Wrap Text
Reviewed Provisional Condensed Consolidated Interim Financial Statements for the period ended 31 August 2015
Ansys Limited
("Ansys" or "the company" or "the group")
(Incorporated in the Republic of South Africa)
(Registration Number: 1987/001222/06)
Share Code: ANS
ISIN: ZAE000097028
Reviewed Provisional Condensed Consolidated Interim Financial Statements
for the period ended 31 August 2015
HIGHLIGHTS
- Revenue increased to R155.1 million from R80.5 million
- EBITDA improved to R9.1 million from R2.1 million
- HEPS up to earnings of R1.32 cents from a loss of R0.16 cents
- Order book increased to R660 million from R400 million
Condensed consolidated statement of financial position
As at 31 August 2015
6 months 6 months Year
ended ended ended
31 Aug 2015 31 Aug 2014 28 Feb 2015
Notes (Reviewed) (Reviewed) (Audited)
R'000 R'000 R'000
Assets
Non-current assets 170 782 32 362 27 091
Property, plan and equipment 43 982 1 435 1 716
Intangible assets 2 118 205 19 062 16 869
Deferred tax asset 8 596 11 865 8 506
Current assets 157 079 60 945 124 739
Inventories 61 770 26 235 40 533
Trade and other receivables 73 890 32 657 64 816
Cash and cash equivalents 21 074 2 053 19 390
Other financial assets 345 - -
Total assets 327 862 93 307 151 830
Equity and liabilities
Equity 185 598 32 199 42 433
Capital, reserves and non-
controlling interest 185 598 32 199 42 433
Non-current liabilities 35 086 16 023 10 496
Instalment sale agreement 4269 297 532
Interest bearing borrowings 4 29 729 - -
Loans from related parties 3 - 14 436 9 070
Deferred tax liability 1 088 1 290 894
Current liabilities 107 178 45 085 98 901
Instalment sale agreements 1 848 231 350
Provisions 2 750 614 2 280
Interest bearing borrowings 4 571 - -
Other financial liabilities 2 11 943 - -
Loans from related parties 3 - 1 000 5 998
Trade and other payables 81 916 36 566 89 938
Current tax payable 1 073 - 335
Cash and cash equivalents 7 077 6 674 -
Total equity and liabilities 327 862 93 307 151 830
Number of shares in issue 461 038 321 244 867 056 244 867 056
Net asset value per share (cents) 40.3 13.2 17.3
Tangible net asset value per
share (cents) 14.6 5.2 10.4
Condensed consolidated statement of comprehensive income
For the six months ended 31 August 2015
6 months 6 months Year
ended ended ended
31 Aug 2015 31 Aug 2014 28 Feb 2015
Notes (Reviewed) (Reviewed) (Audited)
R'000 R'000 R'000
Revenue 155 073 80 529 251 121
Cost ofsales (110 706) (59 337) (187 916)
Gross profit 43 737 21 192 63 205
Other income 117 196 361
Operating costs (33 135) (19 244) (48 748)
Other (losses)/gains (2 298) - 4 270
EBITDA 9 051 2 144 19 088
Depreciation and amortisation (2 205) (1 027) (1 785)
Development cost impairment
reversal/(impairment) - 253 (1 168)
Profit before interest and
taxation 6 846 1 370 16 135
Finance income 443 8 34
Finance cost (801) (584) (1 842)
Profit before taxation 6 488 794 14 327
Taxation (2 184) (1 003) (4 302)
Profit/(loss) for the period 4 304 (209) 10 025
Other comprehensive income,
net of tax - - -
Total comprehensive
profit/(loss) for the period 4 304 (209) 10 025
Attributable to:
Equity holders of the company 4 337 (209) 10 025
Non-controlling interest (32) - -
Basic earnings/(loss) per share
(cents) 1.32 (0.09) 4.09
Diluted earnings/(loss) per share
(cents) 1.32 (0.09) 4.09
Weighted average number of
shares in issue 2 324 954 810 244 867 056 244 867 056
Diluted average number of
shares in issue 2 324 954 810 244 867 056 244 867 056
Condensed consolidated statement of cash flows
For the six months ended 31 August 2015
6 months 6 months Year
ended ended ended
31 Aug 2015 31 Aug 2014 28 Feb 2015
(Reviewed) (Reviewed) (Audited)
R'000 R'000 R'000
Cash flows from operating
activities before working capital 8 634 1 650 17 823
Changes in working capital (64 262) (3 951) 4 626
Cash flows from operating
