|
AST Group Limited - Interim results for the six months ended 31 December 2002
AST Group Limited
Registration number 1998/021790/06
Share code: AAA
ISIN code: ZAE0000027397
Interim results for the six months ended 31 December 2002
www.ast.co.za
Financial policy statements
- The financial statements are prepared in accordance with and comply with the
Statements of Generally Accepted Accounting Practice of 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 except for the change in accounting
treatment of certain loans due to the issue of AC 133.
Income statement
for the six months ended 31 December 2002
Unaudited Unaudited Audited
31 Dec 31 Dec 30 Jun
2002 2001 2002
R"000 R"000 R"000
Revenue 1 196 532 1 004 032 2 219 650
Earnings before
interest, tax,
depreciation
and
amortisation 68 606 135 953 209 884
(EBITDA)
Depreciation (31 747) (25 775) (56 071)
36 859 110 178 153 813
Impairment of (5 262) - -
assets
Exchange loss (21 325) - -
Once-off costs (74 597) - (30 184)
Operating (64 325) 110 178 123 629
(loss)/profit
Net finance (21 308) (259) (3 432)
cost
Share of
results
of associates 53 (6 091) (2 619)
(Loss)/profit
before
tax and (85 580) 103 828 117 578
amortisation
Tax 16 531 (27 912) (29 605)
(Loss)/profit (69 049) 75 916 87 973
after tax
Amortisation of (80 391) (44 158) (138 179)
goodwill
(Loss)/profit
after tax
and (149 440) 31 758 (50 206)
amortisation
Minority 15 156 (2 644) (4 674)
interest
Net
(loss)/profit
for the period (134 284) 29 114 (54 880)
Net finance (21 308) (259) (3 432)
cost
Interest 10 408 4 872 10 878
received
Additional
finance
costs due to AC (4 663) - -
133
Finance costs (27 053) (5 131) (14 310)
Headline
(loss)/earnings
per ordinary (9,05) 12,87 20,08
share (cent)
Fully diluted
headline
(loss)/earnings
per
ordinary share (6,77) 11,47 18,59
(cent)
(Loss)/earnings
per
ordinary share (23,42) 5,27 (9,79)
(cent)
Fully diluted
(loss)/
earnings per
ordinary
share (cent) (17,51) 4,70 (9,06)
Weighted
average
number of 573 287 552 280 560 497
shares
Fully diluted
number
of shares 766 724 619 465 605 493
Number of
shares
in issue 575 046 571 026 575 046
Reconciliation
of
headline
earnings
Net
(loss)/profit
for
The period (134 284) 29 114 (54 880)
Amortisation of 77 169 41 961 129 166
goodwill
Provision for
restructuring 815 - 1 000
costs
Impairment of 5 262 - 7 087
assets
(Profit)/loss
on sale of
business (832) - 30 184
Headline (51 870) 71 075 112 557
(loss)/earnings
Balance sheet
as at 31 December 2002
Unaudited Unaudited Audited
31 Dec 31 Dec 30 Jun
2002 2001 2002
R"000 R"000 R"000
Assets
Non-current 635 426 749 650 602 219
assets
Property,
plant and
equipment 158 110 146 384 164 683
Goodwill 232 879 440 540 281 498
Unlisted 70 868 36 921 24 849
investments
Deferred tax 173 569 125 805 131 189
asset
Current 552 929 555 869 551 253
assets
Rental assets 42 376 20 332 34 915
Inventories 30 688 37 035 30 452
Trade debtors
and
other 447 184 399 517 374 155
receivables
Cash and cash
equivalents 32 681 98 985 111 731
Total assets 1 188 355 1 305 519 1 153 472
Equity and
liabilities
Capital and 222 914 508 815 336 264
reserves
Minority 30 804 58 458 60 960
interest
Non-current 169 009 197 522 125 230
liabilities
Interest 144 111 93 203 86 656
bearing
liabilities
Deferred tax 14 229 21 789 12 907
liability
Amounts due 10 669 82 530 25 667
to vendors
Current 765 628 540 724 631 018
liabilities
Trade 316 838 238 323 315 986
creditors
Income
received
in advance 147 292 65 318 43 059
Other
payables and
provisions 259 428 175 887 203 621
Amounts due 18 382 30 850 46 563
to vendors
Tax liability 23 688 30 346 21 789
Total equity
and
liabilities 1 188 355 1 305 519 1 153 472
Net asset
value per
ordinary 38,76 89,11 58,48
share (cents)
Fully diluted
net asset
value per
ordinary
share (cents) 29,07 82,14 55,54
Cash flow statement
for the six months ended 31 December 2002
Unaudited Unaudited Audited
31 Dec 31 Dec 30 Jun
2002 2001 2002
R"000 R"000 R"000
Operating
activities
Cash
generated
from 70 288 93 614 252 954
operations
Net finance (21 308) (259) (3 432)
cost
Normal tax (23 695) (19 319) (43 433)
paid
Cash from
operating
activities 25 285 74 036 206 089
Investment
activities
Acquisition
of
subsidiaries
and (56 438) (108 940) (131 661)
businesses
Other
investment
activities (33 648) (43 678) (111 412)
Cash used in
investment
activities (90 086) (152 618) (243 073)
Financing
activities
(Repayment
of)/proceeds
from long- (14 249) 16 609 (12 243)
term
borrowings
Cash (used
in)/from
financing (14 249) 16 609 (12 243)
activities
Net decrease
in cash
and cash (79 050) (61 973) (49 227)
