CSG Holdings FY 2013 results

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CSG Holdings FY 2013 results

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CSG Holdings FY 2013 results

  1. 1. REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2013 AND DIVIDEND DECLARATION Announcement appeared on SENS 18 September 2013 Website: www.msholdings.co.za (Registration number 2006/011359/06) JSE code: MSA ISIN: ZAE000165411 [“M&S Holdings” or “the Company”] CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year ended Year ended 30 June 2013 30 June 2012 R’000 Reviewed Audited Revenue 386 814 340 629 Cost of sales (326 518) (287 578) Gross profit 60 296 53 051 Net operating expenses (24 530) (22 099) Operating profit before impairments 35 766 30 952 Loss on sale of property, plant and equipment (54) (26) Impairment of investments in joint ventures – (644) Impairment of loans to joint ventures – (1 206) Operating profit 35 712 29 076 Interest received 799 759 Interest paid (1 931) (2 801) Profit before taxation 34 580 27 034 Equity accounted earnings from joint ventures 1 401 – Taxation (9 660) (9 488) Profit attributable to the equity holders of the parent 26 321 17 546 Other comprehensive income – – Comprehensive income attributable to the equity holders of the parent from continuing operations 26 321 17 546 Comprehensive loss attributable to the equity holders of the parent from discontinued operations – (110 906) Total comprehensive income/(loss) attributable to the equity holders of the parent 26 321 (93 360) Weighted average shares in issue (’000) 155 182 188 231 Headline earnings reconciliation Attributable earnings/(loss) 26 321 (93 360) Profit on sale of property, plant and equipment of joint venture (1 291) – (After taxation) Impairment of assets of the disposal group – 78 922 Loss recognised on the sale of the disposal group – 11 910 Loss on sale of property, plant and equipment (after taxation) 39 19 Impairment of Investments – 644 Headline earnings 25 069 (1 865) Earnings per share (cents) Earnings/(loss) per share 17,0 (49,6) From continuing operations 17,0 9,3 From discontinued operations – (58,9) Headline earnings/(loss) per share 16,2 (1,0) From continuing operations 16,2 9,7 From discontinued operations – (10,7) Dividends per share 4,24 – CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30 June 2013 30 June 2012 R’000 Reviewed Audited ASSETS Non-current assets 27 005 28 595 Property, plant and equipment 5 086 5 343 Goodwill 13 980 13 980 Investment in and loans to joint ventures 6 146 2 455 Vendor loan receivable – 5 000 Deferred taxation 1 793 1 817 Current assets 59 735 64 317 Inventories 985 1 722 Trade and other receivables 49 621 61 389 Vendor loan receivable 5 779 – Taxation receivable 531 – Bank and call deposits 2 819 1 206 TOTAL ASSETS 86 740 92 912 EQUITY AND LIABILITIES Capital and reserves 63 960 37 639 Non-current liabilities 1 679 1 820 Interest-bearing liabilities 1 679 1 820 Current liabilities 21 101 53 453 Interest-bearing liabilities 354 378 Interest-bearing loan from related party – 3 500 Bank overdrafts and invoice discounting 3 192 17 356 Trade and other payables 17 052 29 079 Taxation payable 503 3 140 TOTAL EQUITY AND LIABILITIES 86 740 92 912 Shares in issue (’000) 155 182 155 182 Net asset value per share (cents) 41,2 24,3 Net tangible asset value per share (cents) 32,2 15,2 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Year ended Year ended 30 June 2013 30 June 2012 R’000 Reviewed Audited Cash flow from operations 19 262 6 847 Cash generated by operations 33 978 18 906 Interest received 20 759 Interest paid (1 931) (4 013) Taxation paid (12 805) (8 805) Cash flow from investing activities (3 320) (5 088) Increase in advances to joint ventures (2 290) (2 644) Cash flow from disposal of subsidiary – (1 905) Net investment in property, plant and equipment (1 030) (539) Cash flow from financing activities Movement in loans payable (165) (938) Increase in cash resources 15 777 821 Cash resources at beginning of year (16 150) (16 971) Cash resources at end of year (373) (16 150) Cash resources (373) (16 150) Bank and call deposits 2 819 1 206 Bank overdraft and invoice discounting (3 192) (17 356) CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year ended Year ended 30 June 2013 30 June 2012 R’000 Reviewed Audited Equity at beginning of year 37 639 151 639 Total comprehensive income for the year 26 321 (93 360) Shares repurchased as per subsidiary sale agreement – (20 640) Equity at end of year 63 960 37 639 SEGMENT REPORTING (CONTINUING OPERATIONS) Year ended Year ended 30 June 2013 30 June 2012 R’000 Reviewed Audited Revenue Personnel outsourcing 375 518 328 428 Total revenue 379 735 332 776 Internal (4 217) (4 348) Safety surveillance 11 296 12 201 Total Group 386 814 340 629 Operating profit before impairments 35 766 30 952 Personnel outsourcing 33 597 26 411 Safety surveillance 2 850 4 282 Head office (681) 259 Impairments/loss on sale of property, plant and equipment Personnel outsourcing (54) (1 876) Net interest paid (1 132) (2 042) Personnel outsourcing (1 887) (2 040) Safety surveillance (25) (2) Head office 780 – Profit before taxation 34 580 27 034 Personnel outsourcing 31 032 22 495 Safety surveillance 3 449 4 280 Head office 99 259 INFORMATION ON DISPOSAL GROUPS (SCAFFOLDING) Year