| Tue 31 Mar 2009, 17:09 | | POY - Poynting - Reviewed Interim Results for the six months ended 31 December |
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POY
POY
POY - Poynting - Reviewed Interim Results for the six months ended 31 December
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")
REVIEWED INTERIM RESULTS
for the six months ended 31 December 2008
BALANCE SHEET
as at 31 December 2008
Reviewed Unaudited Audited
31 December 31 December 30 June
2008 2007 2008
R`000 R`000 R`000
Assets
Property, plant and 4 674 3 066 3 511
equipment
Intangible assets 14 464 7 898 10 920
Investments 161 - -
Current assets 34 794 17 861 23 127
Total assets 54 093 28 825 37 558
Equity and liabilities
Capital and reserves 34 103 7 461 14 014
Non-current liabilities 4 524 7 100 4 709
Current liabilities 15 466 14 264 18 835
Total equity and 54 093 28 825 37 558
liabilities
Number of ordinary 88 554 274 4 945 368 67 300 000
shares in issue
Net asset value per 38.51 150.87 20.82
ordinary share (cents)
Net tangible asset value 22.18 (8.84) 4.60
per ordinary share
(cents)
INCOME STATEMENT
for the six months ended 31 December 2008
Reviewed Unaudited Audited
six months six months 12 months
ended ended ended
31 December 31 December 30 June
2008 2007 2008
R`000 R`000 R`000
Revenue 29 255 29 607 56 034
Cost of sales (13 347) (12 025) (25 346)
Gross profit 15 908 17 582 30 688
Other income 230 346 1 807
Operating costs (18 248) (11 967) (25 117)
Operating (loss)/profit (2 110) 5 961 7 378
Interest received 321 37 514
Finance costs (238) (399) (1 106)
(Loss)/Profit before (2 027) 5 599 6 786
taxation
Taxation 1 153 (1 990) (971)
(Loss)/Profit after (874) 3 609 5 815
taxation
Adjustment for headline
earnings:
- Profit on the sale (82) - (9)
of assets
- Impairment of 59 - 221
intangibles assets
Headline (loss)/earnings (897) 3 609 6 027
attributable to ordinary
shareholders
Attributable to:
Equity holders of parent (877) 3 610 5 827
Minority interest 3 (1) (12)
Weighted average number 86 450 885 4 945 368 27 262 138
of ordinary shares in
issue
Losses/Earnings per (1.01) 72.98 21.38
ordinary share (cents)
Headline losses/earnings (1.04) 72.98 22.15
per ordinary share
(cents)
STATEMENT OF CHANGES IN EQUITY
Share Share Retained
capital premium income
R`000 R`000 R`000
Balance at 1 July 2007 * 1 389 2 872
Changes in equity - - -
Net profit/loss for the period - - 3 610
Total changes - - 3 610
Balance at 31 December 2007 * 1 389 6 481
Changes in equity - issue of 3 3 884 -
shares
Net profit/loss for the period - - 2 219
Total changes 3 3 884 2 219
Balance at 30 June 2008 3 5 273 8 700
Changes in equity - issue of 2 20 756 (601)
shares
Share based payment - options * 202 601
exercised
Net loss/profit for the period - - (877)
Total changes 2 20 958 (877)
Balance at 31 December 2008 5 26 231 7 826
* Less than R1 000
Total
attributable
to equity
holders of Minority
the group interest Total
R`000 R`000 R`000
Balance at 1 July 2007 4 261 50 4 311
Changes in equity - - -
Net profit/loss for the period 3 610 (1) 3 609
Total changes 3 610 (1) 3 609
Balance at 31 December 2007 7 870 50 7 920
Changes in equity - issue of 3 887 - 3 887
shares
Net profit/loss for the period 2 219 (12) 2 207
Total changes 6 106 (12) 6 094
Balance at 30 June 2008 13 976 37 14 014
Changes in equity - issue of 20 157 - 20 157
shares
Share based payment - options 803 - 803
exercised
Net loss/profit for the period (877) 3 (874)
Total changes 20 086 3 20 089
Balance at 31 December 2008 34 062 41 34 103
* Less than R1 000
CASH FLOW STATEMENT
for the period ended 31 December 2008
Reviewed Unaudited Audited
six months six months 12 months
ended ended ended
31 December 31 December 30 June
2008 2007 2008
R`000 R`000 R`000
Cash flow from operating (9 213) 5 240 3 494
activities
Cash flow from investing (7 140) (4 379) (9 666)
activities
Cash flow from financing 21 928 (2 103) (101)
activities
Increase/(decrease) in 5 575 (1 242) (6 273)
cash and cash equivalents
Cash and cash equivalents (4 365) 1 907 1 908
at beginning of the period
Cash and cash equivalents 1 210 665 (4 365)
at end of the period
COMMENTARY
Group profile
Poynting`s vision is to "Make Wireless Happen". 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. Exports currently constitute more than
50% of sales, with the largest export region being Europe while a significant
percentage is destined for the Middle East and Asian markets.
