Wrap Text
Reviewed provisional condensed consolidated financial statements for The Year Ended 28 February 2015
ANSYS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1987/001222/06)
(“Ansys” or “the company”)
ISIN Code: ZAE 000097028
Share Code: ANS
Reviewed Provincial Condensed Consolidated Financial Statements
for the year ended 28 February 2015
Engineering beyond imagination
HEPS up from a loss of 3.58 cents to earnings of 4.44 cents
Operating profit of R17.3 million from a previous loss
Strong cash position
Order book at R200 million
Condensed Consolidated Statement of financial position
as at 28 February
Reviewed Audited
2015 2014
Notes R’000 R’000
Assets
Non-current assets
Plant and equipment 1 716 1 584
Intangible assets 1 1 810 4 170
Goodwill 15 059 15 059
Deferred taxation 8 506 13 161
27 091 33 974
Current assets
Inventories 2 40 533 29 218
Derivative financial
assets – 80
Trade and other receivables 64 816 24 031
Cash and cash equivalents 19 390 508
124 739 53 837
Total assets 151 830 87 811
Equity and liabilities
Equity
Stated capital 73 668 73 668
Accumulated loss (31 235) (41 260)
42 433 32 408
Non-current liabilities
Loans from related parties 3 9 070 9 993
Instalment sale agreement 532 436
Deferred taxation 894 1 582
10 496 12 011
Current liabilities
Loans from related parties 3 5 998 –
Trade and other payables 89 938 35 282
Instalment sale agreement 350 179
Current tax payable 335 –
Bank overdraft – 7 722
Provisions 4 2 280 209
98 901 43 392
Total liabilities 109 397 55 403
Total equity and liabilities 151 830 87 811
Number of shares in issue 244 867 056 244 867 056
Net asset value
per share (cents) 17.4 13.2
Tangible net asset value
per share (cents) 10.3 5.4
Condensed consolidated statement of comprehensive income
for the year ended 28 February
Reviewed Audited
2015 2014
Notes R’000 R’000
Revenue 251 121 65 803
Cost of sales (187 917) (42 678)
Gross profit 63 204 23 125
Other income 361 654
Other gains and losses 4 270 796
Operating costs (50 532) (31 917)
Operating profit/(loss) 17 303 (7 342)
Impairment of
intangible asset 1 (1 168) (868)
Profit/(loss) before interest
and taxation 16 135 (8 210)
Finance income 34 3
Finance cost (1 842) (903)
Profit/(loss) before taxation 14 327 (9 110)
Income tax (4 302) 2 085
Profit/(loss) for the year 10 025 (7 025)
Other comprehensive income,
net of taxation – –
Total comprehensive income/
(loss) for the year 10 025 (7 025)
Earnings/(loss) per share
attributable to ordinary
shareholders (cents):
Basic earnings/(loss) 4.09 (3.85)
Diluted earnings/(loss) 4.09 (3.85)
Weighted average number
of shares 244 867 056 182 620 480
Condensed consolidated statement of cash flows
for the year ended 28 February
Reviewed Audited
2015 2014
R’000 R’000
Cash flows from operating
activities before working capital 17 824 (6 891)
Changes in working capital 4 625 10 436
Cash flows from operating activities 22 449 3 545
Cash flows from investing activities (1 188) (329)
Cash flows from financing activities 5 343 (1 839)
Cash flows for the year 26 604 1 377
Cash and cash equivalents at
beginning of period (7 214) (8 591)
Cash and cash equivalents at
end of the year 19 390 (7 214)
Condensed consolidated statement of changes in equity
for the year ended 28 February
Accu-
Stated mulated
capital losses Total
Name R’000 R’000 R’000
Balance at 1 March 2013 47 268 (9 833) 37 435
Common control business
combination acquisition – (24 402) (24 402)
Total comprehensive loss – (7 025) (7 025)
Issue of shares 26 400 – 26 400
Balance at
28 February 2014 (Audited) 73 668 (41 260) 32 408
Balance at 1 March 2014 73 668 (41 260) 32 408
Total comprehensive income – 10 025 10 025
Balance at
28 February 2015 (Reviewed) 73 668 (31 235) 42 433
Condensed consolidated segment report
for the year ended 28 February
Reviewed Audited
2015 2014
R’000 R’000
Segment revenue
Rail 94 109 37 118
Defence 9 993 15 031
Mining 2 112 543
Telecommunications 144 907 13 111
Total* 251 121 65 803
Segment profit/(loss)
Rail 29 778 9 843
Defence 2 721 8 256
Mining (4 110) (4 324)
Telecommunications 7 115 (2 308)
35 504 11 467
Unallocated** (19 389) (19 677)
Finance cost (1 842) (903)
Finance income 34 3
Profit/(loss) before taxation 14 328 (9 110)
Financial position
Assets 151 830 87 811
Rail 58 810 22 125
Defence 1 012 1 677
Mining 1 635 6 212
Telecommunications 57 582 37 698
Unallocated** 32 791 20 099
Liabilities 109 397 55 403
Rail - 72
Defence - 1 347
Mining - 17
Telecommunications 61 264 45 391
Unallocated** 48 133 8 576
* There was no intersegment revenue
** Unallocated includes: head office, unallocated items and consolidated adjustments
Commentary
Introduction
Ansys has delivered a solid performance having achieved profitability for the current
financial year, a clear reflection of the group’s successful turnaround and the
Tedaka Technologies Proprietary Limited (“Tedaka”) business combination. The order book,
including major new contract awards, totals R200 million at the date of this announcement.
