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STO
STO
STO - Set Point Technology Holdings Limited - Unaudited results for the six
months ended 29 February 2008
Set Point Technology Holdings Limited(Incorporated in the Republic of South
Africa)(Registration number: 1996/014334/06)Share code: STO ISIN:
ZAE000013629("Set Point" or "the company" or "the group")
Highlights
* Pretax profit R32,8m up 123%
* HEPS 6,3 cents up 137%* Interim dividend 2 cents
* Strong liquid balance sheet
Unaudited Results for the six months ended 29 February 2008
Consolidated income statements
Unaudited six months ended 29 February
2008
Total Continuing Discontinued
R`000 operations operations
R`000 R`000
Revenue 177 095 177 095 -
Cost of sales (87 237) (87 237) -
Gross profit 89 858 89 858 -
Selling and administration (56 801) (56 801) -
expenses
Other operating income 783 783 -
Other operating expenses (1 082) (1 082) -
Impairment of goodwill - - -
Profit/(loss) on disposal of 261 261 -
plant and equipment
Impairment of long-term - - -
receivable
Foreign exchange transaction (802) (802) -
losses
Impairment of patent - - -
Amortisation of intangible (541) (541) -
assets
Operating profit/(loss) 32 758 32 758 -
Finance income 2 607 2 607 -
Finance costs (2 634) (2 634) -
Profit/(loss) before 32 731 32 731 -
taxation
Taxation (10 946) (10 946) -
Profit/(loss) after taxation 21 785 21 785 -
Loss on disposal of - - -
discontinued operations
Profit/(loss) for the period 21 785 21 785 -
Attributable to:
Equity holders of Set Point 21 741 21 741 -
Minority interests 44 44 -
21 785 21 785 -
Shares in issue
Weighted average number of 342 449
ordinary shares in issue
(000`s)
Fully diluted weighted 352 824
average number of ordinary
shares in issue (000`s)
Earnings/(loss) per share 6,3 6,3 -
(cents)
Diluted earnings/(loss) per 6,2 6,2 -
share (cents)
Headline earnings/(loss) per 6,3 6,3 -
share (cents)
Diluted headline 6,1 6,1 -
earnings/(loss) per share
(cents)
Unaudited six months ended 29 February
2008
Reconciliation of headline Gross Taxation Net
earnings:
Earnings 32 687 (10 946) 21 741
Adjusted for: (261) 72 (189)
Attributable to discontinued
operations
- Loss on disposal of - - -
Mineral Mining
- Loss on disposal of - - -
Tribology
- Deferred taxation loss on - - -
sale of patents
Loss on disposal of - - -
discontinued operations
- Profit on disposal of (261) 72 (189)
plant and equipment
- Goodwill impairment - - -
- Intangible asset - - -
impairment
32 426 (10 874) 21 552
Consolidated income statements (Contd)
Unaudited six months ended 28 February
2007
Total Continuing Discontinued
R`000 operations operations
R`000 R`000
Revenue 219 499 141 504 77 995
Cost of sales (143 044) (75 001) (68 043)
Gross profit 76 455 66 503 9 952
Selling and administration (62 939) (48 576) (14 363)
expenses
Other operating income 630 585 45
Other operating expenses (24 767) (1 002) (23 765)
Impairment of goodwill (4 575) - (4 575)
Profit/(loss) on disposal of 10 (5) 15
plant and equipment
Impairment of long-term (9 900) - (9 900)
receivable
Foreign exchange transaction (466) (457) (9)
losses
Impairment of patent (8 704) - (8 704)
Amortisation of intangible (1 132) (540) (592)
assets
Operating profit/(loss) (10 621) 17 510 (28 131)
Finance income 4 051 4 015 36
Finance costs (8 198) (6 818) (1 380)
Profit/(loss) before (14 768) 14 707 (29 475)
taxation
Taxation (3 862) (5 763) 1 901
Profit/(loss) after taxation (18 630) 8 944 (27 574)
Loss on disposal of - - -
discontinued operations
Profit/(loss) for the period (18 630) 8 944 (27 574)
Attributable to:
Equity holders of Set Point (18 688) 8 886 (27 574)
Minority interests 58 58 -
(18 630) 8 944 (27 574)
Shares in issue
Weighted average number of 335 469
ordinary shares in issue
(000`s)
Fully diluted weighted 343 602
average number of ordinary
shares in issue (000`s)
