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ANS
ANS
ANS - Ansys Limited - Reviewed Provisional Annual Results For The Year Ended
28 February 2010
ANSYS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1987/001222/06)
(Share Code: ANS
ISIN Code: ZAE000097028)
("Ansys" or "the Company")
REVIEWED PROVISIONAL ANNUAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2010
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
28 February 28 February
2010 2009
(Reviewed) (Audited)
R`000 R`000
Assets
Non-current assets
Property, plant and equipment 7 887 6 871
Intangible assets 29 347 29 005
Deferred tax asset 4 482 1 116
Current assets
Inventories 10 156 5 799
Trade and other receivables 32 261 52 235
Cash and cash equivalents 3 355 6 965
Other financial assets 60 1 012
Total assets 87 548 103 003
Equity and liabilities
Equity
Share capital and vendor shares 40 718 42 287
Retained earnings 8 029 23 735
Liabilities
Non-current liabilities
Finance leases 388 665
Current liabilities
Finance leases 274 523
Trade and other payables 30 048 18 950
Other financial liabilities - 5 871
Cash and cash equivalents 7 202 9 115
Current tax payable 889 1 857
Total equity and liabilities 87 548 103 003
Number of shares in issue 142 228 041 140 271 008
Net asset value per share 34.27 47.07
(cents)
Tangible net asset value per 13.64 26.39
share (cents)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
28 February 28 February
2010 2009
(Reviewed) (Audited)
R`000 R`000
Revenue 97 327 120 171
Gross profit 34 305 52 144
Other income 326 90
Operating costs (48 620) (47 632)
EBITDA (13 989) 4 602
Depreciation and amortisation (3 666) (1 544)
(Loss)/profit before interest (17 655) 3 058
and taxation
Interest paid (855) (1 550)
Interest received 220 908
(Loss)/profit before taxation (18 290) 2 416
Taxation 2 584 (887)
(Loss)/profit for the year (15 706) 1 529
Total comprehensive (15 706) 1 529
(loss)/income for the year
Basic (loss)/earnings per share (11.10) 1.09
(cents)
Diluted (loss)/earnings per (10.95) 1.06
share (cents)
Headline (loss)/earnings per (10.25) 1.09
share (cents)
Weighted average number of 141 517 718 140 134 390
shares in issue
Diluted average number of 143 406 733 144 503 386
shares in issue
Reconciliation of headline
(loss)/earnings:
Net (loss)/profit attributable (15 706) 1 529
to ordinary shareholders
Adjusted for loss on disposal 40 6
of property, plant and
equipment
Adjusted for goodwill 1 166 -
impairment
Total tax effect of the (11) (2)
adjustments
Headline (loss)/earnings (14 511) 1 533
attributable to ordinary
shareholders
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Issued Vendor Retained Total
share shares income equity
capital
R`000 R`000 R`000 R`000
Balance at 1 March 28 368 20 128 27 806 76 302
2008
Movements during the
year
Shares issued 813 (813) - -
Re-assessment of - (6 209) - (6 209)
shares to be issued
as a result of
business combination
Profit for the year - - 1 529 1 529
Dividends - - (5 600) (5 600)
Balance at 28 29 181 13 106 23 735 66 022
February 2009
Movements during the
year
Shares issued 5 869 (5 869) - -
Re-assessment of - (1 569) - (1 569)
shares to be issued
as a result of
business combination
Profit for the year - - (15 706) (15
706)
Balance at 28 35 050 5 668 8 029 48 747
February 2010
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
28 February 28 February
2010 2009
(Reviewed) (Audited)
R`000 R`000
Cash flows from operating 11 412 (17 513)
activities
Cash flows from investing (6 632) (4 717)
activities
Cash flows from financing (6 477) (528)
activities
Cash flows for the year (1 697) (22 758)
Cash and Cash equivalents at (2 150) 20 608
beginning of year
Cash and Cash equivalents at (3 847) (2 150)
end of year
CONDENSED SEGMENT REPORT
28 February 28 February
2010 2009
(Reviewed) (Audited)
R`000 R`000
Segment Revenue:
Rail 61 903 90 063
Defense 29 565 28 635
Industrial 5 757 1 270
Corporate Unallocated 102 203
Total 97 327 120 171
Operating (loss)/profit segment results
(before interest and taxation):
Rail 2 600 15 533
Defense (12 648) (8 458)
Industrial (1 598) 1 417
Corporate Unallocated (6 009) (5 434)
Total (17 655) 3 058
NOTES TO THE PROVISIONAL FINANCIAL INFORMATION
1. Intangible assets
2.
3.
