| Thu 7 Mar 2002, 0:00 | | ADvTECH results |
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ADVTECH LIMITED
REGISTRATION NUMBER: 1990/001119/06
(FORMERLY ADVTECH EDUCATION HOLDINGS LIMITED)
INCOME STATEMENT
YEAR ENDED 31 DECEMBER 2001
NOTE 4
RESTATED
AUDITED AUDITED
31 DEC 31 DEC
% 2001 2000
NOTES CHANGE (R'000) (R'000)
TURNOVER -6% 515 950 551 106
-EDUCATION 22% 324 653 267 074
-RECRUITMENT -33% 191 297 284 032
OPERATING PROFIT BEFORE
DEPRECIATION AND AMORTISATION 3% 57 555 55 896
-EDUCATION 21% 44 557 36 895
-RECRUITMENT -32% 12 998 19 001
DEPRECIATION AND AMORTISATION 1% 18 550 18 378
OPERATING PROFIT 4% 39 005 37 518
NET DIVIDEND INCOME - 3 558
NET INTEREST PAID 170% (11 615) (4 298)
EQUITY ACCOUNTED EARNINGS -15% 798 937
PROFIT BEFORE EXCEPTIONAL
ITEMS 1 -25% 28 188 37 715
EXCEPTIONAL ITEMS 57% 29 227 18 575
(LOSS)/PROFIT BEFORE TAXATION -105% (1 039) 19 140
TAXATION -112% (1 025) 7 699
(LOSS)/PROFIT AFTER TAXATION -100% (14) 11 441
ATTRIBUTABLE TO OUTSIDE
SHAREHOLDERS (303) (1 505)
ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS (317) 9 936
NUMBER OF SHARES IN ISSUE (`000) 392 804 392 804
WEIGHTED AVERAGE NUMBER OF
SHARES IN ISSUE (`000) 392 804 392 804
EARNINGS PER SHARE (CENTS) (0.08) 2.53
HEADLINE EARNINGS PER SHARE
(CENTS) 6.16 7.26
FULLY DILUTED ORDINARY SHARES
(`000) 393 664 394 204
FULLY DILUTED EARNINGS PER
SHARE (CENTS) (0.08) 2.52
FULLY DILUTED HEADLINE EARNINGS
PER SHARE (CENTS) 4 6.15 7.23
STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2001
NON-
SHARE SHARE DISTRIBUTABLE RETAINED
CAPITAL PREMIUM RESERVES EARNINGS TOTAL
(R'000) (R'000) (R'000) (R'000) (R'000)
BALANCE AT
BEGINNING OF
THE YEAR 3 928 353 166 27 938 68 146 453 178
PRIOR YEAR
ADJUSTMENT
- (PER NOTE 4) (7 523) (7 523)
- TAXATION (754) (754)
RETAINED
EARNINGS FOR
THE YEAR (317) (317)
GOODWILL
WRITTEN OFF (9 936) (9 936)
MOVEMENT IN
TRANSLATION
RESERVES 2 369 2 369
BALANCE AT END
OF THE YEAR 3 928 353 166 20 371 59 552 437 017
BALANCE SHEET
AS AT 31 DECEMBER 2001
NOTE 4
RESTATED
AUDITED AUDITED
31 DEC 31 DEC
2001 2000
NOTES (R'000) (R'000)
EMPLOYMENT OF CAPITAL
FIXED ASSETS 2 302 852 289 664
GOODWILL AND TRADEMARKS 241 749 274 449
DEVELOPMENT COSTS 2 609 2 965
DEFERRED TAXATION ASSET 37 638 29 321
INVESTMENTS 1 612 1 460
NET CURRENT ASSETS 83 092 115 220
INVENTORIES 4 250 3 605
PREPAYMENTS 9 071 11 333
TAXATION 2 870 7 991
ACCOUNTS RECEIVABLE 56 350 79 021
CASH RESOURCES AND LIQUID
INSTRUMENTS 10 551 13 270
TOTAL ASSETS 669 552 713 079
CAPITAL EMPLOYED
ORDINARY SHARE CAPITAL 3 928 3 928
ORDINARY SHARE PREMIUM 353 166 353 166
NON DISTRIBUTABLE RESERVE 20 371 27 938
RETAINED EARNINGS 59 552 60 625
ORDINARY SHAREHOLDERS
EQUITY 437 017 445 657
OUTSIDE SHAREHOLDERS
INTEREST 2 470 2 166
INTEREST BEARING DEBT 3 129 250 157 043
CURRENT LIABILITIES 100 815 108 213
ACCOUNTS PAYABLE 68 998 71 494
TAXATION - -
VENDOR CLAIMS 8 793 29 445
FEES IN ADVANCE 23 024 7 274
TOTAL LIABILITIES 669 552 713 079
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2001
NOTE 4
RESTATED
AUDITED AUDITED
31 DEC 31 DEC
2001 2000
(R'000) (R'000)
EXCEPTIONAL ITEMS (PRE TAX)
RESTRUCTURING COSTS 393 -
LITIGATION COSTS 10 175 -
CLOSURE COSTS- DISCONTINUED OPERATIONS 9 035 4 130
PROFIT ON SALE OF DIVISIONS (4 210) -
GOODWILL AMORTISATION 13 834 14 445
29 227 18 575
SEE NOTE 3.
