| Tue 8 Oct 2002, 16:49 | | Allied Technologies - Abridged Consolidated Interi |
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ALLIED TECHNOLOGIES - Abridged consolidated interim financial results
for the six months ended 31 August 2002
ALLIED TECHNOLOGIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1946/020415/06)
Share code: ALT ISIN: ZAE000015251
* Revenue up by 14%
* Operating income up by 14%
* Headline earnings per share up by 20.1%
* Cash at R926 million
* Special Dividend of 50 cents per share declared
Abridged consolidated interim financial results for the six months ended
31 August 2002
Income statement
Six months Six months Year
ended ended ended
% 31.8.02 31.8.01 28.2.02
Figures in R000 Change (unaudited) (unaudited) (audited)
Revenue 2 113 124 1 853 732 3 604 706
- Continuing 1 806 955 1 568 722 3 203 018
operations
- Discontinued 306 169 285 010 401 688
operation
Operating income 170 651 150 341 357 293
- Continuing 149 823 132 442 329 398
operations
- Discontinued 20 828 17 899 27 895
operation
Dividend income 10 751 9 973 30 832
Net interest income 35 834 20 747 39 159
- Continuing 35 564 8 397 20 190
operations
- Discontinued 270 12 350 18 969
operation
Goodwill amortised (7 994) (6 701) (13 118)
Exceptional items 300 204 - (60 430)
(Note 1)
- Continuing 300 204 - (14 809)
operations
- Discontinued - - (45 621)
operation
Income before 509 446 174 360 353 736
taxation
- Continuing 488 348 144 111 352 493
operations
- Discontinued 21 098 30 249 1 243
operation
Taxation 62 125 50 920 133 356
- Continuing 55 889 41 807 97 870
operations
- Discontinued 6 236 9 113 35 486
operation
Income after taxation 447 321 123 440 220 380
- Continuing 432 459 102 304 254 623
operations
- Discontinued 14 862 21 136 (34 243)
operation
Attributable to (11 826) (10 933) 21 871
outside shareholders
- Continuing (2 908) 1 749 1 324
operations
- Discontinued (8 918) (12 682) 20 547
operation
Attributable earnings 435 495 112 507 242 251
- Continuing 429 551 104 053 255 947
operations
- Discontinued 5 944 8 454 (13 696)
operation
Basic earnings per 414.5 107.2 230.8
share (cents)
Headline earnings per 20.1 136.4 113.6 268.1
share (cents)
HEPS - Continuing 23.9 130.7 105.5 266.6
operations
Weighted average
number of shares
in issue (000) 105 072 104 964 104 966
Notes:
1. Exceptional items
Impairment of investment (20 264) - -
Profit on disposal of subsidiary 320 468 - -
Impairment of assets - - (10 186)
Net cost on disposal of businesses - - (4 623)
Restructuring - discontinued - - (45 621)
operation
300 204 - (60 430)
2. Reconciliation between earnings
and headline earnings
Attributable earnings 435 495 112 507 242 251
Amortisation of goodwill 7 994 6 701 13 118
Exceptional items - gross (300 204) - 60 430
Tax effects of adjustments - - (8 879)
Outside shareholders` interest - - (25 495)
Headline earnings 143 285 119 208 281 425
Attributable to discontinued (5 944) (8 454) (1 600)
operation
Headline earnings - continuing 137 341 110 754 279 825
3. These interim financial results have been prepared in accordance with
South African statements of Generally Accepted Accounting Practice. The
accounting policies and methods of computation followed in this interim
report is consistent with the annual financial statements for the year
ended 28 February 2002.
4. It is group policy for the annual dividend to be declared after the
end of the financial year.
5. 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.
6. During the period under review, there were various sale and purchase
transactions entered into between subsidiary companies and fellow
subsidiary companies. These transactions occurred under terms that are
no less favourable than those arranged with third parties. All
significant related party transactions are eliminated on consolidation.
7. The financial results of the discontinued operation is for the period
ended 30 June 2002.
