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Summarised provisional consolidated financial statements for the year ended 30 JUNE 2012
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”)
SUMMARISED PROVISIONAL CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
HIGHLIGHTS
CASH 258.94%
Cash increased by 258.60% from R4.835 million in 2011
to R17.398 million in 2012
Profit from continuing and discontinued operations 177.29%
Profit from continuing and discontinued operations
increased by 177.29% from R2.608 million in 2011 to
R7.233 million in 2012
EPS 177.29%
Basic earnings per ordinary share increased by 177.29%
from 2.95 cents to 8.18 cents per share from
continuing and discontinued operations
HEPS 149.70%
Headline earnings per ordinary share increased by
149.70% from 3.28 cents to 8.19 cents per share from
continuing and discontinued operations
Profit from continuing operations 51.83%
Profit from continuing operations increased from by
51.83% from R4.764 to R7.233 million in 2012
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
year ended year ended
30-Jun-12 30-Jun-11
Note R’000 R’000
Continuing operations
Revenue 80 970 81 549
Cost of sales (27 489) (28 102)
Gross profit 53 481 53 447
Other income 1 342 483
Operating expenses (46 349) (47 628)
Operating profit 8 474 6 302
Investment income 448 269
Finance costs (387) (730)
Profit before taxation 8 535 5 841
Taxation (1 302) (1 077)
Profit from continuing operations 7 233 4 764
Discontinued operations
(Loss) from discontinued
operations - (2 156)
Profit for the year 7 233 2 608
Other comprehensive income - -
Total comprehensive income 7 233 2 608
Total comprehensive income
attributable to:
Owners of the parent 1 7 241 2 609
Non-controlling interest (8) (1)
7 233 2 608
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
Non-Current Assets
Property, plant and equipment 2 856 2 081
Intangible assets 9 987 9 993
Other financial assets 87 53
12 930 12 127
Current Assets
Inventories 7 638 8 418
Other financial assets 326 886
Current tax receivable 13 13
Trade and other receivables 11 738 18 629
Cash and cash equivalents 17 398 4 852
37 113 32 798
Total Assets 50 043 44 925
Equity and Liabilities
Equity
Equity attributable to owners of the
parent
Share capital 24 380 24 380
Share based payment reserve 150 221
Retained income 14 514 7 274
39 044 31 875
Non-controlling interest - 28
39 044 31 903
Liabilities
Non-Current Liabilities
Loans and borrowings 158 1 448
Finance lease obligation 45 128
Deferred tax 1 359 57
1 562 1 633
Current Liabilities
Bank overdraft - 16
Loans and borrowings 115 470
Finance lease obligation 83 172
Trade and other payables 9 018 10 194
Current tax payable - 438
Provisions 221 100
9 437 11 389
Total Liabilities 10 999 13 022
Total Equity and Liabilities 50 043 44 925
Number of ordinary shares in issue 88 554 275 88 554 275
Net tangible asset value per
ordinary share (cents) 32.81 24.74
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
Audited Audited
2012 2011
R’000 R’000
Cash flows from operating activities 20 524 5 780
Cash flows from investing activities (6 643) (3 939)
Net cash used in financing activities (1 817) (3 361)
Total cash and cash equivalents movement
for the year 12 064 (1 520)
Cash and cash equivalents at the beginning
of the year 4 835 6 481
Effect of exchange rate movement on cash
balances 498 (125)
Total cash and cash equivalents at end of
the year 17 398 4 835
NOTE 1 – RECONCILIATION OF PROFIT FOR THE YEAR TO HEADLINE
EARNINGS
Audited Audited
year ended year ended
30-Jun-12 30-Jun-11
EARNINGS R’000 R’000
Profit for the year 7 241 2 608
Adjustments for:
Impairment of intangible assets - 299
Add: loss on disposal of property, plant
and equipment 11 -
Deduct: Tax on loss on disposal of
property, plant and equipment (3) -
