| Tue 9 Oct 2001, 0:00 | | Altech - Unaudited Consolidated Interim Financial |
|
(Incorporated in the Republic of South Africa)
(Registration number 1946/020415/06)
Share code: ALT ISIN: ZAE000015251
("Altech")
Unaudited consolidated interim financial results for the six months ended 31
August 2001
* Headline earnings per share up 24%
* Cash at R546 million
* Annualised return on equity at 30,4%
* Annualised return on capital employed at 37,8%
Income statement
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2001 2000 2001
Figures in R000 (unaudited) (unaudited) (audited)
Revenue 1 853 732 1 745 318 3 690 851
Operating income 150 341 149 995 284 431
Dividend income 9 973 - 12 984
Net interest income 20 747 20 970 38 501
Income before amortisation
of goodwill and
exceptional items 181 061 170 965 335 916
Loss on sale of discontinuing
operations - (1 463) (11 573)
Goodwill amortised (6 701) (1 400) (12 354)
Exceptional items - - (1 994)
Income before taxation 174 360 168 102 309 995
Taxation 50 920 41 697 90 520
Income after taxation 123 440 126 405 219 475
Attributable to outside
shareholders (10 933) (32 961) (11 538)
Attributable earnings 112 507 93 444 207 937
Basic earnings
per share (cents) 107.2 89.2 198.4
Headline earnings
per share (cents) 113.6 91.9 223.1
Weighted average
number of shares
in issue (000) 104 964 104 795 104 800
Notes:
1. Reconciliation between earnings
and headline earnings
Attributable earnings 112 507 93 444 207 937
Amortisation of goodwill 6 701 1 400 12 354
Loss incurred on discontinuance
of operation - 1 463 11 573
Exceptional item gross - - 1 994
Headline earnings 119 208 96 307 233 858
2. The accounting policies and methods of computation followed in this
interim report are consistent with the annual financial statements for the
year ended 28 February 2001 with the exception of the change relating to the
recognition of dividends receivable and subsequent dividends payable and the
related STC. The relevant changes have been processed through these interim
results, and take into account statements of Generally Accepted Accounting
Practice.
3. It is group policy for the annual dividend to be declared after the end
of the financial year.
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.
Abridged balance sheet
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2001 2000 2001
Figures in R000 (unaudited) (unaudited) (audited)
Assets
Non-current assets 453 629 285 315 470 673
Fixed assets 131 033 130 870 136 420
Goodwill 47 210 69 561 54 654
Investments and loans 258 135 62 923 261 223
Deferred recoverable taxation 17 251 21 961 18 376
Current assets 1 252 585 1 482 349 1 306 730
Inventories 268 698 400 921 309 933
Accounts receivable 438 188 598 850 469 789
Net cash and cash
equivalents 545 699 482 578 527 008
Total assets 1 706 214 1 767 664 1 777 403
Equity and liabilities
Ordinary shareholders' interest 781 982 648 329 774 397
Outside shareholders' interest 178 415 267 555 234 696
Deferred taxation 8 253 7 572 9 185
Current liabilities 737 564 844 208 759 125
Total equity and liabilities 1 706 214 1 767 664 1 777 403
Net asset value per share (cents) 745 618 738
Ordinary shares in issue at end
of period (000) 104 966 104 940 104 959
Statement of changes in equity
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2001 2000 2001
Figures in R000 (unaudited) (unaudited) (audited)
Balance at start of period 774 397 576 159 567 332
Change in accounting
policy AC107 - 68 762 68 762
774 397 644 921 636 094
Issue of share capital 37 2 709 2 817
Attributable earnings 112 507 93 444 207 937
Dividends (104 959) (68 936) (68 936)
Net gains and losses not recognised
in the income statement - (23 809) (3 515)
Reversal of revaluation
of property - (22 067) -
Other movements - (1 742) (3 515)
Balance at end of period 781 982 648 329 774 397
Abridged cash flow statement
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2001 2000 2001
