PSV HOLDINGS LIMITED - Provisional audited condensed consolidated results for the year ended 28 February 2015

Release Date: 29/05/2015 16:32
Code(s): PSV
 
Wrap Text
Provisional audited condensed consolidated results for the year ended 28 February 2015

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 2015

Condensed consolidated statement of comprehensive income for the year ended 28 February 2015
   
                                                Audited for the   Audited for the
                                                     year ended        year ended
                                                    28 February       28 February
                                                           2015              2014
                                                              R                 R
Revenue                                             281 927 512       391 121 145
Cost of sales                                      (240 747 872)     (318 935 498)
Gross profit                                         41 179 640        72 185 647
Other expenses net of sundry income                 (66 228 783)      (74 723 217)
Results from operating activities                   (25 049 143)       (2 537 570)
Finance income                                        1 431 669           441 927
Finance costs                                        (7 152 147)       (2 672 161)
Net finance costs                                    (5 720 478)       (2 230 234)
Loss before income tax                              (30 769 621)       (4 767 804)
Income tax                                            3 834 512        11 457 532
(Loss)/profit for the year from                
continuing operations                               (26 935 109)        6 689 728
Loss from discontinued operations                             -          (121 249)
Loss on sale of discontinued operations                       -        (4 715 826)
(Loss)/profit for the year attributable to     
ordinary shareholders                               (26 935 109)        1 852 653
Other comprehensive income that may            
be recycled in future periods                  
Foreign currency translation (loss)/gain               (187 402)          111 823
Total comprehensive (loss)/income for          
the year                                            (27 122 511)        1 964 476
Reconciliation of headline earnings            
(Loss)/profit after tax attributable to        
ordinary shareholders                               (26 935 109)        1 852 653
(Loss)/profit on disposal of property,         
plant and equipment                                    (564 541)          188 267
Loss on sale of discontinued operations                       -         4 715 826
Impairment of tangible asset                          1 499 472           351 723
Impairment of intangible assets                       2 459 557                 -
Tax effect of above adjustment                         (261 781)          (52 715)
Headline (loss)/earnings                            (23 802 402)        7 055 754
Headline (loss)/earnings 
- continuing operations                             (23 802 402)        7 177 003
Basic (loss)/earnings per share (cents)                  (10.31)             0.71
Basic (loss)/earnings per share (cents)        
- continuing operations                                  (10.31)             2.56
Headline (loss)/earnings per share (cents)                (9.11)             2.70
Headline (loss)/earnings per share (cents)     
- continuing operations                                   (9.11)             2.75
Diluted (loss)/earnings per share (cents)                (10.25)             0.71
Diluted (loss)/earnings per share (cents)       
- continuing operations                                  (10.25)             2.55
Diluted headline (loss)/earnings per 
share (cents)                                             (9.06)             2.69
Diluted headline (loss)/earnings 
per share (cents) - continuing operations                 (9.06)             2.73
Diluted headline (loss) per share (cents)      
- discontinuing operations                                    -             (0.04)
Actual number of shares in issue at 
end of the year                                     265 879 842       272 547 699
Weighted number of shares in issue at end 
of the year                                         261 378 069       261 378 069
Fully diluted weighted average 
number of shares in issue at 
end of the year                                     262 735 256       262 730 028


Condensed consolidated statement of financial position 
as at 28 February 2015
                                                        Audited           Audited
                                                    28 February       28 February
                                                           2015              2014
                                                              R                 R
ASSETS                                               
Non-current assets                                   
Property, plant and equipment                        13 234 506        21 061 114
Intangible assets                                     6 370 556        10 610 210
Goodwill                                             29 186 265        29 186 265
Deferred taxation                                    15 561 721        12 199 448
Total non-current assets                             64 353 048        73 057 037
Current assets                                      
Inventories                                          25 812 986        29 358 229
Trade and other receivables                          51 032 726        58 032 277
Taxation receivable                                     895 640           894 473
Cash and cash equivalents                            12 136 880        27 710 873
Total current assets                                 89 878 232       115 995 852
Total assets                                        154 231 280       189 052 889
EQUITY
Share capital                                       273 276 078       273 136 360
Share-based payment reserve                             274 315            41 594
Foreign currency translation reserve                   (262 739)          (75 337)
Retained loss                                      (201 037 780)     (174 102 672)
Total equity attributable to ordinary 
shareholders of the Company                          72 249 874        98 999 945
LIABILITIES
Non-current liabilities
Deferred purchase liability                           2 000 000         4 659 206
Deferred taxation liabilities                         2 663 383         3 740 557
Loans and borrowings                                  4 231 930         6 966 779
Total non-current liabilities                         8 895 313        15 366 542
Current liabilities
Trade and other payables                             41 900 314        45 406 737
Taxation payable                                      2 555 541         3 171 195
Current portion of deferred purchase liability        2 845 331         6 599 229
Bank overdraft                                       23 289 397        16 672 996
Current portion of loans and borrowings               2 495 510         2 836 245
Total current liabilities                            73 086 093        74 686 402
Total liabilities                                    81 981 406        90 052 944
Total equity and liabilities                        154 231 280       189 052 889
Net asset value per share (cents)                         27.64             37.88
Net tangible net asset value per share (cents)            14.04             22.65
Total number of shares in issue 
(net of treasury shares)                            261 378 069       261 378 069

