| Tue 19 Feb 2002, 0:00 | | Ast Group - Unaudited results |
|
REGISTRATION NUMBER 1998/021790/06
Share code: AAA ISIN code: ZAE0000027397
AST Group Limited
Unaudited results for the six months ended 31 December 2001
Financial highlights
Revenue growth 46%
EBITDA growth 49%
Operating cash flow
per share growth 18%
Annuity income = 53%
Dollar-hedged income = 15,4%
Chairman's statement
Overview
I am proud to share yet another set of outstanding results with you.
Globally, the IT industry faced tough trading conditions during 2001,
growing at only 9%. The difficulties were exacerbated by the events of
September 11 and, in South Africa, by the currency devaluation at year-end.
In spite of these abnormal market conditions, we have once again achieved a
high growth rate. A remarkable pattern is emerging - the revenue achieved
during the first six months of this financial year equals the revenue
achieved for the full 2000 financial year - for the third year running!
Our 46% revenue growth is associated with increased market share and return
on past investments - a clear demonstration of our ability to deliver on
opportunities which arise in the market and the strength of our business
model. The fact that we maintained our operating margins above 11% is very
pleasing. It is also notable that we have expensed R14 million of up-front
costs on a number of large, newly signed projects - worth more than R400
million - while the associated revenue will only start to gain momentum in
the latter part of the current financial year. We continue to invest in new-
world technologies, through joint ventures to balance the risks and rewards.
Our smart card and biometric initiatives have already secured a substantial
client base and exciting revenue streams on projects, which will commence in
February 2002.
We have now achieved critical mass in each of our technology businesses - a
1998 prelisting strategic objective. Our leadership in the South African ICT
services market was recently confirmed by independent research which rated
all of AST's technology business units in leadership positions in their
respective markets. This competitive advantage will be maintained through
our dynamic approach that ensures constant adaptation of our business model
to changes in the market, thus avoiding dramatic interventions.
Where we historically found traction in IT Solutions and Distributed
Technology, we are now achieving the same in Networking. Our leadership in
IT Solutions and Outsourcing was cemented during the period with a number of
significant wins. We look forward to repeating this same success in
Networking. South African corporate customers are increasingly accepting
outsourcing as an efficiency and cost-reduction tool. Our recent success
around Business Services suggests that the acceptance has also flowed into
this segment.
We are satisfied with our progress in Australia. The business is
fundamentally sound, although results are not quite as initially
anticipated. They were, however, in line with the slower market conditions
experienced globally, and indications for the future are still positive. Our
roll-out is progressing well, albeit at a slower rate. Europe is becoming
increasingly important in our internationalisation strategy. The devaluation
of the rand has placed some constraints on our international expansion
programme.
Dividend policy
The AST Group's current policy is not to pay dividends. However, the
Dividend Policy Committee has recommended to the Board that this policy be
reviewed.
Capital expenditure
The capital expenditure for the Group during the period was R29 million,
allocated to technology infrastructure investments. Expenditure commitments
entered into over the same period amount to R12,5 million.
Empowerment policy (BEE)
The deal flow from the public sector during the period is further evidence
that our BEE model, which includes delivery capability from the Joint
Venture partners to drive real empowerment, is accepted in government
circles. Our model has multiple objectives, from direct project involvement
to equity partnership and, ultimately, greater participation in the listed
AST.
We recognise that increasing our BEE shareholding with active partners is an
enormous opportunity. The placement of the Kumba shareholding is still in
progress, having been delayed by market conditions. However, our BEE
partners are committed to taking up the shares, which will now be placed in
smaller blocks. The positive outcome of the process has a much higher
priority than speedy resolution.
Prospects
I am positive about AST's prospects. We have good visibility of the results
for the full year and AST is on track. In the medium term, we look forward
to increasing AST's market share even further and to an accelerated profit
growth.
