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SPO
SPO
SPO - Set Point Group Unaudited Results for the six months ended 28 February
2010
Set Point Group (formerly Set Point Technology Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 1996/014334/06)
Share code: SPO & ISIN: ZAE000132601
("Set Point" of "the Company" or "the Group")
Set Point Group Unaudited Results for the six months ended 28 February 2010
HIGHLIGHTS
Pre-tax profit declines 29%
Headline earnings per share declines 30%
Consolidated income statements
Unaudited Unaudited Audited
at 28 at 28 at 31
February February August
2010 2009 2009
R`000 R`000 R`000
Revenue 172 915 182 304 359 376
Cost of sales (93 189) (96 339) (191 730)
Gross profit 79 726 85 965 167 646
Selling and administration (57 481) (54 391) (108 735)
expenses
Other operating income 827 976 3 294
Other operating expenses (288) (451) (13 266)
(Loss)/profit on disposal of (12) (121) 64
plant and equipment
Foreign exchange transaction (276) (330) (994)
losses
Impairment of goodwill - - (12 336)
Operating profit 22 784 32 099 48 939
Finance income 984 1 404 3 693
Finance expense (799) (1 388) (2 644)
Profit before taxation 22 969 32 115 49 988
Taxation (8 331) (10 712) (20 040)
Profit after taxation and 14 638 21 403 29 948
attributable to equity
holders of Set Point
Shares in issue
Weighted average number of 327 438 336 895 336 243
ordinary shares in issue
(000`s)
Fully diluted weighted 331 513 340 168 339 868
average number of ordinary
shares in issue (000`s)
Earnings per share (cents) 4.5 6.4 8.9
Diluted earnings per share 4.4 6.4 8.8
(cents)
Headline earnings per share 4.5 6.4 12.6
(cents)
Diluted headline earnings per 4.4 6.4 12.4
share (cents)
Reconciliation of headline earnings:
Earnings 14 638 21 403 29 948
Adjusted for: 9 87 12 290
- loss/(profit) on disposal 12 121 (64)
of plant and equipment
- taxation effect (3) (34) 18
impairment of goodwill - - 12 336
Headline earnings 14 647 21 490 42 238
Consolidated statements of changes in equity
Unaudited Unaudited Audited
six months six months year
ended ended ended
28 February 28 February 31 August
2010 2009 2009
R`000 R`000 R`000
Opening balances 156 614 155 144 155 144
Total comprehensive income 14 533 21 403 29 994
Transactions with shareholders
Share based payments 287 386 741
Dividends (9 830) (10 300) (16 898)
Treasury shares purchased - (5 597) (12 523)
Shares issued - 129 129
Adjustment to premium on (55) - 27
acquisition of minority
interests
Total equity attributable to 161 549 161 165 156 614
equity holders of Set Point
Consolidated statements of financial position
Unaudited Unaudited Audited
at 28 at 28 at 31
February February August
2010 2009 2009
R`000 R`000 R`000
Assets
Non-current assets 74 573 85 527 76 099
Plant and equipment 40 192 39 877 40 594
Investments 3 200 2 212 2 833
Goodwill 27 763 40 099 27 763
Deferred taxation 3 418 3 339 4 909
Current assets 151 884 145 583 159 494
Inventories 58 261 76 952 61 764
Trade and other receivables 55 552 54 596 54 373
Taxation prepaid 277 - -
Cash 37 794 14 035 43 357
Total assets 226 457 231 110 235 593
Equity and Liabilities
Total Equity 161 549 161 165 156 614
Non-current liabilities 12 213 17 336 12 291
Interest bearing liabilities 8 576 13 283 8 244
Post retirement medical aid 524 449 563
liability
Long-term accruals 3 113 3 604 3 484
Current liabilities 52 695 52 609 66 688
Interest bearing liabilities 6 359 3 224 7 976
Trade and other payables 46 336 46 632 47 783
Taxation payable - 2 753 10 929
Total equity and liabilities 226 457 231 110 235 593
Shares in issue (net of 327 438 337 047 327 438
treasury shares) (000`s)
Net asset value per share 49.3 47.8 47.8
(cents)
Consolidated statements of cash flows
Unaudited Unaudited Audited
six months six months year
ended ended ended
28 February 28 February 31 August
2010 2009 2009
R`000 R`000 R`000
Cash flows from operating 775 (24 466) 17 020
activities
Cash generated from 28 318 15 219 65 032
operations
Finance income 984 1 404 3 693
Finance expense (799) (1 388) (2 644)
Taxation paid (18 044) (29 461) (32 183)
Dividends paid (9 684) (10 240) (16 878)
Cash flows from investing (4 651) (7 283) (12 189)
activities
Acquisitions of plant and (5 533) (8 362) (13 864)
equipment
Disposals of plant and 882 1 079 1 675
equipment
Cash flows from financing (1 687) (5 780) (13 038)
activities
Proceeds from issue of shares - 129 129
Shares acquired by treasury - (5 597) (12 523)
Payment to vendors in respect (363) (312) (312)
of purchase consideration
payable
Payment in respect of post (39) (39) (83)
retirement medical aid
liability
Payment of interest bearing (4 776) (4 115) (5 169)
liabilities
Interest bearing liabilities 3 491 4 154 4 920
raised
Cash
Net cash utilised during the (5 563) (37 529) (8 207)
period
At beginning of period 43 357 51 564 51 564
At end of period 37 794 14 035 43 357
Consolidated statements of comprehensive income
Unaudited Unaudited Audited
at 28 at 28 at 31
February February August
2010 2009 2009
R`000 R`000 R`000
Profit for the period 14 638 21 403 29 948
Other comprehensive income
after tax
Exchange differences for (105) - 46
foreign operations
Total comprehensive income 14 533 21 403 29 994
for the period attributable
to equity holders of Set
