Wrap Text
Reviewed Provisional Condensed Consolidated Financial Statements for the year ended 31 March 2017
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 Financial Statements
for the year ended 31 March 2017
HIGHLIGHTS
- Revenue increased to R806 million from R474 million (up 70%)
- EBITDA improved to R113.1 million from R42.8 million (up 164%)
- Profit after tax improved to R67.8 million from R20 million (up 239 %)
- Headline Earnings per share increased to 14.71 cents from 4.86 cents (up 203%)
- Basic Earnings per share increased to 14.72 cents from 4.86 cents (up 203%)
- Tangible Net Asset Value increased to 32.6 cents from 17.5 cents (up 86%)
Condensed consolidated statement of financial position
As at 31 March 2017
31 March 2017 31 March 2016
Notes (Reviewed) (Audited)
R’000 R’000
Assets
Non-current assets 186 616 175 492
Property, plant and equipment 3 53 158 43 053
Intangible assets 118 692 120 418
Deferred tax asset 14 766 12 021
Current assets 305 804 249 489
Inventories 4 101 099 84 774
Trade and other receivables 124 404 121 682
Cash and cash equivalents 79 291 42 358
Other financial assets 1 010 675
Total assets 492 420 424 981
Equity and liabilities
Equity 269 022 201 271
Share capital 212 141 212 141
Accumulated profit/(loss) 56 652 (11 224)
Minority interest 229 354
Non-current liabilities 46 676 48 887
Interest bearing borrowings 5 36 602 32 509
Other financial liabilities - 6 372
Deferred tax liability 10 074 10 006
Current liabilities 176 722 174 823
Provisions 1 186 1 503
Interest bearing borrowings 5 5 211 2 703
Other financial liabilities - 2 070
Trade and other payables 166 467 152 382
Current tax payable 3 802 1 460
Bank overdrafts 56 14 705
Total equity and liabilities 492 420 424 981
Condensed consolidated statement of comprehensive income
For the year ended 31 March 2017
12 months 13 months
ended ended
31 March 2017 31 March 2016
Note (Reviewed) (Audited)
R’000 R’000
Revenue 806 019 474 066
Cost of sales (593 887) (351 054)
Gross profit 212 132 123 012
Other income 969 703
Operating costs (130 304) (88 917)
Other gains/(losses) 17 409 (2 719)
Operating profit 100 206 32 079
Finance income 3 106 1 419
Finance costs (9 132) (4 996)
Profit before taxation 94 180 28 502
Taxation (26 429) (8 529)
Net profit for the period 67 751 19 974
Total comprehensive income
for the period 67 751 19 974
Attributable to:
Equity holders of the company 67 876 20 010
Non-controlling interest (125) (36)
67 751 19 974
Basic earnings per share (cents) 1 14.72 4.86
Diluted earnings per share 14.72 4.86
(cents)
Condensed consolidated statement of cash flows
For the year ended 31 March 2017
Year 13 months
ended ended
31 March 2017 31 March 2016
(Reviewed) (Audited)
R’000 R’000
Cash flows from operating
activities
Cash receipts from customers 789 489 445 616
Cash paid to suppliers and
employees (681 699) (468 638)
Cash generated from/(utilised
in) operations 107 790 (23 022)
Interest paid (9 132) (4 996)
Interest received 3 106 1 419
Taxation paid (26 763) (7 196)
Net cash flow generated
from/(utilised in) operating 75 001 (33 795)
activities
Cash flows from investing
activities
Purchase of property, plant and
equipment (15 371) (4 688)
Proceeds from disposal of
property, plant and equipment 611 81
Cash payment for acquisition of
subsidiary net of cash acquired - 7 281
Investment in intangible assets (6 482) (1 430)
Increase in other financial assets (335) (330)
Net cash flow (utilised
in)/generated from investing
activities (21 577) 914
Cash flows from financing
activities
Issue of share capital - 17 200
Decrease in related party loans - (5 998)
Decrease in other financial
liabilities (8 442) -
Increase in interest bearing
borrowings 6 601 29 940
Net cash flow (utilised
in)/generated from financing
activities (1 841) 41 143
Net increase in cash, cash
equivalents and bank overdrafts 51 583 8 262
Cash, cash equivalents and bank
overdrafts at beginning of year 27 652 19 390
Cash, cash equivalents and bank
overdrafts at end of year 79 235 27 652
Condensed consolidated statement of changes in equity
For the year ended 31 March 2017
Accumu
Issued lated Non-
share (losses)/ controlling
