| Tue 14 Oct 2008, 17:29 | | POY - Poynting - Condensed Audited Financial Results For The Year Ended |
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POY
POY
POY - Poynting - Condensed Audited Financial Results For The Year Ended
30 June 2008
POYNTING HOLDINGS LIMITED
(Formerly Poynting Innovations (Proprietary) 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")
CONDENSED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2008
HIGHLIGHTS
- Revenue of R56 million up 27.57% from 2007.
- Profit after tax of R5.82 million up 196% from 2007.
- Net profit after tax as a percentage of revenue increased to 10.38% from
4.48% in 2007.
- Successfully listed on AltX on 9 July 2008.
Condensed Balance Sheet
Audited Audited
30 June 2008 30 June
R`000 2007
R`000
Assets
Property, plant and equipment 3 511 2 372
Intangible assets 10 920 5 426
Current assets 23 127 20 248
Total assets 37 558 28 046
Equity and liabilities
Capital and reserves 14 013 4 311
Non-current liabilities 4 708 5 417
Current liabilities 18 837 18 318
Total equity and liabilities 37 558 28 046
Number of ordinary shares in 67 300 000 4 945 368
issue
Net asset value per ordinary 20.82 87.18
share (cents)
Net tangible asset value per 4.60 (22.54)
ordinary share (cents)
Condensed Income Statement
Audited Audited
30 June 2008 30 June
R`000 2007
R`000
Revenue 56 034 43 925
Cost of sales (25 346) (20 231)
Gross profit 30 688 23 694
Other income 1 807 1 315
Operating costs (25 117) (22 340)
Operating profit 7 378 2 669
Finance income 514 27
Finance costs (1 106) (709)
Profit before taxation 6 786 1 987
Taxation (971) (21)
Profit after taxation 5 815 1 966
Adjustment for headline 212 -
earnings - impairment of
intangible assets and profit on
sale of assets
Headline earnings attributable 6 039 1 921
to ordinary shareholders
Attributable to:
Equity holders of parent 5 827 1 921
Minority interest (12) 45
Weighted average number of 27 262 138 4 945 368
ordinary shares in issue
Earnings per ordinary share 21.38 38.84
(cents)
Headline earnings per ordinary 22.15 38.84
share (cents)
Condensed Statement of Changes in Equity
Share Share Retained
capital premium income Total
R`000 R`000 R`000 R`000
Balance at 1 July * 1 389 956 2 345
2006
Changes in equity
Net profit for the - - 1 966 1 966
year
Total changes * - 1 966 1 966
Opening balance as * 1 389 2 464 3 853
previously
reported * - 458 458
Prior period error
Balance at 1 July as * 1 389 2 922 4 311
restated
Profit for the year * - 5 815 5 815
Changes in equity 3 3 884 - 3 887
Total changes 3 3 884 5 815 9 702
Balance at 30 June 3 5 273 8 737 14 013
2008
* Less than R1 000
Condensed Cash Flow Statement
Audited Audited
30 June 30 June
2008 2007
R`000 R`000
Cash flow from operating 3 494 742
activities
Cash flow from investing (9 666) (4 956)
activities
Cash flow from financing (101) 7 149
activities
(Decrease)/Increase in cash and (6 273) 2 935
cash equivalents
Cash and cash equivalents at 1 908 (1 027)
beginning of the year
Cash and cash equivalents at end (4 365) 1 908
of the year
Segmental reporting
Management have not presented segment reporting for 2007 as IFRS 8 was early
adopted in the year under review. The basis for the segmentation is the
reporting basis used by management.
The group has two main operating segments encompassing all branches, namely:
- Commercial; and
- Defence
As the more established of the two operating segments, the Commercial Antenna
Division has stable growth while the Defence and Specialised Antenna Division,
which represents the recent expansion area, is a high growth unit.
The segment results for the year ended 30 June 2008 are as follows:
Commercial Defence Total
R`000 R`000 R`000
Segment revenue 43 305 12 729 56 034
Segment cost of sales (15 353) (9 993) (25 346)
Gross profit/segment 27 952 2 736 30 688
result
Other income 1 807
Operating expenses (25 117)
Finance income 514
Finance costs (1 106)
Profit before tax 6 786
Tax (971)
Profit for the year 5 815
No further information is presented for the primary segment as the group does
not have material dedicated segment assets. Management monitors performance by
segment based solely on revenue and gross profit margins.
COMMENTARY
Introduction
The year ended 30 June 2008 marked a milestone in Poynting`s history with a
successful listing on AltX on 9 July 2008, thereby raising R20 million for the
expansion of its business operations. The share opened trade at a premium to the
pre-listing issue price of R1 per share, giving Poynting a market capitalisation
on listing of R108 million.
Group profile
Poynting designs, manufactures and supplies antennas and telecommunication
products to the cellular, wireless data and defence markets, both within South
Africa and internationally via its subsidiaries. The company operates on a
divisional basis with a Commercial Division and a Defence and Specialised
Antennas Division. Approximately 40% of the company`s products are destined for
the export markets, the largest of those being Europe, the USA, the Middle East
and Asia.
