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Condensed consolidated statement of profit and loss and other comprehensive income for the year ended 31 march 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
Reviewed results for the year ended 31 March 2018
Condensed consolidated statement of profit and loss and other comprehensive income
for the year ended 31 march 2018
Reviewed Audited
March March
2018 2017
R' 000 R' 000
Revenue 725 289 642 122
Cost of sales (618 287) (540 905)
Gross profit 107 002 101 217
Other income 1 069 1 139
Operating expenses (85 817) (80 749)
Operating profit 22 254 21 607
Interest received 268 291
Interest paid (2 249) (2 385)
Profit before taxation 20 273 19 513
Taxation (586) (2 770)
Profit and total comprehensive income 19 687 16 743
Profit and total comprehensive income attributable to:
Ordinary shareholders of the Company 19 544 16 008
Non-controlling interest 143 735
Profit and total comprehensive income 19 687 16 743
Basic earnings per share and diluted earnings per share (cents) 21.70 17.77
Condensed consolidated statement of financial position
as at 31 march 2018
Reviewed Audited
March March
2018 2017
R' 000 R' 000
ASSETS
Non-current assets 44 936 43 292
Equipment and vehicles 5 514 3 513
Investment property 6 445 7 045
Goodwill 21 178 21 178
Intangible assets 646 -
Deferred tax asset 11 153 11 556
Current assets 129 965 132 781
Inventories 162 177
Trade and other receivables 125 361 129 907
Taxation receivable - 634
Cash and cash equivalents 4 442 2 063
Total assets 174 901 176 073
EQUITY AND LIABILITIES
Capital and reserves 122 686 106 170
Ordinary share capital and share premium 2 672 2 672
Retained earnings 144 406 128 033
Treasury shares (16 279) (16 279)
Equity attributable to equity holders of the Company 130 799 114 426
Non-controlling interests (8 113) (8 256)
Current liabilities 52 215 69 903
Trade and other payables 39 152 31 810
Bank borrowings 13 063 38 093
Total equity and liabilities 174 901 176 073
Condensed consolidated statement of changes in equity
as at 31 march 2018
Equity
attributable
to equity
holders Non-
Share Share Retained Treasury of the controlling Total
Capital premium earnings shares company interests equity
R '000 R '000 R '000 R '000 R '000 R '000 R '000
Audited: Opening balances at
1 April 2016 1 321 1 351 113 241 (16 279) 99 634 (8 991) 90 643
Audited: Total comprehensive income -
profit - - 16 008 - 16 008 735 16 743
Audited: Dividends paid (1.35 cents
per share) - - (1 216) - (1 216) - (1 216)
Audited: Balances at 1 April 2017 1 321 1 351 128 033 (16 279) 114 426 (8 256) 106 170
Reviewed: Total comprehensive income
- profit - - 19 544 - 19 544 143 19 687
Reviewed: Dividends paid (3.50 cents
per share) - - (3 171) - (3 171) - (3 171)
Reviewed: Closing balances at
31 March 2018 1 321 1 351 144 406 (16 279) 130 799 (8 113) 122 686
Condensed consolidated statement of cash flows
for the year ended 31 march 2018
Reviewed Audited
March March
2018 2017
R' 000 R' 000
Profit before taxation 20 273 19 513
Adjustment for non-cash items 1 927 3 017
Operating cash flows before working capital changes 22 200 22 530
Net working capital changes 11 903 (28 989)
Taxation refunded 451 -
Cash flows from operating activities 34 554 (6 459)
Cash flows from investing activities (3 974) (4 457)
Cash flows from financing activities (3 171) (1 216)
Net increase/(decrease) in cash and cash equivalents 27 409 (12 132)
Cash and cash equivalents at beginning of year (36 030) (23 898)
Cash and cash equivalents at end of year (8 621) (36 030)
Segmental analysis
for the year ended 31 march 2018
Reviewed Audited
March March
2018 2017
R' 000 R' 000
Revenue from external customers
Staffing Services 700 243 609 891
Training and Consulting Services 25 046 32 231
Total 725 289 642 122
Revenue - inter-segment
Staffing Services - -
Training and Consulting Services 30 153
Total 30 153
Business segment operating profit results
Staffing Services 38 182 33 639
Training and Consulting Services (5 901) (1 297)
Shared Services (10 027) (10 735)
Operating profit 22 254 21 607
Interest received 268 291
Interest paid (2 249) (2 385)
Profit before taxation 20 273 19 513
Business segment EBITDA
Staffing Services 39 295 35 195
Training and Consulting Services (5 362) (950)
Shared Services (9 084) (9 670)
Total 24 849 24 575
Business segment total assets
Staffing Services 137 521 126 143
Training and Consulting Services 13 244 21 173
Shared Services 24 136 28 757
Total 174 901 176 073
Business segment total liabilities
Staffing Services 38 485 46 944
Training and Consulting Services 1 397 5 035
Shared Services 12 333 17 924
Total 52 215 69 903
Business segment net assets
Staffing Services 99 036 79 199
Training and Consulting Services 11 847 16 138
Shared Services 11 803 10 833
Total 122 686 106 170
Notes
COMMENTARY
Reviewed results for the year ended 31 March 2018
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, productivity and 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 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.