For and on behalf of the Board
Gerrie J de Klerk
Executive Chairman
19 February 2002
Income statement
for the six months ended 31 December 2001
Unaudited Unaudited Audited
31 December 31 December 30 June
2001 2000 2001
(6 months) (6 months) (12 months)
R'000 R'000 R'000
Revenue 1 004 032 688 785 1 513 542
Earnings before interest,
tax, depreciation
and amortisation (EBITDA) 135 953 91 289 222 202
Depreciation (25 435) (10 086) (39 009)
Operating profit 110 518 81 203 183 193
Net (finance cost)/
interest received (259) 5 862 1 923
Share of results of
associates (6 091) - 69
Profit before tax and
amortisation 104 168 87 065 185 185
Amortisation of goodwill (44 158) (23 820) (126 547)
Profit before tax 60 010 63 245 58 638
Tax (28 014) (15 905) (41 342)
Profit after tax 31 996 47 340 17 296
Minority interest (2 644) (5 328) (814)
Net profit for the period 29 352 42 012 16 482
Net (finance cost)/interest
received (259) 5 862 1 923
Interest received 4 872 7 113 16 431
Finance costs (5 131) (1 251) (14 508)
Headline earnings per
ordinary share (cents) 12,91 11,64* 25,16*
Fully diluted headline
earnings per ordinary
share (cents) 11,51 11,22* 23,87*
Headline earnings per
ordinary share excluding
associates (cents) 14,02 11,64 25,15
Operating cash flow per
share (cents) 13,41 11,35 29,48
Earnings per ordinary
share (cents) 5,31 7,67 3,00
Fully diluted earnings per
ordinary share (cents) 4,74 7,39 2,84
Weighted average number
of shares 552 280 548 034 550 271
Fully diluted number
of shares 619 465 568 197 580 004
Number of shares in issue 571 026 551 361 554 123
Reconciliation of
headline earnings
Net profit for the period 29 352 42 012 16 482
Amortisation of goodwill 41 961 21 756 120 777
Loss on sale of business - - 1 197
Headline earnings 71 313 63 768 138 456
*Restated in terms of the preferred approach to amortisation of goodwill on
minorities.
Cash flow statement
for the six months ended 31 December 2001
Unaudited Unaudited Audited
31 December 31 December 30 June
2001 2000 2001
(6 months) (6 months) (12 months)
R'000 R'000 R'000
Operating activities
Cash generated from
Operations 93 614 67 426 172 278
Net (finance cost)/interest
received (259) 5 862 1 923
Normal tax paid (19 319) (11 064) (11 975)
Cash from operating activities 74 036 62 224 162 226
Investment activities
Acquisition of subsidiaries
and businesses (108 940) (78 305) (185 721)
Increase in investments (1 975) (7 049) (4 014)
Additions to property,
plant and equipment (41 703) (39 134) (90 957)
Cash used in investment
activities (152 618) (124 488) (280 692)
Financing activities
Cash from financing
activities 16 609 1 820 75 473
Net decrease in cash and
cash equivalents (61 973) (60 444) (42 993)
Cash and cash equivalents
at the beginning
of the period 160 958 203 951 203 951
Cash and cash equivalents
as per the Balance Sheet 98 985 143 507 160 958
Short-term loans (28 750) - -
Cash and cash equivalents at
the end of the period 70 235 143 507 160 958
Balance sheet
as at 31 December 2001
Unaudited Unaudited Audited
31 December 31 December 30 June
2001 2000 2001
R'000 R'000 R'000
Assets
Non-current assets 749 568 507 701 562 071
Property, plant and
equipment 147 861 110 414 134 239
Rental assets 20 332 7 304 11 375
Goodwill 440 540 231 251 261 192
Unlisted investments 36 921 28 582 33 316
Deferred tax asset 103 914 130 150 121 949
Current assets 535 537 391 001 489 485
Inventories 37 035 8 332 18 950
Accounts receivable 399 517 239 162 309 577
Cash and cash equivalents 98 985 143 507 160 958
Total assets 1 285 105 898 702 1 051 556
Equity and liabilities
Capital and reserves 510 190 390 624 371 299
Minority interest 58 458 5 328 55 814
Non-current liabilities 175 733 123 043 108 458
