| Wed 30 Sep 2009, 15:28 | | POY - Poynting Holdings - Condensed Consolidated Provisional Financial |
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POY
POY
POY - Poynting Holdings - Condensed Consolidated Provisional Financial
Statements for the Year Ended 30 June 2009
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")
CONDENSED CONSOLIDATED PROVISIONAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2009
Condensed Balance Sheet
Reviewed Audited
30 June 2009 30 June
R`000 2008
R`000
Assets
Property, plant and equipment 4 513 3 511
Intangible assets 14 284 10 920
Investments 98 -
Deferred Tax 1 908
Current assets 27 239 23 127
Total assets 48 042 37 558
Equity and liabilities
Capital and reserves 26 547 14 014
Non-current liabilities 1 897 4 709
Current liabilities 19 598 18 835
Total equity and liabilities 48 042 37 558
Number of ordinary shares in 88 554 274 67 300 000
issue
Net asset value per ordinary 29.98 20.82
share (cents)
Net tangible asset value per 13.85 4.60
ordinary share (cents)
Condensed Income Statement
Reviewed Audited
30 June 2009 30 June
R`000 2008
R`000
Revenue 65 817 56 034
Cost of sales (36 670) (25 346)
Gross profit 29 147 30 688
Other income 1 590 1 807
Operating costs (40 096) (25 117)
Operating (loss)/profit (9 359) 7 378
Finance income 359 514
Finance costs (1 124) (1 106)
(Loss)/Profit before taxation (10 124) 6 786
Taxation 3 554 (971)
(Loss)/Profit after taxation (6 570) 5 815
Attributable to:
Equity holders of parent (6 571) 5 827
Minority interest 1 (12)
Adjustment for headline -
earnings (65) 221
Impairment of intangible assets (9)
Profit on sale of assets
Headline earnings attributable (6 635) 6 027
to ordinary shareholders
Weighted average number of 87 493 935 27 262 138
ordinary shares in issue
(Losses)/Earnings per ordinary (7.51) 21.38
share (cents)
Headline (losses)/earnings per (7.58) 22.15
ordinary share (cents)
Condensed Statement of Changes in Equity
Share Share premium Retained
capital R`000 income
R`000 R`000
Balance at 1 July 2007 * 1 389 2 872
Changes in equity 3 3 884
Net profit for the year - - 5 828
Total changes 3 3 884 5 828
Balance at 1 July 2008 3 5 273 8 700
Changes in equity - issue of 1 18 900
shares
Share based payment - options * 202
exercised
Net profit / (loss) for the year (6 571)
Total Changes 1 19 102 (6 571)
Balance at 30 June 2009 4 24 375 2 129
Table continues:.
Total attributable to Minority
equity holders of the Interest Total
group R`000 R`000
R`000
4 261 50 4 311
3 887 3 887
5 828 (12) 5 816
9 715 (12) 9 703
13 976 38 14 014
18 901 18 901
202 202
(6 571) 1 (6 570)
12 532 1 12 533
26 508 39 26 547
* Less than R1 000
Condensed Cash Flow Statement
Reviewed Audited
30 June 30 June
2009 2008
R`000 R`000
Cash flow from operating (779) 3 494
activities
Cash flow from investing (9 456) (9 666)
activities
Cash flow from financing 20 036 (101)
activities
Increase/(Decrease) in cash and 9 801 (6 273)
cash equivalents
Cash and cash equivalents at (4 365) 1 908
beginning of the year
Cash and cash equivalents at end 5 436 (4 365)
of the year
Segmental reporting
The basis for the segmentation is the reporting basis used by management.
The group has three main operating segments encompassing all branches, namely:
- Commercial;
- Defence; and
- Base Station.
The segment results for the year ended 30 June 2009 are as follows:
Commercial Defence Base Total
R`000 R`000 Station R`000
(9
Months)
R`000
Segment revenue 40 360 17 521 7 936 65 817
Segment cost of (26 712) (5 786) (4 358) (36 856)
sales
Gross 13 648 11 735 3 578 28 961
profit/segment
result
Other income 1 627 18 (55) 1 590
Operating expenses (27 231) (9 196) (3 483) (39 910)
Finance income 171 124 64 359
Finance costs (666) (414) (44) (1 124)
(Loss) / Profit (12 451) 2 267 60 (10 124)
before tax
Tax 2 632 823 99 3 554
(Loss) / Profit (9 819) 3 090 159 (6 570)
for the year
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 income statement.
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 via its
subsidiaries and partner companies. Exports currently constitute approximately
37% 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 consisting of Commercial, Defence and Base
Station Divisions.
