| Tue 7 May 2002, 0:00 | | Power Technologies Limited - Audited Abridged Cons |
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financial results
Power Technologies Limited
(Incorporated in the Republic of South Africa)
(Registration number 1946/022346/06)
Share code: POW
ISIN code: ZAE000015640
Turnover from operations up 11,5% HEPS up 26%
Terms of offer to minorities announced
Audited abridged consolidated preliminary financial results
for the year ended 28 February 2002
Income statement
% Year ended Year ended
Figures in R000 Change 28.2.02 28.2.01
Revenue 11.5 3 737 181 3 351 581
- continuing 19.1 3 656 926 3 070 528
- discontinuing 80 255 281 053
Operating income 9.8 216 388 197 051
- continuing 225 649 220 981
- discontinuing (9 261) (23 930)
Investment income
- income from associate - Voltex 19 136 20 896
- preference dividends 10 721 3 398
Net finance income 4 639 2 355
Exceptional items (note 1) (21 222) (23 591)
Income before taxation 14.8 229 662 200 109
Taxation 10.6 50 951 46 082
Income after taxation 16,0 178 711 154 027
Attributable to outside shareholders 7.1 (39 917) (37 284)
Attributable earnings 18.9 138 794 116 743
Basic earnings per share (cents) 20,0 52.1 43.4
Headline earnings per share (cents) 26.2 61.2 48.5
Weighted average number of
shares in issue (000)
(adjusted for own shares held by the 266 347 269 076
group)
Notes:
1. Exceptional items
Net deficit on disposal of operations
and investments (18 009) (12 837)
Impairment losses (1 071) (9 900)
Capital profit on sale of property 3 553 1 440
Net amortisation of negative and positive goodwill
including accelerated amortisation 23 903 5 785
Voltex put option cancellation fee (32 217) -
Other 2 619 (8 079)
(21 222) (23 591)
2. Reconciliation between earnings and headline earnings
Attributable earnings 138 794 116 743
Exceptional items - gross 21 222 23 591
Loss/(Profit) on disposal of fixed assets accounted
for in operating income 3 163 (539)
163 179 139 795
Tax effect of above adjustments (5 202) (7 896)
Outside shareholders' interest 4 989 (1 529)
Headline earnings 162 966 130 370
3. The group, in line with Generally Accepted Accounting Practice, now only
accrues a dividend in the financial statements on the last day to register
for a dividend declared and no longer in anticipation of a dividend
declaration. Comparative figures have been restated for this change.
The accounting policies and methods of computation adopted in this report
are consistent with statements of Generally Accepted Accounting Practice and
the previous year, except as reported above.
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.
Balance sheet
As at As at
Figures in R000 28.2.02 28.2.01
Assets
Non-current assets 580 027 643 930
Fixed assets 463 033 426 892
Goodwill 3 025 (24 136)
Investments and loans 76 137 217 270
Deferred recoverable taxation 37 832 23 904
Current assets 2 107 157 1 739 917
Inventories 696 680 712 583
Accounts receivable 877 079 820 865
Voltex sale proceeds 92 563 -
Net cash and cash equivalents 440 835 206 469
2 687 184 2 383 847
Equity and liabilities
Ordinary shareholders' interest 1 402 465 1 248 753
Outside shareholders' interest 261 760 170 893
Non-current liabilities and provisions 86 530 94 441
Deferred taxation 13 935 13 117
Current liabilities 922 494 856 643
Total equity and liabilities 2 687 184 2 383 847
Net asset value per share (cents) 527.7 468.4
Shares in issue at end of period (000)
(adjusted for own shares held by the group) 265 755 266 592
Statement of changes in equity
Year ended Year ended
Figures in R000 28.2.02 28.2.01
Balance at start of period 1 201 825 1 127 654
Changes in accounting policy
- dividend accrual 46 928 44 937
1 248 753 1 172 591
Share issues 473 421
Attributable earnings 138 794 116 743
Dividends (42 666) (41 194)
Net gains and losses not recognised
in the income statement 60 095 24 005
Foreign currency translation 77 895 24 005
Portion reversed on sale to minorities (17 800) -
1 405 449 1 272 566
Own shares acquired (2 984) (23 813)
1 402 465 1 248 753
Cash flow statement
Year ended Year ended
Figures in R000 28.2.02 28.2.01
Operating activities 298 949 33 092
Cash generated by operations 294 584 256 173
Net investment income 6 292 12 901
Cash effect of exceptional items (55 477) (8 073)
Changes in working capital 181 662 (107 135)
Taxation paid (64 788) (67 763)
Cash available from operating activities 362 273 86 103
Dividends paid, including to
outside shareholders (63 324) (53 011)
Investing activities 54 228 (125 565)
Fixed assets (64 775) (72 834)
Operations 80 870 (52 731)
Investments 38 133 -
Financing activities (136 756) 25 782
Net funds generated/(utilised) 216 421 (66 691)
Net cash in acquisitions - 93 318
Translation of foreign cash 30 300 -
Net movement in year 246 721 26 627
Segmental reporting
Telecommunications Power Electronics
Figures in R million 2002 2001 2002 2001
Revenue 1 120 871 2 617 2 495
Operating profit 118 88 98 109
Share of net profits of
associates - - 19 21
Net assets 81 173 1 154 1 233
While the segments above reflect the group's business segments, the
previously reported product type segments are analysed below in a similar
manner to that of last year to assist with comparisons.
