| Wed 20 Apr 2011, 8:00 | | ALT - Allied Technologies Limited - Summarised audited consolidated |
|
ALT
ALT
ALT - Allied Technologies Limited - Summarised audited consolidated
financial statements for the year ended 28 February 2011
Allied Technologies Limited
(Incorporated in the Republic of South Africa)
Registration number: 1946/020415/06
Share code: ALT
ISIN: ZAE000015251
Summarised audited consolidated financial statements
for the year ended 28 February 2011
Highlights
- Dividend growth of 5% to 356 cents per share
- Turnover growth to R9,7 billion
- Continued strong balance sheet
- Return on shareholders` equity at 22%
- Significant empowerment transactions concluded
SUMMARISED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
2011 2010
Figures in R million (Audited) (Audited)
Revenue 9 651 9 200
Operating profit before capital items 787 933
Capital items (Note 1) (273) (42)
Results from operating activities 514 891
Finance income 35 25
Finance costs (90) (40)
Profit before taxation 459 876
Taxation (201) (259)
STC (33) (32)
Profit for the year 225 585
Other comprehensive income
Foreign currency translation differences for (281) (332)
foreign operations
Other comprehensive income for the year (281) (332)
Total comprehensive income for the year (56) 253
Profit attributable to:
Non-controlling interest 15 65
Altech equity holders 210 520
Profit for the year 225 585
Total comprehensive income attributable to:
Non-controlling interest (38) 19
Altech equity holders (18) 234
Total comprehensive income for the year (56) 253
Basic earnings per share (cents) 216 536
Diluted basic earnings per share (cents) 213 529
NOTES
Basis of preparation
The summarised consolidated financial statements have been prepared in
accordance with the recognition and measurement criteria of International
Financial Reporting Standards (IFRS) and its interpretations adopted by the
International Accounting Standards Board (IASB) in issue and effective at 28
February 2011 and the presentation and disclosure requirements of IAS 34,
Interim Financial Reporting and in compliance with the Listings Requirements
of the JSE Limited and the AC 500 series of interpretations.
The accounting policies followed are consistent with those used in the prior
year.
Auditors` report
PKF (Jhb) Inc`s unmodified auditor`s report included in the consolidated
annual financial statements and on the summarised consolidated annual
financial statements contained in this summarised report are available for
inspection at the Company`s registered office.
% 2011 2010
Figures in R million change (Audited) (Audited)
Headline earnings per share (cents) (15) 488 571
Diluted headline earnings per share (14) 481 562
(cents)
Adjusted headline earnings per share (13) 529 605
(cents)
Diluted adjusted headline earnings per (12) 522 596
share (cents)
2011 2010
Figures in R million (Audited) (Audited)
1. Capital items
Impairment of goodwill (250) -
Impairment of property, plant and equipment (14) -
Impairment of intangible assets (11) (65)
Net profit on disposal of property, plant and 2 -
equipment
Net profit on disposal of bandwidth capacity - 23
(273) (42)
2. Reconciliation between earnings and headline
earnings
Attributable earnings 210 520
Capital items - gross 273 42
483 562
Tax effects of adjustments (3) (18)
Non-controlling interest in adjustments (5) 9
Headline earnings 475 553
3. Reconciliation between headline earnings and
adjusted headline earnings
Headline earnings 475 553
Adjustments for:
Amortisation of intangible assets arising on 39 40
business combinations
IFRS 2 charge 7 -
BEE transaction costs 4 -
525 593
Tax effect of adjustments (10) (7)
Adjusted headline earnings 515 586
SUMMARISED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
2011 2010
Figures in R million (Audited) (Audited)
ASSETS
Non-current assets 2 449 2 866
Property, plant and equipment 1 027 1 051
Intangible assets, including goodwill 1 207 1 599
Non-current receivables 133 130
Deferred taxation 82 86
Current assets 2 108 2 204
Inventories 366 370
Trade and other receivables, including 1 251 1 218
derivatives
Cash and cash equivalents 491 616
TOTAL ASSETS 4 557 5 070
EQUITY AND LIABILITIES
Total equity 2 229 2 607
Altech equity holders 2 137 2 122
Non-controlling interest 92 485
Non-current liabilities 331 544
Loans 231 342
Finance lease liability - 11
Deferred income 46 96
Deferred taxation 54 95
Current liabilities 1 997 1 919
Trade and other payables, including derivatives 1 813 1 803
Warranty provisions 17 15
Bank overdraft 33 -
Taxation payable 134 101
TOTAL EQUITY AND LIABILITIES 4 557 5 070
Net asset value per share (cents) 2 193 2 179
SUMMARISED STATEMENTS OF CASH FLOWS
Year ended Year ended
2011 2010
Figures in R million (Audited) (Audited)
Cash flows - operating activities 404 514
Cash generated by operations before movements 1 072 1 164
in working capital
Movements in working capital (34) (4)
Net financial expense (55) (15)
Taxation paid (239) (305)
Cash available - operating activities 744 840
Dividends paid
