Incorporated in the Republic of South Africa (Registration number 1998/004365/06) Share code: PSV ISIN: ZAE ( PSV or the Company )

Transcription

1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION The definitions and interpretations commencing on page 3 of this circular apply mutatis mutandis throughout this circular. If you are in any doubt as to the action you should take, please consult your broker, CSDP, attorney, accountant, banker or other professional adviser immediately. 1. If you have disposed of all of your shares in PSV, then this circular, together with the attached notice of general meeting and form of proxy should be forwarded to the purchaser to whom, or the broker, agent, CSDP or banker through whom you disposed of your shares. 2. The general meeting convened in terms of this circular will be held at 10:00 on Thursday, 31 May 2012 at the registered office of PSV, corner Barbara and North Reef Roads, Henville Extension, Elandsfontein, Johannesburg, Certificated shareholders and dematerialised shareholders with own name registration, who are unable to attend the general meeting and wish to be represented thereat, must complete and return the attached form of proxy in accordance with the instructions contained therein. Dematerialised shareholders, other than dematerialised shareholders with own name registration, who: - are unable to attend the general meeting and wish to be represented thereat, must provide their CSDP or broker with their voting instructions, in terms of the custody agreement entered into between themselves and the CSDP or broker concerned, in the manner and within the time stipulated therein; - wish to attend the general meeting, must instruct their CSDP or broker to issue them with the necessary Letter of Representation to attend, in the form of a Letter of Representation. 4. PSV does not accept any responsibility and will not be held liable for any failure on the part of any CSDP or broker of a dematerialised shareholder to notify such shareholder of either the mandatory offer set out in this circular or of the general meeting or any business to be concluded thereat. Incorporated in the Republic of South Africa (Registration number 1998/004365/06) Share code: PSV ISIN: ZAE ( PSV or the Company ) CIRCULAR TO PSV SHAREHOLDERS regarding - the disposal by PSV to WPIL of 100% of the Pump Business Shares and the Pump Business Claims for a total consideration of R54 million; - the harmonisation of the Company s Memorandum of Incorporation with the Companies Act; - the adoption of the amendments to the rules of the Conditional Share Plan; and enclosing - a notice convening the general meeting; and - a form of proxy for use by certificated PSV shareholders and own name registered dematerialised shareholders only. Corporate and Designated Adviser to PSV Legal adviser to PSV Auditors and reporting accountants to PSV Date of issue: 10 May 2012 Additional copies of this circular, in its printed format, may be obtained from the Designated Adviser at the address set out in the Corporate information section on this circular during normal business hours from Thursday, 10 May 2012 up to and including Thursday, 31 May Copies of this circular are available in the English language only.

2 corporate information PSV Holdings Limited Date of incorporation: 24 March 2005 Place of incorporation: South Africa Company Secretary and registered address of PSV Merchantec Proprietary Limited (Registration number 2008/027362/07) Corner Barbara and North Reef Roads Henville Extension, Elandsfontein Johannesburg, 1429 (Private Bag X19, Gardenview, 2047) Designated Adviser to PSV Merchantec Capital (Registration number 2008/027362/07) 2nd Floor, North Block Hyde Park Office Tower Corner 6th Road and Jan Smuts Avenue Hyde Park, Johannesburg, 2196 (PO Box 41480, Craighall, 2024) Legal adviser to PSV Mahons Attorneys Building 1, 19 Impala Road Chislehurston Sandton, 2196 (PO Box , Sandton, 2146) Auditors and reporting accountants to PSV KPMG Incorporated (Registration number 1995/021543/21) Registered Accountants and Auditors 85 Empire Road Parktown, Johannesburg (Private Bag 9, Parkview, 2122) Transfer secretaries to PSV Computershare Investor Services South Africa Proprietary Limited (Registration number 2004/003647/07) Ground Floor 70 Marshall Street Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)

3 TABLE OF CONTENTS Page Corporate information Inside front cover Important dates and times 2 Definitions and interpretations 3 Circular to PSV shareholders 6 1. Introduction 6 2. Nature of PSV s business 6 3. The Pump Business Disposal 7 4. Pro-forma financial effects 7 5. Share capital of PSV 8 6. Harmonisation of the Company s constitutive documents with the Companies Act 8 7. The adoption of the amendments to the rules of the Conditional Share Plan 9 8. Prospects 9 9. Major shareholders Directors of PSV Material contracts Material loans Material changes Working capital statement Litigation statement Directors opinions and recommendation Directors responsibility statement Experts consents Costs Documents available for inspection Exchange control regulations of South Africa General meeting 15 Annexure 1 Unaudited pro forma financial information of PSV 16 Annexure 2 Annexure 3 Annexure 4 Independent reporting accountants limited assurance report on the unaudited pro forma financial information 18 Historical financial information of the Pump Business for the two financial years ended 28 February 2011 and the six months ended 31 August Independent reporting accountants report on the historical financial information of the Pump Business for the two financial years ended 28 February 2011 and for the six months ended 31 August Annexure 5 Extract of the salient features of the Memorandum of Incorporation 40 Annexure 6 Extract of the salient features of the amendments to the Conditional Share Plan 48 Annexure 7 Warranties and Representations to the Pump Business Disposal Agreement 50 Notice of general meeting 61 Form of proxy Enclosed 1

