Wrap Text
Unaudited Condensed Consolidated Financial Results
for the Six Months Ended 31 August 2018
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 2018
Condensed consolidated statement of comprehensive income
Unaudited for Audited for
Unaudited for the 12 months the 12 months
the six months ended ended
ended 31 August 28 February
31 August 2017 2018
2018 (Restated) (Restated)
R'000 R'000 R'000
Revenue 120 130 82 112 175 703
Gross profit 15 075 15 586 31 510
Operating expenses (15 520) (16 960) (30 860)
Operating (loss)/profit (445) (1 374) 650
Net finance (charges)/income (953) 27 (880)
Loss before taxation (1 398) (1 347) (230)
Taxation 389 91 (520)
(Loss) for the period from continued operations (1 009) (1 256) (750)
(Loss)/profit from discontinued operations (2 282) 4 309 (73)
(Loss)/profit for the period attributable to
ordinary shareholders (3 291) 3 053 (823)
Other comprehensive (loss)/income (643) (88) 127
Total comprehensive (loss)/profit for the period (3 934) 2 965 (696)
(Loss) attributable to ordinary shareholders
- continued operations (1 009) (1 256) (750)
Loss on disposal of property, plant and equipment
net of tax (3) 87 100
Loss on sale of disposal group - - 165
Deferred tax on (loss) on disposal of assets 1 (24) (28)
Headline (loss) - continued operations (1 011) (1 193) (513)
(Loss)/profit attributable to ordinary shareholders
- discontinued operations (2 282) 4 309 (73)
(Profit) on disposal of property, plant and equipment
net of tax - - (20)
Deferred tax on profit on disposal of assets - - 4
Headline (loss)/profit - discontinued operations (2 282) 4 309 (89)
Headline (loss)/profit (3 293) 3 116 (602)
Basic (loss)/earnings per share (cents) (1.25) 1.16 (0.31)
Basis (loss) per share (cents) - continued operations (0.38) (0.48) (0.28)
Basis (loss)/earnings per share (cents)
- discontinued operations (0.87) 1.64 (0.03)
Headline (loss)/earnings per share (cents) (1.25) 1.18 (0.23)
Headline (loss) per share (cents)
- continued operations (0.38) (0.45) (0.19)
Headline (loss)/earnings per share (cents)
- discontinued operations (0.87) 1.63 (0.03)
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 263 810 429 263 792 329 263 810 429
* Operating expenses are net of sundry income and include depreciation and amortisation charges.
There is no dilution of earnings.
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
31 August 31 August 28 February
2018 2017 2018
R'000 R'000 R'000
ASSETS
Non-current assets 38 441 43 310 42 541
Current assets 49 980 63 502 77 634
Inventory 8 432 11 019 35 703
Trade and other receivables 30 882 40 437 37 576
Taxation receivable - - -
Loans receivable - short term 186 155 197
Cash and cash equivalents 10 480 11 891 4 158
Non-current assets held for sale 30 363 - 11 093
Total assets 118 784 106 812 131 268
EQUITY AND LIABILITIES
Equity 23 868 33 897 28 529
Non-current liabilities 1 265 5 031 2 147
Current liabilities 51 401 67 884 91 190
Billings in excess of work certified - 388 679
Current portion of long-term liabilities 250 2 022 665
Provisions 2 519 4 034 2 088
Trade and other payables 38 496 41 244 66 777
Bank overdraft 10 136 20 196 20 981
Non-current liabilities held for sale 42 250 - 9 402
Total liabilities 94 916 72 915 102 739
Total equity and liabilities 118 784 106 812 131 268
Condensed consolidated statement of changes in equity
Unaudited for Audited for
Unaudited for the 12 months the 12 months
the six months ended ended
ended 31 August 28 February
31 August 2017 2018
2018 (Restated) (Restated)
R'000 R'000 R'000
Balance at beginning of the period
(February 2018 - restated) 28 529 30 932 29 225
Comprehensive (loss)/profit from trading
for the period (3 291) 3 053 (823)
(Costs) relating to specific shares issue (726) - -
Revaluation surplus reversed (623) - 623
Comprehensive (loss) from foreign
currency fluctuations
arising for the period (21) (88) (496)
Balance at end of the period 23 868 33 897 28 529
Condensed consolidated statement of cash flows
Unaudited for Audited for
Unaudited for the 12 months the 12 months
the six months ended ended
ended 31 August 28 February
31 August 2017 2018
2018 (Restated) (Restated)
R'000 R'000 R'000
Net cash generated from/(used in) operating activities 9 862 5 209 (2 174)
Cash generated from/(used in) operations
- continued operations 2 228 5 209 (3 837)
Cash generated from operations
- discontinued operations 7 634 - 1 663
Net cash generated from investing activities 4 009 1 238 4 586
Cash generated from investing activities
- continued operations 4 009 1 238 4 496
Cash generated from investing activities
- discontinued operations - - 90
Net cash (used in) financing activities (5 529) (510) (7 019)