Earnings/(loss) per share (5,6) 2,6 (8,2)
(cents)
Diluted earnings/(loss) per (5,4) 2,6 (8,0)
share (cents)
Headline earnings/(loss) per (1,6) 2,7 (4,3)
share (cents)
Diluted headline (1,6) 2,6 (4,2)
earnings/(loss) per share
(cents)
Unaudited six months ended 28 February
2007
Reconciliation of headline Gross Taxation Net
earnings:
Earnings (14 826) (3 862) (18 688)
Adjusted for: 13 269 3 13 272
Attributable to discontinued
operations
- Loss on disposal of - - -
Mineral Mining
- Loss on disposal of 615 - 615
Tribology
- Deferred taxation loss on - - -
sale of patents
Loss on disposal of 615 - 615
discontinued operations
- Profit on disposal of (10) 3 (7)
plant and equipment
- Goodwill impairment 3 960 - 3 960
- Intangible asset 8 704 - 8 704
impairment
(1 557) (3 859) (5 416)
Consolidated income statements (Contd)
Audited year ended 31 August 2007
Total Continuing Discontinued
R`000 operations operations
R`000 R`000
Revenue 407 544 293 741 113 803
Cost of sales (251 477) (151 873) (99 604)
Gross profit 156 067 141 868 14 199
Selling and administration (121 068) (95 796) (25 272)
expenses
Other operating income 2 155 2 110 45
Other operating expenses (17 057) (1 620) (15 437)
Impairment of goodwill (3 960) - (3 960)
Profit/(loss) on disposal of 32 70 (38)
plant and equipment
Impairment of long-term (9 000) - (9 000)
receivable
Foreign exchange transaction (610) (610) -
losses
Impairment of patent (1 846) - (1 846)
Amortisation of intangible (1 673) (1 080) (593)
assets
Operating profit/(loss) 20 097 46 562 (26 465)
Finance income 10 041 9 965 76
Finance costs (16 954) (14 948) (2 006)
Profit/(loss) before 13 184 41 579 (28 395)
taxation
Taxation (9 871) (15 007) 5 136
Profit/(loss) after taxation 3 313 26 572 (23 259)
Loss on disposal of (3 509) - (3 509)
discontinued operations
Profit/(loss) for the period (196) 26 572 (26 768)
Attributable to:
Equity holders of Set Point (330) 26 438 (26 768)
Minority interests 134 134 -
(196) 26 572 (26 768)
Shares in issue
Weighted average number of 338 873
ordinary shares in issue
(000`s)
Fully diluted weighted 340 068
average number of ordinary
shares in issue (000`s)
Earnings/(loss) per share (0,1) 7,8 (7,9)
(cents)
Diluted earnings/(loss) per (0,1) 7,8 (7,9)
share (cents)
Headline earnings/(loss) per 2,5 7,8 (5,3)
share (cents)
Diluted headline 2,5 7,8 (5,3)
earnings/(loss) per share
(cents)
Audited year ended 31 August 2007
Reconciliation of headline Gross Taxation Net
earnings:
Earnings 9 541 (9 871) (330)
Adjusted for: 7 423 1 335 8 758
Attributable to discontinued
operations
- Loss on disposal of 1 081 (313) 768
Mineral Mining
- Loss on disposal of 567 - 567
Tribology
- Deferred taxation loss on - 2 174 2 174
sale of patents
Loss on disposal of 1 648 1 861 3 509
discontinued operations
- Profit on disposal of (31) 9 (22)
plant and equipment
- Goodwill impairment 3 960 - 3 960
- Intangible asset 1 846 (535) 1 311
impairment
16 964 (8 536) 8 428
Consolidated balance sheets
Unaudited at Unaudited at Audited at
29 February 28 February 31 August
2008 2007 2007
R`000 R`000 R`000
Assets
Non-current assets 76 808 98 427 73 523
Plant and equipment 31 817 32 519 27 334
Goodwill 40 099 40 507 40 099
Intangible assets 630 1 711 1 171
Receivable - 18 600 -
Deferred taxation 4 262 5 090 4 919
Current assets 154 765 155 833 158 412
Inventories 58 736 71 953 51 373
Trade and other receivables 68 555 78 604 70 346
Non-current assets held for - 3 376 -
sale
Cash and cash equivalents 27 474 1 900 36 693
Total assets 231 573 254 260 231 935
Equity and liabilities
Total equity 132 975 99 924 118 039
Non-current liabilities 14 524 11 438 12 001
Interest bearing 10 333 8 050 8 126
liabilities
Provisions and accruals 4 191 3 388 3 875
Current liabilities 84 074 142 898 101 895
Interest bearing 2 867 16 319 8 254
liabilities
Trade and other payables 62 976 96 791 84 906