Primeserv's results for the year ended 31 March 2018 maintained the positive trend of the
past few years, despite the difficult economic trading conditions experienced across most of
the business sectors serviced by the Group. The Staffing Services segment, the Group's largest
business component, which provides Temporary Employment Services, continued to show
organic growth whilst the Training and Consulting segment delivered a sub-par performance.
The uncertainty regarding changes to labour legislation and, in particular, the
referral of the so-called deeming provision to the Constitutional Court has in a number of
instances curtailed growth opportunities while clients await the final result, anticipated in
August 2018. The Group is, however, well positioned to meet its clients' needs, whatever the
legal outcome, and has developed a range of specialised products and services which will
allow clients continued access to the Group's various staffing and productivity solutions.
Group revenue for the year rose by 13% from R642.2 million to R725.3 million whilst gross
profit increased by 6% from R101.2m to R107.0 million. Operating profit was up by 3% from
R21.6 million to R22.3 million with profit before taxation increasing by 4% from R19.5 million
to R20.3 million. Earnings per share were consequently boosted by 22% from 17.77 cents per
share to 21.70 cents per share while headline earnings per share improved by 18% from
18.74 cents per share to 22.14 cents per share. Cash flows from operating activities improved from
a net outflow of R6.5 million for the 2017 financial year to a net inflow of R34.6 million for
the year under review whilst the overall cash position turned around from an outflow of
R12.1 million in the prior year to an inflow of R27.4 million in the current year. This was
after both the payment of dividends, which went up from R1.2 million in the prior year to
R3.2 million in the current year, and further investment in fixed assets of R3.4 million.
Better collections have led to the Group's gearing lessening from 31% at the end of March 2017
to 7% at the end of the current financial year. This is further evidenced by the reduction in
overall Days Sales Outstanding ("DSO") from 63 days to 53 days and interest cover improving from
9 times for the prior year to 10 times for the current financial year. Trade receivables have decreased
from R125.7m at the end of the prior year to R121.2 million at the end of the current review
period. A stand-out feature of the decrease is that the portion of trade receivables that is past
due reduced by 73% from R21.5 million to R5.9 million at year end. The Group's statement of
financial position is reflective of a strong overall performance. The net asset value per share
increased by 14% from 127 cents per share to 145 cents per share and the tangible net asset
value per share by 20% from 91 cents per share to 109 cents per share.
Revenue for the Staffing Services segment improved by 15% from R609.9 million last financial
year to R700.2 million for the current year with the segment's EBITDA increasing by 12% from
R35.2 million to R39.3 million and its operating profit going up by 14% from R33.6 million to
R38.2 million. The DSO reduced from 61 days at the end of March 2017 to 52 days at the end
of March 2018 as a significant portion of the overdue debts at the end of the prior year were
collected. The blue collar staffing unit, which specialises in servicing the logistics, warehousing
and distribution market, as well as the wholesale and retail, manufacturing and construction
sectors, delivered a satisfactory performance. The staffing unit servicing the financial and
related service industries had a satisfactory year. The large project engineering and
construction sector continues to contend with the lack of new infrastructure developments
and this dampened growth in the white collar professional draughting and engineering
staffing unit. The staffing unit servicing the power generation sector was beset by erratic
headcount volumes and extreme margin erosion.
The Training and Consulting Services segment had a torrid year. Sales decreased by 22% from
R32.2 million to R25.0 million and the unexpected operating loss rose from R1.3 million for
the 2017 financial year to R5.9 million for the review period. The business is intended to
provide both strategic and growth opportunities to the Group as a whole, but, in view of the
performance, has required an intensive reassessment and restructuring. This has included the
closure of non-performing components and a review of the products and services offered as
well as substantial changes in key personnel. Operating costs were significantly affected by
material but unbudgeted expenditure relating to the close-out of a number of legacy projects,
as well as by the investment in senior staff who were employed to develop new business but
who failed to build the requisite sales pipeline or to deliver the expected revenue.
