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Unaudited Condensed Consolidated Financial Results for the Six Months Ended 31 August 2017
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 2017
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
for the six for the six for the 12
months ended months ended months ended
31 August 31 August 28 February
2017 2016 2017
R'000 R'000 R'000
Revenue 111 377 105 673 209 761
Gross profit 29 124 18 513 37 122
Operating expenses* (23 329) (16 026) (32 992)
Operating profit 5 795 2 487 4 130
Net finance charges (1 110) (1 654) (3 603)
Profit before taxation 4 685 833 527
Taxation (1 632) (1 581) (1 674)
Profit/(loss) for the period 3 053 (748) (1 147)
Other comprehensive income/(loss) (88) 287 433
Total comprehensive profit/(loss) for the period 2 965 (461) (714)
Reconciliation of headline profit/(loss)
Profit/(loss) attributable to PSV equity holders 3 053 (748) (1 147)
(Profit)/loss on disposal of property, plant
and equipment net of tax 87 118 (291)
(Profit) on sale of disposal group - - (2 167)
Deferred tax on profit/(loss) on disposal of assets (24) (33) 486
Headline profit/(loss) 3 116 (663) (3 119)
Basic earnings/(loss) per share (cents) 1.16 (0.28) (0.43)
Headline earnings/(loss) per share (cents) 1.18 (0.25) (1.18)
Diluted earnings/(loss) per share (cents) 1.16 (0.28) (0.43)
Diluted headline earnings/(loss) per share (cents) 1.18 (0.25) (1.18)
Actual number of shares in issue at end
of the period 265 879 842 265 879 842 265 879 842
Weighted number of shares in issue at end of
the period 263 792 329 263 879 842 263 792 329
Fully diluted weighted average number of shares
in issue at end of the period 263 792 329 263 879 842 263 792 329
* Operating expenses are net of sundry income and include depreciation and amortisation charges.
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
31 August 31 August 28 February
2017 2016 2017
R'000 R'000 R'000
ASSETS
Non-current assets 43 310 43 936 47 740
Current assets 63 502 60 247 58 216
Inventory 11 019 18 525 10 590
Trade and other receivables 40 437 34 456 39 827
Taxation receivable - - 55
Loans receivable - short term 155 120 1 663
Cash and cash equivalents 11 891 7 146 6 081
Total assets 106 812 104 183 105 956
EQUITY AND LIABILITIES
Equity 33 897 31 185 30 932
Non-current liabilities 5 031 2 413 5 527
Current liabilities 67 884 70 585 69 497
Billings in excess of work certified 388 10 575 4 791
Current portion of long-term liabilities 2 022 3 788 2 952
Provisions 4 034 3 029 -
Trade and other payables 41 244 36 619 41 431
Bank overdraft 20 196 16 574 20 323
Total equity and liabilities 106 812 104 183 105 956
Condensed consolidated statement of changes in equity
Unaudited Unaudited Audited
for the six for the six for the 12
months ended months ended months ended
31 August 31 August 28 February
2017 2016 2017
R'000 R'000 R'000
Balance at beginning of the period 30 932 31 646 31 646
Comprehensive profit/(loss) from trading
for the period 3 053 (748) (1 147)
Comprehensive (loss)/profit from foreign
currency fluctuations arising for the period (88) 287 434
Balance at end of the period 33 897 31 185 30 932
Condensed consolidated statement of cash flows
Unaudited Unaudited Audited
for the six for the six for the 12
months ended months ended months ended
31 August 31 August 28 February
2017 2016 2017
R'000 R'000 R'000
Cash flows from operating activities 5 209 4 662 3 491
Cash generated from operations 5 209 4 662 3 491
Cash flows from investing activities 1 238 (2 003) (4 482)
Cash generated from/(used in) operations 1 238 (2 003) (4 482)
Cash flows from financing activities (510) (3 825) (4 989)
Cash used in operations (510) (3 825) (4 989)
Net movement in cash and cash equivalents 5 937 (1 166) (5 980)
Net cash generated from/(used in) operations 5 937 (1 166) (5 980)
Cash and cash equivalents at beginning of the period (14 242) (8 262) (8 262)
Cash and cash equivalents at beginning of the year (14 242) (8 262) (8 262)
Cash and cash equivalents at end of the period (8 305) (9 428) (14 242)
Analysis of cash flow from operating activities
Cash generated from operations after adjusting
for non-cash flow expenditure and income 8 683 5 324 4 711
Changes in working capital
(Increase)/decrease in inventories (429) (2 795) 5 140
(Increase)/decrease in trade and other receivables (611) 3 713 (1 658)
(Decrease) in trade and other payables (2 491) (1 533) (4 632)
Cash profit 5 152 4 709 3 561
Taxation paid 56 (47) (70)
Cash generated from operations 5 209 4 662 3 491
Condensed consolidated segmental information
Shared
Industrial Specialised services Continuing
Supplies Services and other operations
R'000 R'000 R'000 R'000
For the six months ended
31 August 2017
Reportable revenue 53 543 57 834 - 111 377
Gross profit 10 737 18 377 10 29 124
Operating expenses 6 894 7 525 9 500 23 919
Profit/(loss) before tax 3 463 9 880 (8 658) 4 685
Profit/(loss) after tax 2 459 7 253 (6 659) 3 053
Capital expenditure - 126 616 742
Gross assets 30 748 37 533 38 531 106 812
Gross liabilities (23 170) (44 054) (5 691) (72 915)
For the six months ended
31 August 2016
Reportable revenue 55 296 50 377 - 105 673
Gross profit 11 101 7 721 (309) 18 513
Operating expenses 8 049 1 270 6 707 16 026
Profit/(loss) before tax 1 840 5 213 (6 220) 833
Profit/(loss) after tax 1 225 3 754 (5 727) (748)
Capital expenditure 33 1 710 315 2 058
Gross assets 29 256 40 102 34 825 104 183
Gross liabilities (17 425) (48 680) (6 893) (72 998)
Commentary
BASIS OF PREPARATION
The unaudited condensed consolidated financial results for the six months ended 31 August 2017 ("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 2017.
