| Thu 27 Oct 2005, 17:40 | | Set Point - Audited Results for the year ended 31 |
|
Set Point - Audited Results for the year ended 31 August 2005
Set Point Technology Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1996/014334/06)
Share code: STO
ISIN: ZAE000013629
("Set Point" or "the company" or "the group")
Audited Results for the year ended 31 August 2005
* HEADLINE EPS +50%
* DIVIDEND +33%
* ACQUISITION OF SERAN
* INTRODUCTION OF BEE PARTNER
Consolidated income statement
Audited Audited
year ended year ended
31 August 31 August
2005 2004
R000 R000
Revenue 240 172 247 650
Cost of sales (126 827) (138 279)
Gross profit 113 345 109 371
Interest received 4 443 3 405
Operating expenses (81 030) (83 724)
Profit before goodwill 36 758 29 052
amortisation/impairment and capital
items
Goodwill amortisation (679) (1 858)
Capital items 433 (3 797)
Profit before finance costs 36 512 23 397
Finance costs (9 678) (8 831)
Profit before taxation 26 834 14 566
Taxation (8 165) (5 248)
Profit after taxation 18 669 9 318
Attributable to:
Equity holders of Set Point 17 831 7 318
Minority interests 838 2 000
18 669 9 318
Shares in issue
Weighted average number of ordinary 242 619 242 109
shares in issue ("000"s)
Fully diluted weighted average number of 246 814 253 649
ordinary shares in issue ("000"s)
Earnings per share (cents) 7.3 3.2
Diluted earnings per share (cents) 7.2 3.1
Headline earnings per share (cents) 7.5 5.2
Diluted headline earnings per share 7.3 5.0
(cents)
Headline earnings 18 077 12 973
Earnings 17 831 7 318
Adjusted for: 246 5 655
Capital items (433) 3 797
Loss on disposal of agency - (1 670)
Loss on disposal of divisions - (1 173)
Impairment of fixed assets - (854)
Profit/(loss) on disposal of property, (433) (100)
plant and equipment
- taxation effect on capital items - (852)
- goodwill amortisation and impairment 679 1 858
Abridged consolidated cash flow statements
Audited Audited
year ended year ended
31 August 31 August
2005 2004
R000 R000
Cash flows from operating activities 24 108 20 452
Cash flows from investing activities (22 835) (6 039)
Cash flows from financing activities 4 161 (11 862)
Net cash generated 5 434 2 551
Overdraft in subsidiary acquired (5 702) -
Cash and cash equivalents at beginning 2 822 271
of year
Cash and cash equivalents at end of year 2 554 2 822
Consolidated balance sheets
Audited Audited
at 31 August at 31 August
2005 2004
R000 R000
Assets
Non-current assets 136 382 58 887
Property, plant and equipment 25 586 19 709
Intangibles 100 060 28 914
Deferred taxation 10 736 10 264
Current assets 98 698 83 804
Inventories 36 759 31 685
Receivables 59 385 49 297
Cash and cash equivalents 2 554 2 822
Total assets 235 080 142 691
Equity and liabilities
Equity and reserves 86 964 63 892
Share capital 2 777 2 422
Share premium 52 179 38 709
Premium on minority equity transactions (4 945) -
Retained earnings 36 953 22 761
Minority interests 724 5 349
Total equity 87 688 69 241
Non-current liabilities 70 706 9 849
Deferred purchase consideration 56 304 -
Interest bearing external liabilities 14 402 9 849
Current liabilities 76 686 63 601
Interest bearing liabilities 6 246 15 435
Payables 65 207 44 326
Taxation liability 5 233 3 840
Total equity and liabilities 235 080 142 691
Shares in issue (net of treasury shares) 277 619 242 109
(000"s)
Net asset value per share (cents) 31.3 26.4
Debt-equity ratio (excluding deferred 20.6 32.0
purchase consideration)
Debt-equity ratio (including deferred 84.8 32.0
purchase consideration)
1. Borrowings
Bank overdrafts have been set-off
against cash balances on hand where
allowed in terms of bank facility
arrangements.
