Wrap Text
Unaudited Condensed Consolidated Financial Results for the six months ended 31 August 2012 and
change to the Board
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 2012 and
appointment of independent non-executive director
Condensed consolidated statement of comprehensive income
Unaudited for
Unaudited for the 6 months
the 6 months ended Audited for the
ended 31 Aug 2011 12 months ended
31 Aug 2012 (Restated) 29 Feb 2012
R’000 R’000 R’000
Revenue 182,326 109,992 275,862
Gross profit 46,042 27,602 62,332
Operating expenses* -42,338 -22,604 -79,046
Operating profit/(loss) 3,704 4,998 -16,714
Net finance charges** -513 -3,291 -8,377
Profit/(Loss) before taxation from continuing operations 3,191 1,707 -25,091
Taxation -2,618 268 3,397
Profit/(Loss) for the period from continuing operations 573 1,975 -28,488
(Loss)/Profit from discontinued operations -23,666 307 10,864
Total comprehensive (loss)/income for the period -23,093 2,282 -17,624
Reconciliation of headline (loss)/earnings
(Loss)/Profit attributable to PSV equity holders -23,093 2,282 -17,624
Loss/(Profit) on disposal of fixed assets 144 -775 -637
Impairments 21,629 - 24,935
Deferred tax reversed on impairment of specific intangibles - - -1,697
Loss/(Profit) on sale of discontinued operations 5,717 - -18,820
Gain on bargain purchase - - -10,788
Headline earnings/(loss) 4,397 1,507 -24,631
Headline earnings/(loss) – continuing operations 717 1,200 -28,453
Basic (loss)/earnings per share (cents) -9.03 0.92 -7.06
Basic earnings/(loss) per share (cents) from continuing operations 0.22 0.80 -11.41
Headline earnings/(loss) per share (cents) 1.72 0.61 -9.86
Headline earnings/(loss) per share (cents) from continuing operations 0.28 0.49 -11.39
Diluted (loss)/earnings per share (cents) -8.74 0.91 -6.83
Diluted earnings/(loss) per share (cents) from continuing operations 0.22 0.78 -11.04
Diluted headline earnings/(loss) per share (cents) 1.66 0.60 -9.55
Diluted headline earnings/(loss) per share (cents) from continuing operations 0.27 0.48 -11.04
Actual number of shares in issue at period end 272,548 247,962 272,547
Weighted number of shares in issue at period end 255,791 247,210 249,771
Fully diluted weighted average number of shares in issue at period end 264,352 251,740 258,044
* Operating expenses are net of sundry income and include depreciation, impairments and amortisation charges.
**Actual net interest paid was R2,225 million. Balance comprises deferred purchase consideration interest and foreign exchange gains and losses.
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
31 Aug 2012 31 Aug 2011 29 Feb 2012
R’000 R’000 R’000
ASSETS
Non-current assets 74,853 95,108 82,369
Current assets 162,358 260,582 207,318
Total assets 237,211 355,690 289,687
EQUITY AND LIABILITIES
Equity 97,256 145,358 125,772
Non-current liabilities 28,829 36,964 50,668
Current liabilities 111,126 173,368 113,247
Total equity and liabilities 237,211 355,690 289,687
Net asset value per share (cents) 35.68 58.62 50.72
Tangible net asset value per share (cents) 23.92 34.77 31.60
Condensed consolidated statement of changes in equity
Unaudited for Unaudited for
the 6 months the 6 months Audited for the
ended ended 12 months ended
31 Aug 2012 31 Aug 2011 29 Feb 2012
R'000 R'000 R'000
Balance at beginning of period 125,772 142,749 142,749
Total comprehensive income for the period -23,093 2,282 -17,624
Dividends paid -9,219 - -
Share based payment transactions 10 22 743
Foreign currency translation differences 3,786 305 -96
Balance at end of period 97,256 145,358 125,772
Condensed consolidated statement of cash flows
Unaudited for Unaudited for
the 6 months the 6 months Audited for the
ended ended 12 months ended
31 Aug 2012 31 Aug 2011 29 Feb 2012
R’000 R’000 R’000
Cash flows from operating activities -10,604 2,236 15,770
Cash flows from investing activities 42,942 -8,830 22,160
Cash flows from financing activities -19,893 3,325 -8,185
Net movement in cash and cash equivalents 12,445 -3,269 29,745
Cash at acquisition of subsidiary - -2,001 -
Cash transferred to assets held for sale -4,120 - -9,908
Cash and cash equivalents at beginning of the period 9,169 -10,668 -10,668
Cash and cash equivalents at end of the period 17,494 -15,938 9,169
Condensed consolidated segmental information for the six months ended 31 August 2012
Valves and Industrial Specialised Discontinued
Supplies Services Other Total operations
R'000 R'000 R'000 R'000 R'000
