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PRIMESERV GROUP LIMITED - Reviewed Results for the year ended 31 March 2019

Release Date: 14/06/2019 17:27
Code(s): PMV     PDF:  
 
Wrap Text
Reviewed Results for the year ended 31 March 2019

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 2019    


Condensed consolidated statement of profit and loss and other comprehensive income                                             
For the year ended 31 March 2019                                 
                                                                                            Reviewed        Audited    
                                                                                               March          March    
                                                                                                2019           2018    
                                                                                              R '000         R '000    
Revenue                                                                                      806 735        725 289    
Cost of sales                                                                              (694 451)      (618 287)    
Gross profit                                                                                 112 284        107 002    
Other income                                                                                   2 461          1 069    
Operating expenses                                                                          (89 483)       (85 817)    
Operating profit                                                                              25 262         22 254    
Interest received                                                                                293            268    
Interest paid                                                                                  (668)        (2 249)    
Profit before taxation                                                                        24 887         20 273    
Taxation                                                                                     (1 883)          (586)    
Profit and total comprehensive income                                                         23 004         19 687    
Profit and total comprehensive income attributable to:                                                                 
Ordinary shareholders of the Company                                                          22 988         19 544    
Non-controlling interest                                                                          16            143    
Profit and total comprehensive income                                                         23 004         19 687    
Basic earnings per share and diluted earnings per shares (cents)                               25.61          21.70    

 
Condensed consolidated statement of financial position 
As at 31 March 2019 
                                                                                            Reviewed        Audited    
                                                                                               March          March    
                                                                                                2019           2018    
                                                                                              R '000         R '000    
ASSETS                                                                                                                 
Non-current assets                                                                            42 244         44 936    
Equipment and vehicles                                                                         5 104          5 514    
Investment property                                                                            5 745          6 445    
Goodwill                                                                                      21 178         21 178    
Intangible assets                                                                                430            646    
Deferred tax asset                                                                             9 787         11 153    
Current assets                                                                               172 372        127 311    
Inventories                                                                                      132            162    
Trade and other receivables                                                                  165 244        122 707    
Cash and cash equivalents                                                                      6 996          4 442    
Total assets                                                                                 214 616        172 247    
EQUITY AND LIABILITIES                                                                                                 
Capital and reserves                                                                         141 872        122 686    
Ordinary share capital and share premium                                                       2 672          2 672    
Treasury shares                                                                             (17 292)       (16 279)    
Retained earnings                                                                            164 589        144 406    
Equity attributable to equity holders of the Company                                         149 969        130 799    
Non-controlling interests                                                                    (8 097)        (8 113)    
Current liabilities                                                                           72 744         49 561    
Trade and other payables                                                                      53 370         36 498    
Bank borrowings                                                                               19 374         13 063    
Total equity and liabilities                                                                 214 616        172 247    

 
Condensed consolidated statement of changes in equity 
For the year ended 31 March 2019 
                                                                                                               Equity                                   
                                                                                                         attributable                                   
                                                                                                            to equity            Non-                   
                                                                        Share    Treasury    Retained      holders of    controlling                    
                                                     Share capital    premium      shares    earnings     the company      interests    Total equity    
                                                            R '000     R '000      R '000      R '000          R '000         R '000          R '000    
Audited: Opening balances at 1 April 2017                    1 321      1 351    (16 279)     128 033         114 426        (8 256)         106 170    
Audited: Total comprehensive                                                                                                                            
income - profit                                                  -          -           -      19 544          19 544            143          19 687    
Audited: Dividends paid (3.50 cents per share)                   -          -           -     (3 171)         (3 171)              -         (3 171)    
Audited: Balance at 1 April 2018                             1 321      1 351    (16 279)     144 406         130 799        (8 113)         122 686    
Reviewed: Total comprehensive income - profit                    -          -           -      22 988          22 988             16          23 004    
Reviewed: Dividends paid (3.10 cents per share)                  -          -           -     (2 805)         (2 805)              -         (2 805)    
Reviewed: Acquisition of treasury shares                         -          -     (1 013)           -         (1 013)              -         (1 013)    
Reviewed: Closing balances at 31 March 2019                  1 321      1 351    (17 292)     164 589         149 969        (8 097)         141 872    

