| Wed 5 Sep 2001, 0:00 | | Grintek Limited - Preliminary Report For The Year |
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Reg. No. 1955/000013/06
Share code: GNK
ISIN code: ZAE000003067
PRELIMINARY REPORT FOR THE YEAR ENDED 30 JUNE 2001
REVENUE FROM SALES UP 11%
PROFIT BEFORE TAX UP 78%
DILUTED HEADLINE EPS UP 35%
GROUP INCOME STATEMENTS
Audited Increase Audited
2001 (Decrease) 2000
R000 % R000
Revenue from sales 1 189 479 11 1 076 284
Cost of sales 901 263 5 860 454
Gross profit 288 216 34 215 830
Selling and administration expenses 95 274 18 80 474
Development projects impaired - 14 886
Earnings before financing costs,
taxation, depreciation and
amortisation ("EBITDA") 192 942 60 120 470
Depreciation 14 406 20 12 042
Amortisation 8 393 248 2 414
Operating profit 170 143 60 106 014
Interest received 16 983 43 11 881
Profit before financing costs 187 126 59 117 895
Financing costs (4 561) (42) (7 835)
Financing costs on capitalised leases (3 603) 59 (2 268)
Share of associated companies' results 3 509 774 (521)
Exceptional items (2 074) (66) (6 149)
Profit before taxation 180 397 78 101 122
Taxation 62 595 178 22 547
Profit after taxation 117 802 50 78 575
Attributable to outside shareholders 4 491 134 1 916
Earnings 113 311 48 76 659
Group balance sheets
Audited Audited
2001 2000
R000 R000
ASSETS
Non-current assets 153 967 123 099
Fixed assets 99 555 79 654
Development projects 27 133 24 898
Unlisted investments 10 862 6 206
Deferred taxation asset 5 828 8 540
Loans and long-term receivables 10 589 3 801
Current assets 910 826 611 104
Inventories 197 601 114 699
Trade and other receivables 495 045 260 081
Advance payments 19 129 17 705
Cash and cash equivalents 199 051 218 619
1 064 793 734 203
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders' equity 351 320 219 027
Minority interest 25 956 21 465
Total equity 377 276 240 492
Non-current liabilities 31 731 68 454
Debentures - 35 296
Long-term borrowings 31 731 33 158
Current liabilities 655 786 425 257
Interest bearing 32 182 4 274
Trade and other payables 333 598 187 717
Advance receipts 178 469 152 711
Provisions 53 162 49 137
Corporate taxation 58 375 31 418
1 064 793 734 203
ABRIDGED CASH FLOW STATEMENTS
Audited Audited
2001 2000
R000 R000
Operating activities 3 571 150 408
Cash generated by operations 188 359 110 036
Income from investments 16 983 11 881
Working capital requirements (143 872) 49 417
Financing costs (8 164) (10 103)
Taxation paid (32 926) (7)
Dividends paid (16 809) (10 816)
Investing activities (56 284) (48 663)
Fixed assets - net investment (36 272) (35 268)
Development projects (12 077) (10 335)
Investments (7 935) (3 060)
- associated companies and other
investments (1 147) (6 340)
- long-term receivables (6 788) 3 280
Financing activities
Shareholders' funding 2 400 2 040
Long-term borrowings (1 427) 24 128
- raised 2 906 29 459
- repaid (4 333) (5 331)
Net increase in cash and cash
equivalents (51 740) 127 913
Cash and cash equivalents 218 609 86 432
- at beginning of year 214 345 84 630
- currency adjustments 4 264 1 802
Cash and cash equivalents at end of year 166 869 214 345
EARNINGS AND SHARE PERFORMANCE
Audited Increase/ Audited
2001 (Decrease) 2000
R000 % R000
Earnings 113 311 48) 76 659
Profit on sale of assets (167) (95) (3 598)
Exceptional items 2 074 (66) 6 149
Attributable taxation and minority share 58 108 (772)
Headline earnings 115 276 47 78 438
Trading losses from discontinued
operations (net of taxation) - 2 317
Headline earnings for continuing
operations 115 276 43 80 755
Share performance from continuing operations
- headline earnings per ordinary
share (cents) 42.0 8 38.7
- fully diluted headline earnings per ordinary
share (cents) 38.7 35 28.7
Total dividend per ordinary share paid (cents) 7.0 35 5.2
- No 68, declared 4 September 2000
(1999 - No 66) 4.8 3.2
- No 69, declared 27 February 2001
(2000 - No 67) 2.2 2.0
Dividend no 70 declared 4 September 2001,
payable 8 October 2001 5.8 21 4.8
Number of ordinary shares in issue (thousands)
- at end of year 291 395 211 010
- weighted average 274 298 208 422
- fully diluted 299 533 294 495
Net asset value per ordinary share
(cents) 120.6 16 103.8
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Audited Audited
2001 2000
R000 R000
Stated capital 124 489 86 794
Balance at beginning of year 86 794 84 754
Ordinary shares issued 37 695 2 040
Non-distributable reserves 2 400 4 304
Balance at beginning of year 4 304 4 870
Reversal of property revaluation (1 700) -
Transfer to distributable reserves - (770)
Currency translation differences (204) 204
Distributable reserves 224 431 127 929
Balance at beginning of year 127 929 61 614
Earnings attributable to ordinary
shareholders 113 311 76 659
Ordinary dividends declared (16 809) (10 816)
Deferred taxation on property revaluations - (298)
Transfer to non-distributable reserves - 770
Ordinary shareholders' equity 351 320 219 027
SEGMENTAL ANALYSIS
Revenue from sales
2001 2000
R000 R000
Telecommunications 648 689 720 709
Defence electronics 408 946 273 828
Industrial electronics 120 709 69 858
Corporate and other 11 135 11 889
1 189 479 1 076 284
Comments
The directors of Grintek are pleased to report excellent results for the
year ended 30 June 2001. Headline earnings increased by 43 per cent to
R115,3 million and fully diluted headline earnings are up by 35 per cent to
38,7 cents per share. As expected, the turnaround in the industrial and
defence sectors materialised during the year, contributing to improved
operating margins. The year ended with a strong order book and healthy cash
resources.
