| Tue 19 May 2009, 11:39 | | PSV - PSV Holdings - Reviewed Abridged Results For The Year Ended 28 |
|
PSV
PSV
PSV - PSV Holdings - Reviewed Abridged Results For The Year Ended 28
February 2009
PSV HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1988/004365/06)
JSE code: PSV
ISIN: ZAE000078705
("PSV" or "the Group")
Reviewed Abridged Results for the year ended 28 February 2009
Income statement for the year ended 28 February 2009
R`000 Reviewed Audited
2009 2008
Revenue 430 865 298 618
Cost of sales 332 944 224 994
Gross profit 97 920 73 623
Operating expenses 64 542 43 479
Operating profit 33 379 30 145
Negative goodwill arising on acquisition of - 12 501
business combination
Financial income 7 862 1 021
Financial expenses 18 007 6 862
Profit before taxation 23 234 36 806
Taxation 6 686 8 329
Profit for the year 16 547 28 477
Profit for the year attributable to 47 77
ordinary shareholders
Note: Operating expenses includes
depreciation, amortisation and is net of
sundry income
Reconciliation to headline earnings
Profit for the year as above 16 547 28 477
Loss / (profit) on disposal of fixed assets 108 (62)
Negative goodwill written off arising on (12 501)
the acquisition of a business combination
Headline earnings 16 655 15 914
Reconciliation to core earnings
Headline earnings as above 16 655 15 914
Interest on deferred purchase consideration 1 342 2 102
payable
Amortisation of specific intangibles 4 852 4 258
Deferred taxation provided on above (1 358) (1 235)
IFRS 2 charge arising on BEE transaction 1 513
Straight lining of leases 21
Core earnings 21 511 22 553
Basic earnings per share (cents) 7,02 14,22
Headline earnings per share (cents) 7,06 7,98
Core earnings per share 9,12 11,29
Diluted earnings per share (cents) 6,69 14,03
Diluted headline earnings per share (cents) 6,73 7,87
Actual number of shares in issue at year 236 020 221 332
end
Weighted number of shares in issue at year 235 784 200 269
end
Fully diluted weighted average number of 247 451 202 922
shares in issue at year end
Balance sheet as at 28 February 2009
R`000 Reviewed Audited
2009 2008
ASSETS
Non-current assets 213 403 192 583
Property, plant and equipment 54 413 50 281
Intangible assets 34 569 23 614
Goodwill 117 153 111 817
Investment 8 -
Deferred taxation assets 6 417 6 564
Loans receivable 874 307
Current assets 149 724 155 046
Inventories 74 228 48 004
Trade and other receivables 75 496 77 437
Current portion of long-term assets - 3 734
Cash and cash equivalents - 25 871
Total assets 363 159 347 629
EQUITY AND LIABILITIES
Shareholders` equity
Ordinary shareholders` interest 230 890 202 457
Stated capital (Share capital) 260 605 252 475
Deferred equity consideration 9 917 2 254
Share-based payment reserve 1 513 1 513
Accumulated loss (38 039) (54 586)
Foreign currency translation reserve (3 106) 801
Non-current liabilities 34 395 34 005
Borrowings 20 259 13 862
Purchase consideration payable 5 703 13 363
Deferred tax liabilities 8 432 6 780
Current liabilities 97 874 111 167
Trade and other payables 65 059 72 215
Current portion of long-term liabilities 23 398 31 698
Taxation payable (1 840) 7 253
Bank overdrafts 2 759 -
Short-term loan 8 497 -
Total equity and liabilities 363 159 347 629
Cash flow statement for the year ended 28 February 2009
R`000 Reviewed Audited
2009 2008
Cash flows from operations (7 331) 10 317
Cash flows from investing activities (36 846) (39 772)
Cash flows from financing activities 10 709 34 360
(Decrease)/increase in cash and cash (33 468) 4 906
equivalents
Cash at acquisition of subsidiary 4 838 12 883
Cash and cash equivalents at beginning of 25 871 8 083
the year
Cash and cash equivalents at end of the (2 759) 25 871
year
Segmental analysis for the year ended 29 February 2008
Pump Engineering Petro- Shared Total
spares linings and chemical services
and industrial
valves supplies
Revenue 93 117 90 699 114 802 298 618
Gross Profit 34 261 20 614 18 749 73 623
Operating expenses 10 922 8 285 12 119 9 439 40 766
(1)
Profit before tax 20 687 11 266 5 059 (205) 36 806
Depreciation/amortisa 1 634 666 729 4 933 7 962
tion
Capital expenditure 13 119 922 992 22 055 37 088
Gross assets (2) 86 859 66 269 50 788 147 986 351 902
Gross liabilities (2) 48 703 30 880 31 501 38 146 149 228
Operating expenses excludes depreciation, amortisation and is net of sundry
income
Excludes deferred tax
Segmental analysis for the year ended 28 February 2009
Pump Linings and Specialised Total
spares general services
and valves industrial
supplies
Revenue 102 310 191 360 137 195 430 865
Gross Profit 36 612 38 900 22 408 97 920
Operating expenses 19 007 22 971 18 472 60 451
Profit before tax 4 465 16 166 2 603 23 234
Depreciation/amortisati 3 547 3 752 3 036 10 334
on
Capital expenditure (3 652) (2 872) (1 954) (8 479)
Gross assets* 130 297 152 084 111 382 393 762
Gross liabilities 60 595 50 976 49 286 160 857
Gross assets and liabilities exclude deferred tax assets and liabilities.
