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STO
STO
STO - Set Point Technology Holdings Limited - Audited results for the year ended
31 August 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")
AUDITED RESULTS FOR THE YEAR ENDED 31 AUGUST 2008
Pre-tax profit R75 million - up 81% on continuing operations
HEPS 14,7 cents - up 88% on continuing operations
Final dividend 3,0 cents (full year 5,0 cents)
Strong liquid balance sheet
Consolidated income statements
Audited year ended 31 August 2008
Continuing Discontinued
Total operations operations
R`000 R`000 R`000
Revenue 382 547 382 547 -
Cost of sales (201 958) (201 958) -
Gross profit 180 589 180 589 -
Selling and administration expenses (106 380) (106 380)
Other operating income 2 470 2 470
Other operating expenses (2 117) (2 117) -
Impairment of goodwill - - -
Profit/(loss) on disposal of plant 85 85 -
and equipment
Foreign exchange transaction losses (1 031) (1 031) -
Impairment of long-term receivable - - -
Impairment of patent - - -
Amortisation of intangible assets (1 171) (1 171) -
Operating profit/(loss) 74 562 74 562 -
Finance income 5 109 5 109 -
Finance costs (4 419) (4 419) -
Profit/(loss) before taxation 75 252 75 252 -
Taxation (24 668) (24 668) -
Profit/(loss) after taxation 50 584 50 584 -
Loss on disposal of discontinued - - -
operations
Profit/(loss) for the year 50 584 50 584 -
Attributable to:
Equity holders of Set Point 50 544 50 544 -
Minority interests 40 40 -
50 584 50 584 -
Shares in issue
Weighted average number of ordinary
shares in issue (000`s) 342 753
Fully diluted weighted average 347 165
number of ordinary shares in issue
(000`s)
Basic earnings per share (cents) 14.7 14.7 -
Diluted basic earnings per share 14.7 14.7 -
(cents)
Headline earnings per share (cents) 14.7 14.7 -
Diluted headline earnings per share 14.7 14.7 -
(cents)
Dividends per share
- interim dividend 2.0
- final dividend (declared after 3.0
year end)
Audited year ended 31 August 2008
Reconciliation of headline Gross Taxation Net
earnings:
Earnings 75 212 (24 668) 50 544
Adjusted for: (85) 24 (61)
- loss on disposal of Mineral - - -
Mining
- loss on disposal of Tribology - - -
- deferred taxation loss on sale of - - -
patents
- profit on disposal of plant and (85) 24 (61)
equipment
- goodwill impairment - - -
- intangible asset impairment - - -
Headline earnings 75 127 (24 644) 50 483
Consolidated income statements (Contd)
Audited year ended 31 August 2007
Continuing Discontinued
Total operations operations
R`000 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 expenses (121 068) (95 796) (25 272)
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 plant 32 61 (29)
and equipment
Foreign exchange transaction losses (610) (601) (9)
Impairment of long-term receivable (9 000) - (9 000)
Impairment of patent (1 846) - (1 846)
Amortisation of intangible assets (1 673) (1 080) (593)
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 taxation 13 184 41 579 (28 395)
Taxation (9 871) (15 007) 5 136
Profit/(loss) after taxation 3 313 26 572 (23 259)
Loss on disposal of discontinued (3 509) - (3 509)
operations
Profit/(loss) for the year (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 ordinary
shares in issue (000`s) 338 873
Fully diluted weighted average 340 068
number of ordinary shares in issue
(000`s)
Basic earnings per share (cents) (0.1) 7.8 (7.9)
Diluted basic earnings per share (0.1) 7.8 (7.9)
(cents)
Headline earnings per share (cents) 2.5 7.8 (5.3)
Diluted headline earnings per share 2.5 7.8 (5.3)
(cents)
Dividends per share
- interim dividend -
- final dividend (declared after 2.0
year end)
Audited year ended 31 August 2007
Reconciliation of headline earnings: Gross Taxation Net
Earnings 9 541 (9 871) (330)
Adjusted for: 7 423 1 335 8 758
- loss on disposal of Mineral Mining 1 081 (313) 768
- loss on disposal of Tribology 567 - 567
- deferred taxation loss on sale of - 2 174 2 174
patents
- profit on disposal of plant and (31) 9 (22)