Headline earnings attributable to ordinary
shareholders 7 249 2 907
Weighted average number of ordinary shares
in issue 88 554 275 88 554 275
Weighted average number of diluted ordinary
shares in issue 90 184 454 90 586 388
From continuing and discontinued operations
Basic earnings per ordinary share (cents) 8,18 2,95
Diluted earnings per ordinary share (cents) 8,03 2,88
Headline earnings per ordinary share
(cents) 8,19 3,28
Diluted headline earnings per ordinary
share (cents) 8,04 3,21
From continuing operations
Basic earnings per ordinary share (cents) 8,18 5,38
Diluted earnings per ordinary share (cents) 8,03 5,26
Headline earnings per ordinary share
(cents) 8,19 3,28
Diluted headline earnings per ordinary
share (cents) 8,04 3,21
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Share
capital premium based
payment
reserve
R’000 R’000 R’000
Balance at 01 July
2010 4 24 375 221
Changes in equity
Profit for the year - - -
Total changes - - -
Balance at 01 July
2011 4 24 375 221
Changes in equity
Profit for the year - - -
Share options
forfeited - - (71)
Dividends - - -
Changes in ownership
interest - control not
lost - - -
Subsidiary
deregistered - - -
Total changes - - (71)
Balance at 30 June
2012 4 24 375 150
Retained Non- Audited
earnings controlling total
interest
R’000 R’000 R’000
Balance at 01 July
2010 4 665 28 29 294
Changes in equity
Profit for the
year 2 609 - 2 609
Total changes 2 609 - 2 609
Balance at 01 July
2011 7 274 28 31 903
Changes in equity
Profit for the
year 7 241 (8) 7 233
Share options
forfeited - - (71)
Dividends - (12) (12)
Changes in
ownership
interest - control
not lost - (8) (8)
Subsidiary
deregistered - - -
Total changes 7 241 (28) 7 141
Balance at 30 June
2012 14 515 - 39 044
(All calculations rounded to R’000)
SEGMENTAL ANALYSIS FOR THE PERIOD ENDING 30 JUNE 2012
Continued Discontinued
operations Operations
Commercial CCS Defence Base Audited
2012 Division Division Division Station Total
Total
revenues 38 417 10 851 34 662 - 83 931
Intersegment
revenue (2 960) - - - (2 960)
Total
external
revenue 35 457 10 851 34 662 - 80 970
Corporate
office
expense (509) (156) (497) - (1 162)
Depreciation
and
amortisation (3 834) (172) (2 365) - (6 372)
Operating
profit 558 1 893 6 023 - 8 474
Investment
income 36 - 411 - 448
Finance
costs (255) (5) (127) - (387)
Profit
before
taxation 340 1 888 6 307 - 8 535
Taxation (128) (573) (601) - (1 302)
Profit for
the year 212 1 315 5 706 - 7 233
Reportable
segments
assets 19 167 4 040 26 836 - 50 043
Reportable
segments
liabilities (4 209) (912) (5 878) - (10 999)
(All calculations rounded to R’000)
SEGMENTAL ANALYSIS FOR THE PERIOD ENDING 30 JUNE 2011
Continued Discontinued
operations Operations
Commercial CCS Defence Base Audited
2011 Division Division Division Station Total
Total
revenues 48 732 - 37 105 75 85 912
Intersegment
revenue (4 362) - - - (4 362)
Total
external
revenue 44 370 - 37 105 75 81 550
Corporate
office
expense (838) - (632) - (1 470)
Depreciation
and
amortisation (3 909) - (2 020) (61) (5 990)
Operating
profit (4 102) - 10 917 (513) 6 302
Investment
income 226 - 43 - 269
Finance
costs (400) - (323) (7) (730)
Profit
before
taxation (4 276) - 10 638 (520) 5 841
Taxation 537 (2 135) 520 (1 077)
Profit from
continuing
operations (3 739) - 8 503 - 4 764
Discontinued
operations
Loss from
discontinued
operations - - - (2 156) (2 156)
Profit for
the year (3 739) - 8 503 (2 156) 2 608
Reportable
segments
assets 19 764 - 25 161 - 44 925
Reportable
segments
liabilities (7 749) - (5 273) - (13 023)
(All calculations rounded to R’000)
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. The group operates as three
divisions, namely Commercial, Defence and the newly formed
Cellular Coverage Solutions. Cellular Coverage Solutions started
operating as an independent division in this financial year.
