| Fri 14 Sep 2001, 0:00 | | Advtech Limited - Group Interim Results For The S |
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Unaudited results for the 6 months ended 30 June 2001
Income Statement
For the 6 months ended 30 June 2001
note 4 note 4
restated restated
unaudited unaudited audited
6 months 6 months 12 months
to 30 Jun to 30 Jun to 31 Dec
% 2001 2000 2000
notes change (R'000) (R'000) (R'000)
Turnover 288 046 281 145 551 106
-education 23.1 167 069 135 746 267 074
-resourcing (16.8) 120 977 145 399 284 032
Operating profit
Before depreciation
And amortisation 26 192 34 296 55 896
-education 2.5 20 030 19 541 36 895
-resourcing (58.2) 6 162 14 755 19 001
Depreciation and
Amortisation 9 436 9 345 18 378
Operating profit (32.8) 16 756 24 951 37 518
Net dividend income - 2 725 3 558
Net interest (paid)
/received (6 984) 3 748 (4 298)
Equity accounted
Earnings 286 414 937
Profit before
Exceptional items (68.4) 10 058 31 839 37 715
Exceptional items 1 17 208 6 625 18 575
(loss)/profit
Before taxation (7 150) 25 213 19 140
Taxation (499) 8 516 7 699
(loss)/profit
After taxation (6 651) 16 698 11 441
Attributable to
Outside
Shareholders (347) (785) (1 505)
Attributable to
Ordinary
Shareholders (6 998) 15 912 9 936
Number of shares
In issue (`000) 392 804 391 656 392 804
Weighted average
Number of shares
In issue (`000) 392 804 391 656 392 804
Earnings per
Share (cents) (1.8) 4.1 2.5
Headline earnings
Per share (cents) 1.9 5.8 7.3
Fully diluted
Ordinary shares
(`000) 394 204 393 174 394 204
Fully diluted
Earnings per
Share (cents) (1.8) 4.0 2.5
Fully diluted
Headline earnings
Per share (cents) 1.9 5.7 7.2
Balance Sheet
As at 30 June 2001
Note 4 Note 4
Restated Restated
unaudited unaudited audited
6 months 6 months 12 months
to 30 Jun to 30 Jun to 31 Dec
2001 2000 2000
notes (R'000) (R'000) (R'000)
Employment of
Capital
Fixed assets 2 295 278 274 832 289 664
Goodwill and
Trademarks 250 943 259 792 274 449
Development costs 2 775 3 225 2 965
Deferred taxation
Asset 28 942 30 382 29 321
Investments 1 742 1 218 1 460
Net current assets 125 916 177 332 115 220
Inventories 3 551 2 698 3 605
Prepayments 10 396 9 045 11 333
Taxation 7 727 - 7 991
Accounts receivable 95 721 95 270 79 021
Cash resources and
Liquid instruments 8 521 70 320 13 270
Total assets 705 596 746 781 713 079
Capital employed
Ordinary share
Capital 3 928 4 197 3 928
Ordinary share
Premium 353 166 348 782 353 166
Non distributable
Reserve 14 986 18 767 27 938
Retained earnings 53 625 77 917 60 625
Ordinary
Shareholders equity 425 705 449 664 445 657
Outside shareholders
Interest 2 610 2 112 2 166
Interest bearing
Debt 3 137 609 133 887 157 043
Current
Liabilities 139 672 161 118 108 213
Accounts payable 55 404 61 762 71 494
Taxation - 2 318 -
Vendor claims 13 024 37 018 29 445
Deferred income 71 244 60 020 7 274
Total liabilities 705 596 746 781 713 079
Notes to financial statements
For the 6 months ended 30 June 2001
Note 4 Note 4
Restated Restated
unaudited unaudited audited
6 months 6 months 12 months
to 30 Jun to 30 Jun to 31 Dec
2001 2000 2000
(R'000) (R'000) (R'000)
Exceptional items
restructuring costs 1 272 - -
litigation costs 3 919 - -
losses - discontinued
operations 7 421 - 4 130
profit on sale of
divisions (2 555) - -
goodwill amortisation 7 151 6 625 14 445
17 208 6 625 18 575
See note 3
Interest bearing debt comprises a combination of loan agreements all
substantially short term in nature. Notwithstanding this classication, the
loans have been secured by collateral bonds to facilitate the registration
of mortgage bonds over the group's fixed property.