equipment
- goodwill impairment 3 960 - 3 960
- intangible asset impairment 1 846 (535) 1 311
Headline earnings 16 964 (8 536) 8 428
Summarised Consolidated balance sheet
Audited Audited
year ended year ended
31-Aug 31-Aug
2008 2007
R`000 R`000
Assets
Non-current assets 83 808 73 523
Plant and equipment 37 044 27 334
Goodwill 40 099 40 099
Intangible assets - 1 171
Deferred taxation 6 665 4 919
Current assets 186 302 158 412
Inventories 67 890 51 373
Trade and other receivables 66 848 70 346
Cash 51 564 36 693
Total assets 270 110 231 935
Equity and liabilities
Total equity 155 144 118 039
Non-current liabilities 16 667 12 001
Purchase consideration payable 336 -
Interest bearing liabilities 12 011 8 126
Provisions and accruals 4 320 3 875
Current liabilities 98 299 101 895
Interest bearing liabilities 4 458 8 254
Trade and other payables 69 013 84 906
Taxation liability 24 828 8 735
Total equity and liabilities 270 110 231 935
Shares in issue (net of treasury 343 131 342 040
shares) (000`s)
Net asset value per share (cents) 45.2 34.5
Summarised consolidated cash flow statements
Audited Audited
year ended year ended
31-Aug 31-Aug
2008 2007
R`000 R`000
Cash flows from operating activities 42 380 43 500
Cash generated by operations 65 553 50 875
Finance income 5 109 9 021
Finance costs (4 038) (15 948)
Taxation paid (10 321) (423)
Dividends paid - ordinary (13 598) -
shareholders
- minority shareholders (325) (25)
Cash flows from investing activities (16 639) (11 816)
Capital expenditure on plant and (17 572) (14 021)
equipment
Disposals of plant and equipment 933 2 205
Cash flows from financing activities (10 870) (1759)
Proceeds from issue of shares 266 1 076
Shares issued by treasury 170 331
Acquisition of minorities - (825)
Payment to vendors in respect of
purchase consideration payable (11 321) (3 102)
Proceeds from non-current receivables - 3 256
Payment in respect of long-term (74) (54)
provisions
Payment of interest bearing debt (10 626) (11 544)
Interest bearing debt raised 10 715 9 103
Discontinued operations - 27 882
Cash flows from operating activities - (15 090)
Cash flows from investing activities - (2 281)
Cash flows from financing activities - 18 764
Cash flows from disposal of
discontinued operation - 26 489
Cash
Generated during the year 14 871 57 807
At beginning of year 36 693 (18 953)
Cash in business disposed of - (2 161)
At end of year 51 564 36 693
Summarised consolidated statement of changes in
equity
Audited Audited
year ended year ended
31-Aug 31-Aug
2008 2007
R`000 R`000
Opening balances 117 541 120 277
Recognised income and expense
Profit/(loss) for the year
attributable to
equity holders of Set Point 50 544 (330)
Transactions with shareholders
Share based payments 728 343
Dividends (13 670) -
Treasury shares issued 170 300
Shares issued 266 1 080
Acquisition of minority interests (435) (4 129)
Equity attributable to equity
holders of Set Point 155 144 117 541
Minority interests - 498
Total equity 155 144 118 039
Summarised segmental information
Segment Segment Capital
assets liabilities expenditure Depreciation
Year ended 31 August 2008 R`000 R`000 R`000 R`000
Analytical Services 52 487 29 490 9 120 3 890
Fluid Handling 102 515 30 404 2 504 1 428
Mining Services 65 576 15 016 3 621 1 071
Central Services 41 534 37 762 2 327 954
Consolidation entries 1 333 2 294 - (329)
adjustments and intra
group elimination
263 445 114 966 17 572 7 014
Summarised segmental information (contd)
Segment Segment
revenue operating
profit
Year ended 31 August 2008 R`000 % R`000 %
Analytical Services 115 438 30.2 40 366 54.1
Fluid Handling 173 819 45.4 39 688 53.2
Mining Services 93 290 24.4 11 232 15.1
Central Services - - (16 754) (22.5)
Consolidation entries - - 30 0.1
adjustments and intra group
elimination
382 547 100 74 562 100
COMMENTARY
PROFILE
Set Point is an industrial product and services
group which operates through three divisions -
Analytical Services, Fluid Handling and Mining
Services.
