Wrap Text
Unaudited results for the six months ended 30 September 2017
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 2017
Condensed consolidated statement of comprehensive income
For the six months ended 30 September 2017
Unaudited Unaudited Audited
Sep-17 Sep-16 Mar-17
R'000 R'000 R'000
Revenue 347 906 297 263 642 122
Cost of sales (293 229) (249 801) (540 905)
Gross profit 54 677 47 462 101 217
Other income 86 109 1 139
Operating expenses (44 669) (37 786) (80 749)
Operating profit 10 094 9 785 21 607
Interest received 135 97 291
Interest paid (1 195) (972) (2 385)
Profit before taxation 9 034 8 910 19 513
Taxation (1 101) (1 459) (2 770)
Profit and total comprehensive income 7 933 7 451 16 743
Profit and total comprehensive income attributable to:
Ordinary shareholders of the Company 7 791 7 005 16 008
Non-controlling shareholders' interest 142 446 735
Profit and total comprehensive income 7 933 7 451 16 743
Earnings per share and diluted earnings per share (cents) 8.65 7.78 17.77
Condensed consolidated statement of financial position
As at 30 September 2017
Unaudited Unaudited Audited
Sep-17 Sep-16 Mar-17
R'000 R'000 R'000
ASSETS
Non-current assets 44 213 42 465 43 292
Equipment and vehicles 5 535 3 644 3 513
Investment property 7 045 7 645 7 045
Goodwill 21 178 18 170 21 178
Intangible assets - 693 -
Deferred tax asset 10 455 12 313 11 556
Current assets 114 618 96 314 132 781
Inventories 159 93 177
Trade and other receivables 111 371 94 513 129 907
Taxation receivable 216 634 634
Cash and cash equivalents 2 872 1 074 2 063
TOTAL ASSETS 158 831 138 779 176 073
EQUITY AND LIABILITIES
Equity 112 291 96 878 106 170
Capital and reserves 120 405 105 423 114 426
Non-controlling interests (8 114) (8 545) (8 256)
Current liabilities 46 540 41 901 69 903
Trade and other payables 32 810 25 473 31 810
Bank borrowings 13 730 16 428 38 093
TOTAL EQUITY AND LIABILITIES 158 831 138 779 176 073
Condensed consolidated statement of changes in equity
For the six months ended 30 September 2017
Unaudited Unaudited Audited
Sep-17 Sep-16 Mar-17
R'000 R'000 R'000
Balance at beginning of period 106 170 90 643 90 643
Total comprehensive income - profit 7 791 7 005 16 008
Dividends paid (1 812) (1 216) (1 216)
Non-controlling shareholders' interest in total comprehensive income 142 446 735
Balance at end of period 112 291 96 878 106 170
Condensed consolidated statement of cash flows
For the six months ended 30 September 2017
Unaudited Unaudited Audited
Sep-17 Sep-16 Mar-17
R'000 R'000 R'000
Profit before taxation 9 034 8 910 19 513
Adjustment for non-cash items 790 1 610 3 017
Operating cash flows before working capital changes 9 824 10 520 22 530
Net working capital changes 19 554 (148) (28 989)
Taxation received 418 4 -
Cash flows generated from / (utilised in) operating activities 29 796 10 376 (6 459)
Cash flows utilised in investing activities (2 812) (616) (4 457)
Cash flows utilised in financing activities (1 812) (1 216) (1 216)
Net increase / (decrease) in cash and cash equivalents 25 172 8 544 (12 132)
Cash and cash equivalents at beginning of period (36 030) (23 898) (23 898)
Cash and cash equivalents at end of period (10 858) (15 354) (36 030)
Segmental analysis
For the six months ended 30 September 2017
Unaudited Unaudited Audited
Sep-17 Sep-16 Mar-17
R'000 R'000 R'000
Revenue: sales to external customers
Staffing and Recruitment Services 332 740 280 451 609 891
Training and Consulting Services 15 166 16 812 32 231
Total 347 906 297 263 642 122
Revenue: inter-segment revenue
Staffing and Recruitment Services - - -
Training and Consulting Services - 6 153
Total - 6 153
Business segment operating profit results
Staffing and Recruitment Services 18 323 15 043 33 639
Training and Consulting Services (1 927) 1 487 (1 297)
Shared Services (6 302) (6 745) (10 735)
Operating profit 10 094 9 785 21 607
Interest received 135 97 291
Interest paid (1 195) (972) (2 385)
Profit before taxation 9 034 8 910 19 513
Business segment EBITDA
Staffing and Recruitment Services 19 879 15 522 35 195
Training and Consulting Services (1 580) 1 627 (950)
Shared Services (5 237) (5 916) (9 864)
Total 13 062 11 233 24 381
Business segment total assets
Staffing and Recruitment Services 109 654 104 979 126 143
Training and Consulting Services 20 349 18 736 21 173
Shared Services 28 828 15 064 28 757
Total 158 831 138 779 176 073
Business segment total liabilities
Staffing and Recruitment Services 23 462 35 302 46 944
Training and Consulting Services 5 791 2014 5 035
Shared Services 17 287 4 585 17 924
Total 46 540 41 901 69 903
Business segment net assets
Staffing and Recruitment Services 86 192 69 677 79 199
Training and Consulting Services 14 558 16 722 16 138
Shared Services 11 541 10 479 10 833
Total 112 291 96 878 106 170
NOTES
1. Basis of preparation
The condensed consolidated interim financial statements are prepared in accordance
with IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and the requirements of the Companies Act
of South Africa. 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.
