Wrap Text
Unaudited results for the six months ended 30 September 2014
PRIMESERV GROUP LIMITED
("Primeserv" or "the Group" or "the Company")
Incorporated in the Republic of South Africa
Registration number: 1997/013448/06
Share code: PMV - ISIN: ZAE000039277
UNAUDITED RESULTS
FOR THE SIX MONTHS ENDED
30 SEPTEMBER 2014
COMMENTARY
PROFILE
Primeserv Group Limited focuses on delivering human resources and industrial relations products,
services and solutions through its operating pillar, Primeserv HR Services. This incorporates
two main areas of specialisation: namely Human Capital Development and Human Capital Outsourcing.
OVERVIEW
Group revenue for the six months ended 30 September 2014 increased by 2% from
R321.5 million to R329.2 million. Total comprehensive income attributable to shareholders
of the Company increased from R3.7 million to R4.0 million for the review period. Earnings
per share and headline earnings per share increased by 10% from 3.90 cents per share to
4.29 cents per share.
Trade receivables have remained constant at R100.2 million (2013: R100.8 million) at the
end of the reporting period. The average days sales outstanding ("DSO") has improved from
52 days to 49 days for the period under review. Trade payables have decreased by R8.4 million
from R34.0 million to R25.6 million largely due to a change in the mix of business where
amounts previously held for the benefit of contractors are now increasingly required to be
paid across to the relevant bargaining councils, impacting not only the levels of accounts payable,
but also cash flow and borrowing costs. Cash flow from operations decreased by R1.4 million from
R5.2 million to R3.8 million, in line with the reduced gross profit. Cash invested in working
capital increased from an outflow of R4.9 million to R11.3 million, a combination of increased
trade debtors and decreased trade payables during the 6 months to 30 September 2014. A spike in
project-related business in the latter part of the interim reporting period led to operating
cash flows being distorted as the debtor receipts for these services were delayed until October.
Cash and cash equivalents recorded a net outflow of R7.1 million for the 6 months ended
September 2014. The net asset value per share increased to 87 cents per share at the end
of September 2014.
HUMAN CAPITAL OUTSOURCING
Revenue in the segment was marginally better, increasing by 1% from R306.0 million to
R308.0 million. The low level of revenue increase was primarily due to the expiry of certain
projects and contracts at the beginning of the financial year, with the commencement of new
national contracts starting in the second half of the financial year. This resulted in a revenue gap
which negatively impacted gross profit and earnings. Earnings during the reporting period were
further reduced by the planned costs of establishing an extended national infrastructure and
expanded operational capacity related to the award of new national tenders. The segment's
DSO has improved from 49 days at the end of September 2013 to 47 days at the end of the
current reporting period. The blue collar staffing business performed well, while the engineering
and heavy industrial staffing operations delivered stable results. The white collar professional
staffing unit delivered improved revenues in what remains a constrained operating environment.
Management will continue to focus on revenue growth, cost containment and cash generation.
HUMAN CAPITAL DEVELOPMENT
Revenue from the consulting, training and talent management operations increased by 37%
from R15.4 million to R21.1 million for the period under review. EBITDA improved by 15% from
R1.8 million to R2.1 million, while operating profit increased by 17% from R1.6 million to
R1.9 million for the six months ended 30 September 2014.
EVENTS AFTER THE REPORTING DATE
Management is not aware of any material events which have occurred subsequent to the end
of September 2014.
BASIS OF PREPARATION
The condensed consolidated interim financial statements are prepared in accordance with International
Financial Reporting Standard, (IAS) 34 Interim Financial Reporting, the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued
by Financial Reporting Standards Council and the requirements of the Companies Act of South
Africa and the JSE Listings Requirements. The accounting policies applied in the preparation of
these interim financial statements are in terms of International Financial Reporting Standards and
are consistent with those applied in the previous annual financial statements with no effect from any
new accounting standards. The results were prepared by the Group Financial Director, Mr R Sack CA(SA).
The results have not been reviewed or audited by the Group's external auditors.
DIVIDEND
No interim dividend is proposed for the period under review. The Group will consider the
resumption of dividend payments at the close of its next reporting period.