Balance sheet
31.8.02 31.8.01 28.2.02
Figures in R000 (unaudited) (unaudited) (audited)
Assets
Non-current assets 380 343 453 629 428 517
Property, plant and equipment 105 912 131 033 118 684
Goodwill 34 790 47 210 40 400
Investments and loans 224 000 258 135 244 264
Deferred recoverable taxation 15 641 17 251 25 169
Current assets 1 505 611 1 252 585 1 321 878
Inventories 190 769 268 698 306 474
Accounts receivable 388 795 438 188 417 684
Cash and cash equivalents 926 047 545 699 597 720
Total assets 1 885 954 1 706 214 1 750 395
Equity and liabilities
Ordinary shareholders` interest 1 246 551 781 982 915 341
Outside shareholders` interest 39 057 178 415 49 012
Deferred taxation 10 351 8 253 8 629
Current liabilities 589 995 737 564 777 413
Accounts payable 491 144 646 522 698 010
Provisions 25 531 31 056 28 365
Taxation payable 73 320 59 986 51 038
Total equity and liabilities 1 885 954 1 706 214 1 750 395
Net asset value per share 1 186 745 872
(cents)
Ordinary shares in issue at end 105 117 104 966 104 972
of period (000)
Note: The balance sheet as at the end of August 2001 and February 2002
includes the discontinued operation.
Cash flow statement
Six months Six months Year
ended ended ended
31.8.02 31.8.01 28.2.02
Figures in R000 (unaudited) (unaudited) (audited)
Operating activities 19 268 31 071 88 897
Cash generated by operations 177 058 167 569 343 867
Net investment income 46 585 30 720 69 991
Changes in working capital (62 271) 38 837 71 018
Taxation paid (37 016) (33 882) (118 806)
Cash available from operating 124 356 203 244 366 070
activities
Dividends paid, including to (105 088) (172 173) (277 173)
outside shareholders
Investing activities 308 255 (12 417) (18 272)
Other investing activities (27 230) (12 417) (18 272)
Disposal of subsidiary 335 485 - -
Financing activities 804 37 87
Net funds generated 328 327 18 691 70 712
Cash and cash equivalents
- at beginning of period 597 720 527 008 527 008
- at end of period 926 047 545 699 597 720
Statement of changes in equity
Six months Six months Year
ended ended ended
31.8.02 31.8.01 28.2.02
Figures in R000 (unaudited) (unaudited) (audited)
Balance at start of period 915 341 774 397 669 439
Change in accounting policy - - 108 523
AC 107
915 341 774 397 777 962
Issue of share capital 804 37 87
Attributable earnings 435 495 112 507 242 251
Dividend (105 089) (104 959) (104 959)
Balance at end of period 1 246 551 781 982 915 341
Supplementary information
Six months Six months Year
ended ended ended
31.8.02 31.8.01 28.2.02
Figures in R000 (unaudited) (unaudited) (audited)
Amortisation - goodwill 7 994 6 701 13 118
Capital commitments 2 398 8 143 12 126
Capital expenditure 25 744 19 323 45 955
Depreciation 18 595 20 619 46 424
Lease commitments 54 616 64 066 30 095
Unlisted investments
- carrying amount 224 000 258 135 244 264
- directors` valuation 224 000 258 135 244 264
Operational contribution
Six Six
Months months Year
ended ended ended
Figures in 31.8.02 % 31.8.01 % 28.2.02 %
R000
Revenue:
Telecommunica 1 424 836 67.4 1 241 114 67.0 2 340 961 64.9
tion division
Multi-Media 620 340 29.4 600 522 32.4 1 206 417 33.5
and
Electronics
division
Information 144 794 6.9 105 010 5.7 225 607 6.3
technology
division
Inter group (76 846) (3.6) (92 914) (5.0) (168 279) (4.7)
sales
2 113 124 100.0 1 853 732 100.0 3 604 706 100.0
Operating
income
Telecommunica 85 320 4.0 75 098 4.1 163 057 4.5
tion division
Multi-Media 68 299 3.2 68 707 3.7 163 604 4.5
and
Electronics
division
Information 14 295 0.7 5 721 0.3 26 430 0.7
technology
division
Corporate net 2 737 0.1 815 0.0 4 202 0.1
income
170 651 8.1 150 341 8.1 357 293 9.9
Message to our shareholders
The Directors are pleased to report that Altech has again shown
impressive growth for the half-year ending August 2002 with headline
earnings per share increasing by 20.1 percent and that of the continuing
operations by 23.9 percent over the comparable prior year period. This
growth, off an increased base and now in its seventh consecutive year,
comes during one of the most difficult global and local economic
environments seen in decades. It highlights the strength of the group`s
operations, focused strategies and exceptional people.
