| Mon 14 Oct 2002, 15:47 | | Allied Electronics Corporation Limited - Abridged |
|
Allied Electronics Corporation Limited - Abridged Consolidated Interim Financial
Results For The Six Months Ended 31 August 2002
Altron
Allied Electronics Corporation Limited
(Incorporated in the Republic of South Africa)
(Registration number 1947/024583/06)
Share code: ATN
ISIN: ZAE000029658
Share code: ATNP
ISIN: ZAE000029669
Revenue up 24%
Operating income up 24%
Headline earnings per share up 15%
Net asset value per share up 34%
Income statement
Six months Six months Year
ended ended ended
Figures in R000 % 31.8.02 31.8.01 28.2.02
Change (Unaudited) (Unaudited) (Audited)
Revenue 23.8 6 200 361 5 008 111 9 899 547
- Continuing 5 894 192 4 633 978 9 405 030
operations
- Discontinued 306 169 374 133 494 517
operations
Operating income 23.6 406 920 329 336 762 876
- Continuing 386 236 331 652 751 000
operations
- Discontinued 20 684 (2 316) 11 876
operations
Net interest income 43 812 38 066 68 965
- Continuing 43 542 27 895 52 677
operations
- Discontinued 270 10 171 16 288
operations
Income from 464 9 498 23 990
associates
Investment income 3 369 6 341 22 329
Income before
goodwill
amortisation
and exceptional 18.6 454 565 383 241 878 160
items
- Continuing 433 611 375 386 849 996
operations
- Discontinued 20 954 7 855 28 164
operations
Goodwill amortised (31 687) (51 065) (48 550)
Exceptional items 301 941 (6 862) (83 923)
(Note 1)
- Continuing 301 941 (6 862) (31 101)
operations
- Discontinued - - (52 822)
operations
Income before 122.8 724 819 325 314 745 687
taxation
- Continuing 703 865 317 459 770 345
operations
- Discontinued 20 954 7 855 (24 658)
operations
Taxation 145 582 103 407 195 371
- Continuing 139 346 94 294 166 991
operations
- Discontinued 6 236 9 113 28 380
operations
Income after 161.0 579 237 221 907 550 316
taxation
- Continuing 564 519 223 165 603 354
operations
- Discontinued 14 718 (1 258) (53 038)
operations
Attributable to (270 401) (118 384) (242 309)
outside shareholders
- Continuing (258 784) (111 304) (277 206)
operations
- Discontinued (11 617) (7 080) 34 897
operations
Attributable 198.3 308 836 103 523 308 007
earnings
- Continuing 305 735 111 861 326 148
operations
- Discontinued 3 101 (8 338) (18 141)
operations
Basic earnings per 214.4 114.9 36.5 111.9
share (cents)
Headline earnings 15.0 59.0 51.3 129.5
per share (cents)
- Continuing 57.9 54.3 131.5
operations
- Discontinued 1.1 (3.0) (2.0)
operations
Weighted average
number of shares in
issue (000)
- ordinary shares 93 914 95 479 94 689
- participating 174 925 187 832 180 519
preference shares
Notes:
1. Exceptional items
Net surplus/(loss) on disposal of 322 329 33 966 (22 471)
operations
Net surplus/(loss) on disposal of - 3 554 (30 025)
investments/property
Impairment losses (20 264) (11 275) 4 488
Settlement of obligation to - (38 600) (36 400)
acquire assets at a premium over
market value
Other (124) 5 493 485
301 941 (6 862) (83 923)
2. Reconciliation between
earnings and headline earnings
Attributable earnings 308 836 103 523 308 007
Goodwill amortised 31 687 51 065 48 550
Exceptional items - gross (301 941) 6 862 83 923
Tax effect of above adjustments - (2 811) (13 237)
Outside shareholders` interest 120 110 (13 278) (70 954)
Headline earnings 158 692 145 361 356 289
- Continuing operations 155 591 153 699 361 937
- Discontinued operations 3 101 (8 338) (5 648)
3. The unaudited interim financial results have been prepared in accordance with
South African statements of Generally Accepted Accounting Practice. The
accounting policies used in the preparation of the unaudited interim financial
results are consistent with those used in the annual financial statements for
the year ended 28 February 2002.
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.
5. It is group policy for a dividend to be declared after the end of the
financial year.
