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Annual Report ’09
PSV touches your life in some way each day
Contents
Vision IFC
Mission and goals 1
Financial highlights 2
Milestones 2
Group structure 2
PSV’s local and global footprint 3
Group overview 4
Operational review 6
Board of directors 12
Chairperson’s review 14
Chief executive officer’s review 16
Corporate social investment 22
Corporate governance 23
Audit committee report 27
Annual financial statements 28
Analysis of ordinary shareholders 75
Shareholder analysis tables 76
Shareholders’ diary 77
Notice of annual general meeting 78
Form of proxy 83
Instructions to the form of proxy 84
Administration IBC
To be a recognised provider of specialised industrial engineering products and services throughout Africa
Vision
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To continue developing as a specialised industrial engineering group focused on pumps, valves, engineering linings, industrial supplies, fuel pumps and dispensers and cryogenics through the provision of superior customer service throughout Africa
Mission
• to increase shareholder value• to embrace broad-based black economic
empowerment principles• to empower every employee through participation
in a share incentive scheme
Goals
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Financial highlights Milestones
Revenue (R’000)
500 000
400 000
300 000
200 000
100 000
0’07 ’08 ’09
Operating profit (R’000)
50 000
40 000
30 000
20 000
10 000
0’07 ’08 ’09
’08/’09 PSV successfully concluded the purchase of Rand Air & Gas Installations and
Mather + Platt
’07 PSV successfully concluded the 100% acquisition of APE Pumps, Dasher and
Engineered Linings further strengthening the overall service offering
A Black Economic Empowerment (“BEE”) deal with Vunani Capital and
Mapi Investments is successfully entered into
’06 Listing of PSV as an industrial engineering group, on the Alternative Exchange
of the JSE
’03 Secure large mining supply contract in Zambia
’01 Establishment of PSV Zambia in Kitwe to supply mines in the copper belt
’94 Relocation to larger premises to house company expansion
’90 Expansion of manufacturing base to meet order demand
’88 Establishment of PSV Services with three staff members
Group structure
PSV Zambia
100%
Mather + Platt Pumps
100%
PSV Services
100%
APE Pumps
100%
Engineered Linings
100%
Group Line Projects
100%
Omnirapid
100%
Rand Air & Gas Industries
100%
Petrologic
100%
Specialised servicesEngineering linings and industrial suppliesPumps, spares and valves
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AfricaAlgeria
Angola
Botswana
Burkina Faso
DRC
Ghana
Guinea
Ivory Coast
Lesotho
Mali
Malawi
Mauritania
Mozambique
Namibia
Nigeria
South Africa lNamibia lSwaziland
Tanzania
Uganda
Zambia lZimbabwe
Other countriesKazakhstan
Mauritius
Singapore
Tajikistan
Australia
Iraq
PSV’s local and global footprint
l Main countries of operations
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PSV touches your life in some way each day
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Group overview
• OEM supplier of water and petrochemical pumps
• Supplier of pumps to API 610 specification for
petrochemical use
• Manufacture, service and repair of pumps and valves
for all fluid industries
• Turnkey mechanical electrical contracts
• Supply of UPVC piping to various industries
Pumps spares andvalves
• The provision of fresh, clean running water is a basic human right. PSV is directly involved with
this process through the supply of PVC piping, pumps, and flow instrumentation to water
utilities which facilitates the delivery of this water to households
• Limiting the wastage of water run-off, water seepage or contamination is as important to the
environment as it is to human habitation. Any formation, which holds or contains liquids or
requires waterproofing, such as dams, canals, water features or the lining of land fills, can be
insulated and contained by PSV
• Electrical supply is a critical component of economic stability in South Africa and PSV is
working with Eskom on efficiencies in product flow to fire its coal-burning power stations
• Precision and engineering expertise are a critical part of each fuel station forecourt and PSV
has substantial market share in this market. PSV’s involvement with service stations extends
from the supply and service of fuel dispensing systems, through to point-of-sale software
integration
• An essential requirement for all deep mining operations is that the mines are free of water so
that the mining process is not hindered in any way. PSV is well positioned, both in South Africa
and in Africa, to continue to support these mining operations
• Hospitals require high purity breathing oxygen. This is one of the many applications for which
our cryogenic capabilities supply equipment to the industrial gas market. Not only touching
lives, but saving lives
The Group operates across three key segments:
1. Pumps, spares and valves
2. Engineering linings and industrial supplies
3. Specialised services
• Manufacture, repair, service and support of
fuel pump dispensers
• Bulk meters at forecourts
• Flow meters and consumer fuelling equipment
• Forecourt and retail management software
• Manufacturing of cryogenic storage tanks
Specialisedservices
• Specification, selection and installation of lining products
• Sole distributor of flow tile glass linings
• Specialised geo-synthetic linings contracting
for containment, environmental protection and
corrosion protection
• Piping, fittings, flanges and steel to mining and
specialised industry
Engineeringlinings and
industrialsupplies
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Operational review Pumps, spares and valves
The pumps, spares and valves segment supplies, manufactures, designs, maintains, refurbishes, imports and services pumps, pumps
spares and valves. It is operational primarily in South Africa and Zambia, while the latter focuses primarily on the mining sector.
Capabilities stretch across mechanical, electrical and complete fluid handling contracts. The segment has OEM status as well as the
ability to manufacture certain pumps to ISO 9001-2000 standards. Most recently this division swelled to include Mather + Platt, a brand
name well known in South Africa, where there is currently a strong drive to re-establish the brand name.
Pumps spares andvalves
Original Equipment Manufacturer
(“OEM”) status and the ability to
manufacture to ISO 9001-2000
standards
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Operational review Engineering linings and industrial supplies
The segment offers an array of lining solutions including geo-synthetic, glass, ceramic and plastic lining solutions used for the purpose
of containment, environmental, wear and corrosion protection. Companies work closely with mining operators to assist with
functions such as protection of seepage and environmental protection. The usual order when working together with a mining operation
is that ore is deposited on top of the lining system and then cyanide (for the extraction of gold) is poured over the ore and mixed. The
gold dissolves and is moved through solution ponds. Once at the ponds the gold is extracted.
The stronger more durable linings such as glass and ceramics are used to limit the effects of wear and tear and increase product flow
properties in storage units such as coal hoppers, coal chutes or bin liners in the movement of bulk product.
All the Group’s applications are used in power stations and industries such as agriculture, mining, construction and water supply. The
industrial supplies component enables PSV to source piping, fittings, flanges and steel from internal and external suppliers. These
consumables are provided to mining and industrial clients locally in South Africa as well as being exported to other African countries.
Applications are used in power
stations and industries such as
agriculture, mining, construction
and water supply
Engineeringlinings and
industrialsupplies
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Operational review Specialised services
This segment is made up of
manufacture, support and supply
services to the petrochemical
and cryogenic markets
Specialisedservices
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.
The cryogenic component manufactures and repairs storage vessels and road tankers for the industrial gas industry. It supplies cryogenic
equipment that distributes both liquids and gases such as oxygen, nitrogen, argon and liquid carbon dioxide. The wide range of pumps,
valves, regulators and vaporisers supply gasses to industries such as hospitals, welding workshops, food and beverages and ship
container purging. In the latter application, cryogenic vessels and/or tankers are based dock-side and used to purge massive bulk freight
containers of harmful gases prior to embarking on safe seafaring journeys across the globe.
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Front row from left to right: Abie JD da Silva Chief executive officer, Peter Robinson Executive director and deputy chairman, Dave J Kelly Executive director
Back row from left to right: Mitesh M Patel Non-executive director, Evelyn Chimombe-Munyoro Non-executive chairperson, James Hugh Anderson, Independent non-executive director, Tony R Dreisenstock Chief financial officer
Absent: Graduate J Shongwe and Ethan Dube
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Board of directors
Abilio (Abie) JD da Silva (47)
Chief executive officer
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.
Peter Robinson (48)
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.
Evelyn Chimombe-Munyoro (36)
Non-executive chairperson
BA LLB LLM (Commercial law/Maritime law)
Evelyn is an admitted attorney of the High Court of
South Africa. Having worked at the specialised
corporate finance law firm, Jowell Glyn & Marais,
she joined Fairbridges Attorneys in the commercial
law department in 2002. She was appointed director
and partner at the end of 2004. Evelyn served on the
board of Vunani Capital Holdings (Pty) Limited in her
capacity as a non-executive director during 2005
and joined Vunani Capital Holdings (Pty) Limited as
an executive director in 2006. She serves on the
board of the Southern African German Chamber of
Commerce & Industry as a non-executive director
and chairs its committee representing the interests
of German industry in South Africa in relation to
broad-based black economic empowerment.
Mitesh M Patel (34)
Non-executive director – CA(SA)
Member of the Remuneration Committee
Chairman of the Nomination Committee
Mitesh, upon completion of his articles, opened his
own audit practice and due to self-motivation and
entrepreneurial skills built up a significant client
base and network over a short period of time. He
was presented with an opportunity to join the fifth
largest audit practice in South Africa and became
the Managing Director of PKF (Pta) Incorporated.
Currently Mitesh is an audit managing partner at
Nkonki Inc. He currently serves on the boards of
Africa Cellular Towers Limited, African Dawn Capital
Limited, Stratcorp Limited and Wearne Limited as an
Independent Non-Executive Director.
Anthony (Tony) R Dreisenstock (48)
Financial director
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.
Graduate (Vusi) J Shongwe (63)
Independent non-executive director
Vusi has a theological diploma from the Phumelela
Bible School. From 2001 to February 2006 he was
the Impala Platinum Limited liaison with government
on all BEE-related issues.
David (Dave) J Kelly (50)
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. He is the managing director
of Group Line.
James Hugh Anderson (63)
Chairman of the Audit Committee
Independent non-executive director
James studied at Aberdeen University, where he
gained an LLB and then at Glasgow University where
he obtained the Institute of Chartered Accountants
of Scotland qualification. James has been retained
by several clients to advise on strategies and
structures for BEE transactions and is an experienced
corporate financier.
Ethan Dube (50)
Alternate non-executive director – MSc (Statistics),
executive MBA (Sweden)
Ethan was appointed to the Board as an alternate
non-executive director to Evelyn Chimombe-
Munyoro with effect from 2 August 2007. He has
gained significant corporate finance and asset
management experience over the years. He worked
for Southern Asset Managers for three years as
senior analyst and for Standard Chartered and
Merchant Bank for two years in the corporate
finance departments. In 1996 Ethan founded Infinity
Asset Management with three other partners and
in 1998 he started Vunani Capital Holdings (Pty)
Limited, an investment banking company where he
is the current chief executive officer.
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Chairperson’s review
Continue to be well positioned to benefit
from Government infrastructure spend
Period of consolidation and extraction of
synergies between companies
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IntroductionThe year under review proved to be challenging for most companies in South Africa and worldwide, the result of global market conditions as the world experienced the worst global financial and economic crisis since the Great Depression. Record oil prices, high interest rates and the rapid meltdown of global financial markets created an environment which placed companies under severe pressure worldwide.
The South African economy could not escape the sudden downturn of the US and European economies. The rapid slump by the world’s largest economies into recession translated into concomitant capital flight from emerging markets on the back of heightened risk aversion. Global trade suffered immensely impacting significantly on trade dependent countries like South Africa.
OverviewWhilst trading conditions are undoubtedly tougher PSV Holdings Limited performed well. Revenue increased by 44% to R431 million from R299 million. However, the operating profit was impacted negatively by current market conditions resulting in margins being squeezed. Operating profits decreased to R33 million. Hence headline earnings per share decreased to 6,97 cents per share (“cps”) from 7,98 cps in the previous year. Core earnings decreased to 9 cps. The year proved to be very challenging for the Group’s petrochemical services operations Petrologic, whose performance detracted somewhat from the otherwise solid performance of the Group’s other businesses.
The Group embarked on two strategic acquisitions during the review period namely:• Rand Air & Gas Installations (Pty) Limited• Mather + Platt a division of Hudaco Trading (Pty) Limiteda specialised niche business of cryogenics, which complements the Group’s Specialised Services segment. Rand Air & Gas has recently won a number of supply contracts to the cryogenic aftermarket. This subsidiary contributed R3,8 million to the Group’s after tax profit.
The Group’s second strategic acquisition was the business of Mather + Platt, a long-standing international brand in the pump
industry which complements and bolsters PSV’s offering. This acquisition contributed R0,25 million profit after tax for the month immediately prior to the Group’s financial year-end. Both businesses have been successfully integrated into the Group. Furthermore PSV’s existing businesses, Dasher and Umzantsi, have also been successfully incorporated into Mather + Platt’s subsidiary.
Engineered Linings, a subsidiary based in Cape Town acquired by the Group, has performed exceptionally well. The Company contributed 25% to the revenue of the Group. The subsidiary has currently the largest order book which is going to contribute substantially to the Group.
The Group’s smallest business in terms of staff complement, Omnirapid Mining Industrial & Supplies, showed impressive growth by securing new clients, and maintained existing clients through continued dedicated client services and its ability to adapt to changing market conditions with ease.
APE Pumps outperformed all expectations, while Groupline Projects secured a number of new contracts at mining and power stations.
The economic pressures have been particularly visible at Petrologic with pressure on margins from the devaluation of the rand against major currencies. Petrologic has embarked on a substantial group restructure to optimise resources and enhance profitability going forward. The Group is confident that Petrologic will make a significant contribution to the Group in the year ahead.
We are proud to have increased our staff complement to 382 pursuant to the acquisition of Rand Air & Gas and Mather + Platt.
I am particularly pleased to report that the Group’s share incentive scheme is well under way. Furthermore the Group has implemented a scholarship programme funding the tertiary education of ten previously disadvantaged students. I am especially encouraged by the fact that all students are children of PSV employees, thus all students are particularly close to the Group and will remain so into the future.
Board changesDuring the year under review the Board appointed Mr Mitesh Patel to the Board replacing Mr S Thabojane. On behalf of my fellow directors I would like to thank Mr Thabojane for his contribution to the Group.
ProspectsLooking ahead, and bearing in mind that the economic crisis is likely to continue for the foreseeable future, PSV is well placed to maintain its position as a competitive player in the industry which is evidenced by a healthy order book of R150 million.
AppreciationI would like to sincerely thank the employees and management of PSV for their hard work, dedication and excellent service to clients and customers.
I would like to thank the Group’s customers, suppliers and service providers, particularly our designated advisors Vunani Corporate Finance.
Lastly I would like to thank my fellow directors and the chairmen of the audit and risk committees for their continued commitment and dedication throughout the review period.
Evelyn Chimombe-MunyoroChairperson
22 July 2009
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Chief executive officer’s review
Second half of the year was difficult
for the Group
Restructuring within certain subsidiaries
is being undertaken
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Introduction
The year under review presented itself to PSV in two halves. During the
first half project flow, work load and payments received from clients
was strong and on time. However, in the second half we experienced
project delays in implementation dates and an increase in stock levels
in certain subsidiaries as clients delayed certain projects due to the
current economic environment. Despite this, PSV has not lost any
major clients, but rather, has experienced a slow down in new
projects awarded.
Financial review
As reported in previous years, we were once again able to lift revenue
by 44% to R431 million compared to R299 million in 2008. An
operating profit of R33 million was generated dropping our operating
profit to 7,7% compared to 9,6% in 2008. This decline in operating profit
is attributable to a change in the sales mix to lower margin products and
services and margin sacrifice necessary to secure business.
Headline earnings per share deteriorated by 12,3% primarily due to
an increase in stock as well as additional doubtful debt provisions
raised against long outstanding debts. We are however confident that
the amounts will be recovered.
The Group’s debt/equity ratio was 24,9% compared to 29,1% in
the prior year, well within the Group’s debt/equity ratio limit of 40%.
The current ratio improved to 1,50:1 from 1,36:1 in the previous year.
The Group’s balance sheet continued to strengthen as the net tangible
asset value per share increased by 8,0% to 33,5 cps (2008: 31,0 cps)
and net asset value per share by 4,7% to 97,8 cps (2008: 93,4 cps).
A detailed assessment of the Group’s goodwill was undertaken at year-
end. In terms of this assessment, the carrying values of goodwill of the
Group’s various cash generating units were in line with the values
reflected in the balance sheet. Accordingly, no impairment of goodwill
was made. It should be noted that the cost of running the Group’s head
office has not been apportioned when determining the carrying value
of the cash generating units. The carrying value of goodwill will be
re-assessed when presenting the interim results for the period ending
31 August 2009 based upon market conditions and the performance of
the cash generating units at that time.
