Wrap Text
Abridged condensed consolidated results for the year ended 28 February 2019 and notice of Annual General Meeting
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”)
Abridged condensed consolidated results for the year ended 28 February 2019 and notice of Annual General Meeting
Condensed consolidated statement of comprehensive income
28 February 28 February
2019 2018
R R
Revenue 237 532 704 175 703 448
Cost of sales (209 317 068) (144 755 945)
Gross profit 28 215 636 30 947 503
Other income 431 039 562 994
Other expenses (31 931 315) (30 850 839)
(Loss)/Profit from operating activities (3 284 640) 659 658
Finance income 187 312 1 063 896
Finance costs (2 007 795) (1 943 662)
Net finance costs (1 820 483) (879 766)
(Loss)/Profit before tax from continuing operations (5 105 123) (220 108)
Deferred tax 6 381 625 (520 090)
Profit/(Loss) for the year from continuing operations 1 276 502 (740 198)
Revenue from discontinued operations 57 503 656 51 626 288
Net expenses from discontinued operations (80 368 525) (51 652 168)
(Loss) before tax from discontinued operations (22 864 869) (25 880)
Tax from discontinued operations (3 706 680) (47 398)
(Loss) from discontinued operations (26 571 549) (73 278)
(Loss) for the year attributable to ordinary shareholders (25 294 949) (813 476)
Other comprehensive income that may be recycled in future periods
Foreign currency translation gain/(loss) not subject to tax 30 667 (495 571)
Other comprehensive income that will not be subsequently reclassified to profit or loss
Revaluation surplus net of tax (622 784) 622 784
Total comprehensive (loss) for the year (25 887 164) (686 264)
Reconciliation of headline earnings
Profit/(Loss) after tax attributable to ordinary shareholders – continuing operations 1 276 502 (740 198)
Loss /(Profit) on disposal of property, plant and equipment – continuing operations (48 519) 100 146
Loss on sale of disposal group 226 606 165 381
Tax effect on adjustments – continuing operations 13 585 (28 041)
Headline profit/(loss) – continuing operations 1 468 174 (512 712)
(Loss) after tax attributable to ordinary shareholders – discontinued operations (26 571 549) (73 278)
(Loss) on disposal of property, plant and equipment – discontinued operations (2 134) (20 350)
Tax effect on adjustments – discontinued operations 469 4 477
Headline (loss) - discontinued operations (26 573 214) (89 151)
Headline (loss) for the year attributable to ordinary shareholders (25 105 040) (601 863)
Basic and diluted (loss) per share (cents) (7.71) (0.31)
Basic and diluted (loss) per share (cents) - continuing operations 0.39 (0.33)
Basic and diluted (loss) per share (cents) - discontinued operations (8.10) (0.03)
Headline (loss) per share (cents) (7.65) (0.23)
Headline (loss) per share (cents) - continuing operations 0.45 (0.19)
Headline (loss) per share (cents) - discontinued operations (8.10) (0.03)
Actual number of shares in issue at year end 406 913 577 265 879 842
Weighted number of shares in issue at year end 328 206 846 263 810 429
There are no shares with a dilutive impact
Condensed consolidated statement of financial position
28 February 2019 28 February 2018
R R
ASSETS
Non-current assets 43 079 406 42 540 858
Property, plant and equipment 5 435 889 11 793 921
Goodwill and intangible assets 18 369 192 17 784 334
Long term portion of retention debtors receivable 847 162 847 162
Loans receivable – long term 1 107 239 1 336 387
Deferred taxation 17 319 924 10 779 054
Current assets 60 024 668 77 634 144
Inventories 6 496 855 35 702 949
Trade and other receivables 39 439 382 37 575 071
Loans receivable – short term 209 526 197 450
Cash and cash equivalents 6 683 416 4 158 674
Non-current assets held for sale 7 195 489 11 093 272
Total assets 103 104 074 131 268 274
EQUITY
Share capital 297 743 640 273 329 475
Revaluation surplus - 622 784
Foreign currency translation reserve (107 920) (138 587)
Retained (loss) (270 579 891) (245 284 942)
Total equity attributable to ordinary shareholders of the Company 27 055 829 28 528 730
LIABILITIES
Non-current liabilities 1 778 692 2 147 455
Deferred Tax 29 201 49 728
Loans and borrowings 1 749 491 2 097 727
Current liabilities 67 115 489 91 190 103
Billings in excess of work certified - 679 002
Trade and other payables 45 231 502 66 776 700
Bank overdraft 20 437 169 20 980 994
Current portion of loans and borrowings 694 874 665 119
