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Investor Presentation. 2 Our CompanyOur BusinessOur IndustryGrowth Our Financials BEEOur Listing Rationale Presentation Summary 2.

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Presentation on theme: "Investor Presentation. 2 Our CompanyOur BusinessOur IndustryGrowth Our Financials BEEOur Listing Rationale Presentation Summary 2."— Presentation transcript:

1 Investor Presentation

2 2 Our CompanyOur BusinessOur IndustryGrowth Our Financials BEEOur Listing Rationale Presentation Summary 2

3 Our Company Executive Summary We design and manufacture antennas Established for 17 years Revenue CAGR of 50% since 2001 Projected exports > 50% World class R&D capability Supported by strong growth in wireless data markets Raising of R20m on company value of between R90m and R110m (Fwd PE of 4.7 and 5.8) 3

4 100% Currently being implemented Our Company Structure 4

5 1990: Established consulting company at Wits University 1997: Poynting (Pty) Ltd was formed 2001: Poynting Antennas was formed, moved to Wynberg and started manufacturing 2005: Established: The Commercial Division (Cellular and wireless data antennas) The Defence & Specialised Antenna Division (EW & DF) 2007: Poynting Direct physical and online stores for distribution of Poynting products to end users 2007: Poynting Europe GmbH which distributes commercial and defence products in Europe Our Company History & Milestones 5

6 ‘Making Wireless Happen’ Our Company Vision 6

7 Our Company Organogram Production & Prototyping Chief Executive Officer Andre Fourie Managing Director Juergen Dresel R&DWireless & Cellular Business Units SalesR&D Non executive Chairman Coen Bester Non exec directors Mike Hill / Zuko Kubukeli SalesFinances & Admin QALogistics and Manufacture Chief Technical Officer Derek Nitch Total Number of staff = Defence Common Resources Commercial 7

8 Our Company Stakeholders (post listing) Institutions / Investors 22% Staff Empowerment Trust 3% Management 75% 8

9 OUR BUSINESS

10 World Class Antenna Technology Wireless Data Networks Technology Cellular Products Defence & Specialised projects & products Our Business What we do 10

11 Sales per technology category from January – December 2007 Total R50.9 million Export and Local Sales per division from January – December 2007 Total R50.9 million Our Business What we do 11

12 Our Business Clients

13 International recognition of manufacturing technologies Well developed sales and distribution channels –Network Operators –OEM’s (Original Equipment Manufacturers) –Direct distribution The Poynting brand Innovative niche products Continuous development of new products & range Price and performance competitiveness –Unique patented manufacturing technologies –Low labour component (15% of COS) –Chinese relationships –‘Technology agnostic’ nature of products Our Business Competitive Advantages 13

14 OUR INDUSTRY

15 Networking Integrators Device manufacturers (embedded antennas) Tracking Military Industry Wireless internet & cellular service providers Antenna Products & Applications Our Industry Where we function EDGE 3G HSDPA 15

16 SA is one of the most advanced telecoms systems of all emerging markets Current product set SA market size ± R150 million Market for new whole products in SA an additional R600 million 30% CAGR in cellular market (2001 – 2006) CAGR of 52% in mobile data revenue since 2001 SA Broadband internet usage ± 2-3%, increasing by 50% p.a. Wireless connections (e.g., EDGE, 3G, HSDPA, iBurst) overtook ‘wired’ internet (ADSL) in 2007 Our Industry SA Market 16

17 Our Industry Global Market Trends Rapidly falling electronics costs enable widespread adoption of new wireless applications Growing use of wireless for internet access Machine-to-machine communication to play a growing role going forward The global wireless technology market ± $25 billion* Antennas constitute 10%- 20% (& growing) of this market *This excludes the cellular market which is much larger, which Poynting only addresses a subset of (modems and devices) 17

18 The footprint of companies currently purchasing smaller amounts is much more extensive with many of these displaying scope for further extension Defence customers> R per annum Commercial customers > R per annum Our Industry Geographic Positioning 18

19 High barriers to entry Poynting is the dominant manufacturer in SA market. Most competition from imports. Competitors: Webb Industries, Pacific Wireless (USA), Maxrad (USA), MTI Wireless (Israel), Kenbotong (China) International “giants” do not compete in the “new” markets of cellular cpe and wireless data Our Industry Competition 19

20 GROWTH

21 Growth Personnel 3 PhD, 4 MSc, 11 BSc, 3 Technicians 3 PhD, 7 MSc, 11 BSc, 3 Technicians Good corporate governance 21

22 Growth Growth strategy Growth in the wireless market Growth by entering new countries Grow product range “Triple Play Plan” 22

