| Wed 28 Feb 2001, 0:00 | | Grintek Limited Interim Results |
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GRINTEK LIMITED
Reg. No. 1955/000013/06
INTERIM REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2000
TURNOVER UP 14%
PROFIT BEFORE TAX UP 45%
HEADLINE EARNINGS UP 33%
GROUP INCOME STATEMENTS
Unaudited Unaudited
half-year half-year Audited
ended ended year ended
31 December Increase/ 31 December 30 June
2000 (Decrease) 1999 2000
R000 % R000 R000
Turnover 612 996 14 539 099 1 076 284
Cost of sales 515 565 13 454 544 860 454
Gross profit 97 431 15 84 555 215 830
Administration and selling
expenses 46 452 9 42 721 95 360
Earnings before financing costs,
taxation depreciation and
amortisation ("EBITDA") 50 979 22 41 834 120 470
Depreciation (6 172) (2) 6 307) (12 042)
Amortisation (2 858) 83 (1 565) (2 414)
Operating profit 41 949 24 33 962 106 014
Interest received 6 750 156 2 632 11 881
Profit before financing
costs 48 699 33 36 594 117 895
Financing costs (1 300) (62) (3 433) (7 835)
Financing costs on
capitalised leases (1 975) 511 (323) (2 268)
Share of associated company
results 1 045 (816) (521)
Exceptional items - - - (6 149)
Profit before taxation 46 469 45 32 022 101 122
Taxation 14 526 74 8 345 22 547
Profit after taxation 31 943 35 23 677 78 575
Attributable to outside
shareholders of subsidiaries 398 22 1 916
Earnings 31 545 33 23 655 76 659
BALANCE SHEET
Unaudited Unaudited Audited
half-year half-year year
ended ended ended
31 December 31 December 30 June
2000 1999 2000
R000 R000 R000
ASSETS
Non-current assets 130 528 103 795 123 099
Fixed assets 84 776 62 875 79 654
Development projects 26 126 26 877 24 898
Investments (unlisted 7 854 4 548 6 206
Deferred taxation asset 9 021 4 109 8 540
Loans and long-term receivables 2 751 5 386 3 801
Current assets 763 716 505 219 611 104
Inventories 146 652 194 416 114 699
Trade and other receivables 454 784 216 254 260 081
Advance payments 21 891 405 17 705
Cash and cash equivalents 140 389 94 144 218 619
894 244 609 014 734 203
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders' equity 268 099 164 190 208 562
Minority interest 21 863 19 571 21 465
Total equity 289 962 183 761 230 027
Non-current liabilities 25 423 61 547 68 454
Debentures - 35 296 35 296
Long-term borrowings 25 423 26 251 33 158
Current liabilities 578 859 363 706 435 722
Interest bearing 4 056 5 894 4 274
Trade and other payables 344 113 243 035 187 717
Advance receipts 156 694 54 228 152 711
Provisions 45 608 45 953 49 137
Shareholders for dividend 6 345 4 160 10 465
Current taxation 22 043 10 436 31 418
894 244 609 014 734 203
CASH FLOW STATEMENT
Unaudited Unaudited Audited
half-year half-year year
ended ended ended
31 December 31 December 30 June
2000 1999 2000
R000 R000 R000
Operating activities (55 427) 15 675 150 408
Cash generated by operations 52 217 41 043 110 036
Income from investments 6 750 2 632 11 881
Working capital requirements (77 462) (17 587) 49 417
Financing costs (3 275) (3 756) (10 103)
Taxation paid (23 192) - (7)
Dividends paid (10 465) (6 657) (10 816)
Investing activities (21 950) (29 276) (48 663)
Fixed assets - net investment (18 067) (16 376) (35 268)
Development projects (4 085) (9 618) (10 335)
Investments 202 (3 282) (3 060)
Financing activities
Shareholder funding 35 296 - 2 040
Long-term borrowings - net (38 915) 17 221 24 128
Net change in cash and cash
equivalents (80 996) 3 620 127 913
Cash and cash equivalents 217 329 84 630 86 432
- at beginning of year 214 345 84 630 84 630
- disposal of business and
currency adjustments 2 984 - 1 802
Cash and cash equivalents at end
of period 136 333 88 250 214 345
EARNINGS AND SHARE PERFORMANCE
Unaudited Unaudited
half-year half-year Audited
ended ended year ended
31 December Increase/ 31 December 30 June
2000 (Decrease) 1999 2000
R000 % R000 R000
Earnings 31 545 33 23 655 76 659
Profit on sale of assets (4) (117) 23 (3 598)
Exceptional items - - 6 149
Attributable taxation and
minority share 1 (6) (772)
Headline earnings 31 542 33 23 672 78 438
Trading losses from discontinued
operations (net of taxation) - - 2 317
Headline earnings for
continuing operations 31 542 33 23 672 80 755
Share performance from continuing operations