INTEREST BEARING DEBT COMPRISES A COMBINATION OF LOAN AGREEMENTS ALL
SUBSTANTIALLY SHORT TERM IN NATURE. NOTWITHSTANDING THIS CLASSIFICATION,
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, CERTAIN COMPARATIVES HAVE
BEEN REGROUPED. FURTHERMORE, IN ORDER TO PROVIDE A PROPER APPRECIATION OF
THE GROUP'S PERFORMANCE FOR THE PERIOD UNDER REVIEW, ADJUSTMENTS HAVE BEEN
MADE TO THE 2000 COMPARATIVES TO TAKE INTO ACCOUNT UNACCOUNTED COSTS AND
CHARGES AS WELL AS THE EFFECTS OF A CHANGE IN ACCOUNTING POLICY AT A
SUBSIDIARY. THIS INFORMATION WAS ONLY DETERMINED DURING THE CORRECTIVE
ACTION INITIATIVE. THE IMPACT OF THESE PRIOR YEAR ADJUSTMENTS WAS TO REDUCE
2000 COMPARATIVE FIGURES AS FOLLOWS:
UNACCOUNTED COSTS AND CHARGES 7 618
EFFECT OF CHANGE IN ACCOUNTING POLICY 3 129
REDUCTION IN OPERATING PROFIT 10 747
TAXATION THEREON 3 224
7 523
REDUCTION IN HEADLINE EARNING PER SHARE (CENTS) 1.9
CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2001
NOTE 4
RESTATED
AUDITED AUDITED
31 DEC 31 DEC
2001 2000
(R'000) (R'000)
CASH GENERATED BY OPERATIONS 34 865 49 622
NET INTEREST (PAID)/RECEIVED (11 615) (4 053)
TAXATION PAID (3 414) (8 371)
DIVIDEND PAID (11 729) -
WORKING CAPITAL CHANGES 59 000 (273)
CASH FLOWS FROM OPERATING ACTIVITIES 67 107 36 925
CASH FLOWS FROM INVESTING ACTIVITIES (40 587) (247 260)
CASH FLOWS FROM FINANCING ACTIVITIES (29 351) 145 109
NET DECREASE IN CASH (2 831) (65 226)
CASH AT BEGINNING OF YEAR 13 270 68 000
CASH DISPOSED 112 10 496
CASH AT END OF PERIOD 10 551 13 270
SUPPLEMENTARY INFORMATION
CAPITAL EXPENDITURE - CURRENT YEAR 35 163 62 912
CAPITAL COMMITMENTS - FUTURE YEARS 9 974 22 531
OPERATING LEASE COMMITMENTS FUTURE YEARS 101 787 96 655
CONTINGENT LIABILITIES 8 493 10 284
DETERMINATION OF HEADLINE EARNINGS:
ATTRIBUTABLE TO ORDINARY SHAREHOLDERS (317) 9 936
ADJUSTMENT FOR EXCEPTIONAL ITEMS 24 518 18 575
EXCEPTIONAL ITEMS BEFORE TAXATION 29 227 18 575
TAXATION (4 709) -
HEADLINE EARNINGS 24 201 28 511
COMMENTS:
RESULTS AND OPERATING REVIEW
THE YEAR UNDER REVIEW WAS EXTREMELY CHALLENGING FOR THE ADVTECH GROUP. THE
YEAR COMMENCED IN AN UNPREDICTABLE ENVIRONMENT, WHICH WAS COMPOUNDED BY A
TENTATIVE BUT IMPERATIVE MANAGEMENT RESTRUCTURE. IN ADDITION, THE BUSINESS
WAS FURTHER DISRUPTED BY COSTLY AND TIME CONSUMING VENDOR LITIGATION, AS
WELL AS UNTIMELY OPPORTUNISTIC OFFERS FOR CONTROL OF THE GROUP. HAVING
REGARD TO THESE EVENTS AND CIRCUMSTANCES, IT WAS INEVITABLE THAT GROUP
OPERATIONS WOULD BE ADVERSELY AFFECTED.
