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____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Integrated Annual Report 2019
PSV Holdings Limited
PSV Integrated Annual Report 2019 Scope of the report _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
2
Contents
3
4
4-5
6
7-8
9-11
12-13
13-15
16-26
27
28
28
28
29-30
30
31
31-33
34-37
38
39
40
41
42-54
55-83
84-88
89-92
93
94
Scope of report
Board responsibility statement
2019 Company structure
Group structure and operations
Group directorate
Chairman’s report
CEO’s report
Operating Context
Stakeholders
Sustainability report
Corporate Governance
Corporate governance report
Shareholders
Shareholder information
JSE share information
Shareholders’ diary
Interaction with shareholders
Annual Financial Report
Audit and Risk Committee report
Directors’ responsibility statement
Certification by Company Secretary
Directors’ report
Report of the independent auditors
Consolidated statement of financial position
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated statement of cash flows
Accounting policies
Notes to the annual financial statements
Notice of Annual General Meeting
Form of proxy
Administration
Glossary of terms
PSV Integrated Annual Report 2019 Scope of the report _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
3
Scope of the Report
PSV Holdings Limited (“PSV”) is an industrial engineering holding company comprising two operating business segments:
o Industrial Supplies (including steel, piping, industrial tools and consumable supplies, and a tools agency business in Botswana);
and
o Specialised Services (including comprehensive cryogenic and gas systems and the supply and installation of geosynthetic
linings).
A detailed Company structure can be found on page 4 of this Integrated Annual Report.
Any queries regarding this Integrated Annual Report or its contents should be directed to:
Roger Pitt
Chief Financial Officer
Tel: +27 (11) 452 4004 / Fax: +27 (11) 452 4007 / Email: [email protected]
Cnr. Serenade & North Reef Roads / Henville Ext / Elandsfontein
This document contains the annual financial reports of PSV and its divisions and covers the financial year from 1 March 2018 to
28 February 2019.
The previous year’s report was published in June 2018. The Directors of PSV present to shareholders information pertaining to the
Company’s operations and financial performance. This is the 14th Integrated Annual Report since listing.
The report contains feedback from the Chairman and Chief Executive Officer as well as feedback on corporate governance and the
undertakings of the committees in place. Assurance for the annual financial statements has been provided by our external auditor,
HLB CMA (South Africa) Inc., (‘CMA”), whose unmodified audit opinion is available for inspection at the registered office of PSV.
The financial statements were prepared according to International Financial Reporting Standards (“IFRS”), the requirements of the
Companies Act, Act No. 71 of 2008, as amended (“Companies Act”), the Listings Requirements of the JSE Limited (“the JSE Listings
Requirements”) and the recommendations outlined by the King Report on Corporate Governance for South Africa, 2016 (“King IV”)
where applicable.
PSV is committed to sustainable practices affecting the environment, the economy, our people and the society in which we operate.
We are also committed to the production of quality products which meet various accreditation standards. See further details in the
Sustainability report on pages 13 to 15 of this Integrated Annual Report.
Board responsibility statement
The PSV Board of Directors (“the Board”) confirms its responsibility for the integrity of the Integrated Annual Report, the content of
which has been collectively assessed by the Directors who believe that all material issues have been addressed and fairly
presented.
Anthony de la Rue
Chairman
28 June 2019
PSV Integrated Annual Report 2019 Group Overview _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
4
Group Overview
2019 Company Structure
Group Structure and Operations
Divisional
Overview Geography Management
Industrial
Supplies
Major suppliers of
steel, piping, industrial
tools, consumable
supplies and
automotive equipment.
% of contribution to
total revenue:
75%
Based in Elandsfontein, it
services clients
throughout Africa as well
as local buying offices of
African-based
companies.
Managing Director
Joanne da Silva
turbo agencies
Based in Gaborone,
Botswana
Financial Manager
Tatenda Mawoyo
PSV Asset Co.
Proprietary Limited Registration Number.
1994/004842/07 (100%)
PSV Holdings Limited
Registration Number. 1998/004365/06
PSV Treasury Proprietary Limited Registration Number.
2005/029851/07 (100%)
PSV Industrial Proprietary Limited Registration Number.
1961/002281/07 (100%)
Turbo Agencies Registration Number.
1995/84 (100%)
African Cryogenics
a division of PSV Industrial
Engineered Linings
a division of PSV Industrial
Omnirapid Mining & Industrial Supplies
a division of PSV Industrial
PSV Integrated Annual Report 2019 Group Overview _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
5
Divisional
Overview Geography Management
Specialised
Services
Manufacture, support
and supply of
comprehensive
cryogenic and gas
systems and
installation and supply
of geosynthetic linings.
% of contribution to
total revenue:
25%
Based in Elandsfontein.
Managing Director
John Winterton
Based in Johannesburg.
Work is carried out
across South Africa as
well as in many African
countries.
Projects Manager
Hennie du Toit
Operations Staff
OMNIRAPID provides a specialised procurement
service to the industrial and mining sectors focusing
on the supply of steel, stainless steel, piping and
industrial consumables.
These products are provided to mining and
industrial clients locally in South Africa as well as
being exported to various African countries.
Male
8
Female
5
TURBO AGENCIES offers bespoke and turnkey
solutions to companies in need of computerised
vehicle testing stations and general workshop
equipment. Turbo Agencies also provides
consultancy services on workshop requirements
and is a one-stop solution for mining projects. The
company carries blue chip agencies such as
Milwaukee and Metabo, Mining Equipment and
Fasteners, Kito Lifting, Lincoln Electric Welding
amongst others.
9 4
AFRICAN CRYOGENICS manufactures and
supplies gas and cryogenic equipment including
road tankers and cryogenic storage vessels. The
division primarily supplies the gas and chemical
industries.
It also offers a full repair and complete
refurbishment service. The manufacturing facility
has international accreditation.
41 9
ENGINEERED LININGS supplies and installs a
range of geosynthetic lining materials. All materials
comply with international standards.
The lining solutions are used for the purpose of
environmental protection and containment of
hazardous fluids in mining, municipal and farming
applications.
29 4
A shared service centre supports the operating businesses
3 5
PSV Integrated Annual Report 2019 Group Overview _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
6
Group Directorate
JCP (Carlos) Fernandes (48) - Acting Chief Executive Officer
Non-executive Director
Carlos holds a BCom (Accounting) degree from the University of Johannesburg and an MBA (Corporate Finance and
Entrepreneurship) from Bond University (Australia). He spent 10 years with SABMiller's Africa division in the roles of Managing
Director and Financial Director, and served on various subsidiary board and committees, having also led M&A, Commercial and
Strategy projects across Sub-Saharan Africa. He currently serves as Chief Commercial Officer and member of the investment
committee at Regis Holdings Limited.
RMH (Roger) Pitt (38) - Chief Financial Officer
Executive Director
Roger is a Chartered Accountant, with BCom (Hons)(Accounting) degree from the University of Johannesburg. After completing
his articles, Roger moved into corporate finance where he gained broad experience in the full scope of corporate actions.
Thereafter, Roger acquired and ran an import and distribution business within the baby industry while continuing to serve as an
Independent Non-executive director of various listed and private companies.
A (Anthony) de la Rue (72) - Chairman of the Board Independent Non-executive Director
Anthony is a Chartered Accountant who was previously the CEO for Ernst & Young Zimbabwe and served on their Global Practice
Council prior to his retirement in 2004. He is currently a non-executive director on the boards of various companies.
E (Eric) Ratshikhopha (65) Independent Non-executive Director
Eric currently holds a number of directorships on foundations and serves as a trustee on a number of trusts. His background
includes vast work experience in the mining sector, having been involved in industrial relations, health and safety, strategic
management and corporate social investment. Eric has worked in Gencor, Genmin, Billiton S.A and most recently as Corporate
Development Director at Xstrata. His wealth of experience in transformation, stakeholder relations and community development
as well as general management practices, is advantageous to PSV. Eric holds the following qualifications: BA (Hons) Sociology,
University of the Developmental Programme in Labour Relations, University of South Africa; Advanced Programme in Labour
Relations, University of South Africa; Master of Management, University of the Witwatersrand; Senior Executive Programme,
Harvard School of Business.
DA (Douglas) Lorimer (40)
Independent Non-executive Director
Douglas who has a Bachelor of Business Science, Information Systems from UCT, and is a qualified actuary. He has a broad
financial background, having worked in investment banking both as a quantitative analyst and a primary markets transactor at
Absa Capital, in retail banking as an executive committee member at RMB Private Bank, and in insurance at Momentum. He
currently owns and manages Verdigris, a structured finance advisory consultancy, whilst also fulfilling the role of Non-executive
Director for various financial structures. These roles include audit committee chairman for NewGold, Africa's largest gold
exchange-traded fund, and board chairman for Absa Home Loans 101, which houses in excess of R50 billion of home loan assets.
PSV Integrated Annual Report 2019 Group Overview _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
7
Chairman’s Report
Review of the year
The Group’s capital and cash flow came under renewed pressure particularly in the second half of the year. Based on the Board’s
assessment of the going concern status, the Group initiated a recapitalisation of the business. Under an agreement for acquisition
of new share capital, a new investor acquired 34.99% of the equity of PSV through the issue of new shares in PSV, at a cost of
R25.7 million. The transaction took place at 18 cents per share with the undertakings of the requisite numbers of existing shareholders
to an irrevocable waiver of the requirement for a mandatory offer and to vote in favour of the transaction.
The funds from this transaction were applied to the ongoing and legacy working capital needs of the business.
During the last quarter the same investor advanced a term facility of R5 million, under favourable terms, to support ongoing operations
of the main business units.
Notwithstanding these achievements, the groups forecasts indicated the need for additional capital required to meet targets set by
the Group for growth in the medium-term. Therefore, further significant capital injection into the Group is underway and we are making
good progress in finalising the transaction.
The Group continues with its turnaround strategy as follows:
1. Engineered Linings
o The division has made a material loss which is not acceptable to the Board.
o Management is being further restructured.
o Cape Town office has been closed.
o Closure of legacy projects is underway.
o Realigning the business to different markets.
o The Board has taken the decision to divest of this business at the earliest opportunity, and this objective is being pursued.
2. Omnirapid
o This business has had another excellent year, significantly increasing both turnover and profitability, and continues to make
a major contribution to the Group.
o The only material requirement is for increased capital to sustain its growth trajectory. Efforts are ongoing to acquire additional
capital for this purpose.
o The business would be assisted by B-BBEE accreditation, and efforts are in progress to acquire a B-BBEE rating through
discussions with several parties.
3. African Cryogenics
o This business unit is being restructured to achieve improved results.
o The business requires a B-BBEE rating to meet the requirements of several its customers. Discussion is taking place with
various parties to achieve the requisite rating.
o The company requires additional capital for large specific projects which are planned or underway, and efforts are in
progress to acquire this capital.
o The succession plan for top management is an area of urgent focus.
4. Turbo Agencies
o The Board has determined that this business is not core to the operations of the Group and should be disposed of at the
earliest opportunity. Planning for disposal is in progress and is being treated with urgency.
PSV Integrated Annual Report 2019 Group Overview _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
8
The Group will eliminate non-performing businesses which cannot be turned around in a short time frame, and will focus on the
expansion and resourcing of performing businesses.
The treasury function has been centralised and this will be refined further in the coming year once the Group recapitalisation plan is
complete.
The requirement for the Group to become B-BBEE compliant is urgent and major attention is being applied to achieving this.
Shareholder changes
During the financial year, there were material changes to the shareholdings of PSV. A new shareholder Regis, acquired a 34.99%
shareholding in the Group through the issue of 143 103 148 new shares. Further significant changes are planned for the new financial
year.
Dividend policy
The Board reviews the dividend policy annually. No dividends were declared or proposed for the financial year under review as
management is of the view that cash flow is required to run the day-to-day operations of the Company.
The Board
Some major changes took place to the Board during the year. Please refer to page 17 for further details.
Appreciation
I would like to acknowledge my fellow Board members, both Non-Executive and Executive, management and staff for their support,
effort and hard work in achieving a significant and rapid turnaround of the Group in a fast changing landscape, and for moving the
Group into a position where it is poised for the final capitalisation initiative for the time being. This will set the stage for rapid expansion
of the Group and improved performance.
Particular mention should be made of the insight and dynamic achievements of the new CEO and CFO driving the very rapid changes
and recapitalisation of the Group. They have, in a very short space of time, changed the prospects of the enterprise for the better,
and set it on a new and exciting course.
Members of the team at all levels, have willingly changed roles and taken on more and new responsibility during a period of rapid
change, thrusting themselves into a fast learning curve. This speaks much for the dedication of our people and their belief in the
future of the Group. This is welcome and greatly appreciated, and will be a key element of success going forward.
I am optimistic about the prospects for the Group in the short to medium term, and I look forward to working with all stakeholders in
the year ahead.
Anthony de la Rue
Chairman
28 June 2019
PSV Integrated Annual Report 2019 Group Overview _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
9
CEO’s Report
Introduction
The Group has endured an extremely challenging 12 months with substantial financial losses against a background of extremely
difficult trading conditions and the departure of previous executive management.
Newly-appointed executive management is making encouraging strides toward delivering a turnaround and various initiatives are
starting to show benefits post year end. Reduced costs in the areas of human resources, operating expenses and overheads are
also coming into effect. Management is refocused on deriving value from synergies within the Group to enhance competitiveness
and augment growth.
Discussions toward recapitalising the Group appropriately in order to stabilise its core organic elements are well advanced.
Management expects this will conclude post year end in accordance with the existing timeline.
The 2019 financial results
Specialised Services fared poorly as the general economy weighed heavily on the gas sector, its primary customer base. Poor
execution and structural sector changes in geosynthetic lining material supply and installation resulted in substantial losses. Turbo
Agencies and Engineered Linings meet the requirements contained in IFRS 5 to be treated as a disposal Group and are accounted
for as discontinued operations.
Profit after tax from continued operations was R1.30 million. (2018: loss after tax of R0.75 million). Headline loss per share was 7.65
cents per share ("cps") (2018: Headline loss per share of 0.23 cps).
Operational Review
Industrial Supplies
This segment contributed 75% (2018: 49%) to the Group’s consolidated reportable segment revenue, at an average gross profit
margin of 13.4% (2018: 17.2%).
The business continues to perform well and generates consistent cash flows which, against the general economic background and
sector dynamics is a credit to management. Relentless focus on execution, pricing and customer relationship management has, and
continues, to deliver strong volume growth and an expansion in the customer base. Despite a negative percentage contraction in the
gross margin (-3.8%), the strong volume growth has driven overall margin growth (+33%).
Turbo Agencies has been classified as a discontinued operation.
Specialised Services
Specialised Services contributed 25% (2018: 51%) to the Group’s consolidated reportable segment revenue at an average gross
profit margin of 7.3% (2018: 23.0%).
The cryogenic vessel manufacturing business was impacted negatively by the economy generally and the resultant constrained
capex spend across the sector. The business operated at well below capacity and was unable to adjust its fixed and variable costs
sufficiently to compensate for the slowdown. Management pivoted toward the development and design of key intellectual property
elements which will serve it well going forward. The supply and installation of geosynthetic linings business has been the key source
of poor historical financial performance of the Group. Geosynthetic linings have become a commoditised material with very low
margins and the attached installation industry is very fragmented. The legacy premise that substantial installation margins are
available on large scale, and often, foreign projects, was myopic in that it failed to account for the inherent supply chain and execution
risks in such projects. The pressure which this has exerted on an under-capitalised balance sheet has been problematic. The
business has been classified as a discontinued operation.
PSV Integrated Annual Report 2019 Group Overview _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
10
Broad-Based Black Economic Empowerment
During the year the Group signed a subscription agreement with a privately wholly-owned black company for a 30% equity interest
in its main operating subsidiary. This subscription remains unfulfilled and the parties are exploring a mutually acceptable conclusion.
The Group has also partnered with an expert team of B-BBEE attorneys and consultants to deliver an education-based trust structure
and a broader 3-year journey for the Group culminating in an appropriate and robust scorecard and rating. Management will continue
to explore opportunities to accelerate this process.
Going Concern
The Directors have made an assessment of the ability of the Company and its subsidiaries to continue as going concerns.
Notwithstanding that the Group has made significant losses in the current financial year, the Board believes that the Group will
continue as a going concern. The work being done by the executives and senior management to turn the business around is ongoing,
and is starting to show benefits post year end. Reduced costs in the areas of human resources, operating expenses and overheads
are coming into effect and new leadership is allowing the Group to derive value from synergies within the Group to reduce costs and
drive growth.
Prospects
Industrial Supplies
Our focus is to broaden and grow the strong trading base while simultaneously evolving the operating and control environment. Our
priorities are responsible and appropriately-leveraged trading, robust treasury management, succession and key account
development. This business delivers strong operational synergies with the cryogenics business.
Specialised Services
Against a backdrop of low growth in traditional industrial gas supply, manufacturing opportunities exist for PSV, driven by ageing
local gas company fleets on both road tankers and static or standing vessels.
Newer specification road tankers deliver a much greater cost efficiency via improved payloads and chassis weight. The business has
key elements of intellectual property pertaining to enhanced cost efficiencies and Africa road operating environment specificities.
Gas is typically low margin and savings in supply chain are hugely relevant to the gas companies. Across the vessel manufacturing
universe there are substantial supply constraints, manifested in long lead times on imported tankers.
Static tanks tend to have an element of standardised manufacturing and are generally produced to overall demand with specific
manufacturing slots rather than to specific orders, which materialise through marketing the continuity of the approach. To this end,
the business needs to continue to operate in the same manner, with efficient utilisation of the manufacturing bay with near standard
elements of manufacturing, thereby offering clients the opportunity to book production slots over time. This, together with more
fundamental elements such as health and safety, certification and supplier accreditation, are key focus areas for the division. The
key benefits of this approach are lower unit costs and much-reduced lead times.
Investing into these tactical advantages across road tankers and static tanks will, we believe, ultimately produce a sustainable
strategic advantage over importation.
The business is also one of only two local Vaporisers manufacturers. This component of the business has operated near capacity
over recent periods, and we expect this to continue. Import replacement is unlikely due to the spatial elements of the design.
Other non-manufacturing elements of the business, such as the supply of specialised OEM cryogenic equipment, valves and
maintenance exist as a value-add to customers and warrant higher margins than currently being achieved. The applications bay
which focuses on specialised cryogenic engineering projects, typically for the Food and Beverage industry, is an area of the business
which is also under-developed.
PSV Integrated Annual Report 2019 Group Overview _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
11
Appreciation
My sincere thanks goes out to our dedicated staff members, all customers, suppliers, shareholders, stakeholders and the PSV board,
whose guidance and support continues to be invaluable to executive management as it navigates a turnaround of the business.
Carlos Fernandes
Acting Chief Executive Officer
28 June 2019
PSV Integrated Annual Report 2019 Operating Context
12
Stakeholders
PSV acknowledges and recognises the importance of long-term relationships with all stakeholders in order to support sustainability.
Stakeholder evaluation is undertaken at Group level as well as at divisional level and has evolved over the past three years.
Interaction, feedback, review and communication with all stakeholders is ongoing and PSV management is cognisant that the level
of interaction must be maintained.
Stakeholders
Engagement with stakeholders takes various forms, including informal calls, customer meetings, staff meetings and formal meetings
with regulators. Details of PSV’s key stakeholders, the type of engagement, material issues and action are provided below:
What is important? How do we interact? What are our actions?
Shareholders
o Delivering sustainable returns
and growth on investment
o Results presentations and
roadshows
o One-on-one meetings
o To ensure strategic growth opportunities, good
corporate governance practices and good risk
management
o Disposal of non-core subsidiaries which are
performing poorly
o Recapitalisation to enable growth in target
subsidiaries
o Restructuring of certain functions to utilize opex
more efficiently
Staff
o To create and sustain a safe
work environment for
employees
o Open communication
channels between employee
and employer
o Career development
o Awareness of rules and
regulations within the
workplace
o To regulate discipline in the
workplace through
progressive disciplinary
methods
o Weekly “toolbox” discussions
o Internal communications
through management and HR
o Evaluating employees and
identifying training
and education opportunities
o Abridged employee handbook
o Newsletters/notice boards
o Induction programme for new
employees
o Emphasise health and safety awareness and
regulatory requirements
o Promote the relationship and engagement between
employee and employer
o Promote internal training to employees which will
allow them opportunities to further develop
themselves
o Ensure circulation of updated legislation
o Maintain updated company policies and processes
o To limit disciplinary processes in the workplace by
increasing general communication with employees
on the Company’s disciplinary code
o LabourNet is used to chair disciplinary hearings
Customers
o To provide the best quality
products at the best
competitive pricing
o Regular site visits and
customer meetings
o Promote and market product
offerings to customers
o Conscious effort to meet expectations where
possible
o Maintain our ISO 9001:2008 accreditation
o Source best competitive pricing
o Reduce time to delivery
PSV Integrated Annual Report 2019 Operating Context
13
Suppliers
o Reliable supply/service
delivery and pricing of quality
products
o Transformation of our existing
suppliers in alignment with
B-BBEE codes
o Engage with suppliers to
provide valued
product/services
o Communicate our B-BBEE
strategy with suppliers and the
importance thereof
o Research the market to ensure we use reliable
suppliers and compare pricing
o Promote our B-BBEE policy and if necessary source
alternative suppliers who meet the requirements
Government/Regulators
o Industry regulatory compliance
o Transformation and adherence
to the revised B-BBEE codes
o Meetings with relevant bodies
regarding their requirements
o Business association meetings
o Ensure we continue to comply with the required
legislation in order to secure orders/tenders
o Continue to adhere to the JSE Listing Requirements,
Companies Act and all other regulatory requirements
o To align our B-BBEE strategy and implement a plan
for the next five years
Financiers
o Loan agreements and
overdrafts to PSV
o Formal meetings, updated
status meetings and feedback
sessions
o PSV has kept its providers of finance informed of all
developments within the Company pertaining to
overdraft requirements and the process for settling
debt
Sustainability Report
Health, safety and quality
Policies and procedures
Central to Occupational Health and Safety Act (“OHSAS”) requirements, effective policies and procedures are in place to ensure
compliance. Health is our primary goal to create workplaces free of occupational diseases. Prevention and management are the
primary focus of the Company’s health-related activities. We strive to continually; prevent and reduce exposures to hazards whilst
progressively strengthening our ability to respond to health risks.
Safety is our foremost objective in order to operate all divisions free of occupational injury and harm an improving our ability to
operate safely, a multi-layered approach is being implemented in all divisions:
o strengthening our company’s culture;
o implementing resilient safety standards, procedures and supporting systems;
o proactively identifying threats, assessing risks and continuously instituting controls to eliminate potentially harmful events; and
o strictly adhering to principles of good corporate governance and compliance with all regulations and standards.
All our divisions have safety strategies in place. We continuously reduce the occurrence of safety-related incidents across the
business. The Health and Safety Committee comprises representatives from each division. The committee meets on a regular basis,
addressing the requirements of OHSAS.
Work accidents and injuries
We are continuously creating a heightened awareness in respect of health and safety initiatives in the workplace. PSV is pleased to
report that there were no fatalities at any of its divisions for the year under review. Despite our achievements, we cannot rest on our
laurels. We continue to challenge ourselves and raise our expectations.
PSV Integrated Annual Report 2019 Operating Context
14
Quality systems
To ensure the supply of quality products and services, all divisions comply with the new ISO 9001:2015 standard. TUV Rhineland
South Africa and the South African Bureau of Standards (“SABS”) are the accreditation bodies for PSV and its divisions. External
audits take place annually for all divisions to ensure continued compliance with the ISO 9001:2015 standards, followed by
recertification every three years. Quality systems are regularly reviewed for their adequacy and improvement programmes are
implemented where required.
Human resources management
The management of human resources is key to the Group. Human Resources works closely with the management of each division
to ultimately ensure the effective management of our employees. We are committed, inter alia, to maximising employees’
performance and enhancing their personal growth through effective development, training and support. The Group is committed to
ensure compliance with South African labour and other relevant legislation, which includes, inter alia, the Labour Relations Act, Basic
Conditions of Employment Act, the Employment Equity Act, the Skills Development Act, the Unemployment Insurance Act, Broad-
Based Black Economic Empowerment Act, Protection of Personal Information Act and the Occupational Health and Safety Act.
Fair and sustained employment
PSV treats all staff equitably and responsibly, in compliance with applicable legislation. The Group is committed to the principles of
employment equity as well as achieving a productive and fair working environment that is free of discrimination and offers equal
opportunity to all. The Group recognises the importance of employment equity and through recruitment and training, continuously
strives to improve on previous employment equity standards. The Group makes every effort to remunerate staff and directors fairly
and equitably. We operate on a cost to company structure which includes retirement fund contributions, medical aid and other
benefits.
The annual increases for non-union employees is recommended by the Managing Director of each business unit and approved by
the Remuneration Committee. Increases for employees that fall within the bargaining council are negotiated with representative trade
unions, except in those instances where there are industry-wide bargaining agreements. The Group will continue to respect these
agreements.
External human resource consultants are utilised on an ad hoc basis. Policies and procedures guide business and employee conduct.
Non-discrimination, industrial relations, recruitment, employment equity and grievance and dispute settlements are communicated
to staff through induction programmes, on notice boards and in their employment contracts. PSV operates in an environment of trust
and respect towards all employees. Misconduct or corruption by an employee is treated with appropriate disciplinary action without
delay and in most cases the employee is suspended on full pay pending an investigation. Should an employee be found guilty of
misconduct or corruption, dismissal may follow. In matters of a serious nature, legal action is taken against the employee.
Human rights
PSV is guided by human rights policies detailed in the South African Constitution. South Africa’s endorsement of various International
Labour Organisation principles relating to child labour is also binding on the Group. There were no contraventions of these principles
for the period under review.
Skills development and retention
A key initiative of the Group is to nurture and develop its skills base internally to meet the current and future skills requirements. The
Group encourages training and skills development to provide employees with enhanced capabilities to improve and increase
efficiency levels and productivity.