- headline earnings per
ordinary share (cents) 12.1 6 11.4 38.7
- fully diluted headline
earnings per ordinary
share (cents) 10.8 24 8.7 28.7
Total dividend per ordinary
share (cents) 2.2 2.0 6.8
- interim 2.2 10 2.0 2.0
- final 4.8
Number of ordinary shares
in issue (thousands)
- at end of period 288 395 208 010 211 010
- weighted average 260 705 208 010 208 422
- fully diluted 300 089 294 729 294 495
Net asset value per ordinary
share 93.0 78.9 98.8
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
GROUP
Unaudited Unaudited Audited
half-year half-year year
ended ended ended
31 December 31 December 30 June
2000 1999 2000
R000 R000 R000
Stated capital 122 090 84 754 86 794
Balance at beginning of year 86 794 84 754 84 754
Ordinary shares issued 35 296 - 2 040
Non-distributable reserves 3 345 4 870 4 304
Balance at beginning of year 4 304 4 870 4 870
Transfer to distributable reserves - - (770)
Currency translation differences (959) - 204
Distributable reserves 142 664 74 566 117 464
Balance at beginning of year 117 464 54 958 54 958
Earnings attributable to ordinary
shareholders 31 545 23 655 76 659
Ordinary dividends (6 345) (4 160) (14 625)
Deferred taxation on property
revaluations - - (298)
Transfer to non-distributable
reserves - 113 770
Ordinary shareholders' interest 268 099 164 190 208 562
COMMENTS
The directors of Grintek are pleased to announce the Group results for the six
months to 31 December 2000. Compared with the corresponding period in the
previous financial year, earnings increased by 33 per cent and profit before
tax rose by 45 per cent on a turnover that increased by 14 per cent. Fully
diluted headline earnings per share for continuing businesses showed an
improvement of 24 per cent to 10,8 cents per share, and an interim dividend of
2,2 cents per share has been declared.
BUSINESS REVIEW
Telecommunications
Profitability was well-maintained in core areas of the business while
fully-expensed investment continued in fields of consulting and networking. A
more diverse and broader product offering greatly assisted the business to
expand its customer base during the period under review. Partnership
agreements were concluded with Juniper, Clarent and Cienna for next generation
network solutions and with Moseley for point-to-point radio technology.
Exclusive agreements have also been concluded with Hypercom in the field of
electronic funds transfer and point-of-sale (EFTPOS) solutions, and with
Paragea for VSAT satellite communication systems.
Industrial Electronics
The DC Power business, which supplies regional telecommunications operators
with in-house designed solutions, succeeded in securing long-term supply
contracts for telecommunications power systems. These supply contracts
contributed greatly to the turnaround of this business in the reporting period.
The Antenna and Aviation businesses are performing to expectations.
Defence Electronics
The financial performance of these businesses improved significantly during the
review period and this trend is expected to continue. A record order book as
well as increased acceptance in export markets provides medium- to long-term
stability. The Group's partnering strategy and previous investment in R & D
contributed greatly towards success in penetrating new international markets.
Prospects
Opportunities in the market are exciting, and the increased technology and
solutions base of the telecommunications market provides Grintek Telecom with
the means to show continued growth. The main contributions are expected to
come from new business based on established strategic partnerships in
e-commerce, corporate systems and next generation technologies that will lead
growth in future years.
The Group is well placed to gain from opportunities that will arise from the
licensing of the second national operator as well as from the infrastructural
rollout associated with the granting of the third cellular licence.
Improved levels of business in the industrial electronics market are expected
to continue and will be further enhanced as local and international government
structures proceed with the deregulation of electricity supply and the
associated revenue management.