 
Condensed consolidated statement of cash flows 
For the year ended 31 March 2019 
                                                                                            Reviewed        Audited 
                                                                                               March          March 
                                                                                                2019           2018 
                                                                                              R '000         R '000 
 Cash flows from operations                                                                    1 213         36 084 
 Taxation (paid) / refunded                                                                      (1)            451 
 Interest paid                                                                                 (668)        (2 249) 
 Interest received                                                                               293            268 
 Cash flows generated from operating activities                                                  837         34 554 
 Cash flows utilised in investing activities                                                   (776)        (3 974) 
      ? purchase of equipment and vehicles                                                     (776)        (3 351) 
      ? other investing activities                                                                 -          (623) 
 Cash flows utilised in financing activities                                                 (3 818)        (3 171) 
      ? acquisition of treasury shares                                                       (1 013)              - 
      ? dividends paid                                                                       (2 805)        (3 171) 
 Net (decrease) / increase in cash and cash equivalents                                      (3 757)         27 409 
 Cash and cash equivalents at beginning of year                                              (8 621)       (36 030) 
 Cash and cash equivalents at end of year                                                   (12 378)        (8 621) 
 

Segmental analysis                                                   
For the year ended 31 March 2019                                     
                                                                                            Reviewed        Audited    
                                                                                               March          March    
                                                                                                2019           2018    
                                                                                              R '000         R '000    
Revenue: sales to external customers                                 
Staffing Services                                                                            786 552        700 243    
Training and Consulting Services                                                              20 183         25 046    
Total                                                                                        806 735        725 289    

Revenue: inter-segment revenue                                                                                         
Staffing Services                                                                                  -              -    
Training and Consulting Services                                                                  90             30    
Total                                                                                             90             30    

Business segment operating profit results                                                                              
Staffing Services                                                                             35 084         38 182    
Training and Consulting Services                                                                 594        (5 901)    
Shared Services                                                                             (10 416)       (10 027)    

Operating profit                                                                              25 262         22 254    
Interest received                                                                                293            268    
Interest paid                                                                                  (668)        (2 249)    
Profit before taxation                                                                        24 887         20 273    

Business segment EBITDA                                                                                                
Staffing Services                                                                             35 840         39 295    
Training and Consulting Services                                                               1 084        (5 362)    
Shared Services                                                                              (9 564)        (9 084)    
Total                                                                                         27 360         24 849    


Notes 

Basis of preparation 

The reviewed condensed consolidated results for the year ended 31 March 2019 have been prepared 
in accordance with the framework concepts and the measurement and recognition requirements of 
International Financial Reporting Standards (IFRS) 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 2019 are in terms of IFRS and are 
consistent with those applied in the audited annual financial statements for the year ended 31 March 2018, 
other than those in respect of the implementation of IFRS 9 and IFRS 15. There has been no 
material effect due to the adoption of IFRS 9 and IFRS 15. 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                                                                                      
                                                                                            Reviewed        Audited    
                                                                                               March          March    
                                                                                                2019           2018    
                                                                                              R '000         R '000    
Attributable earnings                                                                         22 988         19 544    
Headline earnings adjustments                       
   ? Loss on disposal of equipment and vehicles                                                    4             67
   ? Impairment of investment in property                                                        700            600
   ? Tax effect in respect of adjustments                                                      (298)          (273)    
Attributable headline earnings                                                                23 394         19 938    
Headline earnings and diluted headline earnings per share (cents)                              26.06          22.14    
Weighted average number of shares at year end ('000)                                          89 778         90 064    


Net asset value per share                                                           
                                                                                            Reviewed        Audited    
                                                                                               March          March    
                                                                                                2019           2018    
                                                                                              R '000         R '000    
Number of shares in issue at end of year (net of treasury shares) ('000)                      88 389         90 064    
Net asset value per share (cents)                                                                167            145    
Tangible net asset value per share (cents)                                                       132            109


Final dividend 

Notice is hereby given that a gross cash dividend of 2.50 cents per share for the year ended 31 March 
2019 was declared on Friday, 14 June 2019, 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, 16 July 2019 
Date trading commences "ex" dividend                                                        Wednesday, 17 July 2019 
Record date                                                                                    Friday, 19 July 2019 
Date of payment                                                                                Monday, 22 July 2019 
 
Ordinary share certificates may not be dematerialised or rematerialised between Wednesday, 
17 July 2019 and Friday, 19 July 2019, both days inclusive. 
 
