Wrap Text
Condensed Reviewed Interim Results for the Period ended 31 August 2013
ANSYS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1987/001222/06)
(Share Code: ANS ISIN Code: ZAE000097028)
"Ansys" or "the company")
CONDENSED REVIEWED INTERIM RESULTS FOR THE PERIOD ENDED 31 AUGUST 2013
HIGHLIGHTS
Basic loss per share improved by 70%
Gross profit margin improved by 32%
Operating expenses improved by R1.5 million
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
6 months ended Year ended
31 August 2013 31 August 2012 28 February 2013
(Reviewed) (Reviewed) (Audited)
Note R'000 R'000 R'000
Assets
Non-current assets 31 347 41 360 31 751
Plant and equipment 359 721 509
Intangible assets 1 20 838 29 782 21 604
Deferred tax asset 10 150 10 857 9 638
Current assets 20 201 24 633 31 873
Inventories 8 671 8 030 8 265
Trade and other receivables 11 470 16 305 23 398
Cash and cash equivalents 60 125 54
Derivative financial assets - 21 4
Current tax receivable - 152 152
Total assets 51 548 65 993 63 624
Equity and liabilities
Equity 34 719 39 728 37 435
Capital and reserves 34 719 39 728 37 435
Non-current liabilities 1 974 5 541 2 452
Deferred tax liability 1 974 5 541 2 452
Current liabilities 14 855 20 724 23 737
Borrowings - 2 096 2 133
Trade and other payables 9 012 12 139 12 959
Cash and cash equivalents 4 881 6 489 8 645
Provisions 962 - -
Total liabilities 16 815 26 265 26 189
Total equity and liabilities 51 548 65 993 63 624
Number of shares in issue 164 867 056 161 867 056 164 867 056
Net asset value per share (cents) 21.1 24.5 22.7
Tangible net asset value per share (cents) 8.4 6.1 9.6
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months ended Year ended
31 August 2013 31 August 2012 28 February 2013
(Reviewed) (Reviewed) (Audited)
R'000 R'000 R'000
Revenue 27 539 43 486 81 259
Cost of sales (15 161) (28 694) (47 744)
Gross profit 12 378 14 792 33 515
Other income 108 72 444
Operating costs (15 379) (16 904) (31 397)
Other losses ( 431) ( 212) ( 347)
Development cost impairment - - (8 536)
Goodwill impairment - (7 907) (7 907)
Loss before interest and taxation (3 324) (10 159) (14 228)
Finance cost ( 231) ( 479) (1 112)
Loss before taxation (3 555) (10 638) (15 340)
Taxation 839 923 2 792
Loss for the year (2 716) (9 715) (12 548)
Other comprehensive income, net of tax - - -
Total comprehensive loss for the year (2 716) (9 715) (12 548)
Basic loss per share (cents) (1.6) (6.0) (7.7)
Diluted loss per share (cents) (1.6) (6.0) (7.7)
Weighted average number of shares in
issue 164 867 056 161 867 056 162 162 946
Diluted average number of shares in
issue 164 867 056 161 867 056 162 162 946
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Retained income /
Issued stated (Accumulated
capital loss) Total equity
Balance as at 1 March 2012 46 728 2 715 49 443
Movements during the year
Loss for the period ending August 2012 - (9 715) (9 715)
Balance as at 31 August 2012
(Reviewed) 46 728 (7 000) 39 728
Movements during the year
Share issue 540 - 540
Loss for the period ending February 2013 - (2 833) (2 833)
Balance as at 28 February 2013
(Audited) 47 268 (9 833) 37 435
Movements during the year
Loss for the period ending August 2013 - (2 716) (2 716)
Balance as at 31 August 2013
(Reviewed) 47 268 (12 549) 34 719
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
6 months ended Year ended
31 August 2013 31 August 2012 28 February 2013
(Reviewed) (Reviewed) (Audited)
R'000 R'000 R'000