- Altech equity holders (330) (313)
- Non-controlling interest (10) (13)
Cash flows - utilised in investing activities (434) (677)
Cash flows - applied in financing activities (133) (138)
Decrease in net cash and cash equivalents (163) (301)
Cash and cash equivalents on acquisition of 5 6
subsidiaries
- at the beginning of the year 616 911
- at the end of the year 458 616
SUPPLEMENTARY INFORMATION
2011 2010
Figures in R million (Audited) (Audited)
Depreciation and amortisation 285 232
Capital expenditure 264 483
Capital commitments 67 137
Lease commitments 238 235
Payable within the next 12 months: 95 93
- Property 50 50
- Plant, equipment and vehicles 45 43
Payable thereafter: 143 142
- Property 59 73
- Plant, equipment and vehicles 84 69
Net foreign exchange losses (2) (23)
Weighted average number of shares (million) 97.389 96.933
Diluted average number of shares (million) 98.677 98.342
Shares in issue at end of year (million) 97.458 97.374
Ratios
EBITDA 1 072 1 165
Operating margin (%) 8,2 10,1
ROCE (%) 32,9 35,2
ROE (%) 22,2 26,1
ROA (%) 29,8 35,3
Current ratio 1,1 1,1
Acid test ratio 0,9 1,0
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
ATTRIBUTABLE TO ALTECH EQUITY HOLDERS
Share capital Treasury Other Retained
Figures in R million and premium shares reserves earnings
Balance at 1 March 7 (292) 116 2 418
2009
Total comprehensive
income
Profit for the year 520
Other comprehensive
income
Foreign currency - - (286) -
translation
differences for
foreign operations
Total other - - (286) -
comprehensive income
Total comprehensive - - (286) 520
income for the year
Transactions with
owners, recorded
directly in equity
Contributions by and
distributions to
owners
Issue of share capital 38
Dividends to equity (313)
holders
Share-based payment - - 8 -
transactions
Total contributions by 38 - 8 (313)
and distributions to
owners
Changes in ownership
interests in
subsidiaries
Changes in ownership - - (94) -
following subscription
for additional share
capital and dilution
Total changes in - - (94) -
ownership interests in
subsidiaries
Total transactions 38 - (86) (313)
with owners
Balance at 28 February 45 (292) (256) 2 625
2010 (audited)
Total comprehensive
income
Profit for the year 210
Other comprehensive
income
Foreign currency - - (228) -
translation
differences for
foreign operations
Total other - - (228) -
comprehensive income
Total comprehensive - - (228) 210
income for the year
Transactions with
owners, recorded
directly in equity
Contributions by and
distributions to
owners
Issue of share capital 4
Dividends to equity (330)
holders
IFRS 2 change - - 6 -
Share-based payment - - 8 -
transactions
Total contributions by 4 - 14 (330)
and distributions to
owners
Changes in ownership
interests in
subsidiaries
Change in ownership - - 345 -
following dilution
Total changes in - - 345 -
ownership interests in
subsidiaries
Total transactions 4 - 359 (330)
with owners
Balance at 28 February 49 (292) (125) 2 505
2011 (audited)
ATTRIBUTABLE TO ALTECH EQUITY HOLDERS
Non- Total
controlling
Figures in R million Total interest equity
Balance at 1 March 2 249 298 2 547
2009
Total comprehensive
income
Profit for the year 520 65 585
Other comprehensive
income
Foreign currency (286) (46) (332)
translation
differences for
foreign operations
Total other (286) (46) (332)
comprehensive income
Total comprehensive 234 19 253
income for the year
Transactions with
owners, recorded
directly in equity
Contributions by and
distributions to
owners
Issue of share capital 38 38
Dividends to equity (313) (13) (326)
holders
Share-based payment 8 - 8
transactions
Total contributions by (267) (13) (280)
and distributions to
owners
Changes in ownership
interests in
subsidiaries
Changes in ownership (94) 181 87
following subscription
for additional share
capital and dilution
Total changes in (94) 181 87
ownership interests in
subsidiaries
Total transactions (361) 168 (193)
with owners
Balance at 28 February 2 122 485 2 607
2010 (audited)
Total comprehensive
income
Profit for the year 210 15 225
Other comprehensive
income
Foreign currency (228) (53) (281)
translation
differences for
foreign operations
Total other (228) (53) (281)
comprehensive income
Total comprehensive (18) (38) (56)
income for the year
Transactions with
owners, recorded
directly in equity
Contributions by and
distributions to
owners
Issue of share capital 4 4
Dividends to equity (330) (10) (340)
holders
IFRS 2 change 6 - 6
Share-based payment 8 - 8
transactions
Total contributions by (312) (10) (322)
and distributions to
owners
Changes in ownership
interests in
subsidiaries
Change in ownership 345 (345) -
following dilution
Total changes in 345 (345) -
ownership interests in
subsidiaries
Total transactions 33 (355) (322)
with owners
Balance at 28 February 2 137 92 2 229
2011 (audited)
Segment analysis
The segment information has been prepared in accordance with IFRS 8 -
Operating Segments (IFRS 8) which defines the requirements for the
disclosure of financial information of an entity`s operating segments.
