| Tue 6 May 2003, 18:30 | | Allied Technologies Limited - Audited Consolidated |
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Allied Technologies Limited - Audited consolidated financial results and
dividend declaration for the year ended 28 February 2003
Allied Technologies Limited
(Incorporated in the Republic of South Africa)
(Registration number 1946/020415/06)
Share code: ALT
ISIN: ZAE000015251
- HEPS growth of 28%
- Revenue in excess of R4 billion
- Operating income in excess of R400 million
- Cash in excess of R1 billion
- Acquisition opportunities being realised
Audited consolidated financial results and dividend declaration for the year
ended 28 February 2003
Income statement
Year Year
% ended ended
Figures in R000 Change 28.02.03 28.02.02
Revenue +12.5 4 056 080 3 604 706
- Continuing operations 3 749 911 3 203 018
- Discontinued operation 306 169 401 688
Operating income +13.8 406 777 357 293
- Continuing operations 385 949 329 398
- Discontinued operation 20 828 27 895
Dividend income 22 569 30 832
Net interest income 82 205 39 159
- Continuing operations 81 935 20 190
- Discontinued operation 270 18 969
Goodwill amortised (14 715) (13 118)
Goodwill impaired (13 623) -
Exceptional items (Note 1) 300 122 (60 430)
- Continuing operations 300 122 (14 809)
- Discontinued operation - (45 621)
Income before taxation 783 335 353 736
- Continuing operations 762 237 352 493
- Discontinued operation 21 098 1 243
Taxation 136 499 133 356
- Continuing operations 130 263 97 870
- Discontinued operation 6 236 35 486
Income after taxation 646 836 220 380
- Continuing operations 631 974 254 623
- Discontinued operation 14 862 (34 243)
Attributable to outside shareholders (15 501) 21 871
- Continuing operations (6 583) 1 324
- Discontinued operation (8 918) 20 547
Attributable earnings +160.6 631 335 242 251
- Continuing operations 625 391 255 947
- Discontinued operation 5 944 (13 696)
Basic earnings per share (cents) +160.3 600.8 230.8
Headline earnings per share (cents) +28.1 342.1 267.1
Adjusted headline earnings per share +20.0 320.6 267.1
(cents)
Dividends paid per share (cents)
- Ordinary 100.0 80.0
- Special 50.0 20.0
Weighted average number of ordinary 105 088 104 966
shares in issue (000)
Notes:
1. Exceptional items
Net loss arising on disposal and - (60 430)
closure
Loss on disposal of preference shares (20 264)
in Rethabile Telecoms Investments (Pty)
Limited
Profit on disposal of 40% interest in
Alcatel
Altech Telecoms (Pty) Limited 320 386
300 122 (60 430)
2. Reconciliation between earnings and
headline earnings
Attributable earnings 631 336 242 251
Adjustments for:
Amortisation of goodwill 14 715 13 118
Impairment of goodwill 13 623 -
Exceptional items - gross (note 1) (300 122) 60 430
Net profit on disposal or scrapping of (85) (2 507)
property, plant and equipment
359 466 313 292
Tax effect 25 (8 866)
Outside shareholders 27 (24 018)
Headline earnings 359 518 280 408
Surplus from the liquidation of the (32 283) -
Altron Group Benefit Fund
Tax effect 9 685 -
Adjusted headline earnings 336 920 280 408
3. The comparatives have been adjusted to take into account the adoption of
circular 7/2002 (Headline earnings)
The accounting policies and methods of computation followed in this report are
consistent with the previous accounting period and comply with South African
Statements of Generally Accepted Accounting Practice.
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.
