| Tue 8 May 2001, 0:00 | | Power Technologies Limited Preliminary Results Ann |
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Power Technologies Limited
Preliminary Report for the year ended 28 February 2001
* Foreign revenue up to 27 % of total
* Operating income up 20 %
* HEPS improved in difficult market
Financials
The directors are pleased to announce that under difficult trading conditions
NAV, headline earnings, operating income and turnover reflected an improvement
over the prior year.
Group turnover increased by 36,7% to R3,35 billion (R2,45 billion), of which 15
% was attributable to acquisitions, primarily in the international arena.
Operating income increased by 20 % to R197 million (R164 million),
notwithstanding the difficult conditions in the local market. HEPS increased
by 3,4 % to 48,2 cents (46,6 cents).
Net investment income has decreased significantly over the previous year as a
result of offshore acquisitions, our share buy-back programme and as changes in
our business environment necessitated increased investment in inventories and
receivables as a competitive advantage to increase sales volumes.
Exceptional items primarily represent the loss on disposal of the lighting
business.
Acquisitions and Divestitures
A significant milestone in our globalisation strategy was achieved with the
acquisition in October 2000 of Cables de Comunicaciones Zaragoza S.L (Spain),
the leading Spanish metallic telecommunication and data cable manufacturer.
This acquisition further reduces our dependency on the local market and has
strengthened our ability to serve telecommunications customers worldwide.
During the course of the year the Altron Group restructured its offshore
investments, resulting in the UK based battery distributor, Dynamic Batteries
and Alcobre Cables, a significant Portugal based cable manufacturer, now being
directly held by Powertech. These interests, which were previously equity
accounted, have been consolidated for the full year.
The non-core, loss making U-Lite Luminaire business was disposed of at the end
of December 2000.
Subsequent to year end, agreement was reached to acquire the Power Engineers
distribution transformer business from NEI, subject to a satisfactory due
diligence and approval of the Competition Commission.
Opportunity to build on the group's successful empowerment initiatives
continues, with possibilities in a number of businesses being explored.
Business Activities
The group has been restructured under Power Electronics and Telecommunications
segments to focus management and streamline business reporting.
Segmental Performance
(R million) Telecommunications Power Electronics
2001 2000 2001 2000
Total sales 871 317 2 495 2 134
Operating profit 88 37 109 127
Share of net profits of associates - - 21 20
Net assets 173 182 1 233 1 006
Power Electronics
A key driver for growth in electrical infrastructure will be the introduction
of the Regional Electricity Distributors (REDs). Government has already
concluded the demarcation of relevant municipal boundaries. When the long
awaited rationalisation of the electricity distribution industry into REDs is
implemented, product and service demand from the infrastructure market should
improve.
Low GDFI spending in the South African economy resulted in continued adverse
market conditions within the building and construction sectors. This impacted
trading and necessitated downsizing and rationalisation programmes,
particularly in the low-voltage power cable manufacturing facilities in
Gauteng. These actions are showing benefits and, coupled with an improving
market outlook, bode well for the future.
While other businesses in the power electronics segment were adversely affected
by the difficult market conditions, the transformer business has again exceeded
all expectations with another exceptionally good year. Export sales accounted
for 70 % of the power transformer division's turnover. The black empowered
distribution transformer business has performed well for the second successive
year and continues to hold a healthy order book.
Powertech's equity accounted investment in Voltex Holdings Limited, jointly
controlled with the Bidvest Group Limited, reported a satisfactory performance.
As part of our customer-centric drive, strategic alliances with major customers
and suppliers have been forged, providing value added service in addition to
manufactured product. Several such long-term alliances with major customers in
the mining, industrial and metropolitan markets have been successfully
concluded.
The development of value added services to customers in the industrial and
automotive battery markets continues. The concept of supplying DC packaged
power systems and solutions has been well received by the market, as it has
been elsewhere in the world. We are actively pursuing business that will
provide these value added services.
Telecommunications
During the period under review, the telecommunications cable business has seen
extensive growth in demand in international markets for both fibre-optic and
metallic cables. Significant export and local orders for metallic cable
resulted in both the Zaragoza (Spain) and Markman (South Africa) facilities
operating to full capacity. Fibre-optic cable orders from local customers
continued below expectation. However, the group was successful in receiving
accreditation with several international telecommunication companies and was
able to secure profitable export orders, which have offset shortfall in local
demand.
