Provisional audited condensed consolidated results. for the year ended 28 February 2018

Transcription

1 Provisional audited condensed consolidated results for the year ended 28 February 2018 Incorporated in the epublic of South Africa (egistration number 1998/004365/06) Share code: PSV ISIN: ZAE ( PSV or the Company or the Group )

2 Condensed consolidated statement of comprehensive income Audited for the year ended 28 February 2018 Audited for the year ended 28 February 2017 (estated) evenue Cost of sales ( ) ( ) Gross profit Other income Other expenses ( ) ( ) esults from operating activities Finance income Finance costs ( ) ( ) Net finance costs ( ) ( ) Profit before tax from continuing operations Deferred tax ( ) ( ) Profit/(loss) for the year from continuing operations ( ) evenue Net expenses ( ) ( ) Pretax (loss) ( ) ( ) Tax (Loss) from discontinued operations ( ) ( ) (Loss) for the year attributable to ordinary shareholders ( ) ( ) Other comprehensive income that may be recycled in future periods Foreign currency translation (loss)/gain not subject to tax ( ) Other comprehensive income that will not be subsequently reclassified to profit or loss evaluation surplus net of tax Total comprehensive (loss) for the year ( ) ( ) econciliation of headline earnings Profit/(loss) after tax attributable to ordinary shareholders continuing operations ( ) Loss/(profit) on disposal of property, plant and equipment continuing operations ( ) Loss/(profit) on sale of disposal group ( ) Tax effect on adjustments continuing operations (28 041) Headline profit/(loss) continuing operations ( ) (Loss) after tax attributable to ordinary shareholders discontinued operations ( ) ( ) (Profit) on disposal of property, plant and equipment discontinued operations (20 350) ( ) Tax effect on adjustments discontinued operations Headline (loss) discontinued operations ( ) ( ) Headline (loss) ( ) ( ) Basic and diluted (loss) per share (cents) (0.31) (0.53) Basic and diluted profit/(loss) per share (cents) continuing operations 0.17 (0.09) Basic and diluted (loss) per share (cents) discontinued operations (0.48) (0.44) Headline (loss) per share (cents) (0.23) (1.28) Headline profit/(loss) per share (cents) continuing operations 0.26 (0.81) Headline (loss) per share (cents) discontinued operations (0.48) (0.47) Actual number of shares in issue at end of the year Weighted number of shares in issue at end of the year There are no shares with a dilutive impact. 1 Provisional audited condensed consolidated results for the year ended 28 February 2018

3 Condensed consolidated statement of financial position 28 February February 2017 (estated) 29 February 2016 (estated) ASSETS Non-current assets Property, plant and equipment Goodwill and intangible assets Long-term portion of retention debtors receivable Loans receivable long term Deferred taxation Current assets Inventories Trade and other receivables Taxation receivable Loans receivable short term Cash and cash equivalents Non-current assets held for sale Total assets EQUITY Share capital evaluation surplus Foreign currency translation reserve ( ) (76 830) etained (loss) ( ) ( ) ( ) Total equity attributable to ordinary shareholders of the Company LIABILITIES Non-current liabilities Deferred tax Loans and borrowings Current liabilities Billings in excess of work certified Trade and other payables Bank overdraft Current portion of loans and borrowings Taxation payable Provisions Non-current liabilities held for sale Total liabilities Total equity and liabilities Provisional audited condensed consolidated results for the year ended 28 February

4 Condensed consolidated statement of changes in equity Share capital Foreign currency translation reserve evaluation surplus etained (loss) Balance at 29 February (76 830) ( ) Prior year adjustment due to early adoption of IFS 15 ( ) ( ) Balance at 29 February 2016 (restated) (76 830) ( ) Total comprehensive (loss) for the year ( ) ( ) Other comprehensive income from currency fluctuations Balance at 28 February 2017 (restated) ( ) Total comprehensive (loss) for the year ( ) ( ) ( ) Balance at 28 February ( ) ( ) Total 3 Provisional audited condensed consolidated results for the year ended 28 February 2018

