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Provisional Audited Condensed Consolidated Results for the Year Ended 29 February 2016
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 29 February 2016
Condensed consolidated statement of comprehensive income
Audited Audited
for the for the
year ended year ended
29 February 28 February
2016 2015*
R R
Revenue 243 428 818 230 289 775
Cost of sales (207 285 730) (200 569 779)
Gross profit 36 143 088 29 719 996
Other expenses net of sundry income 61 453 820 52 046 647
Results from operating activities (25 310 732) (22 326 651)
Finance income 3 253 430 1 338 285
Finance costs (3 556 267) (5 265 480)
Net finance costs (302 837) (3 927 195)
(Loss) before income tax (25 613 569) (26 253 846)
Income tax 6 258 939 3 825 693
(Loss) for the year from continuing operations (19 354 630) (22 428 153)
Revenue 34 091 104 51 637 737
Expenses (53 689 285) (56 153 512)
Pretax (loss) (19 598 181) (4 515 775)
Tax (1 615 988) 8 819
(Loss) from discontinued operations (21 214 169) (4 506 956)
(Loss) for the year attributable to ordinary shareholders (40 568 799) (26 935 109)
Other comprehensive income that may be recycled
in future periods
Foreign currency translation (loss)/gain 185 910 (187 402)
Total comprehensive (loss) for the year (40 382 889) (27 122 511)
Reconciliation of headline loss
Headline (loss) (21 638 050) (23 802 402)
(Loss) after tax attributable to ordinary shareholders (40 568 799) (26 935 109)
(Profit) on disposal of property, plant and equipment (195 963) (564 541)
Impairment of intangible assets 4 463 069 2 459 557
Impairment of goodwill 15 858 433 -
Impairment of tangible assets - 1 499 472
Tax effect of above adjustments (1 194 790) (261 781)
Reconciliation of headline (loss) - continuing operations (7 771 947) (19 295 446)
(Loss) after tax attributable to ordinary
shareholders - continuing operations (19 354 630) (22 428 153)
(Profit) on disposal of property, plant
and equipment (195 963) (564 541)
Impairment of intangible assets 4 148 128 2 459 557
Impairment of goodwill 8 737 124 -
Impairment of tangible assets - 1 499 472
Tax effect of above adjustments (1 106 606) (261 781)
Basic (loss) per share (cents) (15.37) (10.31)
Basic (loss) per share (cents)
- continuing operations (7.33) (8.58)
Basic (loss) per share (cents)
- discontinued operations (8.04) (1.73)
Headline (loss) per share (cents) (8.20) (9.11)
Headline (loss) per share (cents)
- continuing operations (2.95) (7.38)
Headline (loss) per share (cents)
- discontinued operations (5.25) (1.73)
Diluted (loss) per share (cents) (15.37) (10.25)
Diluted (loss) per share (cents)
- continuing operations (7.33) (8.54)
Diluted (loss) per share (cents)
- discontinued operations (8.04) (1.71)
Diluted headline (loss) per share (cents) (8.20) (9.06)
Diluted headline (loss) per share (cents)
- continuing operations (2.95) (7.34)
Diluted headline (loss) per share (cents)
- discontinued operations (5.25) (1.72)
Actual number of shares in issue at end of the year 265 879 842 265 879 842
Weighted number of shares in issue at end of the year 263 879 842 261 378 069
Fully diluted weighted average number of shares
in issue at end of the year 263 879 842 262 735 256
* The 2015 comparative results have been restated due to the sale of Turbo Zambia and
the cessation of operating activities in Turbo DRC in the current financial year
Condensed consolidated statement of financial position
Audited Audited
29 February 28 February
2016 2015
R R
ASSETS
Non-current assets
Property, plant and equipment 9 784 915 13 234 506
Intangible assets 415 600 6 370 556
Goodwill 17 606 734 29 186 265
Deferred taxation 17 023 454 15 561 721
Total non-current assets 44 830 703 64 353 048
Current assets
Inventories 15 729 574 25 812 986
Trade and other receivables 38 169 124 51 032 726
Taxation receivable 55 441 895 640
Cash and cash equivalents 15 407 994 12 136 880
Total current assets 69 362 133 89 878 232
Total assets 114 192 836 154 231 280
EQUITY
Share capital 273 329 475 273 276 078
Share-based payment reserve - 274 315
Foreign currency translation reserve (76 830) (262 739)
Retained loss (241 606 579) (201 037 780)
Total equity attributable to ordinary shareholders
of the Company 31 646 066 72 249 874
LIABILITIES
Non-current liabilities
Deferred purchase liability - 2 000 000
