Wrap Text
POY - Poynting Holdings Limited - Unaudited Interim Results for the Six
Months Ended 31 December 2009
POYNTING HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1997/011142/06)
Share code: POY & ISIN: ZAE000121299
("Poynting" or "the company" or "the group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2009
HIGHLIGHTS
- Revenue up by 32%
- Gross profit up by 39%
- Operating costs maintained at higher revenue levels
- Operating profit of R3.93 million compared to loss of R2.11
million in previous comparative period
- Positive cash flow of R3.14 million with R4.20 million from
operating activities
Condensed consolidated statement of comprehensive income
Unaudited Reviewed Audited year
six months six months ended
ended ended 30 June
31 December 31 December 2009
2009 2008 R`000
R`000 R`000
Revenue 38 648 29 255 65 817
Cost of sales (16 478) (13 347) (36 670)
Gross profit 22 170 15 908 29 147
Operating costs (18 222) (18 248) (40 096)
Other (expenses)/income (15) 230 1 590
Operating profit/(loss) 3 933 (2 110) (9 359)
Finance income 88 321 359
Finance costs (698) (238) (1 124)
Profit/(Loss) before taxation 3 323 (2 027) (10 124)
Taxation (1 062) 1 153 3 554
Profit/(Loss) after taxation 2 261 (874) (6 570)
Other comprehensive income - - -
Total comprehensive income 2 261 (874) (6 570)
Unaudited Reviewed Audited year
six months six months ended
ended ended 30 June
31 31 December 2009
December 2008 R`000
2009 R`000
R`000
Reconciliation of total comprehensive
income to headline earnings
Total comprehensive income 2 261 (874) (6 570)
Adjustments for:
Profit on the sale on assets - (82) (65)
Impairments of intangible assets - 59 -
Headline earnings/(loss) attributable 2 261 (897) (6 635)
to ordinary shareholders
Attributable to:
Equity holders of parent 2 261 (877) (6 571)
Minority interest - 3 1
Weighted average number of ordinary 88 554 274 86 450 885 87 493 935
shares in issue
Earnings per ordinary share (cents) 2.55 (1.01) (7.51)
Headline earnings per ordinary share 2.55 (1.04) (7.58)
(cents)
Condensed consolidated statement of financial position
Unaudited Reviewed Audited
31 December 31 December 30 June
2009 2008 2008
R`000 R`000 R`000
ASSETS
Non-current assets 18 923 19 299 20 803
Property, plant and equipment 3 797 4 674 4 513
Intangible assets 14 268 14 464 14 284
Other financial assets 858 161 2 006
Current assets 30 353 34 794 27 239
Inventories 10 506 14 109 10 633
Trade and other receivables 11 276 19 475 11 127
Bank and cash balances 8 571 1 210 5 479
Total assets 49 276 54 093 48 042
EQUITY AND LIABILITIES
Equity
Share capital and premium 28 808 34 103 26 547
Non-current liabilities
Interest-bearing liabilities 1 847 4 524 1 897
Current liabilities 18 621 15 266 19 598
Interest-bearing liabilities 7 949 - 5 535
Trade and other payables 10 247 14 954 14 020
Deferred taxation 425 512 -
Bank overdraft - - 43
Total equity and liabilities 49 276 54 093 48 042
Number of ordinary shares in issue 88 554 274 88 554 274 88 554 274
Net asset value per ordinary share 32.53 38.51 29.98
(cents)
Net tangible asset value per ordinary 16.42 22.18 13.85
share (cents)
Condensed consolidated statement of changes in equity
Share Retained Minority Total
Capital earnings interest R`000
R`000 R`000 R`000
Balance at 1 July 2008 5 276 8 700 37 14 014
Changes in equity 20 758 (601) - 20 157
Share based payment - options 202 601 - 803
exercised
Net profit for the period - (877) 3 (874)
Total changes 20 960 (877) 3 20 089
Balance at 31 December 2008 26 236 7 826 41 34 103
Changes in equity - - - -
Share issue cost (1 856) - - (1 856)
Net profit for the period - (5 698) (2) (5 700)
Total changes (1 856) (5 698) (2) (7 556)
Balance at 30 June 2009 24 380 2 128 39 26 547
Changes in equity - - - -
Net profit for the period - 2 261 - 2 261
Total changes - 2 261 - 2 261
Balance at 31 December 2009 24 378 4 389 39 28 808
Condensed consolidated cash flow statement
Unaudited Reviewed Audited year
six months six months ended
ended ended 30 June
31 December 31 December 2009
