| Wed 25 Apr 2012, 7:23 | | ALT - Allied Technologies Limited - Results for year ended 29 February 2012 |
|
ALT
ALT
ALT - Allied Technologies Limited - Results for year ended 29 February 2012
Allied Technologies Limited
Member of the Altron Group
Incorporated in the Republic of South Africa (Registration number:
1946/020415/06)
Share code: ALT
ISIN number: ZAE000015251
("Altech" or "the company")
Highlights
Revenue of R9,97 billion
EBITDA before capital items of R919 million
Statement of financial position remains strong
Return on shareholders` equity at 21,2%
Dividend of 248 cents per share declared
Summarised consolidated statements of comprehensive income
2012 2011
Figures in R million (Audited) (Audited)
Revenue 9 972 9 651
Earnings before interest, tax, depreciation,
amortisation and capital items
(EBITDA before capital items) 919 1 072
Depreciation and amortisation (270) (285)
Operating profit before capital items 649 787
Capital items (Note 1) (830) (273)
Results from operating activities (181) 514
Finance income 15 35
Finance expenses (74) (90)
(Loss)/profit before taxation (240) 459
Taxation (227) (201)
STC (35) (33)
(Loss)/profit for the year (502) 225
Other comprehensive income/(loss)
Foreign currency translation differences for 67 (281)
foreign operations
Other comprehensive income/(loss) for the 67 (281)
year
Total comprehensive loss for the year (435) (56)
(Loss)/profit attributable to:
Non-controlling interest (226) 15
Altech equity holders (276) 210
(Loss)/profit for the year (502) 225
Total comprehensive loss attributable to:
Non-controlling interest (208) (38)
Altech equity holders (227) (18)
Total comprehensive loss for the year (435) (56)
Basic (loss)/earnings per share (cents) (283) 216
Diluted basic (loss)/earnings per share (275) 213
(cents)
Summarised consolidated statements of financial position
2012 2011
Figures in R million (Audited) (Audited)
ASSETS
Non-current assets 1 732 2 449
*Property, plant and equipment 886 1 027
*Intangible assets, including goodwill 693 1 207
*Non-current receivables 114 133
*Deferred taxation 39 82
Current assets 2 222 2 108
*Inventories 449 366
*Trade and other receivables, including 1 497 1 251
derivatives
*Cash and cash equivalents 276 491
Assets classified as held-for-sale 135 -
Total assets 4 089 4 557
EQUITY AND LIABILITIES
Total equity 1 433 2 229
*Altech equity holders 1 600 2 137
*Non-controlling interest (167) 92
Non-current liabilities 570 331
*Loans payable 473 231
*Deferred income 51 46
*Deferred taxation 46 54
Current liabilities 2 019 1 997
*Trade and other payables, including 1 649 1 813
derivatives
*Warranty provisions 22 17
*Bank overdrafts 292 33
*Taxation payable 56 134
Liabilities classified as held-for-sale 67 -
Total equity and liabilities 4 089 4 557
Net asset value per share (cents) 1 641 2 193
Summarised consolidated statements of changes in equity
Attributable to Altech equity holders
Premium/
discount
Share on non-
capital controllin
g
and Treasu Other equity Retain
ry ed
Figures in R premium shares reserv earnin Tot
million es transactio gs al
ns
Balance at 1 45 (292) (170) (86) 2 625 2
March 2010 122
Total
comprehensive
income
Profit for the 210 210
year
Other
comprehensive
loss
Foreign
currency
translation
differences
in respect of - - (228) - - (22
foreign 8)
operations
Total other - - (228) - - (22
comprehensive 8)
loss
Total
comprehensive
(loss)/income
for the year - - (228) - 210 (18
)
Transactions
with owners,
recorded
directly in
equity
Contributions
by and
distributions
to owners
Issue of share 4 4
capital
Dividends to (330) (33
equity holders 0)
IFRS 2 charge - - 7 - - 7
on B-BBEE
transactions
Share-based - - 7 - - 7
payment
transactions
Total 4 - 14 - (330) (31
contributions 2)
by and
distributions
to owners
Changes in
ownership
interests
in
subsidiaries
Introduction 345 345
of non-
controlling
interest
Total changes - - - 345 - 345
in ownership
interests in
subsidiaries
Total 4 - 14 345 (330) 33
transactions
with owners
Balance at 28 49 (292) (384) 259 2 505 2
February 2011 137
(Audited)
Total
comprehensive
loss
Loss for the (276) (27
year 6)
Other
comprehensive
income
Foreign
currency
translation
differences
in respect of - - 49 - - 49
foreign
operations
Total other - - 49 - - 49
comprehensive
income
Total
comprehensive
income/(loss)
for the year - - 49 - (276) (22
7)
Transactions
with owners,
recorded
directly in
equity
Contributions
by and
distributions
to owners
Issue of share 1 1
capital
Dividends to (347) (34
equity holders 7)
IFRS 2 charge - - 5 - - 5
on B-BBEE
transactions
Share-based - - 11 - - 11
payment
transactions
Total 1 - 16 - (347) (33
contributions 0)
by and
distributions
to owners
Changes in
ownership
interests
in
subsidiaries