Head office costs have been apportioned pro rata into the respective
operating segments
Statement of changes in equity for the year ended 28 February 2009
Share Share Non- Share based
Capital premium distributable payment
reserves reserve
Balance at 28 - - - -
February 2007
Issue of share - - - -
to Vunani
vendors
Issue of share - - - -
to Mapi
vendors
Issue of share - - - -
to Dasher
vendors
Odd lot shares - - - -
issued
Share issue - - - -
costs
Odd lot shares - - - -
issue costs
Share based - - - 1 513
payment
reserve -
Vunani vendor
Deferred - - 2 254 -
equity -
Engineered
Lining vendor
Net profit for - - - -
the year
Opening - - - -
retained
income
adjustment -
PSV Zambia
Foreign - - - -
translation
reserve - PSV
Zambia
Balance at 29 - - 2 254 1 513
February 2008
Issue of - - -
shares
Share issue - - -
costs
Deferred - 7 663 -
equity -
Engineered
Lining vendor
Odd lot share - - -
buyback
Share buyback - - -
for Share
Incentive
scheme
Net profit for - - - -
the year
Foreign - - - -
translation
reserve - PSV
Zambia
Balance at 28 - - 9 917 1 513
February 2009
Revaluation Accumulated Stated Total
reserve loss capital
Balance at 28 (440) (83 063) 236 178 152 674
February 2007
Issue of share - - 14 250 14 250
to Vunani
vendors
Issue of share - - 3 000 3 000
to Mapi vendors
Issue of share - - 270 270
to Dasher
vendors
Odd lot shares - - 19 19
issued
Share issue - - (1 160) (1 160)
costs
Odd lot shares - - (81) (81)
issue costs
Share based - - - 1 513
payment reserve
- Vunani vendor
Deferred equity - - - 2 254
- Engineered
Lining vendor
Net profit for - 28 477 - 28 477
the year
Opening retained - - - -
income
adjustment - PSV
Zambia
Foreign 1 241 - - 1 241
translation
reserve - PSV
Zambia
Balance at 29 801 (54 586) 252 475 202 457
February 2008
Issue of shares - - 10 500 10 500
Share issue - - (31) (31)
costs
Deferred equity - - - 7 663
- Engineered
Lining vendor
Odd lot share - - (0) (0)
buyback
Share buyback - - (2 339) (2 339)
for Share
Incentive scheme
Net profit for 16 547 - 16 547
the year
Foreign (3 906) - - (3 906)
translation
reserve - PSV
Zambia
Balance at 28 (3 106) (38 039) 260 605 230 890
February 2009
NATURE OF BUSINESS
PSV is an industrial engineering holding company comprising three operating
business segments:
Pumps, spares and valves.
Engineering linings and general industrial supplies.
Specialised services (including petrochemical and cryogenic activities).
ACCOUNTING POLICIES
These reviewed abridged results have been prepared in accordance with the
recognition and measurement principals of International Financial Reporting
Standards ("IFRS") and the presentation and the disclosure requirements of
IAS 34 and are in compliance with Schedule 4 of the Companies Act and the
Listings Requirements of the JSE Limited. The accounting policies followed
are consistent with those used in the annual financial statements for the
year ended 29 February 2008.