2. Contingent liabilities
Performance guarantees 1 306 1 082
Other guarantees 400 4 323
1 706 5 405
3. Capital commitments
Authorised and contracted for 2 100 119
To be financed by long-term borrowings
Abridged consolidated statements of changes in equity
Audited Audited
year ended year ended
31 August 31 August
2005 2004
R000 R000
Opening balance as previously reported 63 892 58 938
Adjusted for the straight-lining of - (25)
operating leases
63 892 58 913
Shares issued 13 790 148
Shares issued by treasury and share 35 259
trust
Shares purchased by treasury - (279)
Treasury shares held by share trust - (23)
Acquisition of minority interests (4 945) -
Profit for the year 17 831 7 318
Dividend paid (3 639) (2 444)
Shareholder equity 86 964 63 892
Minority interests 724 5 349
Total equity 87 688 69 241
Segmental information
Year ended 31 August
2005
Segment Capital Goodwill
Segment liabi- expen- Depre- impair-
assets lities diture ciation ment
R000 R000 R000 R000 R000
Analytics 34 062 12 636 2 859 2 192 -
Fluid Handling 75 971 30 296 691 1 404 -
Instrumentation 46 423 17 628 200 900 -
Mining Technology* 85 269 63 637 507 217 -
Central Services** (6 645) 23 195 540 865 679
235 080 147 392 4 797 5 578 679
Segmental information (continued)
Year ended 31 August 2005 Profit/(loss)
before goodwill,
amortisation/
impairment and Number of
Revenue capital items employees
R000 % R000 % # %
Analytics 57 393 23.9 21 127 57.5 176 30.3
Fluid Handling 109 756 45.7 26 484 72.0 84 14.5
Instrumentation 61 232 25.5 (906) (2.5) 49 8.4
Mining Technology* 11 791 4.9 2 511 6.8 251 43.4
Central Services** - - (12 458) (33.9) 20 3.4
240 172 100.0 36 758 100.0 580 100.0
*2 months only**The negative asset relates to bank overdrafts for which there is
a legal right to off-set within a legal entity.
Review of operations
PROFILESet Point has three core activities:
* Analytics operates through specialised laboratories which offer expert
analysis for the precious metals exploration industry and condition monitoring
of fluids.
* Fluid Handling supplies medium technology, products and services to the
petrochemical and mining industries.
* Mining Technology comprises the manufacture, supply and repair of equipment
and services used in underground mining activities.
FINANCIAL RESULTS AND REVIEW OF OPERATIONSThe results for the year under review
have shown a significant improvement compared with the previous year. This has
been achieved through both organic and acquisitive growth.
Headline earnings per share increased by 50% to 7,5 cents. Although group
revenue declined marginally by 3% to R240 million, gross profit margins improved
from 44% to 47%. In Rand terms, operating expenses declined by 3,2% resulting
in operating profit before taxation improving by 72,9% to R25,2 million.
On the balance sheet, total equity increased to R88 million following an issue
of shares for cash. Actual borrowings, excluding the deferred purchase
consideration, decreased from R22,5 million to R18,1 million, giving a debt
equity percentage of 21%. Including the deferred purchase consideration, this
ratio increases to 85%. These headline earnings were achieved after taking
cogniscence of accounting policy changes with regard to AC105, AC128, AC129 and
AC140. Setpoint has applied the requirements of the revised AC140 - Business
Combinations accounting statement and discontinued the amortisation of goodwill
effective 1 September 2004.
SERAN With effect from 1 July 2005, Set Point acquired the business of Seran
Engineering and Supplies (Pty) Ltd ("Seran"). This business comprises primarily
the manufacture and supply of overburden recovery technology equipment and
services used in underground mining activities.The purchase consideration was
based on average after tax profits over a 3 year period commencing 1 September
2005 multiplied by a P/E ratio of 4.5. Management"s estimate is that the total
purchase consideration will be approximately R80 million, of which, at Set
Point"s option, up to one third may be satisfied by the issue of Set Point
shares.
The transaction gave rise to a Deferred Purchase Consideration liability in the
balance sheet, representing the present value of the estimated amount payable
less the R13 million paid to date. The total actual consideration to be paid is
dependant entirely on the average level of after tax profits achieved during the
3 year period.
At a meeting held on 29 June 2005, shareholders approved the acquisition of
Seran.
