| Tue 28 Feb 2012, 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 2011
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 2011
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
six six months 12
months ended months
ended 31 December ended
31 2010 30 June
December R`000 2011
2011 R`000
R`000
Revenue 38 801 33 679 81 549
Cost of sales (13 776) (14 458) (28 102)
Gross profit 25 025 19 221 53 447
Other (expenses)/income (102) (33) 483
Operating costs (22 157) (19 488) (47 628)
Operating profit/(loss) 2 766 (300) 6 302
Investment income 240 147 269
Finance costs (357) (368) (730)
Profit/(Loss) before taxation 2 649 (521) 5 841
Taxation (707) 509 (1 077)
Profit/(Loss) after taxation from 1 943 (12) 4 764
continuing operations
Discontinued Operations - - (2 779) (2 156)
Profit/(Loss) after discontinued 1 943 (2 791) 2 608
operations
Total comprehensive income/(loss) 1 943 (2 791) 2 608
Profit/(Loss) attributable to:
Continuing operations 1 943 (12) 4 764
Discontinued operations - (2 779) (2 156)
Equity holders of parent 1 944 (2 791) 2 608
Non-controlling interest (1) - -
Total comprehensive income/(loss) 1 943 (2 791) 2 608
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
as at as at as at
31 31 December 30 June
December 2010 2011
2011 R`000 R`000
R`000
ASSETS
Non-current assets 11 410 14 785 12 127
Property, plant and equipment 2 384 2 606 2 081
Intangible assets 8 855 10 648 9 993
Deferred taxation - 1 414 -
Other financial assets 171 117 53
Current assets 33 653 26 405 32 798
Inventories 6 990 10 066 8 418
Trade and other receivables 14 074 8 908 19 528
Bank and cash balances 12 589 7 431 4 852
Total assets 45 063 41 190 44 925
EQUITY AND LIABILITIES
Equity 33 846 26 503 31 903
Equity attributable to owners of 33 819 26 475 31 875
parent
Non-controlling interests 27 28 28
Non-current liabilities
Interest-bearing liabilities 1 935 2 050 1 633
Current liabilities 9 282 12 637 11 389
Interest-bearing liabilities 86 4 299 641
Trade and other payables 9 196 8 338 10 732
Bank overdraft - - 16
Total equity and liabilities 45 063 41 190 44 925
Number of ordinary shares in issue 88 554 275 88 554 275 88 554
275
Net asset value per ordinary share 38.19 29.93 36.03
(cents)
Net tangible asset value per ordinary 28.19 17.90 24.74
share (cents)
Condensed consolidated statement of changes in equity
Share Share- Retained Non Total
capital based earnings controlli R`000
R`000 payment R`000 ng
R`000 interest
R`000
Balance at 1 July 2010 24 380 221 4 665 28 29 294
Changes in equity
Total comprehensive - - (2 791) - (2
income for the period 791)
Total changes - - (2 791) - (2
791)
Balance at 31 December 24 380 221 1 874 28 26 503
2010
Changes in equity
Total comprehensive - - 5 399 - 5 399
income for the period
Total changes - - 5 399 - 5 399
Balance at 30 June 2011 24 380 221 7 273 28 31 903
Changes in equity
Total comprehensive - - 1 944 (1) 1 943
income for the period
Total changes - - 1 944 (1) 1 943
Balance at 31 December 24 380 221 9 217 27 33 846
2011
(Amounts less than R 1 000 rounded up)
Condensed consolidated cash flow statement
Unaudited Unaudited Audited
six months six months as at
ended ended 30 June
31 December 31 December 2011
2011 2010 R`000
R`000 R`000
Cash flow from operating activities 6 591 1 649 5 780
Cash flow from continuing operations 6 591 2 225 5 780
Cash flow from discontinued - (576) -
operations
Cash flow from investing activities 835 (951) (3 939)
Cash flow from continuing operations 835 (951) (3 939)
Cash flow from financing activities 769 (3 361)
(371)
Net increase/(decrease) in cash and 7 055 1 467 (1 520)
cash equivalents
Cash and cash equivalents at the 4 836 6 481 6 481
beginning of the period
Effect of exchange rate movement on 698 (517) (125)
cash held
Cash and cash equivalents at the end 12 589 7 431 4 836
of the period
Unaudited Unaudited Audited
six six months 12
months ended months
ended 31 December ended
31 2010 30 June
December R`000 2011
2011 R`000
R`000
NOTE 1 - RECONCILIATION OF PROFIT FOR
THE YEAR TO HEADLINE EARNINGS