Poynting’s commercial antennas are used in cellular and 3G end-
user equipment, as well as wireless data networks employing Wi-Fi,
iBurst and WiMAX technologies. These antennas enable and enhance
internet access, and increase throughput while also making data
links reliable.
The Defence Division is focused on the electronic warfare market
which comprises of monitoring, jamming and direction-finding
antennas. This division sells to military system integrators and
specialised distribution partners. Close partnerships are created
with customers and antennas are often custom-designed.
The Cellular Coverage Solutions Division (CCS) has two main
focuses namely, installation of 3G and wireless products for end
users and the design and manufacture of novel, small footprint,
environmentally friendly micro base station solutions. This
division started operations in the 2012 financial year although
some of the activities commenced in the prior year within the
Commercial Division.
Poynting retained a very strong Research and Development
department (“R&D”) of around 20 talented members including PhD and
MSc level engineers who design the antennas, develop production
methods, develop manufacturing plant (mainly moulds and stamping
tools) and produce first prototypes. Both Commercial, Defence and
CCS Divisions perform customer-specific designs to supply products
to single customers (“OEM”) and generic products which can be sold
to various customers. Typically, the Defence sales come from large
military OEMs, whereas Commercial mainly focuses on mass
production products sold through distributors or to corporate
customers. CCS mainly services cellular operators and their
customers.
RESULTS OVERVIEW
The highlights of the financial year end results include:
Cash increased by 258% from R4.835 million in 2011 to R17.398
million in 2012
Profit from continuing and discontinued operations increased by
177.29% from R2.608 million in 2011 to R7.233 million in 2012
Headline earnings per ordinary share increased by 149.70% from
3.28 cents in 2011 to 8.19 cents per share in 2012 from continuing
and discontinued operations
Profit from continuing operations increased by 51.83% from R4.764
million to R7.233 million in 2012
The substantial increase in group profits was achieved, despite a
slightly reduced overall turnover and substantial reduction in
Defence Division profits. This hence reflects a substantially more
balanced and well-managed company. The positive R12 million cash
flow is mainly attributed to non-cash expenses of around R6.4
million of depreciation and amortisation combined with the R7.2
million profit after tax.
Profits before tax (PBT) from the Defence Division decreased by
R4.3 million, but this was offset by an increase in Commercial
profits of R4.6 million, while the new CCS Division contributed
R1.9 million profit before tax in its maiden year, thereby
providing healthy overall company growth. It should be noted that
the Defence Division profit reduction was expected and was largely
due to an exceptional profit from the previous year, which was not
sustainable. The reduced Defence profit before tax still comprises
74% of overall profit.
The Defence Division is growing in terms of territory, reputation
and customer base. Almost all Defence products are ultimately
delivered to international clients. While it takes many years to
establish credibility and brand loyalty in this specialised high
technology field, the Defence Division has now reached a “tipping
point” where our expertise, products and capabilities are
internationally recognised and respected. Poynting’s presence at
international exhibitions is now attracting far more interest than
in the past. Our customer base has also shown healthy growth and
we rely far less on single customers as there are now
approximately 7 customers providing sales exceeding R1
million/annum.
The Commercial Division’s return to profitability is encouraging
and helped to claw back at prior year losses. This is mainly the
result of improved gross margins resulting from moving the
manufacture of certain products to China, lower operating costs
and Poynting Direct returning to profitability. Commercial sales
are increasingly driven by cellular data users as well as machine-
to-machine (“M2M”) cellular applications.
CCS Division has introduced some novel small base stations. Some
of these incorporate equipment containers buried into the ground
to reduce visual impact, provide equipment security and are easier
to cool. Current sales still represent only a small number of
units mainly for pilot and trial systems.
SUBSEQUENT EVENTS
Poynting entered into a Sale of Business Agreement, dated 10 July
2012, with Radiant Antennas Proprietary Limited (“Radiant”) to
acquire the business of Radiant as a going concern. The
acquisition will expand Poynting’s current Defence product range
to include HF, VHF and UHF communications antennas and masts,
unlock operational efficiencies and further entrench Poynting in
the international defence industry. The business of Radiant was
moved into Poynting’s premises at 33 Thora Crescent, Wynberg on 13
August 2012. The effective date of the transaction was 1 July
2012.
