| Wed 10 Oct 2001, 0:00 | | Allied Electronics Corporation Limited - Results |
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Allied Electronics Corporation Limited
(Incorporated in the Republic of South Africa)
(Registration number 1947/024583/06)
JSE Code: ATN
ISIN Code: ZAE000029658
CONSOLIDATED interim financial RESULTS for the six months ended
31 August 2001
Revenue up 25.8%
Headline earnings per share up 12.0%
Cash on hand R1.091 billion
BTG shows major improvement
Income statement
Six months Six months Year
ended ended ended
% 31.8.01 31.8.00 28.2.01
Figures in R000 Change (Unaudited) (Unaudited) (Audited)
Revenue 25.8 5 008 111 3 981 182 8 951 166
Operating income 8.8 334 776 307 790 627 300
Net interest income 32 626 33 347 59 891
Income from associates 9 498 9 857 10 529
Investment income 6 341 2 853 22 077
Income before
goodwill amortisation
and exceptional items 8.3 383 241 353 847 719 797
Goodwill amortised (51 065) (5 005) (43 285)
Exceptional
items (note 1) (6 862) 76 608 63 615
Income before
taxation (23.5) 325 314 425 450 740 127
Taxation 103 407 82 093 157 411
Income after
taxation (35.4) 221 907 343 357 582 716
Attributable to
outside shareholders (118 384) (134 934) (285 111)
Attributable
earnings (50.3) 103 523 208 423 297 605
Basic earnings
per share (cents) 36.5 72.4 103.3
Headline earnings
per share (cents) 12.0 51.3 45.8 101.5
Weighted average number
of shares in issue (000)
- ordinary shares 95 479 96 974 96 984
- participating
preference shares 187 832 191 069 191 150
Notes:
1. Exceptional items
Net surplus on disposal
of operations 33 966 (1 463) 32 834
Net surplus on disposal
of investment/property 3 554 82 718 85 417
Impairment losses (11 275) (2 601) (49 500)
Settlement of obligation to
acquire assets at a premium
over market value (38 600) - -
Other 5 493 (2 046) (5 136)
(6 862) 76 608 63 615
2. Reconciliation between
earnings and
headline earnings
Attributable earnings 103 523 208 423 297 605
Goodwill amortised 51 065 5 005 43 285
Exceptional items - gross 6 862 (76 608) (63 615)
161 450 136 820 277 275
Tax effect of
above adjustments (2 811) (419) (7 690)
Outside shareholders' interest (13 278) (4 428) 23 013
Headline earnings 145 361 131 973 292 598
3. 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.
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.
Operational contribution
Six Six
months months
ended ended Year ended
Revenue 31.8.01 % 31.8.00 % 28.2.01 %
Figures in R000
Altech 1 853 732 37.0 1 745 318 43.8 3 690 850 41.2
Powertech 1 919 901 38.3 1 522 956 38.3 3 351 581 37.4
Fintech 95 838 1.9 712 908 17.9 1 525 849 17.0
BTG 1 138 640 22.7 - - 382 886 4.3
5 008 111 100.0 3 981 182 100.0 8 951 166 100.0
%
held at
31.8.01
Headline
earnings
Altech 53.5 63 781 43.9 51 573 39.1 125 211 42.8
Powertech 59.2 34 143 23.5 33 284 25.2 76 436 26.1
Fintech 64.3 13 056 9.0 25 588 19.4 57 490 19.6
BTG 54.5 11 697 8.0 - - (6 287) (2.1)
Altron
Corporate 100.0 22 684 15.6 21 528 16.3 39 747 13.6
145 361 100.0 131 973 100.0 292 597 100.0
Abridged Balance sheet
31.8.01 31.8.00 28.2.01
Figures in R000 (Unaudited) (Unaudited) (Audited)
Assets
Non-current assets 2 225 941 1 763 477 2 138 730
Fixed assets 649 743 568 490 672 391
Net goodwill 198 545 114 261 232 207
Advances to
rental finance customers 966 028 731 911 853 811
Investments and loans 342 793 299 736 300 811
Deferred taxation 68 832 49 079 79 510
Current assets 3 937 230 3 830 927 4 074 852
Inventories 1 039 937 1 180 343 1 124 716
Accounts receivable 1 806 063 1 642 020 1 868 235
Net cash and cash
equivalents 1 091 230 1 008 564 1 081 901
Total assets 6 163 171 5 594 404 6 213 582
Equity and liabilities
Ordinary shareholders'
interest 1 631 482 1 619 587 1 755 258
Outside shareholders'
interest 1 625 580 1 436 236 1 628 076
Non-current liabilities 819 438 582 087 643 911