The standard requires segmentation based on the Group`s internal
organisation and reporting of revenue and operating income based upon
internal accounting presentation.
In identifying its operating segments, management generally follows the
Group`s product and service lines.
Each of these operating segments is managed separately as each of these
service lines requires different technologies and other resources as well as
marketing approaches.
The measurement policies the Group uses for segment reporting under IFRS 8
are the same as those used in its financial statements, except that certain
items are not included in arriving at the operating profit of the operating
segments (amortisation of intangibles, arising on business combinations). A
new segment, Converged Services (International), was included and
comparative information was restated.
The Group operates a number of different operating segments primarily within
the Telecoms and Wireless Communications, Converged Services and
Connectivity, Multi-media & Electronics and Technology (Information
Technology) sectors. Refer to the Operational review for the major
businesses forming part of each sector.
The segment revenues and operating profit generated by each of the Group`s
reportable segments are summarised as follows:
Revenue
Year Year
ended ended Growth
2011 2010 Cur/Pyr
Rm Rm %
Altech Autopage 5 855 5 597 5
Cellular
Altech UEC Group 1 145 1 079 6
Altech Netstar Group 944 880 7
Converged Services 426 488 (13)
(International)
Other Altech Segments 1 429 1 372 8
Altech Group 9 799 9 371 5
Amortisation of - - -
intangibles
Corporate - - -
Inter-segment (148) (171) (13)
eliminations
Altech Group 9 651 9 200 5
Operating profit
Year Year
ended ended Growth
2011 OM 2010 OM Cur/Pyr
Rm % Rm % %
Altech Autopage 280 4,8 296 5,3 (5,4)
Cellular
Altech UEC Group - - 5 0,5 (100,0)
Altech Netstar Group 289 30,6 269 30,6 7,4
Converged Services 32 7,5 154 31,6 (79,2)
(International)
Other Altech Segments 230 16,1 251 18,9 (8,3)
Altech Group 831 8,5 975 10,4 (14,7)
Amortisation of (39) - (40) - (2,5)
intangibles
Corporate (5) (2)
Inter-segment - - - -
eliminations
Altech Group 787 8,2 933 10,1 (15,6)
Revenues and operating profit from segments below the quantitative
thresholds are attributable to smaller operating segments of the Altech
Group.
None of those segments has met any of the quantitative thresholds for
determining reportable segments for the reportable periods.
Quantitative thresholds have been calculated based on totals for the Altech
Group.
Inter-segment revenues represent transactions between reportable segments.
The price is set on an arm`s length basis which is eliminated on
consolidation.
See operational reviews for description of each segment.
Business combinations
Acquisitions
Acquisition of 100% interest in Swist Technology Solutions (Pty) Limited
("Swisttech")
The Group acquired 100% of the issued share capital of Swist Technology
Solutions (Pty) Limited in December 2010. The maximum purchase price is R52
million, payable in cash. The purchase price is payable as follows:
- first tranche: R30 million (Paid in December 2010)
- second tranche: R10 million
- third tranche: R2 million
- fourth tranche: R10 million.
The second, third and fourth tranches will be paid in terms of an earn-out
mechanism over three years based on after-tax profit targets for the
financial years ending February 2011, 2012 and 2013 being achieved.
The acquired business contributed revenues of R4 million and net profit
after tax of R1 million to the Group.
If the acquisition had occurred on 1 March 2010, Group revenue and net
profit after tax before allocations would have increased to R24 million and
R7 million respectively.
These amounts have been calculated using the Group`s accounting policies. A
purchase price allocation will be performed in the next financial year.
Swisttech is an Independent Software Vendor (ISV) focusing on infrastructure
and integration services, mobile services and software development and is a
major billing software vendor in the South African market.