4 IMPORTANT DATES AND TIMES Circular posted to PSV shareholders on Last day to trade in respect of the general meeting General meeting record date Last day to lodge forms of proxy for the general meeting by 10:00 on General meeting to be held at 10:00 on Results of general meeting released on SENS on Notes: 1. The above dates and times are subject to amendment. Any such amendment will be released on SENS Thursday, 10 May Friday, 18 May Friday, 25 May Wednesday, 30 May Thursday, 31 May Thursday, 31 May 2. Additional copies of this circular in its printed format, may be obtained from the Designated Adviser at the address set out in the Corporate information section of this circular during normal business hours from Thursday, 10 May 2012 up to and including, Thursday, 31 May

5 DEFINITIONS AND INTERPRETATIONS In this circular, the annexures and appendices hereto, the notice of general meeting and form of proxy, unless the context otherwise indicates, references to the singular include the plural and vice versa, words denoting one gender include the others, expressions denoting natural persons include juristic persons and associations of persons and vice versa, and the words in the first column hereunder have the meaning stated opposite them in the second column, as follows: AltX APE Pumps APE Shares BBBEE Board or directors business day certificated shareholder certificated shares circular Commission common monetary area Companies Act Conditional Share Plan corporate actions CSDP "custody agreement" dematerialisation dematerialised shareholder dematerialised shares documents of title emigrant the Alternative Exchange of the JSE; APE Pumps Proprietary Limited (Registration number 2007/014880/07), a private company duly registered and incorporated on 22 May 2007 in accordance with the laws of South Africa, and a wholly-owned subsidiary of PSV, and situated at 26 Nagington Road, Wadeville, Johannesburg, 1422; 100 shares with a par value of R1.00 each in the issued share capital of APE Pumps, which shares constitute 100% of the issued share capital of APE Pumps; the economic empowerment of all black people, including women, workers, youth, people with disabilities and people living in rural areas, through diverse but integrated socio-economic strategies as defined in the Broad-Based Black Economic Empowerment Act, 2003 (Act 53 of 2003), as amended ( BBBEE Act ); the board of directors of PSV at the last practicable date whose details are set out in paragraph 10 of this circular; any day other than a Saturday, Sunday or a public holiday in South Africa; a holder of certificated shares; shares which are not dematerialised, title to which is represented by physical documents of title; this bound document, dated 10 May 2012 including the annexures and appendices hereto and incorporating a notice of general meeting and a form of proxy; the Companies and Intellectual Property Commission established in terms of section 185 of the Companies Act; South Africa, the Republic of Namibia and the Kingdoms of Lesotho and Swaziland; the Companies Act, 2008 (Act 71 of 2008), as amended; the PSV Conditional Share Plan constituted by the rules of the plan, as amended from time to time; collectively, the Pump Business Disposal, the harmonisation of the Company s Memorandum of Incorporation with the Companies Act and the amendments to the PSV Conditional Share Plan; Central Securities Depository Participant, accepted as a participant in terms of the Securities Services Act, appointed by an individual shareholder for the purposes of, and in regard to the dematerialisation of documents of title for purposes of incorporation into Strate; the custody mandate agreement between a dematerialised shareholder and a CSDP or broker governing their relationship in respect of dematerialised shares held by the CSDP or broker; the process whereby share certificates, certificated transfer deeds, balance receipts and any other documents of title to shares in a tangible form are dematerialised into electronic records for purposes of incorporation into Strate; a holder of dematerialised shares; shares which have been incorporated into Strate and which are no longer evidenced by physical documents of title, but the evidence of ownership of which is determined electronically and recorded in the sub-register maintained by a CSDP; share certificates, certified transfer deeds, balance receipts and/or any other form of acceptable documents of title in respect of shares; any emigrant from the common monetary area whose address is outside the common monetary area; 3