The results were prepared by the Group Financial Director, Mr. R Sack CA(SA).
2. Headline earnings per share
Unaudited Unaudited Audited
30 September 30 September 31 March
2017 2016 2017
R'000 R'000 R'000
Attributable earnings 7 791 7 005 16 008
Headline earnings adjustments (net of tax effect)
- Loss on disposal of fixed assets 7 - 171
- Impairment of investment in property - - 466
- Impairment of intangible assets - - 234
Attributable headline earnings 7 798 7 005 16 879
Headline earnings and diluted headline earnings per
share (cents) 8.66 7.78 18.74
3. Fair value measurement
Unaudited Unaudited Audited
30 September 30 September 31 March
2017 2016 2017
Level R'000 R'000 R'000
Investment properties 3 7 045 7 645 7 045
The Directors assessed the value of the
properties at year end March 2017. There have
been no indicators of any changes in fair value
during the period under review.
4. Net asset value per share
Unaudited Unaudited Audited
30 September 30 September 31 March
2017 2016 2017
Number of shares in issue at end of period (net of
treasury shares) ('000) 90 064 90 064 90 064
Net asset value per share (cents) 134 117 127
5. Dividend
Notice is hereby given that a gross cash dividend of 1.50 cents per share for the interim
period was declared on Wednesday, 22 November 2017, payable to shareholders
recorded in the share register of the Company at the close of business on the record
date appearing below. The salient dates pertaining to the interim dividend are as
follows:
Last date to trade "cum" dividend Tuesday, 9 January 2018
Date trading commences "ex" dividend Wednesday, 10 January 2018
Record date Friday, 12 January 2018
Date of payment Monday, 15 January 2018
Ordinary share certificates may not be dematerialised or rematerialised between
Wednesday, 10 January 2018 and Friday, 12 January 2018, both days inclusive.
Shareholders who are not exempt from the Dividend Withholding Tax of 20% will
therefore receive a net dividend of 1.20 cents per share. The Company has 132 062 743
ordinary shares in issue and its income tax reference number is 9408/002/71/6. The
dividend is being paid out of income reserves.
All times provided in this announcement are South African local times.
Where applicable, dividends in respect of certificated shares will be transferred
electronically to shareholders' bank accounts on the payment date. In the absence of
specific mandates, dividend cheques will be posted to shareholders at their risk.
Ordinary shareholders who hold dematerialised shares will have their accounts
credited at their CSDP or broker on Monday, 15 January 2018.
6. Events after the reporting date
Management is not aware of any material events that occurred subsequent to the end
of the financial period under review.
7. Auditors' responsibility
The results have not been reviewed or audited by the Group's external auditors.
8. Forward-looking statements
Certain statements contained in the report are forward-looking statements which
Primeserv believes are reasonable and which consider information up to the date of
publication. These statements could differ materially due to various factors such as
changes in economic and market conditions or changes in the regulatory environment.
As a result these forward-looking statements are not guarantees of future
performance. Forward-looking statements have not been reviewed or
audited by the Group's auditors, Mazars.
Commentary
Primeserv is an investment holding company and a leading provider of integrated business
support services focused on providing client-centric human capital services, spanning staffing
and recruitment services, functional outsourcing services and training and consulting services.
