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PSV Holdings Limited HY 2014 results

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PSV Holdings Limited HY 2014 results

PSV Holdings Limited HY 2014 results

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PSV Holdings Limited HY 2014 results PSV Holdings Limited HY 2014 results Document Transcript

  • 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”) Unaudited condensed consolidated financial results for the six months ended 31 August 2013 Highlights Revenue up 34% Pre-tax profit from continuing operations of R8,2 million Operating cost ratio reduced by 24,5% 18% increase in cash and cash equivalents
  • Condensed consolidated statement of comprehensive income for the six months ended 31 August 2013 Unaudited for the six months ended 31 August 2013 R’000 Unaudited for the six months ended 31 August 2012 R’000 Audited for the 12 months ended 28 February 2013 R’000 Revenue 225 512 168 596 381 109 Gross profit Operating expenses* 43 473 (34 225) 41 612 (34 220) 83 342 (71 169) Operating profit Net finance charges 9 248 (1 017) 7 392 (1 926) 13 735 (3 730) Profit/(loss) before taxation from continuing operations Taxation 8 231 (3 154) 5 466 (2 887) 10 006 (5 773) Profit for the period from continuing operations 5 077 2 579 4 233 Loss from discontinued operations (4 838) (25 672) (878) 239 (23 093) (20 773) 239 334 4 716 – (23 093) 144 21 629 5 717 (23 782) (39) 2 871 27 137 Headline earnings 5 290 4 397 6 187 Headline earnings – continuing operations Basic earnings/(loss)per share (cents) Basic earnings per share (cents) from continuing operations Headline earnings per share (cents) Headline earnings per share (cents) from continuing operations Diluted earnings/(loss) per share (cents) Diluted earnings per share (cents) from continuing operations Diluted headline earnings per share (cents) Diluted headline earnings per share (cents) from continuing operations Actual number of shares in issue at end of the period Weighted number of shares in issue at end of the period Fully diluted weighted average number of shares in issue at end of the period 5 372 0,09 1,92 2,00 2,05 0,09 1,91 1,99 717 (9,03) 0,22 1,72 0,28 (8,74) 0,22 1,66 7 064 (9,36) 1,67 2,43 2,78 (9,33) 1,66 2,43 2,04 272 548 263 781 0,27 272 548 255 791 2,77 272 548 254 066 265 308 264 352 254 944 Total comprehensive income/(loss) for the period Reconciliation of headline earnings Profit/(loss) attributable to PSV equity holders Loss /(profit) on disposal of property, plant and equipment Loss on disposal of discontinued operations Loss on sale of discontinued operations * Operating expenses are net of sundry income and include depreciation, impairments and amortisation charges.
  • Condensed consolidated statement of financial position as at 31 August 2013 Unaudited 31 August 2013 R’000 Unaudited 31 August 2012 R’000 Audited 28 February 2013 R’000 ASSETS Non-current assets Current assets 64 888 155 516 74 853 162 358 64 321 149 398 Total assets 220 404 237 211 213 719 EQUITY AND LIABILITIES Equity Non-current liabilities Current liabilities 97 117 19 250 104 037 97 256 28 829 111 126 97 059 18 095 98 565 Total equity and liabilities 220 404 237 211 213 719 35,63 20,88 35,68 23,92 38,20 22,09 Net asset value per share (cents) Tangible net asset value per share (cents)
  • Condensed consolidated statement of changes in equity for the six months ended 31 August 2013 Unaudited for the six months ended 31 August 2013 R’000 Unaudited for the six months ended 31 August 2012 R’000 Audited for the 12 months ended 28 February 2013 R’000 Balance at beginning of the period Total comprehensive income for the period Dividends paid Share-based payment transactions Foreign currency translation differences 97 059 166 – (107) – 125 772 (23 093) (9 219) 10 3 786 125 772 (20 773) (9 239) 1 389 – Balance at end of the period 97 117 97 256 97 059 Condensed consolidated statement of cash flows for the six months ended 31 August 2013 Unaudited for the six months ended 31 August 2013 R’000 Unaudited for the six months ended 31 August 2012 R’000 Audited for the 12 months ended 28 February 2013 R’000 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities 1 059 5 733 (2 896) (10 604) 42 942 (19 893) 8 990 44 740 (42 060) Net movement in cash and cash equivalents Cash at acquisition of subsidiary Cash transferred to assets held for sale Cash and cash equivalents at beginning of the period 3 896 – – 16 749 12 445 – (4 120) 9 169 11 670 (3 640) (450) 9 169 Cash and cash equivalents at end of the period 20 645 17 494 16 749
  • Condensed consolidated segmental information for the six months ended 31 August 2013 Industrial Supplies R’000 Other R’000 Total R’000 115 783 30 446 15 193 10 198 (183) 2 292 81 863 56 574 Revenue Gross profit Operating expenses* Profit/(loss) before tax Depreciation/amortisation Capital expenditure Gross assets Gross liabilities Specialised Services R’000 109 729 13 159 6 540 2 241 – 2 037 85 153 57 458 571 (132) 10 015 (4 208) – 284 53 388 9 255 225 512 43 473 31 748 8 231 (183) 4 613 220 404 123 287 * Operating expenses exclude other income and finance costs. Condensed consolidated segmental information for the six months ended 31 August 2012 Industrial Supplies R’000 Revenue Gross profit Operating expenses* Profit/(loss) before tax Depreciation/amortisation Capital expenditure Gross assets Gross liabilities Specialised Services R’000 Other R’000 Total R’000 Discontinued operations R’000 98 974 32 646 13 599 15 301 878 1 797 100 571 65 308 69 573 8 966 7 583 (2 472) 745 928 64 513 19 540 49 – 10 247 (7 363) 1 168 367 55 305 35 357 168 596 41 612 31 430 5 466 2 791 3 092 220 389 120 205 71 315 12 718 6 539 (25 672) 1 402 – 15 062 15 108 * Operating expenses exclude other income and finance costs.