6 employees employer company Exchange Control Regulations foreign shareholder general meeting Group "IFRS" "Income Tax Act" JSE a person eligible for participation in the Conditional Share Plan, namely an officer or other permanent employee (excluding independent contractors and/or contractors appointed via a labour broker) of any employer company, who has been in the continuous employ of any employer company for (i) more than one year; or (ii) any period of time, where the management of the employer company is of the opinion that such employee should be rewarded for service excellence, but employee shall exclude any non-executive directors; a company in the Group which employs an employee; the Exchange Control Regulations, promulgated in terms of Section 9 of the Currency and Exchanges Act, 1933 (Act 9 of 1933), as amended; a shareholder who is a non-resident of South Africa as contemplated in the Exchange Control Regulations; the general meeting of PSV shareholders to be held at 10:00 on Thursday, 31 May 2012 at the registered office of PSV, corner Barbara and North Reef Roads, Henville Extension, Elandsfontein, Johannesburg, 1429, which meeting is convened in terms of the notice of general meeting attached to this circular; PSV and its direct and indirect subsidiaries; International Financial Reporting Standards; the Income Tax Act, 1962 (Act 58 of 1962), as amended; JSE Limited (Registration number 2005/022939/06), a public company duly incorporated in accordance with the laws of South Africa and licensed as an exchange under the Securities Services Act; KPMG or reporting accountants KPMG Incorporated, Chartered Accountants (SA) and Registered Auditors (Registration number 1999/021543/21), a private company duly registered and incorporated under the laws of South Africa; last practicable date Listings Requirements Mather + Platt Friday, 20 April 2012, being the last practicable date prior to the finalisation of this circular; the Listings Requirements of the JSE, as amended from time to time by the JSE; Mather + Platt (SA) Proprietary Limited (Registration number 2008/023117/07), a private company duly registered and incorporated on 1 October 2008 in accordance with the laws of South Africa, and a wholly-owned subsidiary of PSV, and situated at 26 Nagington Road, Wadeville, Johannesburg, 1422; Mather + Platt Shares 2 shares with a par value of R1.00 each in the issued share capital of Mather + Platt, which shares constitute 100% of the issued share capital of Mather + Platt; Memorandum of Incorporation Merchantec Capital or Designated Adviser Participant "PSV" or "the Company" PSV Properties 2 PSV Properties 2 Shares the memorandum of incorporation which PSV intends to adopt in order to comply with the provisions of the Companies Act, the salient extracts of which have been reproduced in Annexure 5 attached to this circular; Merchantec Proprietary Limited (Registration number 2008/027362/07), a private company duly registered and incorporated under the laws of South Africa; an Employee to whom a conditional award of shares is granted in terms of the rules of the Conditional Share Plan, and who has accepted such grant; PSV Holdings Limited (Registration number 1988/004365/06), a public company duly registered and incorporated under the laws of South Africa and currently listed on the AltX; PSV Properties 2 Proprietary Limited (Registration number 2007/021408/07), a private company duly registered and incorporated on 30 July 2007 in accordance with the laws of South Africa, and a wholly-owned subsidiary of PSV, and situated at 26 Nagington Road, Wadeville, Johannesburg, 1422; 100 shares with a par value of R1.00 each in the issued share capital of PSV Properties 2, which shares constitute 100% of the issued share capital of PSV Properties 2; 4

7 PSV Services PSV Services Shares "PSV shares" or shares "PSV shareholders" or shareholders PSV Zambia PSV Zambia Shares Pump Business Pump Business Claims Pump Business Disposal Pump Business Disposal Agreement Pump Business Disposal effective date Pump Business Shares Rand or R Securities Services Act SENS South Africa Strate sub-register subsidiary transfer secretaries PSV Services Proprietary Limited (Registration number 1968/004672/07), a private company duly registered and incorporated in accordance with the laws of South Africa, and a wholly-owned subsidiary of PSV and situated at 26 Nagington Road, Wadeville, Johannesburg, 1422; 200 shares with a par value of R1.00 each in the issued share capital of PSV Services, which shares constitute 100% of the issued share capital of PSV Services; ordinary shares with no par value in the issued share capital of PSV; holders of PSV shares; PSV Zambia Limited (Registration number 49563), a private company duly registered and incorporated on 26 March 2002 in accordance with the laws of the Republic of Zambia, and a 90% owned subsidiary of PSV, with the remaining 10% held by a nominee in Zambia, and situated at 8 Chingwele Close, Parklands, Kitwe, Republic of Zambia; shares with a par value of 1.00 Zambian kwacha each in the issued share capital of PSV Zambia, which shares constitute 100% of the issued share capital of PSV Zambia; collectively, APE Pumps, Mather + Platt, PSV Properties 2, PSV Services and PSV Zambia; 100% of all and any claims on loan account, or otherwise, due to PSV by APE Pumps, Mather + Platt, PSV Properties 2, PSV Services and PSV Zambia as at the Pump Business Disposal effective date; the disposal by PSV of the Pump Business Shares and the Pump Business Claims to WPIL for a total consideration of R54 million; the Sale of Shares Agreement, entered into between PSV and WPIL on 20 February 2012, in terms of which the Pump Business Disposal is to be implemented; the effective date of the Pump Business Disposal, being the first day of the month following the date on which the last of the suspensive conditions of the Pump Business Disposal is fulfilled or waived, as the case may be; collectively, the APE Pumps Shares, the Mather + Platt Shares, the PSV Properties 2 Shares, the PSV Services Shares and the PSV Zambia Shares; South African Rand, the official currency of South Africa; the Securities Services Act, 2004 (Act 36 of 2004), as amended; Securities Exchange News Service of the JSE; the Republic of South Africa; the settlement and clearing system used by the JSE, managed by Strate Limited (Registration number 1998/022242/06), a public company duly incorporated in accordance with the laws of South Africa; the record of dematerialised shares administered and maintained by a CSDP and which forms part of the Company s register of members as defined in the Companies Act, excluding nominees; a subsidiary as defined in the Companies Act; Computershare Investor Services Proprietary Limited (Registration number 2004/003647/07), a private company duly incorporated in accordance with the laws of South Africa; VAT Value added tax, levied in terms of the provisions of the Value-Added Tax Act, 1991 (Act 89 of 1991), as amended; VWAP WPIL volume weighted average price; and WPIL International Pte Limited (Registration number D), a private company limited by shares duly registered and incorporated in accordance with the company laws of the Republic of Singapore, whose beneficial shareholders are WPIL Limited, an Indian-based company listed on the Bombay Stock Exchange, and V N Enterprises Limited, owned by Mr Nitin Gupte, which is also Indian-based. 5