Revenue 112,753 69,573 - 182,326 71,315
Gross profit 35,905 10,137 - 46,042 12,718
Operating expenses* 18,503 7,583 12,951 39,037 6,539
Profit/(Loss) before tax 6,199 -2,472 -6,254 -2,527 -15,465
Depreciation/amortisation 1,313 745 1,841 3,899 1,402
Capital expenditure 1,797 928 367 3,092 -
Gross assets** 100,571 64,513 55,305 220.389 15,062
Gross liabilities** 65,308 19,540 35,357 120,205 15,108
* Operating expenses exclude other income and finance costs
** Deferred tax assets and deferred tax liabilities are excluded
Condensed consolidated segmental information for the six months ended 31 August 2011
Valves and Industrial Specialised Other Total Discontinued
Supplies Services operations
R'000 R'000 R'000 R'000 R'000
Revenue 59,837 50,210 -55 109,992 105,203
Gross profit 18,694 9,314 -406 27,602 23,204
Operating expenses* 10,415 5,497 14,690 30,602 11,541
Profit/(Loss) before tax 7,782 6,067 -12,142 1,707 511
Depreciation/amortisation 630 577 2,051 3,258 2,436
Capital expenditure -989 -893 9,731 8,698 547
Gross assets** 56,308 35,482 69,694 161,484 158,237
Gross liabilities** 44,547 -11,891 65,990 98,645 73,439
* Operating expenses exclude management fees, depreciation, other income and finance costs
** Deferred tax assets and deferred tax liabilities are excluded
COMMENTARY
NATURE OF BUSINESS
PSV is an industrial engineering holding company comprising two operating business segments:
- Valves and Industrial Supplies; and
- Specialised Services (including geosynthetic lining and cryogenic activities).
BASIS OF PREPARATION
The condensed consolidated financial statements have been prepared in accordance with the recognition and measurement criteria of International Financial
Reporting Standards (“IFRS”) and the presentation and disclosure requirements of IAS 34: Interim Financial Reporting, the JSE Limited Listings Requirements and
in the manner required by the Companies Act No 71 of 2008, as amended, of South Africa. The accounting policies used in the preparation of the interim
financial statements for the six months ended 31 August 2012, are in terms of IFRS and are consistent with those applied in the Audited Financial Statements of
the Group for the year ended 29 February 2012.
These results have not been reviewed or audited by the Group’s auditors, and have been compiled under the supervision of the Chief Financial Officer, Tony
Dreisenstock, CA(SA).
FINANCIAL REVIEW:
The period under review was materially affected by two major corporate actions namely;
- The sale of the businesses comprising the pump segment for a purchase consideration of R54 million plus the recovery of R14 million loan accounts;
and
- The sale of the business of Petrologic to Tokheim International.
In order to better understand the financial position of the Group, the prior year statement of comprehensive income has been restated to reflect the results of
the above businesses as “discontinued operations”. The liquidation of the Group’s primary debt, coupled with the elimination of a major loss-making subsidiary,
has permitted management to implement the last phase of the restructuring programme. This programme also entails decentralising the Group, transferring
shared service costs to the subsidiaries where possible and practical as well as materially reducing the remaining fixed costs. The effects of the last phase of the
restructuring will only start to filter through in the next six months.
The Group’s revenue from continuing operations has increased by 65,7% to R182,3 million (Aug 2011: R110,0 million). The gross profit margin remained
constant at just over 25%. Operating costs, relative to turnover, have increased slightly to 23,2% (Aug 2011: 20,6%) but are substantially lower than the 28,6%
operating cost ratio which prevailed at the February 2012 financial year end. The effects of repaying the Company’s primary debt resulted in a drop in finance
costs and a material reduction in the Group’s debt:equity ratio which now stands at 13% (Aug 2011: 34%).
The decision to transfer the business of Petrologic to Tokheim resulted in a substantial loss on discontinued operations amounting to R21,9 million. The loss is
mainly attributable to the impairment of fixed assets and stock and will not impact upon the Group’s headline earnings. The balance of the loss made on
discontinued operations is attributable to loan accounts written off and relevant disposal costs arising from the sale of the pump segment.