BALANCE SHEET
Figures in R000 31.8.02 31.8.01 28.2.02
(Unaudited) (Unaudited) (Audited)
Assets
Non-current assets 2 249 464 2 225 941 2 302 110
Fixed assets 673 902 649 743 701 845
Net goodwill 238 500 198 545 265 109
Advances to rental finance 1 103 644 966 028 1 041 833
customers
Investments and loans 142 048 342 793 166 539
Deferred taxation 111 370 68 832 126 784
Current assets 4 996 746 3 937 230 4 678 233
Inventories 1 167 434 1 039 937 1 106 345
Accounts receivable 2 590 157 1 806 063 2 127 642
Net cash and cash equivalents 1 239 155 1 091 230 1 444 246
Total assets 7 266 210 6 163 171 6 980 343
Equity and liabilities
Ordinary shareholders` 2 213 158 1 631 482 1 945 075
interest
- Share capital, premium and 2 451 445 1 854 972 2 183 362
reserves
- Own shares acquired (238 287) (223 490) (238 287)
Outside shareholders` 1 197 839 1 625 580 1 635 780
interest
Non-current liabilities 1 030 650 819 438 892 303
Deferred taxation 54 169 53 476 49 524
Current liabilities 2 770 394 2 033 195 2 457 661
Total equity and liabilities 7 266 210 6 163 171 6 980 343
Net asset value per share 820.4 612.7 725.1
(cents)
Shares in issue at end of 93 928 93 875 93 902
period (000)
- ordinary shares
- participating preference 175 844 172 424 174 344
shares
STATEMENT OF CHANGES IN EQUITY
Non-
Share distributable Accumulated
Figures in R000 capital reserves reserves Total
Balance at
28 February 2001 730 641 137 250 931 052 1 798 943
(audited)
Attributable to - - 103 523 103 523
shareholders
Dividend paid - - (89 723) (89 723)
Net
gains/(losses)
not recognised
in the income - 35 655 (5 302) 30 353
statement
Issue of shares 11 876 - - 11 876
Balance at
31 August 2001 742 517 172 905 939 550 1 854 972
(unaudited)
Attributable to - - 204 484 204 484
shareholders
Net
gains/(losses)
not recognised
in the income - 115 305 (6 769) 108 536
statement
Issue of shares 15 370 - - 15 370
Transfer between - (28 218) 28 218 -
reserves
Balance at
28 February 2002 757 887 259 992 1 165 483 2 183 362
(audited)
Attributable to - - 308 836 308 836
shareholders
Dividend paid - - (99 658) (99 658)
Net
gains/(losses)
not recognised
in the income - 51 882 - 51 882
statement
Issue of shares 7 023 - - 7 023
Transfer between
reserves - (49) 49 -
Balance at
31 August 2002 764 910 311 825 1 374 710 2 451 445
(unaudited)
OPERATIONAL CONTRIBUTION
Six months Six months Year
ended ended ended
Figures in 31.8.02 % 31.8.01 % 28.2.02 %
R000
(Unaudited) (Unaudited) (Audited)
Revenue:
Altech 2 113 124 34.1 1 853 732 37.0 3 604 705 36.4
Powertech 2 212 113 35.7 1 919 901 38.3 3 737 180 37.7
BTG 1 767 738 28.5 1 138 640 22.8 2 341 499 23.7
Corporate 107 386 1.7 95 838 1.9 216 163 2.2
&
Financial
Services
6 200 361 100.0 5 008 111 100.0 9 899 547 100.0
% held
at
31.8.02
Headline
earnings:
Altech 53.5 76 667 48.3 63 781 43.9 150 661 42.3
Powertech 100.0 49 022 30.9 34 143 23.5 95 951 26.9
(Note 1)
BTG 54.7 19 514 12.3 11 697 8.0 52 174 14.6
Corporate 100.0 13 489 8.5 35 740 24.6 57 503 16.2
&
Financial
Services
(Note 2)
158 692 100.0 145 361 100.0 356 289 100.0
Notes:
1. Prior year comparative reflects Altron`s 59.2% share
2. Prior year comparative reflects Altron`s 64.3% share
SUPPLEMENTARY INFORMATION
Six months Six months Year
ended ended ended
Figures in R000 31.8.02 31.8.01 28.2.02
(Unaudited) (Unaudited) (Audited)
Borrowings 922 650 721 207 783 531
- interest bearing 922 650 706 124 775 531
- non-interest bearing - 15 083 8 000
Capital commitments 38 562 41 028 46 891
Capital expenditure 79 961 68 731 255 443
Contingent liabilities - 17 651 -
Depreciation 70 756 66 120 153 640
Lease commitments 320 776 267 459 285 088
Listed investments
- carrying amount - 160 394 -
- market valuation - 124 390 -
Unlisted investments
- carrying amount 142 048 342 793 166 539
- directors` valuation 142 048 342 793 166 539
CASH FLOW STATEMENT
Six months Six months Year
ended ended ended
Figures in R000 31.8.02 31.8.01 28.2.02
(Unaudited) (Unaudited) (Audited)
Operating activities 64 099 317 704 542 244
Cash generated by operations 465 799 468 249 821 023
Net investment income 45 349 38 967 82 226
Changes in working capital (178 787) 147 402 238 578
Taxation paid (71 084 (92 358) (247 362)
Cash available from operating 261 277 562 260 894 465
activities
Dividends paid, including to (197 178) (244 556) (352 221)
outside shareholders
Investing activities (283 648) (376 301) (228 363)
Financing activities 14 458 67 926 (51 293)
Net funds (205 091) 9 329 262 588
(utilised)/generated
Cash and cash equivalents 1 444 246 1 081 901 1 081 901
- beginning of period
Translation of foreign cash - - 99 757
Cash and cash equivalents 1 239 155 1 091 230 1 444 246
- end of period