capital profit interest Total
R’000 R’000 R’000 R’000
Balance as at 1 March 2015
(Audited) 73 668 (31 234) - 42 434
Movements during the period
Shares issued 26 270 - - 26 270
Business combination 112 203 - 390 112 593
Profit for the period - 20 010 (36) 19 974
Balance as at 31 March 2016
(Audited) 212 141 (11 224) 354 201 271
Movements during the period
Profit for the period - 67 876 (125) 67 751
Balance as at 31 March 2017
(Reviewed) 212 141 56 652 229 269 022
Condensed consolidated segment report
For the year ended 31 March 2017
Year 13 months
ended ended
31 March 2017 31 March 2016
(Reviewed) (Audited)
R’000 R’000
Segment revenue
Rail 100 240 137 016
Defence and Cyber Security 187 623 90 145
Mining and Industrial 89 320 42 548
Telecommunications 428 836 204 357
Total 806 019 474 066
Segment profit
Rail 5 530 15 871
Defence and Cyber Security 14 721 15 997
Mining and Industrial 7 734 4 029
Telecommunications 82 248 6 130
Sub total 110 233 42 027
Corporate costs (10 027) (9 948)
Finance costs (9 132) (4 996)
Finance income 3 106 1 419
Profit before taxation 94 180 28 502
Financial position ^
Assets 492 420 424 981
Rail 110 741 107 011^
Defence and Cyber Security 132 022 134 765^
Mining and Industrial 59 354 50 456^
Telecommunications 189 092 125 494^
Corporate assets 1 211 7 255^
Liabilities 223 398 223 710
Rail 13 537 38 112^
Defence and Cyber Security 66 595 76 252^
Mining and Industrial 25 186 14 069^
Telecommunications 114 990 92 457^
Corporate liabilities 3 090 2 820^
^ In the current reporting period, the segment assets and liabilities have been allocated using
the same principles in allocating the segment profit and loss. This entails assets and liabilities
being allocated, as far as possible, directly to the segments they relate, and the remaining assets
and liabilities in the entities apportioned to segments based on the gross profit contribution of each
segment they operate in. The March 2016 periods have been restated to align to these new
allocation principles.
In the prior periods the segment assets/liabilities were stated as follows:
13 months
ended
31 March 2016
Assets 424 981
Rail 98 043
Defence and Cyber Security 70 700
Mining and Industrial 33 207
Telecommunications 127 308
Corporate assets 95 723
Liabilities 223 710
Rail 1 263
Defence and Cyber Security 23 995
Mining and Industrial -
Telecommunications 94 271
Corporate liabilities 104 181
COMMENTARY
GROUP PROFILE
The Ansys group consists of a portfolio businesses that provide technology based solutions to
enterprises in sectors such as rail, mining and industrial, defence and cyber security as well as
telecommunications both locally and internationally. Through leveraging our own IP, we develop,
produce, distribute and integrate bespoke and standard technology products and solutions to
satisfy client requirements. Our products and solutions are aimed at improving our client’s safety
and productivity, connectivity and security and are generally employed in harsh environments.
Through constant innovation in design, development and manufacturing, we continuously improve
our technology development and IP generation in all areas of our business.
Financial Results Highlights
The Group delivered excellent financial results in a tough operating environment underpinned by
focussing on improving margins, cost management and strengthening our cash position. Revenue
increased by 70% to R806 million (2016: R474 million) driven by growth in the defence and cyber
security, mining and industrial, and telecommunication segments. EBITDA improved to R113.1
million (2016: R42.8 million) representing an increase of 164%. Operating profit increased by
212.4% to R100.2 million from R32.1 million in the comparative period, whilst headline earnings
more than doubled to R67.8 million from a profit of R20 million, an increase of 239.7%. Headline
earnings per share (HEPS) increased by 202.7%, an increase from 4.86 to 14.71 cents. This
growth is predominantly a result of our strategy of strengthening the verticals in terms of market
access and delivery capability, both organically and through historical acquisitions.
