| Mon 24 May 2010, 19:05 | | PSV - PSV Holdings Limited - Summarised audited co |
|
PSV
PSV
PSV - PSV Holdings Limited - Summarised audited consolidated results for the
year ended 28 February 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" or "the Group"))
SUMMARISED AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2010
Summarised consolidated statement of comprehensive income
2010 2009
R`000
Revenue 372 182 430 865
Cost of sales 282 026 332 944
Gross profit 90 156 97 921
Operating expenses* 161 998 64 599
Operating profit/(loss) (71 842) 33 322
Financial income 8 426 3 950
Financial expenses 19 840 14 038
(Loss)/profit before taxation (83 256) 23 234
Taxation/credit/(charge) 174 (6 686)
(Loss)/profit for the year from continuing (83 082) 16 548
operations
(Loss)/profit for the year attributable to (83 082) 16 548
ordinary shareholders
Basic earnings per share (cents) (34.0) 7.0
Headline earnings per share (cents) 5.2 6.9
Normalised earnings per 8.4 9.0
share (cents)
Diluted earnings per share (cents) (33.3) 6.7
Diluted headline earnings per share 6.6
Reconciliation of earnings
(Loss)/profit after tax (83 082) 16 548
(Loss)/(profit) on disposal of assets 125 (108)
Impairment of goodwill and specific intangibles 98 486
Deferred tax reversed on impairment of (2 833)
intangibles
Headline earnings 12 696 16 440
Interest on deferred purchase consideration 1 893 1 342
Amortisation of intangible assets 4 595 4 852
Deferred taxation on amortisation of intangible (1 286) (1 358)
assets
Share based payments 2 406
Straight lining of rentals 349 21
Normalised earnings 20 599 21 296
Weighted average number of shares in issue 244 223 235 784
Fully diluted number of shares in issue 247 962 247 451
*Operating expenses includes impairment charges, depreciation, amortisation
and is net of sundry income
SUMMARISED STATEMENT OF FINANCIAL POSITION AT 28 FEBRUARY 2010
2010 2009
R`000
ASSETS
Non-current assets 121 312 213 794
Property, plant and equipment 58 647 54 413
Intangible assets 20 948 34 569
Goodwill 31 691 117 153
Investment in subsidiaries 8 -
Deferred taxation assets 9 806 6 916
Loans receivable 212 743
Current assets 157 837 153 781
Inventories 60 798 74 228
Trade and other receivables 77 723 76 469
Taxation receivable 4 004 1 738
Cash and cash equivalents 15 312 1 346
Total assets 279 149 367 575
EQUITY AND LIABILITIES
Shareholders` equity
Ordinary shareholders` interest 150 222 230 891
Stated capital (Share capital) 270 806 260 606
Deferred equity consideration - 9 917
Share based payment reserve 1 670 1 513
Accumulated loss (119 155) (38 039)
Foreign currency translation reserve (3 099) (3 106)
Non-current liabilities 26 995 35 353
Borrowings 19 609 20 064
Purchase consideration payable 2 420 6 460
Deferred tax liabilities 4 966 8 829
Current liabilities 101 932 101 331
Trade and other payables 59 368 65 879
Current portion of long term liabilities 10 939 11 208
Taxation payable - -
Bank overdrafts 27 440 4 404
Short term loan 4 167 19 840
Total equity and liabilities 279 149 367 575
NAV per share 0,61 0,98
NTAV per share 0,40 0,34
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOW AS AT 28 FEBRUARY 2010
Audited Audited
2010 2009
2010 2009
Cash flows from operations 24 548 (2 562)
- -
Cash flows from investing activities (22 177) (55 254)
- -
Cash flows from financing activities (11 440) 24 049
Decrease)/increase in cash and (9 070) (33 767)
cash equivalents
Cash at acquisition of subsidiary - 4 838
Cash and cash equivalents at beginning of the (3 058) 25 871
year
Cash and cash equivalents at end of the year (12 128) (3 058)
SUMMARISED STATEMENT OF CHANGES IN EQUITY AT 28 FEBRUARY 2010
Retained Foreign Share Non- Share Share Total
earnings/ currency pre distribu based capital
(loss) transla mium table payment
tion reserves reserve
reserve
Balance at (54 586) 801 - (2 254) 1 513 252 475 202 457
29
February
2008
- - - - - -
Issue of - - - - 10 500 10 500
shares
Share - - - - (31) (31)
issue
costs
Deferred - - 7 663 - 7 663
equity-
Engineered
Linings
vendor
Odd lot - - - - -
share
buyback
Share - - - - (2 338) (2 338)
buyback
for Share
Incentive
scheme
Net 16 547 - - - - - 16 547
profit/(lo
ss) for
the year
Foreign (3 907) - - - - (3 907)
translatio
n
reserve-PS
V Zambia
- - - - - -
Balance at (38 039) (3 106) - 9 917 1 513 260 606 230 891
28
February
2009
