2013. 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 R204.63 million to R372.04 million, resulting
in a higher operating profit of R48.11 million (2013 – R13 million) for the thirteen months. The division’s
contribution to Group operating profit increased from 24.27% in 2013 to 55.05% in the thirteen months
ended 31 March 2014, 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 59.27% growth in operating profit
from R10.26 million to R16.34 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 with an increased ability to raise capital, which
are expected to facilitate the accelerated growth of the combined group through actively pursuing
acquisition opportunities. 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
the 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;
Mrs SL Grobler’s designation was changed from Acting Financial Director to Chief Financial Officer on
22 May 2014.
DIVIDEND DECLARATION
A dividend of R9.3 million was paid to the shareholders of the BDM group prior to the reverse
acquisition transaction.
CAPITAL COMMITMENTS AND CONTINGENCIES
The Group had no significant outstanding capital commitments or contingencies as at 31 March 2014.
EVENTS AFTER THE REPORTING PERIOD
Subsequent to the balance sheet date and as further detailed in the SENS announcement dated 23 June
2014, the Group has entered into a heads of agreement with the non-controlling shareholders of
Significant Site Services (Pty) Ltd and Significant Site Services Mozambique Limitada to purchase
a further 49% interest in the companies for an aggregate purchase consideration of R61.2 million.
The purchase consideration will be settled through a cash payment of R4 million with the remainder to be
settled by the issue of new CSG shares.
REVIEW REPORT
The condensed consolidated preliminary results for the thirteen months ended 31 March 2014 have
been reviewed by Grant Thornton (Jhb) Inc. and their unqualified review opinion is available for
inspection at the Company’s registered office.
For and on behalf of the Board
BT Ngcuka (Chairman) PJJ Dry (Chief Executive)
Date: 30 June 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: 30/06/2014 02:15:00 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.
Sharenet Sites 