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 and automotive capital
equipment); and
- Specialised Services (including comprehensive cryogenic and gas systems and geosynthetic linings).
INTRODUCTION
Many years of restructuring the business and disposing of loss making operations is finally paying dividends.
With the exception of Turbo, which is operating in an ailing economy in Botswana, all South African business
operations generated a profit.
FINANCIAL RESULTS
Total profit after tax from operations for the period settled at R3,053 million, a significant improvement from
the loss of R0,748 million incurred for the six months ended 31 August 2016. Headline earnings per share improved
from a loss of 0.25 cents per share ("cps") as at 31 August 2016, to a headline earnings per share of 1.18 cps as
at 31 August 2017.
Total cash flow from operating activities remained positive at R5,209 million compared to R4,662 million at
31 August 2016. The Company's net overdraft position reduced to R8,305 million compared to R9,428 million in
the previous year.
The Company's statement of financial position strengthened as a result of the profit generated in the period.
Tangible net asset value per share increased to 6.09 cps compared to 5.01 cps for the comparable period, and
improvement of nearly 22%. 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.
BROAD-BASED BLACK ECONOMIC EMPOWERMENT ("B-BBEE")
PSV's ability to grow has been significantly hampered by its inability to secure a proper B-BBEE partner. The
Company is currently trading under a cautionary while negotiations for a potential B-BBEE investment are in
progress. The outcome of these negotiations should be known within the next few weeks.
OPERATIONAL REVIEW
Industrial Supplies
This segment contributed 48% (2016: 52%) to the Group's consolidated reportable segment revenue from
continuing operations at an average gross profit margin of 20% (2016: 20%).
Omnirapid continues to generate profitability and is on budget despite tough market conditions. Their success
remains cemented in outstanding service delivery and strong customer relationships, essential characteristics
in a tough market.
Turbo Agencies operates only in Botswana. The company is operating in an ailing Botswana economy and this
has manifested in poor trading results for the first six months of this year. The restructuring and streamlining
programmes implemented in the previous financial year have not yet yielded the desired results. Until the
economy starts to improve in Botswana, we don't expect to see the situation improving.
Specialised Services
Specialised Services contributed 52% (2016: 48%) to the Group's consolidated reportable segment revenue at
an average gross profit margin of 32% (2016: 15%). The high profit margin for this segment was underpinned by
the very high margin installation jobs performed by Engineered Linings. This high segmental gross profit is not
sustainable and will drift downwards as the financial year continues.
Engineered Linings is currently operating above budget and is highly profitable. The unit has a strong order book
ensuring the unit's sustained profitability until the end of the year. The bulk of revenue has been generated on
low value high margin installation jobs outside South Africa. Due to various contract issues arising on a
material contract outside South Africa, Engineered Linings' cash flow has been impacted. All issues have
now been resolved and the cash flow position should normalise in the next few weeks.
The benefits of the major restructuring implemented at African Cryogenics in the previous financial year are
starting to manifest in the unit's improved trading performance. The unit is profitable and is meeting budgetary
expectations. The unit's cash flow is starting to improve and it has a strong order book.
DIVIDENDS
No dividends were declared or proposed. The Board reviews the dividend policy annually.
CHANGES TO THE BOARD
There have been no changes to the Board for the period under review.
LITIGATION STATEMENT
There are no material matters under litigation against the Company at present.
GOING CONCERN
Cash flow has been a major concern due to the slow payment on a foreign contract which has affected PSV. Our
cash flow forecasts indicate that as soon as the funds come in, our cash flow will start to normalise and the
situation will improve. We also believe that the introduction of a funded B-BBEE partner will alleviate the
working capital stress currently being experienced.
In light of the above, the Board are of the opinion that the Company has adequate resources to continue
operating for the foreseeable future.
No impairment of the existing goodwill was deemed necessary.
SUBSEQUENT EVENTS
There have been no subsequent events between the period ending and the date of this announcement.
PROSPECTS
For the first time in many years, PSV's future looks brighter. The fundamentals necessary for a successful
business are now in place. Most business units are profitable and have strong order books. We believe that the
platform for sustainable levels of profitability has been implemented and it augurs well for the future,
especially if PSV manages to secure a B-BBEE partner.
For and on behalf of the Board
AJD da Silva
Chief Executive Officer
AR Dreisenstock
Chief Financial Officer
DIRECTORS
Executive directors
AJD da Silva (Chief Executive Officer)
AR Dreisenstock (Chief Financial Officer)
Independent non-executive directors
E Ratshikhopha (Chairman of the Board)
A de la Rue (Chairman of the Audit and Remuneration Committees)
L Mosiah (Chairman of the Social and Ethics Committee)
DESIGNATED ADVISER
Merchantec Capital
AUDITORS
Certified Master Auditors Inc.
COMPANY SECRETARY
Merchantec Capital
REGISTERED OFFICE
Stoneridge Office Park 8 Greenstone Place Greenstone Hill Building C, 2nd Floor
Tel (local): (0860) 778 778
Tel (international): +27 11 452 4004
Fax (local): (0860) 329 778
Fax (international): +27 11 452 4007
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: 19/10/2017 04:38:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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