Group profile
The group, develops, produces, distributes and integrates niche technology-driven engineering
solutions for harsh environments in four key sectors: Rail, Mining, Defence and Telecommunications.
Ansys’ range of standard and bespoke solutions is aimed at improving clients’ productivity,
safety and security.
The group intends to be a centre of engineering excellence and is focussed on research and
development in order to remain at the forefront of innovation in its areas of operation.
Financial results highlights
Revenue was up 282% to R251 million from R65.8 million.
The net profit of R10 million reversed the loss of R7 million in the comparative period.
Operating profit of R17.3 million contrasted with the R7.3 million loss at 28 February 2014.
The group’s performance reflects aggressive growth across the board, boosted by the inclusion of Tedaka,
the Telecoms business unit, for the full financial year for the first time. Headline earnings at the
end of the period were up to a R10.9 million compared to a R6.5 million loss in the comparative period.
This translated to headline earnings per share of 4.44 cents (February 2014:
a headline loss per share of 3.58 cents).
Our operations
Rail
Performance in the year showed a notable improvement in line with expectations, with revenue of
R94.1 million (February 2014: R37.1 million) driving a 214% increase in segment profit to
R29.8 million (February 2014: R9.8 million).
The rail business has grown significantly from the previous year’s performance.The major growth comes
from track-side systems and on-board systems.
Defence
Defence revenue declined to R9.9 million (February 2014:R15 million) and segment profit lowered to
R2.7 million (February 2014: R8.2 million) owing to slow start in defence spending from major clients.
The market is seeing an increase in spending and we are in an ideal position to take advantage of it.
Mining
Revenue increased to R2.1 million (February 2014: R0.543 million)with a slight improvement in the segment
loss to R4.1 million, (segment loss in February 2014: R4.3 million). The mining segment has not done well,
mainly as result of the tough market conditions and the narrowness in our product portfolio, which will be
boosted by the Parsec acquisition.
Telecommunications
With Tedaka included for the full period for the first time, this segment contributed revenue of R144.9 million
(February 2014: R13 million) and segment profit of R7.1 million (segment loss in February 2014: R2.3 million).
The network fibre rollout contributed to the increased revenue. The high growth in this sector will continue
to offer promising opportunities for the group.
Outlook
The Ansys Group has significantly transformed in line with the strategy of being designer, developer and
supplier of niche technology-driven engineering solutions provider in the four vertical markets of rail,
mining, telecommunication and defence. The inclusion of Tedaka and Parsec (subject to shareholder approval)
in the Ansys Group has diversified and strengthened all the four vertical markets, reduced concentration
risk as well as enhanced the company’s delivery capability. This has improved the company’s sustainability
and positioned it for growth.
Despite the projected slowdown in the economy, the railways sector continues to grow as major clients
continues to invest in both rolling stock and railways infrastructure. We expect the defence and security
revenues to increase as a result of our increased product portfolio (mainly owing to the acquisition of Parsec)
and an uptick in the sector as a result of Denel’s significant order book and revenues expected from
international clients.
