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PSV Holdings Limited Annual Report 2010 Contents Vision, mission and goals 1 Group overview 3 All about us 4 Local and global footprint 5 Operational review 6 Board of Directors 12 Chairperson’ review 14 Chief executive officer’s review 16 Corporate social investment 20 Corporate governance 21 PSV touches your life in some way each day Annual financial statements 29 Analysis of ordinary shareholders 76 Shareholders diary 78 Notice of annual general meeting 79 Form of proxy 83 Instructions to the form of proxy 84 Administration IBC

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PSV Holdings Limited Annual Report 2010

Cont

ents

Vision, mission and goals 1

Group overview 3

All about us 4

Local and global footprint 5

Operational review 6

Board of Directors 12

Chairperson’ review 14

Chief executive officer’s review 16

Corporate social investment 20

Corporate governance 21

PSV touches your life in some way each day

Annual financial statements 29

Analysis of ordinary shareholders 76

Shareholders diary 78

Notice of annual general meeting 79

Form of proxy 83

Instructions to the form of proxy 84

Administration IBC

To be a recognised provider of specialised industrial engineering products and

services throughout Africa

To continue developing as a specialised industrial engineering group focused on

pumps, valves, engineering linings, industrial supplies, fuel pumps and dispensers

and cryogenics through the provision of superior customer service throughout Africa

To increase shareholder value

To embrace broad-based black economic empowerment principles

To empower every employee through participation in a share incentive scheme

Visi

onM

issi

onGo

als

1PSV Annual Report 2010

3PSV Annual Report 2010

Pumps, spares and valves Specialised services Engineering linings and industrial supplies

Areas of expertise

•   Manufacturer, service and repair of pumps, spares 

and valves

•   OEM supplier of water and petrochemical pumps

•   Supplier of pumps to API 610 specifications for 

petrochemical use

•   Turnkey mechanical electrical contracts

•   Supply of UPVC piping to various industries

•   Manufacture of cryogenic storage tanks and road 

tankers, road tankers and auxiliary equipment

•   Service and maintenance of cryogenic equipment

•   Specialised cryogenic solutions

•   Manufacture, repair service and support of fuel pump 

dispensers

•   Bulk meters at forecourt

•   Flow meters and consumer fuelling equipment

•   Forecourt and retail management software

•   Specification, selection and installation of lining 

products

•   Sole distributor of low tile glass linings

•   Specialised geo-synthetic linings contracting for 

containment, environment protection and corrosion

protection

•   Piping, fittings, flanges and steel to mining and 

specialised industry and industrial consumables

Number of staff 84 206 90

Facilities 5 119 m2 5 437 m2 1 340 m2

Applications and

product lines

•   vertical turbine pumps

•   split-casing

•   end-suction 

•   vertical sump pumps

•   API 610 designs for the petrochemical industry

•   multi-stage high pressure pumps, all manufactured 

to the internationally accredited standard of

ISO 9001:2008

•   large bulk storage vessels 

•  rigid and semi-trailer tankers

•   vacuum insulated piping 

•   a full range of vaporisers 

•   cryogenic food freezing equipment 

•   cryogenic dosing systems 

•  cryogenic ambient vaporizers 

•   dry phase systems 

•   transformer drying equipment used to remove moisture 

from transformer cores before tanking

•   cryogenic pressure vessels and heat exchangers

•   waterproofing

•   lining of landfills

•   evaporation pads

•   storage dams, canals and dams in the agricultural 

sector

•   heap leach pads, slimes disposals, water storage dams 

and processing plants for the mining industry

•   coal chutes, coal hoppers and storage silos to 

overcome blockages and bridging of the various

products within the storage facility

Sectors supplied to

Mining, water reticulation, infrastructure, coal power, 

nuclear power and manufacturing

South African industrial gas industry including applications

for hospitals, shipping, manufacturing, carbonated soft

drinks and petrochemical

Mining, infrastructure, coal power, agriculture, 

construction, water supply and manufacturing

Group overview

4 PSV Annual Report 2010

’06Listing of PSV as an

industrial engineering group, on the Alternative

Exchange of the JSE

All a

bout

us

PSV Zambia 100%

Pumps, spares and valves

Mather + PlattPumps 100%

PSV Services100%

APE Pumps100%

Specialised services

Rand Air & Gas Industries 100%

Cryoshield100%

Petrologic100%

Engineering linings and industrial supplies

Omnirapid100%

Engineered Linings 100%

Group Line Projects 100%

Milestones

Financial highlights

Group structure

’94Relocation to larger premises to house company expansion

’01Establishment of PSV Zambia

in Kitwe to supply mines in the copper belt

’88Establishment of PSV

Services with three staff members

’90Expansion of manufacturing base to meet order demand

’08PSV successfully

concluded the purchase of Rand Air & Gas Installations

’09PSV adds Mather + Platt as a brand

name to its already sizeable pump capability

’10The acquisition of Cryoshield

becomes unconditional, strengthening PSV’s cryogenics capability

’07PSV successfully concluded the 100% acquisition of APE Pumps, Dasher and

Engineered Linings further strengthening the overall service offering

A Black Economic Empowerment (“BEE”) deal with Vunani Capital is successfully entered into

’03Secure large mining supply

contract in Zambia

Revenue (R’000)500 000

400 000

300 000

200 000

100 000

0’08’07 ’09 ’10

Operating profit (R’000) 50 000

40 000

30 000

20 000

10 000

0

25

20

15

10

5

0’08’07 ’09 ’10

Headline earnings per share (cents) 8.00

6.40

4.80

3.20

1.80

0’08’07 ’09 ’10

6 PSV Annual Report 2010

Pumps, spares and valves

The pumps, spares and valves segment supplies, manufactures, designs, maintains,

refurbishes, imports and services pumps, pumps spares and valves. It is operational primarily 

in South Africa and Zambia, while  the  latter  largely  focuses on  the mining sector. Capabilities 

stretch across mechanical, electrical and complete fluid handling contracts. The segment has 

OEM  (Original  Equipment  Manufacturer)  status  as  well  as  the  ability  to  manufacture  certain 

pumps to ISO 9001 2008 standards. The Mather + Platt acquisition has been absorbed into PSV 

with marketing efforts gaining momentum across South Africa.

Our pump manufacturing arm

has been designing,

developing, manufacturing and

refurbishing pumps for more

than half a century and has an

extensive installed product base

in mines, municipalities, paper

mills, minerals beneficiation

companies, ports and harbours,

water authorities, power

generation utilities and

petrochemical refineries

throughout Africa and

worldwide.

Oper

atio

nal r

evie

w

8 PSV Annual Report 2010

Specialised servicesManufacture, support and

supply of services and

product to the petrochemical

and cryogenic markets.

PSV 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 industry 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 vaporisers supply gases to industries such as

hospitals, welding workshops, food and beverages and ship container purification. Our cryogenic 

capability offers a full repair and complete refurbishment service.

The petrochemical sector is supported through the provision of fuel pumps and dispensers,

bulk meters, LPG dispensers and point-of-sale forecourt and retail store software to an array

of petroleum companies in South Africa and neighbouring countries.

Oper

atio

nal r

evie

w

10 PSV Annual Report 2010

Engineering linings and industrial supplies

The segment offers an array of lining solutions including geo-synthetic, glass, ceramic and plastic lining solutions used for the purpose of containment, environmental, wear and corrosion protection. Work is undertaken together with mining operators to assist with functions such as protection of seepage and environmental protection.

The stronger, more durable linings such as glass and ceramics are used to limit the effects of wear and tear and increase product flow properties in storage units such as coal hoppers, coal chutes or bin liners in the movement of bulk product.

All applications are used in power stations and industries such as agriculture, mining, construction and water supply.

The industrial supplies component enables PSV to source piping, fittings, flanges and steel from internal and external suppliers. These consumables are provided to mining and industrial clients locally in South Africa as well as being exported to other African countries.

Specialising in the supply and

installation of geo-synthetic

linings for all containment

applications including dams,

leach pads and floating covers

and lining solutions to solve a

variety of materials handling

flow and wear problems.

Oper

atio

nal r

evie

w

12 PSV Annual Report 2010

Board of directors

w Abilio (Abie) JD da Silva (48)

Chief executive officer

Abie is the co-founder of the Group and was

appointed as the chief executive officer upon listing.

He has retained the position and steered the Group

towards the growth objectives it has achieved to date.

He obtained a National Technical Certificate 5 from

the Johannesburg Technical College and a Business

Management Diploma from Damelin College.

w Peter Robinson (49)

Executive director and deputy chairman

Peter qualified at Huddersfield Technical College

in the United Kingdom. As a co-founder of PSV,

Peter has been instrumental in securing long-term

contracts for the supply and repair of rotating

machinery (pumps, pump spares, etc) to various

geographical areas throughout Africa. He is the

managing director of PSV Services.

w Evelyn Chimombe-Munyoro (37)

Non-executive chairperson – BA LLB LLM

(Commercial law/Maritime law)

Evelyn is an admitted attorney of the High Court

of South Africa. Having worked at the specialised

corporate finance law firm, Jowell Glyn & Marais,

she joined Fairbridges Attorneys in the commercial

law department in 2002. She was appointed director

and partner at the end of 2004. Evelyn served on the

board of Vunani Capital Holdings (Pty) Limited in her

capacity as a non-executive director during 2005

and joined Vunani Capital Holdings (Pty) Limited as

an executive director in 2006. She serves on the

board of the Southern African German Chamber of

Commerce & Industry as a non-executive director

and chairs its committee representing the interests of

German industry in South Africa in relation to broad-

based black economic empowerment.

w Mitesh M Patel (35)

Independent non-executive director – CA(SA)

Chairman of the Audit Committee

Member of the Remuneration Committee

Chairman of the Nomination Committee

Mitesh, upon completion of his articles, opened his

own audit practice and due to self-motivation and

entrepreneurial skills built up a significant client base

and network over a short period of time. He was

presented with an opportunity to join the fifth

largest audit practice in South Africa and became

the managing director of PKF (Pta) Incorporated.

Currently Mitesh is an audit managing partner at

Nkonki Inc. He currently serves on the boards of

Africa Cellular Towers Limited, African Dawn Capital

Limited, Stratcorp Limited and Wearne Limited

as an independent non-executive director.

w Anthony (Tony) R Dreisenstock (49)

Financial director

Acting company secretary

Tony holds BCom and BAcc degrees obtained

from the University of the Witwatersrand as well

as an H Dip Tax Law obtained at the University

of Johannesburg. Tony is a qualified chartered

accountant. He successfully operated a strategic

management consultancy practice until August 2005

when he was recruited by PSV to assist in listing the

Company and to assume the role of financial director.

w David (Dave) J Kelly (51)

Executive director

Dave was born in Britain and now resides in South

Africa. He obtained an O-level academic qualification

and a City & Guilds diploma at the London Institute in

the United Kingdom. He is the managing director of

Group Line.

w Gordon S Nzalo (44)

Independent non-executive director

BCom BAcc (Wits), CA(SA)

Chairman of the Risk Committee and a member of

the Audit Committee

Gordon has extensive experience in risk management,

corporate governance, external and internal auditing

and was previously a partner with both KPMG and

PWC. He is a director for a number of companies

including Austro Limited, Vunani Limited, Grand

Bridge Trading 65 (Pty) Limited, Mnande Investments

(Pty) Limited, Broad Market Trading 116 (Pty) Limited.

w Ethan Dube (51)

Alternate non-executive director – MSc (Statistics),

executive MBA (Sweden)

Ethan was appointed to the board as an alternate

non-executive director to Evelyn Chimombe-

Munyoro with effect from 2 August 2007. He has

gained significant corporate finance and asset

management experience over the years. He worked

for Southern Asset Managers for three years as

senior analyst and for Standard Chartered and

Merchant Bank for two years in the corporate

finance departments. In 1996 Ethan founded Infinity

Asset Management with three other partners and

in 1998 he started Vunani Capital Holdings (Pty)

Limited, an investment banking company where he

is the current chief executive officer.

Boar

d of

dire

ctor

s

13PSV Annual Report 2010

Front row from left to right: Evelyn Chimombe-Munyoro

Non-executive chairperson, Abie da Silva Chief executive

officer, Gordon Nzalo Independent non-executive director

Back row from left to right: Tony Dreisenstock Financial

director, Acting company secretary, Mitesh Patel Independent

non-executive director, Peter Robinson Executive director

and deputy chairman, Dave Kelly Executive director

Absent: Ethan Dube Alternative non-executive director

14 PSV Annual Report 2010

Fina

ncia

l St

atem

ents

Chairperson’s review

“In spite of difficult market conditions I would like to

commend PSV employees and management for their

commitment to seeing the year through.”

Evelyn Chimombe-Munyoro

Chairperson

14 PSV Annual Report 2010

15PSV Annual Report 2010

Market  conditions  continued  to  be  challenging  for  the  year 

under  review,  the  effects  of  the  global  financial  crisis  which 

resulted in the global recession, gave rise to reduced activity in

the mining and industrial sector. This translated into fewer

orders  making  2009  an  extremely  difficult  environment  to 

conduct business. While South Africa initially lagged behind the

recession experienced globally, South Africa was not spared.

The continued recession throughout 2009 resulted in the

closure of many businesses and significant job losses. In short, 

2009 proved to be a year most people would like to forget.

In  spite of difficult market conditions  I would  like  to commend 

PSV employees and management for their commitment to seeing

the year through. PSV employees and management sought to

adapt and adjust to a challenging environment. While turnover for

the  year  under  review  decreased  by  13,6%  to  R372,2 million 

from R430,9 million, PSV managed to maintain its client base.

The Group’s EBITDA percentage was a satisfactory 9,6% in the 

current year compared to 10,1% in the prior year. Normalised

earnings  decreased  by  6,7%  to  8,4  cents  per  share  (“cps”) 

compared to 9,0 cps for the previous year underscoring the

difficult economic environment. The Company has  improved  its 

cash flow constraints having implemented strict working capital 

procedures  at  the  beginning  of  the  financial  year.  This  has 

resulted  in  efficient  repatriation  of  funds  from  the  Company’s 

Zambia operations translating into positive cash flows.

I  commend  management’s  successful  turnaround  of  the 

Company’s  petrochemical  subsidiary  Petrologic.  Petrologic 

secured a number of lucrative new contracts with oil majors

which has  improved the Company’s performance. Furthermore, 

the Company has received orders in Mozambique and Zimbabwe. 

This has extended its footprint beyond South Africa.

The  Engineered  Linings  and  Industrial  Supplies  segment 

performed  well  under  the  circumstances.  While  Engineered 

Linings adapted to enhance the quantity and sustainability of

earnings, it reduced economic risks by focusing on smaller

projects.  Groupline,  PSV’s  ceramic  linings  division,  posted  its 

best results in the history of Groupline. The 2011 order book is

equally impressive with orders from Eskom’s power stations and 

various orders in Mozambique. Omnirapid continues to produce 

exceptional results year on year which is laudable despite tough

economic conditions.

The Pumps, Spares and Valves segment performed well under

the circumstances, and must be commended for reducing its

debtor’s book in respect of  its Zambian operations significantly. 

The integration of Mather + Platt into the business is well under 

way and will enhance earnings in the coming year. The specialised

services  division  has  been  certified  at  95%  nuclear  compliant 

which is likely to result in additional orders being secured.

Rand Air and Gas, performed well during the year under review

and secured large orders from a blue chip client amongst others

for the manufacture of the largest vertically standing tank in

South Africa for the storage of liquid nitrogen to be deployed in

Richards Bay upon completion. 

The key issue in the future will rest on positive resolution of

the crisis in certain countries in the European Union, which is 

a  significant  trading partner  of South Africa, will  need  to be 

monitored carefully, to gauge the potential impact of this

industrial and mining sector in South Africa and on the PSV

Group in particular.

Mr  James  Anderson  did  not  make  himself  available  for  re-

election at the AGM. I would like to thank Mr Anderson for his 

contribution  to  PSV  over  the  past  couple  of  years. Mr Mitesh 

Patel was  appointed  chairman  of  the Audit  Committee  taking 

over from Mr Anderson. The board appointed Mr Gordon Nzalo, 

effective on 1 November 2009 who was also appointed

chairman of the Risk Committee.

I would like to thank the employees and management of PSV 

for their dedication to PSV.

Lastly I would like to thank my fellow directors for the guidance that 

they have provided to management and their outstanding fiduciary 

responsibility towards the Company and its shareholders.

Evelyn Chimombe-Munyoro

Chairperson

15PSV Annual Report 2010

16 PSV Annual Report 2010

Fina

ncia

l St

atem

ents

Chief executive officer’s review

“The clear strategy to diversify the group has

enabled us to manage the downturn in an

effective manner.”

Abie da Silva

CEO

16 PSV Annual Report 2010

17PSV Annual Report 2010

IntroductionPSV Holdings has  survived what  I  believe  to be  the country’s 

worst  recession  since  PSV’s  inception  in  1988.  The  clear 

strategy to diversify the group has enabled us to manage this

downturn in an effective manner. The diverse product offering

and customer base has allowed PSV to continue trading and

offering products and services across many sectors of industry

in Southern Africa, where we continue to supply products and

services to the power generation, water, petrochemical and

cryogenic industry as well as a wide range of products to the

mining  sector. During  the  year  under  review we  supplied  our 

customers located all over Africa as far north as Egypt, but with 

a predominant focus on Sub-Saharan Africa.

Financial overviewThe  first  six  months  of  the  year  presented  tough  trading 

conditions which deteriorated further in the second half, we

experienced a slowdown in the number of tenders in the

market-place as well as projects awarded. This led to greater

competition in the market and the resultant margin erosion in a

number of our subsidiaries.

Consequently  turnover  for  the  year  decreased  by  13,6%  to 

R372,2  million  (2009:  R430,9  million)  although  the  gross 

profit  margin  increased  to  24,2%  (2009:  22,7%).  Not-

withstanding a R2,4 million share based payment expense

being  incurred  in  the  current  year  together with  inflationary 

adjusted  salary  increases  for  staff,  the  Group’s  operational 

expenditure, excluding impairment of goodwill and intangible

assets  decreased  compared  to  the  prior  year.  The  group’s 

EBITDA  percentage  was  a  satisfactory  9,6%  in  the  current 

year compared to 10,1% in the prior year despite the harsh

economic climate.