PSV Integrated Annual Report 2019 Operating Context
15
Corporate social initiatives
The Group values the importance of Corporate Social Investment (“CSI”) and supports the development and execution of strategies
into sustainable and effective enterprise development initiatives. Our core objectives are to build long-term mutually beneficial
relationships, create sustainable economic growth and fuel potential job creation.
Economic performance
PSV’s objective is to create wealth for its stakeholders. The performance of the Group is discussed in the Chairman and CEO’s
reports and is evidenced in the annual financial statements. PSV contributes to overall growth of the country through:
o investing in skills development and training;
o creating job opportunities; and
o supporting local and small business enterprises where possible.
PSV does not receive financial assistance from Government.
Information technology infrastructure
PSV reviews its IT infrastructure and disaster recovery plan on a quarterly basis. We continuously engage with our IT service
providers to ensure the necessary preventative measures are in place. These measures are designed to minimise operational
outages and the risk of any disruptions. All equipment and servers from our operating divisions are backed up daily, ensuring rapid
recovery in the event of data loss. We estimate normal recovery time to be less than eight hours. The current disaster recovery and
failover plans cover the following servers:
o domain controller;
o application server; and
o VIP server.
PSV uses “VM Ware” as a platform for creating Disaster Recovery “Images” of the above servers on a quarterly basis
PSV Integrated Annual Report 2019 Corporate Governance Report
16
Corporate Governance
The aim of this Report is to provide transparency to stakeholders via disclosure of the Group’s governance practices that is honest
and understandable.
The Board firmly believes that good corporate governance is essentially about responsible leadership, and the Board realises the
importance of its function to act as custodian in this regard. In all dealings, the Group strives to ensure that the interests of
stakeholders are foremost in all decisions.
The Board is cognisant of its challenge in balancing the achievement of the Group’s performance objectives within a framework of
sound corporate governance principles, and believes that the business will prosper in an environment of good and balanced
corporate governance.
Statement of compliance The Board is responsible for the Group’s compliance with applicable laws, rules, codes and standards. Compliance is an integral
part of the Group’s culture, and key to ensuring it achieves its strategy.
The Board confirms that the Group has complied with the various codes and regulations applicable to it, including the principles set
out in the King Report on Governance for South Africa and the King Code of Governance Principles (“King IV”). The Board will
continue to improve the Group’s corporate and operational practices to achieve sound corporate governance practices, through
integrity and accountability.
The Board further confirms that the Group has complied with those provisions set out in the JSE Listings Requirements which are
applicable to AltX listed companies.
Board of Directors The leadership of the Group is provided by a unitary Board which is comprised of two Executive Directors and three Independent
Non-executive Directors. The Independent Non-executive Directors are high-merit objective individuals who collectively contribute a
wide range of skills and knowledge to the decision-making processes of the Board and also ensure proper deliberation of all matters
requiring the Board’s attention.
Independence of the Board is monitored annually in accordance with the requirements of King IV, when formal mandatory
declarations of personal interests are made by each Director.
The Board is satisfied that it has the requisite balance of skills, knowledge, experience and diversity to make it effective. The Board,
together with the Remuneration and Nominations Committee, considers diversity in terms of race, gender and skills when
appointments are made to the Board.
In line with the Board Approved Gender Diversity and Race Diversity Policies, should a vacancy on the Board arise or should there
be a requirement for an additional Board appointment, preference will be given to appropriate candidates who meet the skills,
expertise, experience and background required to fill such position.
There is a clear distinction between the running of the Board and the executive responsibility for the running of the Group’s day-to-
day business. This division of responsibilities ensures a balance of power and authority, such that no one individual has unfettered
powers of decision-making within the Company’s governance structures.
Chairperson
The Chairperson of the Board is Mr Anthony de la Rue, an Independent Non-executive Director. Anthony was appointed as the
Board’s chairperson on 2 October 2018, replacing Mr Eric Ratshikhopha.
PSV Integrated Annual Report 2019 Corporate Governance Report
17
The Chairperson provides leadership and guidance to the Board as a whole while encouraging proper deliberation on all matters and
optimising input from the other Board members. He also takes responsibility for ensuring effective governance practices and
represents the Company to its stakeholders.
Chief Executive Officer
With effect from 21 November 2018 Mr Abie da Silva, resigned as the Chief Executive Officer and as an Executive Director of PSV
in order to pursue personal endeavours. The Board thanks Abie for his dedicated leadership and invaluable contributions over the
last decade steering PSV through the tough years of the financial crises. Mr Carlos Fernandes was appointed as Acting Chief
Executive Officer with effect from 21 November 2018 until such time as a permanent appointment is made.
The CEO accepts full responsibility for the sound and efficient operation of the business as well as the implementation of all strategies
and policies adopted by the Board. Managing Directors of the various businesses within the Group assist him in this task. Board
authority conferred on management is delegated through the CEO, in accordance with approved authority levels. The CEO ensures
the maintenance of good relations with all the shareholders of the Group.
There is a clear separation between the responsibilities of the Board and management. The CEO communicates Board directives to
executive management, ensuring that all strategic objectives of the Company are achieved. For this purpose, he meets on a regular
basis with his Executive committee, which consists of strategic head office employees and Managing Directors of the business units
within the Group.
He ensures that the Group has an effective management team and actively participates in the development of management and
succession planning.
Board processes
Board appointments
The Board, assisted by the Remuneration and Nominations Committee, appoints Directors through a formal, fair and transparent
process. In terms of the approved appointments to the Board, all Board members are required to assist with the identification and
nomination of potential Board candidates.
The Board specifically considers the independence of Directors and their commitments when making appointments, as well as
annually, to ensure the required competency levels in order to be efficient and to provide strategic guidance to the Group. This
assessment is done to determine whether a Director has sufficient time to discharge his or her duties effectively and is free from
conflicts that cannot be managed satisfactorily. Should the assessment identify a lack of competency in a specific area, the Board
will consider the appointment of an additional Director to fulfil this need.
Changes to the Board
As PSV undergoes strategic redirection, we can report a number of changes to the Board.
With effect from 17 May 2019 Mr Douglas Lorimer was appointed as an Independent Non-executive Director and the Board welcomes
Douglas in his new capacity.
With effect from 31 March 2019 Mr Roger Pitt, was appointed as PSV’s Chief Financial Officer (“CFO”). Prior to this, Roger was
appointed as an Independent Non-executive Director of PSV on 2 October 2018 and the Board welcomes him in his new capacity.
Mr Ian Schmidt was appointed as PSV’s CFO on 1 February 2019 and resigned from this capacity with effect from 31 March 2019
to pursue other endeavours. The Board wishes Ian well in his future endeavours.
Mr Tony Dreisenstock resigned as CFO with effect from 1 February 2019 to pursue other endeavours. We would like to thank Tony
for his 14 years of dedication and contributions to PSV and wish him well in his future endeavours.
With effect from 21 November 2018, Mr Carlos Fernandes was appointed as Acting CEO, replacing Mr Abie da Silva. Prior to this,
Carlos was appointed as a Non-executive Director of PSV on 2 October 2018.
PSV Integrated Annual Report 2019 Corporate Governance Report
18
Mr Abie da Silva resigned as CEO with effect from 21 November 2018 to pursue personal endeavours. The Board thanks Abie for
his dedicated leadership and invaluable contributions over the last decade steering PSV through the tough years of the financial
crises.
Ms Lerato Mosiah resigned as an Independent Non-executive Director with effect from 2 October 2018. We would like to thank Lerato
for her contributions and insight during her tenure and wish her well in her future endeavours.
Rotation of Directors
One-third of the Non-executive Directors are subject, by rotation, to retirement and re-election at the Annual General Meeting in
terms of the Company’s Memorandum of Incorporation. Accordingly, Mr Anthony de la Rue will be rotating at the upcoming Annual
General Meeting and, being eligible, will offer himself for re-election.
Mr Anthony de la Rue’s brief curriculum vitae is set out on page 6 of this Integrated Annual Report.
Board charter
The Board operates under an approved charter, which regulates the way business is conducted in line with the principles of sound
corporate governance. The Board charter is aligned to the principles recommended by King IV detailing the powers of the Board and
provides that the Board has ultimate accountability and responsibility for the Group’s performance and affairs. The Board’s primary
responsibilities set out in the charter include, inter alia, the regular review of the strategic direction of investment decisions,
performance against approved plans, budgets and best practice standards. Decisions on material matters are also reserved for the
Board which retains full and effective control of the Group.
The Board is satisfied that it has fulfilled its responsibilities in accordance with the approved charter.
Meeting attendance
The Board meets at least quarterly, and more frequently if circumstances require, or confers through round robin deliberations when
necessary.
Meetings are conducted in accordance with formal agendas and annual work plans, ensuring that all substantive matters are properly
addressed. Any Director may request that additional matters be added to the agenda. Copies of Board packs are circulated to the
Directors well in advance of the meetings to ensure proper preparation to enhance constructive and informed deliberations.
A representative from the Company’s Designated Adviser attends the Board meetings as required by the JSE Listings Requirements.
Attendance by Directors at Board meetings is provided below:
Director
1 June
2018
16 August
2018
1 November
2018
21 November
2018
14 February
2019
A da Silva (CEO)* ✓ ✓ ✓ - -
A Dreisenstock (CFO)# ✓ ✓ ✓ ✓ -
E Ratshikhopha (chairperson
2018) ✓ ✓ ✓ ✗ ✓
A de la Rue (chairperson 2019) ✓ ✓ ✓ ✓ ✓
L Mosiah~ ✓ ✗ - - -
R Pitt** - - ✓ ✓ ✓
C Fernandes** - - ✓ ✓ ✓
I Schmidt## - - - - ✓
D Lorimer ~~ - - - - -
PSV Integrated Annual Report 2019 Corporate Governance Report
19
* Resigned from the Board on 21 November 2018 # Resigned from the Board on 1 February 2019
~ Resigned from the Board on 2 October 2018
** Was appointed to the Board on 2 October 2018 ## Was appointed to the Board on 1 February 2019 and resigned on 31 March 2019
~~ Was appointed to the Board on 17 May 2019
Board evaluation
PSV annually evaluates the effectiveness and performance of the Board, its committees and the individual Directors. During the
period under review, a formal assessment was conducted. Areas requiring improvement were identified and addressed by the Board.
The Board continues to review processes in various areas, including its performance and strategic planning, Board composition,
relationship with management and other stakeholders, and succession planning.
Induction and further training
In addition to being required to attend the AltX Directors Induction Programme hosted by the Institute of Directors, newly appointed
Directors are inducted through a formal process whereby they are familiarised with the Group’s operations, business environment
and sustainability issues. The induction includes a briefing on Directors’ broad fiduciary and statutory responsibilities, including the
JSE Listings Requirements.
The Board and the respective committee meeting packs include relevant and useful information about topics relating to leadership,
new developments in respect of legislation or requirements related to the specific Board committees for self-study by the Directors.
Directors’ share dealings and closed periods
The Board keeps the Company Secretary advised of all Directors’ dealings in securities, which are announced on SENS within 24
hours of receiving notice of the dealing from the relevant Director.
No member of the Board may deal in the Company’s shares without first advising and obtaining clearance from the Chairperson of
the Board.
Closed periods are exercised from the date of the financial year-end and interim period-end until the Group’s results are published
on SENS. Additional closed periods are enforced as required in terms of any corporate activity or when Directors are in possession
of price-sensitive information.
The Board has an approved trading policy in terms of which Directors of the Company and its major business units, the Company
Secretary, Senior Managers in the Group, their associates or members or immediate family, are not allowed to deal directly or
indirectly, at any time, in the securities of the Company on the basis of unpublished price-sensitive information regarding the
Company’s business or affairs. These individuals are made aware of restricted or closed periods for dealings and the provision of
insider trading legislation.
Conflicts of interest
Declarations of interests is a standing agenda item at all Board meetings. Directors are also required to formally update their
directorships and other interests that are relevant to their office as Directors of PSV, at least annually.
Where Directors have an interest in particular matters discussed at Board or Board committee meetings, the Directors are recused
from the meeting and required to leave the meeting room for the duration of the relevant discussion and/or decision.
During the year ended 28 February 2019, none of the Directors had an interest in any contract or arrangement entered into by the
Company or its business units, other than as disclosed in Note 28 to the annual financial statements.
Internal controls
The Board is responsible for the management of the Group’s systems in respect of internal control and risk management, and
evaluates the adequacy and effectiveness of these processes. The Audit and Risk Committee ensures the efficiency and profitability
of operations, the reliability of information, and adherence to rules and regulations.
PSV Integrated Annual Report 2019 Corporate Governance Report
20
The independent external auditor, as recommended by the Audit and Risk Committee, and appointed by shareholders, is responsible
for reporting on whether the annual financial statements are fairly presented in compliance with IFRS and the Companies Act. The
preparation of the annual financial statements remains the responsibility of the Board.
To ensure ongoing relevance, a formal risk assessment is conducted quarterly and the necessary updates are made to the risk
register. In addition to this, changes in risk relative to the formal register are reported to the Audit and Risk Committee and the Board
throughout the year, together with an impact assessment and a proposal of how the identified risk will be managed.
The Board, assisted by the Audit and Risk Committee, is satisfied with the effectiveness of the risk management process.
Board committees
While the Board remains accountable and responsible for the performance and affairs of the Company, Board committees assist the
Board in discharging its duties and responsibilities. However, the committees do not in any way mitigate or discharge the Board of
its duties and responsibilities.
Board committees observe the same rules of conduct and procedures as the Board, unless the Board determines otherwise. Board
committees will only speak to and act for the Board when so authorised. The authority conferred on a Board committee will not
derogate from the authority delegated to the CEO by the Board. Members of the Board committees will ensure transparency and full
disclosure to the Board.
In keeping with the recommendations of King IV, the Board has constituted the following committees: The Audit and Risk Committee,
the Social and Ethics Committee and the Remuneration and Nominations Committee. Each committee has a formally-determined
charter, containing clearly-agreed upon reporting procedures and a written scope of authority, which is reviewed annually and
approved by the Board.
The Chairperson of each Board committee is required to attend the Company’s Annual General Meetings to answer any questions
raised by shareholders.
Audit and Risk Committee
The Audit and Risk Committee is an independent statutory committee appointed by the shareholders in respect of which it has
specific statutory duties. The committee meets the requirements of Section 94 of the Companies Act, as well as the recommendations
of King IV, in that it is currently comprised of three Independent Non-executive Directors. The Board is satisfied that the members of
the Audit and Risk Committee are highly qualified individuals who, on a collective basis, have sufficient qualifications and experience
to fulfil their duties. The members of the committee are also permitted by the Board to consult with specialists when required. The
committee met four times during the year ended 28 February 2019 and the attendance of committee members is provided below.
Member 1 June
2018
16 August
2018
1 November
2018
14 February
2019
A de la Rue (chairperson 2018) ✓ ✓ ✓ ✓
E Ratshikhopha ✓ ✓ ✓ ✓
L Mosiah~ ✓ ✗ - -
R Pitt** - - ✓ ✓
C Fernandes## - - ✓ -
D Lorimer~~ (chairperson 2019) - - - - ~ Resigned from the Board, and accordingly as a Committee member, on 2 October 2018
** Appointed to the Board and Committee on 2 October 2018, resigned as a Committee member after appointment as CFO on 31 March 2019 ## Appointed to the Board and Committee on 2 October 2018, resigned as a Committee member after appointment as Acting CEO on 21 November 2018
~~ Was appointed to the Board on 17 May 2019
PSV Integrated Annual Report 2019 Corporate Governance Report
21
The Audit and Risk Committee operates in terms of a formal charter which sets out the functions and duties of the committee. These
functions are based on the relevant provisions of the Companies Act, as well as relevant corporate governance recommendations
contained in King IV, taking into account the relevant provisions of the JSE Listings Requirements. These include, inter alia, to:
o 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;
o ensure an effective internal control environment in the Company;
o 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;
o determine the fees to be paid to the external auditor as well as its terms of engagement;
o ensure that the appointment of the external auditor complies with the provisions of the Companies Act and any other legislation
relating to the appointment of auditors;
o ensure that both the external audit firm and the individual registered auditor are accredited in terms of the JSE Listings
Requirements and are independent from the Company;
o evaluate the independence and effectiveness of the external auditors;
o 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;
o pre-approve any proposed contract with the external auditor for the provision of non-audit services to the Company;
o consider the JSE’s report on the pro-active monitoring of financial statements and, where necessary, take appropriate action to
apply the findings;
o ensure that the Company has established appropriate financial reporting procedures and that those procedures are operating;
and
o satisfy itself of the appropriateness of the expertise and experience of the CFO as well as the adequacy of the Company’s
financial function.
The committee has an independent role, operating as an overseer and maker of recommendations to the Board for consideration
and final approval, paying particular attention to the adequacy of internal controls and the integrity of financial reporting.
In fulfilling its function, the committee specifically oversees: financial reporting risks, internal financial controls, fraud risks and IT
risks. The Audit and Risk Committee also oversees the Group’s integrated reporting process.
The committee considered and satisfied itself of the appropriateness of the expertise and experience of the CFO, Mr R Pitt, whose
curriculum vitae appears on page 6 of this Integrated Annual Report.
The committee further considered and satisfied itself of the appropriateness of the expertise and adequacy of the resources of the
Company’s financial function and the experience of the responsible senior members of management.
In addition, and following the committee’s review of the Independent Regulatory Board for Auditors’ latest findings report and the
latest inspection reports and summary of internal review findings in terms of paragraph 22.15 (h) of the JSE Listings Requirements
provided by the auditors, the committee satisfied itself that both Certified Masters Incorporated and Althea Cloete are accredited in
terms of the JSE Listings Requirements and are independent from the Company.
The committee is of the opinion that the Company will remain a going concern in the year ahead. The committee’s statement in this
regard is contained in the Directors’ approval to the financial statements. Refer to pages 29-30 of the annual financial statements for
the committee’s report.
Through the discharge of its specific statutory responsibilities, as well as those assigned to it by the Board, the committee assists
the Board in fulfilling its fiduciary responsibilities in respect of the governance of the Group’s risk tolerance and risk appetite.
PSV Integrated Annual Report 2019 Corporate Governance Report
22
PSV is exposed to certain risks which are influenced by its specific choices and actions. The Board, along with the Company’s
Executive Committee and management, recognise that risk management is a critical management tool to ensure that the Group
achieves its objectives. The committee has therefore been mandated with the specific objective of identifying those risks and
implementing policies to combat and mitigate them through the maintenance of a Group Risk Register.
As risk is an intrinsic part of all activities undertaken by PSV, the committee oversees the development and quarterly review of the
policies and plans for risk management in order to recommend these to the Board for approval. In this regard, the Group
acknowledges the importance of risk management as well as the implementation of corporate governance principles.
The committee does not assume the function of management, which remains the role of the Executive Directors, officers and other
senior management members. The role of the committee is to assist the Board to ensure that the Group has implemented effective
policies and plans, including, but not limited to, plans for risk management that will enhance the Group’s ability to achieve strategic
objectives and ensure that the disclosures regarding risk are comprehensive, timely and relevant.
The committee reviews the effectiveness of the system for monitoring compliance with laws and regulations and the results of
management’s investigation and follow-up (including disciplinary action) of any fraudulent acts or non-compliance. In this regard the
committee obtains regular updates from management and the Group’s legal counsel regarding compliance matters and ensures that
all regulatory compliance matters have been considered in the preparation of the financial statements.
Remuneration and Nominations Committee In accordance with the recommendations of King IV, a Remuneration and Nominations Committee has been constituted by the Board
to make recommendations relating to total guaranteed remuneration and incentives of all employees as well as matters such as
Director appointments, the appropriateness of the composition of the Board, and succession planning. The committee met three
times during the financial year ended 28 February 2019. The attendance by members at the Remuneration and Nomination
Committee meetings is provided below.
Member 16 August
2018
1 November
2018
14 February
2019
A de la Rue (chairperson 2018) ✓ ✓ ✓
E Ratshikhopha ✓ ✓ ✓
L Mosiah~ ✗ - -
R Pitt** - ✓ ✓
C Fernandes## - ✓ -
D Lorimer~~ (chairperson 2019) - - -
~ Resigned from the Board, and accordingly as a Committee member, on 2 October 2018
** Appointed to the Board and Committee on 2 October 2018, resigned as a Committee member after appointment as CFO on 31 March 2019 ## Appointed to the Board and Committee on 2 October 2018, resigned as a Committee member after appointment as Acting CEO on 21 November 2018
~~ Was appointed to the Board on 17 May 2019
The Remuneration and Nomination Committee is comprised of three Independent Non-executive Directors and the CEO and CFO
attend committee meetings by invitation only.
The role of the committee is to assist the Board in ensuring that the Company remunerates Directors and Executives fairly and
responsibly and that the disclosure thereof is accurate, complete and transparent. The committee performs, inter alia, the following
functions:
o Oversees the establishment of a remuneration policy that will promote the achievement of strategic objectives at all levels in the
Group and encourage individual performance;
o Ensure that the Company’s remuneration policy is put to a non-binding advisory vote at the Company’s Annual General Meeting;
o Reviews the outcomes of the implementation of the remuneration policy on an annual basis;
PSV Integrated Annual Report 2019 Corporate Governance Report
23
o Report to shareholders on the implementation of the Company’s remuneration policy;
o Ensure that this implementation report is put to a non-binding advisory vote at the Company’s Annual General Meeting;
o Ensure that, where 25% or more of entitled votes are cast against either or both non-binding advisory resolutions, appropriate
steps are taken to engage with dissenting shareholders;
o Ensure that the mix of fixed and variable payments, in cash, shares and other elements, meets the Company’s needs and
strategic objectives;
o Satisfy itself as to the accuracy of recorded performance measures that govern the vesting of incentives;
o Ensure that all benefits, including retirement benefits and other financial arrangements, are justified and correctly valued;
o Considers the results of the evaluation of the performance of the CEO and other Executive Directors, both as Directors and as
Executives in determining remuneration;
o Regularly reviews incentive schemes to ensure continued contribution to shareholder value and that these are administered in
terms of the rules;
o Advises the Board on the remuneration of Non-executive Directors; and
o Exercises governance over the Company’s Human Resources function, inter alia, the setting of Group performance-based
increases and bonuses, job grading, pay scales, and to provide general advice as required to the Human Resources function.
Remuneration philosophy PSV is committed to its shareholders and therefore determines its remuneration policy and philosophy based on best practices within
the market. The Group’s Executive Directors are remunerated on a cost-to-company basis, which includes benefits such as medical
aid, life insurance, death cover, disability, funeral cover and retirement. Increases are based on individual performance and measured
against defined targets for the Group.
Overview of remuneration
The salary structures of the Executive Directors and prescribed officers / key members of management consist of the following
components:
1. Monthly guaranteed basic remuneration;
2. Year-end 13th cheque bonuses – Employees qualify for an individual bonus subject to individual and company performance and
targets being achieved;
3. Directors Incentive Program (“DIP”) – Key members of management are eligible to participate in the DIP, subject to various
measures and budgetary targets being achieved and
4. Retention bonus – This incentive is allocated to key members of management to incentivise and retain such members.
Remuneration packages are reviewed annually and are monitored and benchmarked against reported figures for similar positions to
ensure fairness.
Implementation Report
The remuneration policy has been implemented as per the above.
Directors’ remuneration is set out in Note 28 of the annual financial statements. In line with King IV, the implementation report, as
set out in the remuneration report together with the remuneration policy, will be tabled annually for a separate non-binding advisory
vote by the shareholders at the Annual General Meeting. The Remuneration Committee will engage with shareholders in the event
of a 25% or more dissenting vote on the remuneration policy or implementation report (or both). The key purpose of such an
engagement process is to ascertain the reasons for dissenting votes, and where legitimate and reasonable concerns are raised to
address such concerns. This may include review and amendment to the remuneration policy or merely a clarification of the
remuneration policy.
The Company’s standard practice is to not pay ex gratia payments on termination of office of Executive Directors and prescribed
officers, except for such payments that are due under existing short- and long-term schemes.
PSV Integrated Annual Report 2019 Corporate Governance Report
24
There were no deviations from the Group’s remuneration policy during the current financial year.
There were no terminations of Executive Directors or prescribed officers during the year under review.
Remuneration of Non-executive Directors
The annual remuneration payable to any Non-executive Director is R328 539 (three hundred and twenty-eight thousand five hundred
and thirty-nine rand) per annum (2018) notwithstanding the number of committees he/she is a member/Chairperson of. No increase
to is being proposed to the Non-executive Directors’ remuneration and, accordingly, the proposed fee for 2019 is:
Fees for services as Director Annual fee for 2018/2019 Proposed annual fee for 2019/2020
Chairperson R328 539 R328 539
Members R328 539 R328 539
Fees as set out above are subject to shareholder approval at the Annual General Meeting to be held on 14 August 2019.
Directors’ remuneration is set out in Note 28 of the annual financial statements.
The three highest paid members of management within the Group (excluding Executive Directors) are set out below:
Social and Ethics Committee The Social and Ethics Committee has been established in compliance with the recommendations of King IV. The role of the committee
is described in its Board-approved charter, which regulates the way business is conducted in line with the principles of sound
corporate governance. The charter is aligned to principles recommended by King IV and details the roles and responsibilities of the
committee. The committee is comprised of five members, one of which is an Independent Non-executive Director of the Company.
The committee met twice during the financial year ended 28 February 2019 and attendance by members at committee meetings is
provided below.
Member 1 June 2018 1 November 2018
L Mosiah (chairperson 2018) ~ ✓ -
A da Silva * ✓ ✓
A Dreisenstock# ✓ ✓
C du Preez ✓ ✓
E Ratshikhopha (chairperson 2019) ** - ✓
A de La Rue** - -
R Pitt** ✓ ✓
C Fernandes** - -
~ Resigned from the Board, and accordingly as a Committee member, on 2 October 2018
* Resigned from the Board, and accordingly as a Committee member, on 21 November 2018 # Resigned from the Board, and accordingly as a Committee member, on 1 February 2019 ** Appointed to the Committee on 1 November 2018 ~~ Was appointed to the Board on 17 May 2019
Basic remuneration Retirement and
medical
Incentives and
bonuses
Total
Employee 1 1 675 271 186 141 853 870 2 715 283
Employee 2 1 373 760 152 640 - 1 526 400
Employee 3 1 187 006 131 890 109 908 1 428 804
PSV Integrated Annual Report 2019 Corporate Governance Report
25
The committee assists the Board by focusing its efforts on, inter alia, the following:
o Social and economic development;
o Human rights;
o The Company’s standing as a good corporate citizen;
o The environment, health and public safety;
o Labour and employment; and
o Ethics.