BOARD
Professor Saul Klein, who has served on the Board since the listing of the Company has decided
not to offer himself for re-election due to his international commitments. The Board wishes to
thank Saul for his many years of highly appreciated and exemplary service to the Group and
wishes him well in his future endeavours.
As part of the Group's ongoing transformation process, further changes to the composition of the
Board are planned and announcements will follow in due course.
OUTLOOK
The expansion of the Group's national footprint should facilitate growth at existing and new
clients. The Group is actively exploring acquisitive opportunities aimed at leveraging the scalability
inherent in its operations.
On behalf of the Board
JM Judin M Abel R Sack
Independent Non-executive Chairman Chief Executive Officer Financial Director
25 November 2014
Illovo
www.primeserv.co.za - e-mail: productivity@primeserv.co.za
Directors: JM Judin# (Chairman), M Abel (Chief Executive Officer), LM Maisela*,
DL Rose#, R Sack (Financial Director), DC Seaton, CS Shiceka#
#Independent Non-executive * Non-executive
Company secretary: ER Goodman Secretarial Services CC (represented by E Goodman)
Registered address: 25 Rudd Road, Illovo, Sandton, 2196
(PO Box 3008, Saxonwold, 2132)
Transfer secretaries: Computershare Investor Services (Pty) Ltd, 70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Auditors: Baker Tilly SVG, Third Floor, 3 Melrose Boulevard, Melrose Arch, 2076
(PO Box 355, Melrose Arch, 2076)
Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd, The Woodlands, 20 Woodlands Drive, Woodmead, 2196
(Private Bag X6, Gallo Manor, 2052)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014
6 months 6 months 12 months
Unaudited Unaudited Audited
30 Sep 30 Sep 31 Mar
2014 2013 2014
R'000 R'000 R'000
Revenue 329 160 321 465 638 791
Cost of sales (281 249) (270 095) (540 670)
Gross profit 47 911 51 370 98 121
EBITDA 6 527 9 663 14 454
Depreciation and amortisation (1 319) (1 202) (1 863)
Operating profit 5 208 8 461 12 591
Interest received 171 725 983
Interest paid (2 881) (3 204) (5 766)
Profit before taxation 2 498 5 982 7 808
Taxation 317 (77) (1 366)
Total comprehensive income 2 815 5 905 6 442
Loss from discontinued operation (net of tax)(note 1) – (2 002) (2 002)
Total comprehensive income 2 815 3 903 4 440
Total comprehensive income attributable to:
Ordinary shareholders of the Company 4 016 3 655 6 096
Non-controlling shareholders interest (1 201) 248 (1 656)
Total comprehensive income 2 815 3 903 4 440
Reconciliation of headline earnings
Net profit attributable to shareholders 4 016 3 655 6 096
Headline earnings 4 016 3 655 6 096
– Continuing operations 4 016 5 657 8 098
– Discontinued operations – (2 002) (2 002)
Weighted average number of shares ('000) 93 682 93 682 93 682
Diluted weighted average number of shares ('000) 93 682 93 682 93 682
Earnings per share and diluted earnings per share (cents) 4.29 3.90 6.51
– Continuing operations (cents) 4.29 6.04 8.65
– Discontinued operations (cents) – (2.14) (2.14)
Headline earnings and diluted headline earnings per share (cents) 4.29 3.90 6.51
– Continuing operations (cents) 4.29 6.04 8.65
– Discontinued operations (cents) – (2.14) (2.14)
Note 1: Discontinued operations
2014 2014
1 month 1 month
R'000 R'000
Revenue 1 460 1 460
Cost of sales (158) (158)
Gross profit 1 302 1 302
Operating loss (2 002) (2 002)
Interest paid – –
Impairment of assets – –
Loss before taxation (2 002) (2 002)
Taxation – –
Loss for the year (2 002) (2 002)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2014
Unaudited Unaudited Audited
30 Sep 30 Sep 31 Mar
2014 2013 2014
R'000 R'000 R'000
ASSETS
Non-current assets 48 908 44 140 50 567
Equipment and vehicles 3 814 4 027 3 930
Investment property 7 645 7 645 7 645
Goodwill 18 170 18 170 18 170
Intangible assets 1 751 2 350 2 269