Interest-bearing liabilities 93 203 53 667 62 290
Amounts due to vendors 82 530 69 376 46 168
Current liabilities 540 724 379 707 515 985
Trade creditors 238 323 192 699 176 017
Other payables 241 205 114 731 241 059
Amounts due to vendors 30 850 55 474 60 999
Tax liability 30 346 16 803 37 910
Total equity and
liabilities 1 285 105 898 702 1 051 556
Net asset value per
ordinary share (cents) 89,35 70,85 67,01
Fully diluted net asset
value per ordinary share
(cents) 82,36 68,75 64,02
Statement of changes in equity
for the six months ended 31 December 2001
Unaudited Unaudited Audited
31 December 31 December 30 June
2001 2000 2001
(6 months) (6 months) (12 months)
R'000 R'000 R'000
Share capital 57 55 55
Balance at the
beginning of the period 55 55 55
New shares issued
during the period 2 - -
Share premium 330 819 218 160 228 359
Balance at the beginning
of the period 228 359 220 920 220 920
Premium on new shares
issued during the period 43 416 11 250 18 885
Share issue expenses
written off (160) (428) (830)
Amounts due to vendors 59 497 (13 582) (4 046)
Purchase of treasury shares (293) - (6 570)
Distributable reserves 185 263 172 513 145 925
Balance at the beginning
of the period 145 925 127 277 127 277
Net profit for the period 29 352 42 012 16 482
Currency translation
differences for the period 9 986 3 224 2 166
Non-distributable reserves (5 949) (104) (3 040)
Balance at the beginning
of the period (3 040) 354 354
Currency translation
differences for the period (2 909) (458) (3 394)
Balance at the end
of the period 510 190 390 624 371 299
Financial performance
Revenue increase of 46% of which two thirds represents organic revenue
growth - market share increasing.
EBITDA has increased by 49% - margin increased slightly and is in the target
range. Increased depreciation represents the group's continued investment in
technology infrastructure - investing for tomorrow.
Increase represents goodwill acquired with new acquisitions, mainly Phillips
Business Communications and Red Rock Consulting.
Investment in joint ventures where we share risk and reward - the largest
being Smartcard Solutions - revenue on contracts won will realise from
February 2002.
The goodwill on acquisitions amortised over the post-acquisition warranty
period.
Increase due to investment in maintenance capability - brought in-house to
enhance efficiency.
Changes in the tax legislation - in line with expectation, the tax rate has
increased from 18,3% to 26,9%.
57 days versus 59,5 days as at 30 June 2001.
18% increase in operating cash flow per share.
Cash resources utilised to fund longer- term growth - eliminating use of
script as currency.
Financial policy statements
The financial statements are prepared in accordance with and comply
with the Statements of Generally Accepted Accounting Practice in South
Africa.
The financial statements have been prepared on the historical cost
basis.
The accounting policies of the Group are consistent in all material
respects with those applied in the previous year.
Directors: Gerrie J de Klerk (Executive Chairman), Jan J van Zyl (Chief
Executive Officer), Thinus Mulder (Chief Financial Officer), Marthinus
Erasmus, Joop Groeneveld, Phillip Vermeulen, John Ramatsui, Pieter Bouwer,
John Miller, Malcolm Macdonald*, Jac van der Walt*, Con Fauconnier*, Sipho
Ndlovu* *Non-executives
Registered office: Lords Office Estates, 276 West Street, Centurion, 0157,
South Africa, Tel: (012) 674-7600, info@ast.co.za Transfer secretaries:
Ultra Registrars (Pty) Limited (Registration number 2000/007239/07)
Diagonal Street, Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000)
This and additional information is available on our website: www.ast.co.za