  • Commentary Basis of preparation The unaudited condensed consolidated financial results for the six months ended 31 August 2013 (“the interim results”) have been prepared in accordance with the framework concepts, 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 South African Companies Act, 2008 (Act 71 of 2008), as amended. The accounting policies and method of computation applied in preparation of these financial statements are in accordance with IFRS and are consistent with those applied in the annual financial statements for the 12 months ended 28 February 2013. The financial statements have been prepared under the supervision of the Financial Director, Tony Dreisenstock and have not been audited or reviewed by the Group’s auditors. Introduction The interim results reflect improved trading conditions from continuing operations. The Group successfully unbundled loss-making and cash-hungry businesses during the past year establishing a stable platform for growth in the forthcoming year. NATURE OF BUSINESS PSV is an industrial engineering holding Company comprising two operating business segments: • Industrial Supplies (including industrial spares and supplies, crane maintenance and automotive spares); and • Specialised Services (including geosynthetic linings and cryogenic activities). Financial results Revenue from the period under review increased by 33,8% to R225,5 million (2012: R168,6 million). The growth in the business is attributable to improving market conditions and additional working capital injected back into the business from proceeds derived on the sale of PSV Mitech Control Valves Proprietary Limited (“Mitech”). Gross profit margin reduced primarily due to reduced margins in Engineered Linings Proprietary Limited (“Engineered Linings”) and Turbo Agencies Proprietary Limited (“Turbo”) (see “Operational review” below). Although operating costs are in line with the previous period, the business has grown by 34% and operating costs as a percentage of turnover has decreased by 24,5% to 14,1% (August 2012: 18,6%). The decrease is largely due to the continual assessment of cost-cutting measures implemented at head office, and the disposal of loss-making operations. The Group’s EBITDA increased to R13 million (2012: R10,8 million), a 19,8% improvement. The Company improved its profit before income tax from continuing operations by 50,6% to R8,2 million (2012: R5,5 million). The taxation charge is still high due to the decentralised business model in operation. Notwithstanding, the effective tax rate on continuing operations decreased from 52,8% in the prior period to 38,3% as at 31 August 2013. PSV is aggressively assessing various strategies to be more tax efficient and the results of this strategy are expected to materialise by the year-end. The total comprehensive income for the period is R0,2 million, a substantial improvement from the loss of R23,1 million incurred in the previous period. The Group’s after tax profit was reduced by the R4,8 million loss made on the disposal of Mitech. Headline earnings per share from continuing operations grew by 16,3% to 2,00 cents (2012: 1,72 cents). At the period end, cash of R20,6 million was recorded, 22,6% higher than 28 February 2013. Despite a substantial increase in the trading operations of the business, PSV managed to generate a positive cash flow from operating activities. Operational review Industrial Supplies This segment contributed 51% (2012: 59%) to the Group’s consolidated revenue at an average gross profit margin of 26% (2012: 33%). Omnirapid continues to grow on the back of superior service delivery and increased orders for mining supplies. Omnirapid remains highly profitable, cash generative and consistently delivers positive results. Whilst revenue at Turbo increased, gross profit margins and operating costs came under pressure causing a reduction in the segment’s operating margin to 11,4% (2012: 18,4%). Specialised Services Specialised Services contributed 49% (2012: 41%) to the Group’s consolidated revenue at an average gross profit margin of 12% (2012: 13%). The segmental revenue increased from R69,6 million to R109,7 million. Both the African Cryogenics and the Engineered Linings businesses showed substantial top line growth. However the latter continues to experience cash flow pressure due to the resultant surge in working capital requirements. African Cryogenics has surged forward, delivering a solid set of results on the back of increased demand for its products and services. As a result of the strong performance of African Cryogenics the segment’s operating margin has increased to 5,2% (2012: 0,9%).
