CSG puts trust in management
CSG Holdings, the services company that has PSG and African Rainbow Capital as major shareholders, is looking to lock in big profits from its facilities management and security services segments in the next few years.
CSG Holdings, the services company with PSG and African Rainbow Capital as major shareholders, wants to lock in big profits from its facilities management and security services segments in the next few years.
Speaking after the release of year to end March results on Thursday, CSG CEO Pieter Dry said facilities management and security services, which already accounted for more than 65% of operating profit, would generate about R1.7bn in earnings before interest, tax, depreciation and amortisation within five years.
Dry said the acquisitive security services segment still had ample opportunity for acquisitions in a fragmented sector.
“Now that we are a bigger player, security company owners are knocking at our door. But we are going to be very selective in making new acquisitions going forward.”
In a post balance sheet event, CSG reported an agreement with SOS Protec Sure.
This entailed SOS Protec Sure and CSG subsidiary 7Arrows Security selling each other a portion of their respective businesses at a price earnings multiple of 18 times the revenue attributable to contracts.
In the period under review, CSG’s security division pushed up revenue 78% to R426m and made a R43m contribution to operating profit.
The facility management division pushed revenue up 13% to R757m and chipped in R69m to CSG’s operating profit line.
The staffing solutions business, which was in the previous years CSG’s core business, increased revenue 14% to R952m and contributed R75m to operating profit.
Dry said the staffing solutions business enjoyed greater stability in the temporary employment industry and scored from diversification into other services.
Net operational cash flow came in at R140m, underpinning CSG’s 13% growth in earnings to 21.85c per share. A 5c per share dividend was declared.
Looking ahead, Dry said he believed CSG was well positioned for future growth with a strong foundation of diverse services covering various industries. “We anticipate that overall organic growth is still possible from this solid base and current economic conditions provide opportunities for further lucrative earnings from accretive acquisitions at very attractive multiples.”