| Tue 29 Mar 2011, 13:00 | | POY - Poynting Holdings Limited - Unaudited condensed consolidated interim |
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POY
POY
POY - Poynting Holdings Limited - Unaudited condensed consolidated interim
results for the six months ended 31 December 2010
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")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31
DECEMBER 2010
Condensed consolidated statement of comprehensive income
*Unaudited *Unaudited *Audited
Continuing operations six months six months 12 months
ended ended ended
31 December 31 December 30 June
2010 2009 2010
R`000 R`000 R`000
Revenue 33 679 31 991 66 812
Cost of sales (14 458) (13 523) (23 308)
Gross profit 19 221 18 468 43 504
Other (expenses)/income (33) 10 515
Operating costs (19 488) (15 678) (39 726)
Operating (loss)/profit (300) 2 800 4 293
Finance income 147 80 231
Finance costs (368) (574) (972)
(Loss)/Profit before taxation (521) 2 306 3 552
Taxation 509 (766) (650)
(Loss)/Profit after taxation from (12) 1 540 2 902
continuing operations
Discontinued Operations (Note 1) (2 779) 722 (376)
(Loss)/Profit after Discontinued (2 791) 2 262 2 526
Operations
Total comprehensive (loss)/income (2 791) 2 262 2 526
(Loss)/Profit attributable to:
Continuing operations (12) 1 540 2 913
Discontinued operations (2 779) 722 (376)
Equity holders of parent (2 791) 2 262 2 537
Non-controlling interest - - (11)
Total comprehensive (loss)/income (2 791) 2 262 2 526
Reconciliation of (loss)/earnings to
headline earnings
(Loss)/Earnings after tax (2 791) 2 262 2 537
Adjustments for:
Impairment of intangible assets 1 152 - 91
Headline (loss)/earnings attributable (1 639) 2 262 2 628
to ordinary shareholders
Weighted average number of ordinary 88 554 275 88 554 275 88 554
shares in issue 275
Weighted average number of ordinary 90 586 388 88 554 275 88 680
shares in issue (diluted) 020
Earnings/(Loss) per ordinary share (3.15) 2.55 2.86
(cents)
Fully diluted earnings/(loss) per (3.08) 2.55 2.86
ordinary share (cents)
Headline earnings/(loss) per ordinary (1.85) 2.55 2.97
share (cents)
Fully diluted headline (1.81) 2.55 2.96
earnings/(loss) per ordinary share
(cents)
Continuing operations
Earnings per ordinary share (cents) (0.01) 1.74 3.29
Fully diluted earnings/(loss) per (0.01) 1.74 3.28
ordinary share (cents)
Headline earnings per ordinary share (0.01) 1.74 3.29
(cents)
Fully diluted headline (0.01) 1.74 3.39
earnings/(loss) per ordinary share
(cents)
*In the prior year interim report the income from the Base Station Division was
disclosed as income from a segment. This division was discontinued on 31 October
2010, and treated as a discontinued operation in the 31 December 2010 interim
report. The comparative figures for the six months ended 31 December 2009 and
the audited figures for 30 June 2010 were restated accordingly.
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
as at as at as at
31 December 31 30 June
2010 December 2010
R`000 2009 R`000
R`000
ASSETS
Non-current assets 14 785 18 923 17 538
Property, plant and equipment 2 606 3 797 3 206
Intangible assets 10 648 14 268 13 139
Deferred Taxation 1 414 - 1 020
Other financial assets 117 858 173
Current assets 26 405 30 353 25 465
Inventories 10 066 10 506 7 744
Trade and other receivables 8 908 11 276 11 215
Bank and cash balances 7 431 8 571 6 506
Total assets 41 190 49 276 43 003
EQUITY AND LIABILITIES
Equity 26 503 28 808 29 294
Equity attributable to owners of 26 475 28 769 29 266
parent
Non-controlling interests 28 39 28
Non-current liabilities
Interest-bearing liabilities 2 050 1 847 2 223
Current liabilities 12 637 18 621 11 486
Interest-bearing liabilities 4 299 7 949 3 357
Trade and other payables 8 338 10 247 8 104
Deferred taxation - 425 -
Bank overdraft - - 25
Total equity and liabilities 41 190 49 276 43 003
Number of ordinary shares in issue 88 554 275 88 554 275 88 554 275
Net asset value per ordinary share 29.93 32.53 33.08
(cents)
Net tangible asset value per ordinary 17.90 16.42 18.24
share (cents)
Condensed consolidated statement of changes in equity
Share Share- Retained Non Total
capital based earnings controlling R`000
R`000 payment R`000 interest
R`000 R`000
Balance at 1 July 2009 24 380 - 2 128 39 26 547
Changes in equity
Total comprehensive income - - 2 261 - 2 261
for the period
Total changes - - 2 261 - 2 261
