Wrap Text
Unaudited condensed consolidated financial results for the six months ended 31 August 2016
PSV Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1998/004365/06)
Share code: PSV ISIN: ZAE000078705
("PSV" or "the Company" or "the Group")
Unaudited condensed consolidated financial results
for the six months ended 31 August 2016
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
for the for the for the
six months six months 12 months
ended ended ended
31 August 31 August 28 February
2016 2015 2016
R'000 R'000 R'000
Revenue 105 673 147 734 243 429
Gross profit 18 513 27 141 36 143
Operating expenses** (16 026) (29 041) (61 454)
Operating profit/(loss) 2 487 (1 900) (25 311)
Net finance charges (1 654) 113 (303)
Profit/(loss) before taxation from continuing
operations 833 (1 787) (25 614)
Taxation (1 581) 27 6 259
Loss for the period from continuing operations (748) (1 760) (19 355)
(Loss)/profit from discontinued operations - (5 460) (21 214)
Loss from operations (748) (7 220) (40 569)
Other comprehensive income/(loss) 287 (1 662) 186
Total comprehensive loss for the period (461) (8 882) (40 383)
Reconciliation of headline loss
Loss attributable to PSV equity holders (748) (7 220) (40 569)
(Profit) on disposal of property, plant and
equipment net of tax 85 (79) (196)
Loss/(profit) related to discontinued operations
net of tax - 5 460 7 349
Impairment of loans and investments - discontinued
operations - 2 303 4 279
Impairment of intangible assets - discontinued
operations - 1 150 315
Deferred tax on impairment of intangible assets
- discontinued operations - (88)
Impairment of goodwill - discontinued
operations - 2 007 2 843
Impairment of goodwill - continuing operations - - 8 737
Impairment of tangible assets - - 4 148
Deferred tax on impairment of intangible assets
and loss on disposal of assets - continuing
operations - - (1 107)
Headline loss from operations (663) (4 142) (21 638)
Headline loss - continuing operations (663) (1 839) (7 772)
Basic loss per share (cents) (0.28) (2.74) (15.37)
Basic loss per share (cents) from continuing
operations (0.28) (0.67) (7.33)
Basic loss per share (cents) from discontinued
operations - (2.07) (8.04)
Headline loss per share (cents) (0.25) (1.57) (8.20)
Headline loss per share (cents) from continuing
operations (0.25) (0.70) (2.95)
Headline loss per share (cents) from
discontinued operations - (0.87) (5.25)
Headline loss - discontinued operations - (2 303) (13 866)
Diluted loss per share (cents) (0.28) (2.72) (15.37)
Diluted loss per share (cents) from
continuing operations (0.28) (0.66) (7.33)
Diluted loss per share (cents) from
discontinued operations - (2.06) (8.04)
Diluted headline loss per share (cents) (0.25) (1.56) (8.20)
Actual number of shares in issue at end of
the period 265 879 842 265 879 842 265 879 842
Weighted number of shares in issue at end of
the period 263 879 842 263 879 842 263 879 842
Fully diluted weighted average number of shares
in issue at end of the period 263 879 842 265 879 842 263 879 842
* The columns that have been re-presented, to exclude all profits and losses from the
discontinued operation on the (Loss)/profit from discontinued operations line item in
order to present comparable comparative results.
** Operating expenses are net of sundry income and include depreciation, impairments
and amortisation charges.
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
31 August 31 August 28 February
2016 2015 2016
R'000 R'000 R'000
ASSETS
Non-current assets* 43 936 58 770 44 831
Current assets 60 247 92 017 69 362
Inventory 18 525 13 479 15 730
Trade and other receivables 34 456 51 360 38 169
Non-current assets and current assets
classified as held-for-sale - 9 641
Taxation receivable 120 2 011 55
Cash and cash equivalents 7 146 15 526 15 408
Total assets 104 183 150 787 114 193
EQUITY AND LIABILITIES
Equity 31 185 63 444 31 846
Non-current liabilities 2 413 6 443 3 978
Current liabilities 70 585 80 900 78 541
Billings in excess of work certified 10 575 3 559 5 534
Liabilities directly associated with non-current
assets classified as held-for-sale 4 404 28
Taxation payable - - 70
Current portion of long-term liabilities 3 788 1 987 4 313
Provisions 3 029 1 762
Trade and other payables 36 619 46 639 43 193
Bank overdraft 16 574 24 311 23 670
Total equity and liabilities 104 183 150 787 114 193
* Includes deferred tax assets.