activities (55 628) (2 301) 22 449
Cash flows from investing
activities 23 119 (462) (643)
Cash flows from financing
activities 27 116 5 356 4 798
Cash flows for the period (5 393) 2 593 26 604
Cash and cash equivalents at
beginning of period 19 390 (7 214) (7 214)
Cash and cash equivalents at
end of the period 13 997 (4 621) 19 390
Condensed consolidated statement of changes in equity
For the six months ended 31 August 2015
Issued Accu- Non-
share mulated controlling
Notes capital losses interest Total
R'000 R'000 R'000 R'000
Balance as at 1 March 2014
(Reviewed) 73 668 (41 260) - 32 408
Movements during the period
Loss for the period - (209) - (209)
Balance as at 31 August 2014
(Reviewed) 73 668 (41 469) - 32 199
Movements during the period
Profit for the period - 10 234 - 10 234
Balance as at 28 February 2015
(Audited) 73 668 (31 235) - 42 433
Movements during the period
Shares issued 2,3 26 269 - - 26 269
Business combination 2 112 203 - 389 112 592
Profit/(loss) for the period - 4 337 (32) 4 304
Balance as at 31 August 2015
(Reviewed) 212 140 (26 898) 357 185 598
Condensed consolidated segment report
For the six months ended 31 August 2015
6 months 6 months Year
ended ended ended
31 Aug 2015 31 Aug 2014 28 Feb 2015
Notes (Reviewed) (Reviewed) (Audited)
R'000 R'000 R'000
Segment revenue*
Rail 60 215 20 921 94 109
Defence and Information
Security*** 24 208 9 089 9 993
Mining and Industrial*** 16 753 2 112 2 112
Telecommunications 53 897 48 407 144 907
Total 155 073 80 529 251 121
Segment profit/(loss)
Rail 10 834 5 690 29 778
Defence and Information
Security*** 8 478 3 564 2 721
Mining and Industrial*** (588) (334) (4 110)
Telecommunications 3 412 643 5 936
Subtotal 16 105 9 563 34 325
Corporate unallocated** (9 259) (8 193) (18 190)
Finance cost (801) (584) (1 842)
Finance income 443 8 34
Profit before taxation 6 488 794 14 327
Financial position
Assets 327 862 93 307 151 830
Rail 56 702 27 848 58 810
Defence and Information
Security*** 14 655 2 963 1 012
Mining and Industrial*** 28 423 8 246 1 635
Telecommunications 31 249 40 620 55 881
Intangible assets to be
classified 2 87 731 - -
Unallocated** 109 102 13 630 34 492
Liabilities 142 264 61 108 109 397
Rail 2 270 70 -
Defence and Information
Security*** 31 244 480 -
Mining and Industrial*** 27 314 64 -
Telecommunications 35 735 48 539 59 563
Unallocated** 45 701 11 955 49 834
* There was no intersegment revenue
** Unallocated includes, head office, corporate, marketing, admin and consolidation
adjustments
*** Management is reviewing the segment report due to the Parsec acquisition. The segment
name has been changed from "Mining" to "Mining & Industrial" as well as "Defence" to
"Defence & Information Security" to include new segments from the Parsec acquisition.
COMMENTARY
GROUP PROFILE
The group develops, produces, distributes and integrates niche technology-driven engineering
solutions for harsh environments in four key sectors: Rail, Mining and Industrial, Defence and
Information Security as well as 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 that is underpinned by research and
development in order to remain at the forefront of innovation in its areas of operation.
FINANCIAL RESULTS HIGHLIGHTS
Revenue is up by 93% from R80.5 million to R155.1 million. EBITDA improved to R9.1 million from
R2.1 million representing an increase of 333%.
The group's performance continues to reflect growth across the board. This year's interims have
been augmented by the inclusion of Parsec Holdings Pty Ltd ("Parsec Holdings") for the three
months from the effective acquisition date of 1 June 2015. Headline profit improved to R4.3 million
from a loss of R0.391 million in the comparative period translating to headline profit per share of
R1.32 cents (August 2014: headline loss per share of R0.16 cents).
