PSV’s losses multiply in difficult year


PSV’s losses multiply in difficult year

Published Date: 2019-07-01 | Source: Stephen Gunnion | Author: Stephen Gunnion

PSV’s losses multiply in difficult year

The group says it's confident it can continue as a going concern due to shareholder support and a planned capital raise.

PSV Holdings has reported wider losses for its 2019 financial year due to what it said were extremely difficult trading conditions and the departure of its previous executive management. However, the industrial manufacturing group says new management is making encouraging strides towards delivering a turnaround.

The group has two operating business segments: Industrial Supplies, which includes steel, piping, industrial tools and consumables; and Specialised Services, which includes comprehensive cryogenic and gas systems and the supply and installation of geosynthetic linings.

Industrial Supplies grew revenue by 59% in the year to end-February due to increased export volumes. However, it was unable to convert the increase into overall profitability. Its other division, Specialised Services, fared poorly as the weak economy weighed heavily on the gas sector, its primary customer base. It said poor execution and structural sector changes in geosynthetic lining material supply and installation resulted in substantial losses from the division. Its Turbo Agencies and Engineered Linings businesses, which have been a big drain on profitability, were accounted for as discontinued operations.

Group revenue rose 35% to R238 million but a sharp rise in costs resulted in a R25.9 million loss for the year. Its headline loss per share swelled to 7.65c, while it reported headline earnings from continuing operations of 0.45c per share from last year's 0.19c loss.

It said the issue of shares for cash to Mauritian investment holding company Regis Holdings resulted in a cash inflow of R24.4 million, which also helped it reduce its net overdraft to R13.7 million from R16.8 million.

Despite the significant losses reported for the year, it said it was confident it could continue as a going concern due to shareholder support and a capital raising transaction it's pursuing. Regis has also loaned it $365,000 to support working capital and it's signed a further loan agreement with a subsidiary of Regis for an additional R9 million in order to fund specific projects which have been identified as part of its turnaround process. It said its empowerment strategy was also expected to open up further growth opportunities.

Its shares didn't trade on Friday, closing unchanged at 24c.

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