FINANCIAL REVIEW:
The Group experienced tough trading conditions particularly in the second
half of the year. Gross and net margin reduction were primarily attributable
to a change in the sales mix to lower margin products and services and margin
sacrifice necessary to secure business. Operating expenditure as a percentage
of revenue increased slightly to 14,98% (2008: 14,56%).
Meaningful comparison to the prior year`s profit after tax should be on a
core earnings basis. Core earnings eliminate the effects of amortisation of
intangibles, straight lining of leases and expensing imputed interest on
deferred purchase considerations. In this respect, core earnings decreased by
4,6% to R21 511 million (2008 - R22 553 million).
The Group achieved a 62,3% cash conversion ratio compared to 50,1% in the
previous year. Despite the improved cash conversion ratio, the Group`s cash
flow from operations declined due to a substantial investment in stock
required to underpin the 44% growth in turnover. The Group finished the year
with a net overdraft of R2,8 million mainly as a result of amounts paid on
investing activities of R37 million which was only partially offset by loans
raised to fund these payments. The investing activities primarily related to
the acquisition of plant and equipment and payments made to vendors of
companies acquired.
Based upon a comprehensive evaluation of the Group`s cash flows, PSV is
satisfied that there are adequate working capital facilities available to
fund the current level of business operations. Notwithstanding, the Group has
a short term commitment to fund amounts due and payable to vendors of
businesses acquired and other short term loans. In the event that the Iandra
Industries Limited ("Iandra") transaction is successfully concluded, an issue
of shares for cash will take place which will provide the necessary capital
to settle these obligations. If the Iandra transaction does not materialise,
the Group is investigating various other funding alternatives.
The Group`s debt/equity ratio was 22,6% compared to 16,3% in the prior year,
well within the Group`s debt equity ratio limit of 40%. The current ratio
improved to 1,53:1 from 1,39:1 in the previous year.
The Group`s headline earnings per share reduced by 11,5% to 7,06 cents per
share ("cps") (2008: 7,98 cps). The Group`s core earnings per share decreased
to 9,12 cps, down 19,2% compared to the previous year`s 11,29 cps. The
decline is partially attributable to shares issued during the year. The
Group`s balance sheet continued to strengthen as the net tangible asset value
per share increased by 10,6% to 34,1 cps (2008: 30,8 cps) and net asset value
per share by 6,9% to 97,8 cps (2008: 91,5 cps).
A detailed assessment of the Group`s goodwill was undertaken at year end. In
terms of this assessment, the carrying values of goodwill of the Group`s
various cash generating units were in line with the values reflected in the
balance sheet. Accordingly, no impairment of goodwill was made. It should be
noted that the cost of running the Group`s head office has not been
apportioned when determining the carrying value of the cash generating units.
The carrying value of goodwill will be re-assessed when presenting the
interim results for the period ending 31 August 2009 based upon market
conditions and the performance of the cash generating units at that time.
BUSINESS COMBINATIONS
During the course of the year the Group acquired the shares in Rand Air and
Gas Installations (Pty) Limited for R18 million. R5,1 million of the purchase
price was funded out of internal cash resources. The next instalment of R6,3
million is due for payment on 15 June 2009. For the six months ended 28
February 2009 this subsidiary contributed R3,8 million after tax. An
extrapolation of these results places the acquisition on a 2,4 price/earnings
ratio.
On 1 February 2009 the Group acquired the business of Mather + Platt for a
purchase consideration of R10 million. The acquisition contributed R0,25
million profit after tax for the one month prior to the financial year end.
R9 million of the purchase price was funded with a two year term bank loan
and R0,5 million is due and payable to the seller on 1 February 2010. Whilst
the transaction was constructed essentially as a stock and asset purchase,
PSV believes that the intellectual property acquired will place the new
company at the forefront of the dewatering pump industry.
OPERATIONAL REVIEW
The Group produced a reasonable performance despite the prevailing tough
trading conditions. PSV`s focus on quality products and high levels of
service delivery across all client categories has ensured acceptable revenue
growth.