Point
Segmental information
Segment Segment Capital
assets liabil- expen- Deprecia-
ities diture tion
R`000 R`000 R`000 R`000
Analytical Services 57 638 23 569 2 571 2 844
Fluid Handling 97 141 18 118 854 895
Mining Services 47 393 11 294 915 812
Reportable segments 202 172 52 981 4 340 4 551
Reconciliation:
Central and shared 24 285 11 927 1 193 507
services
226 457 64 908 5 533 5 058
Condensed segmental information (cont)
Segment revenue Segment operating
profit
R`000 % R`000 %
Analytical Services 52 454 30.3 11 673 51.2
Fluid Handling 84 241 48.7 16 600 72.9
Mining Services 36 220 21.0 2 389 10.5
Reportable segments 172 915 100.0 30 662 134.6
Reconciliation:
Central and shared - - (7 878) (34.6)
services
172 915 100.0 22 784 100.0
FINANCIAL RESULTS AND REVIEW OF OPERATIONS
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 business support services sub-sector.
Financial Results
Revenue decreased by 5% to R172,9 million compared to the same period last
year.
Operating profit at R 22,8 million is 29% below the same period last year due
largely to the decline in mining exploration which directly affected the
performance of our assay laboratory. Headline earnings of 4,5 cents are 30%
down on the corresponding period last year.
The balance sheet remains well controlled with cash net of borrowings of R22,9
million.
Review of Operations
Despite improving global commodity prices an upturn in the mining sector has
not yet materialised and general trading conditions were difficult for the
Group.
The analytical services division operates through specialized laboratories
offering expert chemical analyses for the condition monitoring of fluids,
mainly oil, and ore body analysis for the precious metals mining and
exploration industry. Although the oil condition monitoring sector remained
resilient divisional revenue decreased 12,2% and operating profit decreased
41,4% directly as a result of curtailed mineral exploration activity and a
marked slowdown in platinum mining production.
The fluid handling division which supplies pumps, valves, couplings and flow
meters to the mining and petrochemical industries has sustained revenues in a
competitive environment at the cost of a slight reduction in operating
margins. In particular the dewatering division has had another successful
first half with an increase in capacity utilization and profitability.
The mining services division 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 laboratories in the mining, exploration and assay
industries. The significant downturn in these industries, particularly in
platinum mining and exploration, has had a direct and disappointing impact on
the revenue and profitability of the division.
BASIS OF PREPARATION
These condensed interim Group financial statements have been prepared in
accordance with IAS34 -Interim Financial Reporting, and in compliance with the
listings requirements of the JSE Limited and the Companies Act of South
Africa.
The accounting policies applied are consistent with those followed in the
preparation of the consolidated annual financial statements for the year ended
31 August 2009 except for the application of IAS8 Operating Segments which is
being applied for the first time. Reportable segments represent the business
units identified by management for operational decision making, the allocation
of resources and performance management.
POST BALANCE SHEET EVENT - PROPOSED DELISTING
Shareholders are referred to the notice to shareholders published on SENS on 2
March 2010 and in the press relating to the proposed delisting of the company
from the JSE and an offer of 90c per share to shareholders not electing to
remain shareholders after the delisting.
DIVIDENDS
Due to the costs and cash flow implications of the proposed delisting and
offer to shareholders, no interim dividend has been declared at this time.
PROSPECTS
The Group does not anticipate an improvement in trading conditions during the
remainder of this financial year, particularly in the mining exploration and
services sectors. As a result profits for the full financial year are expected
to be lower than in the prior year, before taking account of the costs of the
delisting and offer should these be approved and implemented. This forecast
has not been reviewed or reported on by the company`s auditors.
For and on behalf of the board
Christopher Seabrooke Graeme Horsfield
Chairman Chief Executive Officer
17 March 2010
Directors: CS Seabrooke* (Chairman), MJ Smith*+ (Deputy Chairman), GJ
Horsfield (Chief Executive Officer), MD Evers# (Chief Financial Officer), DC
Seaton*+, BH Kent*+, JM Judin*+, CN Mapaure*, GE Nel*+, TM Skwambane*+, CP
Coutts-Trotter *(Alternate)
(* Non-executive) (+ Independent) (# British) ( Zimbabwean)
Company Secretary: MD Evers
Registered Office: 30 Electron Avenue, Isando, 1601
(PO Box 856, Isando 1600)
Transfer Secretaries: Computershare Investor Services (Pty) Limited
(Registration number: 2004/003647/06)
Ground Floor, 70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown 2107)
Sponsor: Investec Bank Limited
(Registration number: 1969/004763/06)
Date: 17/03/2010 12:50:01 Produced by the JSE SENS Department.
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