Meaningful comparison to the prior year’s profit after tax should 

be on a normalised earnings basis. Normalised earnings

eliminate the effects of impairment of goodwill and intangible

assets, amortisation of intangible assets, straight-lining of

leases, expensing imputed interest on deferred purchase

considerations  and  share-based  payment  expenses.  In  this 

respect, normalised earnings decreased by 6,7% to 8,4 cents 

per share (“cps”) (2009: 9,0 cps).

In my  report  last  year  I  stated  that “every  endeavour will  be 

made to strengthen the cash flow” and I am pleased to report 

that  at  the  start  of  this  financial  year,  strict  working  capital 

procedures were  implemented and during  the first half of  the 

year  the  Group’s  operating  cash  flows  had  turned  positive,  a 

trend we are pleased to report has continued.

Cash flow from operations of R25 million (2009: R2,6 million 

outflow)  was  generated.  The  Group’s  cash  flow  cycle 

reduced from 82 to 76 days primarily attributable to effective 

working capital management procedures implemented. The

Group finished the year with a net overdraft of R12,1 million,

mainly as a result of payments made to vendors of

companies acquired and the repayment of external loans.

Based upon a comprehensive evaluation of the Group’s cash 

flows, the board is satisfied that there are adequate working

capital facilities available to fund the current level of

business operations. Notwithstanding this, the Group has a

short-term commitment to fund amounts due and payable to

vendors of businesses acquired and other short-term loans.

The vendor payments due will be funded by a combination

of  extended  vendor  financing  and  medium-term  loans.  The 

short-term loans will be comfortably serviced out of operational

cash flows.

The Group’s debt:equity ratio was 31,6% compared to 26,3% 

in the prior year, well within the Group’s debt:equity ratio limit 

of 40%. The current ratio increased to 1,55:1 from 1,50:1 in 

the prior year, mainly attributable to a reduction in the

inventory and trade payable balance.

The Group’s HEPS reduced by 25% to 5,2 cps (2009: 6,9 cps). 

The decline is as a result of the tough trading conditions

experienced  during  the  year.  The  Group’s  balance  sheet 

continued to strengthen as the net tangible asset value per

share increased by 17,6% to 39,4 cps (2009: 33,5 cps).

A detailed assessment of the carrying value of the Group’s 

goodwill  was  undertaken  at  year-end.  In  terms  of  this 

assessment, the goodwill attributable to the Group’s various 

cash generating units was not in line with the values

reflected  in the balance sheet.  In terms of the assessment 

and taking into account the world economic crisis, it was

decided to impair goodwill and intangible assets arising on

the  acquisition  of  the  Group’s  various  businesses  by  an 

amount of R98,5 million. It should be noted that the cost of 

running the Group’s head office has not been apportioned to 

17PSV Annual Report 2010

18 PSV Annual Report 2010

CEO

revi

ew

the cash generating units in assessing the carrying value

of goodwill.

Corporate actionsDuring  the  year  PSV  concluded  two  acquisitions,  one  to 

bolster pumps segment and the other to add strength to our

cryogenics capabilities.

At  the  start  of  the  financial  year,  PSV bought Mather + Platt, 

established in 1950 and a leading name in the pump

manufacturing industry in South Africa. The product range

enhanced and complemented that of PSV and opened access

to  markets  such  as  Angola,  Malawi,  Mozambique,  Namibia 

and Zambia. Although PSV is active in the latter, the range of

pumps we were able to supply increased. The total cash

purchase consideration was R10 million.

PSV strengthened its cryogenics capability through the purchase

of Cryoshield with effect from 1 March 2010, a manufacturer of 

cryogenic process control equipment. Since its establishment in

1987,  Cryoshield  has  been  manufacturing  large  capacity, 

new generation cryogenic  freezing equipment, a process  that 

required specialised fabricating techniques in stainless steel

processes, which are used in the freezing of food products. The 

total purchase consideration will be R8 million.

We are delighted with the acquisition, which together with our

subsidiary Rand Air and Gas Installations, added critical mass, 

advanced technologies and new clients to the specialised

services segment of the PSV Group.

Operational reviewWe have, in most cases, maintained our existing infrastructure

and have replaced staff who have resigned allowing the PSV

Group to be prepared when economic conditions change.

During the year we completed various large projects and all our 

operating units were profitable  except  for  one, Mather + Platt. 

Mather + Platt was put under pressure during the year specifically 

because of the R9 million two year loan for the acquisition from

Hudaco and an overdraft inherited from Dasher.

Pumps, spares and valves

Our  pump  subsidiaries  performed  below  expectation  due  to 

low demand from customers largely as a result of reduced

infrastructure spend by government at both local and regional

level.  Despite  this,  the  turnover  for  the  three  companies 

was  R112,1  million,  9,66%  higher  than  the  previous  year 

(2009: R102,2 million). The increase in the revenue line was 

largely due to the inclusion of a full year of trading from

Mather + Platt. This segment contributes 30% to the overall 

revenue of PSV and achieved a profit before tax of R4,7 million 

(2009: R5,1 million). Gross margins were  squeezed by 20% 

resulting in an almost 40% reduction in contributing margins

compared  with  the  previous  period.  Margin  pressure  was 

primarily due to a reduction in high margin business with

Zambian copper mines and the increase in low margin project

business in Zambia and Malawi.

We experienced a slowdown in overall demand in Zambia

where the mining sector has transcended into a phase of

delayed maintenance on the back of weaker copper prices.

Mather + Platt continue to build on their marketing campaign 

which has to date successfully reintroduced this prestigious

name into the market place.

Selected projects undertaken during the year include:

•   The  rehabilitation  of  pumps,  pump  stations  and  valves  for 

Lusaka Water

•   A  project  for  a  Zambian  mine  for  axial  flow  pumps  for 

concentrators (pumping mine slurry)

•   Supplying a number of pumps  to a  large steel producer  in 

South Africa for the rehabilitation of a pumping plant for the

descaling of steel.

Engineering linings and industrial supplies

This  segment  contributed  R134,9 million  of  revenue,  36% 

of the total, which was lower than the previous year (2009: 

R191  million).  Profit  before  tax  was  R6,9  million  (2009: 

R17,5 million), despite this, the gross profit margin increased 

by 31%, attributable to Engineered Linings completing many 

smaller but more profitable contracts compared to the

prior year.

Groupline had its best year ever with large orders from various

Eskom  power  stations  around  the  country  and  large  export 

orders to Ivory Coast, Zambia, and Mozambique. At the moment 

Groupline has a full order book for 2011.

Omnirapid, likewise, had a good year; despite a slight decline in 

turnover it still achieved good profits. It has been able to better 

Chief executive officer’s review continued

19PSV Annual Report 2010

harness the Group’s buying power to secure better pricing and 

discounts from suppliers.

Selected projects undertaken during the year include:

•   Landfill lining projects included those at Empangeni and the 

Coastal Park Landfill in the Western Cape

•   In  the  mining  sector  projects  included  work  at  Impala 

Platinum,  Leeuwpan mine  and Trekkopje  Uranium mine  to 

name a few

•   Linings projects were carried out  for Eskom’s Camden and 

Hendrina power stations

•   Various  linings  projects  have been undertaken  for  the  coal 

division of Anglo American as well as for Sasol.

Specialised services

The specialised services segment contributed 34% to the

overall turnover of PSV. Revenue suffered a 9% reduction in

turnover to R125,1 million (2009: R137,1 million), largely as a 

result of Rand Air and Gas Installations (“RAGI”) having to cut 

margins in order to remain competitive and retain market

share.  In  the  face  of  these  tactics,  RAGI  received  their  first 

large order from Afrox to supply 10 off-force draft 50 bar, 9

metre high vaporizers for liquid nitrogen and liquid oxygen use. 

It has concluded a  large contract  for Richards Bay, details of 

which are contained below.

With  the  completion  of  the  Cryoshield  acquisition,  PSV  is 

now well placed to become the largest supplier of cryogenic

expertise, product knowledge and bespoke manufacturing to

South  Africa  and  Africa.  The  inclusion  of  the  Cryoshield 

business also ensures succession planning for this discipline

going forward.

We are pleased to report that after restructuring Petrologic, the

company has turned the corner and has become profitable. For 

the first time in three years Petrologic has diversified its client 

base  from  predominantly  Engen  to  also  include  Shell,  Sasol, 

Chevron and Petrotec in Mozambique.

Selected projects undertaken during the year include:

•   Continued to supply equipment to the petrochemical sector 

throughout South Africa

•   Island View Storage (“IVS”), a Bidvest subsidiary, owns and 

operates chemical storage facilities in Durban, Richards Bay 

and Cape Town Harbours as well as Isando. These facilities 

are used for the storage of various liquid chemicals, fuel and

oils  either  being  imported  or  exported.  Certain  chemicals 

require nitrogen blankets for storage to ensure their integrity

and  for  safety  reasons.  Furby  Gas  manages  all  nitrogen 

supply and distribution for IVS facilities countrywide. In order 

to support the continued growth of IVS, RAGI has manufactured 

a new 235 ton nitrogen storage tank to support the shipping

activities in Richards Bay. This will assist IVS in meeting the 

growing demand of both chemical exports and imports.

OutlookIn conclusion, all our companies are well placed to benefit from 

the upturn in the economy. When this occurs we will have

maintained our entire existing infrastructure and be able to

react quickly to the renewed placement of orders and projects.

We intend to secure larger premises for Rand Air and Gas

Installations  and  Cryoshield  and  depending  on  the  total  size 

secured, could also house some of our other companies. This

will  ensure  sufficient  capacity  for  the  cryogenics  business  to 

not  have  to  turn  away  work  and  benefits  from  shared  joint 

services and facilities can be extracted.

Despite this the management of PSV is expecting the operating 

environment to remain difficult for the coming six months, we 

have experienced a good start to the year with many prospects

turning in orders and have begun the new financial year with 

a positive order book of R110 million and further prospects

of R120 million.

AppreciationThe past year has been tough but our staff has shown

tenacity and for your support and loyalty I wish to thank you. 

To the shareholders who have supported and remained

committed to PSV, I sincerely thank you for the interest you 

have shown towards PSV. I am grateful to my fellow directors 

and board members for your guidance and motivation during

the year. Lastly to senior management and staff, thank

you for your persistence on project tenders and orders,

without these PSV would not be able to strengthen our base

through diversification.

Abie JD da SilvaChief executive officer

20 PSV Annual Report 2010

Corp

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PSV continues to support skills shortages across economic

sectors and remains committed to socio-economic development.

PSV has in place a graduate programme aptly named “investing 

in  tomorrow’s  leaders”.  During  2009  the  budgeted  costs  for 

the programme was R278 199 and in 2010 the total budgeted

cost is R199 372.

The initiative is focusing on the advancement of talented and

dedicated designated groups. The process has been underpinned

by the commitment of the management team, with progress

being measured against stated quantitative targets.

In  our 2009 annual  report we  reported  that Victor Makwala, 

Thabo  Mohlahlo  and  Derrick  Sithole  had  been  adopted 

through subsidiary companies of PSV to undertake studies.

We are pleased to announce that each of the candidates have

passed and are now undertaking their second year of study at

the University of Johannesburg,  the Vaal University and RAU 

Technology Institute respectively.

To the candidates mentioned above, we have added an

additional three people, namely:

•   Gerald Mahlangu, studying National Diploma in Information 

Technology and has been financed by our subsidiary Petro-

Logic

•   Nhlanhla Dhlamini, studying National Diploma in Information 

Technology and has been financed by our  subsidiary APE 

Pumps

•   Tulisiwe  Madola,  studying  National  Diploma  in  Human 

Resources Management has been financed by our subsidiary 

Groupline Projects.

Within the PSV Group of companies, apprenticeships are also a

vital component of our corporate social investment as benefit to 

all parts of the business are immediate. We are pleased to

report  that  our  apprentice  turner,  boilermaker  and  two  fitters 

are well established in the group.

The group has embarked on continuous skills improvement, to

enhance employee’s career growth.

•   Mothepana  Mankga,  skills  Development  and  Employment 

Equity. Mothepana was employed as an Office Assistant and 

appointed as an HR Assistant in 2009.

PSV’s Ubuntu Project

Once gain during the year, we have touched the lives and hearts 

of those less fortunate than ourselves, by being involved in the

local community and charity organisations.

The PSV Ubuntu Project consists of three projects namely:

Oliver’s House  – This  project  involved  a  Christmas  party  for 

180  children  and  PSV  sponsored  a  Christmas  party  bucket, 

consisting of a soccer ball, soft toy and a T-shirt for each child.

PSV gave 50 children entering Grade I a complete school bag 

and stationery kit.

In  an  initiative  to  collect  clothes,  linen  and  non-perishable 

items, we distributed empty boxes to all subsidiaries for

collection. We received an overwhelming response, 64 black 

bags were collected, filled with clothes,  linen, blankets and 

much more. These donations were distributed to the Oliver’s 

House  Care  Centre  in  Benoni  and  the  Compass  Centre  for 

abused  women  and  children  in  Edenvale  as  well  as  the 

Nomthandazo Care Centre in Daveyton.

Compass-PSV  sponsored  Christmas  party  buckets  for  29 

children  from  the  Compass  Community  Provision  and  Social 

Services  in  Edenvale,  an  organisation which  cares  for  abused 

and neglected women and children. We also bought and installed

a play gym at  the Compass Centre and sponsored six months 

worth of Purity foods, nappies and other baby accessories.

In  addition,  the  centre  was  in  desperate  need  of  beds  and 

linen for the women and children. PSV sponsored 20 bunk

beds, mattresses and complete sets of linen as well as 10

double door wardrobes in which to store clothing for those at

the centre.

Text books for high school pupils – PSV donated 120 text

books to high school children in the Daveyton township with 

text  books  for  Grade  11  and  12  in  the  subjects  of  Math 

and Science.

Corporate social investment

21PSV Annual Report 2010

Introduction

PSV  is  listed on  the Altx board of  the JSE Limited  (“JSE”). The 

board of directors (“the board”) is committed to and subscribes 

to the values of good corporate governance contained in the King

Code of Governance Principles for South Africa, 2009 (“King III”), 

as well as the related Listings Requirements of the JSE.

The  board  welcomes  the  introduction  of  King  III  and  the  PSV 

Group  is  measuring  itself  against  these  principles.  Existing 

governance practices are being reviewed to ensure responsible

qualitative  or  alternative  compliance  that  is  in  the  Group’s 

best interests. PSV endorses the principles of integrity and

accountability  advocated  by  King  III.  The  Group’s  corporate 

governance structures and practices are reviewed on an ongoing

basis in response to changes within and external to the Group.

This corporate governance statement sets out the key

governance principles and practices of PSV to fairly and

honestly inform their internal and external stakeholders through

fair and understandable disclosure.

Endorsement of King III

PSV remains fully committed to the principles of effective

corporate governance and application of the highest ethical

standards in the conduct of its business. We endorse the

principles of integrity and accountability advocated by King III. 

In  all  dealings  we  strive  to  ensure  that  the  interests  of 

stakeholders are foremost in our decisions and that they are

fully informed of the process.

We have long recognised that good corporate governance is

essentially about leadership and there exists the need to conduct the

enterprise with integrity and in compliance with best practices.

Statement of complianceThe  Listings  Requirements  of  the  JSE  require  that  listed 

companies report on the extent to which they comply with

the  principles  incorporated  in  the  King  Report  on  Corporate 

Governance (“King II”).

Based on the information set out in this corporate governance 

statement, the board confirms that the company has complied 

with the principles of the “King II” on an ongoing basis during 

the accounting period under review, unless otherwise indicated

below, and has also complied with the provisions set out in

the Listings Requirements of the JSE. 

King III became effective on 1 March 2010 after the year-end of 

the company. As indicated above, the company is in the process

of evaluating its current governance performance against the

recommendations contained in King III and will be reporting to 

stakeholders on such performance following the current

financial year.

Board of directorsChairperson

The chairperson, Evelyn Chimombe-Munyoro, is a non-executive 

director. The board delegates to the chairperson the responsibility

for ensuring the effectiveness of governance practices. The

chairperson leads the board and is responsible for representing

the Company to stakeholders.

As recommended by King  III  the  role  of  the  chairperson  is separate from that of the chief executive officer.

Chief executive officer

Chief executive officer (“CEO”), Abie da Silva, is responsible for the day-to-day business of the Group, for the implementation of policies and strategies adopted by the board, and takes full  responsibility  for all operations. Managing directors of  the various  businesses  assist  him  in  this  task.  Board  authority conferred  on management  is  delegated  through  the CEO,  in accordance with approved authority levels. Abie da Silva is tasked with addressing all communication matters with institutional shareholders, analysts and the media.

Board

PSV is headed by an effective unitary board that can lead and control the group. The board comprises eight directors of whom two are independent non-executive directors, one non-executive director and an alternate non-executive director. The board recognises  that  this  is  not  in  compliance with  King  III  and  is seeking to appoint an additional independent non-executive director. The board considers Mr Mitesh Patel and Mr Gordon Nzalo as independent non-executive directors. The independent directors ensure that no one individual has unfettered powers of  decision-making  and  authority,  so  that  all  shareholders’ interests are protected. The non-executive directors have no fixed term of office. 

The Board has established policy for appointments to the board and normal nominations for the appointment of new directors

are submitted for consideration and the appointment is a matter

dealt with by the board as a whole.

Corporate governance

22 PSV Annual Report 2010

Corp

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The guidelines contained in the Listings Requirements of the

JSE were used to test the independence of and category most 

applicable to each director. The directors ensure that the

chairperson encourages proper deliberation of all matters

requiring the board’s attention.

The primary responsibilities of the board include the regular

review of the strategic direction of investment decisions and

performance against approved plans, budgets and best practice

standards. The board retains full and effective control of the

Group and decisions on material matters are reserved for the

board. A board charter is in place which, inter alia, addresses

the functions and responsibilities of the board and which

is reviewed on an annual basis. The board charter will be

specifically reviewed during the current financial year to align 

the content thereof with the recommendations of King III.