The telecommunications sector has seen major operators experience tough market conditions resulting in
margin pressure on suppliers. We expect margins to continue to be under pressure. However the expanded
portfolio of our own IP products that have higher margins are expected to off-set this. The sector itself
continues to invest heavily in network upgrades and new infrastructure particularly the deployment of fibre,
an area in which Ansys is well positioned to exploit.
The mining sector, though under cost pressure is expected to perform better in the next financial year.
The drive by mining companies to reduce costs but increase safety is growing expenditure in technologies
that the Ansys group has invested in.
In general, we expect our increased and improved capabilities, the broad spectrum of products and the
depth in the four vertical diversified markets to yield better performance.
Financial results commentary
Statement of financial position
Significant movement comparing the year ending February 2015 with the financial year ending
February 2014 was as follows:
• The trade and other receivables, inventory, trade and other payables increased as a direct result of
the increased revenue close to the financial year end.
• The decline in mining product sales triggered the requirement for an impairment of intangible assets.
Cash flow statement
• The cash flow position of the group improved to R19.3 million as a result of the improved performance
of group.
Notes to the financial information
1. Intangible assets
for the year ended 28 February
Other
CRMS MRTU assets Total
R’000 R’000 R’000 R’000
2015 (Reviewed)
Opening carrying value 1 285 2 836 49 4 170
Movement
– Impairment (795) (373) – (1 168)
– Amortisations/
additions (490) (828) 126 (1 444)
Closing carrying value – 1 635 175 1 810
2014 (Audited)
Opening carrying value 2 107 4 386 52 6 545
Movement
– Impairment (226) (642) – (868)
– Amortisations/
additions (596) (908) (3) (1 507)
Closing carrying value 1 285 2 836 49 4 170
Impairment test for development cost
The recoverable amount of the development cost assets is determined based on fair value less cost to sell
calculations and is based on the assumption that a certain number of units will be sold over a three to five year period.
The fair value is based on management’s best estimated selling price in the current market conditions, which take into
consideration previous selling prices and current market conditions.
The impairment in the current year relates to the development cost capitalised for the Continuous Rope Monitoring System
(“CRMS”) of R0.795 million (2014: R0.226 million) and the Mobile Rope Monitoring System (“MRTU”) of R0.373 million
(2014: R0.642 million). The challenging market conditions have had a significant impact on the sales which triggered the
impairment. The impairment formed part of the mining segment results.
2. Inventory
for the year ended 28 February
Reviewed Audited
2015 2014
R’000 R’000
Inventories comprise:
Raw materials 3 758 3 592
Work in progress 16 165 4 867
Finished goods 20 610 20 541
Goods in transit – 218
40 533 29 218
Work-in-progress inventory to the value of R2 million was written off to net realisable value as it is considered partially
obsolete. The impairment is included in the mining segment. Inventory to the value of R4,8 million included in finished goods
has been written off to its estimated net realisable value as it is technologically obsolete. The impairment is included
in the telecoms segment.
3. Loans to related parties
for the year ended 28 February
Reviewed Audited
2015 2014
R’000 R’000
Amounts owing to:
– Tedaka Investments Pty Ltd (9 070) (9 070)
– Bearing Management
Consultants Pty Ltd (1 792) (923)
– Teddy Daka (4 206) –
(15 068) (9 993)
Non–current liabilities (9 070) (9 993)
Current liabilities (5 998) –
(15 068) (9 993)
4. Provisions
for the year ended 28 February
Reviewed Audited
2015 2014
R’000 R’000
Provision for warranty 2 280 209
2 280 209
The provision for warranty claims on products sold and delivered was calculated on a project specific basis as the revenue
on the products are recognised. A 3% to 7% failure rate and the estimated production and material cost was used to calculate
the provision. The warranty claim is valid for a 12 month period.