Deferred taxation 53 476 39 997 50 216
Current liabilities 2 033 195 1 916 497 2 136 121
Total equity and
liabilities 6 163 171 5 594 404 6 213 582
Net asset value
per share (cents) 612.7 561.6 613.6
Shares in issue at
end of period (000)
- ordinary shares 93 875 96 979 96 997
- participating
preference shares 172 424 191 392 189 043
Abridged Cash flow statement
Six months Six months Year
ended ended ended
31.8.01 31.8.00 28.2.01
Figures in R000 (Unaudited) (Unaudited) (Audited)
Operating activities 317 704 154 212 313 698
Cash generated
by operations 468 249 406 878 797 994
Net investment income 38 967 36 200 80 738
Changes in working capital 147 402 (68 162) (174 001)
Taxation paid (92 358) (46 210) (216 500)
Cash available from
operating activities 562 260 328 706 488 231
Dividends paid, including
to outside shareholders (244 556) (174 494) (174 533)
Investing activities (376 301) (188 834) (408 126)
Financing activities 67 926 78 595 264 767
Net funds generated 9 329 43 973 170 339
Cash and cash equivalents
- beginning of period 1 081 901 842 692 842 692
- acquired in acquisitions - 121 899 68 870
- end of period 1 091 230 1 008 564 1 081 901
Supplementary information
Six months Six months Year
ended ended ended
31.8.01 31.8.00 28.2.01
Figures in R000 (Unaudited) (Unaudited) (Audited)
Borrowings 721 207 353 757 548 308
- interest bearing 706 124 327 532 517 285
- non-interest bearing 15 083 26 225 31 023
Capital commitments 41 028 10 699 44 144
Capital expenditure 68 731 73 020 129 724
Contingent liabilities 17 651 45 410 30 633
Depreciation 66 120 60 071 160 425
Lease commitments 267 459 219 342 288 857
Listed investments
- carrying amount 160 394 264 034 160 968
- market valuation 124 390 226 880 123 971
Unlisted investments
- carrying amount 182 399 466 230 139 843
- directors' valuation 182 399 466 230 139 843
Statement of changes in equity
Six months Six months Year
ended ended ended
31.8.01 31.8.00 28.2.01
Figures in R000 (Unaudited) (Unaudited) (Audited)
Balance at start
of period 1 666 547 1 399 897 1 399 897
Changes in accounting
policies 88 711 80 664 80 664
1 755 258 1 480 561 1 480 561
New share
issues movement 11 876 2 251 5 730
Reduction in equity as
result of group
shares acquired (185 701) (5 236) (37 789)
Attributable earnings 103 523 208 423 297 605
Dividends (89 129) (80 664) (80 664)
Net gains and losses
not recognised
in the income statement 35 655 14 252 89 815
Revaluation of property
and investments - (11 817) (3 131)
Foreign currency
translation 36 706 22 141 99 464
Other movements (1 051) 3 928 (6 518)
Balance at end
of period 1 631 482 1 619 587 1 755 258
Message to our shareholders
The South African and especially the international economies started to lose
momentum during the period under review with growth in gross domestic
product decreasing and international telecoms and IT markets experiencing
significant weakness. Yet, despite these difficult trading conditions, which
impacted certain operating companies, your directors are pleased to report
good results for the half-year ended 31 August 2001.
Over the last six months the group achieved strong revenue growth of 25.8%
from R4 billion to R5 billion with headline earnings per share up 12.0% from
45.8 cents to 51.3 cents. Operating income increased by 8.8% with all listed
subsidiaries contributing improved earnings including a positive headline
earnings contribution from the restructured BTG operation.
The balance sheet remains strong with cash and cash equivalents exceeding R1
billion (2000: R1 billion), reflecting strong cash flow and the result of
focus on working capital. Net asset value per share reached 612.7 cents
despite goodwill amortisation and a 24.2 cents per share negative impact of
the share buy-back concluded during the period under review.