In order to provide a meaningful presentation of the interim results,
certain comparatives have been regrouped. Furthermore, in order to provide
a proper appreciation of the group's operating performance for the period
under review, adjustments have been made to the interim and annual
comparatives to take into account unaccounted costs and charges in previous
periods, and the effects of a change in accounting policy at an human
resources subsidiary, this information being only recently determined during
the corrective action initiatives. The impact of these prior year
adjustments is that operating profits for both comparative periods have been
adjusted downwards as follows:
4.1 unaccounted costs and charges - 7,6
4.2 effect of change in accounting
policy 2,3 3,1
2,3 10,7
4.3 impact on headline earnings
per share (cents) 0,4 1,9
Cash flow statement
For the 6 months ended 30 June 2001
Note 4 Note 4
Restated Restated
unaudited unaudited audited
6 months 6 months 12 months
to 30 Jun to 30 Jun to 31 Dec
2001 2000 2000
(R'000) (R'000) (R'000)
Cash generated by operations 26 192 35 730 60 366
Net interest (paid/received (6 984) (559) (4 053)
Taxation paid - (2 158) (11 594)
Dividend paid (11 062) - -
Working capital changes 1 361 32 916 (7 794)
Cash flows from operating
Activities 9 507 65 929 36 925
Cash flows from investing
Activities 10 553 (281 016) (247 260)
Cash flows from financing
Activities (39 689) 205 478 119 810
Net (decrease)/increase
In cash (16 629) (9 608) (90 525)
Cash at beginning of year (11 916) 68 000 68 000
Acquisition cash - 10 788 10 496
Cash at end of period (28 545) 69 179 (12 029)
Supplementary information
Capital ependiture
- current year 16 503 34 135 62 912
Capital commitments
- remainder of the year 20 700 27 413 -
- future years 2 400 10 518 22 531
Operating lease commitments
Future years 106 019 92 328 96 655
Contingent liabilities 10 284 - 10 284
Determination of headline
Earnings:
Attributable to ordinary
Shareholders (6 998) 15 912 9 936
Adjustment for exceptional
Items 17 208 6 625 18 575
Exceptional items before
Taxation 10 210 22 538 28 511
Taxation (2 609) - -
Headline earnings 7 601 22 538 28 511
Segmental report
For the 6 months ended 30 June 2001
Note 4 Note 4
Restated Restated
unaudited unaudited audited
6 months 6 months 12 months
to 30 Jun to 30 Jun to 31 Dec
2001 2000 2000
(R'000) (R'000) (R'000)
Turnover
Schools 89 757 74 197 149 171
Tertiary 77 312 61 549 117 903
Placement & recruitment 97 228 118 503 229 293
Specialist division 23 749 26 896 54 739
288 046 281 145 551 106
Ebitda
Schools 11 740 10 648 19 132
Tertiary 12 308 12 884 28 292
Placement & recruitment 13 550 17 195 29 837
Spcialist division (3 119) 1 518 (1 766)
Administration (8 287) (7 949) (19 599)
26 192 34 296 55 896
Comments
Advtech Limited operates in the fields of education and resourcing which
includes recruitment and human resources management. A review of the
results of advtech group operations for the six months ended 30 June 2001 is
set out hereunder.
General review
Notwithstanding the satisfactory progress recorded by certain business
units, the period under review has been marked by several dominant events,
the majority of which were unfortunately interruptive in nature rather than
operationally productive. The compounded adverse effects relating to the
poor performance of certain acquisitions has required rapid remedial action.