BUSINESS REVIEW
Telecommunications
As voice and data traffic continue to increase, network operators and
service providers had to find ways to improve the efficiency of their
available network resources. Grintek provides specialised niche solutions
to this market, enabling our business to maintain acceptable trading levels
notwithstanding the general slowdown in infrastructure expenditure during
the reporting period. Margins improved as the Group actively worked towards
supplying systems with greater added value. The introduction of new
solutions such as Voice-over-Internet Protocol, based on world-class
technology, established a sound foundation for growth of the business.
Industrial Electronics
The DC power, antenna, and aviation business units performed well and
measured up to the expectations of management. The energy management unit
continued to experience difficult trading conditions but is well-positioned
to take advantage of the opportunities in this market once the regulatory
issues related to free electricity quotas are in place. DC power sales to
the telecommunications industry have gained significant market share, with
more than 500 systems manufactured and delivered during the year.
Defence Electronics
The increased level of business in the defence electronics market has made
this sector the main contributor to revenue growth in the year under review.
As a result of successful international partnerships established during the
past two years, Grintek has made significant breakthroughs in the European
market. Substantial long-term orders received from the main suppliers to
the South African National Defence Force's strategic procurement programme
will continue to provide a valuable base loading for at least the next six
years. Grintek's defence electronics business is now firmly linked to major
international companies, concluding another phase of the Group's
internationalisation programme.
Research and Development
Previous investment in research and development has greatly assisted the
Group's long-term relationships with international partners. Future
investment in research and development forms part of a joint strategy
developed with the respective partners and is expected to result in
increased returns.
Prospects
The deregulation of the telecommunications industry, providing for the
introduction of a future second fixed-line telecommunications operator and
the establishment of a new cellular network, will require increased network
capacity. Grintek is well-positioned and committed to provide elements of
these new networks.
The DC power and antenna business is also expected to benefit from the
demand for upgraded and increased telecommunications network capacity.
Grintek's defence electronics business is now well-placed as a global
supplier of specialised solutions, in conjunction with its international
partners, and further growth in defence exports is expected.
These opportunities together with a firm order book, which stands at a
record R860 million of which 50 per cent is in hard currencies, provides the
Group with a solid platform to develop and grow the business into the
future.
Personnel
This year was marked by an increased investment in internal skills
development programmes, allowing for continued growth of the business.
Study grants offered to prospective recruits are expected to contribute
towards the diversity of the Group's personnel. The Group continues to
pursue the important objective of identifying young, talented people that
will serve the company in key roles in the future.
FINANCIAL PERFORMANCE
Working capital
The Group's operations generated R188,4 million cash of which R143,9 million
was absorbed by an increase in working capital. Management of working
capital remains a key aspect of the business. The Group's revenue from
sales in the last quarter was substantial when compared to the previous
three quarters. Inventories have increased in line with the higher level of
business activity in the defence division as well the a build-up of
merchandise to satisfy telecommunucations orders received in the last month
of the financial year.
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.
Post balance sheet events
Grintek has concluded an agreement with SAAB AB of Sweden in terms of which
SAAB has acquired a 49 per cent interest in Grintek Communication Systems.
This acquisition by SAAB is in addition to its present 49 per cent interest
in Avitronics, acquired in 1999.
Capital expenditure
Capital expenditure for the Group for the year ended 30 June 2001 was R37,2
million (2000 - R44,5 million). Capital expenditure amounting to a further
R34,1 million (2000 - R6,6 million) has been authorised of which R11,5
million (2000 - R5,6 million) has not been contractually committed.
Contingent liabilities
At 30 June 2001 contingent liabilities amounted to R1,0 million (2000 - R1,4
million).
Financial policy statements
An unqualified audit report has been issued on the financial position of the
Group at 30 June 2001 and the results and cash flows for the year then
ended.
The financial statements are prepared in accordance with and comply with the
Statements of Generally Accepted Accounting Practice in South Africa.
The accounting policies of the Group are consistent in all material respects
with those applied in the previous year, except insofar as the treatment of
the accrual of the final dividend is concerned.
The treatment of the final dividend for the year has been changed to comply
with AC 107 and consequentially has not been reflected as an accrual. The
comparative figures have been restated to reflect this position.
DECLARATION OF DIVIDEND NO. 70
The directors of Grintek Limited have declared dividend no. 70 of 5,8 cents
per share to all shareholders. In compliance with the requirements of
STRATE, the following dates are applicable:
Date dividend declared Tuesday 4 September 2001
Last day to trade "CUM" the dividend Friday 28 September 2001
Date trading commences "EX" the dividend Monday 1 October 2001
Record date Friday 5 October 2001
Date of payment Monday 8 October 2001
Certificated shareholders may not dematerialise their shares between Friday
21 September 2001 and Friday 5 October 2001, both dates inclusive.
For and on behalf of the board
NR Kunene SA Grobbelaar
Chairman Managing Director
4 September 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
Auditors: Ernst & Young Company secretary: A.van der Merwe
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
SPONSOR: INVESTEC
