Wrap Text
Unaudited interim results for the six months ended 30 September 2018
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 interim financial results
For the six months ended 30 September 2018
Condensed consolidated statement of comprehensive income
For the six months ended 30 September 2018
Unaudited Unaudited Audited
September September March
2018 2017 2018
R'000 R'000 R'000
Revenue 386 982 347 906 725 289
Cost of sales (333 639) (293 229) (618 287)
Gross profit 53 343 54 677 107 002
Other income 6 86 1 069
Operating expenses (42 347) (44 669) (85 817)
Operating profit 11 002 10 094 22 254
Interest received 102 135 268
Interest paid (311) (1 195) (2 249)
Profit before taxation 10 793 9 034 20 273
Taxation (1 474) (1 101) (586)
Profit and total comprehensive income 9 319 7 933 19 687
Profit and total comprehensive income attributable to:
Ordinary shareholders of the Company 9 212 7 791 19 544
Non-controlling interest 107 142 143
Profit and total comprehensive income 9 319 7 933 19 687
Basic and diluted earnings per shares (cents) 10.23 8.65 21.70
Condensed consolidated statement of financial position
As at 30 September 2018
Unaudited Unaudited Audited
September September March
2018 2017 2018
R'000 R'000 R'000
ASSETS
Non-current assets 42 669 44 213 44 936
Equipment and vehicles 4 745 5 535 5 514
Investment property 6 445 7 045 6 445
Goodwill 21 178 21 178 21 178
Intangible assets 538 - 646
Deferred tax asset 9 763 10 455 11 153
Current assets 148 229 114 618 127 311
Inventories 113 159 162
Trade and other receivables 142 414 111 371 122 707
Taxation receivable - 216 -
Cash and cash equivalents 5 702 2 872 4 442
TOTAL ASSETS 190 898 158 831 172 247
EQUITY AND LIABILITIES
Capital and reserves 130 556 112 291 122 686
Ordinary share capital and share premium 2 672 2 672 2 672
Retained earnings 152 169 134 012 144 406
Treasury shares (16 279) (16 279) (16 279)
Equity attributable to equity holders of the Company 138 562 120 405 130 799
Non-controlling interests (8 006) (8 114) (8 113)
Current liabilities 60 342 46 540 49 561
Trade and other payables 49 577 32 810 36 498
Bank borrowings 10 765 13 730 13 063
TOTAL EQUITY AND LIABILITIES 190 898 158 831 172 247
Condensed consolidated statement of changes in equity
For the six months ended 30 September 2018
Unaudited Unaudited Audited
September September March
2018 2017 2018
R'000 R'000 R'000
Balance at beginning of period 122 686 106 170 106 170
Total comprehensive income - profit 9 212 7 791 19 544
Dividends paid (1 449) (1 812) (3 171)
Non-controlling interest 107 142 143
Balance at end of period 130 556 112 291 122 686
Condensed consolidated statement of cash flows
For the six months ended 30 September 2018
Unaudited Unaudited Audited
September September March
2018 2017 2018
R'000 R'000 R'000
Profit before taxation 10 793 9 034 20 273
Adjustment for non-cash items 891 790 1 927
Operating cash flows before working capital changes 11 684 9 824 22 200
Net working capital changes (6 579) 19 554 11 903
Taxation (paid) / refunded (84) 418 451
Cash flows generated from operating activities 5 021 29 796 34 554
Cash flows utilised in investing activities (13) (2 812) (3 974)
Cash flows utilised in financing activities (1 450) (1 812) (3 171)
Net increase in cash and cash and cash equivalents 3 558 25 172 27 409
Cash and cash equivalents at beginning of period (8 621) (36 030) (36 030)
Cash and cash equivalents at end of period (5 063) (10 858) (8 621)
Segmental analysis
For the six months ended 30 September 2018
Unaudited Unaudited Audited
September September March
2018 2017 2018
R'000 R'000 R'000
Revenue: sales to external customers
Staffing Services 376 587 332 740 700 243
Training and Consulting Services 10 395 15 166 25 046
Total 386 982 347 906 725 289
Revenue: inter-segment revenue
Staffing Services - - -
Training and Consulting Services 90 - 30
Total 90 - 30