8 Directors Executive A J D da Silva (Chief Executive Officer) A R Dreisenstock (Financial Director) P Robinson (Deputy Chairman) Non-executive R Patmore* (Chairman) A de la Rue* D J Kelly P Molefe* *Independent Incorporated in the Republic of South Africa (Registration number 1998/004365/06) Share code: PSV ISIN: ZAE ( PSV or the Company ) CIRCULAR TO PSV SHAREHOLDERS 1. INTRODUCTION On 22 February 2012, it was announced on SENS that PSV had entered into the Pump Business Disposal Agreement with WPIL in terms of which, subject to the fulfilment or waiver of certain suspensive conditions, PSV will dispose of 100% of the Pump Business Shares and the Pump Business Claims to WPIL for a total consideration of R54 million. Furthermore, it is the intention of the directors to harmonise the Company s constitutive documents with the requirements of the Companies Act by adopting the Memorandum of Incorporation and to amend the rules of the Conditional Share Plan. The purpose of this circular is to provide PSV shareholders with relevant information relating to: - the Pump Business Disposal; - the harmonisation of the Company s constitutive documents with the Companies Act, - the amendments to the rules of the Conditional Share Plan; and - to give notice of a general meeting of PSV shareholders in order to consider and, if deemed fit, to pass the resolutions necessary to approve and implement the corporate actions in accordance with the Listings Requirements and the Companies Act. A notice convening such meeting is attached to, and forms part of, this circular. 2. NATURE OF PSV S BUSINESS PSV, which is listed on the AltX, is an industrial engineering company operating in the primary sectors of the South African economy and comprising of three operating business segments: - the Pump Business, as detailed in paragraph 3.1 below; - Valves and Industrial Supplies; and - Specialised Services (including petrochemical, geosynthetic linings and cryogenic activities). The Valves and Industrial Supplies segment manufactures globe control valves, pneumatic actuators, de-superheaters and allied equipment for the process industry and also enables PSV to source piping, fittings, flanges and steel from internal and external supplies. These consumables are provided to mining and industrial clients locally in South Africa as well as being exported to other African countries. PSV, through the Specialised Services segment, supplies design and manufacturing capabilities, through the manufacture of cryogenic storage tankers, road tankers, cryogenic liquid transfer systems including vacuum insulated lines and vacuum process vessels to the gas industry in South Africa and on the African continent. The Specialised Services segment has the capability to manufacture large capacity, new generation, cryogenic freezing equipment which requires specialised fabricating techniques in stainless steel. The petrochemical sector is supported through the provision of fuel pumps and dispensers, bulk meters, LPG dispensers and point-of-sale forecourt and retail store software to an array of petroleum companies in South Africa and neighbouring countries. 6

9 3. THE PUMP BUSINESS DISPOSAL On 22 February 2012, it was announced on SENS that PSV had entered into the Pump Business Disposal Agreement with WPIL, a subsidiary of WPIL Limited, a global player in large engineered water handling pumps for the power, municipal mining and oil and gas sectors. In terms of the Pump Business Disposal Agreement, and subject to the fulfilment or waiver of certain suspensive conditions (the details of which are set out in paragraph 3.3 below), WPIL will acquire 100% of the Pump Business Shares and the Pump Business Claims from PSV for a total consideration of R54 million. 3.1 Nature of the Pump Business and rationale for the Pump Business Disposal PSV s Pump Business, which operates primarily in South Africa and Zambia, has been designing, manufacturing, maintaining, refurbishing and importing pumps for over five decades, and has an extensive product base in mines, municipalities, paper mills, minerals beneficiation companies, ports and harbours, water authorities, power generation utilities and petrochemical refineries throughout Africa and worldwide. The rationale for the disposal is to expunge PSV s primary debt and inject free cash flow back into the remaining subsidiaries for working capital purposes. It is the intention of the Board to utilise the purchase consideration payable by WPIL to PSV for the Pump Business Shares and Pump Business Claims to reduce its current levels of debt, inject working capital into its remaining subsidiaries and pay a special dividend to its shareholders. In essence, PSV will dispose of approximately 20% of the net assets of its business at a price which is about 20% in excess of its market capitalisation on the date of signature of the Pump Business Disposal Agreement. 3.2 Pump Business purchase consideration The total Pump Business purchase consideration, payable by WPIL to PSV for the Pump Business Shares and the Pump Business Claims, is R54 million, which amount is payable in cash by WPIL to PSV on the closing date of the Pump Business Disposal, being the seventh business day after the Pump Business Disposal effective date, by way of an electronic transfer of funds into the account held by PSV with Investec Bank Limited. 3.3 Effective date and suspensive conditions to the Pump Business Disposal The effective date of the Pump Business Disposal is the first day of the month following the date on which the last of the suspensive conditions is fulfilled or waived, as the case may be. The Pump Business Disposal is subject to the fulfilment or waiver of the following suspensive conditions: - by 31 May 2012, the board of WPIL passing a resolution to approve the Pump Business Disposal; - by 31 May 2012, the Board of PSV passing a resolution to approve the Pump Business Disposal; - by 31 May 2012, PSV delivering to WPIL a certified copy of a resolution of the shareholders of PSV passed in accordance with the provisions of the Listings Requirements, such resolution specifically approving the terms and conditions of the Pump Business Disposal; - by 31 May 2012, to the extent required, obtaining all approvals from the relevant regulatory authorities in South Africa and India, including if applicable, the Competition Commission; - by 31 May 2012, PSV providing WPIL with written confirmation that Investec Bank Limited unconditionally agrees to release all securities currently held over the Pump Business Shares and/or the assets of the Companies upon receipt of the Pump Business purchase consideration payable by WPIL to PSV for the Pump Business Shares and Pump Business Claims, into the account held by PSV with Investec Bank Limited; - by 31 May 2012, PSV delivering to WPIL a signed copy of the Companies management accounts for the period ended 28 February 2012; - by 31 May 2012, WPIL delivering to PSV a letter from its bankers confirming that WPIL will have sufficient funds in its bank account at the closing date of the Pump Business Disposal, being the seventh business day after the Pump Business Disposal effective date, to pay the amount payable by WPIL to PSV for the Pump Business Shares and Pump Business Claims, and PSV being satisfied therewith; and - by 31 May 2012, the Group having undergone an internal restructure. The warranties and representations in relation to the Pump Business Disposal Agreement are included as Annexure 7 to the circular. 4. PRO FORMA FINANCIAL EFFECTS The table below sets out the unaudited pro forma financial effects of the Pump Business Disposal on PSV s earnings per share, headline earnings per share, net asset value per share and tangible net asset value per share. The unaudited pro forma financial effects have been prepared to illustrate the impact of the Pump Business Disposal on the reported financial information of PSV for the six months ended 31 August 2011, had the Pump Business Disposal occurred on 1 March 2011 for statement of comprehensive income purposes and on 31 August 2011 for statement of financial position purposes. The unaudited pro forma financial effects have been prepared using accounting policies that comply with International Financial Reporting Standards and that are consistent with those applied in the annual financial statements for the year ended 28 February