OUR OPERATIONS
During the period under review, we continued to invest in and leverage our core competencies in
innovation, design and production in the group. Further investments were made in plant and
equipment. We streamlined our supply management operation, and implemented a phased ERP
system, resulting in overall improvements in operational performance, mainly from synergies
derived from the integration of our companies.
Rail
The recent decline in general economic growth and impact of lower commodity prices, has
significantly reduced transport volumes from major clients, which has resulted in the reduction of
infrastructure development programmes over the short term. This has had a negative impact on
the revenue of the railways business dropping 26.8% from R137 million to R100.2 million. Margins
were also under pressure and this saw profits reduce from R15.8 million to R5.5 million, a 65.2%
reduction. These difficult market conditions necessitated a review of the operating model, the
positive effects of which is anticipated to be realised in the next financial-year.
Defence & Cyber Security
The South African defence and security budgets and the global demand for defence and security-
related products, particularly in the Middle East markets, saw revenues increase by 108.1% to
R187.6 million from R90.1 million. However, the combination of margin pressure and product mix
saw margins coming under pressure in the defence part of our business. The group also invested
heavily into product development in the cyber security part of our business, and as such this
segment’s profits slightly declined by 8% from R15.9 million to R14.7 million.
Mining & Industrial
Local and global commodity cycles have an impact on the demand for mining-related products and
developments. The recent low commodity price cycle has required many companies to reassess its
capital expenditure programmes to focus on productivity improvements along its value chain. This
translated into a higher demand of our digital solutions resulting in growth of our business in this
sector. Revenue for the period increased by 109.9% to R89.3 million from R42.5 million while
segment profit grew from R4 million to R7.7 million.
Telecommunications
The global telecoms sector is experiencing some significant shifts, both in the composition of its
customer base and the nature of consumer expectations. Across all markets, the fastest growth
area is in data, driven by increasing penetration of smart devices, improved networks and an
increased availability of data content. This encouraged segment revenue growth of 109.8%, to
R428.8 million compared to R204.3 million from the previous year. This growth was driven by
accelerated growth in the FTTX (fibre to the premises) rollouts of all the major telecommunications
operators. Efforts to optimise the supply chain management operations together with a more
effective foreign exchange hedging strategy enabled overall profitability to increase from
R6.1 million to R82.2 million.
OUTLOOK
The recent sovereign credit downgrade in South Africa is anticipated to negatively impact
economic growth opportunities over the next couple of years. Financial market and exchange rate
volatility is expected to continue. It is anticipated that increased fiscal pressure may require
reassessment of government budget priorities. Higher interest charges will impact the company
adversely. The growth rate outlook outside South Africa is more favourable and provides
opportunities for diversification.
Recognising this, the company has sought to continue to position the company as a customer-
centric organisation, being an IP-led entity who provide digital solutions in our fields of expertise.
Rail
We anticipate the challenging trading conditions in the sector to continue particularly in the first
half of the new year. Our investments in current and new IP products are expected to contribute
positively as we take advantage of the digital transformation in the railways sector.
Defence & Cyber Security
The longer-term growth outlook for the segments is favourable. International growth is envisaged,
particularly in the Middle East, where the current spending cycle is anticipated to continue into the
foreseeable future, with benefits to the local industry.
We anticipate moderate growth in the short-to-medium term in the local defence industry owing to
the substantial order books of our major clients, who rely on companies such as ours to meet
delivery commitments. Over the medium-to-longer term, the South African Defence Force’
spending on revitalising the local defence capability is expected to boost the local defence market.
The threat of cyber-attacks continue to increase. From 2010 to 2014 the average global
vulnerability to cyber-attacks increased by 43% and the global cyber security solutions market is
projected to exceed $140 billion by 2020. Locally it is anticipated that investment in cyber security
solutions will increase to 0.35% of the country’s GDP by 2030. Ansys is well positioned to
capitalise on this growth and will continue to invest in innovative technologies.
