Wrap Text
Provisional Audited Condensed Consolidated Results for the Year Ended 28 February 2017
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")
Provisional audited condensed consolidated results
for the year ended 28 February 2017
Condensed consolidated statement of comprehensive income
Audited Audited
for the for the
year ended year ended
28 February 29 February
2017 2016
R R
Revenue 209 761 282 243 428 818
Cost of sales (172 639 253) (207 285 730)
Gross profit 37 122 029 36 143 088
Other expenses net of sundry income 32 991 667 61 453 820
Results from operating activities 4 130 362 (25 310 732)
Finance income 436 000 3 253 430
Finance costs (4 038 954) (3 556 267)
Net finance costs (3 602 954) (302 837)
Profit/(loss) before deferred tax 527 408 (25 613 569)
Taxation (1 674 806) 6 258 939
(Loss) for the year from continuing operations (1 147 398) (19 354 630)
Revenue - 34 091 104
Expenses - (53 689 285)
Pretax (loss) - (19 598 181)
Tax - (1 615 988)
(Loss) from discontinued operations - (21 214 169)
(Loss) for the year attributable to ordinary shareholders (1 147 398) (40 568 799)
Other comprehensive income that may be recycled in
future periods
Foreign currency translation (loss)/gain 433 815 185 910
Total comprehensive (loss) for the year (713 583) (40 382 889)
Reconciliation of headline earnings
Headline (loss) (3 118 954) (21 638 050)
(Loss) after tax attributable to ordinary shareholders (1 147 398) (40 568 799)
(Profit) on disposal of property, plant and equipment (290 069) (195 963)
(Profit) on sale of disposal group (2 166 764) -
Impairment of intangible assets - 4 463 069
Impairment of goodwill and loans - 15 858 433
Tax effect of above adjustments 485 277 (1 194 790)
Headline (loss) - continuing operations (3 118 954) (7 771 947)
(Loss) after tax attributable to ordinary
shareholders - continuing operations (1 147 398) (19 354 630)
(Profit) on disposal of property, plant and equipment (290 069) (195 963)
(Profit) on sale of disposal group (2 166 764) -
Impairment of intangible assets - 4 148 128
Impairment of goodwill - 8 737 124
Tax effect of above adjustments 485 277 (1 106 606)
Basic (loss) per share (cents) (0.43) (15.37)
Basic (loss) per share (cents) - continuing operations (0.43) (7.33)
Basic (loss) per share (cents) - discontinued operations - (8.04)
Headline (loss) per share (cents) (1.18) (8.20)
Headline (loss) per share (cents) - continuing operations (1.18) (2.95)
Headline (loss) per share (cents) - discontinued operations - (5.25)
Diluted (loss) per share (cents) (0.43) (15.37)
Diluted (loss) per share (cents) - continuing operations (0.43) (7.33)
Diluted (loss) per share (cents) - discontinued operations - (8.04)
Diluted headline (loss) per share (cents) (1.18) (8.20)
Diluted headline (loss) per share (cents) - continuing operations (1.18) (2.95)
Diluted headline (loss) per share (cents) - discontinued operations - (5.25)
Actual number of shares in issue at end of the year 265 879 842 265 879 842
Weighted number of shares in issue at end of the year 263 792 329 263 879 842
Fully diluted weighted average number of shares in issue
at end of the year 263 792 329 263 879 842
Condensed consolidated statement of financial position
Audited Audited
28 February 29 February
2017 2016
R R
ASSETS
Non-current assets 47 739 882 44 830 703
Property, plant and equipment 11 940 100 9 784 915
Intangible assets 266 400 415 600
Goodwill 17 606 734 17 606 734
Loans receivable - long term 2 503 409 -
Deferred taxation 15 423 239 17 023 454
Current assets 58 215 931 69 362 133
Inventories 10 590 068 15 729 574
Trade and other receivables 39 826 707 38 169 124
Taxation receivable 55 441 55 441
Loans receivable - short term 1 662 901 -
Cash and cash equivalents 6 080 814 15 407 994
Total assets 105 955 813 114 192 836
EQUITY
Share capital 273 329 475 273 329 475
Foreign currency translation reserve 356 984 (76 830)
Retained loss (242 753 977) (241 606 579)
Total equity attributable to ordinary shareholders
of the Company 30 932 482 31 646 066
LIABILITIES
Non-current liabilities 5 527 141 3 977 566
Deferred tax 74 592 -
Loans and borrowings 5 452 549 3 977 566
Current liabilities 69 496 190 78 569 204
Billings in excess of work certified 4 791 305 5 533 500
Trade and other payables 41 429 922 44 954 712
Taxation payable - 69 812
Bank overdraft 20 323 105 23 670 202
Current portion of loans and borrowings 2 951 858 4 312 963
Non-current liabilities held for sale - 28 014
Total liabilities 75 023 331 82 546 770
Total equity and liabilities 105 955 813 114 192 836
Condensed consolidated statement of changes in equity
Foreign
currency
translation
Share (deficit/ Retained
capital reserve) loss Total
R R R R
Balance at 29 February 2016 273 329 475 (76 830) (241 606 579) 31 646 066
Total comprehensive loss for the year - 433 814 (1 147 398) (713 584)
