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South Africa – Primeserv struggles despite revenue growth

09 October 2013

Human resources company Primeserv Group Ltd (PMV: SJ) reported revenue of ZAR 654.9 million (USD 65.5 million) for the full year ending 31 March 2013, an increase of +6.8% from ZAR 613.1 million (USD 61.4 million) during the previous year.

Comprehensive loss for the year ending 31 March 2013 was ZAR 4.3 million (USD 430,450), a significant drop from a comprehensive income of ZAR 6.8 million (USD 680,713) a year ago.

Primeserv Group is an investment holding company whose subsidiaries own and manage skills training centres, corporate training, productivity consulting business, as well as labour outsourcing operations throughout South Africa.

J Michael Judin, Independent Non-Executive Chairman, commented: “The Group’s major operating segment, Human Capital Outsourcing, delivered a solid set of results, confirming the sustainability of its business model even under trying economic conditions. The profitability generated by Human Capital Outsourcing was unfortunately offset by the losses incurred in the discontinued Colleges division, which resulted in an overall loss this year. The Colleges division was disposed of in May 2013.”

“The Group incurred some start-up costs with the establishment of a specialised permanent resourcing and talent management unit. During the second half of the year, the Human Capital Outsourcing segment’s revenue and gross profit were adversely affected by prolonged industrial action at a national client,” he concluded. 

The Groups’ Human Capital Development segment’s revenue increased by +2% from ZAR 60.8 million (USD 6.1 million) to ZAR 62.1 million (USD 6.2 million). Operating loss for this segment increased from ZAR 1.2 million (USD 120,125) to ZAR 7.9 million (USD 790,830), year-on-year.  

Revenue from the company’s Human Capital Outsourcing segment increased by +7.3% from ZAR 552.3 million (USD 55.3 million) to ZAR 592.8 million (USD 59.3 million) during the period. Operating profit for the segment remained relatively stable, falling to ZAR 20.2 million (USD 2.02 million) from ZAR 20.4 million (USD 2.04 million).

Mr Judin concluded: “The Board anticipates a return to overall profitability and improved working capital management during the 2014 financial year, as the refinement of the Group’s business model with a renewed focus on its core operations materialises.”

The company’s share price was unchanged at ZAR 0.28 (USD 0.03), having remained at this price since the start of October 2013. The current share price remains -31.7% below that of a year ago. Based on its share price, the company has a market value of ZAR 36.98 million (USD 3.7 million).  

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