| Tue 13 May 2003, 10:44 | | Altron - Consolidated Financial Results For The Ye |
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Altron - Consolidated financial Results for the year ended 28 February 2003
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
("Altron")
Consolidated financial Results for the year ended 28 February 2003
- Revenue up 15%
- Operating income up 20%
- HEPS up 16%
- Cash balances at R1,5 billion
- NAV per share up 15%
Income statement
Year Year
ended ended
Figures in R000 % 28.2.03 28.2.02
Change (Reviewed) (Audited)
Revenue + 15.1 11 397 337 9 899 547
Gross operating income + 35.3 876 449 647 659
Net foreign exchange (losses)/gains (38 186) 115 217
Surplus from Benefit Fund 73 358 -
Operating income + 19.5 911 621 762 876
Net interest income 79 163 68 965
Income from associates 18 864 23 990
Investment income 17 481 22 329
Income before goodwill amortisation
and exceptional items + 17.0 1 027 129 878 160
Goodwill amortised (104 951) (48 550)
Exceptional items (Note 1) 244 217 (83 923)
Income before taxation + 56.4 1 166 395 745 687
Taxation 288 091 195 371
Income after taxation + 59.6 878 304 550 316
Attributable to outside shareholders (413 950) (242 309)
Attributable earnings + 50.8 464 354 308 007
Basic earnings per share (cents) + 54.1 172,5 111,9
Headline earnings per share (cents) + 15.6 149,4 129,2
Proposed dividend per share (cents) + 16.2 43 37
Weighted average number of shares in
issue (000)
- ordinary shares 93 920 94 689
- participating preference shares 175 291 180 519
Notes:
1. Exceptional items
Net surplus/(loss) on disposal of operations 282 644 (22 471)
Net loss on disposal of investments/property (21 015) (30 025)
Impairment losses (17 412) 4 488
Settlement of obligation to acquire assets
at a premium over market value - (36 400)
Restraint of trade/Associates exceptional - 485
244 217 (83 923)
2. Reconciliation between earnings and
headline earnings
Attributable earnings 464 354 308 007
Goodwill amortised 104 951 48 550
Exceptional items - gross (244 217) 83 923
Share of associates" goodwill 1 767 -
Profit on disposal of property and equipment (2 509) (2 900)
Tax effect of above adjustments (4 024) (13 106)
Outside shareholders" interest 81 805 (68 892)
Headline earnings 402 127 355 582
3. The annual results have been prepared in accordance with South African
statements of Generally Accepted Accounting Practice. The accounting policies
used in the preparation of the annual 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. The results for the year ended 28 February 2003 have been reviewed by the
external auditors, KPMG. Their unqualified reviewed report is available for
inspection at the registered office of the company, Altron House, 4 Sherborne
Road, Parktown.
6. The results of discontinued operations have not been separately disclosed, as
these are not material.
Balance sheet
Figures in R000 28.2.03 28.2.02
(Reviewed) (Audited)
Assets
Non-current assets 1 723 092 2 302 110
Property, plant and equipment 665 874 701 845
Goodwill 470 935 265 109
Advances to rental finance customers 285 969 1 041 833
Investments and loans 184 820 166 539
Deferred taxation 115 494 126 784
Current assets 4 453 262 4 678 233
Inventories 1 077 405 1 106 345
Accounts receivable 1 866 347 2 127 642
Net cash and cash equivalents 1 509 510 1 444 246
Total assets 6 176 354 6 980 343
Equity and liabilities
Ordinary shareholders" interest 2 266 999 1 945 075
Share capital, premium and reserves 2 505 286 2 183 362
Own shares acquired (238 287) (238 287)
Outside shareholders" interest 1 290 677 1 635 780
Non-current liabilities 368 331 892 303
Deferred taxation 32 682 49 524
Current liabilities 2 217 665 2 457 661
Total equity and liability 6 176 354 6 980 343
Net asset value per share (cents) 837,0 725,9
Shares in issue at end of year (000)
- ordinary shares 93 928 93 902
- participating preference shares 176 933 174 048
Statement of changes in equity
Non-
Share distributable Accumulated
Figures in R000 capital reserves reserves Total
Balance at
28 February 2001
(audited)
730 641 137 250 931 052 1 798 943
Attributable to 308 007 308 007
shareholders
Dividend paid (89 723) (89 723)
Net gains/(losses)
not recognised in
the income
statement
150 960 (12 071) 138 889
Issue of shares 27 246 - - 27 246
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 464 354 464 354
shareholders
Dividend paid (99 659) (99 659)
Net gains/((losses)
not recognised in
