UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2013

Transcription

1 CSG HOLDINGS LIMITED (Formerly M&S Holdings Limited) (Incorporated in the Republic of South Africa) (Registration number 2006/011359/06) JSE code: CSG ISIN: ZAE ("CSG" or "the Company" or "the Group") UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2013 CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME 6 months ended 31 December Year ended February Re-presented 2013 Unaudited Unaudited Audited Revenue Cost of sales ( ) ( ) ( ) Gross profit Net operating expenses (26 244) (26 344) (67 238) Operating profit (Loss) / profit on sale of property, plant and equipment (136) Interest received Income from equity accounted investments Interest paid (1 436) (739) (2 428) Profit before taxation Taxation (11 201) (7 615) (14 102) Profit for the year Other comprehensive income Total comprehensive income Total comprehensive income attributable to: Owners of the parent Non-controlling interest Weighted average shares in issue ('000) Headline earnings reconciliation Attributable earnings Profit / (loss) on sale of property, plant and equipment (after taxation) 83 (54) (104) Headline earnings Basic and diluted earnings per share (cents) Basic and diluted earnings per share Headline earnings per share

2 CONDENSED GROUP STATEMENT OF FINANCIAL POSITION 31 December 28 February Re-presented Unaudited Unaudited Audited ASSETS Non-current assets Property, plant and equipment Intangible assets Investment in and loans to joint ventures Other financial assets Current assets Inventories Current income tax receivable Trade and other receivables Bank and call deposits TOTAL ASSETS EQUITY AND LIABILITIES Capital and reserves Non-current liabilities Interest bearing liabilities Deferred taxation Current liabilities Current portion of interest bearing liabilities Other financial liabilities Bank overdrafts and invoice discounting Trade and other payables Taxation payable TOTAL EQUITY AND LIABILITIES Shares in issue ('000) Net asset value per share (cents) Net tangible asset value per share (cents)

3 CONDENSED GROUP STATEMENT OF CASH FLOWS 6 months ended 31 December Year ended February Re-presented 2013 Unaudited Unaudited Audited Cash flow from operations (6 723) Cash generated by operations Interest received Interest paid (1 436) (739) (2 428) Taxation paid (13 939) (6 075) (13 225) Cash flow from investing activities (5 358) (3 337) (1 216) Cash flow from business combination (1 922) - - Net investment in property, plant and equipment (3 436) (3 337) (1 216) Cash flow from financing activities (10 925) (16 112) (12 467) Dividends paid (10 700) (1 314) (1 332) Movement in loans payable (225) (14 798) (11 135) (Decrease) / increase cash resources (23 006) (13 306) Cash resources at beginning of period Cash resources at end of period (2 942) Cash resources (2 942) Bank and call deposits Bank overdraft and invoice discounting - (2 942) -

4 CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY Total attributable to Nonequity holders controlling of the parent interest Total equity Equity at 1 July Total comprehensive income for the period Dividend paid (1 314) (1 314) Equity at 31 December 2012 (Unaudited) Total comprehensive income for the period Equity at 28 February 2013 (Audited) Total comprehensive income for the period Dividend paid (1 362) (1 362) Equity at 1 July Total comprehensive income for the period Dividend paid (10 700) (10 700) Shares purchased from non-controlling shareholders (21 805) - Shares issued as part of business combination Equity at 31 December 2013 (Unaudited)

5 SEGMENT REPORTING 6 months ended 31 December Year ended February Re-presented 2013 Unaudited Unaudited Audited Revenue Workforce management Total revenue Internal (302) - - Facility management Mining, plant & construction support Total Group Operating profit Workforce management Facility management Mining, plant & construction support Head office (67) - (31) Net interest paid (1 351) (702) (1 870) Workforce management (575) (334) (1 050) Facility management (648) (183) (416) Mining, plant & construction support (128) (185) (404) Profit before taxation Workforce management Facility management Mining, plant & construction support Head office (67) - (11) UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2013 NOTES TO THE CONDENSED FINANCIAL STATEMENTS INTRODUCTION The merger of BDM Holdings (Pty) Ltd ( BDM ) and M&S Holdings Ltd ( M&S ) and the effective reverse listing of BDM via the acquisition by M&S of the entire issued share capital of BDM through the issue of ordinary M&S shares ( consideration shares ) to the shareholders of BDM was concluded on 27 November In terms of IFRS 3 Business Combinations, the transaction constitutes a reverse acquisition as the shareholders of BDM became the majority shareholders of M&S. Accordingly M&S is deemed to be acquired by BDM, even though M&S is the legal acquirer and remains the listed entity.

6 These results represent the continuation of the BDM group as the accounting acquirer and therefore the condensed consolidated statement of comprehensive income and cash flow statement for the six months ended 31 December 2013 represent five months of BDM trading (July 2013 to November 2013) and one month of the combined group trading (December 2013). The comparative information for the prior period represents the unaudited consolidated results of BDM for the six months ended 31 December 2012 as well as the audited consolidated results of BDM for the year ended 28 February Management chose to present the audited BDM results for the year ended 28 February 2013, which were included in the circular to shareholders in October 2013, as comparatives (instead of unaudited BDM figures for the year ended 30 June 2013 to correspond with M&S year-end), because we are of the opinion that previously published, audited results would provide the most relevant and reliable information to the shareholders of CSG. Due to the reverse acquisition accounting as detailed above, the comparative information for the prior period in these results differs from the interim results for the six months ended 31 December 2012 as published on 14 February For ease of reference, the following information is provided: earnings and headline earnings per share for the prior comparative period (as published on 14 February 2013), amounted to 7.7 cents per share; compared to the above, earnings per share has increased by 2.6% from 7.7 cents to 7.9 cents per share for the current period; and headline earnings per share has increased by 3.1% from 7.7 cents to 7.94 cents per share for the current period. BASIS OF PREPARATION These results have been prepared in terms of International Financial Reporting Standards ( IFRS ) 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 2013 and are in terms of IFRS. The condensed financial statements have been prepared under the supervision of Ms. SL Grobler CA (SA), Acting Financial Director. BUSINESS COMBINATIONS As detailed in the SENS announcement dated 2 October 2013, the group planned to acquire an effective 100% control over BDM Holdings (Pty) Ltd via a reverse acquisition, which acquisition was effective on 27 November The transaction has been accounted for in terms of IFRS 3 Business Combinations.