Additional information relating to the points aforementioned focus areas can be found in the Sustainability Report on pages 13 to15
of this Integrated Annual Report.
The Social and Ethics Committee reports to shareholders at the Company’s Annual General Meeting. The Chairperson of the
committee will attend the Annual General Meeting to report back to shareholders.
Company Secretary
The Group Company Secretary provides the Board with guidance in respect of 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 in respect of the discharge of their duties and responsibilities, as well as regarding legislation,
regulatory requirements and governance procedures.
The Board has access to, and is aware of, the responsibilities and duties of the Company Secretary, and has committed itself to
ensure that the Group Company Secretary is afforded the support required to perform its duties.
The Group Company Secretary acts as secretary to the Board committees.
The Board is satisfied that Merchantec Proprietary Limited (“Merchantec”), represented by Ms Natasha Petrides, has the required
knowledge, skill and discipline to perform the functions and duties of the Group Company Secretary.
Furthermore, the skills, competence and experience of the Company Secretary are verified through:
o monitoring, guiding and advising the Board on matters relating to governance, legislative and statutory requirements and their
duties and responsibilities as Directors;
o secretarial and administrative procedures are performed promptly and efficiently by the Company Secretary; and
o the Company Secretary ensures that all Directors have declared in writing any conflicts of interest at every meeting.
Relations with shareholders
The Group maintains dialogue with its key financial audiences, particularly institutional shareholders and analysts. For further
information in this regard, refer to pages 12 to 13 of this Integrated Annual Report.
Stakeholders
The stakeholders of the Group include suppliers, employees, Government and quasi Government organisations, shareholders and
customers. Each stakeholder is communicated with by either the holding company or the division directly, and feedback is also
encouraged in writing, telephonically or via the website.
Fraud and illegal acts
The Group does not engage in, nor tolerates, 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 act they can be reported
via the Group’s whistleblowing policy.
Corporate Values Policy and Code of Ethics
The Group is committed to the highest ethical standards of business conduct. The key pillars of the Board-approved Corporate
Values Policy and Code of Ethics include adherence to the legal framework and ensuring that the Group is not brought into disrepute.
PSV Integrated Annual Report 2019 Corporate Governance Report
26
The overriding background of transparency in all transactions, complying fully with all applicable laws and regulations, ensuring that
a relationship of trust and shared values is built up with both employees and external stakeholders.
The Directors, employees, employees of outsourced functions, as well as suppliers to PSV, are all expected to comply with these
principles and act in terms of the Corporate Values Policy and Code of Ethics. The Directors believe that the ethical standards of the
Group, as stipulated in the Corporate Values Policy and Code of Ethics, are monitored and are being met. Where there is non-
compliance with the Corporate Values Policy and/or the Code of Ethics, the appropriate discipline is enforced with consistency as
the Group responds to contraventions and prevents recurrences.
PSV Integrated Annual Report 2019 Shareholder Information _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
27
Shareholders
No. of % of Total No. of % of Total
Holders Share Shares Issued
Holders Share Capital
Analysis of Shareholdings
1 - 1 000 239 39.64% 79 485 0.02%
1 001 - 10 000 167 27.69% 751 149 0.18%
10 001 - 100 000 124 20.56% 4 721 762 1.15%
100 001 - 1000 000 55 9.12% 22 343 063 5.46%
Over 1 000 000 18 2.99% 381 087 531 93.18%
Total 603 100.00% 408 982 990 100.00%
Major shareholders
(5% and more of the shares in issue)
Windfall 28 Investments (Pty) Ltd 104 619 605 25.58%
Mr Abilio Jose Duarte da Silva 53 578 600 13.10%
Regis Holdings Limited 143 103 148 34.99%
Shareholder Spread
Directors and Associates (Direct and Indirect Holdings) 0 0.00% 0 0.00%
Treasury 1 0.17% 2 069 413 0.78%
10% of Issued Capital or More 3 0.50% 301 301 353 73.67%
Non-Public 4 0.67% 303 370 766 74.45%
Public 602 99.34% 406 913 577 25.55%
Total 603 100% 408 982 990 100%
Distribution of Shareholders
Control Accounts 1 0.17% 1 968 0.00%
Private Companies 21 3.48% 128 491 755 31.42%
Public Companies 9 1.49% 162 873 527 39.82%
Retail Shareholders 529 87.73% 103 421 165 25.29%
Custodians 1 0.17% 3 500 000 0.86%
Hedge Funds 1 0.17% 7 931 0.00%
Managed Funds 1 0.17% 1 000 0.00%
Nominees and Trusts 25 4.15% 7 317 086 1.79%
Close Corporations 9 1.49% 1 285 901 0.31%
Share Schemes 1 0.17% 7 575 0.00%
Treasury 1 0.17% 2 069 413 0.51%
Unclaimed Scrip 4 0.66% 5 669 0.00%
Total 603 100% 408 982 990 100%
PSV Integrated Annual Report 2019 Shareholder Information _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
28
JSE Share Information
Share price performance Shareholder’s Diary
Opening price on 1 March 2018 36c Financial year-end 28 February 2019
Closing price on 28 February 2019 28c
Reports and profit announcements:
Final results publication
28 June 2019
Highest closing price for period 1 March 2018 to
28 February 2019 38c Integrated Annual Report publication 28 June 2019
Lowest closing price for period 1 March 2018 to
28 February 2019 8c Annual General Meeting 14 August 2019
Number of ordinary shares in issue at 28
February 2019 408 982 990 Interim results publication November 2019
Total volume traded for the period 1 March 2018
to 28 February 2019 2 867 123
Total value traded for the period 1 March 2018 to
28 February 2019 R765 107.10
Interaction with Shareholders
The Group maintains a dialogue with key financial audiences, including institutional and private shareholders, analysts, fund and
private client managers. PSV manages the dialogue and feedback with and to these respective audiences through face-to-face
meetings, presentations and telephonic conversations.
The Group adopts a proactive stance in timely dissemination of appropriate information to stakeholders and shareholders through
SENS as well as print and electronic 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 as well as
information on the business units of the Company.
The Board encourages shareholders to attend its Annual General Meeting, notice of which is contained in this Integrated Annual
Report, where shareholders will have the opportunity to put questions to the Board, including the Chairmen of the Board committees
and the Chairman of the Board.
Shareholders are able to provide feedback to PSV via the website in the “contact us” section, where an email is sent directly to the
CEO’s office. An investor relations consultancy has been appointed that further disseminates information to the market and
shareholders.
-
PSV Integrated Annual Report 2019 Annual Financial Report for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
29
Audit and Risk Committee Report
Appointment
The Audit and Risk Committee is appointed at each Annual General Meeting as required by the Companies Act Part D, Section 94.
This section requires the Audit and Risk Committee to prepare a report to be included in the annual financial statements for that
financial year, specifying the matters set out below. The JSE Listings Requirements require the issuer to appoint an Audit and Risk
Committee that “must fulfil the role as set out in the King Code”.
Constitution of the committee
The committee has three Independent Non-executive Directors as required by the Companies Act and the Board is satisfied that the
qualifications, skill and experience of the committee members meet the requirements of the Companies Act and enable it to fulfil its
mandate. At year end the committee was chaired by a chartered accountant.
Responsibilities
The Companies Act requires the Audit Committee to prepare a report which covers the following matters:
o describe how the committee carried out its functions;
o state whether the committee is satisfied that the auditor was independent of the Company; and
o comment as appropriate on the accounting practices and the internal financial controls of the Company.
In addition, the Companies Act sets out the duties of the Audit Committee:
o to nominate an independent auditor;
o to determine the fees and terms of engagement of the auditors;
o to ensure the appointment complies with the Companies Act;
o to determine the nature and extent of non-audit services that the auditor may or may not provide;
o to pre-approve any proposed agreement for the auditor to provide non-audit services;
o to deal with any concerns relating to accounting practices, internal audit, the content or auditing of the
Company’s financial statements, internal financial controls, or any related matter;
o to make submissions to the Board on any matter concerning accounting policies, financial control, records
and reporting; and
o to perform any oversight function required by the Board.
Activities of the Audit and Risk Committee during the year:
o held quarterly meetings of the committee;
o reviewed and approved for recommendation to the Board, the Group interim financial statements and the Group annual financial
statements for the year ended 28 February 2019;
o ensured compliance of the annual financial statements with the requirements of the Act and International
o reviewed and satisfied itself as to the independence and competence of the external auditor;
o reviewed and approved shareholder announcements;
o approved the fees of the external auditor;
o reviewed Group’s business risks on an ongoing basis;
o monitored the internal control environment throughout the Group;
o reviewed monthly management accounts and reports;
o measures taken to improve results of those companies which are not meeting targets;
o application of KPIs for all subsidiaries, executives and key personnel; and
o reviewed and approved the Group budget.
PSV Integrated Annual Report 2019 Annual Financial Report for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
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Conclusion
The committee has satisfied itself that the internal control environment, disciplines and procedures are adequate to comply with the
Companies Act, and to minimise the financial risks of the Group. The committee is of the opinion that its objectives were met during
the year under review.
Douglas Lorimer
Audit and Risk Committee Chairman
28 June 2019
Directors’ responsibility statement
The Directors are responsible for the preparation and fair presentation of the consolidated and separate annual financial statements
of PSV, comprising the statements of financial position at 28 February 2019, and the statements of comprehensive income, changes
in equity and cash flows 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 IFRS and the requirements of the Companies Act of South
Africa. In addition, the Directors are responsible for preparing the Directors’ report.
The Directors are also responsible for such internal control as they deem necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error, and for maintaining adequate accounting records and an
effective system of risk management as well as the preparation of the supplementary schedules included in these financial
statements.
The Directors have made an assessment of the ability of the Company and its subsidiaries to continue as going concerns.
Notwithstanding that the Group has made significant losses in the current financial year, the Board is confident that the Group will
continue as a going concern for the following reasons:
o we continue to enjoy the support of our shareholders and are pursuing a capital raising transaction;
o the Company has raised a loan from Regis for USD365 000 to support the working capital of the business;
o the Company has signed a further loan agreement with a subsidiary of Regis for an additional R9 million in order to fund specific
projects within the Group which have been identified as part of the turnaround process;
o the disposal of Turbo Agencies Botswana is nearing finalisation;
o the potential sale of Engineered Linings a loss-making operation, will remove a cash drain on the business; and
o the Group is actively progressing its B-BBEE strategy which is expected to open up further opportunities for growth.
o Management have assessed the forecast cash flow up to 28 February 2020 and are satisfied that the expected cashflows are
significant for continued operations.
The auditor is responsible for reporting on whether the consolidated and separate annual financial statements are fairly presented in
accordance with the applicable financial reporting framework.
Approval of consolidated and separate annual financial statements
The consolidated and separate annual financial statements of PSV, as identified in the first paragraph, were approved by the Board
of Directors on 28 May 2019 and signed by:
JCP Fernandes RMH Pitt
Acting Chief Executive Officer Chief Financial Officer
PSV Integrated Annual Report 2019 Annual Financial Report for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
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Certification by Company Secretary
In terms of section 88(2)(e) of the Companies Act, as previously defined, I certify that, to the best of my knowledge and belief, the
Group has, in respect of the financial year reported upon, lodged with the Registrar of Companies all returns required of a public
company in terms of the Companies Act and that all such returns are true, correct and up to date.
Merchantec Capital
Company Secretary
28 June 2019
Directors’ report
The Directors submit their report together with the Company and Group annual financial statements for the financial year ended
28 February 2019.
Nature of business
PSV is an industrial engineering holding company comprising two operating business segments:
o Industrial Supplies (including steel, piping, industrial tools and consumable supplies); and
o Specialised Services (including comprehensive cryogenic and gas systems and the supply and installation of geosynthetic
linings).
Financial statements
The Company and Group’s results and financial position are contained in the annual financial statements on pages 55 to 83 of the
report. The audited annual financial statements have been prepared in accordance with IFRS and their interpretation adopted by the
International Accounting Standards Board (“IASB”), the JSE Listings Requirements, the Companies Act, and the Companies
Regulations, and remain consistent with those applied to the provisional audited results announced on 14 June 2018.
Financial results
Despite strong revenue (+59%) and overall margin (+33%) growth in Industrial Supplies driven primarily by exports volume, the
Group was unable to convert this increase into overall profitability. Specialised Services fared poorly as the general economy weighed
heavily on the gas sector, its primary customer base. Poor execution and structural sector changes in geosynthetic lining material
supply and installation resulted in substantial losses. Turbo Agencies and Engineered Linings meet the requirements contained in
IFRS 5 to be treated as a disposal Group and are accounted for as discontinued operations.
Profit after tax from continued operations was R1.3 million (2018: loss after tax of R0.75 million). Engineered Linings has been
defined as a disposal Group in terms of IFRS 5 and due to the application of the requirements of IFRS 5 this has been disclosed as
a discontinued operation. Headline loss per share was 7.65 cents per share ("cps") (2018: Basic loss per share of 0.23 cps).
Total cash flow from operating activities remained negative at R20.3 million (2018: R2.2 million). The Company's net cash increased
resulting in a reduced net overdraft of R13.8 million compared to R16.8 million overdraft in the previous year. This improvement was
largely due the issue of shares for cash to Regis which resulted in a cash inflow of R24.4 million.
As the goodwill in the statement of financial position relates to the Omnirapid cash generating unit, no impairment was considered
necessary. As we consider the goodwill of the cash generating unit Omnirapid as fairly valued and appropriate.
PSV Integrated Annual Report 2019 Annual Financial Report for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
32
Going concern
The Directors have made an assessment of the ability of the Company and its subsidiaries to continue as going concerns.
Notwithstanding that the Group has made significant losses in the current financial year, the Board is confident that the Group will
continue as a going concern for the following reasons:
o We continue to enjoy the support of our shareholders and are pursuing a capital injection transaction;
o The Company has raised a loan from Regis for USD365 000 to support the working capital of the business;
o The Company has signed a further loan agreement with TVE, a subsidiary of Regis, for an additional R9 million in order to fund
specific projects within the Group which have been identified as part of the turnaround process;
o The disposal of Turbo Agencies Botswana is nearing finalisation;
o The potential sale of Engineered Linings a loss-making operation will remove a cash drain on the business; and
o The Group is actively progressing its B-BBEE strategy which is expected to open up further opportunities for growth.
Events after reporting period
Subsequent to the financial year-end on or about 20 March 2019, the Group entered into two loan agreement with Regis, in terms of
which, Regis loaned the business;
o USD365 000 at US prime rate (currently 5.25%); and
o R9 million facility at a rate of SA prime plus 12.5% (currently 22.75%) on the utilised portion and 5% on the un-utilised portion.
Dividends
No dividends were paid nor recommended to shareholders during the financial year ended 28 February 2019.
Property, plant and equipment
No material changes in PPE occurred during the financial year.
Borrowing powers
In terms of the Company’s Memorandum of Incorporation, its borrowing powers are unlimited. The borrowing powers of the Group’s
wholly owned operating subsidiaries may in terms of its Memorandum of Incorporation be limited by the Company.
Certification by the Company Secretary
Refer to page 31 for the certification by the Company Secretary.
Litigation
There were no litigation matters for the period under review.
Independent auditors
In 2013, the Group appointed HLB CMA South Africa Inc. as independent auditors.
Stated capital
Details of the authorised and issued stated capital of the Company and the movements during the period are contained in Note 13
of the annual financial statements.
PSV Integrated Annual Report 2019 Annual Financial Report for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
33
Directors and secretary
The names of the Directors in office are set out on page 6. The interests of Directors, including Directors who have resigned during
the reporting period, in the issued share capital of the Company is set out below:
Directors' interest in shares
2019
Number of shares
2018
Number of shares
Abilio Jose Duarte da Silva 53 578 600 53 578 600
Anthony Robert Dreisenstock 6 876 100 6 876 100
here have been no changes to the respective shareholdings from the financial year end to the date of this report.33
In accordance with the JSE Listing Requirements, a detailed report on Directors’ remuneration appears in Note 28.
Details of the top earners, other than Directors, are provided on page 24.
Significant shareholders
Details of significant shareholders are included on page 27 of this Integrated Annual Report
Business units
Details of the Company’s business units appear on pages 4 to 5 of the annual financial statements.
Special resolutions passed at the previous Annual General Meeting
All the resolutions as set out in the notice of Annual General Meeting were passed by the requisite majority of shareholders, at the
Annual General Meeting held on 14 August 2019, with the exception of ordinary resolution number 2 “Control of authorised but
unissued ordinary shares” and ordinary resolution number 3 “Approval to issue ordinary shares, and to sell treasury shares, for cash”.
Approval of annual financial statements
The consolidated and separate annual financial statements of PSV Holdings Limited and its business units were approved by the
Board on 28 June 2019 and are signed on its behalf by:
JCP Fernandes RMH Pitt
Acting Chief Executive Officer Chief Financial Officer
PSV Integrated Annual Report 2019 Annual Financial Report for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
34
Report of the independent auditors
To the shareholders of PSV Holdings Limited
Our opinion
In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and
separate financial position of PSV Holdings Limited (the Company) and its subsidiaries (together the Group) as at 28 February 2019,
and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in
accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.
What we have audited
PSV Holdings Limited’s consolidated and separate financial statements comprise:
o the consolidated and separate statement of financial position as at 28 February 2019;
o the consolidated and separate income statement for the year then ended;
o the consolidated and separate statement of comprehensive income for the year then ended;
o the consolidated and separate statement of changes in equity for the year then ended;
o the consolidated and separate statement of cash flows for the year then ended; and
o the notes to the consolidated and separate financial statements, which include a summary of significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards
are further described in the Auditor’s responsibilities for the audit of the consolidated and separate financial statements section of
our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and Company in accordance with the sections 290 and 291 of the Independent Regulatory Board
for Auditors’ Code of Professional Conduct for Registered Auditors (Revised January 2018), parts 1 and 3 of the Independent
Regulatory Board for Auditors’ Code of Professional Conduct for Registered Auditors (Revised November 2018) (together the IRBA
Codes) and other independence requirements applicable to performing audits of financial statements in South Africa. We have
fulfilled our other ethical responsibilities, as applicable, in accordance with the IRBA Codes and in accordance with other ethical
requirements applicable to performing audits in South Africa. The IRBA Codes are consistent with the corresponding sections of the
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants and the International Ethics
Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence
Standards) respectively.
Material Uncertainty Related to Going Concern
We draw attention to Note 31 to the consolidated and separate financial statements and the details as noted in the Directors report,
which describes the managements consideration with regards to the liquidity issues the group is currently facing and the uncertainty
regarding the going concern of the Group and Company. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated and
separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated
and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
PSV Integrated Annual Report 2019 Annual Financial Report for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
35
Key audit matter How our audit addressed the key audit matter
Impairment of Goodwill (Group)
Goodwill is the result of acquisitions by the Group. The directors
conducted their annual impairment consideration to assess the
recoverability of the goodwill.
In order to establish whether an impairment exists, fair value less costs to sell or the value in use is determined and compared to the net book value of the goodwill.
As detailed in note 5, this determination of an impairment is highly
subjective as significant judgement is required by the directors in
determining the value in use.
The value in use is based on the discounted cash flow model for
each cash-generating unit and requires the estimation of model
assumptions, most importantly the discount rate and growth rate.
Accordingly, due to the high estimation uncertainty and significant
impairment in preceding years, the impairment consideration of
goodwill is considered to be a key audit matter.
We focused our testing on the impairment consideration on goodwill
by the directors by the key assumptions made by them. Our audit
procedures included:
o Critically evaluating the determination of the cash-generating
units;
o Evaluating whether the model used to calculate the value in use
of the individual cash-generating units complies with the
requirements of IAS 36: Impairment of Assets; and
o Validating the assumptions applied in the goodwill impairment
assessments to be appropriate and concur with the directors’
valuation.
Recoverability of deferred tax asset (Group)
A deferred tax asset is recognised to the extent that it is probable
that taxable profit will be available against which a deductible
temporary difference or unused tax losses or tax credits can be
utilised. The carrying value of the existing deferred tax asset is
R17 319 924 (refer to note 8) to the consolidated and separate
financial statements.
In order to recognise the deferred tax asset, management has made
estimates based on assumptions in relation to the future taxable
income of the relevant entities within the Group.
These judgements and assumptions include the forecasted contract
cash flows, the nominal growth rate applied to those cash flows as
well the entity’s ability to execute these plans.
Accordingly, due to the significant estimation uncertainty related to
the cash flows, the assessments of the recoverability of deferred tax
asset is considered to be a key audit matter.
We made use of our taxation expertise to evaluate the accuracy and
completeness of the deferred tax asset computation. This involved
obtaining the computation for the deferred tax asset and agreeing
the underlying data to audited information and assessing the
computation for completeness based on our understanding of the
industry and the transactions entered into by the relevant entities
within the Group during the year.
We evaluated the assumptions applied to the forecasted taxable
income calculations by comparing management’s assessments to
supporting evidence, such as approved cash flow forecasts, the
Group’s five year strategic plan, historical data and comparison to
industry trends.
Other information
The directors are responsible for the other information. The other information comprises the information included in the PSV Holdings
Limited consolidated and separate annual financial statements for the year ended 28 February 2019 and the PSV integrated report
for the year ended 28 February 2019, which includes the Directors’ report, the Report of the Audit, Risk and Compliance Committee
and the Certificate by the Company Secretary as required by the Companies Act of South Africa. Other information does not include
the consolidated and separate and separate financial statements and our auditor’s report thereon.
Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express an
audit opinion or any form of assurance conclusion thereon.
PSV Integrated Annual Report 2019 Annual Financial Report for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
36
In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the consolidated and separate financial statements
The directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in
accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for
such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated and separate financial statements, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do
so.
Auditor’s responsibilities for the audit of the consolidated and separate financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated
and separate financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout
the audit. We also:
o Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
o Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
o Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
o Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s
ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going concern.
o Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the
disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
PSV Integrated Annual Report 2019 Annual Financial Report for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
37
o Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the consolidated and separate financial statements. We are responsible for the direction,
supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence,
and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, related safeguards.
From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the
consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015, we report that HLB CMA (South
Africa) Inc. has been the auditor of PSV Holdings Limited for 7 years.