the income
statement
(65 679) 10 380 (55 299)
Issue of shares 12 528 - 12 528
Transfer between - 26 292 (26 292) -
reserves
Balance at
28 February 2003
(reviewed)
770 415 220 605 1 514 266 2 505 286
Cash flow statement
Year Year
ended ended
Figures in R000 28.2.03 28.2.02
(Reviewed) (Audited)
Operating activities 709 883 542 244
Cash generated by operations 1 055 522 821 023
Net investment income 87 037 82 226
Changes in working capital (7 451) 238 578
Taxation paid (201 689) (247 362)
Cash available from operating activities 933 419 894 465
Dividends paid, including to outside (223 536) (352 221)
shareholders
Investing activities (16 981) (228 363)
Financing activities (592 680) (51 293)
Net funds generated 100 222 262 588
Cash and cash equivalents - beginning of 1 444 246 1 081 901
period
Translation of foreign cash (34 958) 99 757
Cash and cash equivalents - end of period 1 509 510 1 444 246
Segmental analysis
Year Year
ended ended
% 28.2.03 28.2.02
Figures in R000 Change (Reviewed) % (Audited) %
Revenue:
Telecommunications 11.5 3 858 582 33.9 3 460 839 35.0
Electronics and 8.7 4 155 472 36.4 3 823 720 38.6
Multimedia
Information 29.3 3 320 426 29.1 2 567 105 25.9
technology
Corporate and 62 857 0.6 47 883 0.5
financial services
15.1 11 397 337 100.0 9 899 547 100.0
Operating income:
Telecommunications (19.2) 226 987 24.9 280 943 36.8
Electronics and 42.6 373 804 41.0 262 106 34.4
Multimedia
Information 58.8 216 446 23.7 136 319 17.9
technology
Corporate and 94 384 10.4 83 508 10.9
financial services
19.5 911 621 100.0 762 876 100.0
Operational contribution
Year Year
ended ended
Figures in R000 28.2.03 28.2.02
% (Reviewed) % (Audited) %
Revenue:
Altech 12.5 4 056 081 35.6 3 604 705 36.4
Powertech 10.2 4 116 627 36.1 3 737 180 37.7
BTG 29.6 3 035 128 26.6 2 341 499 23.7
Corporate and (12.3) 189 501 1.7 216 163 2.2
financial services
15.1 11 397 337 100.0 9 899 547 100.0
Operating income:
Altech 13.8 406 778 44.6 357 293 46.8
Powertech 23.4 266 962 29.3 216 388 28.4
BTG 66.7 183 180 20.1 109 889 14.4
Corporate and (31.0) 54 701 6.0 79 306 10.4
financial services
19.5 911 621 100.1 762 876 100.0
Headline earnings: % held at
28.02.03
Altech 53.5 192 272 47.8 150 116 42.2
Powertech (Note 1) 100.0 126 424 31.4 95 789 26.9
BTG 54.7 60 306 15.0 52 174 14.7
Corporate and
financial
services (Note 2) 100.0 23 125 5.8 57 503 16.2
402 127 100.0 355 582 100.0
Notes:
1. Prior year comparatives reflect Altron"s 59.2% share of Powertech.
2. Prior year comparatives reflect Altron"s 64.3% share of Fintech.
Supplementary information
Year Year
ended ended
Figures in R000 28.2.03 28.2.02
(Reviewed) (Audited)
Long term borrowings 281 120 783 531
- Interest bearing 275 656 775 531
- Non-interest bearing 5 464 8 000
Capital commitments 32 235 46 891
Capital expenditure 202 417 255 443
Contingent liabilities 5 200 -
Depreciation 161 816 153 640
Lease commitments 267 669 285 088
Unlisted investments
- Carrying amount- Directors" 184 820 166 539
valuation
Message to our shareholders
Financial overview
Your directors are pleased to report that Altron posted satisfactory results for
the year under review notwithstanding international recessionary market
conditions, the unprecedented appreciation in the rand and the continued global
downturn in the information technology and telecommunications sectors. Revenue
improved by 15% from R9,9 billion to R11,4 billion. Operating income rose by 20%
from R763 million to R912 million. Attributable earnings increased by 51% from
R308 million to R464 million translating to a 54% increase in earnings per share
from 111,9 cents to 172,5 cents. Headline earnings per share increased by 16%
from 129,2 cents to 149,4 cents with dividends per share increasing by a
marginally higher rate at 43 cents per share.
The average rand/US$ exchange rate weakened by 9% from an average of R9,31 in
the previous financial year to R10,13 in this financial year. While the average
rate had a beneficial effect on the translation of earnings from our offshore
operations, the closing rate on 28 February 2003 of R8,22 was significantly
stronger than the closing rate of preceding months and 28% stronger than the
closing rate of R11,48 on 28 February 2002. This resulted in net currency losses
of R38 million charged to the income statement as a result of the translation of
offshore financial assets at 28 February 2003 and compares to net translation
gains in the previous financial year of R115 million.