Business segment operating profit results
Staffing Services 16 844 18 323 38 182
Training and Consulting Services (1 286) (1 927) (5 901)
Shared Services (4 556) (6 302) (10 027)
Operating profit 11 002 10 094 22 254
Interest received 102 135 268
Interest paid (311) (1 195) (2 249)
Profit before taxation 10 793 9 034 20 273
Business segment EBITDA
Staffing Services 17 131 19 879 39 295
Training and Consulting Services (1 008) (1 580) (5 362)
Shared Services (4 368) (5 237) (9 084)
Total 11 755 13 062 24 849
Notes
1. Basis of preparation
The condensed consolidated interim financial statements are prepared in accordance with
IAS 34 Interim Financial Reporting, the Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council 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 ("IFRS") and are
consistent with those applied in the previous annual financial statements. IFRS 9 and
IFRS 15 had no material effect on the Group's results. The results were prepared by the
Group Financial Director, Mr. R Sack CA (SA).
2. Headline earnings per share
Unaudited Unaudited Audited
September September March
2018 2017 2018
R'000 R'000 R'000
Attributable earnings 9 212 7 791 19 544
Headline earnings adjustments
- Loss on disposal of equipment and vehicles 4 10 67
- Impairment of investment in property - - 600
- Impairment of intangible assets 108 - -
Attributable headline earnings before tax impact 9 324 7 801 20 211
Tax impact of adjustments (30) (3) (273)
Attributable headline earnings 9 294 7 798 19 938
Headline earnings and diluted headline earnings per 10.32 8.66 22.14
share (cents)
3. Net asset value per share
Unaudited Unaudited Audited
September September March
2018 2017 2018
R'000 R'000 R'000
Number of shares in issue at end of period (net of 90 064 90 064 90 064
treasury shares) ('000)
Net asset value per share (cents) 154 134 144
Tangible net asset value per share (cents) 119 99 109
4. Dividend
Notice is hereby given that a gross cash dividend of 1.50 cents per share for the interim
period was declared on Friday, 23 November 2018, 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, 15 January 2019
Date trading commences "ex" dividend Wednesday, 16 January 2019
Record date Friday, 18 January 2019
Date of payment Monday, 21 January 2019
Ordinary share certificates may not be dematerialised or rematerialised between Wednesday,
16 January 2019 and Friday, 18 January 2019, 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,
21 January 2019.
5. 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.
6. Auditors responsibility
The results have not been reviewed or audited by the Group's external auditors, Mazars
7. 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 nor audited by the Group's external auditors, Mazars.
Commentary
For the six months ended 30 September 2018
Primeserv is an investment holding company and a leading provider of integrated business support
services focused on client-centric human capital services, spanning staffing and recruitment
services, productivity and functional outsourcing services as well as 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 prioritise business objectives, so as to achieve their strategic goals. Primeserv has a
strong focus on workplace flexibility solutions which are aligned to government initiatives aimed
at enhancing youth employment opportunities, and on the development of labour force skills through
its training and learnership programmes, with a particular emphasis on the up-skilling of youth in
South Africa.
Group revenue for the 6 month review period has increased by 11% from R347.9 million to R387 million
with operating profit increasing by 9% from R10.1 million to R11 million. A slight decrease in
gross profit has been offset by stringent cost containment, whilst strong cash flows have seen
overall finance costs decreasing by nearly 80% from an aggregate R1.1 million to R0.2 million.