Provisions 751 944 2 088 288
Non-current liabilities held for sale 7 154 064 9 401 986
Total liabilities 76 048 245 102 739 544
Total equity and liabilities 103 104 074 131 268 274
Condensed consolidated statement of changes in equity
Share capital Foreign currency Revaluation Retained (loss) Total
translation reserve surplus
Balance at 28 February 2017 273 329 475 356 984 - (244 461 465) 29 224 994
Total comprehensive (loss) for the - (495 571) 622 784 (823 477) (696 264)
year
Balance at 28 February 2018 273 329 475 (138 587) 622 784 (245 284 942) 28 528 730
Total comprehensive (loss) for the - - - (25 295 047) (25 295 047)
year
Issue of Shares 24 414 165 24 414 165
Other comprehensive income from (622 784) (622 784)
the revaluation of assets (net of
tax)
Other comprehensive income from - 30 667 30 667
currency fluctuations
Balance at 28 February 2019 297 743 640 (107 920) - (270 579 989) 27 055 731
Condensed consolidated statement of cash flows
28 February 28 February
2019 2018
R R
Cash flows from operating activities (20 348 124) (2 719 152)
Taxation paid - 55 441
Net cash (used in) operating activities (20 348 124) (2 663 711)
Net cash (used in) operating activities – continuing operations (1 526 926) (4 326 910)
Net cash (used in)/from operating activities – discontinued operations (18 821 198) 1 663 199
Cash flows from investing activities
(Additions) to property, plant and equipment to expand operations (556 732) (746 398)
Proceeds from disposal of property, plant and equipment 1 770 434 1 777 185
(Additions) to intangibles to expand operations (718 570) -
Loan raised on B-BBEE sale - 3 188 542
Decrease in assets held for sale 784 888 -
Finance income 48 782 1 063 896
Net cash from investing activities 1 328 802 5 283 225
Net cash (used in)/from investing activities – continuing operations (18 818 464) 4 495 696
Net cash from investing activities – discontinued operations 20 147 266 89 901
Cash flows from financing activities
Net proceeds of Share Subscription 24 414 165 -
Loans and borrowings repaid (318 481) (3 255 881)
Finance expenses (2 007 795) (1 943 662)
Net cash from/(used in) financing activities 22 087 889 (5 199 543)
Net cash from/(used in) financing activities – continuing operations 23 713 709 (3 165 143)
Net cash from/(used in) financing activities – discontinued operations (1 625 820) (2 034 400)
(Decrease) in cash and cash equivalents 3 068 567 (2 580 029)
Net (decrease) in cash and cash equivalents – continuing operations 3 368 319 (2 298 729)
Net increase/(decrease) in cash and cash equivalents – discontinued
operations (299 752) (281 300)
Cash balance transferred to non-current assets held for sale - 2 026 648
Cash balance transferred to non-current assets held for sale - (244 449)
Bank overdraft transferred to non-current liabilities held for sale - 2 271 097
Cash and cash equivalents at beginning of the year (16 822 320) (14 242 291)
Cash and cash equivalents at end of the year (13 753 753) (16 822 320)
Segmental report 2019
Industrial Specialised Shared Services Total Continued
Supplies Services and Other operations
R R R R
Total segment Revenue 178 351 228 60 757 954 - 239 109 182
Inter-segmental revenue (1 576 478) - - (1 576 478)
Reportable segment revenue 176 774 750 60 757 954 - 237 532 704
Gross profit 23 668 348 4 415 452 131 836 28 215 363
Operating Expenses (9 500 540) (7 629 811) (14 800 964) (31 931 315)
Depreciation and amortisation - (133 013) (1 052 841) (1 185 854)
Other operating expenses (9 500 540) (7 496 798) (13 748 123) (30 745 461)
Profit/(Loss) before tax from continuing
operations 14 047 337 (4 130 236) (15 022 224) (5 105 124)
Capital expenditure - 105 602 482 181 587 783
Total assets 24 104 864 21 654 156 55 090 069 100 849 089
Continuing operations 20 487 726 18 075 905 55 090 069 93 653 700
Discontinued operations 3 617 138 3 578 251 - 7 195 389
Total liabilities 23 515 812 33 630 044 16 647 502 73 793 358
Continuing operations 16 361 748 33 630 044 16 647 502 66 639 294
Discontinued operations 7 154 064 - - 7 154 064
Segmental report 2018
Industrial Specialised Shared Services Total Continued
Supplies Services and Other operations
R R R R
Total segment Revenue 112 019 381 72 276 381 - 184 295 545
Inter-segmental revenue (8 592 097) - - (8 592 097)
Reportable segment revenue 103 427 284 72 276 381 - 175 703 448
Gross profit 17 760 703 13 171 311 15 489 30 947 503