Statement of changes in equity
Year Year
ended ended
Figures in R000 28.02.03 28.02.02
Balance at beginning of year 915 341 669 439
Change in accounting policy AC 107 - 108 523
Restated balance 915 341 777 962
Issue of shares 1 758 87
Attributable earnings 631 335 242 251
Dividends (157 670) (104 959)
Balance at end of year 1 390 764 915 341
Balance sheet
Figures in R000 28.02.03 28.02.02
Assets
Non-current assets 334 206 428 517
Property, plant and equipment 105 481 118 684
Goodwill 13 333 40 400
Investments and loans 201 000 244 264
Deferred taxation 14 392 25 169
Current assets 1 795 495 1 321 878
Inventories 174 956 306 474
Accounts receivable 522 406 417 684
Cash and cash equivalents 1 098 133 597 720
Total assets 2 129 701 1 750 395
Equity and liabilities
Capital and reserves 1 390 764 915 341
Outside shareholders" interest 42 732 49 012
Deferred taxation 12 011 8 629
Current liabilities 684 194 777 413
Accounts payable 585 153 698 010
Provisions 24 224 28 365
Taxation payable 74 817 51 038
Total equity and liabilities 2 129 701 1 750 395
Net asset value per share (cents) 1 322 872
Ordinary shares in issue at end of 105 217 104 959
period (000)
Cash flow statement
Year Year
ended ended
Figures in R000 28.02.03 28.02.02
Operating activities 226 113 88 897
Cash generated by operations 440 440 343 867
Investment income 104 774 69 991
Changes in working capital (53 616) 71 018
Taxation paid (107 815) (118 806)
Cash available from operating activities 383 783 366 070
Dividends paid, including to outside (157 670) (277 173)
shareholders
Investing activities 317 011 (18 272)
Financing activities (42 711) 87
Net funds generated 500 413 70 712
Cash and cash equivalents
- at beginning of year 597 720 527 008
- at end of year 1 098 133 597 720
Operational contribution
Year Year
ended ended
Figures in R000 28.02.03 % 28.02.02 %
Revenue:
Telecommunications division 2 877 955 71.0 2 488 434 69.0
Multi-Media and Electronics 1 019 472 25.1 1 058 944 29.4
divisions
Information Technology 285 298 7.0 225 607 6.3
division
Inter group sales (126 645) (3.1) (168 279) (4.7)
4 056 080 100.0 3 604 706 100.0
Operating income:
Telecommunications division 189 025 46.5 175 437 49.1
Multi-Media and Electronics 144 804 35.6 151 224 42.3
divisions
Information Technology 33 266 8.2 26 430 7.4
division
Corporate net income 39 682 9.8 4 202 1.2
406 777 100.0 357 293 100.0
The comparative figures in the operational reporting table have been restated in
order to reflect the new operational structure of the group.
Message to our shareholders
For the seventh consecutive year it is once again pleasing to report an
excellent set of results for Altech. This is especially so in light of the
current difficult economic conditions being experienced both locally and
globally. This strong performance is once again proof of the ongoing success of
the group"s strategy on the convergence of Telecommunications, Multi-Media and
Technology (TMT).
Despite continued negative market sentiment and downward pressure on virtually
all global stock markets, Altech"s share price has shown great resilience. For
the current financial year the Altech share price outperformed the JSE All Share
Index as well as the Electronic and Electrical Equipment Index.
Return on equity of 26 percent continues to improve with a compounded growth
rate on headline earnings per share over the past five years of 30 percent. The
group"s revenue increased by 12.5 percent. This was achieved with the inclusion
of only four months of trading at Alcatel Altech Telecoms (AAT) which was sold
effective 1 July 2002. Similarly, operating income has increased to R407
million. Adjusted headline earnings of 320.6 cents per share increased by 20
percent.
The operating income includes a surplus of R32.2 million that arose from the
liquidation of the Altron Group Benefit Fund.
The balance sheet remains exceptionally strong with cash in excess of R1 billion
and a return on equity of 26 percent.
The Altech Board has declared a 25% increase in dividend to 125 cents per share,
representing a dividend cover of 2.7 times.
GROUP HIGHLIGHTS
Corporate Finance Activities
During the financial year Altech completed the disposal of its interest in AAT
as well as Altech"s preference shares in the special purpose vehicle funding
AAT"s empowerment shareholder. These transactions were effected on terms
financially beneficial to Altech and generated R358 million in cash.
Despite some criticism at the time, the group refused to be drawn into the
acquisition frenzy which gripped the technology sector during the past three
years and which decimated the share prices of many companies. As a result of
this reduction in value of many other technology sector companies, Altech"s
relative position is currently very strong and, for the first time in recent
years, the group is now beginning to see value in some opportunities becoming
available to it.
