| Thu 15 Dec 2011, 15:03 | | ATR - Africa Cellular Towers Limited - Unaudited i |
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ATR - Africa Cellular Towers Limited - Unaudited i 15 Dec 2011
ATR
ATR
ATR - Africa Cellular Towers Limited - Unaudited interim results for the six
months ended 31 August 2011 and renewal of cautionary announcement
AFRICA CELLULAR TOWERS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2000/027374/06)
JSE code: ATR ISIN: ZAE000088084
("ACTOWERS" or "the company" or "the Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2011 AND RENEWAL OF
CAUTIONARY ANNOUNCEMENT
Condensed Consolidated Statements of Comprehensive Income
Unaudited Reviewed Audited
6 months 6 months 12 months
August August February
2011 2010 2011
R`000 R`000 R`000
Revenue 109 187 102 739 202 128
Gross loss (18 432) (23 368) (11 635)
Other income 1 094 3 697 2 316
Operating expenses (30 217) (50 908) (76 818)
Trading loss (47 555) (70 579) (86 137)
Loss on foreign exchange (1 257) (7 256)
differences (7 499)
(Loss)/gain on disposal of (667) -
fixed assets 118
Impairment of investment - - (22 032)
Impairment of goodwill - (7 532) -
Impairment of land - - (1 711)
Operating loss before (49 479) (85 367) (117 261)
interest, taxation,
depreciation and amortisation
Depreciation and amortisation (3 766) (3 041) (7 786)
Loss before interest and (53 245) (88 408) (125 047)
taxation
Net interest (paid)/received (215) 2 111 2 633
Loss before taxation (53 460) (86 297) (122 414)
Taxation (paid)/received (1 333) 2 681 (10 686)
Loss attributable to ordinary (54 793) (83 616) (133 100)
shareholders
Loss from continued operations (43 457) (56 420) (102 711)
(11 336) (27 196) (30 389)
Loss from discontinued
operations
52 (1 917) (2 904)
Other comprehensive income
Exchange differences arising
on translation of
foreign operations
Other comprehensive loss for (2 904)
the year(net of tax) 52 (1 917)
Total comprehensive loss for (54 742) (85 533) (136 004)
the year
Reconciliation of headline
loss:
Loss attributable to ordinary (54 793) (83 616) (133 100)
shareholders
Adjusted for:
Profit on sale of property, - - (118)
plant and equipment
Loss on sale of property, 667 - -
plant and equipment
Impairment of goodwill - 7 532 22 032
Impairment of land - - 1 711
Headline loss attributable to (54 126) (76 084) (109 475)
ordinary shareholders
Weighted average shares in 356 055 356 055 356 055
issue on which earnings per
share are based (`000)
Fully diluted weighted average 356 055 356 055 356 055
shares in issue (`000)
Loss per share (cents) (15.4) (23.5) (37.4)
Continuing operations (13.3) (15.9) (28.9)
Discontinued operations (2.1) (7.6) (8.5)
Headline loss per share (cents) (15.2) (21.4) (30.8)
Continuing operations (13.2) (13.7) (22.2)
Discontinued operations (2) (7.7) (8.6)
Fully diluted loss per share (15.4)
(cents) (23.5) (37.4)
Continuing operations (13.3) (15.9) (28.9)
Discontinued operations (2.1) (7.6) (8.5)
Fully diluted headline loss per (15.2)
share (cents) (21.4) (30.8)
Continuing operations (13.2) (13.7) (22.2)
Discontinued operations (2) (7.7) (8.6)
Condensed Consolidated Statements of Financial Position
Unaudited Reviewed Audited
August August February
2011 2010 2011
R`000 R`000 R`000
ASSETS
Non-current assets 66 232 78 314 61 144
Property, plant and equipment 59 243 54 013 54 724
Goodwill - 14 500 -
Intangible assets 6 86 48
Other financial assets 6 983 6 110 6 297
Deferred taxation - 3 605 75
Current assets 116 805 171 040 139 418
Inventories 38 023 40 977 37 212
Other financial assets - 166 -
Current tax receivable 94 6 161 95
Construction contracts and 20 945 26 284 37 545
receivables
Trade and other receivables 43 740 56 326 46 434
Cash and cash equivalents 14 003 41 126 18 132
Non-current assets of disposal 4 098 - -
group
187 135 249 354 200 562
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity and liabilities
Equity and reserves 85 753 191 902 140 495
Share capital 218 652 219 589 218 652
Reserves (26 975) (26 040) (27 026)
Retained earnings (105 924) (1 647) (51 131)
