| Thu 4 Sep 2003, 10:14 | | AUDITED PRELIMINARY REPORT FOR THE YEAR ENDED 30 J |
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GRINTEK LIMITED -
GRINTEK LIMITED
Reg. No. 1955/000013/06
Share code: GNK
ISIN code: ZAE000003067
AUDITED PRELIMINARY REPORT FOR THE YEAR ENDED 30 JUNE 2003
* REVENUE UP 25%
* EBITDA UP 10%
* EXPORT REVENUE UP 53%
GROUP INCOME STATEMENTS
Audited Increase/ Audited
2003 (Decrease) 2002
R000 % R000
Revenue from sales 1 467 854 25 1 177 301
Cost of sales 1 200 874 27 942 296
Gross profit 266 980 14 235 005
Selling and administration
expenses 146 666 17 125 360
Earnings before financing costs,
taxation, depreciation and
amortisation ("EBITDA") 120 314 10 109 645
Depreciation 20 452 18 17 302
Amortisation 15 609 50 10 419
Operating profit 84 253 3 81 924
Interest received 7 633 (44) 13 510
Profit before financing costs 91 886 (4) 95 434
Financing costs (22 778) 106 (11 045)
Foreign exchange (losses)/gains (26 373) (136) 73 367
Share of associated companies"
results 316 (88) 2 717
Exceptional items (11 233) (200) 11 246
Profit before taxation 31 818 (81) 171 719
Taxation 18 880 (65) 53 467
Profit after taxation 12 938 (89) 118 252
Attributable to outside shareholders 4 370 (67) 13 391
Earnings 8 568 (92) 104 861
GROUP BALANCE SHEETS
Audited Audited
2003 2002
R000 R000
ASSETS
Non-current assets 255 753 255 609
Property, plant and equipment 159 070 149 580
Development projects 54 557 62 425
Intangible assets 7 544 9 700
Unlisted investments 11 493 14 601
Deferred taxation asset 14 667 9 561
Loans and long-term receivables 8 422 9 742
Current assets 983 554 983 772
Inventories 274 456 248 743
Trade and other receivables 485 348 547 969
Derivative assets 10 908 -
Corporate taxation 6 506 -
Advance payments 10 410 22 828
Cash and deposits 195 926 164 232
TOTAL ASSETS 1 239 307 1 239 381
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders" equity 361 828 378 359
Minority interest 93 120 94 142
Total equity 454 948 472 501
Non-current liabilities
Long-term borrowings 74 841 47 812
Current liabilities 709 518 719 068
Interest bearing borrowings 84 374 50 927
Trade and other payables 256 054 246 494
Advance receipts 228 098 301 285
Derivative liabilities 3 530 -
Provisions 116 883 79 965
Corporate taxation 20 579 40 397
TOTAL EQUITY AND LIABILITIES 1 239 307 1 239 381
ABRIDGED CASH FLOW STATEMENTS
Audited Audited
2003 2002
R000 R000
Operating activities 53 467 57 825
Cash generated by operations 90 093 166 686
Income from investments 7 633 13 510
Working capital requirements 59 779 (12 406)
Cash generated by operating activities 157 505 167 790
Financing costs (22 778) (11 045)
Taxation paid (50 339) (73 187)
Dividends paid (30 921) (25 733)
Investing activities (53 735) (99 131)
Net investment in property, plant
and equipment (29 734) (65 066)
Development projects (19 671) (32 140)
Investments and long-term receivables (4 330) (1 925)
Financing activities 27 029 (8 055)
Shareholders" funding - (51 582)
Shares issued to outside shareholders in
subsidiary company - 27 445
Long-term borrowings - net 27 029 16 082
Net change in cash and cash equivalents 26 761 (49 361)
Cash and cash equivalents 84 791 162 666
- at beginning of year 113 305 166 869
- currency adjustments (28 514) (4 203)
Cash and cash equivalents at end of year 111 552 113 305
EARNINGS AND SHARE PERFORMANCE
Audited Increase/ Audited
2003 (Decrease) 2002
R000 % R000
Earnings 8 568 (92) 104 861
Profit on sale of assets (208) (43) (365)
Amortisation of intangible assets 2 156 99 1 086
Impairment of investments 5 329 255 1 500
Net impairment of development projects 11 930 188 (13 571)
Profit on disposal of investment - (365)
Profit on disposal of business - (13 995)
Share repurchase expenses 3 (99) 528
Attributable taxation and
minority share (8 641) (333) 3 702
Headline earnings 19 137 (77) 83 381
Share performance
- headline earnings per ordinary
- share (cents) 7.0 (75) 28.5
- fully diluted headline earnings per
ordinary share (cents) 6.9 (75) 27.4
Total dividend per ordinary
share paid (cents) 9.4 7 8.8
- Interim paid during current year 3.0 3.0
- Final paid for previous year 6.4 5.8
Dividend no 74 declared 2 September 2003,
payable 14 October 2003 2,0 (69) 6.4