SEGMENTAL ANALYSIS
Six months Six months Year
ended ended ended
Figures in R000 31.8.02 % 31.8.01 % 28.2.02 %
(Unaudited) (Unaudited) (Audited)
Revenue:
Telecommunications 1 957 378 31.6 1 848 085 36.9 3 460 839 35.0
Electronics & 2 299 911 37.1 1 913 452 38.2 3 823 720 38.6
Multimedia
Information 1 912 532 30.8 1 243 650 24.8 2 567 105 25.9
technology
Corporate & 30 540 0.5 2 924 0.1 47 883 0.5
Financial Services
6 200 361 100.0 5 008 111 100.0 9 899,547 100.0
Operating income:
Telecommunications 96 360 23.7 138 333 42.0 280 943 36.8
(Note 1)
Electronics & 178 239 43.8 97 868 29.7 262 106 34.4
Multimedia
(Note 1)
Information 93 321 22.9 50 849 15.2 136 319 17.9
technology
Corporate and 39 000 9.6 42 286 12.9 83 508 10.9
Financial Services
(Note 2)
406 920 100.0 329 336 100.0 762 876 100.0
Notes:
1. Prior year comparative reflects Altron`s 59.2% share
2. Prior year comparative reflects Altron`s 64.3% share
MESSAGE TO OUR SHAREHOLDERS
Overview
The Altron Group showed continued strong resilience to both local and
international trading conditions. Subsequent to the acquisition of the Fintech
and Powertech minorities Altron has transformed from an investment holding
company to an operating company with substantial assets. A pleasing set of
results for the half-year to 31 August 2002 were reported. Worldwide market
conditions in the telecommunications and information technology sectors
continued to deteriorate during the period under review while the South African
market was further impacted by rising inflation and a continued slow down of the
growth in the gross domestic product. Notwithstanding these difficult trading
conditions, Altron recorded good results for the six months to August 2002.
Revenue increased by 23.8% from R5 billion to R6.2 billion while operating
income improved by 23.6% from R329 million to R407 million. Due to a higher tax
rate, headline earnings per share, although satisfactory, did not reflect the
same growth levels that were achieved at the revenue and operating income levels
and increased by 15% from 51.3 cents to 59 cents. Cash and cash equivalents were
at R1.2 billion and net asset value per share increased 34% from 612.7 cents to
820.4 cents. Revenues from exports and foreign operations totalled 31% of
overall revenues for the period under review.
BUSINESS ACTIVITIES
Telecommunications
The downturn in the global telecommunications market continues unabated.
Altron`s telecommunications interests, representing 31.6% of total group revenue
and 23.7% of total group operating income, were not immune to these trends and
saw a drop in operating income of 30% from its telecommunications businesses
when compared to the prior period. The overall impact was partially offset by
the significant performances delivered by Altech`s wholly-owned subsidiaries,
Autopage Cellular and Netstar.
The timely sale of Altech`s 40% holding in Alcatel Altech Telecoms to Alcatel
CIT of France for R335 million substantially lessened Altron`s exposure to the
infrastructure network telecommunication market. This was concluded on 12 July
2002.
Autopage Cellular performed ahead of expectations in a market which has
undergone significant restructuring since the entry of Cell C in late 2001.
Netstar achieved remarkable growth resulting in a subscriber base of over 200
000 and is now the market leader with a market share of over 46%. The Malaysian
Netstar venture is now well underway and this augurs well for future annuity
income. Similar global ventures are currently being negotiated.
The overcapacity in the international telecommunications industry, together with
sluggish demand from Telkom and delays concerning licence awards for the Second
Network Operator, negatively impacted Powertech`s telecommunication businesses
during the first six months. Significant downsizing and rationalisation
programmes were implemented, primarily in the Aberdare Cables optical fibre and
copper telecommunication cable businesses. New markets in Africa, the Middle
East and Asia Pacific are being explored by Aberdare Telecom Networks with
initial orders having been received from Nigeria, the Middle East and Lesotho.
Cables de Comunicaciones in Zaragoza, the group`s Spanish cable manufacturer,
has successfully diversified into railway telecommunications cable for high
speed train requirements in Spain and the United Kingdom. Battery Technologies
performed satisfactorily while Rentech benefited from the award of a sizable
tender for Lesotho Telecoms during the first six months. Lambda Cables recorded
excellent results for the period under review achieving revenues and profits
well ahead of budget and that of the previous period.