HLB CMA (South Africa) Inc
G Davias
(Chartered Accountant)SA RA
Director
28 June 2019
(Original independent auditors report available on request)
PSV Integrated Annual Report 2019 Annual Financial Report for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
38
Statement of financial position as at 28 February 2019
GROUP COMPANY
Note
2019
R
2018
R
2019
R
2018
R
ASSETS
Non-current assets
Property, plant and equipment 2-3 5 435 889 11 793 921 - -
Goodwill and intangible assets 18 369 192 17 784 334 - -
Intangible assets 4 762 458 177 600 - -
Goodwill 5 17 606 734 17 606 734 - -
Long-term portion of retention trade receivable 847 162 847 162 - -
Long-term portion of loans receivable 6 1 107 239 1 336 387 - -
Investment in subsidiaries 7 - - 35 003 202 48 411 619
Deferred taxation assets 8 17 319 924 10 779 054 - -
Total non-current assets 43 079 406 42 540 858 35 003 202 48 411 619
Current assets
Inventories and WIP 9 6 496 855 35 702 949 - -
Loans to Group companies 7 - - 430 151 3 165 376
Trade and other receivables 10 39 439 382 37 575 071 2 360 549 3 044 272
Current portion of long-term loan receivable 6 209 526 197 450 - -
Cash and cash equivalents 11 6 683 416 4 158 674 351 984 706 574
Total current assets 52 829 179 77 634 144 3 142 684 6 916 222
Non-current assets held for sale 12 7 195 489 11 093 272 - -
Total assets 103 104 074 131 268 274 38 145 886 55 327 841
EQUITY
Share capital 13 294 790 290 270 376 125 298 097 508 273 683 543
Share premium 13 2 953 350 2 953 350 - -
Foreign-currency translation reserve (107 920) (138 587) - -
Revaluation surplus 3 - 622 784 - -
Retained loss (245 284 942) (244 461 465) (219 828 302) (244 464 812)
(Loss)/profit this year (25 294 949) (823 477) (43 788 286) 24 636 610
Total equity attributable to ordinary shareholders 27 055 829 28 528 730 34 480 920 53 855 341
LIABILITIES
Non-current liabilities
Finance lease liabilities 14 1 749 491 2 097 727 - -
Deferred taxation liabilities 8 29 201 49 728 - -
Total non-current liabilities 1 778 692 2 147 455 - -
Current liabilities
Billings in excess of work certified - 679 002 - -
Provisions 15 751 944 2 088 288 - -
Finance lease liabilities 14 694 874 665 119 - -
Trade and other payables 16 45 231 502 66 776 700 3 664 966 1 472 500
Bank overdrafts 11 20 437 169 20 980 994 - -
Total current liabilities 67 115 489 91 190 103 3 664 966 1 472 500
Non-current liabilities held for sale 12 7 154 064 9 401 986 - -
Total liabilities 76 048 245 102 739 544 3 664 966 1 472 500
Total equity and liabilities 103 104 074 131 268 274 38 145 886 55 327 841
PSV Integrated Annual Report 2019 Annual Financial Report for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
39
Consolidated statement of comprehensive income for the year ended 28 February 2019
GROUP COMPANY
Note
2019
R
2018
R
2019
R
2018
R
Revenue 17 237 532 704 175 703 448 - -
Cost of sales (209 317 068) (144 755 945) - -
Gross profit 28 215 636 30 947 503 - -
Sundry income 431 039 562 994 2 230 418 27 781 902
Operating expenses (31 931 315) (30 850 839) (46 007 883) (3 060 365)
Results from operating activities 18 (3 284 640) 659 658 (43 777 465) 24 721 537
Finance income 19 187 312 1 063 896 27 802 19 841
Finance expenses 19 (2 007 795) (1 943 662) (38 523) (104 768)
Net finance costs (1 820 483) (879 766) (10 721) (84 927)
(Loss)/profit before tax from continuing
operations (5 105 123) (220 108) (43 788 186) 24 636 610
Income taxation expense 20 6 381 625 (520 090) - -
(Loss)/profit for the year from continuing
operations 1 276 502 (740 198) (43 788 186) 24 636 610
Loss from discontinued operations 12 (26 571 549) (73 278) - -
(Loss)/profit for the year attributable to ordinary
shareholders (25 294 949) (813 476) (43 788 186) 24 636 610
Other comprehensive income that can be
recycled in future periods
The amount below does attract tax and will not be
subsequently recycled to profit or loss
Revaluation surplus net of tax 3 (622 784) 622 784 - -
The amount below does not attract any tax and will
be subsequently recycled to profit or loss
Foreign currency translation reserve 30 667 (495 571) - -
Total comprehensive (loss)/income for the year (25 887 164) (686 264) (43 788 186) 24 636 610
Profit/(loss) per share
Basic and diluted loss per share 21 (7.71) (0.31) - -
Basic and diluted profit/(loss) per share (cents) -
continuing operations 21 0.39 (0.33) - -
Basic and diluted loss per share (cents) -
discontinued operations 21 (8.10) (0.03) - -
PSV Integrated Annual Report 2019 Annual Financial Report for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
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Consolidated statement of changes in equity for the year ended 28 February 2019
GROUP
Share capital
R
Share
premium
R
Foreign
currency
translation
reserve
R
Revaluation
Surplus
R
Accumulated
loss
R
Total
R
Balance as at 28 February 2017 270 376 125 2 953 350 356 984 - (244 461 465) 29 224 994
Loss for the year - - - - (823 477) (823 477)
Continued operations - - - - (750 198) (750 198)
Discontinued operations - - - - (73 279) (73 279)
Other comprehensive income from revaluation
of assets - net of tax - - - 622 784 - 622 784
Other comprehensive (loss) from currency
fluctuations - - (495 571) - - (495 571)
Total comprehensive loss for the period - - (495 571) 622 784 (823 477) (696 264)
Balance as at 28 February 2018 270 376 125 2 953 350 (138 587) 622 784 (245 284 942) 28 528 730
Loss for the year - - - - (25 295 047) (25 295 047)
Continued operations - - - - 1 276 502 1 276 502
Discontinued operations - - - - (26 571 549) (26 571 549)
Other comprehensive loss from revaluation of
assets - net of tax - - - (622 784) - (622 784)
Other comprehensive income from currency
fluctuations - - 30 667 - - 30 667
Total comprehensive loss for the period - - 30 667 (622 784) (25 295 047) (25 887 164)
Contributions by and distributions to owners
Issue of shares 25 758 567 - - - - 25 758 567
Cost related to specific shares issue (1 344 402) - - - - (1 344 402)
Balance as at 28 February 2019 294 790 290 2 953 350 (107 920) - (270 579 989) 27 055 731
COMPANY
Share capital
R
Accumulated loss
R
Total
R
Balance as at 28 February 2017 273 683 543 (244 464 912) 29 218 631
Total comprehensive income for the period
Profit for the year - 24 636 610 24 636 610
Balance as at 28 February 2018 273 683 543 (219 828 302) 53 855 241
Total comprehensive income for the period
Loss for the year - (43 788 186) (43 788 186)
Issue of shares 25 758 567 - 25 758 567
Cost related to specific shares issue (1 344 602) - (1 344 602)
Balance as at 28 February 2019 298 097 508 (263 616 488) 34 481 020
PSV Integrated Annual Report 2019 Annual Financial Report for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
41
Consolidated statement of cash flows for the year ended 28 February 2019
GROUP COMPANY
Note
2019
R
2018
R
2019
R
2018
R
Cash flows from operating activities 24 (20 348 124) (2 719 152) (7 062 419) (1 054 635)
Taxation paid 25 - 55 441 - -
Net cash (used in)/from operating activities (20 348 124) (2 663 711) (7 062 419) (1 054 635)
Net cash (used in)/from operating activities - continuing operations (1 526 926) (4 326 910) (7 062 419) (1 054 635)
Net cash (used in)/from operating activities - discontinued operations (18 821 198) 1 663 199 - -
Cash flows from investing activities
Additions to property, plant and equipment to expand operations (556 732) (746 398) - -
Additions to intangibles to expand operations (718 570) - - -
Proceeds from disposal of property, plant and equipment 1 770 434 1 777 185 - -
Loan repaid on B-BBEE sale - 3 188 542 - -
Decrease in assets held for sale 12 784 888 - - -
Loans to Group companies advanced/(repaid) - - (24 629 805) (7 612 231)
Loans to Group companies granted - - 6 934 390 9 227 474
Financial income 48 782 1 063 896 27 802 19 841
Net cash from/(used in) investing activities 1 328 802 5 283 225 (17 667 613) 1 635 084
Net cash (used in)/from investing activities - continuing operations (18 818 464) 4 495 696 (17 667 613) 1 635 084
Net cash from investing activities - discontinued operations 20 147 266 89 901 - -
Cash flows from financing activities
Loans and borrowings (repaid) (318 481) (3 255 881) - -
Financial expenses arising on interest bearing debt (2 007 795) (1 943 662) (38 523) -
Net proceeds related to share subscription 24 414 165 - 24 413 965 (104 768)
Net cash from/(used in) financing activities 22 087 889 (5 199 543) 24 375 442 (104 768)
Net cash from/(used in) financing activities - continuing operations 23 713 709 (3 165 143) 24 375 442 (104 768)
Net cash from/(used in) financing activities - discontinued operations (1 625 820) (2 034 400) - -
Increase/(decrease) in cash and cash equivalents 3 068 567 (2 580 029) (354 590) 475 682
Net increase/(decrease) in cash and cash equivalents - continuing
operations 3 368 319 (2 298 729) (354 590) 475 682
Net (decrease) in cash and cash equivalents- discontinued operations (299 752) (281 300) - -
Net bank overdraft transferred to non-current liabilities held for sale - 2 026 648 - -
Cash balance transferred to non-current assets held for sale - (244 449) - -
Bank overdraft transferred to non-current liabilities held for sale - 2 271 097 -
Cash and cash equivalents at beginning of year (16 822 320) (14 242 291) 706 574 230 892
Cash and cash equivalents at end of year 11 (13 753 753) (16 822 320) 351 984 706 574
PSV Integrated Annual Report 2019 Accounting Policies for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
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Accounting Policies
PSV Holdings Limited (“the Company”) is a Company domiciled in South Africa. The consolidated financial statements at 28 February 2019
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.
Basis of preparation
The consolidated financial statements (“the financial statements”) for the year ended 28 February 2019 (“the year”) have been prepared in
accordance with the framework concepts, the recognition and measurement requirements of International Financial Reporting Standards (“IFRS”),
the Listings Requirements of the JSE Limited, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and
Financial Pronouncements as issued by the Financial Reporting Standards Council and the South African Companies Act, 2008 (Act 71 of 2008).
The accounting policies and method of computation applied in preparation of these financial statements are in accordance with IFRS and are
consistent with those applied in the annual financial statements for the prior period except for the following; the effect of the adoption of new
standards that have become effective during the year, the adoption of IFRS 15 Revenue from contracts with customers, IFRS 9 Financial
instruments and a change in the accounting policy for a certain class of Property, plant and equipment.
Use of estimates and judgement
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that may
affect the application of 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 results of which form
the basis of making the judgements about carrying values of assets and liabilities that 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.
In particular, information about areas of estimation and critical judgements in applying accounting policies that have the most significant effect on
the amount recognised in the financial statements are described in the following notes:
o Note 5 - Impairment test on goodwill.
o Note 8 - Recognition of deferred tax assets.
o Note 4 - Intangible assets at fair values.
o Note 10 - Loss allowance on financial assets at amortised costs.
o Note 17 - Revenue - judgement in identifying when control transfer to customers.
o Cost of sales estimates made on cost allocations.
Going Concern In determining the appropriate basis of preparation of the financial statements, the directors are required to consider whether the Group and
company can continue in operational existence for the foreseeable future. The Group and company’s result in the current year were significantly
impacted by loss making division being Engineered Linings a division of PSV Industrial Proprietary Limited and entity Turbo Agencies Botswana. As a result, the Group reported net loss after tax of R25 294 949 for the 2019 financial year. The following are significant items included in the
loss for the year: o Discontinued operations for Engineered Linings and Turbo Agencies Botswana being R26 571 549. The trading conditions in the industrial supply sector continue to be challenging as reflected in the group’s results. The Group’s balance sheet has
been negatively impacted by the loss realised from operations. At year-end, the group’s current liabilities R67 115 489 exceeded current assets
R60 024 668 and group cash had increased to (R13 753 753). Total assets at R103 104 074 still exceed total liabilities at R76 048 245. In order to ensure the future sustainability of the group, the executive team are executing a turnaround plan. A number of initiatives have been
implemented by the Group under this plan which include raising equity capital, the sale of non-core assets, renegotiating terms with funders and
securing new profitable projects.
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In order to provide more liquidity, the Group has successfully managed to perform the following during the year: o the Company has raised a loan from Regis for USD365 000 to support the working capital of the business; o the Company has signed a further loan agreement with a subsidiary of Regis for an additional R9 million in order to fund specific projects
within the Group which have been identified as part of the turnaround process; o the disposal of Turbo Agencies Botswana is nearing finalisation; o the potential sale of Engineered Linings a loss-making operation, will remove a cash drain on the business; and o the Group is actively progressing its B-BBEE strategy which is expected to open up further opportunities for growth. Despite the progress made, group cash flows remain critically tight and the Group is continuing with its efforts to improve liquidity within the group.
Based on the turnaround plan, management has prepared a budget for the 2020 financial year and cash flow forecasts covering a minimum of
12 months. This budget and cash flow forecast, if successfully implemented, indicates that the Group will raise sufficient cash resources for the
foreseeable future. In compiling its cash flow forecasts, the Group has made a number of key judgements and assumption. The judgements and estimates are based
on the turnaround plan and include the following: o Accelerating the resolutions of legacy losses; o Negotiations to obtain additional long-term financing; and
The above plans are important elements of securing adequate liquidity for the business going forward. If not concluded successfully, cash flow
resources available to the Group will be negatively impacted. As a result of the events and conditions described above, there is uncertainty on the
timing of cash flows that may cast doubt on the Group and company’s ability to continue as a going concern and, therefore, the company may be
unable to realise its assets and discharge its liabilities in the normal course of business.
Functional and presentation currency
The 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 consolidation
Subsidiaries
The Group financial statements include the financial statements of the Company and its subsidiaries. A subsidiary is an entity over which the
Group exercises control.
In assessing when an investor controls an investee, consideration is given to when the entity is exposed, or has rights, to variable returns from its
involvement with the investee and whether it has the ability to effect those returns through its power over the investee. An investor controls an
investee when it has: power over the investee; exposure or rights to variable returns from its involvement with the Investee; and the ability to use
its power to effect the amount of the investor’s returns.
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. Investments in subsidiaries are measured at fair
value in the Company financial statements.
Foreign currencies
Foreign currency transactions
Foreign 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 tha t date. Gains
or losses on translation are recognised in profit or loss.
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.
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Foreign subsidiaries
The assets and liabilities of foreign subsidiaries, 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 of foreign subsidiaries are recognised in other comprehensive income as a foreign currency
translation reserve.
Where loans to the foreign subsidiaries are long-term in nature and its settlement is neither planned nor likely in the foreseeable future, it forms
part of the Company’s net investment in the foreign subsidiaries, the translation gains or losses arising on converting the loans to the rates of
exchange ruling at the date the investment in equity was made are taken directly to a foreign currency translation reserve in shareholders’ equity
in the Group financial statements.
On disposal of the net investment, the translation gains or losses accumulated in the foreign currency translation reserve are recognised in profit
or loss.
Financial income
Interest income is recognised in profit or loss as it accrues using the effective interest method.
Financial expenses
Finance expenses comprise interest payable on borrowings; calculated on the principal outstanding using the effective interest method. Losses
on foreign currency transactions are also included in financial expenses where they relate to the revaluation of foreign bank accounts / cash.
Taxation
Income tax expense comprises current and deferred tax.
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 reporting date, and any adjustments of taxation payable for previous years. There is no current tax payable by the
Group owing to their loss-making position.
Deferred taxation is recognised in respect of temporary differences Temporary differences are differences between the carrying amounts of assets
and liabilities for financial reporting purposes and their tax base.
Deferred taxation is recognised in profit or loss except to the extent that it relates to a transaction that is recognised in other comprehensive
income or directly in equity, which is recognised where the transaction was recorded respectively. 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 reporting 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. Refer to note 8 for disclosure of
management’s assessment of the recoverability of the deferred tax asset.
The carrying value of a deferred tax asset is reviewed at the end of each reporting period.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets against current tax liabilities,
the deferred tax assets and deferred tax liabilities relate to taxes levied by the same tax authority on the same taxable entity, and the Group
intends to settle on a net basis
Property, plant and equipment
Property, plant and equipment are recorded initially at cost, and subsequently at cost less accumulated depreciation and impairment losses. In
the prior reporting period, the accounting policy for the Road Tanker class of asset was changed from the cost model to the revaluation model.
All assets are depreciated on the straight-line method over their expected useful lives to an estimated residual value. The estimated useful lives
are currently:
o Plant and machinery 5 to 10 years
o Road Tanker 30 years
o Motor vehicles 5 years
PSV Integrated Annual Report 2019 Accounting Policies for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
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o Furniture, fittings and office equipment 5 to 10 years
o Computer equipment and software 3 years
o Leasehold improvements Shorter of useful lives or lease term
Cost includes expenditure that is directly attributable to the acquisition of the asset.
Revalued assets were disposed in the current period, for revalued assets, the assets are carried at their fair value at the date of revaluation less
any subsequent accumulated depreciation. Revaluations are made with sufficient regularity such that the carrying amount does not differ materially
from that which would be determined using fair value at the reporting date. Increases in the carrying amounts of assets arising on revaluation are
recognised in other comprehensive income. 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. Depreciation methods, residual values and useful lives are reassessed annually. Changes
in the depreciation method, residual value, or useful lives are accounted for prospectively as a change in accounting estimate. 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 amounts and are taken to profit or
loss.
Subsequent costs
The 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 liabilities
Finance leases
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Lease payments
are allocated to each period during the lease term to produce a constant periodic rate of interest on the remaining liability balance.
Operating leases
Other leases that do not transfer substantially all the risks and rewards of ownership, are treated as operating leases with lease payments charged
against profit or loss. In addition, an adjustment to the operating lease payment to a straight-line lease expense over the period of the lease is
made. This adjustment is calculated by aggregating the operating lease payments over the life of the lease and dividing it by the period of the
lease to give a fixed monthly lease payment which is equal over the period of the lease.
Intangible assets
Intangible assets are stated at cost less accumulated amortisation and impairment losses. The current estimated useful lives are:
o Market relationships 10 to 20 years
o Customer relationships 1 to 7 years
o Technology relationships 10 years
o Cryogenics tanker 10 years
o Patent on road tanker design 10 years
The amortisation methods, useful lives and residual values are reviewed at each financial year-end.
Amortisation is recognised in profit or loss on the straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from
the date they are available for use, since this most closely reflects the expected portion of consumptions of the future economic benefits embodied
in the asset.
Development costs are capitalised only after technical and commercial feasibility of the asset for sale or use have been established. This means
that the entity will intend and be able to complete the intangible asset and either use it or sell it and be able to demonstrate how the asset will
generate future economic benefits If the entity cannot distinguish the research phase of an internal project to create an intangible asset from the
development phase, the entity treats the expenditure for that project as if it were incurred in the research phase only.
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Goodwill
All business combinations are accounted for by applying the purchase method, any differences between the fair value of consideration transferred
and the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
Goodwill is tested annually for impairment losses. Impairment losses recorded are not subsequently reversed. 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.
Impairment of non-financial assets
The carrying amount of the Group’s assets, other than inventories, receivables and deferred tax assets, which are separately assessed, are
reviewed at each balance sheet 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. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset of CGU. An impairment loss is recognised whenever the carrying amount of an asset or its cash
generating unit 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 and market conditions 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 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.
Inventories
Inventories are stated at the lower of cost or net realisable value. Cost is determined using weighted average cost. These are regularly reviewed
and updated to reflect 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.
Provisions and Commitments
A provision is recognised when there is a present legal or constructive obligation as a result of a past event for which it is more likely than not that
an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. A provision to
pay a levy is not recognised until the obligating event specified in the legislation occurs, even if there is no realistic opportunity to avoid the
obligation. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class
of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of
obligations may be small. Provisions are measured at the present value of the expected outflow of resources required to settle the obligation using
a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the
provision due to the passage of time is recognised as a finance cost.
Revenue
Revenue comprises of consideration received or receivable on contracts entered into with customers for the sale of goods and services in the
ordinary course of the Group’s activities. Revenue is shown net of taxes and discounts and is recognised when the Group satisfies its performance
obligations as set out in the contracts entered into with its customers. Revenue is recognised at the amount of the transaction price that is allocated
to each performance obligation and this is determined at an amount that depicts the consideration to which the Group expects to be entitled in
exchange for transferring the goods and services promised to the customer.
The principles in IFRS 15 are applied using the following 5 step model:
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o Identify the contract(s) with a customer
o Identify the performance obligations in the contract
o Determine the transaction price
o Allocate the transaction price to the performance obligations in the contract
o Recognise revenue when or as the entity satisfies its performance obligations.
The standard requires entities to exercise considerable judgement taking into account all the relevant facts and circumstances when applying
each step of this model to its contracts with customers.
For sales of industrial supplies and tankers to the market, revenue is recognised when control of the goods has transferred, being when the goods
have been shipped and/or installed/work performed. For the sale of lining installations this is performed over a period of time. The purchase of
material is at a point at time as the client receives control but the service of installation occurs over a period of time, as and when the client the
receives and consumes the benefits simultaneously.
A receivable is recognised by the company when the goods are delivered to the client as this represents the point in time at which the right to
consideration becomes unconditional, as only the passage of time is required before payment is due. No element of financing is deemed present
as the sales are made with a credit term of 30 to 90 days, which is consistent with market practice.
The industrial supplies, tankers and lining installations are often sold with volume discounts based on aggregate sales over a 12 months period.
Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume discounts. Accumulated
experience is used to estimate and provide for the discounts, using the expected value method, and is only recognised to the extent that it is highly
probable that a significant reversal will not occur
The Group has the following revenue streams:
Sale of outsourced goods
Specialised valves and pumps Control of the good or service is transferred to the customer at a point in time
On delivery of product
Lining material Control of the good or service is transferred to the customer at a point in time
On delivery of product
General industrial supplies Control of the good or service is transferred to the customer at a point in time
On delivery of product
Sale of manufactured goods
Vessel, Tanker and Vaporisers Control of the good or service is transferred to the customer at a point in time
On delivery of product
Special projects Control of the good or service is transferred to the customer at a point in time
On delivery of product
Tanker and vessel repairs Control of the good or service is transferred to the customer over time
Revenue recognized based on labour hours worked divided by total budgeted hours to be worked
Lining installation Control of the good or service is transferred to the customer over time
Revenue recognized based on lining material installed as a percentage of total lining material to be installed
Nature of goods and services
The following is a description of principle activities separated by revenue streams
Sale of outsourced goods
Products and services Nature, timing of satisfaction of performance obligations and significant payment terms
Specialised valves and pumps The Group recognises revenue when a customer takes possession of the goods. Payment terms vary between 30-90 days.
Lining material The Group recognises revenue when a customer takes possession of the goods. This usually occurs when the customers sign a contract. Payment terms are generally 30 days from final invoice date.
General industrial supplies The Group recognises revenue when a customer takes possession of the goods. Payment terms vary between 30-90 days.
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Nature of goods and services
Sale of manufactured goods
Products and services Nature, timing of satisfaction of performance obligations and significant payment terms
Vessel, tanker and vaporisers The Group recognises revenue when a customer takes possession of the goods. Payment terms vary between 30-60 days.
Special projects The Group recognises revenue when a customer takes possession of the goods. This usually occurs when the customers sign a contract. Payment terms are generally 30 days from final invoice date.
Tanker and vessel repairs The Group recognises revenue when a customer repair has been completed. Payment terms vary between 30-60 days.
Lining installation The Group recognises revenue when the lining installation has been completed. Payment terms vary between 30-60 days.
Income received in advance on all revenue streams is reflected under trade and other payables in the statement of financial position.
Amounts invoiced, for which revenue has not been recognised are reflected as billings in excess of work certified in the statement of financial
position. Similarly, amounts not yet invoiced, for which revenue has been recognised are reflected under trade and other receivables.
Cost incurred on projects which do not yet meet the revenue recognition criteria are capitalized to inventories as work in progress and are expensed
when control of the good or service is transferred to the customer.
Where losses are projected to be made on a contract in progress; these losses are provided for immediately and the credit is taken to trade and
other payables.
Contracts which make provision for retention payments, the amount receivable from the customer has been estimated by management, and where
management is certain the amount will be collected from the customer, are included in revenue and the receivable is reflected as retentions under
trade and other receivables.
Cost of sales
Cost of sales primarily comprises the cost of goods sold and services provided, including an allocation of direct overhead expenses, net of supplier
rebates, and costs incurred that are necessary to acquire and store goods. Cost of sales also includes: the cost to distribute an service goods to
customers where delivery is invoiced; warehousing costs and the cost of other shipping and handling activities; any write-downs and reversals of
write-downs to inventory; and any foreign currency exposure, including reclassified gains and losses on foreign currency hedging instruments,
relating directly to goods imported.
When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenues
recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the
period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value,
is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.
The related cost of providing services recognised as revenue in the current period is included in cost of sales. Contract costs comprise:
o costs that relate directly to the specific contract;
o costs that are attributable to contract activity in general and can be allocated to the contract; and
o such other costs as are specifically chargeable to the customer under the terms of the contract.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from
equity.
When share 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 by subsidiaries are classified as treasury shares and are presented as a deduction from total
equity. Shares repurchased by PSV Treasury are treated as treasury shares until cancelled or reissued. Where such ordinary shares are
subsequently reissued, any consideration received, net of any directly attributable incremental costs and related income tax effects, is included in
equity attributable to the Company’s equity holders.
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Employee benefits
Short-term employee benefits
The cost of all short-term employee benefits is recognised during the period in which the employee renders the related service.
A provision is raised for the estimated liability for annual leave and performance bonuses as a result of services rendered by employees up to the
date of the statement of financial position.
Defined contribution plans
Certain business units 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 profit or loss
when they are due.
Earnings per share
The 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 deferred equity purchase considerations and share awards
granted to employees.
Headline earnings per share
Headline earnings per share is calculated using the weighted average number of ordinary shares in issue during the period and is based on the
earnings attributable to ordinary shareholders after excluding those items as required by Circular 2/2015 issued by the South African Institute of
Chartered Accountants (“SAICA”).
Non-current assets and liabilities held-for-sale and discontinued operations
Non-current assets are classified as held-for-sale if their carrying amount will be recovered principally through a sale transaction, not through
continuing use. A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical
area of operation, or a business unit acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon the earlier
of disposal or when the operation meets the criteria to be classified as held-for-sale.
In order to provide clarity on values disclosed as held for sale and as a discontinued operation with the requirements of IFRS 5, further disclosures
are provided in note 12.
Fair value estimation
The fair value of financial instruments and other assets that are not traded in an active market is determined by using valuation techniques. The
Group and the company use a variety of methods and make assumptions that are based on market conditions existing at the end of each reporting
period. Market prices are used for revalued assets. Other techniques, such as estimated discounted cash flows, are used to determine fair value
for financial instruments.
Operating segments
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses,
including revenues and expenses that relate to transactions with any of the Group’s other components. The Group determines and presents
operating segments based on the information that is internally provided to the Group’s Chief Executive Officer (CEO), who is the Group’s Chief
Operating Decision-maker.
An operating segment’s operating results are reviewed regularly by the CEO to make decisions about resources to be allocated to the segment
and assess its performance, and for which discrete financial information is available. Segment results that are reported to the CEO include items
directly attributable to a segment as well as those that can be allocated on a reasonable basis.
PSV Integrated Annual Report 2019 Accounting Policies for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
50
Standards and interpretations
During the year the Company and Group adopted the new standards and interpretations that become effective. There was no material impact on
the financial statements.
The standards and interpretations issued and not yet effective have been considered by the Company and Group and those that are relevant will
be adopted in the accounting period in which they become effective and are listed below.
Financial Instruments IFRS 9
The impact of transition from IAS 39 to IFRS 9 is disclosed below. The Group has disclosed the relationship between transferred financial assets
that are derecognised in its entity and the associated liabilities to evaluate the nature of, and the risk associated with, the entities continued
involvement in derecognised financial assets. The impact has not been significant on the changes in classification and measurement of certain
financial assets and balance sheet impairment allowance and provisions.
o Balance sheet impairment allowance and provisions.
o Changes in classification and measurement of certain financial assets.
o Reclassification of subordinated liabilities to fair value.
Financial instruments held by the Group are classified in accordance with the provisions of IFRS 9 Financial Instruments.
Broadly, the classification possibilities, which are adopted by the Group as applicable, are as follows:
Financial assets which are equity instruments:
o Mandatorily at fair value through profit or loss.
Financial assets which are debt instruments:
o Amortised cost. (This category applies only when the contractual terms of the instrument give rise, on specified dates, to cash flows that are
solely payments of principal and interest on principal, and where the instrument is held under a business model whose objective is met by
holding the instrument to collect contractual cash flows).
Financial liabilities:
o Amortised cost.
Financial instruments and risk management presents the financial instruments held by the Group based on their specific classifications (Note 23).
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales
are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the
marketplace.