Number of ordinary shares in issue (thousands)
- at end of year 271 582 271 582
- weighted average 271 582 292 703
- fully diluted 276 078 304 107
Net asset value per ordinary
share (cents) 133.2 (4) 139.3
STATEMENT OF CHANGES IN SHAREHOLDERS" EQUITY
Audited Audited
2003 2002
R000 R000
Stated capital 117 766 117 766
Balance at beginning of year 117 766 124 489
Ordinary shares issued - 3 169
Shares repurchased - (9 892)
Non-distributable reserves - 1 893
Balance at beginning of year 1 893 2 400
Revaluation of properties 108 (343)
Realisation on disposal of property (2 001 -
Realisation on disposal of investment - (164)
Distributable reserves 244 062 258 700
Balance at beginning of year 258 700 224 431
AC 133 transitional adjustment 322 -
Earnings attributable to
ordinary shareholders 8 568 104 861
Ordinary dividends (25 529) (25 733)
Realisation on disposal of property 2 001 -
Shares repurchased as treasury shares - (44 859)
Ordinary shareholders" equity 361 828 378 359
SEGMENTAL ANALYSIS
Revenue from sales
2003 2002
R000 R000
Telecommunications 606 064 517 619
Defence electronics 717 868 519 710
Industrial electronics 132 024 128 626
Corporate and other 11 898 11 346
1 467 854 1 177 301
COMMENTS
A demanding year produced a mixed set of results. Revenue from sales increased
by 25 per cent to R1 467,8 million with 36,6 per cent derived from exports.
EBITDA increased by 10 per cent to R120,3 million. The Group experienced a
foreign exchange loss of R26,4 (2002 - R73,4 gain) million in the reporting
period, after netting off an unrealised gain of R9,6 (2002 - R10,0) million.
The Group continues to improve its approach in limiting its exposure to foreign
currency fluctuations.
Export revenue increased by 53 per cent to R536,6 million. The order book
remains strong and is predominantly contracted in US dollars.
The effective tax rate of 59 per cent is compounded by the effects of tax losses
in subsidiaries and STC of R4,1 million on dividends paid during the year.
Fully diluted headline earnings per share decreased to 6,9 cents per share from
27,4 cents per share the previous year. Cash flow from operating activities
amounted to R53,5 (2002 - R57,8) million. A final dividend of 2,0 cents per
share has been declared amounting to a total dividend of 5,0 cents for the year.
BUSINESS REVIEW
Telecommunications
This division"s revenue increased by 17 percent over the previous year, due to
growth in new markets in Africa, mainly in the petrochemical and manufacturing
sectors. International telecom equipment suppliers are showing greater interest
in this market with an expected increase in competition.
The global downturn in the telecommunications sector, delays in announcing the
second network operator, longer sales cycles, slow acceptance of next generation
technologies and curbed expenditure in the enterprise environment resulted in
lower operating margins.
The e-Commerce business has shown encouraging growth. This can be attributed to
managed support services and integration contracts for mobile workforce
management, and the new EMV standard for banks and multi-lane retailers.
New strategic partnerships have been formed with Verint, Cybercom, Cyberline,
MDSI and Hughes Network Systems, widening access to global best of breed
technologies.
While emerging alternative operators in Africa offer a number of new
opportunities, the telecommunications environment is expected to remain
challenging.
Industrial
Industrial electronics experienced a difficult trading period. The envisaged
joint venture with Kathrein Werke of Germany was dissolved when Kathrein could
no longer commit to the planned local production strategy.
The aviation systems unit has increased its business in Africa for commercial
avionics and airport navigational aids.
Sales of DC power systems were also adversely affected by the slowdown in the
telecommunications market.
The establishment of regional electricity distributors and Eskom"s demand-side
management programme created new opportunities for the energy management
business and turnover has more than doubled. The integrated services management
system installation in Alexandra for City Power is progressing well.