The Group incurred a net exchange loss of R3,9 million. Most of the
loss was unrealised and was attributable to the conversion of our PSV
Zambia operation from kwacha into rand.
Corporate actions
During the course of the year the Group acquired Rand Air & Gas
Installations (Pty) Limited for R18 million. The rationale for the
transaction was to expand PSV’s speciality engineering, product,
manufacturing and distribution base. Of the total purchase
consideration, R5,1 million was funded out of internal cash
resources. The next instalment of R6,3 million is due for payment
on 15 June 2009. For the six months ended 28 February 2009 this
subsidiary contributed R3,8 million after tax. An extrapolation of
these results places the acquisition on a 2,4 price/earnings ratio.
The PSV Group, through its Dasher subsidiary, had for a number of
years been servicing, repairing and maintaining Mather + Platt pumps.
The acquisition of Mather + Platt on 1 February 2009 elevated PSV’s
OEM status and will enhance the ability to take the Mather + Platt
name back into the market place. The purchase consideration was
R10 million and the acquisition contributed R0,25 million profit after tax
for the one month prior to the financial year-end. R9 million of the
purchase price was funded with a two-year term bank loan and
R0,5 million is due and payable to the seller on 1 February 2010. Whilst
the transaction was constructed essentially as a stock and asset
purchase, PSV believes that the intellectual property acquired will place
the new company at the forefront of the pump industry.
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Chief executive officer’s review continued
Operational review
Pumps, spares and valves
Within this segment, PSV Services and PSV Zambia concentrate on the
manufacturing of pumps and spares primarily for mining and water
service clients outside of South Africa. During the year our stock levels
increased as a result of having to supply stock to the Zambian operation
in order to fulfil contract requirements with clients.
APE Pumps has significantly outperformed all expectations, doubling
in size since being acquired by PSV and strong growth is expected
to continue into the future. Project wins continue for the operation
which has also been kept busy with the refurbishment and service
maintenance contracts for its ±25 000 APE pumps in circulation across
southern Africa.
Mather + Platt became part of the Group in January 2009 and the
year ahead will see the company embark on a marketing drive to
re-establish the Mather + Platt brand in the market place. Current
marketing efforts are being well received. Dasher, the valve and pump
manufacturer, and Umzantsi Africa Pumps & Valves, the valve marketing
business, have been incorporated into the Mather + Platt business in
order to maximise the extraction of synergies.
During the year some of the major achievements included:
• Two vertical turbine pumps were supplied to a Nigerian raw water
project for installation at a high volume water transfer application;
• The contract for swirl vane pumps has been signed and production
according to special specifications has begun under licence for
Shell Global Solutions International;
• The signing of PSV’s first mechanical contract for a water treatment
plant in Zambia was a major achievement for the Group;
• A total of four water pumps, to a value of R30 million, were
manufactured and transported to Iraq for use at a water supply
project about 100 km south-west of Baghdad. These pumps
were the largest ever manufactured and assembled within the
PSV Group;
• An upgrade and reorganisation of the pumps business took
place, moving the operations from Sebenza to Wadeville. This
move included a machinery upgrade and the installation of a
new centre lathe as well as a second computer numerically
controlled (“CNC”) lathe and a 3,5 ton dynamic balancing machine.
This equipment reduced the segment’s need to utilise the
services of sub-contractors and enhanced manufacturing
capability and profitability;
• We concluded a new valve supply contract with a major mining
group in South Africa. These valves are used in the plant as
well as underground in the mining operations.
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Chief executive officer’s review continued
Engineering linings and industrial supplies
Engineered Linings has performed exceptionally well over the period as
well as concluding the Group’s largest contract ever. In South Africa,
Government and provincial infrastructure spending is coming to the
fore, with the Company involved in a number of local government
projects relating to the lining of landfill sites.
Groupline Projects continues to do well with glass, ceramic and plastic
lining contracts being undertaken at mines and power stations. In
addition to these projects on-site work is carried out at Boksburg
factory lining heavy duty trucks with low friction liners.
Omnirapid Mining & Industrial Supplies has once again shown
exceptional growth largely due to new client wins and superb client
service and turnaround times. High growth in this company continues
to be attributed to the high demand for steel and steel products.
Major projects and achievements during the year include:
• Participating in projects in Africa including the lining of leach pads
for the Tarkwa Gold Mine in Ghana as well as for the Trekkopje
Uranium Mine in Namibia. The latter being one of the largest
projects ever undertaken by the PSV Group;
• Lining solutions at the Bellville, Empangeni, Rietfontein and
Visserhok landfill sites for ground water protection once refuse
is dumped into the fill;
• Awarded three separate linings maintenance contracts by Eskom
which range from three to five years in duration;
• Undertaken various linings projects with new developing coal
mines;
• Applied low friction liners to a number of heavy duty mining
tip trucks.
Specialised services
This segment saw the acquisition of Rand Air & Gas Installations (Pty)
Limited which has now been part of the Group for six months and has
exceeded expectations. Integration into the Group was unflawed and
has exposed the Group to a specialised niche business of cryogenics
with recent wins in supply contracts to the cryogenic aftermarket.
The dramatic increase in fuel prices had a positive impact on the
business of Petrologic for the first six months of the year, as the existing
unleaded petrol pumps were not designed to accommodate a petrol
price in excess of R10 a litre. This meant that Petrologic was involved
in the upgrade of suitable dispensers for a number of petroleum
companies in South Africa. In the remaining six months Petrologic
experienced a tough year with pressure on margins, coupled with
the devaluation of the rand against the euro. The pressure was felt
because of the importation of various components from Europe.
Petrologic managed to retain turnover levels but incurred a small loss
for the year.
The Company has embarked on a substantial restructuring programme
to optimise resources and profitability. All expenses across the Company
have been assessed. Corrective action in the form of rightsizing the
business has taken place with voluntary, early retirement packages
being offered to staff members, strict stock control measures
implemented and the call centre relocated to save on rental and
telephone costs. The culmination of these strategies should result in a
significant contribution to the Group for the February 2010 year.
Major projects undertaken in this segment during the year included:
• Upgrade of a substantial amount of petrol pumps for a major
petroleum company in South Africa to accommodate petrol price
per litre increases;
• The manufacture and supply of cryogenic tankers for dock-side in
Richards Bay for an international company involved in the use of
purging gases;
• The upgrade of various cryogenic storage units.
Prospects and future strategy
The Group expects to face challenging market conditions in the coming
period and has adopted a conservative outlook. Despite this, the PSV
Group of companies is solid and able to continue bidding on lucrative
projects. The confirmed forward order book for 2010 is in the region of
R150 million and includes projects such as:
• Lining projects for municipal landfill sites;
• Refurbishment and service contracts in Zambia;
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• A contract for the supply of valves for underground and surface
operations for a South African mining group;
• Water treatment contracts are being quoted on in Malawi and
Zambia; and
• A pilot project with Shell for the manufacture of a diffuser
under licence.
PSV is well positioned to benefit from ongoing Government infrastructure
spend and through new project growth outside of South Africa.
With new projects across the spectrum of the Group companies,
diversity within the Group and quotes for new equipment requirements
from clients, the Group is capable of filling all orders and contract
requirements. The enhanced manufacturing capacity is complete and
the new workshop capacity is close to completion, giving the Group
spare capacity to meet growing demands.
The future strategy that will be applied to the business is firstly to
continue to contain debtor’s days. The coming period will also be seen
as one of consolidation of the business units. Every endeavour will be
made to strengthen the cash flow and the Group will continue to bid on
new contracts to increase our project pipeline of work.
Appreciation
The Group could not have come through the year without loyal and
supportive staff, whom I wish to thank for their hard work. I also wish
to thank the management team and the Board for their guidance and
assistance during the year.
Abie da Silva
Chief Executive Officer
22 July 2009
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Corporate social investment
As a direct result of skills shortage across economic sectors and
commitment to socio-economic development, PSV group has
implemented a graduate programme. The total budgeted cost is
R278 199. The initiative is focusing on the advancement of talented
and dedicated designated groups. The process has been underpinned
by the commitment of the management team, with progress being
measured against stated quantitative targets. Our subsidiaries are
involved in the sponsorship of the following candidates:
• Victor Makwala studying Bing Mechanical Engineering, second
year through the University of Johannesburg has been adopted
by Rand Air & Gas Installations;
• Thabo Mohlahlo studying towards a National Diploma in Mechanical
Engineering has been adopted by Petrologic as well as;
• Derrick Sithole studying towards a Diploma in Mechanical
Engineering.
From our group of internal employees, we have a programme aimed
at apprentices in the fields of the turner, boilermaker and fitter trades.
A budgeted cost of R189 874 has been put aside for this initiative,
which is not only geared towards achieving our set out business
strategy, but also willingness to contribute to the growth of the South
African economy as a whole.
• Eugene Shaw has been nominated for a turner apprentice at
Dasher;
• Warren Adams has been nominated for a boilermaker apprentice
at APE;
• Goitsi Letshwiti and Emmanuel Qwabe have been nominated for
fitter apprentices at APE.
The Group has also embarked on a continuous skills improvement
programme, to enhance our employees’ career growth. As an
example, PSV has taken an employee, Lynn Neilson, who was
originally appointed as a receptionist to the position of HR assistant
in August 2008, after sending her on training for VIP payroll system
and A Kroll Biometric system.
Elizabeth Makoso was working for a construction company when the
premises of PSV’s new head office were being built. She was then
appointed as a cleaner and was later sent on a catering course. She is
now running the canteen at the head office.
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Corporate governance
Introduction
PSV is listed on the AltX Board of the JSE Limited (“JSE”). The board of
directors (“the Board”) is committed to and subscribes to the values of
good corporate governance contained in the Code of Corporate
Practices and Conduct recommended by the 2002 King Report on
Corporate Governance for South Africa (“King II”), as well as the Listings
Requirements of the JSE.
The Board endorses the principles of integrity and accountability
advocated by King II. The Group’s corporate governance structures and
practices are reviewed on an ongoing basis in response to changes
within and external to the Group. Based on this, the Board will also give
due consideration to the recommendations and principles as contained
in the draft King III report to ensure that the Group and the Board
aligns its practices and procedures to meet these standards once it
becomes effective.
This corporate governance statement sets out the key governance
principles and practices of PSV to fairly and honestly inform their
internal and external stakeholders through fair and understandable
disclosure.
Statement of compliance
The Listings Requirements of the JSE require that listed companies
report on the extent to which they comply with the principles
incorporated in King II as well as the requirements of the Corporate
Laws Amendment Act, 2006.
Based on the information set out in this corporate governance
statement, the Board has committed itself to apply the principles of
King II on an ongoing basis and has complied with the provisions set
out in the Listings Requirements of the JSE.
Endorsement of King II
PSV remains fully committed to the principles of effective corporate
governance and application of the highest ethical standards in the
conduct of its business. We endorse the principles of integrity and
accountability advocated by King II. In all dealings we strive to ensure
that the interests of stakeholders are foremost in our decisions and that
they are fully informed of the process.
We have long recognised that good corporate governance is essentially
about leadership and there exists the need to conduct the enterprise
with integrity and in compliance with best practices.
Deviations from the recommendations as contained in King II are
highlighted in this report where applicable.
Chairperson and Board of Directors
Chairperson
The chairperson, Evelyn Chimombe-Munyoro, is a non-executive
director. The Board delegates to the chairperson the responsibility for
ensuring the effectiveness of governance practices. The chairperson
leads the Board and is responsible for representing the Board to
shareholders.
As recommended by King II the role of the chairperson is separate from
that of the chief executive officer. The chairperson is not independent
as recommended by King II and represents a major shareholder of the
Company. The Board is however of the view that Ms Chimombe-
Munyoro is best suited to lead the Board at this point in time and the
decision will be reviewed on an annual basis.
Chief executive officer
Chief executive officer (“CEO”), Mr Abie da Silva, is responsible for
the day-to-day business of the Group, for the implementation of
policies and strategies adopted by the Board, and takes full
responsibility for all operations. Managing directors of the various
businesses assist him in this task. Board authority conferred on
management is delegated through the CEO, in accordance with
approved authority levels. Mr Abie da Silva is tasked with addressing
all matters with shareholders.
Board
PSV is headed by an effective unitary board that can lead and control
the Group. The Board comprises eight directors of whom three are
independent non-executive directors. The Board considers Messrs
James Anderson, Graduate Shongwe and Mitesh Patel as independent
non-executive directors. The independent directors ensure that no one
individual has unfettered powers of decision-making and authority, so
that all shareholders’ interests are protected. The non-executive
directors have no fixed term of office.
The guidelines contained in the Listings Requirements of the JSE were
used to test the independence of and category most applicable to each
director. Each director ensures that the chairman encourages proper
deliberation of all matters requiring the Board’s attention.
The primary responsibilities of the Board include the regular review of
the strategic direction of investment decisions and performance against
approved plans, budgets and best practice standards. The Board retains
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Corporate governance continued
full and effective control of the Group and decisions on material matters
are reserved for the Board.
The Board meets at least quarterly, and more frequently if circumstances
or decisions require.
Meetings are conducted in accordance with formal agendas, ensuring
that all substantive matters are properly addressed. Any director may
request that additional matters be added to the agenda and it is
reviewed regularly for effectiveness. Copies of Board papers are
circulated to the directors in advance of the meetings.
There is a clear division between the responsibilities of the Board and
management.
All directors have the requisite knowledge and experience required to
properly execute their duties, and all participate actively in the
proceedings at Board meetings. Non-executive directors contribute an
unfettered and independent view on matters considered by the Board
and enjoy significant influence in deliberations at meetings.
The following executive management (Exco) members, namely, Abilio
Jose Duarte da Silva, Anthony Robert Dreisenstock, Joanne da Silva,
Dave Kelly, Phillip Pretorius, Peter Robinson, Alan Sparrow, Allan
Sternsdorf and J du T Viljoen attend monthly meetings in order to
discuss and attend to the day-to-day management of the business of
the Group.
One-third of the directors are subject, by rotation, to retirement and
re-election at the annual general meeting in terms of the Company’s
articles of association.
The details for each of the directors are set out on page 13 of the
annual report.
Attendance by directors at Board meetings is provided below:
Director7 March
200816 May
200818 July
200831 October
2008
JH Anderson Yes Yes Yes Yes
CE Chimombe-Munyoro Yes Yes Yes Yes
AJD da Silva Yes Yes Yes Yes
AR Dreisenstock Yes Yes Yes Yes
DJ Kelly Yes Yes Yes Yes
P Robinson Yes Yes Yes No
M Patel¹ – – – –
GJ Shongwe Yes Yes Yes Yes
LDS Thobejane² Yes Yes No No
¹Appointed on 11 December 2008
²Removed on 24 November 2008
Changes to the Board
The Board removed Mr Senti Thobejane as non-executive director
in terms of the Group’s memorandum and articles of association
on 24 November 2008. Mr Mitesh Patel was appointed as
independent non-executive director to the Board, member of the Audit
Committee and chairman to the Risk Committee with effect from
11 December 2008. Mr GJ Shongwe officially resigned from the Board
for personal reasons on 17 July 2009.
Board committeesWhile the Board remains accountable and responsible for the
performance and affairs of the Company, it delegates to management
and Board committees certain functions to assist it in properly
discharging its duties. The chairman of each Board committee reports
at each scheduled meeting of the Board and minutes of board
committee meetings are provided to the Board. All the members of
each Board committee are independent, non-executive directors. Each
Board committee functions in accordance with the provisions of the
committee mandate as approved by the Board.
Both the directors and the members of the Board committees are
supplied with full and timely information that enable them to properly
discharge their responsibilities. All directors have unrestricted access
to all Group information.
The chairman of each Board committee is required to attend annual
general meetings to answer questions raised by shareholders.
The established Board committees are:
Audit Committee
During the financial year ended 28 February 2009, the Audit Committee
comprised two members, Messrs James Anderson (chairman) and
Vusi Shongwe, as well as a representative from the Company’s
appointed designated adviser. Mr Tony Dreisenstock attended the
meetings by invitation. Mr Mitesh Patel who has extensive financial
and auditing expertise replaced Mr Shongwe as committee member
in December 2008.
The Audit Committee met four times during the financial year. The
external auditors attend the meetings and also have unrestricted
access to the chairman of the Audit Committee.