Acquisition of 20 20
non-
controlling
interest
Total changes - - - 20 - 20
in ownership
interests in
subsidiaries
Total 1 - 16 20 (347) (31
transactions 0)
with owners
Balance at 29 50 (292) (319) 279 1 882 1
February 2012 600
(Audited)
Summarised consolidated statements of changes in equity
Figures in R million Non-
controlli
ng
interest Total
equity
Balance at 1 March 2010 485 2 607
Total comprehensive income
Profit for the year 15 225
Other comprehensive loss
Foreign currency translation differences
in respect of foreign operations (53) (281)
Total other comprehensive loss (53) (281)
Total comprehensive (loss)/income
for the year (38) (56)
Transactions with owners, recorded
directly in equity
Contributions by and distributions
to owners
Issue of share capital - 4
Dividends to equity holders (10) (340)
IFRS 2 charge on B-BBEE transactions - 7
Share-based payment transactions - 7
Total contributions by and distributions to (10) (322)
owners
Changes in ownership interests
in subsidiaries
Introduction of non-controlling interest (345) -
Total changes in ownership interests in (345) -
subsidiaries
Total transactions with owners (355) (322)
Balance at 28 February 2011 (Audited) 92 2 229
Total comprehensive loss
Loss for the year (226) (502)
Other comprehensive income
Foreign currency translation differences
in respect of foreign operations 18 67
Total other comprehensive income 18 67
Total comprehensive income/(loss)
for the year (208) (435)
Transactions with owners, recorded
directly in equity
Contributions by and distributions
to owners
Issue of share capital - 1
Dividends to equity holders (12) (359)
IFRS 2 charge on B-BBEE transactions - 5
Share-based payment transactions - 11
Total contributions by and distributions to (12) (342)
owners
Changes in ownership interests
in subsidiaries
Acquisition of non-controlling interest (39) (19)
Total changes in ownership interests in (39) (19)
subsidiaries
Total transactions with owners (51) (361)
Balance at 29 February 2012 (Audited) (167) 1 433
Summarised consolidated statements of cash flows
Year Year
ended ended
2012 2011
Figures in R million (Audited) (Audited)
Cash flows (utilised in)/from operating (365) 404
activities
Cash generated by operations before 965 1 072
movements in working capital
Movements in working capital (583) (34)
Net financial expenses (59) (55)
Taxation paid (329) (239)
Cash (utilised in)/available from operating (6) 744
activities
Dividends paid
- Altech equity holders (347) (330)
- non-controlling interest (12) (10)
Cash flows utilised in investing activities (314) (434)
Cash flows from/(applied in) financing 209 (133)
activities
Decrease in net cash and cash equivalents (470) (163)
(Bank overdraft)/cash and cash equivalents (16) 5
on acquisition of subsidiaries
- at the beginning of the year 458 616
- bank overdraft at the end of the year 12 -
classified as held-for-sale
- at the end of the year (16) 458
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"), the AC500 series of interpretations as
issued by the Accounting Practices Board or its successor, IAS34: Interim
Financial Reporting and in accordance with the requirements of the Companies
Act, No 71 of 2008 of South Africa and the Listing Requirements of the JSE
Limited.
The accounting policies applied are consistent with those used in the prior
year.
This report was compiled under supervision of Dr John Carstens CA(SA), Chief
Financial Officer, and Mr Francois Verster CA(SA), Group Financial Manager.
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.
% 2012 2011
Figures in R million Change (Audited) (Audited)
Headline earnings per share (29) 347 488
(cents)
Diluted headline earnings per (30) 337 481
share (cents)
Adjusted headline earnings per (27) 388 529
share (cents)
Diluted adjusted headline (28) 377 522
earnings per share (cents)
1. Capital items
Impairment of goodwill (335) (250)
Impairment of intangible assets (300) (11)
Impairment of property, plant and (231) (14)
equipment
Net profit on disposal of 36 2
property, plant and equipment
(830) (273)
2. Reconciliation between
(loss)/earnings and headline
earnings
(Loss)/earnings attributable to (276) 210
Altech equity holders
Impairment of goodwill 335 250
Impairment of intangible assets 300 11
Impairment of property, plant and 231 14
equipment
Profit on disposal of property, (36) (2)
plant and equipment
554 483
Tax effect of adjustments (11) (3)
Non-controlling interest in (205) (5)
adjustments
Headline earnings 338 475
3. Reconciliation between headline
earnings and adjusted headline
earnings
Adjusted headline earnings have
been presented to demonstrate the
impact of some once-off events
and accounting charges on the
headline earnings of the Group.