Non-current liabilities - 2 431 -
held for sale
Taxation liability 18 231 1 333 8 735
Bank overdraft - 26 024 -
Total equity and 231 573 254 260 231 935
liabilities
Shares in issue (net of 342 816 336 740 342 040
treasury shares) (000`s)
Net asset value per share 38,7 29,6 34,4
(cents)
Condensed consolidated cash flow statements
Unaudited six Unaudited six Audited
months ended months ended year ended
29 February 28 February 31 August
2008 2007 2007
R`000 R`000 R`000
Cash flows from operating 12 643 (3 358) 43 500
activities
Cash generated by 20 644 915 50 875
operations
Finance income 2 607 4 051 9 021
Finance costs (2 634) (8 198) (15 948)
Taxation paid (793) (101) (423)
Dividends paid (7 181) (25) (25)
Cash flows from investing (7 627) (6 748) (11 816)
activities
Increase in investments - (615) -
Capital expenditure on (7 920) (7 679) (14 021)
plant and equipment
Disposals of plant and 293 1 546 2 205
equipment
Cash flows from financing (14 235) 4 279 (1 759)
activities
Proceeds from issue of 131 - 1 076
shares
Shares issued by treasury 170 - 331
Acquisition of minorities - - (825)
Payment to vendors in (11 322) (575) (3 102)
respect of purchase
consideration payable
Proceeds from non-current - 1 109 3 256
receivables
Payment in respect of long- (34) (27) (54)
term provisions
Decrease in interest (6 600) (6 770) (11 544)
bearing debt
Interest bearing debt 3 420 10 542 9 103
raised
Discontinued operations - 2 817 27 882
Cash flows from operating - (13 529) (15 090)
activities
Cash flows from investing - (563) (2 281)
activities
Cash flows from financing - 10 920 18 764
activities
Cash flows from disposal of - 5 989 26 489
discontinued operation
Cash and cash equivalents
Net cash (9 219) (3 010) 57 807
(utilised)/generated during
the period
At beginning of period 36 693 (18 953) (18 953)
Cash in business disposed - (2 161) (2 161)
of
At end of period 27 474 (24 124) 36 693
Condensed segmental information
Segment Segment Capital
assets liabilities expenditure Depreciation
R`000 R`000 R`000 R`000
Analytical 58 650 25 234 (4 678) 1 939
Services
Fluid Handling 95 228 25 734 (1 416) 576
Mining Services 52 759 14 456 (851) 426
Central Services 25 136 33 174 (975) 464
Consolidation (200) - - -
entries,
adjustments and
intra group
elimination
231 573 98 598 (7 920) 3 405
Condensed segmental information (Contd)
Segment revenue Segment operating
profit
R`000 % R`000 %
Analytical Services 57 043 32,2 20 167 61,6
Fluid Handling 81 590 46,1 17 848 54,5
Mining Services 39 221 22,1 3 277 10,0
Central Services - - (8 712) (26,6)
Consolidation entries, (759) (0,4) 178 0,5
adjustments and intra group
elimination
177 095 100,0 32 758 100,0
Condensed consolidated statement of changes in equity
Unaudited Unaudited Audited
six months six months year
ended ended ended
29 February 28 February 31 August
2008 2007 2007
R000 R000 R000
Opening balances 117 541 120 277 120 277
Recognised income and
expense
Profit/(loss) for the 21 741 (18 688) (330)
period attributable to
equity holders of Set Point
Transactions with
shareholders
Share based payments 31 22 343
Dividends (6 856) - -
Treasury shares issued 170 - 300
Shares issued 131 - 1 080
Acquisition of minority - (2 109) (4 129)
interests
Equity attributable to 132 758 99 502 117 541
equity holders of Set Point
Minority interests 217 422 498
Total equity 132 975 99 924 118 039
Financial results and review of operations
FINANCIAL RESULTS
Revenue growth increased by 25,2% to R177,1 million compared to the continuing
operations in the first half of the previous financial year. All operating
divisions reported improved revenue. The gross profit from continuing operations
increased by R23,4 million (35,1% ) to R89,9 million. This higher gross profit
percentage of 50,7%, against 47,0%, reflected the significant increase in
business activity in Analytical Services.
