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Grintek Limited - Unaudited Interim Results For Half-year Ended 31 December 2002
Release Date: 05/03/2003 17:10:12 Code(s): GNK
GRINTEK LIMITED - UNAUDITED INTERIM RESULTS FOR HALF-YEAR ENDED 31 DECEMBER 2002
GRINTEK LIMITED
Reg. No. 1955/000013/06
Share code: GNK
ISIN code: ZAE000003067
UNAUDITED INTERIM RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2002
* REVENUE FROM SALES UP 13%
* OPERATING PROFIT UP 30%
GROUP INCOME STATEMENTS
Unaudited Unaudited Audited
half-year half-year year
ended ended ended
31 December Increase/ 31 December 30 June
2002 (Decrease) 2001 2002
R000 % R000 R000
Revenue from sales 683 028 13 606 364 1 177 301
Cost of sales 555 906 12 496 666 942 296
Gross profit 127 122 16 109 698 235 005
Selling and administration
Expenses 66 188 3 64 055 125 360
Earnings before financing costs,
taxation, depreciation and
amortisation ("EBITDA") 60 934 34 45 643 109 645
Depreciation (10 075) 19 (8 436) (17 302)
Amortisation (7 799) 93 (4 040) (10 419)
Operating profit 43 060 30 33 167 81 924
Interest received 4 183 (45) 7 674 13 510
Profit before financing costs 47 243 16 40 841 95 434
Financing costs (8 701) 14 (7 602) (11 045)
Foreign exchange (losses)/gains (15 753) (163) 25 119 73 367
Share of associated companies`
Results 215 (80) 1 100 2 717
Exceptional items (1 288) (14) (1 500) 11 246
Profit before taxation 21 716 (63) 57 958) 171 719
Taxation 10 253 (47) 19 491 53 467
Profit after taxation 11 463 (70 38 467 118 252
Attributable to outside
Shareholders (729) (120) 3 709 13 391
Earnings 12 192 (65) 34 758 104 861
GROUP BALANCE SHEETS
Unaudited Unaudited Audited
half-year half-year year
ended ended ended
31 December 31 December 30 June
2002 2001 2002
R000 R000 R000
ASSETS
Non-current assets 248 534 182 073 255 609
Fixed assets 146 042 119 067 149 580
Development projects 59 703 36 400 62 425
Intangibles 8 412 - 9 700
Unlisted investments 14 148 11 963 14 601
Deferred taxation asset 11 956 7 659 9 561
Loans and long-term receivables 8 273 6 984 9 742
Current assets 1 065 993 933 889 983 772
Inventories 293 743 202 623 248 743
Trade and other receivables 619 820 513 687 547 969
Advance payments 18 220 22 600 22 828
Cash 134 210 194 979 164 232
1 314 527 1 115 962 1 239 381
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders` equity 373 170 372 346 378 359
Minority interests 88 476 57 110 94 142
Total equity 461 646 429 456 472 501
Non-current liabilities
Long-term borrowings 77 381 31 015 47 812
Current liabilities 775 500 655 491 719 068
Interest bearing 51 212 24 919 50 927
Trade and other payables 368 632 326 632 246 494
Advance receipts 243 572 230 096 301 285
Provisions 81 492 58 757 79 965
Corporate taxation 30 592 15 087 40 397
1 314 527 1 115 962 1 239 381
ABRIDGED CASH FLOW STATEMENTS
Unaudited Unaudited Audited
half-year half-year year
ended ended ended
31 December 31 December 30 June
2002 2001 2002
R000 R000 R000
Operating activities (37 938) 9 512 57 825
Cash generated by operations 55 565 67 832 166 686
Income from investments 4 183 7 674 13 510
Working capital requirements (44 215) 30 587 (12 406)
Financing costs (8 701) (7 602) (11 045)
Taxation paid (22 452) (72 078) (73 187)
Dividends paid (22 318) (16 901) (25 733)
Investing activities (9 307) (39 004) (99 131)
Fixed assets - net investment (6 367) (27 803) (65 066)
Development projects (5 077) (13 307) (32 140)
Investments and long-term receivables 2 137 2 106 (1 925)
Financing activities 25 159 27 863 (8 055)
Shareholder`s funding - 3 169 (51 582)
Proceeds of share issue to outside
shareholders in subsidiary - 27 445 27 445
Long-term borrowings - net 25 159 (2 751) 16 082
Net change in cash and cash
Equivalents (22 086) (1 629) (49 361)
Cash and cash equivalents 105 084 171 689 162 666
- at beginning of year 113 305 166 869 166 869
- subsidiary acquired and currency
adjustments (8 221) 4 820 (4 203)
Cash and cash equivalents at
end of period 82 998 170 060 113 305
STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY
Unaudited Unaudited Audited
half-year half-year year
ended ended ended
31 December 31 December 30 June
2002 2001 2002
R000 R000 R000
Stated capital 117 766 127 658 117 766
Balance at beginning of year 117 766 124 489 124 489
Ordinary shares issued - 3 169 3 169
Shares repurchased as treasury shares - - (9 892)