2009 2008 R`000
R`000 R`000
Cash flow from operating activities 4 196 (9 213) (679)
Cash flow from investing activities (720) (7 140) (9 456)
Cash flow from financing activities (341) 21 928 19 936
Net increase in cash and cash 3 135 5 575 9 801
equivalents
Cash and cash equivalents at the 5 436 (4 365) (4 365)
beginning of the period
Cash and cash equivalents at the end 8 571 1 210 5 436
of the period
Unaudited segmental analysis for the six months ended 31 December 2009
Commercial Defence Base Total
R`000 R`000 Station R`000
R`000
Segment revenue 15 692 16 298 6 658 38 648
Segment cost of sales 8 735 4 789 2 955 16 478
Gross profit/segment 6 957 11 510 3 703 22 170
result
Other income/(expenses) 464 (454) (25) (14)
Operating expenses (9 608) (6 070) (2 544) (18 222)
Finance income 47 29 8 84
Finance costs (313) (258) (124) (695)
(Loss)/Profit before (2 453) 4 757 1 018 3 323
taxation
Taxation 841 (1 607) (296) (1 062)
(Loss)/Profit after (1 612) 3 151 723 2 261
taxation
Unaudited segmental analysis for the six months ended 31 December 2008
Commercial Defence Base Total
R`000 R`000 Station R`000
R`000
Segment revenue 21 838 6 364 1 053 29 255
Segment cost of sales 11 295 1 579 473 13 347
Gross profit/segment 10 543 4 785 580 15 908
result
Other income/(expenses) 44 218 (32) 230
Operating expenses (13 760) (3 914) (574) (18 248)
Finance income 158 162 1 321
Finance costs (127) (110) (1) (238)
(Loss)/Profit before (3 142) 1 141 (26) (2 027)
taxation
Taxation 825 327 - 1 153
(Loss)/Profit after (2 317) 1 468 (26) (874)
taxation
GROUP COMMENTARY
INTRODUCTION
Poynting designs, manufactures and supplies antennas and telecommunication
products to the cellular, wireless data and defence markets, both within
South Africa and internationally through its subsidiaries and partner
companies. Poynting`s export markets primarily incorporate Europe, the
United States of America ("USA"), the Middle East and Asia.
Poynting operates on a divisional basis which is comprised of its Commercial,
Defence and Base Station Equipment Divisions.
The Commercial Division designs and manufactures antennas for Wireless Data
and Cellular applications. These antennas typically form part of a
customer`s premises equipment rather than base station equipment. Sales
via distributors, network operators and equipment manufacturers are
carried out internationally by Poynting`s partner company in Europe,
Poynting Europe GmBH ("Poynting Europe"), and locally by its own sales
staff and subsidiary, Cascade Avenue Trading 90 (Proprietary) Limited
(trading as "Poynting Direct"), who supply trade clients and end users.
The Defence Division designs and manufactures antennas mainly for use in the
area of Electronic Warfare. These antennas, which are used for Direction
Finding, Monitoring and Jamming systems, are often custom designed for
customers` system integrators on a project basis. Engineering costs are
usually paid by customers during the design phase.
The Base Station Equipment Division mainly manufactures diplexers,
amplifiers, splitters and indoor antennas used in cellular base stations
and for indoor coverage solutions.
RESULTS OVERVIEW
Currently both the Defence and the Base Station Divisions are operating
profitably, while the Commercial Division is benefiting from reductions in
the company`s overhead structure. Poynting`s overall performance has shown
a significant increase in profitability and the cost saving exercises
implemented over the past 18 months are showing the desired results.
This marked improvement in Poynting`s performance is due to a significant
increase in orders received by the Defence Division. In addition, the
Base Station Equipment Division, which was acquired in the prior financial
year, has produced better than expected results. Decreasing exports which
resulted in lower sales in the Commercial Division have stabilised and
together with continued aggressive reductions in the company`s overhead
expenses, losses incurred by the Commercial Division are successfully
being curtailed.
