Poynting growth plan well on its way


The Poynting Holdings CEO growth plan, which was announced about one year ago, has already shown real benefits in the acquisition of Aucom (African Union Communications) and the possible acquisition of RNS (Radio Network Solutions). The group released its results today, which highlighted both the successes and challenges of the last financial year.

Cash flows from operating activities are up 23% to R7.9 million, while revenue increased by 47% to R132 million.

The Defence and Specialised (“DS”) division increased profit after tax by 74% from R9.1 million to R15.8 million, but unfortunately the Commercial and CCS (Cellular Coverage Solutions) divisions recorded a combined loss of R 8.6 million.

Aucom, a local powerhouse in the design, supply and integration of digital television transmission systems for broadcasters in Africa, reported a full year profit of R13.7 million, which is 24% above the profit warranty target of R11 million.

The group, however, had to report a loss after tax of R107.2 million due to IFRS accounting in respect of the acquisition of Aucom. Without these, a profit after tax of R21.3 million would have been reported.


“The financial results this year have a number of IFRS reporting requirements and once-off transaction costs, which presents a very confusing and unrealistic picture to investors,” says group CEO, André Fourie. “A very good commercial acquisition, which already is showing good performance, now results in financials which show unrealistic losses and a balance sheet which does not reflect the sound financial position of the group.”

The single biggest distortion of the results is the complex accounting treatment of the Aucom acquisition, of which a comprehensive summary is given in the results booklet. These distort the profit numbers by R104.4 million and increase balance sheet liabilities by R143.5 million. Management has prepared adjusted numbers removing IFRS distortions and once-off costs to allow comparison to previous period results, and these will also provide more realistic figures to compare future performance to. The commentary should be read with care to understand underlying (sound) company performance.

Technology segments

Poynting, which has a registered Intellectual Property portfolio of 60 items, a growth of 20 during the year, is focused on four technology segments, namely: Defence and Specialised Antennas “DS”, Cellular end-user antennas “Commercial”, Cellular Coverage Solutions “CCS” and Digital Television “DTV”. Together with this, the New Business Development unit has been renamed to SkunkWorks, a term widely used in business, engineering, and technical fields to describe a group within an organisation given a high degree of autonomy and unhampered by bureaucracy, tasked with working on specialised projects.

Exponential growth opportunities in innovation

The Defence Division continued to grow credibly in its various markets. This, coupled with the weakness in the rand and the maintaining of an almost exclusive South African cost base, has delivered the exceptional growth of profit after tax by 74%. “With well-established management teams and proven systems, Defence continues to grow their international customer base and increase sales of existing products,” says Fourie.

With a disappointing loss of R4.6 million, matters at Poynting’s Commercial division started to settle down towards the end of the financial year. Fourie comments: “Revenue declined by 10% due to reduced sales to Europe. The move of commercial product production from South Africa to China absorbed management time, which resulted in operational inefficiencies and stock write-offs.

However, we have a renewed focus on driving revenue and developing focused sales channels to benefit from the broader introduction of 4G/LTE networks and uptake in the machine-to-machine market.

CCS (Cellular Coverage Solutions) invested R4 million in its cellular micro base station solution, the Subterranean (“SubT”), which was a product ahead of its time. The Johannesburg Light Pole initiative may allow CCS to gain traction.

Aucom had its first year as part of the group in the DTV segment and delivered profit exceeding its profit warranties. “We are satisfied with the performance of this acquisition, and market conditions for DTV infrastructure roll-out in Africa remain robust,” says Fourie.

With novel and IP-rich products reaching maturity, SkunkWorks products will hopefully exploit real market demand in the next financial year.

Although the RNS acquisition has not been completed, it is in final stages. “RNS fits the group well with good synergies in a number of segments and possible project and cross-selling opportunities,” says Fourie.


Corrective actions to improve CCS and Commercial profitability is a matter of high priority and includes the establishment of a renewed focus on driving revenue, understanding the market and assessing the sales channels available to the group.

On the future growth of the company, Fourie concludes: “Our acquisition pipeline is healthy and we are engaging with several targets locally and internationally. The focus is on securing a European or USA footprint to support the Defence product range and distribution potential, while identifying companies which fit our market profile and provide synergies to the entire group. We are well on our way to reach our current growth objectives.”