Set Point`s ordinary shares have been listed on
the JSE since 1997 and are quoted in the
electronic equipment sub-sector. The Group
intends to table a resolution at the Annual
General Meeting to change the name of the Group
to `Set Point Group Limited`.
FINANCIAL RESULTS
The Board is pleased to announce a significant
improvement in the financial results of the
Group.
Revenue from continuing operations increased by
30% to R382,5 million, with all operating
divisions achieving higher revenues.
Operating profit improved by 60% and pretax
profit by 81% to R75m.
The Group achieved headline earnings per share of
14.7 cents compared to 2.5 cents and 7.8 cents
from continuing operations in the previous year.
The balance sheet remains strong with cash
balances of R51,6 million and cash net of
borrowings of R35,1 million.
Based on these results, the Board has recommended
the payment of a final dividend of 3 cents per
share making a total of 5 cents for the year
(2007: 2 cents per share).
REVIEW OF OPERATIONS
Analytical 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 resulted in an increase in
operating profits of 51,9%. 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 23,4% to R174,9 million. Operating
profit increased by 28,7% with the dewatering
operations producing particularly pleasing
results.
Following the sale of various operations, Mining
Services was rationalised last year and now
consists of the manufacture and repair of hopper
wheels, skip and cage guides and rollers, as well
as the production and supply of reference
materials for exploration, mining and assay
laboratories. Revenues increased by 19,8% and
operating profit by 20,4%.
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 has resulted in administrative
savings.
BASIS OF PREPARATION
The annual financial statements have been
prepared in accordance with IFRS and in
compliance with the listing requirements of the
JSE Limited and the Companies Act of South
Africa. This preliminary report has been prepared
in accordance with the recognition and
measurement requirements of IFRS and the
presentation and disclosure requirements of IAS34
and has been extracted from the complete set of
annual financial statements.
AUDIT OPINION
The independent auditors, KPMG Inc., have issued
their opinion on the Group`s financial statements
for the year ended 31 August 2008. A copy of
their unqualified audit report is available for
inspection at the company`s registered office.
DIRECTORATE
During the year, Norman Kennelly retired and
relinquished his positions of Company Secretary
and Acting CFO. We thank him for his services to
the Group and wish him well in his retirement.
Martyn Evers has joined the Group and been
appointed to the Board as Group CFO and Company
Secretary.
Subsequent to the year-end Ms Tebogo Skwambane
has joined the Board as an independent non-
executive director.
DIVIDENDS
The Group`s policy is to pay interim and final
dividends annually which are covered 2,5 to 3,0
times by HEPS.
Notice is hereby given that a final dividend of 3
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, 28 November
2008. The last date to trade, to participate in
the dividend, is Friday,21 November 2008. Shares
will commence trading ex-dividend from Monday, 24
November 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, 21 November 2008
Shares trade "EX" dividend from Monday, 24 November 2008
Record date Friday, 28 November 2008
Payment date Monday, 1 December 2008
Share certificates may not be materialised or
rematerialised between Monday, 24 November and
Friday, 28 November 2008, both days inclusive.
PROSPECTS
Notwithstanding the current global economic
turbulence, management will remain focused on the
control of costs and working capital levels and
is budgeting for a moderate increase in
profitability in the year ahead.
The Group will continue its strategy of growing
organically and by acquisition.
For and on behalf of the board
Christopher Seabrooke Graeme Horsfield
Chairman Chief Executive Officer
22 October 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")
Directors: CS Seabrooke* (Chairman), MJ Smith*
(Deputy Chairman),
GJ Horsfield (Chief Executive Officer), MD Evers
(Chief Financial Officer)#,
DC Seaton*+, AP Nkuna*, BH Kent*+, JM Judin*+, GE
Nel*+, TM Skwambane*+
(* Non-executive) (+ Independent) (# British)
Company Secretary: MD Evers
Registered Office: 30 Electron Avenue, Isando
1601,
(PO Box 856 Isando 1600)
Transfer Secretaries: Computershare Investor
Services (Pty) Limited
(Reg No: 1958/003546/06), Ground Floor, 70
Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown 2107)
Sponsor: Investec Bank Limited, Registration
number 1969/004763/06
Date: 22/10/2008 15:31:39 Produced by the JSE SENS Department.
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