Revenue
Figures in R million 2002 2001
Cables 2 377 1 894
Transformers 499 466
Batteries and solar systems 552 591
Lighting 80 217
Electrical accessories 261 190
Gross 3 769 3 358
Consolidation adjustments (32) (6)
Reported totals 3 737 3 352
Message to stakeholders
The group has produced good results for the year, notwithstanding global
events which have had a marked impact on business and world economies and
which exacerbated already difficult trading conditions for the Powertech
group.
The significant devaluation of the rand towards the end of 2001, while
having a positive effect on export revenue and vindicating our strategy of
globalisation, impacted domestic margins. A large component of the group's
raw material input costs are either hard currency or import parity priced
and it is not always possible to pass these cost increases on to our
customer base.
Financial results
Headline earnings improved a pleasing 26,2% to 61,2 cents per share.
Operations showed revenue growth of 11,5% to R3,7 billion (R3,4 billion) and
operating income growth of 9,8% to R216,4 million (R197 million) despite the
difficult trading conditions. These conditions necessitated the
implementation of stringent expense control programmes and restructuring
across all divisions with associated costs of R17,5 million. The significant
devaluation of the rand gave rise to realised and unrealised exchange gains
in the operating results for the year from continuing operations of R53,1
million (2001: R25,9 million).
The balance sheet remains strong with cash of R440,1 million (R206,5
million) on hand at year end, which includes R116,6 million received from
the disposals of Aberdare Fibre Optic Cables and R38 million from the Voltex
capital reduction.
Corporate Activities
The disposal of a 25,1% equity interest in Aberdare Fibre Optic Cables to
the world leader in fibre-optics, Corning Inc. of the USA, was reported at
the half-year.
Significant progress was made during the year under review with regard to
our empowerment drive with:
the Ikwezi Group acquiring 10% of the equity of Aberdare Cables and 20% of
Renergy Technologies;
Desta Power Matla (a subsidiary of ABB Powertech Transformers) acquiring
the Power Engineers distribution transformer business from Northern
Engineering Industries; and
agreement to the establishment of a joint venture with the black empowered
Kutlwano Engineering to acquire Alcon Conductors, a manufacturer of
aluminium overhead conductor.
The non-core Aberdare Plastics operation has been discontinued and the
Lighting Structures business divested. Pursuant to the offer to minority
shareholders in Voltex Holdings by Bidvest, Powertech disposed of its entire
29% shareholding in Voltex Holdings.
Review of Continuing Operations
Power Electronics
The impact of the actions taken during the year by management in
restructuring this sector of the business is reflected in the overall
performance and in particular in the turnaround of the low-voltage cable
manufacturing operations. A state-of-the-art cable distribution centre has
been established in Jet Park, Gauteng to handle the distribution of low-
voltage cable and other cable products, thereby significantly improving
customer service levels and reducing lead times. The medium-voltage cable
operations reported a pleasing increase in sales on the back of export
orders.
ABB Powertech Transformers has again recorded a good performance in the year
under review in the face of challenging market conditions. Through the
acquisition of Power Engineers, Desta Power Matla has been able to improve
efficiencies and provide a broader range of products and services, which
together with organic growth has produced a pleasing result for the year.
The battery group experienced a difficult year, with declining demand for
automotive batteries and increased raw material and operating costs. These
factors negatively impacted on the profitability of the group's automotive
battery division, necessitating factory consolidation and restructuring of
the product distribution network. However, the Industrial battery business
(mining and traction) continued to perform to expectations.
The building and construction industry remains depressed and impacted the
Crabtree Electrical Accessories group which nevertheless recorded an
improved performance over the prior year.
Telecommunications
The group has been successful with the award of contracts by Telkom for the
supply of optical fibre and copper cable and DC power systems, with further
contracts for standby batteries presently under adjudication.
Lambda Cables recorded another good year and has expanded its product range,
offering the new generation CAT 6 data cable which has reinforced Lambda
Cables' position as a major supplier of data cable to local and world
markets.