We align our customised services to our clients' needs, optimising their required human
capital base to enhance the capabilities of their organisations. Our innovative solutions
deliver economically measurable value-added services that directly impact on productivity
and performance. This allows our clients to focus on their business objectives, so as to achieve
their strategic goals. Primeserv has a strong focus on workplace flexibility solutions and on
the development of labour force skills through its training and learnership programmes with
a particular emphasis on the advancement and employment of youth in South Africa.
Group revenue for the period increased by 17% from R297.3 million to R347.9 million
although the constrained trading conditions have continued to place margins
under pressure. EBITDA increased by 16% from R11.2 million to R13.1 million whilst operating
profit was marginally up by 3% from R9.8 million to R10.1 million. Operating expenses reflect
a period-on-period increase that is attributable to a substantial investment
made in new business development initiatives, increased marketing and product and services offerings
and associated costs in relation to the repositioning of the Group and the brand to meet changing
market conditions. Interest paid for the review period was higher than forecast due in the
main to a parastatal being slow in settling its obligations, which has largely been addressed
at the interim reporting date. This is evident in the significant improvement in both Days
Sales Outstanding ("DSO") and in the strong cash generation. The Group's DSO has improved from
63 days at the end of March 2017 to 49 days at the end of the review period. Cash flows from
operations was greatly improved to R29.8 million for the six months, compared with R10.4 million for
the comparable period. This has led to the Group's gearing improving from 31% at year end
to 9% at the end of September 2017. Total comprehensive income attributable to shareholders of
the Company increased by 11% from R7.0 million to R7.8 million for the review period.
Earnings per share increased by 11% from 7.78 cents per share to 8.65 cents per share while
headline earnings per share increased from 7.78 cents per share to 8.66 cents per share.
The net asset value reflects the continued improved position of the Group, having increased by
14% from 117 cents per share to 134 cents per share.
Revenue in the Staffing and Recruitment Services segment increased by 19% from R280.5 million
to R332.7 million. The segment's operating profit improved by 22% from R15.0 million to R18.3 million.
EBITDA was up by 28% from R15.5 million to R19.9 million. The segment's DSO improved from 61 days at
the end of March 2017 to 48 days at the end of the current reporting period.
The blue collar staffing unit, specializing in servicing the logistics, warehousing and
distribution market, as well as the wholesale and retail, manufacturing and engineering and
construction sectors, delivered another period of satisfactory results under difficult market
conditions. Headcount remained stable but man-hours worked were under pressure, particularly across
the units servicing the logistics and wholesale and retail sectors. The white collar professional
draughting and engineering staffing unit faced revenue pressure in some of its markets, whilst
continuing to deliver a stable performance.
The Training and Consulting Services segment offers both strategic and growth opportunities
to the Group. Ongoing investment was made in new training products and services so as to
remain relevant to the constantly changing skills gap in the South African economy. This
segment continues to work closely with the Group's staffing units, placing particular emphasis
on youth employee development and advancement allied to staff placement and procurement initiatives
directed at the local communities in which the Group's clients are located. This strategy is a key
component of the Group's sustainability plan that aligns its staffing and training offerings to the
national imperative of growing employment in South Africa.
The Training and Consulting Services segment experienced an unanticipated 10% decrease in revenue from
R16.8 million to R15.2 million with the business recording an unexpected operating loss of R1.9 million
for the period with operating margins having been severely affected during the review period due to
unbudgeted costs relating to the close out of historical projects. DSO remains high at 79 days albeit
better than the 89 days at year end March 2017. This remains a function of slow payment by various SETAs.
Substantial emphasis has been placed on developing a sustainable growth and profit generating strategy
for this segment's business operations.
Board and transformation
There were no changes to the Board during the period under review. The Board is actively
engaged in furthering its transformation by increasing its black female representation in line
with its stated B-BBEE transformation and gender diversity programme.
Outlook
The South African economy remains under pressure and growth prospects in many of the
sectors serviced by the Group continue to be weak. Nevertheless, Primeserv continues to seek
out both organic and acquisitive opportunities in line with its strategy of advancing its national
business support services capability, whilst also aiming to unlock the value inherent in the
Group.
On behalf of the Board
CS Ntshingila M Abel R Sack
Chairperson Chief Executive Officer Financial Director
Illovo
22 November 2017
Sponsor
Grindrod Bank Limited
Date: 22/11/2017 05:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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