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Unaudited condensed consolidated financial results for the six months ended 31 August 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')
Unaudited condensed consolidated financial results
for the six months ended 31 August 2015
Condensed consolidated statement of comprehensive income
Re-presented* Re-presented*
Unaudited Unaudited Audited
for the for the for the
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2015 2014 2015
R'000 R'000 R'000
Revenue 147 734 118 826 242 041
Gross profit 27 141 22 394 27 669
Operating expenses** (29 041) (30 907) (54 320)
Operating loss (1 900) (8 513) (26 651)
Net finance (charges)/income 113 (1 602) (5 591)
Loss before taxation from
continuing operations (1 787) (10 115) (32 242)
Taxation 27 724 3 545
Loss for the period from
continuing operations (1 760) (9 391) (28 697)
(Loss)/profit from discontinued
operations (5 460) (1 074) 1 762
Loss from operations (7 220) (10 465) (26 935)
Other comprehensive loss (1 662) (340) (187)
Total comprehensive loss
for the period (8 882) (10 805) (27 122)
Reconciliation of headline loss
Loss attributable to PSV
equity holders (7 220) (10 465) (26 935)
(Profit) on disposal of property,
plant and equipment net of tax (79) (89) (826)
Total loss/(profit) on discontinued
operations net of tax 5 460 1 074 (1 762)
Loss/(profit) on discontinued
operations - other revenue,
expenditure and taxation 2 303 1 074 (1 762)
Loss on discontinued
operations - impairment
of intangible assets 1 150 - -
Loss on discontinued operations -
impairment of goodwill 2 007 - -
Impairment of tangible assets - - 1 499
Impairment of intangible assets - - 2 459
Headline loss - continuing operations (1 839) (9 480) (25 565)
Headline (loss)/profit - discontinued
operations (2 303) (1 074) 1 762
Headline loss from operations (4 142) (10 554) (23 803)
Basic loss per share (cents) (2.74) (3.98) (10.31)
Basic loss per share (cents)
from continuing operations (0.67) (3.57) (10.98)
Basic loss per share (cents) from
discontinued operations (2.07) (0.41) 0.67
Headline loss per share (cents) (1.57) (4.01) (9.11)
Headline loss per share (cents)
from continuing operations (0.70) (3.60) (9.78)
Headline loss per share (cents) from
discontinued operations (0.87) (0.41) (0.67)
Diluted loss per share (cents) (2.72) (3.98) (10.25)
Diluted (loss)/profit per share
(cents) from continuing operations (0.66) (3.57) 0.67
Diluted loss per share (cents)
from discontinued operations (2.06) (0.41) (10.92)
Diluted headline loss per share
(cents) (1.56) (4.01) (9.06)
Diluted headline loss per share
(cents) from continuing operations (0.69) (3.60) (9.73)
Actual number of shares in issue at
end of the period (R'000) 265 879 272 548 265 879
Weighted number of shares in issue
at end of the period (R'000) 263 628 262 989 261 378
Fully diluted weighted average
number of shares in issue at end
of the period (R'000) 265 308 263 218 262 735
* The columns that have been re-presented, have been re-presented to exclude all
profits and losses derived from the discontinued operation from the remainder of
the operations and to disclose these profits and losses on the (loss)/profit from
discontinued operations line item in order to present comparable comparative
results.
** Operating expenses are net of sundry income and include depreciation,
impairments and amortisation charges.
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
31 August 31 August 28 February
2015 2014 2015
R'000 R'000 R'000
ASSETS
Non-current assets* 58 770 69 073 64 353
Current assets 92 017 116 012 89 877
Inventory 13 479 29 852 25 812
Trade and other receivables 51 360 65 633 51 032
Non-current assets and current
assets classified as held-for-sale 9 641 - -
Taxation receivable 2 011 - 896
Cash and cash equivalents 15 526 20 527 12 137
Total assets 150 787 185 085 154 230
EQUITY AND LIABILITIES
Equity 63 444 88 293 72 249
Non-current liabilities 6 443 12 948 8 895
Current liabilities 80 900 83 844 73 086
Current portion of deferred purchase
consideration 3 559 5 722 2 846
Liabilities directly associated with
non-current assets classified as
held-for-sale 4 404 - -
Taxation payable - 2 456 2 556
Current portion of long-term liabilities 1 987 3 134 2 495
Trade and other payables 46 639 51 245 41 900
Bank overdraft 24 311 21 287 23 289
Total equity and liabilities 150 787 185 085 154 230
Net asset value per share (cents) 24.07 33.57 27.64
Tangible net asset value per share
(cents) 12.06 18.76 14.04
* Includes deferred tax assets
Condensed consolidated statement of changes in equity
Re-presented* Re-presented*
Unaudited Unaudited Audited
for the for the for the
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2015 2014 2015
R'000 R'000 R'000
Balance at beginning of the period 72 249 99 000 98 999
Comprehensive loss from trading
arising from continuing operations
for the period (1 760) (9 391) (28 697)
Comprehensive (loss)/profit from
foreign currency fluctuations arising
from continuing operations for the
period (33) 74 (471)
Comprehensive (loss)/profit from
trading for the period from discontinued
operations (5 460) (1 074) 1 762
Comprehensive (loss)/profit from
foreign currency fluctuations arising
from discontinued operations for the
period (1 629) (414) 284
Dividends paid - - -
Share-based payment transactions 77 98 372
Balance at end of the period 63 444 88 293 72 249
* The columns that have been re-presented, have been re-presented in order to
disclose all profits and losses from the discontinued operation separately from
those of the continuing operations.