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The attendance by members at the Audit Committee meetings is
provided below:
Director12 May
200813 May
200815 July
200822 October
2008
JH Anderson Yes Yes Yes Yes
GJ Shongwe Yes Yes Yes Yes
AR Dreisenstock Yes# Yes# Yes# Yes#
Vunani Corporate Finance* Yes* Yes* Yes* Yes*
#By invitation*Designated advisor
Refer to page 27 of the annual report for the report of the Audit
Committee as required in terms of the Corporate Laws Amendment
Act of 2006.
Risk CommitteeDuring the financial year ended 28 February 2009, the Risk Committee
comprised two members, Messrs Dave Kelly (chairman) and
Graham Hill. Mr Allan Sternsdorf was appointed as a member of the
committee during the financial year. Mr Abie da Silva attends the
meetings of the committee by invitation.
The Risk Committee met twice during the financial year.
The attendance by members at the Risk Committee meetings is
provided below:
Director9 May 2008
22 October 2008
LDS Thobejane Yes No
GH Hill Yes Yes
A Sternsdorf No Yes
AJD da Silva Yes# Yes#
# By invitation
The committee in particular assists the Board in discharging its duties
relating to:
• Corporate accountability and the associated risks in terms of
management, assurance and reporting;
• The safeguarding of assets;
• The operation of adequate systems and control processes;
• The identification and management of risks, safeguarding health
and safety and the environment and commercial risks; and
• Compliance with good corporate governance.
The composition of the committee changed during December 2008
with the departure of Mr Thobejane and the appointment of Mr Patel
as chairman.
Remuneration Committee
In terms of the JSE Listings Requirements it is not a requirement for
AltX companies to constitute a remuneration committee. Although this
is recommended by King II, the Board as a whole currently takes full
responsibility for all remuneration related issues in the Group.
Company secretary
The appointment and removal of the company secretary is approved by
the Board. The company secretary advises the Board on the appropriate
procedures for the management of meetings and the implementation
of governance procedures, and is further responsible for providing the
Board collectively, and each director individually, with guidance on the
discharge of their responsibilities in terms of the legislation and
regulatory requirements applicable to South Africa.
The board has unlimited access to the company secretary, who advises
the Board and its committees on issues including compliance with
Group policies and procedures, statutory regulations and King II.
Janine van Eden was appointed as company secretary with effect from
1 June 2008 and resigned on 30 April 2009. iThemba Governance &
Statutory Solutions (Pty) Limited has been appointed as interim
company secretary with effect from 4 May 2009.
Interest in contracts
During the year ended 28 February 2009 none of the directors had a
significant interest in any contract or arrangement entered into by the
Company or its subsidiaries, other than as disclosed in note 25 to the
annual financial statements.
Directors are required to inform the Board timeously of conflicts or
potential conflicts of interest they may have in relation to particular
items of business. Directors are obliged to excuse themselves from
discussions or decisions on matters in which they have a conflicting
interest.
Relations with shareholders
The Group maintains dialogue with its key financial audiences,
especially institutional shareholders and analysts. The investor relations
team manages the dialogue with these audiences and presentations
take place at the time of publishing interim and final results.
The Group adopts a proactive stance in timely dissemination of
appropriate information to stakeholders through print and electronic
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Corporate governance continued
news releases and the statutory publication of the Group’s financial
performance.
The Group’s website provides the latest and historical financial and
other information, including the financial reports.
The Board encourages shareholders to attend its annual general
meeting, notice of which is contained in this annual report, where
shareholders will have the opportunity to put questions to the Board,
including the chairmen of the board committees.
Directors’ share dealings
The Board has an approved trading policy in terms of which dealing in
the Group’s shares by directors and employees is prohibited during
closed periods.
Directors of the Company and its major subsidiaries may not deal in the
Company’s shares without first advising and obtaining clearance from
the CEO and the financial director. The CEO and financial director may
not deal in the Company’s shares without first advising and obtaining
clearance from the chairperson. No director or executive may trade in
PSV shares during closed periods as defined in the JSE Listings
Requirements. The directors of the Company keep the company
secretary advised of all their dealings in securities.
Fraud and illegal acts
The Group does not engage in or accept any illegal acts in the conduct
of its business. The directors’ policy is to actively pursue and prosecute
the perpetrators of fraudulent or other illegal activities, should they
become aware of any such acts.
Insider tradingNo employee may deal, directly or indirectly, in PSV shares on the basis
of unpublished price-sensitive information regarding the business or
affairs of the Group.
Code of conductThe Group is committed to the highest ethical standards of business
conduct and to complying fully with all applicable laws and
regulations.
The directors, employees, employees of outsourced functions as well
as suppliers to PSV, are all expected to comply with the principles and
act in terms of the code of conduct. The directors believe that the
ethical standards of the Group, as stipulated in the code of conduct, are
monitored and are being met. Where there is non-compliance with the
code of conduct, the appropriate discipline is enforced with consistency
as the Group responds to offences and prevents recurrences.
Human resources reportThe Human Resources Department has grown and currently has four
staff members. Some of the initiatives have been implemented.
However, the department still has outstanding projects to implement to
ensure that it is a business partner to all the subsidiaries within the
Group. The department’s aim is still to support the Group’s Mission and
Vision statements, and to focus on attracting talent, encouraging
human resources development, staff retention and maximising the
utilisation of talent, skills and knowledge.
Human resources strategy
The department’s strategy is to develop, establish and maintain an
integrated human resources function which will focus on:
• Compliance with Group HR policies
• Recruitment
• Remuneration and benefits
• Retention strategies
• Employee relations
• Training and development
• Employee assistance programmes
The graduate programme
The group has established a graduate programme. Our subsidiaries
have adopted three students:
• Victor Makwala studying BING second year through the University
of Johannesburg has been adopted by Rand Air & Gas
• Thabo Mohlahlo studying a National Diploma in Mechanical
Engineering has been adopted by Petrologic
• Derrick Sithole studying a Diploma in Mechanical Engineering has
been adopted by Petrologic
• The group is also looking at apprenticeship in the turner,
boilermaker and fitter trades for internal employees
Going concern
The annual financial statements contained in this annual report have
been prepared on the going concern basis. The directors report that,
after making enquiries, they have a reasonable expectation that the
Group has adequate resources to continue in operational existence for
the foreseeable future. For this reason, the Group continues to adopt
the going concern basis in preparing the annual financial statements.
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Audit committee report
The Corporate Laws Amendment Act, 24 of 2006 (“CLAA”) which came
into effect on 14 December 2007, requires the establishment of an
audit committee and furthermore prescribes the composition and
functions of such a committee. The Audit Committee of the Company is
fully compliant with the requirements of the CLAA. This committee
comprises Mr J Anderson (Chairman) and Mr M Patel both of whom are
independent non-executive directors.
As part of its function in assisting the board of directors in the discharge
of its duties relating to corporate accountability, the duties of the Audit
Committee include, inter alia, the following:
• Review the annual financial statements to ensure that they present
a true, balanced and understandable assessment of the financial
position and performance of the Company;
• Ensure effective internal control environment in the Company;
• Nominate the external auditor for appointment as the registered
independent auditor after satisfying itself through enquiry that the
external audit firm and the designated audit partner, are
independent as defined in terms of the CLAA;
• Determine the fees to be paid to the external auditor as well as its
terms of engagement;
• Ensure that the appointment of the external auditor comply with
the provisions of the CLAA and any other legislation relating to the
appointment of auditors;
• Evaluate the independence and effectiveness of the internal and
external auditors;
• Approve a non-audit service policy which determines the nature
and extent of any non-audit services which the external auditor
may provide to the Company; and
• Pre-approve any proposed contract with the external auditor for
the provision of non-audit services to the Company.
The committee has implemented an annual work plan to ensure that
all duties and responsibilities of the committee are dealt with during
an annual cycle. The committee confirms that all its duties and
responsibilities had been attended to during the 2009 financial year.
The Audit Committee has furthermore satisfied itself through enquiry
that the external audit firm, KPMG, is independent from the Company.
In terms of the JSE Listing Requirements, the Audit Committee has
considered and satisfied itself of the appropriateness of the expertise
and experience of the Financial Director.
The Audit Committee recommended the annual financial statements
for the year ended 28 February 2009 for approval to the Board. The
Board has subsequently approved the annual financial statements
which will be open for discussion at the forthcoming annual general
meeting.
Audit Committee Chairman
22 July 2009
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Annual financial statements
Contents
Report of the independent auditors 30
Directors’ responsibility and approval 31
Certification by company secretary 31
Directors’ report 32
Income statements 34
Balance sheets 35
Statements of changes in equity 36
Cash flow statements 38
Accounting policies 39
Notes to the annual financial statements 44
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We have audited the Group annual financial statements and the annual financial statements of PSV Holdings Limited, which comprise the balance sheets at 28 February 2009, and the income statements, the statements of changes in equity and cash flow statements for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, and the directors’ report as set out on pages 32 to 74.
Directors’ responsibility for the financial statementsThe Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
auDitors’ responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
opinionIn our opinion, these financial statements present fairly, in all material respects, the consolidated and separate financial position of PSV Holdings Limited at 28 February 2009, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa.
KpmG inc.Registered Auditor
per tG cheadleChartered Accountant (SA)Registered AuditorDirector
85 Empire RoadParktown, South Africa
22 July 2009
Financial statements report of the independent auditors
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The directors are responsible for the preparation and fair presentation of the annual financial statements, comprising the balance sheet as at 28 February 2009 and the income statement, the statement of changes in equity and the cash flow statement for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa.
The directors’ responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and the fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
The directors’ responsibility also includes maintaining adequate accounting records and an effective system of risk management.
The directors have made an assessment of the Group’s ability to continue as a going concern and have no reason to believe the business will not be a going concern in the year ahead.
The auditor is responsible for reporting on whether the annual financial statements are fairly presented in accordance with the applicable financial reporting framework.
aJD da silva ar DreisenstockChief Executive Officer Chief Financial Officer
Financial statements Directors’ responsibility and approval
Financial statements certification by company secretary
In terms of section 268(G) of the Companies Act, 61 of 1973, as amended (“the Act”), I certify that, to the best of my knowledge and belief, the Group has, in respect of the financial year reported upon, lodged with CIPRO all returns required of a public company in terms of the Act and that all such returns are true, correct and up to date.
m saaymanCompany Secretary
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The directors have pleasure in submitting their report together with the Company and Group annual financial statements for the financial year ended 28 February 2009.
nature of businessPSV is a specialised industrial engineering group focused on the provision of pumps, valves, engineering linings, industrial supplies and fuel pumps and dispensers and cryogenics to the mining, petrochemical, water and waste water management sectors in South Africa and Africa.
financial statementsThe Company and Group’s results and financial position are contained in the annual financial statements on pages 32 to 74 of the report.
The audited annual financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and their interpretation adopted by the International Accounting Standards Board (“IASB”), the Listings Requirements of the JSE Limited (“JSE”) and the Companies Act, 61 of 1973, as amended (“the Act”) and remain consistent with those applied to the preliminary results announced on 19 May 2009.
results of operationsThe Company and Group’s income statement and segmental analysis for the period set out the results of the operations.
DiViDenDsNo dividends were paid nor recommended to shareholders during the financial year ended 28 February 2009 (2008: nil).
property, plant anD eQuipmentDuring the year the Group invested R9 813 741 in new property, plant and equipment in order to expand its operations. Details of property, plant and equipment are contained in note 7 of the annual financial statements.
borroWinG poWersIn terms of the Company’s articles of association, its borrowing powers are unlimited. The borrowing powers of the Group’s wholly owned operating subsidiaries may in terms of its articles of association be limited by the Company.
litiGationThere are no legal or arbitration proceedings, including any such proceedings that are pending or threatened, of which PSV is aware that may have, or have had during the 12 months preceding the date of the annual report, a material effect on the financial position of the Group.
inDepenDent auDitorsThe independent auditors, KPMG Inc., were re-appointed during the year.
stateD capitalDetails of the authorised and issued stated capital of the Company and the movements during the period are contained in note 15 of the annual financial statements.
Directors anD secretaryThe names of the directors in office are set out on page 13 of the annual report.
The following changes to the Board occurred during the period under review:• MrLDSThobejanewasremovedasadirectoron24November2008;and• MrMMPatelwasappointedasanindependentnon-executivedirector;ChairmanoftheRiskCommitteeandmemberoftheAuditCommitteewitheffectfrom11December2008.
Financial statements Directors’ report
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In terms of the articles of association, Messrs D Kelly and JH Anderson retire at the forthcoming annual general meeting, and, being eligible, offer themselves for re-election.
During the period under review Premium Corporate Consulting (Pty) Limited resigned as company secretary and Miss J van Eden was appointed with effect from 1 June 2008. Miss J van Eden resigned as company secretary with effect 30 April 2009 and Ms M Saayman was appointed new company secretary with effect 13 July 2009. In the interim period the Company appointed iThemba Governance and Statutory Solutions (Pty) Limited.
The interests of directors in the issued share capital of the Company are provided on page 76 of the annual report.
In accordance with the requirements of the JSE Limited, a detailed report on directors’ remuneration appears in note 26.
siGnificant shareholDersDetails of significant shareholders are included on page 75 of this annual report.
subsiDiary companiesDetails of the Company’s subsidiary companies appear in note 11 to the annual financial statements.
special resolutions by subsiDiary companiesThe authority of the wholly owned subsidiaries to purchase their own and the Company’s shares, subject to the relevant provisions of the Act and the Listings Requirements of the JSE, was approved by shareholders on 29 August 2008 and registered by CIPRO on 29 August 2008.
No other special resolutions were passed by subsidiary companies during the period under review, or between the balance sheet date and the date of this report.