Headline earnings is reconciled
to adjusted headline earnings as
follows:
Headline earnings 338 475
Adjustments for:
Amortisation of intangible assets 37 39
arising on business combinations
IFRS 2 charge on B-BBEE 5 7
transactions
B-BBEE transaction costs 6 4
386 525
Tax effect of adjustments (8) (10)
Adjusted headline earnings 378 515
4. Dividends
It is Group policy for dividends
to be declared after the
financial year.
Supplementary information
2012 2011
Figures in R million (Audited) (Audited)
Depreciation and amortisation 270 285
Capital expenditure 293 264
Capital commitments 10 67
Lease commitments 227 238
Payable within the next 12 months: 66 95
- property 65 50
- plant, equipment and vehicles 1 45
Payable thereafter: 161 143
- property 155 59
- plant, equipment and vehicles 6 84
Net foreign exchange losses (including FEC (26) (3)
fair value adjustment)
Ordinary shares in issue (million)
- weighted average 97.479 97.389
- diluted average 100.341 98.677
- at year-end 97.488 97.458
Ratios
EBITDA to revenue (%) 9,2 11,1
Operating profit to revenue (%) 6,5 8,2
Return on shareholders` equity (%) 21,2 22,2
Return on capital employed (%) 29,6 28,0
Return on operating assets (%) 21,3 29,8
Current ratio 1,1 1,1
Acid test ratio 0,9 0,9
Segmental 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.
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 earnings before interest, tax, depreciation
and amortisation ("EBITDA") (foreign exchange gains and losses are excluded) and
operating profit of the operating segments (amortisation of intangibles arising
on business combinations and foreign exchange gains and losses are excluded). In
the prior year the foreign exchange gains and losses were included in operating
profit and the prior year`s operating profit of the operating segments were
therefore restated.
Effective 1 March 2011 Altech Autopage Cellular (APC) purchased the business of
Altech Technology Concepts (ATC). APC`s revenue, EBITDA and operating profit
thus includes the results of ATC.
APC`s revenue, EBITDA and operating profit for the prior year was therefore
restated.
The segment revenue, EBITDA before capital items and operating profit before
capital items generated by each of the Group`s reportable segments are
summarised as follows:
Revenue EBITDA
Year Year Growt Year Year Growt
h h
ended ende Cur/P ended EBITD ende EBITD Cur/P
d yr A d A yr
2012 2011 % 2012 % 2011 % %
Rm Rm Rm Rm
Altech 1 944 6,8 335 33,2 331 35,1 1,2
Netstar 008
Group
Altech 6 5 2,8 266 4,4 294 5,0 (9,5)
Autopage 069 903
Cellular
Altech UEC 1 1 3,7 126 10,6 93 8,1 35,5
Group 187 145
Converged 396 426 53 13,4 115 27,0
Services (7,0) (53,9
Internation )
al
Other 1 1 6,0 191 13,0 223 16,1
Altech 464 381 (14,3
segments )
10 9 3,3 971 9,6 1 10,8
124 799 056 (8,0)
Amortisatio - - - - - - - -
n of
intangibles
Net foreign
exchange
losses
for the - - - (26) - (3) -
Group 766,7
Corporate 2,7 (26) - 19 -
and inter- (152) (148 (236,
segment ) 8)
elimination
s
Altech 9 9 3,3 919 9,2 1 11,1 (14,3
Group 972 651 072 )
See operational reviews for description of each segment.