Fair
Carrying value Recognised
amount adjustments values
Rm Rm Rm
The acquiree`s balance sheets at the
date of acquisition is as follows:
Goodwill acquired 9 - 9
Trade and other receivables 9 - 9
Trade and other payables (1) - (1)
Tax liability (1) (1)
Cash and cash equivalents 5 5
Total net assets on acquisition 21 - 21
Goodwill on acquisition 29
Interest on deferred payment terms 2
Total purchase consideration 52
Cash and cash equivalents in (5)
subsidiary acquired
Less: Amounts due to vendors (20)
Less: Unrealised interest on (2)
deferred payment terms
Net cash outflow on acquisition 25
Disposal
Disposal of 25% plus 1 share shareholding of the the Group`s interest in
Altech Netstar Group
The Group entered into an empowerment transaction where Thebe Investment
Corporation (Pty) Limited and Identity Capital Partners (Pty) Limited
acquired a 25% plus 1 share shareholding in the Altech Netstar Group
effective 1 December 2010. The transaction as announced in the 28 February
2010 annual financial statements as a post-balance sheet event was
restructured to enable the vendor funding for the empowerment shareholders.
The empowerment consortium acquired its interest in the Altech Netstar Group
for a nominal consideration. The related IFRS 2 BEE charge accounted for in
profit and loss in the current financial year was R7 million.
Post-balance sheet events
The Group has signed agreements to sell 25% plus 1 share of its interest in
Altech Alcom Motomo (Pty) Limited, Altech Alcom Radio Distributors (Pty)
Limited and Altech Fleetcall (Pty) Limited to Southern Palace Group of
Companies (Pty) Limited, effective 1 March 2011.
The empowerment consortium acquired its shareholding for a nominal
consideration.
The Group has signed agreements, effective 1 March 2011, to sell 25% plus 1
share of its interest in UEC`s South African entities to Power Matla ((Pty)
Limited, Empower a Thousand (Pty) Limited and Epiworx Investment (Pty)
Limited.
The empowerment consortium acquired its shareholding in UEC`s South African
entities for a nominal consideration.
COMMENTARY
MESSAGE TO SHAREHOLDERS
The financial year ended 28 February 2011 saw satisfactory results from most
of Altech`s operating companies. The group`s overall turnover increased by
5%, but trading conditions for certain subsidiaries were adversely affected
by subdued global and local economic conditions, as well as currency
volatility, particularly in respect of both the Rand and the Kenya shilling
- this affected both export revenues and translated results from operations
outside of South Africa, specifically.
Operating profit for the financial year was R787 million, with an operating
margin of 8,2%. Due to the factors referred to above, adjusted headline
earnings amounted to 529 cents per share (2010: 605 cents). An encouraging
factor was that the second six months of the financial year reflected
results materially better than the first six months.
Cash at year end was R458 million, with the group`s balance sheet continuing
to show considerable strength.
Impairments of R275 million, mainly in respect of the carrying value of the
group`s East African operations, were effected, to take into account their
reduced profit levels, attributable to the trading and currency factors
mentioned above and certain once-off costs which were incurred during the
financial year. As a result of this non-cash adjustment, basic earnings per
share amounted to 216 cents.
A highlight of the financial year has been BEE ownership transactions
relating to three of Altech`s major sub-groups, Altech Netstar, Altech Radio
and Altech UEC. These have involved restructurings of the sub-groups
concerned, to facilitate vendor-financed empowerment mechanisms, which have
assisted Altech`s recent achievement of a level 3 BBBEE status.
A dividend of 356 cents per share has been declared, representing an
increase of 5% over the dividend paid in respect of the previous financial
year.
OPERATIONAL REVIEWS
Telecoms
Telecoms and Wireless Communications
Altech Autopage Cellular
Despite difficult trading conditions during the first half of the financial
year, compounded by the reduction in mobile termination rates and the
disconnection of dormant and high-risk subscribers, revenues increased
compared to the prior year largely due to the growth in value-added services
and prepaid airtime vouchers.
The planned reductions in mobile termination rates, as agreed by the
industry, saw the implementation of the first reduction during the year.
This reduction had an adverse effect on revenues as well as operating
margins; however, actions to mitigate those impacts were taken, as planned.
Further reductions by the operators are to take place as per the agreed
"glide path" over the coming three years.
The acquisition of, and co-operation with, Altech Technology Concepts has
provided a platform to take various converged voice and data products and
offerings to market. Channel activities are underway within both
organisations to leverage the products and solutions developed.
Subscriber acquisitions remained strong at 183 960 gross connections for the
period, although slightly down from the prior year largely due to the
difficult trading conditions as well as the after-effects of the
organisational restructuring. The latter half of the year did see an
improvement across all channels.
Altech Netstar Group
The group recorded a growth in billable subscriber vehicles from 467 963 to
505 358 units. Profit before tax grew by 13,4% year-on-year.
The Group underwent a restructuring during the latter part of the year,
which saw a 13% reduction in personnel, contributing towards significant
cost savings that will materialise in the next reporting period. The
reduction was primarily in areas of duplicated services in regional offices.