approVal of annual financial statementsThe annual financial statements of PSV Holdings Limited and its subsidiaries were approved by the board of directors on 22 July 2009 and are signed on its behalf by
aJD da silva ar DreisenstockChief Executive Officer Chief Financial Officer
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Financial statements income statements for the year ended 28 February 2009
Group Company
Notes2009
r2008
R2009
r2008
R
revenue 430 864 719 298 617 655 17 480 000 1 907 464
Cost of sales 332 944 380 224 994 165 – –
Gross profit 97 920 339 73 623 490 17 480 000 1 907 464
Operating income 6 185 384 17 780 497 948 087 –
Operating expenses (70 784 480) (50 171 267) (14 201 681) (10 041 355)
operating profit/(loss) 2 33 321 243 41 232 720 4 226 406 (8 133 891)
Financial income 3 7 919 507 3 330 036 5 548 453 2 771 279
Dividends received – – – 4 800 000
Finance expenses 4 (18 007 131) (7 757 178) (7 120 159) (3 182 660)
profit/(loss) before taxation 23 233 619 36 805 578 2 654 700 (3 745 272)
Taxation charge/(credit) 5 6 686 485 8 328 650 897 950 (1 190 308)
profit/(loss) for the year 16 547 134 28 476 928 1 756 750 (2 554 964)
Basic earnings per share (cents) 6 7,02 14,22
Headline earnings per share (cents) 6 6,97 7,95
Diluted earnings per share (cents) 6 6,69 14,03
Diluted headline earnings per share (cents) 6 6,64 7,85
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Financial statements balance sheets at 28 February 2009
Group Company
Notes2009
r2008
R2009
r2008
R
assetsnon-current assets 213 795 019 192 812 363 220 880 037 204 014 866Property, plant and equipment 7 54 413 180 50 280 774 2 912 675 3 730 228Intangible assets 8 34 569 320 23 380 524 – –Goodwill 9 117 153 067 111 817 208 – –Loans receivable 10 743 308 770 008 743 308 770 008Deferred taxation assets 17 6 916 144 6 563 849 1 442 011 2 362 721Investment in subsidiaries 11 215 782 043 197 151 909current assets 157 505 831 165 419 611 3 981 033 3 906 648Inventories 12 74 227 984 48 003 774 – –Trade and other receivables 13 76 469 063 77 593 737 3 981 033 1 409 887Loans receivable – short-term – 3 114 167 – 2 436 872Cash and cash equivalents 14 1 346 061 36 707 933 – 59 889Taxation receivable 5 462 723 – – –
total assets 371 300 850 358 231 974 224 861 070 207 921 514
eQuity anD liabilitiesshareholders’ equity 230 890 393 202 456 950 173 005 921 155 456 450Stated capital 15 260 605 126 252 475 078 260 605 126 252 475 078Share-based payment reserve 1 513 158 1 513 158 1 513 158 1 513 158Foreign currency translation (deficit)/reserve (3 105 800) 800 612 – –Deferred equity reserve 9 917 115 2 254 442 9 917 115 2 254 442Accumulated loss (38 039 206) (54 586 340) (99 029 478) (100 786 228)total liabilitiesnon-current liabilities 35 353 318 33 771 484 7 709 788 17 324 839Deferred purchase consideration 16 6 460 309 13 362 750 6 460 309 13 877 417Deferred taxation liabilities 17 8 829 049 6 546 547 – –Borrowings 18 20 063 960 13 862 187 1 249 479 3 447 422current liabilities 105 057 139 122 003 540 44 145 361 35 140 225Trade and other payables 19 88 430 735 103 913 351 14 535 908 26 208 270Taxation payable 3 724 643 7 253 461 – 22 760Bank overdraft 14 4 404 324 10 836 728 21 112 016 8 909 195Short-term loan 8 497 437 – 8 497 437 –
total equity and liabilities 371 300 850 358 231 974 224 861 070 207 921 514
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Stated capitalR
Share-based payment reserve
R
Foreign currency translation
(deficit)/reserveR
Deferred equity reserve
RAccumulated loss
RTotal
R
Groupbalance as at 28 february 2007 236 177 737 (439 993) (83 063 268) 152 674 476
Issue of shares to Vunani Capital 14 250 000 14 250 000
Issue of shares to Mapi Investments 3 000 000 3 000 000
Issue of shares to Dasher vendors 269 500 269 500
Share issue costs (1 159 814) (1 159 814)
Odd lot shares issued 18 854 18 854
Odd lot share issue costs (81 199) (81 199)
Discount to fair value of shares issued to Vunani and Mapi 1 513 158 1 513 158
Deferred equity reserve – Engineered Linings 2 254 442 2 254 442
Profit for the year 28 476 928 28 476 928
Foreign currency translation reserve 1 240 605 1 240 605
balance as at 29 february 2008 252 475 078 1 513 158 800 612 2 254 442 (54 586 340) 202 456 950
Issue of shares for cash 10 500 000 10 500 000
Share issue costs (31 210) (31 210)
Odd lot share buy back (194) (194)
Buy back of shares for share incentive scheme (2 338 548) (2 338 548)
Deferred equity reserve – Engineered Linings 7 662 673 7 662 673
Profit for the year 16 547 134 16 547 134
Foreign currency translation reserve (3 906 412) (3 906 412)
balance as at 28 february 2009 260 605 126 1 513 158 (3 105 800) 9 917 115 (38 039 206) 230 890 393
Financial statements statements of changes in equity for the year ended 28 February 2009
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Stated capitalR
Share-based payment reserve
R
Deferred equity reserve
RAccumulated loss
RTotal
R
companybalance as at 28 february 2007 236 177 737 (98 231 264) 137 946 473
Issue of shares to Vunani Capital 14 250 000 14 250 000
Issue of shares to Mapi vendors 3 000 000 3 000 000
Issue of shares to Dasher vendors 269 500 269 500
Share issue costs (1 159 814) (1 159 814)
Odd lot shares issued 18 854 18 854
Odd lot share issue costs (81 199) (81 199)
Discount to fair value of shares issued to Vunani and Mapi 1 513 158 1 513 158
Deferred equity reserve – Engineered Linings 2 254 442 2 254 442
Loss for the year (2 554 964) (2 554 964)
balance as at 29 february 2008 252 475 078 1 513 158 2 254 442 (100 786 228) 155 456 550
Issue of shares for cash 10 500 000 10 500 000
Share issue costs (31 210) (31 210)
Odd lot shares buy back (194) (194)
Buy back of shares for share incentive scheme (2 338 548) (2 338 548)
Profit for the year 1 756 753 1 756 753
Deferred equity reserve – Engineered Linings 7 662 673 7 662 673
balance as at 28 february 2009 260 605 126 1 513 158 9 917 115 (99 029 478) 173 005 921
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Group Company
Notes2009
r2008
R2009
r2008
R
cash GenerateD by/(utiliseD in) operations 23A 24 133 449 10 779 756 4 906 837 (7 421 395)
Financial income 7 919 507 3 330 036 5 548 453 2 771 279
Finance expenses (16 660 137) (5 669 919) (5 777 988) (1 095 401)
Dividends received – – – 4 800 000
Taxation (paid)/refunded 23B (17 954 386) (9 237 430) – 22 760
net cash (outflow)/inflow from operating activities (2 561 567) (797 557) 4 677 302 (922 757)
cash floWs from inVestinG actiVitiesAdditions to property, plant and equipment to expand operations (9 813 741) (19 998 132) (481 249) (4 019 683)
Proceeds from disposal of property, plant and equipment 1 332 341 573 100 314 073 –
Cash paid in share buy backs (2 338 548) – (2 338 548) –
Net cash paid investing in subsidiaries (44 434 557) (11 328 197) (34 799 684) (23 216 329)
net cash (outflow)/inflow from investing activities (55 254 505) (30 753 229) (37 305 408) (27 236 012)
cash floW from financinG actiVitiesIssue of shares for cash 10 500 000 17 268 854 10 500 000 17 268 854
Share issue expenses (31 404) (1 241 013) (31 404) (1 241 013)
Trade finance facility raised/(repaid) (9 880 353) 9 880 353 – –
External loans granted to finance PPE 20 431 102 6 940 134 7 315 794 3 447 422
Loans raised 3 029 118 2 372 778 2 581 007 222 559
net cash inflow from financing activities 24 048 481 35 221 106 20 365 397 19 697 822
movement in cash and cash equivalents (33 767 609) 3 670 320 (12 262 710) (8 460 947)
cash at acquisition of subsidiary 4 838 141 14 118 310
Cash and cash equivalents at beginning of year 25 871 205 8 082 575 (8 849 306) (388 359)
cash and cash equivalents at end of year 14 (3 058 263) 25 871 205 (21 112 016) (8 849 306)
Financial statements cash flow statements for the year ended 28 February 2009
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PSV Holdings Limited (“the Company”) is a company domiciled in South Africa. The consolidated financial statements at 28 February 2009 comprise the Company and its subsidiaries (together referred to as “the Group”). The principal accounting policies adopted in the preparation of the financial statements are set out below.
statement of complianceThe Company and Group’s annual financial statements have been prepared in accordance with and comply with International Financial Reporting Standards (“IFRS”) and its interpretations adopted by the International Accounting Standards Board (“IASB”) and the requirements of the Companies Act of South Africa.
basis of preparationThe Company and the Group’s annual financial statements are prepared on the historical cost basis, except for the measurement of certain non-current assets and certain financial instruments which are stated at fair value.
The accounting policies set out below have been applied consistently to all periods presented in these Company and Group financial statements.
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that may affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the result of which form the basis of making the judgements about carrying values of assets and liabilities and are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods. Judgements made by management in the application of IFRS that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are disclosed in the notes to the financial statements where appropriate.
functional anD presentation currencyThe financial statements are presented in rand, which is the Company’s functional currency, and all values are rounded to the nearest rand except when otherwise indicated.
basis of consoliDationsubsidiariesThe Group financial statements include the financial statements of the Company and its subsidiaries. Where an investment in a subsidiary was acquired and disposed of during the financial year its results are included from, or to, the date control commences or ceases.
Subsidiaries are those entities over whose financial and operating policies the Group has the power to exercise control, so as to obtain benefits from their activities. In assessing control, potential voting rights that are presently exercisable are taken into account.
New acquisitions are included in the Group financial statements using the purchase method whereby the assets and liabilities are measured at their fair value. The purchase consideration is allocated on the basis of the fair values on the dates of acquisition.
All intra-group transactions and balances arising are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
All companies in the Group maintain consistent accounting policies and have the same year-end.
foreiGn currenciesforeign currency transactionsForeign currency transactions are translated at the rates of exchange ruling at the dates of the transactions. Balances on monetary assets and liabilities outstanding on foreign transactions at the end of the financial year are translated to rand at the rates ruling at that date. Gains or losses on translation are recognised in the income statement.
Non-monetary assets and liabilities that are measured in terms of historical cost in foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities dominated in foreign currencies that are stated at fair value are translated to rand at the foreign exchange rates ruling at the dates the fair value was determined.
Financial statements accounting policies
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foreign subsidiariesThe assets and liabilities of foreign subsidiaries, including goodwill and fair value adjustments arising on acquisition, whose functional currencies are not rand, are translated into rand at rates of exchange ruling at the end of the financial year and the results of operations and cash flow items are translated at an appropriate weighted average rate of exchange for the year. Gains and losses on translation are taken directly to a foreign currency translation reserve in shareholders’ equity.
Where loans to the foreign subsidiaries are long-term in nature in that they form part of the Company’s net investment in the foreign subsidiary, the translation gains or losses arising on converting the loans to the rates of exchange ruling at the end of the financial year are taken directly to a foreign currency translation reserve in shareholders’ equity in the Group financial statements and to the income statement for the Company. On disposal of the net investment, the translation gains or losses are recognised in the income statement.
Exchange rates utilised to convert the income statement and balance sheet of the foreign subsidiary are as follows:
Weighted average rate for the year Closing rate
ZMK – ZR 481,55 573,00
reVenue recoGnitionRevenue is recognised only when it is probable that the economic benefits associated with a transaction will flow to the Group and the amount of revenue can be measured reliably. No revenue is recognised if there are significant uncertainties regarding the recovery of the consideration due or associated costs for the possible return of goods.
GoodsRevenue arising from the sale of goods is measured at the fair value of the consideration received, or receivable net of returns and allowances, trade discounts, volume rebates and value added taxes. Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, recovery of the consideration is probable, the associated costs and possible return of the goods can be estimated reliably, and there is no continuing management involvement with the goods.
financial incomeinterestInterest income is recognised in the income statement as it accrues using the effective interest rate method.
exchange gainsGains on foreign currency transactions are included in finance income.
financial eXpensesFinance expenses comprise interest payable on borrowings and the unwinding of discounts arising on deferred purchase considerations owing to vendors on investments acquired; calculated on the principal outstanding using the effective interest rate method. Losses on foreign currency transactions are also included in financial expenses.
taXationIncome tax expense comprises current and deferred tax. Income tax expense is recognised in profit and loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised directly in equity.
Current taxation comprises taxation payable calculated on the basis of the expected taxable income for the year, using the taxation rates enacted or substantively enacted at the balance sheet date, and any adjustments of taxation payable for previous years. Deferred taxation is provided using the balance sheet method on temporary differences. Temporary differences are differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax base.
Financial statements accounting policies
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Deferred taxation is not recognised for the following temporary differences:– the initial recognition of goodwill– the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit– differences relating to investments in subsidiaries to the extent that the timing of the reversal is controlled by the company and it is probable that they will not reverse in the foreseeable future
Deferred taxation is recognised in the income statement except to the extent that it relates to a transaction that is recorded directly in equity. The amount of deferred taxation provided is based on the expected manner of the realisation or settlement of the carrying amount of assets and liabilities using taxation rates enacted or substantively enacted at the balance sheet date. A deferred taxation asset is recognised to the extent that it is probable that future taxable profits will be available against which the associated unutilised taxation losses and deductible temporary differences can be utilised. Deferred taxation assets are reduced to the extent that it is no longer probable that the related taxation benefit will be realised.
property, plant anD eQuipmentProperty, plant and equipment are recorded at cost, less accumulated depreciation and impairment losses. All assets except for land are depreciated on the straight-line method over their expected useful lives to an estimated residual value. The estimated useful lives are currently:• Buildings 50years• Plantandmachinery 5to10years• Motorvehicles 5years• Furnitureandofficeequipment 6to10years• Computerequipment 3years• Patternsanddies 3to20years• Leaseholdimprovements Termoflease
Cost includes expenditure that is directly attributable to the acquisition of the asset. Cost also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. Residual values, methods of depreciation and useful lives are reassessed annually. Depreciation of an item of property, plant and equipment begins when it is available for the use and ceases at the earlier of the date it is classified as held for sale or the date it is derecognised.
Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amount and are taken to the income statement.
subsequent costsThe cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.
lease assetsfinance leasesLeases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Property, plant and equipment subject to finance lease agreements are capitalised initially at the lesser of their fair value and the present value of the minimum lease payments and the corresponding liability to the lessor is raised. Lease payments are allocated using the effective interest rate method to determine the lease finance cost, which is charged against operating profit, and the capital repayment, which reduces the liability to the lessor. These assets are treated on the same basis as the property, plant and equipment owned by the Group and are subject to impairment losses.
operating leasesOther leases that do not transfer substantially all the risks and rewards of ownership, are treated as operating leases with lease payments charged against operating profit. Payments made under operating leases are charged against income on a straight-line basis over the period of the lease.
intanGible assetsIntangible assets are stated at cost less accumulated amortisation and impairment losses. The current estimated useful lives are:
• Marketrelationships 20years• Customerrelationships 5years• Technologyrelationships 10years
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GooDWillAll business combinations are accounted for by applying the purchase method, any differences between the cost of the acquisition and the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
Where the excess is negative, it is recognised immediately in the income statement as a gain made on acquisition of business combinations.
Goodwill is tested annually for impairment losses. Gains and losses on disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash generating units for the purpose of impairment testing.
payment in aDVancePayments in advance are capitalised and are released to the income statement in the period they are legally due.
impairment of assetsThe carrying amount of the Group’s assets, other than inventories, receivables and deferred tax assets, which are separately assessed, are reviewed at each balance date to determine whether there is an indication of impairment and at any time when there is an indication of impairment. If there is any indication that an asset may be impaired, its recoverable amount is estimated. The recoverable amount is the higher of its fair value less cost to sell and its value in use. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit (“CGU”) exceeds its recoverable amount.
A previously recognised impairment loss, other than for goodwill, is reversed if the recoverable amount increases as a result of a change in the estimates used to determine the recoverable amount, but not to an amount higher than the carrying amount that would have been determined (net of depreciation and amortisation) had no impairment loss been recognised in previous years.
A cash generating unit (“CGU”) is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of goodwill allocated to the CGU and then to reduce the carrying amount to the other assets in the unit on a pro rata basis.
inVentoriesInventories are stated at the lower of cost or net realisable value. Cost is determined using weighted average cost. These estimates are regularly reviewed and updated to reflect in input cost of raw materials, direct labour, other direct costs and related normal production overheads. Slow-moving goods and obsolete inventories are written down to their estimated net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses.
traDe anD other receiVablesThe fair value of trade and other receivables is estimated as the present value of the future cash flows, discounted at the market interest rate at the reporting date.
cash anD cash eQuiValentsCash and cash equivalents are measured at fair value on initial recognition and amortised cost thereafter.
proVisionsProvisions are recognised when the Group has a present legal or constructive obligation as a result of past events, for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the obligation can be made. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
stateD capitalordinary sharesIncremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity.
repurchase of stated capitalWhen stated capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity.
Financial statements accounting policies
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employee benefitsshort-term employee benefitsThe cost of all short-term employee benefits is recognised during the period in which the employee renders the related service.
An accrual is made for the estimated liability for annual leave and performance bonuses as a result of services rendered by employees up to the balance sheet date.
Defined contribution plansCertain subsidiaries in the Group contribute to a defined contribution fund for employees. A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in the income statement when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
financial instrumentsnon-derivative financial instrumentsNon-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs, except as described below. Subsequent to initial recognition non-derivative financial instrument are measured as described below.
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
otherOther non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.
DiscontinueD operationsA discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative income statement is restated as if the operation had been discontinued from the start of the comparative period.
earninGs per shareThe Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.
seGment reportinGA segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of other segments. Segment information is presented in respect of the Group’s business and geographical segments. The Group’s primary format for segment reporting is based on business segments. The business segments are determined based on the Group’s management and internal reporting structure.
Inter-segment pricing is determined on an arm’s length basis.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly investments (other than investment property) and related revenue, loans and borrowings and related expenses, corporate assets (primarily the Company’s headquarters) and head office expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment.
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
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1. seGmental reportinG The Group is organised into four main business segments, pumps, spares and valves; linings and general industrial supplies; specialised services; and a shared service centre. The Group manufactures and
distributes in two main geographical areas, South Africa and Zambia.