Non-current liabilities 22 433 22 534 19 970
Instalment sale obligation 13 180 15 941 12 414
Deferred taxation 2 658 - 957
Mortgage bond 6 595 6 593 6 599
Current liabilities 78 562 34 918 40 097
Current taxation payable 674 2 101 1 710
Other financial liabilities 26 446 - -
Current portion of instalment 10 430 4 965 5 817
sale obligation
Trade and other payables 40 999 27 848 32 565
Current portion of mortgage bond 4 4 5
Bank overdraft 9 - -
Liabilities of disposal group 387 - -
TOTAL EQUITY AND LIABILITIES 187 135 249 354 200 562
Shares in issue at period end 370 287
(`000) 370 287 370 287
Net asset value per share 37.9
(cents) 23.2 51.8
Net tangible asset value per 37.9
share (cents) 23.2 47.9
Condensed Group Statements of Changes in Equity
Share Foreign Revaluation Retained Total
capital currency reserve earnings equity
and translation R`000 R`000 R`000
premium reserve
R`000 R`000
Balance 1 219 152 (24 122) - 81 969 276 999
March 2010
Changes in - - - -
equity:
Share
capital -
issued
Share-based 437 - - 437
payment
reserve -
Total - (1 917) - (83 616) (85 533)
comprehensiv
e loss for
the year
Balance 31 219 589 (26 040) - (1 647) 191 902
August 2010
Balance 1 218 652 (27 026) - (51 131) 140 495
March 2011
Changes in - - - -
equity:
Share
capital -
issued
Share-based - - - -
payment
reserve -
Total - 51 - (54 793) (54 742)
comprehensiv
e loss for
the year
218 652 (26 975) - (105 924) 85 753
Balance at
31 August
2011
Condensed Group Cash Flow Statements
Unaudited Reviewed Audited
6 months 6 months 12
August August months
2011 2010 Februar
R`000 R`000 y 2011
R`000
Cash flows from operating (24 728) 1 433 (14
activities 826)
Cash flows from investing (11 084) (12 629) (19
activities 582)
Cash flows from financing 31 683 (8 177) (7 959)
activities
Change in cash and cash (4 129) (19 373) (42
equivalents 367)
Cash and cash equivalents at 18 132 60 499 60 499
beginning of period
Cash and cash equivalents at 14 003 41 126 18 132
end of period
Segmental Reporting
Unaudited Reviewed Audited
6 months 6 months 12 months
August August February
2011 2010 2011
R`000 R`000 R`000
Gross revenue
Continued operations 110 194 89 730 182 125
Power Lines 71 759 5 792 56 955
Cellular Towers 7 023 65 364 82 761
Manufacturing 31 412 18 574 42 409
(1 007) 13 009 20 003
Discontinued operations
Equipment Shelters 1 563 2 879 9 429
Fibre Optics (2 570) 10 130 10 574
Trading (loss)/profit
Continued operations (37 411) (54 303) (58 879)
Power Lines (28 908) (793) 7 207
Cellular Towers (13 502) (31 273) (56 637)
Manufacturing 4 999 1 417 (9 449)
Elimination - (23 653) -
(10 810) (23 807) (27 139)
Discontinued operations
Equipment Shelters (6 759) (7 438) (8 613)
Fibre Optics (4 051) (16 369) (18 826)
(Loss)/profit before
interest and taxation
Continued operations (41 865) (62 707) (110 298)
Power Lines (29 876) (24 779) (1 801)
Cellular Towers (13 986) (37 026) (72 226)
Manufacturing 1 997 (902) (20 071)
(11 380) (25 700) (52 978)
Discontinued operations
Equipment Shelters (7 329) (9 152) (10 510)
Impairment of investment - - (22 032)
Fibre Optics (4 051) (16 548) (20 436)
Depreciation and
impairment
Continued operations (3 570) (2 748) (29 366)
Power Lines (644) (122) (7 976)
Cellular Towers (369) (1 049) (11 515)
Manufacturing (2 557) (1 577) (9 875)
(195) (294) ( 2 164)
Discontinued operations
Equipment Shelters (195) (228) (488)
Impairment of investment - - (22 032)
Fibre Optics - (66) (1 716)
OVERVIEW
Further to the trading statement and cautionary announcement issued on 17
November 2011, ACTOWERS presents its interim results for the six months ended 31
August 2011 ("interim period"). Despite an extensive turnaround process
undertaken by the Group since May 2010 and debt funding secured from the
Industrial Development Corporation (IDC) to the amount of R99 million in March
2011, macro-economic factors and continued depressed trading conditions
negatively impacted the Group`s results. Although ACTOWERS reports a slight
improvement, the results unfortunately did not meet the Board`s expectations.