Financial results
The results for the year ended 30 June 2008 show an increase in revenue of
27.57% to R56 million from the previous year while profit after tax increased by
196% to R5.82 million. Net profit after tax as a percentage of revenue increased
to 10.38% from 4.48% in the previous year.
Poynting failed to achieve the profit forecast set out in the prospectus dated
26 June 2008, falling short of the forecast R9.28 million profit after tax by
R3.46 million resulting in an actual profit after tax of R5.82 million. The
principle reasons for this under achievement are:
- lower than expected turnover in the last month of operation resulting in
reduced profit of R0.68 million;
- the discovery of an error in the management accounts whereby Poynting
Direct overheads were only included in the consolidated forecast for an 8
month period resulting in an error of R0.6 million;
- a reduction of R1.5 million in profit resulting from various audit
adjustments. These include turnover incorrectly recognised for goods
delivered around year end, impairment of intangible assets, provision for
obsolete stock, leave provisions, bad debts and bad debt provisions; and
- a higher than forecast deferred tax of R0.8 million as a result of a
decision to treat the research and development tax base in a different
manner than in the prior year by not creating a negative tax base.
Furthermore, the basis of calculation of the weighted average number of shares
in issue presented in these condensed audited financial results for the year
ended 30 June 2008, being a daily basis, has been adjusted from the monthly
basis presented in the prospectus dated 26 June 2008 and used to calculate
earnings per share ("EPS") for the trading update released on SENS on 18
September 2008. This adjustment resulted in a further 5.95% reduction in EPS.
Failure to meet the profit targets in the last quarter has led to a reduction of
the management remuneration of approximately R350 000. This will be accounted
for in the financial results for the year ending 30 June 2009.
On a more positive note, whilst acknowledging the potential for a global
slowdown in our markets given the current market turmoil, Poynting is currently
focussed on prospects for 2009. The following growth areas are showing promise:
- Sales and marketing activities in the USA have started and we have
established a master distributor in California who carries stock of our
products.
- We are in the final stages of the development of two new whole products,
being an outdoor cellular data modem/router and a WiFi client unit, for
which we foresee strong demand.
- Poynting Direct has introduced its first franchise branch and will add
another branch located in a major shopping mall in October 2008. It is
anticipated that these branches will increase our footprint in the retail
market.
- We have made first volume deliveries to a major Nasdaq listed company and
one of the largest fixed wireless equipment suppliers in the world.
Deliveries to this customer should reach significant volumes from January
2009 onwards.
- As set out in the cautionary announcement released on SENS on 29 September
2008, Poynting has signed a sales agreement with Saab Grintek Defence
(Proprietary) Limited which, if successfully concluded, will give Poynting
a more diverse product line and contribute to our growth.
Basis of preparation
The audited consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards ("IFRS"), IAS 34, the Listings
Requirements of the JSE Limited and the Companies Act (Act 61 of 1973) as
amended, and are consistent with those applied in the prior year.
The results for the year ended 30 June 2008 have been audited by Poynting`s
auditors, KPMG Inc., and their unqualified report is available at the company`s
registered office for inspection.
Extract from Auditor`s Report
Report on Other Legal and Regulatory Requirements
"In accordance with our responsibilities in terms of sections 44(2) and 44(3) of
the Auditing Profession Act, we report that we have identified certain unlawful
acts or omissions by persons responsible for the management of the subsidiaries
of Poynting Holdings Limited which constitute reportable irregularities in terms
of the Auditing Profession Act, and we have reported such matters to the
Independent Regulatory Board for Auditors. The matter pertaining to the
reportable irregularities have been described in the directors` report."
Comparative figures
Certain amounts in the prior year have been reclassified. These relate to the
reclassification of trade receivables, trade payables and finance lease
obligations.
In addition to the above the method of calculating the tax base of intangible
assets has been revised and the assessed loss was incorrectly calculated. These
changes resulted in an adjustment to the deferred tax balance of R0.5 million.
Subsequent events
There have been no facts or circumstances of a material nature that have
occurred between 30 June 2008 and the issue of these statements other than those
stated above.
14 October 2008
Directors
C P Bester* (Non-executive Chairman), A P C Fourie (Chief Executive Officer), S
O Mullah (Financial Director (resigned 7 October 2008)), J Dresel^ (Managing
Director), T D Abbott, M P Haarhoff, M K Hill*# (acting Financial Director
effective 7 October 2008), Z N Kubukeli*#, A C Nitch, D C Nitch, A Selikow
*Non-executive
#Independent
^German
Company secretary and registered office
Derek Nitch
B.Sc.Eng (Elec), PhD (Wits)
33 Thora Crescent, Wynberg, 2090,
(PO Box 76579, Wendywood 2144)
Designated Adviser
Merchantec (Proprietary) Limited
Auditors and reporting accountants
KPMG Inc.
Transfer secretaries
Computershare Investor Services (Proprietary) Limited
Date: 14/10/2008 17:29:04 Produced by the JSE SENS Department.
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