Non-distributable reserves 1 893 2 400 1 893
Balance at beginning of year 1 893 2 400 2 400
Revaluation of properties - - (343)
Realisation on disposal of investment - - (164)
Distributable reserves 253 511 242 288 258 700
Balance at beginning of year 258 700 224 431 224 431
Earnings attributable to ordinary
Shareholders 12 192 34 758 104 861
Ordinary dividends (17 381) (16 901) (25 733)
Shares repurchased as treasury shares - - (44 859)
Ordinary shareholders` interest 373 170 372 346 378 359
EARNINGS AND SHARE PERFORMANCE
Unaudited Unaudited Audited
half-year half-year year
ended ended ended
31 December Increase/ 31 December 30 June
2002 (Decrease) 2001 2002
R000 % R000
Earnings 12 192 (65) 34 758) 104 861
Profit on sale of assets (170) 16 (146) (365)
Amortisation of intangible assets 1 288 - 1 086
Attributable taxation and
minority share 99 125 44 182
Impairment of investment - 1 500 1 500
Profit on disposal of investment - - (365)
Profit on disposal of business - - (13 995)
Share repurchase expenses - - 528
Headline earnings 13 409 (63) 36 156 93 432
Share performance
- headline earnings per ordinary
share (cents) 4.9 (60) 12.4 31.9
- fully diluted headline earnings
per ordinary share (cents) 4.8 (59) 11.9 30.7
Total dividend per ordinary
share (cents) 6.4 5.8 8.8
- Interim paid during previous period 3.0
- Final paid for previous year 6.4 5.8 5.8
Interim dividend declared 3.0 3.0 3.0
Number of ordinary shares in
issue (thousands)
- at end of period 271 582 294 395 271 582
- weighted average 271 582 292 651 292 703
- fully diluted 277 838 303 748 304 107
Net asset value per ordinary share 137.4 9 126.5 139.3
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
half-year half-year year
ended ended ended
31 December 31 December 30 June
2002 2001 2002
R000 R000 R000
Revenue from sales 683 028 606 364 1 177 301
Telecommunications 323 349 293 123 517 619
Defence electronics 277 195 247 925 519 710
Industrial electronics 76 790 59 777 128 626
Corporate and other 5 694 5 539 11 346
COMMENTS
BUSINESS REVIEW
The board is pleased to announce its results for the six months to 31 December
2002. The Group`s performance is characterised by a relatively strong
performance at operating level, as well as the conundrum of the South African
rand, resulting in lower earnings for the period. Revenue from sales has
increased by 13 per cent to R683,0 million with a total of 28 per cent derived
from exports. EBITDA has increased by 33 per cent to R60,9 million and profit
before financing costs and tax (PBIT) by 16 per cent to R47,2 million.
The volatility in the value of the rand against currencies of our main customers
has resulted in a turnaround of R40,9 million in our foreign currency position
compared to the previous interim period. If the effect of this volatility is
excluded from operational earnings by removing the net effect of the foreign
currency gains and losses in each period, headline earnings per share would have
grown by more than 40 per cent. This foreign exchange loss is a major
contributory factor in the reduction of earnings from R34,8 million to the
current R12,2 million. Fully diluted earnings per share have shown a similar
reduction to 4,8 cents per share.
Based on current prospects and a signed operating performance, the Company has
maintained the interim dividend at 3,0 cents per share.
Telecommunications
Although affected by the downturn in the global market, the telecommunications
division showed a growth in turnover of 10 per cent compared with the six months
ended 31 December 2001. Order intake from South African enterprise customers
increased by almost 20 per cent and the division was successful in growing its
sales to Africa, which now exceeds 10 per cent of divisional sales.
The diversity of products sold into traditional markets has increased, with the
result that there is less dependence on single products. In parallel, the
division retains its culture to continuously develop new business areas. This
has lead to the successful deployment of a debit card payment solution for a
large retail group`s multi-lane point of sale terminals.
Industrial
Turnover in the industrial electronics division increased by 28 per cent to R
76,8 million, setting a new record for a six-month period. Exceptional growth
in turnover was recorded in the energy management and aviation business units.