The roll-out of the network for the Second Telecommunications Network
Operator (SNO) by Eskom's Esi-tel and Transnet's Transtel has afforded
the group some relief following the collapse of the international
telecommunications market, with Aberdare Telecom Networks being awarded
contracts for the supply of innovative fibre optic cable products to both
these operators.
The DC Power Systems business, supplying standby and renewable energy
systems and solutions mainly to the telecommunications market, enjoyed a
reasonable demand for its products and services. Long-term alliances were
forged with major customers active in both the fixed line and cellular
telecommunications arenas where Battery Technologies is well established as
the preferred supplier of rectifiers and batteries.
Exports and foreign operations
Exports and foreign revenue increased to R1 045 million (R907 million) which
represents 28% of total revenue. The unprecedented downturn in the global
telecommunications industry impacted our Spanish based metallic
telecommunications cable manufacturer, Cables de Comunicaciones Zaragoza,
with certain contracts being cancelled or deferred. New business has,
however, been secured in Europe and Eastern Europe and this operation
reported a healthy performance for the year under review, exceeding budget
expectations.
Alcobre, primarily active in the power cable market in Portugal, faced
difficult market conditions.
Empowerment
Powertech is dedicated to achieving a meaningful transformation of the
workplace.
The group has a core strategy to develop a holistic empowerment programme
embracing all facets of the business from equity ownership, procurement from
and growth of SMME's, skills transfers and training as well as targeting
corporate social investment and promoting previously disadvantaged groups
within our workforce.
Outlook
Conditions in the markets in which the group operates show little sign of
any significant turnaround in the short-term. These conditions have dictated
the significant restructuring of the Powertech operations, the benefits of
which were demonstrated in the second six months of the year and which
should become evident in the years ahead.
The telecommunications market is expected to remain challenging in the short-
term. However, the continuing increase in demand for bandwidth could signal
a turnaround in this market in the near future.
The recent increase in interest rates will have a negative impact on the
building and construction industry and this market is not expected to show
any real improvement in the short-term.
The year ahead will be one of continued focus on the core businesses locally
and abroad, forging and strengthening relationships with strategic and
technology partners and ensuring the smooth integration of restructuring
efforts undertaken during the year under review. Provision of added value
services, offering customers turnkey solutions tailor-made to their needs,
building on the strong manufacturing base of group operations, an area where
the group has already achieved success, will continue.
Capital reduction and offer to minorities
Stakeholders are referred to the cautionary announcement published in the
media on 6 March 2002. In this regard, stakeholders are referred to the
terms announcement published together with this announcement detailing the
salient features of a capital reduction and scheme of arrangement proposed
by Allied Electronics Corporation Limited (Altron) between Powertech and its
shareholders in terms of which Powertech is to become a wholly-owned
subsidiary of Altron.
Appreciation
The past year for the Powertech group has necessitated difficult corrective
decisions and action to ensure a reasonable return for our shareholders.
Much progress was achieved in this area and in this regard we express our
thanks and appreciation to all our stakeholders especially our suppliers and
customers for their loyalty and support and management and employees for the
significant resilience and dedication.
As previously reported Gavin Rochussen, the former Altron Chief Financial
Officer resigns from the board on 10 May 2002. As a consequence of the sale
of the investment in Voltex, Myron Berzack is also to resign from the board
from the same date. We thank both these gentlemen for their valuable input
and contribution to the affairs of Powertech during their respective terms
of office.
On behalf of the Board
Dr John Maree Norbert Claussen Grant Scrutton
Chairman Chief Executive Financial Director
7 May 2002
Directors:
Dr JB Maree (Non-Executive Chairman), N Claussen (Chief Executive), MC
Berzack,
L Boyd, WS McCarroll*, DC Mpofu, GM Rochussen, GM Scrutton, GJ Trollope, RE
Venter (Alt PD Redshaw*), Dr WP Venter, PL Wilmot
(* British)
Business address: Transfer secretaries:
Powertech House, Hampton Park Computershare Services
Limited
20 Georgian Crescent, Bryanston 11 Diagonal Street
Sandton Johannesburg 2001
PO Box 228, Sloane Park 2152, South Africa PO Box 1053, Johannesburg 2000
Telephone +27 11 706 7184 Telephone +27 11 370 5000
Telefax + 27 11 706 1036 Telefax +27 11 370 5271
e-mail: info@powertech.co.za
Website: www.powertech.co.za
This report is available on the company website at www.powertech.co.za and
the JSE news service SENS.
The circular dealing with the capital reduction and offer to minorities will
be mailed to shareholders on or about 17 May 2002.
Member of the Altron Group