Reconciliation of earnings/(loss) to
headline earnings
Earnings/(Loss) after tax 1 943 (2 791) 2 608
Adjustments for:
Impairment of intangible assets - 1 152 299
Headline earnings/(loss) attributable 1 943 (1 639) 2 907
to ordinary shareholders
Weighted average number of ordinary 88 554 88 554 275 88 554
shares in issue 275 275
Weighted average number of ordinary 90 586 90 586 388 90 586
shares in issue (diluted) 388 388
From continuing and discontinued
operations
Basic earnings/(loss) per ordinary 2.20 (3.15) 2.95
share (cents)
Diluted earnings/(loss) per ordinary 2.15 (3.08) 2.88
share (cents)
Headline earnings/(loss) per ordinary 2.20 (1.85) 3.28
share (cents)
Fully diluted headline earnings/(loss) 2.15 (1.81) 3.21
per ordinary share (cents)
From continuing operations
Basic earnings/(loss) per ordinary 2.20 (0.01) 5.38
share (cents)
Diluted earnings/(loss) per ordinary 2.15 (0.01) 5.26
share (cents)
Headline earnings/(loss) per ordinary 2.20 (0.01) 5.72
share (cents)
Fully diluted headline earnings/(loss) 2.15 (0.01) 5.59
per ordinary share (cents)
NOTE 2 - Unaudited SEGMENTAL ANALYSIS for the period ending 31 December 2011
Continued Discontinued Total
Operations Operations R`000
Commerci Defence Base Station
al Division Equipment
Division R`000 Division
R`000 R`000
Total revenue 21 850 17 990 - 39 840
Inter-segment revenue (1 039) - - (1 039)
Total external revenue 20 811 17 990 - 38 801
Corporate office expense (301) (227) - (528)
Depreciation and (1 955) (1 089) - (3 044)
amortisation
Operating profit (1 583) 4 349 - 2 766
Investment income 71 169 - 240
Finance costs (243) (114) - (357)
(Loss)/Profit before (1 755) 4 404 - 2 649
taxation
Taxation 228 (935) - (707)
(Loss)/Profit from (1 527) 3 470 - 1 943
continuing operations
Loss from discontinued - - - -
operations
(Loss)/Profit for the period (1 527) 3 470 - 1 943
Unaudited segmental analysis for the six months ended 31 December 2010
Continued Discontinued Total
Operations Operations R`000
Defence Base Station
Commerci Division Equipment
al R`000 Division
Division R`000
R`000
Total revenue 22 238 12 623 - 34 861
Inter-segment revenue (1 182) - - (1 182)
Total external revenue 21 056 12 623 - 33 679
Corporate office expense (348) (263) - (611)
Depreciation and (1 949) (1 114) - (3 063)
amortisation
Operating profit (1 571) 1 271 - (300)
Investment income 97 50 - 147
Finance costs (197) (171) - (368)
Profit/(Loss) before (1 671) 1 150 - (521)
taxation
Taxation 319 190 - 509
Profit/(Loss) from (1 352) 1 340 - (12)
continuing operations
Loss from discontinued - - (2 779) (2 779)
operations
Profit/(Loss) for the period (1 352) 1 340 (2 799) (2 791)
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, comprising of its Commercial and
Defence divisions.
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 recovered during the design phase. The vast majority of Defence
products are used by international customers, even though Poynting often sells
to locally based system integrators who in turn supply international customers.
The Commercial Division designs and manufactures antennas for wireless data
and cellular applications. 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 users. This division has also started to manufacture cellular micro base
stations and provide installation services, which installs fixed antennas for
customers in areas of inadequate signal coverage.
RESULTS OVERVIEW
Group earnings before interest, taxes, depreciation and amortisation ("EBITDA")
for six months increased by 110% from R2.76 million in December 2010 to R5.81
million in December 2011. We feel the EBITDA number to be the most
representative indicator of profitability since our final earnings number
includes amortisation and depreciation of about R3 million which mainly relates
to changes in intangible assets. Group revenues increased by 15%.
Our Defence Division`s growth in revenue and profitability continued during this
period. Defence revenues increased by 43% and EBITDA increased by 128% compared
to the previous comparative period.