Grintek`s integrated system concept for energy management is becoming the
preferred option in the market, which has been further enhanced by the new
regulatory environment for electricity distribution. The system addresses
issues such as improving payment rates, recovery of arrears, preventing debt
escalation and reducing overheads.
The mid-year performance for commercial GSM antennas was lower than expected,
restrained by reduced domestic telecommunications spend. The capacity of the
local production facility is, however, being utilised for growing volumes of
energy management and DC power products.
Defence
Growth of 12 per cent in turnover was recorded for this reporting period,
reflecting increased activity, albeit at unfavourable exchange rates. The
strengthening of the rand has exerted pressure on the net margins of the three
defence units, where export business accounts for around 56 per cent of sectoral
turnover.
The market for self-protection of aircraft, ships and combat vehicles continues
to grow worldwide, and increased demand for these systems is anticipated.
International partnerships with SAAB and EADS have led to involvement in larger
projects, which run over a number of years and increase the long-term scope of
the business. Successful joint R&D programmes ensure a product range that will
remain competitive in international markets.
Prospects
The telecommunications market in Africa is improving as infrastructure is
implemented and expanded throughout the continent. Finalisation of Telkom`s
IPO should result in greater confidence in this sector.
Increased business in the SADC region is anticipated for commercial avionics and
for improvements to airports, as the management of air traffic over Africa
becomes a priority.
The defence order book is being constantly replenished, thus facilitating medium
to long-term planning and ensuring stability. Significant export orders have
been secured in new markets. The strength of this wider customer base will
increase the potential for future growth internationally over the longer term.
The current order book is a record R1,8 billion for delivery over three to four
years. Profitability in the second half is expected to be stronger than that
recorded for this reporting period.
Financial performance
The Group operations generated a positive cash flow of R55,6 million. Increases
in working capital and the payments of taxation and dividends absorbed a net
R93,5 million leaving a net cash outflow of R37,9 million on operating
activities.
The Group continues to improve its control over foreign currency flows, in an
attempt to limit some of the volatility in accounting for hard currency
contracts in rand terms, particularly in periods of a strengthening rand. Of
the R15,8 million exchange losses, R10,5 million were unrealised at 31 December
2002, compared to an unrealised profit of R12,7 in the corresponding period.
The effective tax rate is influenced by STC of R3,4 million on dividends paid
during the period.
Capital Expenditure
Capital expenditure for the Group during the six months ended 31 December 2002
was R12,9 (2001 - R28,1) million. Capital expenditure amounting to a further
R16,8 (2001 - R26,2) million has been authorised of which R15,2 (2001 - R17,2)
million has not been contractually committed.
Contingent Liabilities
At 31 December 2002, contingent liabilities amounted to R6,1 (2001 - R6,3)
million. The Group has, in addition, issued performance guarantees amounting to
R33,8 million.
Financial policy statements
The interim information has been prepared in accordance with and complies with
the Statements of Generally Accepted Accounting Practice in South Africa. The
accounting policies of the Group are consistent in all material respects with
those applied in the previous financial year. Certain comparative figures have
been regrouped.
DECLARATION OF DIVIDEND NO. 73
The directors of Grintek Limited have declared dividend no. 73 of 3,0 cents per
share to all shareholders. In compliance with the requirements of STRATE, the
following dates are applicable:
Date dividend declared Tuesday 4 March 2003
Last day to trade cum the dividend Friday 28 March 2003
Date trading commences ex the dividend Monday 31 March 2003
Record date Friday 4 April 2003
Date of payment Monday 7 April 2003
Share certificates may not be dematerialised or rematerialised between Monday 31
March 2003 and Friday 4 April 2003, both dates inclusive.
JSE Share code GNK
ISIN Number ZAE000003067
For and on behalf of the board
NR Kunene SA Grobbelaar
Chairman Managing Director
4 March 2003
REGISTERED OFFICE/TRANSFER SECRETARIES
44 Oak Avenue Computershare Investor Services Limited
Highveld Technopark 70 Marshall Street
Centurion Johannesburg 2001
E-mail: info@grintek.com PO Box 61051
www.grintek.com Marshalltown 2017
Auditors: Ernst & Young Company secretary: A van der Merwe
Register for electronic updates at www.grintek.com/investor
DIRECTORS
NR Kunene* (Chairman) SA Grobbelaar (Managing Director) JR McAlpine*
P Moholi M Msimang* GJ Royston* AN Saulez* Dr EW Schumann EE Strauss GE
Swanepoel
* Non-executive
Sponsor: Investec
Date: 05/03/2003 05:10:00 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