Long-term receivables 5 940 1 050 6 860
Deferred tax asset 11 588 10 898 11 693
Current assets 108 768 112 976 102 595
Inventories 222 1 193 200
Trade receivables 100 151 100 813 94 555
Other receivables 7 207 5 785 6 748
Cash and cash equivalents 1 188 5 185 1 092
Total assets 157 676 157 116 153 162
EQUITY AND LIABILITIES
Equity 73 557 70 166 70 742
Capital and reserves 81 325 74 908 77 309
Non-controlling interest (7 768) (4 742) (6 567)
Current liabilities 84 119 86 950 82 420
Trade and other payables 25 571 33 962 30 545
Financial liabilities – 4 830 –
Taxation payable 2 317 1 170 2 803
Bank borrowings 56 231 46 988 49 072
Total equity and liabilities 157 676 157 116 153 162
Number of shares in issue at end of the period
(net of treasury and share trust shares) ('000) 93 682 93 682 93 682
Net asset value per share (cents) 87 80 83
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014
6 months 6 months 12 months
Unaudited Unaudited Audited
30 Sep 30 Sep 31 Mar
2014 2013 2014
R'000 R'000 R'000
Profit before taxation 2 498 3 980 7 808
Loss before tax from discontinued operations – – (2 002)
Adjusted for non-cash items
– continuing and discontinued operations 1 319 1 202 1 863
Operating cash flows before working capital changes 3 817 5 182 7 669
Net working capital changes (11 290) (4 944) (5 460)
Taxation paid (63) (10) (461)
Cash flows from operating activities (7 536) 228 1 748
Cash flows from investing activities 473 921 (1 946)
Cash flows from financing activities – (201) (5 031)
Net decrease in cash and cash equivalents (7 063) 948 (5 229)
Cash and cash equivalents at beginning of period (47 980) (42 751) (42 751)
Cash and cash equivalents at end of period (55 043) (41 803) (47 980)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014
6 months 6 months 12 months
Unaudited Unaudited Audited
30 Sep 30 Sep 31 Mar
2014 2013 2014
R'000 R'000 R'000
Balance at beginning of the period 70 742 66 263 66 263
Attributable earnings 4 016 3 655 6 096
Disposal of interest to minority – – 39
Non-controlling shareholders interest (1 201) 248 (1 656)
Balance at end of period 73 557 70 166 70 742
SEGMENTAL ANALYSIS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014
6 months 6 months 12 months
Unaudited Unaudited Audited
30 Sep 30 Sep 31 Mar
2014 2013 2014
R'000 R'000 R'000
Revenue from external customers
(continuing and discontinued operations)
Human Capital Outsourcing 308 022 306 032 605 932
Human Capital Development 21 138 16 893 34 319
- Continuing operations 21 138 15 433 32 859
- Discontinued operations – 1 460 1 460
Total 329 160 322 925 640 251
Revenue – inter-segment
Human Capital Outsourcing – – –
Human Capital Development 196 242 493
Total 196 242 493
Business segment operating profit results
(continuing and discontinued operations)
Human Capital Outsourcing 10 505 13 794 25 347
Human Capital Development 1 869 (411) (1 428)
– Continuing operations 1 869 1 591 574
– Discontinued operations – (2 002) (2 002)
Central Services (7 166) (6 924) (13 330)
Operating profit 5 208 6 459 10 589
Interest received 171 725 983
Interest paid (2 881) (3 204) (5 766)
Profit before taxation 2 498 3 980 5 806
– Continuing operations 2 498 5 982 7 808
– Discontinued operations – (2 002) (2 002)
Business segment EBITDA
(continuing and discontinued operations)
Human Capital Outsourcing 11 456 14 663 27 056
Human Capital Development 2 106 (176) (865)
– Continuing operations 2 106 1 826 1 137
– Discontinued operations – (2 002) (2 002)
Central Services (7 035) (6 826) (13 739)
Total 6 527 7 661 12 452
Business segment total assets
Human Capital Outsourcing 124 023 123 234 116 789
Human Capital Development 26 902 25 997 26 617
Central Services 6 751 7 885 9 756
Total 157 676 157 116 153 162
www.primeserv.co.za
Date: 25/11/2014 04:26:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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