| Wed 8 Oct 2003, 17:36 | | abridged CONSOLIDATED interim FINANCIAL RESULTS fo |
|
Allied Technologies -
Allied Technologies Limited
(Incorporated in the Republic of South Africa)
(Registration number 1946/020415//06)
Share code: ALT
ISIN: ZAE000015251
* HEPS on continuing operations UP 10.1%
* annualised return on equity of 22%
* cash in excess of R1.2 billion
* Acquisition opportunities being pursued
abridged CONSOLIDATED interim FINANCIAL RESULTS for the six months ended 31
august 2003
Income statement
Six months Six months Year
ended ended ended
% 31.8.03 31.8.02 28.2.03
Figures in R000 Change (Unaudited) (Unaudited) (Audited)
Revenue 1 960 759 2 113 124 4 056 080
- Continuing operations 8.5 1 960 759 1 806 955 3 749 911
- Discontinued - 306 169 306 169
operations
Operating profit 159 541 170 651 406 777
- Continuing operations 6.5 159 541 149 823 385 949
- Discontinued - 20 828 20 828
operations
Dividend income 11 428 10 751 22 569
Net interest income 55 623 35 834 82 205
Profit before goodwill 226 592 217 236 511 551
amortisation/impairment
and exceptional items
Amortisation of (5 118) (7 994) (14 715)
goodwill
Impairment of goodwill - - (13 623)
Exceptional items 2 661 300 204 300 122
(note 1)
Profit before taxation 224 135 509 446 783 335
Normal taxation 55 241 62 125 136 499
STC 14 775 - -
Profit after taxation 154 119 447 321 646 836
Attributable to outside (6 695) (11 826) (15 501)
shareholders
Earnings attributable 147 424 435 495 631 335
to shareholders
- 140.1 414.5 600.8
Basic earnings per
share (cents)
Headline earnings per 143.9 136.4 342.1
share (cents)
HEPS - Continuing 10.1 143.9 130.7 336.5
operations
Weighted average 105 220 105 072 105 088
number of shares in
issue (000)
Notes:
1. Exceptional items
Loss on disposal of
investment -
Rethabile Telecoms - (20 264) (20 264)
Investments (Pty)
Limited
Profit on disposal of
investment -
Alcatel Altech - 320 468 320 386
Telecoms (Pty)
Limited
Profit on disposal of 2 661 - -
a division
2 661 300 204 300 122
2. Reconciliation
between attributable
earnings and headline
earnings
Attributable earnings 147 424 435 495 631 335
Adjustment for:
Amortisation of 5 118 7 994 14 715
goodwill
Impairment of - - 13 623
goodwill
Exceptional items - (2 661) (300 204) (300 122)
gross
Surplus on disposal - - (85)
of property, plant
and equipment
149 881 143 285 359 466
Tax effect of above 399 - 25
adjustments
Outside shareholders" 1 131 - 27
interest
Headline earnings 151 411 143 285 359 518
Attributable to - (5 944) (5 944)
discontinued
operation
Headline earnings - 151 411 137 341 353 574
continuing
3. Accounting policies
The unaudited interim financial results have been prepared in accordance with
South African Statements of Generally Accepted Accounting Practice. The
accounting policies used in the preparation of the unaudited interim financial
results are consistent with those used in the annual financial statements for
the year ended 28 February 2003, except for the adoption of AC 133 on Financial
Instruments. In terms of the standard, comparative years have not been restated.
However the closing balances of financial instruments from the previous year
have been revalued, resulting in a decrease of R10 million to the group"s
opening accumulated reserves. (See statement of changes in equity).
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. It is group policy for a dividend to be declared after the end of the
financial year.
6. During the period under review, there were various sale and purchase
transactions entered into between subsidiary companies and fellow subsidiary
companies. These transactions occurred under terms that are no less favourable
than those arranged with third parties. All significant related party
transactions are eliminated on consolidation.