Figures in R000 (unaudited) (unaudited) (audited)
Operating activities 31 071 53 106 313 272
Cash generated by operations 167 569 180 754 316 660
Investment income 30 720 20 971 51 485
Changes in working capital 38 837 (49 669) 119 035
Taxation paid (33 882) (9 408) (84 366)
Cash available from operating
activities 203 244 142 648 402 814
Dividends paid, including
to outside shareholders (172 173) (89 542) (89 542)
Investing activities (12 417) (100 935) (318 585)
Acquisition of operations
and investments (15 505) (101 099) (120 450)
Other net investing activities 3 088 164 (198 135)
Financing activities 37 (1 907) 7
Net funds generated/(utilised) 18 691 (49 736) (5 306)
Cash and cash equivalents
- at beginning of period 527 008 532 314 532 314
- at end of period 545 699 482 578 527 008
Segment reporting
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2001 % 2000 % 2001 %
Figures in R000
Revenue:
Telecommunication
Division 1 241 114 67.0 1 105 320 63.3 2 322 384 62.9
Multi-Media and
Electronics Division 600 522 32.4 708 614 40.6 1 502 523 40.7
Information
Technology Division 105 010 5.6 85 600 4.9 192 650 5.2
Inter group sales (92 914) (5.0) (154 216) (8.8) (326 706) (8.8)
1 853 732 100.0 1 745 318 100.0 3 690 851 100.0
Operating income:
Telecommunication
Division 75 098 50.0 79 201 52.8 139 340 49.0
Multi-Media and
Electronics Division 68 707 45.7 66 467 44.3 115 232 40.5
Information
Technology Division 5 721 3.8 4 755 3.2 20 317 7.1
Corporate net income 815 0.5 (428) (0.3) 9 542 3.4
150 341 100.0 149 995 100.0 284 431 100.0
Supplementary information
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2001 2000 2001
Figures in R000 (unaudited) (unaudited) (audited)
Capital commitments 8 143 10 391 4 105
Capital expenditure 19 323 27 119 54 883
Depreciation 20 619 25 036 47 258
Lease commitments 64 066 69 244 73 213
Unlisted investements
- carrying amount 258 135 61 923 260 223
- directors' valuation 258 135 61 923 260 223
Message to our shareholders
The Directors are pleased to report that Altech has once again shown
impressive growth for the period under review with headline earnings per
share increasing by 24 percent. This growth momentum, now in its sixth
consecutive year, is in line with forecasts made by the group at the
beginning of the period and has been achieved in the face of continuing
global turmoil and local economic uncertainties, especially in the sectors
in which Altech operates.
Revenue has increased to R1,9 billion, with operating income of R150
million.
The balance sheet remains strong with cash and cash equivalents in excess
of R546 million and an annualised return on equity of 30,4 percent.
GROUP HIGHLIGHTS
* Telecommunications Division
Infrastructure and solutions
Alcatel Altech Telecoms (AAT) delivered acceptable results in a very
difficult market and is strongly positioned to exploit the expected upturn
in the local telecoms sector. AAT has contained overhead expenditure and
with its strong balance sheet is well positioned to take advantage of both
the Telkom's Next Generation Network (NGN) and the Second Network Operator
(SNO) infrastructure roll-outs. It has exceptional products that have
already changed the ground rules internationally for voice and data
convergence through the Alcatel Softswitch, Media Gateways and Intelligent
Network Services.
The outlook for AAT's business with Vodacom remains positive with a
further three-year frame contract for the supply of products and services,
including cellular base stations, having been secured from Vodacom.
Enhancements to the Vodacom network are continuing and the rollout of
1800Mhz equipment is expected in the early part of 2002.
AAT continues its restructuring drive to reposition for the future and
become a knowledge management focused organisation, providing turnkey
lifecycle solutions while interacting seamlessly with its customers.