ended Year ended 30 June 2013 30 June 2012 R’000 Reviewed Audited Analysis of the results of discontinued operations Revenue – 19 905 Expenses – (38 767) Impairment of assets of the disposal group – (78 922) Operating loss – (97 784) Interest paid – (1 212) Loss before tax – (98 996) Tax – – Loss after tax – (98 996) Loss recognised on the sale of the disposal group – (11 910) Total comprehensive loss attributable to the equity holders of the parent from discontinued operations – (110 906) Assets of the disposal group disposed of Non-current assets – 24 697 Property, plant and equipment – 24 624 Deferred tax asset – 73 Current assets – 21 677 Inventories – 2 061 Trade and other receivables – 17 711 Bank and call deposits – 1 905 TOTAL ASSETS – 46 374 Liabilities of the disposal group disposed of Non-current liabilities – 2 317 Interest-bearing liabilities – 2 317 Current liabilities – 6 505 Trade and other payables – 6 505 TOTAL LIABILITIES – 8 822 Cash flow information Cash flow from operations – 4 206 Cash flow from investing activities – 753 Cash flow from financing activities – (1 183) Increase in cash resources – 3 776 NOTES TO THE CONDENSED FINANCIAL STATEMENTS BASIS OF PREPARATION These results have been prepared in terms of International Financial Reporting Standards and comply with IAS 34 – Interim Financial Reporting, the Listings Requirements of the JSE Limited, the Companies Act No. 71 of 2008, as amended and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee. The condensed financial statements do not include all of the information required for a full set of annual financial statements. The accounting policies applied are consistent with those applied in the annual financial statements for 30 June 2012. The condensed financial statements have been prepared under the supervision of Ms SL Grobler CA (SA), Acting Financial Director. DISCONTINUED OPERATION As per the circular dated 23 April 2012, the M&S Holdings Group [“the Group”] disposed of the Scaffolding Division during the previous financial year. Financial information relating to the scaffolding business operation is set out after the Segment report. The results of the discontinued operation are disclosed separately in the Statement of comprehensive income. The sale consideration was partially settled through the debiting of a consideration loan of R5 million against the purchaser. The consideration loan bears interest at the prime rate plus 1% (one per cent) per annum, calculated daily and compounded monthly in arrears and is repayable by no later than 30 September 2013. As security for repayment of the consideration loan, the purchaser has pledged an additional 8 000 000 of his M&S ordinary shares to the Company until the consideration loan, plus all interest that accrues thereon, has been settled in full. ACQUISITIONS As detailed in the SENS announcement dated 21 June 2013, the Group is at an advanced stage of finalising formal agreements with BDM Holdings (Pty) Limited [“BDM”] regarding a proposed transaction in terms of which the Group will acquire BDM and its subsidiaries [“BDM Group”]. A binding heads of agreement has been concluded with the BDM Group, setting out the salient terms of the proposed transaction which will effectively result in a merger of the two businesses. The heads of agreement is conditional upon the parties concluding formal agreements and obtaining all regulatory approvals as may be required for implementation of the transaction. FINANCIAL PERFORMANCE The positive results achieved during the six months ended 31 December 2012, continued throughout the second half of the year despite ongoing uncertainties surrounding the personnel outsourcing industry. The board and management of M&S are pleased by the strong performance from continuing operations and return to profitability for the Group. We will continue to embrace the ongoing changes in labour legislation in order to keep delivering an outstanding service to our clients. Revenue from continuing operations increased by 13,6% from R340,6 million to R386,8 million in the current year, while the gross profit percentage remained stable at 15,6%. Current headline earnings per share from continuing operations of 16,2 cents reflect a 66,5% increase from the 9,7 cents reported for the previous year. Operating profit from continuing operations rose by 22,8% to R35,7 million. Further to the SENS announcement of 13 September 2013, Group results for the year ended 30 June 2013 reflect earnings per share of 17,0 cents and headline earnings per share of 16,2 cents, compared to a loss per share of 49,6 cents and a headline loss per share of 1,0 cent for the comparative period to 30 June 2012. The increase is mainly due to the elimination of losses previously suffered in the scaffolding division. Net interest charges incurred in the current year decreased to R1,1 million as compared to R3,2 million in the comparative period. PERSONNEL OUTSOURCING The Personnel Outsourcing division achieved an operating profit for the year of R33,6 million, representing an increase of 27,3% on that achieved for the year ended 30 June 2012. The spectrum of local clients has been broadened, contracts for international personnel placements in Mozambique have been renewed and further international placements are being actively pursued. SAFETY