Balance at 31 December 2009 24 380 - 4 389 39 28 808
Changes in equity
Employees option scheme:
Options issued - 221 - - 221
Total comprehensive income - - 276 (11) 265
for the period
Total changes - 221 276 (11) 486
Balance at 30 June 2010 24 380 221 4 665 28 29 294
Changes in equity
Total comprehensive income - - (2 791) - (2 791)
for the period
Total changes - - (2 791) - (2 791)
Balance at 31 December 2010 24 380 221 1 874 28 26 503
Condensed consolidated cash flow statement
Unaudited Unaudited Audited
six months six months 12
ended ended months
31 31 December ended
December 2009 30 June
2010 R`000 2010
R`000 R`000
Cash flow from operating activities 1 649 4 196 6 401
Cash flow from continuing operations 2 225 3 310 6 775
Cash flow from discontinued operations (576) 886 (374)
Cash flow from investing activities (951) (720) (3 687)
Cash flow from continuing operations (951) (720) (3 687)
Cash flow from financing activities 769 (341) (927)
Net increase in cash and cash equivalents 1 467 3 135 1 787
Cash and cash equivalents at the beginning 6 481 5 436 5 436
of the period
Effect of exchange rate movement on cash (517) - (742)
held
Cash and cash equivalents at the end of 7 431 8 571 6 481
the period
Unaudited segmental analysis for the six months ended 31 December 2010
Commercial Defence Discontinued Total
Division Division Base Station R`000
R`000 R`000 Equipment
Division
R`000
Segment revenue 21 056 12 623 74 33 753
Segment cost of sales (10 678) (3 780) (803) (15
261)
Segment gross profit/(loss) 10 378 8 843 (729) 18 492
Other income/(expenses) (12) (21) (6) (39)
Operating expenses (11 937) (7 551) (2 037) (21
525)
Finance income 97 50 - 147
Finance costs (197) (171) (7) (375)
(Loss)/Profit before taxation (1 671) 1 150 (2 779) (3 300)
Taxation 319 190 - 509
(Loss)/Profit after taxation (1 352) 1 340 (2 779) (2 791)
Unaudited segmental analysis for the six months ended 31 December 2009
Commercial Defence Base Total
Division Division Station R`000
R`000 R`000 Equipment
Division
R`000
Segment revenue 15 692 16 298 6 658 38 648
Segment cost of sales (8 735) (4 788) (2 955) (16 478)
Segment gross profit/(loss) 6 957 11 510 3 703 22 170
Other income/(expenses) 464 (453) (25) (14)
Operating expenses (9 608) (6 070) (2 544) (18 222)
Finance income 47 29 8 84
Finance costs (313) (258) (124) (695)
(Loss)/Profit before taxation (2 453) 4 758 1 018 3 323
Taxation 841 (1 607) (296) (1 062)
(Loss)/Profit after taxation (1 612) 3 151 722 2 261
NOTES
1) Discontinued operations
The Base Station Equipment sales declined considerably since January 2010.
Management decided to close down the Base Station Equipment Division and absorb
the products into the Commercial Division to reduce overheads associated with
running a separate division. Stock to the value of R704 106 and intangible
assets to the value of R1 152 860 were written off.
The intangible asset of R1 152 860 (31 December 2009: R1 428 592) represents
100% of the total value of the Base Station intangible assets. The total Base
Station stock figure of R1 466 632 (31 December 2009: R1 910 128) was assessed
and written off to the value of R762 526.
ASSETS AND LIABILITIES
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 December 31 December 30 June
2010 2009 2010
R`000 R`000 R`000
Inventory - 1 910 1 237
Intangible assets - 1 429 1 213
Trade and other receivables - 593 1 422
Current assets - 3 932 3 872
Results from discontinued Unaudited Unaudited Audited
operations six months six months 12 months
ended ended ended
31 December 31 December 30 June
2010 2009 2010
R`000 R`000 R`000
Revenue 74 6 658 9 482
Cost of sales (803) (2 955) (4 097)
Gross profit/(loss) (729) 3 703 5 385
Other income/(expenses) (6) (25) (7)
Operating expenses (2 037) (2 544) (5 366)
Finance income - 8 1
Finance costs (7) (124) (151)
(Loss)/Profit before taxation (2 779) 1 018 (138)
Taxation - (296) (238)
(Loss)/Profit after taxation (2 779) 722 (376)
Cash flow from discontinued Unaudited Unaudited Audited
operations six months six months 12 months
ended ended ended
31 December 31 December 30 June
2010 2009 2010
R`000 R`000 R`000
Cash flow from operating (576) 886 (374)
activities
Cash flow from investing - - -
activities
Cash flow from financing - - -
activities
GROUP COMMENTARY
INTRODUCTION
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.