  • disposal of mitech On 13 May 2013, PSV announced on SENS the disposal of the Mitech business. Mitech is a specialised control valves business that produces valves which are primarily used in the mining and petrochemical industries. The rationale for the disposal was that Mitech did not meet PSV’s return on investment targets. It was therefore decided to dispose of Mitech and focus efforts on maximising the returns generated by the rest of the companies within the Group. Mitech was sold for a total consideration of R7,0 million in cash. The effective date of the disposal was 1 April 2013. PSV made a consolidated loss on the disposal of Mitech of under R5 million, of which R1,6 million was a cash loss incurred in writing off an inter-company loan. The balance represented a non-cash flow reversal of fixed asset revaluation gains previously booked to income. Dividends The Group will continue to retain and utilise cash generated to fund working capital requirements and as such, no dividends were declared or proposed. The board of directors of PSV (“the Board”) reviews the dividend policy annually. CHANGES TO THE BOARD On 5 June 2013, it was announced on SENS that Peter Robinson resigned as a Non-Executive Director with effect from 4 June 2013. We wish him well in his future endeavours. CHANGE IN TRANSFER SECRETARY On 11 October 2013, it was announced on SENS that Link Market Services South Africa Proprietary Limited will replace Computershare Investor Services Proprietary Limited as PSV’s transfer secretary with effect from 1 November 2013. PROSPECTS The remainder of the financial year is viewed as a year of consolidation for PSV, where the main aim is to focus on profitability, working capital management and cash flow generation. In concentrating on core competencies in South Africa and further expansion into Africa, PSV will build on its existing foundation. Much of our work is carried out on a project basis and this will continue into the future. PSV has experienced larger capex spend by mines in Africa and is looking to take advantage of this opportunity. The focus on improved cash flow is slowly producing results and as such cautious expansion in Africa will be assessed, ever mindful of the risks associated with doing business on the continent. The domestic market continues to show sustainable growth in the industrial segments in which we operate and PSV will be looking to maximise efficiencies and gain market share to improve profitability. Both the Industrial Supplies and Specialised Services segments began the new financial year with larger order books than last year and indications are that this trend, although small, should continue. The appointment of a marketing manager to exploit opportunities across the Group of companies is showing positive results. For and on behalf of the Board AJD da Silva Chief Executive Officer Johannesburg 28 October 2013 AR Dreisenstock Chief Financial Officer
  • DIRECTORS Executive Directors: AJD da Silva (Chief Executive Officer); AR Dreisenstock (Chief Financial Officer) Non-Executive Directors: R Patmore (Independent Chairperson); A de la Rue (Independent Chairman of the Audit Committee); E Ratshikhopha (Independent Chairman of the Social and Ethics Committee) COMPANY SECRETARY Merchantec Capital DESIGNATED ADVISER Merchantec Capital REGISTERED OFFICE PSV Holdings Office Park, Corner Barbara and North Reef Roads, Henville Ext, Elandsfontein PostNet Suite 229, Private Bag X19, Gardenview, 2047 Tel (local): (011) 657 6000 Tel (international): +27 11 657 6000 Fax: (011) 822 8470 TRANSFER SECRETARIES Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, South Africa, 2001 PO Box 61051, Marshalltown, South Africa, 2107