Balance at 28 February 2017 273 329 475 356 984 (242 753 977) 30 932 482
Condensed consolidated statement of cash flows
Audited Audited
28 February 29 February
2017 2016
R R
Cash flows from operating activities 3 561 140 6 283 692
Taxation paid (69 812) (3 818 382)
Net cash (used in) operating activities 3 491 328 2 465 311
Net cash from operating activities - continuing operations 3 491 328 15 581 969
Net cash (used in) operating activities - discontinued operations - (13 116 658)
Cash flows from investing activities
Additions to property, plant and equipment to expand operations (3 664 021) (3 812 182)
Loan advanced on sale of disposal group (1 981 758) -
Proceeds from disposal of property, plant and equipment 745 232 4 739 939
Proceeds on sale of subsidiaries - 3 082 322
Finance income 418 212 3 253 430
Net cash from investing activities (4 482 335) 7 263 509
Net cash from investing activities - continuing operations (4 482 335) 3 721 840
Net cash from investing activities - discontinued operations - 3 541 669
Settlement of deferred purchase liability - (4 845 331)
Loans and borrowings granted (950 122) 1 563 088
Finance expenses arising on interest-bearing debt (4 038 954) (3 556 268)
Net cash used in financing activities (4 989 076) (6 838 511)
Net cash from financing activities - continuing operations (4 989 076) (16 389 407)
Net cash from financing activities - discontinued operations - 9 550 896
(Decrease)/increase in cash and cash equivalents (5 980 083) 2 890 309
Cash and cash equivalents at the beginning of the year (8 262 208) (11 152 517)
Cash and cash equivalents at the end of the year (14 242 291) (8 262 208)
Cash balances at the end of the year 6 080 814 15 407 994
Bank overdraft at the end of year (20 323 105) (23 670 202)
Segmental report
Shared
Industrial Specialised Services
Supplies Services and other Total
R R R R
For the 12 months ended
28 February 2017
Total segment revenue 107 900 834 112 570 275 - 220 471 109
Inter-segmental revenue (9 694 152) (1 015 674) - (10 709 826)
Reportable segment revenue 98 206 682 111 554 601 - 209 761 282
Gross profit 19 121 765 18 177 871 (177 607) 37 122 029
Depreciation and amortisation (443 431) (111 179) (1540 768) (2 095 378)
Other operating expenses (17 429 089) (11 002 328) (6 057 768) (34 489 186)
Profit/(loss) before tax 576 383 5 620 873 (5 669 848) 527 408
Capital expenditure 30 575 3 467 558 1 229 887 4 728 020
Gross assets 40 320 719 39 842 399 25 792 695 105 955 813
Gross liabilities (39 239 251) (53 615 483) 17 831 403 (75 023 332)
For the 12 months ended
29 February 2016
Total segment revenue 136 393 978 121 022 489 (13 987 649) 243 428 818
Inter-segmental revenue (6 501 221) (7 486 428) 13 987 649 -
Reportable segment revenue 129 892 757 113 536 061 - 243 428 818
Gross profit 23 197 678 12 948 280 (2 870) 36 143 088
Depreciation and amortisation 795 756 - 3 113 368 3 909 124
Impairment of goodwill and
other intangibles 14 560 798 13 907 634 16 191 012 44 659 444
Other operating expenses - - 12 885 252 12 885 252
Profit/(loss) before tax from
continuing operations 9 519 376 (3 734 958) (31 397 987) (25613 569)
Profit after tax 10 487 113 (2 745 346) (27 096 397) (19 354 630)
Capital expenditure 693 955 2 740 316 377 910 3 812 181
Gross assets 67 962 514 38 974 654 7 255 668 114 192 836
Gross liabilities -
continuing operations 29 393 163 43 887 371 9 266 236 82 546 770
Gross liabilities -
discontinued operations 28 014 - - 28 014
South Africa Botswana DRC Total
R R R R
Segmental information by
geographical region
Revenue (external) 190 173 150 19 588 132 - 209 761 282
Non-current assets 43 092 732 4 647 150 - 47 739 882
Revenue per major customer 68 547 568 - 2 482 019 71 029 587
Commentary
BASIS OF PREPARATION
The provisional audited condensed consolidated results for the year ended 28 February 2017
("the year") have been prepared in accordance with 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 and the
Companies Act, 2008 (Act 71 of 2008), as amended. The accounting policies and method of
computation applied in preparation of these provisional audited condensed consolidated results
are in accordance with IFRS and are consistent with those applied in the annual financial
statements for the year ended 29 February 2016.
This provisional report is extracted from audited information but is not itself audited.
The board of directors of PSV ("the Board") takes full responsibility for the preparation of this
report and the financial information has been correctly extracted from the underlying annual
financial statements.
The annual financial statements have been prepared under the supervision of the Financial
Director, Tony Dreisenstock CA(SA), and have been audited by the Group's auditors, Certified
Master Auditors Inc., whose unqualified audit report is available for inspection at the
registered office of the Company.