Issue of - - - - - 10 550 10 550
shares
Share - - - - - (5) (5)
issue
costs
Deferred - - - (9 917) - - (9 917)
equity -
Engineered
Linings
vendor
Odd lot - - - - - (345) (345)
share
buyback
Share - - - - 2 123 2 123
based
payment
transactio
ns
Net (83 082) - - - - - (83 082)
profit/(lo
ss) for
the year
Transfer 1 966 (1,966)
of vested
shares
from share
based
payment
reserve
Foreign - 7 - - - - 7
translatio
n
reserve-PS
V Zambia
Balance at (119 155) (3 099) - 0 1 670 270 806 150 222
28
February
2010
SEGMENTAL REPORT AT 28 FEBRUARY 2010
2010
Pumps, Engineerin Specialised Shared Total
Spares g Linings Services Services
and and
Valves Industrial
Supplies
Revenue 112 134 914 125 190 - 372 182
078
Gross Profit 35 237 35 899 19 020 - 90 156
Operating expenses 22 888 32 813 13 951 (11 171) 58 481
Profit before tax 4 780 6 937 5 016 (1 502) 15 231
Depreciation 2 670 1 185 1 171 4 210 9 236
/amortisation
Capital expenditure 3 868 1 021 5 996 2 161 13 046
Gross assets 74 550 63 620 45 842 84 327 268 339
Gross liabilities 21 771 9 647 16 574 74 965 122 957
2009
Engineering Specialised Shared Total
Pumps, Linings and Services Services
Spares Industrial
and Supplies
Valves
Revenue 102 191 173 137 061 422 430 865
209
Gross Profit 36 512 38 713 22 274 422 97 921
Operating expenses 15 832 17 109 14 269 13 200 60 410
Profit before tax 5 180 17 504 3 561 (3 012) 23 233
Depreciation 2 138 1 042 1 093 6 102 10 375
/amortisation
Capital expenditure 2 453 1 956 954 4 451 9 814
Gross assets 89 984 76 684 57 324 140 393 364 385
Gross liabilities 48 204 27 800 32 717 22 860 131 581
BASIS OF PREPARATION
The summarised consolidated financial statements have been prepared in
accordance with the recognition and measurement criteria of International
Financial Reporting Standards ("IFRS"), its interpretations adopted by the
International Accounting Standards Board ("IASB"), the presentation and
disclosure requirements of IAS34, Interim Financial Reporting and in
compliance with the Listing Requirements of the JSE Limited and the
requirements of the South African Companies Act.
The accounting policies followed are consistent with those used in the prior
year and are in terms of IFRS.
REPORT OF THE INDEPENDENT AUDITORS
The unmodified audit reports of KPMG Inc, the independent auditors, on the
annual financial statements and the summarised financial statements contained
herein for the year ended 28 February 2010, dated 21 May 2010, are available
for inspection at the registered office of the company.
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).
OPERATIONAL REVIEW
The Group produced a reasonable performance despite the prevailing tough
trading conditions. The Group`s focus on quality products and high levels of
service delivery across all client categories ensured that gross margin
increased to 24.2% compared to 22.7% and operational margins were
substantially maintained.
The Pumps, Spares and Valves segment was detrimentally affected by market
conditions. Notwithstanding an increase in revenue attributable to the
inclusion of a full year of trading from the Mather + Platt subsidiary, gross
margins were squeezed by 20% resulting in an almost 40% reduction in
contribution margin compared to the previous year.
The Engineering Linings and Industrial Supplies segment reflected a 29,4 %
reduction in turnover but a 31% increase in gross profit margin to 26,6%. This
outstanding performance was attributable to Engineered Linings completing many
smaller but much more profitable contracts compared to the prior year and
Omnirapid better harnessing the Group`s buying power to secure better pricing
and discounts from suppliers. Groupline Projects, the Group`s glass and
ceramic lining business, experienced the best year in the company`s history,
securing several large contracts from Eskom and other power stations.
The Specialised Services segment also suffered a 9% reduction in turnover and
a 7% reduction in gross margin. Rand Air and Gas was forced to cut margins in
order to remain competitive and retain market share.
After restructuring, the board is pleased to report that Petrologic has
generated a profit for the year. This company still has to improve in several
areas but plans are in place to eliminate areas of weakness. It is expected
that this company`s restructure will be completed during the course of this
year.