Condensed consolidated statement of changes in equity
Unaudited Unaudited Audited
for the for the for the
six months six months 12 months
ended ended ended
31 August 31 August 28 February
2016 2015 2016
R'000 R'000 R'000
Balance at beginning of the period 31 646 72 249 72 249
Comprehensive loss from trading arising from
continuing operations for the period (748) (1 760) (40 569)
Comprehensive loss from foreign currency
fluctuations arising from continuing operations
for the period 287 (33) (186)
Comprehensive (loss)/profit from trading for the
period from discontinued operations (5 460)
Comprehensive (loss)/profit from foreign
currency fluctuations arising from discontinued
operations for the period (1 629)
Share-based payment transactions 77 (221)
Balance at end of the period 31 185 63 444 31 646
Condensed consolidated statement of cash flows
Unaudited Unaudited Audited
for the for the for the
six months six months 12 months
ended ended ended
31 August 31 August 28 February
2016 2015 2016
R'000 R'000 R'000
Cash flows from operating activities 4 662 4 479 2 465
Cash generated from/(used in) continuing
operations 4 662 8 955 15 582
Cash generated from/(used in) discontinued
operations - (4 476) (13 117)
Cash flows from investing activities (2 003) 1 109 7 264
Cash generated from continuing operations (2 003) 1 110 3 722
Cash used in discontinued operations - (1) 3 542
Cash flows from financing activities (3 825) (2 986) (6 839)
Cash used in continuing operations (3 825) (7 130) (16 389)
Cash generated from/(used in) discontinued
operations - 4 144 9 551
Net movement in cash and cash equivalents (1 166) 2 602 2 890
Net cash generated from/(used in) continuing
operations (1 166) 2 935 2 914
Net cash used in discontinued operations - (333) (24)
Cash and cash equivalents at beginning of
the period (8 262) (11 720) (11 153)
Cash and cash equivalents at the beginning of
the year - continuing operations (8 262) (12 188)
Cash and cash equivalents at the beginning of
the year - discontinued operations - 1 035
Cash and cash equivalents at end of
the period (9 428) (8 785) (8 262)
Condensed consolidated segmental information
for the six months ended 31 August 2016
Shared
Industrial Specialised services Continuing
Supplies Services and other operations
R'000 R'000 R'000 R'000
Reportable revenue 55 296 50 377 - 105 673
Gross profit 11 101 7 721 (309) 18 513
Operating expenses* 8 049 1 270 6 707 16 026
Profit/(loss) before tax 1 840 5 213 (6 220) 833
Profit/(loss) after tax 1 225 3 754 (5 727) (748)
Capital expenditure 33 1 710 315 2 058
Gross assets 41 447 40 103 22 633 104 183
Gross liabilities 35 769 57 980 (20 751) 72 998
Condensed consolidated segmental information
for the six months ended 31 August 2015
Shared
Industrial Specialised services Continuing
Supplies Services and other operations
R'000 R'000 R'000 R'000
Reportable revenue 85 975 61 759 - 147 734
Gross profit 18 725 8 418 (2) 27 141
Operating expenses* (12 815) (7 197) (9 029) (29 041)
Profit/(loss) before tax 7 490 (713) (8 564) (1 787)
Profit/(loss) after tax 5 476 (523) (6 713) (1 760)
Capital expenditure 336 1 010 1 346
Gross assets 64 893 35 506 37 876 138 275
Gross liabilities 51 919 54 919 (28 212) 78 626
* Operating expenses are net of sundry income and include depreciation, impairments and
amortisation charges. It also excludes management fees and finance charges.
Commentary
Basis of preparation
The unaudited condensed consolidated financial results for the six months ended
31 August 2016 ("the interim results") have been prepared in accordance with the framework
concepts, the recognition and measurement requirements of International Financial Reporting
Standards ("IFRS"), the disclosure and presentation requirements of IAS 34: Interim Financial
Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee, the Financial Reporting Pronouncements as issued by the Financial Reporting
Standards Council, the Listings Requirements of the JSE Limited ("Listings Requirements")
and the South African Companies Act, 2008 (Act 71 of 2008), as amended. The accounting
policies and method of computation applied in preparation of these financial statements are
in accordance with IFRS and are consistent with those applied in the annual financial
statements for the 12 months ended 28 February 2016.
The interim results have been prepared under the supervision of the Financial Director,
Tony Dreisenstock CA(SA), and have not been audited or reviewed by the Group's auditors.
Any forecast financial information contained in the interim results has not been reviewed
and reported on by the Group's auditors in accordance with paragraph 8.40(a) of the
Listings Requirements.
Nature of business
PSV is an industrial engineering holding company comprising two operating business segments:
- Industrial Supplies (including steel, piping, industrial tools and consumable supplies and
automotive capital equipment); and
- Specialised Services (including comprehensive cryogenic and gas systems and
geosynthetic linings).
Introduction
The interim period has seen an improvement in the South African businesses of PSV,
primarily Engineered Linings and a discernible improvement in Turbo Agencies.
Financial results
Total loss from operations for the period settled at R0.748 million, a significant
improvement from the loss of R7.2 million incurred for the six months ended, 31 August 2015.