The auditor's report does not necessarily report on all of the information contained in this
announcement. Shareholders are therefore advised that in order to obtain a full understanding
of the nature of the auditor's engagement they should obtain a copy of the audit report, together
with the accompanying financial information, from the Group's registered office. Any reference
to future financial performance included in this announcement has not been reviewed by or
reported on by the Group's auditor.
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
a tools agency business in Botswana).
- Specialised Services (including comprehensive cryogenic and gas systems and the supply and
installation of geosynthetic linings).
INTRODUCTION
Despite tough trading conditions, PSV managed to generate a pre-tax profit of R0.53 million
underpinned by sterling operating performances from its South African trading operation, PSV
Industrial (Pty) Ltd. Unfortunately, the Group generated an after tax loss (attributable to a
non-cash flow deferred tax charge) of R1.15 million (2016: R40.57 million loss). The
disproportionate tax charge arose on our inability to claim tax relief on holding company costs.
FINANCIAL RESULTS
Although turnover contracted by 13.83% to R209.76 million (2016: R243.43 million), gross margins
strengthened to 17.70% (2016: 14.85%) and operating costs reduced by 46.31% to R33 million
(2016: R61.45 million). The net result was that the Group incurred a R1.15 million after tax loss
from continuing operations compared to a R19.35 million loss the previous financial year.
The headline loss per share strengthened from a loss of 8.20 cents per share ("cps") to a loss
of 1.18 cps. Notwithstanding the pleasing turnaround in the business, our cash flow position
worsened by R6 million, principally caused by high finance costs, loan advances to fund our
B-BBEE enterprise development initiative and cash spent on assets built internally and bought for
cash. As a result of the loss incurred, the Company's debt: equity ratio (net of cash) increased
from 52% in 2016 to 73% in the current year. The Company's net tangible asset per share decreased
marginally to 4.95 cps from 5.16 cps in 2016.
OPERATIONAL REVIEW
Industrial Supplies
This segment contributed 47% (2016: 53%) to the Group's consolidated reportable segment revenue
at an average gross profit margin of 19.47% (2016: 17.86%).
Omnirapid continues to generate good profitability underpinned by improved margins, despite a
contraction in turnover. The business continues to show resilience.
Turbo Botswana made a small operating loss for the year. During the course of the year, the
company's capital structure was improved by the conversion of approximately R5 million overdraft
debt into a four-year non-revolving structured loan. The Botswana economy has contracted,
exacerbated by the liquidation of a major state-owned mining company and many other mines going
on "care and maintenance".
Specialised Services
Specialised Services contributed 53% (2016: 47%) to the Group's consolidated reportable segment
revenue at an average gross profit margin of 16.30% (2016: 11.40%).
Despite many trading obstacles, African Cryogenics achieved profitability, underpinned by the
profitable disposal of its calibration business to our enterprise development partner, and the
restructuring of the operating lease on its premises. New management has been appointed with
the relevant expertise and experience. Former management has been retained on a consultancy basis.
Although Engineered Linings generated good levels of profitability, its cash flow came under
severe pressure in the latter part of the financial year due to delayed payments from customers.
Notwithstanding, Engineered Linings has a strong order book in place and financial stability is
gradually being restored.
DIVIDENDS
No dividends were declared or proposed. The Board reviews the dividend policy annually.
CHANGES TO THE BOARD
During the year under review Ralph Patmore resigned as Chairman on 30 August 2016 and
Eric Ratshikhopha was appointed Chairman in his stead on 15 September 2016. Lerato Mosiah was
appointed as an independent non-executive director on 1 October 2016. We wish Ralph well in his
future endeavours and thank him for his valuable input.
SUBSEQUENT EVENTS
There have been no subsequent events.
GOING CONCERN
Whilst the turnaround in the Company's fortunes has mitigated the need for an extensive going
concern evaluation, the marginal after tax loss incurred in the current year necessitates the
need for continual assessment of the Group's economic viability. In assessing the solvency and
liquidity of PSV, cognisance of the deficit between current liabilities and assets has been
considered. After eliminating non-cash flow provisions, job costing accruals, offset and debt
reduction agreements negotiated with suppliers post-year-end, the deficit reduces to an
immaterial amount. The Company is engaging in continual dialogue with its customers, suppliers
and bankers and is confident that the deficit will be addressed in the coming months. Based on
the approved budgets, the Board is satisfied that PSV will remain a viable going concern. The
Company's major bankers have also recently renewed the Company's existing overdraft facilities.
PROSPECTS
Notwithstanding ongoing tough market operating conditions, PSV expects that growth will gain
traction and that its various operating divisions will weather the current economic climate.
We remain confident that we will secure a successful funded B-BBEE equity partner which will
contribute favourably to the Group's profitability.
For and on behalf of the Board
AJD da Silva
Chief Executive Officer
AR Dreisenstock
Chief Financial Officer
Johannesburg
31 May 2017
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
Building C, 2nd Floor, Greenstone Hill
Tel (local): (0860) 778 778
Tel (international): +27 11 452 4004
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: 31/05/2017 03:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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