JSE-listed communications and defence antenna manufacturer Poynting’s interim results for the period ended December 31show that the company has increased turnover for continuing operations by 101% after disposing of its lossmaking segments. It posted profits after tax and before fair value adjustments for continuing operations of R6.6-million.

The interim results show cash on hand of R75.8-million, and the potential acquisition of US-based company Antenna Research Associates Incorporated (ARA) will provide the company with a footprint in the US, which is a long-term goal, says Poynting CEO Jürgen Dresel.

Headlines earnings per share showed positive growth, largely because of fair value adjustments, and the group reported adjusted headline earnings per share from continuing operations, which decreased from 10.77 c a share to 5.26 c a share.

The company sold off the Commercial Products division of the business to former CEO Dr André Fourie and the simplified business structure is showing promise, says Dresel.

“The sale has resulted in a much more profitable and focused group, which is now positioned for growth around what we are good at,” he adds.

The lossmaking segments, comprising the Commercial cellular end-user antennas, Cellular Coverage Solutions and New Business divisions, were disposed of in December for R35.8 million. This, Dresel says, is to be settled by the repurchasing of 14-million shares at 256c a share, with the sold assets amounting to R33.4-million, resulting in a profit of R2.4-million.

Despite revenue growth of 58% during the interim period, these segments recorded a loss of R6.5- million, compared with a loss of R6.1-million in the comparative 2013 period, owing to low margins.

The Defence & Specialised (DS) business continues to perform well, with revenue increasing by 13% to R42.4-million while maintaining high gross margins. Profit after tax was R8.5 million, 18% – or R1.9-million – lower than recorded in the same period in 2013.

DS invested in its capacity for growth by increasing its headcount from 77 to 92, which increased salary costs by R2.5-million. DS added 36 new products to its portfolio in the six months to support revenue growth.

“This should be reflected in future results, with a large confirmed order book and pipeline, which extend into the next financial year. Further cost increases are not expected in the second half of the current financial year.

“Management believes that DS still has significant potential for organic growth. The immediate and biggest opportunity is the US market, which is facilitated through the ARA acquisition,” says Dresel.

A R50.2-million order received only in January impacted on the Digital TV division, specifically the Aucom business. The business was able to realise a small profit of R300 000 in the half-year and Aucom management is optimistic that it will achieve its profit warranty for the full year.

The market conditions for Digital TV infrastructure roll-out in Africa remain robust.

“The Africa pipeline continues to offer significant potential, but, owing to the long sales cycles, it is probable that these will not be realised in the next half-year.”

Dresel adds that migration to digital television broadcasting remains slow, owing to long approval processes at State broadcasters, but provides good opportunity for the next three to five years.

“There are also numerous new private operators in Africa that, together with the installation of more complex equipment and more frequent upgrades, allow for more maintenance revenue,” he concludes.