10 The unaudited pro forma financial effects, which are the responsibility of the Board, are provided for illustrative purposes only and, because of their pro forma nature may not fairly present PSV s financial position, changes in equity, results of operations or cash flow. The full pro forma financial information is set out in Annexure 1 and the Reporting Accountants Report thereon is set out in Annexure 2 to this circular, respectively. After the Pump Percentage Business change Before 1 Disposal 2 (%) Basic earnings per share (cents) (2.45) (366.3) Headline earnings per share (cents) (0.64) (204.9) Net asset value per share (cents) (11.2) Net tangible asset value per share (cents) (16.9) Weighted average number of shares in issue (000s) Total number of shares in issue (000s) Notes 1. The amounts in the Before column relate to the published unaudited interim results of PSV and its subsidiaries for the six month period ended 31 August The amounts in the After the Pump Business Disposal column relate to the unaudited results of PSV for the six month period ended 31 August 2011 and are based on the assumption that: - the trading results of the Pump Business for the six months ended 31 August 2011 have been excluded from PSV s published unaudited results for the six months ended 31 August 2011; - the Pump Business has been sold for a total consideration of R54 million; - R44 million of consideration received from the Pump Business Disposal will be utilised to settle interest bearing debt, resulting in an interest saving of 11.04% per annum which will have a continuing effect on PSV; and - Expenses of R have been incurred to effect the Pump Business Disposal. 3. The effects on basic earnings per share and headline earnings per share are calculated based on the assumption that the Pump Business Disposal and was effected on 1 March The effects on net asset value per share and tangible net asset value per share are calculated based on the assumption that the Pump Business Disposal was effected on 31 August SHARE CAPITAL OF PSV The share capital of PSV as at the last practicable date is set out in the table below. Number of shares (R 000) Authorised Ordinary shares of no par value Issued Ordinary shares of no par value PSV has treasury shares in issue HARMONISATION OF THE COMPANY S CONSTITUTIVE DOCUMENTS WITH THE COMPANIES ACT Subject to the approval of shareholders in general meeting, it is proposed that the Company s constitutive documents are harmonised with the provisions of the Companies Act. Following the introduction of the Companies Act on 1 April 2011, all companies are required to draft, adopt and adhere to a Memorandum of Incorporation in compliance with the Companies Act, which is required to be completed by no later than 31 March In addition, all listed entities must within the same two year period, align its own memorandum of incorporation, as well as those of its subsidiaries, with Schedule 10 of the JSE Listings Requirements. PSV intends to adopt the Memorandum of Incorporation, as well as a similar memorandum of incorporation for its subsidiaries, in order comply with the provisions of the Companies Act and Schedule 10 of the JSE Listings Requirements. No amendments to the Memorandum of Incorporation shall be competent unless approved by a 75% majority of the shareholders of PSV in general meeting. An extract of the salient features of the Memorandum of Incorporation has been reproduced in Annexure 5 of this circular. The Memorandum of Incorporation is available for inspection as set out in paragraph 19 below. 8