equivalents
Cash and cash
equivalents
at the
beginning of
the
period 111 731 160 958 160 958
32 681 98 985 111 731
Short-term - (28 750) -
loan
Cash and cash
equivalents
at the
end of the 32 681 70 235 111 731
period
Operating
cash flow
per share 4,41 13,41 36,77
(cent)
Cash
conversion
ratio (%) 136,56 68,86 120,52
Statement of changes in equity
for the six months ended 31 December 2002
Unaudited Unaudited Audited
31 Dec 31 Dec 30 Jun
2002 2001 2002
R"000 R"000 R"000
Share capital 58 57 58
Balance at the
beginning of the 58 55 55
period
New shares issued
during the period - 2 3
Share premium 283 083 330 819 253 519
Balance at the
beginning
of the period 253 519 228 359 228 359
Premium on new shares
issued during the - 43 416 52 880
period
Share issue expenses
written off (61) (160) (246)
Changes in amounts
Due to vendors during
The period 26 624 59 497 (27 182)
Utilisation/(purchase)
of treasury shares 3 001 (293) (292)
Distributable reserves (66 327) 183 888 78 278
Balance at the
beginning
of the period 65 531 144 788 144 788
- as shown previously 78 278 145 925 145 925
- adjusted for AC 133 (12 747) - -
- adjusted for AC 123
And AC 135 - (1 137) (1 137)
Net (loss)/profit for
The period (134 284) 29 114 (54 880)
Currency translation
differences for the 2 426 9 986 (11 630)
period
Non-distributable
reserves 6 100 (5 949) 4 409
Balance at the
beginning
of the period 4 409 (3 040) (3 040)
Profits/(losses) on
cash
flow hedges for the 4 852 - (5 951)
period
Currency translation
differences for the (3 161) (2 909) 13 400
period
Balance at the end
of the period 222 914 508 815 336 264
CEO report
Since the changes announced by our Board of Directors in December 2002,
significant progress has been made to ensure the long-term sustainability and
prospects of the Group.
The market is aware that late last year the Board announced its disappointment
with AST"s performance and management, which resulted in significant changes to
both the Board and the executive management of the company. Since then, we have
been faced with a number of challenges in addressing short term liquidity needs,
realigning and simplifying the business and reducing the cost base - the
negative side effects of a too aggressive and, in light of changed market
conditions, unsustainable earnings and revenue growth strategy of the past.
Business update
We are pleased to announce the following progress we have made:
A stringent business improvement and cost reduction programme (BIP) has
been initiated. Using our full year to June 2002 as a baseline this programme
has identified a minimum of R120m of cost savings on an annualised basis,
including those resulting from the centralisation referred to below. We will not
see the full benefit of this for some 18 - 24 months, but we have aggressive
plans. Details of this programme are provided below.
AST is being restructured into a single business entity as opposed to the
previous decentralised and largely autonomous business units. This enables the
centralisation of functions such as marketing, finance, information management,
human resource management etc. We have also addressed our need to become more
client centric by creating a Customer Care Division reporting directly to the
executive director responsible for Sales and Marketing. Client satisfaction has
improved with more open communication and client focus - and our already good
service levels have improved.
We have clearly defined our core and non-core business entities and are
selling or closing the latter. Some of these were loss making and others were
profitable, some only marginally. This has so far generated some R10m in cash
and in addition has saved on operating expense.
AST"s board has for some time recognised the need to raise permanent
capital for the company. In this regard, the company is currently at an advanced
stage of negotiation with a group of stakeholders, who, having already provided
short-term liquidity, intend to assist with the raising of permanent capital.
Shareholders are referred to the cautionary announcement issued today as part of
this release in relation to the recapitalisation of the company.
Gerrie de Klerk has resigned from his non-executive Chairman position and
as a director of the Group due to ill health. Hans Smith, formerly Chairman of
Iscor and Kumba Resources is appointed Chairman of the AST Group with immediate
effect. We welcome Hans to the Board and are looking forward to the contribution
he will make due to his experience with the management of cost reduction
programmes.