5 Condensed consolidated statement of cash flows 28 February February 2017 Cash flows from operating activities ( ) Taxation paid (69 812) Net cash (used in)/from operating activities ( ) Net cash (used in)/from operating activities continuing operations ( ) Net cash from operating activities discontinued operations Cash flows from investing activities (Additions) to property, plant and equipment to expand operations ( ) ( ) Proceeds from disposal of property, plant and equipment Loan repaid/(advanced) on sale of business to B-BBEE partner ( )* Loan repaid on B-BBEE sale * Finance income Net cash from/(used in) investing activities ( ) Net cash from/(used in) investing activities continuing operations ( ) Net cash from investing activities discontinued operations Cash flows from financing activities Loans and borrowings (repaid) ( ) ( ) Finance expenses ( ) ( ) Net cash (used in) financing activities ( ) ( ) Net cash (used in) financing activities continuing operations ( ) ( ) Net cash (used in) financing activities discontinued operations ( ) (Decrease) in cash and cash equivalents ( ) ( ) Net (decrease) in cash and cash equivalents continuing operations ( ) ( ) Net (decrease) in cash and cash equivalents discontinued operations ( ) Cash balance transferred to non-current assets held for sale ( ) Bank overdraft transferred to non-current liabilities held for sale Cash and cash equivalents at beginning of the year ( ) ( ) Cash and cash equivalents at end of the year ( ) ( ) * This amount was previously classified under financing activities and has been reclassified to better reflect the nature of the cash flows. Provisional audited condensed consolidated results for the year ended 28 February

6 Segmental report Industrial Supplies Specialised Services Shared Services and Other Total Continued operations For the 12 months ended 28 February 2018 Total segment revenue Inter-segment revenue ( ) ( ) eportable segment revenue Gross profit Operating expenses ( ) ( ) ( ) ( ) Depreciation and amortisation (88 100) ( ) ( ) Other operating expenses ( ) ( ) ( ) ( ) Profit/(loss) before tax from continuing operations ( ) Profit/(loss) after tax excluding discontinued operations ( ) Capital expenditure Total assets Continuing operations Discontinued operations Total liabilities Continuing operations Discontinued operations For the 12 months ended 28 February 2017 (estated) Total segment revenue Inter-segment revenue ( ) ( ) ( ) eportable segment revenue Gross profit ( ) Operating expenses ( ) ( ) ( ) ( ) Depreciation and amortisation (26 815) ( ) ( ) ( ) Other operating expenses ( ) ( ) ( ) ( ) Profit/(loss) before tax from continuing operations ( ) Profit/(loss) after tax excluding discontinued operations ( ) ( ) Capital expenditure Total assets Total liabilities ( ) Provisional audited condensed consolidated results for the year ended 28 February 2018