Cash flows from operating activities
before working capital (3 165) (1 234) 4 582
Changes in working capital 8 543 3 953 (2 555)
Cash flows from operating activities 5 378 2 719 2 027
Cash flows from investing activities 525 (3 286) (5 397)
Cash flows from financing activities (2 133) (1 360) ( 784)
Cash flows for the year 3 770 (1 927) (4 153)
Cash and cash equivalents at beginning
of period (8 591) (4 437) (4 438)
Cash and cash equivalents at end of
the period (4 821) (6 364) (8 591)
CONDENSED SEGMENT REPORT
6 months ended Year ended
31 August 31 August 28 February
2013 2012 2013
(Reviewed) (Reviewed) (Audited)
R'000 R'000 R'000
Segment revenue
Rail 19 085 40 106 57 800
Defence 7 922 2 972 18 230
Mining and Industrial 532 408 5 229
Total segment revenue 27 539 43 486 81 259
Segment profit/(loss) before taxation
Rail 5 603 1 049 5 853
Defence 3 882 635 8 324
Mining and Industrial (1 716) (4 240) (9 743)
Total segment profit/(loss) before taxation 7 769 (2 556) 4 434
Corporate unallocated (11 093) (7 603) (18 662)
Finance cost ( 231) ( 479) (1 112)
Total loss before taxation (3 555) (10 638) (15 340)
Financial position
51 534
Assets 65 993 63 624
Rail 21 169 9 414 21 280
Defence 2 393 1 528 10 308
Mining and Industrial 7 850 15 172 12 473
Unallocated 20 122 39 879 19 563
NOTES TO THE PROVISIONAL FINANCIAL INFORMATION
1. Intangible assets
CRMS Goodwill Other intangible Total
assets
R'000 R’000 R'000 R'000
Year ended 31 August
2013 (Reviewed)
Opening net carrying 2 107 15 059 4 438 21 604
amount
Movement:
- other (291) - (475) (766)
Closing net carrying 1 816 15 059 3 963 20 838
amount
Year ended 28 February
2013 (Audited)
Opening net carrying 11 485 22 966 1 559 36 010
amount
Movement:
- impairment (8 536) (7 907) - (16 443)
- other (842) - 2 879 2 037
Closing net carrying 2 107 15 059 4 438 21 604
amount
2. Headline (loss)/earnings
6 months ended Year ended
31 August 2013 31 August 2012 28 February 2013
(Reviewed) (Reviewed) (Audited)
Reconciliation of headline R'000 R'000 R'000
(loss)/earnings:
Loss attributable to ordinary
shareholders (2 716) (9 715) (12 548)
Goodwill impairment - 7 907 7 907
Development cost impairment - - 8 536
Adjusted for (profit)/loss on disposal of
plant and equipment (516) 15 1
Total tax effects of adjustments 144 (4) -
Headline (loss)/earnings attributable
to ordinary shareholders (3 088) (1 797) 3 895
Headline (loss)/earnings per share
(cents) (1.9) (1.1) 2.4
Diluted (loss)/earnings per share (cents) (1.9) (1.1) 2.4
COMMENTARY
Introduction
During the period under review ending 31 August 2013, Ansys experienced a low revenue generating period
which was expected due to a slow-down in projects and a boost in tender activities. Revenue decreased by
37% when compared with the interims of 31 August 2012. However, despite this reduction in revenue, gross
profit margins improved by 11% from 34% to 45%.
Basic loss per share improved from 6.0 cents in 31 August 2012 to a basic loss per share of 1.6 cents in the
31 August 2013 review period. A significant part of the basic loss for 31 August 2012 was due to goodwill
impairment. The current improvement was mainly due to the restructuring process highlighted below which
included a cost compression exercise, clean-up of development cost assets in the prior financial year as well
as the reduction in finance cost. Included in operating costs in the 31 August 2013 review period is non-
recurring restructuring cost of R1.7 million.