Cash Flow Review
The Group’s cash flows have improved from R9,2 million in February 2012 to R17,5 million as at 31 August 2012 due to the following factors:
R’000
- Net cash received on the sale of the pump companies and the settlement of residual Investec debt 33 049
- Cash reinvested into subsidiaries for working capital purposes (10 000)
- Dividend paid to shareholders (9 218)
- Income tax paid ( including R1,5 million extraneous tax charge levied by the DRC tax authorities)* (3 523)
- Net finance costs paid (net of exchange gains and losses) (513)
- Cash balances transferred to pump companies on sale (4 120)
- Cash generated from operations 2 436
*The tax charge is currently being investigated by the Group’s auditors and tax attorneys
The loss attributable to the sale of Petrologic has not affected the Group’s cash flows. The remaining businesses are generally profitable and cash generative.
Due to the substantial growth in the remaining cash generating units, the Board has decided that a detailed assessment of the Group’s goodwill and intangibles
will only be undertaken at year end. Accordingly, no impairment was made at this time.
OPERATIONAL REVIEW
Valves and Industrial Supplies
This segment contributed 62% (Aug 2011: 31%) to the Group’s consolidated revenue at an average gross profit margin of 31,8% (Aug 2011: 31,2%). Revenue
increased substantially to R112,7 million (Aug 2011: R59,8million). The increase in revenue is partially attributable to the inclusion of the revenue from PSV
Mitech for the first time amounting to R13,8 million. However the remaining companies in this segment, namely Omnirapid and Turbo Agencies, have exceeded
budget expectations and shown organic growth patterns exceeding 30% on the prior period.
Specialised Services
Specialised Services contributed 38% (Aug 2011: 69,7%) to the Group’s consolidated revenue at an average gross profit margin of 14,6% (Aug 2011: 18,6%). The
segmental revenue increased from R50,2 million to R69,6 million mainly as a result of a 65% increase in revenue generated by Engineered Linings. The small loss
generated in this segment is expected to reverse in the next six months due to the existing escalating order book.
CHANGES TO THE BOARD
During the period under review, Portia Molefe resigned as independent non-executive director on 11 July 2012 and David Joseph Kelly resigned as non-executive
director on 30 August 2012. We would like to thank Portia and Dave for their hard work and dedication.
In addition, the Board is pleased to advise shareholders of the appointment of Eric Ratshikhopha as independent non-executive director with immediate effect.
Eric will also be appointed as member of the Audit Committee and as chairman of the Social and Ethics Committee. He currently holds a number of directorships
on foundations and serves as a trustee on a number of trusts. His background includes vast work experience in the mining sector, having been involved in
industrial relations, health and safety, strategic management and corporate social investment. Eric has worked at Gencor, Genmin, Billiton SA and most recently
as Corporate Development Director at Xstrata. His wealth of experience in transformation, stakeholder relations and community development as well as general
management practices will be advantageous to PSV. The Board welcomes Eric and looks forward to his contribution to PSV.
DIVIDENDS
Other than the special dividend paid in July 2012, the Group will continue to retain and utilise cash generated to fund working capital requirements and as such,
no dividends were declared or proposed. The Board will review the dividend policy annually.
SUBSEQUENT EVENTS
Aside from the transfer of Petrologic to Tokheim, with effect from 4 September 2012, there have been no material events that have occurred since 31 August
2012 up to the date of this report.
PROSPECTS
With the implementation of the decentralising model well under way, the management team of PSV is confident regarding the Group’s prospects. The real
benefits of this model are expected to fully unfold during the course of next year. The continuing operations of the Group are profitable as well as cash
generative and should contribute to the Group’s growth going forward. The Group’s order book is healthy at record levels compared to the prior periods.
For and on behalf of the Board
AJD da Silva AR Dreisenstock
Chief Executive Officer Chief Financial Officer
19 October 2012
DIRECTORS
Executive Directors: AJD da Silva (Chief Executive Officer); AR Dreisenstock (Chief Financial Officer)
Non-Executive Directors: R Patmore (Independent Chairperson); A De La Rue (Independent Chairman of the Audit Committee); P Robinson*
*British
COMPANY SECRETARY: Merchantec Capital
REGISTERED OFFICE: PSV Holdings Office Park, Corner Barbara and North Reef Roads, Henville Ext, Elandsfontein
Postnet Suite 229, Private Bag X19, Gardenview, 2047 T (local): (011) 657 6000 T (international): +2711 657 6000 F: (011) 822 8470
TRANSFER SECRETARIES: Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg,
South Africa, 2001. PO Box 61051, Marshalltown, South Africa, 2107
DESIGNATED ADVISER: Merchantec Capital
Date: 19/10/2012 03:41:00 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.