7 Commentary BASIS OF PEPAATION The provisional audited condensed consolidated results for the year ended 28 February 2018 ( the year ) have been prepared in accordance with the recognition and measurement requirements of International Financial eporting Standards ( IFS ), the disclosure and presentation requirements of IAS 34: Interim Financial eporting, the SAICA Financial eporting Guides as issued by the Accounting Practices Committee, the Financial eporting Pronouncements as issued by the Financial eporting Standards Council, the Listings equirements of the JSE Limited and the Companies Act, 2008 (Act 71 of 2008), as amended. The accounting policies and method of computation applied in preparation of these provisional audited condensed consolidated results are in accordance with IFS and are consistent with those applied in the annual financial statements for the year ended 28 February This provisional report is extracted from audited information but is not itself audited. The board of directors of PSV ( the Board ) takes full responsibility for the preparation of this report and confirms that the financial information has been correctly extracted from the underlying annual financial statements. The annual financial statements have been prepared under the supervision of the Financial Director, Tony Dreisenstock CA(SA), and have been audited by the Group s auditors, Certified Master Auditors Inc., whose unqualified audit report is available for inspection at the registered office of the Company. The unqualified audit report contains an emphasis of matter paragraph regarding management s consideration with regards to the liquidity issues the Group is facing. Their opinion is not modified in respect of this matter. The auditor s report does not necessarily report on all of the information contained in this announcement. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor s engagement they should obtain a copy of the audit report, together with the accompanying financial information, from the Group s registered office. Any reference to future financial performance included in this announcement has not been reviewed by or reported on by the Group s auditor. NATUE OF BUSINESS PSV is an industrial engineering holding company comprising two operating business segments namely: Industrial Supplies (including steel, piping, industrial tools and consumable supplies). Specialised Services (including comprehensive cryogenic and gas systems and the supply and installation of geosynthetic linings). INTODUCTION Notwithstanding tough cash constraints, the Group s sustained turnaround continues to gather momentum. The Group generated an after-tax profit from continuing operations of 0.44 million compared to a loss after tax of 0.24 million in the 2017 financial year. These figures have been restated due to the Group s decision to early adopt IFS 15 dealing with revenue recognition. FINANCIAL ESULTS The early adoption of IFS 15 necessitated the restatement of the financial results for the year ended February 2017 and the presentation of a comparative restated statement of financial position as at February The implementation of IFS 15 resulted in an additional after-tax loss of 1.46 million for February 2016 and 0.25 million for February The current year s after-tax profit was increased by 0.42 million as a result of the early implementation. In addition, the Group decided to change its accounting policy from the cost to the revaluation model in respect of the road tanker class of asset. The carrying value of the road tanker was measured in terms of the level three hierarchy as stipulated in IFS 13. The consequential revaluation surplus reflected in other comprehensive income amounted to 0.62 million after tax. Turbo Agencies meets the requirements contained in IFS 5 as being treated as a disposal group and a discontinued operation. This resulted in the restatement of our year-end 28 February 2017 results in the statement of comprehensive income and the reclassification of all relevant assets and liabilities held for sale in the 28 February 2018 statement of financial position. Provisional audited condensed consolidated results for the year ended 28 February

8 Commentary (continued) Turnover increased by 13.89% to million (2017 (restated): million), gross margins strengthened to 20.19% (2017 (restated): 17.34%). The net result was that the Group generated an after-tax profit from continuing operations of 0.44 million compared to a 0.24 million loss (restated) in the previous financial year. The headline loss per share strengthened from a loss of 1.28 cents per share ( cps ) (restated) to a loss of 0.23 cps. Notwithstanding the pleasing turnaround in the business, our cash flow position worsened by 2.58 million, principally caused by high finance costs, repayment of loans and slow debtor payments. The Group s debt to equity ratio (net of cash) improved from 77% in 2017 to 69% in the current financial year mainly due to the reclassification of Turbo Agencies as a discontinued operation. The Group s net tangible asset per share decreased marginally to 4.07 cps from 4.30 cps (restated) in OPEATIONAL EVIEW Industrial Supplies This segment contributed 49% (2017 (restated): 42%) to the Group s consolidated reportable segment revenue, at an average gross profit margin of 17.17% (2017 (restated): 18.80%). Omnirapid s tenacity, resilience and indomitable will to succeed despite all odds was inspirational. The customer base was diversified, major clients regained and budgetary expectations far exceeded. The business expanded by 27% compared to the previous financial year, the order book is full and prospects are excellent. Turbo Agencies made an operating loss for the year. Despite maintaining margins at historic levels, the business contracted particularly in the domestic sales space in Botswana. This contraction was primarily attributable to the poor state of the Botswana economy and the consequentially restricted working capital cycles that retarded the division s ability to place timeous orders with suppliers resulting in cancelled orders. The Group made funds available to Turbo Agencies in early February 2018, unlocking the trade cycle. Notwithstanding, the Board has taken a decision to actively pursue selling the business. Specialised Services Specialised Services contributed 51% (2017 (restated): 58%) to the Group s consolidated reportable segment revenue at an average gross profit margin of 23.02% (2017 (restated): 16.45%). The successful implementation of a new, dynamic and innovative approach to doing business has stimulated the appetite of the major gas companies. African Cryogenics is currently enjoying unsurpassed interest levels manifesting in increased enquiries and consequential orders. Working capital management has tightened considerably and cash flow generation and profitability have improved. The division has expanded by 52% compared to the same time last year, and productivity levels have improved by 50%. Engineered Linings suffered a severe setback in the second half of the financial year as the execution of their strong order book was materially delayed by extraneous factors. The division s inability to timeously fill the void created against the backdrop of high fixed operating costs, materially eroded profitability and placed the entire Group under financial pressure. Fortunately, the situation started to improve towards the end of the financial year and profitability and cash flow are gradually being restored. With the restructuring of management, and the re-establishment of the Johannesburg office, we expect a sustained return to profitability in the coming months. DIVIDENDS No dividends were declared or proposed. The Board reviews the dividend policy annually. CHANGES TO THE BOAD There have been no changes to the Board for the period under review. 7 Provisional audited condensed consolidated results for the year ended 28 February 2018