Simultaneously, a corporate restructuring to facilitate the introduction of
the Altech Netstar Group`s new BEE partners, Thebe Investments Corporation
(Pty) Limited and Identity Capital Partners (Pty) Limited, was accomplished.
Altech Netstar Stolen Vehicle Recovery (SVR)
SVR reached a total of 436 917 billable subscriber vehicles, on the back of
new vehicle sales which gained strong momentum towards the end of the
financial year, representing an increase of 6,8% for the year. This growth
must be viewed within the context of a slight migration of subscriber
vehicles from SVR to Fleet Management, which has recorded a more robust
growth as detailed in the next section.
There is a growing trend in First World countries for insurance companies to
use driver behaviour as a risk rating engine. This is known as insurance
telematics. We expect this trend to also take hold in South Africa, where we
have already witnessed elementary forms of driver behaviour products offered
by Altech Netstar and the competition. Far more sophisticated systems are
available overseas and Altech Netstar recently concluded a deal with OCTO
Telematics, the global leader in insurance telematics. This agreement will
enable Altech Netstar to offer insurance telematics services to the market
and is expected to bolster the SVR business in years to come as insurance
companies pursue additional services over and above stolen vehicle recovery.
Altech Netstar Fleet Solutions (ANFS)
ANFS achieved a 16% growth in billable subscribers to close the year with a
base of 68 441 subscriber vehicles. A number of Provincial Government and
Municipal tenders were won, with the most significant being the City of Cape
Town, for an amount of R65 million, representing a total of 5 000 vehicles.
The full implementation of this project will begin during the first quarter
of the new financial year.
Altech Netstar International (ANI)
Investigations into a significant potential acquisition in Latin America
were ultimately terminated by Altech Netstar due to inadequate prospective
returns. We continue to search for international opportunities. Sales
through the existing footprint in Africa remained stable. Our expansion into
Cote d`Ivoire was unfortunately delayed by political turmoil in that
country, but we anticipate establishing operations in other countries in
Africa within the near future.
Altech Netstar Traffic (ANT)
The rate of take-up of traffic services by the on selling channels (such as
Motor Manufacturers, Cellular Handset Manufacturers and Portable Navigation
Device Manufacturers) was somewhat disappointing, but is expected to improve
in the year ahead. Good progress was made in developing a media traffic
solution that allows traffic congestion to be visually displayed in 3-D
format on TV and we are optimistic of our prospects in interesting a major
TV channel to adopt this product.
Altech Technology Concepts (ATC)
ATC focused its efforts during the second half of the year on the
implementation of its new network and managed services which went live in
February 2011. The network was built to cater for redundancy and resiliency
requirements and this has been evidenced by positive feedback from both the
media and customers.
Despite ATC`s internal focus on its new network and services developments,
the overall business still achieved more than 40% growth in revenue. ATC has
also invested significantly in additional systems and sales and technical
resources to support the expected growth for the next financial year. ATC is
now perfectly positioned to capitalise on converged voice and data
opportunities and expects significant growth in these areas in the coming
financial year.
ATC will specifically target the SME and corporate markets through both
direct and indirect sales channels. A focused channel partner programme will
be launched during the year to support this drive. The consumer market will
be addressed by Altech Autopage and other partners.
Converged Services and Connectivity
An important milestone was achieved in this sub-group with the incorporation
of a new holding company for Altech Alcom Matomo, Altech Alcom Radio
Distributors and Altech Fleetcall and the introduction of a BEE consortium,
as ownership partners with Altech in respect of these companies` South
African assets and activities.
Altech Alcom Matomo (AAM)
AAM provides a number of specialised mission-critical radio, broadband and
telemetry products and solutions for various customers. The company again
recorded a solid performance, despite an adverse market environment,
experiencing on-going customer growth in the SADC region, with key projects
for police services.
A contract with the FIFA 2010 World Cup Organising Committee, to provide
digital TETRA communications inter-linked across all stadiums for the
duration of the event, proved to be a resounding success. Over 2 000 users
benefited from the secure solution which was professionally supported by
constant on-site engineering personnel.
Buying contracts for intelligent remote terminal units were awarded by the
national power utility with an initial order already fulfilled, and the
balance of the national roll-out planned across the contract term. Further
buying contracts have been awarded by both the City of Cape Town and
Ekurhuleni Metropolitan Municipality for the supply of TETRA technology
equipment. Promising opportunities are emerging for other national agencies.
Altech Alcom Radio Distributors (AARD)
AARD recorded a stable performance and was again amongst Motorola`s top
distributors for Europe, Middle East and Africa, notwithstanding challenging
trading conditions locally.
Digital radio sales continued to flourish in the marketplace, with various
sectors adopting the technology. Software-based radio applications support
further expansion of the product range.