Operating Expenses (8 949 208) (6 893 962) (15 017 669) (30 860 839)
Depreciation and amortisation - (88 100) (303 219) (391 319)
Other operating expenses (8 949 208) (6 805 862) (14 714 450) (30 469 520)
Profit / (loss) before tax from continuing
operations 8 895 724 5 221 820 (14 347 652) (230 108)
Profit/(loss) after tax excluding
discontinued operations 6 296 861 3 924 476 (10 971 535) (750 198)
Capital expenditure - - 1 993 585 1 993 585
Total assets 22 758 447 63 456 240 45 053 587 131 268 274
Continuing operations 11 665 175 63 456 240 45 053 587 120 175 002
Discontinued operations 11 093 272 - - 11 093 272
Total liabilities 22 329 822 60 036 300 20 373 422 102 739 544
Continuing operations 12 927 836 60 036 300 20 373 422 93 337 558
Discontinued operations 9 401 986 - - 9 401 986
COMMENTARY
BASIS OF PREPARATION
The abridged condensed consolidated results for the year ended 28 February 2019 (“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 Companies Act, 2008 (Act 71 of 2008), as amended. The accounting policies and method
of computation applied in preparation of these abridged condensed consolidated results are in accordance with IFRS and are
consistent with those applied in the annual financial statements for the year ended 28 February 2018 with the exception of the
adoption of IFRS 9: Financial Instruments (“IFRS 9”).
The Group has adopted IFRS 9 with a date of application of 1 March 2018. IFRS 9 replaces IAS 39: Financial Instruments: Recognition
and Measurement. It makes major changes to the previous guidance on the classification and measurement of financial assets
and introduces an “expected credit loss” model for the impairment of financial assets. There have been no changes to the
classification and measurement of the financial instruments in the Group with the application of IFRS 9 and there was no material
impact on the financial statements.
There were no other new revised standards adopted that have a material impact on the consolidated financial statements.
This abridged report is extracted from audited financial information but is not itself audited. The board of directors of PSV
(“the Board”) takes full responsibility for the preparation of the abridged report and that the financial information has been
correctly extracted from the underlying financial statements.
The annual financial statements have been prepared under the supervision of the Financial Director, Roger Pitt CA(SA), and have
been audited by the Groups’ auditors, HLB CMA South Africa Inc., whose unmodified audit report is available for inspection at the
registered office of the Company.
Since the publication of the reviewed provisional condensed consolidated results for the year ended 28 February 2019 (“Reviewed
Results”), changes to the financial statements were required as a result from the audit. These changes, which related to the 2019
figures, are set out below:
The impairment of a group loan processed prior to the release of the Reviewed Results was incorrectly processed. The correction
of this entry resulted in:
o a reclassification of R2 422 749 between operating expenses and cost of sales;
o an adjustment of R678 370 to deferred tax; and
o and the resultant changes to profit, EPS, HEPS, deferred tax asset, trade and other receivables, trade and other payables,
reserves and cash flow.
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 and the supply and installation of geosynthetic linings).
INTRODUCTION
The Group has endured an extremely challenging 12 months with substantial financial losses against a background of extremely
difficult trading conditions and the departure of previous executive management. Newly appointed management is making
encouraging strides toward delivering a turnaround.
FINANCIAL RESULTS
Despite strong revenue (+59%) and overall margin (+33%) growth in Industrial Supplies driven primarily by exports volume, the
Group was unable to convert this increase into overall profitability. Specialised Services fared poorly as the general economy
weighed heavily on the gas sector, its primary customer base. Poor execution and structural sector changes in geosynthetic lining
material supply and installation resulted in substantial losses. Turbo Agencies and Engineered Linings meet the requirements
contained in IFRS 5 to be treated as a disposal group and are accounted for as discontinued operations.