Poynting operates on a divisional basis; its three divisions comprising a
Commercial Division, a Defence Division and a newly acquired Base Station
Equipment Division.
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. Distribution to network
operators and equipment manufacturers is carried out internationally by our
partner company in Europe, Poynting Europe GmBH, and locally by our subsidiary,
Poynting Direct (Proprietary) Limited.
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 is a newly established division, which came
about as a result of the acquisition of SAAB Grintek (Proprietary) Limited`s
("SAAB Grintek") Commercial Antenna Division in October 2008. This division
mainly manufactures Diplexers and Amplifiers used in Cellular Base Stations.
PERFORMANCE OVERVIEW
Performance in the Defence and Base Station Equipment Divisions has been in line
with expectations despite current market conditions. Sales in the Commercial
Division have been impacted by very weak demand in Europe, as well as low local
sales volumes. This has resulted in losses in the Commercial Division, where
sales revenues have been inadequate in covering the overhead structure of the
division.
The inventory balances reflected in the interim financial information do not
agree to the detailed inventory listings. The company implemented a new ERP
system that needs to be adjusted to account for all forms of stock. The systems
specialists are currently attending to the valuation reports that differ by
approximately 10% of the stated ledger values. These differences have been taken
into account in the stock obsolescence provisions.
Considering cash flow:
The company has also suffered from cash flow constraints as a result of high
accounts receivable and high stock levels. Working capital programmes have been
implemented to improve debtor collections and to reduce stock levels. The
results of these programmes have seen an improvement in cash flows to date. Also
the company has recently secured an R8 million order finance facility from the
Industrial Development Corporation, which will improve the company`s liquidity
position.
Considering profitability:
Both the Defence and Base Station Divisions are currently profitable. Since
December management has implemented cost reduction programmes which will reduce
Commercial Division overheads by 40% which will ensure profitability of this
Division under more adverse market conditions than those experienced.
An investment committee consisting of non-executive directors was formed to
monitor the implementation of the cash flow and profitability programmes
mentioned above on a monthly basis.
The directors confirm, in view of the above, that the going concern basis
applied in this set of results is appropriate based on the actions outlined
above. The R8 million order finance facility, together with other measures and
trading is sufficient to ensure cash flow sufficiency for the next 12 months.
The company`s overall performance is significantly below forecast and steps have
been taken to reduce overheads in order to achieve profitability going forward.
Furthermore, we anticipate that the company`s overall performance will be well
below sales forecasts as set out in the company`s June 2008 Prospectus and that
it is unlikely that profit growth will be achieved on the previous financial
year.
SEGMENT REPORTING
Base Station
Commercial Defence Equipment Total
R`000 R`000 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/(expense) 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 tax (3 142) 1 141 (26) (2 027)
Tax 825 327 - 1 153
Loss/Profit for the (2 317) 1 468 (26) (874)
period
BUSINESS COMBINATIONS
During the interim period, Poynting acquired the Commercial Antenna division of
SAAB Grintek, as announced on SENS on 18 December 2008. This division has been
successfully integrated into the group which has seen modest gross profits from
the division from December 2008.