Segment assets consist primarily of: – property, plant and equipment – payments in advance – inventories – receivables – cash
Deferred tax assets are excluded
Segment liabilities consist primarily of: – borrowings – payables
Deferred tax liabilities are excluded
2009
pumps,spares
and valvesr
linings andgeneral
industrialr
specialisedservices
r
sharedservices
rtotal
r
Revenue 102 209 258 191 172 523 137 060 438 422 500 430 864 719
Gross profit 36 511 660 38 712 763 22 273 416 422 500 97 920 339
Depreciation and amortisation 2 138 309 1 041 613 1 092 566 6 102 000 10 374 488
Other operating expenses 15 832 164 17 108 888 14 269 031 13 199 909 60 409 992
Operating profit 5 179 965 17 503 777 3 562 371 (3 012 494) 23 233 619
Capital expenditure 2 453 009 1 956 258 953 812 4 450 662 9 813 741
Gross assets 89 984 247 76 683 550 57 324 234 140 392 675 364 384 706
Gross liabilities 48 204 092 27 800 070 32 717 108 22 860 139 131 581 408
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1. seGmental reportinG continued
2008
Pumps,spares
and valvesR
Linings andgeneral
industrialR
Specialisedservices
R
Sharedservices
RTotal
R
Revenue 93 116 763 90 699 274 114 801 618 – 298 617 655
Gross profit 34 260 684 20 614 297 18 748 509 – 73 623 490
Depreciation and amortisation 1 634 348 666 346 746 384 4 933 004 7 980 082
Other operating expenses 12 693 151 9 715 420 12 101 553 7 681 062 42 191 186
Profit before tax 33 425 156 12 154 296 5 058 940 (13 832 814) 36 805 578
Capital expenditure 3 796 837 992 162 991 897 14 217 236 19 998 132
Gross assets 80 134 777 63 176 866 47 807 256 48 732 018 239 850 917
Gross liabilities 43 280 201 26 409 842 31 500 617 48 037 817 149 228 477
Group2009
r2008
R
2. operatinG profitThe following items have been charged/(credited) in arriving at operating profit:
Amortisation of intangible asset 4 889 300 4 258 303
Auditors’ remuneration 1 228 782 721 428
– current year – –
– prior year underprovision 1 228 782 721 428
Depreciation 5 485 188 3 721 779
Directors’ remuneration 5 893 640 4 728 994
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
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Group
2009r
2008R
2. operatinG profit continued
Fees paid for secretarial services 235 547 274 057
Gains made on acquisition of business combinations – (12 581 475)
Gain on rationalisation of Group structure – (256 540)
Inventory impairment 1 164 302 1 291 530
(Profit)/loss on sale of property, plant and equipment (107 538) 28 869
Operating lease charges in respect of buildings 2 293 355 1 701 329
Impairment of trade receivables 2 755 513 (189 093)
Retirement fund contributions 701 464 2 454 694
Salaries and wages 25 248 022 23 826 127
Share-based payment cost of transaction with Vunani and Mapi – 1 513 158
Group Company
2009r
2008R
2009r
2008R
3. financial incomeInterest received 3 949 902 1 246 855 5 548 453 2 771 279
Foreign exchange gains 3 969 605 2 083 181 – –
7 919 507 3 330 036 5 548 453 2 771 279
4. finance eXpensesForeign exchange losses 10 396 274 2 568 694 – –
Interest paid 7 610 857 5 188 484 7 120 159 3 182 660
Bank and loans 5 402 675 2 205 536 5 777 988 905 503
Deferred purchase considerations 1 346 994 2 087 259 1 342 171 2 087 259
Finance leases 861 188 895 689 – 189 898
18 007 131 7 757 178 7 120 159 3 182 660
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Group Company
2009r
2008R
2009r
2008R
5. taXationSouth African normal taxation
Current tax expense/(credit) 8 389 036 10 064 582 (22 760) –
– current year 8 339 698 10 322 083 – –
– prior year under/(over)provision 49 338 (257 501) (22 760) –
Deferred tax (credit)/expense (1 708 092) (1 765 097) 920 710 (1 190 308)
– current year (1 666 606) (1 798 176) 1 121 169 (1 233 769)
– reduction in tax rate – 10 248 – 40 320
– prior year (over)/underprovision (41 486) 22 831 (200 459) 3 141
Total normal taxation 6 680 944 8 299 485 897 950 (1 190 308)
Foreign taxes 5 541 29 165 – –
Total taxation charge 6 686 485 8 328 650 897 950 (1 190 308)
The effective rate of taxation differs from the standard rate of taxation as follows:
% % % %
Standard rate of taxation 28,00 29,00 28,00 29,00
Deferred taxation prior year (over)/underprovision (0,18) 0,06 (7,55) (0,09)
Disallowed expenditure 0,79 2,73 14,23 5,12
Normal taxation prior year under/(over)provision 0,21 (0,64) (0,86) –
Capital gains tax (0,06) – – –
Foreign taxes (0,02) 1,22 – –
Exempt income – (9,74) – –
Tax rate change – (0,01) – (2,25)
Effective rate of taxation 28,78 22,62 33,82 31,78
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
48
Group2009
r2008
R
6. earninGs per shareProfit attributable to ordinary shareholders 16 547 134 28 476 928
Weighted average number of ordinary shares in issue (000’s) 235 784 272 200 269 462
basic earnings per share (cents) 7,02 14,22
Basic earnings per share is calculated by dividing the net profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year.
Reconciliation of weighted average shares
Shares in issue 236 020 439 216 576 004
Effect of weighting of shares issued during the year – (16 306 542)
Weighting of treasury shares acquired during the year (236 167) –
235 784 272 200 269 462
reconciliation of headline earnings
Profit attributable to ordinary shareholders 16 547 134 28 476 928
(Profit)/loss on disposal of property, plant and equipment (107 538) 28 869
Gain made on acquisition of business combinations – (12 581 475)
Headline earnings 16 439 596 15 924 322
headline earnings per share (cents) 6,97 7,95
Headline earnings per share is calculated by dividing the headline earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year.
Dilutive effect
The calculation of diluted earnings per share and diluted headline earnings per share are based on:
Weighted average number of shares in issue for basic and headline earnings per share (000’s) 235 784 272 200 269 426
Potentially dilutive ordinary shares resulting from the weighted average number of options outstanding (000’s) 11 667 194 2 652 285
Weighted average number of shares for diluted earnings per share (000’s) 247 451 466 202 921 711
Diluted earnings per share (cents) 6,69 14,22
Diluted earnings per share is calculated by dividing the profit attributable to ordinary shareholders by the diluted weighted average number of ordinary shares in issue during the year.
Diluted headline earnings per share (cents) 6,64 7,85
Diluted headline earnings per share is calculated by dividing the headline earnings attributable to ordinary shareholders by the diluted weighted average number of ordinary shares in issue during the year.
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costr
accumulated depreciation
rcarrying amount
r
7. property, plant anD eQuipment2009
Group – owned
Computer equipment and software 1 944 419 1 365 286 579 133
Furniture and fittings 3 246 309 974 657 2 271 652
Land and buildings 29 366 824 426 261 28 940 563
Leasehold improvements 591 616 318 948 272 668
Motor vehicles 6 261 564 3 049 536 3 212 028
Office equipment 677 343 322 403 354 940
Patterns and dies 12 214 577 1 623 113 10 591 464
Plant and machinery 12 469 099 6 289 158 6 179 941
66 771 751 14 369 362 52 402 389
Group – leased
Motor vehicles 3 820 462 1 809 671 2 010 791
total 70 592 213 16 179 033 54 413 180
company – owned
Computer equipment and software 372 985 188 945 184 040
Furniture and fittings 1 239 310 296 086 943 224
Motor vehicles 112 160 22 000 90 160
Office equipment 63 510 9 865 53 645
Plant and machinery 2 354 474 712 868 1 641 606
total 4 142 439 1 229 764 2 912 675
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
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CostR
Accumulated depreciation
RCarrying amount
R
7. property, plant anD eQuipment continued
2008
Group – owned
Computer equipment and software 1 481 834 966 158 515 676
Furniture and fittings 2 469 012 562 688 1 906 324
Land and buildings 25 890 152 113 172 25 776 980
Leasehold improvements 680 541 222 937 457 604
Motor vehicles 5 774 425 2 904 010 2 870 415
Office equipment 243 569 107 987 135 582
Patterns and dies 12 164 506 1 082 195 11 082 311
Plant and machinery 9 160 091 3 628 197 5 531 894
57 864 130 9 587 344 48 276 786
Group – leased
Motor vehicles 3 372 253 1 368 265 2 003 988
total 61 236 383 10 955 609 50 280 774
company – owned
Computer equipment and software 251 512 75 698 175 814
Furniture and fittings 951 974 110 584 841 390
Leasehold improvements 100 386 24 999 75 387
Motor vehicles 112 975 50 112 925
Office equipment 34 832 1 149 33 683
Patterns and dies 468 766 90 237 378 529
Plant and machinery 2 354 474 241 974 2 112 500
total 4 274 919 544 691 3 730 228
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51
opening carrying value
radditions
rDisposals
r
acquisition of subsidiary and business combinations
rDepreciation
rtotal
r
7. property, plant anD eQuipment continued
reconciliation of the carrying amount
2009
Group – owned
Computer equipment 515 676 474 748 (31 822) 24 294 (403 763) 579 133
Furniture and fittings 1 906 324 816 193 – 46 167 (497 032) 2 271 652
Land and buildings 25 776 980 3 649 893 (191 500) – (294 810) 28 940 563
Leasehold improvements 457 604 11 461 (72 598) – (123 799) 272 668
Motor vehicles 2 870 415 1 171 428 (220 846) 244 495 (853 464) 3 212 028
Office equipment 135 582 250 068 (19 597) 65 577 (76 690) 354 940
Patterns and dies 11 082 311 518 838 (314 073) – (695 612) 10 591 464
Plant and equipment 5 531 894 1 778 596 (38 603) 648 123 (1 740 069) 6 179 941
48 276 786 8 671 225 (889 039) 1 028 656 (4 685 239) 52 402 389
Group – leased
Motor vehicles 2 003 988 1 142 516 (335 764) – (799 949) 2 010 791
total 50 280 774 9 813 741 (1 224 803) 1 028 656 (5 485 188) 54 413 180
company – owned
Computer equipment 175 814 160 100 (22 879) – (128 995) 184 040
Furniture and fittings 841 390 287 337 – – (185 503) 943 224
Leasehold improvements 75 387 – (72 598) – (2 789) –
Motor vehicles 112 925 5 135 (5 702) – (22 198) 90 160
Office equipment 33 683 28 677 – – (8 715) 53 645
Patterns and dies 378 529 – (314 074) – (64 455) –
Plant and equipment 2 112 500 – – – (470 894) 1 641 606
total 3 730 228 481 249 (415 253) – (883 549) 2 912 675
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
52
Opening carrying value
RAdditions
RDisposals
R
Acquisition of subsidiary and business combinations
RDepreciation
RTotal
R
7. property, plant anD eQuipment continued
reconciliation of the carrying amount
2008
Group – owned
Computer equipment 286 306 448 556 (1 448) 30 523 (248 261) 515 676
Furniture and fittings 399 342 1 755 464 (26 650) 9 220 (231 052) 1 906 324
Land and buildings 191 500 9 722 737 – 15 975 915 (113 172) 25 776 980
Leasehold improvements 331 445 258 639 – – (132 480) 457 604
Motor vehicles 1 347 344 1 337 249 (394 373) 1 221 208 (641 013) 2 870 415
Office equipment 121 781 45 407 (42 026) 55 405 (44 985) 135 582
Patterns and dies 320 692 2 148 511 – 9 256 130 (643 022) 11 082 311
Plant and equipment 1 686 187 3 652 033 – 1 147 763 (954 089) 5 531 894
4 684 597 19 368 596 (464 497) 27 696 164 (3 008 074) 48 276 786
Group – leased
Motor vehicles 2 225 629 629 536 (137 472) – (713 705) 2 003 988
total 6 910 226 19 998 132 (601 969) 27 696 164 (3 721 779) 50 280 774
company – owned
Computer equipment 47 606 198 129 – – (69 920) 175 815
Furniture and fittings 90 302 853 503 – – (102 415) 841 390
Leasehold improvements 92 118 – – – (16 731) 75 387
Motor vehicles – 112 975 – – (50) 112 925
Office equipment 2 787 31 836 – – (941) 33 682
Patterns and dies – 468 766 – – (90 237) 378 529
Plant and equipment – 2 354 474 – – (241 974) 2 112 500
total 232 813 4 019 683 – – (522 268) 3 730 228
Certain property, plant and equipment has been encumbered as stated in note 18.
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Group2009 2008
costr
accumulateddepreciation
r
carryingvalue
rCost
R
Accumulateddepreciation
R
Carryingvalue
R
8. intanGible assetsMarket relationships 17 337 251 (1 846 396) 15 490 855 14 871 777 (982 433) 13 889 344
Customer relationships 16 794 769 (8 790 822) 8 003 947 12 483 485 (5 651 105) 6 832 380
Technology relationships 12 624 838 (1 550 320) 11 074 518 3 323 500 (664 700) 2 658 800
46 756 858 (12 187 538) 34 569 320 30 678 762 (7 298 238) 23 380 524
carrying value reconciliation
Period startR
AmortisationR
AdditionsR
Period endR
Market relationships 13 889 344 (863 963) 2 465 474 15 490 855
Customer relationships 6 832 380 (3 139 717) 4 311 284 8 003 947
Technology relationships 2 658 800 (885 620) 9 301 338 11 074 518
23 380 524 (4 889 300) 16 078 096 34 569 320
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
54
Group Company
2009r
2008R
2009r
2008R
9. GooDWillOpening balance 111 817 208 96 991 453 – –
Subsidiaries acquired (refer to note 24) 2 198 948 16 518 834 – –
Goodwill impairment – Groupline – (1 949 619) – –
Revision of goodwill – Omnirapid/Engineered Linings/AP Pumps/Dasher 3 136 911 – – –
Dissolution of Silvarob – 256 540 – –
Closing balance 117 153 067 111 817 208 – –
For the purpose of impairment testing, goodwill is allocated to the Group’s individual operating subsidiaries, other than PSV Services (Pty) Limited, PSV Thuthuka (Pty) Limited, PSV Zambia (Pty) Limited and Omnirapid Mining and Industrial Supplies (Pty) Limited (“PSV CGU”), which are assessed in aggregate. These represent the lowest level within the Group at which goodwill is monitored for internal management purposes.
The aggregate carrying amounts of goodwill allocated to each of the units is as follows:
2009r
2008R
PSV Services (including PSV Thuthuka, PSV Zambia and Omnirapid Mining and Industrial Supplies) 88 822 061 88 332 472
Groupline Projects (Pty) Limited 3 039 117 3 039 117
Petrologic (Pty) Limited 3 986 785 3 986 785
Engineered Linings (Pty) Limited 19 106 156 16 458 834
Rand Air & Gas Installations (Pty) Limited 788 817 –
Mather + Platt (Pty) Limited 1 410 131 –
117 153 067 111 817 208
The recoverable amount of the PSV CGU was based on its value in use and was determined with the assistance of independent valuers. The carrying amount of this unit was determined to be less than its recoverable amount and hence no impairment loss was recognised.
The recoverable amounts for the Groupline, Petrologic, Engineered Linings, Rand Air & Gas and Mather + Platt cash generating units were based on their values in use and were determined by internally generated valuations. These internal valuations indicated that the recoverable amounts were in excess of the carrying amounts.
The value in use for the cash generating units was determined by discounting the future cash flows from the continuing use of the unit and was based upon the following key assumptions:• Cashflowswerebasedonactualoperatingresultsandafive-yearforecastbusinessplan;• Aterminalgrowthrateof4,5%wasusedthereafter,whichdoesnotexceedthelong-termaveragegrowthoftheindustry;• Revenueandoperatingcostswereprojectedtogrowbyapproximately8to9%fortheyears2010to2014;and• Apre-taxdiscountrateofbetween21,74%and23,05%wasusedindeterminingtherecoverableamountsoftheunits.
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Group Company
2009r
2008R
2009r
2008R
10. loans receiVableColvic Petroleum Products (Pty) Limited 735 808 1 248 556 735 808 1 248 556
Other 7 500 – 7 500 –
CDR Industrial Properties (Pty) Limited – 62 318 – –
APE Properties (Pty) Limited – 88 000 – –
C Gillespie – 1 958 323 – 1 958 323
Bassap Investments (Pty) Limited – 526 978 – –
743 308 3 884 175 743 308 3 206 880
Current portion – (3 114 167) – (2 436 872)
743 308 770 008 743 308 770 008
The loan to Colvic is secured and interest bearing and has fixed repayment terms.