Condensed consolidated statement of changes in equity 
for the year ended 28 February 2015
                                                         Share-        (Deficit)/
                                                          based           reserve
                                              Share     payment       translation
                                            capital     reserve           reserve
Balance at 28 February 2013             273 059 364     141 842          (187 160)
Total comprehensive income
for the year
Profit for the year                               -           -           111 823
Total comprehensive income
for the year                                      -           -           111 823
Transactions with owners, recorded
directly in equity
Contributions by and distributions
to owners
Shares vested during the year                76 996     (76 996)                -
Share-based payment transactions                  -     (23 252)                -
                                             76 996    (100 248)                -
Balance at 28 February 2014             273 136 360      41 594           (75 337)
Total comprehensive income
for the year
Loss for the year                                 -           -          (187 402)
Total comprehensive income
for the year                                      -           -          (187 402)
Transactions with owners,
recorded directly in equity
Contributions by and distributions
to owners
Shares vested during the year               139 718    (139 718)                -
Share-based payment transactions                  -     372 440                 -
                                            139 718     232 721                 -
Balance at 28 February 2015             273 276 078     274 315          (262 739)

                                                       Retained
                                                           loss             Total
Balance at 28 February 2013                        (175 955 326)       97 058 720
Total comprehensive income
for the year
Profit for the year                                   1 852 653         1 964 476
Total comprehensive income
for the year                                          1 852 653         1 964 476
Transactions with owners, recorded
directly in equity
Contributions by and distributions
to owners
Shares vested during the year                                 -                 -
Share-based payment transactions                              -           (23 252)
                                                              -           (23 252)
Balance at 28 February 2014                        (174 102 672)       98 999 945
Total comprehensive income
for the year
Loss for the year                                   (26 935 109)      (27 122 511)
Total comprehensive income
for the year                                        (26 935 109)      (27 122 511)
Transactions with owners,
recorded directly in equity
Contributions by and distributions
to owners
Shares vested during the year                                 -                 -
Share-based payment transactions                              -           372 440
                                                              -           372 440
Balance at 28 February 2015                        (201 037 780)       72 249 874

Condensed consolidated statement of cash flows 
for the year ended 28 February 2015
                                                        Audited           Audited
                                                    28 February       28 February
                                                           2015              2014
                                                              R                 R
Cash flows from operating activities                 (8 088 615)         (970 457)
Taxation paid                                        (1 221 756)       (2 169 755)
Net cash (used in) operating activities              (9 310 371)       (3 140 212)
Cash flows from investing activities
Additions to property, plant and equipment
to expand operations                                 (2 252 165)       (3 937 410)
Additions to intangibles to expand operations          (219 891)         (449 009)
Proceeds from disposal of property,
plant and equipment                                   4 801 199         1 454 187
Proceeds on sale of subsidiaries                              -         6 810 204
Finance income                                        1 431 669           441 927
Net cash from investing activities                    3 760 812         4 319 899
Cash flows from financing activities
Loans repaid                                         (3 168 374)       (2 683 911)
Settlement of deferred purchase liability            (4 063 856)       (1 415 715)
Repayment of loans and borrowings                    (3 541 749)         (764 720)
Loans and borrowings granted                            466 165                 -
Finance expenses arising on interest-bearing debt    (6 333 021)       (2 026 527)
Net cash used in financing activities               (16 640 835)       (6 890 873)
Decrease in cash and cash equivalents               (22 190 394)       (5 711 186)
Cash and cash equivalents at beginning of the year   11 037 877        16 749 063
Cash and cash equivalents at end of the year        (11 152 517)       11 037 877