The specific accounting policies for the classification, recognition and measurement of each type of financial instrument held by the Group are
presented below.
Accounting for financial instruments
Financial instruments comprise investments in equity and, loans receivable, trade and other receivables (excluding VAT and prepayments), equity
investments in subsidiaries, cash and cash equivalents, Group loans, borrowings, other non-current liabilities (excluding provisions), bank
overdrafts, and trade and other payables.
Investments in subsidiaries
Investments in subsidiaries in the Company financial statements are recognised at cost less impairment losses and include the equity contributions
of share-based payments to employees of subsidiaries as well as loans owing from non-operating subsidiaries.
PSV Integrated Annual Report 2019 Accounting Policies for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
51
Trade and other receivables
Classification
Trade and other receivables, excluding, when applicable, VAT and prepayments, are classified as financial assets subsequently measured at
amortised cost (Note 10). They have been classified in this manner because their contractual terms give rise, on specified dates to cash flows
that are solely payments of principal and interest on the principal outstanding, and the Group's business model is to collect the contractual cash
flows on trade and other receivables.
Recognition and measurement
Trade and other receivables are recognised when the Group becomes a party to the contractual provisions of the receivables. They are measured,
at initial recognition, at fair value plus transaction costs, if any. They are subsequently measured at amortised cost. The amortised cost is the
amount recognised on the receivable initially, minus principal repayments, plus cumulative amortisation (interest) using the effective interest
method of any difference between the initial amount and the maturity amount, adjusted for any loss allowance.
Impairment
The Group recognises a loss allowance for expected credit losses on trade and other receivables, excluding VAT and prepayments. The amount
of expected credit losses is updated at each reporting date. The Group measures the loss allowance for trade and other receivables at an amount
equal to lifetime expected credit losses (lifetime ECL), which represents the expected credit losses that will result from all possible default events
over the expected life of the receivable.
Impairment of financial assets
IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ (“ECL”) model. The new impairment model applies to financial
assets measured at amortised cost, contract assets and debt investments at FVOCI, but not to investments in equity instruments. Under IFRS 9,
credit losses are recognised earlier than under IAS 39. The financial assets at amortised cost consist of trade receivables, cash and cash
equivalents, and corporate debt securities. Under IFRS 9, loss allowances are measured on either of the following bases:
o 12-month ECLs: these are ECLs that result from possible default events within the 12 months after the reporting date; and
o lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument.
The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured as 12-month ECLs:
o debt securities that are determined to have low credit risk at the reporting date; and
o other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument)
has not increased significantly since initial recognition.
The Group has elected to measure loss allowances for trade receivables and contract assets at an amount equal to lifetime ECLs.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the
Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative
and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and including forward-looking
information.
The Group considers a financial asset to be in default when:
o the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if
any is held); or
o the financial asset is more than 90 days past due.
The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.
PSV Integrated Annual Report 2019 Accounting Policies for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
52
Measurement of ECL’s
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference
between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).
ECLs are discounted at the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities at FVOCI are credit-impaired.
A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial
asset have occurred.
Presentation of impairment
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities
at FVOCI, the loss allowance is recognised in OCI, instead of reducing the carrying amount of the asset. Impairment losses related to trade and
other receivables, including contract assets, are presented separately in the statement of profit or loss and OCI.
Impact of the new impairment model
For assets in the scope of the IFRS 9 impairment model, impairment losses are generally expected to increase and become more volatile.
Trade and other payables
Classification
Trade and other payables (Note 16), excluding VAT and amounts received in advance, are classified as financial liabilities subsequently measured
at amortised cost.
Recognition and measurement
They are recognised when the Group becomes a party to the contractual provisions, and are measured, at initial recognition, at fair value plus
transaction costs, if any.
They are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant
period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received
that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial
liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.
If trade and other payables contain a significant financing component, and the effective interest method results in the recognition of interest
expense, then it is included in profit or loss in finance costs (Note 19).
Cash and cash equivalents
Cash and cash equivalents are stated at carrying amount which is deemed to be fair value. Cash and cash equivalents comprise cash balances
and bank overdrafts.
Bank overdrafts
Bank overdrafts are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.
Derecognition of Financial assets and financial liabilities
Derecognition of a financial instrument occurs when an entity no longer controls a financial asset and has no further obligation to settle a financial
liability. Derecognition of a financial instrument will depend on whether the instrument is a financial asset or a financial liability. Financial assets
will be derecognised as follows:
PSV Integrated Annual Report 2019 Accounting Policies for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
53
o The contractual rights to the cash flows of the assets has expired;
o The entity has transferred the asset and no longer has continuing involvement; or
o The entity transfers the asset and retains a continuing involvement in it but the transferee has the practical ability to transfer the asset for the
transferee's own benefit.
Financial liabilities will be derecognised when the financial liability no longer qualifies as a liability, that is, the entity has no further obligations and
is no longer required to transfer the economic resources in respect of the obligation.
Leases
IFRS16 is only applicable from 1st January 2019. IFRS 16 Leases is a new standard which replaces IAS 17 Leases, and introduces a single lessee
accounting model. The main changes arising from the issue of IFRS 16 which are likely to impact the company are as follows:
Company as lessee:
o Lessees are required to recognise a right-of-use asset and a lease liability for all leases, except short term leases or leases where the
underlying asset has a low value, which are expensed on a straight line or other systematic basis.
o The cost of the right-of-use asset includes, where appropriate, the initial amount of the lease liability; lease payments made prior to
commencement of the lease less incentives received; initial direct costs of the lessee; and an estimate for any provision for dismantling,
restoration and removal related to the underlying asset.
o The lease liability takes into consideration, where appropriate, fixed and variable lease payments; residual value guarantees to be made by
the lessee; exercise price of purchase options; and payments of penalties for terminating the lease.
o The right-of-use asset is subsequently measured on the cost model at cost less accumulated depreciation and impairment and adjusted for
any re-measurement of the lease liability. However, right-of-use assets are measured at fair value when they meet the definition of investment
property and all other investment property is accounted for on the fair value model. If a right-of-use asset relates to a class of property, plant
and equipment which is measured on the revaluation model, then that right-of-use asset may be measured on the revaluation model.
o The lease liability is subsequently increased by interest, reduced by lease payments and re-measured for reassessments or modifications.
o Re-measurements of lease liabilities are affected against right-of-use assets, unless the assets have been reduced to nil, in which case
further adjustments are recognised in profit or loss.
o The lease liability is re-measured by discounting revised payments at a revised rate when there is a change in the lease term or a change in
the assessment of an option to purchase the underlying asset.
o The lease liability is re-measured by discounting revised lease payments at the original discount rate when there is a change in the amounts
expected to be paid in a residual value guarantee or when there is a change in future payments because of a change in index or rate used
to determine those payments.
o Certain lease modifications are accounted for as separate leases. When lease modifications which decrease the scope of the lease are not
required to be accounted for as separate leases, then the lessee re-measures the lease liability by decreasing the carrying amount of the
right of lease asset to reflect the full or partial termination of the lease. Any gain or loss relating to the full or partial termination of the lease
is recognised in profit or loss. For all other lease modifications which are not required to be accounted for as separate leases, the lessee re-
measures the lease liability by making a corresponding adjustment to the right-of-use asset.
o Right-of-use assets and lease liabilities should be presented separately from other assets and liabilities. If not, then the line item in which
they are included must be disclosed. This does not apply to right-of-use assets meeting the definition of investment property which must be
presented within investment property. IFRS 16 contains different disclosure requirements compared to IAS 17 leases.
The accounting policy related to the Group is disclosed below. IFRS 16 requires a lessee to recognize a right of use asset and lease obligations
for all leases except for short term leases, or leases of low value assets which will leases may be treated similarly to operating leases under the
current standard IAS 17 if the exceptions are applied. A lessee measures its lease obligation at the present value of future lease payments and
recognises a right of use asset initially measured at the same amount as the lease obligation including costs directly related to entering into the
lease. Right of use assets are subsequently treated in a similar way to other assets such as Property, plant and equipment or intangible assets
dependent on the nature of the underlying item.
The Group has a number of rental agreements in place. In accordance with the above, right of use assets and lease obligations associated to
these rentals would be recognised in the statement of financial position, the extent thereof is yet to be determined. The Group is still to make a
decision on the transition method to be applied or the application of exceptions related to short term and low value asset leases.
IFRS 16 Requires lessees to account for leases ‘on-balance sheet’ by recognising a ‘right-of-use’ asset and lease liability.
PSV Integrated Annual Report 2019 Accounting Policies for the period ended 28 February 2019 _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
54
It also changes the definition of a lease, sets requirements on how to account for the asset and liability, provides exemptions for short-term leases
and leases of low-value assets, changes the accounting for sale-and-leaseback arrangements, largely retains IAS 17’s approach to lessor
accounting and introduces new disclosure requirements. There is still uncertainty as to whether options to renew at a rental, to be determined on
a market basis at the time of renewal, are required to be included in the calculation.
Operating lease commitments
Where substantially all of the risks and rewards of ownership are retained by the lessor, are classified as operating leases. Rentals payable under
operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease. In all significant operating lease
arrangements in place during the year, the Group acted as the lessee. The Group leases various premises and sites under non-cancellable. The
leases have varying terms, escalation clauses and renewal rights. Penalties are chargeable on certain leases should they be cancelled before the
end of the agreement.
Finance lease commitments
Assets held under finance leases are capitalised at the lower of the fair value of the leased asset and the estimated present value of the minimum
lease payments at the inception of the lease. The corresponding liability to the lessor, net of finance charges, is included in the statement of
financial position under other non-current/current liabilities.
Each lease payment is allocated between the liability and finance charges. Finance charges, which represent the difference between the total
lease commitments and fair value of the assets acquired, are charged to profit or loss over the term of the relevant lease so as to produce a
constant periodic rate of interest on the remaining balance of the obligation for each accounting period. In all significant finance lease arrangements
in place during the period, the Group acted as the lessee
Non-applicable standards, amendments and interpretations
The other remaining standards, amendments and interpretations issued but not yet effective have been assessed for applicability to the Company
and Group and management has concluded that they are not applicable or material to the business of the Group and will therefore have no
material impact on future financial statements.
The Group and the company have adopted all new accounting standards that became effective in the current reporting period. The following
standards had an impact on the group:
o Foreign Currency Transactions and Advance Consideration
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 55
1. Segmental information
The Group's executive management has determined the operating segments based upon the information reviewed by them for the purposes of allocating resources
and assessing performance. The executive team consider the business from a product and geographical perspective. The executive team assess the performance
of the operating segments based upon profit before tax.
This measurement basis excludes discontinued operations. The measure includes unrealised exchange gains and losses arising from normal trading operations.
The executive team review internal management reports every month.
The following summary describes the operations in each of the Group's reportable segments.
o Industrial Supplies includes the purchasing and distribution of general industrial supplies
o Specialised Services includes the manufacture and distribution of cryogenic vessels and heat exchangers, the supply and installation of geosynthetic linings
and the provision of specialized cryogenic-based solutions for industrial applications (the operations of Engineered Linings and African Cryogenics)
o Shared Services and Other includes direct head office costs and operating costs not recovered from the operating segments.
Revenue
Sales between segments are carried at arm's length. The revenue from external parties reported to the CEO is measured in a manner consistent with that in the
statement of profit and loss.
Reportable Segmental Assets
Segment assets consist primarily of:
o property, plant and equipment
o deferred tax
o payments in advance
o inventories
o receivables
o cash
Reportable Segmental Liabilities
Segment liabilities consist primarily of:
o borrowings
o payables
Segmental report for the year ended 28 February 2019
2019 Note
Industrial
Supplies
R
Specialised
Services
R
Shared Services
and Other
R
Total
R
Total segment revenue 178 351 228
60 757 954
-
239 109 182
Inter-segmental revenue (1 576 478)
-
-
(1 576 478)
Reportable segment revenue
4A
176 774 750
60 757 954
-
237 532 704
Gross profit 23 668 348
4 415 452
131 836
28 215 636
Operating expenses
(9 500 540)
(7 629 811)
(14 800 964)
(31 931 315)
Depreciation and amortisation - (133 013) (1 052 841) (1 185 854)
Other operating expenses (9 500 540) (7 496 798) (13 748 123) (30 745 461)
Profit/(loss) before tax and discontinued operations 14 047 337 (4 130 236) (15 022 224) (5 105 123)
Profit/(loss) after tax but before discontinued operations 10 113 929 (3 007 129) (5 830 298) 1 276 502
Capital expenditure - 105 602 482 181 587 783
Finance income 4B
148 724 - 38 588 187 312
Finance expense 4B (7 873) (389 992) (1 609 930) (2 007 795)
Total assets net of depreciation 24 104 864 21 654 156 55 090 069 100 849 089
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 56
1. Segmental information (continued)
2019 Note
Industrial
Supplies
R
Specialised
Services
R
Shared Services
and Other
R
Total
R
Continuing operations 20 487 726 18 075 905 55 090 069 93 653 700
Discontinued operations 6 3 617 138 3 578 251 - 7 195 389
Total liabilities 23 515 812 33 630 044 16 647 502 73 793 358
Continuing operations 16 361 748 33 630 044 16 647 502 66 639 294
Discontinued operations 6 7 154 064 - - 7 154 064
Revenue per major customer - - - -
No customer represents more than 10% of the Group's total consolidated turnover
Segmental information by geographical region
2019
South Africa
R
Botswana
R
DRC
R
Zambia
R
Zimbabwe
R
Total
R
Revenue per customer region 182 642 312 - 53 992 008 695 056 203 328 237 532 704
Revenue per customer region -
discontinued operations 44 154 804 13 348 852 - - - 57 503 656
Non-current assets 43 079 406 - - - - 43 079 406
Segmental report for the year ended 28 February 2018
2018
Industrial
Supplies
R
Specialised
Services
R
Shared Services
and Other
R
Total
R
Profit/(loss) before tax from continuing operations 8 895 724 5 221 820 (14 347 652) (230 108)
Profit/(loss) after tax 6 296 861 3 924 476 (10 971 535) (750 198)
Capital expenditure - - 1 993 585 1 993 585
Finance income 209 054 497 212 357 630 1 063 896
Finance expense (5 673) (171 480) (1 766 509) (1 943 662)
Total assets net of depreciation 22 758 447 63 456 240 45 053 587 131 268 274
Continuing operations 11 665 175 63 456 240 45 053 587 120 175 002
Discontinued operations 11 093 272 - - 11 093 272
Total liabilities 22 329 822 60 036 300 20 373 422 102 739 544
Continuing operations 12 927 836 60 036 300 20 373 422 93 337 558
Discontinued operations 9 401 986 - - 9 401 986
No customer represents more than 10% of the Group's total consolidated turnover.
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 57
1. Segmental information (continued)
Segmental information by geographical region
2018
South
Africa
R
Botswana
R
Mauritania
R
DRC
R
Namibia
R
Zambia
R
Zimbabwe
R
Total
R
Revenue per customer
region 151 852 700 - 11 291 886 9 465 786 2 668 705 243 901 180 470 175 703 448
Revenue per customer
region - discontinued
operations 37 260 010 14 366 278 - - - - - 51 626 288
Non-current assets 42 540 858 - - - - - - 42 540 858
2. Property, plant and equipment
GROUP: OWNED - 2019
Cost
R
Accumulated depreciation
R
Carrying amount
R
Computer equipment 371 027 (218 556) 152 471
Furniture and fittings 203 903 (193 277) 10 626
Office equipment 76 490 (32 640) 43 850
Leasehold improvements 55 641 (13 354) 42 287
Motor vehicles 679 163 (394 902) 284 261
Plant and machinery 6 963 400 (4 163 879) 2 799 521
8 349 624 (5 016 608) 3 333 016
GROUP: LEASED
Motor vehicles 2 961 903 (1 135 263) 1 826 640
Plant and machinery 490 000 (213 767) 276 233
3 451 903 (1 349 030) 2 102 873
Total 11 801 527 (6 365 638) 5 435 889
GROUP: OWNED - 2018
Cost
R
Accumulated depreciation
R
Carrying amount
R
Computer equipment 546 684 (344 852) 201 832
Furniture and fittings 409 324 (335 070) 74 254
Road tankers 2 384 894 (34 894) 2 350 000
Office equipment 122 128 (106 404) 15 724
Leasehold improvements 430 938 (334 759) 96 179
Motor vehicles 733 327 (344 457) 388 870
Plant and machinery 9 833 409 (3 569 629) 6 263 780
14 338 576 (4 963 661) 9 374 915
GROUP: LEASED
Motor vehicles 3 453 489 (1 151 577) 2 301 912
Plant and machinery 490 000 (372 906) 117 094
3 943 489 (1 524 483) 2 419 006
Total 18 282 065 (6 488 144) 11 793 921
Instalment sale and finance lease agreements are reflected in note 14.
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 58
3. Reconciliation of the carrying amount
2019
Opening carrying
value
R
Additions
R
Transfer
R
Disposals
R
Reclassification
of assets
R
Depreciation
R
FCTR movement
R
Total
R
GROUP: OWNED
Computer
equipment 201 832 70 404 - (16 487) - (103 278) - 152 471
Furniture and
fittings 58 530 - - - - (47 904) - 10 626
Office
equipment 15 724 49 237 - (10 909) - (10 202) - 43 850
Leasehold
improvements 96 179 - - - - (53 892) - 42 287
Motor
vehicles 388 870 - - (6 000) (65 588) (33 021) - 284 261
Road tankers 2 350 000 - - (2 350 000) - - - -
Plant and
equipment 6 263 780 468 142
(3 338 150) - (193 439) (400 812) - 2 799 521
9 374 915 587 783 (3 338 150) (2 383 396) (259 027) (649 109) - 3 333 016
GROUP: LEASED
Motor
vehicles 2 301 912 - - (172 127) 65 588 (368 733) - 1 826 640
Plant and
machinery 117 094 - - - 193 439 (34 300) - 276 233
2 419 006 - - (172 127) 259 027 (403 033) - 2 102 873
Total 11 793 921 587 783 (3 338 150) (2 555 523) - (1 052 142) - 5 435 889
2018
Opening
carrying value
R
Additions
R
Revaluation
R
Transfer to
non-current
held for sale
R
Disposals
R
Reclassificati
on of assets
R
Depreciation
R
FCTR
movement
R
Total
R
GROUP: OWNED
Computer
equipment 178 686 196 901 - (1) (2 316) - (171 415) (23) 201 832
Furniture and
fittings 147 680 - - (5 241) - (83 783) (126) 58 530
Office
equipment 76 790 - - (9 241) (5 645) - (45 874) (306) 15 724
Leasehold
improvements 218 858 - - - - - (122 679) 96 179
Motor vehicles 577 101 298 017 (293 912) (503 652) 492 621 (180 798) (507) 388 870
Road tankers 481 733 - 802 557 - - - 1 065 710 2 350 000
Plant and
equipment 7 058 441 251 480 - (85 364) (647 253) 193 439 (505 786) (1 177) 6 263 780
8 739 289 746 398 - (393 759) (1 158 866) 686 060 (44 625) (2 139) 9 374 915
GROUP: LEASED
Motor vehicles 2 855 978 1 368 562 (178 697) (718 465) (492 621) (527 708) (5 137) 2 301 912
Plant and
machinery 344 833 - 802 557 - - (193 439) (34 300) - 117 094
3 200 811 1 368 562 - (178 697) (718 465) - (562 008) (5 137) 2 419 006
Total 11 940 100 2 114 960 802 557 (572 456) (1 877 331) - (606 633) (7 276) 11 793 921
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 59
3. Reconciliation of the carrying amount (continued)
Security
Group and Company assets leased are subject to instalment sale agreements (Note 14).
There are currently no contractual commitments for the acquisition of plant and equipment.
The Road Tanker is currently the only class of fixed asset that will now be valued at fair value using the level 3 value hierarchy fair value measurement as
prescribed in IFRS 13.
The valuation methodology used was based on the exit price the price that would be received on the sale of the asset in the open market, at its highest and best
use. The fair value of the tanker is based on recent offers from multiple third parties to buy the asset. In our opinion, this represents the fair value of the tanker.
The revaluation surplus has been taken to other comprehensive income as follows:
GROUP
2019
R
2018
R
Revaluation surplus over historic cost (837 451) 837 451
Depreciation 34 894 34 894
As reflected above (802 557) 802 557
Deferred tax adjustment on capital gain and depreciation 179 773 179 773
Net amount reflected in other comprehensive income (622 784) 622 784
4. Intangible assets
GROUP
Cost
2019
Accumulated
amortisation
and impairment
Carrying
value Cost
2018
Accumulated
amortisation
and impairment
Carrying
value
R R R R R R
Market
relationships 3 869 563 (3 780 763) 88 800 4 032 763 (3 855 163) 177 600
Customer
relationships 4 697 748 (4 697 748) - 4 697 748 (4 697 748) -
Technology
relationships 3 638 033 (3 638 033) - 4 426 433 (4 426 433) -
Cryogenics tanker 718 570 (44 912)- 673 608 - - -
Patent on road
tanker designs 439 746 (439 746) - 439 746 (439 746) -
13 363 660 (12 601 202) 762 458 13 596 690 (13 419 090) 177 600
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 60
4. Intangible assets
Opening value Amortisation Closing value
R R R
Intangible assets
Carrying value reconciliation - 2019
Market relationships 177 600 (88 800) 88 800
Patent on road tanker designs 718 570 (44 912) 673 658
896 170 (133 712) 762 458
Carrying value reconciliation - 2018
Market relationships 266 400 (88 800) 177 600
266 400 (88 800) 177 600
There are currently no commitments to purchase any intangible assets. Management has assessed that the assets with a cost value of R13 363 660, have reached
its useful life but have not been written off. Economic benefits are generated by these assets – they have been amortised to R Nil. Management considers 5 years
as reasonable for the continued used of these intangible assets.
5. Goodwill
GROUP
2019
R
2018
R
Opening balance 17 606 734 17 606 734
Impairment of goodwill - -
Closing balance 17 606 734 17 606 734
For the purpose of impairment testing, goodwill is allocated to the Group's individual operating subsidiaries or cash generating units ("CGU"). These represent the
lowest level within the Group at which goodwill is monitored for internal management purposes.
The aggregate carrying and calculated recoverable amount of goodwill allocated to the Omnirapid a division of PSV Industrial Proprietary Limited CGU is as
follows:
Carrying value
R
Recoverable
amount
R
Carrying value
R
Recoverable
amount
R
Omnirapid Mining and Industrial Supplies 17 606 734 84 251 879 17 606 734 87 265 157
The recoverable amounts of the CGU were based on its value in use and was assessed by management.
The value in use for the CGU was determined by discounting the future cash flows from the continuing use of the CGU, and is based on the following key
assumptions:
o Cash flows were based on actual operating results and a five-year forecast business plan.
o Operating expenses in the historical and forecast periods includes management fees attributable to value added services.
o Cash flows include maintainable capex but exclude expandable capex items and reflect the on-going operating cash flows of the CGU.
o The terminal growth rate is calculated with reference to the Omnirapid CGU and has remained constant at 6% (2018: 6%).
o Revenue and operating costs were projected to grow by between 5% to 10% for the years 2019 to 2023 (2018: years 2018 to 2022).
o Cashflows and discounts are pre-tax.
o The Weighted Average Cost of Capital (WACC) is a calculation of the company’s cost of capital in which each category of capital is proportionately weighted.
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 61
5. Goodwill (continued)
o The forecast cash flows of Omnirapid CGU are discounted using its respective WACC which has been adjusted for company specific risks and a small stock
premium.
o The value of use of the cash generating unit is considered to be R84 251 879 as the total carrying value of all the entities’ cash generating unit is
R 17 606 734.
The discount rate used is below:
2019
%
2018
%
Omnirapid - CGU - (%) 21.49 19.34
Based upon our evaluation of the value in use of the abovementioned CGU, no impairment was raised for the current year (2018: R Nil).
6. Loans Receivable
GROUP
Cryoshield (Pty) Ltd Cryoshield (Pty) Ltd
2019
R
2018
R
Balance owing at beginning of period 1 533 837 4 166 310
Non-current portion 1 336 387 2 503 409
Current portion 197 450 1 662 901
Repayments (355 602) (3 350 000)
Unwinding of interest 138 530 717 527
Balance owing at 28 February 1 316 765 1 533 837
Non-current portion 1 107 239 1 336 387
Current portion 209 526 197 450
The loan receivable arose on the disposal of:-
o Fixed assets used in manufacturing of knife gate valves
o Stock associated with manufacture of knife gate valves
o Sale of cryogenic vessel calibrations
The business was disposed of to Cryoshield (now owned by the Groups previous Health and Safety Office, Mr. Sagren Sookanathan) with effect 1 February 2017.
As the sale was an enterprise development initiative, the assets and business were sold on interest free loan for periods ranging between four and seven years,
with a minimum repayment required amounting to 10% of the pre discounted balance outstanding annually. Cryoshield paid the Group R1 Million on
2 March 2017.
The amount outstanding is secured as follows:
o Unlimited personal suretyship by Mr Sookanathan
o Cryoshield unlimited suretyship
o Specific notarial bond over the fixed assets
o General notarial bond over the stock
The bonds will remain in place until the entire indebtedness is expunged. The discount rate to determine the unwinding of the loan is 10.5%. This market related
rate of the time of the loan was recognised with reference to the prime lending rate adjusted for counter-party credit risk.
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 62
7. Investment in subsidiaries
Percentage holding Fair value of shares Loans to/(from)
Issued share capital
2019 R
2018 R
2019 R
2018 R
2019 R
2018 R
Held by PSV Holdings Limited Dormant entities 300 100 100 300 300 - - Operating companies PSV Industrial (Pty) Limited 258 100 100 34 642 800 45 616 403 31 017 938 376 439 PSV Asset Company (Pty) Ltd 100 100 100 - 2 434 714 2 334 655 2 358 786 African Cryogenics (Pty) Ltd 3 876 100 100 3 876 3 876 - - PSV Treasury (Pty) Ltd 100 100 100 356 226 356 226 430 151 430 151
35 003 202 48 411 519 33 782 744 3 165 376
Gross loan balance - - 47 677 324 17 982 400 Impairment of PSVI loan - - (31 017 938) (1 010 539) Impairment of Turbo Agencies (Pty) Ltd loan - - (16 229 235) (13 806 485)
Total loan impairment - - (47 247 173) (14 817 024)
Net loans after impairment - - 430 151 3 165 376
Valuation of investments
Fair value methodology used PSV Industrial (Pty) Ltd
In terms of IFRS 13 the company has fair valued its wholly owned investment in PSV Industrial (Pty) Ltd (“PSVI”) in terms of the level 3 fair value hierarchy as prescribed in terms of paragraph 94.