Cash (used in) financing activities
- continued operations 1 859 (510) (4 985)
Cash (used in) financing activities
- discontinued operations (7 388) - (2 034)
Net movement in cash and cash equivalents 8 342 5 937 (4 607)
Net cash generated from/(used in) operations
- continued operations 8 096 5 937 (4 326)
Net cash generated/(used in) operations
- discontinued operations 246 - (281)
Net cash and cash equivalents moved to
assets/liabilities held for sale 8 824 - 2 027
(Cash balance) transferred to non-current assets
held for sale (514) - (244)
Bank overdraft transferred to non-current liabilities
held for sale 9 338 - 2 271
Cash and cash equivalents at beginning of the period (16 822) (14 242) (14 242)
Cash and cash equivalents at end of the period 344 (8 305) (16 822)
Analysis of cash flow from operating activities
Cash (used in) generated from operations
after adjusting for non-cash flow expenditure
and income (1 546) 8 683 3 517
Changes in working capital
Decrease/(increase) in inventories (1 666) (429) (16 766)
Decrease/(increase) in trade and other receivables 19 188 (611) (459)
(Decrease)/increase in trade and other payables (6 114) (2 491) 11 479
9 862 5 152 (2 228)
Taxation paid - 57 54
Cash generated from/(used in) operations 9 862 5 209 (2 174)
Condensed consolidated segmental information
Shared
Industrial Specialised Services
Supplies Services and Other Total
R'000 R'000 R'000 R'000
For the six months ended 31 August 2018
Reportable revenue 85 216 34 914 - 120 130
Gross profit 10 934 4 095 46 15 075
Operating expenses (4 514) (3 909) (7 096) (15 520)
Profit/(loss) before tax 6 381 (375) (7 404) (1 398)
Profit/(loss) after tax 4 595 (296) (5 307) (1 009)
Capital expenditure - - 8 8
Gross assets 32 256 41 057 45 471 118 784
Continued operations 19 696 23 254 45 471 88 421
Discontinued operations 12 560 17 803 - 30 363
Gross liabilities (27 050) (48 716) (19 150) (94 916)
Continued operations (18 196) (16 161) (18 309) (52 666)
Discontinued operations (8 854) (32 555) (841) (42 250)
For the six months ended 31 August 2017
(Restated)
Reportable revenue 46 789 35 323 - 82 112
Gross profit 8 544 6 578 464 15 586
Operating expenses (4 343) (3 534) (9 083) (16 960)
Profit/(loss) before tax 4 171 3 140 (8 658) (1 347)
Profit/(loss) after tax 3 003 2 400 (6 659) (1 256)
Capital expenditure - 126 616 742
Gross assets 30 748 37 533 38 531 106 812
Continued operations 30 748 37 533 38 531 106 812
Discontinued operations - - - -
Gross liabilities (23 170) (44 054) (5 691) (72 915)
Continued operations (23 170) (44 054) (5 691) (72 915)
Discontinued operations - - - -
Commentary
BASIS OF PREPARATION
The unaudited condensed consolidated financial results for the six months ended 31 August 2018
("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
("JSE 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 2018.
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 or reported
on by the Group's auditors in accordance with paragraph 8.40(a) of the JSE Listings Requirements.
NATURE OF BUSINESS
PSV is an industrial engineering holding company comprising two operating business segments, namely:
- Industrial Supplies (including steel, piping, industrial tools and consumable supplies); and
- Specialised Services (including comprehensive cryogenic and gas systems).
INTRODUCTION
The business was detrimentally impacted by the following factors during the interim period:
- The dire financial state of the civil construction industry;
- The freeze on capex spend by the gas companies;
- The absence of suitable B-BBEE credentials; and
- The lack of working capital.
FINANCIAL RESULTS
Total loss after tax from continued operations was R1 million (August 2017 restated: loss after tax
of R1.26 million). Engineered Linings has been defined as a disposal group in terms of IFRS 5 and has
been reclassified as a discontinued operation. This has necessitated a restatement of the August 2017
and February 2018 comparatives respectively. Headline loss per share was 1.25 cents per share ("cps")
(August 2017 restated: Headline earnings per share of 1.18 cps).
Total cash flow from operating activities remained positive at R9.86 million (August 2017:
R5.2 million). The Company's net cash increased to R0.34 million compared to R8.30 million overdraft
in the previous year. This improvement was partially attributable to substantial prepayments received
from customers, but mainly due to the transfer of the net overdraft pertaining to Engineered Linings
of R8.82 million to non-current liabilities held for sale.
As the goodwill in the statement of financial position relates to the Omnirapid cash generating unit,
no impairment was considered necessary.