Seran contributed positively to group results for the two months to 31 August
2005. The vacuuming contracts currently being negotiated should result in Seran
making a significant contribution to group results in the year ahead.SHARE
ISSUEFollowing the acquisition of Seran and in order to strengthen the balance
sheet and increase our BEE credentials, shareholders approved, on 29 June 2005,
the issue of 35 million shares for cash at a price of 40 cents per share, being
a discount of 11% on the market price at the time.
The shares were issued to the Haroon Habib Family Trust and enabled Set Point to
increase the BEE ownership of the company to 17%.
POST BALANCE SHEET EVENTSShareholders" attention is drawn to the announcement on
25 October 2005 that, effective 1 October 2005, the group had acquired the
businesses of Northwest Gopro CC and Fixtrade 1092 CC. These businesses supply
wheels, buffers and axles and recondition wheels for hoppers and locomotives.
These businesses are situated in Stilfontein and Rustenberg.
The purchase consideration is based on the average after tax profits for the 3
years to 31 August 2008 multiplied by a P/E ratio of 3, plus payment in respect
of inventories of approximately R6 million and the assumption of some minor
liabilities.
The maximum purchase consideration, excluding inventories, for the combined
businesses would be R17 million payable in cash at the end of the calculation
period. The businesses complement, in particular, the manufacture of hoppers at
Seran.
With effect from 1 October 2005, certain assets and liabilities of the Set Point
Instruments Division, excluding Profchem, were acquired by Double Ring Trading
338 (Pty) Ltd. The sale is at net asset value of approximately R10 million.
The disposal falls outside the threshold of a category three transaction as
defined in the JSE Listing Requirements.
Deferred Purchase Consideration
The deferred purchase consideration is payable as follows:
Seran Engineering and Supplies - Vendor 52 465
Letaba minorities 6 180
Total purchase consideration payable 58 645
Less current portion (2 341)
Total purchase consideration payable 56 304
These amounts are payable at the end of the calculation periods and are directly
linked to management"s best estimate of future profits generated by the two
entities and are payable from the anticipated cash flows of the respective
businesses.
PROSPECTSTogether with the acquisitions, start-up businesses and continuing
operations within the group, Set Point is in a position to build positively for
the future on the results obtained this year.
DIVIDENDNotice is hereby given that dividend number 4 of 2 cents per share has
been declared in respect of the year ended 31 August 2005.
This dividend will be paid out of profits as determined by the directors, to
shareholders recorded as such in the register at the close of business on the
record date, Friday, 13 January 2006. The last date to trade, to participate in
the dividend, is Friday, 6 January 2006. Shares will commence trading ex-
dividend from Monday, 9 January 2006.
The important dates pertaining to this dividend for shareholders trading on the
JSE Limited are as follows:
Last day to trade "CUM" dividend Friday, 6 January 2006
Shares trade "EX" dividend from Monday, 9 January 2006
Record date Friday, 13 January 2006
Payment date Monday, 16 January 2006
Share certificates may not be dematerialised or rematerialised between Monday, 9
January 2006 and Friday, 13 January 2006, both days inclusive.
BASIS OF PREPARATIONThe reviewed results have been prepared in accordance with
South African Statements of Generally Accepted Accounting Practice.
UNQUALIFIED AUDIT REPORT BY INDEPENDENT AUDITORSThe group"s auditors, KPMG Inc.
have audited these year-end results. The unqualified audit report dated October
2005 is available for inspection at the registered office of the company.
For and on behalf of the Board
CS Seabrooke
(Chairman)
Johannesburg
27 October 2005
Directors: CS Seabrooke*+ (Chairman), MJ Smith (Deputy Chairman),
EG Gregor (Chief Executive Officer), Dr DE Baloyi*+, GJ Horsfield,
BH Kent*+, JM Judin*, GE Nel*
(* Non-executive) (+ Independent)
Company Secretary: ND Kennelly
Registered Office: 30 Electron Avenue, Isando 1601, (PO Box 856, Isando 1600)
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Limited, Ground
Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown 2107)
Sponsor: The Standard Bank of South Africa Limited, Registration number
1962/000738/06
www.setpoint.co.za
Date: 27/10/2005 05:40:51 PM Produced by the JSE SENS Department