Commercial Division revenues and EBITDA was roughly the same as the previous
comparative period.
The tangible net asset value per share increased by 57% from 17.90c to 28.19c
between December 2010 and December 2011.
The Company generated R6.59 million in cash from operating activities during
this 6 month period. The statement of financial position is healthy with good
liquidity and low gearing.
OPERATIONAL OVERVIEW
The Commercial Division of Poynting has moved to new premises in Samrand,
Centurion. The 1300 square meter building comprise new offices as well as
factory and warehousing space. The Poynting Direct Pretoria and Johannesburg
branches were also moved to the same premises.
The current Wynberg building now houses a considerably larger Defense Division
as well as our finance and administration department.
The Defense Division is focusing on considerable marketing and sales efforts to
expand into new markets. We have seen good growth in sales to the USA which is
currently by far the biggest defense market in the world. The Defense Division
is also achieving increased sales of existing products as opposed to custom
developed products. This has been an aim of the Defense Division for some years,
increasing the scalability of this operation.
The Defense Division has strengthened its sales and marketing department with
some high level appointments and we are clearly experiencing the benefits, as
shown by the increased revenues. Several very talented engineers joined the
Company to bolster our market-leader position in antenna design.
The Commercial Division is transferring the manufacturing of more of its largest
volume antenna products to China. We have built valuable relations and acquired
rare experience in the past 3 years where we have been engaged in outsourced
manufacture to China.
The Commercial Division has diversified its offering by developing an innovative
range of cellular micro base station products. One version, a subterranean
equipment container next to a streetlight- or flagpole-like mast is generating
considerable local and international interest and some initial trial units were
deployed in the past few months. The Commercial Division is growing its
countrywide antenna installation service which is used by network operators,
wireless solution companies and the general public - mainly to improve cellular
data speed and reliability.
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 December 2011 interim period
and the date of this report.
PROSPECTS
We expect similar or better Defence revenues in the second half of the financial
year and have an order book supporting this assessment. We are also actively
looking for acquisitions which will enhance the Defence product range and/or
give us better access to the USA market.
The Defence Division products are sold via long-term relationships with several
local and international partners. Company brand and reputation is key to
acceptance in this market, which took many years to develop. We lately see many
signs that Poynting is recognised as an internationally respected supplier in
this marketplace. Whereas Poynting previously battled to get customers to visit
our exhibits at international defence shows, we now find that we have to
allocate additional personnel to deal with the increase in enquiries. Our order
pipeline has also grown in size and number of interested customers from all over
the world.
Commercial revenues and profits will be better due to healthy existing product
sales and additional revenue from the micro base stations for which significant
orders are already in place or imminent. Poynting Direct has been turned around
from a loss making first half to an expected profitable second half year, which
positively impacts on Commercial Division profitability.
Commercial products in the cellular data space is benefiting from the
exponential growth in cellular data, both locally and internationally. Cellular
antennas now comprise the majority of revenue and also show the fastest growth.
Sales of products in the Wi-Fi/WiMax space have been shrinking during the past 2
years.
Poynting historically has had a stronger second half performance and indications
are that we should maintain or improve on first half performance. Overall
performance is however never certain due to the uncertainty associated with the
Commercial Division sales, which can change relatively quickly due to
fluctuations in market sentiment.
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 consistent with those applied in the annual financial statements
for the year ended 30 June 2011. These unaudited condensed consolidated interim
results as set out in this report have been prepared in terms of the recognition
and measurement requirements of the International Financial Reporting Standards
("IFRS"), presentation and disclosure requirements of IAS 34 - Interim Financial
Reporting, the Companies Act, 2008 (Act 71 of 2008), the AC500 standards as
issued by the APB and the Listings Requirements of JSE Limited.
The unaudited condensed consolidated interim results have not been reviewed or
audited by the Company`s auditors.
DIRECTORATE
Jones Kalunga resigned as a director on 2 November 2011. There have been no
additional changes to the Board up to and including the date of this report.
By order of the board
Andre Fourie Johan Ebersohn
Chief Executive Officer Financial Director
28 February 2012
Johannesburg
Directors
Coen Bester* (Chairman), Andre Fourie (Chief Executive Officer), Juergen Dresel
(Managing Director) (German), Johan Ebersohn (Financial Director), 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: 28/02/2012 13:00:01 Produced by the JSE SENS Department.
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