The board meets at least quarterly, and more frequently if

circumstances or decisions require.

Meetings  are  conducted  in  accordance with  formal  agendas, 

ensuring that all substantive matters are properly addressed.

Any director may request that additional matters be added

to  the  agenda.  Copies  of  board  papers  are  circulated  to  the 

directors in advance of the meetings.

There is a clear division between the responsibilities of the

board and management.

All directors have the requisite knowledge and experience

required to properly execute their duties, and all participate

actively in the proceedings at board meetings. Non-executive

directors contribute an unfettered and independent view on

matters considered by the board and enjoy significant influence 

in deliberations at meetings.

One-third of the directors are subject, by rotation, to retirement 

and re-election at the annual general meeting in terms of the

Company’s articles of association. 

The details for each of the directors are set out on page 12 of

the annual report.

Attendance by directors at board meetings is provided below:

6 Mar 18 May 22 Jul 17 Nov

Director  2009 2009 2009 2009

JH Anderson* Yes Yes Yes N/A

CE Chimombe-Munyoro  Yes Yes Yes Yes

AJD da Silva  Yes Yes Yes Yes

AR Dreisenstock  Yes Yes Yes Yes

DJ Kelly  Yes Yes Yes Yes

GS Nzalo¤ N/A N/A N/A Yes

P Robinson Yes Yes Yes Yes

GJ Shongwe• Yes N/A N/A N/A • Resigned ¤ Appointed * Removed

A  representative  from  the  Company’s  Designated  Adviser 

attended  the board meetings as  required  in  terms of  the JSE 

Listings Requirements.

Changes to the board

Mr James Anderson was not re-elected as an independent non-

executive  director  at  the  company’s  annual  general  meeting 

and  stepped  down  as  chairman  of  the  Audit  Committee  on 

28 August 2009. Mr Mitesh Patel was appointed chairman of 

the Audit Committee on 28 August 2009.

Mr  Gordon  Nzalo  was  appointed  as  an  independent  non-

executive director, chairman of the Risk Committee and member 

of the Audit Committee with effect from 1 November 2009.

Mr Vusi  Shongwe  resigned  as  an  independent  non-executive 

director of the company on 13 July 2009.

Board committeesWhile the board remains accountable and responsible for

the  performance  and  affairs  of  the  Company,  it  delegates  to 

management and board committees certain functions to assist

it to properly discharge its duties. The chairman of each board

committee reports at each scheduled meeting of the board and

minutes of committee meetings are provided to the board.

The members  of  the Audit  Committee  are  independent,  non-

executive  directors.  The  Risk  Committee  is  chaired  by  an 

independent non-executive director, but also comprises senior

management in the group who have the relevant knowledge

and experience.

Both the directors and the members of  the board committees 

are supplied with full and timely information that enable them

to properly discharge their responsibilities. All directors have

unrestricted access to all group information.

Corporate governance continued

23PSV Annual Report 2010

Each  board  committee  operates  in  terms  of  formal  terms  of 

reference that are reviewed on an annual basis and approved

by the board. The chairman of each board committee is required

to attend annual general meetings to answer questions raised

by shareholders.

The established board committees are:

Audit Committee

At the end of the financial year, the Audit Committee comprised 

two  members,  Mr  Mitesh  Patel  who  replaced  Mr  James 

Anderson  as  chairman  on  28  August  2009  and  Mr  Gordon 

Nzalo who was appointed on 1 November 2009. The financial 

director attended the meetings by invitation.

The Audit Committee met five times during the financial year. 

The external auditors attended the meetings and also have

unrestricted access to the chairman of the Audit Committee.

The attendance by members at the Audit Committee meetings

is provided below: 

Director 6 Mar 

2009

15 May 

2009

17 Jul 

2009

19 Aug

2009

6 Nov 

2009

JH Anderson* Yes Yes Yes Yes N/A

AR Dreisenstock# Yes Yes Yes Yes Yes

GS Nzalo¤ N/A N/A N/A N/A Yes

MM Patel Yes Yes Yes Yes Yes

Vunani Corporate 

Financeø Yes Yes Yes Yes Yes

* Removed # By invitation ¤ Appointed ø As required in terms of the JSE Listing Requirements

The Audit Committee operates in terms of a formal mandate

that sets out the functions and duties of the committee. These

functions are based on the relevant provisions of the Companies 

Act of 1973, as amended, as well as relevant corporate

governance recommendations. 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 of 1973, 

as amended, 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.

The Audit  Committee  has  also  reviewed  and  satisfied  itself 

with the appropriateness of the expertise and experience of

the financial director as required in terms of the JSE Listings 

Requirements. The Company does not have an internal audit 

function  and  the  Audit  Committee  therefore  pays  particular 

attention to the adequacy of internal controls and the integrity

of financial reporting. 

Risk Committee

At the end of  the financial year,  the Risk Committee comprised 

five members, Mr Gordon Nzalo who replaced Mr Senti Thobejane 

as chairman, Messrs Mitesh Patel, Graham Hill, Dave Kelly and 

Alan  Sternsdorf. The  financial  director, Mr Tony  Dreisenstock, 

attended the meetings by invitation.

The Risk Committee met four times during the financial year.

The attendance by members at the Risk Committee meetings is 

provided below:

Director 6 Mar

2009

18 May 

2009

28 Jul

2009

6 Nov 

2009

AR Dreisenstock# No No No Yes

GH Hill Yes Yes Yes No

DJ Kelly  Yes Yes Yes Yes

MM Patel Yes Yes Yes Yes

GS Nzalo¤ N/A N/A N/A Yes

A Sternsdorf Yes Yes Yes Yes

Vunani Corporate Finance Yes Yes Yes Yes

# By invitation ¤ Appointed

24 PSV Annual Report 2010

The Group acknowledges the importance of risk management

and corporate governance principles. Risk is an intrinsic part of

all activities undertaken by PSV. The organisation is exposed to

certain  peculiar  risks,  which  are  influenced  by  its  specific 

choices and actions. The board of PSV along with its executive

and management recognises that risk management is a critical

management tool to ensure that the Group achieves its

objectives. The Risk Committee has been formulated with  the 

specific objective  of  identifying  those  risks and  implementing 

policies to combat and mitigate those risks.

Risk management matrix

Description of risk    Mitigation strategies

Strategic

Succession

planning

•   Focus  on  the  recruitment  of  young  talent  and 

nurturing them for the future

•   Apprenticeship programme in place

•   Extensive training programmes 

B-BBEE •   Identification of new viable strategic partners

•   Re-aligning procurement policies to acquire from 

level 4 and higher rated companies

•   Identification  of  previously  disadvantaged 

individuals working within the company and

promoting them accordingly

Financial

Debtors 

collections

•   Strict credit vetting and granting of credit limits to 

customers

•   Accountability  KPAs  implemented  with  senior 

management of subsidiaries

•   Advanced payments wherever possible

Description of risk    Mitigation strategies

Foreign currency 

exposure

•   Covering exposure with a combination of forward 

exchange contracts or currency futures

Loan covenants •   Monitoring  and  policing  cash  flows  through

group treasury

•   Implementation of working capital management 

targets with senior management of subsidiaries

Operational

Over trading •   Tight controls for declining prospective contracts 

if requisite funding is not available

Quality assurance •   Appointment  of  group  health  and  safety  officer 

and  subordinate  health  and  safety  officers  at 

subsidiary level

•   Regular  meetings  and  follow  up  to  ensure 

compliance with all regulatory covenants

Human resources

Change 

management

•   The Risk Committee will develop a formal policy 

in this regard

Standardisation

of employment

contracts

•   Dedicated  HR  function  to,  in  the  long  term, 

standardise all employment contracts

Legal

Proper

authorisation

of material

contracts

•   Implemented  limits  of  authority  in  place  at 

subsidiary level

•   Will  be  enforcing  the  approval  of  material 

contracts through soon to be appointed legal

officer for the group

Remuneration Committee

In  terms  of  the  JSE  Listings  Requirements  it  is  not  a 

requirement for Altx companies to constitute a Remuneration

Committee. Although a recommendation of King II, the board 

is comfortable that remuneration matters are appropriately

dealt with at board level.

Health and safety policyPSV has begun  implementing OHSAS 18001 to ensure a high 

standard of health and safety within the Group and its

subsidiaries. The implementation of the policy demonstrates

the continuous commitment to providing all our employees with

a safe and satisfying working environment, and to assist in the

drive towards zero work-related injuries and accidents.

Within each subsidiary, there are appointed health and safety

representatives who assist with the implementation of the

health  and  safety  systems.  Bi-monthly  meetings  are  held  in 

order to ensure the effectiveness of the system.

Social responsibility PSV is a committed, socially responsible organisation with a

dedicated corporate social investment programme in place,

supported by various initiatives. The Group continues to support

skills shortages across economic sectors and in an endeavour

to fill shortages the Group itself experiences, it has put in place 

an apprenticeship programme.

A  graduate  programme, “investing  in  tomorrow’s  leaders”,  is 

also in place, which focuses on the advancement of talent. The

programme is underpinned by PSV assisting identified students 

with the advancement of their university degrees.

Corporate governance continued

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25PSV Annual Report 2010

The Group embarks on continuous skills improvement, to

enhance an employee’s career growth.   

On  a  social  level  PSV  participates  in  various  projects  for 

Oliver’s House, Compass and an initiative to distribute school 

text books.

For  further  information  on  our  corporate  social  investment 

and social responsibility projects refer to page 20 in this

annual report.

Company secretary

The appointment and removal of the company secretary is

approved by the board. The company secretary advises

the board on the appropriate procedures for the management

of meetings and the implementation of governance

procedures, and is further responsible for providing the board

collectively, and each director individually, with guidance

on the discharge of their responsibilities in terms of

the legislation and regulatory requirements applicable to

South Africa.

The board has unlimited access to the company secretary, who

advises the board and its committees on issues including

compliance with group policies and procedures, statutory

regulations and relevant governance principles and

recommendations.

Megan  Saayman  was  appointed  as  company  secretary  with 

effect from 13 July 2009. On 29 June 2010 it was announced 

that Mrs Saayman had resigned as the company secretary and 

PSV will, in due course, make a further announcement on

SENS  detailing  a  new  appointment.  As  an  interim  measure 

Tony  Dreisenstock,  financial  director  will  fulfill  the  role  of 

acting company secretary.

Interest in contracts

During the year ended 28 February 2010 none of the directors 

had  a  significant  interest  in  any  contract  or  arrangement 

entered into by the company or its subsidiaries, other than as

disclosed in note 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.

Relations with shareholders

The Group maintains dialogue with its key financial audiences, 

especially institutional shareholders and analysts. The investor

relations team manages the dialogue with these audiences and

presentations take place at the time of publishing interim and

final results.

The Group adopts a proactive stance in timely dissemination

of appropriate information to stakeholders through print and

electronic news releases and the statutory publication of the

Group’s financial performance.

The Group’s website provides the latest and historical financial 

and other information, including the financial reports.

The board encourages shareholders to attend its annual general

meeting, notice of which is contained in this annual report,

where shareholders will have the opportunity to put questions

to the board, including the chairmen of the board committees.

Directors’ share dealings

The board has an approved trading policy in terms of which

dealing  in  the  Group’s  shares  by  directors  and  employees  is 

prohibited during closed periods.

Directors may not deal  in  the Company’s shares without first 

advising  and  obtaining  clearance  from  the  CEO  and  the 

financial director. The CEO and financial director may not deal 

in  the Company’s shares without first advising and obtaining 

clearance from the chairman of the board. No director or

executive may trade in PSV shares during closed periods as

defined in the JSE Listings Requirements. The directors of the 

Company  keep  the  company  secretary  advised  of  all  their 

dealings in securities.

26 PSV Annual Report 2010

Corporate governance continued

Fraud and illegal acts

The Group does not engage in or accept any illegal acts in the

conduct  of  its  business.  The  directors’  policy  is  to  actively 

pursue and prosecute the perpetrators of fraudulent or other

illegal activities, should they become aware of any such acts.

Insider trading

No employee may deal, directly or indirectly, in PSV shares on

the basis of unpublished price-sensitive information regarding

the business or affairs of the Group.

Code of conduct

The Group is committed to the highest ethical standards of

business conduct and to complying fully with all applicable

laws and regulations.

The directors, employees, employees of outsourced functions

as well as suppliers to PSV, are all expected to comply with the

principles and act in terms of the code of conduct. The directors

believe that the ethical standards of the Group, as stipulated in

the code of conduct, are monitored and are being met. Where

there is non-compliance with the code of conduct, the

appropriate discipline is enforced with consistency as the Group

responds to offences and prevents recurrences.

Going concern

The annual financial statements contained in this annual report 

have been prepared on the going concern basis. The directors

report that, after making enquiries, they have a reasonable

expectation that the Group has adequate resources to continue

in  operational  existence  for  the  foreseeable  future.  For  this 

reason, the Group continues to adopt the going concern basis

in preparing the annual financial statements.

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Annual financial statements

ContentsReport of the independent auditors ....................................................................................... 29

Audit Committee report ......................................................................................................... 30

Directors’ responsibility and approval ................................................................................... 31

Certification by company secretary ....................................................................................... 31

Directors’ report ................................................................................................................... 32

Consolidated statement of comprehensive income ............................................................... 34

Consolidated statement of financial position ......................................................................... 35

Statements of changes in equity ........................................................................................... 36

Consolidated statement of cash flows .................................................................................. 38

Accounting policies ............................................................................................................... 39

Notes to the annual financial statements .............................................................................. 44

29PSV Annual Report 2010

Report of the independent auditors

To the members of PSV Holdings Limited

Independent auditor’s reportWe have audited the Group’s annual financial statements and the annual financial statements of PSV Holdings Limited, which comprise the statements of financial position at 28 February 2010, and the statements of comprehensive income, the statements of changes in equity and statements of cash flows for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, and the directors’ report as set out on pages 32 to 75.

Directors’ responsibility for the financial statementsThe Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, these financial statements present fairly, in all material respects, the consolidated and separate financial position of PSV Holdings Limited at 28 February 2010, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa.

KPMG Inc.

Per TG CheadleChartered Accountant (SA) 85 Empire RoadRegistered Auditor Parktown, South AfricaDirector 20 July 2010

30 PSV Annual Report 2010

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Audit Committee report

BACKGROunDThe committee is pleased to present our report for the financial year ended 28 February 2010 as recommended by the King II report on Corporate Governance and in line with the South African Companies Act, 61 of 1973 (as amended) (the Act).

OBjeCtIve AnD sCOPeThe overall objectives of the committee are as follows:•   To  review  the  principles,  policies  and  practices  adopted  in 

the preparation of the accounts of Companies in the Group and to ensure that the annual financial statements of the Group and any other formal announcements relating to the financial performance comply with all statutory, regulatory and PSV requirements as may be required.

•   To  ensure  that  the  consolidated  financial  statements  of  the group comply with all statutory, regulatory and PSV requirements and similarly, that the financial information contained in any consolidated submissions to PSV is suitable for inclusion in its consolidated financial statements.

•   To annually assess the appointment of the auditors and their independence, recommend their appointment and approve their fees.

•   To review the work of the group’s external and internal auditors to ensure the adequacy and effectiveness of the Group’s financial, operating compliance and risk management controls.

•   To  review  the  management  of  risk  and  the  monitoring  of compliance effectiveness within the Group.

• To perform duties that are attributed to it by the Act, the JSE and King II.

The committee performed the following activities:•   Received  and  reviewed  reports  from  external  auditors 

concerning the effectiveness of the internal control environment, systems and processes.

•   Reviewed the reports of external auditors detailing their concerns arising out of their audits and requested appropriate responses from management resulting in their concerns being addressed.

•   Made appropriate  recommendations  to  the board  of  directors regarding the corrective actions to be taken as a consequence of audit findings.

•   Considered  the  independence  and  objectivity  of  the  external auditors and ensured that the scope of their additional services provided was not such that they could be seen to have impaired their independence.

•   Reviewed  and  recommended  for  adoption  by  the  board  such financial information that is publicly disclosed which for the year included:

– the audited results for the year ended 28 February 2010 – the interim results for the six months ended 31 August 2009.

The Audit Committee is of the opinion that the objectives of the committee were met during the year under review.

Where weaknesses in specific controls had been identified, management undertook to implement appropriate corrective actions to mitigate the weakness identified.

MeMBeRshIPDuring the course of the year, the membership of the committee comprised solely independent non-executive directors. They are Mitesh Patel (Chairman) and Gordon Nzalo

exteRnAl AuDItThe committee has satisfied itself through enquiry that the auditor of PSV is independent as defined by the Act.

The committee, in consultation with executive management,

agreed to an audit fee for the 2010 financial year. The fee is

considered appropriate for the work that could reasonably have

been foreseen at that time.

There is a formal procedure that governs the process whereby

the external auditor is considered for the provision of non-audit

services, and each engagement letter for such work is reviewed

in accordance with set policy and procedure.

Meetings were held with the auditor where management was 

not present, and no matters of concern were raised.

The committee has reviewed the performance of the external

auditors and nominated, for approval at the annual general

meeting, KPMG as the external auditor for the 2011 financial year.

AnnuAl fInAnCIAl stAteMentsThe Audit Committee has evaluated the consolidated annual

financial statements for the year ended 28 February 2010 and

considers that it complies, in all material aspects, with the

requirements of the Act and International Financial Reporting

Standards. The committee has therefore recommended the

annual financial statements for approval to the board. The

board has subsequently approved the financial statements

which will be open for discussion at the forthcoming annual

general meeting.

Mitesh PatelAudit Committee chairman20 July 2010

31PSV Annual Report 2010

Directors’ responsibility and approval

The directors are responsible for the preparation and fair presentation of the Group annual financial statements and the annual financial statements, comprising the statement of financial position as at 28 February 2010 and the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa.

The directors’ responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and the fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

The directors’ responsibility also includes maintaining adequate accounting records and an effective system of risk management.