Segmental information as at 28 February 2015
                                                     Industrial       Specialised
                                                       Supplies          Services
                                                              R                 R
2015
Total segment revenue                               204 288 703        83 925 890
Intersegmental revenue                               (4 319 939)       (1 967 142)
Reportable segment revenue                          199 968 764        81 958 748
Gross profit                                         37 572 883         3 977 241
Depreciation/amortisation                             1 994 933                 -
Other operating expenses                             26 018 684        14 494 885
Profit/(loss) before shared service
costs from continuing operations                      5 568 490       (12 367 475)
Loss before tax from continuing operations              865 511       (19 247 330)
Capital expenditure                                   1 216 928            41 651
Gross assets                                         68 990 940        35 023 596
Gross liabilities                                    27 931 700        33 483 599
2014
Total segment revenue                               226 701 276       175 023 809
Intersegmental revenue                              (10 603 940)                -
Reportable segment revenue                          216 097 336       175 023 809
Gross profit                                         51 046 882        21 917 352
Depreciation/amortisation                             2 764 125         2 000 223
Other operating expenses                             29 488 840        17 940 563
Profit/(loss) before tax and shared
service costs from continuing
operations                                           19 395 045         3 278 473
Profit/(loss) before tax from
continuing operations                                 2 616 939        (8 582 711)
Loss before tax from
discontinued operations                                (181 993)                -
Capital expenditure                                   3 598 312         2 657 103
Gross assets                                         76 698 040        64 921 455
Gross liabilities                                    29 117 999        41 384 481

                                                         Shared
                                                       Services             Total
                                                              R                 R
2015
Total segment revenue                                 6 025 733       294 240 326
Intersegmental revenue                               (6 025 733)      (12 312 814)
Reportable segment revenue                                    -       281 927 512
Gross profit                                           (370 484)       41 179 640
Depreciation/amortisation                             3 882 244         5 877 177
Other operating expenses                             17 378 481        57 892 050
Profit/(loss) before shared service
costs from continuing operations                    (23 970 636)      (30 769 621)
Loss before tax from continuing operations          (12 387 802)      (30 769 621)
Capital expenditure                                     993 586         2 252 165
Gross assets                                         50 216 745       154 231 281
Gross liabilities                                    20 566 107        81 981 406
2014
Total segment revenue                                         -       401 725 085
Intersegmental revenue                                        -       (10 603 940)
Reportable segment revenue                                    -       391 121 145
Gross profit                                           (778 587)       72 185 647
Depreciation/amortisation                             2 350 587         7 114 935
Other operating expenses                             27 117 528        74 546 931
Profit/(loss) before tax and shared
service costs from continuing
operations                                          (27 441 322)       (4 767 804)
Profit/(loss) before tax from
continuing operations                                 1 197 968        (4 767 804)
Loss before tax from
discontinued operations                                       -          (181 993)
Capital expenditure                                     445 716         6 701 131
Gross assets                                         47 433 394       189 052 889
Gross liabilities                                    19 550 464        90 052 944

Commentary

BASIS OF PREPARATION
The provisional audited condensed consolidated financial statements ('the financial 
statements') for the year ended 28 February 2015 ('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 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 year ended 28 February 2014.

This report is extracted from audited information. The Board of Directors of 
PSV ('the Board') takes full responsibility for the preparation of this report.

The financial statements have been prepared under the supervision of the Financial 
Director, Tony Dreisenstock, 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 Company's registered office. Any reference to 
future financial performance included in this announcement has not been 
reviewed or reported on by the Company'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, crane/forklift maintenance and automotive capital 
  equipment).
- Specialised Services (including comprehensive cryogenic and gas systems 
  and geosynthetic linings).

INTRODUCTION
The current financial year proved to be the most difficult in PSV's history. 
Strike action, disruptive relocation of the African Cryogenics business, ongoing 
load-shedding and major customers going into liquidation, all detrimentally 
contributed to the Company's financial position.

FINANCIAL RESULTS
Total comprehensive loss for the year settled at R27.1 million, down from the 
comprehensive income of R2 million in 2014. Headline earnings per share weakened 
from 2.70 cents per share ('cps') to a headline loss of 9.11 cps.

Cash flow from operating activities declined from negative R1 million (2014) to 
negative R8.1 million principally due to losses incurred in most business units. 
As a result, the Company's debt:equity ratio (net of cash) increased from 10.1% 
in 2014 to 31.6% in the current year. PSV ended the year with a net overdraft of 
R11.2 million, compared to a cash balance in 2014 of R11 million.

The Company's statement of financial position weakened as a result of the losses 
incurred in the year. The Company's net tangible asset per share decreased by 
38% from 22.65 cps in 2014 to 14.04 cps in 2015.