Profit after tax from continued operations was R1.3 million (2018: loss after tax of R0.75 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
reclassification of the 2018 comparatives. Headline loss per share was 7.65 cents per share ("cps") (2018: Headline loss per share
of 0.23 cps).
Total cash flow from operating activities remained negative at R20.3 million (2018: R2.2 million). The Company's net cash increased
resulting in a reduced net overdraft of R13.7 million compared to R16.8 million overdraft in the previous year. This improvement
was largely due the issue of shares for cash to Regis Holdings Limited (“Regis”) which resulted in a cash inflow of R24.4 million.
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 remained constant due to the offset of the losses for the year and the issue of
shares to Regis.
OPERATIONAL REVIEW
Industrial Supplies
This segment contributed 74% (2018: 49%) to the Group’s consolidated reportable segment revenue, at an average gross profit
margin of 13.4% (2018: 17.2%).
The business continues to perform well and generates consistent cash flows which, against the general economic background and
sector dynamics is a credit to management. Relentless focus on execution, pricing and customer relationship management has,
and continues, to deliver strong volume growth and an expansion in the customer base. Despite a negative percentage contraction
in the gross margin (-3.8%), the strong volume growth has driven overall margin growth (+33%).
Turbo Agencies has been classified as discontinued operation.
Specialised Services
Specialised Services contributed 26% (2018: 51%) to the Group’s consolidated reportable segment revenue at an average gross
profit margin of 7.3% (2018: 23.0%).
The cryogenic vessel manufacturing business was impacted negatively by the economy generally and the resultant constrained
capex spend across the sector. The business operated at well below capacity and was unable to adjust its fixed and variable costs
sufficiently to compensate for the slowdown. Management pivoted toward the development and design of key intellectual
property elements which will serve it well going forward.
The supply and installation of geosynthetic linings business has been the key source of poor historical financial performance of
the Group. Geosynthetic linings have become a commoditised material with very low margins and the attached installation
industry is very fragmented. The legacy premise that substantial installation margins are available on large scale, and often, foreign
projects, was myopic in that it failed to account for the inherent supply chain and execution risks in such projects. The pressure
which this has exerted on an under-capitalised balance sheet has been problematic. The business has been classified as a
discontinued operation.
DIVIDENDS
No dividends were declared or proposed. The Board reviews the dividend policy annually.
CHANGES TO THE BOARD
The following changes to the Board occurred during the period under review.
Ms Lerato Mosiah resigned as an independent non-executive director with effect from 2 October 2018.
Mr Anthony de la Rue, who was appointed as Chairman of the Board, 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, who was appointed as Chairman of the Social and Ethics Committee, stepped down as Chairman of the
Board with effect from 3 October 2018.
Mr Roger Pitt was 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 was 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 resigned as Chief Executive Officer with effect from 21 November 2018.
Mr Carlos Fernandes was appointed as Interim Chief Executive Officer with effect from 22 November 2018.
Mr Tony Dreisenstock resigned as Chief Financial Officer with effect from 1 February 2019.
Mr Ian Schmidt, who was appointed as Chief Financial Officer with effect from 1 February 2019, resigned with effect from 31 March
2019.
Mr Roger Pitt was appointed as Chief Financial Officer with effect from 31 March 2019, stepping down as an independent non-
executive director at the same date.
Mr Douglas Lorimer (“Doug”) was appointed as an independent non-executive director of the Board and Chairman of the Audit
and Risk Committee with effect from 17 May 2019. Doug has subsequently also been appointed as Chairman of the Remuneration
Committee with effect from 23 May 2019.
SUBSEQUENT EVENTS
Subsequent to the financial year-end on or about 20 March 2019, the Group entered into a loan agreement with Regis, in terms
of which, Regis loaned the business USD365 000 at US prime rate (currently 5.5%). The Company further entered into a loan
agreement with a subsidiary of Regis for a R9 million facility at a rate of SA prime plus 12.5% (currently 22.75%) on the utilised
portion and 5% on the unutilised portion.
GOING CONCERN
The Directors have made an assessment of the ability of the Company and its subsidiaries to continue as going concerns.