SURVEILLANCE The establishment of the Safety Surveillance division’s in-house training facility and resulting increase in revenue did not realise in the second half of the year as expected, but accreditation should be finalised early in 2014. Revenue decreased from R12,2 million to R11,3 million, resulting in a lower operating profit of R2,9 million (2012: R4,3 million) for the year. The decrease is mainly due to one division of a certain client not renewing its contract with the company. Management has identified growth opportunities and is optimistic about future prospects. RELATED PARTY TRANSACTIONS During the previous period the Group borrowed various amounts to assist with working capital requirements from one of its non-executive directors on a short-term basis (one-month loans) at a rate of R50 000 per month per R1 million borrowed. The loan and interest thereon was repaid in July 2012 as reported in the interim results for the six months ended 31 December 2012. Interest on the loan amounted to R175 000 and is included in net interest charges for the year. FUTURE PROSPECTS The acquisition referred to above will result in a more substantial business, which is expected to facilitate the accelerated growth of the combined Group. Synergies which are expected to be captured include cross-selling of services to the larger client base, the leveraging of expertise across the combined Group as well as capitalising on potential cost synergies. The Personnel Outsourcing division will take advantage of the expanded client base and the resulting organic growth opportunities. The Safety Surveillance division expects its in-house training centre to be accredited within the next six months which should result in an increase in revenue. Current sale volumes are expected to continue and margins are expected to remain stable. The Group is focused on securing new contract business in all divisions. CAPITAL COMMITMENTS AND CONTINGENCIES The Group had no significant outstanding capital commitments or contingencies as at 30 June 2013. MATERIAL MANAGEMENT JUDGEMENTS A trade receivable amounting to R6,5 million receivable from a certain debtor has been offset against an equal amount due to a creditor regarding the same transaction. The management team of M&S believes that it has the legal right to offset and net settle the amounts. The creditor is currently disputing this right, but management has sought legal opinion which opinion concurs with that of management. DIVIDEND DECLARATION (Number 1) Notice is hereby given that the board has declared a maiden cash dividend of 4,24 cents per ordinary share for the year ended 30 June 2013. Shareholders are advised that the last day to trade “cum dividend” will be Friday, 25 October 2013. The shares will trade “ex dividend” from the commencement of business on Monday, 28 October 2013. The record date will be Friday, 1 November 2013 and the payment date will be Monday, 4 November 2013. Share certificates may not be dematerialised or rematerialised during the period Monday, 28 October 2013 to Friday, 1 November 2013, both days inclusive. The dividend has been declared from income reserves and will be subject to dividends tax that was introduced with effect from 1 April 2012 at a rate of 15%. The gross amount per share subject to the withholding of dividends tax is 4,24 cents per ordinary share. A net dividend of 3,604 cents per share will apply to shareholders liable to pay dividends tax and 4,24 cents per share to shareholders that are exempt therefrom. The issued share capital at 17 September 2013 is 151 181 818 ordinary shares and the company’s income tax reference number is 9159/246/16/5. In terms of the dividends tax legislation, the dividends tax due will be withheld and paid over to the South African Revenue Services [“SARS”] by a nominee company, stockbroker or Central Security Depository Participant [“CSDP”] [collectively “Regulated Intermediary”] on behalf of the shareholders. However, all shareholders should declare their status to their Regulated Intermediary, as they may qualify for a reduced dividends tax rate or they may even be exempt from dividends tax. RESPONSIBILITY STATEMENT The directors take full responsibility for the preparation of the reviewed condensed consolidated results for the year ended 30 June 2013 and that the financial information has been correctly extracted from the underlying annual financial statements. REVIEW REPORT The condensed consolidated preliminary results for the year ended 30 June 2013 have been reviewed by Grant Thornton (Jhb) Inc. The external auditors’ unqualified review opinion and the reviewed condensed consolidated results for the year ended 30 June 2013 are available for inspection at the Company’s registered office. For and on behalf of the Board BT Ngcuka (Chairman) FF Goosen (Chief Executive) 18 September 2013 Directors: BT Ngcuka* (Chairman); FF Goosen (CEO); SL Grobler (Acting Financial Director); JJ Senekal*#; NN Sonjani*#; PN de Waal* (* non-executive) (# independent) Secretary and Registered Office: MN Hattingh, 6 Topaz Street, Lyttleton Manor, Centurion, 0157 Transfer Secretaries: 11 Diagonal Street, Johannesburg, 2000, (PO Box 4844, Johannesburg 2001) Designated Advisor: Sasfin Capital, a division of Sasfin Bank Limited

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