Cost Accumulated Carrying
amortisati value
on and
impairment
R`000 R`000 R`000
As at 28 February 2010
Intangible assets 8 850 (2 469) 6 381
Purchased:
- Computer software 2 283 (1 502) 781
Internally generated:
- Signalling Product Development 246 (31) 215
- Continuous Rope Monitoring 2 335 - 2 335
System Development
- AMMS Development 3 986 ( 936) 3 050
Goodwill 24 132 (1 166) 22 966
Total 32 982 (3 635) 29 347
Cost Accumulated Carrying
amortisation value
and
impairment
R`000 R`000 R`000
As at 28 February 2009
Intangible assets 4 131 ( 827) 3 304
Purchased:
- Computer software 1 281 ( 827) 454
Internally generated:
- Signalling Product Development 246 - 246
- AMMS Development 2 604 - 2 604
Goodwill 25 701 - 25 701
Total 29 832 (827) 29 005
The carrying value of the intangible assets is reconciled as follows:
Opening Re- Goodwill Additions Amortisation Closing
balance assessment impairment balance
of
goodwill
R`000 R`000 R`000 R`000 R`000 R`000
At 28 February
2010
Intangible 3 304 - - 4 719 (1 642) 6 381
assets
Purchased:
- 454 - - 1 002 ( 675) 781
Computer
software
Internally - - - - - -
generated:
- - - - 2 335 - 2 335
Continuous
Rope
Monitoring
System
Development
- 246 - - - ( 31) 215
Signalling
Product
Development
- AMMS 2 604 - - 1 382 ( 936) 3 050
Development
Goodwill 25 701 (1 569) (1 166) - - 22 966
Total 29 005 (1 569) (1 166) 4 719 (1 642) 29 347
Opening Re- Goodwill Additions Amortisation Closing
balance assessment impairment balance
of
goodwill
R`000 R`000 R`000 R`000 R`000 R`000
At 28 February
2009
Intangible 1 509 - - 2 050 ( 255) 3 304
assets
Purchased:
- Computer 167 - - 542 ( 255) 454
software
Internally - - - - -
generated:
- 246 - - - - 246
Signalling
Product
Development
- AMMS 1 096 - - 1 508 - 2 604
Development
Goodwill 34 216 (8 515) - - - 25 701
Total 35 725 (8 515) - 2 050 (255) 29 005
Note:
The re-assessment of goodwill relates to the excess of the re-calculated
purchase consideration over the fair value of the assets acquired as part of
the business combinations concluded during the 2008 financial year. The
purchase consideration was re-assessed due to the difference between the
forecasted results for 28 February 2009 and 28 February 2010 as per the
initial purchase agreement and the actual results achieved during 28 February
2009 and 28 February 2010.
COMMENTARY
Introduction
The 2010 financial year was the worst year in the history of Ansys.
Performance was adversely affected by a number of factors. The group
experienced longer than usual procurement and payment cycles of major clients.
Two subsidiaries, Optocon and Emerging Signals experienced capital equipment
pressure and delayed project execution respectively. Sales were depressed
owing to reduced demand as a result of the global financial melt-down. The
combined effect of these factors has resulted in the less than satisfactory
results.
However, prospects for 2011 financial year have improved dramatically as the
factors highlighted above have in main been resolved. Government`s re-
energized commitment to service delivery has encouraged our public sector
clients to speed up both procurement and payment cycles. Projects in the
signaling and defence domain, a major portion of Ansys` business, are being
expedited to meet the service delivery backlogs. Demand in our mining market
has begun to grow. Major orders of the Ansys Rope Tester have been secured and
more are expected for this unique product.
Ansys has significantly diversified away from the state-owned enterprise
sector. Currently more than 50% of the R100 million orders on hand are from
the private sector. Other actions were taken to improve the operational
effectiveness of the business and are expected to improve returns.
Improvements made to Optocon include the appointment of a new managing
director and concluding a distribution agreement for the Ansys Commercial
Optical Cameras with a major distributor to boost sales. Emerging Signals,
which is still imperative to Ansys` rail operation, has been completely
integrated in terms of its management and administration to enhance
management`s focus. QuadSoft, which remains profitable and a generator of free
cash flows, is expected to increase its contribution as efforts are underway
to expand into other markets.
Financial Results
Revenue generation for the year decreased from R120.2 million for the year
ended 28 February 2009 to R97.3 million for the year ended 28 February 2010.
Profit before tax for the year decreased from R2.4 million to a loss before
tax of R18.3 million.
Acquisitions
The purchase consideration in respect of the 2008 acquisitions (Optocon,
Quadsoft and Emerging Signals) is subject to profit warranties. The profit
warranties for Emerging Signals and QuadSoft expired on 28 February 2009.
Optocon was still subjected to a profit warranty for the 28 February 2010
financial year, which profit warranties was not achieved. A subsequent re-
assessment was made to the purchase consideration.
The net effect of the Optocon re-assessment was as follows:
- Intangible assets
Goodwill, included in intangible assets, decreased by R1.6 million from
the year ended 28 February 2009 to the current 28 February 2010 review
period.