Deferred taxation liabilities - 2 663 383
Loans and borrowings 3 977 566 4 231 930
Total non-current liabilities 3 977 566 8 895 313
Current liabilities
Billings in excess of work certified 5 533 500 -
Trade and other payables 44 954 712 41 900 314
Taxation payable 69 813 2 555 541
Current portion of deferred purchase liability - 2 845 331
Bank overdraft 23 670 202 23 289 397
Current portion of loans and borrowings 4 312 963 2 495 511
Total current liabilities 78 541 190 73 086 093
Non-current liabilities held for sale 28 014 -
Total liabilities 82 546 770 81 981 406
Total equity and liabilities 114 192 836 154 231 280
Condensed consolidated statement of changes in equity
Foreign
Share- currency
based translation
Share payment (deficit/
capital reserve reserve)
Balance at 28 February 2014 273 136 360 41 594 (75 337)
Total comprehensive income
for the year
Profit 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)
Total comprehensive income for
the year
Loss for the year - - 185 910
Transactions with owners,
recorded directly in equity
Contributions by and distributions
to owners
Shares vested during the year 53 397 (53 397) -
Share-based payment transactions - (220 918) -
Balance at 29 February 2016 273 329 475 - (76 830)
Retained
loss Total
Balance at 28 February 2014 (174 102 672) 98 999 945
Total comprehensive income for the year
Profit 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
Total comprehensive income for the year
Loss for the year (40 568 799) (40 382 889)
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Shares vested during the year - -
Share-based payment transactions - (220 918)
Balance at 29 February 2016 (241 606 579) 31 646 066
Condensed consolidated statement of cash flows
Audited Audited
29 February 28 February
2016 2015
R R
Cash flows from operating activities 6 283 692 (8 088 623)
Taxation paid (3 818 382) (1 221 756)
Net cash (used in) operating activities 2 465 310 (9 310 379)
Net cash (used in) operating activities
- continuing operations 15 581 968 (10 946 666)
Net cash (used in) operating activities
- discontinued operations (13 116 658) 1 636 287
Cash flows from investing activities
Additions to property, plant and equipment
to expand operations (3 812 182) (2 252 165)
Additions to intangibles to expand operations - (219 889)
Proceeds from disposal of property, plant
and equipment 4 739 939 4 801 209
Proceeds on sale of subsidiaries 3 082 322 -
Finance income 3 253 430 1 431 669
Net cash from investing activities 7 263 509 3 760 820
Net cash from investing activities
- continuing operations 3 721 839 4 104 470
Net cash from investing activities
- discontinued operations 3 541 670 (343 650)
Cash flows from financing activities
Loans repaid - (3 168 374)
Settlement of deferred purchase liability (4 845 331) (4 063 856)
Repayment of loans and borrowings - (3 541 749)
Loans and borrowings granted 1 563 088 466 165
Finance expenses arising on interest-bearing debt (3 556 267) (6 333 021)
Net cash used in financing activities (6 838 510) (16 640 835)
Net cash used in financing activities
- continuing operations (16 389 407) (12 667 176)
Net cash used in financing activities
- discontinued operations 9 550 897 (3 973 659)
Increase/(decrease) in cash and cash equivalents 2 890 309 (22 190 394)
Increase/(decrease) in cash and cash equivalents
- continuing operations 2 914 401 (19 509 372)
Increase/(decrease) in cash and cash equivalents
- discontinued operations (24 092) (2 681 022)
Cash and cash equivalents at beginning of the year (11 152 517) 11 037 877
Cash and cash equivalents at beginning of the year
- continuing operations (12 187 646) 7 321 726
Cash and cash equivalents at beginning of the year
- discontinued operations 1 035 129 3 716 151
Cash and cash equivalents at end of the year (8 262 208) (11 152 517)
Cash and cash equivalents at end of the year
- continuing operations (9 273 245) (12 187 646)
Cash and cash equivalents at end of the year
- discontinued operations 1 011 037 1 035 129
Segmental report
Industrial Specialised
Supplies Services
R R
For the 12 months ended 29 February 2016
Total segment revenue 136 393 978 121 022 489
Inter-segmental revenue (6 501 220) (7 486 429)
Reportable segment revenue 129 892 758 113 536 060
Gross profit 23 197 679 12 948 279
Depreciation and amortisation (795 757) -