Given the weakness in the market we are proud to announce that we have
signed more than R500m of business with both existing and new clients since
December 2002.
We have taken firm action to improve margins. This will become visible
towards the end of this financial year, but real results will only become more
evident in the next financial year.
The Business Improvement Programme (BIP)
At the request and with the assistance of our non-executive directors and Kumba
Resources we appointed a respected international consulting company to assist us
in returning AST to health. The first phase of the programme entailed a detailed
due diligence of AST"s attractiveness to the market and its sustainability. The
consultants" report confirmed management"s view that the underlying business is
sound and that profitability can readily be improved. The competitive advantage
of the services and solutions portfolio was also confirmed, as was the viability
and sustainability of the Group, provided that certain remedial actions were
rigorously implemented.
This resulted in a Business Improvement Programme (BIP) commencing under the
Chairmanship of myself. A key element of the BIP is a cost reduction initiative
to be chaired by Mr Charles Meintjes, a non-executive director of AST. Charles
also has significant experience in the management of cost reduction programmes
at Kumba Resources, as does our new chairman, Hans Smith.
We are pleased that our major clients and business partners have embraced the
BIP, as is evidenced by the new deals from both existing and new clients
amounting to over R500m.
In line with the more focused and conservative strategy of the Group, new
opportunities are approached taking into account the available financial
resources and market conditions. Greater prudence in financial management has
been introduced together with stringent working capital management and the
initiation of a long-term capital management programme, which will result in the
strengthening of the balance sheet.
Despite the current climate of change, AST"s core business is sound and the
Group is generating, on average, some R200m in revenue per month with positive
cash flow. We have retained all of our major clients and all of our key
employees.
Financial results
The results confirm that we have a strong value proposition in the marketplace
as evidenced by the 19% increase in revenue, against an estimated industry
growth of about 12% for the comparable period. However, the cost of
restructuring the business and a highly competitive operating environment has
eroded profitability - the margin before interest, depreciation and tax has
reduced to 5,7% from 13,5% for the comparable period last year. Non-recurring
items relating to the cost reduction, BIP and forex losses of R95,9m have
resulted in the Group reporting a headline loss of 9,05c per share for the six
months ended 31 December 2002.
The balance sheet is weaker than desired due to a number of factors including
the recent settlement in cash of large earn out payments, which resulted from
our earlier aggressive non-organic growth strategy. Thankfully 96% of the vendor
payments due in the current financial year are now behind us. The reduction of
debt, difficult market conditions and once-off costs have exacerbated the impact
on the balance sheet.
We believe that the worst is behind us and that the positive benefits of the
cost reductions; positive monthly cash flows and a stronger second half will
rebuild liquidity and, over time, the strength of the balance sheet.
Capital
The capital expenditure for the Group during the period under review was R20,7m,
primarily in respect of purchases of income generating computer equipment.
Dividend policy
There will be no dividend payments for the 2003 financial year.
Prospects
The management team has addressed the liquidity requirements of the Group and
the operations are stable. Profitability will improve as we move forward and the
results of the BIP become evident. The simplification of the business and the
structure, a more conservative and focused growth strategy leveraged on the
strengths of the Group, and continued cost reductions will all contribute to
profitability. Client focus and satisfaction coupled with quality of service
remain a primary focus.
We will aggressively pursue opportunities to strengthen and better position the
Group and its balance sheet. We have a sound company that can only benefit from
the actions that we"ve already taken to improve it - regrettably it takes time
for the results to become apparent.
I wish to thank our stakeholders including employees, shareholders, our Board of
Directors, our clients, suppliers and our bankers for their continued support
and commitment.
John Miller, CEO
AST Group
27 March 2003
Cautionary announcement
The attention of shareholders is drawn to the Chief Executive Officer"s comments
regarding negotiations to recapitalise the company. Shareholders are advised
that these negotiations, if successfully concluded, may have a material effect
on the price of the company"s securities. Accordingly, shareholders are advised
to exercise caution when dealing in the company"s securities until a full
announcement is made.
Board of directors: Hans J Smith (Chairman)*, John Miller (CEO), Marthinus
Erasmus, Pieter Bouwer, Malcolm Macdonald*, Jac van der Walt*, Sipho Ndlovu*,
Mofasi Lekota*, Charles Meintjes* (* Non-executive director)
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
| Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information. | |||||||||||||
| Other Profile Group sites: FundsData Online (unit trust data) | Profile Group corporate site | |||||||||||||
| [ Terms of Use | Privacy Policy | PAIA manual | FAQs/Help | Site Map | © Copyright Reserved 2026 ] | |||||||||||||
|
|||||||||||||