Revenue has increased to R2.1 billion, whilst operating income has
increased to R171 million for the period under review.
The balance sheet remains strong with cash and cash equivalents in
excess of R926 million and an annualised return on equity in excess of
23 percent.
Due to Altech`s cash balance the Board has resolved to declare a special
dividend of 50 cents per share. The decision to distribute cash to
shareholders was made even though Altech has reached advanced stages of
various acquisition opportunities. In addition to the announced PTSS
transaction, heads of agreement, conferring periods of exclusivity have
been negotiated, relating to further acquisition prospects. The cash
remaining after the special dividend payout will be used for these
planned and future acquisitions.
Group Highlights
Telecommunications Division
Infrastructure and Solutions
We refer shareholders to the Chairman`s and Chief Executive Officer`s
Review in the 2002 Altech Annual Report in which it was stated that
Altech had sold its 40 percent of the Alcatel Altech Telecoms (AAT)
business to Alcatel CIT of France. On July 12 of this year Altech
received R335 million from this sale.
This set of interim results, for the half-year ending August 2002,
includes the trading of AAT for the period March to June 2002 and is
classified as a discontinued operation. Profit on the sale of the
business is disclosed as an exceptional item after the impairment of the
Rethabile preference shares. The redemption thereof should be finalised
by February 2003.
Wireless Communications
The Wireless Communications Division is focused on providing cellular
telephony services through Autopage Cellular and vehicle tracking and
recovery services through Netstar. Both businesses are leading players
in their respective fields and are important contributors to group
profits.
Autopage Cellular performed ahead of expectations in a market which has
undergone restructuring since the entry of Cell C late in 2001.
For the interim period Autopage Cellular showed a healthy increase in
its contract subscriber base of more than 13 000 net subscribers, with a
good percentage of higher valued added tariffs. The total subscriber
base now exceeds 460 000.
Most encouraging was the success of Autopage Cellular in its ongoing
initiative to improve Airtime Revenues Per User/Subscriber (ARPU),
through changing the mix in favour of high tariff connections. Corporate
sales teams at both Autopage Cellular and Supercall, as well as the
Autopage Direct franchised dealers, were key contributors to this
initiative.
Sales of electronic pre-paid vouchers through the partnership with ABSA
have shown good growth, particularly through the 1 700 ABSA ATM`s, but
also through ABSA point-of-sale devices. A number of other projects have
been completed to extend the range of cellular and related services
offered by Autopage Cellular and to meet the needs of an increasingly
sophisticated market.
Looking ahead, the cellular industry continues to generate new
opportunities with the advent of GPRS - 2.5G capabilities and Multi-
Media Messaging Service (MMS), which opens the way for increased growth
for new services and revenue streams.
Netstar, now the dominant player in Southern Africa`s stolen vehicle
tracking and recovery market, has achieved significant growth during the
period, well ahead of its competitors. Both the low-end Sleuth and top-
end Early Warning products featured strongly with unprecedented sales
volumes. Netstar now has a subscriber base of over 200 000 active units
and a market share of well over 46 percent, making it the undisputed
market leader. The company recovered 1 828 stolen and hijacked vehicles
over the six month period, with an estimated market value of R228
million.
The Malaysian Netstar venture is contributing annuity income and this,
together with opportunities which are under discussion in India, Brazil
and the rest of Africa, will entrench Netstar as a strong global
participant in its sector in the foreseeable future.
Multi-Media and Electronics Division
UEC Technologies (UEC) has exceeded its turnover budget as well as its
profit before tax, despite difficult market conditions. Research and
development expenditure increased significantly as compared to the prior
year`s first six months and this resulted in the introduction of the
"Zapper" Set-Top-Box, (STB), in record development time. The
introduction of this product was essential for UEC to remain competitive
at the lower end of the product range and resulted in a recent R100
million order being received
from the Middle East.