Wireless communications
The Wireless Communications Division performed extremely well over the
reporting period, exceeding all expectations. Following the delisting of
Autopage Holdings on 25 August 2000, Autopage Cellular and Supercall
Cellular have operated effectively as wholly-owned subsidiaries of the
Altech Group for the past year.
Autopage Cellular remains the largest independent service provider in the
South African cellular industry with a base of over 440 000 subscribers on
both the Vodacom and MTN networks. Autopage Cellular has performed
exceptionally well in the changing cellular market and has added some 20 000
net contract subscribers during the past six months.
Highlights over the reporting period include the strong growth of pre-
paid voucher sales through the ABSA points of sale, albeit off a present low
base.
"Mobile Direct," Autopage Cellular's original exclusive channel for
direct-to-market Vodacom services, continues to report steady connections.
Autopage Cellular is a clear leader in this form of marketing. "Mobile
Xpress," the new direct-to-market channel offering MTN services is
performing well.
Continuing initiatives and enhancements to Call Centre and IT systems are
delivering improved service and performance in the customer care and credit
control areas. As a result of significant investments in IT over the past 18
months a number of subscriber services are now available through new web-
based facilities.
Supercall Cellular, a specialist service provider that operates as a
division of Autopage Cellular, continues to focus its efforts on the
important high revenue corporate subscriber market segments.
Netstar, a dominant player in Southern Africa's stolen vehicle tracking
and recovery market, has improved its leadership position during the past
six months which, in turn, has resulted in substantial revenue growth. The
subscriber base had a real growth of 26 percent over this reporting period
and more than 126 000 vehicles, with a value of around R14 billion, are
currently being protected by Netstar.
Netstar's increasingly popular low cost tracking system, Sleuth, has
proved most successful and technological enhancements to the sophisticated
Early-Warning and Phone-in systems have ensured a continued high success
vehicle recovery rate. Netstar responded to a total of 1 704 incidents of
theft and hijacking in the past six months and recovered vehicles to the
value of R160 million.
Netstar's recent initiative to expand across South Africa's borders is
increasingly adding value to the business through activities in Swaziland,
Mozambique, Zambia, Namibia and Botswana.
In addition, Netstar has concluded its first offshore license agreement.
After negotiations with Proton, the largest Malaysian vehicle manufacturer,
a license agreement for a Netstar operation in Malaysia has been signed
whereby Proton will be a senior partner. The agreement will enable Netstar
to receive significant royalties and additional economies of scale.
* Multi-Media and Electronics Division
UEC Multi-Media (UEC) exceeded its forecasted operating profit, despite a
significant increase of activity in research and development expenditure,
which resulted in several new exciting products being launched.
The period under review has also seen an increase in UEC's market share
in the Middle-East and the first shipment of Digital Cable product to New
Zealand. UEC has also secured a further full year supply contract for
MultiChoice South Africa and MultiChoice Greece (Hellas).
UEC is a "dedicated" specialised Digital Set-Top-Box company. Current and
future forecasted trends show that electronic "consumer" companies are
experiencing a decline in activity in the Digital Set-Top-Box market.
However, "dedicated" Digital Set-Top-Box companies, like UEC, which offer
customised solutions, are still showing good growth and this trend is
expected to continue, especially in the Digital Cable Set-Top-Box market.
MediaVerge, the Interactive/Applications Software Development Division of
UEC, besides undertaking several software developments for UEC Technologies,
has also developed applications for MultiChoice Greece (Hellas), OpenTV,
Show Time, Mindport and MultiChoice South Africa. Most notable and also most
topical and popular amongst these, is the interactive application for the
"Big Brother" TV programme which was developed for MultiChoice South Africa.
The Alcom two-way radio group had an exciting first half of the financial
year and exceeded its operating profit forecast. The Professional Radio
series, introduced by Motorola last year, has contributed significantly to
this success. Motorola has announced the imminent release of a new compact
TETRA system, TETRA "C", which will be a solution offered by Alcom Radio
Distributors.