In the area of renewable energy, sales of solar systems, rectifiers and DC
power supply systems have been buoyant. The recent award of the third cellular
licence, the expansion of the existing cellular telecommunication network and
the pending award of the second fixed line telecommunication service licence
should have a positive impact on our businesses serving these markets.
Globalisation
In addition to foreign acquisitions, the globalisation strategy includes the
identification of foreign growth markets which can be serviced from the group's
strong base in South Africa. Foreign revenue in the year under review has again
reflected significant growth increasing to R907 million (R411 million) and
constitutes 27% of turnover in the period under review.
Ordinary dividend number 24
Notice is hereby given that dividend number 24 of 16 cents (15 cents) per share
has been declared in respect of the year ended 28 February 2001. The dividend
is payable on or about Friday 8 June 2001 to shareholders registered on Friday
1 June 2001.
Directorate
Tony Trahar resigned from the board following his appointment as Chief
Executive of Anglo American. His alternate, Richard McBride, Chairman of the
Powertech Audit Committee also resigned during the year.
Following the appointment of Robert Venter as Chief Executive Officer of the
Altron Group on 1 March, he relinquished his position as Chief Executive, but
remains a member of the board.
We wish him, Tony Trahar and Richard McBride well in their new positions and
wider responsibilities.
Norbert Claussen, who has served the group for the past five year as Chief
Executive Officer of the Battery group, was appointed to the board and as Chief
Executive Powertech from March 2001.
Adv Dali Mpofu, Altron Group Executive - Corporate Affairs, and Peter Wilmot
were appointed to the board; the latter as Chairman of the Audit Committee as
well. We welcome these gentlemen; their varied skills and experience will
undoubtedly add value to the group.
Outlook
The long-term demand for the group's products is expected to continue. Reduced
interest rates have already had a positive impact on building plans passed. An
increase in enquiries for infrastructural products indicates improvement in the
economy.
The welcome deregulation and liberalisation in both the telecommunications and
power electronic markets will provide further opportunities for the group,
broadening the customer base and reducing our dependency on local single
customer industries. Similar deregulation internationally, together with our
globalisation strategy, will reduce our exposure to the sub-Saharan area.
Ongoing investment in manufacturing technologies and human resource development
is being made to be competitive in local and world markets and sustain export
growth.
With some short term challenges, Powertech is well positioned for growth in the
future.
On behalf of the board
Dr John Maree Norbert Claussen Grant Scrutton
Chairman Chief Executive Financial Director
7 May 2001
The full year end report is available on the company website at
www.powertech.co.za and the JSE news service SENS and will be posted to
shareholders on or about 30 May 2001.
Directors: Dr JB Maree (Non-Executive Chairman), N Claussen (Chief Executive),
MC Berzack, L Boyd (Alt L Hauptfleisch), WS McCarroll*, DC Mpofu, GM Rochussen,
GM Scrutton, GJ Trollope, RE Venter (Alt PD Redshaw*), Dr WP Venter, PL Wilmot
(* British)
Business address Transfer Secretaries
PO Box 228, Sloane Park 2152, South Africa Mercantile Registrars Limited
Telephone +27 11 706 7184 PO Box 1053, Johannesburg 2000
Telefax +27 11 706-1036 Telephone + 27 11 370 5000
e-mail: info@powertech.altron.co.za Telefax + 27 11 370 5721
Website: www.powertech.co.za
Audited consolidated preliminary financial results for the year ended 28
February 2001 and dividend announcement
Income statement Figures R000
Year Year
% ended ended
Change 28.02.01 28.2.00
Revenue 36.7% 3,351,581 2,451,019
Operating income 19.9% 197,051 164,385
Investment income 34,655 45,393
Finance costs (8,006) (1,673)
Exceptional items (Note 1) (23,591) 3,825
Income before taxation 200,109 211,930
Taxation 47,463 51,677
Income after taxation 152,646 160,253
Attributable to outside shareholders (36,429) (29,225)
Attributable earnings 116,217 131,028
Basic earnings per share (cents) 43.2 47.7
Headline earnings per share(cents)3.4% 48.2 46.6
Dividend per share(cents) 6.7% 16.0 15.0
Weighted average number of
shares in issue(000)
(adjusted for own shares held
by the group) 269,076 274,493
Notes:
1. Exceptional items
Net amortisation of
negative and positive goodwill 5,785 -
Net(deficit)/surplus on
disposal of operations
and investments (12,837) 13,667
Capital profit on sale of property 1,440 -
Impairment losses (9,900) -
Closure and rationalisation costs (7,433) (8,342)
Other (646) (1,500)
(23,591) 3,825
2. Reconciliation between earnings and
headline earnings
Attributable earnings 116,217 131,028
Exceptional items - gross 23,591 (3,825)
139,808 127,203
Tax effect of above adjustments (7,690) -
Outside shareholders'terest (2,316) 605
Headline earnings 129,802 127,808
3. The group changed its accounting policies for land and buildings and
goodwill. Previous revaluations of land and buildings were reversed and
additional depreciation was provided in the year to Feb 2000.