Shareholders who are not exempt from the Dividend Withholding Tax of 20% will therefore receive a 
net dividend of 2.00 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, 22 July 2019. 

Events after the reporting date 

Management is not aware of any material events that occurred subsequent to the end of March 2019. 
There has been no change in the Group's contingent liabilities since year-end. 

Directors 
DL Rose#^ (Chairman), M Abel (CEO), B Kali#, LM Maisela*, R Sack (FD) 
#  Independent non-executive *Non-executive ^Lead Independent 

On behalf of the Board 

 
DL Rose                M Abel                    R Sack 
Chairman               CEO                       FD 
 
14 June 2019, Illovo 
 

Commentary 
For the year ended 31 March 2019 

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. 

The Group has delivered another solid set of results 
with revenue for the year increasing by 11% from 
R725.3 million to R806.7 million when compared to 
the previous year. Gross profit increased by 5% 
from R107.0 million to R112.3 million and operating 
profit increased by 14% from R22.3 million to 
R25.3 million. Net finance costs also reflected a strong 
improvement, decreasing from a net charge of 
R2.0 million to R0.4 million. Profit before taxation 
improved by 23% from R20.3 million to R24.9 million. 
Earnings per share increased by 18% from 
21.70 cents per share for the past year to 25.61 
cents per share. The Group's balance sheet has also 
continued to strengthen with the net asset value 
climbing by 15% from 145 cents per share to 167 
cents per share. During the year under review the Group 
invested in the repurchase of shares as part of its buy-back 
programme. Cash flows for the year were affected by 
some significant project business that was 
delivered towards the latter part of the financial 
year, evidenced in the steep increase in trade 
receivables and cash outflows. A significant portion 
of these trade receivables were collected after year end, 
resulting in a return to positive cash generation. As a result 
the Days Sales Outstanding (DSO) moved out from 52 days to 63 days. 
Whilst the Group's gearing increased slightly from 7% to 8%, 
the interest cover improved from 11 times to 67 times. 

The improved performance of the Group has 
facilitated an increase in the dividends declared 
with the overall dividend increasing by 29% from 
3.10 cents per share to 4.00 cents per share (refer 
dividend declaration below).

Revenue generated by the Staffing Services 
segment increased by 12% from R700.2 million to 
R786.6 million albeit that the project business 
referred to above, was earned at lower margins. 
Consequently, the segment's operating profit 
decreased by 8% from R38.2 million to 
R35.1 million. The segment's DSO increased from 52 days 
to 63 days. The blue-collar staffing unit, which 
specialises in servicing the logistics, warehousing 
and distribution market, as well as the wholesale 
and retail, and manufacturing and construction 
sectors, produced a satisfactory set of results given 
the prevailing adverse economic conditions. The 
white-collar professional draughting and 
engineering staffing unit delivered another pleasing 
performance. As indicated in our interim report for 
the six months to September 2018, the staffing unit 
servicing the power generation sector faced 
"extreme margin pressure". 

The Training and Consulting Services segment was 
restructured during the year and as a consequence 
saw its revenue decrease by 19% from R25.1 million 
to R20.2 million. The remedial actions implemented 
over the last year resulted in a meaningful 
turnaround with an operating profit of R0.6 million 
being delivered when compared to the operating 
loss of R5.9 million incurred in the prior year. The 
segment's DSO improved from 54 days to 38 days at the 
end of the current reporting period. The segment 
continues to perform a strategic function within the 
Group's operations. 

Despite challenging and uncertain market 
conditions, the Group is well positioned to respond 
to opportunities as and when they present 
themselves.  


Sponsor
Grindrod Bank Limited 
4th Floor Grindrod Towers, 8A Protea Place, Sandton, 2196

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