Following the adoption of a new staff benefit structure, the Altron Group
Benefit Fund was liquidated. An amount of R33,7 million was included in headline
earnings in respect of the liquidation of the Benefit Fund.
Excluding the above foreign exchange effects as well as the income from the
Benefit Fund from both 2002 and 2003 would have resulted in an increase of
operating earnings of 35% from the underlying operations.
Long-term liabilities decreased substantially as a result of the securitisation
of R680 million of the Fintech office automation receivables, offset by external
funding of R120 million required for the acquisition of the UK IT company, Plato
by BTG.
Both Altech and BTG recorded strong performances, reflecting pleasing growth in
adjusted headline earnings per share of 20% and 32% and headline earnings per
share of 28% and 14% respectively. Powertech, which was impacted by the
downturn in the telecommunications market, reported a decrease in headline
earnings of 12% mainly as a result of the tax rate increasing to 31% from 21% in
the prior year. The reduction in earnings from the telecommunications sector was
mitigated by the excellent contribution from Powertech"s power electronics
businesses, resulting in an 21% growth at the operating income level. Fintech,
our financial services business, reported growth in headline earnings of 8%.
Group exports coupled with revenue generated by offshore operations amounted to
R2,9 billion representing 26% of group revenues versus R2,3 billion and 23% of
revenues in the prior year.
Through reduced borrowings, Altron has strengthened its balance sheet when
compared to the prior year with cash and cash equivalents at year end of R1,5
billion. Net asset value per share rose by 15% from 725,9 cents to 837,0 cents.
Business activities
TELECOMMUNICATIONS
The global downturn in the telecommunications sector saw a significantly reduced
contribution from Aberdare Cables" copper and fibre optic cable manufacturing
businesses, both locally and internationally. This was, however, offset by
strong growth in Altech"s wireless telecommunications businesses, represented by
Autopage Cellular, Netstar, Alcom Radio and Alcom Systems.
In particular, Autopage Cellular performed exceptionally well and remains the
largest independent cellular service provider in South Africa. With a
subscriber base of over 460 000, the sales focus was on high-value tariffs, and,
together with growth in the net contract base, increased the average revenue per
user. Netstar recorded significant growth for the year and continued to be the
leader in the Southern African vehicle tracking and recovery market, growing its
market share from 44% to 47% at year end.
As reported at the interim stage, significant downsizing and rationalisation
programmes were implemented within our telecoms cables business. Further
rationalisation continues in the current financial year. New markets in Africa,
the Middle East and Asia Pacific are being explored together with
diversification into industrial markets such as instrumentation cable and rapid
transit railway cable. Along with global trends, the prospects for the
telecommunications industry are expected to remain sluggish over the medium
term. Lambda Cables, Battery Technologies and Rentech recorded good performances
despite challenging market conditions.
The telecommunications sector as a whole accounted for 34% (2002: 35%) of
Altron"s revenue and 25% (2002: 37%) of operating income.
POWER ELECTRONICS AND MULTI-MEDIA
Altron achieved a 9% increase in revenue from the group"s electronics and multi-
media sector for the year under review which represents some 37% (2002: 39%) of
total revenue and contributed 41% (2002: 34%) in terms of Altron"s operating
income.
All of Powertech"s businesses operating in the power electronics sector,
particularly Aberdare Power Cables, ABB Powertech Transformers, Desta Power
Matla and the Industrial Group, recorded exceptionally strong performances for
the period under review. This was mainly as a result of strong demand within
both the power electronics sector driven by a recovery in the building and
construction industry.
The improvement in the power electronics business was further driven by platinum
mining expansion, the modernisation and expansion of the country"s electrical
distribution infrastructure especially at municipal level, as well as the
impetus given by the aforementioned infrastructural development. However,
indications are that demand from the building and construction sector appears to
have peaked and any further delay in reducing interest rates may well reduce
demand in this sector.
Altech"s UEC Technologies (UEC) and MediaVerge Solutions enjoyed a good year
against the backdrop of a somewhat depressed market. UEC continued to expand its
exports into its traditional international markets and also entered new markets
including the United States. Significant market share with its primary local
customer Multichoice was maintained. High value added products such as the
innovative DualView DSTV Decoder were recently introduced to the South African
market and received an enthusiastic response. This again proving the significant
software development capabilities of UEC in developing a world-first product.
Arrow Altech Distribution, our electronics component distribution company, grew
its market share and profitability despite a worldwide decline for demand of
these products.
INFORMATION TECHNOLOGY
The information technology businesses, contributed 29% (2002: 26%) of the
group"s revenue and 24% of the group"s operating income (2002: 18%). All of the
businesses within this segment improved their performance.