Various restructuring options are currently being implemented by the Group in
order to restore the company to profitability. Should these options not be
successfully concluded, there will be material uncertainty created with regards
to its going concern status.
The focus on developing the Power Lines Division into the core business of
ACTOWERS has also proven more challenging than expected. The reasons for this
being the difficult nature of the business as well as the dependency on Eskom to
award tenders timeously. The Cellular Towers Division has been successful over
this period in securing some contracts within South Africa as well as Ghana, but
not to the levels previously reported. The Manufacturing operation is above
expectations and secured lucrative third party work during this past six months.
FINANCIAL RESULTS
Revenue increased by 6.3% to R109.2 million, mainly on the back of new power
line contracts and third party work through the manufacturing plant.
The gross loss reduced to R18.4 million from R23.4 million for the 2010 interim
period. The gross loss was mainly attributed to the losses made on certain power
line contracts as well as the overall low revenue through-put compared to the
fixed overhead cost structures.
The trading loss of R47,6 million compared to the R70.6 million trading loss
reported for the 2010 interim period has substantially reduced as a direct
result of the cost cutting initiatives and the closure of the Fibre Optic and
Equipment Shelters Divisions.
The net interest received position of R2.1 million changed to a net interest
paid position of R0.2 million as a result of the IDC debt secured earlier in the
year.
Trade debtors decreased to R42.9 million at 31 August 2011 (31 August 2010:
R50.1 million). Debtor days have improved from 89 days at 28 February 2011 to 72
days at 31 August 2011, primarily as a result of the shift in receivables from
the Cellular Towers Division to the Power Lines and Manufacturing Divisions. No
additional doubtful debt provision was raised for this interim period.
The statement of financial position reflects a net tangible asset value of 23.2
cents as at 31 August 2011, a 38.8% decrease from the 37.9 cents reported at 28
February 2011. As a result of the working capital requirements of the Group,
ACTOWERS is currently in strategic discussions with the IDC and its bankers
regarding the re-negotiation of existing and further funding facilities. The
outcome of these negotiations will be disclosed once an agreement has been
reached.
DIVISIONAL REVIEW
Continued operations
Power Lines Division
The significant increase in revenue to R71.7 million from R5.8 million in the
corresponding 2010 interim period, is as a result of securing contracts in the
transmission and distribution market. A big disappointment was that despite
securing these contracts, the division was unable to complete some of these
projects on time and experienced operational inefficiencies, which resulted in
the division reporting a trading loss of R28.9 million. Although Eskom`s roll-
out plans are well documented, Eskom is far behind with their roll-out targets.
The delay in the awarding of tenders timeously affected the pipeline of this
division. The outlook for this division is depressed as a result of the fierce
competition being experienced in this market as well as the high capital
requirements to operate such a division.
Cellular Towers Division
The Cellular Towers Division`s performance was impacted by the decision to
restructure this business into a low cost flexible unit that is selective in the
type of contracts and countries it operates in. The division also did not secure
a sufficient number of contracts. As a result, revenue for this division
decreased significantly to R7.0 million (2010: R65.4 million). The trading loss
position improved to R13.5 million (2010: R31.3 million trading loss) as a
result of the strategy adopted, exacerbated by the uncompleted loss-making
contract in Chad, which remains a challenge. The contracts currently being
secured by this division are mainly in South Africa and Ghana at profitable
margins. ACTOWERS has established good relationships with reputable
international groups that have sufficient funding, the order book for this
division could be increased.
Manufacturing Division
A decision was taken to split the manufacturing operations out into a separate
"reporting" division. As a result of the manufacturing plant achieving high
accreditation, it has secured some lucrative third party work for the
manufacturing of power line towers. Revenue increased by 69.1% to R31.4 million
(2010: R18.6 million) resulting in a trading profit of R5.0 million compared to
R1.4 million in the comparative period.
Discontinued operations
Fibre Optic and Equipment Shelters Divisions
Due to the ongoing operational losses with no future prospects for these
divisions, the Group decided to close the Fibre Optic as well as the Equipment
Shelters Divisions and hence the classification as "discontinued".
PROSPECTS
The outlook for ACTOWERS is strained by the inability to secure sustainable long
term contracts within the power lines industry, the depressed trading
environment as well as the working capital constraints being experienced by the
Group. Although the size of the transmission and distribution market is well
documented, unless there is a marked improvement in trading conditions in the
short to medium term for the Power Lines Division, coupled with the successful
restructuring of existing funding facilities and/or conclusion of an equity
transaction with a strategic equity partner to recapitalise the business, the
Group may face some tough decisions pertaining to the business as a whole.