Share buy-back
Shareholders are referred to the press announcement of 3 August 2001 which
outlined details of the results of the specific pro rata repurchase of
ordinary and participating preference shares. Altron Finance (Pty) Limited,
a wholly-owned subsidiary of the company, has acquired since February 2001,
in aggregate, the following number of ordinary and participating preference
shares:
Number of shares
Participating
Ordinary preference
In terms of a general authority 1 262 100 3 147 462
In terms of the specific
pro rata authority 1 984 369 19 591 628
Total 3 246 469 22 739 090
The above translates to an effective reduction of 8% of the number of issued
shares in the market.
business activities
Altech
Altech has again shown impressive growth for the period under review with
headline earnings per share up 24% - growth achieved in the face of
continuing global and local economic turmoil in the sectors in which Altech
operates.
Alcatel Altech Telecoms delivered acceptable results in a difficult market
but is strongly positioned to benefit from the expected upturn in the local
telecoms sector. Autopage Cellular performed well in the changing cellular
market and increased its net contract subscribers by some 20 000 during the
past six months.
Netstar improved its leadership position during the period under review,
resulting in substantial revenue growth coupled with a subscriber base
growth of 26%. It recently concluded its first offshore licence agreement
with Malaysia's largest vehicle manufacturer, Proton.
UEC Multi-Media ("UEC") exceeded its anticipated operating profit despite a
significant increase in research and development expenditure which resulted
in the launch of various new products. The period under review also saw an
increase in UEC's market share in the Middle East and its first products
being exported to New Zealand. Alcom, the two-way radio group had an
exciting first half, and performed above expectations with The Professional
Radio series introduced by Motorola, contributing to this good result. The
proposed National Public Safety Trunk Radio Network bodes well for Alcom's
future prospects. Arrow Altech Distribution cemented its dominant position
in the electronic components market and increased its market share over the
previous year.
Isis Information Systems and French partner, Thales, are jointly installing
air traffic nagivational systems at 18 major South African airports through
the Motseta project to the value of R17 million. Good growth is expected
from the intellectual capital investment in Keops Isis Industrial
Information Systems. Altech Card Solutions was successfully consolidated
during the period under review with good prospects for all three of its
operations, Altech Smart Card Technologies, Datacard and Africard. Despite
uncertain world economic forecasts, Altech will continue to remain strongly
focused on positioning itself for the exciting opportunities that will come
about and real growth can be expected for the remainder of the year.
Powertech
Powertech recorded an increase in headline earnings per share of 4.3% to
21.6 cents from 20.7 cents for the same period last year. Operating margins
were impacted by factory under-recoveries and several rationalisation
programmes are in place to meet the lower levels of demand.
Powertech further strengthened its empowerment alliances with the Ikwezi
Group purchasing a 10% equity interest in Aberdare Cables and a 20% equity
interest in Rentech, our solar systems business. Through the black empowered
Desta Power Matla, Power Engineers, the distribution transformers business
of Northern Engineering Industries Limited based in Cape Town, was acquired,
which will provide a broader product and service offering to customers.
Aberdare Telecoms Networks benefited from Eskom and Transtel's fibre-optic
cable telecommunications network roll out with initial orders received
related to their position as participants within the Second Network Operator
(SNO) structure. A significant portion of the three-year Telkom contract for
the supply of copper telecommunication cables has been secured, assuring an
adequate loading of their Port Elizabeth manufacturing facility.
In terms of foreign revenues Powertech is moving closer to the target of one
third of total revenues coming from foreign operations and export. A number
of substantial export orders have been booked across the Powertech business.
Rationalisation programmes have been initiated to overcome difficulties
currently experienced with the automotive battery division. The non-core
Aberdare Plastics operations and Lighting Structures were sold during the
period under review. The restructuring, and rightsizing projects plus the
focus on core activities further positions Powertech as a competitive player
in the world market. Signs of deterioration in world telecommunication
markets were seen some months ago. These have become a reality and certain
orders for supply to the USA, Europe and South America have been cancelled
or deferred. The situation has been exacerbated by the recent tragedy in the
United States with its impact on global economies, the extent of which will
only become evident over time. The roll out of the SNO networks and the
third cellular network provider will assist local operations, but is not
expected to fully offset the impact felt from the loss of international
business. No upturn is expected in the building and construction industries
and together with the downturn in trading conditions, earnings for the full
year are expected to be somewhat lower than those of the prior year.
Fintech
The momentum that started three years ago to expand the business into a
broader customer base has been sustained with capital financed increasing by
14.2% during the period under review.