The directors have made an assessment of the Group and Company’s ability to continue as a going concern and have no reason to believe the businesses will not be going concerns in the year ahead.

The auditor is responsible for reporting on whether the Group annual financial statements and the annual financial statements are fairly presented in accordance with the applicable financial reporting framework.

AjD da silva AR DreisenstockChief Executive Officer Chief Financial Officer

Certification by company secretary

In terms of section 268(G) of the Companies Act, 61 of 1973, as amended (“the Act”), I certify that, to the best of my knowledge and belief, the Group has, in respect of the financial year reported upon, lodged with CIPRO all returns required of a public company in terms of the Act and that all such returns are true, correct and up to date.

AR DreisenstockActing company secretary

32 PSV Annual Report 2010

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Directors’ report

The directors have pleasure in submitting their report together with the Company and Group annual financial statements for the financial year ended 28 February 2010.

nAtuRe Of BusInessPSV is a specialised industrial engineering group focused on the provision of pumps, valves, engineering linings, industrial supplies and fuel pumps and dispensers and cryogenics to the mining, petrochemical, water and waste water management sectors in South Africa and Africa.

fInAnCIAl stAteMentsThe Company and Group’s results and financial position are contained in the annual financial statements on pages 34 to 75 of the report.

The audited annual financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and their interpretation adopted by the International Accounting Standards Board (“IASB”), the Listings Requirements of the JSE Limited (“JSE”) and the Companies Act, 61 of 1973, as amended (“the Act”) and remain consistent with those applied to the abridged results announced on 24 May 2010.

Results Of OPeRAtIOnsThe Company and Group’s statement of comprehensive income and segmental analysis for the period set out the results of the operations.

DIvIDenDsNo dividends were paid nor recommended to shareholders during the financial year ended 28 February 2010 (2009: nil).

PROPeRtY, PlAnt AnD eQuIPMentDuring the year the Group invested R10 944 756 in new property, plant and equipment in order to expand its operations. Details of property, plant and equipment are contained in note 7 of the annual financial statements.

BORROWInG POWeRsIn terms of the Company’s articles of association, its borrowing powers are unlimited. The borrowing powers of the Group’s wholly owned operating subsidiaries may in terms of its articles of association be limited by the Company.

lItIGAtIOnThere are no legal or arbitration proceedings, including any such proceedings that are pending or threatened, of which PSV is aware that may have, or have had during the 12 months preceding the date of the annual report, a material effect on the financial position of the Group.

InDePenDent AuDItORsThe reappointment of the auditors KPMG Inc., for the ensuing year, will be confirmed at the Company’s annual general meeting in accordance with Section 270(1) of the Companies Act.

stAteD CAPItAlDetails of the authorised and issued stated capital of the Company and the movements during the period are contained in note 15 of the annual financial statements.

DIReCtORs AnD seCRetARYThe names of the directors in office are set out on page 12 of the annual report.

33PSV Annual Report 2010

The following changes to the Board occurred during the period under review:Mr JA Anderson was not re-elected as an independent non-executive director of the company and stepped down as Chairman of the Audit Committee on 28 August 2009.Mr MM Patel stepped down as chairman of the risk committee and was appointed Chairman of the Audit Committee with effect from 28 August 2009.Mr GS Nzalo was appointed as an independent non-executive director, Chairman of the Risk Committee and member of the Audit Committee with effect from 1 November 2009.The interests of directors in the issued share capital of the Company are provided below.In accordance with the requirements of the JSE Limited, a detailed report on directors’ remuneration appears in note 25.

hOlDInGs Of Psv shARes BY DIReCtORs2010 2009

Name Direct holding Indirect holding Direct holding Indirect holding

Mr P Robinson 51 350 000 974 217 47 600 000 –

Mr AJD da Silva 51 150 000 974 218 47 200 000 –

Mr AR Dreisenstock 4 400 000 974 218 4 600 000 –

Mr DJ Kelly 2 000 000 – 2 000 000 –

Total 108 900 000 2 922 653 101 400 000 –

MAjOR shARehOlDeRsDetails of major shareholders are included on page 76 of this annual report.

suBsIDIARY COMPAnIesDetails of the Company’s subsidiary companies appear in note 11 to the annual financial statements.

sPeCIAl ResOlutIOns BY suBsIDIARY COMPAnIesThe authority of the wholly owned subsidiaries to purchase their own and the Company’s shares, subject to the relevant provisions of the Act and the Listings Requirements of the JSE, was approved by shareholders on 28 August 2009 and registered by CIPRO on 19 January 2010.

No other special resolutions were passed by subsidiary companies during the period under review, or between the balance sheet date and the date of this report.

APPROvAl Of AnnuAl fInAnCIAl stAteMentsThe annual financial statements of PSV Holdings Limited and its subsidiaries were approved by the board of directors on 20 July 2010 and are signed on its behalf by

AjD da silva AR DreisenstockChief executive officer Chief financial officer

34 PSV Annual Report 2010

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Group Company

Notes2010

R2009

R2010

R2009

R

Revenue 2 372 182 472 430 864 719 22 180 000 17 480 000

Cost of sales 282 025 909 332 944 380 – –

Gross profit 90 156 563 97 920 339 22 180 000 17 480 000

Other income 4 166 067 6 185 384 1 088 203 948 087

Other expenses (166 163 988) (70 784 480) (105 095 016) (14 201 681)

Results from operating activities 3 (71 841 358) 33 321 243 (81 826 813) 4 226 406

Finance income 4 8 426 235 3 949 902 7 681 354 5 548 453

Finance costs 4 (19 839 558) (14 037 526) (12 526 749) (7 120 159)

net finance costs (11 413 323) (10 087 624) (4 845 395) (1 571 706)

(loss)/profit before income tax (83 254 681) 23 233 619 (86 672 208) 2 654 700

Income tax credit/(expense) 5 172 529 (6 686 485) (670 868) (897 950)

(loss)/profit for the period (83 082 152) 16 547 134 (87 343 076) 1 756 750

Other comprehensive income

Foreign currency translation gain/(loss) 6 356 (3 906 412) – –

total comprehensive (loss)/income for the year (83 075 796) 12 640 722 (87 343 076) 1 756 750

(loss)/earnings per share

Basic earnings per share (cents) 6 (34,02) 7,02 – –

Diluted earnings per share (cents) 6 (33,31) 6,69 – –

Consolidated statement of comprehensive incomefor the year ended 28 February 2010

35PSV Annual Report 2010

Consolidated statement of financial positionfor the year ended 28 February 2010

Group Company

Notes2010

R2009

R2010

R2009

R

Assetsnon-current assetsProperty, plant and equipment 7 58 646 559 54 413 180 3 365 861 2 912 675Intangible assets 8 20 947 731 34 569 320 – –Goodwill 9 31 691 449 117 153 067 – –Loans receivable 10 219 402 743 308 190 600 743 308Investment in subsidiaries 11 – – 122 671 258 197 988 883Deferred taxation assets 17 9 806 069 6 916 144 886 257 1 442 011total non-current assets 121 311 210 213 795 019 127 113 976 203 086 877Current assetsInventories 12 60 798 283 74 227 984 – –Loans to group companies 11 – – 24 224 364 28 103 698Trade and other receivables 13 77 722 821 76 469 063 18 651 184 3 981 033Taxation receivable 4 004 435 5 462 723 – –Cash and cash equivalents 14 15 311 947 1 346 061 797 247 –total current assets 157 837 486 157 505 831 43 672 795 32 084 731total assets 279 148 696 371 300 850 170 786 771 235 171 608eQuItYShare capital 15 270 806 106 260 605 126 270 806 106 260 605 126Share-based payment reserve 1 669 696 1 513 158 1 669 696 1 513 158Foreign currency translation reserve (3 099 444) (3 105 800) – –Deferred equity reserve – 9 917 115 – 9 917 115Retained loss (119 155 318) (38 039 206) (184 132 182) (99 029 478)total equity attributable to equity holders of the Company 150 221 040 230 890 393 88 343 620 173 005 921lIABIlItIesnon-current liabilitiesDeferred purchase consideration 16 2 420 145 6 460 309 2 420 145 6 460 309Deferred taxation liabilities 17 4 966 467 8 829 049 – –Loans and borrowings 18 19 609 722 20 063 960 1 022 598 1 249 479total non-current liabilities 26 996 334 35 353 318 3 442 743 7 709 788Current liabilitiesLoans from group companies 11 – – 53 562 645 10 310 538Trade and other payables 19 59 385 693 65 879 578 3 328 791 2 750 517Taxation payable – 3 724 643 – –Current portion of deferred purchase consideration 16 5 235 343 11 208 698 5 235 343 10 769 091Bank overdraft 14 27 439 726 4 404 324 16 099 462 21 112 016Current portion of loans and borrowings 18 9 870 560 19 839 896 774 167 9 513 737total current liabilities 101 931 322 105 057 139 79 000 408 54 455 899total liabilities 128 927 656 140 410 457 82 443 151 62 165 687total equity and liabilities 279 148 696 371 300 850 170 786 771 235 171 608

36 PSV Annual Report 2010

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share capitalR

share-based payment reserve

R

foreign currencytranslation

(deficit)/reserve R

Deferred equity reserve

RRetained loss

Rtotal

R

Group

Balance at 29 february 2008 252 475 078 1 513 158 800 612 2 254 442 (54 586 340) 202 456 950total comprehensive income for the periodProfit for the year – – – – 16 547 134 16 547 134Other comprehensive incomeForeign currency translation differences – – (3 906 412) – – (3 906 412)

Total comprehensive income for the period – – (3 906 412) – 16 547 134 12 640 722

Transactions with owners, recorded directly in equityContributions by and distributions to ownersIssue of shares for cash 10 500 000 – – – – 10 500 000Share issue costs (31 210) – – – – (31 210)Odd-lot share buyback (194) – – – – (194)Share-based payment transactions (2 338 548) – – – – (2 338 548)Deferred equity reserve – Engineered Linings – – – 7 662 673 – 7 662 673

8 130 048 – – 7 662 673 – 15 792 721

Balance at 28 february 2009 260 605 126 1 513 158 (3 105 800) 9 917 115 (38 039 206) 230 890 393

total comprehensive income for the periodLoss for the year – – – – (83 082 152) (83 082 152)Other comprehensive incomeForeign currency translation differences – – 6 356 – – 6 356

Total comprehensive income for the period – – 6 356 – (83 082 152) (83 075 796)

Transactions with owners, recorded directly in equityContributions by and distributions to ownersIssue of shares 10 549 396 – – – – 10 549 396Share issue costs (4 816) – – – – (4 816)Odd-lot share buyback (343 600) – – – – (343 600)Share-based payment transactions – 2 122 578 – – – 2 122 578Deferred equity reserve – Engineered Linings – – – (9 917 115) – (9 917 115)Transfer of vested shares from share-based payment reserve – (1 966 040) – – 1 966 040 –

10 200 980 156 538 – (9 917 115) 1 966 040 2 406 443

Balance at 28 february 2010 270 806 106 1 669 696 (3 099 444) – (119 155 318) 150 221 040

statements of changes in equityfor the year ended 28 February 2010

37PSV Annual Report 2010

share capitalR

share-based payment reserve

R

Deferred equity reserve

RAccumulated loss

Rtotal

R

Company

Balance as at 29 february 2008 252 475 078 1 513 158 2 254 442 (100 786 228) 155 456 550

total comprehensive income for the period

Profit for the year – – – 1 756 753 1 756 753

Transactions with owners, recorded directly in equityContributions by and distributions to owners

Issue of shares for cash 10 500 000 – – – 10 500 000

Share issue costs (31 210) – – – (31 210)

Odd-lot share buyback (194) – – – (194)

Share-based payment transactions (2 338 548) – – – (2 338 548)

Deferred equity reserve – Engineered Linings – – 7 662 673 – 7 662 673

8 130 048 – 7 662 673 – 15 792 721

Balance at 28 february 2009 260 605 126 1 513 158 9 917 115 (99 029 478) 173 005 921

total comprehensive income for the period

Loss for the year – – – (87 343 076) (87 343 076)

Transactions with owners, recorded directly in equityContributions by and distributions to owners

Issue of shares 10 549 396 – – – 10 549 396

Share issue costs (4 816) – – – (4 816)

Odd-lot share buyback (343 600) – – – (343 600)

Share-based payment transactions – 2 122 578 – – 2 122 578

Deferred equity reserve – Engineered Linings – – (9 917 115) – (9 917 115)Transfer of vested shares from share-based payment reserve – (1 966 040) – 1 966 040 –

10 200 980 156 538 (9 917 115) 1 966 040 2 680 775

Balance at 28 february 2010 270 806 106 1 669 696 – (184 132 182) 88 343 620

38 PSV Annual Report 2010

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Group Company

Notes2010

R2009

R2010

R2009

R

CAsh flOWs fROM OPeRAtInG ACtIvItIes 21A 43 390 855 24 133 449 (7 240 424) 4 906 837

Financial income 8 426 235 7 919 507 7 681 354 5 548 453

Financial expenses (18 000 202) (16 660 137) (10 747 787) (5 777 988)

Taxation paid 21B (8 846 333) (17 954 386) (115 114) –

Net cash from/(used in) operating activities 24 970 555 (2 561 567) (10 421 971) 4 677 302

CAsh flOWs fROM InvestInG ACtIvItIes

Additions to property, plant and equipment to expand operations (10 944 756) (9 813 741) (1 592 355) (481 249)

Proceeds from disposal of property, plant and equipment 1 052 363 1 332 341 175 438 314 073

Additions to intangible assets (2 679 000) – – –

Cash paid in share buy backs (343 600) (2 338 548) (343 600) (2 338 548)

Settlement of purchase and deferred purchase consideration (11 852 875) (44 434 557) (11 352 874) (34 799 684)

Net cash (used in)/from investing activities (24 767 868) (55 254 505) (13 113 391) (37 305 408)

CAsh flOWs fROM fInAnCInG ACtIvItIes

Issue of shares for cash 632 281 10 500 000 632 281 10 500 000

Share issue expenses (4 816) (31 404) (4 816) (31 404)

Repayment of loan granted 523 906 – 552 708 –

Loans (repaid)/raised (21 756 438) (9 880 353) (8 966 451) 2 581 007

External loans granted to finance property, plant and equipment 11 332 864 20 431 102 37 131 441 –

Net cash (used in)/from financing activities (9 272 203) 24 048 481 29 345 163 17 784 390

Net (decrease)/increase in cash and cash equivalents (9 069 516) (33 767 609) 5 809 801 (12 262 710)

Cash at acquisition of subsidiary – 4 838 141 – –

Cash and cash equivalents at beginning of year (3 058 263) 25 871 205 (21 112 016) (8 849 306)

Cash and cash equivalents at end of year 14 (12 127 779) (3 058 263) (15 302 215) (21 112 016)

Consolidated statement of cash flowsfor the year ended 28 February 2010

39PSV Annual Report 2010

An entity is required to assess goodwill for impairment at every reporting date, to assess investments in equity instruments and in financial assets carried at cost for impairment at every balance sheet date and, if required, to recognise an impairment loss at that date in accordance with IAS 35 and IAS 39. However, at a subsequent reporting or balance sheet date, conditions may have so changed that the impairment loss would have been reduced or avoided had the impairment assessment been made only at that date. This interpretation provides guidance on whether such impairment losses should ever be reversed. Furthermore, the interpretation addresses the interaction between the requirements of IAS 34 and the recognition of impairment losses on goodwill in IAS 36 and certain financial assets in IAS 39, and the effect of that interaction on subsequent interim and annual financial statements.

•  IFRIC 11 – “Group and Treasury Share Transactions”:This interpretation addresses two issues. The first is whether the share transactions should be accounted for as equity-settled or as cash-settled under the requirements of IFRS 2. This did not affect the results of the Group. The second issue concerns share-based payment arrangements that involve two or more entities within the same group. In applying this interpretation the Groups’ results have not been affected, however the results of the Company and some of its subsidiaries have been adjusted accordingly.

use of estimates and judgementThe preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that may affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.In particular, information about areas of estimation and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes:

Note 7 useful lives and residual values of property, plant and equipmentNote 8 useful lives and impairment tests on intangible assetsNote 9 impairment test on goodwillThe accounting policies set out below have been applied consistently to all periods presented.

Accounting policiesfor the year ended 28 February 2010

PSV Holdings Limited (“the Company”) is a company domiciled in South Africa. The consolidated financial statements at 28 February 2010 comprise the Company and its subsidiaries (together referred to as “the Group”).

The principal accounting policies adopted in the preparation of the financial statements are set out below.

stAteMent Of COMPlIAnCeThe Company and Group’s annual financial statements have been prepared in accordance with and comply with International Financial Reporting Standards (“IFRS”) and its interpretations adopted by the International Accounting Standards Board (“IASB”) and the requirements of the Companies Act of South Africa.

BAsIs Of MeAsuReMentThe annual financial statements are prepared on the historical cost basis except for derivative financial instruments which are stated at fair value.

The Group has adopted the following new and amended IFRS and International Financial reporting interpretations Committee (“IFRIC”) interpretations during the year. Adoption of these revised standards and interpretations did not have any effect on the financial performance or position of the Group. They did however give rise to additional disclosures, including in some cases, revisions to accounting policies or adjustments to the financial statements on an entity level.

•  IFRS 7 – “Financial instruments: Disclosures”: This revised standard requires disclosure of:

(a) the significance of financial instruments for an entity’s financial position and performance. These disclosures incorporate many of the requirements previously in IAS 32.

(b) qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk. The qualitative disclosures describe management’s objectives, policies and processes for managing those risks. The quantitative disclosures provide information about the extent to which the entity is exposed to risk, based on information provided internally to the entity’s key management personnel. Together, these disclosures provide an overview of the entity’s use of financial instruments and the exposures to risks they crate.

•  Amendments to IAS 1 – “Presentation of financial Statements”:

The amendments require that an entity disclose information that enables users of its financial statements to evaluate the entity’s objectives, policies and processes for managing capital.