The Company's statement of financial position weakened because of the loss generated in the period;
reversal of the revaluation surplus and the capitalisation of costs relating to the fresh subscription
of shares that occurred after the interim period. Tangible net asset value per share decreased to
1.98 cps (August 2017: 6.09 cps). 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. As announced on SENS on 18 September 2018 and with effect from 17 October 2018, PSV has
secured a 30% B-BBEE equity partner in PSV Industrial Proprietary Limited and PSV Asset Company (Pty)
Ltd, the Company's domestic operating subsidiaries. We are hopeful that this positive development
will make a major difference to the Company's ability to source work in the future.
OPERATIONAL REVIEW
Industrial Supplies
This segment contributed 71% (August 2017: 57%) to the Group's consolidated reportable segment
revenue from continuing operations at an average gross profit margin of 13% (2017: 18%).
Omnirapid has outperformed all budgetary expectations and has grown by 67% compared to 2017.
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 board of
directors of PSV ("the Board") is still exploring all options to sell this company. As a result,
the operations of Turbo are being disclosed as a discontinued operation.
Specialised Services
Specialised Services contributed 29% (August 2017: 43%) to the Group's consolidated reportable
segment revenue at an average gross profit margin of 12% (August 2017: 19%). The low profit margin
is attributable to lower turnover levels, reducing margins to secure work, high fixed costs and a
distressed economic environment.
Engineered Linings is currently operating below budget and is making a loss. Lack of B-BBEE,
limited working capital and operating in the civil construction industry are all contributing
factors. As a result, our Cape Town office was right sized to a small sales and contracting office
whilst the Johannesburg office was simultaneously upgraded to become the main operating hub.
The management of Engineered Linings has also been changed. Whilst any major restructuring takes
time to gain traction, we are confident that the latest initiatives will resolve many operational
issues and propel the division towards sustained profitability. Notwithstanding, considering the
parlous state of the industry Engineered Linings operates in and the substantial losses incurred
to date, the Board has made a decision in principle to sell the division within the next
twelve months.
African Cryogenics experienced a tough six months. A full pipeline as at 28 February 2018 has yet
to materialise as capex spend was suspended by the gas companies. The lack of throughput in the
division's fabrication department resulted in the under-recovery of fixed costs and
depressed margins. We are hopeful that the recapitalisation of the Group and the introduction of
a B-BBEE partner will revive the business's fortunes.
DIVIDENDS
No dividends were declared or proposed. The Board reviews the dividend policy annually.
CHANGES TO THE BOARD
The following changes to the Board were effected after the period end:
- Ms Lerato Mosiah resigned as an independent non-executive director with effect from
2 October 2018.
- Mr Anthony de la Rue has been appointed as Chairman of the Board and has stepped down as Chairman
of the Audit and Risk Committee and as Chairman of the Remuneration Committee with effect from
3 October 2018.
- Mr Eric Ratshikhopha has been appointed as Chairman of the Social and Ethics Committee and has
stepped down as Chairman of the Board with effect from 3 October 2018.
- Mr Roger Pitt has been appointed as an independent non-executive director of the Board and
Chairman of the Audit and Risk Committee with effect from 3 October 2018.
- Mr Carlos Fernandes has been appointed as a non-executive director of the Board and Chairman of
the Remuneration Committee with effect from 3 October 2018.
- Mr Abilio da Silva has resigned as Chief Executive Officer with effect from 21 November 2018.
- Mr Carlos Fernandes has been appointed as Interim Chief Executive Officer with effect from
22 November 2018.
LITIGATION STATEMENT
There are no material matters under litigation against the Company at present.
GOING CONCERN
The directors have made an assessment of the Group's ability to continue as a going concern and have
no reason to believe that it is not a going concern.
SUBSEQUENT EVENTS
Subsequent to 31 August 2018, Regis Holdings Limited ("Regis") acquired a 34.99% shareholding in PSV
via a specific issue of shares to Regis at a price of 18 cps for a total consideration of
R25.7 million. The subscription became unconditional on 17 September 2018 and the funds were received
on 28 September 2018.
PROSPECTS
The Company's prospects were limited until the introduction of Regis and Beryl. Since 31 August 2018,
the Company's balance sheet has been stabilised. The Board and management are taking the necessary
steps to address core strategic elements in order to restore the group to profitability.
For and on behalf of the Board
JCP Fernandes AR Dreisenstock
Interim Chief Executive Officer Chief Financial Officer
Johannesburg
30 November 2018
DIRECTORS
Executive directors
JCP Fernandes (Interim Chief Executive Officer)
AR Dreisenstock (Chief Financial Officer)
Independent non-executive directors
A de la Rue (Chairman of the Board)
E Ratshikhopha (Chairman of the Social and Ethics Committee)
R Pitt (Chairman of the Audit and Risk Committee)
COMPANY SECRETARY
Merchantec Capital
DESIGNATED ADVISER
Merchantec Capital
AUDITORS
Certified Master Auditors Inc.
REGISTERED OFFICE
Stoneridge Office Park
8 Greenstone Place
Building C
2nd Floor
Greenstone Hill
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
www.psvholdings.com
Date: 30/11/2018 01:28:00 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
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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