Headline losses increased from 1.1 cents in the 31 August 2012 interim review period to 1.9 cents in
31 August 2013 interim review period, mainly due to profit made on the disposal of non-core assets.
Restructuring
All restructuring initiatives have been concluded successfully during the period under review. Management
refined the business model to a more focused approach to research and development, a limited facility for
maintenance and repairs works and subcontracting of non-core functions to align costs with the cyclical
nature of our industry. This resulted in an improved cost base which in turn has significantly improved Ansys
sustainability and competitiveness. The effect of these improvements will realise as revenues begin to rise to
the maximum benefit of shareholders and other stakeholders.
Prospects
The company expects to continue its route to recovery in the second half of the year. Increased spending by
Ansys’ major customers has resulted in an increase of bids submitted with a reasonably high probability of
success. The order book is currently in excess of R26 million and is expected to continue improving in the
last six months of the financial year.
Market segments
Rail
Revenue decreased by 52% from 31 August 2012 to 31 August 2013, mainly due to a decrease in project
activities which was anticipated. Revenue generation during the 31 August 2013 period was mostly from
maintenance and spares of our installed product base, which provides a growing annuity income base.
The railways market has shown improved prospects as we have had major activity in tender submissions
during the 31 August 2013 period from our major customers.
Revenue from Rail will continue to grow and Ansys expects to create new revenue streams from the
Southern African Development Community (SADC) region as the pace to modernise railway networks and
locomotives by member states begins to rise.
Defence
The Defence revenue generation during the 31 August 2013 financial year increased by 167% compared to
the 31 August 2012 review period, mainly due to the execution of a significant order received in the last
quarter of the 28 February 2013 financial year.
Ansys’ defence focus remained opportunistic and strategically positioned to exploit the expected increase in
Defence spending, given government’s new impetus to grow the South African Defence industry. However,
performance in the second half of the 28 February 2014 financial year will continue on a similar path as the
first half of the year.
Mining and Industrial
The Mining and Industrial business continued to disappoint as its performance is positively correlated to the
performance of the mining sector, which has difficulties particularly in the local market. However Ansys is
maintaining its current client base and continues to invest in the rope monitoring systems as the mining
market is expected to turn.
Financial results
Current assets
A significant part of the decrease in current assets from 28 February 2013 to 31 August 2013 was due to the
decrease in trade and other receivables of R11.9 million, due to a decrease in the invoicing activity and
receipt of amounts due for the current review period.
Cash flow statement
- Cash flows from operating activities increased by R3.4 million from the 28 February 2013 to 31
August 2013 year, due to an improved corporate cost structure.
- Cash flows from investing activities for the 31 August 2013 review period of R525 000
(28 February 2013: R5.3 million) mainly resulted from disposal of non-core plant and equipment.
- Cash outflows from financing activities for the 31 August 2013 financial yearof R2.1 million
(28 February 2013: R784 000) was mainly due to the repayment of a shareholder loan.
The cash flow position improved by R3.8 million from the 28 February 2013 to 31 August 2013
Current liabilities
Provision for onerous lease
The Waterkloof building lease expires at the end of February 2014 and consists of monthly rental
payments of R160 260. The premises can be sublet when a new suitable premises is found. A
provision was raised for the full unavoidable cost, which is the monthly rental for the next six
months.
Comprehensive income
Loss for the year
The loss for the 31 August 2013 interim period was a direct result of the reduction in revenue.
Gross profit margins improved due to higher margins generated from maintenance and spare
work in Rail performed and a Defence project compared to the prior periods.
Operating expenses improved by R1.5 million from 31 August 2012 to 31 August 2013, mainly as
a result of the cost compression exercise. Included in the 31 August 2013 review period is
R1.7 million once-off restructuring expenses.