Notwithstanding that the Group has made significant losses in the current financial year, the Board is confident that the Group
will continue as a going concern for the following reasons:
- we continue to enjoy the support of our shareholders and are pursuing a capital raising transaction;
- the Company has raised a loan from Regis for USD365 000 to support the working capital of the business;
- the Company has signed a further loan agreement with a subsidiary of Regis for an additional R9 million in order to fund
specific projects within the Group which have been identified as part of the turnaround process;
- the disposal of Turbo Agencies Botswana is nearing finalisation;
- the potential sale of Engineered Linings a loss-making operation will remove a cash drain on the business; and
- the Group is actively progressing its B-BBEE strategy which is expected to open up further opportunities for growth.
PROSPECTS
Industrial Supplies
Our focus is to broaden and grow the strong trading base while simultaneously evolving the operating and control environment.
Our priorities are responsible and appropriately leveraged trading, robust treasury management, succession and key account
development. This business delivers strong operational synergies with the cryogenics business.
Specialised Services
Against a backdrop of low growth in traditional industrial gas supply, manufacturing opportunities which are driven by ageing local
gas company fleets on both road tankers and static or standing vessels, exist for PSV.
Newer specification road tankers deliver a much greater cost efficiency via improved payloads and chassis weight. The business
has key elements of intellectual property pertaining to enhanced cost efficiencies and Africa road operating environment
specificities. Gas is typically low margin and savings in supply chain are hugely relevant to the gas companies. Across the vessel
manufacturing universe there are substantial supply constraints, manifested in long lead times on imported tankers.
Static tanks tend to have an element of standardised manufacturing and are generally produced to overall demand with specific
manufacturing slots rather than to specific orders, which materialise through marketing the continuity of the approach. To this
end, the business needs to continue to operate in the same manner, with efficient utilisation of the manufacturing bay with near
standard elements of manufacturing, thereby offering clients the opportunity to book production slots over time. This, together
with more fundamental elements such health and safety, certification and supplier accreditation, are key focus areas for the
division. The key benefits of this approach are lower unit costs and much reduced lead times.
Investing into these tactical advantages across road tankers and static tanks will, we believe, ultimately produce a sustainable
strategic advantage over importation.
The business is also one of only two local Vaporisers manufacturers. This component of the business has operated near to capacity
over recent periods, and we expect this to continue. Import replacement is unlikely due to the spatial elements of the design.
Other non-manufacturing elements of the business, such as the supply of specialised OEM cryogenic equipment and valves, and
maintenance exist as a value-add to customers and warrant higher margins than currently being achieved.
The applications bay, which focuses on specialised cryogenic engineering projects, typically for the Food and Beverage industry, is
an area of the business which is also under developed before its potential customer base.
Distribution of Integrated Annual Report and Notice of Annual General Meeting
Shareholders are advised that PSV’s Integrated Annual Report for the year ended 28 February 2019 has been distributed
shareholders today, 28 June 2019 and is available on the Company’s website, www.psvholdings.com.
Notice is hereby given that the Annual General Meeting of the Company will be held at 11:30 on Wednesday, 14 August 2019 at
the Corner of Serenade Road and North Reef Road, Elandsfontein Rail, Germiston to transact the business as stated in the notice
of the Annual General Meeting, which is contained in the Integrated Annual Report.
The board of directors of PSV has determined that, in terms of section 62(3)(a), as read with section 59 of the Companies Act,
2008 (Act 71 of 2008), as amended, the record date for the purposes of determining which shareholders of the Company are
entitled to participate in and vote at the Annual General Meeting is Friday, 2 August 2019. Accordingly, the last day to trade in
PSV shares in order to be recorded in the Register to be entitled to vote at the Annual General Meeting will be Tuesday,
30 July 2018.
For and on behalf of the Board
Carlos Fernandes Roger Pitt
Chief Executive Officer (interim) Chief Financial Officer
Johannesburg
28 June 2019
DIRECTORS
Executive Directors:
Carlos Fernandes (interim Chief Executive Officer)
Roger Pitt (Chief Financial Officer)
Independent Non-Executive Directors:
A de la Rue (Chairman of the Board)
Douglas Lorimer (Chairman of the Audit and Risk Committee and Remuneration Committee)
E Ratshikhopha (Chairman of the Social and Ethics Committee)
COMPANY SECRETARY
Merchantec Capital
DESIGNATED ADVISER
Merchantec Capital
AUDITORS
HLB CMA South Africa Inc.
REGISTERED OFFICE
Bantry Park, 41 Jansen Avenue, Jet Park, Boksburg
Tel (local): (0860) 778 778
Tel (international): +27 11 452 4004
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: 28/06/2019 03:51:00 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.
Sharenet Sites 