OUR OPERATIONS
Rail
Performance in the first half was in line with expectations with revenue increasing by 188% to
R60.2 million compared to R20.9 million in the comparable period. Rail profit improved to R6.8
million from R5.7 million, an increase of 19%, due to the execution of long term contracts.
Defence & Information Security
Defence revenue grew by 168% to R24.2 million (August 2014:R9 million) and achieved a profit
increase of 81% to R6.5 million (August 2014:R3.6 million). This growth is mainly a result of the
amalgamation of the Parsec defence and Ansys defence businesses.
Mining & Industrial
Performance in mining and industrial has improved following the acquisition of Parsec when
compared to the previous year's interim results. Revenue for the period increased to R16.8 million
(August 2014: R2.1 million) with a loss of R0.6 million (August 2014: R0.3 million).
Telecommunications
Performance in the first half of the year showed a notable improvement in line with expectations,
with revenue up by 11% to R53.9 million (August 2014: R48.4 million) driving an increase in profit
to R3.4 million (August 2014: R0.6 million). In addition to the expectations, growth was also
boosted by the acquisition of Parsec's telecommunication business.
OUTLOOK
The strategy is yielding tangible benefits for the group. We have improved the Statement of
Financial Position and simplified the Group. We expect continued and improved performance in the
second half of the year.
The telecommunications sector is growing due to wireless and fibre network rollouts as well as
general network upgrades to meet increased demand for bandwidth. We are well positioned with
our products and services to benefit from this growth.
The mining and industrial sector outlook remains subdued; however, we are cautiously optimistic
about this sector where we are a supplier of safety and productivity enhancing products.
The amalgamation of the Ansys and Parsec defence and information security businesses into a
single division has resulted in the creation of the critical mass required to be a player in the sector
both locally and internationally. The local defence market continues to show signs of growth which
the group is well positioned to exploit. Our opportunities in the international defence business
remain strong.
Despite the slowdown in the economy which may impact our rail business, our rail clients continue
to invest in the product areas of safety and productivity that the group operates in.
Given the persistent cyber security challenges experienced worldwide and the robust growth and
demand for innovation in the telecommunications sector, some of our telecommunications and
information security products are geared to accelerate our growth within these sectors both locally
and internationally.
FINANCIAL RESULTS COMMENTARY
The Parsec Holdings acquisition was concluded on 1 June 2015 and the results have been included
in the reported results for the period ending 31 August 2015. As a result the majority of the
movement in the statement of comprehensive income, the statement of financial position and the
cash flow statement is due to the Parsec business combination.
Significant movement other than noted above, comparing the period ending 31 August 2015 with
the period ending 31 August 2014, includes the following:
CASH FLOW STATEMENT
The changes in working capital had a significant impact on the cash outflow from operating
activities which decreased to R55.6 million (outflow in August 2014: R2.3 million). Included in the
working capital change of R64.3 million (outflow in August 2014: R3.9 million) is a R30.3 million
trade creditor relating to the purchase of the Parsec Group office building that was subsequently
replaced by the bond referred to in note 4.
STATEMENT OF COMPREHENSIVE INCOME
The taxation expense of R2.2 million comprises deferred tax of R1.1 million and current taxation of
R1.1 million.
STATEMENT OF FINANCIAL POSITION
Intangible assets of R118.2 million includes "intangible assets to be classified" of R87.7 million
relating to the Parsec acquisition. Refer to note 2 in the notes to the financial information.
Other financial liabilities of R11.9 million relates to the outstanding balance of the cash
consideration payable for the Parsec acquisition. The total cash consideration payable of R21.9
million, was reduced by the first tranche payment of R10 million. Refer to note 2 in the notes to
the financial information.
NOTES TO THE FINANCIAL INFORMATION
1. Headline earnings per share for the 6 months ended 31 August 2015
6 months 6 months Year
ended ended ended
31 Aug 2015 31 Aug 2014 28 Feb 2015
(Reviewed) (Reviewed) (Audited)
R'000 R'000 R'000
Reconciliation of headline
earnings/(loss):
Profit/(loss) attributable to ordinary
shareholders 4 304 (209) 10 025
Development cost impairment - (253) 1 168
Total tax effects of adjustments - 71 (327)
Headline earnings/(loss) attributable
to ordinary shareholders 4 304 (391) 10 866
Headline earnings/(loss) per share
(cents) 1.32 (0.16) 4.44
Diluted headline earnings/(loss) per
share 1.32 (0.16) 4.44
2. Acquisition of Parsec group
On 1 June 2015, the Group acquired the shares and all the shareholders' claims against Parsec
Holdings, Parsec and Redline Telecommunications SA Pty Ltd ("Redline").