•  IFRIC 10 – “Interim Financial reporting and Impairment”:

40 PSV Annual Report 2010

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40 PSV Annual Report 2010

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 financial year are taken directly to a foreign currency translation reserve in shareholders’ equity in the Group financial statements and to the income statement for the Company. On disposal of the net investment, the translation gains or losses are recognised in the income statement.

Revenue ReCOGnItIOnRevenue is recognised only when it is probable that the economic benefits associated with a transaction will flow to the Group and the amount of revenue can be measured reliably. No revenue is recognised if there are significant uncertainties regarding the recovery of the consideration due or associated costs for the possible return of goods.

GoodsRevenue arising from the sale of goods is measured at the fair value of the consideration received, or receivable net of returns and allowances, trade discounts, volume rebates and value added taxes. Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, recovery of the consideration is probable, the associated costs and possible return of the goods can be estimated reliably, and there is no continuing management involvement with the goods.

Where the Company enters into contracts, to the extent that these are less than three months, revenue  is  recognized  based  on  the  completed  contract  method.  To  the  extent  that  the contracts extend for more than three months, the percentage of completion method is used to recognise revenue.

fInAnCIAl InCOMeInterestInterest income is recognised in profit and loss as it accrues using the effective interest rate method.

exchange gainsGains on foreign currency transactions are included in finance income.

fInAnCIAl exPensesFinance expenses comprise interest payable on borrowings and the unwinding of discounts arising on deferred purchase considerations owing to vendors on investments acquired; calculated on the principal outstanding using the effective interest rate method. Losses on foreign currency transactions are also included in financial expenses.

Accounting policiesfor the year ended 28 February 2010

funCtIOnAl AnD PResentAtIOn CuRRenCYThe financial statements are presented in Rand, which is the Company’s functional currency, and all values are rounded to the nearest Rand except when otherwise indicated.

BAsIs Of COnsOlIDAtIOnsubsidiariesThe Group financial statements include the financial statements of the Company and its subsidiaries. Where an investment in a subsidiary was acquired and disposed of during the financial year its results are included from, or to, the date control commences or ceases.

Subsidiaries are those entities over whose financial and operating policies the Group has the power to exercise control, so as to obtain benefits from their activities. In assessing control, potential voting rights that are presently exercisable are taken into account.

New acquisitions are included in the Group financial statements using the purchase method whereby the assets and liabilities are measured at their fair value. The purchase consideration is allocated on the basis of the fair values on the dates of acquisition.

All intra-group transactions and balances arising are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

All companies in the Group maintain consistent accounting policies and have the same year-end.

fOReIGn CuRRenCIesforeign currency transactionsForeign currency transactions are translated at the rates of exchange ruling at the dates of the transactions. Balances on monetary assets and liabilities outstanding on foreign transactions at the end of the financial year are translated to Rand at the rates ruling at that date. Gains or losses on translation are recognised in profit or loss.

Non-monetary assets and liabilities that are measured in terms of historical cost in foreign currency are translated using the exchange rate at the date of the transaction. 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 financial year and the results of operations and cash flow items are translated at an appropriate weighted average rate of exchange for the year. Gains and losses on translation are taken directly to a foreign currency translation reserve in shareholders’ equity.

41PSV Annual Report 2010

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. Residual values and useful lives are reassessed annually. Depreciation of an item of property, plant and equipment begins when it is available for the use and ceases at the earlier of the date it is classified as held for sale or the date it is derecognised.

Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amount and are taken to profit 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 benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

leAse Assetsfinance leasesLeases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Property, plant and equipment subject to finance lease agreements are capitalised initially at the lesser of their fair value and the present value of the minimum lease payments and the corresponding liability to the lessor is raised. Lease payments are allocated 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 profit, and the capital repayment, which reduces the liability to the lessor. These assets are treated on the same basis as the property, plant and equipment owned by the Group and are subject to impairment losses.

Operating leasesOther leases that do not transfer substantially all the risks and rewards of ownership, are treated as operating leases with lease payments charged against operating profit. Payments made under operating leases are charged against income on a straight-line basis over the period of the lease.

IntAnGIBle AssetsIntangible assets are stated at cost less accumulated amortisation and impairment losses. The current estimated useful lives are:

•  Market relationships   10 to 20 years•  Customer relationships   1 to 7 years•  Technology relationships   10 years

tAxAtIOnIncome tax expense comprises current and deferred tax. Income tax expense is recognised in profit and loss except to the extent that it relates to 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. Temporary differences are differences between the carrying amounts of assets and liabilities for financial 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•   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 profit 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 profits will be available against which the associated unutilised taxation losses and deductible temporary differences can be utilised. Deferred taxation assets are reduced to the extent that it is no longer probable that the related taxation benefit will be realised.

PROPeRtY, PlAnt AnD eQuIPMentProperty, plant and equipment are recorded at cost, less accumulated depreciation and impairment losses. All assets except for land are depreciated on the straight-line method over their expected useful lives to an estimated residual value. The estimated useful lives are currently:

•  Buildings   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.

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IMPAIRMent Of fInAnCIAl AssetsA financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial 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 flows of the asset.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value.

All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in equity is transferred to profit or loss.

InventORIesInventories are stated at the lower of cost or net realisable value. Cost is determined using weighted average cost. These estimates are regularly reviewed and updated to reflect in input cost of raw materials, direct labour, other direct costs and related normal production overheads. Slow-moving goods and obsolete inventories are written down to their estimated net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses.

The policy is reviewed annually in accordance with market conditions.

tRADe AnD OtheR ReCeIvABlesThe fair value of trade and other receivables is estimated as the present value of the future cash flows, discounted at the market interest rate at the reporting date.

CAsh AnD CAsh eQuIvAlentsCash and cash equivalents are measured at fair value plus transaction costs on initial recognition and amortised cost using the effective interest method thereafter.

PROvIsIOnsProvisions are recognised when the Group has a present legal or constructive obligation as a result of past events, for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the obligation can be made. If the effect is material, provisions are determined by discounting the expected future cash

Accounting policiesfor the year ended 28 February 2010

The amortisation methods, useful lives and resettlement values are reviewed at each financial year end.

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 cost of the acquisition and the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.

Where the excess is negative, it is recognised immediately in the income statement as a gain made on acquisition of business combinations.

Goodwill is tested annually for impairment losses. Gains and losses on disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash generating units for the purpose of impairment testing.

PAYMent In ADvAnCePayments in advance are capitalised and are released to profit and loss in the period they are legally due.

IMPAIRMent Of AssetsThe carrying amount of the Group’s assets, other than inventories, receivables and deferred tax assets, which are separately assessed, are reviewed at each balance date to determine whether there is an indication of impairment and at any time when there is an indication of impairment. If there is any indication that an asset may be impaired, its recoverable amount is estimated. The recoverable amount is the higher of its fair value less cost to sell and its value in use. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit (“CGU”) exceeds its recoverable amount.

A previously recognised impairment loss, other than for goodwill, is reversed if the recoverable amount increases as a result of a change in the estimates and market conditions used to determine the recoverable amount, but not to an amount higher than the carrying amount that would have been determined (net of depreciation and amortisation) had no impairment loss been recognised in previous years.

A CGU is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of goodwill allocated to the CGU and then to reduce the carrying amount to the other assets in the unit on a pro rata basis.

43PSV Annual Report 2010

Regular way purchases and sales of financial 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 specified in the contract expire or are discharged or cancelled.

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

OtherOther non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

eARnInGs PeR shAReThe Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise deferred equity purchase considerations and share awards granted to employees.

seGMent RePORtInGA segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of other segments. Segment information is presented in respect of the Group’s business and geographical segments. The Group’s primary format for segment reporting is based on business segments. The business segments are determined based on the Group’s management and internal reporting structure.

Inter-segment pricing is determined on an arm’s length basis.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly investments (other than investment property) and related revenue, loans and borrowings and related expenses, corporate assets (primarily the Company’s headquarters) and head office expenses, and income tax assets and liabilities.

Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment.

flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

stAteD CAPItAlOrdinary sharesIncremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity.

Repurchase of stated capitalWhen stated capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity.

eMPlOYee BenefItsshort-term employee benefitsThe cost of all short-term employee benefits is recognised during the period in which the employee renders the related service.

An accrual is made for the estimated liability for annual leave and performance bonuses as a result of services rendered by employees up to the balance sheet date.

Defined contribution plansCertain subsidiaries in the Group contribute to a defined contribution fund for employees. A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in the income statement when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

fInAnCIAl InstRuMentsnon-derivative financial instrumentsNon-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instrument are measured as described below.

A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset.

44 PSV Annual Report 2010

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notes to the annual financial statementsfor the year ended 28 February 2010

1. segmental reportingThe Group is organised into four main business segments, pumps, spares and valves; linings and general industrial supplies; specialised services; and a shared service centre. The Group manufactures and distributes in two main geographical areas, South Africa and Zambia.

Segment assets consist primarily of:– property, plant and equipment

– payments in advance

– inventories

– receivables

– cash

Deferred tax assets are excluded

Segment liabilities consist primarily of: – borrowings

– payables

Deferred tax liabilities are excluded

2010

Pumps, spares and valves

R

linings and general industrial

R

specialised services

R

shared services

Rtotal

R

Revenue 112 077 722 134 915 236 125 189 514 – 372 182 472

Gross profit 35 237 241 35 899 310 19 020 012 – 90 156 563

Depreciation and amortisation 2 547 091 1 130 133 1 117 149 4 015 855 8 810 228

Other operating expenses 23 039 123 33 029 417 14 043 283 (11 244 286) 58 867 538

Profit before tax* 4 779 768 6 937 943 5 015 664 (1 501 834) 15 231 541

Capital expenditure 3 244 869 856 843 5 030 175 1 812 870 10 944 756

Gross assets 74 829 348 63 857 666 46 013 465 84 642 148 269 342 627

Gross liabilities 21 948 522 9 725 921 16 709 574 75 577 172 123 961 189

*Excluding impairment of intangible assets and goodwill

45PSV Annual Report 2010

1. segmental reporting continued

2009

Pumps, spares and valves

R

Linings and general industrial

R

Specialised services

R

Shared services

RTotal

R

Revenue 102 209 258 191 172 523 137 060 438 422 500 430 864 719

Gross profit 36 511 660 38 712 763 22 273 416 422 500 97 920 339

Depreciation and amortisation 2 138 309 1 041 613 1 092 566 6 102 000 10 374 488

Other operating expenses 15 832 164 17 108 888 14 269 031 13 199 909 60 409 992

Operating profit 5 179 965 17 503 777 3 562 371 (3 012 494) 23 233 619

Capital expenditure 2 453 009 1 956 258 953 812 4 450 662 9 813 741

Gross assets 89 984 247 76 683 550 57 324 234 140 392 675 364 384 706

Gross liabilities 48 204 092 27 800 070 32 717 108 22 860 139 131 581 408

Group Company

2010R

2009R

2010R

2009R

2. Revenue

Sales of goods 312 467 086 370 543 658 – –

Rendering of services 59 715 386 60 321 061 22 180 000 17 480 000

372 182 472 430 864 719 22 180 000 17 480 000

46 PSV Annual Report 2010

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notes to the annual financial statementsfor the year ended 28 February 2010

Group Company

2010R

2009R

2010R

2009R

3. Results from operating activities

The following items have been charged/(credited) in arriving at results from operating activities:

Amortisation of intangible assets 3 275 985 4 889 300 – –

Auditors’ remuneration

Audit fee – prior year underprovision 1 247 556 1 228 782 316 525 335 775

Depreciation 5 534 243 5 485 188 963 731 883 549

Directors’ remuneration 8 160 317 5 893 640 – –

Fees paid for

Secretarial services 333 283 235 547 333 283 235 547

Loss/(profit) on sale of property, plant and equipment 124 771 (107 538) – 101 180

Operating lease charges in respect of buildings 3 864 034 2 293 355 480 000 240 000

Impairment of trade receivables 2 891 516 2 755 513 – –

Impairment of goodwill 85 461 618 – – –

Impairment of intangible assets 13 024 604 – – –

Retirement fund contributions 4 936 091 4 639 926 695 121 213 145

Salaries and wages 50 084 715 47 079 632 8 928 002 6 745 856

Equity-settled share-based payment transactions 2 122 578 – 2 122 578 –

47PSV Annual Report 2010

3. Results from operating activities continued

At 28 February 2010 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 vesting price is zero cents.

terms and conditions of share option programme

Share 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.

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.

vesting periods

Employees in service before 21 April 2006 when the company listed:

– 100% of shares vested on 28 February 2010

Employees in service between 22 April 2006 to 28 February 2007:

– 100% of shares vested on 28 February 2010

Employees in service after 28 February 2007:

– 100% of shares will vest three years from the date of employment

Employees of all subsidiaries acquired:

– Shares will vest three years from the date of acquisition for employees already in service when the company was acquired

– Employees joining after the acquisition date, 100% will vest three years from the date of employment

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notes to the annual financial statementsfor the year ended 28 February 2010

3. Results from operating activities continued

share options granted during the year ended 28 february 2010

Grant date number of instruments Grant price Contractual life of options

21 June 2009 7 261 200 0c Ranges between 1 to 41 months

10 December 2009 366 030 0c 12 months

27 January 2010 877 900 0c 20 months

10 February 2010 1 626 279 0c Ranges between 8 to 25 months

10 131 409

Reconciliation of share options granted during the year ended 28 february 2010

Opening balance –

Options granted during the period 10 131 409

Options vested during the period (4 915 100)

Unvested options 5 216 309

Group Company2010

R2009

R2010

R2009

R

4. finance income and finance costsRecognised in profit or loss

Interest income on loans and receivables – – 2 006 948 2 365 148

Interest income on bank deposits 8 426 235 3 949 902 5 674 406 3 183 305

finance income 8 426 235 3 949 902 7 681 354 5 548 453

Net foreign exchange loss 2 631 468 6 426 669 – –

Interest expense on bank overdrafts and loans 13 879 864 5 402 675 10 747 787 5 777 988

Interest expense on finance leases 1 353 348 861 188 – –

Interest expense – SARS 135 522 – – –

Unwinding of interest on deferred purchase considerations 1 839 356 1 346 994 1 778 962 1 342 171

finance costs 19 839 558 14 037 526 12 526 749 7 120 159

net finance costs recognised in profit or loss (11 413 323) (10 087 624) (4 845 395) (1 571 706)

49PSV Annual Report 2010

Group Company

2010R

2009R

2010R

2009R

5. Income tax expense

South African normal taxation

Current tax expense/(credit) 6 578 450 8 389 036 115 114 (22 760)

– current year 6 769 608 8 339 698 – –

– prior year (over)/underprovision (191 158) 49 338 115 114 (22 760)

Deferred tax (credit)/expense (6 752 507) (1 708 092) 555 754 920 710

– current year (5 917 587) (1 666 606) 555 754 1 121 169

– prior year (over)/underprovision (834 920) (41 486) – (200 459)

Total normal taxation (174 057) 6 680 944 670 868 897 950

Foreign taxes 1 528 5 541 – –

Total taxation charge (172 529) 6 686 485 670 868 897 950

The effective rate of taxation differs from the standard rate of taxation as follows:

% % % %

Standard rate of taxation 28,00 28,00 28,00 28,00

Deferred taxation prior year under/(over) provision 1,00 (0,18) – (7,55)

Disallowed expenditure (28,91) 0,79 (28,64) 14,23

Normal taxation prior year under/(over) provision 0,23 0,21 (0,13) (0,86)

Capital gains tax – (0,06) – –

Foreign taxes (0,11) 0,02 – –

Effective rate of taxation 0,21 28,78 (0,77) 33,82

50 PSV Annual Report 2010

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notes to the annual financial statementsfor the year ended 28 February 2010

Group

2010R

2009R

6. earnings per shareProfit attributable to ordinary shareholders (83 082 152) 16 547 134Weighted average number of ordinary shares in issue 244 223 462 235 784 272Basic (loss)/earnings per share (cents) (34,02) 7,02

Basic (loss)/earnings per share is calculated by dividing the net profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year.Reconciliation of weighted average number of sharesShares in issue 247 961 670 236 020 439Effect of weighting of shares issued during the year (3 738 208) (236 167)

Weighted average number of shares 244 223 462 235 784 272

Reconciliation of headline earnings(Loss)/profit attributable to ordinary shareholders (83 082 152) 16 547 134Loss/(profit) on disposal of property, plant and equipment 124 771 (107 538)Impairment of goodwill and intangibles 98 486 222 –Deferred tax on impairment of intangibles (2 833 147) –

headline earnings 12 695 693 16 439 596

headline earnings per share (cents) 5,20 6,97

Headline earnings per share is calculated by dividing the headline earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year. Dilutive effectThe calculation of diluted earnings per share and diluted headline earnings per share are based on:Weighted average number of shares in issue for basic and headline earnings per share 244 223 462 235 784 272Potentially dilutive ordinary shares resulting from the weighted average of deferred shares outstanding – 11 667 194Potentially dilutive share grants 5 216 309 –

Number of shares for diluted earnings per share 249 439 771 247 451 466

Diluted (loss)/earnings per share (cents) (33,31) 6,69

Diluted earnings per share is calculated by dividing the net profit attributable to ordinary shareholders by the diluted weighted average number of ordinary shares in issue during the year. 5,09 6,64Diluted headline earnings per share (cents) Diluted headline earnings per share is calculated by dividing the headline earnings attributable to ordinary shareholders by the diluted weighted average number of ordinary shares in issue during the year.