- Capital and Reserves
Included in capital and reserves are vendor shares that relate to the
issue of shares for the acquisitions. The vendor shares decreased by R1.6
million from the year ended 28 February 2009 to the current 28 February
2010 review period.
Impairment of goodwill
Goodwill is allocated to the Group`s cash-generating units identified
according to business segments, which include Optocon, Emerging Signals and
QuadSoft. Goodwill is tested for impairment annually and the only cash
generating unit showing indications of impairment was Optocon. The impairment
was calculated at R1.2 million and written off during the current financial
year. There were no indications requiring the impairment of goodwill relating
to Emerging Signals and QuadSoft.
These adjustments should be read in conjunction with the audited annual
consolidated financial statements of 28 February 2009.
Non-Current assets
A significant part of the increase in non-current assets is attributable to
the increase in the deferred tax asset. The increase relates to the
recognition of taxable losses during the current financial year of R3.3
million.
Current assets
The changes in current assets are mainly attributable to the following:
- increase in inventories of R1.3 million for stock acquired at year end
for the Bayhead yard automation project and R2.3 million of stock on hand
relating to a cancelled order.
- The 2009 trade receivables were reflected at an inflated value when
compared to normal values, due to the completion of a rail project during
February 2009.
Prospects
The 2011 financial year has begun with the award of R25 million worth of
orders for Mine Rope (Cable) Testers. Feedback from customers on this product
is that it is the most effective Mine Rope Tester available on the market.
After the successful completion of the Bayhead pilot project, a further two
orders have been received from GE South Africa Technologies (GESAT) for yard
automation using General Electric Transportation equipment. These orders will
be executed by Emerging Signals during the current financial year.
The order book of Optocon for the 2011 financial year is full and a turnaround
is expected.
The group order book is currently at R100 million, which is good for this time
of the year and 25% better than this time last year.
Dividend policy
The Group has historically exercised a policy of paying dividends to
shareholders, having due regard to profits, future capital requirements and
the cash flow position. In the light of the low profitability for 2010, no
dividend will be payable for this year.
Changes to the board of directors
The following changes to the board of directors incurred during the financial
year and up to the date of this report:
MG Diliza (Non-executive director) - Resigned on 21 August 2009
Dr JL Steyn (Non-executive director) - Resigned on 1 March 2010
Although the group is not currently compliant in terms of the constitution of
the Audit and Risk committee as a result of the above resignations, the board
acknowledges that the Companies Act requires the Audit Committee to have at
least two independent non-executive directors appointed as members of the
Audit committee. The Board further supports the principle of independence in
order to maintain corporate division of power and negotiations. The nomination
committee is currently considering the recommendation for appointment of
several candidates, as independent non-executive directors.
Broad Based Black Economic Empowerment ("BBBEE")
The BBBEE committee was established by the board of directors, during the
previous financial year, to actively manage the Group`s BBBEE status. During
the current year assessment, Ansys improved from a level 7 contributor to a
level 6 contributor.
Statement of compliance and basis of preparation
The provisional reviewed financial information for the year ended 28 February
2010 has been presented in accordance with, and containing the information
required by, IAS 34: Interim Financial Reporting. The results have been
prepared in accordance with accounting policies of the group that comply with
International Financial Reporting Standards, the Companies Act of South Africa
and the Listings Requirements of the JSE Limited and have been consistently
applied, throughout the Group, to all periods presented. These provisional
financial results have been reviewed by the Company`s auditors, BDO South
Africa Incorporated, who have expressed an unmodified review conclusion on the
results. A copy of their review report is available for inspection at the
company`s registered office.
Appreciation
We wish to thank our customers, business partners, advisors and suppliers for
their contribution to Ansys in the past year. No growth or economic activity
would be possible without orders and the capable staff and shareholder
investment to execute them. Special thanks are thus due to our financial
service providers, staff and shareholders who are loyally assisting Ansys
through this time of world economic turmoil.
By order of the Board
12 May 2010
Alan Holloway Rachelle Grobbelaar
Chief Executive Officer Chief Financial Officer
CORPORATE INFORMATION
Non executive directors: T Daka (Chairman)
Executive directors: A Holloway (CEO), R Grobbelaar (CFO),RF Barnard
Registration number: 1987/001222/06
Registered address: 170 Outeniqua Avenue, Waterkloof Park, Pretoria
Postal address: PO Box 95361, Waterkloof, Pretoria
Company secretary: Fusion Corporate Secretarial Services (Pty) Ltd
Telephone: +27 12 424 8500
Facsimile: +27 12 346 3720
Transfer secretaries: Computershare Investor Services (Pty) Limited
Designated Adviser: Exchange Sponsors (2008) (Pty) Limited
Date: 12/05/2010 09:38:02 Produced by the JSE SENS Department.
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