Acquisition of Tedaka Technologies
On 10 May 2013 Ansys made an offer to purchase 100% of the shares and shareholder loans of
Tedaka Technologies Proprietary Limited ("Tedaka Technologies") from Tedaka Investments
Proprietary Limited ("the seller") ("Tedaka Investments") with an effective date of 1 January 2014.
The offer to purchase was accepted by the seller on 21 May 2013, subject to certain conditional
and statutory requirements. The transaction is still conditional upon the approval by shareholders.
The total purchase price is a maximum of R 25.944 million, subject to certain profit warranties,
payable by the issue of 129 720 000 Ansys ordinary shares at an issue price of 20 cents per
share. The loan claims in Tedaka Technologies by Tedaka Investments, having a value of
R7.9 million, will be paid by Tedaka Technologies to Tedaka Investments.
Teddy Daka is a beneficiary of TDK Trust that owns 100% of the seller.
Going concern
The directors have reviewed the group’s budget and cash flow forecast for the year 31 August
2014. On the basis of this review and in the light of the current financial position of the group, the
directors are satisfied that the group will continue to operate for the foreseeable future and have
adopted the going concern basis in preparing the reviewed interim results.
Dividend policy
Ansys has historically exercised a policy of paying dividends to shareholders, having due regard
to the profit, future capital requirements and cash flow position. In the light of these, no dividend
will be payable for this period.
Changes to the board of directors
The following new appointments were made to the board of directors since the previous reporting
date:
- Nonhlanhla Mjole-Mncube – appointed 5 June 2013 as Chairperson
- Sizakele Mzimela – appointed 5 June 2013 as non-executive director to the board and as
member of the Audit Committee
- Teddy Daka – appointed 5 June 2013 as CEO
Broad Based Black Economic Empowerment ("BBBEE")
Ansys is a level 5 contributor.
Events subsequent to period end
The directors are not aware of any significant subsequent events that have occurred between the
end of the review period and the date of this report that may materially affect the results of the
group for the period under review or their financial position as at 31 August 2013.
Statement of compliance, basis of preparation and review opinion
The condensed interim financial results for the period ended 31 August 2013 has been prepared
in accordance with the framework concepts and the measurement and recognition requirements
of International Financial Reporting Standards and the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Reporting Pronouncements as
issued by Financial Reporting Standards Council, the South African Companies Act 71 of 2008,
as amended and the Listings Requirements of the JSE Limited and contain the information
required by IAS 34: Interim Financial Reporting.
The condensed interim financial results have been reviewed by the company's auditors, BDO
South Africa Incorporated, who has expressed an unmodified review conclusion on the results. A
copy of their review report is available for inspection at the company’s registered office.
The accounting policies adopted are consistent with those of the annual financial statements for
the year ended 28 February 2013.
Preparer
These results were prepared under the supervision of Rachelle Grobbelaar, the Chief Financial
Officer.
Appreciation
We thank our management and employees for their commitment and unfailing spirit in the face of
ongoing challenges. Their efforts make as significant an impact on the group's performance as
does their enthusiasm and positivity. We also thank our business partners, suppliers, advisors
and our valued clients and shareholders for your continued confidence in the group.
By order of the Board
29 November 2013
Teddy Daka Rachelle Grobbelaar
Chief Executive Officer Chief Financial Officer
CORPORATE INFORMATION
Non executive directors: FF Dantile, MD Keebine, NS Mjoli-Mncube
(Chairperson), SP Mzimela
Executive directors: T Daka (CEO), R Grobbelaar (CFO)
Registration number: 1987/001222/06
Registered address: 140 Bauhinia Street, Centurion, Pretoria, 0157
Postal address: PO Box 95361, Waterkloof, Pretoria
Company secretary: Fusion Corporate Secretarial Services
ProprietaryLimited
Telephone: +27 12 648 9600
Facsimile: +27 12 346 3720
Transfer secretaries: Computershare Investor Services Proprietary
Limited
Designated Advisor: Exchange Sponsors 2008 Proprietary Limited
Date: 29/11/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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