Effective from 1 March 2000, goodwill is capitalised and amortised over its
useful life. Comparative figures have not been restated for this change.
The accounting policies and methods of computation adopted in this report are
consistent with statements of Generally Accepted Accounting Practice.
4. Diluted earnings per share and diluted headline earnings per share are not
materially different from basic earnings per share and headline earnings per
share respectively.
Balance Sheet Figures in R000
As at As at
28.2.01 29.2.00
ASSETS
Non-Current assets 642,288 596,119
Fixed assets 426,892 347,644
Negative goodwill (24,136) -
Investments and Loans 215,628 233,425
Deferred recoverable taxation 23,904 15,050
Current assets 1,729,204 1,272,068
Inventories 712,583 581,352
Accounts receivable 822,507 523,229
Net cash and cash equivalents 194,114 167,487
Total assets 2,371,492 1,868,187
Equity and Liabilities
Ordinary shareholders' interest 1,201,825 1,127,654
Outside shareholders' interest 151,159 131,027
Non-current liabilities and provisions 94,441 40,025
Deferred taxation 13,117 18,460
Current liabilities 910,950 551,021
Total equity and liabilities 2,371,492 1,868,187
Net asset value per share (cents) 450.8 410.7
Shares in issue at end of period (000)
adjusted for own shares
held by the group) 266,592 274.595
Statement of changes in equity
Figures in R000
Year ended Year ended
28.2.01 29.2.00
Balance at start of period 1,172,865 1,120,516
Changes in accounting policy (45,211) (43,707)
1,127,654 1,076,809
Share issues 421 509
Attributable earnings 116,217 131,028
Dividends (42,659) (41,217)
Net gains and losses not recognised
In the income statement 24,005 (39,475)
Foreign currency translation 24,005 (6,320)
Goodwill on acquisition - (29,923)
Other movements - (3,232)
Balance at end of period 1,225,638 1,127,654
Own shares acquired (23,813) -
1,201,825 1,127,654
Cash flow statement
Year Year
ended ended
28.2.01 29.2.00
Operating activities 33,092 (64,961)
Cash generated by operations 256,173 227,589
Net investment income 12,150 29,095
Cash effect of exceptional items (8,073) (9,842)
Changes in working capital (106,384) (142,648)
Taxation paid (67,763) (94,740)
Cash available from operating activities 86,103 9,454
Dividends paid, including to
outside shareholders (53,011) (74,415)
Investing activities (125,565) (30,498)
Financing activities 25,782 (12,455)
Net funds utilised (66,691) (107,914)
Net cash inm acquisitions 93,318 1,925
Net movement in year 26,627 (105,989)
POWERTECH CAPITALISING ON GLOBALISATION
Power Technologies Limited, a member of the Altron Group and the largest power
electronics and telecommunication group in Southern Africa, has reported a
substantial increase in turnover of 36.7 percent to R3.35 billion (R2.45
billion) for the year ended 28 February 2001. During the same period operating
income increased by 20 percent to R197 million (164 million), while headline
earnings per share increased by 3.4 percent to 48.2 cents (46.6 cents).
The Board has declared a dividend of 16 cents (15 cents).
Norbert Claussen, who has taken over the reins at Powertech as Chief Executive
after Robert Venter's appointment as Chief Executive of Altron, says, "The
Group was able to achieve double digit growth in both revenue and operating
income despite challenging market conditions. However, low GDFI spending and
slow levels of activity in the local telecommunications sector have impacted
our business. Despite these market conditions our operations have managed to
perform to expectation. We have further streamlined our operations and pursued
a focussed rationalisation programme. These actions taken are already bearing
fruit and have impacted our results positively."