Mining & Industrial
The continued focus on mine safety by regulators, labour and other stakeholders as well as stricter
safety legislation, is anticipated to increase demand for the mine safety products that we develop
and manufacture. Furthermore, the recent trend of mine mechanisation and automation to make
local mining operations more competitive will create opportunities for our service offering.
Telecommunications
We envisage the telecommunication sector to continue investing in network upgrades and
expansion over the medium-term.
During the 2016 calendar year, operators invested around R26 billion in broadband infrastructure.
Currently mobile broadband 4G/LTE coverage stands between 35% and 53% in South Africa and
operators target to connect 80% of the population to mobile broadband by 2019. Similarly,
investment in fibre infrastructure, particularly in the deployment of fibre-to-premises, is expected
to continue.
Margin management and continuing our optimisation efforts will remain an important focus, as
increased competition in the supply of telecommunication solutions is anticipated.
Positioning for growth
As a technology and IP based company, the ability to adapt, develop or gain access to new and
improved technology is critical to the long-term success of the business. Technology innovation
and enhancements, customer expectations and market shifts in technology, including digitalisation,
technology convergence, product-agnostic and disruptive technologies and system life cycles all play
a role in demand (affecting volume and margin). Technology and access to IP impacts the competitive
position in the market.
Over the past few years, the company has developed core capabilities in four vertical business
segments, namely: defence and cyber security, mining and industrial, rail and telecommunications.
Going forward we will reposition the entity as a digital technology solutions provider along the
following four broad capabilities: safety and productivity, digital network connectivity, cyber
security and lastly original design manufacturing. This will enable us to leverage existing
technologies, capabilities and processes and offer solutions beyond the existing business segments
providing opportunities to broaden our revenue base and provide economies of scale.
We also intend to continue to grow, both organically and through the acquisition of companies
aligned to our core business. We are deeply committed to ensuring that our locally developed and
manufactured products meet world class standards and are of the quality required for global
distribution.
Looking at 2018, we anticipate a moderation to the exceptional growth experienced in 2017. The
challenging economic environment is expected to increase margin pressure within most of our
local businesses. Internationally the outlook appears more favorable but is only expected to
contribute meaningfully over the medium-term.
FINANCIAL RESULTS COMMENTARY
During the year under review, the Ansys group has experienced a second consecutive year of
significant growth in revenue, profits and cash.
The improved profitability was mainly attributable to robust growth in our telecommunications as
well as mining and industrial segments but was offset by the impact of tougher economic
conditions on our local defence and rail segments.
These financial results also incorporated the 12 months performance of the Parsec Holdings group,
as compared to the 10 months of performance included in the 2016 financial year results.
Significant movement other than noted above, comparing the period ended 31 March 2017 with
the period ended 31 March 2016, include the following:
CASH FLOW STATEMENT
The cash balance has grown by R 51.6 million for the period under review.
As a result of the high growth experienced, the group managed to create positive cash flow from
operating activities which increased to R75 million from an outflow of R33.8 million in the previous
reporting period. This positive result was also aided by active management of the group’s
inventory, as well as payment terms with key customers and suppliers.
STATEMENT OF COMPREHENSIVE INCOME
The taxation expense of R26.4 million comprises deferred tax credit of R2.7 million and current
taxation of R29.1 million.
STATEMENT OF FINANCIAL POSITION
Some of the line items on the statement of financial position that have shown significant changes
when compared to March 2016 have been included in the notes to the financial information to give
some context and explanation to these movements.
Other financial liabilities related to the outstanding balance of the cash consideration payable for
the Parsec Holdings acquisition. The total outstanding balance was repaid during the past financial-
year.
NOTES TO THE FINANCIAL INFORMATION
STATEMENT OF COMPLIANCE, BASIS OF PREPARATION
The reviewed provisional condensed consolidated 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, the requirements of the Companies Act of South
Africa and the Listing Requirements of the JSE Limited. The accounting policies applied in the
preparation of these financial statements are in terms of International Financial Reporting Standards
and are consistent with those applied in the previous annual financial statements for the period ended
31 March 2016. The directors take full responsibility for the preparation of the reviewed provisional
condensed consolidated financial statements.
