| Mon 22 Nov 2010, 7:05 | | PSV - PSV Holdings Limited - Unaudited interim results for the six months ended |
|
PSV
PSV
PSV - PSV Holdings Limited - Unaudited interim results for the six months ended
31 August 2010
PSV HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1988/004365/06)
JSE code: PSV ISIN: ZAE000078705
("PSV" or "the company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2010
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
for the for the for the
6 months 6 months 12 months
ended ended ended
31 August 31 August 28
2010 2009 February
R`000 R`000 2010
R`000
Revenue 195 578 188 882 372 182
Gross profit 45 393 50 635 90 156
Other income 2 252 2 899 4 166
Operating expenses (32 932) (29 671) (58 869)
Operating profit 14 713 23 863 35 453
Impairment of goodwill and intangibles - (69 421) (98 486)
Earnings/(loss) before interest, taxation, 14 713 (45 558) (63 033)
depreciation and amortisation
Net finance charges* (3 550) (6 115) (8 782)
Net foreign exchange loss (783) (1 386) (2 632)
Depreciation and amortisation (5 258) (6 120) (8 809)
Profit/(loss) before taxation 5 122 (59 179) (83 256)
Taxation (1 441) (609) 174
Total comprehensive income/(loss) for the 3 680 (59 788) (83 082)
period attributable to owners of the parent
Reconciliation to headline earnings
Profit/(loss) attributable to PSV equity 3 680 (59 788) (83 082)
holders
(Profit)/loss on disposal of fixed assets (462) (73) 125
Impairment of goodwill and intangibles - 69 421 98 486
Tax effect arising on impairment - (2 640) (2 833)
Headline earnings 3 218 6 920 12 696
Reconciliation to normalised earnings
Headline earnings 3 218 6 920 12 696
Interest on deferred purchase consideration 627 1 534 1 839
payable
Amortisation of specific intangibles 1 442 2 733 4 595
Deferred taxation provided on above (425) (765) (1 286)
Straight lining of leases (8) 349 349
Share based payments 570 289 2 406
Normalised earnings 5 424 11 060 20 599
Basic earnings/(loss) per share (cents) 1.48 (25.25) (34.02)
Headline earnings per share (cents) 1.30 2.92 5.20
Normalised earnings per share (cents) 2.19 4.67 8.43
Diluted earnings/(loss) per share (cents) 1.45 (24.11) (33.31)
Diluted headline earnings per share (cents) 1.27 2.79 5.09
Actual number of shares in issue at period end 247 962 247 962 247 962
Weighted number of shares in issue at period 247 962 236 795 244 223
end
Fully diluted weighted average number of shares 253 178 247 962 249 440
in issue at period end
*Net finance charges comprise:
Interest received 907 4 483 8 426
Interest paid (3 830) (9 122) (15 369)
Deferred purchase consideration interest (627) (1 476) (1 839)
(3 550) (6 115) (8 782)
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
31 August 31 August 28
2010 2009 February
R`000 R`000 2010
R`000
ASSETS
Non-current assets 130 212 147 456 121 312
Current assets 151 944 138 808 157 837
Inventories 71 727 74 509 60 798
Trade and other receivables 67 552 62 772 77 723
Taxation receivable 3 520 1 527 4 004
Cash and cash equivalents 9 145 - 15 312
Total assets 282 155 286 264 279 149
EQUITY AND LIABILITIES
Equity 154 471 171 602 150 222
Non-current liabilities 26 005 26 868 26 995
Borrowings 20 579 19 508 19 609
Purchase consideration payable - 1 557 2 420
Deferred tax liabilities 5 426 5 803 4 966
Current liabilities 101 680 87 794 101 932
Trade and other payables 76 501 77 343 74 492
Bank overdrafts 25 179 10 451 27 440
Total equity and liabilities 282 155 286 264 279 149
Net asset value per share (cents) 62.30 69.20 60.58
Tangible net asset value per share (cents) 39.01 35.77 38.28
Condensed consolidated statement of cash flows
Unaudited Unaudited Audited for
for the for the the
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2010 2009 2010
R`000 R`000 R`000
Cash flows from operating activities 733 6 097 24 971
Cash flows from investing activities (14 029) (19 179) (24 768)