IN THE EVENT, HEADLINE EARNINGS PER SHARE IN THE FIRST SIX MONTHS OF 2001
DECLINED BY 67% AGAINST THE COMPARABLE PRIOR PERIOD. DECISIVE ACTION WAS
TAKEN TO ADDRESS THE DIFFICULTIES. THE BOARD OF DIRECTORS WAS
RECONSTITUTED, THE MANAGEMENT WAS REORGANISED AND REMOTIVATED AND MORE
FOCUSED AND APPROPRIATE ATTENTION WAS PAID TO COMPANY BUSINESS THAN TO
PERIPHERAL MARKET DISTRACTIONS.
THE BOARD IS PLEASED THEREFORE TO RECORD THAT, AFTER THE APPLICATION AND
IMPLEMENTATION OF NORMAL AND REGULAR MANAGEMENT INTERVENTIONS AND GIVEN THE
UNDERLYING STRENGTH OF THE CORE BUSINESS UNITS, HEADLINE EARNINGS PER SHARE
INCREASED FROM 1.9 CENTS PER SHARE FOR THE FIRST HALF YEAR TO 4.2 CENTS PER
SHARE FOR THE SECOND HALF OF THE YEAR.
ACCORDINGLY THE GROUP HAS BEEN REFOCUSED TOWARDS ITS CORE COMPETENCIES AND
SEVERAL NON-PERFORMING AND NON-CORE ACTIVITIES, PARTICULARLY THOSE IN THE
RECRUITMENT DIVISION, WERE EITHER SOLD OR CLOSED. LOSSES ARISING FROM
DISCONTINUED ACTIVITIES AND RESTRUCTURING COSTS DURING THE YEAR AMOUNTED TO
R9.4 MILLION. EXCEPTIONAL COSTS OF R10,2 MILLION WERE ALSO INCURRED DURING
THE YEAR ON VENDOR LITIGATION AND RELATED EXPENSES INCLUDING CERTAIN
FORENSIC CONSULTING IN RELATION TO THE LITIGATION. INTEREST PAID WAS
SUBSTANTIALLY HIGHER FOR THE YEAR DUE MAINLY TO HIGHER GROUP BORROWINGS
ARISING FROM PAYMENTS TO VENDORS LATE IN 2000.
EDUCATION DIVISION
A FEATURE OF THE YEAR HAS BEEN THE GROWTH IN EARNINGS OF THE EDUCATION
DIVISION WITH A 21% IMPROVEMENT IN EBITDA FOR THE YEAR AND A 41% INCREASE IN
THE SECOND HALF OF THE YEAR AGAINST THE COMPARABLE PERIOD OF THE PREVIOUS
YEAR. THE CRAWFORD SCHOOLS DIVISION CONTINUED TO GROW AS FORECAST AND
PRODUCED IMPRESSIVE RESULTS. THE OTHER MAJOR CONTRIBUTOR IN THE EDUCATION
DIVISION WAS VARSITY COLLEGE WHICH MET ITS EXPECTED PROFIT FORECAST. OTHER
TERTIARY OPERATIONS PERFORMED SATISFACTORILY. THE EDUCATION DIVISION IS
EXPECTED TO SHOW CONTINUED GROWTH IN THE COMING FINANCIAL YEAR. TWO NEW
COLLEGES HAVE BEEN PLANNED FOR OPENING IN 2002.