A Discounted Cash Flow (“DCF”) analysis has been utilised in determining the values of Omnirapid, African Cryogenics and the Shared Services Division. These divisions comprise the cash flows of PSVI. This methodology uses forecast free cash flow analysis to arrive at a Net Present Value (“NPV”) of the company.
Engineered linings has been classified as a discontinued operation and has not been considered in the valuation of PSVI.
The valuation has been performed by management.
Sources of information
The sources of information include, but were not limited to, the following:
o Industry analysis reports;
o Audited financial statements; and
o Forecasts income statements and balance sheets for each division.
Fair value methodology Omnirapid a division of PSV Industrial (Pty) Ltd
o Based on the calculated projected future cash flows of the division the fair value of R84 251 879 is considered appropriate.
Effective date
The effective valuation date is 28 February 2019 (2018: 28 February 2018).
Discounted cash flow based on future earnings
A discounted cash flow model has been applied by the company for the financial year 2024 and then assumed a growth rate in perpetuity using a 6% terminal growth rate (2018:6%).
Such forecasts are based on management’s view of the most likely levels to be obtained by the respective entities over the forecast period.
Assumptions have been reviewed and tested for reasonability. Such cash flows include maintainable capex items and reflect the ongoing operating cash flows of the divisions.
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 63
7. Investment in subsidiaries (continued)
The relevant discount rates used for each division for the years ending February 2019 and February 2018 respectively are summarised below:
2019
% 2018
%
Omnirapid 21.49% 19.34%
African Cryogenics 21.79% 19.84%
Engineered Linings N/A 22.34%
Shared Service centre 21.79% 20.00%
The discount rates are based on the Weighted Average Cost of Capital (WACC) which has been adjusted for division specific risk. Based on a sum of the parts
valuation, each operating segment has been valued as follows:
Operating segment 2019
R 2018
R
Omnirapid Industrial supplies 84 251 879 87 265 157
African Cryogenics Specialised Services 14 614 768 22 233 314
Engineered Linings Specialised Services - 17 467 497
Shared Service centre Shared Services (64 223 847) (81 349 565)
34 642 800 45 616 403
Fair value methodology used PSV Asset Company (Pty) Ltd
The shares in PSV Asset Company (Pty) Ltd were valued based on a price earnings multiple in February 2018. The investment in PSV Asset Company has
been impaired in 2019.
Fair value methodology used African Cryogenics (Pty) Ltd
No valuation has been performed on African Cryogenics (Pty) Ltd as they are dormant and adjustment to their fair value is not considered to be material.
Fair value methodology used PSV Treasury (Pty) Ltd
The shares in PSV Treasury (Pty) Ltd were valued at net asset value.
The shares in PSV Treasury (Pty) Ltd were not valued at February 2019 as the amount was considered immaterial.
Fair value methodology used Turbo Agencies (Pty) Ltd
The shares in Turbo Agencies (Pty) Ltd are held for sale and have been valued at R100 for February 2019 and February 2018 due to the consistent losses made
by this company over the last few years.
Note
2019 R
2018 R
A reconciliation of the movement in the fair value is reflected below: Opening balance 48 411 619 21 587 235 Revaluation (impairment)/ surplus 2 (13 408 317) 26 824 384
Closing balance 35 003 302 48 411 619
The Revaluation impairment (2018 surplus) have been reflected in the statement of comprehensive income and are currently unrealised.
The fair value adjustment disclosed above would be sensitive to changes in the above inputs and assumptions made. There are interdependencies between the
various inputs and assumptions.
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 64
8. Deferred taxation
GROUP
Note 2019
R 2018
R
The movement on the deferred taxation account is as follows: Balance at beginning of year 10 729 326 16 012 669 Profit or loss charge 6 381 624 (567 489)
o current year 6 377 288 (878 740) o prior year over/(under) provision 4 336 (50 531) o transferred to discontinued operations - 361 782
Statement of Financial Position debit/(credit) 179 773 (4 715 854)
o tax on capital gain on revaluation of asset 179 773 (179 773) o transferred to held for sale 6 - (4 005 823) o foreign currency translation difference arising on opening balance now reversed - (530 258)
Balance at end of year 17 290 723 10 729 326
Balance at end of year is made up of: 17 290 723 10 729 326
o deferred taxation assets 17 319 924 10 779 054 o deferred taxation liabilities (29 201) (49 728)
Comprising: Capital allowances (549 508) (1 090 359) Provisions 929 941 563 047 Intangibles (24 864) (49 728) Advance receipts 187 214 336 249 Prepayments (58 447) (186 405) Estimated taxation losses 16 806 387 11 156 522
17 290 723 10 729 326
The Group have prepared approved five (5) year cashflows that provide sufficient probability that the adequate taxable income will be generated to fully utilise the
deferred tax asset recognised. At the balance sheet date, on assessing the profitability forecasts of the Group entities, the Group has deferred tax losses of
R17.3 m (2018: R10.7 m) available for offset against future taxable profits, which have been recognised as deferred tax assets due to the positive predictability of
future profit streams. On assessing the profitability forecasts of the Group entities, sufficient taxable income should be generated to fully utilise the deferred tax
assets so provided for.
No deferred tax asset has been raised in PSV Holdings Limited as the Company is not expected to make any taxable income in the foreseeable future.
GROUP
2019
R 2018
R
Deferred taxation The computed tax losses for which a deferred tax asset has not been raised 69 813 473 69 651 196
The computed capital gains tax loss for which a deferred tax asset has not been raised 388 884 1 716 577
9. Inventory
GROUP
2019 R
2018 R
Raw materials and consumables 3 395 526 19 641 961 Work in progress 3 595 594 500 158 Provision for obsolete stock (494 265) (664 769) Goods in transit Inventories in progress -
6 767 168 9 458 431
6 496 855 35 702 949
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 65
9. Inventory (continued)
Work in progress has been written down to net realisable value based on the terms of the contract.
GROUP
2019
R 2018
R
Provision for obsolete stock
Opening balance (664 769) (1 968 978)
Less discontinued operation 111 154 1 509 652
Provisions (raised)/release during the period 59 350 (205 443)
Provisions utilised during the period - -
Closing balance (494 265) (664 769)
10. Trade and other receivables
GROUP COMPANY
2019
R
2018
R
2019
R
2018
R
Non-financial assets Deposits 1 353 312 1 273 312 55 000 55 000 Prepayments 263 482 660 304 52 667 48 204 Payments in advance to supplier - - 3 150 - Related parties trade and other receivables - - 1 907 662 2 598 998 Foreign withholding tax 347 102 3 672 587 - - Value added taxation - 144 791 - - Other - - 342 070 342 070 Financial assets Trade receivables 36 005 481 30 040 845 - - Loss Allowance (148 398) (879 478) - - Revenue accrual on installation/jobs 1 564 672 1 815 548 - - Retentions 53 731 847 162 - -
39 439 382 37 575 071 2 360 549 3 044 272
Exposure to credit risk
Trade receivables inherently expose the company to credit risk, being the risk that the company will incur financial loss if customers fail to make payments as they
fall due.
In order to mitigate the risk of financial loss from defaults, the company only deals with reputable customers with consistent payment histories. Sufficient collateral
or guarantees are also obtained when appropriate. Each customer is analysed individually for creditworthiness before terms and conditions are offered. Statistical
credit scoring models are used to analyse customers. These models make use of information submitted by the customers as well as external bureau data (where
available). Customer credit limits are in place and are reviewed and approved by credit management committees. The exposure to credit risk and the
creditworthiness of customers, is continuously monitored.
There have been no significant changes in the credit risk management policies and processes since the prior reporting period.The average credit period on trade
receivables is 45 days (2018: 45 days). No interest is charged on outstanding trade receivables.
A loss allowance is recognised for all trade receivables, in accordance with IFRS 9 Financial Instruments, and is monitored at the end of each reporting period. In
addition to the loss allowance, trade receivables are written off when there is no reasonable expectation of recovery, for example, when a debtor has been placed
under liquidation. Trade receivables which have been written off are not subject to enforcement activities.
The company measures the loss allowance for trade receivables by applying the simplified approach which is prescribed by IFRS 9. In accordance with this
approach, the loss allowance on trade receivables is determined as the lifetime expected credit losses on trade receivables. These life time expected credit losses
are estimated using a provision matrix, which is presented below. The provision matrix has been developed by making use of past default experience of debtors
but also incorporates forward looking information and general economic conditions of the industry as at the reporting date.
The estimation techniques explained have been applied for the first time in the current financial period, as a result of the adoption of IFRS 9. Trade receivables
were previously impaired only when there was objective evidence that the asset was impaired. The impairment was calculated as the difference between the
carrying amount and the present value of the expected future cash flows.
There has been no change in the estimation techniques or significant assumptions made during the current reporting period.
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 66
10. Trade and other receivables (continued)
The company's historical credit loss experience does not show significantly different loss patterns for different customer segments. The provision for credit losses
is therefore based on past due status without disaggregating into further risk profiles. The loss allowance provision is determined as follows
The expected credit loss rate for the entity is 0.1%.
2019
R 2018
R
Loss allowance
Opening balance (879 478) (436 875)
Less: Discontinued operation - 41 197
New provision raised - (483 800)
Provisions utilised 731 080 -
Closing balance (148 398) (879 478)
Concentration of credit risk
The following table provides information about the exposure to credit risk and the expected credit loss rates ( ECL’s) for trade receivables as at 28 February 2019.
GROUP 2019
Weighted Average loss rate
(%)
Gross carrying amount
R
Specific loss allowances
R
Lifetime ECL allowance
R
Total loss allowance
R
Current (not yet due) - 23 102 403 (44 271) - (44 271)
1 to 30 days past due - 8 660 425 - - -
31 to 60 days past due 1 2 549 711 (104 127) - (104 127)
61 to 90 days past due 2 917 751 - - -
More than 90 days past due 0.05 775 192 - - -
36 005 481 (148 398) - (148 398)
GROUP 2018
Weighted Average loss rate
(%)
Gross carrying amount
R
Specific loss allowances
R
Lifetime ECL allowance
R
Total loss allowance
R
Current (not yet due) - 21 502 786 - - -
1 to 30 days past due - 5 135 417 - - -
31 to 60 days past due - 1 691 134 - - -
61 to 90 days past due 1 525 615 - - -
More than 90 days past due 2 1 185 894 (879 478) - (879 478)
30 040 845 (879 478) - (879 478)
Trade receivables are non-interest bearing and are generally on 30-day terms. The carrying value of the financial assets above approximates fair value owing to the short-term nature thereof.
In terms of IFRS 15 the retention receivable represents amounts due from customers in the future and is defined as variable consideration. As such management has estimated the amount that will be due and has raised the amount as revenue.
The carrying value of the amount is deemed to be its fair value due to the short-term nature thereof.
For amounts and terms and conditions relating to related-party receivables (Note 27).
The Group's exposure to credit and currency risks, and impairment losses related to trade and other receivables is disclosed in Note 23.
2019
R 2018
R
Trade and other receivables – pledge security
Cession of the trade debtors in lieu of banking facilities provided by:
Standard Bank 36 486 651 33 126 916 Df
A general cession of all trade debtors on the entire Group receivables balance.
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 67
11. Cash and cash equivalents
GROUP COMPANY
2019
R
2018
R
2019
R
2018
R
Bank and cash balances 6 702 753 4 403 123 351 984 706 574
Continuing operations 6 683 416 4 158 674 351 984 706 574
Discontinued operation 19 337 244 449 - -
Bank overdraft (22 782 906) (23 252 091) - -
Continuing operations (20 437 169) (20 980 994) - -
Discontinued operation (2 345 737) (2 271 097) - -
Transferred to assets held for sale (Note 12) 2 326 400 2 026 648 - -
Cash and cash equivalents in the statement of cash flow (13 753 753) (16 822 320) 351 984 706 574
The Company's and Group's bank overdraft forms part of the cash management activities.
The Group's exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities is disclosed in Note 23.4
2019
R 2018
R
The following security has been provided to Standard Bank for the banking facilities granted by them:
Cession of trade debtors of PSV Industrial 36 486 651 33 126 916
12. Discontinued operations
Discontinued operations - Inclusions in the Consolidated statement of comprehensive income
Turbo Agencies Botswana (Industrial Supply Segment) and Engineered linings (Specialised Services Segment) are currently disclosed at discontinued
operations.
In terms of IFRS 5, all the following conditions have been met:
o The Board is committed to a plan to sell;
o It is available for immediate sale;
o An active programme to locate a buyer has been initiated;
o A sale is highly probable, within 12 months of classification as held for sale; and
o It is being actively marketed for sale at a sales price reasonable in relation to its fair value.
Due to the key provision of IFRS 5, all the following conditions have been applied:
o Board resolution date confirming commitment to plan to sell being 28 February 2018.
o A Turbo Agencies Botswana employee share scheme has been circulated and in principal been approved by staff that are willing to participate;
o The employee share scheme for Turbo Agencies Botswana has been drafted demonstrates that an active programme has been initiated;
o The imminent approval of the Turbo Agencies Botswana employee share scheme demonstrates that the sale is probable and we believe it is appropriate to
maintain the IFRS 5 classification for these operations.
During November 2018 the Group announced its intention to exit the TAB business and initiated an active program to locate a buyer for this subsidiary. The
associated assets and liabilities were consequently presented as held for sale in the 2018 financial statements
Due to circumstances beyond our control TAB was not sold during the financial year. We remain committed to dispose of TAB and it continues to be disclosed as
a discontinued operation. An employee share scheme is being negotiated with employees of the Turbo Agencies Botswana that is expected to be concluded in
the short term we believe it is appropriate to maintain the IFRS 5 classification for these operations.
The Engineered linings business has incurred significant losses during the financial year and the Board has taken the decision to wind down the business.
As per the requirements of IFRS 5, adjustments have been made to 2018 results due to the reclassification of Engineered Linings and TAB as disclosed.
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 68
12. Discontinued operations (continued)
GROUP
2019 R
2018 R
Revenue 57 503 656 51 626 288
Cost of sales (59 825 763) (35 449 161)
Gross profit (2 322 107) 16 177 127
Sundry income 3 619 169 830
Asset rental - (860 715)
Depreciation (114 819) (317 165)
Operating expenses (17 778 533) (12 682 870)
Results from operating activities (20 211 840) 2 486 207
Finance income 62 073 62
Finance expenses (2 715 102) (2 512 149)
Net finance (costs) (2 653 029) (2 512 087)
Loss before tax (22 864 869) (25 880)
Deferred taxation (3 706 680) (47 398)
Comprehensive (Loss) for the year from discontinued operations (26 571 549) (73 278)
Discontinued operations - inclusions in non-current assets/liabilities held for sale
GROUP
2019 R
2018 R
Non-current assets held for sale 7 195 489 11 093 272
Property, plant and equipment 493 244 572 456
Investment in subsidiaries 1 404 -
Deferred taxation assets 551 888 4 005 823
Inventories & WIP 4 666 830 3 465 915
Trade and other receivables 1 462 786 2 804 629
Cash and cash equivalents 19 337 244 449
Non-current liabilities held for sale (7 154 064) (9 401 986)
Current portion of loans and borrowings (2 686 193)) (3 754 246))
Trade and other payables (2 028 024) (3 275 163)
Provisions (94 110) (101 480)
Bank overdrafts (2 345 737) (2 271 097)
Discontinued operations - inclusions in non-current assets/liabilities held for sale
The following security has been provided to FNB Botswana for the banking facilities granted by them:
o Cession of trade debtors
o Cession of call account
o PSV Holdings suretyship of Pula 7 500 000 in favour of the bank
o Cession of fire insurance policies
o Deed of hypothecation Pula 7 500 000 over all tangible and intangible assets
o General indemnity
o Entity disposed of current assets held for sale to the value of R784 888 per statement of cash flow.
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 69
12. Discontinued operations (continued)
GROUP
2019 R
2018 R
Cession of the trade debtors in lieu of banking facilities provided by: FNB Botswana 1 153 322 2 804 629
First National Bank Limited overdraft facility of Pula 1.8 million - overdraft facility utilised 2 345 737 2 271 097
The facility utilisation in Pula was as follows: 1 804 413 1 871 144
13. Share capital and share premium
GROUP COMPANY
2019
R
2018
R
2019
R
2018
R
Authorised
1 000 000 000 ordinary shares of no-par value
Issued
408 982 990 (2017: 265 879 842) ordinary shares of no-par value 294 790 290 270 376 125 298 097 508 273 683 543
Share Premium 2 953 350 2 953 350 - -
297 743 640 273 329 475 298 097 508 273 683 543
Number of shares issued to external parties:
Total shares in issue 408 982 990 265 879 842 408 982 990 265 879 842
Treasury shares held by PSV Treasury (2 069 413) (2 069 413) (2 069 413) (2 069 413)
Net shares held by external parties 406 913 577 263 810 429 406 913 577 263 810 429
14. Finance lease liabilities
GROUP COMPANY
2019
R
2018
R
2019
R
2018
R
Local Secured Instalment sale and finance lease agreements for motor vehicles and equipment 2 444 365 2 762 846 - - Secured by underlying financed assets and payable over periods from two to five years at variable interest rates.
Total 2 444 365 2 762 846 - - Less: Current portion (694 874) (665 119) - -
1 749 491 2 097 727 - -
The carrying value of interest-bearing liabilities approximates their fair value due to interest rates being linked to current market rates.
Interest rates are variable and there have been no changes in liquidity risk related to the loans.
The carrying amount of leased assets is reflected in Note 2.
GROUP
Capital portions of borrowing repayable
2019
R
2018
R
Borrowings Instalment sale is payable as follows: Within 1 year 694 874 869 279 2 to 5 years 1 054 617 1 228 448
1 749 491 2 097 727
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 70
15. Provisions
GROUP
2019
R
2018
R
Leave pay provision 557 868 1 271 112 Provision for bonuses 194 076 817 176
751 944 2 088 288
Provision for leave pay and bonus Opening balance 2 088 288 2 098 976 Less: discontinued operation - (102 855) Provision utilised (2 088 288) (519 338) Provisions raised during the year 751 944 611 505
Closing balance 751 944 2 088 288
Bonus provisions are at the discretion of management primarily dependant on the Group’s annual results. Leave pay provisions are based on leave due at year
end as per employment contracts.
16. Trade and other payables
GROUP COMPANY
2019
R
2018
R
2019
R
2018
R
Non-financial liabilities Accruals 4 219 482 1 713 506 323 805 - Payroll accruals 2 186 261 2 907 383 2 186 261 - Payments in advance 6 459 000 11 238 471 - - Rental straight-line liability 36 828 18 178 - - Vat payable 2 274 533 253 024 - 66 Other payables 1 146 790 1 415 637 371 679 407 225 Financial liabilities Trade payables 28 908 608 49 230 501 838 703 1 065 209
45 231 502 66 776 700 3 720 448 1 472 500
Payments in advance represents payments received from customers on tanker, vessel, vaporiser and special manufacturing projects whereby the risk and reward
of ownership only passes to the customer when the product is completed. Payments received in advance becomes earned within six months after the financial
year end.
17. Revenue
At a point in time
R
Over time
R R 2019
The disaggregation of revenue with customers is as follows:
Sale of goods 192 575 686 - 192 575 686
Specialised valves and pumps 15 800 936 - 15 800 936
Lining material - - -
General industrial supplies 176 774 750 - 176 774 750
Sale of manufactured goods 21 552 559 12 882 637 34 435 196
Vessel, Tanker and Vaporisers 21 552 559 - 21 552 559
Special projects - 12 882 637 12 882 637
Sale of goods 214 128 245 12 882 637 227 010 882
Tanker and vessel repairs 6 012 379 6 012 379
Lining installation -
Other 4 509 443 4 509 443
Rendering of services 10 521 822 10 521 822
214 128 245 23 404 459 237 532 704
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 71
17. Revenue (continued)
At a point in time
R Over time
R R 2018
The disaggregation of revenue with customers is as follows:
Sale of goods 117 159 434 117 159 434
Specialised valves and pumps 13 732 150 - 13 732 150
Lining material - - -
General industrial supplies 103 427 284 - 103 427 284
Sale of manufactured goods 44 050 899 7 664 354 51 715 253
Vessel, Tanker and Vaporisers 44 050 899 - 44 050 899
Special projects - 7 664 354 7 664 354
Sale of goods 161 210 333 7 664 354 168 874 687
Tanker and vessel repairs 6 619 745 6 619 745
Lining installation - -
Other 209 016 209 016
Rendering of services 6 828 761 6 828 761
161 210 333 14 493 115 175 703 448
The Group is required per IFRS 15 to make a classification of its revenue specific to either a point in time or over the expected lifetime of contracts
from its customers. For sales of industrial supplies, revenue is recognised when control of the goods have transferred and at this point in time
usually 30 days revenue is recognised.
Tankers, lining installations and rendering of services to the market, revenue is recognised based on the performance obligations satisfied in the
contract usually once installation or work is performed being 60 to 180 days.
17.1 Revenue from contracts with customers
The Group principally generates revenue from providing Industrial Supplies (including steel, piping, industrial tools and consumable supplies, and a tools agency
business in Botswana). Specialised Services (including comprehensive cryogenic and gas systems and the supply and installation of geosynthetic linings).
Products and services may be sold separately or in bundled contracts.
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Group
recognises revenue when it transfers control over a product or services to a customer.
The consideration is allocated between separate products and services in a contract based on their stand-alone selling prices. The stand-alone selling prices are
determined based on the list prices at which the Group sells industrial and consumable supplies separately. Contract costs are assessed for impairment in terms
of IAS 36 Impairment of Assets (IAS 36) when there is an indication of impairment.
18. Results from operating activities
The following items have been charged/(credited) in arriving at results from operating activities:
GROUP COMPANY
Note
2019
R
2018
R
2019
R
2018
R
Audit fee - current year 686 916 882 320 150 000 339 310
Directors' remuneration 28 12 110 702 11 429 857 - -
Secretarial services 364 612 353 523 364 612 200 373
(Impairment) of impairment of investment loan 7 - - (47 247 173) 128 806
(Fair value impairment)/Fair value gain on revaluation of investment 7 - - (13 408 317) 26 824 384
Profit/(loss) on sale of software, property, plant and equipment 48 519 (100 146) - -
Operating lease charges in respect of buildings 5 434 189 5 763 267 - -
(Reversal)/impairment of trade receivables 10 (731 080) 483 800 - -
Salaries and wages 21 753 834 20 409 208 - -
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 72
19. Finance income and finance costs GROUP COMPANY
2019
R
2018
R
2019
R
2018
R
Recognised in profit or loss
Interest income received from banks 43 614 238 847 27 802 19 841
Deferred purchase interest income 138 530 717 527 - -
Foreign exchange gains 5 168 107 522 - -
Finance income 187 312 1 063 896 27 802 19 841
Interest expense on bank overdrafts and loans (1 533 056) (1 474 569) (109) (97 657)
Interest expense on finance leases (388 872) (336 306) - -
Interest paid - South African Revenue Service (170 077) (107 253) - -
Other 84 210 (25 534) (38 414) (7 111)
Unwinding of interest on deferred purchase considerations 133 000 10 000 - -
Interest paid - other (non-cash items) (48 790) (35 534) (38 414) (7 111)
Finance costs (2 007 795) (1 943 662) (38 523) (104 768)
Net finance costs recognised in profit or loss (1 820 483) (879 766) (10 721) (84 927)
Non-cash flow interest expense (48 782) (366 268) (27 802) (19 841)
Non-cash flow interest income 143 698 844 948 - -
20. Income taxation expense GROUP
Note
2019
R
2018
R
South African normal taxation Current tax expense - -
Deferred tax (expense)/credit 6 381 625 (520 090)
o current year 6 377 288 (442 123) o prior year overprovision 4 337 (50 531) o writing off of deferred tax asset - (27 436)
Total taxation 6 381 625 (520 090)
Transfer to discontinued operations 12 (3 706 680) 361 782
Total taxation (expense)/credit 2 674 945 (158 308)
The effective rate of taxation differs from the standard rate of taxation as follows: % % Base rate 28.00% 28.00% Non deductibles -0.93% -1.80% Reduced CGT rate -0.01% 0.00% Prior year deferred tax 0.08% 3.69% Impairment of deferred tax 0.00% 2.00% Deferred tax portion on deferred tax asset not recognised 97.85% 35.99%
Effective rate of taxation 124.99% 67.88%
No deferred tax asset has been raised in relation to the assessed loss in PSV Holdings Limited as the Company is not expected to make any taxable income in
the foreseeable future. Refer to Note 8 for further details.