Defence
Turnover in the defence divisions increased by 38,1 percent.
Avitronics, together with its partner SaabTech, has grown its share of the
market by focusing on radar and electro-optic systems and products. Revenue has
grown by more than 34 per cent on the back of improved exports, specifically to
Europe.
Grintek Communications Systems (GCS) experienced delayed deliveries and a cost
overrun of approximately R30 million on its airborne communications systems.
The programme is now entering its qualification-testing phase and pre-production
deliveries have been well received. The division"s radio product family enjoyed
a good year with the largest contract coming from Africa.
Logtronics had a successful maiden financial year, with orders, turnover and
profitability exceeding targets. The order book secured for the year ahead
includes key orders for periods of between one and four years. This has
positioned the business to become the leader in integrated logistic support of
high technology electronics equipment and systems in the southern African
region.
Dollar based exports contributed 60 per cent of Grintek Ewation"s revenue during
the year. Order intake from the Middle East recovered well and the division has
secured the bulk of its planned turnover for the new financial year from this
region.
Research, product and market development
The Group remains committed to investing in the development of new solutions in
accordance with customer requirements. Core research and development
programmes, extending over a number of years, are conducted in close association
with our international partners to reduce the risk in market acceptance and to
enhance the joint product offering. Continued investment in the development of
relevant intellectual property is essential for sustainability and long-term
growth.
Prospects
Prospects for our telecommunications business remain steady. New solutions for
the banking and retail sectors are available for the new chip card standards to
be introduced in 2004. The rate of deliveries on existing defence orders is
increasing and should contribute towards improved operating margins and cash
flow.
The current order book of R1 450,9 (2002 - R1 582,3) million is contracted for
delivery over the next three to four years, of which R779,6 million will be
executed in the first year.
Personnel
Continuing development of human resources is the key to a stable, enabled and
diversified workforce. The Company therefore continues to increase its
investment in internal skills development programmes and study grants offered to
suitable recruits.
Financial policy statements
The preliminary 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 year, except for the adoption of AC133
(revised) Financial Instruments: Recognition and Measurement. The comparative
figures have been restated to reflect the exclusion of development project
impairment from headline earnings.
Auditors" review
The Company"s auditors, Ernst & Young, have issued their opinion on the Group"s
annual financial statements for the year ended 30 June 2003. The audit was
conducted in accordance with South African Auditing Standards. An unqualified
audit opinion has been issued which is available for inspection at the Company"s
registered office.
These summarised annual financial statements have been derived from the Group"s
annual financial statements and are consistent in all material aspects with the
Group"s annual financial statements.
JSE Securities Exchange requirements
This announcement has been prepared in accordance with the listing requirements
of the JSE Securities Exchange South Africa.
STRATE ELECTRONIC SETTLEMENT
Shareholders were advised during 2002 that the Company had moved to the STRATE
electronic settlement system for shares on the JSE Securities Exchange South
Africa "JSE" and that shares had to be converted into an electronic format
before they could be traded on the JSE and settled in STRATE.
Shareholders are advised to dematerialise their shares and surrender all share
certificates to their Central Securities Depository Participant "CSDP" bank or
broker.
Should you not have a CSDP or broker, please contact the STRATE Share Care Line
on 0800 200 797 for advice and assistance.
DECLARATION OF DIVIDEND NO. 74
The directors of Grintek Limited have declared dividend no. 74 of 2,0 cents per
share to all shareholders. In compliance with the requirements of STRATE, the
following dates are applicable:
Last day to trade cum the dividend 3 October 2003
Date trading commences ex the dividend 6 October 2003
Record date 10 October 2003
Date of payment 13 October 2003
Share certificates may not be dematerialised or rematerialised between Monday 6
October 2003 and Friday 10 October 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
2 September 2003
REGISTERED OFFICE/TRANSFER SECRETARIES
44 Oak Avenue Computershare Limited
Highveld Technopark 70 Marshall Street
Centurion Johannesburg 2001
E-mail: info@grintek.com PO Box 61051
www.grintek.com Marshalltown 2107
Sponsor: Investec Securities Limited
100 Grayston Drive
Sandown Sandton 2196
Auditors: Ernst & Young
Company secretary: A van der Merwe
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
Sponsoring broker:
Investec
Date: 04/09/2003 10:00:22 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