The wireless broadband product portfolio continues to grow and gain market
share amongst users in South and southern Africa.
Altech Fleetcall (AF)
AF maintained its position as a leading radio network operator, providing
superior and reliable national network coverage. The company successfully
increased its subscriber base, whilst expanding and upgrading the network in
order to improve national coverage and exploit new opportunities.
Major achievements included providing a national voice communication
solution to the FIFA 2010 World Cup Organising Committee, in conjunction
with Altech Alcom Matomo, in addition to implementing radio communication
services to the Gautrain Rapid Rail Link. The first phase of the Gautrain
project provided communication services between OR Tambo International
Airport and the Gautrain Sandton station, whilst phase two was to provide
communication services between Sandton and Park stations, as well as
communication services between Marlboro and Hatfield stations. Both phases
were successfully installed and commissioned during the year, in accordance
with AF`s contractual milestones.
AF`s financial performance for the financial year was better than expected,
building on the growth achieved in the preceding financial year. The focus
for the new financial year is to develop and deploy an overlay digital
network infrastructure. This will increase coverage, enhance the customer
value proposition and assist in exploiting synergies that exist with other
Altech Group companies.
Altech Stream East Africa (ASEA)
ASEA had a challenging year. There was substantially increased competition
within the telecommunications and data broadband sectors generally, as
evidenced by major reductions in the published profitability of East
Africa`s listed companies in these fields of activity.
These background circumstances were triggered primarily by the introduction
of cheaper, large-volume international submarine cable connectivity with
East Africa, which largely replaced the more expensive satellite-based
gateway traffic during the reporting period, in addition to the entry of new
operators who tended to reduce prices in order to gain market share.
Management of ASEA is confident that within the near future the disruptions
caused by these events will diminish, the market will stabilise and the ASEA
Group will benefit from the overall substantial increase in data broadband
traffic which will result from these developments.
Significant changes took place in the portfolio managed by ASEA through
clearer segmentation of business focus and management restructuring. Carrier
bandwidth sales were positive and the full SEACOM bandwidth acquired has now
been utilised. At least 25% of the TEAMS bandwidth capacity held by ASEA is
now also utilised.
Altech Data International (ADI) (Mauritius)
ADI performed to expectations, with all SEACOM bandwidth being sold.
Kenya Data Networks (KDN)
KDN experienced a shortfall in expected revenues, which combined with
increased depreciation on projects completed, had a negative trading impact.
However, the overall market position is still very positive and KDN is well-
positioned to capitalise on this. Recent large and long-term infrastructure
and support contracts with cellular operator Bharti-Airtel are indicative of
this potential.
KDN`s new Data Centre in Nairobi will begin operations in the first quarter
of the new financial year and has already contracted major corporate and
public sector clients. This will enhance profitability and growth for KDN
going forward.
KDN has been refocused to participate exclusively in the carrier market and
this has seen a positive market reaction from the majority of the
alternative network providers (ISPs) in Kenya.
Swift Global (Kenya) (Swift)
It has been a year of consolidation and rationalisation for Swift across its
products and services. The company is now focused as an alternative network
provider and purchases most of its connectivity from KDN.
Infocom Uganda (Infocom)
Infocom is the leading Internet Service Provider (ISP) brand in Uganda and
is recognised as a technologically-strong service entity. It also holds
important telecommunications infrastructure and service licensing rights
within Uganda.
In addition to its existing Wi-Fi and WiMax network business, Infocom is
starting to generate strong revenue from distributing undersea data cable
capacity to Uganda. This also provides the vital link between KDN and Altech
Stream Rwanda. Infocom returned to profitability during the financial year.
Altech Stream Rwanda (ASR)
ASR is a start-up broadband Network Operator and Internet Service Provider
(ISP) which was granted Internet and gateway licences in June 2007. The
business has completed the roll-out of an outdoor Wi-Fi network for
consumers and a WiMax network for corporate customers, both covering most of
Kigali, the capital city. The company did well in providing carrier services
during the reporting period, exceeding its profitability targets.
MULTI-MEDIA AND ELECTRONICS
Altech UEC (UEC)
Despite the global economic slow-down, UEC is starting to see the benefits
of investing in developing technologies and products for the Digital Pay TV
industry. Local demand for set-top-boxes (STBs) remains firm while exports
to Africa, Australia, Middle East, Europe and India are growing steadily.
Additional investments have been made in local manufacturing plant and
equipment and a total of 2,7 million STB units were produced during the
year.
Ahead of the South African Digital Migration (DTT) programme, UEC has
developed a terrestrial STB and has been participating in trials with all
potential operators. Coupled with this opportunity, UEC has developed the
"MediaGate" concept which allows movies from a kiosk located in retail
outlets, or other central points such as post offices, to be downloaded and
played from a USB storage device via a DTT STB in the home. This concept
will open up a new market in the telecommunications arena as converged
technologies increasingly become a customer requirement.