11 7. ADOPTION OF THE AMENDMENTS TO THE RULES OF THE CONDITIONAL SHARE PLAN The purpose of the Conditional Share Plan is to promote the effective participation in the Company of the Employees of the Group and to incentivise such Employees. The Conditional Share Plan, in its current and unamended form, was adopted by shareholders on 6 May 2011 and complies with Schedule 14 of the Listings Requirements. PSV intends to amend the Conditional Share Plan in order to provide for the following: 1. To provide the Participant with an option to retain the shares which have vested in him in terms of the Conditional Share Plan. Where the Participant elects to: - retain such shares, PSV will pay all amounts required to be paid by the Participant to the South African Revenue Services to meet its obligations and liability for any form of taxation relative to the Employees income arising out of the implementation of the Conditional Share Plan and the participation therein by any Participant ( Tax Liability ), which amount will then be deducted from the Participant s salary, in equal instalments, over a three month period, subject to the normal fringe benefit tax consequences; or - sell a portion of or all such shares, then PSV will pay the Tax Liability on behalf of the Participant upfront. PSV will then deduct the Tax Liability from the Participant s salary in the month in which PSV pays the Tax Liability. Under the current unamended Conditional Share Plan, Participants had the option to request that PSV sell sufficient amounts of the shares which vested to settle the Tax Liability. This did not work due to the illiquidity of the shares. PSV will now process the Participant s full share allocation and transfer same into the PSV CSDP account. The Participant will then need to notify the scheme administrator if they wish to dispose of some or all of the shares that have vested. 2. The Conditional Share Plan can also be used to give Employees shares immediately in order to reward service excellence, retention awards, etc, instead of having to accumulate at least one year s worth of service before being eligilble to participate in the Conditional Share Plan. 3. The grant letter issued to Employees will be amended to include the following: - full particulars of the nature of the transaction, including the risks associated with it; - information relating to the Company, including its latest annual financial statements, the general nature of the business and its profit history over the last three years; and - full particulars of any material changes that occur in respect of any information provided in terms of the above two points. In accordance with the Listings Requirements, the adoption of the amendments to the Conditional Share Plan requires an ordinary resolution to be passed by a 75% (seventy five percent) majority of the votes cast in favour of the resolution by all shareholders present or represented by proxy at the general meeting. No amendments affecting the Conditional Share Plan shall be competent unless it is sanctioned by the Company in general meeting in terms of a resolution approved by a 75% majority of the votes cast in favour of such resolution for which purposes the votes attaching to all shares owned or controlled by persons who are existing Participants in the Conditional Share Plan shall be excluded. An extract of the salient features of the rules of the Conditional Share Plan incorporating the amendments have been reproduced in Annexure 6 of this circular. The amended rules of the Conditional Share Plan are available for inspection as set out in paragraph 19 below. 8. PROSPECTS The Board is of the opinion that the six month interim period ended 31 August 2011 was undoubtedly the most difficult period which the Company had to endure during its history. However, the Board is pleased with its adopted strategy of disposing of Group Line Projects Proprietary Limited ( Group Line Projects ), effective October 2011 and replacing the lost income with the positive contribution from the acquisition of Turbo Agencies Proprietary Limited ( Turbo Agencies ), effective 16 March Turbo Agencies is also assisting with the diversification of the PSV footprint in Africa. Furthermore, the consolidation of costs and businesses into the PSV Office Park has been a resounding success. In October 2011, PSV acquired the business of PSV Mitech, a local manufacturer of globe control valves, pneumatic actuators, de-superheaters and allied equipment for the process industry. This acquisition will provide PSV with access to the high end of the control valve market, a segment PSV has not previously been involved in, as well as the ability to broaden the existing valve range in South African, African and international markets. The effective date accounts are still being finalised. Consequently, the relevant financial information is not yet available. The Pumps Business currently has an order book of around R46 million, of which R36 million is international. Although the economic climate is expected to remain difficult, the Board is cautiously optimistic that the changes effected within the various business units will position them to generate better returns despite the current operating environment. 9

12 9. MAJOR SHAREHOLDERS Those shareholders (excluding directors whose interests are detailed in paragraph 10.5 below) who, at 29 February 2012 insofar as is known to PSV, directly or indirectly, were beneficially interested in 5% or more of the issued share capital of PSV, are listed below: Percentage shareholding Shareholder Number of shares (%) Wonderwall Investments 36 Proprietary Limited Note: 1. The beneficial shareholder is Vunani Capital Proprietary Limited, whose major shareholders are Vunani Limited and ABSA Bank Limited. There have been no changes to the shareholding of those shareholders (excluding directors whose interests are detailed in paragraph 10.2 below) who, at the last practicable date insofar as is known to PSV, directly or indirectly, were beneficially interested in 5% or more of the issued share capital of PSV, as a result of the Pump Business Disposal set out in paragraph 3 above. 10. DIRECTORS OF PSV 10.1 Details and experience of directors The full names, ages, qualifications, business addresses, functions in the group and background of the executive and non-executive directors of the Company at the last practicable date are as follows: Abilio ( Abie ) J D da Silva (50) Qualifications: Business address: Function and committees: Background: National Technical Certificate 5, Business Management Diploma Corner Barbara and North Reef Roads, Henville Extension, Elandsfontein, Johannesburg, 1429 Chief executive Officer Remuneration Committee Abie is the co-founder of the Group and was appointed as the Chief Executive Officer upon listing. He has retained the position and steered the Company towards the growth objectives it has achieved to date. He obtained a National Technical Certificate 5 from the Johannesburg Technical College and a Business Management Diploma from Damelin College. Anthony ( Tony ) R Dreisenstock (51) Qualifications: CA(SA), H.Dip Tax Law Business address: Corner Barbara and North Reef Roads, Henville Extension, Elandsfontein, Johannesburg, 1429 Function and committees: Financial Director Audit Committee (invitee) Background: Tony holds BCom and BAcc degrees obtained from the University of the Witwatersrand as well as an H Dip Tax Law obtained at the University of Johannesburg. Tony is a qualified chartered accountant. He successfully operated a strategic management consultancy practice until August 2005 when he was recruited by PSV to assist in listing the Company and to assume the role of Financial Director. Peter Robinson (52) Qualifications: Business address: Function and committees: Background: Qualified at Huddersfield Technical College in the United Kingdom Corner Barbara and North Reef Roads, Henville Extension, Elandsfontein, Johannesburg, 1429 Executive director and Deputy Chairman Peter qualified at Huddersfield Technical College in the United Kingdom. As a co-founder of PSV, Peter has been instrumental in securing long term contracts for the supply and repair of rotating machinery (pumps, pump spares, etc) to various geographical areas throughout Africa. He is the Managing Director of PSV Services. 10