Condensed consolidated statement of cash flows
Re-presented* Re-presented*
Unaudited Unaudited Audited
for the for the for the
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2015 2014 2015
R'000 R'000 R'000
Cash flows from operating activities 4 479 (9 507) (9 310)
Cash generated from/(used in)
continuing operations 8 955 (9 214) (9 393)
Cash generated from/(used in)
discontinued operations (4 476) (293) 83
Cash flows from investing activities 1 109 2 996 3 761
Cash generated from continuing
operations 1 110 3 668 4 008
Cash used in discontinued operations (1) (672) (247)
Cash flows from financing activities (2 986) (5 288) (16 641)
Cash used in continuing operations (7 130) (5 480) (16 136)
Cash generated from/(used in)
discontinued operations 4 144 192 (505)
Net movement in cash and cash
equivalents 2 602 (11 799) (22 190)
Net cash generated from/(used in)
continuing operations 2 935 (10 932) (21 520)
Net cash used in discontinued
operations (333) (772) (670)
Cash and cash equivalents at
beginning of the period (11 720) 11 039 11 039
Cash and cash equivalents at the
beginning of period attributable to
non-current and current assets held
for sale 568 - -
Cash and cash equivalents at end of
the period (8 785) (760) (11 152)
Cash and cash equivalents at the end
of period attributable to non-current
and current assets held for sale 235 - -
Condensed consolidated segmental information
for the six months ended 31 August 2015
Shared
Industrial Specialised Services
Supplies Services and Other
R'000 R'000 R'000
Total segmental revenue 88 214 61 759 (2 239)
Inter-segmental revenue (2 239) - 2 239
Reportable revenue 85 975 61 759 -
Gross profit 18 725 8 418 (2)
Operating expenses* (12 815) (7 197) (9 029)
Profit/(loss) before tax 7 490 (713) (8 564)
Profit/(loss) from operations after tax 5 476 (523) (6 713)
Capital expenditure 336 - 1 011
Gross assets 64 893 35 506 37 876
Gross liabilities 51 919 54 919 (28 212)
Continuing Discontinued Total
operations operations per AFS
R'000 R'000 R'000
Total segmental revenue 147 734 8 226
Inter-segmental revenue - -
Reportable revenue 147 734 8 226
Gross profit 27 141 362
Operating expenses* (29 041) 6 644
Profit/(loss) before tax (1 787) (8 666)
Profit/(loss) from operations after tax (1 760) (5 460) (7 220)
Capital expenditure 1 347 - 1 347
Gross assets 138 275 12 513 150 788
Gross liabilities 78 626 8 718 87 344
Condensed consolidated segmental information for
the six months ended 31 August 2014 (Re-presented*)
Shared
Industrial Specialised Services
Supplies Services and Other
R'000 R'000 R'000
Total segmental revenue 78 637 42 251 (2 062)
Inter-segmental revenue (2 595) - 2 595
Reportable revenue 76 042 42 251 533
Gross profit 16 044 6 790 (440)
Operating expenses* (8 882) (7 316) (14 709)
Profit/(loss) before tax 1 700 (5 499) (6 316)
Profit/(loss) from operations after tax 979 (4 001) (6 369)
Capital expenditure 265 41 165
Gross assets 60 455 45 851 60 374
Gross liabilities 50 987 54 824 (26 741)
Continuing Discontinued Total
operations operations per AFS
R'000 R'000 R'000
Total segmental revenue 118 826 17 120
Inter-segmental revenue - -
Reportable revenue 118 826 17 120
Gross profit 22 394 4 431
Operating expenses* (30 907) (6 028)
Profit/(loss) before tax (10 115) (1 950)
Profit/(loss) from operations after tax (9 391) (1 074) (10 465)
Capital expenditure 471 119 590
Gross assets 166 681 18 405 185 086
Gross liabilities 79 070 17 724 96 794
* Operating expenses are net of sundry income and include depreciation,
impairments and amortisation charges. It also excludes management fees and
finance charges
Commentary
BASIS OF PREPARATION
The unaudited condensed consolidated financial results for the six months ended
31 August 2015 ('the interim results') have been prepared in accordance with the
framework concepts, 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 ('Listings Requirements') 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 12 months
ended 28 February 2015.
The interim results have been prepared under the supervision of the Financial Director,
Tony Dreisenstock CA(SA), and have not been audited or reviewed by the Group's
auditors.