FINANCIAL REVIEW
The Group experienced tough trading conditions, particularly in the second
half of the year. Turnover for the year decreased by 13, 6% to R 372,2 million
(2009: R 430,9 million) although the gross profit margin increased to 24,2%
(2009: 22, 7%). Notwithstanding a R 2, 4 million share based payment expense
being incurred in the current year together with inflationary adjusted salary
increases for staff, the Group`s operational expenditure, excluding impairment
of goodwill and intangible assets decreased compared to the prior year. The
Group`s EBITDA percentage was a satisfactory 9, 6% in the current year
compared to 10,1% in the prior year despite the harsh economic climate.
Meaningful comparison to the prior year`s profit after tax should be on a
normalised earnings basis. Normalised earnings eliminate the effects of
impairment of goodwill and intangible assets, amortisation of intangible
assets, straight lining of leases, expensing imputed interest on deferred
purchase considerations and share based payment expenses. In this respect,
normalised earnings decreased by 6,7% to 8,4cents per share ("cps")2009: 9,0
cps).
A positive cash flow from operations was generated of R 24,5 million (2009: R
2,6 million outflow). The Group`s cash flow cycle reduced from 82 to 76 days
primarily attributable to effective working capital management procedures
implemented. The Group finished the year with a net overdraft of R12,1
million, mainly as a result of payments made to vendors of companies acquired
and the repayment of external loans.
Based upon a comprehensive evaluation of the Group`s cash flows, the board is
satisfied that there are adequate working capital facilities available to fund
the current level of business operations. Notwithstanding this, the Group has
a short-term commitment to fund amounts due and payable to vendors of
businesses acquired and other short-term loans. The vendor payments due will
be funded by a combination of extended vendor financing and medium term
loans. The short term loans will be comfortably serviced out of operational
cash flows.
The Group`s debt / equity ratio was 31, 6% compared to 26, 3% in the prior
year, well within the Group`s debt / equity ratio limit of 40%. The current
ratio decreased to 1, 51 :1 from 1,54:1 in the prior year, mainly attributable
to the difficulty in collecting the debtors book as debtors days stretched to
67 days (2009: 55 days).
The Group`s HEPS reduced by 25% to 5,2 (2009: 6,9 cps). The decline is as a
result of the tough trading conditions experienced during the year. The
Group`s balance sheet continued to strengthen as the net tangible asset value
per share increased by 17, 3% to 39,4 cps (2009: 33,5 cps).
A detailed assessment of the carrying value of the Group`s goodwill was
undertaken at year end. In terms of this assessment, the goodwill attributable
to the Group`s various cash generating units was not in line with the values
reflected in the balance sheet. In terms of the assessment and taking into
account the world economic crisis, it was decided to impair goodwill and
intangible assets arising on the acquisition of the Group`s various businesses
by an amount of R 98,5 million. It should be noted that the cost of running
the Group`s head office has not been apportioned to the cash generating units
in assessing the carrying value of goodwill.
PROSPECTS
The management of PSV expect the operating environment to remain difficult for
the coming six months. Although the Group has experienced an increase in the
number of orders placed, this increase is attributable to orders placed at
certain subsidiaries and not across the board. Management will continue to
monitor costs over the next 6 to 12 months. The Group has a current order book
of approximately R110 million with an additional R120million prospective
orders to be finalised in the next six months.
CHANGES TO THE BOARD
Mr MM Patel was appointed chairman of the audit committee on 28 August 2009
replacing Mr JA Anderson.
Mr GS Nzalo was appointed as an independent non-executive director, chairman
of the risk committee and member of the audit committee with effect from 1
November 2009.
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.
ANNUAL GENERAL MEETING
The annual general meeting will be held at Unit 419, Greenhills Industrial
Estate, Sam Green Road, Tunney Ext 6, Germiston on 27 August 2010. Further
details on the company`s annual general meeting will be contained in PSV`s
annual report to be posted to shareholders on or about 30 July 2010.
For and on behalf of the board
AJD da Silva AR Dreisenstock
Chief Executive Officer Financial Director
24 May 2010
DIRECTORS
Executive Directors: P Robinson* (Deputy Chairman), AJD da Silva (Chief
Executive Officer),
AR Dreisenstock (Financial Director), DJ Kelly*.
Non-Executive Directors: CE Chimombe-Munyoro (Non-Executive Chairperson),
E Dube (Alternate), MM Patel**, GS Nzalo**
*British
**Independent Non-Executive Directors
COMPANY SECRETARY: M Saayman
REGISTERED OFFICE: Unit 419, Sam Green Road, Greenhills Industrial Estate,
Tunney Ext 6, Germiston
Postnet Suite 229, Private Bag X19, Gardenview, 2047 T (local): 0860 778 778
T (international): +2711 828 7789 F: 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: 24/05/2010 07:05:39 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.