Operating profit Depreciation
Year Year Year Year
ende ended Growth ended ended Growt
d h
2012 OM 2011 OM Cur/Py 2012 2011 Cur/P
r yr
Rm % Rm % % Rm Rm %
Altech 311 30,9 289 30,6 7,6 17 16 6,3
Netstar
Group
Altech 244 4,0 277 4,7 (11,9) 21 17 23,5
Autopage
Cellular
Altech UEC 54 4,5 12 1,0 350,0 24 20 20,0
Group
Converged (41) (10,4 16 3,8 (356,3 72 72 -
Services ) )
Internation
al
Other 170 11,6 216 15,6 (21,3) 28 33 (15,2
Altech )
segments
738 7,3 810 8,3 (8,9) 162 158 2,5
Amortisatio (37) - (39) - - - - -
n of
intangibles
Net foreign
exchange
losses
for the (26) - (3) - 766,7 - - -
Group
Corporate (26) - 19 - (236,8 - - -
and inter- )
segment
elimination
s
Altech 649 6,5 787 8,2 (17,5) 162 158 2,5
Group
Transaction with minorities
Acquisition of 25% shareholding of Pamodzi Investments Holdings (Pty) Limited in
Altech Information Technologies (Pty) Limited
Effective 1 July 2011 the Group acquired the 25% shareholding of Pamodzi
Investments Holdings (Pty) Limited in Altech Information Technologies (Pty)
Limited, the holding company for the Group`s information technology sub-group,
for R37,5 million in cash.
BUSINESS COMBINATIONS
Acquisitions
Acquisition of 100% interest in Eyenza Mobile Money (Pty) Limited Effective 1
September 2011 the Group acquired 100% of the issued share capital of Eyenza
Mobile Money (Pty) Limited ("Eyenza") for a nominal amount.
Eyenza is a wallet-based, mobile money payments system that is targeted to the
unbanked population of South Africa and Africa.
Acquisition of 100% interest in SetOne GmbH
The Group signed agreements with SetOne GmbH in August 2011 to acquire 80% of
the shares in the company for a maximum purchase price of Euro3,96 million.
In addition, the Altech Board approved the exercise of a call option to purchase
the remaining 20% of the shares on the same basis as the initial 80%. The call
option was exercised on 27 September 2011. The total maximum purchase price for
100% of the shares in the company is Euro4,92 million (R45 million). Euro2,52
million was payable in cash upon fulfilment of the conditions precedents and the
balance of Euro2,40 million is payable in terms of an earn-out over three years.
The effective date of this transaction was 1 October 2011.
SetOne specialises in the manufacturing, repair and servicing of digital video
broadcasting set-top box receivers. It has expertise and key skills in the
supply chain design phase and product management of these products. SetOne has
built partnerships, including licencing agreements, with key players in the
sector`s product and services value chains throughout Asia and Europe.
The maximum purchase price is Euro4,92 million, payable in cash. The purchase
price is payable as follows:
* first tranche: Euro2,52 million (Paid in October 2011).
* second tranche: Euro0,13 million (Payable October 2012).
* third tranche: Euro1,33 million (Payable October 2013).
* fourth tranche: Euro0,94 million (Payable October 2014).
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 2012, 2013 and 2014 being achieved.
The acquired business contributed revenues of R83 million and net profit after
tax of R9 million to the Group.
If the acquisition had occurred on 1 March 2011, the acquisition would have
contributed R150 million to revenue and a loss after tax of R5 million to profit
and loss.
These amounts have been calculated using the Group`s accounting policies.
The goodwill on acquisition allocated below has been calculated on provisional
numbers due to the purchase price allocation to be performed in the next
financial year.
Carryin Fair value Recognise
g d
amount adjustment values
s
Rm Rm Rm
The acquiree`s statement of
financial position at the date of
acquisition was:
Non-current assets 7 - 7
Current assets 38 - 38
Non-current liabilities (5) - (5)
Current liabilities (excluding (35) - (35)
bank overdraft)
Bank overdraft (16) - (16)
Total net assets on acquisition (11) - (11)
Goodwill on acquisition 56
Total purchase consideration 45
Bank overdraft acquired 16
Less: Amounts due to vendors (24)
Net cash outflow on acquisitions 37
Disposals
Disposal of 25% plus one share shareholding of the Group`s interest in the
operations of Altech Alcom Motomo, Altech Alcom Radio Distributors and Altech
Fleetcall
The Group entered into an empowerment transaction where Southern Palace Group of
Companies (Pty) Limited acquired a 25% plus 1 share shareholding in the
operations of Altech Alcom Motomo, Altech Alcom Radio Distributors and Altech
Fleetcall, effective 1 March 2011.
The empowerment consortium acquired its shareholding for a nominal
consideration.
Disposal of 25% plus one share shareholding of the Group`s interest in UEC`s
African business
In March 2011 the Group signed agreements to sell 25% plus one share of its
interest in UEC`s African business to PowerMatla (Pty) Limited, Empower a
Thousand (Pty) Limited and Epiworx Investment (Pty) Limited. This transaction
became effective from 1 September 2011.
The empowerment consortium acquired its shareholding in UEC`s African business
for a nominal consideration.