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 (EW). These antennas, which are used for Direction
Finding (DF), monitoring and -jamming systems, are often custom designed for
customers` system integrators on a project basis. These products are mainly
sold to system integrators locally and internationally where after they are
predominantly delivered to international defence customers. Sales are mainly
done by maintaining close relationships across many levels with a few large
system houses where we are often involved from product definition to
manufacture.
The Base Station Division is a newly-established division, as a result of the
acquisition of SAAB Grintek (Proprietary) Limited`s Commercial Antenna
Division in October 2008. This division mainly manufactures diplexers and
amplifiers used in cellular base stations. Customers are mainly African based
cellular network operators. Sales are done by company representatives who keep
close relationships with network operators and their infrastructure rollout
agents.
Performance Overview
Despite current market conditions performance in the Defence and Base Station
Divisions has been in line with management expectations. 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 revenues have been inadequate in covering the overhead
structure of the division. Management have implemented detailed measures to
rectify the situation as discussed below.
Considering cash flow:
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. In addition, the company secured an R8
million order finance facility from the Industrial Development Corporation,
which will provide working cash flow against large orders received.
Going Concern
Both the Defence and Base Station Divisions are currently profitable. Since
December 2008 management has implemented cost reduction programmes which have
reduced Commercial Division overheads by 50% which caused this division to
reach breakeven in May and we expect modest profits from this division under
current adverse market conditions experienced. The Defence Division is
continuing to provide solid growth and profitability with a strong order book
for the 2010 financial year.
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` view, as result of the above, is that the going concern basis
applied in this set of results is appropriate. The R8 million order finance
facility, mentioned above, together with trading and other measures is
sufficient to ensure cash flow sufficiency for the next 12 months.
The group`s overall performance was significantly below forecast in the
reporting period and steps have been taken to reduce overheads in order to
achieve profitability going forward. Furthermore, we anticipate that the
group`s overall performance will be profitable in all three divisions for the
next financial year The performance over the months May 2009 to August 2009
has been profitable in all divisions.
The directors are therefore of the opinion, that for the reasons mentioned
above, the going concern assumption is appropriate for the compilation of the
financial statements and that the group will be a going concern in the
foreseeable future. This basis presumes that funds will be available to
finance future operations and that the realisation of assets and settlement of
liabilities, contingent obligations and commitments will occur in the ordinary
course of business.
Base Station Acquired
During the last 6-month period the newly acquired Base Station division has
been successfully integrated into the group and has produced modest net
profits since December 2008.
Subsequent Events
The board of directors is not aware of any material matters or circumstances
arising since the end of the final period and up to the date of this report.
Prospects
We have been successful in reducing overheads in the Commercial Division by
approximately 50% compared to our prospectus forecasts. This was done by
reducing staff numbers and other measures. This reduced overhead structure has
improved profitability in this division in the second half of the current
financial year.
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". This includes the new
Electronic Communication Network Service licences, 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 us receiving orders from various large customers.
Basis of Preparation
The accounting policies applied in the preparation of these condensed
financial statements, which are based on reasonable judgements 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 twelve months ended 30 June 2009 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 historical Financial Information Performed
by the Independent Auditor of the Entity. A review of final 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.
Conclusion
Based on our review nothing has come to our attention that causes us to
believe that the accompanying 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 a subsidiary in prior years. Although
management have provided for such liabilities at 30 June 2009, the matter has
not been resolved at the date of this report."
Directorate
The following changes have been made to the board during the period:
Director Detail Date
Sayed Omar Mullah Resigned as Financial 07-Oct-08
Director
Anthony Selikow Resigned 03-Nov-08
Thomas David Abbott Resigned 03-Nov-08
Ancell Claire Nitch Resigned 03-Nov-08
Mark Pierre Haarhoff Resigned 03-Nov-08
Derek Collin Nitch Resigned 03-Nov-08
Pieter Andries J Appointed as Financial 03-Nov-08
Ebersohn Director
Clive Harvey Douglas Appointed 03-Nov-08
Michael Keith Hill Deceased 31-May-09
There have been no other changes to the board of directors other than detailed
above in the current year.
Andre Fourie Johan Ebersohn
Chief Executive Office Financial Director
30 September 2009
Registered Office
33 Thora Crescent, Wynberg 2090 (PO Box 76579, Wendywood 2144)
Company Secretary
Merchantec (Proprietary) Limited
Designated Adviser
Merchantec (Proprietary) Limited
Auditors and reporting accountants
KPMG Inc.
Transfer secretaries
Computershare Investor Services (Proprietary) Limited
Directors
CP Bester*# (Non-executive Chairman), APC Fourie (Chief Executive Officer),
PAJ Ebersohn (Financial Director), J Dresel^ (Managing Director), ZN
Kubukeli*#, CHJ Douglas*
*Non-executive
#Independent
^German
Date: 30/09/2009 15:28:02 Produced by the JSE SENS Department.
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