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 73
21. Profit/(loss) per share GROUP
2019 R
2018 R
Loss attributable to ordinary shareholders (25 295 047) (823 476) Profit/(loss) attributable to ordinary shareholders - continuing operations 1 276 502 (750 198) Weighted average number of ordinary shares in issue 328 206 846 263 810 429 Basic and diluted loss per share (cents) (7.71) (0.31)
Basic and diluted profit/(loss) per share (cents) - continuing operations 0.39 (0.33) Basic and diluted loss per share (cents) - discontinued operations (8.10) (0.03) Basic and diluted profit/(loss) per share is calculated by dividing the net profit/(loss) attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year - -
Reconciliation of weighted average number of shares Shares in issue 408 982 990 265 879 842 Treasury shares not issued to third parties (in PSV Treasury) (2 069 413) (2 069 413)
406 913 577 263 810 429
Effect of weighting of shares issued (78 706 731) -
Weighted average number of shares 328 206 846 263 810 429
There are no shares with a dilutive impact Reconciliation of headline earnings Profit/(loss) after tax attributable to ordinary shareholders - continuing operations 1 276 502 (750 198) Loss/(profit) on disposal of property, plant and equipment - continuing operations (48 519) 100 146 Loss/(profit) on Sale of disposal Group 226 606 165 381 Tax effect of adjustments - continuing operations 13 585 (28 041)
Headline profit/(loss) - continuing operations 1 468 174 (512 712) Loss after tax attributable to ordinary shareholders - discontinued operations (26 571 549) (73 279)
(Profit) on disposal of property, plant and equipment - discontinued operations (2 134) (20 350)
Tax effect on adjustments - discontinued operations 469 4 477
21. Profit/(loss) per share GROUP
2019 R
2018 R
Headline (loss) - discontinued operations (26 573 214) (89 152)
Headline (loss) (25 105 040) (601 864)
Headline (loss) per share (cents) (7.65) (0.23)
Headline profit/(loss) per share (cents) - continuing operations 0.45 (0.19)
Headline (loss) per share (cents) - discontinued operations (8.10) (0.03)
Headline profit/(loss) 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
22. Share incentive scheme
At 28 February 2019 the Group has the following share-based payment arrangements:
Share option programme (equity-settled)
On 21 June 2009 the Group established a share option programme whereby share awards were granted to employees.
Further grants on similar terms were offered to employees on 10 December 2009, 27 January 2010 and 10 February 2010.
There is no consideration payable for these share options and the strike price is zero cents.
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 74
22. Share incentive scheme (continued)
GROUP
2019
R
2018
R
The movements in the number of shares allocated to eligible participants are as follows: Balance brought forward 2 069 413 2 087 513 Resignations - (18 100) Grants vested during the year - -
As at year end 2 069 413 2 069 413
With effect 31 August 2015, there were no further grants or vesting as the scheme was discontinued. The unclaimed shares are warehoused in PSV Treasury
(Pty) Ltd, a wholly-owned subsidiary of PSV Holdings Limited.
23. Financial risk management overviews
The Group has exposure to the following risks from its use of financial instruments:
o credit risk;
o liquidity risk; and
o market risk.
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. There have been no changes since the prior year.
23.1 Credit risk
At each reporting date, a loss allowance is recognized for financial assets, loan commitments and financial guarantees other than those to be measured at fair
value through profit or loss reflecting expected losses for these instruments. The same method is used for the impairment of non-revocable loan commitments
and financial guarantees. Expected credit losses are allocated using three stages:
Stage 1: expected credit losses within the next twelve months
Stage 1 includes all contracts with no significant increase in credit risk since initial recognition and usually includes new acquisitions and contracts with fewer than
30 days past due date. The portion of the lifetime expected credit losses resulting from default events possible within the next 12 months is
recognised.
Stage 2: expected credit losses over the lifetime – not credit impaired
If a financial asset has a significant increase in credit risk since initial recognition but is not yet credit impaired, it is moved to stage 2 and measured at lifetime
expected credit loss, which is defined as the expected credit loss that results from all possible default events over the expected life of a financial instrument.
Stage 3: expected credit losses over the lifetime – credit impaired
If a financial asset is defined as credit-impaired or in default, it is transferred to stage 3 and measured at lifetime expected credit loss. Objective evidence for a
credit-impaired financial asset includes 90 days past due date and other information about significant financial difficulties of the borrower. The determination of
whether a financial asset has experienced a significant increase in credit risk is based on an assessment of the probability of default, which is made at least
quarterly, incorporating external credit rating information as well as internal information on the credit quality of the financial asset.
A financial asset is migrated to stage 2 if the asset’s credit risk has increased significantly compared to its credit risk at initial recognition. The credit risk is assessed
based on the probability of default. For trade receivables, the simplified approach is applied whereby all trade receivables are allocated to stage 2 initially. Hence,
no determination of significant increases in credit risk is necessary.
Measurement of expected credit losses. Expected credit losses are measured in a way that reflects:
o Probability-weighted amount.
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 75
23. Financial risk management overviews (continued)
Expected credit losses are measured as the probability-weighted present value of all cash shortfalls over the expected life of each financial asset. For receivables
from financial services, expected credit losses are mainly calculated with a statistical model using three major risk parameters: probability of default, loss given
default and exposure at default. The estimation of these risk parameters incorporates all available relevant information, not only historical and current loss data,
but also reasonable and supportable forward-looking information reflected by the future expectation factors.
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.
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's major customers adhered to extended credit terms of between 30 and 90 days.
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 on-going basis.
The Group has transacted with a credit guarantee insurance provider to insure the debtors.
In the event that an individual assessment indicates no impairment, the unimpaired balances are assessed collectively for impairment.
The company only deposits cash with major banks of high-quality credit standing to manage its credit risk relating to cash and cash equivalents. Refer to Note 11
for the bank and cash balances which represent the maximum exposure of cash and cash equivalents to credit risk.
23.2 Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. Credit risk exposure associated to trade receivables at the reporting date was:
GROUP
2019
R
2018
R
Trade and other short-term receivables 36 005 481 30 040 845 The maximum exposure to credit risk by significant customer at year-end was: CUSTOMER A 4 232 721 2 874 589 CUSTOMER B 3 176 281 568 559 CUSTOMER C 2 731 846 2 476 489 CUSTOMER D 1 567 026 1 225 764 CUSTOMER E 1 286 439 - CUSTOMER F 1 102 373 - CUSTOMER G 1 099 618 2 357 256 CUSTOMER H 503 497 -
Impairment losses The ageing of trade receivables not impaired as at reporting date was: Not past due 33 620 612 28 329 336 90 days past due 917 751 525 615 120 days past due 1 467 118 1 185 894
Trade receivables (Note 10) 36 005 481 30 040 845
The movement in the allowance for impairment of trade receivables during the year was as follows: Balance at beginning of year 879 478 436 875 Discontinued Operations - (41 197) Impairment/(reversal) processed through profit or loss (1 022 876) 483 800
Balance at end of year (148 398) 879 478
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 76
23. Financial risk management overviews (continued)
23.3 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 acknowledges that Current Liabilities exceed Current Assets. Please refer to the going concern disclosures.
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.
Billings in excess of work certified has been excluded from financial liabilities as our customers cannot demand payment of cash unless we do not perform.
2019
R
2018
R
In addition, the Group maintains the following lines of credit: Standard Bank Limited overdraft facility of R21.2 million o overdraft facility utilised 20 437 169 20 980 994 First National Bank Limited overdraft facility of Pula 1.8 million o overdraft facility utilised - 2 271 097 Less: transferred to discontinued operation - (2 271 097)
20 437 169 20 980 994
Interest on the above are variable with the prime overdraft rate.
The First National Bank Pula facility above has been disclosed as part of non-current liabilities held for sale.
The gearing ratio of the Group was 281% at 28 February 2019 in comparison to 360% in the comparative period.
negatively impacted by the loss realised from operations. In order to ensure the future sustainability of the Group and restore equity a number of initiatives have
been implemented by the Group under this plan, which includes the sale of non-core assets, raising new equity capital and securing new profitable projects.
Subsequent to year-end, the Group has embarked on a recapitalising process to raise additional funds. This funding will assist in improving the gearing position
of the Group.
Group management continues to focus on other initiatives aimed at raising more equity and restoring the company’s gearing ratio to the targeted gearing ratio of
25%. The Group further monitors the ratio of total borrowings to net book value of property, plant and equipment and other assets.
The following are the contractual maturities of financial liabilities
Carrying amount
R
Contractual cashflows
R
12 months or less
R
More than 12 months
R
Non-derivative financial liabilities 28 February 2019 Trade and other payables (excluding VAT and straight-line leasing) 42 920 141 36 459 064 36 459 064 - Loans and borrowings 2 894 728 2 894 728 845 132 2 894 728 Bank overdraft 20 437 169 20 437 169 20 437 169 -
Total 66 342 038 59 340 598 57 591 107 1 749 491
28 February 2018 Trade and other payables (excluding VAT and straight-line leasing) 66 505 498 55 267 027 55 267 027 - Loans and borrowings 2 762 846 2 762 846 665 119 2 097 727 Bank overdraft 20 980 994 20 980 994 20 980 994 -
Total 90 249 338 79 010 867 76 913 140 2 097 727
23.4 Market risk
The Group is exposed to currency risk and cash flow interest rate risk.
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 77
23. Financial risk management overviews (continued)
23.4.1 Currency risk
The Group is exposed to currency risk on certain debtors or creditors that are denominated in a currency other than the functional currency of the Group, the
South African Rand.
The Company is also exposed to currency risk on certain long-term intercompany loans are denominated in a currency other than the functional currency of the
Group.
The currency in which these transactions primarily are denominated is Euros, US Dollars, British Pound and Botswana Pula.
The table below presents the Rand equivalent of the foreign currency exposure:
2019
USD GBP Euro BWP
Trade receivables - - - (2 033 221) Cash and cash equivalents 9 480 - - - Trade payables (17 363 828) (1 392 758) (2 117 167) 2 147 853 Gross exposure (17 354 348) (1 392 758) (2 117 167) 114 632
2018
USD
GBP
Euro
BWP
Trade receivables -
-
-
2 296 427
Cash and cash equivalents 8 025
-
-
(1 657 099)
Trade payables (17 363 828)
(1 392 758)
(2 117 167)
(2 677 952)
Gross exposure (17 354 990)
(1 392 758)
(2 117 167)
(2 038 624)
The following significant exchange rates applied at year end.
Reporting date spot rate Average rate
2019
R
2018
R
2019
R
2018
R
USD 14.08 11.75 13.78 12.35
GBP 18.69 16.26 17.92 16.18
Euro 16.02 14.35 15.64 14.02
BWP 1.33 1.21 1.32 1.31
Sensitivity analysis
The following significant exchange rates applied at year end.
2019
R
2018
R
20% 20%
USD 3 470 870
3 471 161
GBP 278 552
278 552
Euro 423 433
423 433
BWP (22 926)
407 725
23.4.2 Cashflow Interest rate risk
Borrowings are generally at a rate linked to the prime bank overdraft rate.
The Group had 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:
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 78
23. Financial risk management overviews (continued)
Note
2019
R
2018
R
Variable rate instruments Financial liabilities Bank overdraft 14 20 437 169 20 980 994 Finance lease liabilities 17 2 444 365 2 762 846
22 881 534 23 743 840
A change of 1% has been used due to the relative stability of the prime lending rate in South Africa and the effect would have increased/(reduced) profits or losses
by the amounts shown below based on year-end balances.
The following significant exchange rates applied at year end.
2019
R
2018
R
1% decrease 1% increase 1% decrease 1% increase R R R R Variable rate instruments 228 815 (228 815) 237 438 (237 438)
23.5 Capital management
Capital is defined as total equity as reflected on the statement of financial position.
The Board’s policy is to try maintaining a strong capital base to sustain future development of the business and maintain creditor and market confidence.
There were no changes in the Company’s approach to capital management during the year. The Group’s objectives when managing capital are to safeguard the
Group’s ability to continue as a going concern and to maintain an optimal capital structure to reduce the cost of capital.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net
debt is calculated as total borrowings (including "current and non-current borrowings" as shown in the consolidated statement of financial position) less cash and
cash equivalents. Total capital is calculated as 'equity' as shown in the consolidated statement of financial position plus net debt.
2019 R
2018 R
Reconciliation of capital Opening balance 28 528 730 29 224 995 (Loss) for the year (25 295 047) (823 477) Revaluation Surplus (622 784) 622 784 Foreign currency translation reserve 30 668 (495 571) Disposal of Subsidiaries - Turbo Zambia 200 - Shares issued during the year 25 758 567 - Cost related to specific shares issue (1 344 602) -
27 055 731 28 528 731
Gearing ratio 61% 69%
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 79
23. Financial risk management overviews (continued)
23.6 Classification and fair values of financial instruments
The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:
GROUP
2019
R
2018
R
Loans receivables
and investments /
liabilities at amortised cost
Fair value
Loans receivables and
investments / liabilities at
amortised cost Fair
value
Financial assets Investments in subsidiary companies Trade and other receivables (excluding VAT and prepayments) 39 175 900 39 173 823 36 769 976 36 769 976 Cash and bank balances 6 683 416 6 683 416 4 158 674 4 158 674 Loans receivable 1 316 765 1 316 765 1 533 837 1 533 837
Non-current assets and current assets held for sale 7 195 389 7 195 389 11 093 272 11 093 272
54 371 470 54 369 393 53 555 759 53 555 759
The fair value of loan receivable is similar to the amortised costs as the effective interest rate used to calculate amortised cost is the market rate.
GROUP
2019
R
2018
R
Loans receivables and
investments / liabilities at
amortised cost Fair
value
Loans receivables and
investments / liabilities at
amortised cost Fair
value
Financial liabilities Loans and borrowings 2 444 365 2 444 365 2 762 846 2 762 846 Trade and other payables (excluding VAT) 36 461 141 28 908 608 55 267 027 55 964 207 Bank overdraft 20 437 169 20 437 169 20 980 994 20 980 994
59 342 675 51 790 142 79 010 867 79 708 047
COMPANY
2019
R
2018
R
Loans receivables and
investments / liabilities at
amortised cost Fair
value
Loans receivables and
investments / liabilities at
amortised cost Fair
value
Financial assets Investments in subsidiary companies - 35 003 103
- 48 411 319
Trade and other receivables (excluding VAT and prepayments)
2 996 068
2 360 549
2 996 068
3 044 272
Cash and bank balances 351 984
351 984
706 574
706 574
Loans receivable - - - -
3 348 052
37 715 636
3 702 642
52 162 165
Financial liabilities Loans and borrowings - - - - Trade and other payables (excluding VAT) 3 720 448
3 720 448
1 472 434
1 472 434
Bank overdraft - - - -
3 720 448
3 720 448
1 472 434
1 472 434
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 80
23. Financial risk management overviews (continued)
Billings in excess of work certified has been excluded from financial liabilities as our customers cannot demand payment of cash unless we do not perform.
Payments in advance received from customers have been excluded from February 2019 and February 2018 disclosures above as they are not deemed to be
financial liabilities as the customer does not have the right to demand the repayment of cash unless the Group does not perform.
24. Cash flows from operating activities
GROUP COMPANY
2019
R
2018
R
2019
R
2018
R
(Loss)/profit before taxation and discontinued operation (5 105 123) (220 108) (43 788 086) 24 636 610
adjustments for:
Loss before tax - discontinued operation (22 864 869) (73 278) - -
Finance income (48 782) (1 063 896) (27 802) (19 841)
Finance expenses 2 007 795 1 943 662 38 523 104 768
Interest on deferred purchase consideration (138 530) (717 527) - -
Depreciation 1 052 142 606 633 - -
Amortisation of intangibles 133 712 88 800 - -
Movement in provisions (1 354 994)) 110 906 - -
IFRS lease straight-lining 18 647 (20 114) - -
Impairment of loans - - 47 247 173 128 806
Profit on disposal of property, plant and equipment 3 289 631 - - -
Movement in foreign currency translation reserve 30 667 41 963 - -
Impairment of investments - - (13 408 317) (25 942 453)
Profit/(loss) on disposal Group 226 606 165 381 - 100
(22 753 098) 862 422 (9 938 509) (1 092 010)
Changes in working capital
Decrease/(increase) in inventories 27 506 554 (14 601 912)
- -
Decrease/(increase) in inventories - continuing operations
25 308 381
(17 059 364)
- -
Decrease in inventories classified as held for sale
2 198 173
2 457 452
- -
(Increase) in trade and other receivables (622 493) (458 192)
683 723
37 375
(Increase) in trade and other receivables - continuing operations (2 050 002)
(313 979)
- -
(Increase)/decrease in trade and other receivables classified as held for sale 1 427 509
(144 213)
- -
Decrease/(increase) in trade and other payables (24 479 087) 11 478 530
2 192 367 -
Decrease/(increase) in trade and other payables - continuing operations (22 401 408)
9 485 368
- -
Decrease/(increase) in trade and other payables classified as held for sale (2 077 679)
1 993 162
- -
(20 348 124) (2 719 152)
7 062 419
(1 054 635)
25. Taxation paid
GROUP COMPANY
2019
R
2018
R
2019
R
2018
R
Balance payable at beginning of year
-
(55 441)
-
-
Taxation paid -
55 441
-
-
Closing balance - - - -
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 81
26. Defined contribution plan
Employees of the Group contribute to the Momentum provident fund effective 1 August 2017. (previously Sanlam Provident fund). All employees contribute 10%
of their pensionable salary to the fund. All permanent salaried staff are required to join the fund.
GROUP
2019
R
2018
R
Defined contribution plan expense for the year (included in salaries and wages in note 18) 2 507 795 2 470 282
At year-end the total number of employees in the Company belonging to the fund was 59 (2018: 66).
27. Related-party transactions
All related-party transactions, except for related party loans which are interest free, are concluded under terms that are no less favourable than those arranged
with third parties. Outstanding trading balances at year-end are unsecured, interest free and settlement is in cash. Outstanding loan balances at year-end are
unsecured, interest free and are repayable on demand.
Management fees
Management fees were charged in the current year amounting to R2 228 400 (2018: R1 086 956).
Directors' remuneration
Detailed disclosure of directors' remuneration is made in Note 28.
Group companies
Details of subsidiary companies are given in Note 7.
Transactions with related parties
Details of revenue from subsidiaries are:
2019
R
2018
R
Category of Transaction
Recipient Company /Division
Paying Company /Division SOCI disclosure line Income/(Expense) Income/(Expense)
Asset rental
PSV Asset Company Revenue 1 304 464 1 274 256
PSV Industrial (Pty) Ltd Asset rental (1 304 464) (1 274 256)
Shared Services Other Expenses (250 345) (190 705)
African Cryogenics Other Expenses (792 796) (798 000)
Omnirapid Mining & Industrial Other Expenses (261 323) (285 551)
Engineered Linings Other Expenses - -
Recovery costs received
PSV Holdings Ltd Other Income 2 228 400 1 086 956
PSV Industrial (Pty) Ltd Management fees (2 228 400) (1 086 956)
Shared Services Other Expenses (2 228 400) (1 086 956) Finance Costs and Finance Income
PSV Holdings Ltd Finance Income - -
Turbo Bots Finance Costs - -
Total check - -
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 82
28. Directors' remuneration
Directors' remuneration in respect of the financial year ended 28 February 2019 was as follows:
Basic remuneration
R Other benefits
R
Retirement and medical
R
Incentives and bonuses
R Directors' fees
R Total
R
28 February 2019
Executive
AJD da Silva 1 754 503 134 941 219 313 740 779 - 2 849 536
AR Dreisenstock 2 030 236 165 000 243 658 - - 2 438 894
J Da Silva 1 675 271 - 186 141 853 870 - 2 715 282
G Cooper 1 079 006 108 000 131 890 109 908 - 1 428 804
WJ Winterton 1 373 760 - 152 640 - - 1 526 400
I Schmidt 121 500 - 13 500 - - 135 000
Non-executive
E Ratshikhopha - - - - 329 748 329 748
A de la Rue - - - - 329 778 329 778
L Mosiah - - - - 219 852 219 852
RMH Pitt - - - - 137 408 137 408
JCP Fernandes - - - - - -
8 034 276 407 941 947 142 1 704 557 1 016 786 12 110 702
28 February 2018
Executive
AJD da Silva 2 189 938 180 000 365 157 - - 2 735 095
AR Dreisenstock 1 992 355 180 000 334 030 - - 2 506 385
J Da Silva 1 486 246 180 000 185 138 795 946 - 2 647 330
G Cooper 1 006 560 108 000 123 840 103 200 - 1 341 600
WJ Winterton 1 080 000 - 119 618 70 000 - 1 269 618
Non-executive
E Ratshikhopha - - - - 309 943 309 943
A de la Rue - - - - 309 943 309 943
L Mosiah - - - - 309 943 309 943
7 755 099 648 000 1 127 783 969 146 929 829 11 429 857
PSV Holdings Limited executive and non-executive remuneration is approved annually by the Remuneration Committee.
29. Contingent liabilities
There are no contingent liabilities at year end.
30. Commitments
The Group has entered operating leases for premises which is expected to result in the following outflows:
30.1 Operating lease arrangements
The Group has entered into numerous operating leases in respect of fixed property used for warehousing, offices and branch trading facilities. The leases generally
have an initial one-year term with options to renew at market-related rentals. Annual escalations ranging from 5% to 10% are common to all leases. No leases
contain contingent rent provisions or covenants.
At the reporting date the Group had outstanding commitments under these operating leases in respect of fixed properties which fall due as follows:
GROUP
2019
R
2018
R
Within 1 year
6 673 570
6 249 149
2 to 5 years 23 253 586 497 176
More than 5 years
- 258 149
29 927 156
7 004 474
PSV Integrated Annual Report 2019 Notes to the financial statements for the period ended 28 February 2019
__________________________________________________________________________________________________________________ 83
31. Going concern
The Directors have made an assessment of the ability of the Company and its subsidiaries to continue as going concerns. Notwithstanding that the Group has
made significant losses in the current financial year, the Board is confident that the Group will continue as a going concern for the following reasons:
o We continue to enjoy the support of our shareholders and are pursuing a capital injection transaction;
o The Company has raised a loan from Regis for USD365 000 to support the working capital of the business;
o The Company has signed a further loan agreement with TVE, a subsidiary of Regis, for an additional R9 million in order to fund specific projects within the
Group which have been identified as part of the turnaround process;
o The disposal of Turbo Agencies Botswana is nearing finalisation;
o The potential sale of Engineered Linings a loss-making operation will remove a cash drain on the business; and
o The Group is actively progressing its B-BBEE strategy which is expected to open up further opportunities for growth.
32. Events after reporting period
Subsequent to the financial year-end, the Group entered into two loan agreements. On or about 20 March 2019, the Group entered into a loan agreement with
Regis, in terms of which, Regis loaned the business USD365 000 at US prime rate (currently 5.5%). A second loan agreement was entered into with TVE (a
subsidiary of Regis) on 12 June 2019 for an additional R9 million in order to fund specific projects within the Group which have been identified as part of the
turnaround process.
.
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Notice of Annual General Meeting PSV Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1998/004365/06)
Share code: PSV ISIN: ZAE000078705
(“PSV” or “the Company” or “the Group”)
In terms of section 59(1) of the Companies Act, 2008 (Act 71 of 2008), as amended (“the Companies Act”), notice is hereby given that the Annual General Meeting
(“AGM”) of the shareholders of PSV will be held at 11:30 on Wednesday, 14 August 2019, at the corner of Serenade Road and North Reef Road, Elandsfontein
Rail, Germiston, 1429, for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions set out hereafter.
Record dates
In terms of section 62(3)(a), read together with section 59 of the Companies Act, the following dates apply to the AGM:
2019
Record date for determining those shareholders entitled to receive this notice Friday, 21 June 2019
Last day to trade in order to be eligible to participate in and vote at the AGM Tuesday, 30 July 2019
Record date (for voting purposes at the AGM) Friday, 2 August 2019
Action by shareholders
Shareholders entitled to attend and vote at the AGM may appoint one or more proxies to attend, speak and vote thereat in their stead. A proxy need not be a
member of PSV. A form of proxy which provides instructions for its completion is hereby inserted. Completion of a form of proxy will not preclude such shareholder
from attending and voting (in preference to that shareholder’s proxy) at the AGM.
Proxy forms must be completed by certificated shareholders or “own name” registered dematerialised shareholders who wish to be represented at the AGM.
Dematerialised shareholders (not with “own name” registration) must notify their Central Securities Depository Participant (CSDP) or broker of their intention to
attend the AGM in order for such CSDP or broker to be able to issue them with the necessary letter of representation to enable them to attend the AGM, or,
alternatively, should the dematerialised shareholder not wish to attend the AGM, they should provide their CSDP or broker with their voting instructions.
Forms of proxy must reach the Company’s transfer secretaries, Link Market Services South Africa Proprietary Limited, at 13th Floor Rennie House, 19 Ameshoff
Street, Braamfontein, to be received by them by no later than 11:30 on Monday, 12 August 2019 (or 48 (forty-eight) hours before any adjournments of the AGM
which date, if necessary, will be notified on SENS). Thereafter, forms of proxy may be delivered to the chairperson of the AGM, at the AGM, before voting on a
particular resolution commences.
AGM participants may be required to provide identification to the reasonable satisfaction of the chairperson of the AGM. An official identification document issued
by the South African Department of Home Affairs, a driving license or a valid passport will be accepted as sufficient identification.
Shareholders who have any doubt as to what action they are required to take in respect of the following resolutions, should consult their CSDP, broker, banker,
attorney, accountant or other professional adviser immediately.
On a poll, ordinary shareholders will have one vote in respect of each share held.
Electronic Participation In terms of section 61(10) of the Companies Act, every shareholders’ meeting of a public company must be reasonably accessible within South Africa for electronic
participation by shareholders. Therefore, shareholders, or their proxies, may participate in a meeting by way of a teleconference call if they wish to do so. In this
event:
o written notice to participate via electronic communication must be sent to the group company secretary, at 13th Floor, Illovo Point,
68 Melville Road, Illovo, Sandton, 2196, to be received by no later than 11:30 on Monday, 12 August 2019;
o a pin number and dial-in details for the conference call will be provided;
o shareholders will be billed separately by their own telephone service providers for the teleconference call to participate in the AGM; and
o valid identification will be required:
a. if the shareholder is an individual, a certified copy of their identity document and/or passport.
b. if the shareholder is not an individual, a certified copy of a resolution by the relevant entity and a certified copy of the identity documents and/or passports
of the persons who passed the relevant resolution, specifying the name of the individual that is authorised to represent the relevant entity at the AGM by
way of teleconference call.
c. a valid email address and/or facsimile number.
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Agenda Presentation of Annual Financial Statements
The summarised consolidated financial statements of the Company (as approved by the Board of directors (“the Board”)) for the year ended 28 February 2019
have been distributed and accompany this notice of AGM as required and will be presented to shareholders at the AGM together with the reports of the directors
and the Audit and Risk Committee.