Potential transactions which would have been out of Altech"s reach in terms of
valuations, as recently as last year, are now being brought to its attention and
are currently under in-depth consideration and prudent examination.
However, apart from the above opportunities that are presently being fully
investigated, the group"s transaction momentum gathered pace during the past
financial year and resulted in the following:
- An agreement to purchase NamITech (Pty) Limited (`NamITech"), a market leader
in Africa for the manufacture and supply of secure tokens such as SIM cards,
smartcards and magcards, plus secure solutions technology. The net consideration
for the transaction is R559.3 million, a portion of which is for shareholder
loans to NamITech. Although some conditions precedent to the transaction still
have to be fulfilled, due diligence has been completed and heads of agreement
have been signed. This acquisition is in line with Altech"s IT vision and
convergence strategy and will give the group"s IT Division critical mass with a
turnover in excess of R1 billion. The acquisition will be of Nampak"s 51 percent
plus Pamodzi"s existing 28 percent shareholdings, giving Altech an effective
interest of 79 percent of the company, prior to the implementation of a new
structure to enable Pamodzi to continue as NamITech"s BEE partner as before.
International technology and equity partner, Gieseke & Devrient Gmbh will be a
15 percent shareholder.
- The purchase of the remaining 49.75 percent interest in one of Altech"s IT
subsidiaries, Keops Altech (Pty) Limited, from Keops Technologies of Canada,
part of the Air Liquide group. The purchase consideration was R3.7 million. The
agreement for this transaction has been signed and all conditions met. Keops
Altech is a leading software developer and integrator of manufacturing execution
systems (MES).
- The acquisition of an interactive TV software developer, Consumer Controlled
Content Television BV (3CTV), for Altech"s multi-media group, UEC Technologies.
3CTV, based in the Netherlands and South Africa, is a developer of software for
interactive TV applications and will be fully integrated into UEC"s MediaVerge
Solutions. The company was acquired for a purchase price of approximately R6.4
million. 3CTV is a pure technology player with its main customers being
MultiChoice and other global broadcasters.
- The disposal by Arrow Altech Distribution (Pty) Limited of its computer
products division to Sahara Computers (Pty) Ltd. This division was sold for R11
million. Although profitable, it was not core to AAD"s strategic focus. The sale
agreement has been signed and regulatory approval is awaited.
TELECOMMUNICATIONS DIVISION
WIRELESS COMMUNICATIONS
Autopage Cellular
This company, a provider of cellular telephony services, exceeded its budget
expectations for the year and proudly remains the largest independent cellular
service provider in South Africa. During the year, Autopage Cellular"s
subscriber base of over 460 000 showed a substantial increase in high-value
contract subscribers which, together with a sales focus on high-value tariffs,
resulted in an increased average revenue per user (ARPU). This, in turn, coupled
with other strategies including strong cost control measures, led to significant
improvements in bottom-line performance.
Business operations within Autopage Cellular benefited considerably during the
year from capital investment in improved systems and processes. Customers will
also benefit from this expenditure through improved service levels from the
company.
While Autopage Cellular continues its leading role of excelling in South
Africa"s cellular industry, it is also actively seeking and evaluating a number
of exciting opportunities to exploit its expertise through possible joint
ventures both locally and globally.
Netstar
Netstar recorded exceptional growth for the year and exceeded budget
expectations while increasing its market position as the leading vehicle
tracking and recovery company in South Africa.
The South African market for vehicle recovery grew some 36 percent during the
fiscal year, while Netstar increased its leadership by growing its share from 44
to 47 percent. The local market is forecast to grow by a further 30 percent in
the coming year.
To further consolidate its market position, Netstar recently launched two new
innovative GSM-based products aimed at a combination of fleet management
services and vehicle recovery. These products not only open new markets locally,
but will also provide an excellent product platform for planned additional
offshore expansion.
Alcom Systems (Alcom)
Alcom, which designs, supplies and manages advanced radio communication
infrastructure, experienced a successful year.
Alcom is presently negotiating with an acknowledged BEE group to acquire a 30
percent shareholding in Alcom.
The radio communications sector is undergoing a resurgence in South Africa with
the total value of tenders awaiting adjudication, plus others expected to be
issued in the near future, of approximately R700 million.