51PSV Annual Report 2010

CostR

Accumulateddepreciation

R

Carryingamount

R

7. Property, plant and equipment2010

Group – Owned

Computer equipment and software 2 302 959 1 532 859 770 100

Furniture and fittings 2 934 689 1 230 289 1 704 400

Land and buildings 30 104 880 664 920 29 439 960

Leasehold improvements 591 615 341 343 250 272

Motor vehicles 5 560 928 3 154 857 2 406 071

Office equipment 416 884 239 431 177 453

Patterns and dies 12 348 935 1 932 624 10 416 311

Plant and machinery 9 669 189 5 741 344 3 927 845

63 930 079 14 837 667 49 092 412

Group – leased

Computer equipment and software 167 546 53 864 113 682

Furniture and fittings 413 522 183 810 229 712

Motor vehicles 7 564 829 3 265 894 4 298 935

Office equipment 57 070 4 756 52 314

Plant and machinery 6 463 741 1 604 237 4 859 504

total 78 596 787 19 950 228 58 646 559

52 PSV Annual Report 2010

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notes to the annual financial statementsfor the year ended 28 February 2010

CostR

Accumulateddepreciation

R

Carryingamount

R

7. Property, plant and equipment continued

2010

Company – Owned

Computer equipment and software 793 969 310 028 483 941

Furniture and fittings 749 307 243 928 505 379

Land and buildings – – –

Leasehold improvements – – –

Motor vehicles – – –

Office equipment 63 510 20 452 43 058

Patterns and dies – – –

Plant and machinery – – –

1 606 786 574 408 1 032 378

Company – leased

Computer equipment and software 167 546 53 864 113 682

Furniture and fittings 413 522 183 810 229 712

Motor vehicles 220 793 63 917 156 876

Office equipment 57 070 4 756 52 314

Plant and machinery 3 093 639 1 312 740 1 780 899

total 5 559 356 2 193 495 3 365 861

53PSV Annual Report 2010

CostR

Accumulateddepreciation

R

Carryingamount

R

7. Property, plant and equipment continued

2009

Group – Owned

Computer equipment and software 1 944 419 1 365 286 579 133

Furniture and fittings 3 246 309 974 657 2 271 652

Land and buildings 29 366 824 426 261 28 940 563

Leasehold improvements 591 616 318 948 272 668

Motor vehicles 6 261 564 3 049 536 3 212 028

Office equipment 677 343 322 403 354 940

Patterns and dies 12 214 577 1 623 113 10 591 464

Plant and machinery 12 469 099 6 289 158 6 179 941

66 771 751 14 369 362 52 402 389

Group – leased

Computer equipment and software – – –

Furniture and fittings – – –

Motor vehicles 3 820 462 1 809 671 2 010 791

Office equipment – – –

Plant and machinery – – –

total 70 592 213 16 179 033 54 413 180

54 PSV Annual Report 2010

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notes to the annual financial statementsfor the year ended 28 February 2010

CostR

Accumulateddepreciation

R

Carryingamount

R

7. Property, plant and equipment continued

2009

Company – Owned

Computer equipment and software 372 985 188 945 184 040

Furniture and fittings 1 239 310 296 086 943 224

Land and buildings – – –

Leasehold improvements – – –

Motor vehicles 112 160 22 000 90 160

Office equipment 63 510 9 865 53 645

Patterns and dies – – –

Plant and machinery – – –

1 787 965 516 896 1 271 069

Company – leased

Computer equipment and software – – –

Furniture and fittings – – –

Motor vehicles – – –

Office equipment – – –

Plant and machinery 2 354 474 712 868 1 641 606

total 4 142 439 1 229 764 2 912 675

55PSV Annual Report 2010

Opening carrying value

RAdditions

Rtransfers in

RDisposals

Rtransfers out

RDepreciation

R

Closing carrying value

R

7. Property, plant and equipment continued

Reconciliation of the carrying amount

2010

Group – Owned

Computer equipment and software 579 133 598 848 – (497) (17 423) (389 961) 770 100

Furniture and fittings 2 271 652 269 784 – (172 976) (298 632) (365 428) 1 704 400

Land and buildings 28 940 563 800 288 – – – (300 891) 29 439 960

Leasehold improvements 272 668 13 940 – – – (36 336) 250 272

Motor vehicles 3 212 028 660 895 – (84 265) (803 614) (578 973) 2 406 071

Office equipment 354 940 30 711 – (111 098) – (97 100) 177 453

Patterns and dies 10 591 464 374 360 – – – (549 513) 10 416 311

Plant and equipment 6 179 941 1 037 767 – (583 875) (1 778 622) (927 366) 3 927 845

52 402 389 3 786 593 – (952 711) (2 898 291) (3 245 568) 49 092 412

Group – leased

Computer equipment and software – 128 346 17 423 – – (32 087) 113 682

Furniture and fittings – – 298 632 – – (68 920) 229 712

Motor vehicles 2 010 791 3 000 495 803 614 (224 423) – (1 291 542) 4 298 935

Office equipment – 57 071 – – – (4 757) 52 314

Plant and machinery – 3 972 251 1 778 622 – – (891 369) 4 859 504

total 54 413 180 10 944 756 2 898 291 (1 177 134) (2 898 291) (5 534 243) 58 646 559

56 PSV Annual Report 2010

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notes to the annual financial statementsfor the year ended 28 February 2010

Opening carrying value

RAdditions

Rtransfers in

RDisposals

Rtransfers out

RDepreciation

R

Closing carrying value

R

7. Property, plant and equipment continued

Reconciliation of the carrying amount

2010

Company – Owned

Computer equipment and software 184 040 460 184 – – (17 423) (142 860) 483 941

Furniture and fittings 943 224 98 957 – (175 438) (298 632) (62 732) 505 379

Land and buildings – – – – – – –

Leasehold improvements – – – – – – –

Motor vehicles 90 160 – – – (90 160) – –

Office equipment 53 645 – – – – (10 587) 43 058

Patterns and dies – – – – – – –

Plant and machinery – – – – – – –

1 271 069 559 141 – (175 438) (406 215) (216 179) 1 032 378

Company – leased

Computer equipment and software – 128 346 17 423 – – (32 087) 113 682

Furniture and fittings – – 298 632 – – (68 920) 229 712

Motor vehicles – 108 632 90 160 – – (41 916) 156 876

Office equipment – 57 071 – – – (4 757) 52 314

Plant and machinery 1 641 606 739 165 – – – (599 872) 1 780 899

total 2 912 675 1 592 355 406 215 (175 438) (406 215) (963 731) 3 365 861

57PSV Annual Report 2010

Opening carrying value

RAdditions

RDisposals

R

Acquisition of subsidiary and business

combinationsR

DepreciationR

Closingcarrying value

R

7. Property, plant and equipment continued

Reconciliation of the carrying amount

2009

Group – Owned

Computer equipment and software 515 676 474 748 (31 822) 24 294 (403 763) 579 133

Furniture and fittings 1 906 324 816 193 – 46 167 (497 032) 2 271 652

Land and buildings 25 776 980 3 649 893 (191 500) – (294 810) 28 940 563

Leasehold improvements 457 604 11 461 (72 598) – (123 799) 272 668

Motor vehicles 2 870 415 1 171 428 (220 846) 244 495 (853 464) 3 212 028

Office equipment 135 582 250 068 (19 597) 65 577 (76 690) 354 940

Patterns and dies 11 082 311 518 838 (314 073) – (695 612) 10 591 464

Plant and equipment 5 531 894 1 778 596 (38 603) 648 123 (1 740 069) 6 179 941

48 276 786 8 671 225 (889 039) 1 028 656 (4 685 239) 52 402 389

Group – leased

Motor vehicles 2 003 988 1 142 516 (335 764) – (799 949) 2 010 791

total 50 280 774 9 813 741 (1 224 803) 1 028 656 (5 485 188) 54 413 180

Company – Owned

Computer equipment and software 175 814 160 100 (22 879) – (128 995) 184 040

Furniture and fittings 841 390 287 337 – – (185 503) 943 224

Leasehold improvements 75 387 – (72 598) – (2 789) –

Motor vehicles 112 925 5 135 (5 702) – (22 198) 90 160

Office equipment 33 683 28 677 – – (8 715) 53 645

Patterns and dies 378 529 – (314 074) – (64 455) –

Plant and equipment 2 112 500 – – – (470 894) 1 641 606

total 3 730 228 481 249 (415 253) – (883 549) 2 912 675

Certain property, plant and equipment has been encumbered as stated in note 18.

58 PSV Annual Report 2010

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notes to the annual financial statementsfor the year ended 28 February 2010

Group

2010 2009

CostR

Accumulateddepreciation

and impairmentR

Carryingvalue

RCost

R

Accumulateddepreciation

and impairmentR

Carryingvalue

R

8. Intangible assets

Market relationships 17 337 251 (8 267 219) 9 070 032 17 337 251 (1 846 396) 15 490 855

Customer relationships 16 794 769 (12 421 352) 4 373 417 16 794 769 (8 790 822) 8 003 947

Technology relationships 15 303 838 (7 799 556) 7 504 282 12 624 838 (1 550 320) 11 074 518

49 435 858 (28 488 127) 20 947 731 46 756 858 (12 187 538) 34 569 320

Carrying value reconciliation 2010

Opening valueR

Amortisation R

AdditionsR

ImpairmentsR

Closing valueR

Market relationships 15 490 855 (812 909) – (5 607 914) 9 070 032

Customer relationships 8 003 947 (1 625 033) – (2 005 497) 4 373 417

Technology relationships 11 074 518 (838 043) 2 679 000 (5 411 193) 7 504 282

34 569 320 (3 275 985) 2 679 000 (13 024 604) 20 947 731

2009

Opening value Amortisation Additions Impairments Closing value

Market relationships 13 889 344 (863 963) 2 465 474 – 15 490 855

Customer relationships 6 832 380 (3 139 717) 4 311 284 – 8 003 947

Technology relationships 2 658 800 (885 620) 9 301 338 – 11 074 518

23 380 524 (4 889 300) 16 078 096 – 34 569 320

For details of the methodology adopted for the impairment of intangible assets refer to note 9.

59PSV Annual Report 2010

Group Company

2010

R2009

R2010

R2009

R

9. GoodwillOpening balance 117 153 067 111 817 208 – –

Subsidiary acquired (refer to note 23) – 2 198 948 – –

Revision of goodwill – Omnirapid/Engineered Linings/APE Pumps/Dasher – 3 136 911 – –

Impairment of goodwill (85 461 618) – – –

Closing balance 31 691 449 117 153 067 – –

For the purpose of impairment testing, goodwill is allocated to the Group’s individual operating subsidiaries.

These represent the lowest level within the Group at which goodwill is monitored for internal management purposes.

The aggregate carrying amounts of goodwill allocated to each of the units is as follows:

2010R

2009R

PSV Services (including PSV Thuthuka, PSV Zambia and Omnirapid Mining and Industrial Supplies) 17 606 734 88 822 061

Groupline Projects (Pty) Limited 3 039 117 3 039 117

Petrologic (Pty) Limited – 3 986 785

Engineered Linings (Pty) Limited 10 256 781 19 106 156

Rand Air & Gas Installations (Pty) Limited 788 817 788 817

Mather + Platt (Pty) Limited – 1 410 131

31 691 449 117 153 067

The recoverable amounts of the operating subsidiaries were based on their value in use and were determined with the assistance of independent valuers. The carrying amount PSV Services, Petrologic, Engineered Linings and Mather + Platt were determined to be in excess of their recoverable amounts and hence an impairment loss has been recognised in the current year for both goodwill and intangibles. These impairment losses were as a result of deteriorating market conditions and a reduction in expectation of future profitability of the operations.

The value in use for the cash generating units was determined by discounting the future cash flows from the continuing use of the unit, after eliminating all intercompany management fees and is based on the following key assumptions:• Cash flows were based on actual operating results and a five-year forecast business plan;•  A terminal growth rate of 4,5% was used thereafter, which does not exceed the long-term average growth of the industry;•  Revenue and operating costs were projected to grow by approximately 6% to 7% for the years 2011 to 2015; and•  A pre-tax discount rate of between 23,57% and 28,90% was used in determining the recoverable amounts of the units.

60 PSV Annual Report 2010

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notes to the annual financial statementsfor the year ended 28 February 2010

Group Company

2010

R2009

R2010

R2009

R

10. loans receivable

Colvic Petroleum Products (Pty) Limited 183 100 735 808 183 100 735 808

Other 36 302 7 500 7 500 7 500

219 402 743 308 190 600 743 308

The loan to Colvic is secured, interest-bearing and has fixed repayment terms.

Issued share Percentage holding Cost of shares loans to/(from)

capital 2010 2009 2010 2009 2010 2009

R % % R R R R

11. Investment in subsidiaries

held by Psv holdings limited

Operating companies

PSV Services (Pty) Limited 200 100 100 11 672 971 99 248 781 1 974 194 10 955 240

PSV Thuthuka (Pty) Limited 200 100 100 2 106 098 2 106 099 (1 264 671) 4 716 384

PSV Zambia Limited 18 943 100 100 1 280 924 3 094 671 1 327 303 1 187 001

Omnirapid Mining & Industrial Supplies (Pty) Limited 100 100 100 20 151 954 3 096 589 (11 721 543) 1 563 594

Groupline Projects (Pty) Limited 100 100 100 13 344 698 13 166 301 (5 548 584) (3 221 411)

Petrologic (Pty) Limited 258 100 100 14 920 152 18 906 937 5 535 178 5 869 574

Umzantsi Africa Pumps & Valves  (Pty) Limited 120 100 100 120 100 1 204 547 254 187

Engineered Linings (Pty) Limited 100 100 100 32 659 437 41 491 525 (16 082 397) (471 894)

APE Pumps (Pty) Limited 100 100 100 603 109 426 989 7 735 905 2 414 638

Dasher (Pty) Limited 1 333 100 100 – 684 060 – 856 197

61PSV Annual Report 2010

Issued share Percentage holding Cost of shares loans to/(from)

capital 2010 2009 2010 2009 2010 2009

R % % R R R R

11. Investment in subsidiaries continued

PSV Properties (Pty) Limited 100 100 100 100 100 6 447 237 287 258

PSV Properties 2 (Pty) Limited 100 100 100 100 100 (3 099 202) (2 757 953)

PSV Marketing (Pty) Limited 100 100 100 100 100 (956) (375)

Rand Air & Gas Installations (Pty) Limited 3 876 100 100 15 739 451 15 726 395 (5 661 089) (3 859 280)

Mather + Platt (Pty) Limited 2 100 100 10 192 044 40 136 (10 184 203) –

122 671 258 197 988 883 (29 338 281) 17 793 160

Total owing by subsidiaries 24 224 364 28 103 698

Total owing to subsidiaries (53 562 645) (10 310 538)

(29 338 281) 17 793 160

For terms and conditions relating to related-party loans, refer to note 24.

62 PSV Annual Report 2010

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notes to the annual financial statementsfor the year ended 28 February 2010

Group Company

2010

R2009

R2010

R2009

R

12. InventoriesRaw materials and consumables 10 848 748 14 845 597 – –

Work in progress 4 840 235 6 680 519 – –

Finished goods and merchandise 45 109 300 52 701 868 – –

60 798 283 74 227 984 – –

The amount of write-down of inventories recognised as an expense is R1 820 150 (2009: R1 172 322). This expense is included in the cost of sales line item on the face of the income statement.Provision for obsolete stockBalance at 1 March 2009 1 963 852 791 530 – –

Provisions made during the period 5 425 176 1 172 322 – –

Provisions used during the period (3 605 026) – – –

Balance at 28 February 2010 3 784 002 1 963 852 – –

13. trade and other receivablesTrade receivables 73 926 090 74 141 363 18 605 115 3 948 890

Prepayments 1 418 100 530 458 46 069 32 143

Deposits 200 008 139 171 – –

VAT 1 929 034 1 658 071 – –

Derivatives 131 952 – – –

Other 117 637 – – –

77 722 821 76 469 063 18 651 184 3 981 033

Trade receivables are non-interest bearing and are generally on 30 day terms. There was a reversal of the provision for doubtful debts of R2 891 516 (2009: R2 755 513 impairment) during the year.Provision for doubtful debtsBalance at 1 March 2009 7 713 952 4 958 439 – –

Impairment (gain)/loss processed through profit and loss (2 891 516) 2 755 513 – –

Balance at 28 February 2010 4 822 436 7 713 952 – –

For terms and conditions relating to related-party receivables, refer to note 24.

The Group’s exposure to credit and currency risks, and impairment losses related to trade and other receivables is disclosed in note 20.A restricted cession of the trade debtors has been given as security for the banking and loan facilities provided by Standard Bank.

63PSV Annual Report 2010

Group Company

2010

R2009

R2010

R2009

R

14. Cash and cash equivalents

Cash and bank balances 15 311 947 1 346 061 797 247 –

Bank overdraft (27 439 726) (4 404 324) (16 099 462) (21 112 016)

Cash and cash equivalents in the statement of cash flows (12 127 779) (3 058 263) (15 302 215) (21 112 016)

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 capital

Authorised

1 000 000 000 ordinary shares of no par value

Issued

247 961 670 (2009: 236 020 439) ordinary shares of no par value 270 806 106 260 605 126 270 806 106 260 605 126

Number of shares issued to external parties:

Total shares in issue 247 961 670 236 020 439 247 961 670 236 020 439

Treasury shares held by company/subsidiary (752 100) (2 338 548) (752 100) (2 338 548)

Net shares held by external parties 247 209 570 233 681 891 247 209 570 233 681 891

64 PSV Annual Report 2010

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notes to the annual financial statementsfor the year ended 28 February 2010

GroupGroupline

ProjectsR

PSVZambia

R

OmnirapidMining

R

EngineeredLinings

R

Rand Air& Gas

R

Mather+ Platt

RTotal

R

16. Purchase consideration payable Purchase price 14 601 234 3 094 671 2 607 000 38 530 070 15 710 848 9 934 783 84 478 606

Cumulative unwinding of interest to 28 February 2009 960 260 223 000 193 000 2 364 363 810 643 4 824 4 556 090

Revision to value of investment in Groupline (1 434 952) – – – – – (1 434 952)

– Reallocation to deferred equity reserve – – – (7 662 673) – – (7 662 673)

– Revision to cash consideration payable – – – 2 002 672 – – 2 002 672

Adjustment due to achievement of super-profit target – Omnirapid – – 489 589 – – – 489 589

settlements

Cash (10 887 724) (3 317 671) (3 289 589) (28 510 899) (5 400 000) (9 500 000) (60 905 883)

Shares issued (1 600 000) – – (2 254 442) – – (3 854 442)

Balance owing at 28 february 2009 1 638 818 – – 4 469 091 11 121 491 439 607 17 669 007

long-term portion 1 638 818 – – – 4 821 491 – 6 460 309

Current portion – – – 4 469 091 6 300 000 439 607 11 208 698

Unwinding of interest 2010 160 525 – – 583 785 1 034 653 60 393 1 839 356

settlements

Cash – – – (5 052 876) (6 299 999) (500 000) (11 852 875)

Shares issued – – – – – –

Balance owing at 28 february 2010 1 799 343 – – – 5 856 145 – 7 655 488

long-term portion – – – – 2 420 145 – 2 420 145

Current portion 1 799 343 – – – 3 436 000 – 5 235 343

Rand Air & Gas Installations (Pty) Limited was acquired by PSV Holdings effective 1 September 2008. The purchase price is payable over 16 months from balance sheet date. Mather + Platt (Pty) Limited was acquired with effect from 1 February 2009. The final instalment of the purchase price was paid in February 2010.The final instalment for Group Line Projects is payable on 28 February 2011.