5. Headline earnings/(loss)
for the year ended 28 February
Reviewed Audited
2015 2014
R’000 R’000
Headline and diluted headline
earnings/(loss) per share attributable
to ordinary shareholders:
Net profit/(loss) attributable
to ordinary shareholders 10 025 (7 025)
Non-headline items after tax:
Impairment of intangible assets 1 168 868
Profit on the sale of plant
and equipment – (522)
Total tax effects of adjustments (327) 146
Headline and diluted
profit/(loss) attributable to
ordinary shareholders 10 866 (6 533)
Weighted average number of
ordinary shares in issue 244 867 056 182 620 480
Headline and diluted earnings/(loss)
per share (cents) 4.44 (3.58)
Statement of compliance, basis of preparation and review opinion
The reviewed provisional condensed consolidated financial statements are prepared in accordance with the JSE Limited Listings
Requirements for provisional reports and the requirements of the Companies Act of South Africa. The Listings Requirements
require provisional reports to be prepared in accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and to also,
as a minimum, contain the information required by IAS 34 Interim Financial Reporting
The accounting policies applied in the preparation of the provisional condensed consolidated financial statements are in terms of
IFRS and consistent with those of the annual financial statements for the year ended 28 February 2014, except for the adoption of
new, improved and revised standards and interpretations which became effective, which had no material effect on the financial results.
The directors take responsibility for the preparation of the provisional condensed financial statements based on the underlying
financial information.
These reviewed provisional condensed consolidated financial statements for the year ended 28 February 2015 have been reviewed by
BDO South Africa Incorporated, who expressed an unmodified review conclusion. A copy of the auditor’s review report is available
for inspection at the Company’s registered office.
Preparer
These results were prepared under the supervision of Rachelle Grobbelaar CA (SA), the Chief Financial Officer.
Going concern
The directors have reviewed the group’s budget and cash flow forecast for the year to February 2016. On this basis and in
light of the group’s current financial position, the directors are satisfied that the group will continue to operate for the
foreseeable future and have adopted the going concern basis in preparing these reviewed provisional financial results.
Directorate
David Keebine resigned with effect from 28 August 2014. The board would like to thank David for his valuable contribution during
his term of office. Sizakele Mzimela was appointed as the Chair of the Audit and Risk Committee in his stead.
BBBEE
Ansys improved it’s BEE rating from a level 4 to a level 2.
Events subsequent to YEAR end
Acquisition of Parsec
Ansys is in the process of acquiring 100% of the shares in and all shareholders claims against Parsec Holdings Pty Ltd (“Parsec”),
25% of the shares in and all shareholders claims against Parsec Pty Ltd and 20% of the shares in and all shareholders claims against
Redline Telecommunications SA Pty Ltd for a maximum amount of R81,7 million, which includes the net consideration for the property,
Erven 3323 and 3318, Irene Extension 72, Kungwini local municipality, JR, Gauteng, together with all improvements thereon of
approximately R6,7 million.
All conditions precedent to the acquisition of Parsec have been fulfilled save for shareholders’ approval at the general meeting
scheduled for 1 June 2015.
Part of the purchase price for the acquisition of Parsec has been funded by the issue on 8 April 2015 of 42 406 667 Ansys ordinary
no par value shares at 36 cents per share to various new investors in terms of a vendor consideration placing.
To assist in improving the Statement of Financial Position of Ansys, Tedaka Investments Pty Ltd signed an agreement to convert the
loan entered into with Tedaka Technologies Pty Ltd with a value of R7 900 000, into equity, in terms of a specific issue of
22 674 375 Ansys ordinary no par value shares to Tedaka Technologies Pty Ltd at an issue price of 40 cents per share,
subject to shareholder’s approval at the general meeting scheduled for 1 June 2015.
Appreciation
We would like to thank all management and staff for their tenacity and effort during the period. Your talent and commitment
have ensured a strong foundation for growth and it is evident that your hard work is bearing fruit. We would also like to extend our appreciation to our fellow directors for their valuable contribution. We finally thank our business partners, suppliers, advisors and valued clients and shareholders for their continued confidence in the group.
By order of the board
Teddy Daka Rachelle Grobbelaar
Chief Executive Officer Chief Financial Officer
29 May 2015
Directors: T Daka (CEO); R Grobbelaar (CFO); NS Mjoli-Mncube* (Chair); FF Dantile*, SP Mzimela*
*Independent non-executive
Company secretary: Fusion Corporate Secretarial Services Proprietary Limited
Telephone: +27 12 749 1800
Facsimile: +27 12 665 2767
Website: www.ansys.co.za
Registered office: 140 Bauhinia Street Centurion, Pretoria 0157 (PO Box 95361, Waterkloof, Pretoria)
Designated Adviser: Exchange Sponsors 2008 Proprietary Limited
Transfer Secretaries: Computershare Investor Services Proprietary Limited
Date: 29/05/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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