The prospects for the telecommunications industry are expected to remain
sluggish due to worldwide overcapacity. Continuing local and global economic
uncertainty leaves little doubt that the coming months will be challenging.
However, given the efforts made by group operations to find new markets and
reduce the cost base, the group remains positive with regards to the medium and
long-term prospects for its telecommunications` businesses.
Electronics and Multimedia
Altron recorded a 21% increase in revenue from R1.9 billion to R2.3 billion by
the group`s electronics and multimedia sector for the six months under review.
Electronics and multimedia represents 37% of group revenue and reported a steep
rise in operating income of 82% to R178 million for the past six months compared
to R98 million for the previous comparable period. These exceptional results
largely offset the impact of the downturn in telecoms industry had on the
group`s performance.
Most of Powertech`s businesses operating in the electronics sector, particularly
Aberdare Power Cables, ABB Powertech Transformers and the Industrial Group have
recorded exceptionally strong performances for the period under review.
Municipalities have started to invest substantially in maintaining their
existing networks while sizable projects in the sub-Saharan region, such as
Mozal II and Scorpion, coupled with exports to China Light & Power in Hong Kong,
have provided buoyant market conditions far exceeding forecast expectations for
the power cables business. Tridonic SA also recorded a strong first half and it
is anticipated that this will continue for the remainder of the year.
Powertech`s DC Power Systems, together with the industrial batteries businesses
performed satisfactorily but the automotive battery market continues to be
overtraded, especially in the United Kingdom where action has been taken to
reduce the cost base.
Arrow Altech Distribution capitalised on its dominant position in the domestic
electronic component market and surpassed expectations for its profits and cash
flow despite depressed industry conditions. UEC Multi-Media (UEC) exceeded its
forecast profit before tax, and recorded a satisfactory increase in revenue,
despite difficult market conditions. It is encouraging to note that UEC`s major
customers such as MultiChoice Africa and Foxtel Australia are ordering product
volumes higher than the corresponding period last year. UEC is presently
responding to several opportunities in the USA cable market.
Information Technology
Information technology, the second largest contributor to revenue in the group
at 30.8% of the total, recorded significant growth in operating income of 82.9%
to R93.3 million from R51 million. The broadly based improvement in results
achieved, following BTG`s major restructuring some 18 months ago, has continued
with increased momentum during the period under review. As recently announced,
BTG has concluded the acquisition of Plato Computer Services, an IT services
company in the United Kingdom for GBP22.5 million as an initial cash purchase
consideration and an additional cash consideration not exceeding GBP5.5 million
based on the earnings before interest and tax of Plato for the 12 months ending
31 December 2002.
ISIS Information Systems performed well for the review period and is increasing
its share of the export market. Keops Isis Industrial Information Systems
performed above expectations. Altech Card Solutions (ACS) has consolidated its
dominant position within its areas of operation and has performed well for the
review period.
Altech has entered into an agreement to acquire the country`s foremost
electronic funds transfer and bill payment processing services business, Prism
TranSwitch Services (Pty) Limited, from Prism Holdings Limited for a
consideration of R47 million. Subject to certain conditions, the sale will
become effective on 1 December 2002.
Financial Services and Corporate
Altron`s financial services business recorded a 12% increase in revenue and
operating profit for the six months under review. Altron has subsequently
disposed of the management and administration business of Fintech to a
consortium comprising Gensec Bank, Altron and Fintech management for R13
million, whilst retaining the asset based financing book and related profits.
This sale is in line with Altron`s policy of focusing on core operations. In
addition, Fintech is exploring alternative capital raising options, including
securitisation of its asset based financing book and an announcement will be
made shortly in this regard.
Recent payments to acquire the minority shareholdings of Fintech and Powertech,
reduced interest income earned by Altron Finance.
Outlook
Unlike many companies around the world that are active in the diversified high
technology arena, Altron remains with a strong and well-structured balance sheet
which provides the capacity to take advantage of further acquisition
opportunities.
Market conditions are expected to remain difficult. However, with group wide
order books at a satisfactory level, overall growth should be achieved for the
twelve month period to 28 February 2003.
On behalf of the board
Dr Bill Venter Robert Venter Diane Radley
Chairman Chief Executive Chief Financial Officer
15 October 2002
Directors: Dr WP Venter (Chairman) RE Venter (Chief Executive)
IM Ayob MC Berzack PMO Curle* (Alternate: GJ Trollope) DA Hawton
MJ Leeming DC Radley 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)
The interim financial results are also available on the Internet at
www.altron.co.za
Date: 14/10/2002 02:07:20 PM Produced by the JSE SENS Department