Performance was further affected by the undertaking of some new business at inferior
margins with a view to improving sales volumes. This operation remains key to the Group's
integrated service offering, and is anticipated to return to profitability in the medium-term.
The Group has, notwithstanding the negative performance of the Training and Consulting
Services segment, delivered a solid set of results for the year.
BASIS OF PREPARATION
The reviewed condensed consolidated results for the year ended 31 March 2018 have been
prepared in accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards (IFRS), the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council. The report contains
the information required by International Accounting Standard (IAS) 34: Interim Financial
Reporting, and, are in compliance with the Listings Requirements of the JSE Limited. The
accounting policies as well as the methods of computation used in the preparation of the
results for the year ended 31 March 2018 are in terms of IFRS and are consistent with those
applied in the audited annual financial statements for the year ended 31 March 2017. There
is no significant difference between the carrying amounts of financial assets and liabilities and
their fair values. The results are presented in Rand, which is Primeserv Group Limited's
reporting currency.
The company's directors are responsible for the preparation and fair presentation of the
reviewed condensed consolidated results. These results have been prepared by the Group
Financial Director, Mr R Sack, CA(SA).
AUDITOR'S REVIEW
The results have been reviewed by the Group's auditors, Mazars. Their unqualified review
opinion is available for inspection at the company's registered office. Their review was
conducted in accordance with ISRE 2410 "Review of interim financial information performed
by the independent auditor of the entity."
HEADLINE EARNINGS PER SHARE
2018 2017
R '000 R '000
Attributable earnings 19 544 16 008
Headline earnings adjustments (net of tax effect)
- Loss on disposal of equipment and vehicles 48 171
- Impairment of investment in property 346 466
- Impairment of intangible assets - 234
Attributable headline earnings 19 938 16 879
Earnings and diluted headline earnings per share (cents) 22.14 18.74
Weighted average number of shares at year end ('000) 90 064 90 064
There have been no changes in the issued share capital during
the year. There are no potentially dilutive shares.
FINAL DIVIDEND
Notice is hereby given that a final gross cash dividend of 1.60 cents per share for the year
ended 31 March 2018 was declared on Friday, 15 June 2018, payable to shareholders
recorded in the register of the Company at the close of business on the record date
appearing below. The salient dates pertaining to the final dividend are as follows:
Last date to trade "cum" dividend Tuesday, 17 July 2018
Date trading commences "ex" dividend Wednesday, 18 July 2018
Record date Friday, 20 July 2018
Payment date Monday, 23 July 2018
Ordinary share certificates may not be dematerialised or rematerialised between
Wednesday, 18 July 2018 and Friday, 20 July 2018, both days inclusive.
Shareholders who are not exempt from Dividend Withholding Tax of 20% will therefore
receive a net dividend of 1.28 cents per share. The Company has 132 062 743 ordinary
shares in issue and the income tax reference number is 9408/002/71/06. The dividend is
being paid out of income reserves.
All times provided in this pronouncement 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, 23 July 2018.
TRANSFORMATION
The Group is continuing to assess ways to enhance its transformation and B-BBEE credentials.
This review encompasses all categories of staff, including, but not limited to senior executives
and non-executive directors. Other empowerment initiatives have already been established
and are being effected in the forthcoming year, such as a preferential procurement scheme
whereby services and products required by the Group are channeled to small black-owned
enterprises, and preferably those owned by women.
EVENTS AFTER THE REPORTING DATE
Management is not aware of any material events which have occurred subsequent to the end
of March 2018. There has been no material change in the Group's contingent liabilities since
year-end.
OUTLOOK
The uncertain and weak trading and macro-economic environment combined with the socio-economic
challenges facing the country, make it difficult to assess the short to medium-term outlook,
however, the Group remains well poised to respond to opportunities as they present themselves.
The Group continues to target both organic growth, and acquisitive opportunities aimed at
furthering its national business support services capability.
DIRECTORS
CS Ntshingila(#) (Chairperson), M Abel (CEO), JM Judin(#), LM Maisela(*), DL Rose(#^), R Sack
(Financial Director)
(#) Independent non-executive (*) Non-executive (^) Lead Independent non-executive
On behalf of the Board
CS Ntshingila M Abel R Sack
Chairperson CEO Financial Director
15 June 2018, Illovo
Corporate information
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
www.primeserv.co.za
Email: productivity@primeserv.co.za
Directors
CS Ntshingila* (Chairperson), M Abel (CEO), JM Judin*,
LM Maisela#, DL Rose* (Lead Independent), R Sack (Financial Director)
* Independent non-executive # Non-executive
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
Date: 15/06/2018 05:13:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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