The letter to shareholders accompanying this notice of AGM contains details of where copies of the Integrated Annual Report and annual financial statements are
available.
Report from the Social and Ethics Committee
In accordance with Regulation 43(5)(c) of the Companies Act, the chairperson of the Social and Ethics Committee or, in his absence, any member of the
Committee, will present the Committee’s report to shareholders at the AGM.
Ordinary Resolutions
To consider and, if deemed fit, to pass, with or without modification, all of the ordinary resolutions relating to the business set out below. Unless otherwise indicated,
in order for each ordinary resolution to be adopted the support of more than 50% of the voting rights exercised on the resolutions by shareholders, present or
represented by proxy at the AGM and entitled to exercise voting rights on the resolution, is required.
1. ORDINARY RESOLUTION NUMBER 1: RE-ELECTION OF DIRECTOR
A de la Rue will retire at the AGM in accordance with PSV’s memorandum of incorporation (“MOI”) and, being eligible, offers himself for re-election.
“Resolved that the re-election of A de la Rue, as an Independent Non-executive Director who, in terms of Article 24.8 of the Company’s MOI retires by
rotation at this AGM, but being eligible to do so, offers himself for re-election, is hereby confirmed with effect from 14 August 2019.”
A de la Rue’s abbreviated curriculum vitae appears on page 6 of the Integrated Annual Report to which this notice is attached.
2. ORDINARY RESOLUTION NUMBER 2: CONFIRMATION OF DIRECTOR
It is hereby brought to the attention of the shareholders that D Lorimer was appointed as an Independent Non-executive Director on 17 May 2019.
“Resolved, as an ordinary resolution, that the appointment of D Lorimer as an Independent Non-executive Director with effect from 17 May 2019 be and is
hereby confirmed.”
D Lorimer’s abbreviated curriculum vitae appears on page 6 of the Integrated Annual Report to which this notice is attached.
3. ORDINARY RESOLUTION NUMBER 3: CONFIRMATION OF DIRECTOR
It is hereby brought to the attention of the shareholders that C Fernandes was appointed as a Non-executive Director on 2 October 2018.
“Resolved, as an ordinary resolution, that the appointment of C Fernandes as a Non-executive Director with effect from 2 October 2018 be and is hereby
confirmed.”
C Fernandes’ abbreviated curriculum vitae appears on page 6 of the Integrated Annual Report to which this notice is attached.
4. ORDINARY RESOLUTION NUMBER 4: CONFIRMATION OF DIRECTOR
It is hereby brought to the attention of the shareholders that R Pitt was appointed as an Independent Non-executive Director on 2 October 2018. R Pitt was
subsequently appointed as PSV’s chief financial officer with effect from 31 March 2019.
“Resolved, as an ordinary resolution, that the appointment of R Pitt as PSV’s Chief Financial Officer with effect from 31 March 2019 be and is hereby
confirmed.”
R Pitt’s abbreviated curriculum vitae appears on page 6 of the Integrated Annual Report to which this notice is attached
5. ORDINARY RESOLUTION NUMBER 5: ELECTION OF CHAIRPERSON AND MEMBERS OF THE AUDIT AND RISK COMMITTEE
To consider and, if deemed fit, elect the following independent non-executive directors as members of PSV’s Audit and Risk Committee, with effect from
the end of this AGM. Subject to ordinary resolution numbers 1 and 2 being approved, shareholders elect, by way of a separate vote, each of the following:
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Ordinary resolution number 5.1
“Resolved that D Lorimer be and is hereby elected as a member and the chairperson of PSV’s Audit and Risk Committee.”
Ordinary resolution number 5.2
“Resolved that A de la Rue be and is hereby elected as a member of PSV’s Audit and Risk Committee.”
Ordinary resolution number 5.3
“Resolved that E Ratshikhopha be and is hereby elected as a member of PSV’s Audit and Risk Committee.”
Rationale: In terms of the Companies Act PSV, as a public company, must appoint an audit committee and the members of such audit committee must be
appointed or reappointed, as the case may be, at each of PSV’s AGMs.
An abbreviated curriculum vitae in respect of each member of the Audit and Risk Committee appears on page 6 of the Integrated Annual Report to which
this notice is attached.
6. ORDINARY RESOLUTION NUMBER 6: RE-APPOINTMENT OF EXTERNAL AUDITOR
“Resolved that CMA be reappointed, on the recommendation of the current Audit and Risk Committee, as independent registered auditors of PSV. The
individual designated registered auditor who will undertake the audit during the financial year ending 29 February 2020 is A Cloete.”
At the PSV Audit and Risk Committee meeting held on 23 May 2019, the Committee considered the independence of CMA and has satisfied itself of their
independence.
Rationale: In terms of the Companies Act PSV, as a public company, must have its financial results audited and such an auditor must be appointed or
reappointed each year at PSV’s AGM.
7. ORDINARY RESOLUTION NUMBER 7: ADVISORY ENDORSEMENT OF REMUNERATION POLICY AND IMPLEMENTATION REPORT
Ordinary resolution number 7.1
“Resolved that PSV’s remuneration policy, as set out on page 23 of the Integrated Annual Report, be and is hereby endorsed, by way of a non-binding
advisory vote for the period 28 February 2019 to 29 February 2020, on the same basis as set out in the audited annual financial statements, escalated as
being reasonable by the Remuneration and Nominations Committee of PSV and PSV’s remuneration policy”
Ordinary resolution number 7.2
“Resolved that the remuneration implementation report, as set out on pages 22 to 24 of the Integrated Annual Report, be and is hereby endorsed by way
of a non-binding advisory vote.”
Note: Failure to pass these resolutions will not have legal consequences relating to existing arrangements. However, the Board will take the outcome of
the vote into consideration when assessing PSV’s remuneration policy.
Rationale: King IV requires companies to table their remuneration policy and implementation report each year to shareholders for separate non-binding
advisory votes at the AGM.
8. ORDINARY RESOLUTION NUMBER 8: SIGNATURE OF DOCUMENTS
“Resolved that each director of PSV be and is hereby individually authorised to sign all such documents and do all such things as may be necessary for, or
incidental to, the implementation of the resolutions set out in this notice of AGM, at which this ordinary resolution is to be considered and approved.”.”
Special Resolutions
To consider and, if deemed fit, to pass, with or without modification, all of the special resolutions relating to the business set out below. In order for each special
resolution to be adopted, the support of more than 75% of the voting rights exercised on the resolutions by shareholders, present or represented by proxy at the
AGM and entitled to exercise voting rights on the resolution, is required.
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9. SPECIAL RESOLUTION NUMBER 1: NON-EXECUTIVE DIRECTORS’ REMUNERATION
“Resolved that, to the extent applicable in terms of the provisions of section 66(9) of the Companies Act, the annual remuneration payable to the Non-
executive Directors of PSV for the financial year ending 29 February 2020, as set out on page 24 of the Integrated Annual Report, be and is hereby
approved”
Rationale: The Companies Act requires that directors’ fees be authorised by shareholders by way of a special resolution. The passing of this special
resolution will have the effect of approving the remuneration of each of the directors of PSV for the year ending 29 February 2020, in accordance with
section 66(9) of the Companies Act.
10. SPECIAL RESOLUTION NUMBER 2: GENERAL APPROVAL TO REPURCHASE SECURITIES
“Resolved by way of a general approval that an acquisition by PSV and/or any of its business units from time to time to repurchase any of the shares issued
by PSV, upon such terms and conditions and in such amounts as the directors may from time to time determine, but subject to the provisions of sections
46 and 48 of the Companies Act, the MOI of PSV and/or the relevant business units and the JSE Listings Requirements, as amended from time to time,
provided that:
o the repurchase of securities must be effected through the order book operated by the JSE trading system and done without any prior understanding or
arrangement between the Company and the counterparty (reported trades are prohibited);
o this general authority shall only be valid until the Company’s next AGM or for a period of 15 (fifteen) months from the date of passing of this special
resolution, whichever is shorter;
o repurchases may not be made at a price greater than 10% (ten percent) above the weighted average of the market value of the securities for the 5 (five)
business days immediately preceding the date on which the transaction is effected;
o at any point in time, the Company may only appoint one agent to effect any acquisition/s on its behalf;
o the repurchase of its own securities by the Company may not, in the aggregate in any one financial year, exceed 20% (twenty percent) of the Company’s
issued ordinary share capital;
o the Company may only effect the repurchase once a resolution has been passed by the Board confirming that the repurchase is authorised, that the
Company has passed the solvency and liquidity test, as defined in the Companies Act, and that from the time that the test was applied there have been
no material changes to the financial position of the Group;
o neither the Company nor its business units may repurchase securities during a prohibited period, as defined in the JSE Listings Requirements, unless a
repurchase programme is in place in terms of which the dates and quantities of securities to be traded during the relevant period are fixed (not subject to
any variation) and full details of which programme have been submitted to the JSE in writing prior to the commencement of the prohibited period. The
Company will instruct an independent third party, which makes its investment decisions in relation to the Company’s securities independently of, and
uninfluenced by, the Company, prior to the commencement of the prohibited period to execute the repurchase programme submitted to the JSE; and
o an announcement will be published on SENS as soon as the Company, or any of its business units, have acquired securities constituting, on a cumulative
basis, 3% (three percent) of the number of securities in issue at the time that this general authority is granted (“initial number”), and for each 3% (three
percent) in aggregate of the initial number acquired thereafter.”
Although there is no immediate intention to effect a repurchase of securities of PSV, the directors would utilise the general authority to repurchase securities
as and when suitable opportunities present themselves, which opportunities may require expeditious and immediate action.
The directors undertake that, after considering the maximum effect of securities which may be repurchased and the price at which the repurchases may
take place pursuant to the general authority, for a period until the next AGM or 15 (fifteen) months (whichever is shorter), after the date of notice of this
AGM:
o the Company and the Group will be able to repay their debts in the ordinary course of business;
o the consolidated assets of PSV, fairly valued in accordance with International Financial Reporting Standards (IFRS) and on a basis consistent with the
last financial year of the Company, will exceed the consolidated liabilities of PSV;
o the working capital, stated capital and reserves of PSV will be adequate for the ordinary business purpose of PSV and its business units; and
o a resolution by the Board will be passed that it has authorised the repurchase, that the Company and its business units have passed the solvency and
liquidity test and, since the test was performed, there have been no material changes to the financial position of the Group.
The following additional information is provided in terms of the JSE Listings Requirements for purposes of this general authority:
o Major shareholders of the Company – page 27 of the Integrated Annual Report; and
o Share capital of the Company – page 27 of the Integrated Annual Report.
Material changes
There have been no material changes in the affairs or financial position of the Company and its business units since the Company’s financial year-end and
the date of this notice.
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Directors’ responsibility statement
The directors, whose names are given on page 6 of the Integrated Annual Report to which this notice is attached, collectively and individually accept full
responsibility for the accuracy of the information pertaining to special resolution number 2 and certify that, to the best of their knowledge and belief:
o there are no facts in relation to this special resolution number 2 that have been omitted which would make any statement in relation hereto false or
misleading;
o that all reasonable enquiries to ascertain such facts have been made; and
o that this special resolution number 2, together with the notice of AGM, contains all information required by law and the JSE Listings Requirements in
relation hereto.
11. SPECIAL RESOLUTION NUMBER 3: FINANCIAL ASSISTANCE TO RELATED OR INTER-RELATED COMPANIES
“Resolved that shareholders hereby approve in terms of section 45 of the Companies Act of the provision by PSV of direct or indirect financial assistance
to any of its present or future business units.
Special resolution 3 is hereby approved provided that no such financial assistance may be provided at any time in terms of this authority after the expiry of
2 (two) years from the date of the adoption of the special resolution and provided that:
o the recipient(s) of such financial assistance, the form, nature and extent of such financial assistance, and the terms and conditions under which such
financial assistance is provided, are determined by the Board from time to time;
o the Board may not authorise PSV to provide any financial assistance pursuant to this special resolution unless the Board meets all the requirements
set out in section 45 of the Companies Act, which it is required to meet in order to authorise PSV to provide such financial assistance; and
o such financial assistance to a recipient thereof is, in the opinion of the Board, required for the purpose of meeting all or any of such recipient’s operating
expenses (including capital expenditure), and/or funding the growth, expansion, reorganisation or restructuring of the businesses or operations of such
recipient, and/or funding such recipient for any other purpose which, in the opinion of the Board, is directly or indirectly in the interests of PSV.”
Section 45 of the Companies Act provides, inter alia, that any financial assistance to related or inter-related companies and corporations, including, inter
alia, to subsidiaries of the Company, must be provided only pursuant to a special resolution of the shareholders, adopted within the previous 2 (two) years,
which approved such assistance either for the specific recipient, or generally for a category of potential recipients, and the specific recipient falls within that
category, and the Board must be satisfied that:
o immediately after providing the financial assistance, PSV would satisfy the solvency and liquidity test, as defined in section 4 of the Companies Act;
o the terms under which the financial assistance is proposed to be given are fair and reasonable to the Company; and
o any conditions or restrictions in respect of the granting of financial assistance set out in PSV’s MOI have been satisfied.
As part of the ordinary conduct of the business of the Group, where necessary, may provide guarantees and other support undertakings to third parties
which enter into financial agreements with its business units and joint ventures in which the Company or members of the Group have an interest. In the
circumstances and in order to, inter alia, ensure that the Company and its business units, and other related and inter-related companies, and entities
continue to have access to financing for purposes of refinancing existing facilities and funding their corporate and working capital requirements, it is
necessary to obtain approval of the shareholders as set out in this special resolution.
Other business
To transact such other business as may be transacted at an AGM or raised by shareholders with or without advance notice to PSV.
By order of the Board
Merchantec Capital
Company Secretary
28 June 2019
Johannesburg
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Form of Proxy
PSV Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1998/004365/06)
Share code: PSV ISIN: ZAE000078705
(“PSV” or “the Company” or “the Group”)
For use only by ordinary shareholders who:
1. hold ordinary shares in certificated form (“certificated ordinary shareholders”); or
2. have dematerialised their ordinary shares (“dematerialised ordinary shareholders”) and are registered with “own name” registration,
at this Annual General Meeting (“AGM”) of shareholders of the Company to be held at 11:30 on Wednesday, 14 August 2019, at the corner of Serenade and
North Reef Roads, Elandsfontein Rail, Germiston, 1429, and any adjournment thereof.
Dematerialised ordinary shareholders holding ordinary shares other than with “own name” registration who wish to attend the AGM must inform their Central
Securities Depository Participant (“CSDP”) or broker of their intention to attend the AGM and request their CSDP or broker to issue them with the relevant letter
of representation to attend the AGM in person or by proxy and vote. If they do not wish to attend the AGM in person or by proxy, they must provide their CSDP or
broker with their voting instructions in terms of the relevant custody agreement entered between them and the CSDP or broker. These ordinary shareholders must
not use this form of proxy.
Name of beneficial shareholder: __________________________________________________________
Name of registered shareholder: _________________________________________________________
Address: ___________________________________________________________________________
Telephone (work): _________________Telephone (home): ________________Cell: ________________
being the holder/custodian of_____________ ordinary shares in the Company, hereby appoint (see Note):
1. ___________________________________________________________________or failing him/her,
2. _______________________________________________________________or failing him/her,
3. the chairperson of the meeting
as my/our proxy to attend and act for me/us on my/our behalf at the AGM of the Company convened for purpose of considering and, if deemed fit, passing, with
or without modification, the special and ordinary resolutions to be proposed thereat (“resolutions”) and at each postponement or adjournment thereof and to vote
for and/or against such resolutions, and/or abstain from voting, in respect of the ordinary shares in the issued share capital of the Company registered in my/our
name/s in accordance with the following instructions:
PSV Integrated Annual Report 2019 Annual General Meeting _________________________________________________________________________________________________________________________________________________________________________________________________________________
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Number of ordinary shares
For Against Abstain
1. Ordinary Resolution 1: Re-election of A de la Rue as an Independent Non-executive
Director
2. Ordinary Resolution 2: Confirmation of appointment of D Lorimer as an Independent Non-
executive Director
3. Ordinary Resolution 3: Confirmation of appointment of C Fernandes as a Non-executive
Director
4. Ordinary Resolution 4: Confirmation of appointment of R Pitt as Chief Financial Officer
5. Ordinary Resolution 5: Election of chairperson and members of the Audit and Risk
Committee
5.1. Election of D Lorimer, subject to the passing of ordinary resolution number 2, as a
member and chairperson of the Audit and Risk Committee
5.2. Election of A de la Rue, subject to the passing of ordinary resolution number 1, as
a member of the Audit and Risk Committee
5.3. Election of E Ratshikhopha as a member of the Audit and Risk Committee
6. Ordinary Resolution 6: Re-appointment of external auditor
7. Ordinary Resolution 7: Advisory endorsement of remuneration policy and remuneration
report
7.1. Endorsement of remuneration policy
7.2. Endorsement of remuneration implementation report
8. Ordinary Resolution 8: Signature of documents
9. Special Resolution 1: Non-executive directors’ remuneration
10. Special Resolution 3: General approval to repurchase securities
11. Special Resolution 3: Financial assistance to related on inter-related companies
Please indicate instructions to proxy in the space provided above by the insertion therein of the relevant number of votes exercisable.
A member entitled to attend and vote at the AGM may appoint one or more proxies to attend and act in his/her stead. A proxy so appointed need not be a
member of the Company.
Signed at__________________ on___________________2019
Signature_______________________
Assisted by (if applicable) ______________________
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Notes to the form of proxy
1. The form of proxy must only be completed by shareholders who hold shares in certificated form or who are recorded on the sub-register in electronic form
in “own name”.
2. All other beneficial owners who have dematerialised their shares through a CSDP or broker and wish to attend the AGM must provide the CSDP or broker
with their voting instructions in terms of the relevant custody agreement entered into between them and the CSDP or broker.
3. A shareholder entitled to attend and vote at the AGM may insert the name of a proxy or the names of two alternate proxies (none of whom need be a
shareholder of the Company) of the shareholder’s choice in the space provided, with or without deleting “the Chairperson of the meeting”. The person
whose name stands first on this form of proxy and who is present at the AGM will be entitled to act as proxy to the exclusion of those proxy(ies) whose
names follow. Should this space be left blank, the proxy will be exercised by the Chairperson of the meeting.
4. A shareholder is entitled to one vote on a show of hands and, on a poll, one vote in respect of each ordinary share held. A shareholder’s instructions to the
proxy must be indicated by the insertion of the relevant number of votes exercisable by that shareholder in the appropriate space provided. If an “X” has
been inserted in one of the blocks to a particular resolution, it will indicate the voting of all the shares held by the shareholder concerned. Failure to comply
with this will be deemed to authorise the proxy to vote or to abstain from voting at the AGM as he/she deems fit in respect of all the shareholders’ votes
exercisable thereat. A shareholder or the proxy is not obliged to use all the votes exercisable by the shareholder or by the proxy, but the total of the votes
cast and in respect of which abstention is recorded may not exceed the total of the votes exercisable by the shareholder or the proxy.
5. A vote given in terms of an instrument of proxy shall be valid in relation to the AGM notwithstanding the death, insanity or other legal disability of the person
granting it, or the revocation of the proxy, or the transfer of the ordinary shares in respect of which the proxy is given, unless notice as to any of the
aforementioned matters shall or have been received by the transfer secretaries not less than 48 (forty-eight) hours before the commencement of the AGM.
6. If a shareholder does not indicate on this form that his/her proxy is to vote in favour of or against any resolution or to abstain from voting, or gives contradictory
instructions, or should any further resolution(s) or any amendment(s) which may properly be put before the AGM be proposed, such proxy shall be entitled
to vote as he/she thinks fit.
7. The chairperson of the AGM may reject or accept any form of proxy which is completed and/or received other than in compliance with these notes.
8. A shareholder’s authorisation to the proxy, including the chairperson of the AGM, to vote on such shareholder’s behalf shall be deemed to include the
authority to vote on procedural matters at the AGM.
9. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the AGM and speaking and voting in person there
at to the exclusion of any proxy appointed in terms hereof.
10. Documentary evidence establishing the authority of a person signing the form of proxy in a representative capacity must be attached to this form of proxy,
unless previously recorded by the Company’s transfer secretaries or waived by the chairperson of the AGM.
11. A minor or any other person under legal incapacity must be assisted by his/her parent or guardian, as applicable, unless the relevant documents establishing
his/her capacity are produced or have been registered by the transfer secretaries of the Company.
12. Where there are joint holders of ordinary shares:
o any one holder may sign the form of proxy; and
o the vote(s) of the senior ordinary shareholders (for that purpose seniority will be determined by the order in which the names of ordinary shareholders
appear in the Company’s register of ordinary shareholders) who tender a vote (whether in person or by proxy) will be accepted to the exclusion of the
vote(s) of the other joint shareholder(s).
13. Forms of proxy should be lodged with or mailed to Link Market Services South Africa (Pty) Ltd:
Hand deliveries to: Postal deliveries to:
Link Market Services South Africa (Pty) Ltd Link Market Services South Africa (Pty) Ltd
13th Floor, Rennie House PO Box 4844
19 Ameshoff Street, Braamfontein Johannesburg
2001 2000
to be received by no later than 11:30 on Monday, 12 Augusts 2019 (or 48 (forty-eight) hours before any adjournment of the AGM which date, if necessary,
will be notified on SENS).
14. A deletion of any printed matter and the completion of any blank space need not be signed or initialled. Any alteration or correction must be signed and not
merely initialled.
15. Summary of the rights of a shareholder to be represented by proxy, as set out in section 58 of the Companies Act:
o A proxy appointment must be in writing, dated and signed by the shareholder appointing a proxy, and, subject to the rights of a shareholder to revoke
such appointment (as set out below), remains valid only until the end of the relevant shareholders’ meeting.
o A proxy may delegate the proxy’s authority to act on behalf of a shareholder to another person, subject to any restrictions set out in the instrument
appointing the proxy.
o The appointment of a proxy is suspended at any time and to the extent that the shareholder who appointed such proxy chooses to act directly and in
person in the exercise of any rights as a shareholder.
o The appointment of a proxy is revocable by the shareholder in question cancelling it in writing, or making a later inconsistent appointment of a proxy,
and delivering a copy of the revocation instrument to the proxy and to the Company. The revocation of a proxy appointment constitutes a complete and
final cancellation of the proxy’s authority to act on behalf of the shareholder as of the later of:
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92
• the date stated in the revocation instrument, if any; and
• the date on which the revocation instrument is delivered to the Company as required in the first sentence of this paragraph
o If the instrument appointing the proxy or proxies has been delivered to the Company, as long as that appointment remains in effect, any notice that is
required by the Companies Act or the Company’s Memorandum of Incorporation to be delivered by the Company to the shareholder, must be delivered
by the Company to:
• the shareholder; or
• the proxy or proxies, if the shareholder has (i) directed the Company to do so in writing; and (ii) paid any reasonable fee charged by the
Company for doing so.
o The completion of a form of proxy does not preclude any shareholder from attending the AGM.
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Administration
Business address and registered office: Cnr, Serenade & North Reef Roads Henville Ext. Elandsfontein Telephone: +27 (0) 11 452 4004 Facsimile: +27 (0) 11 452 4007 Postnet Suite 229 Private Bag X19 Gardenview 2047
Attorneys Fluxmans Attorneys 30 Jellicoe Ave, Rosebank, Johannesburg, 2196, South Africa. Docex 54, Johannesburg. Private Bag X41, Saxonwold, 2132. Telephone: +27 (0) 11 328-1867 Facsimile: +27 (0) 11 880-2261 Auditors HLB CMA (South Africa) Inc. No 1 2nd Road Midrand Private Bag X168 Halfway House 1685 Telephone: +27 (0) 11 315 0215 Facsimile: +27 (0) 11 315 0639
Transfer secretaries Link Market Services South Africa Proprietary Limited 13th Floor Rennie House 19 Ameshoff Street Braamfontein PO Box 4844 Johannesburg 2000 Telephone: +27 (0) 861 546 572 Facsimile: +27 (0) 86 674 4381
Company secretary Merchantec Capital 13th Floor, Illovo Point 68 Melville Road Illovo, Sandton Telephone: +27 (0) 11 325 6363 Facsimile: +27 (0) 11 325 6362 Designated adviser Merchantec Capital 13th Floor Illovo Point 68 Melville Road Illovo, Sandton PO Box 41480 Craighall 2024 Telephone: +27 (0) 11 325 6363 Facsimile: +27 (0) 11 325 6362
PSV Integrated Annual Report 2019 General _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________
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Glossary of terms
African Cryogenics African Cryogenics, a division of PSV Industrial Proprietary Limited
AltX Alternative Exchange of the JSE Securities Exchange
B-BBEE Broad-Based Black Economic Empowerment
BWP Botswana Pula
CEO Chief Executive Officer
CFO Chief Financial Officer
CGU Cash Generating Unit
CMA HLB CMA (South Africa) Inc. (auditors)
the Company PSV Holdings Limited
CPS Cents per share
CSDP Central Securities Depository Participant
CSI Corporate Social Investment
DRC Democratic Republic of the Congo
ECL Expected credit loss
Engineered Linings Engineered Linings, a division of PSV Industrial (Pty) Ltd
Euro European Monetary Unit
FCTR Foreign Currency Translation Reserve
GBP Great British Pound
the Group Collectively the company and its subsidiaries
HR Human Resources
IFRS International Financial Reporting Standards
IT Information Technology
JSE JSE Limited
KPI Key Performance Indicator
LabourNet A strategic HR business partner which specialises in ensuring fair labour procedures and practices are implemented in all
aspects of the PSV business
OHSAS Occupational Health and Safety Act
Omnirapid Omnirapid Mining and Industrial Supplies a division of PSV Industrial (Pty) Limited
PSVI PSV Industrial Proprietary Limited
PSV PSV Holdings Limited
Regis Regis Holdings Limited
SENS Securities Exchange News Service
Turbo Agencies / TABTurbo Agencies Proprietary Limited (Botswana)
TVE Thomson and Van Eck Proprietary Limited
USD United States Dollar
VAT Value Added Tax
WIP Work In Progress