7 According to the agreements, ordinary M&S shares were issued to the BDM shareholders at 84 cents per share, which comprised the total purchase consideration. The acquired business, being M&S, contributed incremental revenues of R24.6 million and earnings of R1.4 million to the group from the period from date of control to 31 December If the acquisition had occurred on 1 July 2013, group income would have increased by R201.4 million and earnings by R10.5 million, excluding earnings already accounted for. These amounts have been calculated using the group s accounting policies. RECOGNISED AMOUNTS OF IDENTIFIABLE NET ASSETS AT 27 NOVEMBER 2013 R'000 Non-current assets Property, plant and equipment Investments Deferred tax asset Current assets Inventories 208 Trade and other receivables Non-current liabilities (1 558) Interest bearing liabilities (1 558) Current liabilities (28 107) Taxation payable (4 189) Trade and other payables (21 996) Bank overdraft and invoice discounting (1 922) IDENTIFIABLE NET ASSETS GOODWILL ON ACQUISITION CASH FLOW INFORMATION Bank overdraft and invoice discounting acquired (1 922) The goodwill that arose on the combination can be attributed to the synergies expected to be derived from the combination. The fair values above have been provisionally determined, because the acquisition was completed late in the period. The group is currently obtaining the information necessary to finalise its valuation within 12 months of the acquisition date. CHANGE OF NAME The name of the company was changed to CSG Holdings Ltd (Contract Services Group) on 27 November The change of name was registered at the CIPC on 20 January 2014.

8 FINANCIAL PERFORMANCE Notwithstanding continued uncertainties surrounding the temporary labour industry, the group saw steady growth in revenues and earnings during the six months under review. Revenue increased by 26.3% from R336.3 million to R424.5 million in the current period, with a slight decrease in gross profit percentage from 15.9% to 15.6%. Current headline earnings per share of 7.94 cents reflect a 22.4% increase from the 6.49 cents for the previous period. Operating profit of R40 million was 47.8% above the prior period, assisted by the inclusion of R1.4 million M&S group earnings. Net interest charges incurred in the current period increased to R1.4 million as compared to R in the comparative period. WORKFORCE MANAGEMENT The Workforce Management division achieved an operating profit for the period of R10 million, representing a decrease of 28.9% on that achieved for the period ended 31 December The decrease is mainly due to ongoing strikes, especially in the mining industry, uncertainties as to the potential effect of the proposed changes to labour legislation on temporary employment and the general trend to outsource certain functions previously performed by temporary employees to a managed outsourced service provider. FACILITY MANAGEMENT Facility Management revenue increased substantially from R102.5 million to R173.6 million, resulting in a higher operating profit of R24.2 million (2012 R8.7 million) for the six months. The division s contribution to group operating profit increased from 32.3% in 2012 to 60.4% in the six months ended 31 December 2013, mainly because of the growing demand for facility management services in various African countries. MINING, PLANT AND CONSTRUCTION SUPPORT SERVICES This division remains small in comparison to other divisions but saw a 38.6% growth in operating profit from R4.2 million to R5.9 million in the current period. Management is actively looking to further expand services within this division. FUTURE PROSPECTS The merger has resulted in a more substantial business and increased capital raising facilities, which are expected to facilitate the accelerated growth of the combined group through active perusal of acquisition opportunities of opposition companies as well as other facility management companies. Other 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.

9 CHANGES TO THE BOARD The following changes to the board took place on 27 November 2013: - Mr FF Goosen resigned and his position of Group Chief Executive has been assumed by CEO of BDM, Mr PJJ Dry; - Mr JG Nieuwoudt was appointed as Chief Operating Officer; - Mr NG Thiart was appointed as Executive Director; - Mr JJ Senekal resigned as Lead Independent Director and Ms J Malan has been appointed as an Independent Non-executive Director. Ms Malan was appointed as Lead Independent Director on 26 February DIVIDEND DECLARATION No dividend has been declared for the period under review. CAPITAL COMMITMENTS AND CONTINGENCIES The group had no significant outstanding capital commitments or contingencies as at 31 December For and on behalf of the Board BT Ngcuka (Chairman) PJJ Dry (Chief Executive) Date: 24 March 2014 Directors: BT Ngcuka* (Chairman) PJJ Dry (CEO); JG Nieuwoudt (COO); SL Grobler (CFO); NG Thiart J Malan*#; NN Sonjani*#; PN de Waal* (* - non-executive) (# - independent) Secretary and Registered Office: MN Hattingh, 6 Topaz Street, Littleton Manor, Centurion 0157 Transfer Secretaries: Link Market Services South Africa (Pty) Ltd, 11 Diagonal Street, Johannesburg 2000 (PO Box 4844, Johannesburg 2001) Designated Advisor: Sasfin Capital, a division of Sasfin Bank Ltd Website: