Upload
others
View
6
Download
1
Embed Size (px)
Citation preview
Integrated Annual Report 2013
Taking our industrial engineering expertise into Africa
African Cryogenics Comprising the businesses of Rand Air and Gas Installations and Cryoshield
AltX Alternative Exchange of the Johannesburg Stock Exchange
B-BBEE Broad Based Black Economic Empowerment
BWP Botswana Pulas
CEO Chief Executive Offi cer
CFO Chief Financial Offi cer
CGU Cash Generating Unit
CIPC Companies and Intellectual Property Commission
CPIX Consumer Price Index
CPS Cents per share
Cryoshield Cryoshield Proprietary Limited
CSDP Central Securities Depository Participant
CSI Corporate Social Investment
DRC Democratic Republic of the Congo
Engineered Linings Engineered Linings Proprietary Limited
Euro European Monetary Unit
GBP Great British Pound
Group PSV Holding Limited and its subsidiaries
HEPS Headline Earnings per Share
HR Human Resources
IT Information Technology
JSE JSE Limited
KPA Key Performance Area
KPI Key Performance Indicator
Mitech PSV Mitech Control Valves Proprietary Limited
OHSAS Occupational Health and Safety Assessment Series
Omnirapid Omnirapid Mining and Industrial Supplies Proprietary Limited
PBT Profi t Before Tax
Petrologic Petrologic Proprietary Limited
PSV PSV Holdings Limited
Pumps Business/
Pump Businesses
Corporate action including the sale of PSV Services Proprietary Limited,
PSV Zambia (Pvt) Limited, APE Pumps Proprietary Limited, Mather + Platt
Proprietary Limited, Dasher Proprietary Limited and PSV Properties 2
Proprietary Limited
RAGI Rand Air and Gas Installations Proprietary Limited
SARS South African Revenue Services
SENS Stock Exchange News Service
Turbo Agencies Incorporating Turbo Agencies Proprietary Limited: (Botswana), Turbo
Agencies (Pvt) Limited: (Zambia), Turbo Agencies (DRC): SPRL (DRC)
USD United States Dollar
VAT Value Added Tax
ZMK Zambia Kwacha
Glossary of terms
1PSV Integrated Annual Report 2013 www.psvholdings.com
Glossary of terms ........................................... IFC
Scope of report ................................................ 1
Board responsibility statement ......................... 1
Group overview /2
Group structure ................................................ 2
Key strategic objectives of PSV ........................ 3
Vision, mission and goals ................................. 4
Group directorate ............................................. 6
Chairman’s report ............................................ 8
CEO’s report ..................................................... 9
Operating context / 11
Operating environment .................................. 11
Stakeholders .................................................. 12
Performance review /14
Financial highlights ........................................ 14
Highlights ...................................................... 15
Value added statement .................................. 15
Analysis of corporate costs ............................ 15
Sustainability Report ...................................... 16
Corporate Governance /19
Board of Director’s ......................................... 19
Board Committees and attendance ................ 19
Corporate Governance report ......................... 21
Shareholders /33
Analysis of shareholders ................................ 33
JSE share information .................................... 36
Interaction with shareholders ......................... 36
Shareholders’ diary ........................................ 36
Annual financial report /37
Notice of Annual General Meeting .................. 96
Form of proxy .............................................. 103
Administration .............................................. IBC
Contents
This document contains the annual financial reports of PSV and its subsidiaries and covers the financial year from 1 March 2012 to 28 February 2013. The previous year’s report was published in August 2012.
The report contains feedback from the Chairman and CEO. Activities and the performance of PSV are discussed in conjunction with an evaluation of risks and the manner in which stakeholder communication is upheld.
External assurance for the annual financial statements has been provided by our external auditor, Certified Master Auditors Inc, whose unmodified audit opinion is available for inspection at the registered office of PSV. No accounting policies have been changed. The results were reclassified where it was necessary to clarify or provide stakeholders with additional information regarding the performance of the company.
The financial statements were prepared according to International Financial Reporting Standards (“IFRS”), the requirements of the South African Companies Act, regulations of the JSE Limited (“JSE”) and wherever possible recommendations of King III.
The PSV Board of Directors 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.
Ralph PatmoreChairman
7 August 2013
PSV Holdings Limited (“PSV”) is a recognised provider of industrial engineering products and services throughout Africa. PSV comprises two main areas of operations: Industrial Supplies and Specialised Services. A detailed Group structure can be found on page 2 of this Integrated Annual Report.
Scope of report
Board responsibility statement
Any queries regarding this Integrated Annual Report or its contents should be directed to:
Tony Dreisenstock Chief Financial Officer Tel: +27 11 657 6004 Fax: +27 11 822 8470
Corner Barbara & North Reef RoadsHenville Ext, Elandsfontein South AfricaEmail: [email protected]
2 PSV Integrated Annual Report 2013 www.psvholdings.com
PSV is an industrial engineering holding Company comprising two main areas of operation in South Africa and parts of Africa. PSV’s two main operating segments are:• Industrial Supplies; and• Specialised Services.
Mitech was previously included in the Industrial Supplies segment. However, as this company was disposed with effect from 1 April 2013, its results were included in discontinued operations (see additional details in Note 5 of this Integrated Annual Report).
Each operating segment comprises of the following companies, all of which are 100% owned by PSV:
Reshaping our industrial engineering offering
% of total revenue per segment % of total revenue per segment
Group structureGr
oup
over
view
Specialised ServicesIndustrial Supplies
turbo agencies (pty) Itd
Manufacturers Representatives and Distributors
Industrial Supplies Specialised Services
48%
52%
2013
Industrial Supplies Specialised Services
41%
59%
2012
Corporate governance
ShareholdersPerformancereview
Operating context
Annual fi nancial report
Group overview
3PSV Integrated Annual Report 2013 www.psvholdings.com
Spec
ialis
ed S
ervi
ces
Manufacture, support and supply of services and products to the cryogenic markets and
installation of geosynthetic linings for all containment applications including dams, leach pads
and fl oating covers.
Indu
stri
al S
uppl
ies
Strong agency agreements and suppliers of piping, fl anges and steel
Turbo Agencies has strong agency agreements with blue chip
suppliers, and equips workshops and computerised vehicle testing
stations, supplies overhead crane refurbishment and maintenance,
undertakes general workshop equipment maintenance, provides
consultancy services on workshop requirements and is a one-stop
solution for mining projects. Turbo Agencies carries blue chip
agencies such as Hilti Fasteners, Sykes Picavant, Facom Tools,
Arndt Hand Tools, Ridgid Tooling, Orbis of Germany, Actia Muller
– France, Kito Lifting, Lincoln Welding, Acmi Motori Power and
Captels Weighbridges, amongst others.
Omnirapid is a supplier of inter alia piping, fi ttings, fl anges and
steel. These products are provided to mining and industrial
clients locally in South Africa as well as being exported to various
African countries.
Engineered Linings offers an array of geosynthetic and plastic lining solutions. These lining solutions are designed to assist mining operators for the purpose of seepage containment, corrosion and environmental protection.
African Cryogenics supplies much needed design and manufacturing capability, through the manufacture of cryogenic storage tankers, road tankers, cryogenic liquid transfer systems including vacuum insulated lines and vacuum process vessels to the gas and
petrochemical industries in South Africa and Africa. It has the
capability to manufacture large capacity, new generation, cryogenic
freezing equipment, which requires specialised fabricating
techniques in stainless steel. The wide range of pumps, valves,
regulators and vapourisers supply gases to industries such as
hospitals, welding workshops, food and beverages and ship
container purifi cation. Our cryogenic capability offers a full repair
and complete refurbishment service.
Key strategic objectives of PSV
4 PSV Integrated Annual Report 2013 www.psvholdings.com
Key strategic objectives of PSV (continued)
To be a recognised provider of industrial engineering products
and services throughout Africa.
Vision
To continue developing as an industrial engineering Group
focused on engineering linings, mining and industrial supplies and
cryogenics through the provision of superior customer service
throughout Africa.
Mission
To deliver a high-quality service and
product in each area of business
To empower every employee through
participation in an incentive scheme
To increase shareholder value
To embrace Broad-based Black
Economic Empowerment principles
PSV is committed to sustainable practices across
the Group as these pertain to the environment, the
economy, to our people through sustainable labour
practices and human rights, to the society in which we
operate and the various financial components of PSV.
We are also committed to the production of quality
products which meet various accreditation standards
in accordance with high levels of manufacturing
standards. See further details in the Sustainability
Report on page 16 of this Integrated Annual Report.
Goals
Corporate governance
ShareholdersPerformancereview
Operating context
Annual fi nancial report
Group overview
5PSV Integrated Annual Report 2013 www.psvholdings.com
Key strategic objectives for the year Achievements in 2013
Focus and growth of consolidated cryogenics operation • The businesses of Cryoshield and RAGI have been consolidated into African Cyrogenics
Continue downsizing and streamlining PSV by disposing or closing down non-profitable subsidiaries
• The Pumps Business was disposed of for the amount of R54 million to refinance the Group• PSV transferred the business of Petrologic to Tokheim International. The contract was effective on 4 September 2012 and involved
the take-over of all assets, staff and certain liabilities• Post the financial year-end PSV sold Mitech for R7 million as PSV felt the company did not meet PSV’s return on investment targets
Implement a more effective operational model • Successfully transitioned from a centralised to a decentralised model
Devolving and reducing expensive head office and shared services costs to the underlying trading operations
• There has been a substantial reduction in shared service costs and successful subletting of vacant space at the PSV office park• Improved service offering by PSV to subsidiaries of the Group
Pay off debt • More than R50 million of debt has been paid off
Recapitalise businesses that require cash flow for effective operations
• Reinvested R10 million from the disposal of the Pumps Business back into working capital
Bed down the current African footprint and then shift to a phase of expansion
• The African footprint is well established in South Africa, Botswana, Zambia and the DRC
Refocus PSV and concentrate on fundamentals, such as working capital and profitability
• PSV’s continuing operations are profitable, however overall profitability has not been restored
Pay special dividend• On 5 July 2012, a special cash dividend of 3.6 cents (gross) per share was declared and paid for from the proceeds of the sale of
the Pumps Business
Over the past year, PSV has changed its approach to business by going back to the fundamentals the Company was established on and to focus on experience
and skills of doing business in Africa. Further expansion into Africa, to undertake project work in which PSV supplies goods and services, will broaden the base and
profi tability of the Company.
Achievements in 2013
6 PSV Integrated Annual Report 2013 www.psvholdings.com
Group directorate
Executive Directors Non-executive Directors
Abilio (Abie) JD da Silva (51)Chief Executive Officer
• Member of the Social and Ethics Committee
Abie is the co-founder of PSV and was appointed as the Chief Executive Officer upon listing. He has retained the position and steered the Company towards the objectives which it has achieved to date. He obtained a National Technical Certificate 5 from the Johannesburg Technical College and a Business Management Diploma from Damelin College.
Anthony (Tony) R Dreisenstock (52)Chief Financial Officer
• Member of the Social and Ethics Committee
Tony holds BCom and BAcc degrees obtained from the University of the Witwatersrand as well as an HDip Tax Law obtained at the University of Johannesburg. Tony is a qualified chartered accountant. He successfully operated a strategic management consultancy practice until August 2005, when he was recruited by PSV to assist in listing the Company and to assume the role of Chief Financial Officer.
Ralph Patmore (61)Independent Non-executive Director
• Chairman of the Board• Member of the Audit and Risk Committee • Member of the Remuneration Committee
Ralph holds BCom and MBL degrees. He co-founded Iliad Africa in 1998 and was the Chief Executive Officer until 2008. He currently serves as a Non-executive Director on the boards of various companies.
Corporate governance
ShareholdersPerformancereview
Operating context
Annual fi nancial report
Group overview
7PSV Integrated Annual Report 2013 www.psvholdings.com
Non-executive Directors (continued)
Anthony de la Rue (66)Independent Non-executive Director
• Chairman of the Audit and Risk Committee • Chairman of the Remuneration Committee
Anthony is a chartered accountant who was previously the Chief Executive Offi cer 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.
Eric Ratshikhopha (62)Independent Non-executive Director
• Chairman of the Social and Ethics Committee• Member of the Audit and Risk Committee • Member of the Remuneration Committee
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 holds the following qualifications: BA (Hons) Sociology, University of the North, 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 and Harvard School of Business.
Peter Robinson (52)Non-executive Director
Peter qualified at Huddersfield Technical College in the United Kingdom. He was a Non-executive Director on the Board, offering input based on vast experience gained in the fields of operation PSV is currently involved in.
Peter resigned as a Non-executive Director with effect from 4 June 2013.
8 PSV Integrated Annual Report 2013 www.psvholdings.com
comfortable with our cash flow generation we will cautiously look to expand geographically in Africa. There are real opportunities but we will be breaking new ground. We are fully aware of the risks and will monitor them as such. In South Africa we will be looking to maximise efficiencies and gain market share to improve profitability.
AppreciationI would like to acknowledge my co-Directors, both Executive and Non-executive, for the support and the effort that they have put in over the past year. We have had wonderful loyal support from the management, staff, customers and suppliers which has been truly appreciated. Finally we feel we are now well placed to start producing acceptable returns for the shareholders.
Ralph PatmoreChairman
7 August 2013
ReviewThe year saw the repositioning of PSV take effect. The Pumps Businesses were sold, with the proceeds being utilised to refinance the Group and to pay a special dividend to shareholders. Petrologic was sold to stem operational losses as no forward-looking solution could be identified to turn the dismal performance.
Finally post year-end, Mitech was sold as projected returns were not in line with Group hurdles. The majority of funds generated were ploughed back into working capital to enable the businesses left in the Group to expand.
The strategy adopted appears to be working well and we anticipate reaping the full benefit in the next financial year. It is imperative that 2014 be seen as a year of consolidation to ensure that the Group develops a strong performance base, that is cash generative, before future controlled expansion is considered. Indications are that both the Industrial Supplies and Specialised Services divisions are now operating from solid foundations and have sufficient working capital to leverage the opportunities in their respective market segments. Africa will provide the bulk of the expansion opportunities for both divisions but operating cross border brings challenges that will need to be closely monitored and managed.
The two divisions are not perfect but clear plans are in place to ensure that we get to grips with the identified short comings. Emphasis has been placed on working capital management to ensure the generation of cash flow.
The executives made huge strides over the year in implementing the clean-up disposal strategy, cutting overheads to right size the leaner Group and finally moving closer to the operations to ensure focused efficiency. They are now excited to leverage the opportunity in the coming year of extracting full value from the remaining operations.
ProspectsThe state of the economy is well publicised and does not present huge opportunities for the Group. However, as mentioned above, once we are
Ralph Patmore Chairman
In South Africa we will be looking to
maximise efficiencies and gain market
share to improve profitability.
It is imperative that 2014 be seen as a year
of consolidation to ensure that the Group
develops a strong performance base, that
is cash generative, before future controlled
expansion is considered.
Chairman’s report
Corporate governance
ShareholdersPerformancereview
Operating context
Annual fi nancial report
Group overview
9PSV Integrated Annual Report 2013 www.psvholdings.com
Abilio (Abie) JD da Silva Chief Executive Offi cer
The fi nancial results for the year refl ect
improved trading conditions from continuing
operations. PSV unbundled loss-making
and cash-hungry businesses to establish
a stable platform for organic growth. Our
Group will continue to focus on cryogenics,
agency business, geosynthetic linings and the
specialist procurement and supply of product.
Overview of resultsRevenue from continuing operations increased by 46% to R381.1 million from R261.7 million. The growth in the business is attributable to the improving market conditions and to the additional working capital which was injected back into the business from proceeds derived from the sale of the Pumps Business. Gross profi t margins were maintained at 22%. Operating costs were reduced by approximately 20% compared to the previous period, largely due to substantial cost-cutting measures which were implemented at head office, and the disposal of loss-making operations. The Company made a profi t before income tax from continuing operations of R10.0 million compared to a loss of R32.6 million in 2012.
During the year under review, the Pumps Businesses were sold and disclosed as discontinued operations. A loss of R27.1 million was attributable to the discontinued operations which negatively impacted the overall result for the year. The total comprehensive loss for the year was R20.8 million compared to a loss of R17.6 million in 2012. These losses did not affect cash fl ow and were once off.
Headline earnings per share from continuing operations grew by 123.2% to 2.78 cents per share compared to the loss of 11.98 cents in the previous period.
At year-end, cash and cash equivalents of R16.7 million was recorded, 82% up on the R9.2 million for 2012.
DividendsAfter the disposal of the Pumps Business, PSV declared a special dividend amounting to R9.3 million. Notwithstanding, the once off special dividend, PSV will continue to retain and utilise cash generated to fund working capital requirements and as such, no dividends were declared or proposed. The Board reviews the dividend policy annually.
Operational reviewIndustrial SuppliesThis segment contributed 52% (2012: 59%) to the Group’s consolidated revenue at an average gross profit margin of 27.6%
(2012: 27.4%). Revenue increased substantially to R199.4 million (2012: R153.6 million).
Omnirapid continued to show strong growth, primarily due to mining supply orders increasing, whilst Turbo Agencies grew marginally, enjoying slightly better margins. Turbo Agencies invested in additional infrastructure that was required as it had experienced an increase in service contracts and workshop equipment orders. Notwithstanding, the investment will see the business poised for signifi cant growth, already refl ecting in the order book, together with better margins expected in the new fi nancial year.
Omnirapid Industrial and Mining SuppliesAs Omnirapid enters its 15th year of operation it continues to focus on what it does best – maintain market knowledge, nurture trade relationships and excel at service delivery and turnaround times. It further maintains this competitive advantage by keeping pricing reasonable. Omnirapid is an expert procurement operation which specialises in sourcing products which are diffi cult to fi nd, and this skill keeps customers returning to Omnirapid. The Company has increased sales to local buying offi ces of African-based companies.
Turbo AgenciesTurbo Agencies has its head offi ce based in Gaborone, Botswana. The Company was established in 1986 and has branch offi ces in Zambia and the DRC. Since our last Integrated Annual Report, an additional branch offi ce has been opened in Lubumbashi, primarily to support mines in the Copperbelt area.
Specialised ServicesSpecialised Services contributed 48% (2012: 41%) to the Group’s consolidated revenue at an average gross profit margin of 16.0% (2012: 15.6%). The segmental revenue increased from R108.2 million to R181.7 million. Both the African Cryogenics and the Engineered Linings businesses showed substantial top line growth. However, the latter experienced cash fl ow pressure due to the resultant surge in the required working capital.
CEO’s report
10 PSV Integrated Annual Report 2013 www.psvholdings.com
CEO’s report (continued)
expansion into Africa, PSV will build on the foundation which it already has in place. Much of our work is carried out on a project basis and this will remain into the future.
AppreciationThere is no doubt that this year was tough in many respects, but despite these conditions I wish to thank my fellow Board members, subsidiary management, staff, customers, suppliers, shareholders and all other stakeholders for their continued support throughout the year. It remains my belief that only with dedication, tenacity, and hard work by all, can we continue to achieve the goals that we have set for PSV to achieve.
Abie da SilvaCEO
7 August 2013
outstanding conditions precedent. On headline earnings per share the disposal was accretive by 60.47% and HEPS showed an increase from 1.72 cents per share to 2.76 cents per share before and after the transaction, respectively. The disposal was classified as a Category 2 transaction in terms of the Listings Requirements of the JSE and did not require shareholder approval.
SustainabilityLast year was the first year PSV began reporting on sustainability measures. For a small company this continues to be difficult. PSV continues to strive for improved sustainability measures.
Changes to the BoardDave Kelly resigned as a Non-executive Director on 30 August 2012. Eric Ratshikhopha was appointed on 19 October 2012 as an Independent Non-executive Director, a member of the Audit and Risk Committee as well as the Remuneration Committee and as the Chairman of the Social and Ethics Committee.
On 4 June 2013, Peter Robinson resigned as a Non-executive Director.
ProspectsPSV has always had a strong footprint in Africa and is looking to leverage this in the coming year. Turbo Agencies in particular is busy expanding its product offering and its geographic representation in African countries. A marketing manager has been appointed to exploit African opportunities across the Group of Companies.
PSV has experienced larger capex spend by mines in Africa and is looking to take advantage of this opportunity. The domestic market continues to show sustainable growth in the industrial segments in which we operate. Both our Industrial Supplies and Specialised Services segments began the new financial year with larger order books than last year.
2014 is viewed as a year of consolidation for PSV, where the main aim is to focus on profitability and working capital management. In concentrating on core competencies in South Africa and further
African CryogenicsAfrican Cryogenics is involved in the manufacture of cryogenic vessels and the provision of innovative technologically advanced cryogenic-based applications used to solve industrial problems. The cryogenics business has experienced an improvement in operating conditions compared to 2012, which was characterised by the toughest trading conditions in the past 10 years. Local gas and petrochemical companies have begun to spend capex, which was not previously the case. The spend has translated into orders primarily for new tankers and/or vessels whereas previously the majority of their time was focused on repairing tankers and vessels, a service which holds very little margin.
The pipeline for African Cryogenics is much healthier than it was at this time last year and management are confident that this increase in activity will be maintained.
Engineered LiningsEngineered Linings is a specialist contracting Company, concentrating on the supply and installation of geosynthetic liners for the purpose of containment and environmental and corrosion protection. We are pleased to report that the pipeline for Engineered Linings is above what it was in 2012. Notwithstanding, the upsurge in top line growth came at substantially lower margins and resultant pressure on working capital. Management has reformulated working capital strategies and redefined marketing and business focus in order to adapt to the changing marketing conditions.
Corporate actions and subsequent eventsOn 13 May 2013, PSV announced on SENS the disposal of the Mitech business. Mitech is a specialised control valves business that produces valves which are primarily used in the mining and petrochemical industries. The rationale for the disposal is that Mitech did not meet PSV’s return on investment targets. It was therefore decided to dispose of Mitech and focus efforts on maximising the returns generated by the rest of the Companies within the Group.
Mitech was sold for a total consideration of R7.0 million in cash. The effective date of the disposal was 1 April 2013 and there were no
Corporate governance
Performancereview
Annual fi nancial report
Group overview
11PSV Integrated Annual Report 2013 www.psvholdings.com
Operating context
Shareholders
Operating environment
The operating environment for PSV is mixed due to the diversity of the underlying
businesses. In general the economic climate has improved, manifested by the
increasing order books and an uptick in contracting activity.
Oper
atin
g co
ntex
t
Industrial Supplies
Omnirapid
Continues to grow, develop markets and increase inter group sales
Turbo Agencies
Experienced good growth within the African market place, primarily as a result of strong agency brand names
Requires expansion capital
Specialised Services
African Cryogenics
Industry capex spend is prevalent and a reversal from the position in 2012 when limited spending took place
Engineered Linings
Internal restructuring is paying off
Order book has increased relative to 2012
Better prepared to analyse costs and pricing structures to be competitive
12 PSV Integrated Annual Report 2013 www.psvholdings.com
Stakeholders
PSV categorises stakeholders as groups, people or organisations that have a direct interest in the various businesses of the PSV Group. Stakeholder evaluation has been undertaken at Group as well as at subsidiary level and still remains in the early stages of development.
Engagement with stakeholders takes various forms including informal calls, customer meetings, staff meetings and newsletters to formal meetings with regulators.
Details of PSV’s key stakeholders, the type of engagement, material issues raised and actions are provided in the table below:
Stakeholder Type of engagement Material issue raised Action taken
Shareholders Active website, dissemination of information through a defined contact list, calls and meetings with strategic shareholders take place if and when required
Earnings and sustainability of the Company, dividend payments
The profitable sale of underlying Companies and the restructuring of segments in order to maintain a sustainable Company for the future
Internal staff newsletter General information Ongoing
Individual Company staff meetings Company and employee issues on a social trend Ongoing
Training on new revised employee handbook. Abridged hard copy version of Company policies and procedures handed to all employees on commencement of employment
Awareness of rules and regulations within the workplace Training to all employees
Performance counselling Intention to improve the expected employee standard of performance for the position
After counselling ensure guidance, monitoring, training, evaluation over a time period are given to employees
Industrial Relations – Process, disciplinary hearings Regulate discipline in the workplace through progressive disciplinary method
Conduct disciplinary hearings. An external Chairman ensures objectivity and adherence to procedural and substantive issues
Grievance procedures Allow aggrieved employee to resolve issues through a fair process
Human Resources Division regulates to ensure fairness
Employment Equity (“EE”) Forum EE representatives engage in meaningful discussions to eliminate barriers of the past
Quarterly meetings
Trade unions Changes in employment conditions, retrenchments, etc Bargaining best packages for employees, all decisions equal and fair as per South African legislation
The engagements are not infrequent
Customers Formalised business dealings, meetings, telephone conversations, credit checks and reviews
Competitive pricing structures Conscious effort to meet expectations where applicable
Complaints Recorded, addressed and resolved
Ongoing
Corporate governance
Performancereview
Annual fi nancial report
Group overview
13PSV Integrated Annual Report 2013 www.psvholdings.com
Operating context
Shareholders
Stakeholder Type of engagement Material issue raised Action taken
Suppliers One-on-one business dealings, presentations on productfeatures, correspondence and factory visits, if required
Record complaints Recorded, addressed and resolved
Database of suppliers kept and maintained Oversee across PSV and updated accordingly
Delivery of products Timeous delivery is strived for
Government/municipalities/parastatals
Meetings, industry body representation and conferenceparticipation
Transformation remains a key driver for PSV Developing new B-BBEE compliant structures
Regulators Reporting, correspondence, formal meetings and feedback session
Regulatory compliance PSV adheres to the Listings Requirements of the JSE, the Companies Act, and all other requirements for a public company
Financiers Formal meetings, updated status meetings and feedbacksessions
Loan agreements and overdrafts to PSV PSV has kept their providers of finance informed of all developments within the Company pertaining to overdraft requirements and the process for settling debt
Communitiesand civil society
Active CSI initiatives, meetings with representatives fromorganisations supported
Help, support and assistance required Assistance in the form of money or physical requirements such as books, blankets, etcPSV staff also give of their own personal time
14 PSV Integrated Annual Report 2013 www.psvholdings.com
Financial highlights
2.78
-14
-12
-10
-8
-6
-4
-2
0
2
4
‘13‘12
123.2%
(11.
98)
Cps
Perf
orm
ance
revi
ew
0
2
4
6
8
10
12
14
16
18
‘13‘12
81.5%
9.2
16.7
R’m
Cash at the end of the year
HEPS from continuingoperations
0
50
100
150
200
250
300
350
400
450
‘13‘12
45.6%
261.
7
381.
1
R’m
Revenue
0
1
2
3
4
5
6
7
8
‘13‘12
47.8%
7.1
3.7
R’m
Reduction in net finance costs
-35
-25
-15
-5
5
15
‘13‘12
130.6%
(32.
6)
10.0
R’m
PBT from continuing operations
Corporate governance
Performancereview
Annual fi nancial report
Group overview
Performancereview
15PSV Integrated Annual Report 2013 www.psvholdings.com
Operating context
Shareholders
Compliance costs – R4 million
Costs incurred by PSV in order to comply with the various relevant statutes
arising due to PSV being a listed company.
Group costs – R13.1 million
Costs incurred by the head offi ce for and on behalf of underlying subsidiaries.
For example IT-related costs and security. These are costs that the subsidiaries
would have normally incurred themselves.
Head offi ce costs – R8.2 million
Costs directly attributable to running the head offi ce of the PSV Group including,
inter alia, the cost to Company of the CEO and CFO.
Highlights
Great strides continue to be made to increase the footprint and activities in Africa
Return to focus on core-competencies
No industrial action took place during the year
Zero material accidents or incidents for the second consecutive year
Analysis of corporate costs
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
Head office costsGroup costsCompliance costs
(0.9%)
R’000
4 10
3
(21.8%)
(19.2%)
2013 2012
13 1
00
8 20
0 10 4
82
16 2
15
4 06
7
Corporate costs
Value added statement
Employees
Government Depreciation and amortisation
Providers of capital
Retailed loss
41%
40%
8%
7% 4%
2013
Employees
Government Depreciation and amortisation
Providers of capital
Retailed loss
123%
16%
11%
7%
-57%
2012
16 PSV Integrated Annual Report 2013 www.psvholdings.com
Sustainability Report
StrategyAs a manufacturing Group in the industrial engineering sector, PSV has
a responsibility to operate taking into consideration how its decisions
and actions impact stakeholders, including people, the habitat and
environment in which PSV operates. PSV recognises that sustainability
is integrated within all facets of their business and is aligned to the
Group’s objectives. As a result, PSV is committed to improving the
management of risks and opportunities in the social, environmental and
economic spheres to ensure PSV’s future success.
PSV is in the process of improving policies, procedures, information
gathering and data assessment that are linked to sustainability. This will
have a direct benefit to PSV, as well as its stakeholders, and could assist
the Group’s ability to achieve their strategic goals. In addition, this will
help improve the reporting of sustainability matters and the quality of
stakeholder engagements. Furthermore a Social and Ethics Committee
has been established under the leadership of Eric Ratshikhopha which
will assist the Group in achieving sustainability objectives.
Environmental performancePSV recognises that it has a responsibility to consider the effect of
our business activities on the environment and we are committed
to ensuring that we minimise the impact of our “carbon footprint”
by adopting a policy aimed at achieving this outcome. PSV has an
environmental policy outlining this, however we do not yet measure our
carbon footprint. PSV and its subsidiaries are looking at the process of
the implementation of the ISO 14001:2004 Environment system.
All PSV subsidiaries are equipped with recycle bins which encourage
the recycling of paper, plastic, glass, aluminium, tin cans and cardboard.
Some of the subsidiaries reuse cardboard packaging and purchase
second hand boxes in order to use as delivery boxes, thereby extending
the proportion of these that are being recycled and therefore reducing
the amount sent to landfills.
Health, safety and qualityOccupational SafetyThe health of employees is a primary concern for PSV. For this reason
weekly and monthly toolbox talks and training programs are held
at various sites, and this attaches great importance to protecting
employees from work-place accidents. In the year under review,
PSV Holdings implemented the Group’s Health and Safety Policy and
Procedures, and this governs such rules, as per the Act.
PSV’s Health and Safety Policy has been implemented in accordance
with the guidelines set in the Act and articulates a commitment to
ensuring a secure work environment.
The Health and Safety Policy includes fire drills, monthly Health and
Safety Forum meetings as well as regular training workshops for elected
representatives in respect of first aid, fire fighting and evacuation
procedures.
Work accidents and injuriesEfforts to prevent accidents at work are an essential part of PSV
activities and require continuous motivation of employees by Health and
Safety representatives and line managers. PSV is pleased to report
that there were no fatalities at any of its subsidiaries for the year
under review.
Quality-systemsPSV is proud to announce that it was granted the ISO 9001:2008
(Quality Management systems) certification on 29 October 2012.
The certification follows an audit, undertaken, by TUV Rhineland South
Africa (Accreditation Body). The implementation and achievement
of ISO 9001:2008 is in line with PSV’s vision of being a locally and
globally competitive industrial engineering Company. Achieving the ISO
9001:2008 certification gives PSV a competitive edge, especially when
trading locally and abroad. We undertake to continually give of our best
to ensure that we retain this certification.
Follow-up audits will take place annually to ensure continued compliance with and improvement regarding the ISO 9001:2008 standards.
Human resource managementThe human resources management responsibility is centralised at PSV’s head office in Elandsfontein, although the responsibility of direct management of employees remains with each of the subsidiaries. PSV ensures compliance with South African labour legislation and other legislation which includes but is not limited to 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 and the Occupational Health and Safety Act. No incidents of non-compliance were noted in the period under review.
Our demographic and male to female split is as follows:
Demographic male to female split
Male Female
0
50
100
150
200
250
WhiteIndianColoured
‘12‘13 ‘12‘13African
‘12‘13 ‘12‘13
Corporate governance
Performancereview
Annual fi nancial report
Group overview
Performancereview
17PSV Integrated Annual Report 2013 www.psvholdings.com
Operating context
Shareholders
Fair and sustained employmentPSV strives to treat all staff equitably and responsibly, in compliance
with applicable legislation, to ensure that their full potential is reached.
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. The Group recognises the importance of employment
equity and through recruitment and training continuously tries to
improve on previous employment equity standings.
The Group makes every effort to remunerate staff and Directors fairly
and equitably. Permanent employees reap the benefi t of a basic salary,
retirement fund contributions, medical aid and other benefi ts. This is not
applicable to non-permanent staff. The annual increases for non-union
employees are recommended by the Managing Director of each Group
Company and approved by the Remuneration Committee. Increases
for employees that fall within the bargaining unit 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.
The Group has a strategic HR business partner being LabourNet.
LabourNet specialises in ensuring that fair labour procedures and
practices are implemented in all aspects of the business. LabourNet
assists PSV from the employees date of employment, ensuring that both
parties in the employment relationship are treated fairly.
Codes and practices, policies and procedures that 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. In instances where corruption
by an employee is suspected, the employee is suspended pending an
investigation. Disciplinary hearings with the employee are held and the
employee is dismissed if found guilty. If the matter remains unresolved
to ensure the fair, compassionate and non-discriminatory treatment of
employees who are impacted by disease.
Corporate social initiativesThe Group recognises that Corporate Social Responsibility (“CSR”) is no
longer an optional “to do” and has identifi ed CSR as a vital part of PSV’s
business principles. The Group has been honoured to be involved with
some fantastic projects throughout the year and continues to encourage
all management and staff to improve on identifying and investing
in sustainable projects in conjunction with local communities. PSV
believes that the smallest action can better another person’s existence,
and has the potential to create a phenomenal ripple effect which could
lead to major change. PSV has invested in taking the time and making
the effort into enhancing PSV’s social investment.
PSV undertook several social investment projects in the year including:
Blanket and Food Drive PSV visited the St Peter’s Child Care (“StPCC”) facility in Douglasdale.
The facility was formed in 2000 and focuses on children affected by
HIV/AIDS, especially orphans. The objective of the project is to provide
an emotionally secure environment for raising children which are
orphaned as a result of the HIV/AIDS pandemic. StPCC supports a
number of foster families and is run by a committee of volunteers. PSV
donated 150 blankets and bulk food supplies to the centre.
PSV also donated the same to the Community Provision and Social
Services (“COMPASS”) in Edenvale. The centre cares for the poor,
homeless, unemployed and uneducated communities. The centre offers
various development programmes to individuals in need and feeds
hundreds of people on a daily basis.
Nelson Mandela DayPSV was once again fortunate to participate in this humble initiative.
Employees took to the streets and spend their 67 minutes by dishing
out soup and bread to people living on the streets.
and is considered to be of a serious nature, legal action is taken against the employee. Corruption is a practice not tolerated within the Group.
Human rightsPSV 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 retentionAlthough PSV has no formal skills management and training policy, a key initiative of the Group is to nurture and develop it’s skills base internally to meet the current and future skills requirements of PSV. The Group encourages training and skills development as and when required to empower employees with skills to improve efficiency, safety and progress within the Group. PSV continues with an internal programme which has produced successful graduates into the Group as well as apprentices skilled in turning, boiler making and fi tting.
A comprehensive performance and career development review system is in place, with all staff members being reviewed at least once a year.
During the year, R352 823 (2012: R266 811) was spent on training 373 employees across PSV. A total of 2 624 hours of training took place during the year, compared to 2 544 hours in 2012. These measures assist in determining future training objectives and needs.
Organisational health and wellnessPSV holds Wellness Days for all employees twice a year to encourage lifestyle changes and optimal health. The purpose of this initiative is to identify health risks, provide health education and influence positive behaviour changes as well, which leads to healthier and happier employees. PSV believes this initiative enhances overall employee performance.
The Wellness Day is also used as a platform to promote the awareness and prevention of HIV/AIDS and other illnesses. PSV remains committed
18 PSV Integrated Annual Report 2013 www.psvholdings.com
Sustainability Report (continued)
94.7 Highveld Stereo Christmas Wish 2012
PSV heard about the wish for Justin, an 11-year old boy who lost his
mother to cancer as well as two other family members in a short period
of time. Months after his grandmother adopted Justin, she too was
diagnosed with cancer. His grandmother submitted a wish for Justin to
have a break from all the emotional stress and sadness he had been
through and for Justin to have some fun and enjoy life like any 11-year
old boy should. PSV sponsored a holiday at the Sugar Bay Holiday
Resort for Justin and a friend. PSV also paid Justin’s school fees for
2013 and furnished the family with a shopping gift card.
Economic performancePSV’s objective is to create sustainable business to create wealth for its stakeholders. The performance of the Group is discussed in the CEO’s report and is evidenced in the annual financial statements.
PSV contributes to overall growth of the country through:• investing in skills development and training;• creating job opportunities;• supporting local and small business enterprises where possible; and• corporate social investment programmes.
PSV does not get financial assistance from the Government.
Corporate governance
Performancereview
Annual fi nancial report
Group overview
Corporate governance
19PSV Integrated Annual Report 2013 www.psvholdings.com
Operating context
Shareholders
Corp
orat
e go
vern
ance
Board of Directors
Audit and Risk Committee
Remuneration Committee
Social and Ethics Committee
Board of Directors
Board Committees and attendanceThe Board of Directors of PSV (“the Board”) is mindful and cognisant that Corporate Governance is essential to protect the interests of all stakeholders and remains committed to compliance with legal requirements and sound Corporate Governance principles.
Details of the membership and responsibility of the Board and Committees are summarised below:
Board/Committee Roles and responsibilities Members
PSV Holdings Board The Board is the focal point of the Group’s Corporate Governance structure and the overriding body at which strategic decisions are made. It is responsible for the governance process, sustainable growth and Company affairs.
Ralph Patmore (Chairman and Independent Non-executive Director)Abie da Silva (Executive Director)Tony Dreisenstock (Executive Director)Eric Ratshikhopha (Independent Non-executive Director)Anthony de la Rue (Independent Non-executive Director)
Audit and Risk Committee
This committee is responsible for:• reviewing annual financial statements;• ensuring effective internal control;• liaising and nominating external auditors and their
fee structure;• evaluating the independence of the auditors; and• pre-approving contracts with external auditors
for the provision of non-audit services.
Anthony de la Rue (Chairman)Ralph PatmoreEric Ratshikhopha Abie da Silva (CEO) (by invitation)Tony Dreisenstock (CFO) (by invitation)
20 PSV Integrated Annual Report 2013 www.psvholdings.com
Board Committees and attendance (continued)
Board/Committee Roles and responsibilities Members
Remuneration Committee
The committee is responsible for:• recommending annual salary increase rates
for the Group; and• quantifying the CEO and CFO incentives.
Anthony de la Rue (Chairman)Ralph Patmore (Independent Non-executive Director)Eric Ratshikhopha (Independent Non-executive Director)
Social and Ethics Committee
The Board established the Social and Ethics Committee in compliance with the requirement of Section 74 and Regulation 43(5) of the Act which regulates social and ethical practices. The committee, although still very new, will monitor:• social and economic development;• good corporate citizenship;• the environment, health and public safety;• consumer relationships; and• labour and employment.
Eric Ratshikhopha (Chairman)Abie da Silva (Executive Director)Tony Dreisenstock (Executive Director)Sagren Sookanathan (Group SHEQ Manager)
Corporate governance
Performancereview
Annual fi nancial report
Group overview
Corporate governance
21PSV Integrated Annual Report 2013 www.psvholdings.com
Operating context
Shareholders
Corporate Governance report
Corporate governanceThe Board regards Corporate Governance as vitally important to the success of the business of the Group and is unreservedly committed to applying the principles necessary to ensure that good governance is practiced in all of its business dealings in respect of its shareholders and relevant stakeholders.
The content of this document is aimed to inform internal and external stakeholders of the Group transparently and honestly through fair and understandable disclosure. The Board fi rmly believes that good Corporate Governance is essentially about responsible leadership and the Board realises the importance of their function to act as custodians 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. The Board believes that the business will prosper in an environment of good and balanced Corporate Governance.
Statement of complianceThe Board confi rms that the Group has complied with the principles of King III, except where otherwise explained in the report. The Group will continue to improve corporate and operational practices to achieve sound Corporate Governance practices, through integrity and accountability. For easy reference a King III compliance matrix is included at the end of this report. All areas marked “partially applied” or “under review” have a commentary alongside the area and will be considered during the ensuing year.
The Board also confirms that the Group has complied with the provisions set out in the Listings Requirements of the JSE.
Board of DirectorsThe leadership of the Group is provided by a unitary effective Board which at year-end comprised two Executive Directors and four Non-
executive Directors, three of whom are independent. 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 terms of the requirements of King III, when formal mandatory declarations of personal interests are made by each Director.
The Board is satisfi ed with the knowledge and skills level of the Board. The composition of the Board consists of a majority of Non-executive Directors, the majority of whom are independent. All Directors are required to attend the AltX Directors Induction Programme, hosted by the Institute of Directors.
There are two key tasks at the head of the Group namely, the running of the Board and the executive responsibility for the running of the Group’s day-to-day business. There is a clear division of responsibilities at the head of the Group to ensure a balance of power and authority, such that no one individual has unfettered powers of decision-making.
ChairmanThe Chairman of the Board is Mr Ralph Patmore, an Independent Non-executive Director.
The Chairman provides leadership and guidance to the Board as a whole, and encourages proper deliberation of all matters requiring the Board’s attention, and obtains optimum input from the other Board members. He also takes responsibility for ensuring effective governance practices. The Chairman also represents the Company to stakeholders.
Chief Executive Offi cerThe Chief Executive Offi cer (“CEO”), Mr Abie da Silva, accepts full responsibility for the sound and effi cient operation of the business as well as the implementation of all strategies and policies adopted by
the Board. Managing Directors of the various businesses in the Group assist him in this task. Board authority conferred on management is delegated through the CEO, in accordance with approved authority levels. Mr da Silva ensures the maintenance of good relations with all the shareholders of the Group.
There is a clear division between the responsibilities of the Board and management. Mr da Silva ensures clear communication from the Board to executive management of the Group to ensure 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 subsidiary Companies in the Group. He ensures that the Group has an effective management team and actively participates in the development of management and succession planning.
Rotation of DirectorsOne-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.
Biographical details of each Director are set out on pages 6 and 7 of this Integrated Annual Report.
Meeting attendanceThe Board meets at least quarterly, and more frequently if circumstances or decisions require. They furthermore confer 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.
22 PSV Integrated Annual Report 2013 www.psvholdings.com
Corporate Governance report (continued)
Attendance by Directors at Board meetings is provided below:
Name of Director
2 March 2012
24 April 2012
28 May 2012
27 August 2012
19 October2012
1 February2013
AJD da Silva ✓ ✓ ✓ ✓ ✓ ✓
AR Dreisenstock ✓ ✓ ✓ ✓ ✓ ✓
RB Patmore ✓ ✓ ✓ ✓ ✓ ✓
A de la Rue ✓ – ✓ – ✓ ✓
P Robinson ✓ ✓ ✓ ✓ – ✓
E Ratshikhopha – – – – ✓ ✓
A representative from the Company’s Designated Adviser attends the
Board meetings as required in terms of the JSE Listings Requirements.
Board processesDirectors’ share dealingsThe Board has an approved trading policy in terms of which dealing
in the Group’s shares by Directors and employees is prohibited during
closed periods.
Directors may not deal in the Company’s shares without first advising
and obtaining clearance from the CEO and from the CFO. The CEO
and CFO may not deal in the Company’s shares without first advising
and obtaining clearance from the Chairman of the Board. No Director
or Executive Committee member may trade in PSV’s shares during
closed periods, as defined in terms of the JSE Listings Requirements.
The Board keeps the Company Secretary advised of all their dealings in
securities. All dealings are announced on SENS within 48 hours.
Interest in contractsDuring the year ended 28 February 2013, none of the Directors had a
interest in any contract or arrangement entered into by the Company
or its subsidiaries, other than as disclosed in Note 24 to the annual
financial statements.
Directors are required to inform the Board timeously of conflicts
or potential conflicts of interest they may have in relation to particular
items of business. Directors are obliged to recuse themselves
from discussions or decisions on matters in which they have a
conflicting interest.
Board appointmentsIn terms of the approved appointments to the Board, all Board members
are required to assist with the identification and nomination of potential
Board candidates. Appointments to the Board are conducted in a formal
and transparent manner in terms of the Board policy.
The Board will from time to time assess the skills of the Board to ensure
that it consists of the required competency levels in order to be efficient
and in order to provide strategic guidance to the Group. Should the
assessment indicate that there is a lack of competency in a certain
area, the Board will consider the appointment of a Director to fulfil
this need.
Closed periodsClosed 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.
Directors of the Company and its major subsidiaries, 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.
Self-evaluationUnder the leadership of the Chairman of the Board, self-evaluations of the Board members have been carried out. 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. Areas requiring improvement have been identified, and are receiving attention.
Changes to the BoardDuring the 2013 financial year, Mr Peter Robinson was re-elected by shareholders at the Annual General Meeting of PSV held on 17 September 2012 and resigned on 4 June 2013. Mr David Kelly resigned on 30 August 2012 due to an increase in business commitments.
Mr Eric Ratshikhopha was appointed as an Independent Non-executive Director on 19 October 2012.
Board charterThe purpose of the Board charter is to set out specific responsibilities that are to be discharged by the Board, and every member of the Board, in accordance with King III. The Board charter has been reviewed during the past financial year to align the content thereof with the recommendations of King III.
PSV is accountable to its share and stakeholders by setting a charter for the Board, which regulates how business is conducted while adhering to best practice and the highest standard of business conduct.
Corporate governance
Performancereview
Annual fi nancial report
Group overview
Corporate governance
23PSV Integrated Annual Report 2013 www.psvholdings.com
Operating context
Shareholders
The Audit and Risk Committee operates in terms of a formal mandate which sets out the functions and duties of the committee. These functions are based on the relevant provisions of the Companies Act, 2008 (Act 71 of 2008) (“the Companies Act”), as amended, as well as relevant Corporate Governance recommendations in terms of King III. These include, inter alia, to:• review the annual financial statements to ensure that they present a
true, balanced and understandable assessment of the financial position and performance of the Company;
• ensure an effective internal control environment in the Company;• nominate the external auditor for appointment as the registered
independent auditor after satisfying itself through enquiry that the external audit firm and the designated audit partner are independent;
• determine the fees to be paid to the external auditor as well as its terms of engagement;
• ensure that the appointment of the external auditor complies with the provisions of the Companies Act and any other legislation relating to the appointment of auditors;
• evaluate the independence and effectiveness of the external auditors;• approve a non-audit service policy which determines the nature and
extent of any non-audit services which the external auditor may provide to the Company;
• pre-approve any proposed contract with the external auditor for the provision of non-audit services to the Company; and
• satisfy itself as to the appropriateness of the expertise and experience of the CFO.
The primary responsibilities of the Board include the regular review of the strategic direction of investment decisions and performance against approved plans, budgets and best practice standards. The Board retains full and effective control of the Group and decisions on material matters are reserved for the Board.
The objectives of the Board charter are to ensure that all Board members acting on behalf of the Group are aware of their duties and responsibilities as Board members and the various legislation and regulations affecting their conduct and to ensure that the principles of good Corporate Governance are applied in all their dealings in respect, and on behalf, of the Group.
The Board charter is reviewed annually.
Board CommitteesWhile the Board remains accountable and responsible for the performance and affairs of the Company, Board sub-committees assist the Board in discharging its duties and responsibilities, however the sub-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, except where the Board Committees have been mandated otherwise by the Board.
In keeping with the recommendations of King III, Board Committees currently comprise of the following sub-committees, namely the Audit and Risk Committee and the Remuneration Committee. The sub-committees have formally determined terms of reference, clearly agreed upon reporting procedures and written scope of authority which are reviewed annually and approved by the Board. The Chairman of
each Board Committee is required to attend Annual General Meetings
to answer questions raised by shareholders. A Social and Ethics
Committee was established during the 2013 fi nancial year and Mr Eric
Ratshikhopha was appointed as the Chairman of this sub-committee.
Audit and Risk CommitteeThe Audit and Risk Committee currently comprises three Independent Non-executives, Mr Anthony de la Rue (Chairman), Mr Eric Ratshikhopha and Mr Ralph Patmore. The Board is satisfi ed that the three members of the Audit and Risk Committee are highly qualifi ed individuals who on a collective basis have suffi cient qualifi cations and experience to fulfi l its duties. The members of the committee are also permitted by the Board to consult with specialists when required. The Board meets the requirement of King III in that there must be at least three Independent Non-executive Directors fulfi lling the duty as members of the Audit and Risk Committee.
The CEO and CFO attend all the meetings by invitation. The JSE Designated Adviser attends all Audit and Risk Committee meetings in compliance with the JSE Listings Requirements. The external auditors attended the meetings and also have unrestricted access to the Chairman of the Audit and Risk Committee.
The Audit and Risk Committee met four times during the fi nancial year.
The attendance by members at the Audit and Risk Committee meetings is provided below:
Name of Director
24 May 2012
17 August 2012
12 October 2012
25 January 2013
AJD da Silva – ✓ ✓ ✓
AR Dreisenstock ✓ ✓ ✓ ✓
RB Patmore ✓ ✓ ✓ ✓
A de la Rue ✓ ✓ ✓ ✓
E Ratshikhopha – – – ✓
24 PSV Integrated Annual Report 2013 www.psvholdings.com
Corporate Governance report (continued)
The Company does not have a separate internal audit function and the
Audit and Risk Committee therefore pays 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 has identified the implementation of
an effective, independent internal audit function in the Company as a
priority for the ensuing financial year. The Audit and Risk Committee will
also oversee the integrated reporting process of the Company from the
ensuing year.
The Audit and Risk Committee forms part of a unitary Board even
though it has specific statutory responsibilities over and above the
responsibilities assigned by the Board.
The Audit and Risk Committee assists the Board in fulfilling its fiduciary
responsibilities in respect of the governance of risk tolerance and risk
appetite of the Company.
The Audit and Risk Committee has an independent role, operating as an
overseer and maker of recommendations to the Board for consideration
and final approval.
The Audit and Risk 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
Audit and Risk Committee is to assist the Board to ensure that the
Company has implemented effective policies and plans, including but
not limited to plans for risk management that therefore enhances the
Company’s ability to achieve strategic objectives, and ensures that
the disclosure regarding risk is comprehensive, timely and relevant.
The Audit and Risk Committee oversees the development and annual
review of the policies and plans for risk management in order to
recommend same to the Board for approval.
The Group acknowledges the importance of risk management and
Corporate Governance principles.
Risk is an intrinsic part of all activities undertaken by PSV.
PSV is exposed to certain risks, which are influenced by its specific
choices and actions. The Board of PSV along with its Executive
Committee and management recognise that risk management is
a critical management tool to ensure that the Group achieves its
objectives. The Audit and Risk Committee has been formulated with the
specific objective of identifying those risks and implementing policies to
combat and mitigate those risks.
The Audit and Risk 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, obtains
regular updates from management and Group’s legal counsel
regarding compliance matters and ensures that all regulatory
compliance matters have been considered in the preparation of the
financial statements.
During the course of the year the Company appointed BDO Spencer
Steward to perform a gap analysis of the Group as well as the
underlying subsidiaries intrinsic and residual risks. A comprehensive
report was tabled to the Audit and Risk Committee. All gaps identified
are being vigorously addressed and mitigation strategies implemented
by the Executive Board as well as senior management.
Remuneration Committee
A Remuneration Committee had been established in compliance
with the requirements of King III. The Remuneration Committee met
three times during the financial year ended 28 February 2013. The
attendance by members at the Remuneration Committee meetings is
provided below:
Name ofDirector
16 March 2012
12 November 2012
25 January 2013
AJD da Silva ✓ ✓ ✓
AR Dreisenstock – ✓ ✓
RB Patmore ✓ ✓ ✓
A de la Rue ✓ ✓ ✓
P Robinson – – –
E Ratshikhopha – ✓ ✓
The Remuneration Committee comprises the three Independent
Non-executive Directors as members. The CEO and CFO attend the
Committee by invitation only.
The role of the Remuneration 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 Remuneration Committee performs, inter alia, the following
functions:
1. Oversee the establishment of a remuneration policy that will promote
the achievement of strategic objectives at all levels in the Group and
encourage individual performance;
2. Ensure that the remuneration policy is put to a non-binding advisory
vote at the general meeting of shareholders annually;
3. Review the outcomes of the implementation of the remuneration
policy on an annual basis;
4. Ensure that the mix of fixed and variable payments, in cash, shares
and other elements, meets the Company’s needs and strategic
objectives;
Corporate governance
Performancereview
Annual fi nancial report
Group overview
Corporate governance
25PSV Integrated Annual Report 2013 www.psvholdings.com
Operating context
Shareholders
5. Satisfy itself as to the accuracy of recorded performance measures
that govern the vesting of incentives;
6. Ensure that all benefits, including retirement benefits and other
fi nancial arrangements, are justifi ed and correctly valued;
7. Consider the results of the evaluation of the performance of the CEO
and other Executive Directors, both as Directors and as Executives in
determining remuneration;
8. Regularly review incentive schemes to ensure continued contribution
to shareholder value and that these are administered in terms of the
rules; and
9. Advise on the remuneration of Non-executive Directors.
Remuneration philosophyPSV is committed to its shareholders and therefore determines their
remuneration policy and philosophy based on best practices within the
market. The Group’s Directors are remunerated on a cost to Company
basis, which includes benefi ts such as medical aid, life insurance, death
cover, disability, funeral cover and retirement. Increases are based
on individual performance and measured against defi ned targets for
the Group.
Remuneration of Non-executive Directors
Type of feeProposed annual
fee for 2013 Proposed annual
fee for 2014
CommitteeChairman 240 000 255 600Member 240 000 255 600
The annual remuneration payable to any Non-executive Director is
R240 000 per annum (2013), notwithstanding the number of committees
he/she is a member/Chairman of. The proposed fee for 2014 is
R255 600 per annum.
Fees as set out above are subject to shareholder approval at the Annual
General Meeting to be held on 20 September 2013.
Directors’ remuneration is set out in Note 25 of the annual fi nancial
statements.
The three highest paid members of management (excluding Executive
Directors) are set out below:
2013R
2012R
Employee 1 1 267 857 3 185 313
Employee 2 1 069 983 1 057 353
Employee 3 967 901 912 767
Total 3 305 741 5 155 433
Social and Ethics CommitteeThe Social and Ethics Committee has also been established in
compliance with the requirements of King III and met three times during
the year, under the chairmanship of Eric Ratshikhopha. Attendance of
the meetings was as follows:
Name ofDirector
31 July2012
1 February 2013
16 May 2013
E Ratshikhopha – ✓ ✓
AR Dreisenstock ✓ ✓ ✓
AJD da Silva ✓ ✓ ✓
S Sookanathan – ✓ ✓
The committee comprises four members including an Independent Non-
executive Director, who chairs the committee, two executive directors
as well as the Group SHEQ Manager. Although the committee is newly
established, over the year it has monitored:• social and economic development;• good corporate citizenship;• the environment, health and public safety;
• consumer relationships; and • labour and employment.
Additional information relating to the points above can be found in the Sustainability Report.
Company SecretaryThe appointment and removal of the Company Secretary is approved by the Board. The Company Secretary advises the Board on the appropriate procedures for the management of meetings and the implementation of governance procedures, and is further responsible for providing the Board collectively, and each Director individually, with guidance on the discharge of their responsibilities in terms of the legislation and regulatory requirements applicable to South Africa.
The Board is satisfi ed that there is an arm’s length relationship between the Company Secretary and PSV as the Company Secretary is not a Director of the Group and is itself a separate legal entity and at all time maintains open lines of communication with the Board. The Board has unlimited access to the Company Secretary, who advises the Board and its committees on issues including compliance with Group policies and procedures, statutory regulations and relevant governance principles and recommendations. The Company Secretary attends Board and Committee meetings to ensure that comprehensive minutes of meetings are recorded.
Merchantec Capital was appointed in January 2011 as the Company Secretary of PSV. The Board has considered and is satisfied that the Company Secretary has the required qualifications, skills and knowledge through their many years of experience as such. The Board is satisfied with the considered advice received from the Company Secretary as well as the level of service provided to PSV. Furthermore the skills, competence and experience of the Company Secretary are verifi ed through the:a. monitoring, guiding and advising the Board on matters relating to
governance, legislative and statutory requirements and their duties and responsibilities as directors;
26 PSV Integrated Annual Report 2013 www.psvholdings.com
Corporate Governance report (continued)
b. the performance of the Company Secretary is currently under review;c. secretarial and administrative procedures are performed promptly
and efficiently by the Company Secretary; andd. the Company Secretary ensures that all directors have declared in
writing any conflicts of interests at every meeting.
Relations with shareholdersThe Group maintains dialogue with its key financial audiences, especially institutional shareholders and analysts. For further information, refer to page 36 of this Integrated Annual Report.
StakeholdersThe 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 subsidiary directly, and feedback is also encouraged in writing, telephonically or via the website.
Fraud and illegal actsThe Group does not engage in nor tolerate any illegal acts in the conduct of its business. The Directors’ policy is to actively pursue and prosecute the perpetrators of fraudulent or other illegal activities, should they become aware of any such acts.
Insider trading
No employee may deal, directly or indirectly, in PSV’s shares on the
basis of unpublished price-sensitive information regarding the business
or affairs of the Group.
Code of Conduct
The Group is committed to the highest ethical standards of business
conduct. The key pillars of the code include adherence to the legal
framework and ensuring that the Group is not brought into disrepute,
against 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
Code of Conduct. The Directors believe that the ethical standards of
the Group, as stipulated in the Code of Conduct, are monitored and are
being met. Where there is non-compliance with the Code of Conduct,
the appropriate discipline is enforced with consistency as the Group
responds to offences and prevents recurrences.
Corporate governance
Performancereview
Annual fi nancial report
Group overview
Corporate governance
27PSV Integrated Annual Report 2013 www.psvholdings.com
Operating context
Shareholders
King III Compliance Matrix
Requirement Comments
1. Ethical leadership and corporate citizenship
1.1 The Board should provide effective leadership based on an ethical foundation. ✓
1.2 The Board should ensure that the Company is and is seen to be a responsible corporate citizen. ✓
1.3 The Board should ensure that the Company’s ethics are managed effectively. ✓
2. Boards and Directors
Role and function of the Board
2.1 The Board should act as the focal point for and custodian of Corporate Governance. ✓
2.2 The Board should appreciate that strategy, risk, performance and sustainability are inseparable. ✓
2.3 The Board should provide effective leadership based on an ethical foundation. ✓
2.4 The Board should ensure that the Company is and is seen to be a responsible corporate citizen. ✓
2.5 The Board should ensure that the Company’s ethics are managed effectively. ✓
2.6 The Board should ensure that the Company has an effective and Independent Audit Committee. ✓
2.7 The Board should be responsible for the governance of risk. ✓
2.8 The Board should be responsible for information technology (“IT”) governance. The Group has fully outsourced its IT Department. A comprehensive IT report is regularly furnished to the Board, weaknesses are identified and corrected.
2.9 The Board should ensure that the Company complies with applicable laws and considers adherence to non-binding rules, codes and standards.
✓
2.10 The Board should ensure that there is an effective risk-based internal audit. Still in progress.
2.11 The Board should appreciate that stakeholders’ perceptions affect the Company’s reputation. ✓
2.12 The Board should ensure the integrity of the Company’s Integrated Annual Report. ✓
2.13 The Board should report on the effectiveness of the Company’s system of internal controls. ✓
2.14 The Board and its Directors should act in the best interests of the Company. ✓
2.15 The Board should consider business rescue proceedings or other turnaround mechanisms as soon as the Company is financially distressed as defined in the Act.
Non-applicable.
28 PSV Integrated Annual Report 2013 www.psvholdings.com
Corporate Governance report (continued)
Requirement Comments
2. Boards and Directors (continued)
Role and function of the Board (continued)
2.16 The Board should elect a Chairman of the Board who is an independent Non-executive Director. The CEO of the Company should not also fulfil the role of Chairman of the Board.
✓
2.17 The Board should appoint the CEO and establish a framework for the delegation of authority. ✓
Composition of the Board
2.18 The Board should comprise a balance of power, with a majority of Non-executive Directors. The majority of Non-executive Directors should be independent.
✓
Board appointment process
2.19 Directors should be appointed through a formal process. ✓
Director developments
2.20 The induction of and ongoing training and development of Directors should be conducted through formal processes. ✓
Company Secretary
2.21 The Board should be assisted by a competent, suitably qualified and experienced Company Secretary. ✓
Performance assessment
2.22 The evaluation of the Board, its committees and the individual Directors should be performed every year. ✓
Board Committees
2.23 The Board should delegate certain functions to well-structured committees but without abdicating its own responsibilities. ✓
Group Boards
2.24 A governance framework should be agreed between the Group and its subsidiary Boards. ✓
Remuneration of Directors and senior Executives
2.25 Companies should remunerate Directors and executives fairly and responsibly. ✓
2.26 Companies should disclose the remuneration of each individual Director and certain senior Executives. ✓
2.27 Shareholders should approve the Company’s remuneration policy. ✓
Corporate governance
Performancereview
Annual fi nancial report
Group overview
Corporate governance
29PSV Integrated Annual Report 2013 www.psvholdings.com
Operating context
Shareholders
Requirement Comments
3. Audit Committee
Membership and resources of the Audit Committee
3.1 The Board should ensure that the Company has an effective and Independent Audit Committee. ✓
3.2 Audit Committee members should be suitably skilled and experienced Independent Non-executive Directors. ✓
3.3 The Audit Committee should be chaired by an Independent Non-executive Director. ✓
Responsibilities of the Audit Committee
3.4 The Audit Committee should oversee integrated reporting. ✓
3.5 The Audit Committee should ensure that a combined assurance model is applied to provide a coordinated approach to all assurance activities.
✓
Internal assurance providers
3.6 The Audit Committee should satisfy itself of the expertise, resources and experience of the Company’s finance function. ✓
3.7 The Audit Committee should be responsible for overseeing of internal audit. The Group is in the process of appointing an individual who will perform the internal audit function – reporting directly to the Chairman of the Audit and Risk Committee.
3.8 The Audit Committee should be an integral component of the risk management process. ✓
External assurance providers
3.9 The Audit Committee is responsible for recommending the appointment of the external auditor and overseeing the external audit process.
✓
Reporting
3.10 The Audit Committee should report to the Board and shareholders on how it has discharged its duties. ✓
4. The governance of risk
Board’s responsibility for risk governance
4.1 The Board should be responsible for the governance of risk. ✓
4.2 The Board should determine the levels of risk tolerance. ✓
4.3 The Risk Committee or Audit Committee should assist the Board in carrying out its risk responsibilities. ✓
30 PSV Integrated Annual Report 2013 www.psvholdings.com
Requirement Comments
4. The governance of risk (continued)
Managements responsibility for risk management
4.4 The Board should delegate to management the responsibility to design, implement and monitor the risk management plan. ✓
Risk assessment
4.5 The Board should ensure that risk assessments are performed on a continual basis. ✓
4.6 The Board should ensure that frameworks and methodologies are implemented to increase the probability of anticipating unpredictable risks.
✓
Risk response
4.7 The Board should ensure that management considers and implements appropriate risk responses. ✓
Risk monitoring
4.8 The Board should ensure continual risk monitoring by management. ✓
Risk assurance
4.9 The Board should receive assurance regarding the effectiveness of the risk management process. In progress.
Risk disclosure
4.10 The Board should ensure that there are processes in place enabling complete, timely, relevant, accurate and accessible risk disclosure to stakeholders.
✓
5. The governance of information technology
5.1 The Board should be responsible for information technology (“IT”) governance. ✓
5.2 IT should be aligned with the performance and sustainability objectives of the Company. ✓
5.3 The Board should delegate to management the responsibility for the implementation of an IT governance framework. ✓
5.4 The Board should monitor and evaluate significant IT investments and expenditure. ✓
5.5 IT should form an integral part of the Company’s risk management. ✓
5.6 The Board should ensure that information assets are managed effectively. ✓
5.7 The Risk and Audit Committees should assist the Board in carrying out its IT responsibilities. ✓
Corporate Governance report (continued)
Corporate governance
Performancereview
Annual fi nancial report
Group overview
Corporate governance
31PSV Integrated Annual Report 2013 www.psvholdings.com
Operating context
Shareholders
Requirement Comments
6. Compliance with laws, rules, codes and standards
6.1 The Board should ensure that the Company complies with applicable laws and considers adherence to non-binding rules, codes and standards.
✓
6.2 The Board and each individual Director should have a working understanding of the effect of the applicable laws, rules, codes and standards on the Company and its business.
✓
6.3 Compliance risk should form an integral part of the Company’s risk management process. ✓
6.4 The Board should delegate to management the implementation of an effective compliance framework and processes. ✓
7. Internal audit
The need for and role of internal audit
7.1 The Board should ensure that there is an effective risk based internal audit. Under review – The Group is in the process of recruiting an individual who will perform the internal audit function.
Internal audit’s approach and plan
7.2 Internal audit should follow a risk-based approach to its plan. ✓
7.3 Internal audit should provide a written assessment of the effectiveness of the Company’s system of internal control andrisk management.
Under review – will be performed by new internal auditor.
7.4 The Audit Committee should be responsible for overseeing internal audit ✓
7.5 Internal audit should be strategically positioned to achieve its objectives. Under review – See above.
8. Governing stakeholder relationships
8.1 The Board should appreciate that stakeholders’ perceptions affect a Company’s reputation. ✓
8.2 The Board should delegate to management to proactively deal with stakeholder relationships. ✓
8.3 The Board should strive to achieve the appropriate balance between its various stakeholdergroupings, in the best interests of the Company.
✓
8.4 Companies should ensure the equitable treatment of stakeholders. ✓
8.5 Transparent and effective communication with stakeholders is essential for building and maintaining their trustand confidence.
✓
32 PSV Integrated Annual Report 2013 www.psvholdings.com
Requirement Comments
8. Governing stakeholder relationships (continued)
8.6 The Board should ensure disputes are resolved effectively, efficiently and expeditiously as possible. ✓
9. Integrated reporting and disclosure
9.1 The Board should ensure the integrity of the Company’s Integrated Annual Report. ✓
9.2 Sustainability Reporting and disclosure should be integrated with the Company’s financial reporting. PSV has complied as best possible, it is however not financially viable to have the entire report assured to meet this requirement.
9.3 Sustainability Reporting and disclosure should be independently assured. ✗
Corporate Governance report (continued)
Corporate governance
ShareholdersPerformancereview
Annual fi nancial report
Group overview
Shareholders
33PSV Integrated Annual Report 2013 www.psvholdings.com
Operating context
Analysis of shareholdersas at 28 February 2013
Shar
ehol
ders
Size of holdingsNumber of
shareholdings% of total
shareholdingsNumber of
shares% of shares
in issue
1 – 1 000 shares 281 34.39 96 876 0.041 001 – 10 000 shares 208 25.46 1 035 370 0.3810 001 – 100 000 shares 231 28.27 9 046 055 3.32100 001 – 1 000 000 shares 78 9.55 26 981 366 9.901 000 001 shares and over 19 2.33 235 388 032 86.36
Total 817 100.00 272 547 699 100.00
Distribution of shareholdersRetail shareholders 711 87.03 159 924 428 58.68Private companies 22 2.69 86 263 763 31.65Treasury 2 0.25 15 481 493 5.68Trusts 33 4.04 4 789 170 1.76Custodians 5 0.61 2 585 177 0.95Close corporations 22 2.69 2 544 895 0.93Hedge funds 1 0.12 454 527 0.17Investment partnerships 4 0.49 430 989 0.16Stockbrokers and nominees 5 0.61 51 758 0.02Unclaimed scrip 8 0.98 10 894 –Share schemes 1 0.12 7 575 –Foundations and Charitable Funds 2 0.25 2 030 –Managed funds 1 0.12 1 000 –
Total 817 100.00 272 547 699 100.00
Shareholder type Non-public shareholders 11 1.35 177 174 868 65.00 Directors of the Company or its subsidiaries
Directors and Associates (direct holding) 3 0.35 111 185 800 40.79 Directors and Associates (indirect holding) 4 0.46 3 000 000 1.10 Holders holding more than 10% (excluding
Director’s holding) Wonderwall Investments 36 Proprietary Limited 1 0.1 47 500 000 17.43Share Trusts 1 0.1 7 575 0.00Treasury (Less Directors’ interests) 2 0.25 15 481 493 5.68
Public shareholders 806 98.65 95 372 831 35.00
Total 817 100.00 272 547 699 100.00
34 PSV Integrated Annual Report 2013 www.psvholdings.com
Analysis of shareholders (continued)
as at 28 February 2013
Beneficial shareholders with a holding greater than 5% of the shares in issueNumber of
shareholdingsNumber of
shares% of shares
in issue
Mr Peter Robinson 1 52 778 600 19.36Mr Abilio Jose Duarte da Silva 1 52 578 600 19.29Wonderwall Investments 36 Proprietary Limited 1 47 500 000 17.43PSV Treasury Proprietary Limited 1 11 199 686 4.11
Total 4 164 056 886 60.19
Total number of Shareholdings 817 – –
Total number of Shares in issue 272 547 699 – –
Holding entity name (as per unit register) DirectorDirect
holding Indirect holding
Non-public breakdown – Directors of the Company or any of its subsidiariesMr Peter Robinson Mr P Robinson 52 778 600 1 000 000 Mr Abilio Jose Duarte da Silva Mr AJD da Silva 52 578 600 1 000 000 Mr Anthony Robert Dreisenstock Mr AR Dreisentock 5 828 600 1 000 000
Direct holding 111 185 800 3 000 000
Holders holding more than 10% of issued capital (excluding Director’s holding)Wonderwall Investments 36 Proprietary Limited 47 500 000 –
47 500 000 –
Share schemes (excluding Director’s holding)Share trusts 7 575 –Treasury (own holdings)PSV Treasury Proprietary Limited 18 481 493 –PSV Holdings Limited 4 281 807 –
15 481 493 –
Non-public shareholding 177 174 868 –
Corporate governance
ShareholdersPerformancereview
Annual fi nancial report
Group overview
Shareholders
35PSV Integrated Annual Report 2013 www.psvholdings.com
Operating context
2013 2012
NameDirect
holdingIndirect holding
Directholding
Indirect holding
Holdings of PSV shares by DirectorsMr P Robinson 52 778 600 1 000 000 52 778 600 974 217Mr AJD da Silva 52 578 600 1 000 000 52 578 600 974 218Mr AR Dreisenstock 5 828 600 1 000 000 5 828 600 974 218
Total 111 185 800 3 000 000 111 185 800 2 922 653
Subsequent to the year end, Peter Robinson disposed of his entire shareholding and on 4 June 2013 he resigned from the Board of Directors.There have been no other changes in the directors interests since 28 February 2013 to the date on which the annual financial statements were approved.
36 PSV Integrated Annual Report 2013 www.psvholdings.com
JSE share information
Opening price 1 March 2012 27 cents
Closing price 28 February 2013 21 cents
Closing High for the period (14,15 and 16 March 2012) 29 cents
Closing Low for the period (12 June 2012) 14 cents
Number of shares in issue 272 547 699
Volume traded during period 83 094 189
Ratio of volume traded to shares in issue (%) 30.49
Total (R) value traded during the period R16 878 320
Interaction with shareholders The Group maintains dialogue with its key financial audiences, especially institutional and private shareholders and analysts. The Investor Relations team together with the CEO and CFO manages the dialogue with these respective audiences. The Group adopts a proactive stance in timely dissemination of appropriate information to stakeholders and shareholders through 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 subsidiaries 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.
Shareholders are able to provide feedback to PSV via the website in the “contact us” section, where an email is produced directly to the CEO’s office. An Investor Relations Consultancy has been appointed who further disseminate information to the market and shareholders are also encouraged to contact the consultancy should they require additional information.
Shareholders’ diary
Financial year-end 28 February 2013
Reports and profit announcements
Final results publication May
Integrated Annual Report publication July/August
Interim results publication November
Annual General Meeting 20 September 2013
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
37PSV Integrated Annual Report 2013 www.psvholdings.com
Audit and Risk Committee report ................................................................................................................................................................. 38
Directors’ responsibility statement ............................................................................................................................................................... 40
Certifi cation by Company Secretary ............................................................................................................................................................. 40
Directors’ report ......................................................................................................................................................................................... 41
Report of independent auditors ................................................................................................................................................................... 43
Consolidated statement of comprehensive income ....................................................................................................................................... 44
Consolidated statement of fi nancial position ................................................................................................................................................ 45
Consolidated statements of changes in equity .............................................................................................................................................. 47
Consolidated statement of cash fl ows .......................................................................................................................................................... 49
Accounting policies .................................................................................................................................................................................... 50
Notes to the annual fi nancial statements ..................................................................................................................................................... 59
Financial section
The annual fi nancial statements have been audited in compliance with Section 30 of the Companies Act of 2008. Tony Dreisenstock CA(SA)was responsible for the supervision of the preparation of the annual fi nancial statements. The annual fi nancial statements were published on7 August 2013.
Annu
al fi
nanc
ial r
epor
t
38 PSV Integrated Annual Report 2013 www.psvholdings.com
For the year ended 28 February 2013
Audit and Risk Committee report
AppointmentThe Audit and Risk Committee is appointed at each Annual General Meeting as required by the new Companies Act 71 of 2008 (“the Act”) Part D, Section 94. This section requires the Audit and Risk Committee to prepare a report to be included in the annual fi nancial statements for that fi nancial year, specifying the matters set out below. The JSE Listings Requirements (AltX section paragraph 21.5) requires the issuer to appoint an Audit and Risk Committee that “must fulfi l the role as set out in the King Code”.
Constitution of the committeeThe committee was approved by the shareholders at the Special General Meeting held on 31 May 2012. It has three Independent Non-executive Directors as required by the Act and the Board is satisfied that the qualifi cations, skill and experience of the committee members meet the requirements of the Act and enable it to fulfi l its mandate. The Chairman of the committee is a chartered accountant.
During the year the Risk Committee was integrated with the Audit Committee.
ResponsibilitiesThe Act requires the Audit Committee to prepare “a report” which covers the following matters: • describe how the committee carried out its functions;• state whether the committee is satisfied that the auditor was independent of the Company; and• comment as appropriate on the accounting practices and the internal financial controls of the Company.
In addition the Act sets out the “duties” of the Audit Committee:• to nominate an independent auditor;• to determine the fees and terms of engagement of the auditor;• to ensure the appointment complies with the Act;• to determine the nature and extent of non-audit services that the auditor may or may not provide;• to pre-approve any proposed agreement for the auditor to provide non-audit services;• 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;• to make submissions to the Board on any matter concerning accounting policies, financial control, records
and reporting; and• to perform any oversight function required by the Board.
Activities of the Audit Committee during the year:• held quarterly meetings of the committee;• reviewed management accounts and reports, budgets, budget variations, strategic, financial and operational
risks, analysed the balance sheet and income statement, examined working capital management, assessed the performance of subsidiaries, approved and recommended to the Board the disposal of non-performing
subsidiaries, examined funding structures and approved financial restructuring of the Group, examined executive and staff remuneration, assessed the state of internal controls and areas of weakness, examined the business model, examined the security and integrity of the IT environment, other related matters;
• approved the external audit plan and year-end programme for the year ended 28 February 2013; • examined the final report of the external auditors, and held year-end meetings with the external auditors in
the absence of management, to cover matters in their final report, and held discussions on the year-end audit adjustments;
• reviewed and approved accounting treatment of significant matters;• reviewed and satisfied itself as to the independence and competence of the external auditor, having due
regard to the scope of additional services provided by them and that such services were properly authorised and have not impaired their independence;
• assessed and satisfied itself as to the competence of the CFO;• reviewed and approved shareholder announcements; • satisfied itself as to the compliance of the final consolidated results for the year ended 28 February 2013
with the Act and International Financial Reporting Standards, reviewed and approved the results and recommended same to the Board for acceptance. The Board has subsequently approved the results for 2013 which will be open for discussion at the forthcoming Annual General Meeting;
• approved the fees of the external auditor, having given due consideration to additional work performed by the auditors at year-end;
• reviewed and approved a new decentralised business model and the financial implications thereof; • reviewed the management information system in the light of the new business model and subsidiary and
executive KPIs, and identified risks; and• commissioned an independent risk review.
Key matters arising out of the work of the Audit and Risk Committee:• An Audit and Risk Committee mandate has been drafted and will be in place in the second quarter of 2014.• On the basis of an independent risk review carried out in the latter part of the year, an internal audit function
has been established and will commence its risk-based work programme during 2014.• Significant emphasis has been placed on remedying the previously reported lack of adequate internal
controls in countries outside South Africa where the Group operates. Some progress has been made but the process is ongoing. Management have instituted direct control over these accounting offices.
• Management have instituted better internal controls in the Group in South Africa, however there is still room for improvement, and areas of weakness are being addressed.
• The Group will move to Pastel Evolution during the first half of 2014. All subsidiaries will be required to adopt this system.
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
39PSV Integrated Annual Report 2013 www.psvholdings.com
• Scrutiny of the performance of subsidiaries is a continuing focus area and measures are taken to improve
results of those companies which are not meeting the targets for return on capital and assets. The policy is
to divest of non-performing subsidiaries which can not show a reasonable turnaround time. This policy has
been implemented and one such entity was sold during the year.
• KPIs have been established for all subsidiaries and executives.
• Working capital management continues to be variable. Standard targets have been now been set and
subsidiaries are required to meet these targets going forward.
• The executive meets the management of subsidiaries on a monthly basis to review performance against
targets. This current hands on approach is achieving results and arises out of the new decentralised
business model.
• The Group has been regeared following the sale of the Pumps Business and now reflects a strong financial
position. This improvement has been augmented by the sale of Petrologic and Mitech which were loss
generators and the benefits of these disposals will be reflected in 2014.
• Work has been ongoing to reduce head office costs and significant progress has been made. This is a work
in progress.
• Management continue to seek suitable people to fill gaps in the Group finance and accounting functions.
The new decentralised model has changed the need for resources at head office and subsidiary level.
ConclusionNotwithstanding the ongoing initiatives or matters requiring attention noted above, the committee has satisfi ed itself that the internal control environment, disciplines and procedures are adequate to comply with the Act, to minimise the fi nancial risks of the Group, and to provide adequate information in a timeous manner to enable management and the Audit Committee to perform their responsibilities.
The committee is of the opinion that its objectives were met during the year under review.
Anthony de la RueAudit Committee Chairman
7 August 2013
40 PSV Integrated Annual Report 2013 www.psvholdings.com
Director’s responsibility statement
Certifi cation by Company Secretary
The Directors are responsible for the preparation and fair presentation of the consolidated and separate
annual fi nancial statements of PSV Holdings Limited, comprising the statements of fi nancial position at
28 February 2013, and the statements of comprehensive income, changes in equity and cash fl ows for the
year then ended, and the Notes to the fi nancial statements which include a summary of signifi cant accounting
policies and other explanatory Notes, in accordance with International Financial Reporting Standards 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 the Directors determine what is necessary to
enable the preparation of fi nancial 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 fi nancial statements.
The Directors have made an assessment of the ability of the Company and its subsidiaries to continue as going
concerns and have no reason to believe that the businesses will not be going concerns in the year ahead.
The auditor is responsible for reporting on whether the consolidated and separate annual fi nancial statements are fairly presented in accordance with the applicable fi nancial reporting framework.
Approval of consolidated and separate annual fi nancial statements. The consolidated and separate annual fi nancial statements of PSV Holdings Limited, as identifi ed in the fi rst paragraph, were approved by the Board of Directors on 7 August 2013 and signed by:
AJD da Silva AR DreisenstockChief Executive Offi cer Chief Financial Offi cer
In terms of Section 88(2)(e) of the Companies Act, 2008 (Act 71 of 2008), as amended (“the Act”), I certify that, to the best of my knowledge and belief, the Group has, in respect of the fi nancial year reported upon, lodged with the Registrar of Companies all returns required of a public Company in terms of the Act and that all such returns are true, correct and up to date.
Company Secretary: Merchantec Capital
Merchantec Capital Company Secretary
7 August 2013
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
41PSV Integrated Annual Report 2013 www.psvholdings.com
Director’s report
The Directors have pleasure in submitting their report together with the Company and Group annual fi nancial statements for the fi nancial year ended 28 February 2013.
Nature of businessPSV is a specialised industrial engineering Group focused on engineering linings, industrial supplies and cryogenics to the mining, petrochemical, water and waste water management sectors in South Africa and Africa.
Financial statementsThe Company and Group’s results and fi nancial position are contained in the annual fi nancial statements on pages 44 to 95 of the report. The audited annual fi nancial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and their interpretation adopted by the International Accounting Standards Board (“IASB”), the Listings Requirements of the JSE Limited (“JSE”), the Companies Act, 2008 (as amended) and the Companies Regulations, and remain consistent with those applied to the provisional audited results announced on 27 May 2013.
Results of operationsThe Group’s trading results have been marred by the necessity to impair the goodwill arising in Engineered Linings amounting to R2.8 million.
In addition, the Group incurred a loss from discontinued operations amounting to R28 million (refer to Note 5 of the annual fi nancial statements) arising from the disposal of Petrologic and Pump Businesses and the trading loss incurred by PSV Mitech.
As a result of the loss on disposal of discontinued operations and the impairments of the goodwill in Engineered Linings (refer to Note 9 of the annual fi nancial statements), the Group’s basic loss per share from continuing operations increased from 7.06 cents to 9.36 cents, and its headline earnings per share from continuing operations improved from 11.98 cents loss to 2.78 cents earnings.
Disposal of the Pumps BusinessShareholders voted in favour of the disposal of the Group’s pump Companies comprising PSV Services Proprietary Limited, PSV Zambia (Pvt) Limited, APE Pumps Proprietary Limited, Mather + Platt Proprietary Limited and the property these Companies operate from, PSV Properties 2 Proprietary Limited for a total purchase consideration amounting to R54 million. In addition, the Group managed to recover loan accounts from the above mentioned Companies amounting to R16 million. As stated previously, the main purpose for the disposal was to settle debt, provide working capital to the Group’s remaining subsidiaries and pay a special dividend to shareholders. The results of the Pump Business’ operations have been refl ected as part of the loss from discontinued operations. The Pump Businesses were sold to WPIL Limited, a global player in large engineered water handling pumps for the power, municipal mining and oil and gas sectors.
Disposal of Petrologic Proprietary Limited With effect 1 September 2012 the Group disposed of the business of Petrologic to its principal supplier of pump assembly components, Tokheim Holding SAS. Petrologic incurred substantial losses in the previous fi ve years despite management’s best efforts to turn the business around. After due consideration, management calculated that it was cost-effective to transfer the business to Tokheim as opposed to liquidating the Company. As a result of the sale, the Group incurred a loss amounting to R20.7 million. This loss together with the trading results for Petrologic have been refl ected as part of the loss made on discontinued operations.
The full fi nancial results of the above mentioned discontinued operations can be found in Note 5 of the annual fi nancial statements.
DividendsNo dividends were paid nor recommended to shareholders during the fi nancial year ended 28 February 2013 (2012: nil). However, following the disposal of the Pump Business, the Board declared a gross special dividend of 3.6 cents per share, paid from part of the proceeds of the sale.
Property, plant and equipmentDuring the year the Group invested R11.6 million in new property, plant and equipment in order to expand its operations. Details of property, plant and equipment are contained in Note 7 of the annual fi nancial statements.
Borrowing powersIn 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 Articles of Association be limited by the Company.
Certifi cation by the Company SecretaryRefer to page 40 for the certifi cation by the Company Secretary.
LitigationThe acquirer of Groupline Projects Proprietary Limited has declared a dispute on the basis of a supposed breach of warranties contained in the Sale of Shares Agreement. The Group has aggressively opposed this action. Consequently the parties have entered into arbitration to resolve the dispute. The arbitration hearing will be in September 2013. After consultation with the Group’s auditors, no provision has been made in the Group accounts for any potential loss arising from this dispute.
Other than the above, there are no legal or arbitration proceedings, including any such proceedings that are pending or threatened, of which PSV is aware that may have, or have had during the 12 months preceding the date of the Integrated Annual Report, a material effect on the fi nancial position of the Group.
42 PSV Integrated Annual Report 2013 www.psvholdings.com
Independent auditorsDuring the course of the year, the Group appointed new auditors Certifi ed Master Auditors Inc to replace KPMG Inc the previous auditors. The change was primarily attributable to economic considerations.
Stated capitalDetails of the authorised and issued stated capital of the Company and the movements during the period are contained in Note 15 of the annual fi nancial statements.
Directors and secretaryThe names of the Directors in offi ce are set out on pages 6 and 7.
The interests of Directors in the issued share capital of the Company are provided on page 34 of the Integrated Annual Report.
During the year under review, the following changes were made to the Board:• Dave Kelly resigned as Non-executive Director on 30 August 2012.
The following independent Non-executive Director was appointed:• Eric Ratshikhopha (Chairman of the Social and Ethics Committee, member of the Audit and Risk Committee
and Remuneration Committee)** Appointed 19 October 2012
In accordance with the requirements of the JSE Limited, a detailed report on Directors’ remuneration appears in Note 25.
Details of the top earners, other than Directors, is provided on page 25.
Signifi cant shareholdersDetails of signifi cant shareholders are included on page 33 of this Integrated Annual Report.
Subsidiary CompaniesDetails of the Company’s subsidiary Companies appear in Note 11 to the annual fi nancial statements.
Special Resolutions by subsidiary CompaniesThe authority of the wholly owned subsidiaries to purchase their own and the Company’s shares, subject to the relevant provisions of the Act and the Listings Requirements of the JSE, will be approved by shareholders on 20 September 2013 and fi led with CIPC.
No other special Resolutions were passed by subsidiary Companies during the period under review, or between the reporting date and the date of this report.
Approval of annual fi nancial statementsThe consolidated and separate annual fi nancial statements of PSV Holdings Limited and its subsidiaries were approved by the Board of Directors on 7 August 2013 and are signed on its behalf by:
AJD da Silva AR DreisenstockChief Executive Offi cer Chief Financial Offi cer
Director’s report (continued)
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
43PSV Integrated Annual Report 2013 www.psvholdings.com
Report of independent auditors
To the Shareholders of PSV Holdings Limited
Report on the fi nancial statementsWe have audited the fi nancial statements of PSV Holdings Limited, as set out on pages 44 to 95, which comprise the statement of fi nancial position as at 28 February 2013, and the statement of comprehensive income, statement of changes in equity and statement of cash fl ows for the year then ended, and the notes, comprising a summary of signifi cant accounting policies and other explanatory information.
Directors’ responsibility for the fi nancial statementsThe company’s directors are responsible for the preparation and fair presentation of these fi nancial statements in accordance with International Financial Reporting Standards, and requirements of the Companies Act 71 of 2008, and for such internal control as the directors determine is necessary to enable the preparation of fi nancial statements that are free from material misstatements, whether due to fraud or error.
Auditors’ responsibilityOur responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the fi nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements.
We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the fi nancial statements present fairly, in all material respects, the fi nancial position of PSV Holdings Limited as at 28 February 2013, and its fi nancial performance and its cash fl ows for the year then ended in accordance with International Financial Reporting Standards, and the requirements of the Companies Act 71 of 2008.
Other reports required by the Companies ActAs part of our audit of the fi nancial statements for the year ended 28 February 2013, we have read the Directors’ Report and the Audit Committee’s Report for the purpose of identifying whether there are material inconsistencies between these reports and the audited financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identifi ed material inconsistencies between these reports and the audited fi nancial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.
Certifi ed Master Auditors Inc. No.1 2nd RoadHalfway HouseMidrand1685
Registered Auditors
Per G DaviasChartered Accountant (SA)Registered AuditorDirector
44 PSV Integrated Annual Report 2013 www.psvholdings.com
for the year ended 28 February 2013
Consolidated statement of comprehensive income
Group Company
2013 2012 2013 2012Notes R R R R
Revenue 381 109 304 261 747 911 16 523 499 23 719 627 Cost of sales 3A (297 767 130) (202 715 144) – –
Gross profit 83 342 174 59 032 767 16 523 499 23 719 627 Other income 1 563 627 4 529 415 82 214 224 32 454 636 Other expenses (71 169 895) (88 988 029) (47 351 217) (43 535 615)
Results from operating activities 2 13 735 906 (25 425 847) 51 386 506 12 638 648
Finance income 3B 2 035 634 341 775 1 175 234 17 340 483 Finance costs 3B (5 765 951) (7 478 758) (5 967 223) (15 248 509)
Net finance costs (3 730 317) (7 136 983) (4 791 989) 2 091 974
Profit/(loss) before income tax 10 005 589 (32 562 830) 46 594 517 14 730 622 Income tax 4 (5 772 703) (4 408 301) – (3 006 064)
Profit/(loss) for the year from continuing operations 4 232 886 (36 971 131) 46 594 517 11 724 558
(Loss)/profit from discontinued operations 5 (877 981) 527 030 – –(Loss)/profit on sale of discontinued operations 5 (27 136 736) 18 820 209 – –
(Loss)/profit for the year attributable to ordinary shareholders (23 781 831) (17 623 892) 46 594 517 11 724 558
Other comprehensive incomeReclassification adjustment on disposal of foreign operation 3 099 444 – – –Foreign currency translation reserve (90 981) (96 179) – –
Total comprehensive (loss)/income for the year (20 773 368) (17 720 071) 46 594 517 11 724 558
Earnings/(loss) per shareBasic loss per share (cents) 6 (9.36) (7.06) – –Diluted loss per share (cents) 6 (9.33) (6.83) – –Basic earnings/loss per share (cents) – continuing operations 6 1.67 (14.80) – –Diluted earnings/loss per share (cents) – continuing operations 6 1.66 (14.33) – –
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
45PSV Integrated Annual Report 2013 www.psvholdings.com
Consolidated statement of fi nancial positionas at 28 February 2013
Group Company
2013 2012 2013 2012Notes R R R R
ASSETS Non-current assets Property, plant and equipment 7 21 212 730 31 860 127 3 563 350 7 634 482 Intangible assets 8 11 750 851 15 353 434 – – Goodwill 9 29 186 265 32 056 838 – – Loans receivable 10 – 688 060 – – Investment in subsidiaries 11 – – 85 422 267 114 115 536 Deferred taxation assets 17 2 171 068 2 410 108 – –
Total non-current assets 64 320 914 82 368 567 88 985 617 121 750 018
Current assets Inventories 12 33 953 769 42 866 901 3 231 032 – Loans to Group Companies 11 – – 25 982 988 42 438 665 Trade and other receivables 13 70 570 850 57 613 569 5 637 492 12 204 763 Short-term portion of loans receivable 10 – 1 000 000 – 1 000 000 Taxation receivable – 838 451 – – Cash and cash equivalents 14 23 029 914 27 180 014 11 300 592 9 243 117
Total current assets 127 554 533 129 498 935 46 152 104 64 886 545
Non-current assets held-for-sale 5 21 843 562 78 949 436 – –
Total assets 213 719 009 290 816 938 135 137 721 186 636 563
EQUITY Share capital 15 273 059 364 271 606 106 274 494 010 274 494 010 Share-based payment reserve 141 842 205 782 15 068 395 243 Foreign currency translation reserve (187 160) (3 195 623) – – Retained loss (175 955 326) (142 844 627) (163 669 094) (200 934 736)
Total equity attributable to equity holders of the Company 97 058 720 125 771 638 110 839 984 73 954 517
46 PSV Integrated Annual Report 2013 www.psvholdings.com
Consolidated statement of fi nancial position (continued)
as at 28 February 2013
Group Company
2013 2012 2013 2012Notes R R R R
LIABILITIES Non-current liabilities Deferred purchase consideration 16 7 578 457 20 503 934 7 578 457 20 503 934 Deferred taxation liabilities 17 4 873 649 5 695 681 – – Loans and borrowings 18 5 642 916 22 499 840 390 289 16 665 728
Total non-current liabilities 18 095 022 48 699 455 7 968 746 37 169 662
Current liabilities Loans from Group Companies 11 – – 3 339 363 43 826 494 Loans from Directors – 1 600 000 – 1 600 000 Trade and other payables 19 67 868 525 57 749 051 5 734 860 6 069 556 Taxation payable 4 779 574 2 476 742 – – Current portion of deferred purchase consideration 16 7 133 970 1 953 252 7 133 970 1 953 252 Current portion of loans and borrowings 18 2 161 107 9 089 812 120 798 6 043 567Bank overdraft 14 6 280 851 18 010 869 – 16 019 515
Total current liabilities 88 224 027 90 879 726 16 328 991 75 512 384
Non-current liabilities held-for-sale 5 10 341 240 25 466 119 – –
Total liabilities 116 660 289 165 045 300 24 297 737 112 682 046
Total equity and liabilities 213 719 009 290 816 938 135 137 721 186 636 563
Net asset value per share 38.20 49.73 – –Net tangible asset value per share 22.09 30.98 – –
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
47PSV Integrated Annual Report 2013 www.psvholdings.com
Consolidated statements of changes in equityfor the year ended 28 February 2013
Share capital
Share-based payment reserve
Foreign currency translation
(deficit)/reserve Retained
loss Total R R R R R
GroupBalance at 28 February 2011 270 806 106 263 021 (3 099 444) (125 220 735) 142 748 948 Loss for the year – – – (17 623 892) (17 623 892)Foreign currency translation reserve – – (96 179) – (96 179)
Total comprehensive loss for the period – – (96 179) (17 623 892) (17 720 071)
Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of shares 2 887 904 – – – 2 887 904 Acquisition of shares by subsidiary Company (2 887 904) – – – (2 887 904)Issue of shares to Directors 800 000 – – – 800 000 Share-based payment transactions – (57 239) – – (57 239)
800 000 (57 239) – – 742 761
Balance at 29 February 2012 271 606 106 205 782 (3 195 623) (142 844 627) 125 771 638
Total comprehensive income for the period Profit/(loss) for the year – – 3 008 463 (23 781 831) (20 773 368)
Total comprehensive income for the period – – 3 008 463 (23 781 831) (20 773 368)
Transactions with owners, recorded directly in equity Contributions by and distributions to owners Dividends paid – – – (9 328 872) (9 328 872)Shares vested during the year 1 453 258 (1 453 258) – – –Share-based payment cost – 1 389 318 – – 1 389 318
1 453 258 (63 940) – (9 328 872) (7 939 554)
Balance at 28 February 2013 273 059 364 141 842 (187 160) (175 955 326) 97 058 720
48 PSV Integrated Annual Report 2013 www.psvholdings.com
Consolidated statements of changes in equity (continued)
for the year ended 28 February 2013
Share capital
Share-based payment reserve
Accumulated loss Total
R R R R
CompanyBalance at 28 February 2011 270 806 106 263 021 (212 659 294) 58 409 833 Total comprehensive income for the period Loss for the year – – (11 724 558) (11 724 558) Transactions with owners, recorded directly in equity Contributions by and distributions to owners Share-based payment transactions – 132 222 – 132 222 Issue of shares to Directors 800 000 – – 800 000 Issue of shares 2 887 904 – – 2 887 904
3 687 904 132 222 – 3 820 126
Balance at 29 February 2012 274 494 010 395 243 (200 934 736) 73 954 517
Total comprehensive income for the period Profit for the year – – 46 594 517 46 594 517 Transactions with owners, recorded directly in equity Contributions by and distributions to owners Dividends declared – – (9 328 872) (9 328 872)Shares vested during the year – (817 209) – (817 209)Share-based payment cost – 437 034 – 437 034
– (380 175) (9 328 872) (9 709 047)
Balance at 28 February 2013 274 494 010 15 068 (163 669 091) 110 839 987
* Breakdown of FCTR movementPre-tax effect 3 008 463 – – –Tax effect – – – –
3 008 463 – – –
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.
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
49PSV Integrated Annual Report 2013 www.psvholdings.com
for the year ended 28 February 2013
Consolidated statement of cash fl ows
Group Company
2013 2012 2013 2012Notes R R R R
Cash flows from operating activities 21A 8 989 683 30 060 057 (3 103 537) 14 084 365 Taxation paid 21B (5 322 694) (4 677 439) – –
Net cash from/(used in) operating activities 3 666 989 25 382 618 (3 103 537) 14 084 365
Cash flows from investing activitiesAdditions to property, plant and equipment to expand operations (8 416 993) (7 106 757) – (6 073 343)Proceeds from disposal of property, plant and equipment 7 921 201 1 069 682 4 308 059 362 463 Acquisition of Turbo Agencies 23 – (3 204 036) – (8 402 991)Proceeds on sale of subsidiaries 46 406 906 37 464 252 45 246 700 35 000 000 Dividends received – – 41 534 651 –Financial income 2 035 634 380 056 1 175 234 17 340 483
Net cash from investing activities 47 946 748 28 603 197 92 264 644 38 226 612
Cash flows from financing activities Loans repaid/(granted) to previous vendors 1 688 060 (1 688 060) – (1 000 000)Loans repaid (2 057 653) (11 042 240) – (8 219 220)Settlement of deferred purchase consideration (7 367 288) (5 893 357) (9 424 942) (5 893 357)External loans (repaid)/granted (22 515 811) 508 261 (22 411 806) 3 527 250Loan to Group companies – – (24 031 456) (10 502 400)Financial expenses (4 085 768) (7 724 988) (4 287 041) (15 248 509)Dividends paid (9 328 872) – (9 328 872) –Loans from Directors (1 600 000) 1 600 000 (1 600 000) 1 600 000
Net cash used in financing activities (45 267 332) 24 240 384 71 084 117 (35 736 236)
Net increase in cash and cash equivalents 6 346 405 29 745 431 18 076 990 16 574 741 Cash transferred to assets held-for-sale 5 1 233 513 (9 908 239) – –Cash and cash equivalents at the beginning of the year 9 169 145 (10 668 047) (6 776 398) (23 351 139)
Cash and cash equivalents at the end of the year 14 16 749 063 9 169 145 11 300 592 (6 776 398)
For cash flow effects of discontinuing operations refer to Note 5.
50 PSV Integrated Annual Report 2013 www.psvholdings.com
for the year ended 28 February 2013
Accounting policies
PSV Holdings Limited (“the Company”) is a Company domiciled in South Africa. The consolidated fi nancial statements at 28 February 2013 comprise the Company and its subsidiaries (together referred to as “the Group”).
The principal accounting policies adopted in the preparation of the fi nancial statements are set out below.
Statement of complianceThe Company and Group’s annual fi nancial statements have been prepared in accordance with and comply with International Financial Reporting Standards (“IFRS”) and its interpretations adopted by the International Accounting Standards Board (“IASB”) and the requirements of the Companies Act of South Africa and Financial Reporting Guidelines of SAICA.
Basis of measurementThe annual fi nancial statements are prepared on the historical cost basis except for derivative fi nancial instruments which are stated at fair value.
Accounting for business combinationsThe Group has applied IFRS 3 – Business Combinations (2008) in accounting for business combinations.
For acquisitions on or after 1 March 2010, the Group measures goodwill at the acquisition date as:• the fair value of consideration transferred, plus• the recognised amount of any non-controlling interests in the acquiree, plus• if the business combination is achieved in stages, the fair value of the existing equity interest in the
acquiree, less• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profi t or loss.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profi t or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with the business combination are expensed as incurred.
Use of estimates and judgementThe preparation of fi nancial 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 signifi cant effect on the amount recognised in the fi nancial statements are described in the following notes:• Note 8 useful lives and impairment tests on intangible assets.• Note 9 impairment test on goodwill.• Note 17 impairment of deferred tax assets.• Note 23 business combinations acquired.
The accounting policies set out below have been applied consistently to all periods presented.
Functional and presentation currencyThe fi nancial statements are presented in Rand, which is the Company’s functional currency, and all values are rounded to the nearest Rand except when otherwise indicated.
Basis of consolidationSubsidiariesThe Group fi nancial statements include the fi nancial statements of the Company and its subsidiaries. Where an investment in a subsidiary was acquired and disposed of during the fi nancial year its results are included from, or to, the date control commences or ceases.
Subsidiaries are those entities over whose fi nancial and operating policies the Group has the power to exercise control, so as to obtain benefi ts from their activities. In assessing control, potential voting rights that are presently exercisable are taken into account.
New acquisitions are included in the Group fi nancial statements using the purchase method whereby the assets and liabilities are measured at their fair value. The purchase consideration is allocated on the basis of the fair values on the dates of acquisition.
All intra-group transactions and balances arising are eliminated in preparing the consolidated fi nancial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
51PSV Integrated Annual Report 2013 www.psvholdings.com
All Companies in the Group maintain consistent accounting policies and have the same year-end.
Loss of controlOn the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling
interests and the other components of equity related to the subsidiary. Any surplus or defi cit arising on the loss
of control is recognised in profi t or loss. If the Group retains any interest in the previous subsidiary, then such
interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-
accounted investee or as an available-for-sale fi nancial asset depending on the level of infl uence retained.
Foreign currenciesForeign currency transactionsForeign currency transactions are translated at the rates of exchange ruling at the dates of the transactions.
Balances on monetary assets and liabilities outstanding on foreign transactions at the end of the fi nancial year
are translated to Rand at the rates ruling at that date. The foreign currency gain or loss on monetary items is the
difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective
interest and prepayments during the period, and the amortised cost in foreign currency translated at the
exchange rate at the end of the reporting period. Gains or losses on translation are recognised in profi t 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. Non-monetary assets and liabilities
denominated in foreign currencies that are stated at fair value are translated to Rand at the foreign exchange
rates ruling at the dates the fair value was determined.
Foreign subsidiariesThe assets and liabilities of foreign subsidiaries, including goodwill and fair value adjustments arising on
acquisition, whose functional currencies are not Rand, are translated into Rand at rates of exchange ruling at
the end of the fi nancial year and the results of operations and cash fl ow items are translated at an appropriate
weighted average rate of exchange for the year. Gains and losses on translation are taken directly to a foreign
currency translation reserve in shareholders’ equity.
Where loans to the foreign subsidiaries are long-term in nature and its settlement is neither planned nor likely
in the foreseeable future, it forms part of the Company’s net investment in the foreign subsidiary, the
translation gains or losses arising on converting the loans to the rates of exchange ruling at the end of the
fi nancial year are taken directly to a foreign currency translation reserve in shareholders’ equity in the Group
financial statements and to the profit and loss for the Company. On disposal of the net investment,
the translation gains or losses are recognised in profi t and loss.
Revenue recognitionRevenue is recognised only when it is probable that the economic benefi ts associated with a transaction will fl ow to the Group and Company and the amount of revenue can be measured reliably. No revenue is recognised if there are signifi cant uncertainties regarding the recovery of the consideration due or associated costs for the possible return of goods.
GoodsRevenue arising from the sale of goods is measured at the fair value of the consideration received, or receivable net of returns and allowances, trade discounts, volume rebates and value added taxes. Revenue is recognised when the signifi cant risks and rewards of ownership of the goods have passed to the buyer, recovery of the consideration is probable, the associated costs and possible return of the goods can be estimated reliably, and there is no continuing management involvement with the goods.
Where the Group enters into contracts, the percentage of completion method is used to recognise revenue.
ServicesRevenue from services is recognised on a stage of completion basis and is measured at the fair value of the consideration receivable. Revenue is recognised only where the costs associated can be reliably measured and where a contract is expected to result in a loss, the loss is recognised immediately.
Financial incomeInterestInterest income is recognised in profi t and loss as it accrues using the effective interest method.
Financial expensesFinance expenses comprise interest payable on borrowings and the unwinding of discounts arising on deferred purchase considerations owing to vendors on investments acquired; calculated on the principal outstanding using the effective interest method.
TaxationIncome tax expense comprises current and deferred tax. Income tax expense is recognised in profi t and loss except to the extent that it relates to a business combination or items recognised directly in equity, in which case it is recognised directly in equity.
Current taxation comprises taxation payable calculated on the basis of the expected taxable income for the year, using the taxation rates enacted or substantively enacted at the reporting date, and any adjustments of taxation payable for previous years. Deferred taxation is recognised in respect of temporary differences.
52 PSV Integrated Annual Report 2013 www.psvholdings.com
for the year ended 28 February 2013
Accounting policies (continued)
Temporary differences are differences between the carrying amounts of assets and liabilities for fi nancial
reporting purposes and their tax base.
Deferred taxation is not recognised for the following temporary differences:• the initial recognition of goodwill;• the initial recognition of assets and liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit; and• differences relating to investments in subsidiaries to the extent that the timing of the reversal is controlled
by the Company and it is probable that they will not reverse in the foreseeable future.
Deferred taxation is recognised in profi t and loss except to the extent that it relates to a transaction that is
recorded directly in equity. The amount of deferred taxation provided is based on the expected manner of the
realisation or settlement of the carrying amount of assets and liabilities using taxation rates enacted or
substantively enacted at the reporting date. A deferred taxation asset is recognised to the extent that it is
probable that future taxable profi ts 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 benefi t will be realised.
The carrying value of a deferred tax asset is reviewed at the end of each reporting period.
Property, plant and equipmentProperty, plant and equipment are recorded at cost, less accumulated depreciation and impairment losses.
All assets except for land are depreciated on the straight-line method over their expected useful lives to an
estimated residual value. The estimated useful lives are currently:• Buildings 50 years• Plant and machinery 5 to 10 years• Motor vehicles 5 years• Furniture and office equipment 6 years• Computer equipment 3 years• Patterns and dies 3 to 20 years• Leasehold improvements Shorter of useful lives or lease term
Cost includes expenditure that is directly attributable to the acquisition of the asset.
Residual values and useful lives are reassessed annually. Depreciation of an item of property, plant and
equipment begins when it is available for the use and ceases at the earlier of the date it is classifi ed as held-
for-sale or the date it is derecognised.
Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amount and are taken to profi t and loss.
Subsequent costsThe cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefi ts embodied within the part will fl ow 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 profi t or loss as incurred.
Lease assetsFinance leasesLeases in terms of which the Group assumes substantially all the risks and rewards of ownership are classifi ed as fi nance leases. Property, plant and equipment subject to fi nance lease agreements are capitalised initially at the lesser of their fair value and the present value of the minimum lease payments and the corresponding liability to the lessor is raised. Lease payments are allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability, which is charged against operating profi t, and the capital repayment, which reduces the liability to the lessor. These assets are treated on the same basis as the property, plant and equipment owned by the Group and are subject toimpairment testing.
Operating leasesOther leases that do not transfer substantially all the risks and rewards of ownership, are treated as operating leases with lease payments charged against operating profi t. Payments made under operating leases are charged against income on a straight-line basis over the period of the lease.
Intangible assetsIntangible assets are stated at cost less accumulated amortisation and impairment losses. The current estimated useful lives are:• Market relationships 10 to 20 years• Customer relationships 1 to 7 years• Technology relationships 10 years
The amortisation methods, useful lives and residual values are reviewed at each fi nancial year-end.
Amortisation is recognised in profi t and loss on the straight-line basis over the estimated useful lives or intangible assets, other than goodwill, from the date they are available for use, since this most closely refl ects the expected portion of consumptions of the future economic benefi ts embodied in the asset.
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
53PSV Integrated Annual Report 2013 www.psvholdings.com
Intangible assets are reviewed annually for impairment by management and with the assistance of independent valuers.
GoodwillAll 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 identifi able assets, liabilities and contingent liabilities acquired is recognised as goodwill.
Where the excess is negative, it is recognised immediately in profi t and loss as a gain made on acquisition of business combinations.
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 assetsThe carrying amount of the Group’s assets, other than inventories, receivables and deferred tax assets, which are separately assessed, are reviewed at each balance date to determine whether there is an indication of impairment and at any time when there is an indication of impairment. If there is any indication that an asset may be impaired, its recoverable amount is estimated. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset of CGU. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit (“CGU”) exceeds its recoverable amount.
A previously recognised impairment loss, other than for goodwill, is reversed if the recoverable amount increases as a result of a change in the estimates 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 identifi able asset group that generates cash fl ows that are largely independent from other assets and groups. Impairment losses recognised in respect of CGUs are allocated fi rst 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.
Impairment of fi nancial assetsA fi nancial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A fi nancial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash fl ows of the asset.
Individually signifi cant fi nancial assets are tested for impairment on an individual basis. The remaining fi nancial assets are assessed collectively in groups that share similar credit risk characteristics.
An impairment loss in respect of a fi nancial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash fl ows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale fi nancial asset is calculated by reference to its fair value.
All impairment losses are recognised in profi t or loss.
InventoriesInventories 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 refl ect input cost of raw materials, direct labour, other direct costs and related normal production overheads. Slow-moving goods and obsolete inventories are written down to their estimated net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses.
Trade and other receivablesThe fair value of trade and other receivables is estimated as the present value of the future cash fl ows, discounted at the market interest rate at the reporting date.
Cash and cash equivalentsCash and cash equivalents are measured at amortised cost.
ProvisionsProvisions are recognised when the Group has a present legal or constructive obligation as a result of past events, for which it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation and a reliable estimate of the obligation can be made. If the effect is material, provisions are determined by discounting the expected future cash fl ows at a pre-tax rate that refl ects current market assessments of the time value of money and, where appropriate, the risks specifi c to the liability.
Stated capitalOrdinary sharesOrdinary shares are classifi ed as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity.
54 PSV Integrated Annual Report 2013 www.psvholdings.com
for the year ended 28 February 2013
Accounting policies (continued)
Repurchase of share capitalWhen 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 are classifi ed as
treasury shares and are presented as a deduction from total equity.
Employee benefi tsShort-term employee benefi tsThe cost of all short-term employee benefi ts is recognised during the period in which the employee renders
the related service.
An accrual is made for the estimated liability for annual leave and performance bonuses as a result of services
rendered by employees up to the balance sheet date.
Defi ned contribution plansCertain subsidiaries in the Group contribute to a defined contribution fund for employees. A defined
contribution plan is a post-employment benefi t plan under which an entity pays fi xed contributions into a
separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for
contributions to defi ned contribution pension plans are recognised as an employee benefi t expense in the
income statement when they are due. Prepaid contributions are recognised as an asset to the extent that a
cash refund or a reduction in future payments is available.
Financial instrumentsNon-derivative fi nancial instrumentsNon-derivative fi nancial instruments comprise debt securities, trade and other receivables, cash and cash
equivalents, loans and borrowings, and trade and other payables.
Non-derivative fi nancial instruments are recognised initially at fair value plus, for instruments not at fair value
through profi t or loss, any directly attributable transaction costs. Subsequent to initial recognition non-
derivative fi nancial instrument are measured at amortised cost using the effective interest method less any
impairment losses.
A fi nancial instrument is recognised if the Group becomes a party to the contractual provisions of the
instrument. Financial assets are derecognised if the Group’s contractual rights to the cash fl ows from the
fi nancial assets expire or if the Group transfers the fi nancial asset to another party without retaining control or
substantially all risks and rewards of the asset. Regular way purchases and sales of fi nancial assets are
accounted for at trade date, ie the date that the Group commits itself to purchase or sell the asset. Financial
liabilities are derecognised if the Group’s obligations specifi ed in the contract expire or are discharged or cancelled.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash fl ows.
OffsetFinancial assets and liabilities are offset and the net amount presented in the statement of fi nancial position when, and only when, the Group has a legal right to offset the amount, and intends either to settle on a net basis or to realise the assets and settle the liability simultaneously.
Earnings per shareThe Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profi t 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 profi t or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.
Non-current assets held-for-sale and discontinued operationsNon-current assets are classifi ed as held-for-sale if their carrying amount will be recovered principally through a sale transaction, not through continuing use. These assets may be a component of an entity, a disposal group or an individual non-current asset. Upon initial classifi cation as held-for-sale, non-current assets and disposal groups are recognised at the lower of carrying amount and fair value less costs to sell. Any impairment losses arising are recognised in profi t or loss as capital items.
A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations or a subsidiary acquired exclusively with a view to resale. Classifi cation as a discontinued operation occurs upon the earlier of disposal or when the operation meets the criteria to be classifi ed as held-for-sale. When an operation is classifi ed as a discontinued operation, the comparative statement of comprehensive income and statement of cash fl ows are restated as if the operation has been discontinued from the start of the comparative period.
Operating segmentsAn 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 a the
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
55PSV Integrated Annual Report 2013 www.psvholdings.com
information that is internally provided to the Group’s Chief Executive Offi cer (“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 fi nancial
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.
Share-based payment transactionsEquity-settledThe fair value of deferred delivery shares granted to selected employees, including Directors, is recognised as
an employee expense with a corresponding increase in equity. The fair value is measured at grant date and
expensed over the period during which the employees are required to provide services in order to become
unconditionally entitled to the equity instruments.
The cost of the deferred delivery shares is recognised, together with a corresponding increase in shareholders’
equity, over the vesting period ending on that date on which the employees become fully entitled to take up
the deferred delivery shares. The cumulative expense recognised for deferred delivery shares granted at each
reporting date until the vesting date refl ects the extent to which the vesting period has expired and the number
of deferred delivery shares grants that will ultimately vest in the opinion of the Directors of the Company, at
that date. This is based on the best available estimate of the number of deferred delivery shares that will
ultimately vest. No expense is recognised for deferred delivery shares that do not ultimately vest.
Where the terms of the deferred delivery shares are modifi ed, as a minimum, an expense is recognised as if
the terms had not been modifi ed. In addition, an expense is recognised for any increase in the value of the
options, as a result of the modifi cation, as measured at the date of modifi cation.
Where an unvested deferred delivery shares is cancelled, the unrecognised cost is charged to profi t or loss.
However, if a new deferred delivery shares is substituted for the cancelled deferred delivery shares and
designated as a replacement deferred delivery shares on the date that it is granted, the cancelled and
new deferred delivery shares grant are treated as if they were a modifi cation of the original grant, as
described above.
Group share-based payment transactionsTransactions in which a parent grants rights to its equity instruments directly to the employees of its
subsidiaries are classifi ed as cash-settled in the fi nancial statements of the subsidiary, and is refl ected as a
liability repayable on demand.
Standards and interpretations in issue but not yet effectiveA number of new standards, amendments to standards and interpretations are not yet effective for the year
ended 28 February 2013.
These include the following standards and interpretations that are applicable to the business of the Group, and
have not been applied in preparing these consolidated fi nancial statements:
Amendment to IAS 1 – Presentation of Financial Statements
The amendment to IAS 1 will be adopted by the Group for the fi rst time for its fi nancial reporting period ending
28 February 2014.
The Company will present those items of other comprehensive income that may be reclassifi ed to profi t or loss
in the future separately from those that would never be reclassifi ed to profi t or loss. The related tax effects for
the two sub-categories will be shown separately. This is a change in presentation and will have no impact on
the recognition or measurement of items in the fi nancial statements. This amendment will be applied
retrospectively and the comparative information will be restated.
IAS 27 (2011) – Separate Financial Statements
IAS 27 (2011) supersedes IAS 27 (2008) and is effective for the Group for the year ending 28 February 2014.
IAS 27 (2011) carries forward the existing accounting and disclosure requirements for separate fi nancial
statements only, with some minor clarifi cations. The adoption of IAS 27 (2011) will not have a signifi cant
impact on the Company’s separate fi nancial statements.
Amendment to IAS 32 and IFRS 7 – Offsetting of Financial Assets and Financial Liabilities
The amendment to IAS 32 will be adopted by the Group for the fi rst time for its fi nancial reporting period
ending 28 February 2014. An entity may offset fi nancial assets and fi nancial liabilities when it currently has
a legally enforceable right to set off the recognised amounts. IAS 32 previously did not provide guidance on
what was meant by “currently has a legal enforceable right to set off”. The IASB decided to include guidance
in IAS 32 to clarify the criteria.
The amendments clarify that an entity currently has a legally enforceable right to set-off if that right is:
• not contingent on a future event; and
• enforceable in all of the following circumstances:
– the normal course of business;
– the event of default; and
– the event of insolvency or bankruptcy.
56 PSV Integrated Annual Report 2013 www.psvholdings.com
for the year ended 28 February 2013
Accounting policies (continued)
IFRS 7 disclosure requirements have been amended so that the IASB and the US Financial Accounting Standards Board can have common disclosure requirements. New disclosures are required for fi nancial assets and liabilities that are:• offset in the statement of financial position; or• subject to master netting arrangements or similar arrangements.
The amendment will be adopted by the Group for the year ending 28 February 2014.
Management will assess the impact of the amendment on any possible offsetting arrangements.
IFRS 10 – Consolidated Financial StatementsIFRS 10 – Consolidated Financial Statements supersedes IAS 27 – Consolidated and Separate Financial Statements and SIC-12 Consolidation – Special Purpose Entities and is effective for the Group for the year ending 28 February 2014. IFRS 10 provides a single model to be applied in the control analysis for all investees, including entities that currently are defi ned as special purpose entities in the scope of SIC-12. The consolidation procedures are carried forward from IAS 27 (2008) and remain unchanged. An investor controls an investee when:• it is exposed to or has rights to variable returns from its involvement with that investee;• has the ability to affect those returns through its power over that investee; and• there is a link between power and returns.
The exposure to risks and rewards of an investee does not, on its own, determine that the investor has control over an investee. It is one of the factors of the control analysis.
In assessing control over an investee, the investor considers:• the purpose and design of the investee so as to identify the investee’s relevant activities;• how decisions about such activities are made;• who has the current ability to direct those activities; and• who receives returns there from.
IFRS 10 states that there must be both power and returns and a linkage between the two in order to have control. The defi nition also includes the concept of de facto control, which may result in the consolidation of entities in which less than 50 voting rights are held.
If there is a change in control conclusion between IAS 27/SIC 12 and IFRS 10, retrospective application will be required. IFRS 10 may result in additional entities that were not consolidated previously being consolidated. Alternatively, existing subsidiaries or special purpose entities may no longer meet the consolidation criteria. The Group will perform a detailed exercise before the period in which IFRS 10 becomes effective for the fi rst time (1 March 2013) to determine the appropriate accounting of affected entities.
IFRS 12 – Disclosure of Interests in Other EntitiesIFRS 12 combines, in a single standard, the disclosure requirements for subsidiaries, associates and joint arrangements, as well as unconsolidated structured entities. The standard is effective for the Group for the year ending 28 February 2014.
The required disclosures aim to provide information to enable users to evaluate:• the nature of, and risks associated with, an entity’s interests in other entities; and• the effects of those interests on the entity’s financial position, financial performance and cash flows.
The following specifi c disclosure areas are addressed in IFRS 12:• significant judgements and assumptions made in determining the nature of interests in an entity or
arrangement;• interests in subsidiaries;• interests in joint arrangements and associates; and• interests in unconsolidated structured entities, even if an entity concludes that a structured entity should not
be consolidated.
IFRS 12 may result in additional disclosures for the Group in respect of the affected entities. Managementwill assess the impact of the new standard in detail in order to determine whether the adoption of the new standard would increase the level of disclosure provided for the entity’s interests in subsidiaries and structured entities.
IFRS 13 – Fair Value MeasurementIFRS 13 – Fair Value Measurement will be effective for the Group for the year ending 28 February 2014. It will be applied prospectively and comparatives will not be restated.
IFRS 13 replaces the fair value measurement guidance contained in individual IFRS with a single source of fair value measurement guidance. It defi nes fair value, establishes a framework for measuring fair value and sets out disclosure requirements for fair value measurements for both non-fi nancial and fi nancial items. IFRS 13 does not introduce new requirements to measure assets and liabilities at fair value, nor does it eliminate the practicability exceptions to fair value measurement that currently exist in certain standards.
IFRS 13 defi nes fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, ie an exit price.
A fair value measurement requires an entity to determine:• the particular asset or liability that is the subject of the measurement;• for a non-financial asset, the asset’s highest and best use and whether the asset would be used by a market
participant on a stand-alone basis or in combination with other assets;
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
57PSV Integrated Annual Report 2013 www.psvholdings.com
• the principal (or most advantageous market) for the asset or liability; and• when market prices for the asset, liability or equity instrument are not available, the valuation technique(s)
appropriate for the measurement, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. In respect of a non-financial asset, a fair value measurement considers a market participant’s ability to generate economic benefit by using the asset or by selling it to another market participant who will use the asset in its highest and best use.
If an entity manages a group of fi nancial assets and liabilities that are measured at fair value on the basis of its net exposure to market or credit risks, it is permitted to measure the fair value of the Group on the basis of its net exposures to particular risks if this is in accordance with its documented strategy and information is reported on this basis to its key management personnel.
The fair value of a liability or an entity’s own equity instrument is measured using quoted prices for the transfer of identical instruments. When such prices are not available, an entity measures fair value from the perspective of a market participant holding the identical item as an asset. If quoted prices in an active market for the corresponding asset are also not available, then other observable inputs are used, such as prices in an inactive market for the asset. Otherwise, an entity uses another valuation technique(s), such as a present value measurement or the pricing of a similar liability or instrument.
IFRS 13 requires disclosure of the fair value hierarchy, which was introduced by IFRS 7, to be applied to all fair value measurements. The fair value hierarchy gives highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. Where an entity has assets and liabilities (including non-fi nancial assets and liabilities) which were disclosed as Level 3 on the fair value hierarchy, the following disclosure is required:• its valuation policies and procedures;• analysis of changes in fair value measurements from period-to-period; and• narrative description of the sensitivity of these assets and liabilities measurements to changes in
unobservable inputs, including the effect of any interrelationships between unobservable inputs as well as quantitative information on significant unobservable inputs used in measuring fair value.
The Group is already required to recognise its fi nancial instruments initially at fair value and to provide fair value disclosures relating to its fi nancial instruments in terms of IFRS 7. As a result, management will perform an assessment to determine the impact of the new standard in detail, taking into account that the Group uses fair value measurement on a limited basis.
IFRS 9 (2009) – Financial InstrumentsThe revised statement is effective for the Group for the year ending 29 February 2016 with restatement of comparatives required, subject to transitional provisions.
IFRS 9 addresses the initial measurement and classifi cation of fi nancial assets and will replace the relevant
sections of IAS 39. Under IFRS 9, there are two options in respect of classifi cation of fi nancial assets, namely,
fi nancial assets measured at amortised cost or at fair value. Financial assets are measured at amortised cost
when the business model is to hold assets in order to collect contractual cash fl ows and when they give rise
to cash fl ows that are solely payments of principal and interest on the principal outstanding. All other fi nancial
assets are measured at fair value. Embedded derivatives are no longer separated from hybrid contracts that
have a fi nancial asset host. The amendment may have an impact on the Group’s results as a consequence of
the new classifi cation requirements on fi nancial assets if instruments classifi ed as loans and receivables do
not meet the criteria for measurement at amortised cost. Subject to a detailed analysis of the loans and
receivables, management expects that most of the Group’s receivables would qualify for measurement at
amortised cost and accordingly, it is not expected to signifi cantly impact the Group’s results.
In respect of the embedded derivative amendment, the Group has not historically concluded contracts that
contain embedded derivatives. However, management will continuously review this position in order to ensure
that the relevant requirements are appropriately applied should the Group enter into embedded derivatives
contracts in future.
IFRS 9 (2010) addresses both fi nancial assets and fi nancial liabilities and is effective for the Group for the year
ending 29 February 2016, with restatement of comparatives required subject to transitional provisions.
IFRS 9 (2010) incorporates the guidance in IAS 39 dealing with fair value measurement, derivatives embedded
in host contracts that are not fi nancial assets, and the requirements of IFRIC 9 – Reassessment of Embedded
Derivatives. Under IFRS 9 (2010), the classifi cation and measurement requirements of fi nancial liabilities are
the same as per IAS 39, barring the following two aspects:
The fair value option
Fair value changes for fi nancial liabilities (other than fi nancial guarantees and loan commitments) designated
at fair value through profi t or loss, attributable to the changes in the credit risk of the liability will be presented
in other comprehensive income. The remaining change is recognised in profi t or loss. However, if the
requirement creates or enlarges an accounting mismatch in profi t or loss, then the whole fair value change is
presented in profi t or loss. The determination as to whether such presentation would create or enlarge an
accounting mismatch is made on initial recognition and is not subsequently reassessed.
Certain derivatives linked to unquoted equity instruments
Under IFRS 9 (2010), derivative liabilities that are linked to and must be settled by delivery of an unquoted
equity instrument whose fair value cannot be reliably measured, are measured at fair value.
58 PSV Integrated Annual Report 2013 www.psvholdings.com
for the year ended 28 February 2013
Accounting policies (continued)
Management expects an insignifi cant impact from the application of IFRS 9 (2010) in respect of fi nancial liabilities as classifi cation and measurement of fi nancial liabilities under IFRS 9 are mostly the same as in IAS 39. In addition, the Group has not designated any of its fi nancial liabilities at fair value through profi t or loss. Historically, the Group has not concluded derivative liabilities contracts that require settlement by unquoted equity instruments. Although management has not yet assessed the impact of the revision in detail, it does not expect any signifi cant impact on the fi nancial results.
Non-applicable standards, amendments and interpretationsThe other remaining standards, amendments and interpretations issued but not yet effective have been assessed for applicability to the Group and management has concluded that they are not applicable to the business of the Group and will therefore have no impact on future fi nancial statements.
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
59PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statementsfor the year ended 28 February 2013
1. Segmental informationThe Group’s Chief Executive Officer (“CEO”) is the Group’s chief operating decision maker. The CEO has determined the operating segments based upon the information reviewed for the purposes of allocating
resources and assessing performance. The CEO considers the business from a product and geographical perspective. The CEO assesses the performance of the operating segments based upon profit before tax.
This measurement basis excludes discontinued operations and the effects of non-recurring expenditure from the operating segments such as goodwill impairments where such impairment arises from an isolated,
non-recurring event. The measure includes the effects of equity-settled share-based payments and unrealised exchange gains and losses arising normal trading operations. The CEO reviews internal management
reports every month.
The following summary describes the operations in each of the Group’s reportable segments:• Industrial Supplies includes the purchasing and distribution of general industrial and automotive supplies as well as the provision of crane and forklift maintenance;• Specialised Services includes the manufacture and distribution of cryogenic vessels and heat exchangers, the supply and installation of geosynthetic linings and the provision of specialised cryogenic based solutions
for industrial applications; and• Shared Services and Other includes direct head office costs and Segmental operating costs not recovered from the operating segments.
RevenueSales 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 assetsSegment assets consist primarily of:• property, plant and equipment;• payments in advance;• inventories; • receivables; and• cash.
Reportable segmental liabilitiesSegment liabilities consist primarily of:• borrowings; and• payables.
60 PSV Integrated Annual Report 2013 www.psvholdings.com
for the year ended 28 February 2013
Notes to the annual fi nancial statements
2013
Industrial Supplies
Specialised Services
Shared Services and other Total
R R R R
1. Segmental information (continued)Total segment revenue 201 916 452 181 675 347 – 383 591 799 Inter-segmental revenue (2 482 495) – – (2 482 495)
Reportable segment revenue 199 433 957 181 675 347 – 381 109 304
Gross profit 54 349 321 28 992 853 – 83 342 174 Depreciation and amortisation 1 984 380 1 660 136 2 988 407 6 632 923 Other operating expenses 29 733 839 16 667 078 18 136 055 64 536 972 Profit/(loss) before tax from continuing operations 15 187 917 3 519 341 (8 701 669) 10 005 589 Capital expenditure 7 517 392 2 292 851 1 813 606 11 623 849 Gross assets 70 056 718 70 819 524 72 842 767 213 719 009Gross liabilities 54 575 664 43 595 110 18 489 515 116 660 289
Botswana Zambia DRC Namibia TotalR R R R R
Segmental information by geographical regionTurnover (external) 49 290 432 27 136 415 9 524 169 7 370 601 93 321 617 Non-current assets 11 124 690 2 666 519 1 252 503 – 15 043 712
2012
Industrial Supplies
Specialised Services
Shared Services and other Total
R R R R
Total segment revenue 164 096 718 109 407 657 – 273 504 375 Inter-segmental revenue (10 536 926) (1 219 538) – (11 756 464)
Reportable segment revenue 153 559 792 108 188 119 – 261 747 911
Gross profit 42 129 492 16 903 275 – 59 032 767 Depreciation and amortisation 1 296 603 1 459 374 4 534 948 7 290 925 Other operating expenses 21 214 849 12 427 816 48 054 439 81 697 104 Profit/(loss) before tax from continuing operations 6 208 718 (926 701) (37 844 847) (32 562 830)Capital expenditure 15 952 747 3 583 734 6 795 971 26 332 452 Gross assets 71 397 332 68 612 485 150 807 121 290 816 938Gross liabilities 34 105 638 33 562 293 97 377 369 165 045 300
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
61PSV Integrated Annual Report 2013 www.psvholdings.com
Botswana Zambia DRC Namibia TotalR R R R R
1. Segmental information (continued)Segmental information by geographical regionTurnover (external) 53 888 531 22 314 006 4 150 783 7 285 124 87 638 444Non-current assets 10 610 996 1 350 668 790 771 – 12 752 435
Group Company
2013 2012 2013 2012R R R R
2. Results from operating activities The following items have been charged/(credited) in arriving at results from operating activities:Amortisation of intangible assets 1 471 906 2 482 905 – – Auditors’ remuneration:
Audit fee – current year 1 351 813 1 412 799 1 351 813 277 912 Depreciation 5 173 439 9 164 926 1 516 502 1 982 314 Directors’ remuneration 5 816 079 11 220 420 4 113 848 6 376 824 Fees paid for:
Secretarial services 381 762 261 704 381 762 215 133 Foreign exchange gain/(loss) 3 195 463 (665 986) 3 423 113 (691 199)Profit on disposal of subsidiary – – 34 499 344 – Impairment of loans to subsidiaries – – 1 624 612 9 511 860 Impairment of investments – – 14 920 152 2 106 097 Profit on sale of property, plant and equipment 54 504 636 643 60 170 28 273Operating lease charges in respect of buildings 6 301 411 9 189 668 5 649 575 3 653 579 Impairment reversal of trade receivables (Note 13) (1 550 601) – 492 642 – Impairment of goodwill (Note 9) 2 870 573 8 175 025 – – Impairment of intangible assets – 6 060 308 – – Retirement fund contributions 2 146 469 4 558 398 728 438 826 442 Salaries and wages 34 905 847 78 450 804 6 662 046 7 680 446 Share-based payment expense 1 389 318 (57 239) 437 034 132 222
Dividends received – – 41 534 651 –
62 PSV Integrated Annual Report 2013 www.psvholdings.com
for the year ended 28 February 2013
Notes to the annual fi nancial statements (continued)
2. Results from operating activities (continued)At 28 February 2013 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.
Terms and conditions of share option programmeShare options are granted to all permanent employees who have been in the employ of the Group for at least one year (of unbroken employment service), and must remain in the employ of the Group until such time
as the share options vest.
In addition, shares may be awarded in special circumstances to deserving employees for exceptional performance and or as a retention mechanism.
In these circumstances, the vesting period may vary from immediate to up to five years.
At management’s discretion, employees may still qualify for shares if they are retrenched, retire or become disabled.
All options are settled by physical delivery of shares.
Group
2013 2012
The movements in the number of shares allocated to eligible participants are as follows:New grant allocations during the yearBalance brought forward 4 651 200 1 375 603 Share awards granted during the course of the year 2 086 341 7 050 200Grants vested during the year (4 160 275) (3 774 603)
As at year end 2 577 266 4 651 200
The outstanding grants will vest on the following dates:By 28 February 2014 1 416 050 4 068 300 After 28 February 2014 1 161 216 582 900
2 577 266 4 651 200
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
63PSV Integrated Annual Report 2013 www.psvholdings.com
2. Results from operating activities (continued)Vesting periodsEmployees of subsidiaries acquired:• shares will vest three years from the date of acquisition for employees already in service when the Company was acquired; and• employees joining after the acquisition date, 100% will vest three years from the date of employment.
Employees of existing subsidiaries:• shares will vest three years after commencement of service.
Grant letters are issued to qualifying employees one year after commencement of service or the effective date a new subsidiary is acquired.
In special circumstances, the performance conditions embodied in grant letters may vary the vesting date terms.
Group Company
2013 2012 2013 2012R R R R
3A. RevenueSale of goods 343 145 263 252 236 095 Rendering of services 37 964 041 9 511 816
381 109 304 261 747 911
3B. Finance income and fi nance costsRecognised in profit or lossInterest income on loans and receivables – – 863 628 3 284 630 Interest income on bank deposits 2 248 367 406 460 311 606 188 124 Dividends received – – – 13 867 729 Interest income from SARS 143 231 – – – Transfer to discontinued operations (Note 5) (355 964) (64 685) – –
Finance income 2 035 634 341 775 1 175 234 17 340 483
Net foreign exchange loss – – – 691 199 Interest expense on bank overdrafts and loans 1 871 138 5 364 565 1 269 530 11 122 529 Interest expense on finance leases 3 567 169 1 775 669 3 017 511 266 777 Interest paid – South African Revenue Service – 426 823 – – Unwinding of interest on deferred purchase considerations 1 680 182 2 594 074 1 680 182 2 594 074 Interest paid – other 4 570 921 694 – 573 930 Transfer to discontinued operations (Note 5) (1 357 108) (3 604 067) – –
Finance costs 5 765 951 7 478 758 5 967 223 15 248 509
Net finance costs recognised in profit or loss (3 730 317) (7 136 983) (4 791 989) 2 091 974
64 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
Group Company
2013 2012 2013 2012R R R R
4. Income tax expenseSouth African normal taxationCurrent tax expense 8 463 977 4 531 227 – –
– current year 8 463 977 4 521 756 – – – prior year under provision – 9 471 – –
Deferred tax (credit)/expense (29 846) 4 048 163 – 3 006 064
– current year (272 001) (8 327 028) – (6 429 090)– impairment of previously recognised deferred tax asset – 12 383 467 – 9 435 154 – prior year overprovision 242 155 (8 276) – –
Total normal taxation 8 434 131 8 579 390 – 3 006 064
Transfer to discontinued operations (2 661 428) (4 171 089) – –
Total taxation charge 5 772 703 4 408 301 – 3 006 064
The effective rate of taxation differs from the standard rate of taxation as follows:Base rate 28.00 28.00 – 28.00Non-deductibles 63.60 (25.18) – (38.15)Reduced CGT rate (32.16) 0.27 – –Prior year current tax 0.51 (0.02) – –Prior year deferred tax 2.42 0.09 – –Foreign taxes 4.83 (0.55) – –Impairment of deferred tax 0.00 (12.92) – 20.41Deferred tax current not recognised (9.51) (3.16) – 10.15
Effective rate of taxation 57.69 (13.47) – 20.41
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
65PSV Integrated Annual Report 2013 www.psvholdings.com
Petrologic R
MitechR
TotalR
5. Discontinued operations and assets and liabilities held-for-saleThe following has been reclassified as held-for-sale in the current year:ASSETS Non-current assets Property, plant and equipment – 7 928 790 7 928 790
Total non-current assets – 7 928 790 7 928 790
Current assets Inventories – 8 870 763 8 870 763 Trade and other receivables 504 119 4 089 488 4 593 607 Cash and cash equivalents 442 817 7 585 450 402
Total current assets 946 936 12 967 836 13 914 772
Total assets 946 936 20 896 626 21 843 562
LIABILITIES Non-current liabilities Deferred taxation liabilities – 348 970 348 970 Loans and borrowings – 2 227 802 2 227 802
Total non-current liabilities – 2 576 772 2 576 772
Current liabilities Provisions – 425 244 425 244 Trade and other payables 1 440 169 1 966 268 3 406 437 Bank overdraft – 1 683 915 1 683 915 Current portion of loans and borrowings – 2 248 872 2 248 872
Total current liabilities 1 440 169 5 899 055 7 764 468
Total liabilities 1 440 169 8 475 827 10 341 240
66 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
5. Discontinued operations and assets and liabilities held-for-sale (continued)The following was reclassified as held-for-sale in the prior year:
Pump Business disposed
R Total
R
ASSETS Non-current assets Property, plant and equipment 18 640 419 18 640 419 Deferred tax asset 4 864 374 4 864 374
Total non-current assets 23 504 793 23 504 793
Current assets Inventories 27 085 931 27 085 931 Trade and other receivables 13 215 505 13 215 505 Taxation receivable 5 234 968 5 234 968 Cash and cash equivalents 9 908 239 9 908 239
Total current assets 55 444 643 55 444 643
Total assets 78 949 436 78 949 436
LIABILITIES Non-current liabilities Deferred taxation liabilities 1 304 337 1 304 337 Loans and borrowings 535 379 535 379
Total non-current liabilities 1 839 716 1 839 716
Current liabilities Trade and other payables 23 327 785 23 327 785 Current portion of loans and borrowings 298 618 298 618
Total current liabilities 23 626 403 23 626 403
Total liabilities 25 466 119 25 466 119
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
67PSV Integrated Annual Report 2013 www.psvholdings.com
Group
2013R
2012R
5. Discontinued operations and assets and liabilities held-for-sale (continued)Discontinued operationsRevenue 102 908 393 199 881 317 Cost of sales (63 790 400) (162 173 286)
Gross profit 39 117 993 37 708 031 Other income 2 516 558 10 837 171 Other expenses (38 849 960) (29 607 702)
Results from operating activities 2 784 591 18 937 500
Finance income 355 964 64 686 Finance costs (1 357 108) (3 604 067)
Net finance costs (1 001 144) (3 539 381)
Impairment of property – (10 700 000)
Profit before income tax 1 783 447 4 698 119 Income tax (2 661 428) (4 171 089)
(Loss)/profit for the year from discontinued operations (877 981) 527 030
(Loss)/gain on sale of discontinued operation (27 136 736) 18 820 209
(Loss)/profit for the year (28 014 717) 19 347 239
Cash flow effects of discontinued operationsCash flows from operating activities 2 014 241 –Cash flows from investing activities (2 156 173) –Cash flows from financing activities – –
The Pump Business has been sold for a purchase consideration of R54 million. The sale was approved by shareholders in a shareholders meeting held on the 31 May 2012.
The effective date of the sale was 13 June 2012.
The business and assets of Petrologic Proprietary Limited were sold with effect 30 September 2012. The business of Petrologic was previously incorporated into the Specialised Services segment.
The shares and claims in PSV Mitech Proprietary Limited were sold with effect 1 April 2013 for a purchase consideration of R7 000 100. PSV Mitech Proprietary Limited was previously disclosed as forming part of the Valve and Industrial Supply segment.
PSV Holdings Ltd as a substantial assessed tax loss and as a result no taxes are due on the sale of the discontinued operation. The pre- and post-tax effects on the gain on disposal of discontinued operation are the same. Refer to Note 17 for deferred tax policy on assessed losses.
68 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
Group
2013 2012R R
6. Earnings per shareLoss attributable to ordinary shareholders (23 781 831) (17 623 892)Profit/(loss) attributable to ordinary shareholders – continuing operations 4 232 886 (36 971 131)Weighted average number of ordinary shares in issue 254 066 206 249 770 838 Basic loss per share (cents) (9.36) (7.06)
Basic profit/(loss) per share (cents) – continuing operations 1.67 (14.80)
Basic profit/(loss) per share (cents) – discontinued operations (11.03) 7.74
Basic profit/loss per share is calculated by dividing the net profit/loss attributable to ordinary shareholders bythe weighted average number of ordinary shares in issue during the yearReconciliation of weighted average number of sharesShares in issue 272 547 699 272 547 699 Treasury shares not issued to third parties (18 481 493) (19 623 843)
254 066 206 252 923 856
Effect of weighting of shares issued – (3 153 018)
Weighted average number of shares 254 066 206 249 770 838
Reconciliation of headline profit/(loss)Loss attributable to ordinary shareholders (23 781 831) (6 923 892)Profit on disposal of property, plant and equipment (54 504) (636 643)(Profit)/loss on disposal of discontinued operations 27 136 736 (18 820 209)Gain on bargain purchase – (10 788 130)Impairment of intangible assets – 6 060 308 Impairment of goodwill 2 870 573 8 175 025 Deferred tax on impairment of intangibles – (1 696 886)Tax effect of above adjustments 15 261 –
Headline profit/(loss) 6 186 235 (24 630 427) Headline profit/(loss) – continuing operations 7 064 216 (29 926 376)
Headline profit/(loss) per share (cents) 2.43 (9.86)
Headline profit/(loss) per share (cents) – continuing operations 2.78 (11.98)
Headline profit/(loss) per share (cents) – discontinued operations (0.35) 2.12
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
69PSV Integrated Annual Report 2013 www.psvholdings.com
Group
2013 2012R R
6. Earnings per share (continued)Headline profit/loss per share is calculated by dividing the headline earnings attributable to ordinary shareholdersby the weighted average number of ordinary shares in issue during the yearDilutive effectThe calculation of diluted profit/loss per share and diluted headline profit/loss per share are based on:Weighted average number of shares in issue for basic and headline profit/loss per share 254 066 206 249 770 838 Potentially dilutive share grants 877 931 8 272 855
Number of shares for diluted profit/loss per share 254 944 137 258 043 693
Diluted loss per share (cents) (9.33) (6.83)
Diluted profit/(loss) per share (cents) – continuing operations 1.66 (14.33)
Diluted profit/(loss) per share (cents) – discontinued operations (10.99) 7.50
Diluted loss per share is calculated by dividing the net loss attributable to ordinary shareholdersby the diluted weighted average number of ordinary shares in issue during the year
Diluted headline profit/(loss) per share (cents) 2.43 (9.55)
Diluted headline profit/(loss) per share (cents) – continuing operations 2.77 (11.60)
Diluted headline profit/(loss) per share (cents) – discontinued operations (0.34) 2.05
Diluted headline profit/loss per share is calculated by dividing the headline earnings attributable to ordinary shareholders by the diluted weighted average number of ordinary shares in issue during the year.
70 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
Cost R
Accumulated depreciation
R
Carrying amount
R
7. Property, plant and equipment 2013 Group – owned Computer equipment and software 2 747 682 (2 222 940) 524 742 Furniture and fittings 1 822 410 (1 056 364) 766 046 Land and buildings 3 024 799 (108 651) 2 916 148 Leasehold improvements 2 610 840 (257 083) 2 353 757 Motor vehicles 4 794 579 (2 807 536) 1 987 043 Office equipment 491 468 (280 372) 211 096 Patterns and dies 37 408 (37 408) – Plant and machinery 8 981 595 (5 684 801) 3 296 794
24 510 781 (12 455 155) 12 055 626
Group – leased Computer equipment and software 306 603 (306 135) 468 Furniture and fittings 451 485 (172 185) 279 300 Motor vehicles 12 167 795 (3 859 073) 8 308 722 Plant and machinery 793 273 (224 659) 568 614
13 719 156 (4 562 052) 9 157 104
Total 38 229 937 (17 017 207) 21 212 730
Company – owned Computer equipment and software 1 541 502 (1 391 003) 150 499 Furniture and fittings 1 081 003 (682 832) 398 171 Leasehold improvements 2 258 723 (219 579) 2 039 144
4 881 228 (2 293 414) 2 587 814
Company – leased Computer equipment and software 167 546 (167 545) 1 Furniture and fittings 451 485 (172 185) 279 300 Motor vehicles 362 766 (65 191) 297 575 Plant and machinery 447 887 (49 227) 398 660
1 429 684 (454 148) 975 536
Total 6 310 912 (2 747 562) 3 563 350
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
71PSV Integrated Annual Report 2013 www.psvholdings.com
Cost R
Accumulated depreciation
R
Carrying amount
R
7. Property, plant and equipment (continued) 2012 Group – owned Computer equipment and software 3 906 698 (3 113 035) 793 663 Furniture and fittings 2 630 345 (1 489 392) 1 140 953 Land and buildings 2 983 197 (88 543) 2 894 654 Leasehold improvements 2 611 359 (600 995) 2 010 364 Motor vehicles 4 584 018 (2 831 285) 1 752 733 Office equipment 563 457 (309 308) 254 149 Patterns and dies 784 365 (103 727) 680 638 Plant and machinery 12 869 996 (5 777 346) 7 092 650
30 933 435 (14 313 631) 16 619 804 Group – leased Computer equipment and software 306 602 (249 086) 57 516 Furniture and fittings 451 485 (96 922) 354 563 Motor vehicles 14 573 582 (5 095 913) 9 477 669 Plant and machinery 7 654 417 (2 303 842) 5 350 575
22 986 086 (7 745 763) 15 240 323
Total 53 919 521 (22 059 394) 31 860 127
Company – owned Computer equipment and software 1 494 475 (1 240 656) 253 819 Furniture and fittings 963 424 (474 125) 489 299 Leasehold improvements 1 035 484 (84 807) 950 677 Office equipment 63 510 (41 626) 21 884
3 556 893 (1 841 214) 1 715 679 Company – leased Computer equipment and software 167 546 (156 850) 10 696 Furniture and fittings 451 485 (96 922) 354 563 Motor vehicles 451 296 (125 771) 325 525 Plant and machinery 7 425 506 (2 197 487) 5 228 019
8 495 833 (2 577 030) 5 918 803
Total 12 052 726 (4 418 244) 7 634 482
72 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
Opening carrying
valueR
AdditionsR
Category transfers in
RDisposals
R
Category transfers
outR
Transferred to assets held-for-
saleR
Impair-ment
R
Depre-ciation
R
FCTRmovement
RTotal
R
7. Property, plant and equipment (continued)Reconciliation of the carrying amount2013Group – ownedComputer equipment and software 793 663 393 906 101 381 (2 968) (116 927) (86 942) (114 101) (477 140) 33 870 524 742 Furniture and fittings 1 140 953 159 143 41 022 (4 317) (19 138) (88 930) (202 213) (313 056) 52 582 766 046 Land and buildings 2 894 654 – – – – – – (19 313) 40 807 2 916 148 Leasehold improvements 2 010 364 1 519 449 – (944 062) – – – (283 231) 51 236 2 353 756 Motor vehicles 1 752 733 488 750 107 460 (238 708) (220 783) (121 894) – (532 302) 751 787 1 987 043 Office equipment 254 149 23 583 37 069 13 071 (58 953) (16 609) – (46 145) 4 931 211 096 Patterns and dies 680 638 74 928 – – – (594 838) – (160 728) – – Plant and equipment 7 092 650 5 757 234 799 309 (282 408) (799 309) (7 019 577) (460 283) (1 848 574) 57 763 3 296 805
16 619 804 8 416 993 1 086 241 (1 459 392) (1 215 110) (7 928 790) (776 597) (3 680 489) 992 976 12 055 636
Group – leasedComputer equipment and software 57 516 – – – – – – (57 048) – 468 Furniture and fittings 354 563 – – – – – – (75 263) – 279 300 Motor vehicles 9 477 669 2 788 808 113 323 (2 281 059) 15 546 – (161 241) (2 207 577) 563 243 8 308 712 Office equipment – – – – – – – – – – Plant and machinery 5 350 575 418 048 – (4 235 254) – – – (964 755) – 568 614
15 240 323 3 206 856 113 323 (6 516 313) 15 546 – (161 241) (3 304 643) 563 243 9 157 094
Total 31 860 127 11 623 849 1 199 564 (7 975 705) (1 199 564) (7 928 790) (937 838) (6 985 132) 1 556 219 21 212 730
Company – owned Computer equipment and software 253 819 47 027 – – – – – (150 347) – 150 499 Furniture and fittings 489 299 54 069 21 884 – – – – (167 082) – 398 170 Land and buildings – – – – – – – – – – Leasehold improvements 950 677 1 223 239 – – – – – (134 772) – 2 039 144 Motor vehicles – – – – – – – – – – Office equipment 21 884 – – – (21 884) – – – – –
1 715 679 1 324 335 21 884 – (21 884) – – (452 201) – 2 587 813
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
73PSV Integrated Annual Report 2013 www.psvholdings.com
Opening carrying
valueR
AdditionsR
Category transfers in
R
Acquisition of business
RDisposals
R
Category transfers
outR
Transferred to assets held-for-
saleR
Impair-ment
R
Depre-ciation
R
FCTRmovement
RTotal
R
7. Property, plant and equipment (continued)Company – leasedComputer equipment and software 10 696 – – – – – – – (10 696) – – Furniture and fittings 354 563 – – – – – – – (75 263) – 279 300 Motor vehicles 325 525 187 690 – – (132 976) – – – (82 664) – 297 575 Office equipment – – – – – – – – – – – Plant and machinery 5 228 019 301 572 – – (4 235 254) – – – (895 678) – 398 659
5 918 803 489 262 – – (4 368 230) – – – (1 064 301) – 975 534
7 634 482 1 813 597 21 884 – (4 368 230) (21 884) – – (1 516 502) – 3 563 347
Opening carrying
value R
Additions R
Category transfers in
R
Acquisition of business
R Disposals
R
Category transfers
out R
Transferred to assets held-for-
sale R
DepreciationR
TotalR
Reconciliation of the carrying amount2012Group – ownedComputer equipment and software 843 688 665 546 – 184 725 (31 261) (26 454) (14 144) (828 437) 793 663 Furniture and fittings 1 043 875 574 992 – 221 404 (34 009) – (226 451) (438 858) 1 140 953 Land and buildings 19 018 798 120 193 – 195 563 (51 915) – (16 299 953) (88 032) 2 894 654 Leasehold improvements 349 794 1 773 407 – – – – – (112 837) 2 010 364 Motor vehicles 2 196 358 623 765 – 642 274 (371 544) (118 212) (510 999) (708 909) 1 752 733 Office equipment 111 377 67 947 (219) 268 307 (4 388) – (38 955) (149 920) 254 149 Patterns and dies 9 918 673 158 561 – 746 957 (92 400) – (9 378 906) (672 247) 680 638 Plant and equipment 3 543 437 3 122 346 – 8 273 556 (293 325) (4 797 213) (834 576) (1 921 575) 7 092 650
37 026 000 7 106 757 (219) 10 532 786 (878 842) (4 941 879) (27 303 984) (4 920 815) 16 619 804
74 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
Opening carrying
value R
Additions R
Transfers in R
Acquisition of business
R Disposals
R
Transfers out
R
Transferred to assets held-for-
sale R
DepreciationR
TotalR
7. Property, plant and equipment (continued)Group – leasedComputer equipment and software 150 543 – – – – – – (93 027) 57 516 Furniture and fittings 240 314 144 701 42 800 – – – – (73 252) 354 563 Motor vehicles 5 104 593 3 227 117 118 212 4 655 918 (827 483) – (480 872) (2 319 816) 9 477 669 Office equipment 42 800 – – – – (42 800) – – – Plant and machinery 3 175 095 665 173 4 823 886 – – – (1 555 563) (1 758 016) 5 350 575
8 713 345 4 036 991 4 984 898 4 655 918 (827 483) (42 800) (2 036 435) (4 244 111) 15 240 323
Total 45 739 345 11 143 748 4 984 679 15 188 704 (1 706 325) (4 984 679) (29 340 419) (9 164 926) 31 860 127
Company – ownedComputer equipment and software 496 056 225 369 – – – – – (467 606) 253 819 Furniture and fittings 456 956 186 992 – – – – – (154 649) 489 299 Land and buildings – – – – – – – – – Leasehold improvements 349 794 676 084 – – – – – (75 201) 950 677 Motor vehicles 118 212 – – – – (118 212) – – – Office equipment 32 471 – – – – – – (10 587) 21 884
1 453 489 1 088 445 – – – (118 212) – (708 043) 1 715 679
Company – leasedComputer equipment and software 57 833 – – – – – – (47 137) 10 696 Furniture and fittings 240 314 144 701 42 800 – – – – (73 252) 354 563 Motor vehicles 112 718 339 136 118 212 – (173 178) – – (71 363) 325 525 Office equipment 42 800 – – – – (42 800) – – – Plant and machinery 913 671 572 981 4 823 886 – – – – (1 082 519) 5 228 019
1 367 336 1 056 818 4 984 898 – (173 178) (42 800) – (1 274 271) 5 918 803
2 820 825 2 145 263 4 984 898 – (173 178) (161 012) – (1 982 314) 7 634 482
Group Company
2013 2012 2013 2012R R R R
SecurityGroup and Company assets leased are subject to instalment sale agreements. The amount outstanding is as follows:Please refer to Note 18 for additional information. 7 804 024 31 589 652 511 087 22 709 295
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
75PSV Integrated Annual Report 2013 www.psvholdings.com
Group
2013 2012
Accumulated Accumulated depreciation Carrying depreciation Carrying
Cost and impairment value Cost and impairment valueR R R R R R
8. Intangible assetsMarket relationships 7 176 120 (2 391 956) 4 784 164 7 176 120 (1 993 021) 5 183 099 Customer relationships 7 284 742 (3 195 942) 4 088 800 7 284 742 (2 684 842) 4 599 900 Technology relationships 5 618 708 (2 740 821) 2 877 887 8 455 508 (2 885 073) 5 570 435
20 079 570 (8 328 719) 11 750 851 22 916 370 (7 562 936) 15 353 434
Group
2013
Opening value Amortisation Impairment
Closing value
R R R R
Carrying value reconciliationMarket relationships 5 183 099 (398 936) – 4 784 163 Customer relationships 4 599 900 (511 100) – 4 088 800 Technology relationships 5 570 435 (764 418) (1 928 129) 2 877 888
15 353 434 (1 674 454) (1 928 129) 11 750 851
2012
Opening value Amortisation Impairment
Acquisition of business
Closingvalue
R R R R R
Market relationships 7 444 796 (677 037) (2 734 660) 1 150 000 5 183 099 Customer relationships 2 771 539 (1 126 997) (2 155 642) 5 111 000 4 599 900 Technology relationships 7 824 407 (1 083 966) (1 170 006) – 5 570 435
18 040 742 (2 888 000) (6 060 308) 6 261 000 15 353 434
The intangible asset impaired during the year relates to discontinued operation Petrologic. Due to losses incurred by Petrologic, and no foreseeable return to profits the intangible asset was considered of no value. This was borne out when the intangible was sold for nil value on disposal of the Petrologic business.
76 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
Group Company
2013 2012 2013 2012R R R R
9. GoodwillOpening balance 32 056 838 32 997 332 – – Subsidiary acquired – 7 234 531 – – Impairment of goodwill (2 870 573) (8 175 025) – – Transfers to held-for-sale – – – –
Closing balance 29 186 265 32 056 838 – –
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.
Group
2013 2012R R
The aggregate carrying amounts of goodwill allocated to each of the units is as follows:Omnirapid Mining and Industrial Supplies Proprietary Limited 17 606 734 17 606 734 Engineered Linings Proprietary Limited – 2 870 573 Cryoshield Proprietary Limited 4 345 000 4 345 000 Turbo Agencies Proprietary Limited 7 234 531 7 234 531
29 186 265 32 056 838
The recoverable amounts of the operating subsidiaries were based on their value in use and were assessed by management.
The value in use for the CGU was determined by discounting the future cash flows from the continuing use of the unit, and is based on the following key assumptions:• cash flows were based on actual operating results and a five-year forecast business plan; and• operating expenses in the historical and forecast periods exclude management fees as these are purely a head office cost allocation.
In order to value each CGU on a stand-alone maintainable basis, a fee has been included in operating expenses to compensate for additional costs that would be incurred for services performed on behalf of the CGUs by head office and to include market-related expenses instead of benefiting from being part of the larger Group.
• cash flows include maintainable capex but exclude expandable capex items and reflect the ongoing operating cash flows of the CGUs;• a terminal growth rate of 5.5% (2012 – 6%) was used thereafter. This rate is considered reasonable given current CPIX forecasts;• revenue and operating costs were projected to grow by between 5% to 10% for the years 2014 to 2018;• attributable growth rates in excess of 10% are due to substantial infrastructural investment being made in various CGU’s establishing a platform for higher growth; and• 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.
The forecast cash flows of the PSV Holdings Limited CGUs are discounted using their respective WACCs.
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
77PSV Integrated Annual Report 2013 www.psvholdings.com
9. Goodwill (continued)The WACCs used in performing the valuations for each CGU are as follows:
CGU WACC (%) 2012
Omnirapid 20.26 19.55
Cryoshield 20.26 19.98
Turbo Agency Group of Companies 19.53 18.81
Based upon our evaluation of the value in use of the abovementioned CGU’s, no impairment of goodwill was considered necessary.
Impairment of CGU• When assessing the carrying amount of the CGU’s in relation to their value in use, it was found that the Engineered Lining CGU’s value in use was less than the carrying amount.• Considering the CGU made sustained losses for three years historically, the remaining goodwill was impaired particularly as the CGU is not achieving the requisite return in investment required by the Group.• The Engineered Lining CGU is classified as a business operation and is included in the Specialised Services operating segment for reporting purposes.• The CGU was impaired by R2 870 573. The value in use of this CGU was calculated based upon a WACC of 20.26% (2012 – 19.84%) using a 5.5% terminal rate (2012 – 6%).• The impairment arose notwithstanding the CGU’s forecasted return to profitability in future years. However, future forecast profitability mitigated the need for further impairment of specific intangibles and non-current
assets.• The estimated recoverable amount of Engineered Linings amounted to R7.2 million. In arriving at the recoverable amount so determined, management relied on risk factors and discount rates applied to similar external
businesses when determining an appropriate WACC to the free cash flows of the CGU. The acceptable investment return is set by the Board of PSV.
Group Company
2013 2012 2013 2012R R R R
10. Loans receivableLoan to the previous vendors of Turbo Agencies – 1 688 060 – –
Less: Current portion – (1 000 000) – –
– 688 060 – –
The loan was interest free and was fully repaid in the current financial year.
78 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
Issued share
capital
Percentage holding Cost of shares Loans to/(from)
2013 2012 2013 2012 2013 2012% %
11. Investment in subsidiariesHeld by PSV Holdings LimitedOperating CompaniesPSV Services Proprietary Limited 200 – 100 – 11 672 971 – 596 613 PSV Thuthuka Proprietary Limited 200 100 100 200 – – – PSV Zambia Proprietary Limited 18 943 – 100 – 1 280 924 – 1 327 303 Omnirapid Mining & Industrial Supplies
Proprietary Limited 100 100 100 19 967 589 20 151 954 – (13 316 196)Petrologic Proprietary Limited 258 100 100 – 14 920 152 – – Umzantsi Africa Pumps & Valves
Proprietary Limited 120 100 100 120 120 – – Engineered Linings Proprietary Limited 100 100 100 32 640 547 32 659 437 – (19 704 892)APE Pumps Proprietary Limited 100 – 100 – 603 109 – 9 307 108 PSV Mitech Control Valves Proprietary Limited 100 100 100 100 100 4 804 005 6 700 254 PSV Properties 2 Proprietary Limited 100 – 100 – 100 – (3 796 246)Abiton Proprietary Limited 100 100 100 100 100 – (378)Rand Air & Gas Installations Proprietary Limited 3 876 100 100 15 726 395 15 739 451 (3 339 363) (7 008 782)Mather + Platt Proprietary Limited 2 – 100 1 1 – – Cryoshield Proprietary Limited 100 100 100 7 592 100 7 592 000 – – Turbo Agencies Proprietary Limited 47 590 100 100 9 495 115 9 495 117 18 674 948 21 620 061 PSV Treasury Proprietary Limited 100 100 100 – – 2 504 035 2 887 326 TASA Mining Proprietary Limited 100 100 100 – – – –
– – 85 422 267 114 115 536 22 643 625 (1 387 829)
Total owing by subsidiaries – – – – 25 982 988 42 438 665 Total owing to subsidiaries – – – – (3 339 363) (43 826 494)
– – – – 22 643 625 (1 387 829)
The loans are unsecured, interest free and have no fixed repayment terms.
No provisions for impairment are raised against any loans.
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
79PSV Integrated Annual Report 2013 www.psvholdings.com
Group Company
2013 2012 2013 2012R R R R
12. InventoriesRaw materials and consumables 29 738 766 13 993 936 3 231 032 – Work in progress 11 092 483 11 514 308 – – Finished goods and merchandise 1 993 283 44 444 588 – – Transferred to assets held-for-sale (8 870 763) (27 085 931) – –
33 953 769 42 866 901 3 231 032 –
The amount of inventory included in Cost of Sales is R260 092 321 (2012: R177 652 432)Provision for obsolete stockOpening balance 4 785 373 3 241 494 – 759 798 Provisions raised during the period 856 268 1 543 879 – –Provisions utilised during the period (1 929 310) – – (759 798)
Closing balance 3 712 331 4 785 373 – –
13. Trade and other receivablesTrade receivables 66 315 512 57 498 534 4 909 852 9 408 607 Prepayments 2 691 132 8 414 617 – 1 307 655 Deposits 395 100 727 851 328 483 344 651 VAT receivable 1 921 863 3 820 023 399 157 1 118 025 Accrued revenue and retentions 3 818 199 – – – Other 22 651 368 049 – 25 825 Transferred to assets held-for-sale (4 593 607) (13 215 505) – –
70 570 850 57 613 569 5 637 492 12 204 763
Trade receivables are non-interest bearing and are generally on 30-day termsProvision for doubtful debtsOpening balance 4 175 129 3 932 948 – –Decrease in provision through profit and loss (1 550 601) (524 175) – –Increase in provision through profit and loss 351 890 766 356 – –
Closing balance 2 976 418 4 175 129 – –
80 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
13. Trade and other receivables (continued)The Group’s exposure to credit and currency risks, and impairment losses related to trade and other receivables is disclosed in Note 20. A cession of the trade debtors with a carrying value of R38 197 697 has been
given as security for the banking facilities provided by Standard Bank.
In 2012 Investec held unrestricted cession on local debtors to the value of R38 266 457 for banking facilities.
Group Company
2013 2012 2013 2012R R R R
14. Cash and cash equivalentsBank and cash balances 21 796 401 37 088 253 11 300 592 9 243 117 Bank overdraft (6 280 851) (18 010 869) – (16 019 515)Transferred to assets held-for-sale 1 233 513 (9 908 239) – –
Cash and cash equivalents in the statement of cash flow 16 749 063 9 169 145 11 300 592 (6 776 398)
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities is disclosed in Note 20.3.
15. Share capitalAuthorised1 000 000 000 ordinary shares of no par valueIssued272 547 699 (2012: 272 547 699) ordinary shares of no par value 273 059 364 271 606 106 274 494 010 274 494 010
Number of shares issued to external parties:Total shares in issue 272 547 699 272 547 699 272 547 699 272 547 699 Treasury shares held by Company/subsidiary (18 481 493) (19 623 843) – –
Net shares held by external parties 254 066 206 252 923 856 272 547 699 272 547 699
Treasury shares are held in terms of the Groups share incentive scheme. For details refer to Note 2.
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
81PSV Integrated Annual Report 2013 www.psvholdings.com
Turbo Agencies Vendor 1 –
Parry
Turbo Agencies Vendor 2 – Earthwise Total
R R R
16. Purchase consideration payablePurchase price 9 336 773 12 000 000 21 336 773 Cumulative unwinding of interest to 29 February 2012 1 120 413 1 203 027 2 323 440 Cash – (1 203 027) (1 203 027)Balance owing at 29 February 2012 10 457 186 12 000 000 22 457 186
Long-term portion 10 457 186 10 046 748 20 503 934 Current portion – 1 953 252 1 953 252
Unwinding of interest 2013 1 680 182 1 185 856 2 866 038 Settlements – – – Cash (7 367 287) (3 243 510) (10 610 797)Balance owing at 28 February 2013 4 770 081 9 942 346 14 712 427
Long-term portion – 7 578 457 7 578 457 Current portion 4 770 081 2 363 889 7 133 970
– The Earthwise Vendor is repayable in monthly instalments R270 293, with the last instalment due on 1 March 2016. The outstanding balance attracts interest at prime plus 1%. On 1 March 2016 a further
R2 million shall be paid over and above in full and final settlement of the purchase price.– The deferred purchase consideration payable to the Parry’s is due to be settled by 28 February 2014.
Group Company
2013 2012 2013 2012R R R R
17. Deferred taxationThe movement on the deferred taxation account is as follows:Balance at the beginning of the year (3 285 573) 7 085 841 – 3 006 064 Income statement charge 29 846 (4 048 163) – (3 006 064)
– current year 272 001 8 327 028 2 643 163 6 429 090 – prior year (under)/over provision (242 155) 8 276 – (9 435 154) – impairment – (12 383 467) (2 643 163) –
82 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
Group Company
2013 2012 2013 2012R R R R
17. Deferred taxation (continued)Balance sheet credit 553 146 (6 323 251) – –
– acquisition of subsidiary – (2 763 214) – – – subsidiaries sold during the year 204 176 – – – – transferred to held-for-sale 348 970 (3 560 037) – –
Balance at the end of the year (2 702 581) (3 285 573) – –
Balance at the end of the year is made up of:Deferred taxation assets 2 171 068 2 410 108 – – Deferred taxation liabilities (4 873 649) (5 695 681) – –
(2 702 581) (3 285 573) – –
Comprising: Capital allowances (613 069) (2 425 173) – – Provisions 850 947 1 508 584 – – Intangibles (3 290 238) (3 516 076) – – Advance receipts (1 914 869) (538 654) – – Prepayments (47 908) (430 805) – – Estimated taxation losses 2 312 556 2 116 551 – –
(2 702 581) (3 285 573) – –
The computed tax losses in respect of which a deferred tax asset has not been raised amounts to R27 958 377 and R33 696 986 in 2012.
The computed capital gains tax loss in respect of which a deferred tax asset has not been raised is R23 740 279 (2012: R15 105 946).
The deferred tax asset has been raised on assessed and estimated tax losses in Engineered Linings Proprietary Limited and Tasa Mining Proprietary Limited.
On assessing the three-year profitability forecasts of both these 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.
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
83PSV Integrated Annual Report 2013 www.psvholdings.com
Group Company
2013 2012 2013 2012R R R R
18. BorrowingsLocalSecuredInstalment sale and finance lease agreements for motor vehicles and equipment payable over periods from two to five years at interest rates between 7.75% and 10.5% 10 031 826 14 459 703 511 087 5 771 306 Portion classified as held-for-sale in the current year (refer to Note 5 for details) (2 227 802) (833 997) – – Investec Bank long-term loan – 16 937 989 – 16 937 989 The loan was fixed over five years with quarterly repayments of the capital and interest. The loan bore interest at 11.28%.The proceeds received on the sale of the Pumps Business were used to settle the loan.Loan owing to previous vendors of Turbo Agencies. Repayable in February 2014. – 1 025 957 – – The loan was unsecured and bore interest at the prime borrowing rate.
Total borrowings 7 804 024 31 589 652 511 087 22 709 295 Less: Current portion (2 161 108) (9 089 812) (120 798) (6 043 567)
5 642 916 22 499 840 390 289 16 665 728
The carrying value of interest-bearing liabilities approximates their fair value.
19. Trade and other payablesTrade payables 55 841 121 56 716 869 608 306 949 885 Accruals 11 322 323 8 235 830 4 451 258 3 721 014 VAT payable 645 315 6 005 107 – – Payroll accruals 3 344 909 8 510 009 675 296 1 309 548 Other payables 121 294 1 609 021 – 89 109 Transferred to liabilities held-for-sale (3 406 437) (23 327 786) – –
67 868 525 57 749 051 5 734 860 6 069 556
Trade payables are non-interest-bearing and are normally settled on 30-day terms. Accruals are non-interest-bearing and, other than employee benefit accruals, have an average term of 30 days.
For terms and conditions relating to related-party payables, refer to Note 24.
The Group’s exposure to liquidity and currency risk related to trade and other payables is disclosed in Note 20.2 and 20.3.
84 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
20. Financial Risk Management OverviewThe Group has exposure to the following risks from its use of financial instruments:• credit risk;• liquidity risk; and• 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.
20.1 Credit riskCredit 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 does not require collateral in respect of trade and other receivables, as it mainly renders services to major companies in the industries in which they operate and the exposure to credit risk is monitored on an ongoing basis.
The Group is in the process of assessing the feasibility of credit guarantee insurance.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables.
The key components of this allowance is a specific loss component that relates to individually significant exposures in respect of losses that have been incurred but not yet identified.
At balance sheet date there was an allowance for impairment based on the above process.
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
85PSV Integrated Annual Report 2013 www.psvholdings.com
20. Financial Risk Management Overview (continued)20.1 Credit risk (continued)
Exposure to credit riskThe carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
Group
2013 2012R R
Trade and other receivables – excludes prepayments and VAT 65 957 855 45 378 929
Loans receivable – 1 688 060 The maximum exposure to credit risk reflected by extent of trading activities for the year by significant customer, was:Customer A 5 529 466 16 180 195Customer B 2 279 302 – Customer C – 4 001 460 Customer D 9 637 842 – Customer E – 383 849 Customer F 3 050 160 – Customer G – 1 899 393 Customer H 3 051 683 –
Group
2013 2012
Gross Impairment Gross Impairment R R R R
Impairment lossesThe ageing of trade and other receivables as reporting date was:Not past due 50 474 590 – 38 946 802 10 127 Past due 10 460 251 2 976 418 9 227 494 2 977 275
60 934 841 2 976 418 48 174 296 2 987 402
86 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
2013 2012
20. Financial Risk Management Overview (continued)20.1 Credit risk (continued)
The Company defines “past due” as invoices which are more than 60 days past due. Balance at the beginning of the year 4 175 129 3 932 948 Impairment loss processed through profit and loss (1 198 711) (945 546)
2 976 418 2 987 402
20.2 Liquidity riskLiquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due under normal conditions.
The Group manages its working capital requirements stringently and ensures that it has sufficient cash on demand to meet expected operational expenses for the short-term, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted such as natural disasters.
In addition, the Group maintains the following lines of credit:• R17 million overdraft facility with Standard Bank Limited (of which R6 280 851 was utilised at year-end).
Interest on the above are variable with the prime overdraft rate.
Where acquisitions are made, transactions are structured in such a way so as to settle the purchase price over a period.
Group
2013
Carrying Contractual 12 months More than amount cash flows or less 12 months
R R R R
The following are the contractual maturities of financial liabilities:Non-derivative financial liabilities Deferred purchase consideration 14 712 427 16 840 390 7 133 970 9 706 420 Trade and other payables 67 868 525 67 868 525 67 868 525 – Loans and borrowings 7 804 023 8 826 149 2 161 107 6 665 042 Bank overdraft 6 280 851 6 280 851 6 280 851 –
Total 96 665 826 99 815 915 83 444 453 16 371 462
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
87PSV Integrated Annual Report 2013 www.psvholdings.com
Group
2012
Carrying Contractual 12 months 12 months amount cash flows or less or more
R R R R
20. Financial Risk Management Overview (continued)20.2 Liquidity risk (continued)
Deferred purchase consideration 22 457 186 26 703 771 3 243 510 23 460 261 Trade and other payables 51 743 944 51 743 944 51 743 944 – Loans and borrowings 31 589 652 34 183 763 10 126 911 24 056 852 Bank overdraft 18 010 869 18 010 869 18 010 869 –
Total 123 801 651 130 642 347 83 125 234 47 517 113
20.3 Market riskMarket risk is the risk that changes in market prices, such as foreign currency exchange rates may cause a decrease in fair values of future cash flows of financial instruments and consequently result in a financial loss for the Group.
20.3.1 Currency riskThe Group is exposed to currency risk on certain group creditors that are denominated in a currency other than the functional currency of the Group, the South African Rand.
The currency in which these transactions primarily are denominated is Euros, British Pounds, US Dollars and Botswana Pulas.
The Group policy is not to actively manage foreign exchange risk by means of FEC’s, or other hedging instruments.
The table below presents the Rand equivalent of the foreign currency exposure:
2013 2012
USD GBP Euro ZMK BWP USD GBP Euro ZMK BWP
Trade receivables 13 953 293 – – – 13 951 210 4 037 877 – – 25 267 20 097 799 Cash and cash equivalents 159 512 – – – 2 475 887 1 224 954 – – 42 217 (1 985 174)Trade payables (17 508 362) (419 373) (2 753 600) – (9 783 237) (3 876 199) (66 625) (2 246 244) (280 162) (971 002)
Gross exposure (3 395 557) (419 373) (2 753 600) – 6 643 860 1 386 632 (66 625) (2 246 244) (212 678) 17 141 623
Net exposure (3 395 557) (419 373) (2 753 600) – 6 643 860 1 386 632 (66 625) (2 246 244) (212 678) 17 141 623
88 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
Reporting date spot rate Average rate
2013 2012 2013 2012
20. Financial Risk Management Overview (continued)20.3 Market risk (continued)
20.3.1 Currency risk (continued)The following significant exchange rates applied at year-end:USD 8.84 7.53 8.38 7.37 GBP 13.37 11.94 13.29 11.77 Euro 11.57 10.12 10.82 10.20 BWP 1.08 1.03 1.10 1.08 ZMK 0.0017 0.0014 0.0017 0.0015
Sensitivity analysis A 20% (2012: 10%) strengthening in the Rand against the following currency would have increased/(decreased) profit or loss by the amounts shown below.
Average rate
201320%
201210%
USD (6 003 345) 1 044 134 GBP (1 121 403) (79 550)Euro (6 371 830) (2 273 199)BWP 1 435 074 –ZMK – (30)
A 20% weakening in the Rand against the above currencies at 28 February 2013 would have an equal and opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
The sensitivity analysis was increased to 20% due to current volatility of the Rand against major currencies.
20.3.2 Interest rate riskBorrowings are generally at a rate linked to the prime bank overdraft rate.
The Group had group interest-bearing borrowings at year-end as well as instalment sale liabilities and finance leases.
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
89PSV Integrated Annual Report 2013 www.psvholdings.com
2013 2012
20. Financial Risk Management Overview (continued)20.3 Market risk (continued)
20.3.2 Interest rate risk (continued)At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was as follows:
Variable rate instruments Financial liabilities
Bank overdraft 6 280 851 18 010 869
Instalment sale liabilities, leases and bonds 10 031 826 31 397 692
16 312 677 49 408 561
A change of 1% basis points in interest rates would have increased/(reduced) profits by the amounts shown below based on year-end balances:
2013 2012
1% decrease 1% increase 1% decrease 1% increaseR R R R
Variable rate instruments 163 127 (163 127) 496 005 (496 005)
20.4 Capital managementCapital is defined as total equity as reflected on balance sheet.
The Board’s policy is to maintain a strong capital base to sustain future development of the business and maintain creditor and market confidence. Capital is defined as share capital less accumulated losses.
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 in order to provide returns for shareholders and benefits for other stakeholders and to maintain
an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net interest-bearing debt divided by total capital. Net debt is calculated as total
borrowings (including “current and non-current borrowings” as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated
balance sheet.
90 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
2013 2012
20. Financial Risk Management Overview (continued)20.4 Capital management (continued)
Reconciliation of CapitalOpening balance 125 771 638 142 748 948 Loss for the year (23 781 831) (17 623 892)Dividend paid (9 328 872) –Foreign currency translation reserve 3 008 463 (96 179)Share based payment reserve (63 940) (57 239)Shares issued during the year 1 453 258 800 000
97 058 720 125 771 638
Made up as follows:Accumulated losses (175 955 326) (142 844 627)Foreign currency translation reserve 141 842 205 782 Share based payment reserve (187 160) (3 195 623)Stated capital 273 059 364 271 606 106
97 058 720 125 771 638
20.5 Fair valuesThe fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:
Group Company
2013 2012 2013 2012
Carrying Fair Carrying Fair Carrying Fair Carrying Fair amount value amount value amount value amount value
R R R R R R R R
Financial assets Trade and other receivables 70 570 850 70 570 850 57 613 569 57 613 569 5 637 492 5 637 492 12 204 763 12 204 763 Cash and bank balances 21 796 401 21 796 401 27 180 014 27 180 014 11 300 592 11 300 592 9 243 117 9 243 117 Loans receivable – – 1 688 060 1 688 060 – – 1 000 000 1 000 000
92 367 251 92 367 251 86 481 643 86 481 643 16 938 084 16 938 084 22 447 880 22 447 880
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
91PSV Integrated Annual Report 2013 www.psvholdings.com
Group Company
2013 2012 2013 2012
Carrying Fair Carrying Fair Carrying Fair Carrying Fair amount value amount value amount value amount value
R R R R R R R R
20. Financial Risk Management Overview (continued)20.5 Fair values (continued)
Financial liabilities Loans and borrowings 10 031 826 10 031 826 32 423 649 32 423 649 511 087 511 087 22 709 295 22 709 295 Trade and other payables 67 223 210 67 223 210 51 743 943 51 743 943 5 734 860 5 734 860 6 069 556 6 069 556 Bank overdraft 6 280 851 6 280 851 18 010 869 18 010 869 – – 16 019 515 16 019 515 Deferred purchase consideration 14 712 427 14 712 427 22 457 186 22 457 186 14 712 427 14 712 427 22 457 186 22 457 186
98 248 314 98 248 314 124 635 647 124 635 647 20 958 374 20 958 374 67 255 552 67 255 552
Group Company
2013 2012 2013 2012R R R R
21. Cash fl ow informationA. Cash generated by/(utilised in) operationsProfit/(loss) before taxation including discontinued operations 11 789 036 (17 164 712) 14 904 923 (6 924 680)Adjustments for:Finance income (2 035 634) (380 056) (1 175 234) (17 340 483)Finance expenses 4 085 769 8 928 015 4 287 041 12 654 435 Interest on deferred purchase consideration 1 680 182 1 391 047 1 680 182 2 594 074 Share-based payment expense 1 389 318 (57 239) 437 034 132 222 Depreciation 6 985 132 9 164 926 1 516 500 1 982 314 Amortisation of intangibles 1 674 454 2 888 000 – –Impairment of intangibles – 6 060 308 – – Impairment of goodwill 2 870 573 8 175 025 – –Gain on acquisition of business combination – (10 788 130) – –Impairment of property, plant and equipment – – – (28 273)Loss on disposal of property, plant and equipment 54 504 636 643 60 170 –Share-based payments – Directors – 800 000 – – Impairment of investments – – 14 920 152 11 617 957 Dividend received from subsidiaries – – (41 534 651) –
29 903 013 9 653 827 (4 903 883) 4 687 566
92 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
Group Company
2013 2012 2013 2012R R R R
21. Cash fl ow information (continued)Changes in working capital(Increase)/decrease in inventories (16 920 489) (4 897 339) (3 231 032) 1 940 913 (Increase)/decrease in trade and other receivables (16 897 378) 1 104 695 6 966 073 7 029 531 Increase/(decrease) in trade and other payables 12 904 537 24 198 874 (1 934 695) 426 355
8 989 683 30 060 057 (3 103 537) 14 084 365
B. Taxation paidBalance receivable at the beginning of the year 1 638 291 (6 256 547) – – Charge to income statement 8 463 977 4 531 227 – – Transferred to discontinued operations – 8 041 050 – – Balance payable at the end of the year (4 779 574) (1 638 291) – –
5 322 694 4 677 439 – –
22. Defi ned contribution benefi t informationEmployees of the Group contribute to the Sanlam Umbrella Provident Fund.
Those employed before 1 September 2010 may elect to contribute 10%, 12% or 19% of their pensionable salary to the fund.
Those employed after 1 September 2010 contribute 10% of their pensionable salary to the fund. All permanent salaried staff are required to join the fund.
At year-end the total number of employees in the Company belonging to the fund was 98 (2012: 179).
Contributions for the year in Note 2
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
93PSV Integrated Annual Report 2013 www.psvholdings.com
TurboR
PSV MitechR
TotalR
23. Business combinationsNo business combination took place in the 2013 financial year:
The following business combination took place in the 2012 financial year:Non-current assets 7 587 711 8 349 304 15 937 015
Property, plant and equipment 6 839 400 8 349 304 15 188 704 Goodwill – – – Deferred taxation 748 311 – 748 311
Current assets 19 596 396 6 866 744 26 463 140
Inventories 5 625 369 6 866 744 12 492 113 Trade and other receivable 13 971 027 – 13 971 027
Non-current liabilities 3 564 927 1 758 525 5 323 452
Deferred taxation – 1 758 525 1 758 525 Shareholders loans 2 000 000 – 2 000 000 Borrowings 1 564 927 – 1 564 927
Current liabilities 14 024 940 2 669 392 16 694 332
Current portion of long-term borrowings 1 232 721 – 1 232 721 Taxation payable 2 806 082 – 2 806 082 Trade and other payables 7 985 129 2 669 392 10 654 521 Bank overdraft 2 001 008 – 2 001 008
Fair value of net assets acquired 9 594 240 10 788 131 20 382 371 Pre-existing goodwill – – – Purchased loans 11 841 659 – 11 841 659 Goodwill 7 234 531 – 7 234 531 Bargain purchase price – (10 788 130) (10 788 130) Intangibles 6 261 000 – 6 261 000 Deferred tax on intangibles (1 753 000) – (1 753 000)
Purchase consideration 21 336 771 1 21 336 772
94 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes to the annual fi nancial statements (continued)
for the year ended 28 February 2013
TurboR
PSV MitechR
TotalR
23. Business combinations (continued)Settled as follows:Deferred equity consideration – The Parry’s 9 336 772 – 9 336 772 Deferred equity consideration – Earthwise 12 000 000 – 12 000 000
Unwinding of interest 2 323 440 – 2 323 440 Cash paid (1 203 027) (1) (1 203 028)
Balance owing at 28 February 2012 22 457 185 (1) 22 457 184
Net cash (3 204 035) – –
Bank overdraft (2 001 008) – –Cash paid (1 203 027) – –
24. Related-party transactionsThe Company has no holding Company. All related-party transactions are concluded under terms that are no less favourable than those arranged with third parties. Outstanding trading balances at year-end are unsecured, interest free and settlement is in cash. Outstanding loan balances at year-end are unsecured, bear interest at the prime interest rate and are repayable on demand.
Management feesAll management fees are intra-group and have been eliminated on consolidation.
Directors’ remuneration and share optionsDetailed disclosure of Directors’ remuneration is made in Note 25.
Group CompaniesDetails of subsidiary Companies are given in Note 11.
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
95PSV Integrated Annual Report 2013 www.psvholdings.com
Basic remuneration
Other benefits
Retirement and medical
Incentives and bonuses
Directors´ fees
Share grants Total
R R R R R R R
25. Directors’ remunerationDirectors’ remuneration in respect of the financial year ended 28 February 2013 was as follows:2013Executive AJD da Silva 1 648 351 – 87 339 321 234 – – 2 056 924 AR Dreisenstock 1 663 240 – 72 450 321 234 – – 2 056 924 P Robinson (resigned 4 June 2013) 397 189 37 500 – 500 000 – – 934 689 Non-executiveDJ Kelly (resigned 30 August 2012) – – – – 116 665 – 116 665 E Ratshikhopha – – – – 80 000 – 80 000 P Robinson – – – – 160 000 – 160 000 A de la Rue – – – – 214 210 – 214 210 R Patmore – – – – 196 667 – 196 667
3 708 780 37 500 159 789 1 142 468 767 542 – 5 816 079
2012Executive AJD da Silva 1 457 239 87 500 259 951 950 391 – 200 000 2 955 081 AR Dreisenstock 1 457 239 87 500 259 951 950 391 – 200 000 2 955 081 DJ Kelly 627 620 75 000 70 369 800 000 – 200 000 1 772 989 P Robinson 1 416 847 150 000 226 703 950 391 – 200 000 2 943 941 Non-executiveE Chimombe-Munyoro – – – – 175 000 – 175 000 GS Nzalo – – – – 140 000 – 140 000 MM Patel – – – – 151 662 – 151 662 A de la Rue – – – – 63 333 – 63 333 R Patmore – – – – 63 333 – 63 333
4 958 945 400 000 816 974 3 651 173 593 328 800 000 11 220 420
PSV Holdings Limited executive and non-executive remuneration is approved annually by the Remuneration Committee.
96 PSV Integrated Annual Report 2013 www.psvholdings.com
PSV Holdings LimitedIncorporated in the Republic of South Africa
(Registration number: 1998/004365/06)
Share code: PSV
ISIN: ZAE000078705
(“PSV” or “the Company” or “the Group”)
If you are in any doubt as to what action you should take in respect of the following Resolutions, please consult your Central Securities Depository Participant (“CSDP”), broker, banker, attorney, accountant or other professional adviser immediately.
Notice is hereby given of the Annual General Meeting (“Annual General Meeting”) of shareholders of PSV
Holdings which will be held at 10:00 on Friday, 20 September 2013 at the corner of Barbara and North Reef
Roads, Henville Extension, Elandsfontein, Johannesburg, for the purpose of considering, and, if deemed fi t,
passing, with or without modifi cation, the Resolutions set out hereafter.
The Board of Directors of the Company (“the Board”) has determined that, in terms of Section 62(3)(a), as read
with Section 59 of the Companies Act, 2008 (Act 71 of 2008), as amended, the record date for the purposes
of determining which shareholders of the Company are entitled to participate in and vote at the Annual General
Meeting is Friday, 13 September 2013. Accordingly, the last day to trade PSV Holding’s shares in order to be
recorded in the Register to be entitled to vote will be Friday, 6 September 2013.
1. To receive, consider and adopt the annual fi nancial statements of the Company and the Group for the
fi nancial year ended 28 February 2013, including the reports of the auditors, Directors and the Audit and
Risk Committee.
2. To approve the appointment of Eric Ratshikhopha as a Non-executive Director of the Company with effect
from 12 October 2012.
3. To re-elect, Ralph Patmore who, in terms of Article 24 of the Company’s Memorandum of Incorporation,
retires by rotation at this Annual General Meeting but, being eligible to do so, offers himself for re-election.
An abbreviated curriculum vitae in respect of each Director offering himself for re-election appears on pages
6 and 7 of the Integrated Annual Report to which this notice is attached.
4. To appoint, Anthony de La Rue as a member and Chairman of the PSV Holdings Limited Independent Audit
and Risk Committee.
5. To appoint, Eric Ratshikhopha as a member of the PSV Holdings Limited Independent Audit and Risk
Committee.
6. To appoint, Ralph Patmore as a member of the PSV Holdings Limited Independent Audit and Risk Committee.
An abbreviated curriculum vitae in respect of each member of the Independent Audit Committee appears on pages 6 and 7 of the Integrated Annual Report.
7. To confi rm the appointment of Certifi ed Master Auditors Inc as independent auditors of the Company with George Davias, being the individual registered auditor who has undertaken the audit of the Company for the ensuing fi nancial year and to authorise the Directors to determine the auditors’ remuneration.
The minimum percentage of voting rights required for each of the Resolutions set out in item number 1 to 7 above to be adopted is more than 50% (fi fty percent) of the voting rights exercised on each of the Resolutions by shareholders present or represented by proxy at the Annual General Meeting.
As special business, to consider and, if deemed fi t, to pass, with or without modifi cation, the following Resolutions:
8. Special Resolution number 1Non-executive Directors’ remuneration“Resolved that, in terms of the provisions of Section 66(9) of the Companies Act, 2008 (Act 71 of 2008), the annual remuneration payable to the Non-executive Directors of PSV Holdings Limited (“the Company”), as amended, for their services as Directors of the Company for the fi nancial year ending 28 February 2013, be and is hereby approved as follows:
Type of feeProposed annual
fee for 2013 Proposed annual
fee for 2014
CommitteeChairman 240 000 255 600Member 240 000 255 600
Explanatory noteIn terms of Section 66(9) of the Companies Act, a Company is required to pre-approve the payment of remuneration to Non-executive Directors for their services as Directors for the ensuing fi nancial year by means of a special resolution passed by shareholders of the Company within the previous two years.
The annual remuneration payable to any Non-executive Director is R240 000 per annum (2013), notwithstanding the number of committees he/she is a member/Chairman of. The proposed fee for 2014 is R255 600 per annum.
Notice of Annual General Meeting
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
97PSV Integrated Annual Report 2013 www.psvholdings.com
Special Resolutions to be adopted at this Annual General Meeting require approval from at least 75% (seventy fi ve percent) of the votes exercised on such Resolutions by shareholders present or represented by proxy at the meeting.
9. Special Resolution number 2General approval to acquire shares“Resolved, by way of a general approval that PSV Holdings and/or any of its subsidiaries from time to
time be and are hereby authorised to acquire ordinary shares in the Company in terms of Sections 46 and
48 of the Companies Act, 2008 (Act 71 of 2008), the Memorandum of Incorporation of the Company and
its subsidiaries and the Listings Requirements of JSE Limited (“the JSE”), as amended from time to time.
The JSE Listings Requirements currently provide, inter alia, that: • the acquisition of the ordinary shares 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 counter party;• this general authority shall only be valid until the earlier of the Company’s next Annual General Meeting
or the expiry of a period of 15 (fifteen) months from the date of passing of this special resolution;• in determining the price at which the Company’s ordinary shares are acquired in terms of this general
authority, the maximum premium at which such ordinary shares may be acquired will be 10%
(ten percent) of the weighted average of the market value at which such ordinary shares are traded on
the JSE, as determined over the 5 (five) business days immediately preceding the date on which the
transaction is effected;• at any point in time, the Company may only appoint one agent to effect any acquisition/s on its behalf.• the acquisitions of ordinary shares in the aggregate in any one financial year may not exceed 20%
(twenty percent) of the Company’s issued ordinary share capital;• the Company may only effect the repurchase once a resolution has been passed by the Board of
Directors of the Company (“the Board”) confirming that the Board has authorised the repurchase, that the Company has passed the solvency and liquidity test (“test”) and that since the test was done there have been no material changes to the financial position of the Group;
• the Company or its subsidiaries may not acquire ordinary shares during a prohibited period as defined in paragraph 3.67 of the JSE Listings Requirements; and
• an announcement will be published once the Company has cumulatively repurchased 3% (three percent) of the number of the ordinary shares in issue at the time this general authority is granted (“initial number”), and for each 3% (three percent) in aggregate of the initial number acquired thereafter.”
Explanatory noteThe purpose of this special Resolution number 2 is to obtain an authority for, and to authorise, the Company and the Company’s subsidiaries, by way of a general authority, to acquire the Company’s issued ordinary shares.
It is the intention of the Directors of the Company to use such authority should prevailing circumstances (including tax dispensations and market conditions) in their opinion warrant it.
Special Resolutions to be adopted at this Annual General Meeting require approval from at least 75% (seventy fi ve percent) of the votes exercised on such Resolutions by shareholders present or represented by proxy at the meeting.
Other disclosure in terms of Section 11.26 of the JSE Listings RequirementsThe JSE Listings Requirements require the following disclosure, which are contained in the Integrated Annual Report of which this notice forms part:• Directors and management – pages 6 and 7;• Major shareholders of the Company – pages 33 and 34;• Directors’ interests in securities – page 34; and• Share capital of the Company – page 80.
Material changeThere have been no material changes in the affairs or financial position of the Company and its subsidiaries since the Company’s fi nancial year-end and the date of this notice.
Directors’ responsibility statementThe Directors, whose names are given on pages 6 and 7 of the Integrated Annual Report of which this notice forms part, 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 there are no facts in relation to special Resolution number 2 that have been omitted which would make any statement in relation to special Resolution number 2 false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that special Resolution number 2 together with this notice contains all information required by law and the JSE Listings Requirements in relation to special Resolution number 2.
Adequacy of working capitalAt the time that the contemplated repurchase is to take place, the Directors of the Company will ensure that, after considering the effect of the maximum repurchase and for a period of 12 months thereafter:• the Company and its subsidiaries will be able to pay their debts as they become due in the ordinary
course of business;
98 PSV Integrated Annual Report 2013 www.psvholdings.com
• the consolidated assets of the Company and its subsidiaries, fairly valued in accordance with International Financial Reporting Standards, will be in excess of the consolidated liabilities of the Company and its subsidiaries;
• the issued share capital and reserves of the Company and its subsidiaries will be adequate for the purpose of the ordinary business of the Company and its subsidiaries; and
• the working capital available to the Company and its subsidiaries will be sufficient for the Group’s requirements.
The Company may not enter the market to proceed with the repurchase until its designated adviser, Merchantec Proprietary Limited, has discharged of all of its responsibilities in terms of the JSE Listings Requirements insofar as they apply to working capital statements for the purposes of undertaking an acquisition of its issued ordinary shares.
10. Special Resolution number 3 Financial assistance for subscription of securities “Resolved that, as a special Resolution, in terms of Section 44 of the Companies Act, 2008 (Act 71 of 2008) (“Companies Act”), the shareholders of PSV Holdings Limited (“the Company”) hereby approve of the Company providing, at any time and from time to time during the period of two years commencing on the date of this special Resolution number 3, fi nancial assistance by way of a loan, guarantee, the provision of security or otherwise, as contemplated in Section 44 of the Companies Act, to any person for the purpose of, or in connection with, the subscription for any option, or any securities, issued or to be issued by the Company or a related or inter-related Company, or for the purchase of any securities of the Company or a related or inter-related Company, provided that:(a) the Board of Directors of the Company (“the Board”), from time to time, determines:
(i) the specifi c recipient, or general category of potential recipients of such fi nancial assistance; (ii) the form, nature and extent of such fi nancial assistance; and(iii) the terms and conditions under which such fi nancial assistance is provided; and
(b) the Board may not authorise the Company to provide any fi nancial assistance pursuant to this special Resolution number 3 unless the Board meets all those requirements of Section 44 of the Companies Act which it is required to meet in order to authorise the Company to provide such financial assistance.”
Explanatory noteReason for and effect of special Resolution number 3The purpose for and effect of this special Resolution number 3 is to grant the Board the authority to authorise the Company to provide fi nancial assistance to any person for the purpose of, or in connection
with, the subscription for any option or securities issued or to be issued by the Company or a related or
inter-related Company.
Special Resolutions to be adopted at this Annual General Meeting require approval from at least 75%
(seventy fi ve percent) of the votes exercised on such Resolutions by shareholders present or represented
by proxy at the meeting.
11. Special Resolution number 4 Loans or other fi nancial assistance to Directors “Resolved that, as a special resolution, in terms of Section 45 of the Companies Act, 2008 (Act 71 of
2008) (“Companies Act”), the shareholders of PSV Holdings Limited (“the Company”) hereby approve of
the Company providing, at any time and from time to time during the period of two years commencing on
the date of this special Resolution number 4, any direct or indirect fi nancial assistance (which includes
lending money, guaranteeing a loan or other obligation, and securing any debt or obligation) as
contemplated in Section 45 of the Companies Act to a Director or prescribed offi cer of the Company, or
to a related or inter-related Company or Corporation or to a member of any such related or inter-related
Corporation or to a person related to any such Company, Corporation, Director, prescribed offi cer or
member provided that:
(a) the Board of Directors of the Company (“the Board”), from time to time, determines:
(i) the specifi c recipient or general category of potential recipients of such fi nancial assistance;
(ii) the form, nature and extent of such fi nancial assistance; and
(iii) the terms and conditions under which such fi nancial assistance is provided, and
(b) the Board may not authorise the Company to provide any fi nancial assistance pursuant to this
special Resolution number 4 unless the Board meets all those requirements of Section 45 of the
Companies Act which it is required to meet in order to authorise the Company to provide such
fi nancial assistance.”
Explanatory noteReason for and effect of special Resolution number 4The reason for and purpose of this special Resolution number 4 is to grant the Board the authority to
authorise the Company to provide fi nancial assistance as contemplated in Section 45 of the Companies
Act to a Director or prescribed offi cer of the Company, or to a related or inter-related Company or
Corporation, or to a member of a related or inter-related Corporation, or to a person related to any such
Company, Corporation, Director, prescribed offi cer or member.
Notice of Annual General Meeting (continued)
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
99PSV Integrated Annual Report 2013 www.psvholdings.com
Notice given to shareholders of the Company in terms of Section 45(5) of the Companies Act of a resolution adopted by the Board authorising the Company to provide such direct or indirect fi nancial assistance in respect of special Resolution number 4:(a) by the time that this notice of Annual General Meeting is delivered to shareholders of the Company,
the Board will have adopted a resolution (“Section 45 Board Resolution”) authorising the Company to provide, at any time and from time to time during the period of two years commencing on the date on which special Resolution number 4 is adopted, any direct or indirect financial assistance as contemplated in Section 45 of the Companies Act (which includes lending money, guaranteeing a loan or other obligation, and securing any debt or obligation) to a Director or prescribed offi cer of the Company or of a related or inter-related Company, or to a related or inter-related Company or Corporation, or to a member of any such related or inter-related Corporation, or to a person related to any such Company, Corporation, Director, prescribed offi cer or a member;
(b) the Section 45 Board Resolution will be effective only if and to the extent that special Resolution number 4 is adopted by the shareholders of the Company, and the provision of any such direct or indirect fi nancial assistance by the Company, pursuant to such resolution, will always be subject to the Board being satisfi ed that: (i) immediately after providing such fi nancial assistance, the Company will satisfy the solvency and
liquidity test as referred to in Section 45(3)(b)(i) of the Companies Act; and (ii) the terms under which such fi nancial assistance is to be given are fair and reasonable to the
Company as referred to in Section 45(3)(b)(ii) of the Companies Act, and
(c) in as much as the Section 45 Board Resolution contemplates that such fi nancial assistance will in the aggregate exceed one-tenth of one percent of the Company’s net worth at the date of adoption of such resolution, the Company hereby provides notice of the Section 45 Board Resolution to shareholders of the Company. Such notice will also be provided to any trade union representing any employees of the Company.
12. Ordinary Resolution number 1Approval of remuneration policy“Resolved that the remuneration policy of the Directors of PSV Holdings Limited (“the Company”), as set out on page 25 of the Integrated Annual Report, be and is hereby approved as a non-binding advisory vote of shareholders of the Company in terms of the King III Report on Corporate Governance.”
13. Ordinary Resolution number 2Control of authorised but unissued ordinary shares“Resolved that the authorised but unissued ordinary shares in the capital of PSV Holdings Limited (“the Company”) be and are hereby placed under the control and authority of the Directors of the
Company (“Directors”) and that the Directors be and are hereby authorised and empowered to allot and issue all or any of such ordinary shares, or to issue any options in respect of all or any of such ordinary shares, to such person/s on such terms and conditions and at such times as the Directors may from time to time and in their discretion deem fi t, subject to the provisions of Sections 38 and 41 of the Companies Act, 2008 (Act 71 of 2008), as amended, the Memorandum of Incorporation of the Company and the Listings Requirements of JSE Limited, as amended from time to time.”
Ordinary Resolutions to be adopted at this Annual General Meeting require approval from a simple majority, which is more than 50% of the votes exercised on such Resolutions by shareholders present or represented by proxy at the meeting.
14. Ordinary Resolution number 3Approval to issue ordinary shares, and to sell treasury shares, for cash“Resolved that the Directors of PSV Holdings and/or any of its subsidiaries from time to time be and are hereby authorised, by way of a general authority, to: • allot and issue, or to issue any options in respect of, all or any of the authorised but unissued ordinary
shares in the capital of the Company; • sell or otherwise dispose of or transfer, or issue any options in respect of, ordinary shares in the capital
of the Company purchased by subsidiaries of the Company; and/or• for cash, to such person/s on such terms and conditions and at such times as the Directors may from
time to time in their discretion deem fit, subject to the Companies Act, 2008 (Act 71 of 2008), the Memorandum of Incorporation of the Company and its subsidiaries and the Listings Requirements of JSE Limited (“the JSE Listings Requirements”) from time to time.
The JSE Listings Requirements currently provide, inter alia, that:• the securities which are the subject of the issue for cash must be of a class already in issue, or where
this is not the case, must be limited to such securities or rights that are convertible into a class already
in issue;• any such issue may only be made to “public shareholders” as defined in the JSE Listings Requirements
and not to related parties;• the number of ordinary shares issued for cash shall not in any one financial year in the aggregate
exceed 50% (fifty percent) of the number of issued ordinary shares. The number of ordinary shares
which may be issued shall be based, inter alia, on the number of ordinary shares in issue, added to
those that may be issued in future (arising from the conversion of options/convertibles) at the date of
such application, less any ordinary shares issued, or to be issued in future arising from options/
convertible ordinary shares issued during the current financial year; plus any ordinary shares to be
100 PSV Integrated Annual Report 2013 www.psvholdings.com
issued pursuant to a rights issue which has been announced, is irrevocable and is fully underwritten,
or an acquisition which has had final terms announced;• this general authority will be valid until the earlier of the Company’s next Annual General Meeting or the
expiry of a period of 15 (fifteen) months from the date that this authority is given;• an announcement giving full details, including the impact on net asset value per share, net tangible
asset value per share, earnings per share and headline earnings per share and, if applicable, diluted
earnings and headline earnings per share, will be published when the Company has issued ordinary
shares representing, on a cumulative basis within 1 (one) financial year, 5% (five percent) or more of
the number of ordinary shares in issue prior to the issue;• in determining the price at which an issue of ordinary shares may be made in terms of this authority,
the maximum discount permitted will be 10% (ten percent) of the weighted average traded price on the
JSE Limited of the ordinary shares over the 30 (thirty) business days prior to the date that the price of
the issue is agreed between the issuer and the party subscribing for the securities; and• whenever the Company wishes to use ordinary shares, held as treasury stock by a subsidiary of the
Company, such use must comply with the JSE Listings Requirements as if such use was a fresh issue
of ordinary shares.”
Under the JSE Listings Requirements, ordinary Resolution number 3 must be passed by a 75% (seventy
fi ve percent) majority of the votes cast in favour of the Resolution by all members present or represented
by proxy at the Annual General Meeting, (excluding the Designated Advisers, controlling shareholders and
their associates).
15. Ordinary Resolution number 4Signature of documents
“Resolved that each Director of PSV Holdings 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 those
Resolutions to be proposed at the Annual General Meeting convened to consider the Resolutions which
are passed, in the case of ordinary Resolutions, or are passed and registered by the Companies and
Intellectual Property Commission, in the case of special Resolutions.”
16. Ordinary Resolution number 5Cancellation of the PSV Holdings Limited Conditional Share Plan
“Resolved that the cancellation of the PSV Holdings Limited Conditional Share Plan, be and is hereby
approved by the shareholders of PSV Holdings Limited.”
Explanatory noteThe rationale for the cancellation of the share plan is that the plan did not fulfi l the intended purpose
of staff retention and often caused the share price to be under negative pressure when staff members
sold shares.
In terms of the Listings Requirements of JSE Limited, the approval of a 75% (seventy fi ve percent)
majority of the votes cast by all shareholders present or represented by proxy in the annual general
meeting, is required for this Ordinary Resolution number 5 to become effective.
Other businessTo transact such other business as may be transacted at the Annual General Meeting of the Company.
Voting and proxiesSpecial Resolutions to be adopted at this Annual General Meeting require approval from 75% (seventy fi ve
percent) of the votes exercised on such Resolutions by shareholders present or represented by proxy at the
meeting. Ordinary Resolutions to be adopted at this Annual General Meeting require approval from a simple
majority, which is more than 50% (fi fty percent) of the votes exercised on such Resolutions by shareholders
present or represented by proxy at the meeting.
A shareholder entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy or proxies
to attend and act in his/her stead. A proxy need not be a member of the Company. For the convenience of
registered members of the Company, a form of proxy is attached hereto.
The attached form of proxy is only to be completed by those ordinary shareholders who:• hold ordinary shares in certificated form; or• are recorded on the sub-register in “own name” dematerialised form.
Ordinary shareholders who have dematerialised their ordinary shares through a CSDP or broker without
“own name” registration and who wish to attend the Annual General Meeting, must instruct their CSDP or
broker to provide them with the relevant Letter of Representation to attend the meeting in person or by proxy
and vote. If they do not wish to attend in person or by proxy, they 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.
Proxy forms should be forwarded to reach the transfer secretaries, Computershare Investor Services
Proprietary Limited, at least 48 hours, excluding Saturdays, Sundays and public holidays, before the time of
the meeting.
Notice of Annual General Meeting (continued)
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
101PSV Integrated Annual Report 2013 www.psvholdings.com
Kindly note that meeting participants, which include proxies, are required to provide reasonably satisfactory identifi cation before being entitled to attend or participate in a shareholders’ meeting. Forms of identifi cation include valid identity documents, driver’s licences and passports.
By order of the Board
Company Secretary: Merchantec Capital
Merchantec CapitalCompany Secretary
7 August 2013
Johannesburg
102 PSV Integrated Annual Report 2013 www.psvholdings.com
Notes
Corporate governance
ShareholdersPerformancereview
Operating context
Group overview
Annual fi nancial report
103PSV Integrated Annual Report 2013 www.psvholdings.com
Form of proxyfor the year ended 28 February 2013
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:
• hold ordinary shares in certificated form (“certificated ordinary shareholders”); or
• have dematerialised their ordinary shares (“dematerialised ordinary shareholders”) and are registered with “own name” registration, at
this Annual General Meeting of shareholders of the Company to be held at 10:00 on Friday, 20 September 2013 at the registered
offi ce of PSV Holdings, corner Barbara and North Reef Roads, Henville Extension, Elandsfontein, Johannesburg, 1429, and any
adjournment thereof.
Dematerialised ordinary shareholders holding ordinary shares other than with “own name” registration who wish to attend the Annual
General Meeting must inform their Central Securities Depository Participant (“CSDP”) or broker of their intention to attend the Annual
General Meeting and request their CSDP or broker to issue them with the relevant Letter of Representation to attend the Annual General
Meeting in person or by proxy and vote. If they do not wish to attend the Annual General Meeting in person or by proxy, they must provide
their CSDP or broker with their voting instructions in terms of the relevant custody agreement entered into between them and the CSDP or
broker. These ordinary shareholders must not use this form of proxy.
Name of benefi cial 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 Chairman of the meeting,
as my/our proxy to attend and act for me/us on my/our behalf at the Annual General Meeting of the Company convened for purpose of
considering and, if deemed fi t, passing, with or without modifi cation, 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:
Number of ordinary shares
For Against Abstain
1. To receive, consider and adopt the annual financial statements of the Company and Group for the financial year ended 28 February 2013
2. To approve the appointment of Eric Ratshikhopha as Director
3. To approve the re-election as Director of Ralph Patmore who retires by rotation
4. To approve the appointment of Anthony de La Rue as member and Chairman of the Independent Audit Committee
5. To approve the appointment of Eric Ratshikhopha as a member of the Independent Audit Committee
6. To approve the appointment of Ralph Patmore as a member of the Independent Audit Committee
7. To confirm the appointment of Certified Masters Auditors Inc as auditors of the Company together with George Davias for the ensuing financial year.
8. Special Resolution number 1Approval of the Non-executive Directors’ remuneration
9. Special Resolution number 2General approval to acquire shares
10. Special Resolution number 3Financial assistance for the subscription of securities
11. Special Resolution number 4Loans or other financial assistance to Directors
12. Ordinary Resolution number 1Approval of the remuneration policy
13. Ordinary Resolution number 2Control of authorised but unissued ordinary shares
14. Ordinary Resolution number 3Approval to issue ordinary shares, and to sell treasury shares, for cash
15. Ordinary Resolution number 4Signature of documents
16. Ordinary Resolution number 5Cancellation of the PSV Holdings Limited Conditional Share Plan
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 Annual General Meeting may appoint one or more proxies to attend and act in his stead. A proxy
so appointed need not be a member of the Company.
Signed at on 2013
Signature
Assisted by (if applicable)
104 PSV Integrated Annual Report 2013 www.psvholdings.com
1. The form of proxy must only be completed by shareholders who hold shares in certifi cated form or who are recorded on the
sub-register in electronic form in “own name”.
2. All other benefi cial owners who have dematerialised their shares through a CSDP or broker and wish to attend the Annual
General Meeting 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 Annual General Meeting 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 Chairman of the meeting”. The person whose name stands fi rst on this form of proxy and who is
present at the Annual General Meeting 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 Chairman 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 Annual General Meeting as he/she deems fi t 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 shareholders 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 Annual General Meeting 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 Annual General
Meeting.
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 Annual General Meeting be proposed, such proxy shall be entitled to vote as he/she thinks fi t.
7. The Chairman of the Annual General Meeting 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 Chairman of the Annual General Meeting, to vote on such
shareholder’s behalf, shall be deemed to include the authority to vote on procedural matters at the Annual General Meeting.
9. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the Annual General
Meeting and speaking and voting in person thereat 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 Chairman
of the Annual General Meeting.
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:• any one holder may sign the form of proxy; and
• 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 Computershare Investor Services Proprietary Limited:
Hand deliveries to: Postal deliveries to:Computershare Investor Services Proprietary Limited Computershare Investor Services Proprietary Limited
Ground Floor, 70 Marshall Street PO Box 61051
Johannesburg Marshalltown
2001 2107
to be received by no later than Wednesday on 18 September 2013 (or 48 hours before any adjournment of the Annual General
Meeting which date, if necessary, will be notifi ed 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.
Summary of the rights of a shareholder to be represented by proxy, as set out in Section 58 of the Companies Act:
• 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.
• 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.
• 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.
• 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:
(a) the date stated in the revocation instrument, if any; and
(b) the date on which the revocation instrument is delivered to the Company as required in the fi rst sentence of this
paragraph.
• 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:
(a) the shareholder; or
(b) 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.
• Attention is also drawn to the “Notes to proxy”.
• The completion of a form of proxy does not preclude any shareholder from attending the Annual General Meeting.
Notes to the form of proxy
Administration
Business addressPSV Holdings Offi ce Park, Corner Barbara and North Reef Roads, ElandsfonteinTelephone: +27 (0) 11 657 6000 Facsimile: +27 (0) 11 822 8470(Postnet Suite 229, Private Bag X19, Gardenview, 2047)
Company Secretary and registered offi ceMerchantec Capital2nd Floor, North Wing, Hyde Park Corner Offi ce Suites, Corner 6th Road and Jan Smuts Avenue, Hyde ParkTelephone: +27 (0) 11 325 6363Facsimile: +27 (0) 11 325 6362
Transfer secretariesComputershare Investor Services Proprietary LimitedGround Floor, 70 Marshall Street, Johannesburg, 2001(PO Box 61051, Marshalltown, 2107)Telephone: +27 (0) 11 370 5000Facsimile: +27 (0) 11 688 5210
AttorneysMahons AttorneysBuilding 1, 19 Impala Road, Chislehurston, Johannesburg, 2196(PO Box 782244, Sandton City, 2146)Telephone: +27 (0) 10 500 1175Facsimile: +27 (0) 73 577 1607
Designated adviserMerchantec Capital2nd Floor, North Wing, Hyde Park Corner Offi ce Suites, Corner 6th Road and Jan Smuts Avenue, Hyde Park(PO Box 41480, Craighall, 2024)Telephone: +27 (0) 11 325 6363Facsimile: +27 (0) 11 325 6362
AuditorsCertifi ed Master Auditors Inc234 Alexander Road, Midrand(Private Bag X168, Halfway House, 1685)Telephone: +27 (0) 11 315 0215Facsimile: +27 (0) 11 315 0639
Investor RelationsKeyter Rech Investor SolutionsVanessa RechFountain Grove Offi ce Park, Corner William Nicol and 2nd Road, Hyde Park(PO Box 653078, Benmore, 2010)Telephone: +27 (0) 11 447 8656 Facsimile: +27 (0) 11 447 9391Email: [email protected]
Physical address
PSV Holdings Offi ce Park
Corner Barbara and North Reef Roads
Elandsfontein
Postal address
Postnet Suite 229
Private Bag X19
Gardenview, 2047
Tel +27 11 657 6000
Fax +27 11 822 8470
www.psvholdings.com