Issued share capital
R
Percentage holding Cost of shares Loans to/(from)
2009%
2008%
2009r
2008R
2009r
2008R
11. inVestment in subsiDiariesHeld by PSV Holdings Limited
Operating companies
PSV Services (Pty) Limited 200 100 100 99 248 781 99 248 781 10 955 240 5 043 000
PSV Thuthuka (Pty) Limited 200 100 100 2 106 099 2 106 099 4 716 384 3 074 124
PSV Zambia (Pty) Limited 18 943 100 100 3 094 671 3 094 671 1 187 001 1 020 512
Omnirapid Mining and Industrial Supplies (Pty) Limited 100 100 100 3 096 589 2 607 000 1 563 594 (256 616)
Groupline Projects (Pty) Limited 90 100 100 13 166 301 13 166 301 (3 221 411) (4 469 769)
Petrologic (Pty) Limited 64 500 100 100 18 906 937 18 906 937 5 869 574 4 284 346
Umzantsi Africa Pumps and Valves (Pty) Limited 120 100 100 100 100 254 187 1 869 582
Engineered Linings (Pty) Limited 100 100 100 41 491 525 39 146 282 (471 894) (1 001 192)
APE Pumps (Pty) Limited 100 100 100 426 989 348 303 2 414 638 2 036 423
Dasher (Pty) Limited 1 333 100 100 684 060 624 060 856 197 1 382 138
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
56
Percentage holding Cost of shares Loans to/(from)
Issued share capital
2009%
2008%
2009r
2008R
2009r
2008R
11. inVestment in subsiDiaries continued
balance brought forward 182 222 030 179 248 534 24 123 510 12 982 548
PSV Properties (Pty) Limited 100 100 100 100 100 287 258 4 442 114
PSV Properties 2 (Pty) Limited 100 100 100 100 100 (2 757 953) 262 624
PSV Marketing (Pty) Limited 100 100 100 100 100 (375) 215 789
Rand Air & Gas Installations (Pty) Limited 3 876 100 – 15 726 395 – (3 859 280) –
Mather + Platt (Pty) Limited 100 100 – 40 136 – – –
197 988 883 179 248 834 17 793 160 17 903 075
Total owing by subsidiaries 28 103 698 23 630 652
Total owing to subsidiaries (10 310 538) (5 727 577)
17 793 160 17 903 075
Group Company
2009r
2008R
2009r
2008R
12. inVentoriesFinished goods and merchandise 74 227 984 48 003 774 – –
74 227 984 48 003 774 – –
The amount of write-down of inventories recognised as an expense is R1 164 302 (2008: R1 291 530). This expense is included in the cost of sales line item on the face of the income statement.
13. traDe anD other receiVablesTrade receivables 74 141 363 77 403 299 3 948 890 1 409 887
Prepayments and deposits 1 541 730 152 736 32 143 –
Other 785 970 37 702 – –
76 469 063 77 593 737 3 981 033 1 409 887
Trade receivables are non-interest bearing and are generally on 30 day terms. Trade receivables were impaired by R2 325 625 (2008: R4 958 439) during the year.
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Group Company
2009r
2008R
2009r
2008R
14. cash anD cash eQuiValentsCash and bank balances 1 346 061 36 707 933 – 59 889
Bank overdraft (4 404 324) (10 836 728) (21 112 016) (8 909 195)
Cash and cash equivalents in the cash flow statement (3 058 263) 25 871 205 (21 112 016) (8 849 306)
15. share capitalauthorised1 000 000 000 ordinary shares of no par value
issued236 020 439 (2008: 221 332 058) ordinary shares of no par value 260 605 126 252 475 078 260 605 126 252 475 078
number Number number Number
Number of shares issued to external parties:
Total shares in issue 236 020 439 221 332 058 236 020 439 221 332 058
Treasury shares held by company/subsidiary (2 338 548) (4 756 054) (2 338 548) (4 756 054)
Net shares held by external parties 233 681 891 216 576 004 233 681 891 216 576 004
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
58
GrouplineProjects
R
PSVZambia
R
OmnirapidMining
R
EngineeredLinings
R
Rand Air& Gas
R
Mather + Platt
RTotal
R
16. purchase consiDeration payableGroupPurchase price 14 601 234 3 094 671 2 607 000 38 530 070 – – 58 832 975
Cumulative unwinding of interest to 28 February 2008 964 624 223 000 193 000 1 828 472 – – 3 209 096
Revision to value of investment in Groupline (1 949 619) – – – – – (1 949 619)
settlementsCash (10 887 724) (2 817 671) (2 100 000) (1 053 285) – – (16 858 680)
Shares issued (1 600 000) – – (2 254 442) – – (3 854 442)
balance owing at 29 february 2008 1 128 515 500 000 700 000 37 050 815 – – 39 379 330
long-term portion 1 128 515 – – 12 234 235 – – 13 362 750current portion – 500 000 700 000 24 816 580 – – 26 016 580Acquisitions during the year – – – – 15 710 848 9 934 783 25 645 631
Revision to deferred purchase consideration – Engineered Linings
– Reallocation to deferred equity reserve – – – (7 662 673) – – (7 662 673)
– Revision to cash consideration payable – – – 2 002 672 – – 2 002 672
Adjustment due to achievement of super-profit target – Omnirapid – – 489 589 – – – 489 589
Revision to deferred purchase consideration – Groupline 514 667 – – – – – 514 667
Unwinding of interest – 2009 (4 364) – – 535 891 810 643 4 824 1 346 994
settlementsCash – (500 000) (1 189 589) (27 457 614) (5 400 000) (9 500 000) (44 047 203)
balance owing at 28 february 2009 1 638 818 – – 4 469 091 11 121 491 439 607 17 669 007long-term portion 1 638 818 – – – 4 821 491 – 6 460 309current portion included in trade and other payables – – – 4 469 091 6 300 000 439 607 11 208 698
Rand Air & Gas Installations (Pty) Limited was acquired by PSV Holdings effective 1 September 2008. The purchase price is based on achievement of profit warranties and is payable over 28 months from balance sheet date. The vendor provided PSV with warranties normal in transactions of this nature.
Mather + Platt (Pty) Limited was acquired by Dasher (Pty) Limited effective 1 February 2009. The final instalment of the purchase price is due in February 2010.
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Group Company
2009r
2008R
2009r
2008R
17. DeferreD taXationThe movement on the deferred taxation account is as follows:
Balance at beginning of year 17 302 253 010 2 362 721 1 172 413
Income statement charge 1 708 092 1 765 097 (920 710) 1 190 308
– current year 1 666 606 1 798 176 (1 121 169) 1 233 769
– decrease in tax rate – (10 248) – (40 320)
– prior year over/(under)provision 41 486 (22 831) 200 459 (3 141)
Balance sheet credit (3 638 299) (2 000 805) – –
– acquisition of subsidiary – 135 179 – –
– understatement of Engineered Linings at acquisition deferred tax (207 887) – – –
– deferred tax arising on intangibles (3 430 412) (2 135 984) – –
Balance at end of year (1 912 905) 17 302 1 442 011 2 362 721
Balance at end of year is made up of:
Deferred taxation assets 6 916 144 6 563 849 1 442 011 2 362 721
Deferred taxation liabilities (8 829 049) (6 546 547) – –
(1 912 905) 17 302 1 442 011 2 362 721
Comprising:
Capital allowances (1 684 819) (717 061) (195 949) (192 003)
Provisions 2 743 027 1 237 594 162 350 75 301
Intangibles (8 616 884) (6 546 547) – –
Advance receipts 84 203 91 741 – –
Prepayments (268 538) (42 766) (9 000) (4 342)
Estimated taxation losses 5 830 106 5 994 341 1 484 610 2 483 765
(1 912 905) 17 302 1 442 011 2 362 721
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
60
Group Company
2009r
2008R
2009r
2008R
18. borroWinGslocal
Secured
Instalment sale and finance lease agreements for motor vehicles and equipment payable over periods from two to five years at interest rates between 9,25% and 10,5% 6 156 454 9 297 308 3 282 079 3 447 422
Mortgage bond – Secured by first covering bond over Unit 419, Greenhills Industrial Estate, Sam Green Road, Tunney Ext 6. The bond is repayable in 120 equal instalments. Current monthly instalments on the bond amounts to R84 737 and bears interest linked to prime less 1,5%. 5 071 426 5 380 382 – –
Mortgage bond – Secured by first covering bond over 26 Nagington Road, Wadeville. The bond is repayable in 120 equal instalments. Current monthly instalments on the bond amounts to R134 703 and bears interest linked to prime less 1%. 8 650 989 – – –
Mortgage bond – Secured by first covering bond over 10 Hamburg Avenue, Aeroport, Gauteng and 8 Station Road, Montague Gardens, Cape Town. The bond is repayable in 120 equal instalments. Current monthly instalments for these two bonds amount to R40 847 and bears interest linked to prime less 0,5%. 2 477 618 2 866 173 – –
Standard Bank medium-term loan – Arising from Dasher acquisition of Mather + Platt, bearing interest at the prime interest rate repayable in 24 monthly instalments commencing on 1 March 2009 9 049 932 – – –
Standard Bank term loan – APE – 1 999 900 – –
Total borrowings 31 406 419 19 543 763 2 265 779 3 447 422
Less: Current portion included in trade and other payables (11 342 459) (5 681 576) (1 016 300)
20 063 960 13 862 187 1 249 479 3 447 422
19. traDe anD other payablesTrade payables 65 879 578 62 334 842 2 750 517 191 690
Trade finance liability – 9 880 353 – –
Current portion of purchase considerations 11 208 698 26 016 580 10 769 091 26 016 580
Current portion of borrowings 11 342 459 5 681 576 1 016 300 –
88 430 735 103 913 351 14 535 908 26 208 270
For terms and conditions relating to related party payables, refer to note 25. Trade payables are non-interest bearing and are normally settled on 30 day terms. Accruals are non-interest bearing and, other than employee benefit accruals, have an average term of 30 days.
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Foreign currency 000’s Currency Rand equivalent
20. financial instrumentsThe following foreign currency balances have been consolidated in the Group financial statements at 28 February 2009:
assets
Property, plant and equipment 243 626 ZMK 425 177
Trade and other receivables 6 944 646 ZMK 12 119 801
Inventories 16 836 689 ZMK 29 383 402
Cash and cash equivalents 766 943 ZMK 1 338 470
liabilities
Trade and other payables 9 184 876 ZMK 16 029 452
Taxation (242 057) ZMK (422 438)
income statement
Revenue 14 407 826 ZMK 29 919 688
Cost of sales 11 422 784 ZMK 23 720 869
Operating expenses 2 557 239 ZMK 5 310 434
Sundry income 661 412 ZMK 1 373 507
The exchange rates used for the conversions are as follows:
Closing rate 573,00
Average rate 481,55
20.1 overview The Group has exposure to the following risks from its use of financial instruments: • creditrisk • liquidityrisk • marketrisk • currencyrisk • interestraterisk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these financial statements.
The board of directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
The board of directors is also responsible for analysing the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
62
20. financial instruments continued20.2 credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from
customers.
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit risk. Approximately R73,1 million of the Group’s revenue is attributable to sales transactions with two customers from whom more than 17% of total revenue is derived.
The Group has established a credit process under which each new customer is evaluated individually for creditworthiness before the Group’s standard payment terms and conditions are offered. The Group’s review includes external ratings, where available, and in some cases bank references. Exposure limits are established for each customer, in accordance with the approval framework. All new clients are required to complete a credit application.
More than 50% of the Group’s customers have been transacting with the Group for over five years, and losses have occurred infrequently. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including geographic location, industry, ageing profile, maturity and existence of previous financial difficulties.
The Group does not require collateral in respect of trade and other receivables, as it mainly renders services to major companies in the industries in which they operate and the exposure to credit risk is monitored on an ongoing basis. The Group is in the process of assessing the feasibility of credit guarantee insurance.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The key components of this allowance is a specific loss component that relates to individually significant exposures in respect of losses that have been incurred but not yet identified.
At balance sheet date there was an allowance for impairment based on the above process.
Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
2009r
2008R
Trade and other receivables 76 469 063 77 593 737
The maximum exposure to credit risk reflected by extent of trading activities for the year by significant customer, was:
Mopani Copper Mines – Zambia 18 827 876 50 203 827
Engen 54 220 028 45 329 902
Geographical concentration of revenue generating activities
Southern Africa region 359 808 387 242 835 625
Africa region (including Zambia) 71 056 332 55 782 030
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2009 2008
Grossr
impairmentr
GrossR
ImpairmentR
20. financial instruments continued
20.2 credit risk continued
impairment losses
The ageing of trade and other receivables at reporting date was:
Not past due 57 223 864 – 62 411 719 –
Past due 26 959 151 7 713 952 20 140 457 4 958 439
84 183 015 7 713 952 82 552 176 4 958 439
The Company defines “past due” as invoices which are more than 60 days past due.
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
2009r
2008R
Balance at beginning of year 4 958 439 453 544
Impairment loss processed through profit and loss 2 755 513 (189 093)
Impairment loss arising on acquisition of business combination – 4 693 988
7 713 952 4 958 439
20.3 liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due under normal conditions.
The Group manages its working capital requirements stringently and ensures that it has sufficient cash on demand to meet expected operational expenses for the short term, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted such as natural disasters. In addition, the Group maintains the following lines of credit:
• R20,6millionoverdraft facility,R9millionmedium-termloanandR5million letterofcredit facilitywithStandardBank–securedbyunrestrictedcessionofbookdebtsbyallgroupcompaniesandcrossguarantees and suretyships from group companies.
• R1,93millionoverdraftfacilitywithABSABank–securedbycrosssuretyshipsandguaranteesfromgroupcompaniesandcessionofloanaccounts. • R8,5millionloanfacilityfromLeafEnhancedAlternativePartners(Pty)Limited,repayableon31August2009–securedbysecondarycessionofbookdebtsandpowerofattorneytoregisterasecondmortgage
bond over property.
Interest on the above are variable with the prime overdraft rate. The interest rate on the Leaf Enhanced Alternative Fund facility is the prime overdraft rate plus six percentage points.
Where acquisitions are made, transactions are structured in such a way so as to settle the purchase price over a period.
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
64
20. financial instruments continued20.3 liquidity risk continued The following are the contractual maturities of financial liabilities:
Non-derivative financial liabilities
carryingamount
r
contractualcash flows
r
12 monthsor less
r
12 monthsor more
r
2009
Deferred purchase consideration 17 669 007 19 909 476 11 208 698 6 460 309
Trade and other payables 65 879 578 65 879 578 65 879 578 –
Instalment sales, finance leases and bonds 31 406 419 31 406 419 11 342 459 20 063 960
Bank overdraft 4 404 324 4 404 324 4 404 324 –
119 359 328 121 599 797 92 835 059 26 524 269
2008
Deferred purchase consideration 39 379 330 39 379 330 26 016 580 13 362 750
Trade and other payables 62 334 842 62 334 842 62 334 842 –
Trade finance liability 9 880 353 9 880 353 9 880 353 –
Instalment sales, finance leases and bonds 19 543 763 19 543 763 5 681 576 13 862 187
Bank overdraft 10 836 728 10 836 728 10 836 728 –
141 975 016 141 975 016 114 750 079 27 224 937
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20. financial instruments continued20.4 market risk Market risk is the risk that changes in market prices, such as foreign currency exchange rates may cause a decrease in fair values of future cash flows of financial instruments and consequently result in a financial
loss for the Group.
20.4.1 Currency risk The Group is exposed to currency risk on certain group creditors that are denominated in a currency other than the functional currency of the Group, the South African rand. The currency in which these transactions
primarily are denominated is euros, US dollars and Canadian dollars.
2009r
2008R
Covered financial liabilities
– Trade and finance liability – Reichmanns (US dollars) – 9 880 353
Uncovered financial liabilities
– Tokheim 4 089 476 1 759 138
– Eleflex 1 141 128 48 521
The following exchange rates applied at year-end
Rand/euro 12,83 12,32
Rand/US dollar 10,15 8,02
sensitivity analysis A sensitivity analysis has not been performed as the Group has limited foreign currency purchases and foreign currency exposure.
20.4.2 Interest rate risk Borrowings are generally at a rate linked to the prime bank overdraft rate. The Group had group interest-bearing borrowings at year-end as well as instalment sale liabilities and finance leases. At the reporting date
the interest rate profile of the Group’s interest-bearing financial instruments was as follows:
2009r
2008R
Variable rate instruments
Financial liabilities
Bank overdraft 4 404 324 10 836 728
Instalment sale liabilities, leases and bonds 31 406 419 19 543 763
Trade and finance liability – Reichmanns – 9 880 353
35 810 743 40 260 844
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
66
20. financial instruments continued20.4.2 Interest rate risk continued A change of 100 basis points in interest rates would have increased/(reduced) profit by the amounts shown below based on recalculation of balances during the year. The analysis is performed on the same basis
for 2008.
2009 2008
1% decreaser
1% increaser
1% decreaseR
1% increaseR
Variable rate instruments 415 461 (447 419) 220 434 (237 390)
20.5 capital management The Board’s policy is to maintain a strong capital base to sustain future development of the business and maintain creditor and market confidence. Capital is defined as stated capital and retained earnings.
There were no changes in the Company’s approach to capital management during the year.
20.6 fair values The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows:
2009 2008
carryingamount
r
fairvalue
r
Carryingamount
R
Fairvalue
R
Financial assets
Trade and other receivables 76 469 063 76 469 063 77 593 737 77 593 737
Cash and bank balances 1 346 061 1 346 061 36 707 933 36 707 933
Loans receivable 743 308 743 308 3 884 175 3 884 175
78 558 432 78 558 432 118 185 845 118 185 845
Financial liabilities
Instalment sale liabilities, finance leases and bonds 31 406 419 31 406 419 19 543 763 19 543 763
Trade and other payables 65 879 578 65 879 578 62 334 842 62 334 842
Trade finance facility – – 9 880 353 9 880 353
Bank overdraft 4 404 324 4 404 324 10 836 728 10 836 728
Deferred purchase consideration 17 669 007 17 669 007 39 379 330 39 379 330
119 354 328 119 354 328 141 975 016 141 975 016
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Group Company
2009r
2008R
2009r
2008R
21. commitmentsa. capital commitments
Capital expenditure authorised and contracted for capital expenditure authorised, but not yet contracted for:
Property, plant and equipment – – – –
Vehicles – – – –
– – – –
The proposed capital expenditure will be financed by borrowings partly secured by the value of items purchased and partly by cash generated from operations.
b. operating commitments
The Group leases certain of its office equipment in terms of operating leases.
The total future minimum lease payments under non-cancellable operating leases is:
Not later than one year 1 929 711 958 429 – –
Between one and five years 669 782 1 517 513 – –
2 599 493 2 475 942 – –
22. retirement benefit information Petrologic (Pty) Limited contributes to a defined contribution provident fund for its employees at 12,5% of basic salary. Employees contribute to a defined contribution pension fund at 6,5% of basic salary. The funds
are governed by the Pension Funds Act. The funds are administered by Liberty Life. All permanent salaried staff are required to join the fund. The market value of the pension fund at 31 December 2006 was R6 138 308 and the market value of the provident fund at 31 December 2006 was R9 054 170. At year-end the total number of employees in the company belonging to the fund was 90 (2008: 67).
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
68
Group Company
2009r
2008R
2009r
2008R
23. cash floW informationa. cash generated by/(utilised in) operations
Profit/(loss) before taxation 23 233 619 36 805 578 2 654 703 (8 545 272)
Adjustments for:
Gains made on acquisition of business combinations – (12 581 475) – –
Amortisation of intangible assets 4 889 300 4 258 303 – –
(Decrease)/increase in foreign currency translation reserve (3 906 412) 1 240 606 – –
Depreciation 5 485 188 3 721 779 883 549 522 268
Finance expenses 16 660 137 5 669 919 5 485 909 817 082
Financial income (7 919 507) (3 330 036) (5 548 453) (2 771 279)
Interest on deferred purchase considerations 1 346 994 2 087 259 1 342 171 2 365 578
Cost of shares issued at discount to market value – 1 513 158 – 1 513 158
Movement in provisions – – 614 020 –
(Profit)/loss on disposal of property, plant and equipment (107 538) 28 869 101 180 –
Gain on group rationalisation – 256 540 – –
Changes in working capital – – – –
Increase in inventories (21 158 488) (1 372 741) – –
Decrease/(increase) in trade and other receivables 5 537 363 (27 556 640) (2 571 147) (1 408 097)
Increase in trade and other payables 72 793 38 637 1 944 905 85 167
24 133 449 10 779 756 4 906 837 (7 421 395)
b. taxation paid
Balance payable at beginning of year 7 253 461 5 192 343 22 760 –
Charge to income statement 8 394 577 10 093 747 (22 760) –
Acquisition of subsidiary 568 268 1 204 801 – –
Balance (payable)/receivable at end of year 1 738 080 (7 253 461) – 22 760
17 954 386 9 237 430 – 22 760
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Group Company
2009r
2008R
2009r
2008R
23. cash floW information continued
c. rationalisation of Group structure
Investment in subsidiary
– cost of shares – 101 400 000 – 101 400 000
– loan from subsidiary – (34 592 421) – (34 592 421)
Investment in fellow subsidiaries – 40 186 335 – 40 186 335
Trade and other receivables – 23 030 – 23 030
Cash and cash equivalents – 7 465 – 7 465
Trade and other payables – (136 877) – (136 877)
Loans to fellow subsidiaries – 520 646 – 520 646
Borrowings – (3 808 272) – (3 808 272)
Carrying value – 103 599 906 – 103 599 906
Loss on disposal of subsidiary – (256 540) – (256 540)
Proceeds on disposal of subsidiary – (103 350 833) – (103 350 833)
Cash and cash equivalents in subsidiary – 7 465 – 7 465
Net cash proceeds on disposal of subsidiary – – – –
Silvarob Investment Holdings Limited was incorporated into PSV Holdings Limited on 30 September 2007 in terms of a corporate restructure. All assets and liabilities of that company were transferred to PSV Holdings Limited at carrying values.
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
70
Rand Air& Gas
R
Mather +Platt
RTotal
R
24. business combinations acQuireDnon-current asset 802 853 225 803 1 028 656
Property, plant and equipment 802 853 225 803 1 028 656
current assets 11 240 105 4 011 420 15 251 525
Inventories 1 054 302 4 011 420 5 065 722
Trade and other receivables 4 293 441 – 4 293 441
Cash and cash equivalents 5 892 362 – 5 892 362
non-current liabilities 6 896 – 6 896
Loan 6 896 – 6 896
current liabilities 5 094 433 – 5 094 433
Provisions 1 689 923 – 1 689 923
Taxation payable 568 268 – 568 268
Trade and other payables 1 782 021 – 1 782 021
Bank overdraft 1 054 221 – 1 054 221
fair value of net assets acquired 6 941 629 4 237 223 11 178 852
Goodwill 788 817 1 410 131 2 198 948
Intangibles 11 555 721 4 522 375 16 078 096
Deferred tax on intangibles (3 235 602) (194 810) (3 430 412)
Purchase consideration 16 050 566 9 974 919 26 025 485
settled as follows:Cash paid to vendors 5 400 000 9 500 000 14 900 000
Cost incurred and capitalised 339 718 40 136 379 854
Deferred purchase considerations 10 310 848 434 783 10 745 631
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25. relateD party transactions The Company has no holding company. All related party transactions are concluded under terms that are no less favourable than those arranged with third parties. Outstanding balances at year-end are unsecured,
interest free and settlement is in cash.
purchase transactions Total services rendered by CDR Contracts, an employment agency in which Mr P Robinson, one of the directors of the Group, owns shares, amounted to R4 785 543 (2008: R7 731 644) for the year under review.
Total rental to CDR Properties, the property company which owns the building from which two of the Group’s subsidiaries operate, amounted to R256 108 (2008: R327 961). Mr A da Silva and Mr P Robinson owned the shares in the property company. The two subsidiaries moved from this property in October 2008.
outstanding balances The total balance of the accounts payable to CDR Contracts amounted to R698 764 (2008: R1 421 286) at year-end. The amount owing to CDR Properties at year-end was nil (2008: R62 318).
management fees All management fees are intra-group and have been eliminated on consolidation.
loans to directors At year-end there were no loans to directors or executive management.
Directors’ remuneration and share options Detailed disclosure of directors’ remuneration is made in note 26.
Group companies Details of subsidiary companies are given in note 11.
26. Directors’ remuneration Directors’ remuneration in respect of the financial year ended 28 February 2009 was as follows:
basic remuneration
rother benefits
r
retirement and medical
r
incentives and bonuses
rDirectors’ fees
rtotal
r
2009
ExecutiveAJD da Silva 1 065 757 150 000 – 218 773 – 1 434 530
AR Dreisenstock 1 071 487 150 000 – 218 773 – 1 440 260
DJ Kelly 1 050 000 150 000 32 090 100 000 – 1 332 090
P Robinson 1 071 487 150 000 – 218 773 – 1 440 260
Non-executiveV Shongwe – – – – 55 000 55 000
JH Anderson*** – – – – 118 167 118 167
E Chimombe-Munyoro** – – – – 73 333 73 333
4 258 731 600 000 32 090 756 319 246 500 5 893 640
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
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26. Directors’ remuneration continued
Basic remuneration
ROther benefits
R
Retirement and medical
R
Incentives and bonuses
RDirectors’ fees
RTotal
R
2008
ExecutiveAJD da Silva 840 000 120 000 – 200 000 – 1 160 000
AR Dreisenstock 840 000 120 000 – 200 000 – 1 160 000
DJ Kelly 834 000 126 000 24 156 – – 984 156
P Robinson 840 000 120 000 – 200 000 – 1 160 000
Non-executive –
GJ Shongwe – – – – 75 000 75 000
JJH Mateya* – – – – 40 000 40 000
JH Anderson** – – – – 149 838 149 838
3 354 000 486 000 24 156 600 000 264 838 4 728 994
* Resigned on 8 August 2007** Appointed on 7 May 2007
PSV Holdings Limited executive and non-executive remuneration is approved annually by the chairman of the Board.
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27. neW accountinG pronouncements At the date of authorisation of the financial statements of PSV Holdings Limited, the year ended 28 February 2009, the following standards and interpretations were in issue but not yet effective:
Standard/Interpretation Effective date
IFRS 1 amendment First Time Adoption of International Financial Reporting Standards – amendments Annual periods commencing on or after 1 July 2009*
IFRS 2 amendment IFRS 2 Share-based Payments – Vesting Conditions and Cancellations Annual periods commencing on or after 1 January 2009*
IFRS 3 Business Combinations Annual periods commencing on or after 1 July 2009*
IFRS 5 amendment IFRS 5 Non-current Assets Held for Sale and Discontinued Operations Annual periods commencing on or after 1 July 2009*
IFRS 7 amendment Financial Instruments: Disclosures Annual periods commencing on or after 1 January 2009*
IFRS 8 Operating Segments Annual periods commencing on or after 1 January 2009*
IAS 1 Presentation of Financial Statements Annual periods commencing on or after 1 January 2009*
IAS 23 amendment Borrowing Costs Annual periods commencing on or after 1 January 2009*
IAS 27 amendment Consolidated and Separate Financial Statements Annual periods commencing on or after 1 July 2009*
IAS 27 and IFRS 1 amendment Amendment to IAS 27 and IFRS 1 Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate
Annual periods commencing on or after 1 January 2009*
IAS 32 and IAS 1 amendment IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements: Puttable Financial Instruments and Obligations Arising on Liquidation
Annual periods commencing on or after 1 January 2009*
IAS 39 amendment Amendment to IAS 39 Eligible hedged items Annual periods commencing on or after 1 July 2009*
IFRIC 9 and IAS 39 IFRIC 9 and IAS 39 amendments – Reassessment of Embedded Derivatives Annual periods commencing on or after 1 July 2008*
IFRIC 13 Customer Loyalty Programmes Annual periods commencing on or after 1 July 2008*
IFRIC 15 Agreements for the Construction of Real Estate Annual periods commencing on or after 1 January 2009*
IFRIC 16 Hedges of a Net investment in a Foreign Operation Annual periods commencing on or after 1 October 2008*
IFRIC 17 Distributions of Non-cash Assets to Owners Annual periods commencing on or after 1 July 2009*
IFRIC 18 Transfers of Assets from Customers Annual periods commencing on or after 1 July 2009*
AC 503 Accounting For Black Economic Empowerment (BEE) Transactions amendments Annual periods commencing on or after 1 January 2009*
AC 504 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction in the South African Pension Fund Environment
Annual periods commencing on or after 1 April 2009*
*All Standards and Interpretations will be adopted at their effective date (except for those Standards and Interpretations that are not applicable to the Company).
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Financial statements notes to the annual financial statements for the year ended 28 February 2009
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27. neW accountinG pronouncements continued All the above, except for IAS 1, IFRS 3, IFRS 8 and the amendments to IFRS 7, are not applicable to the business of the Group and will therefore have no impact on future financial statements. The directors are of
the opinion that the impact of the application of IAS 1, IFRS 3, IFRS 8 and amendments to IFRS 7 will be as follows:
ias 1 IAS 1 will be adopted by the Group for the first time for its financial reporting period ending 28 February 2010. The Group will present all non-owner changes in equity in a single statement of comprehensive income
(which will include the current income statement) and owner changes in equity in the statement of changes in equity.
Reclassification adjustments and income tax relating to each component of other comprehensive income will be disclosed on the face of the statement of comprehensive income.
ifrs 3 The amendments to IFRS 3 will be adopted by the Group for the first time for its financial reporting period ending 28 February 2011. The Group will account for business combinations by applying the acquisition
method and account for deferred tax in terms of the revised recognition criteria.
ifrs 7 The amendments to IFRS 7 will be adopted by the Group for the first time for its financial reporting period ending 28 February 2009. The Group will present enhanced disclosures of fair value measurements relating
to financial instruments, specifically in relation to disclosures over the inputs used in valuations techniques and the uncertainty associated with such valuations.
In addition, the Group will present improved disclosures surrounding liquidity risk particularly focused on the maturity analysis.
ifrs 8 IFRS 8 will be adopted by the Group for the first time for its financial reporting period ending 28 February 2010. The Group will disclose information about the entity’s operating segments, products and services,
geographical areas and major customers.
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analysis of ordinary shareholdersas at 28 February 2009
Number of ordinary
shareholders % of total
Number of ordinary
shares% of total
issued capital
size of holDinGs1 – 1 000 shares 358 32,5 123 578 0,05
1 001 – 10 000 shares 298 27,1 1 496 279 0,63
10 001 – 100 000 shares 346 31,5 12 694 860 5,38
100 001 – 1 000 000 shares 80 7,3 24 208 417 10,26
1 000 001 shares and over 18 1,6 197 497 305 83,68
1 100 100 236 020 439 100
Distribution of shareholDersBanks 1 0,09 1 550 0,00
Close corporations 37 3,36 1 488 118 0,63
Custodians 3 0,27 2 003 627 0,85
Empowerment partners 2 0,18 60 263 157 25,53
Endowment funds 2 0,18 4 996 0,00
Other corporations 10 0,91 603 409 0,26
Own holdings 6 0,55 5 668 000 2,40
Personal liability companies 1 0,09 300 0,00
Private companies 26 2,36 4 066 686 1,72
Public companies 5 0,45 6 936 306 2,94
Retail shareholders 934 84,91 134 264 212 56,89
Share trust 1 0,09 7 575 0,00
Stockbrokers and nominees 11 1,00 4 365 0,00
Trusts 56 5,09 3 697 853 1,57
Unit trusts/mutual funds 5 0,45 17 010 285 7,21
1 100 100 236 020 439 100
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Number of ordinary
shares% of total
issued capital
public/non-public shareholDersNon-public shareholders 162 425 575 68,82
Holders holding more than 10% (excluding directors’ holdings) 55 000 000 23,30
Directors – direct beneficial 101 750 000 43,11
Share schemes (excluding directors’ holdings) 7 575 0,01
Own holdings (subsidiary companies) 5 668 000 2,40
Public shareholders 73 594 864 31,18
236 020 439 100
beneficial shareholDers holDinG more than 5% of share capitalWonderwall Investments 36 (Pty) Limited 55 000 000 23,30
Mr P Robinson 47 600 000 20,17
Mr AJD da Silva 47 200 000 20,00
share price performanceOpening price 3 March 2008 R0,62
Closing price 27 February 2009 R0,41
High for the period R0,70
Low for the period R0,30
Number of shares in issue 236 020 439
Volume traded during period 76 321 598
Ratio of volume traded to shares issued (%) 32,34
shareholder analysis tables
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financial year-end 28 February 2009
reports and profit announcements Annual report 22 July 2009 Interim report October 2009
annual general meeting 28 August 2009
shareholders’ diary
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Notice is hereby given that the annual general meeting of shareholders will be held in the boardroom, Unit 419, Greenhills Industrial Estate, Sam Green Road, Tunney Ext 6, Germiston, South Africa on Friday, 28 August 2009
at 09:00 to conduct the following business:
orDinary businessordinary resolution number 1
Adoption of the annual financial statements
“Resolved that the annual financial statements of the Group and the Company for the financial year ended 28 February 2009, including the directors’ report and the report of the auditors therein, be adopted.”
ordinary resolution number 2
Re-election of directors
To elect directors of the Company in accordance with its articles of association which provide that:
• Atleastonethirdofthedirectors,beingthoselongestinofficeatthedateoftheannualgeneralmeeting,shouldretirebutthatsuchdirectorsmayofferthemselvesforre-election;and
• AnydirectorappointmentsmadebytheBoardsincethepreviousannualgeneralmeetingrequireconfirmation.