65PSV Annual Report 2010

Group Company

2010 2009 2010 2009

17. Deferred taxationThe movement on the deferred taxation account is as follows:

Balance at beginning of year (1 912 905) 17 302 1 442 011 2 362 721

Income statement charge 6 752 507 1 708 092 (555 754) (920 710)

– current year 5 917 587 1 666 606 (555 754) (1 121 169)

– prior year over/(under) provision 834 920 41 486 – 200 459

Balance sheet credit – (3 638 299) – –

– acquisition of subsidiary – – – –

– understatement of Engineered Linings at acquisition deferred tax – (207 887) – –

– deferred tax arising on intangible assets – (3 430 412) – –

Balance at end of year 4 839 602 (1 912 905) 886 257 1 442 011

Balance at end of year is made up of:

Deferred taxation assets 9 806 069 6 916 144 886 257 1 442 011

Deferred taxation liabilities (4 966 467) (8 829 049) – –

4 839 602 (1 912 905) 886 257 1 442 011

Comprising:

Capital allowances (2 540 277) (1 684 819) (203 198) (195 949)

Provisions 2 945 578 2 743 027 201 090 162 350

Intangibles (4 966 467) (8 616 884) – –

Advance receipts 34 233 84 203 – –

Prepayments (491 663) (268 538) (12 899) (9 000)

Estimated taxation losses 9 858 198 5 830 106 901 264 1 484 610

4 839 602 (1 912 905) 886 257 1 442 011

A deferred tax asset has only been raised in respect of a portion of the computed tax losses arising in PSV Zambia. The computed tax losses in respect of which a deferred tax asset has not been raised amounts to R10 675 389.

66 PSV Annual Report 2010

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Notes to the aNNual fiNaNcial statemeNts

for the year ended 28 february 2010

Group Company

2010

R2009

R2010

R2009

R

18. loans and borrowingslocal

SecuredInstalment sale and finance lease agreements for motor vehicles and equipment payable over periods from two to five years at interest rates between 9,25% and 10,5% 9 984 219 6 156 454 1 796 765 3 282 079

Mortgage bond – Secured by first covering bond over Unit 419, Greenhills Industrial Estate, Sam  Green Road, Tunney Ext 6. The bond is repayable in 120 equal instalments. Current monthly instalments on the bond amounts to R76 624 and bears interest linked to prime less 1,5% 4 666 076 5 071 426 – –

Mortgage bond – Secured by first covering bond over 26 Nagington Road, Wadeville. The bond is  repayable in 120 equal instalments. Current monthly instalments on the bond amounts to R115 785 and bears interest linked to prime less 1% 8 098 026 8 650 989 – –

Mortgage bond – Secured by first covering bond over 10 Hamburg Avenue, Aeroport, Gauteng and 8 Station  Road, Montague Gardens, Cape Town. The bond is repayable in 120 equal instalments. Current monthly instalments for these two bonds amount to R40 254 and bears interest linked to prime less 0,5% 2 231 961 2 477 618 – –

Standard Bank medium term loan – Arising from acquisition of Mather + Platt, bearing interest at the prime interest rate repayable in 24 monthly instalments commencing on 1 March 2009 secured by cession of debtors. 4 500 000 9 049 932 – –

Leaf Capital short term loan – Arising from the acquisition of Engineered Linings, bearing interest linked to prime plus 6% repaid on 31 August 2009. – 8 497 437 – 8 497 437

Total borrowings 29 480 282 39 903 856 1 796 765 10 763 216

Less: Current portion (9 870 560) (19 839 896) (774 167) (8 497 437)

19 609 722 20 063 960 1 022 598 1 249 479

19. trade and other payablesTrade payables 42 187 414 51 376 694 288 570 214 651

Accruals 4 897 389 3 162 748 150 140 16 912

Vat payable 3 134 909 3 779 463 1 965 721 1 792 559

Payroll accruals 5 588 911 4 216 941 924 360 726 395

Derivatives 337 438 – – –

Other payables 3 239 632 3 343 732 – –

59 385 693 65 879 578 3 328 791 2 750 517

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 20.3 and 20.4.

67PSV Annual Report 2010

20. Overview

The Group has exposure to the following risks from its use of financial instruments:

•  credit risk

•  liquidity risk

•  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 risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers.

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate has less of an influence on credit risk.

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.

68 PSV Annual Report 2010

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notes to the annual financial statementsfor the year ended 28 February 2010

2010R

2009R

20.1 Credit risk continued

exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

Trade and other receivables – excludes prepayments and VAT 74 375 687 74 280 534

The maximum exposure to credit risk reflected by extent of trading activities for the year by significant customer was:

Mopani Copper Mines – Zambia 5 231 351 11 668 062

Engen 7 026 649 8 812 210

Department of Water Affairs 5 882 883 6 822 227

Civcontract Civils 8 650 416 –

Fraser Alexander 8 888 135 624 363

Geographical concentration of revenue generating activities

Southern Africa region 304 587 685 359 808 387

Africa region (including Zambia) 67 594 787 71 056 332

2010 2009

Gross R

ImpairmentR

GrossR

ImpairmentR

Impairment losses

The ageing of trade and other receivables as reporting date was:

Not past due 64 153 505 75 432 57 223 864 –

Past due 14 595 021 4 747 004 26 959 151 7 713 952

78 748 526 4 822 436 84 183 015 7 713 952

The Company defines ‘past due’ as invoices which are more than 60 days past due.

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

2010 2009

Balance at beginning of year 7 713 952 4 958 439

Impairment loss utilised (3 929 667) _

Impairment loss processed through profit and loss 1 098 151 2 755 513

4 882 436 7 713 952

69PSV Annual Report 2010

20.2 liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due under normal conditions.

The Group manages its working capital requirements stringently and ensures that it has sufficient cash on demand to meet expected operational expenses for the short term, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted such as natural disasters. In addition, the Group maintains the following lines of credit:•   R26 million overdraft facility, R9 million medium-term loan and R5 million letter of credit facility with Standard Bank, secured by unrestricted cession of book debts by all group companies and cross 

guarantees and suretyships from group companies.•  R1,93 million overdraft facility with ABSA Bank – secured by cross-suretyships and guarantees from group companies and cession of loan accounts.

Interest on the above are variable linked to 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.

The following are the contractual maturities of financial liabilities.

Non-derivative financial liabilities

Carrying amount

R

Contractual cashflows

R

12 monthsor less

R

12 monthsor more

R

2010

Deferred purchase consideration 7 655 488 8 300 000 6 500 000 2 800 000

Trade and other payables 59 385 693 59 385 693 59 385 693 –

Loans and borrowings 29 480 282 35 892 878 11 945 666 23 947 212

Bank overdraft 27 439 726 27 439 726 27 439 726 –

123 961 189 131 018 297 105 271 085 26 747 212

Derivative financial liabilities

Forward exchange contracts 337 438 7 085 116 7 085 116 –

total 124 298 627 138 103 413 112 356 201 26 747 212

2009

Deferred purchase consideration 17 669 007 19 909 476 11 208 698 6 460 309

Trade and other payables 65 879 578 65 879 578 65 879 578 –

Loans and borrowings 39 903 856 39 903 856 11 342 459 28 561 397

Bank overdraft 4 404 324 4 404 324 4 404 324 –

127 856 765 130 097 234 92 835 059 35 021 706

70 PSV Annual Report 2010

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notes to the annual financial statementsfor the year ended 28 February 2010

20. Overview continued

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, US Dollars and Canadian Dollars

2010 2009

usD GBP euro ZMK USD GBP Euro ZMK

Trade Receivables 579 257 – – – 83 259 – – –Cash and cash equivalnets 310 218 – 5 151 284 090 560 4 086 – – –Trade Payables (1 506 032) (299 139) (37 629) – (1 092 195) – 88 942 –

Gross exposure (616 557) (299 139) (32 478) 284 090 560 (1 004 850) – 88 942 –Forward exchange contracts 1 133 005 325 860 – – 689 291 – – –

Net exposure 516 448 26 721 (32 478) 284 090 560 (315 559) – 88 942 –

The following significant exchange rates were applied during the year

Reporting date spot rate Average Rate

2010 2009 2010 2009

USD 7,70 10,11 8,02 8,66GBP 11,77 12,69 12,69 15,10Euro 10,51 12,62 11,26 12,39ZMK 0,0016 0,0017 – –

Sensitivity analysis

A 10 percent strengthening in the Rand against the following currency would have increased (decreased) profit or loss by the amounts shown below.

2010 2009

USD (397 665) 319 030GBP (31 451) –Euro 34 134 (112 245)ZMK (45 455) –

A 10 percent weakening in the rand against the above currencies at 28 February 2010 would have the equal an opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

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. At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was as follows:

71PSV Annual Report 2010

2010R

2009R

variable rate instrumentsFinancial liabilitiesBank overdraft 27 439 726 4 404 324

Instalment sale liabilities, leases and bonds 29 480 282 31 406 419

56 920 008 35 810 743

A change of 1% basis points in interest rates would have increased/(reduced) profits by the amounts shown below based on year end balances.

2010 2009

1% decreaseR

1% increaseR

1% decreaseR

1% increaseR

Variable rate instruments 569 200 (569 200) 415 461 (415 461)

20.4 Capital managementThe 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.

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:

2010 2009

Carryingamount

R

fair value

R

Carrying amount

R

Fairvalue

R

financial assetsDerivatives 131 952 – – –Trade and other receivables 74 243 735 74 243 735 76 469 063 76 469 063Cash and bank balances 15 311 947 15 311 947 1 346 061 1 346 061Loans receivable 219 402 219 402 743 308 743 308

89 907 036 89 907 036 78 558 432 78 558 432

financial liabilitiesLoans and borrowings 29 480 282 29 480 282 39 903 856 39 903 856Derivatives 337 438 – – –Trade and other payables 59 048 255 59 048 255 65 879 578 65 879 578Bank overdraft 27 439 726 27 439 726 4 404 324 4 404 324Deferred purchase consideration 7 655 488 7 655 488 17 669 007 17 669 007

123 961 189 123 961 189 127 856 765 127 856 765

72 PSV Annual Report 2010

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notes to the annual financial statementsfor the year ended 28 February 2010

20. Overview continued

fair value hierarchy

28 February 2010 level 1 level 2 level 3 total

Derivative financial assets – 131 952 – 131 952 Derivative financial liabilities – (337 438) – (337 438)

– (205 486) – (205 486)

Group Company

2010 2009 2010 2009

21. Cash flow informationA. Cash generated by/(utilised in) operations

(Loss)/profit before taxation (83 254 681) 23 233 619 (86 672 208) 2 654 703Adjustments for:Movement in share-based payment reserve 2 122 578 – 2 396 910 –Amortisation and impairment of intangible asset 16 300 589 4 889 300 – –Increase/(decrease) in foreign currency translation reserve 6 356 (3 906 412) – –Depreciation 5 534 243 5 485 188 963 731 883 549Finance expenses 18 000 202 16 660 137 10 747 787 5 485 909Financial income (8 426 235) (7 919 507) (7 681 354) (5 548 453)Interest on deferred purchase consideration 1 839 356 1 346 994 1 778 962 1 342 171Goodwill impairment 85 461 618 – 85 317 625 –Movement in provisions – – – 614 020Loss/(Profit) on disposal property, plant and equipment 124 771 (107 538) – 101 180Impairment of investments – – – –Changes in working capitalDecrease/(Increase) in inventories 13 429 701 (21 158 488) – –(Increase)/decrease in trade and other receivables (1 253 758) 5 537 363 (14 670 151) (2 571 147)(Decrease)/Increase in trade and other payables (6 493 885) 72 793 578 274 1 944 905

43 390 855 24 133 449 (7 240 424) 4 906 837B. taxation paid

Balance payable/(receivable) at beginning of year (1 738 080) 7 253 461 – 22 760Charge to income statement 6 579 978 8 394 577 115 114 22 760Acquisition of subsidiary – 568 268 – – Balance (payable)/receivable at end of year 4 004 435 1 738 080 – –

8 846 333 17 954 386 115 114 –

73PSV Annual Report 2010

22. Retirement benefit information

All employees of the Group contribute to the Alexander Forbes provident fund. Employees may elect to contribute 10%, 12% or 19% 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 218 (2009: 90).

23. Business combinations acquiredThere were no business combinations in the current year.

The following business combinations were acquired in 2009:

Rand Air & GasR

Mather + PlattR

TotalR

non-current asset 802 853 225 803 1 028 656

Property, plant and equipment 802 853 225 803 1 028 656

Current assets 11 240 105 4 011 420 15 251 525

Inventories 1 054 302 4 011 420 5 065 722

Trade and other receivable 4 293 441 – 4 293 441

Cash and cash equivalents 5 892 362 – 5 892 362

non-current liabilities 6 896 – 6 896

Loan 6 896 – 6 896

Current liabilities 5 094 433 – 5 094 433

Provisions 1 689 923 – 1 689 923

Taxation payable 568 268 – 568 268

Trade and other payables 1 782 021 – 1 782 021

Bank overdraft 1 054 221 – 1 054 221

fair value of net assets acquired 6 941 629 4 237 223 11 178 852

Shareholders’ loans acquired – – –

Implied goodwill 788 817 1 410 131 2 198 948

Negative goodwill – – –

Intangibles 11 555 722 4 522 375 16 078 097

Deferred tax on intangibles (3 235 602) (194 810) (3 430 412)

Purchase consideration 16 050 566 9 974 919 26 025 485

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notes to the annual financial statementsfor the year ended 28 February 2010

23. Business combinations acquired continued

Rand Air & GasR

Mather + PlattR

TotalR

settled as follows:

Cash paid to vendors 5 400 000 9 500 000 14 900 000

Cost incurred and capitalised 339 718 40 136 379 854

Deferred purchase considerations 10 310 848 434 783 10 745 631

Equity issued – – –

Balance owing at 28 February 2009 11 121 491 439 607 11 561 098

Unwinding of interest 1 034 653 60 393 1 095 046

Cash paid (6 299 999) (500 000) (6 799 999)

Balance owing at 28 February 2010 5 856 145 – 5 856 145

Refer to note 16 for details of current year repayments of the purchase considerations.

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 have no fixed terms of repayment.

Purchase transactions

In 2010, total services rendered by CDR Contracts, an employment agency in which Mr P Robinson, one of the directors of the Group, owns shares, amounted to R7 501 766 (2009: R4 785 543).

Outstanding balances

The amount payable to CDR Contracts at year-end is R376 090 (2009: R698 764).

Management fees

All management fees are intra-group and have been eliminated on consolidation.

loans to directors

At year-end there were no loans to directors or executive management.

Directors’ remuneration and share options

Detailed disclosure of directors’ remuneration is made in note 25.

Group companies

Details of subsidiary companies are given in note 11.

75PSV Annual Report 2010

25. Directors’ remunerationDirectors’ remuneration in respect of the financial year ended 28 February 2010 was as follows:

Basic remuneration

ROther benefits

R

Retirement and medical

R

Incentives and bonuses

RDirectors’ fees

RShare grants

RTotal

R

2010ExecutiveAJD da Silva 1 198 590 150 000 218 005 126 024 – 400 000 2 092 619AR Dreisenstock 1 198 590 150 000 218 005 126 024 – 400 000 2 092 619DJ Kelly 1 097 400 150 000 202 064 115 500 – – 1 564 964P Robinson 1 198 586 150 000 218 005 126 024 – 400 000 2 092 615Non-executiveV Shongwe – – – – 40 000 – 40 000JH Anderson – – – – 46 667 – 46 667E Chimombe-Munyoro – – – – 100 833 – 100 833GS Nzalo – – – – 40 000 – 40 000MM Patel – – – – 90 000 – 90 000

4 693 166 600 000 856 079 493 572 317 500 1 200 000 8 160 3172009ExecutiveAJD da Silva 1 065 757 150 000 – 218 773 – – 1 434 530AR Dreisenstock 1 071 487 150 000 – 218 773 – – 1 440 260DJ Kelly 1 050 000 150 000 32 090 100 000 – – 1 332 090P Robinson 1 071 487 150 000 – 218 773 – – 1 440 260Non-executiveV Shongwe – – – – 55 000 – 55 000JH Anderson – – – – 118 167 – 118 167E Chimombe-Munyoro – – – – 73 333 – 73 333

4 258 731 600 000 32 090 756 319 246 500 – 5 893 640

PSV Holdings Limited executive and non-executive remuneration is approved annually by the Chairman of the Board.