1. Headline earnings per share
for the year ended 31 March 2017
Year 13 months
ended ended
31 March 2017 31 March 2016
(Reviewed) (Audited)
R’000 R’000
Profit attributable to ordinary
shareholders 67 876 19 974
Basic earnings per share
(cents) 14.72 4.86
Diluted earnings per share
(cents) 14.72 4.86
Reconciliation of headline
earnings:
Profit attributable to ordinary
shareholders 67 876 19 974
Profit on disposal of property,
plant and equipment (111) (21)
Total tax effect of adjustments 31 6
Headline earnings
attributable to ordinary
shareholders 67 796 19 958
Headline earnings per share
(cents) 14.71 4.86
Diluted headline earnings per
share (cents) 14.71 4.86
Weighted average number of
shares in issue 461 038 321 410 797 070
Net asset value per share
(cents) 58.4 43.7
Tangible net asset value per
share (cents) 32.6 17.5
2. Earnings before interest, taxation, depreciation and amortisation (EBITDA)
for the year ended 31 March 2017
Year 13 months
ended ended
31 March 2017 31 March 2016
(Reviewed) (Audited)
R’000 R’000
Operating profit 100 206 32 079
Depreciation and amortisation 12 876 10 759
EBITDA 113 082 42 838
3. Property, plant and equipment
31 March 31 March
2017 2016
(Reviewed) (Audited)
R’000 R’000
Total property, plant and equipment at book 53 158 43 053
value
To cater for the growth experienced within the group, we have invested in numerous plant and
manufacturing equipment in this reporting period to increase our delivery capacity. This was the
main contributor to the increase in property, plant and equipment in the past financial year.
4. Inventories
31 March 31 March
2017 2016
(Reviewed) (Audited)
R’000 R’000
Inventories comprise:
- Raw materials and finished goods 82 036 62 381
- Work in progress 19 063 22 393
101 099 84 774
The current level of inventory is in line with the increase in business activities.
5. Interest bearing borrowings
31 March 31 March
2017 2016
(Reviewed) (Audited)
R’000 R’000
Non-current liabilities
Instalment sale agreements 8 762 3 420
Interest bearing borrowings 27 840 29 089
36 602 32 509
Current liabilities
Instalment sale agreements 3 963 1 836
Interest bearing borrowings 1 248 867
5 211 2 703
The increase in instalment sale agreements correlates roughly to the increase in property plant
and equipment (refer note 3) as most of the manufacturing equipment bought in this period was
financed via instalment sale agreements.
AUDIT REPORT
These provisional condensed consolidated financial statements for the year ended 31 March 2017
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.
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 Burt Lamprecht CA (SA), the Chief Financial
Officer.
GOING CONCERN
The directors have reviewed the group’s budget and cash flow forecast for the year to March 2018.
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 with effect from 6 June 2017:
Teddy Daka, the Executive Chairperson of the Board, has been appointed as the Chief Executive
Officer of Ansys whilst Rynier van der Watt, an executive director of the Board, will forthwith focus
on the merger and acquisition opportunities in support of the growth strategy of the Company.
Nhlanhla Mjoli-Mncube, the Lead Independent Non-Executive Director, has been appointed as the
Independent Non-executive Chairperson of the Board
EVENTS SUBSEQUENT TO YEAR END
The directors are not aware of any significant events, other than noted above, that have occurred
between the year ended 31 March 2017 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 March 2017.
APPRECIATION STATEMENT
The directors would like to thank our clients, suppliers, business partners and all other
stakeholders for their continued support and for the confidence they have shown in us in the past
year. Without your support we would not have been able to make such a huge success of the past
financial year.
By order of the board
Teddy Daka Burt Lamprecht
Chief Executive Officer Chief Financial Officer
21 June 2017
Directors
CP Bester; T Daka (CEO)*; Dr. SJ Khoza; BC Lamprecht (CFO)*; N Medupe; NS Mjoli-Mncube;
SP 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
Date: 21/06/2017 07:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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