POST-BALANCE SHEET EVENTS
There were no post-balance sheet events to report.
ASSETS AND LIABILITIES CLASSIFIED AS HELD-FOR-SALE
On 14 February 2012 the decision was taken to sell Altech West Africa Limited
and the operation was subsequently classified as held-for-sale.
The operation did not constitute a discontinued operation.
MESSAGE TO SHAREHOLDERS
The directors present the Altech Group`s results for the financial year ended 29
February 2012.
The group`s revenue increased by 3,3% to R9,97 billion. EBITDA before capital
items amounted to R919 million, a reduction of 14,3% from the prior year.
Operating profit before capital items was 17,5% lower than that of the prior
year, mainly due to losses incurred in Altech`s operations in East and West
Africa. Adjusted headline earnings per share decreased by 27% to 388 cents, from
529 cents for the prior year.
The other operations within Altech performed to expectations, with Altech UEC
returning to profit after two years of losses.
Taking into account the losses in East and West Africa, Altech has decided to
impair the goodwill and carrying value of its East and West African investments.
Principally due to these impairments, which are accounting (rather than cash
flow) items, there was a loss before tax of R240 million.
In view of the reduced headline earnings, a dividend of 248 cents per share
(prior year: 356 cents per share) has been declared in respect of the financial
year ended 29 February 2012.
OPERATIONAL REVIEWS
Telecoms
Telecoms and Wireless Communications
Altech Autopage Cellular (AAPC)
AAPC increased its revenue over the prior year. This increase is largely
attributable to enhanced value-added services (VAS) and prepaid voucher sales.
AAPC subscriber acquisition costs are lower, with total subscriber acquisitions
at 187 624 gross and net growth of 48 221 customers. The active prepaid
subscriber base closed at 92 146 on all networks, resulting in a total AAPC base
of 1 031 995 active subscribers.
Average revenue per user (ARPU) for the financial period, including VAS, is down
on the prior year.The on-going dilution on post-paid airtime revenue, as
illustrated by the ARPU trend, is expected to continue as the networks release
new products at lower price points and heavily discounted tariffs on data, in an
increasingly competitive market. This is further affected by customers opting
for hybrid rather than open-end products at time of sale.
The process to reduce the operating costs of the business has continued, with an
overall reduction in operating expenditure during the year. On-going operating
expense management remains a key activity within AAPC, to mitigate the margin
erosion.
Altech Technology Concepts (ATC) has been successfully integrated into AAPC,
which is now well-positioned to provide Converged Solutions for the future.
Altech Netstar Group
Altech Netstar exceeded prior year`s earnings and achieved a net growth in
subscribers of 20 151 vehicles. The potential acquisition of an offshore
business in Latin America has made good progress.
Expansion into Africa has not met expectations, with delays experienced in
setting up the joint venture in Mozambique. A number of potential business
partners have been identified in East Africa.
The investment into growing the government and state-owned enterprises market is
starting to deliver promising results, with a number of mid-sized tenders
recently awarded to Altech Netstar. These efforts should enable the fleet
management activity to deliver strong results in the current financial year.
Growth expectations in the insurance telematics market were met, and monthly
connections for this activity are accelerating to a target of 2 500 per month.
Encouraging growth prospects are envisaged for Altech Netstar Traffic, with
projects in the supply of information to a leading TV station, RDS data being
tested by two OEMs, and the SANRAL tender finalisation.
Converged Services and Connectivity
Altech Alcom Matomo (AAM)
AAM provides a number of specialised mission-critical radio and telemetry
products and solutions. The company continues to meet expectations despite
adverse market conditions, and is experiencing positive customer growth in the
SADC region.
Revenue for the financial year exceeded the prior year`s, by 22,8%, and there
are substantial future business prospects, including public sector
opportunities.
Altech Alcom Radio Distributors (AARD)
AARD is a channel distributor for the Motorola product set and has regularly
featured among Motorola`s top three distributors in Europe, the Middle East and
Africa. Unit sales and revenues exceeded those of the prior year.
Digital mobile radio sales are expanding positively as the new technology is
being assimilated into the market. Software-based radio applications to enhance
the productivity of these digital systems are being explored and are expected to
support further expansion of the product range.
Altech Fleetcall (AF)
AF is a national trunked radio network operator. It provides airtime services
for wireless voice and data communication for telemetry, dispatching, alarm
monitoring, fleet management, security and many more voice and data
applications. It has its own national network infrastructure and primarily
serves customers operating fleets of vehicles and closed user groups. Net
billable connections increased by 8% year-on-year.
Altech Stream East Africa (ASEA)
Altech Converged Services International`s financial results for the year were
down on the prior year.