The UEC MultiView STB was also introduced to the market and the first
order of 10 000 units, valued in excess of R20 million, was recently
received from MultiChoice. All indications are that additional volume
orders will soon be received from our traditional and new customers.
This product allows the consumer to view two channels simultaneously.
The launch of MultiChoice`s Interactive Offering saw the introduction of
UEC`s new modem design "Infoplug" and its Interactive Software Offering.
Despite the globally depressed market for digital satellite decoders, it
is encouraging to note that UEC`s major customers such as MultiChoice
Africa (MCA) and Foxtel Australia are ordering product volumes higher
than the corresponding period last year.
It is further especially encouraging to note that UEC is presently
responding to several opportunities in the USA cable market. Whilst
still early, UEC`s "Eagle" family of STB`s and also its "End to End
Solution", which are being jointly offered together with MediaVerge, are
gaining acceptance.
MediaVerge, a start-up company recently established, is progressing well
as it continues to provide innovative end-to-end solutions, all
developed in-house, for the local and global multi-media markets.
During the review period MediaVerge successfully implemented, for
example, its TV-mail solution for MCA`s interactive channel. Other key
deliveries have been its embedded set-top-box multi-language support
solutions for a number of clients, including Arab Digital Distribution
and Showtime in the Middle East, Multichoice Hellas in Greece and CB-SAT
in China. These exciting new embedded set-top-box specific solutions
have resulted in MediaVerge being appointed as the exclusive support and
new development partner for Irdeto Access, a leading global conditional
access provider. Similarly, UEC has appointed MediaVerge as its set-top-
box menu support provider on a global basis.
The Alcom Motorola two-way radio group, comprising Alcom Systems
(Alcom), and Alcom Radio Distributors (ARD), has performed well during
the review period with both companies exceeding financial budgets.
Alcom is well prepared for the imminent issuing of the Thswane and SAPS
radio communication tenders that are valued at in excess of R800
million. Both Alcom and ARD are well positioned to enter and generate
further sales on the greater African continent by making use of their
knowledge and engineering skills of Terrestrial Trunked Radio digital
communications.
During the review period the Industrial Components Division of Arrow
Altech Distribution, (AAD), capitalised on its dominant position in the
domestic electronic component market and exceeded expectations on profit
and cash flow. This significant achievement was obtained despite the
currently depressed global electronic component distribution industry.
The Computer Products Division has signed a Distribution Agreement with
Fujitsu Siemens Computers which has enhanced its product offerings. The
division is now able to cover all needs of the personal computer market
sector - from supplying PC components to local PC integrators, to
supplying a range of multi-national branded products covering desktops,
laptops and servers. Tight fiscal expense controls, good asset
management, coupled with a continued focus on relationship enhancement
with strategic suppliers and customers, contributed towards AAD`s
success.
Information Technology Division
ISIS Information Systems (ISIS), performed well for the review period
and is operating ahead of budget and prior year. While maintaining its
role as a leading software and systems integration company operating
across a broad spectrum in the South African IT industry, ISIS, at the
same time, is increasing its share of the export market. The upgrade of
the Ground Command and Control System for the South African Air Force is
entering its final stages and training on the new system is already
taking place. ISIS is providing 24-hour-a-day support on this project.
During the review period ISIS completed phase one of the SAP cable
solution at Aberdare Cables. Phase two, the extension of the network as
well as ongoing maintenance, is now being implemented.
Keops Isis Industrial Information Systems (Keops Isis), has outperformed
its budget during the review period and has returned to profitability -
despite ongoing tough trading conditions.
In recent months Keops Isis increased its customer base by securing
contracts with several new prominent clients, including SA Chrome,
Columbus Stainless Steel and Alpha Cement. The company reports that all
current projects are progressing well and that proposals in excess of
R20 million are currently awaiting adjudication.
Synergistic acquisitions in the process control and consulting areas are
presently being discussed which, if successful, could widen the
company`s offering to industrial clients.
Altech Card Solutions (ACS) has consolidated its dominant position
within its areas of operation and has performed well for the review
period, with all of its divisions making significant contributions.