Headline loss per share improved from 1.57 cents per share ("cps") as at 31 August 2015,
to 0.25 cps as at 31 August 2016.
Total cash flow from operating activities remained positive at R4.67 million compared
R4.48 million at 31 August 2015. The Company's net overdraft position remained stable at
R9.428 million compared to R8.785 million in the previous year.
The Company's statement of financial position weakened slightly as a result of the loss
incurred in the period. The fair values of the long-term financial instruments approximate
their carrying values due to the variable interest rate terms of the financial instruments.
The directors consider the carrying values of the current financial instruments to approximate
their fair value due to their short-term nature.
Operational review
Industrial Supplies
This segment contributed 52% (2015: 58%) to the Group's consolidated reportable segment
revenue from continuing operations at an average gross profit margin of 20% (2015: 22%).
Omnirapid continues to perform ahead of expectations with good profit at improved margins.
This success remains cemented in outstanding service delivery and strong customer relationships,
essential characteristics in a tough market.
Turbo Agencies operates only in Botswana. This business has been substantially restructured
and is starting to show signs of a sustainable turnaround. The Company has aggressively
focused on recapturing lost market share and diversifying its client base. We expect this
business to return to profitability in the near future.
Specialised Services
Specialised Services contributed 48% (2015: 42%) to the Group's consolidated reportable
segment revenue at an average gross profit margin of 15% (2015: 14%).
Engineered Linings' resurgence continues apace. The business unit enjoys a healthy order
book, excellent cash flow generation and tight cost control. A combination of these factors
has ensured significantly higher gross margins being achieved, and sustainable levels
of profitability.
African Cryogenics has struggled in the first half of the current year. A depressed oil and
gas industry, changing management structures and no tariff protection against foreign imports
have all contributed to the business unit's problems. Notwithstanding, the unit managed to
generate a profit for the first six months, although the sustainability is not certain.
Outlook
The Company has a cautiously optimistic view going forward. All South African business
operations are now profitable; cash flow generation from operating activities has remained
positive for the fourth quarter in a row and gross margins have recovered reversing a
declining trend lasting several years. Shared service costs now represent just under 5% of
consolidated Group turnover.
Dividends
No dividends were declared or proposed. The Board reviews the dividend policy annually.
Changes to the Board
During the period under review, Ralph Patmore resigned as Chairman and was replaced by
Eric Ratshikhopha, our previous Social and Ethics Committee Chairperson. Eric's position
as Chairperson of the Social and Ethics Committee has been occupied by Lerato Mosiah,
who was appointed as an independent non-executive director effective from 1 October 2016.
Lerato Mosiah has vast experience in general management and business leadership. She holds
inter alia a BSc with Honours in General Physiology (Wits), a B-Pharm degree and an MBA.
Lerato also participated in the executive global leadership development programme at Oxford
University School of Business. She is currently an executive director at the Leato Group.
Litigation statement
There are no material matters under litigation against the Company at present.
Going concern
Whilst the Company continues to incur losses, the Board performs a continual extensive
review of the going concern viability, liquidity and solvency of PSV. Based on the actual
results to date and forecasted figures to February 2017, the Board is satisfied that the
Company will remain a viable going concern.
Notwithstanding the small loss generated by the Company for the first six months, no
impairment of the existing goodwill was deemed necessary.
Subsequent events
There have been no subsequent events between the period ending and the date of
this announcement.
Prospects
PSV's management remains cautiously optimistic on the prospects of the Company's business
operations. Management is confident that the business units of Omnirapid, Engineered
Linings, African Cryogenics and Turbo will be able to diversify, source new clients and
remain profitable.
For and on behalf of the Board
AJD da Silva
Chief Executive Officer
AR Dreisenstock
Chief Financial Officer
Johannesburg
27 October 2016
Directors
Executive directors:
AJD da Silva (Chief Executive Officer)
AR Dreisenstock (Chief Financial Officer)
Independent non-executive directors:
E Ratshikhopha (Chairman of the Board)
A de la Rue (Chairman of the Audit and Remuneration Committees)
L Mosiah (Chairman of the Social and Ethics Committee)
Company secretary
Merchantec Capital
Designated adviser
Merchantec Capital
Auditors
Certified Master Auditors Inc.
Registered office
Stoneridge Office Park
8 Greenstone Place
Greenstone Hill
Building C, 2nd Floor
Tel (local): (0860) 778 778
Tel (international): +27 860 778 778
Fax: (0860) 329 778
Transfer secretaries
Link Market Services South Africa Proprietary Limited
13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein
(PO Box 4844, Johannesburg, 2000)
Telephone: +27 (0) 11 713 0899
Facsimile: +27 (0) 86 674 4381
www.psvholdings.com
Date: 27/10/2016 10:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