The Company cancelled 6.7 million unissued treasury shares in December 2014, as 
a result of the winding down of PSV's employee share scheme.

OPERATIONAL REVIEW
Industrial Supplies
This segment contributed 71% (2014: 55%) to the Group's consolidated reportable 
segment revenue at an average gross profit margin of 18.8% (2014: 23.6%).

Omnirapid again performed well despite tough market conditions, which impacted 
slightly on the gross profit margin of the business. The mantra of Omnirapid 
remains outstanding service delivery and strong customer relationships, 
resulting in a business that is profitable and cash generative.

Whilst Turbo DRC remains profitable and Turbo Botswana and Zambia incurred 
losses attributable to management issues and a declining copper price which 
resulted in a reduction in customer spend.

Specialised Services
Specialised Services contributed 29% (2014: 45%) to the Group's consolidated 
reportable segment revenue at an average gross profit margin of 4.9% (2014: 12.5%).

African Cryogenics was impacted by strike action, load-shedding and relocation 
during the year contributing to the first loss made by this business unit since 
acquisition. In previous commentary it was stated that it would take at least 
two years for African Cryogenics to compete successfully on an international 
level and thus far management is pleased with the progress made during the 
past year. It has provided a good foundation of accreditations, products and 
systems, which are now in place from which to market the business.

Engineered Linings suffered a significant loss exacerbated by the liquidation 
of a primary customer. The continued viability of this business unit is being 
reassessed. Notwithstanding, intensive restructuring has reduced breakeven 
levels by 70%. Due to the losses incurred it was decided to impair the 
Engineered Linings market related intangible asset by R2.5 million.

DIVIDENDS
No dividends were declared or proposed. The Board reviews the dividend 
policy annually.

CHANGES TO THE BOARD
During the year under review there were no changes to the Board.

LITIGATION OUTCOME
PSV recently won an arbitration case against the purchaser of Groupline 
Projects, which PSV sold in 2011. This resulted in an injection of R3.5 million 
plus interest into the Company, which was used to reduce debt and to fund working 
capital. Legal fees incurred are currently being evaluated by the arbitrator 
and the award in favour for PSV is pending.

LITIGATION STATEMENT
On 31 October 2014, PSV served notice of cancellation of the lease agreement 
at its principal location in Elandsfontein, Germiston. The reason for the 
cancellation was the non-performance by the landlord of its obligations in 
terms of the lease agreement. As a result of vacating the leased premises it 
was necessary to impair the leasehold improvements by R1.5 million. The matter 
has been referred to arbitration set for October 2015.

SUBSEQUENT EVENTS
Windfall 28 Investments (Pty) Ltd ('Windfall') has acquired 38.9% of the 
issued share capital in PSV and a subsequent offer to minorities has been made. 
The offer by Windfall is to acquire all, or part, of the ordinary shares of 
shareholders for a consideration of R0.15 (fifteen cents) per share.

It is the intention of the board of directors of Windfall and of PSV to retain 
the listing of PSV on the JSE for the time being. Shareholders who elect not 
to accept the offer, or elect to accept the offer in part, will remain 
shareholders of PSV.

GOING CONCERN
With the losses incurred by PSV in the current year, the Board has performed 
an extensive review of the going concern viability and liquidity of PSV. 
Based on the approved budgets, the Board are satisfied that PSV will remain 
a viable going concern.

An independent valuation was performed to test the carrying value of the 
underlying cash generating units. Apart from the Engineering Linings, 
impairment to market related intangible assets, no other impairment was 
necessary.

PROSPECTS
Operating conditions remain extremely tough, especially on the contracting 
side of the business, and it is envisaged that these will continue for some 
time to come.

The drive by PSV to win additional contracts and to renew projects is proving 
successful and these projects should reflect in the new financial year's 
results.

The management of PSV remains confident that a good foundation is in place 
for the various businesses of the Group to gain traction.

For and on behalf of the Board

AJD da Silva 
Chief Executive Officer
 
AR Dreisenstock
Chief Financial Officer

Johannesburg
29 May 2015

DIRECTORS
Executive Directors:
AJD da Silva (Chief Executive Officer)
AR Dreisenstock (Chief Financial Officer)
Independent Non-Executive Directors:
R Patmore (Chairman of the Board)
A de la Rue (Chairman of the Audit and Remuneration Committees)
E Ratshikhopha (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






Date: 29/05/2015 04:32:00 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.

Email this JSE Sens Item to a Friend.

Share This Story