23 R45 mil → Estimated 20-30% growth in current customers/markets R20 mil → 100%+ growth in Europe through Poynting Europe R20 mil → Defence and specialised R10 mil → Sales into new markets R10 mil → Introduction of new products R7 mil → Poynting Direct: Branches & organic growth (SA & Africa) Total Sales Prospects ± R130 mil R15 mil → New OEM contracts to supply large international manufacturers Growth Sales prospects for FY

24 OUR FINANCIALS

25 Our Financials Turnover (June) 133% 62% 29% 76% 25

26 Our Financials Profit After Tax (June) 38% 515% 105% 300% 26

27 Revenue increase on prior years (%) Gross margin (%) Profit After Tax (%)31619 Our Financials Key Revenue Ratio’s 27

28 Our Financials Income Statement Audited year ended 30- Jun 2005 Audited year ended 30- Jun 2006 Audited year ended 30- Jun 2007 Forecast year ended 30- Jun 2008 Forecast year ended 30- Jun 2009 R'000 Revenue Cost of Sales(7 331)(10 524)(20 033)(25 408)(52 180) Gross Profit Operating costs(5 181)(13 597)(22 539)(23 429)(31 105) Other income Operating profit( 507) Investment income Finance costs( 797)( 546)( 710)( 688)( 410) Profit before taxation(1 278) Taxation 70( 1 248) (479)( 236)(320) Profit after taxation(1 208) Notes: 1.The above income statement takes into account the effects of the anticipated issue of shares. 2. Capital raised of R20 million on listing less estimated share issue costs of R1.676 million. 3. Surplus cash will be applied to the organic growth of the business in the short to medium-term and therefore no dividends are planned for the forecast period. 4. Poynting takes advantage of research and development allowances in their tax computations, resulting in a reduced tax charge and a lower effective tax rate. 28

29 Financials Balance Sheet - Condensed 1. The increase in instalment sale liabilities is due to the financing of property plant and equipment. 2. Capital raised R20 million (20 million shares of R1). Share issue costs of million deducted from share premium. Audited yr end 30 Jun 2005 Audited yr end 30 Jun 2006 Audited yr end 30 Jun 2007 Forecast yr end 30 Jun 2008 Forecast yr end 30 Jun 2009 R'000 ASSETS Non Current assets Property, plant and equipment Intangible assets Investments Current assets TOTAL ASSETS EQUITY AND LIABILITIES Capital and reserves(208) ² Non -current liabilities ¹ Current Liabilities TOTAL EQUITY AND LIABILITIES

30 BLACK ECONOMIC EMPOWERMENT

31 Keen to enhance our BBBEE rating Establishing an Employee Empowerment Trust - will own 3% equity of the company Seeking genuine participation by an empowerment partner which will add value to the business Employment Equity Plan has been submitted Black Economic Empowerment 31

32 OUR LISTING RATIONALE

33 Rationale for listing Raising of money to supplement current cash resources: R10 mil R5 mil R4 mil R8 mil 33

34 34 Threats Unqualified entrants into the market Low cost international products Increase in energy prices A strengthening rand harmful for exports Consumer devices with integrated antennas and no connectors for external antennas Weaknesses Technology is capital intensive Length of cycles (implementation, manufacturing, delivery) International distribution channel development for branded products High transport costs to international clients Restricted cash flow has limited number of technical staff for product development Resource / funding restrictions constrain registering of patents and designs Opportunities Globalisation Growth in fixed wireless markets (wireless data & cellular) Replacements / new infrastructure typically wireless Increasing market share in SA, Africa & Europe Attractive markets of E. Europe, USA, Asia & S. America Remote office space “Whole” products - Integration of antennas into complete systems A weakening Rand’s positive affect on margins and competitiveness Capital injection will leverage much faster growth Strengths Established business model International customer base Antenna design capabilities and tools Brand equity (the Poynting brand) Technologically agnostic Intellectual property Product portfolio World leaders in certain commercial and defence products Research & Development Unique, cost effective manufacturing processes Innovative / flexible solutions SWOT Analysis 34

35 Excellent international growth prospects Strong, experienced management Highly qualified and experienced R&D team is the company core strength Innovative product range Very high historical company growth with strong future prospects Seeks to list in June 2008 Intends to raise R20 million through private placement Summary 35

36 Thank You & Questions 36


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