Other operating expenses (14 560 798) (13 907 634)
Impairment of goodwill and intangibles - -
Management fee/asset rental paid/ (received) (313 729) (1 608 000)
(Loss) before tax 9 519 376 (3 734 958)
Capital expenditure 306 259 2 740 316
Gross assets 67 962 514 38 974 654
Gross liabilities (29 365 149) (43 887 371)
Continuing operations (29 337 135) (43 887 371)
Discontinued operations (28 014) -
For the 12 months ended 28 February 2015
Total segment revenue 152 390 536 83 924 972
Inter segmental revenue (4 058 591) (1 967 142)
Reportable segment revenue 148 331 945 81 957 830
Gross profit 26 113 239 3 977 241
Depreciation and amortisation (1 004 050) -
Impairment of goodwill and other intangibles - -
Other operating expenses (12 827 431) (14 494 885)
Profit/(loss) before tax from continuing operations 5 381 286 (19 247 330)
Capital expenditure 1 216 928 41 651
Gross assets 68 990 939 35 023 596
Continued 45 522 433 35 023 596
Discontinued 23 468 506 -
Gross liabilities (27 931 699) (33 483 599)
Continued (19 463 568) (33 483 599)
Discontinued (8 468 131) -
Shared Services
and Other Total
R R
For the 12 months ended 29 February 2016
Total segment revenue (13 987 649) 243 428 818
Inter-segmental revenue 13 987 649 -
Reportable segment revenue - 243 428 818
Gross profit (2 870) 36 143 088
Depreciation and amortisation (3 114 466) (3 910 223)
Other operating expenses (17 745 423) (46 213 855)
Impairment of goodwill and intangibles (11 329 742) (11 329 742)
Management fee/asset rental paid/ (received) 1 921 729 -
(Loss) before tax (31 397 987) (25 613 569)
Capital expenditure 377 910 3 424 485
Gross assets 7 255 668 114 192 836
Gross liabilities (9 294 250) (82 546 770)
Continuing operations (9 294 250) (82 518 756)
Discontinued operations - (28 014)
For the 12 months ended 28 February 2015
Total segment revenue 6 025 733 242 341 242
Inter segmental revenue (6 025 733) (12 051 466)
Reportable segment revenue - 230 289 775
Gross profit (370 484) 29 719 996
Depreciation and amortisation (4 053 648) (5 057 699)
Impairment of goodwill and other intangibles (3 959 029) (3 959 029)
Other operating expenses (17 207 078) (44 529 394)
Profit/(loss) before tax from continuing operations (12 387 802) (26 253 846)
Capital expenditure 993 586 2 252 165
Gross assets 50 216 745 154 231 280
Continued 50 216 745 130 762 280
Discontinued - 23 468 506
Gross liabilities (20 566 108) (81 981 406)
Continued (20 566 108) (73 513 275)
Discontinued - (8 468 131)
Segmental information by geographical region
South Africa Botswana
R R
For the 12 months ended 29 February 2016
Revenue (external) 225 495 281 17 933 537
Non-current assets 20 015 446 24 815 257
Revenue per major customer 27 294 341 -
For the 12 months ended 28 February 2015
Revenue (external) 24 975 994 205 313 781
Non-current assets 8 571 118 55 781 930
Revenue per major customer 11 642 472 56 381 062
Other Total
R R
For the 12 months ended 29 February 2016
Revenue (external) - 243 428 818
Non-current assets - 44 830 703
Revenue per major customer - 27 294 341
For the 12 months ended 28 February 2015
Revenue (external) - 230 289 775
Non-current assets - 64 353 048
Revenue per major customer - 68 023 534
Commentary
BASIS OF PREPARATION
The provisional audited condensed consolidated financial statements ('the financial
statements') for the year ended 29 February 2016 ('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 2015.
This provisional 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 CA(SA), 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 Group's registered office.
Any reference to future financial performance included in this announcement has not been
reviewed by or reported on by the Group'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,
and a parts dealership in Botswana).
- Specialised Services (including comprehensive cryogenic and gas systems and geosynthetic
linings).
INTRODUCTION
The year under review necessitated PSV to focus on cost cutting and restructuring in
order to ensure the survival of the business. The reduction in mining activities in Africa
resulted in the sale of Turbo Zambia ('TAZ') and the closing of Turbo DRC ('TDRC')
(hereinafter referred to as the discontinued operations). This together with a difficult trading
environment contributed to the losses incurred.