Any forecast financial information contained in the interim results has not been reviewed
and reported on by the Group's auditors in accordance with paragraph 8.40(a) of the
Listings Requirements.
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 maintenance and automotive capital equipment); and
- Specialised Services (including comprehensive cryogenic and gas systems and
geosynthetic linings).
INTRODUCTION
The interim period has seen an improvement in the South African businesses of
PSV, primarily Engineered Linings and Omnirapid, however the Turbo businesses
have taken strain. An overall decline in the mining sector has negatively impacted
certain of the businesses.
FINANCIAL RESULTS
Due to the disposal of the shares in Turbo Zambia, the 2014 interim results and the
2015 year-end results have been re-presented.
Total loss from operations for the period settled at R7.2 million, an improvement from
the loss of R10.4 million incurred for the six months ended 31 August 2014. Headline
loss per share improved from 4.01 cents as at 31 August 2014, to 1.57 cents as at
31 August 2015.
Total cash flow from operating activities also improved from negative R9.5 million
(2014) to a positive R4.4 million in the current period, underpinned by cash flow from
continuing operations of R8.9 million.
Although the Company operated a net overdraft of R8.8 million in the current period,
the cash flow position has improved by R3 million compared to the net overdraft at
28 February 2015, mainly attributed to the cash flow generated by continuing operations.
The Company's statement of financial position continued to weaken as a result of the
losses incurred in the year. The Company's tangible net asset per share decreased
from 14.07 cents as at 28 February 2015 to 12.06 cents as at 31 August 2015.
The fair values of the long-term financial instruments approximate their carrying values
due to the variable interest rate terms of the financial instruments. The directors consider
the carrying values of the current financial instruments to approximate their fair value
due to their short-term nature.
DISCONTINUED OPERATIONS
Turbo Zambia
The Company has disposed of 100% of the shares in Turbo Zambia to management
of Turbo Zambia. Accordingly, the financial results of Turbo Zambia have been reflected
as a discontinued operation. The assets and respective liabilities have been reclassified
as held for sale in accordance with International Financial Reporting Standards. The
comparative periods for the statements of comprehensive income, changes in equity,
cash flows and segmental reports have been accordingly re-presented.
Due to its relative size, the disposal falls below the threshold of a categorised
transaction in terms of the Listings Requirements.
OPERATIONAL REVIEW
Industrial Supplies
This segment contributed 58% (2014: 64%) to the Group's consolidated reportable
segment revenue from continuing operations at an average gross profit margin of
22% (2014: 21%).
Omnirapid continues to perform ahead of expectations with good profit and cash
generation at improved margins. This success remains cemented in outstanding service
delivery and strong customer relationships, essential characteristics in a tough market.
Turbo Agencies operates in Botswana and Democratic Republic of Congo ('DRC').
While Turbo Botswana and DRC remain profitable, in Botswana a slight contraction
of the economy as well as smaller competitors entering the market, has obliged the
business to build up new lines of supply and service offering. This has assisted in
maintaining profitability over the six-month period under review. The suspension of
mining operations by mines operating in the DRC will detrimentally impact the ongoing
viability of the DRC operation. The impact is still being determined.
Specialised Services
Specialised Services contributed 42% (2014: 36%) to the Group's consolidated reportable
segment revenue at an average gross profit margin of 14% (2014: 16%).
Engineered Linings has turned around with a healthy order book after much remedial
action was implemented. Bad debts have been significantly reduced and the Company
has taken a decision to insure all debtors in an effort to reduce risk. Management has
been streamlined, the Johannesburg office closed and better controls and marketing
put in place.
African Cryogenics experienced a slow six months with the gas industry cutting down
on capex spend. However, post the interim period, the order book is picking up.
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 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.
The matter has been referred to arbitration set for April 2016.
SUBSEQUENT EVENTS
Cautionary announcement
Shareholders are referred to the renewal of cautionary announcement released on
SENS on 5 October 2015 and are reminded to exercise caution when dealing in the
Company's securities, until a further announcement is made.
GOING CONCERN
With the losses incurred by PSV in the current period, the Board has performed an
extensive review of the going concern viability, liquidity and solvency of PSV. Based
on the actual results to date and forecasted figures to February 2016, the Board is
satisfied that the Company will remain a viable going concern.
Due to the continued losses incurred in Turbo Zambia, the underlying goodwill attributable
to this cash-generating unit has been impaired by R2.0 million and specific intangibles
by R1.2 million. Other than impairing the discontinued operation, no other impairment
was deemed necessary.
PROSPECTS
It is expected that operating conditions will remain difficult with an expectation of a
down-turn in trading activities in Botswana and the DRC.
The Group remains under cash flow pressure and there is no indication that the operating
environment will improve. Management will continue striving to control costs and gain
market share wherever possible. Under the prevailing circumstances, the Board is
considering a number of options to take the Group forward.
For and on behalf of the Board
AJD da Silva
Chief Executive Officer
AR Dreisenstock
Chief Financial Officer
Johannesburg
2 November 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: 02/11/2015 08:55:00 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
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