Technologies Acceptances, which focuses mainly on the group customer base,
increased its capital financed to R691 million from R648 million at February
2001, with earnings slightly down against last year. The restructuring of
Fintech has resulted in increased gearing of the business to be more in line
with a rental and lease financing business.
Corporate Finance Solutions and Spartan Computer Rentals achieved
exceptional growth in both capital financed and in earnings. Despite recent
high levels of business failures, Fintech reported bad debts below industry
standards and it is expected that growth will be maintained for the full
year with improvements in profitability.
Comparison to the prior year has been complicated by the unbundling and
restructuring of Fintech. On an equivalent gearing structure to that
currently employed, headline earnings per share increased from 13.7 cents to
16.1 cents, an improvement of 18%.
BTG
BTG posted much improved results despite challenging market conditions and
reported headline earnings per share of 14.26 cents compared to a loss per
share of 324.3 cents in August 2000. Net cash balances amounted to
approximately R94 million after funding net investment activities during the
period of R26,9 million. Improved operating performance and an increase in
the level of business conducted by the group necessitated a commensurate
increased investment in working capital of R75 million so as to meet its
future operational requirements.
Notwithstanding the challenging market conditions and the global downturn in
the IT industry, the BTG Group has met expectations with pleasing
performance both from the original USKO IT operations and the former Fintech
Group companies. Specifically, the turnarounds in Mediswitch (emanating from
the successful merger with QEDI to form Digital Healthcare Solutions) and
BTG in the United Kingdom - both reporting satisfying results. Digital
Healthcare Solutions is now the pre-eminent business-to-business solutions
provider in the healthcare industry. The Networking operations and Uskotec
(a joint venture with Old Mutual) both showed substantial improvements and
should produce positive results in the second half. Business Solutions
(including ERP) returned to profitability. National Data Systems reported
excellent results and although lower profits are expected during the second
half, a satisfactory performance is anticipated for the full year. Xerox
South Africa continued the exceptional progress it has achieved over the
last few years with another pleasing performance expected for the full year
and the recently acquired Xerox Africa operations have performed better than
projected. Although Alcatel Business Systems had a relatively quiet period,
it was in line with seasonal trends and is expected to perform strongly in
the second half.
The restructured and much enlarged BTG group provided significant synergies
in terms of offering comprehensive information technology solutions. Local
acquisitions, disposal and further partnerships will be pursued and BTG will
continue to concentrate on securing a suitable acquisition in the UK to
complement and enlarge the already successful UK operations of the group. It
should be acknowledged that securing a first class business in the United
Kingdom is made more difficult given the current global IT climate and
accordingly time scales on this strategy cannot be accurately defined. The
prospects for full year remain positive with further improvements expected
during the second half despite the difficult trading conditions. However,
this should be seen against the potential effect that the recent tragedy in
the United States may have on global economies.
Outlook
While the domestic economy has weathered the global slowdown reasonably well
in the first half of this year, the short-term outlook for market conditions
appear to have worsened. In the light of the potential effect that the
recent tragedy in the United States might have on global economies, accurate
forecasting has become even more problematical and there could be an impact
on some of our businesses. International technology markets have also
deteriorated and recovery is not anticipated until late 2002 or 2003.
Nothwithstanding the above, management remains confident that the group is
well positioned to improve headline earnings compared to that of the
previous period.
STRATE
The dematerialisation date for Altron securities was Monday 3 September
2001. As of Tuesday 2 October 2001, electronic settlement of Altron trades
commenced for the first time and shareholders are reminded that Altron
securities must now be in electronic form before they may be traded on the
JSE Securities Exchange South Africa.
On behalf of the board
Dr Bill Venter Rober Venter Gavin Rochussen
Chairman Chief Executive Officer Chief Financial Officer
10 October 2001
Directors: Dr WP Venter (Chairman), RE Venter (Chief Executive),
IM Ayob, MC Berzack, L Boyd, PMO Curle* (Alternate: GJ Trollope),
DA Hawton, F Mabuza-Suttle, PD Redshaw*, GM Rochussen,
Dr HA Serebro (Alternate: Adv. DC Mpofu), CG Venter, PL Wilmot
British*
Secretaries: Altron Management Services (Pty) Limited:
Ms SF Linford (Group Secretary)
This interim report is also available on the Internet at www.altron.co.za