13 David Kelly (53) Qualifications: Business address: Function and committees: Background: Anthony de la Rue (65) Qualifications: Business address: Function and committees: Background: Ralph Patmore (60) Qualifications: Business address: Function and committees: Background: O-level academic qualification, City & Guilds 17 Grader Road, Spartan, Kempton Park Non-executive director Dave was born in Britain and now resides in South Africa. He obtained an O-level academic qualification and a City & Guilds diploma at the London Institute in the United Kingdom. CA (Zimbabwe) 1529 Waltham Drive, Hertford Village, Dainfern Golf Estate Independent non-executive director Audit Committee (chairman) Risk Committee Anthony is a Chartered Accountant who was previously the CEO for Ernst & Young Zimbabwe and served on their Global Practice Council prior to his retirement in He is currently a non-executive director on the boards of various companies. BCom, MBL (SBL) 1172 Aspen Drive, Dainfern Independent non-executive director and chairman Risk Committee (chairman) Audit Committee Ralph co-founded Iliad Africa in 1998 and was the CEO until He currently serves as a non-executive director on the boards of various companies. Portia Molefe (42) Qualifications: BSc Honours (Economics), MBA Business address: 5 Bauhinia Street, Highveld, Centurion, 0046 Function and committees: Independent non-executive director Social and Ethics Committee (chairperson) Audit Committee Risk Committee Background: Portia was the acting Chief Operating Officer of the Department of Trade and Industry and was the Director-General of the Department of Public Enterprises. Portia is currently the Chief Executive Officer of Ubu Investment Holdings Proprietary Limited, which provides strategic advisory services in areas relating to economic infrastructure development. All directors of PSV are South African citizens, except for P Robinson and D J Kelly who originate from the United Kingdom. 11

14 10.2 Directors' interests in securities Directors interests At the Last Practicable Date, the directors of PSV held, directly and indirectly, beneficial interests in PSV Shares, representing approximately 43.1% of the total issued share capital of PSV. The direct and indirect beneficial interests of the directors of PSV are as follows: Beneficial Total Total Director Direct Indirect shares % Executive P Robinson A J D da Silva A R Dreisenstock Non-executive D J Kelly Note: Between the financial year ended 28 February 2011 (2011: direct and indirect beneficial interest) and the last practicable date, direct, beneficially held ordinary shares were allotted to each of P Robinson, D Kelly, A da Silva and A Dreisenstock in terms of the share incentive scheme Former directors interests As at the last practicable date, none of the directors who resigned during the last 18 months held or controlled any PSV shares Associates interests in securities At the last practicable date, as far as the Board is aware, there were no associates of directors (including those directors who had resigned during the past 18 months), who held or controlled any shares in the issued share capital of PSV Directors' interests in transactions None of the directors have had any beneficial interest, either directly or indirectly, in any transactions effected by PSV during the current or preceding financial year or during any earlier financial year which remains outstanding or unperformed in any respect Directors' emoluments The components of the executive directors emoluments in respect of the financial year ended 28 February 2011 is set out below: Other Retirement Incentives Basic Benefits and medical and bonuses Total R 000 R 000 R 000 R 000 R 000 A J D da Silva A R Dreisenstock D J Kelly P Robinson TOTAL Note: 1. D J Kelly s designation changed from that of executive director to that of non-executive director on 30 September The non-executive directors fees in respect of the financial year ended 28 February 2011 is set out below: Directors fees R 000 E Chimombe-Munyoro G S Nzalo M M Patel TOTAL 441 Note: 1. E Chimombe-Munyoro, G S Nzalo and M M Patel were not re-elected by shareholders at PSV s annual general meeting held on 29 September