9 SUBSEQUENT EVENTS Subsequent to the financial year-end, the Group entered into a subscription of shares agreement with egis Holdings Limited ( egis ), in terms of which, subject to certain conditions precedent, including shareholder approval, egis will acquire a 34.99% stake in the Group for 25.7 million. GOING CONCEN The directors have made an assessment of the ability of the Group to continue as a going concern. Notwithstanding the consolidated current liabilities exceed the consolidated current assets, the Board is confident that the Group will continue as a going concern for the following reasons: the subscription of new shares by egis will inject 25.7 million cash into the Group; a condition precedent of the abovementioned subscription is the sourcing of a credible B-BBEE partner. The Group has been aggressively pursuing this objective and is positive on concluding an agreement in the short term; the Board is actively pursuing selling Turbo Agencies which will eliminate a loss-making operation and approximately 6 million of interest-bearing debt; all remaining business operations are profitable and our budgetary projections for 2019 indicate that our profitability is sustainable; and the Group currently enjoys the support of its bankers. POSPECTS We are confident that the recapitalisation of the Group s balance sheet as well as the introduction of a new B-BBEE partner will secure substantial additional orders for the Group and have a significant positive impact on our future prospects. For and on behalf of the Board AJD da Silva Chief Executive Officer A Dreisenstock Chief Financial Officer Johannesburg 14 June 2018 Provisional audited condensed consolidated results for the year ended 28 February

10 Notes 9 Provisional audited condensed consolidated results for the year ended 28 February 2018

11 DIECTOS Executive directors AJD da Silva (Chief Executive Officer) A Dreisenstock (Chief Financial Officer) Independent non-executive directors E atshikhopha (Chairman of the Board) A de la ue (Chairman of the Audit and emuneration Committees) L Mosiah (Chairman of the Social and Ethics Committee) COMPANY SECETAY Merchantec Capital DESIGNATED ADVISE Merchantec Capital AUDITOS Certified Master Auditors Inc. EGISTEED OFFICE Stoneridge Office Park 8 Greenstone Place Building C 2nd Floor Greenstone Hill Tel (local): (0860) Tel (international): Fax: (0860) TANSFE SECETAIES Link Market Services South Africa Proprietary Limited 13th Floor ennie House 19 Ameshoff Street Braamfontein (PO Box 4844, Johannesburg, 2000) Telephone: +27 (0) Facsimile: +27 (0) Provisional audited condensed consolidated results for the year ended 28 February

12 Main heading egistered office Stoneridge Office Park 8 Greenstone Place Greenstone Hill Building C, 2nd Floor Tel (local): (0860) Tel (international): Fax (local): (0860) Fax (international):