PROSPECTS
Various international players and customers are mentioning a
slowdown in Defence spending. Poynting Defence Division order book
on the other hand, is marginally bigger than the same period a
year ago. We are concerned about a possible slowdown in this
market, but believe that Poynting’s size means that our growth can
be sustained by entering new markets, finding new customers and
adding to our product range and offering. The purchase of Radiant
Antennas is also strategically important since it provides
products and customers in the Military communications market,
whereas Poynting has focused on the more specialised Electronic
Warfare market in the past. The military communications market is
much larger and provides good growth opportunities.
The Commercial Division is finding healthy demand for its cellular
antenna range. This division is also developing new Long Term
Evolutions (“LTE”) or 4G antennas for the European market. These
antennas are developed around new patents and inventions and are
currently unique in terms of performance. We are seeing strong
demand and are receiving orders for these antennas from
international customers before first production runs which is
encouraging. The local and international double digit growth in
cellular data underpins growth in this division. The next
generation (LTE/4G) cellular data technology promises to boost
antennas as they require more than one antenna at end user devices
to achieve optimal performance. Antennas are hence becoming
fundamentally important rather than just something required in
areas of weak signal. Commercial division exports as a percentage
of overall sales also have shown a healthy increase and sales to
Europe are growing. Financially the Commercial Division has only
reached break even in 2012. A number of structural changes in the
previous year added “once off” costs to this Division, but are
aimed at long term improvements. The Commercial Division is hence
poised and primed to produce profits in 2013.
CCS Division is in the early stages of market penetration. Overall
market potential for the micro base stations is massive but it is
too early to say if these solutions will achieve market
penetration. 2013 will give a strong indication of the viability
and potential of this new product range.
Poynting intends to also aggressively pursue company growth by
acquisitions and investments aimed at entering new markets in the
coming year. We are building cash reserves and a healthy recovery
in our share price puts us in a position where we can achieve
considerable growth through carefully considered corporate
activities.
The board of Poynting has decided that the group will aim to
improve the BEE rating from a level eight to a level four in the
next two years and we aim to improve the BEE rating to a level six
in the next twelve months. We will establish a Poynting
Empowerment Foundation to assist and support the community and
developing organisations.
BASIS OF PREPARATION
The accounting policies applied in the preparation of these
summarised consolidated financial statements, which are based on
reasonable judgments and estimates, are consistent with those
applied in the annual financial statements for the year ended 30
June 2012. These summarised financial statements as set out in
this report have been prepared in terms of the recognition and
measurement requirements of the International Financial Reporting
Standards (“IFRS”), presentation and disclosure requirements of
IAS 34 – Interim Financial Reporting, the Companies Act, 2008 (Act
71 of 2008), the AC500 standards as issued by the APB and the
Listings Requirements of JSE Limited.
AUDITOR’S REPORT
The group annual financial results have been audited by KPMG Inc.
South Africa and form the basis of this set. The unqualified audit
report and the annual financial statements are available for
inspection at the registered office of the Company.
DIRECTORATE
J Kalunga resigned from the board effective 2 November 2011 and
there were no additional current or post year-end changes to the
board prior to the date of this report.
By order of the board
Andre Fourie
Chief Executive Officer
Johan Ebersohn
Financial Director
27 September 2012
Johannesburg
Directors
Coen Bester*^ (Chairman), Andre Fourie (Chief Executive Officer),
Juergen Dresel (Managing Director) (German)
Johan Ebersohn (Financial Director), Zuko Kubukeli*^, Richard
Willis^,*Independent ^Non-executives
The provisional summarised consolidated financial statements were
prepared under the supervision of Johan Ebersohn. (Financial
Director).
Registered Office
33 Thora Crescent, Wynberg, 2090. (PO Box 76579, Wendywood, 2144)
Designated Adviser
Merchantec Capital
Company secretary
Merchantec Capital
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