ACTOWERS is still facing a variety of challenges and all efforts are being made
by management to find a strategy that will protect shareholder value.
ACTOWERS has been successful in securing Cellular construction contracts in
South Africa. A general improvement in the cellular division is being
experienced.
The Manufacturing division has seen a marked improvement in the number of third
party orders specifically in power line manufacturing and substation steel. The
prospects for this division has further been boosted by the announcement that
power line towers are now categorised as a designated product and that power
line towers will have to be secured in South Africa instead of being imported.
Currently there are only three active recognised manufacturers of power lines in
South Africa of which ACTOWERS is one.
STATEMENT ON GOING CONCERN
The financial results for the six months ended 31 August 2011 have been prepared
on the going concern basis. The directors believe that the Group is technically
solvent, however, the ability of the Group to honour its commitments and provide
adequate working capital to sustain its operations are limited and largely
dependent on a combination of factors including, restructuring of the overhead
cost structure, securing additional funds and/or refinancing certain operations
as well as a return to profitability. Should the above not be successful it
will create a material uncertainty about the ability of the group to continue as
a going concern.
The Group`s ability to continue on a going concern basis is dependent on the
restructuring of the Group and the Group`s funding requirements which could
involve the following:
* The Group is applying to the IDC to restructure the current financing
facilities. The Group is not endeavouring to increase the overall
facilities of R99m, but to restructure the facilities to increase the
working capital funding from the asset based financing facility. The Group
has only utilised R34.4m of the R99m IDC facility at the end of August 2011
and R39.96m at the end of November 2011;
* Increasing liquidity into the Group through utilising increased banking
facilities;
* The Group is in discussions with strategic industry players for a possible
equity transaction whereby funds could be injected in the Group;
* Reducing the overhead structure of the Group even further; and
Secure sustainable work either in the Cellular, power lines or steel
processing industry.
BOARD CHANGES AND EVENTS AFTER THE REPORTING DATE
Mr. CJJ Kruger resigned as a Non-Executive Director with effect from 17 August
2011 and Mr. PN Swart, the Financial Director, resigned with effect from 12
December 2011.
No other subsequent events, of a material nature, occurred between the financial
period end and the date of this report.
BASIS OF PREPARATION OF THE UNAUDITED INTERIM RESULTS
The unaudited consolidated interim results have been prepared in accordance with
the Framework Concepts and the Measurement and Recognition Requirements of the
International Financial Reporting Standards ("IFRS") and containing information
required by the IAS 34 Interim Financial Reporting; the AC 500 standards as
issued by the Accounting Practice Board and in compliance with the Listings
Requirements of the JSE Limited and in the manner required by the Companies Act
No 71 of 2008, as amended.
No audit and/or review were performed on these interim results.
The results are prepared on the historical cost basis, with the exception of
certain financial instruments which are measured at fair value. The accounting
policies and method of measurement and recognition applied in preparation of the
reviewed results are consistent with those applied in the group`s audited annual
financial statements for the previous year ended 28 February 2011.
The interim financial statements were prepared under the supervision of the
Finance Director, Mr. PN Swart, CA(SA) who has subsequently resigned on 12
December 2011.
DIVIDEND POLICY
In line with Group policy and having regard to the loss incurred, the Group will
not pay a dividend for the interim period ended 31 August 2011. The dividend
policy will be reviewed on a continuous basis.
RENEWAL OF CAUTIONARY
Shareholders are referred to the announcement dated 17 November 2011 and are
advised that the funding requirements are not yet finalised and that the going
concern prospects have been dealt with above. Shareholders are however advised
that ACTOWERS have entered into discussions with a third party and accordingly,
shareholders are advised to exercise caution when dealing in their shares on the
JSE Limited until a further announcement is made.
J de Villiers SM Radebe
Chief Executive Officer Chairman Audit Committee
15 December 2011
CORPORATE INFORMATION
Independent Non-Executive Directors: MM Patel (Chairman) and SM Radebe
Non-Executive Director: V Nkonyeni
Executive Directors: J de Villiers (Chief Executive Officer), NWJ van der Mescht
and DM van Staden
Registration number: 2000/027374/06
Registered address: 10 Tennyson Drive, Tulisa Park, Johannesburg
Postal address: PO Box 1078, Jukskei Park, 2153
Company Secretary: Premium Corporate Consulting Services (Pty) Limited
Telephone: (011) 907 7364
Facsimile: (011) 869 9107
Transfer Secretaries: Computershare Investor Services (Pty) Limited
Designated Adviser: Vunani Corporate Finance
These results are available on the company`s website www.africacellular.co.za.
Date: 15/12/2011 14:30:01 Produced by the JSE SENS Department.
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