He said net investment income had decreased significantly over the previous
year as the group utilised its cash for an offshore acquisitions, a share
buy-back arrangement, and investment in working capital to facilitate foreign
business.
Claussen said Powertech's equity accounted investment in the publicly listed
Voltex Holdings Limited, jointly controlled with the Bidvest Group Limited, had
reported a satisfactory performance.
"We have accelerated our globalisation drive and I am pleased to report
significant progress," said Claussen. "In October 2000 we bought Cables de
Comunicaciones Zaragoza SL, Spain, the leading Spanish metallic communication
and data cable manufacturer. This acquisition further reduces our dependency on
the local market and strengthens our position to serve telecommunications
customers worldwide."
He said exports and foreign operations together had shown significant growth,
increaasing to R 907 million (R411 million). "We anticipate that foreign
revenues for the coming financial year will account in excess of a third of out
total turnover."
Concerning actual operations, Claussen said that one of the key drivers in the
electrical infrastructure sector was the pending restructuring of the
electricity distribution industry into Regional Electricity Distributors
(REDs). "The implementation of these REDs will improve the demand for
Powertech's power electronics product and services from the infrastructure
sector."
He said that while the other businesses in the power electronics segment had
been adversely effected by the difficult market condtions, the transformer
business under ABB Powertech had again exceeded all expectations with yet
another exceptionally good year. "Export sales accounted for 70 percent of the
power transformer turnover." Said Claussen, "and for the second successive year
our black empowered distribution transformer business, Desta Power Matla,
reported a strong performance. It also holds a healthy order book."
Claussen emphasised Powertech's thrust to become customer-centric and reported
the conclusion of several strategic alliances with major customers and
suppliers in the mining, industrial and metropolitan market sectors. "This is
largely due to Powertech's initiative to constantly improve its offer of value
added services complementing its manufactured products."
He said that during the year under review the telecommunications cable business
had seen extensive growth in demand in international markets for both optic and
metallic cables. "Signficant export and local orders resulted in both the
Zaragoza (Spain) and Port Elizabeth facilities operating to full capacity. We
were sucessful in receiving accreditation with several international
telecommunication companies which resulted in profitable export orders. This
has offset the shortfall in local demand for fibre optic cables."
Claussen points out that in the areas of renewable energy, sales of solar
system and DC power supply systems have been bouyant. The recent developments
in the expansion of the telecommunication infrastructure should also have a
positive impact on Powertech's businesses serving these markets.
Powertech continues its drive to include the previously disadvantaged in the
mainstream economy of the country. Claussen said a memorandam of understanding
has been signed with Ikwezi Telecommunications, a division of Ikwezi Group
Holding Company (Pty) Ltd, in respect of the equity involvement in Powertech's
renewable energy business. "Once this deal has been signed and sealed, we can
welcome the third empowerment group with an equity stake in one of our
businesses." he said. "In addition to this we are supporting SMMEs wherever
possible and financially viable. For the year under review we have sourced
goods and services in excess of R55 million from black empowered enterprises. A
number of our customers are today requesting that all participants in the value
chain are fully supportive of empowerment. Eskom, for example, has established
a point system to rate their suppliers in terms of this and we are pleased that
Aberdare Cables and Desta Power Matla have become fully accredited as
"empowerment suppliers" Eskom."
Moving on to the future, Claussen commented, "The long term demand for our
products and services will continue in the years ahead. The reduction in
interest rates has already had a positive impact on building plans passed and
recently published economic indicators for the building and construction
industries show positive trends in the economy. In the telecommunication arena
we are well placed to meet the infrastructural requirements of the national
service providers. Despite the short term market challenges we are confident
that Powertech can benefit from improved market conditions and look ahead to a
future of growth."
ENDS
The JSE-listed Powertech group has an annual turnover of R3.4 billion and
employs 6,900 people. More information on the Powertech group is available on
the Internet at www.powertech.co.za
For additional information contact:
Norbert Claussen - Chief Executive Powertech
Cell 083-230-4140
or Regula Niehus - Communications Manager Powertech.
Telephone 706-7184 or,
Cell 083-442-6777
