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Poynting in the right direction

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Johannesburg - Poynting Holdings [JSE:POY] on Monday released another good set of results for the six months to December 31 2013.

Revenue increased by 27.4% to R53.5m, after tax profit by 72.7%, from R2.2m to R3.8m and headline earnings per share by 68.0% to 4.10c.

Net asset value increased by 83.6%, from R43.9m to R80.6m, while  tangible net asset value per share rose by 76.9% to 62.5c.

“This performance was mainly the result of an excellent performance by the Defence Division where after tax profit increased by 227% to R9.9m on revenues of R37.6m,” says Poynting CEO Andre Fourie.



This was offset by a loss of R2.1m in the Commercial Division, a loss of R3.0m in the Cellular Coverage Solutions (CCS) Division and losses of R1.0m associated with new business development.

Poynting is trying to position itself as a leading player in the ‘triple play’ future, on the assumption that TV, Voice and Internet communications will eventually converge on a digital platform.

To this end it acquired a 100% of African Union Communications (Aucom), effective March 1 this year.

While Aucom’s contribution is not included in these interim results, “Aucom did about R8.4m profit after tax for the first 6 months,” says Fourie, “which will ultimately get into our bank account even though it won’t go through the income statement.”

"It’s quite clear," he says, "that the Aucom contribution will be substantial  given that our earning per share was around 4c while Aucom made about 11c a share in this interim period.”

Indications are that Aucom’s second half performance will be better than its first half performance.

Poynting’s cash balances in the six months to December 31 increased by 224.7%, from R11.4m to R36.9m, mainly as a result of the PSG investment of R100m announced earlier this month.

"About R75m of that will come in as a cash injection," explains Fourie, "R50m of which we’ll only see in the second half; the other R25m has already come in, which is why the cash reserves have risen to that extent.

"Cash out of operations wasn’t that great (there was a net cash outflow from operations of R3.0m) but that was mainly due to the fantastic turnover generated in the defence section that is now sitting in debtors."

Turning to prospects

The Defence Division is poised to continue producing excellent results in the second half with a larger order book, strong pipeline and well established customer relationships.

“Their customer base is now primarily made up of international, large military integrators, distributors and so forth and, whereas three years ago two customers accounted for most of their turnover they now have 10 to 15 customers that make up about 80% of turnover.”

The Commercial Division’s second half performance is expected to be better than their first half performance.

“There was a complete restructuring of the sales channels as well as a change of suppliers in the Chinese operations,” says Fourie, “which did harm our results a bit in the first half, but that’s now behind us  and we should see a much better performance in the second half.”

“On the CSS side, while we don’t expect any fireworks, costs have been reduced and we should certainly see a much better performance than we did in the first half.”

“On the new product side we expect to see the benefits of the new television and consumer products in about 12-18 months.”



“Historically, we’ve always had a stronger second half performance,and market indications along with the strong order books suggest that we should again see an improvement on the first half in the second half of this year," says Fourie.

"Meanwhile, the Growth Plan remains firmly focused on acquisitions to improve international sales channels and add to the current Defence, Telecommunication and DTV businesses.”

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