Cash flows from financing activities 9 093 5 690 (9 272)
Net movement in cash and cash equivalents (4 203) (7 392) (9 069)
Decrease in cash and cash equivalents (4 203) (7 392) (9 069)
Cash at acquisition of subsidiary 296 - -
Cash and cash equivalents at beginning of (12 128) (3 059) (3 059)
the period
Cash and cash equivalents at end of the (16 035) (10 451) (12 128)
period
Condensed consolidated statement of changes in equity
Unaudited Unaudited Audited for
for the for the the
6 months 6 months 12 months
ended ended ended
31 August 31 August 28 February
2010 2009 2010
R`000 R`000 R`000
Balance at beginning of year 150 222 230 891 230 891
Total comprehensive income for the period 3 680 6 993 12 571
Buy back of shares for share incentive - - (345)
scheme
Issue of shares for cash less costs - - 10 545
Share based payments 569 493 2 123
Impairment of goodwill and intangibles - (66 781) (95 653)
Foreign translation reserve - - 7
Net movement in stated capital - 7 (9 917)
Balance at end of period 154 471 171 603 150 222
Condensed consolidated segmental information 2010
Pump spares Linings Shared Total
and valves and Specialised services R`000
R`000 general services R`000
industrial R`000
supplies
R`000
Revenue 49 552 89 565 56 461 - 195
578
Gross profit 12 554 20 861 11 978 - 45 393
Operating expenses 8 828 8 464 6 174 9 466 32 932
Profit before tax (1 880) 9 088 2 540 (4 627) 5 121
Depreciation/amortisation 1 178 501 1 327 2 252 5 258
Capital expenditure (703) (1 031) (775) 269 (2 240)
Gross assets* 77 168 60 973 51 478 77 175 266
794
Gross liabilities* 38 600 499 18 054 61 586 118
739
* Deferred tax assets and deferred tax liabilities are excluded
Condensed consolidated segmental information 2009
Pump spares Linings and Shared Total
and valves general Specialised services R`000
R`000 industrial services R`000
supplies R`000
R`000
Revenue 62 282 55 176 70 424 - 188
882
Gross profit 23 721 15 316 11 598 - 50
635
Operating expenses 10 201 9 623 7 003 6 065 32
892
Profit before tax 6 420 2 236 1 586 (9 937) 305
Depreciation/amortisation 1 886 552 455 3 226 6
119
Capital expenditure 4 006 94 290 1 789 6 179
Gross assets* 105 314 61 414 57 047 167 721 391
496
Gross liabilities* 56 313 8 571 28 177 60 337 153
398
* Deferred tax assets and deferred tax liabilities are excluded
Commentary
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; and
Specialised services (including petrochemical and cryogenic
activities).
Basis of preparation
The condensed consolidated financial statements have been prepared in accordance
with the recognition and measurement criteria of International Financial
Reporting Standards ("IFRS") and the presentation and disclosure requirements of
IAS 34: Interim Financial Reporting, the JSE Limited Listings Requirements and
in the manner required by the Companies Act of South Africa. The principal
accounting policies as set out in the company`s 2010 annual report, which are in
terms of IFRS, have been consistently applied throughout the six-month period
under review.
Financial review
PSV experienced its toughest six month trading period since listing in April
2006. Whilst turnover increased by 3.5% compared to the six month period ended
31 August 2009, gross margins came under pressure declining to 23.2% (2009
26.8%). Operating expenses increased by 9.3%, mainly attributable to CPI
adjusted salary increases in March 2010. Management decided to maintain
infrastructural capacity at pre-recessionary levels. In an economy suffering
from severe skill shortages, the costs of retrenchment and subsequent
replacement costs that would inevitably be incurred when the economy rebounded
far outweigh the costs of retaining key personnel. This strategy is being
continually monitored and will be reversed in the event that the recession
continues in the medium term.