Alcom Radio Distributors (ARD)
ARD, which supplies and distributes advanced Motorola two-way radio products,
performed to expectations while exceeding its sales growth forecast and
increasing its substantial market share in South Africa. The company is
expanding its distribution channels countrywide.
Both Alcom and ARD were incorporated into the Wireless Communications Division
of Altech"s Telecommunications Division with effect from 1 October 2002.
MULTI-MEDIA AND ELECTRONICS DIVISION
UEC Multi-Media (UEC)
UEC enjoyed another good year, with volumes exceeding the prior year, despite
difficult international trading conditions and the strengthening of the Rand.
The ongoing focus of UEC on innovative research and development resulted in the
company once again introducing a world-first product to the market - the Dual
View Decoder, which includes a microprocessor capable of processing almost three
hundred million instructions per second.
During the fiscal year, UEC successfully enhanced its world market share and
secured its first orders from large cable markets, including a contract to
supply cable set-top-boxes to the USA. The company"s exports continue to grow in
the Middle East and UEC now exports almost 30 percent of its product to this
region.
While global economic conditions remain uncertain, UEC is optimistic that its
market, especially the cable market, will show growth in the coming financial
year. Its budget for 2004 reflects this confidence with potential new contracts
on hand already exceeding R720 million.
Arrow Altech Distribution (AAD)
In another profitable year, AAD grew its market share despite a world-wide
decline in the electronics industry.
During the past year the company capitalised on its training and customer-
focussed initiatives which were designed and implemented to make its service the
best-in-class in its industry. The results of this focus have been excellent,
both in terms of financial performance and customer feedback.
INFORMATION TECHNOLOGY DIVISION
Keops Altech
Keops Altech, previously Keops Isis, experienced strong organic growth during
the year and has significantly exceeded its sales, profit and cash budgets.
The company secured several large contracts on the BHP-Billiton Aluminium
expansion projects at Mozal and Hillside Aluminium, and these will continue to
contribute positively to its results for the next financial year.
Isis Information Systems (ISIS)
ISIS is maintaining its role in the markets it serves while, at the same time,
making inroads into export markets. During the year co-operation agreements were
signed with several players in the defence industry to exploit opportunities
both locally and internationally.
Altech Card Solutions (ACS)
Through strong growth ACS consolidated its position as a leading supplier of
card related solutions to the local market and exceeded budgeted expectations
for the year.
The EFTPOS division of ACS has entered the pre-paid telecommunications market
resulting in significant exports to central Africa for the sale of pre-paid
airtime to cellular users.
Looking ahead, the roll-out of the Europay Mastercard Visa (EMV) standard by the
major acquiring banks bodes well for ACS for the coming year. The company
commands a strong position in this market.
EXPORTS
Altech"s products, services and solutions are exported to 36 countries worldwide
with export revenue for the year under review having increased 27 percent from
R451 million to R571 million. Included in this revenue is a four month
contribution from recently divested Alcatel Altech Telecoms.
OUTLOOK
Altech"s growth has been excellent over the past seven years. Notwithstanding
ongoing global and local economic pressures, we remain confident that by staying
focussed and innovative the group will continue to strengthen and create
financial benefits and long-term shareholder value from its traditional sources
and through sound acquisitions. The year ahead should once again see a real
increase in profits.
DECLARATION OF ORDINARY DIVIDEND NUMBER 60
Dividend number 60 of 125 cents per share (2002: 100 cents) in respect of the
year ended 28 February 2003, was declared payable on Monday 2 June 2003 to
ordinary shareholders recorded in the register at the close of business on
Friday 30 May 2003. The timetable relating to the payment of the dividend is as
follows:
Last day to trade cum dividend Friday 23 May 2003
Trading ex dividend commences Monday 26 May 2003
Record date Friday 30 May 2003
Payment date Monday 2 June 2003
Share certificates may not be dematerialised or rematerialised between Monday 26
May 2003 and Friday 30 May 2003, both days inclusive.
On behalf of the Board
Dr Hilton Davies
Non-Executive Chairman
Craig Venter
Chief Executive Officer
John Carstens
Financial Director
6 May 2003
This report is available on the company website www.altech.co.za