FINANCIAL RESULTS
The consolidated statement of comprehensive income has been restated as a
result of the discontinued operations. With the prior year restated, revenue is up 6% based
on continued operations, with gross profit percentages improving from 13% in 2015 to 15%
in the current year. The poor operating performance of the Company necessitated the
impairment of R16 million of goodwill and specific intangibles. This impairment, together
with substantial retrenchment costs exceeding R3 million, caused costs to increase
compared to the previous year.
Total comprehensive loss for the year settled at R40 million, up from the comprehensive
loss of R27 million in 2015. Headline loss per share strengthened from a headline loss per
share of 9.11 cents per share ('cps') to a headline loss of 8.20 cps.
Due to tight working capital management, cash flow from operating activities improved from
negative R8 million (2015) to positive R6 million. Cash flow was further enhanced by the
proceeds received on the sale of Turbo Zambia. As a result of the losses incurred, the
Company's debt: equity ratio (net of cash) increased from 31% in 2015 to 52% in the current
year. Notwithstanding, the absolute amount of interest-bearing debt decreased by 8% to
R32 million. PSV ended the year with a net overdraft of R8 million, compared to a net overdraft
in 2015 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 value per share decreased by 63% from
14 cps in 2015 to 5 cps in 2016.
SALE OF TURBO ZAMBIA CLOSURE OF TURBO DRC
Effective 1 January 2016 Turbo Zambia was sold. In terms of the transaction, the seller
repaid PSV's loan account in the business and certain stock items were returned to Turbo
Botswana. Operations in the DRC were also ceased effective 1 January 2016, with the
suspension of mining activities by Turbo DRC's main customer.
OPERATIONAL REVIEW
Industrial Supplies
This segment contributed 53% (2015: 64%) to the Group's consolidated reportable segment
revenue at an average gross profit margin of 18% (2015: 18%).
Omnirapid continues to generate good profitability and cash flow, despite a client in DRC
suspending mining operations for the next 18 months. This is a business that has and
continues to show resilience, high cash flow generation and profitability. The outstanding
management team at Omnirapid is expected to make up the reduced income from Africa.
Turbo Botswana made a small operating profit in the year under review. This company has
undergone further restructuring and we expect the company's operating profitability and
cash flow generation to improve in the coming year.
Specialised Services
Specialised Services contributed 47% (2015: 36%) to the Group's consolidated reportable
segment revenue at an average gross profit margin of 11% (2015: 5%).
African Cryogenics suffered as a result of the gas industry having been in recession for
some time now. Imports from overseas still continue without sufficient protection for local
suppliers, making the operating environment difficult. However, towards the end of the
financial year, the weakening currency turned the tide and stemmed imports. African
Cryogenics has experienced an uptick in interest from the gas companies; however, this
revenue will only flow in the coming financial year. New management has been appointed,
with the expertise of former management retained on a consulting basis.
Engineered Linings has emerged from a period of restructuring as a vibrant company that
has restored customer relations and profitability. The structural changes implemented have
resulted in better collections, marketing and job costing. Engineered Linings has a strong
order book in place, which stands the company in good stead for the coming year and
beyond.
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
On 31 October 2014, PSV served notice of cancellation of the lease agreement at its
principal location in Elandsfontein, Germiston. The matter was referred to arbitration and
PSV is pleased to announce that it won the case with costs in March 2016.
SUBSEQUENT EVENTS
There have been no subsequent events.
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, and is also aware of the deficit
between current liabilities and assets. Based on the approved budgets, the Board is satisfied
that PSV will remain a viable going concern. Notwithstanding, the Board is very mindful of
the eroding solvency base and is taking major steps to ensure sustained future profitability.
The Company's major bankers have recently renewed existing overdraft facilities.
An independent valuation was performed to test the carrying value of the underlying
cash-generating units. Due to the losses incurred, the goodwill and specific intangible
assets pertaining to African Cryogenics and Turbo have been impaired amounting to
R16 million.
PROSPECTS
Given pressure on commodity prices and low economic growth rates, the year ahead will
continue to be a challenging one for the Company. However, the down and right sizing of
the Company, the sale of loss making entities and the introduction of new management at
African Cryogenics should ensure sustainability in the new financial year.
For and on behalf of the Board
AJD da Silva
Chief Executive Officer
AR Dreisenstock
Chief Financial Officer
Johannesburg
31 May 2016
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): +27 114 524 004
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: 31/05/2016 11:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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