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
We have been successful in reducing overheads in the Commercial Division by 40%
compared to our prospectus forecasts. This was done by way of a reduction in
staff numbers and other cost reduction measures. This reduced overheads
structure will likely improve profitability in this division in the second half
of the financial year. Despite this, current market conditions will require
further cost saving exercises.
We are experiencing significant growth in sales in Poynting Direct, which is
encouraging. Corporate and export sales are however our main areas of concern.
Export sales have been impacted by the global crisis and our local corporate
sales are down largely due to new developments in the telecommunications
industry creating "technological uncertainty". These include the new Electronic
Communication Network Service licences, the technologies offered by new entrant
Neotel and the introduction of WiMAX services by several current operators.
Although all of these developments show significant potential for the future of
Poynting Commercial products, the current technology flux is delaying orders by
various large customers.
BASIS OF PREPARATION
The accounting policies applied in the preparation of these condensed financial
statements, 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 2008. 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 results for the six months ended 31 December 2008 have been reviewed by
Poynting`s auditors, KPMG Inc., and their review report is available at the
company`s registered office for inspection.
The following is an extract from the auditor`s review report:
"Scope of review
We conducted our review in accordance with the International Standard on Review
Engagements 2410, Review of Interim Financial Information Performed by the
Independent Auditor of the Entity.
A review of interim financial information consists of making enquiries,
primarily of persons responsible for the financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less
in scope than an audit conducted in accordance with International Standards on
Auditing and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Basis for qualified conclusion
As indicated in the commentary, in the paragraph headed performance overview,
the inventory balances included in current assets in the interim financial
information amounting to R13 637 985, do not agree to the detailed inventory
listings and inventory valuation sheets.
Qualified conclusion
Based on our review, except for the possible effect of the matter described in
the preceding paragraph, nothing has come to our attention that causes us to
believe that the accompanying interim financial information is not prepared, in
all material respects, in accordance with International Financial Reporting
Standards, which include IAS 34, Interim Financial Reporting, and in the manner
required by the Companies Act of South Africa.
Report on other legal and regulatory requirements
We previously reported in accordance with our responsibilities in terms of
Auditing Profession Act Sections 44(2) and 44(3), a matter identified which
constituted a reportable irregularity in accordance with this Act in relation to
late payment of certain taxes by two subsidiaries. Although management have
provided for such liabilities at 31 December 2008, the matter has not been
resolved at the date of this report."
DIRECTORATE
The following changes have been made to the board during the interim period:
Director Detail Date
Sayed Omar Mullah Resigned as 7 October 2008
Financial Director
Anthony Selikow Resigned 3 November 2008
Thomas David Abbott Resigned 3 November 2008
Ancell Claire Nitch Resigned 3 November 2008
Mark Pierre Haarhoff Resigned 3 November 2008
Derek Collin Nitch Resigned 3 November 2008
Pieter Andries Johannes Appointed as 3 November 2008
Ebersohn Financial Director
Clive Harvey Douglas Appointed 3 November 2008
As a result of these changes to the board, the current board composition is:
Coen Bester*^ (Chairman), Andre Fourie (Chief Executive Officer), Johan Ebersohn
(Financial Director), Mike Hill*^,
Zuko Kubukeli*^, Juergen Dresel (German), Clive Douglas^ *Independent
^Non-executives
Andre Fourie Johan Ebersohn
Chief Executive Office Financial Director
31 March 2009
REGISTERED OFFICE
33 Thora Crescent, Wynberg 2090
(PO Box 76579, Wendywood 2144)
COMPANY SECRETARY
Merchantec (Proprietary) Limited
Designated Advisors
Merchantec (Proprietary) Limited
AUDITOR
KPMG
Date: 31/03/2009 17:09:05 Produced by the JSE SENS Department.
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