BTG"s Software Products and Solutions, Managed Networking Services and Digital
Healthcare Solutions also recorded pleasing results while operating income
within the Document Management Services (Xerox SA) and Enterprise Solutions (UK)
businesses improved by a significant 40% and 70% respectively.
As announced at the interim stage, BTG concluded the acquisition of Plato
Computer Services, a UK-based IT services business, for 22,5 million.
Notwithstanding the depressed IT service market in the United Kingdom, the
strategic rationale for the acquisition remains valid.
In the Altech Group, Keops Altech (formerly Keops Isis), now a wholly-owned
subsidiary, and Isis performed above expectations while Altech Card Solutions
consolidated its position as a leading supplier of card related solutions to the
local market.
Altech recently announced that agreement had been reached for the purchase
NamITech Holdings (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 for a consideration of R559,3 million. The acquisition will
be of Nampak Limited"s 51% plus Pamodzi"s existing 28% shareholdings giving
Altech an effective interest of 79%. Agreement has been reached for Pamodzi to
repurchase a 28% shareholding thereby remaining as a significant empowerment
partner in NamITech.
This acquisition complies with Altech"s IT vision and convergence strategy and
is highly complementary to Altech"s existing smart card technology business,
Altech Card Solutions.
CORPORATE
During the second half of the year, the major portion of the Fintech office
equipment lease portfolio was successfully securitised through Fintech
Receivables 1 (Pty) Limited which purchased R680 million of the lease portfolio.
Altron retained a R27,2 million interest in the securitised lease portfolio
through a participation loan and the remaining R653 million of the securitised
lease portfolio was financed through the sale of non-recourse secured floating
rate notes by Fintech Receivables. This resulted in the significant repayment
of long term liabilities, thus strengthening the balance sheet. In addition,
Altron disposed of the administration and management business of Fintech to a
consortium comprising of Altron, Gensec Bank and Fintech Management.
Black Economic Empowerment
During the year several new partnerships were formed in terms of black economic
empowerment (BEE) throughout the group"s operations in compliance with Altron"s
aggressive BEE strategy.
Outlook
Market conditions in the telecommunications and information technology sectors
are not likely to show improvement in the short- to medium-term, especially with
regards to the international markets in which we operate. However, the local
economy should remain buoyant for many of our products should the widely
predicted reduction in interest rates materialise. If the rand remains at
current levels, the rate of growth in profits in the first half of the year for
our group will possibly be lower than that achieved in the first half of the
previous year.
Altron will concentrate on expanding the existing group"s operations while
seeking appropriate acquisitions. Our management team remains committed to
expanding our businesses under the current volatile and unpredictable conditions
and we expect to show continued growth in the year ahead.
Corporate Governance
In line with our objectives to stay abreast of South Africa"s corporate
governance guidelines, Altron recently announced a number of important changes
to the board which focus on having a particularly strong representation of non-
executive independent directors.
Dividends
The following dividends were declared in respect of the year ended 28 February
2003:
ordinary dividend No. 55 of 43,0 cents per share (2002: 37,0 cents); and
participating preference dividend No. 9 of 43,0 cents per share (2002: 37,0
cents).
The above dividends are payable as follows:
2003
Last day for trading to qualify Friday 27 June
for and participate in the
dividend (cum dividend)
Trading ex dividend commences Monday 30 June
Record Date Friday 4 July
Dividend payment date (electronic Monday 7 July
and certificated register)
Dividend cheques in payment of these dividends to certificated shareholders will
be posted to shareholders on or about Monday 7 July 2003. Electronic payment to
certificated shareholders will be undertaken simultaneously.
Shareholders who have dematerialised their share certificates will have their
accounts at their CSDP or broker credited on Monday 7 July 2003.
In the case of certificated shareholders, notice of any change of address of
shareholders must reach the transfer secretaries, Computershare Investor
Services Limited, on or before Friday 27 June 2003. Share certificates may not
be dematerialised or rematerialised from Monday 30 June 2003 to Friday 4 July
2003, both days inclusive.
On behalf of the board
Dr Bill Venter Robert Venter Diane Radley
Chairman Chief Executive Chief Financial Officer
13 May 2003
Directors:
Dr WP Venter (Chairman) RE Venter (Chief Executive)
IM Ayob MC Berzack PMO Curle* DA Hawton JRD Modise DC Mpofu MJ Leeming
DC Radley PD Redshaw* Dr HA Serebro C van Vught CG Venter PL Wilmot
*British
Secretaries:
Altron Management Services (Pty) Limited - Ms SF Linford (Group Secretary)
Transfer Secretaries:
Computershare Investor Services Limited
P O Box 1053, Johannesburg 2000
The annual financial results are also available on the Internet at
www.altron.co.za
Date: 13/05/2003 07:01:00 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