Within the Pumps, Spares and Valves segment, PSV Services and PSV Zambia,
which concentrate on the manufacture of pumps and spares for primarily mining
and water service clients outside of South Africa, performed well. The
contract for Swirl Vane pumps has been signed and production according to
special specifications has begun. A major achievement was the signing of
PSV`s first mechanical contract for a water treatment plant in Zambia.
APE Pumps has significantly outperformed all expectations, doubling in size
since the acquisition and strong growth is expected to continue into the
future.
Mather + Platt became part of the Group in January 2009 and the year ahead
will see the company embark on a marketing drive to re-establish the Mather +
Platt brand in the market place. Current marketing efforts are being well
received.
Dasher, the valve and pump manufacturer, and Umzantsi Africa Pumps & Valves,
the valve marketing business, have been incorporated into the Mather + Platt
business in order to maximise the extraction of synergies.
Within the Engineering Linings and Industrial Supplies segment, Engineered
Linings has performed exceptionally over the period as well as concluding the
Group`s largest contract ever. In addition the subsidiary has completed
various contracts both in South Africa and abroad.
Groupline Projects continues to do well with glass, ceramic and plastic
lining contracts being undertaken at mines and power stations.
Omnirapid Mining & Industrial Supplies has once again shown exceptional
growth largely due to new client wins and superb client service and
turnaround times.
The Specialised Services segment saw the acquisition of Rand Air & Gas
Installations (Pty) Limited which has now been part of the Group for six
months and has exceeded expectations. Integration into the Group was unflawed
and has exposed the Group to a specialised niche business of cryogenics with
recent wins in supply contracts to the cryogenic aftermarket.
Petrologic had a tough year with pressure on margins and from the
devaluationof the Rand against the Euro. Petrologic managed to retain
turnover levels but incurred a small loss for the year. Petrologic has
embarked on a substantial restructuring programme to optimise resources and
profitability, which should result in a significant contribution to the Group
for the February 2010 year.
PROSPECTS
The Group expects to face challenging market conditions in the coming period
and has adopted a conservative outlook. Despite this, the PSV Group of
companies is solid and able to continue bidding on lucrative projects. The
Group closed off the 2009 financial year with a strong order book of R150
million. PSV is well positioned to benefit from ongoing Government
infrastructure spend and through new project growth outside of South Africa.
With new projects across the spectrum of the Group companies, diversity
within the Group and quotes for new equipment requirements from clients, the
Group is capable of filling all orders and contract requirements. The
enhanced manufacturing capacity is complete and the new workshop capacity is
close to completion, giving the Group spare capacity to meet growing demands.
CHANGES TO THE BOARD
On 26 November 2008 PSV announced the removal of non-executive director Mr
LDS Thobajane. With effect from 11 December 2008, PSV welcomed Mr MM Patel as
an independent non-executive director to the board. He is Chairman of the
Risk Committee and a member of the Audit Committee.
DIVIDENDS
The Group will continue to retain and utilise cash generated to fund working
capital requirements and potential acquisitions and as such, no dividends
were declared or proposed. The Board will review the dividend policy
annually.
AUDITOR`S REPORT
The unmodified review report issued by KPMG Inc on the abridged financial
statements contained in this report is available for inspection at the
Group`s registered office.
For and on behalf of the Board
AJD da Silva AR Dreisenstock
Chief Executive Officer Financial Director
19 May 2009
DIRECTORS
Executive Directors: P Robinson* (Deputy Chairman), AJD da Silva (Chief
Executive Officer), AR Dreisenstock (Financial Director), DJ Kelly*.
Non-Executive Directors: E Chimombe-Munyoro (Non-Executive Chairperson), JH
Anderson*,
E Dube (Alternate), GJV Shongwe, MM Patel
*British
COMPANY SECRETARY: Ithemba Governance and Statutory Solutions (Pty) Limited
REGISTERED OFFICE: Unit 419, Sam Green Road, Greenhills Industrial Estate,
Tunney Ext 6, Germiston
Postnet Suite 229, Private Bag X19, Gardenview, 2047 Tel (local): 011 0860
778 778 Tel (international): +27 11 828 7789 Fax: 011 0860 329 778
TRANSFER SECRETARIES: Computershare Investor Services (Pty) Limited, 70
Marshall Street, Johannesburg, South Africa, 2001. PO Box 61051,
Marshalltown, South Africa, 2107
DESIGNATED ADVISER: Vunani Corporate Finance
Date: 19/05/2009 11:39:54 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.