Operating profit improved by 87% and reduced net finance costs from positive
cash balances resulted in the pretax profit increasing by 123%.
The group recorded headline earnings per share of 6,3 cents compared to a loss
of 1,6 cents in the corresponding period of the previous year and 2,7 cents from
continuing operations in that period.
The balance sheet remains strong with cash balances of R27,5 million and cash
net of borrowings of R14,3 million. During the period the final tranche of R11,3
million was paid to the minority vendors of Letaba Holdings (Pty) Limited.
Based on these results, the board has resumed the payment of an interim dividend
with the declaration of a 2 cent dividend.
Review of OperationsAnalytical Services operates through specialised
laboratories offering expert chemical analysis for the precious metals
exploration industry and condition monitoring of fluids. Sustained business
activity particularly in the mining exploration arena reflected in an increase
in operating profits of 107%. During the period under review Set Point
Laboratories received ISO 17025 accreditation as well as accreditation from the
National Nuclear Regulator of South Africa to analyse uranium in naturally
occurring radio active isotope bearing materials.
The Fluid Handling division, which supplies pumps, valves, couplings and flow
meters to the petrochemical and mining industries, increased revenue by 12,9% to
R81,6 million. Operating profit increased by 20% with all businesses producing
particularly pleasing results.
Following the sale of various business activities, Mining Services has been
rationalised and now consists solely of the manufacture and repair of hopper
wheels, skip and cage guides and rollers. Results from this operation are ahead
of budget and this trend is forecast to continue following recent improvements
in production processes.
The 25% minority interest in Rogene Pumps (Pty) Limited was acquired effective 1
March 2008. All divisions within the Set Point Group are now wholly-owned which
will result in administrative savings.
Problems being experienced with Eskom`s load-shedding have impacted on the group
with outages, particularly in Rustenburg, occurring on a regular basis. The
group is making the necessary investments in alternative energy supplies to
minimise future disruptions in its operating units.
BASIS OF PREPARATION
The condensed interim financial statements have been prepared in accordance with
IFRS and interpretation statements in issue and effective at 29 February 2008,
IAS 34 - Interim Financial Reporting and in compliance with the Listing
Requirements of the JSE Limited and the Companies Act of South Africa.
DIVIDENDS
Notice is hereby given that an interim dividend number 7 of 2 cents per share
has been declared in respect of the year ending 31 August 2008.
This dividend will be paid out of profits as determined by the directors, to
shareholders recorded as such in the register at the close of business on the
record date, Friday, 30 May 2008. The last date to trade, to participate in the
dividend, is Friday, 23 May 2008. Shares will commence trading ex-dividend from
Monday, 26 May 2008.
The important dates pertaining to this dividend for shareholders trading on the
JSE Limited are as follows:
Last day to trade "CUM" dividend Friday, 23 May 2008
Shares trade "EX" dividend from Monday, 26 May 2008
Record date Friday, 30 May 2008
Payment date Monday, 2 June 2008
Share certificates may not be materialised or rematerialised between Monday, 26
May and Friday, 30 May 2008, both days inclusive.
PROSPECTS
All of the group`s divisions are achieving profit growth and central costs are
being well contained. Accordingly, the group anticipates substantial growth in
HEPS for the full year, with second half earnings expected to exceed those of
the first half. The group will continue its strategy of growing organically and
by acquisition.
For and on behalf of our board
CS Seabrooke GJ HorsfieldChairman
Chief Executive Officer
23 April 2008
Directors: CS Seabrooke* (Chairman), MJ Smith* (Deputy Chairman),
GJ Horsfield (Chief Executive Officer), JM Judin*, BH Kent*+, GE Nel*+
AP Nkuna*, DC Seaton*+, (* Non-executive) (+ Independent)
Company Secretary: ND Kennelly
Registered Office: 30 Electron Avenue, Isando 1601, (PO Box 856 Isando 1600)
Transfer Secretaries: Computershare Investor Services (Pty) Limited (Reg No:
2004/003647/07), Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box
61051, Marshalltown 2107)
Sponsor: Investec Bank Limited, Registration number 1969/004763/06
www.setpoint.co.za
Date: 23/04/2008 13:11:01 Produced by the JSE SENS Department.
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