RECRUITMENT DIVISION
A 33% REDUCTION IN TURNOVER AND 32% DECLINE IN EBITDA TO R13 MILLION IN THE
RECRUITMENT DIVISION WAS MAINLY DUE TO THE DISAPPOINTING PERFORMANCE FROM
THE GROUP'S AUSTRALIAN OPERATIONS. THE PERFORMANCE OF OTHER RECRUITMENT
DIVISIONS WERE EQUALLY DISAPPOINTING. SUBSEQUENT TO THE MID-YEAR
REORGANISATION HOWEVER, EBITDA FOR THE SECOND HALF OF THE FINANCIAL YEAR FOR
THE RECRUITMENT DIVISION INCREASED BY 61% ON THE COMPARABLE PERIOD THE
PREVIOUS YEAR AND BY YEAR END WAS INDICATING A CONVINCING RECOVERY. AS PART
OF THE GROUP'S REORGANISATION, THIS DIVISION WAS SIGNIFICANTLY REDUCED
DURING THE YEAR WITH EIGHT UNITS EITHER DOWNSIZED OR CLOSED. THE GROUP IS
CONFIDENT THAT THE DIFFICULTIES ENCOUNTERED IN THE DIVISION HAVE BEEN
OVERCOME AND THAT AN IMPROVEMENT IN EARNINGS CAN BE EXPECTED.
LITIGATION
LEGAL CLAIMS WERE INITIATED AGAINST THE VENDORS OF BOTH THE COMMUNICATE AND
CRAWFORD DIVISIONS DURING THE YEAR UNDER REVIEW. BOTH CLAIMS INVOLVE
SIGNIFICANT AMOUNTS AND IT IS EXPECTED THAT THE LEGAL PROCESS WILL BE
CONCLUDED BY THE END OF THE 2002 FINANCIAL YEAR. SHAREHOLDERS WILL BE
ADVISED OF THE OUTCOME OF THESE MATTERS WHEN A CONCLUSION HAS BEEN REACHED.
ALL LITIGATION COSTS INCURRED TO DATE HAVE BEEN WRITTEN OFF AND NO ACCOUNT
HAS BEEN TAKEN OF ANY POTENTIAL RECOVERIES.
FINANCIAL
GEARING AT 61% AS AT 31 DECEMBER, 2001, IS SIGNIFICANTLY LOWER THAN THE
GEARING LEVEL OF 84% AT THE END OF DECEMBER 2000, AS WELL AS THE LEVEL OF
74% AT 30 JUNE, 2001. THIS IS SUBSTANTIALLY THE RESULT OF IMPROVED
EFFICIENCIES AND WORKING CAPITAL CONTROLS. THE GROUP IS CURRENTLY BEING
COMFORTABLY MANAGED WITHIN THE CONSTRAINTS OF ITS FACILITIES, THE OBJECT
BEING TO REDUCE THE LEVEL OF GEARING TO BELOW THE SELF IMPOSED TARGET OF 50%
FOR 2002.
ACCOUNTING POLICIES
THE ACCOUNTS FOR THE YEAR HAVE BEEN PREPARED IN ACCORDANCE WITH SOUTH
AFRICAN STATEMENTS OF GENERALLY ACCEPTED ACCOUNTING PRACTICE. THE
ACCOUNTING POLICIES USED ARE CONSISTENT WITH THOSE USED IN THE PREVIOUS
YEAR, WITH THE EXCEPTION OF THE POLICY OF REVENUE RECOGNITION AT A DIVISION,
SUBSEQUENTLY SOLD, TO CONFORM WITH AC111.
DIVIDEND
NO DIVIDEND HAS BEEN DECLARED FOR THE YEAR ENDED 31 DECEMBER 2001.
PROSPECTS
THE GROUP'S REMAINING OPERATING DIVISIONS ARE PROFITABLE CASH GENERATING
BUSINESSES AND THE TREND OF IMPROVEMENT, CLEARLY DETECTABLE DURING THE
SECOND HALF OF THE YEAR IS GRATIFYING. THIS MOMENTUM AND TREND OF
PERFORMANCE IS EXPECTED TO BE MAINTAINED AND SHAREHOLDERS CAN EXPECT AN
IMPROVEMENT IN EARNINGS FOR THE ENSUING YEAR.
BY ORDER OF THE BOARD
BD BUCKHAM, CHAIRMAN
HF BROWN, ACTING CHIEF EXECUTIVE OFFICER
6 MARCH 2002
DIRECTORATE:
BD BUCKHAM (CHAIRMAN); HF BROWN (ACTING CEO) (CA(SA)); JNP BOOYENS
(FINANCIAL) (B COM(HONS), CA(SA)); C BOMELA*; HJ BORKUM*; CN DUFF; DK
FERREIRA (BA LLB, MA(OXON), MSC(LONDON)); 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
Date: 07/03/2002 03:30:00 PM Produced by the JSE SENS Department