2010AJD da Silva AR Dreisenstock P Robinson

Shares vested and granted to directors in terms of the Conditional Share PlanOpening balance – – – Shares granted 1 000 000 1 000 000 1 000 000 Shares Vested (1 000 000) (1 000 000) (1 000 000) Closing balances – – –

76 PSV Annual Report 2010

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size of holdingsnumber of

shareholders% of total

shares in issue number of shares%

of shares in issue

1 – 1000 shares 337 32,3 112 701 0,05

1001 – 10 000 shares 275 26,4 1 311 662 0,53

10 001 – 100 000 shares 324 31,1 12 448 569 5,02

100 001 – 1 000 000 shares 88 8,4 27 002 140 10,89

1 000 001 shares and over 19 1,8 207 086 598 83,52

total 1 043 100 247 961 670 100

Distribution of shareholders

Retail shareholders 898 86,10 143 836 220 58,01

Empowerment partners 1 0,10 47 500 000 19,16

Collective investment schemes 4 0,38 16 010 506 6,46

Private companies 25 2,40 15 273 193 6,16

Public companies 5 0,48 8 459 412 3,41

Trusts 49 4,70 6 113 003 2,47

Treasury 2 0,19 5 192 552 2,09

Custodians 3 0,29 2 003 627 0,81

Close corporations 35 3,36 1 783 575 0,72

Investment partnerships 4 0,38 1 764 385 0,71

Other corporations 4 0,38 11 170 0,00

Share trusts 1 0,10 7 575 0,00

Stockbrokers and nominees 7 0,67 3 005 0,00

Banks 1 0,10 1 550 0,00

Unclaimed scrip 2 0,19 1 297 0,00

Endowment funds 1 0,10 300 0,00

Personal liability companies 1 0,10 300 0,00

total 1 043 100 247 961 670 100

Analysis of ordinary shareholdersas at 28 February 2010

77PSV Annual Report 2010

size of holdingsnumber of

shareholders% of total

shares in issue number of shares%

of shares in issue

shareholder type

Non-public shareholders 11 1,05 165 108 899 66,59

Directors of the company or its subsidiaries 7 112 408 772 45,33

Directors and associates (direct holding) 6 108 900 000 43,92

Directors and associates (indirect holding) 1 2 922 653 1,42

Holders holding more than 10% (excluding directors’ holding)

Wonderwall Investments 36 (Pty) Limited 1 47 500 000 19,16

Share trusts 1 7 575 0,00

Treasury (own holdings) 2 5 192 552 2,09

Public shareholders 1 032 98,95 82 852 771 33,41

total 1 043 100 247 961 670 100

BenefICIAl shARehOlDeRs WIth A hOlDInG GReAteR thAn 5% Of the shARes In Issue OtheR thAn DIReCtORs

Number of shareholdings Total shareholding % of shares in issue

Wonderwall Investments 36 (Pty) Limited 1 47 500 000 19,16

total number of shareholders 1 043

total number of shares in issue 247 961 670

shARe PRICe PeRfORMAnCe

Opening price 2 March 2009 41c

Closing price 26 February 2010 24c

Closing high for the period 62c

Closing low for the period 22c

Number of shares in issue 247 961 670

Volume traded during period 15 448 478

Ratio of volume traded to shares in issue (%) 6,23%

78 PSV Annual Report 2010

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financial year end 28 February 2010

Reports and profit announcements

Annual report August 2010

Interim report November 2010

Annual general meeting 27 August 2010

shareholders’ diary

79PSV Annual Report 2010

notice of annual general meeting

Psv hOlDInGs lIMIteD(Incorporated in the Republic of South Africa)(Registration number 1998/004365/06)JSE code: PSVISIN: ZAE000078705(“the Company”)

Notice is hereby given that the annual general meeting of shareholders will be held in the boardroom, Unit 419, Greenhills Industrial Estate, Sam Green Road, Tunney Ext 6, Germiston, South Africa on Friday, 27 August 2010 at 09:00 to conduct the following business:

ORDInARY BusInessOrdinary resolution number 1Adoption of the annual financial statements“Resolved that the annual financial statements of the Company and the Group for the financial year ended 28 February 2010, including the directors’ report and the report of the auditors therein, be and is hereby adopted.”

Ordinary resolution number 2Re-election of directors and appointment of new directorTo elect directors of the Company in accordance with its articles of association which provide that:

•  At least one third of the directors, being those longest in office at the date of the annual general meeting, should retire but that such directors may offer themselves for re-election; and

•  Any director appointments made by the Board since the previous annual general meeting require confirmation.

Therefore, to approve the following by way of separate resolutions:

2.1 “Resolved that Mrs CE Chimombe-Munyoro be and is hereby re-elected as a director of the Company.”

2.2 “Resolved that Mr MM Patel be and is hereby re-elected as director of the Company.”

2.3 “Resolve that Mr GS Nzalo be and is hereby appointed as a independent non-executive director of the Company.”

Abbreviated curricula vitae in respect of the aforementioned directors are set out on page 12 of this annual report.

Ordinary resolution number 3Re-appointment of the auditors“Resolved that KPMG Inc., the audit partner being Mr T Cheadle, be and is hereby re-appointed as auditors of the Company and that the directors be authorised to fix the auditors’ remuneration for the past year.”

Ordinary resolution number 4Approval of non-executive directors’ fees“Resolved that the fees payable to the non-executive directors for the year ended 28 February 2010 as reflected on page 75 of this annual report be approved.”

80 PSV Annual Report 2010

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Ordinary resolution number 5General authority to issue unissued shares“Resolved that the directors of the Company be and are hereby authorised to issue the unissued shares in the share capital of the Company, at their discretion and upon such terms and conditions as they deem fit, subject to the provisions of Section 221 of the Companies Act (Act 61 of 1973), as amended, and the Listings Requirements of the JSE Limited.”

Ordinary resolution number 6Renewal of the general authority to allot and issue ordinary shares for cash“Resolved that the authority given to the directors of the Company, to allot and issue ordinary shares for cash other than by way of a rights issue, pursuant to the articles of association of the Company and subject to the Companies Act (Act 61 of 1973), as amended, and the Listings Requirements of the JSE Limited (“JSE”), be and is hereby renewed, subject to the following conditions:

•  that the shares be of a class already in issue;

•  the shares may only be issued or sold, as the case may be, to public shareholders as defined in the Listings Requirements of the JSE, and not to related parties;

•  that the shares may not in any one financial year in the aggregate exceed 50% of the Company’s issued shares of that class;

•  that the maximum discount at which such shares may be issued or sold, as the case may be, is 10% of the weighted average traded price of such shares on the JSE over the 30 business days preceding the date that the price of the issue is agreed between the Company and the party subscribing for the shares;

•  that such authorisation be valid only until the next annual general meeting or for 15 months from the date of the passing this resolution, whichever is the earlier date;

•  that an announcement giving full details, including the impact on net asset value, net tangible asset value, earnings and headline earnings per share (and if applicable, diluted earnings and diluted headline earnings per share), be published at the time of any issue representing, on a cumulative basis within a financial year, 5% or more of the number of securities in issue prior to the issue; and

•  that this authority include any options/convertible securities that are convertible into an existing class of equity securities.”

votingIn terms of the Listings Requirements of the JSE, the approval of a 75% majority of all the votes cast in respect of this resolution by shareholders present or represented by proxy (excluding the designated adviser and the controlling shareholders together with their associates) is required to approve this resolution.

Ordinary resolution number 7Authority regarding signature of documents“Resolved that any director or the company secretary of the Company be and is hereby authorised to sign any documents and to take any steps as may be necessary or expedient to give effect to the special and ordinary resolutions set out in this notice.”

sPeCIAl BusInessspecial resolutionGeneral authority to repurchase shares“Resolved, as a special resolution, that the Company hereby approves, as a general authority contemplated in the Companies Act (Act 61 of 1973), as amended (“the Act”), the repurchase of shares from time to time, either by the Company itself or by its subsidiaries, of the Company’s issued shares, upon such terms and conditions and in such amounts as the directors of the Company may from time to time decide, subject however to the provisions of the Act and the Listings Requirements of the JSE Limited (“JSE”), it being recorded that in terms of the Listings Requirements of the JSE, general repurchases of the Company’s shares may only be made subject to the following:

notice of annual general meeting

81PSV Annual Report 2010

– that the Company and its subsidiaries are enabled by their articles of association to repurchase such shares;

– that the repurchase of shares be effected through the order book operated by the JSE trading system and be done without any prior understanding or arrangement between the Company and the counter party;

– that this general authority be valid only until the next annual general meeting or for 15 months from the date of this special resolution, whichever is the earlier date;

– that an announcement be made giving such details as may be required in terms of the Listings Requirements of the JSE when the Company has cumulatively repurchased 3% of the initial number (the number of that class of share in issue at the time that the general authority is granted) of the relevant class of shares and for each 3% in aggregate of the initial number of that class acquired thereafter;

– at any point in time the Company may only appoint one agent to effect any repurchase on the Company’s behalf;

– repurchases may not be made by the Company and/or its subsidiaries during a prohibited period as defined by the Listings Requirements of the JSE unless a repurchase programme is in place where the dates and quantities of securities to be traded during the relevant period are fixed and full details of the programme have been disclosed in an announcement over SENS prior to the commencement of the prohibited period;

– the repurchase of shares shall not, in the aggregate, in any one financial year, exceed 20% of the Company’s issued share capital and a maximum of 10% in aggregate of the Company’s issued share capital may be repurchased in terms of the Act, by the subsidiaries of the Company, at the time this authority is given;

– the repurchase of shares may not be made at a price greater than 10% above the weighted average of the market value of the shares as determined over the five business days immediately preceding the date on which the transaction is effected; and

– the Company may not enter the market to proceed with the repurchase of its ordinary shares until the Company’s designated adviser has confirmed the adequacy of the Company’s working capital for the purpose of undertaking a repurchase of securities in writing to the JSE.”

The reason for this special resolution is to grant the Company and its subsidiaries a general authority to repurchase the Company’s shares by way of open market transactions on the JSE, subject to the Act and the Listings Requirements of the JSE.

The effect of this special resolution is that the Company and its subsidiaries have been authorised, in terms of a general authority, to repurchase the Company’s shares on the open market, subject to the Act and the Listings Requirements of the JSE.

At the present time the directors have no specific intention regarding the utilisation of this general authority, which will only be used if the circumstances are appropriate.

The directors are of the opinion that, after considering the effect of the maximum repurchase permitted and for a period of 12 months after the date of this notice of annual general meeting:

•  the Company and the Group will be able, in the ordinary course of business, to pay their debts;

•  the assets of  the Company and the Group will be  in excess of  the  liabilities of  the Company and the Group,  the assets and  liabilities being recognised and measured  in accordance with the accounting policies used in the latest annual financial statements;

•  the share capital and reserves of the Company and the Group are adequate for ordinary business purposes; and

•  the working capital of the Company and the Group will be adequate for ordinary business purposes.

In terms of the Listings Requirements of the JSE, the following disclosures are required with reference to the general authority to repurchase the Company’s shares set out in the above special resolution, some of which are set out elsewhere in the annual report of which this notice forms part (“this annual report’).

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Directors and management – refer page 12.

Litigation – refer page 32.

Directors’ interests in the Company’s securities – refer page 33.

Share capital – refer page 63.

Major shareholders of the company – refer pages 76 and 77.

Directors’ responsibility statementThe directors, whose names are given on page 12 of this annual report, collectively and individually accept full responsibility for the accuracy of the information pertaining to the above special resolution and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the above special resolution contains all information required.

Material changesOther than the facts and developments reported on in this annual report, there have been no material changes in the financial or trading position of the Group since the Company’s year-end and the date of this annual report.

vOtInG AnD AttenDAnCeA shareholder entitled to attend and vote at the annual general meeting is entitled to appoint a proxy or proxies to attend, speak and, on a poll, vote in his/her stead. A proxy need not be a shareholder of the Company.

A form of proxy is attached for completion by registered certificated shareholders and dematerialised shareholders with own-name registration who are unable to attend the annual general meeting in person. Forms of proxy must be completed and received by the transfer secretaries, Computershare Investor Services (Proprietary) Limited, by no later than 09:00 on Wednesday, 25 August 2010. Registered certificated shareholders and dematerialised shareholders with own-name registration who complete and lodge forms of proxy will nevertheless be entitled to attend and vote in person at the annual general meeting to the exclusion of their appointed proxy/(ies) should such member wish to do so. Dematerialised shareholders, other than with own-name registrations, must inform their CSDP or broker of their intention to attend the annual general meeting and obtain the necessary letter of representation from their CSDP or broker to attend the annual general meeting or provide their CSDP or broker with their voting instructions should they not be able to attend the annual general meeting in person. This must be done in terms of the agreement entered into between the shareholder and the CSDP or broker concerned.

By order of the Board

AR Dreisenstock

Acting company secretary

20 July 2010

notice of annual general meeting

83PSV Annual Report 2010

Psv hOlDInGs lIMIteD(Incorporated in the Republic of South Africa)(Registration number 1998/004365/06)JSE code: PSVISIN: ZAE000078705(“the Company”)to be completed by registered certificated shareholders and dematerialised shareholders with own-name registration only.For use in respect of the annual general meeting to be held on Friday, 27 August 2010 at 09:00 in the boardroom, Unit 419, Greenhills Industrial Estate, Sam Green Road, Tunney Ext 6, Germiston, South AfricaOrdinary shareholders who have dematerialised their shares with a CSDP or broker, other than with own-name registration, must arrange with the CSDP or broker concerned to provide them with the necessary letter of representation to attend the annual general meeting or the ordinary shareholders concerned must instruct their CSDP or broker as to how they wish to vote in this regard. This must be done in terms of the agreement entered into between the shareholder and the CSDP or broker concerned.I/We (Full name in block letters) (Address in block letters)Telephone: Work ( ) Home ( ) being the holder(s) of ordinary shares in the company, appoint (see note 1):1. or failing him/her2. or failing him/herthe chairman of the meeting as my/our proxy to act for me/us at the annual general meeting, to be held on Friday, 27 August 2010, in the boardroom, Unit 419, Greenhills Industrial Estate, Sam Green Road, Tunney Ext 6, Germiston, South Africa and at any adjournment thereof, as follows:

Number of votes (one vote per ordinary share)

For Against Abstain

Ordinary resolution number 1 – adoption of annual financial statements

Ordinary resolution number 2 – re-election of directors/appointment of new director

2.1  CE Chimombe-Munyoro

2.2  MM Patel

2.3  GS Nzalo

Ordinary resolution number 3 – re-appointment of the independent auditors

Ordinary resolution number 4 – approval of the non-executive directors’ fees

Ordinary resolution number 5 – renewal of general authority placing the unissued shares under the control of the directors

Ordinary resolution number 6 – renewal of general authority to issue shares for cash

Ordinary resolution number 8 – authority regarding the signature of documents

Special resolution – authority to repurchase the Company’s shares

Signed at on 2010

Signature(s)

Capacity

Please read the instructions on the reverse side of this form of proxy.

form of proxy

84 PSV Annual Report 2010

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1. On a poll a shareholder is entitled to one vote for each share held.

  2.   Forms of proxy must be lodged at, posted to or faxed to Computershare Investor Services (Proprietary) Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107, 

Fax +27 11 688 5238), to reach Computershare by no later than 09:00 on Wednesday, 26 August 2009.

3. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space/s provided, with or without deleting the words “the chairman

of the annual general meeting”. Any such deletion must be individually initialled by the shareholder, failing which it will not have been validly affected. The person present at the annual

general meeting whose name appears first on the form of proxy and has not been deleted shall be entitled to act as proxy to the exclusion of the persons whose names follow.

4. Any alterations or corrections to this form of proxy must be initialled by the relevant signatory(ies).

5. Each shareholder is entitled to appoint one or more proxies (who need not be a shareholder(s) of the Company) to attend, speak and vote (either on a poll or by show of hands) in place of

that shareholder at the annual general meeting.

6. Voting instructions for each of the resolutions must be completed by filling in the number of votes (one per ordinary share) under the “In favour”, “Against” or “Abstain” headings on the

form of proxy. If no instructions are filled in on the form of proxy, the chairman of the annual general meeting, if the chairman is the authorised proxy, or any other proxy shall be authorised

to vote in favour of, against or abstain from voting as he/she deems fit.

7. A shareholder or his/her proxy is entitled but not obliged to vote in respect of all the ordinary shares held by the shareholder. The total number of votes for or against the ordinary and special

resolutions and in respect of which any abstention is recorded may not exceed the total number of shares held by the shareholder.

8. Documentary evidence establishing the authority of a person signing this form must be attached to this form of proxy unless previously recorded by the transfer secretaries of the Company

or waived by the chairman of the annual general meeting.

9. This form of proxy is to be completed only by those shareholders who either still hold shares in a certificated form, or whose shares are recorded in their “own name” in electronic form in

the sub-register.

10. The completion and lodging of this form of proxy does not preclude the relevant shareholder from attending the annual general meeting and speaking and voting in person to the exclusion

of any proxy appointed by the shareholder.

11. The chairman of the annual general meeting may accept or reject any form of proxy which is completed and/or received other than in accordance with these instructions, provided that he

shall not accept a proxy unless he is satisfied as to the manner in which a shareholder wishes to vote.

Instructions to the form of proxy

PSV Annual Report 2010

Administration

Business AddressUnit 419, Greenhills Industrial Estate, Sam Green Road, Tunney Ext 6, Germiston, 1400Telephone: +27 (0) 11 828 7789, Facsimile: +27 (0) 11 828 7920

ACTinG CompAny seCreTAry And reGisTered offiCeTony DreisenstockUnit 419, Greenhills Industrial Estate, Sam Green Road, Tunney Ext 6, Germiston, 1400Telephone: +27 (0) 11 828 7789, Facsimile: +27 (0) 11 828 7920

TrAnsfer seCreTAriesComputershare Investor Services (Pty) LimitedGround Floor, 70 Marshall Street, Johannesburg, 2001(PO Box 61051, Marshalltown, 2107)Telephone: +27 (0) 11 370 5000, Facsimile: +27 (0) 11 688 5210

ATTorneysFluxmans Inc11 Biermann Road, Rosebank, 2196(Private Bag X41, Saxonwold, 2132)Telephone: +27 (0) 11 328 1700, Facsimile: +27 (0) 11 880 2261

desiGnATed AdviserVunani House, Athol Ridge Office Park, 151 Katherine Street, Sandton, 2196Telephone: +27 (0) 11 263 9500, Facsimile: +27 (0) 11 784 1989

AudiTorsKPMG IncorporatedKPMG Crescent, 85 Empire Road, Parktown, 2193Telephone: +27 (011) 647 7111 Facsimile: +27 (011) 647 8000

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