The Australian Digital Migration project has commenced and UEC Australia has
been contracted to participate and has already supplied 60 000 STBs into
this market.
The UEC Group has undertaken a corporate restructuring to facilitate the
introduction of a BEE consortium, led by Power Matla (Pty) Limited,as
ownership partners in UEC`s African operations, whilst separating UEC`s
other international operations and IPR into a different structure which is
100% owned by the Altech Group.
Arrow Altech Distribution (AAD)
A proactive response from AAD`s management to the generally difficult market
and economic conditions in South Africa has resulted in excellent
operational results for the year.
Positive contributions from AAD`s entire product range have resulted in AAD
achieving revenue, profit and market share growth for the year.
AAD has entered into a distribution agreement for specialist products to
service the military and aerospace market. The transfer of technology
thereunder was completed during February 2011 and the full contribution from
this activity will be realised in the new financial year.
TECHNOLOGY (INFORMATION TECHNOLOGY)
Altech ISIS
Altech ISIS met expectations for the year and has strengthened its position
with existing customers. The company is well-positioned to generate strong
revenue and income growth going forward. Its innovative real-time converged
customer care and billing solution, supported by its project management,
business analysis and systems integration capabilities, will cement its
position as a reliable and reputable supplier of turnkey business support
systems.
Altech West Africa
Located in Lagos, Nigeria, Altech West Africa is the predominant supplier of
prepaid cellular vouchers for all the major telecommunications operators in
the country. Its financial performance was negatively affected by delays in
large customer orders compounded by late delivery and commissioning of
certain manufacturing equipment. It is expected that order flow will
normalise going forward.
The project to add manufacturing facilities to initialise and personalise
chip-card products for Nigerian tele-communications network operators and
financial service providers has been completed, with the pipeline for these
products already exceeding 2,2 million cards. The supply of Altech`s e-
Security range of products and servicesin West Africa has been slower than
originally envisaged due to the long sales cycles involving customer
education for the monitoring and intrusion detecting product range. It is
expected that with the region`s increasing integration into the
international banking infrastructure, uptake of these e-Security products
and services will steadily increase.
Altech Card Solutions (ACS)
ACS has experienced an excellent trading performance, surpassing all
expectations. This was driven by growth in the supply of EFT Point-of-sale,
PIN-pad end-to-end solutions and the supply of electronic security solutions
supported by its fully PCI and EMV compliant security hosting operation
centre. Instant and central issuance card personalisation solutions and
integrated financial transaction services performed as expected.
Altech NuPay
Altech NuPay exceeded all of its profit targets, despite the global economic
downturn. The launch of its co-branded NuCard product range has surpassed
all expectations, with excellent prospects for continued future growth. It
is expected that this new product line will assist clients in leveraging
their own infrastructure to offer value-added products and services.
Swist Technology Solutions (Swisttech)
Swisttech, acquired by Altech with effect from 1 January 2011, is a provider
of data integration and data management solutions and services and
complements the products provided by Altech ISIS. Its blue-chip customer
base is synergistic with the Altech Information Technology Group`s overall
customer base and is well placed to meet demand for sustainable, reliable
supplies. Its integration with the Group has been successfully completed.
CORPORATE FINANCE TRANSACTIONS
Salient transactions during the reporting period under review were as
follows:
Acquisition
- Altech has acquired 100% of the equity in Swist Technology Solutions (Pty)
Limited ("Swisttech"). Swisttech is an Independent Software Vendor (ISV)
focusing on infrastructure and integration services, mobility services and
software development and is a major billing software vendor in the South
African market. The maximum purchase consideration is R52 million, of which
R30 million was paid up-front in cash, with the balance being payable over
three years, dependent on specific and agreed profit targets being achieved.
Empowerment Transactions
- Altech Netstar (Pty) Limited has implemented an empowerment ("BEE")
transaction whereby Thebe Investment Corporation (Pty) Limited and Identity
Capital Partners (Pty) Limited acquired a combined 25% plus 1 share equity
shareholding in the Netstar Group. This transaction reflected certain
amendments to the previously-reported structure, to facilitate its
implementation and certain group efficiencies, but the financial effects and
substance thereof remain unchanged. The total value of the assets involved
in this empowerment transaction was in excess of R1,5 billion.
The international business and intellectual property of the Altech Netstar
Group have been retained and remain wholly-owned by Altech.
- Altech has recently entered into a further empowerment transaction whereby
a consortium of BEE partners led by Power Matla (Pty) Limited will acquire
an effective 25% plus 1 share equity stake in the Altech UEC sub-group`s
African operations. The total value of the assets involved in this
empowerment transaction is R509 million.