Revenue from the Defence Division has increased from the previous
corresponding period by 156% with profits before tax up 317% to R4.8
million.
The Base Station Equipment Division produced solid revenues and margins
resulting in profit before tax of R1.0 million. As a result of the Base
Station Division having only been acquired in the previous corresponding
period, it is difficult to make a fair comparison. Regardless, results
have been better than expected.
Although revenue from the Commercial Division declined by 28%, losses before
tax were successfully reduced by 22% as a result of the 30% reduction in
divisional overheads. An analysis of sales in the Commercial Division
shows that local sales have been flat when compared to the previous
corresponding period while export sales dropped by 57%. The reduction in
export sales is mainly attributable to certain projects in Africa having
been put on hold, a reduction of inventory levels in Europe and equipment
manufacturers experiencing a slowdown of sales in the Middle East and
Asia. However, in almost all cases, customers have been retained and there
is little indication that Poynting`s competitors have increased their
market share in these regions. Exports to the USA, a new market which
Poynting have been developing since mid-2008, have increased and
paradoxically the USA is now Poynting`s biggest commercial export market
as a result of the lower sales into Poynting`s traditional markets, being
Europe and the Middle East.
Poynting has managed to raise an Industrial Development Corporation order
finance facility of R7.9 million for major projects. This, together with
profitable results and improved management of working capital, has
improved the company`s liquidity position.
BUSINESS COMBINATIONS
Poynting is currently in the final stages of acquiring a 100% stake in
Poynting Europe, as disclosed in the company`s June 2008 Prospectus.
SUBSEQUENT EVENTS
The board of directors is not aware of any material matters or circumstances
arising since the end of the interim period and up to the date of this
report.
PROSPECTS
Overall, the board of Poynting ("the board") is optimistic about the
prospects of the group as a whole. This optimism is supported by improved
macro-economic data both locally and internationally.
The board believes that current revenue levels can be maintained by the
Defence Division for the remainder of the financial year, although
realistically, performance is likely to be somewhat subdued compared to
the exceptional first six months experienced by this division.
The Base Station Equipment Division is also experiencing improved trade and
could maintain current performance levels. However, since orders from the
network operators are sporadic, financial performance for this division
can be volatile and difficult to accurately forecast.
If market conditions continue to improve at the current rate, the Commercial
Division is expected to produce modest profits over the final six months
of the year. Significant growth in sales by Poynting Direct, increased
export orders as well as resumption of orders by large corporate customers
are encouraging indicators that profitability is likely to return to this
division in the near future.
The majority of group profits in the six month period ended December 2009 was
due to performance in the second quarter of the 2010 financial year
("second quarter"). This improved performance follows three consecutive
quarters in which losses before tax cumulatively exceeded R8 million.
Poynting`s performance in the second quarter once again confirms the
improvement of market conditions. These improvements cause the board to
believe that prospects are good for solid profits in the remaining six
months of the financial year.
BASIS OF PREPARATION
The accounting policies applied in the preparation of these condensed interim
results, which are based on reasonable judgments and estimates, are in
accordance with International Financial Reporting Standards ("IFRS") and
are consistent with those applied in the annual financial statements for
the year ended 30 June 2009. These condensed financial statements as set
out in this report have been prepared in terms of IAS 34 - Interim
Financial Reporting, the Companies Act, 1973 (Act 61 of 1973), as amended,
and the Listings Requirements of JSE Limited.
The interim results have not been reviewed or audited by the company`s
auditors.
DIRECTORATE
Coen Bester*^ (Chairman), Andre Fourie (Chief Executive Officer), Juergen
Dresel (German), Johan Ebersohn (Financial Director), Zuko Kubukeli*^,
Clive Douglas^ *Independent ^Non-executives
Andre Fourie Johan Ebersohn
Chief Executive Office Financial Director
19 March 2010
Johannesburg
Registered office
33 Thora Crescent, Wynberg 2090
(PO Box 76579, Wendywood 2144)
Designated Adviser
Merchantec Capital
Company secretary
Merchantec Capital
Date: 19/03/2010 12:42:05 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