The Cape Metropolitan Council's TETRA System (Terrestrial Trunked Radio),
the first fully digital TETRA Public Safety system in Africa, has been
successfully commissioned. As Alcom Systems is the exclusive local solutions
provider for Motorola, it is well positioned to participate in the National
Public Safety Trunk Radio Network that has been announced by Government.
Subsequent to the period under review, the profitable, but non-core
operations of African Capacitors (Afcap) were disposed of. This continues
with the group's philosophy of further focusing the operations of Altech.
STC Frequency Technology, the largest manufacturer and distributor of
frequency control products on the African continent, performed in line with
expectations.
Arrow Altech Distribution's Industrial Components Division cemented its
dominant position in the electronic components market and increased its
market share over the previous year.
The Computer Products Division has secured the exclusive distribution
rights for LG Electronics' entire range of networking products to compliment
its existing product portfolio. The full benefits of this agreement will be
seen in the next reporting period.
* Information Technology Division
ISIS Information Systems (Isis) remains a leading South African systems
integrator and software house. The company applies its methodologies and
project approach to deliver business benefits to its clients.
The Motseta project, valued at R17 million, a joint project between ISIS
and French partner, Thales, is currently in its installation phase whereby
air traffic navigational systems are being installed at 18 South African
airports. ISIS will provide local support for the system after its
completion in the third quarter of 2002.
Keops Isis Industrial Information Systems (Keops Isis) has been
strategically positioned to exploit the convergence of industrial
information technologies such as operations management systems, control
systems and radio frequency identification.
In addition, it as also broadened its addressable vertical market sectors
which now include food and beverage, pulp and paper, chemicals and
packaging. Several industry solutions have been developed by Keops Isis
which will be marketed both locally and internationally and good growth is
expected in the near future from this intellectual capital investment.
Altech Card Solutions, which encompasses the businesses of Altech Smart
Card Technologies, Datacard and Africard, were successfully consolidated
during the period under review.
The main focus of Altech Card Solutions is to provide customers with end-
to-end card based solutions. Prospects within this business are exciting and
benefits from this new focus should be attained during 2002.
Altech Card Solutions has recently concluded a contract to supply another
major financial institution with EFTPOS terminals and software solutions.
This will increase its market share within the acquiring business to 50
percent, supplying three of the five major acquiring banks. Simultaneously,
it has also secured the contract for the personalisation and mailing for a
second major South African bank. More and more of South African card
issuers, whether they be banks or retailers, see this personalisation
function as non-core to their business activities and are outsourcing this
function. Altech Card Solutions is firmly capitalising on this annuity
income option.
* Acquisitions
Altech continues to look at acquisition prospects both locally and abroad.
Over the past nine months the group has appraised a large number of
possibilities, of which many have been aborted, but 24 are still considered
"live." Of those "live" possibilities 50 percent are situated in South
Africa, 33 percent in Australasia, nine percent in the United Kingdom and
eight percent in other regions. Albeit that valuations are at more realistic
levels, Altech will proceed with caution and will only make acquisitions
with a low-risk profile and sustainable earnings growth.
* Outlook
In recent history, both local and world economies have never been so
uncertain. The Altech group will continue to remain as strongly focused as
ever during this period of economic turmoil while, at the same time,
positively positioning itself for the inevitable opportunities that will
eventuate. Meanwhile, it is envisaged that real growth can again be expected
from the group during the remainder of this financial year, as it continues
to benefit from the strong annuity income base of Autopage Cellular, UEC,
Netstar and Altech Card Solutions.
On behalf of the Board
Dr Hilton Davies Craig Venter John Carstens
Non-Executive Chairman Chief Executive Officer Financial Director
9 October 2001
These results are available on the Internet at http://www.altech.co.za