A key area of focus this year was resolving some of the historical issues within
Kenya Data Networks (KDN). This has taken a lot of management time but certain
of these issues have now been resolved or are in the process of being resolved.
Another key initiative is restructuring the different East African operations
into a more regionally-focused business. Closer collaboration between these
operations is already having a positive impact and is the first step in
providing regional unity and a single interface for key customers. The next step
is to look at implementing an optimal regional operating structure, which
process is currently underway.
KDN, specifically, is trading below expectations and has been heavily impacted
by the cancellation of a major client`s dark fibre business. On the positive
side, the first floor capacity of the Altech Sameer East Africa Data Centre is
fully taken up and clients have installed their equipment in the data centre.
KDN already has orders pending for the second floor capacity of the data centre.
This facility is one of the most comprehensive data centres of its kind, in the
East African region.
Across the businesses, a concerted effort is in place to enhance existing
customer relationships and to be more responsive to customer requirements. Given
the disappointing performance, the turnaround of Altech`s East African
businesses is clearly a top priority within the group and is receiving
considerable management attention. New management has made a positive impact on
KDN and this is complemented by strong management teams in Altech Stream Rwanda
(ASR), Altech Swift Global (ASG) and Infocom.
Altech Stream Rwanda (ASR)
The Kampala-Kigali link is now in operation and carries traffic for both the
government and commercial customers. This link will not only provide a
competitive advantage but also improve the quality of service delivery by ASR.
Network expansion, around access connectivity, is a priority for ASR, and this
expansion will allow it to capitalise on key market opportunities and meet its
regulatory commitments.
Infocom
Infocom, based in Uganda, is also expanding its network operations. KDN was
commissioned by Infocom to complete the Kampala-Kigali link referred to above.
The implementation of the Kampala metro network is now critical to drive high-
speed access to corporate customers and mobile operators. Infocom is maximising
its current WIMAX access infrastructure, combined with excellent customer
services. The newly-installed Kampala-Kigali fibre network will have a positive
impact not only in Uganda but also across the East African region.
Altech Swift Global (ASG)
ASG`s split of its retail and wholesale activities has been successfully
implemented, and it now focuses on delivering new services to SMME`s and
corporate customers.
ASG`s focus on cost savings continues and right-sizing to improve productivity
has been undertaken. Revenue growth is still being impacted by high levels of
churn. However, new product offerings are currently being implemented which will
provide customers with a more resilient service. Revenue growth is still the
primary focus within ASG and this is directly linked to service delivery and
customer retention. A continued focus on targeted business segments is critical
to improving the profitability of the business.
Kenya Data Networks (KDN)
As indicated above, this has been a challenging year for KDN. The new management
team, led by Mr Shahab Meshki, appointed in October 2011, is implementing a
focused strategy to get the company back to profitability and become more
externally focused. Some key projects were completed, and the new management has
implemented a five-point strategy to drive short to medium-term results. These
include: network stabilisation, cost management, key account management, skills
development and stringent corporate governance.
The successful launch of the Altech Sameer East Africa Data Centre took place at
the end of January 2012. The Kenyan Prime Minister, Raila Odinga, was the
official guest of honour at the opening.
Airtel officially launched its 3G offering during February 2012. This has been
enabled through the backhaul connectivity, provided by KDN, for 100 Airtel
sites.
Multimedia and Electronics
Altech Multimedia (incorporating Altech UEC)
Altech Multimedia continues to make progress in transforming from a
manufacturing-focused business to one encompassing the complete life cycle
management of multimedia service delivery. Its operational performance is now
approaching best-in-class industry benchmark levels. The business is focused
around four divisions: Devices (Altech UEC and Altech SetOne), Support (Altech
GDL), Services and Solutions (Altech MediaVerge). Driven by the rapid
development of fixed-line and wireless broadband in its key markets globally,
the business is experiencing convergence of digital media distribution across
multiple devices including mobile smartphones, tablets and advanced Set-Top
Boxes (STB`s).
Ahead of the implementation of the South African digital migration (DTT)
programme, Altech Multimedia`s experience in delivering DTT STB`s into the
Australian and European markets will stand it in good stead. Altech UEC
Australia has now delivered 100 000 STB`s to the Australian market for digital
migration. In October 2011, Altech acquired SetOne GmbH, a German-based
distribution, logistics, STB repair and service business focused on the DVB free
to air retail business in the central European markets of Germany, Switzerland
and Austria for DTT and Freesat services. Altech SetOne has now deployed over 1
million STB`s ahead of the European analogue switch-off, with new business
emerging in Poland, Hungary and Turkey.