Poynting`s export markets primarily incorporate Europe, the United States of
America ("USA"), the Middle East and Asia.
Poynting operates on a divisional basis which is comprised of its Commercial and
Defence Divisions. The Base Station Equipment Division was discontinued in the
reporting period due to low demand for its products.
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. Sales via
distributors, network operators and equipment manufacturers is performed
internationally by Poynting`s partner company in Europe, Poynting Europe GmbH
("Poynting Europe"), and locally by the sales staff of Poynting and its
subsidiary, Cascade Avenue Trading 90 (Proprietary) Limited (trading as
"Poynting Direct"), who supply trade clients and end customers.
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
typically paid for during the design phase.
RESULTS OVERVIEW
Currently both the Commercial and the Defence Divisions are operating profitably
on an Earnings Before Interest, Tax, Depreciation and Amortisation ("EBITDA")
level. Certain losses were however, sustained in the Base Station Equipment
Division before it was closed down, resulting in a Discontinued Operations.
The Commercial Division has seen turnover and gross profit increase by 34% and
49%, respectively compared to the previous corresponding period. This resulted
in a small EBITDA profit for the Commercial Division during the reporting
period.
As a result of the timing pertaining to deliveries, the Defence Division
experienced a 23% decrease in turnover and gross profit compared to the previous
corresponding period. However, the orders which the Defence Division currently
has on hand are anticipated to stop the gap going forward.
The Base Station Division produced an operating loss of R922 679, a stock
disposal of R704 106 and an intangible impairment of R1 152 860 as a result of
turnover being 99% lower than in the previous corresponding period. The Base
Station Equipment Division was closed early on in the reporting period and
retrenchments were effected in order to avoid further losses.
Poynting is currently operating on a positive cash flow basis, with good margins
being maintained by both the Commercial and the Defence Divisions.
BUSINESS COMBINATIONS
Poynting has not reached agreement with the management of Poynting Europe to
acquire the company. Accordingly, Poynting Europe, which is currently Poynting`s
largest Commercial Division customer in Europe, will continue trading as a
distributor of Poynting products in Europe.
SUBSEQUENT EVENTS
The board of directors of Poynting ("the board") is not aware of any material
events that have occurred between the end of the interim period and the date of
this report.
PROSPECTS
Overall, the board is optimistic about the prospects of the group. This optimism
is supported by improved macro-economic data both locally and internationally.
Due to the order pipeline for the Defence Division being more robust than what
it was during the previous comparative period, the board believes that the
Defence Division will see improved turnover during the next six months. In
addition, good margins are expected to boost group profitability during the
remainder of the financial year.
During the reporting period, as a result of improved margins, the Commercial
Division`s turnover increased by 34% compared to the previous comparative
period. If market conditions continue to improve at the current rate, the
Commercial Division is expected to improve profitability during the remainder of
the financial year.
Despite the losses experienced in the reporting period, the board is cautiously
optimistic of a turnaround going forward. The Commercial Division is expected to
at least maintain current performance and the Defence Division`s order book is
looking relatively strong with deliverables already scheduled for roll out over
the next few months.
BASIS OF PREPARATION
The accounting policies applied in the preparation of these unaudited condensed
consolidated interim results, which are based on reasonable judgments and
estimates, are in accordance with International Financial Reporting Standards
and are consistent with those applied in the annual financial statements for the
year ended 30 June 2010. The unaudited condensed interim results 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 unaudited condensed interim results have not been reviewed or audited by the
company`s auditors.
DIRECTORATE
There have been no changes to the board during the period under review, up to
and including the date of this report.
By order of the board
Andre Fourie Johan Ebersohn
Chief Executive Office Financial Director
29 March 2011
Johannesburg
Directors
Coen Bester* (Chairman), Andre Fourie (Chief Executive Officer), Juergen Dresel
(German), Johan Ebersohn (Financial Director), Jones Kalunga, Zuko Kubukeli*,
Richard Willis
*Independent Non-executives
Registered office
33 Thora Crescent, Wynberg, 2090
(PO Box 76579, Wendywood, 2144)
Designated Adviser
Merchantec Capital
Company secretary
Merchantec Capital
Date: 29/03/2011 13:00:02 Produced by the JSE SENS Department.
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