Further medium-term contracts for the supply of in-house designed defence
electronic systems to local and international customers are in the process of
being concluded.
Greater access to new international markets for the Group's products and
services will lead to an increase in export revenue.
The Group is in a position to enhance its organic growth through the
acquisition of synergistic businesses in the telecommunications field.
FINANCIAL PERFORMANCE
Working capital
The control over cash resources remains a key aspect of the business. Cash
generated from operations amounted to R52,2 million (1999 - R41,0 million).
Cash absorbed by increases in working capital amounted to R77,5 million (1999 -
R17,6 million). The largest portion (79 per cent) of trade receivables
outstanding is in respect of current invoicing.
Investing activities absorbed cash resources of a further R22,0 million (1999 -
R29,3 million).
Conversion of Debentures
On 19 July 2000, seven million "D" debentures were converted into Grintek
ordinary shares at the option of the debenture holder and the remaining 70 384
885 debentures into Grintek ordinary shares on 11 September 2000.
Basis of Accounting
These consolidated, condensed interim financial statements are prepared in
accordance with AC127 and Schedule 4 of South African Companies Act (Act No.
61 of 1973 as amended). The accounting policies are consistent with those used
in the annual financial statements for the year ended 30 June 2000.
Comparative figures
Comparative figures have been restated where necessary to ensure a more
meaningful presentation of the financial results.
Capital expenditure
Capital expenditure for the Group during the six months ended 31 December 2000
was R18,2 million (1999 - R18,9 million). Capital expenditure amounting to a
further R27,0 million (1999 - R26,5 million) has been authorised of which R7,4
million (1999 - R14,3 million) has not been contractually committed.
Contingent liabilities
At 31 December 2000 contingent liabilities amounted to R12,7 million (1999 -
R2,6 million) which includes guarantees for banking facilities granted to
Associate Companies amounting to R9,5 million (1999 - R0,6 million).
DECLARATION OF DIVIDEND NO. 69
Notice is hereby given that ordinary dividend no. 69 of 2,2 cents per share for
the half- year ended 31 December 2000 has today been declared payable to
holders of ordinary shares registered in the Company's books as at 23 March
2001. The register of members will be closed from 24 March 2001 to 30 March
2001, both days inclusive to determine which members qualify for the dividend.
The dividend paid is subject to conditions, which are available for inspection
at the registered office of the Company. Dividends will be paid by electronic
transfer to members' bank accounts on or about 6 April 2001 or where this
method of payment is not mandated, dividend warrants will be posted.
STRATE
Grintek Limited has been notified by the JSE Securities Exchange that we have
been selected to transfer the company's share capital to the electronic STRATE
"Share Transactions Totally Electronic" environment as from 16 April 2001.
This is the date from which investors' shares can be converted into an
electronic record in order to become eligible to settle in the STRATE
environment. Trading for electronic settlement begins on 7 May 2001 and from
this date there is a legal requirement for investors to deposit their shares
with a CSDP or qualifying stockbroker prior to selling them in order for the
trade to settle in STRATE. This means that with effect from 7 May 2001
investors will not be able to sell their Grintek Limited shares unless they
exist in electronic form in the STRATE environment. Electronic settlement of
trades in Grintek Limited shares will take place for the first time on 14 May
2001. Investors have previously been informed of these important dates and are
urged to convert their shares to the STRATE environment in the interests of
efficiency and security.
Any queries shareholders may have should be referred to STRATE on 0800 004 727.
For and on behalf of the board
NR Kunene SA Grobbelaar
Chairman Managing Director
27 February 2001
REGISTERED OFFICE/TRANSFER SECRETARIES
44 Oak Avenue Mercantile Registrars Limited
Highveld Technopark 11 Diagonal Street
Centurion Johannesburg 2001
E-mail: info@grintek.com PO Box 1053
www.grintek.com Johannesburg 2000
DIRECTORS
NR Kunene* (Chairman) SA Grobbelaar (Managing Director) JR McAlpine* P
Moholi* M Msimang* GJ Royston* AN Saulez* Dr EW Schumann EE Strauss GE
Swanepoel
* Non-executive directors
A Member of KUNENE TECHNOLOGY LIMITED