Altech Multimedia`s core device business continues expanding with the growth of
the MultiChoice DSTV and new GoTV DVB-T2 terrestrial services across Africa.
Altech Multimedia continues strengthening the foundation for product and
intellectual property development with development teams in Durban,
Johannesburg, and Cape Town, in South Africa, and in Sydney, Australia, and
Bangalore, India. Supply chain capability has been enhanced with the opening of
a sourcing centre in Shenzen in Southern China using the existing Hong Kong
entity for procurement of product for the sales and marketing businesses in
Europe, Africa and Australia.
Arrow Altech Distribution (AAD)
The company has delivered a commendable performance for the financial year under
review, by achieving all time record sales and operating profit since the
formation of AAD in 1999. AAD has managed to maintain good margins in a very
competitive environment impacted by a volatile rate of exchange and selected
product shortages.
The company also successfully realigned its technical marketing department into
more focused product/technology groups. AAD expects to receive the full benefit
of this change in the current financial year. AAD achieved its strategic growth
objective of an overall 30% market share.
Information Technology
Altech ISIS (AI)
The company strengthened its position with existing customers and has acquired
additional customers during the financial year. Capitalising on its innovative,
real-time converged customer care, billing solutions, business analysis and
system integration skills, AI has expanded into market segments beyond its
traditional telecommunications client base.
Growth is expected to continue based on the solid business development pipeline
that has been created during the financial year.
Altech West Africa (AWA)
Located in Lagos, Nigeria, the company has underperformed due to margin
pressures in the voucher and scratch card businesses and the shift to extremely
low-cost, non-secure paper products. The company`s product lines have been
expanded to include supply of initialised and personalised chip-card products to
Nigerian telecommunications network operators and financial service providers.
It is expected that growth in the supply of chip-card-based products will
increase rapidly going forward.
Despite its underperformance, AWA expects to benefit from the Nigerian
government`s drive to convert the bank and retail market segments from cash-
based transacting to a card-based model.
Altech Card Solutions (ACS)
ACS has surpassed all growth expectations during the financial year. The roll
out of Eyenza, its mobile payment transaction platform, is progressing as
planned, with an expected corporate launch in the second quarter of 2012.
Altech NuPay (ANP)
ANP has improved on its prior year`s performance. The NuCard product, a prepaid
PIN-based product, has surpassed all expectations and should provide similar
growth for the future. It is intended to supplement this product with a mobile
payment channel through Eyenza, during the current financial year.
Altech Swisttech (AS)
AS increased its contribution for the financial year. Its strategy to expand
into providing mobile applications (e.g. lifestyle, gaming, communication
solutions and bespoke client applications) has resulted in the award of new
contracts. These initiatives are expected to contribute substantially going
forward, with further growth expected from existing product offerings.
ALTECH TRANSFORMATION
The Altech Group remains committed to transformation and empowerment through
skills enhancement, representative shareholding, and widespread development of
disadvantaged communities by focusing on areas with maximum long-term benefit.
Altron`s Transformation Vision 2012 sets the guidelines for developing its
people and the communities around it through education, training and skills
development, health, social welfare and job creation. Altech is proud to confirm
that the group and its operations have all achieved the targets for 2011 as set
out in the guidelines of Vision 2012 and as a result have been verified as level
3 contributors.
CORPORATE ACTIVITY
Salient transactions and arrangements involving the Altech Group during the
financial year ended 29 February 2012 are as follows:
Empowerment Transactions
* A consortium of BEE partners led by PowerMatla (Pty) Limited acquired an
effective 25% plus one share equity stake of the Altech UEC subgroup`s
African operations, on 1 September 2011. The international business of
Altech UEC outside of Africa and its intellectual property was retained as
wholly-owned by Altech.
* Southern Palace Group of Companies (Pty) Limited acquired an effective 25%
plus one share equity holding in the subgroup consisting of AAM, AARD and
AF, through a new holding company which was incorporated for this purpose,
on 1 March 2011. The international business of this subgroup and its
intellectual property was retained as wholly-owned by Altech.
Both of the above transactions were vendor-financed by Altech and facilitated by
restructuring of the subgroups concerned, enabling the empowerment consortia to
acquire their interests for a nominal consideration.
Altech acquired the 25% equity interest of Pamodzi Investment Holdings (Pty)
Limited in Altech Information Technologies (Pty) Limited (AIT), the holding
company for Altech`s information technology subgroup, on 1 July 2011. The
purchase price for the interest concerned was R37,5 million, payable in cash and
the shares were acquired without the right to receive the dividend for the prior
financial year.