15 10.5 Directors service contracts The executive directors do not have employment contracts with the Company, as they have expired and are on a month to month basis. Long term contracts are in the process of being finalised. Non-executive directors do not have service contracts with the Company Directors share options No share options were granted to nor exercised by the directors during the financial year ended 28 February Subsequent to the year end, as announced on SENS on 30 January 2012, P Robinson, D Kelly, A da Silva and T Dreisenstock were allotted shares each in terms the share incentive scheme on 27 January 2012 at a price of R0.14 per share. 11. MATERIAL CONTRACTS Neither PSV nor the Pump Business have entered into any material contract otherwise than in the ordinary course of business within two years prior to the circular or entered into at any time and containing an obligation or settlement that is material to the PSV group or the Pump Business at the date of this circular. 12. MATERIAL LOANS Save for the material loan(s) set out in the table below, PSV and its subsidiaries had no material loans receivable and had not made any loans or furnished any security to or for the benefit of any director or manager or of any associates of any director or manager of PSV. Lender Security Amount Terms Rate Investec Bank Limited None R16 million Working capital facility Prime plus 1 Investec Bank Limited None R20 million Fully amortising loan payable quarterly in arrears 11.24% (fixed) Note: 1. There are no conversion or redemption rights in respect of the loans above. 2. Debts payable within the next 12 months will be financed from the proceeds of the Pump Business Disposal and from cash generated by PSV s operations 13. MATERIAL CHANGES Save for the effects of the Pump Business Disposal which have been disclosed in the pro forma financial information set out in paragraph 4 above and in Annexure 1 to the circular, at the last practicable date, there have been no material changes in the financial or trading position of the Company and its subsidiaries since the reported financial information of PSV for the six months ended 31 August WORKING CAPITAL STATEMENT The Board has considered the effects of the Pump Business Disposal and is of the opinion that, for a period of 12 months subsequent to the date of this circular: - the PSV group will in the ordinary course of business be able to pay its debts; - the assets of the PSV group fairly valued, will be in excess of its liabilities. For this purpose the assets and liabilities are recognised and measured in accordance with the accounting policies applied to the latest audited financial results; - the share capital and reserves of the PSV group will be adequate for ordinary business purposes; and - the working capital of the PSV group will be adequate for ordinary business purposes. 15. LITIGATION STATEMENT There are no legal or arbitration proceedings, pending or threatened, of which PSV is aware, that may have or have had, in the 12-month period preceding the date of this circular, a material effect on the financial position of PSV and its subsidiaries. 16. DIRECTORS OPINIONS AND RECOMMENDATION The directors, having considered the terms and conditions of the corporate actions, are of the opinion that the Pump Business Disposal will have a beneficial financial effect on the group. Accordingly, the directors recommend that shareholders vote in favour of the resolutions, to be proposed at the general meeting to approve the corporate actions, which include the Pump Business Disposal. 17. DIRECTORS RESPONSIBILITY STATEMENT The directors collectively and individually, accept full responsibility for the accuracy of the information contained in the circular and certify that, to the best of their knowledge and belief the information contained in the circular is true and that there are no facts that have been omitted which would likely affect the importance of such information or make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the circular contains all information required by law and the Listings Requirements. 13

16 18. EXPERTS CONSENTS The designated adviser, auditors and independent reporting accountants, legal advisers, company secretary and the transfer secretaries have consented in writing to act in the capacities stated and to their names being stated in this circular and, where applicable, to the inclusion of their reports in the form and context in which they have been reproduced in this circular in Annexures 2 and 4, have not, prior to the last practicable date, withdrawn their consents prior to publication of this circular. 19. COSTS The total costs of the Corporate Actions, which amount to approximately R excluding VAT, are detailed in the table below: Estimated amount R Merchantec Proprietary Limited Corporate and Designated adviser to PSV Mahons Attorneys Legal adviser to PSV Deloitte Incorporated Introductory fee for introducing the purchaser to PSV KPMG Incorporated Auditors and reporting accountants to PSV JSE documentation inspection fees Printing and postage fees Wounded Buffalo/Computershare Total DOCUMENTS AVAILABLE FOR INSPECTION The following documents, or copies thereof, will be available for inspection at the office of the designated adviser which address is set out in the Corporate Information section of the circular, during normal business hours from Thursday, 10 May 2012 up to and including Thursday, 31 May 2012: - the Memorandum of Incorporation of the Company and its subsidiaries; - a copy of the signed Pump Business Disposal Agreement including the appendices thereto ; - a copy of the signed Reinstatement and Amendment Agreement; - the Conditional Share Plan trust deed and Deed of Amendment; - the signed independent reporting accountants limited assurance report on the pro forma financial information of the Company, the text of which is included as Annexure 2 to this circular; - the historical financial information of the Pump Business for the two financial years ended 28 February 2011 and the interim results of the Pump Business for the six months ended 31 August 2011; - the independent reporting accountants report on the historical financial information of the Pump Business for the two financial years ended 28 February 2011 and for the six months ended 31 August 2011, the text of which is included as Annexure 4 to this circular; - the written consent letters referred to in paragraph 18 above; and - a signed copy of this circular. 21. EXCHANGE CONTROL REGULATIONS OF SOUTH AFRICA In the case of certificated shareholders whose registered addresses are outside the common monetary area or where the share certificates are restrictively endorsed in terms of the Exchange Control Regulations, the following will apply: Non-residents who are emigrants from the common monetary area: Share certificates will be restrictively endorsed non-resident in terms of the Exchange Control Regulations and will be sent to the shareholder s authorised dealer in foreign exchange in South Africa controlling his blocked assets. All other residents: Share certificates will be restrictively endorsed non-resident in terms of the Exchange Control Regulations. With regard to dematerialised shareholders whose registered addresses are outiside the common monetary area, their shares will be annotated in the comany s relevant sub-register as non-resident and statements will be restrictively endorsed in terms of those regulations. 14