The above factors manifested in pre-impairment operating margins declining to
4.8% (2009 9.4%) and headline earnings per share declining to 1.30 cents (2009
2.92 cents). Normalised earnings per share, calculated after eliminating
interest provided on deferred purchase considerations, straight lining of
leases, share based payments and amortisation of intangibles net of tax effects
thereon also declined to 2.19 cents (2009 4.67 cents).
The deterioration in market conditions also detrimentally impacted upon cash
flows as our customers struggled to pay on time. Notwithstanding, the company
managed to generate over R7 million from operating activities (before net
finance charges, foreign exchange losses and taxation), although pressure on
working capital significantly reduced cash flow.
A detailed assessment of the group`s goodwill and intangibles was undertaken at
period end. In terms of this assessment, the carrying values of goodwill and
intangibles of the company`s cash generating units were in line with the values
reflected in the balance sheet. Accordingly, no impairment was felt to be
necessary at this time. The carrying value of goodwill and intangibles will be
re-assessed at year end.
Operational review
Pumps, spares and valves
This segment experienced a sharp decline in turnover, gross margins and
consequential profitability for the six months ended 31 August 2010 compared to
the prior interim period. The segment contributed 25% of total consolidated
revenue for the period at an average gross profit percentage of 25,3% (2009
37,5%). As the rainy season approaches we are confident that there will be an
improvement in high margin refurbishment and maintenance work on water pumps.
Whilst Mather + Platt performed below expectations, significant progress is
being made in penetrating the opportunities within the Eskom power stations. We
are hopeful that this company will return to profitability in the new financial
year.
Engineered linings and industrial supplies
This segment contributed 46% of the company`s consolidated revenue at an average
gross profit percentage of 23.3% (2009 27.8%). Revenue increased substantially
to R89.6 million (2009 R55.2 million) mainly attributable to the outstanding
performance of Groupline Projects ("Groupline"). Although this company
sacrificed margin in the pursuit of large contracts, it has already exceeded its
entire turnover for the 2009 financial year in just six months. This company is
in the fortunate position of carrying an order book which is full until October
2011. Groupline is benefitting from power station infrastructure spend. The
phenomenal growth in Groupline has placed considerable demands on the company`s
operational cash flow. We believe that this situation will gradually reverse
itself over the next twelve months.
PSV`s general industrial supply company Omnirapid has continued to exceed
budgetary expectations, generating a pre tax profit of 70% higher than the same
period last year, notwithstanding that revenue only increased by 16%.
Specialised services
Specialised services contributed 29% to the total consolidated revenue of the
company at an average gross profit margin of 21,2% ( 2009 16,5%). Despite
segmental revenue declining from R70.4 million for the six months ended 31
August 2009 to R56.5 million for the same period ending 31 August 2010, the
substantial increase in gross margins manifested in an increased segmental
contribution to shared services costs of over 56%. This increase was primarily
attributable to the substantial performance in the company`s petrochemical
business, Petrologic. This company has benefited from a major two year
restructuring process which should be finalised by the financial year end.
Changes to the Company Secretary
The Company Secretary, Megan Saayman resigned with effect 30 June 2010. On 16
July 2010, AR Dreisenstock, the current Financial Director of PSV, assumed the
role of interim Company Secretary. A permanent candidate is being evaluated and
an announcement will be made in due course.
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.
Prospects
In the past six months PSV has seen a slight increase in project and new
contract activity, which is expected to continue with improved economic
conditions in 2011. PSV has export opportunities to Ghana, Zimbabwe, Nigeria,
Burkina Faso and Malawi, coupled with an order book of R113 million and
prospects in the pipeline to the value of R225 million.
For and on behalf of the Board
AJD da Silva AR Dreisenstock
Chief Executive Officer Financial Director
22 November 2010
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 (Chairperson),
MM Patel (Chairman Audit Committee); G Nzalo, E Dube (Alternate), *British
Company secretary: AR Dreisenstock
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): +2711 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: 22/11/2010 07:05:20 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.