Other Transactions
* As approved by Altech shareholders in a general meeting in July 2011,
Altech entered into a strategic collaboration with Intel Capital to
accelerate the adoption of broadband services in Africa in the
telecommunications, multimedia and IT sectors. The transaction includes the
investment by Intel Capital of US$5 million by way of a convertible loan at
a fixed interest rate, convertible to Altech ordinary shares, at Intel
Capital`s election, after the first anniversary thereof.
* The acquisition of Eyenza Mobile Money, referred to under the IT division
report above, took place on 1 September 2011.
* The acquisition of SetOne GmbH (SetOne) by Altech UEC, referred to in the
multimedia division report above, took place on 1 October 2011. The
acquisition involved an immediate cash outlay of Euro2.52 million, to be
followed by three annual payments totalling a maximum of Euro2.4 million,
linked to the achievement of specified profit levels by SetOne.
THE WAY FORWARD
Altech is confident that it will overcome the operational challenges in East and
West Africa and return to its normal pattern of profit growth in the future.
In this regard, Altech is reviewing its options regarding certain of its
investments in Africa, but will continue pursuing acquisition opportunities both
locally and internationally.
This outlook has not been reviewed or reported on by Altech`s external auditors.
DECLARATION OF ORDINARY DIVIDEND NO 69
Notice is hereby given that on Tuesday, 24 April 2012, Altech declared a gross
ordinary dividend (number 69) of 248 cents per ordinary share (210.80 cents per
ordinary share net of dividend withholding tax)(2011: 356 cents) for the year
ended 29 February 2012, payable on Monday, 25 June 2012 to holders of the
ordinary shares recorded in the books of the company at close of business on
Friday, 22 June 2012.
The dividend has been declared from income reserves. The company has no
secondary tax on companies credits available. The dividend withholding tax rate
is 15%.
The issued share capital at the declaration date is 97 488 109 ordinary shares
(net of treasury shares).The company`s income tax reference number is
9999480719.
The timetable for payment of the dividend is as follows:
Last day to trade cum dividend Friday, 15 June 2012
Trading ex-dividend commences Monday, 18 June 2012
Record date Friday, 22 June 2012
Payment date Monday, 25 June 2012
Share certificates may not be dematerialised or rematerialised between Monday,
18 June 2012 to Friday, 22 June 2012, both days inclusive.
CHANGE IN AUDITORS
Shareholders are advised that Altech has changed its auditors from PKF Inc. to
KPMG Inc., with effect from the 2013 financial year, subject to shareholder
approval at the Annual General Meeting to be held on 17 July 2012.
In order to be closer aligned to Altech`s parent company, Allied Electronics
Corporations and due to Altech`s global footprint, Altech`s Audit Committee has
taken a decision to change its auditors to KPMG Inc.
Altech would like to thank PKF (Inc) for its professional services over the
years.
ANNUAL GENERAL MEETING
The company`s 66th Annual General Meeting will be held the Boardroom, Altech
Corporate Offices, 79 Central Street, Houghton on Tuesday, 17 July 2012 at
13h00. 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 25 June
2012.
On behalf of the board
Moss Leoka
(Non-executive chairman)
Craig Venter
(Chief executive officer)
Dr John Carstens
(Chief financial officer)
25 April 2012
Corporate information
DIRECTORS
M Leoka (Chairman)#
CG Venter (Chief executive officer)
Dr JEW Carstens (Chief financial officer)
PMO Curle*#
AD Dixon#
R Naidoo#
SR Ntuli#
Dr HA Serebro#
M Sindane#
ZJ Sithole#
AMR Smith*#
RE Venter#
Dr WP Venter#
*British??#Non-executive
Corporate and business office
79 Central Street
Houghton 2198
Telephone: +27 (0) 11 715 9000
Telefax: +27 (0) 11 715 9048
Website: http://www.altech.co.za
Secretaries and registered office
Altech Management Services (Pty) Limited
79 Central Street, Houghton 2198
PO Box 153, Bergvlei 2012, South Africa
Telephone: +27 (0) 11 715 9000
Telefax: +27 (0) 11 715 9048
Website: http://www.altech.co.za
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street
Johannesburg 2001
PO Box 1053, Johannesburg 2000, South Africa
Telephone:+27 (0) 11 370 5000
Auditors
PKF (Jhb) Inc.
42 Wierda Road West, Wierda Valley 2196
Telephone: +27 (0) 11 384 8000
Bankers
Absa Bank Limited
Nedbank, a division of Nedcor Bank Limited
Sponsor
Investec Bank Limited
Date: 25/04/2012 07:23:01 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.