The acquired business contributed revenues of R43.9 million and net profit of R2.6 million to the
group for the period from 1 June 2015 to 31 August 2015. If the acquisition had occurred on 1 April 2015,
the acquired business would have contributed revenues of R75.9 million and net profit
of R1 million to the group up to the period ending 31 August 2015.
Details of the net assets acquired are as follows:
R'000
Fair value of the purchase consideration
- Shares issued (1 June 2015 share price of 77 cents) 112 203
- Cash consideration 15 570
- Contingent cash consideration 6 373
Total purchase consideration 134 146
The fair value of assets acquired comprise:
Property, plant and equipment 40 983
Intangible assets 6 911
Goodwill 7 288
Deferred tax 975
Other financial assets 345
Inventory 15 501
Trade and other receivables 36 322
Cash and cash equivalents 20 781
Current tax payable 308
Non-controlling interest (389)
Interest bearing borrowings (4 387)
Trade and other payables (78 223)
Total fair value of assets acquired 46 415
Intangible assets to be classified 87 731
Total purchase consideration 134 146
The issue price of 40 cents per share, as reported in the circular, was determined by the board on
8 October 2014 and was at a premium of 1.37% to the 30 day VWAP of Ansys for the 30 days
preceding 8 October 2014. The fair value of the shares issued was based on the published share
price as at 1 June 2015, which was 77 cents. The impact of the fair value of the shares was an
increase of R30.5 million to the purchase consideration relating to the increase in the market price.
The initial purchase consideration was made up as follows:
R63 583 492, of which R6 700 000 relates to the property and is only payable once the
property is transferred into the name of Parsec Properties Pty Ltd, payable to Parsec Holdings
sellers, by the issue of 102 475 593 Ansys shares at 40 cents per share and R22 593 255 in cash;
R15 750 002, which relates to the 25% shareholding in Parsec, not owned by Parsec Holdings,
payable to the Parsec seller, by the issue of 39 375 004 Ansys shares at 40 cents per share;
and
R2 399 626, which relates to the 20% shareholding in Redline not owned by Parsec Holdings,
payable to the Redline Telecommunications seller by the issue of 3 867 404 Ansys shares at
40 cents per share and R852 664 in cash.
Prior to the effective date, Parsec Holdings distributed R10 000 000 and R9 779 203 to the Parsec
Holdings sellers.
The cash consideration payable (undiscounted) to the sellers will be settled in three tranches as
follows:
the first tranche of R10 000 000 was paid in cash on the closing date, R9 636 327 was paid to
the Parsec Holdings sellers and R363 673 was paid to the Redline sellers. This payment was
subject to Parsec Holdings achieving a minimum NTAV of R25 million on the effective date,
which was achieved.
the second tranche of R3 500 000 is payable in cash on 1 December 2015, to the sellers.
R3 372 715 is payable to the Parsec Holding sellers and R127 285 payable in cash to the
Redline sellers.
the third tranche of R9 945 919 is payable in cash to the sellers as follows:
the first instalment of R2 300 000 is payable on 1 June 2016, R2 216 255 to the Parsec
Holdings sellers and R83 645 to the Redline sellers.
the subsequent instalments of R2 500 000 each are payable in quarterly instalments
commencing 1 June 2017 and accruing interest at the prime interest rate. R7 367 858 is
payable to Parsec Holdings and R278 061 to the Redline sellers.
these are payable subject to Parsec having sufficient free cash flow. In the event that
Parsec does not have sufficient free cash flow, the quarterly instalments of R2 500 000
each shall be increased by the amount of the shortfall in free cash flow.
in the event that any tranche and/or tranche shortfall is not paid after 36 months from
1 June 2015, due to a shortfall in free cash flows, all the said amounts shall be forfeited.
The purchase price was funded by a capital raising in terms of a general issue for cash of
47 778 889 shares at 36 cents to various investors and the cash instalments will be funded out of
current cash flows. Refer to the shares issued in the Statement of Changes in Equity.
The total number of Ansys shares issued to the sellers was 145 718 001, which were all issued in
July 2015. Refer to the business combination in the Statement of Changes in Equity.