In addition, the attentions of several bidding institutions seeking to
capitalise on the group's temporary distress further served to destabilise
operations. Shareholders will be aware that regular announcements were
published regarding these events.
Pursuant to these events plans were immediately implemented to stabilise the
shareholder base, strengthen the board of directors, replace and restructure
group management and focus on the restoration of operational efficiencies.
The positive effects of these interventions are already evident in
operations.
Education
Turnover in this division increased by 23.1% from R135,746 million to
R167,069 million. Due to weighted front-end operating costs at certain
education institutions and the loss generated at ieti, margins were
disappointing. Education management is currently focussing on restoring the
profit margins of the education division to at least the historical levels.
A material improvement is expected in the tertiary sector in the second six
months.
The group's successful education brands, including Crawford College,
Abbotts' College, Varsity College, Bond South Africa, Vega, College Campus
and IMD, continue to attract broad interest from the market and the range of
programmes offered by these institutions retain their popularity and appeal.
Resourcing
Apart from the softening of corporate activity in the It and staff training
areas during the period under review, the decline in revenues in the
resourcing division was compounded by the inconsistent focus and attention
of vendors responsible for the management of certain resourcing business
units.
It was determined that variable and erratic performance threatened the order
of several of the resourcing businesses and corrective action has been taken
to redefine the vision and restore the management systems in these cash
positive enterprises. Legal claims have been lodged against certain vendors
for damages arising from breaches of profit warranties and other contractual
infractions.
Committed and proactive management is now in place and significant effort is
being invested to inter alia determine the destiny of certain loss making
divisions and to enhance productivity and profitability of continuing
divisions. Shareholders are advised that the business unit trading as Bryan
Hattingh Information Services has been disposed of for a cash consideration
of R2,5 million. The performance of the Australian recruitment business for
the period was disappointing and is the subject of focussed management
attention.
Administration
The exceptional items are more fully described in note 1 to the financial
statements.
Whereas interest bearing debt and vendor claims have declined by
approximately R36 million since December 2000, the core levels of interest
bearing debt were significantly higher in this six month period as a result,
inter alia, of the payment of certain remaining vendor liabilities. Hence
the substantial increase in interest paid. The interest bearing debt is
likely to remain relatively constant during the ensuing period and is
expected to show progressive reductions early in 2002.
Litigation
The company is engaged in litigation for the recovery of amounts paid to
vendors relating to material breaches of warranty conditions contained in
acquisition agreements. These breaches include, inter alia, breaches of
restraints and profit warranties. In addition, certain damages claims are
presently being considered and formulated against other parties arising out
of the same transactions. The board is satisfied that save for the legal
costs to be incurred, no additional prejudice will be suffered by the group.
Prospects
Considering the difficulties experienced in the group over the past two
years, the decline in profitability in the period under review is considered
reasonable in the circumstances. Whereas the overall performance is below
expectation, it is anticipated that having regard to the restructured
management and more recent interventions, all business units are likely to
show improved results during the ensuing period. Whilst it is difficult to
forecast the result of the group's various legal claims, group legal opinion
is that these claims are well founded.
Dividends
It is group policy to only consider dividends at the conclusion of each
financial year.
On behalf of the board
BD Buckham, Chairman
RW Childs, Chief Executive Officer
13 September 2001
Directors:
BD Buckham (Chairman); RW Childs (CEO) (Ba, B Com, MBA); JNP Booyens
(Financial) (B Com(Hons), CA(SA)); C Bomela*; HJ Borkum*; HF Brown*
(CA(SA)); CN Duff; DL Honey (B Com(Hons), MBA); Hr Levin*(B Com, LLB, LLM,
H Dip Tax Law, H Dip Co Law); MI Sacks* (CTA, CA(SA), AICPA(ISR)).
*non-executive
Company Secretary: L Verster (ACIS)
Transfer secretaries: Mercantile Registrars,
11 Diagonal Street,
Johannesburg 2001