The international business of Altech UEC outside of Africa and the
intellectual property of Altech UEC have been retained and remain wholly-
owned by Altech.
- Altech has entered into an empowerment transaction whereby the Southern
Palace Group of Companies (Pty) Limited ("Southern Palace") has acquired an
effective 25% plus 1 share equity holding in the holding company for the sub-
group consisting of Altech Alcom Matomo, Altech Alcom Radio Distributors and
Altech Fleetcall. Southern Palace is an industrial holding company with
investments in telecommunications, transport, automotive, equipment
manufacturing, steel and metal recycling.
The vendor-financed value of the assets concerned amounted to approximately
R405 million.
Any international business of the sub-group concerned outside of South
Africa and its intellectual property have been retained and remain wholly-
owned by Altech.
- Altech has agreed to acquire the 25% plus 1 share equity holding of
Pamodzi Investment Holdings (Pty) Limited ("Pamodzi") in Altech Information
Technologies (Pty) Limited ("Altech IT"), the holding company for Altech`s
information technology sub-group.
The purchase price for the interest concerned is R37,5 million, payable in
cash, and the shares will be acquired, ex any dividend, to be paid by Altech
IT in respect of the financial year ended 28 February 2011.
This transaction will be followed shortly by a further vendor-financed
empowerment transaction involving Altech IT and which will include the
recently acquired Swisttech operation.
ALTECH TRANSFORMATION
During the year Altech was awarded a consolidated level 3 BBBEE verification
status by an accredited verification agency. The company achieved a 110%
procurement recognition level, 28,6% black ownership and 13,2% black female
ownership, scoring maximum points in these areas.
Altech was also rated the 7th most empowered company in the ICT sector by
the Financial Mail Empowerdex Top Empowered Companies in South Africa
survey, was rated number 6 of the top empowered ICT companies, number 7 of
the top companies that procure from black-owned and empowered companies and
the number 3 ICT company that procures from black-empowered companies.
Altech was rated as the number one company on Skills Development - this was
achieved through the success of the Altech Academy. Altech also completed
several important empowerment ownership transactions involving key operating
subsidiaries and assets.
Altech is committed to transformation and empowerment through skills
enhancement, representative shareholding and widespread development of
disadvantaged communities. The company is proud to have achieved its target
of a level 3 BBBEE rating, ahead of the Altron Vision 2012 Transformation
timetable.
OUTLOOK
Altech is confident that it will return to previous profit growth patterns
in the future.
The Altech Group`s participation in the South African and Australian digital
migration programmes, its East African data centre and network expansion
activities, the ICT sector`s convergence opportunities and the expansion of
its annuity income base (currently at 84%) are all favourable for future
prospects and growth.
This forecast has not been reviewed or reported on by Altech`s external
auditors.
Furthermore, Altech will continue to pursue globalisation opportunities
through acquisition and trading activities.
DECLARATION OF ORDINARY DIVIDEND NO 68
Ordinary dividend number 68 of 356 cents per share (2010: 339 cents) for the
year ended 28 February 2011 is declared payable to ordinary shareholders
recorded in the register at the close of business on 30 May 2011. The
timetable for the payment of the dividend is as follows:
Last day to trade cum dividend Friday, 20 May 2011
Trading ex-dividend commences Monday, 23 May 2011
Record date Friday, 27 May 2011
Payment date Monday, 30 May 2011
Share certificates may not be dematerialised or rematerialised between
Monday, 23 May 2011 and Friday, 3 June 2011, both days inclusive. The
certificated register will be closed for this period.
ANNUAL GENERAL MEETING
The company`s 65th annual general meeting will be held in the Boardroom,
Altech Corporate Offices, 79 Central Street, Houghton on Wednesday, 20 July
2011 at 15h00. Further details on the company`s annual general meeting will
be included in Altech`s annual report to be posted to shareholders on or
before 29 June 2011.
On behalf of the board
Dr Hilton Davies Craig Venter Dr John Carstens
(Non-Executive Chairman) (Chief Executive (Chief Financial
Officer) Officer)
19 April 2011
Directors:
Dr HK Davies (Chairman)#
CG Venter (Chief Executive Officer)
Dr JEW Carstens (Chief Financial Officer)
PMO Curle*, ML Leoka#,
R Naidoo#, M Sindane#
ZJ Sithole#, AMR Smith*#
RE Venter#, Dr WP Venter#
* British #Non-executive
Secretaries:
Altech Management Services (Pty) Limited
Sponsor:
Investec Bank Limited
Altech
(Incorporated in the Republic of South Africa)
Registration number: 1946/020415/06
Share code: ALT
ISIN: ZAE000015251
www.altech.co.za
Date: 20/04/2011 08:00:04 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