The Card Manufacturing and Personalisation Division has increased
payment card volumes by 35 percent while the Cardtronic facility
acquired by ACS during March of this year has bedded down well and is
performing as expected. Africard continues to consolidate its position
as the leading supplier of cards to the local market.
The EFTPOS Terminal Division continues to perform well. Two of South
Africa`s leading banks have had their card payment networks, which use
ACS supplied terminals, certified by the two major associations in the
country. Of the five local acquiring banks, three now use ACS supplied
terminals, while SA`s leading cellular network is using ACS supplied
terminals for the selling of pre-paid airtime to customers as it rolls-
out into Africa. This is an exciting development and good growth is
anticipated in this sector.
Operational Restructuring
Subsequent to the close of the interim reporting period the group
announced two organisational changes.
Alcom Systems and Alcom Radio Distributors have been transferred to the
Wireless Communications sector of the Telecommunications Division.
These changes reaffirm Altech`s commitment to capitalise on the
opportunities arising from the convergence of Telecommunications, Multi-
Media and Technology (TMT), and provide the opportunity to integrate
certain group companies into divisions where operational synergy already
exists.
Acquisitions
Altech has continued to identify, investigate and negotiate with a
number of potential acquisitions within the TMT sector, locally and
internationally. Certain prospects are currently at an advanced stage
within this process.
Subsequent to the interim period under review Altech reached agreement
to purchase South Africa`s foremost electronic funds transfer and bill
payment processing services business, Prism TranSwitch Services, from
Prism Holdings for R47 million. Subject to certain conditions, the
purchase will be earnings enhancing to the Altech Group, will become
effective on 1 December 2002.
The acquisition of Prism TranSwitch Services (PTSS) into the Altech
group of companies, announced yesterday, will enable Altech to offer
full end-to-end payment solutions for credit and debit, loyalty, purse,
utility payments and pre-paid items. The acquisition of PTSS is the
final piece in Altech`s payment solutions strategy. The Altech group now
offers card manufacture and personalisation solutions through Africard
and Datacard, card applications through ACS, terminal solutions through
ACS, E-commerce through PTSS and EasyPay, T-commerce through UEC and
MediaVerge, M-commerce through Autopage Cellular and transaction
switching through PTSS.
Altech, has, however, continued to be stringent in its requirements as
to fit, risk and similar criteria. Due to these factors the group
ultimately "walked" from several acquisition prospects after in-depth
due diligence processes. The result of this stringent approach and its
refusal to "make acquisitions for their own sake," is that Altech is now
almost uniquely positioned within the TMT sector. It is one of the few
listed groups in this sector with substantial cash resources and neither
gearing, nor loss-making operations.
The decimation of TMT sector valuations has resulted in a higher level
of potential deal flow and has created a window of opportunity for
advantageous acquisition activity in the near term. In fact, a number of
acquisition prospects which would have been well beyond the group`s
price range even one year ago, are now serious possibilities.
Outlook
Continuing local and global economic uncertainty, exacerbated by the
threat of armed conflict in the Gulf Region, leaves little doubt that
the coming months will be as tough, if not more so, than the period
under review.
The Altech Group remains positive, focused and acquisitive and will
maintain its healthy balance of successfully managing the basics and
driving for continuous improvement.
Similar growth can be expected from the group for the remainder of this
financial year.
SPECIAL DIVIDEND
Special Dividend No. 2 of 50 cents per share, in respect of the six
months ended 31 August 2002, was declared payable on Monday 25 November
2002 to ordinary shareholders recorded in the register at the close of
business on Friday 22 November 2002. The timetable relating to the
payment of the Special Dividend is as follows:
Last day to trade cum dividend Friday 15 November 2002
Trading ex dividend commences Monday 18 November 2002
Record date Friday 22 November 2002
Payment date Monday 25 November 2002
Share certificates may not be dematerialised or rematerialised between
Monday 18 November 2002 and Friday 22 November 2002, both days
inclusive.
On behalf of the Board
Dr Hilton Davies Craig Venter John Carstens
Non-Executive Chairman Chief Executive Officer Financial Director
8 October 2002
This interim report is available on the company website and the JSE news
service SENS. The interim report will be posted to shareholders on or
about 9 October 2002.
Date: 08/10/2002 03:29:21 PM Produced by the JSE SENS Department