Management is in the process of completing the purchase price allocation and the "intangible assets to be classified"
will be re-classified at year-end.
3. Loans from related parties
6 months 6 months Year
ended ended ended
31 Aug 2015 31 Aug 2014 28 Feb 2015
(Reviewed) (Reviewed) (Audited)
Name Relationship R'000 R'000 R'000
Amounts owing to:
Same director
- TDK Trust (T Daka) - 1 000 -
Same director
- Tedaka Investments Pty Ltd (T Daka) - (9 070) (9 070)
- Bearing Management Same director
Consultants Pty Ltd (T Daka) - (966) (1 792)
Same director
- Teddy Daka (T Daka) - (3 400) (4 206)
- (15 436) (15 058)
Non-current liabilities - (14 436) (9 070)
Current liabilities - (1 000) (5 998)
- (15 436) (15 098)
The Tedaka Investments Pty Ltd loan was repaid with the issue of 22 674 375 shares at 40 cents
as part of the Parsec Holdings acquisition. Refer to the shares issued in the Statement of Changes
in Equity. The other loans were repaid in cash.
4. Interest bearing loan
6 months 6 months Year
ended ended ended
31 Aug 2015 31 Aug 2014 28 Feb 2015
(Reviewed) (Reviewed) (Audited)
R'000 R'000 R'000
Parsec Properties Pty Ltd loan from Nedbank 30 300 - -
30 300 - -
Non-current liabilities 29 729 - -
Current liabilities 571 - -
30 300 - -
The interest bearing borrowing is within Parsec Properties Pty Ltd for the new Parsec group office.
The loan is secured over the property and is repayable over 10 years, for which the first 3 years
the interest is fixed at 10.43% and thereafter it will be at prime less 0.5%. A R5 million residual
value will remain on the loan at the end of the 10-year period. Included in the R30.3 million loan is
mezzanine finance of R5 million, with interest rate at 11.5% and is repayable at end of the 3-year
period.
STATEMENT OF COMPLIANCE, BASIS OF PREPARATION AND REVIEW REPORT
The condensed consolidated interim financial statements are prepared in accordance with
International Financial Reporting Standard, (IAS) 34 Interim Financial Reporting, the SAICA
Financial Reporting Guides as issued by Accounting Practices Committee and Financial
Pronouncements as issued by Financial Reporting Standards Council and the requirements of the
Companies Act of South Africa. The accounting policies applied in the preparation of these interim
financial statements are in terms of International Financial Reporting Standards and are consistent
with those applied in the previous annual financial statements. The directors take full responsibility
for the preparation of the condensed interim financial statements.
These interim condensed consolidated financial statements for the period ended 31 August 2015
have been reviewed by PricewaterhouseCoopers Incorporated, which expressed an unqualified
review conclusion.
A copy of the auditor's report is available for inspection at the company's registered office together
with the financial statements identified in the auditor's report.
The auditor's report does not necessarily report on all the information contained in these financial
results. 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 auditor's report together with
the accompanying financial information from the issuers 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 August
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
The following changes were made to the board of directors:
N Medupe – appointed 9 September 2015
Dr SJ Khoza – appointed 21 October 2015
FF Dantile – resigned 9 September 2015
AR van der Watt – appointed 1 June 2015
CP Bester – appointed 1 June 2015
BBBEE
Ansys improved its BEE rating from a level 4 to a level 2.
EVENTS SUBSEQUENT TO YEAR END
PricewaterhouseCoopers was appointed as Auditors to the Group with effect 1 October 2015.
PricewaterhouseCoopers are the Auditors of the Parsec Group.
Ansys changed its year-end from 28 February to 31 March to align its year–end with the year-end
date of the Parsec Group.
The directors are not aware of any significant events, other than noted above, that have occurred
between the interim period ending 31 August 2015 and the date of this report that may materially
affect the results of the group for the year or its financial position as at
31 August 2015.
By order of the board
Teddy Daka Rachelle Grobbelaar
Chief Executive Officer Chief Financial Officer
30 November 2015
Directors
CP Bester, T Daka* (CEO); R Grobbelaar* (CFO); Dr. SJ Khoza, N Medupe, NS Mjoli Mncube;
S P Mzimela, AR van der Watt
*Executive
Company secretary
M van den Berg
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 Pty Ltd
Transfer secretaries: Computershare Investor Services Pty Ltd
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