Therefore, to approve the following by way of separate resolutions:
2.1 “Resolved that Mr DJ Kelly be re-elected as an executive director of the Company.”
2.2 “Resolved that Mr JA Anderson be re-elected as an independent non-executive director of the Company.”
Abbreviated curricula vitae in respect of the aforementioned directors are set out on page 13 of this annual report.
ordinary resolution number 3
Re-appointment of the auditors
“Resolved that KPMG Inc., the audit partner being Mr T Cheadle, be re-appointed as independent auditors of the Company for the ensuing period terminating on the conclusion of the next annual general meeting of the
Company and that the directors be authorised to fix the auditors’ remuneration for the past year.”
ordinary resolution number 4
Approval of directors’ remuneration
“Resolved that the remuneration of the directors for the financial year ended 28 February 2009 as reflected on page 71 of this annual report be approved.”
ordinary resolution number 5
Approval of non-executive directors’ fees
“Resolved that the fees payable to the non-executive directors for the year ended 28 February 2009 as reflected on page 71 of this annual report be approved.”
ordinary resolution number 6
General authority to issue unissued shares
“Resolved that the directors of the Company be and are hereby authorised to issue the unissued shares in the share capital of the Company, at their discretion and upon such terms and conditions as they deem fit, subject
to the provisions of Section 221 of the Companies Act (Act 61 of 1973), as amended, and the Listings Requirements of the JSE Limited.”
notice of annual general meeting
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Ordinary resolution number 7
Renewal of the general authority to allot and issue ordinary shares for cash
“Resolved that the authority given to the directors of the Company, to allot and issue ordinary shares for cash, pursuant to the articles of association of the Company and subject to the Companies Act (Act 61 of 1973), as
amended, and the Listings Requirements of the JSE Limited (“JSE”), be and is hereby renewed, subject to the following conditions:
• thatthesharesbeofaclassalreadyinissue;
• thesharesmayonlybeissuedorsold,asthecasemaybe,topublicshareholdersasdefinedintheListingsRequirementsoftheJSE,andnottorelatedparties;
• thatthesharesmaynotinanyonefinancialyearintheaggregateexceed50%oftheCompany’sissuedsharesofthatclass;
• thatthemaximumdiscountatwhichsuchsharesmaybeissuedorsold,asthecasemaybe,is10%oftheweightedaveragetradedpriceofsuchsharesontheJSEoverthe30businessdaysprecedingthedatethat
thepriceoftheissueisagreedbetweentheCompanyandthepartysubscribingfortheshares;
• thatsuchauthorisationbevalidonlyuntilthenextannualgeneralmeetingorfor15monthsfromthedateofthisresolution,whicheveristheearlierdate;
• thatanannouncementgivingfulldetails,includingtheimpactonnetassetvalue,nettangibleassetvalue,earningsandheadlineearningspershare(andifapplicable,dilutedearningsanddilutedheadlineearnings
pershare),bepublishedatthetimeofanyissuerepresenting,onacumulativebasiswithinafinancialyear,5%ormoreofthenumberofsecuritiesinissuepriortotheissue;and
• thatthisauthorityincludeanyoptions/convertiblesecuritiesthatareconvertibleintoanexistingclassofequitysecurities.”
Voting
IntermsoftheListingsRequirementsoftheJSE,theapprovalofa75%majorityofallthevotescastinrespectofthisresolutionbyshareholderspresentorrepresentedbyproxy(excludingthedesignatedadviserandthe
controllingshareholderstogetherwiththeirassociates)isrequiredtoapprovethisresolution.
Ordinary resolution number 8
Authority regarding signature of documents
“ResolvedthatanydirectororthecompanysecretaryoftheCompanybeandisherebyauthorisedtosignanydocumentsandtotakeanystepsasmaybenecessaryorexpedienttogiveeffecttothespecialandordinary
resolutionssetoutinthisnotice.”
SPECIAL BUSINESSSpecial resolution
General authority to repurchase shares
“Resolved, as a special resolution, that the Company hereby approves, as a general authority contemplated in the Companies Act (Act 61 of 1973), as amended, the repurchase of shares from time to time, either by the
Companyitselforbyitssubsidiaries,oftheCompany’sissuedshares,uponsuchtermsandconditionsandinsuchamountsasthedirectorsoftheCompanymayfromtimetotimedecide,subjecthowevertotheprovisions
oftheActandtheListingsRequirementsoftheJSELimited(“JSE”),itbeingrecordedthatintermsoftheListingsRequirementsoftheJSE,generalrepurchasesoftheCompany’ssharesmayonlybemadesubjecttothe
following:
– thattheCompanyanditssubsidiariesareenabledbytheirarticlesofassociationtorepurchasesuchshares;
– thattherepurchaseofsharesbeeffectedthroughtheorderbookoperatedbytheJSEtradingsystemandbedonewithoutanypriorunderstandingorarrangementbetweentheCompanyandthecounterparty;
– thatthisgeneralauthoritybevalidonlyuntilthenextannualgeneralmeetingorfor15monthsfromthedateofthisspecialresolution,whicheveristheearlierdate;
– thatanannouncementbemadegivingsuchdetailsasmayberequiredintermsoftheListingsRequirementsoftheJSEwhentheCompanyhascumulativelyrepurchased3%oftheinitialnumber(thenumberofthatclass
ofshareinissueatthetimethatthegeneralauthorityisgranted)oftherelevantclassofsharesandfor3%inaggregateoftheinitialnumberofthatclassacquiredthereafter;
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– at any one time the Company may only appoint one agent to effect any repurchase on the Company’s behalf;
– repurchases may not be undertaken if they will impact negatively on the shareholder spread as required by the JSE;
– repurchases may not be made by the Company and/or its subsidiaries during a prohibited period as defined by the Listings Requirements of the JSE unless a repurchase programme is in place where the dates and
quantities of securities to be traded during the relevant period are fixed and full details of the programme have been disclosed in an announcement over SENS prior to the commencement of the prohibited period;
– the repurchase of shares shall not, in the aggregate, in any one financial year, exceed 20% of the Company’s issued share capital and a maximum of 10% in aggregate of the Company’s issued share capital that may
be repurchased in terms of the Act, by the subsidiaries of the Company, at the time this authority is given;
– the repurchase of shares may not be made at a price greater than 10% above the weighted average traded price of the market value of the shares as determined over the five business days immediately preceding
the date on which the transaction is effected; and
– the Company may not enter the market to proceed with the repurchase of its ordinary shares until the Company’s designated adviser has confirmed the adequacy of the Company’s working capital for the purpose of
undertaking a repurchase of securities in writing to the JSE.”
The reason for this special resolution is to grant the Company and its subsidiaries a general authority to repurchase the Company’s shares by way of open market transactions on the JSE, subject to the Act and the Listings
Requirements of the JSE.
The effect of this special resolution is that the Company and its subsidiaries have been authorised, in terms of a general authority, to repurchase the Company’s shares on the open market, subject to the Act and the Listings
Requirements of the JSE.
At the present time the directors have no specific intention regarding the utilisation of this general authority, which will only be used if the circumstances are appropriate.
The directors are of the opinion that, after considering the effect of the maximum repurchase permitted and for a period of 12 months after the date of this notice of annual general meeting:
• theCompanyandtheGroupwillbeable,intheordinarycourseofbusiness,topaytheirdebts;
• theassetsoftheCompanyandtheGroupwillbeinexcessoftheliabilitiesoftheCompanyandtheGroup,theassetsandliabilitiesbeingrecognisedandmeasuredinaccordancewiththeaccountingpoliciesusedin
the latest annual financial statements;
• thesharecapitalandreservesoftheCompanyandtheGroupareadequateforordinarybusinesspurposes;and
• theworkingcapitaloftheCompanyandtheGroupwillbeadequateforordinarybusinesspurposes.
In terms of the Listings Requirements of the JSE, the following disclosures are required with reference to the general authority to repurchase the Company’s shares set out in the above special resolution, some of which
are set out elsewhere in the annual report of which this notice forms part (“this annual report’).
Directors and management – refer page 13.
Major shareholders of the company – refer pages 75 and 76.
Directors’ interests in the Company’s securities – refer page 76.
Share capital – refer page 57.
Litigation – refer page 32.
notice of annual general meeting
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Directors’ responsibility statement
The directors, whose names are given on page 13 of this annual report, collectively and individually accept full responsibility for the accuracy of the information pertaining to the above special resolution and certify that to
the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the
above special resolution contains all information required.
material changes
Other than the facts and developments reported on in this annual report, there have been no material changes in the financial or trading position of the Group since the Company’s year-end and the date of this annual report.
VotinG anD attenDance
A shareholder entitled to attend and vote at the annual general meeting is entitled to appoint a proxy or proxies to attend, speak and, on a poll, vote in his/her stead. A proxy need not be a shareholder of the Company.
A form of proxy is attached for completion by registered certificated shareholders and dematerialised shareholders with own-name registration who are unable to attend the annual general meeting in person. Forms of
proxy must be completed and received by the transfer secretaries, Computershare Investor Services (Proprietary) Limited, by no later than 09:00 on Wednesday, 26 August 2009. Registered certificated shareholders and
dematerialised shareholders with own-name registration who complete and lodge forms of proxy will nevertheless be entitled to attend and vote in person at the annual general meeting to the exclusion of their appointed
proxy/(ies) should such member wish to do so. Dematerialised shareholders, other than with own-name registrations, must inform their CSDP or broker of their intention to attend the annual general meeting and obtain the
necessary letter of representation from their CSDP or broker to attend the annual general meeting or provide their CSDP or broker with their voting instructions should they not be able to attend the annual general meeting
in person. This must be done in terms of the agreement entered into between the shareholder and the CSDP or broker concerned.
By order of the Board
m saayman
Company Secretary
22 July 2009
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notes
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psV holDinGs limiteD(Incorporated in the Republic of South Africa)(Registration number 1998/004365/06)JSE code: PSVISIN: ZAE000078705(“the Company”)
to be completed by registered certificated shareholders and dematerialised shareholders with own-name registration only.
For use in respect of the annual general meeting to be held on Friday, 28 August 2009 at 09:00 in the boardroom, Unit 419, Greenhills Industrial Estate, Sam Green Road, Tunney Ext 6, Germiston, South Africa
Ordinary shareholders who have dematerialised their shares with a CSDP or broker, other than with own-name registration, must arrange with the CSDP or broker concerned to provide them with the necessary letter of representation to attend the annual general meeting or the ordinary shareholders concerned must instruct their CSDP or broker as to how they wish to vote in this regard. This must be done in terms of the agreement entered into between the shareholder and the CSDP or broker concerned.
I/We (Name in block letters)
of (Address in block letters)
being a member/members of PSV Holdings Limited and entitled to votes, hereby appoint
1. or failing him/her
2. or failing him/her
the chairman of the meeting as my/our proxy to act for me/us at the annual general meeting, to be held on Friday, 28 August 2009, in the boardroom, Unit 419, Greenhills Industrial Estate, Sam Green Road, Tunney Ext 6, Germiston, South Africa and at any adjournment thereof, as follows:
Number of votes (one vote per ordinary share)
For Against Abstain
Ordinary resolution number 1 – adoption of annual financial statements
Ordinary resolution number 2 – re-election of directors
2.1 DJ Kelly
2.2 JH Anderson
Ordinary resolution number 3 – re-appointment of the independent auditors
Ordinary resolution number 4 – approval of the directors’ remuneration
Ordinary resolution number 5 – approval of the non-executive directors’ fees
Ordinary resolution number 6 – renewal of general authority placing the unissued shares under the control of the directors
Ordinary resolution number 7 – renewal of general authority to issue shares for cash
Ordinary resolution number 8 – authority regarding the signature of documents
Special resolution – authority to buy back shares
Signed at on 2009
Signature(s)
Capacity
please read the instructions on the reverse side of this form of proxy.
form of proxy
PSV
ANNU
AL R
EPOR
T ’0
9
84
1. On a poll a shareholder is entitled to one vote for each share held.
2. Forms of proxy must be lodged at, posted to or faxed to Computershare Investor Services (Proprietary) Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107, Fax +27 11 688 5238), to reach Computershare by no later than 09:00 on Wednesday, 26 August 2009.
3. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space/s provided, with or without deleting the words “the chairman of the annual general meeting”. Any such deletion must be individually initialled by the shareholder, failing which it will not have been validly affected. The person present at the annual general meeting whose name appears first on the form of proxy and has not been deleted shall be entitled to act as proxy to the exclusion of the persons whose names follow.
4. Any alterations or corrections to this form of proxy must be initialled by the relevant signatory(ies).
5. Each shareholder is entitled to appoint one or more proxies (who need not be a shareholder(s) of the Company) to attend, speak and vote (either on a poll or by show of hands) in place of that shareholder at the annual general meeting.
6. Voting instructions for each of the resolutions must be completed by filling in the number of votes (one per ordinary share) under the “In favour”, “Against” or “Abstain” headings on the form of proxy. If no instructions are filled in on the form of proxy, the chairman of the annual general meeting, if the chairman is the authorised proxy, or any other proxy shall be authorised to vote in favour of, against or abstain from voting as he/she deems fit.
7. A shareholder or his/her proxy is entitled but not obliged to vote in respect of all the ordinary shares held by the shareholder. The total number of votes for or against the ordinary and special resolutions and in respect of which any abstention is recorded may not exceed the total number of shares held by the shareholder.
8. Documentary evidence establishing the authority of a person signing this form must be attached to this form of proxy unless previously recorded by the transfer secretaries of the Company or waived by the chairman of the annual general meeting.
9. This form of proxy is to be completed only by those shareholders who either still hold shares in a certificated form, or whose shares are recorded in their “own name” in electronic form in the sub-register.
10. The completion and lodging of this form of proxy does not preclude the relevant shareholder from attending the annual general meeting and speaking and voting in person to the exclusion of any proxy appointed by the shareholder.
11. The chairman of the annual general meeting may accept or reject any form of proxy which is completed and/or received other than in accordance with these instructions, provided that he shall not accept a proxy unless he is satisfied as to the manner in which a shareholder wishes to vote.
instructions to the form of proxy
business aDDressUnit 419, Greenhills Industrial Estate, Sam Green Road, Tunney Ext 6, Germiston, 1400Telephone: +27 (0) 11 828 7789, Facsimile: +27 (0) 11 828 7920
company secretary anD reGistereD officeMegan SaaymanUnit 419, Greenhills Industrial Estate, Sam Green Road, Tunney Ext 6, Germiston, 1400Telephone: +27 (0) 11 828 7789, Facsimile: +27 (0) 11 828 7920
transfer secretariesComputershare Investor Services (Pty) LimitedGround Floor, 70 Marshall Street, Johannesburg, 2001(PO Box 61051, Marshalltown, 2107)Telephone: +27 (0) 11 370 5000, Facsimile: +27 (0) 11 688 5210
attorneysFluxmans Inc11 Biermann Road, Rosebank, 2196(Private Bag X41, Saxonwold, 2132)Telephone: +27 (0) 11 328 1700, Facsimile: +27 (0) 11 880 2261
DesiGnateD aDViserVunani House, Athol Ridge Office Park, 151 Katherine Street, Sandton, 2196Telephone: +27 (0) 11 263 9500, Facsimile: +27 (0) 11 784 1989
auDitorsKPMG IncorporatedKPMG Crescent, 85 Empire Road, Parktown, 2193
administration
Maxx
Corporate
Communications
©
Unit 419, Greenhills Industrial Estate
Sam Green Road, Tunney Ext 6
Germiston, South Africa
www.psvholdings.com
