Set Point may pay dividends

Set Point Technology Holdings is to consider resuming dividend payments at the end of the 2003 financial year after its latest set of results showed the benefits of a turnaround strategy.

Despite a 31% decline in revenue as a result of a disposal programme, the JSE-listed group achieved pretax income of R21.17 million for the year to 31 August, compared with a loss of more than R31 million the previous year.

Positive operating cash flows and the sale of Set Point Europe helped reduce group borrowings from R63 million to R26 million and the debt-to-equity level fell from 260% to 67%.

On a negative note, CEO Mark Smith says the company is obliged to buy 2.79 million Set Point shares from a vendor at 72c a share if they are tendered in a negotiable form at the end of next February.

The purchase will be conditional on shareholder approval. If this is not obtained, Smith says, Set Point will still be obliged to settle the liability.

Set Point Laboratories and Wearcheck had a good year but Set Point Instruments, affected by tough trading conditions, reported a 13.5% decline in operating income to R8.3 million.

Smith says with the restructuring now complete, the emphasis has moved to growing the group's business units both internally and through external alliances. All divisions remain profitable and generate positive cash flows.

"Headline earnings in the new year are expected to reflect continued satisfactory real growth. The board will give consideration to resuming dividend payments at the conclusion of the 2003 financial year."

The Set Point share was trading at 30c on the JSE this morning, 1c down from yesterday's close.