The Group's profit before taxation has increased by 20% from R9 million to R10.8 million. Earnings
per share has increased by 18% from 8.65 cents per share for the 6 months ended 30 September 2017 to
10.23 cents per share for the six months under review. Headline earnings per share have improved by
19% from 8.66 cents per share to 10.32 cents per share. Cash flows from operating activities are lower
than when compared with the comparable period. This is attributable to the collection of significant
overdue amounts last year, rather than to any intrinsic issue this year, albeit that there has been a
large increase in trade receivables given timing differences as a result of payment terms granted to
certain clients who make payment after the period end. The Group's Days Sales Outstanding ("DSO")
has increased from 49 days at the end of the comparable period to 57 days at the end of the
current reporting period, however, all significant amounts due were collected after the reporting
period. Gearing has decreased from 6.6% at the end of March 2018 to 3.7% at the end of September
2018, and interest cover has improved from 11 times at the end of March 2018 to 53 times at the
end of the six months under review. The overall improved performance is reflected in the tangible
net asset value per share increasing by 20% from 99 cents per share to 119 cents per share, with the
overall net asset value per share increasing by 15% from 134 cents per share to 154 cents per share.
The Staffing Services segment increased its revenue by 13% from R332.7 million to R376.6 million with
its operating profit lower by 8% from R18.3 million to R16.8 million. The segment's DSO has increased
from 52 days at the end of March 2018 to 56 days at the end of September 2018, for reasons as
described above. The blue-collar staffing unit, which specialises in servicing the logistics,
warehousing and distribution centre market, as well as the wholesale and retail, manufacturing and
construction sectors, delivered a reasonable performance given the recessionary economy.
The white-collar professional draughting and engineering staffing unit delivered a solid
performance. The staffing unit servicing the power generation sector experienced extreme margin
pressure, whilst the unit servicing the financial services industry was subject to erratic volumes.
The Training and Consulting Services segment has gone some way to reversing the prior year's
performance and consequently produced a reduced loss for the period. As indicated in the commentary
to the results for the year ended March 2018, it is anticipated that the business will return to profitability
in the medium term. Revenue in the segment has decreased by 31% from R15.2 million in the comparable period to
R10.4 million during the current review period, primarily due to the introduction of new products
and services being phased in only towards the end of the reporting period. The segment's DSO, which
remain a function of SETA-related payment cycles, has improved slightly from 78 days at the end of
September 2017 to 77 days at the end of the current reporting period.
Board and Transformation
After having served on the Board for many years, Michael Judin decided not to stand for re-election
and will be replaced by a suitably qualified candidate. The Group thanks him for his
commitment and long service to the Group.
Transformation at Board and operating staff levels remains a Group imperative with all new
appointments favouring candidates with B-BBEE transformation credentials. The Group also remains
committed to strengthening its B-BBEE scorecards through preferential procurement and skills
development programmes aimed at the advancement of South Africa's youth and the unemployed.
Outlook
Whilst market conditions remain tough, the Group continues to seek out those opportunities that can
add meaningful and sustainable value to the Group's strategy of growing its integrated business
support services throughout southern Africa.
Directors
CS Ntshingila# (Chairperson), M Abel (CEO), JM Judin#*,
LM Maisela*, DL Rose#^, R Sack (FD)
# Independent non-executive *Non-executive ^Lead Independent
On behalf of the Board
CS Ntshingila M Abel R Sack
Chairperson CEO FD
23 November 2018, Illovo
Company secretary
ER Goodman Secretarial Services (Pty) Ltd (represented by M Janse van Rensburg)
Registered address
25 Rudd Road, Illovo, 2196
(PO Box 3008, Saxonwold, 2132)
Transfer secretaries
Computershare Investor Services (Pty) Ltd, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
(PO Box 61051, Marshalltown, 2107)
Auditors
Mazars, 54 Glenhove Road, Melrose Estate, 2196
Sponsor
Grindrod Bank Limited, 4th Floor Grindrod Towers, 8A Protea Place, Sandton, 2196
www.primeserv.co.za
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