7. The financial results of the discontinued operation is for the period ended
30 June 2002.
BALANCE SHEET
31.8.03 31.8.02 28.2.03
Figures in R000 (Unaudited) (Unaudited) (Audited)
Assets
Non-current assets 327 512 380 343 334 206
Property, plant and equipment 102 793 105 912 105 481
Goodwill 11 785 34 790 13 333
Investments 201 000 224 000 201 000
Deferred taxation 11 934 15 641 14 392
Current assets 1 826 305 1 505 611 1 795 495
Inventories 187 849 190 769 174 956
Accounts receivable 426 709 388 795 522 406
Net cash and cash equivalents 1 211 747 926 047 1 098 133
Total assets 2 153 817 1 885 954 2 129 701
Equity and liabilities
Ordinary shareholders" 1 396 644 1 246 551 1 390 764
interest
Outside shareholders" 42 991 39 057 42 732
interest
Deferred taxation 5 252 10 351 12 010
Current liabilities 708 930 589 995 684 195
Total equity and liabilities 2 153 817 1 885 954 2 129 701
Net asset value per share 1 327 1 186 1 322
(cents)
Ordinary shares in issue at 105 224 105 117 105 217
end of period (000)
CASH FLOW STATEMENT
Six months Six months Year
ended ended ended
31.8.03 31.8.02 28.2.03
Figures in R000 (Unaudited) (Unaudited) (Audited)
Operating activities 133 796 19 267 226 113
Cash generated by operations 146 804 177 058 440 440
Net investment income 67 051 46 585 104 774
Changes in working capital 102 041 (62 271) (53 616)
Taxation paid (50 579) (37 016) (107 815)
Cash available from operating 265 317 124 356 383 783
activities
Dividends paid, including to (131 521) (105 089) (157 670)
outside shareholders
Investing activities (13 782) 308 256 317 011
Financing activities (6 400) 804 (42 711)
Net funds generated 113 614 328 327 500 413
Cash and cash equivalents - 1 098 133 597 720 597 720
beginning of period
Cash and cash equivalents - 1 211 747 926 047 1 098 133
end of period
STATEMENT OF CHANGES IN EQUITY
Share Non- Accumu-
Figures in capital and Distributable lated Total
R000 premium reserves reserves
Balance at 28 53 339 35 893 826 109 915 341
February 2002
(audited)
Attributable - - 435 495 435 495
to
shareholders
Dividend paid - - (105 089) (105 089)
Issue of 804 - - 804
shares
Balance at 31 54 143 35 893 1 156 515 1 246 551
August 2002
(unaudited)
Attributable - - 195 840 195 840
to
shareholders
Dividend paid - - (52 581) (52 581)
Issue of 954 - - 954
shares
Balance at 28 55 097 35 893 1 299 774 1 390 764
February 2003
(audited)
Adjustment to - - (10 060) (10 060)
opening
accumulated
reserves due
to adoption
of AC133 (see
note 3)
Attributable - - 147 424 147 424
to
shareholders
Dividend paid - - (131 521) (131 521)
Issue of 37 - - 37
shares
Balance at 31 55 134 35 893 1 305 617 1 396 644
August 2003
(unaudited)
OPERATIONAL CONTRIBUTION
Six months Six months Year
Figures in ended ended ended
R000 31.8.03 % 31.8.02 % 28.2.03 %
Revenue
Tele- 1 492 207 76.1 1 181 726 55.9 2 571 786 63.4
communication
division
Multi-Media 403 249 20.6 557 281 26.4 1 019 472 25.1
and
Electronics
division
Information 119 615 6.1 144 794 6.9 285 298 7.0
Technology
division
Inter group (54 312) (2.8) (76 846) (3.6) (126 645) (3.1)
sales
Continuing 1 960 759 100 1 806 955 85.5 3 749 911 92.5
operations
Discontinued - - 306 169 14.5 306 169 7.5
operations
Total 1 960 759 100 2 113 124 100 4 056 080 100
Operating
profit
Tele- 99 372 62.3 73 446 43.0 168 197 41.3
communication
division
Multi-Media 51 570 32.3 59 345 34.8 144 804 35.6
and
Electronics
division
Information 8 613 5.4 14 295 8.4 33 266 8.2
Technology
division
Corporate net (14) - 2 737 1.6 39 682 9.8
income
Continuing 159 541 100 149 823 87.8 385 949 94.9
operations
Discontinued - - 20 828 12.2 20 828 5.1
operations
Total 159 541 100 170 651 100 406 777 100
The comparative figures in the operational reporting table have been restated in
order to reflect the new operational structure of the group.
Supplementary information
Six months Six months Year
ended ended ended
31.8.03 31.8.02 28.2.03
Figures in R000 (Unaudited) (Unaudited) (Audited)
Amortisation - goodwill 5 118 7 994 14 715
Impairment - goodwill - - 13 623
Capital commitments 414 2 398 2 118
Capital expenditure 12 970 25 744 40 552
Depreciation 15 602 18 595 33 791
Lease commitments 50 602 54 616 66 510
Unlisted investments
- Carrying amount 201 000 224 000 201 000
- Directors" valuation 201 000 224 000 201 000
Message to our shareholders
The Directors are pleased to report that Altech continues to show growth and
increased shareholder value with headline earnings per share of 143.9 cents for
the half-year ended August 2003. This reflects an increase of 10.1% for
continuing operations over the comparable prior half-year after taking into
account a Secondary Tax on Companies (STC) charge of 14 cents per share.
No STC was incurred in the prior comparable period.
The above growth comes during one of the most prolonged difficult global and
local business environments experienced in years and highlights Altech"s
resilience and strength within its operations.
Revenue and operating profit for the continuing operations increased by 8.5% and
6.5% to R1.961 billion and R160 million respectively. With continuous focus
being placed on strong asset management, cash and cash equivalents increased to
an amount in excess of R1.2 billion.
GROUP HIGHLIGHTS
CORPORATE FINANCE ACTIVITIES
Altech"s proposed acquisition of control of NamITech Holdings Limited from the
Nampak Group was announced on 6 May 2003. Detailed agreements concerning this
transaction have since been finalised with the vendor, Nampak Products Limited
and with NamITech"s black economic empowerment partner, Pamodzi Investment
Holdings Limited. In addition, agreement has been reached to acquire from two
minority shareholders of NamITech additional shares in NamITech, amounting to a
further 5.92% of its equity.
The NamITech transaction will involve a maximum outlay of approximately R526.8
million, taking into account the acquisition of the minority shareholdings
referred to above. Through a highly innovative new black economic empowerment
investment structure devised by Altech, Pamodzi will be enabled to acquire an
effective 28% shareholding interest in NamITech.
A circular to shareholders detailing this transaction and containing information
concerning NamITech, was posted on 23 September 2003. A negative recommendation
from the Competition Commission has been noted, but the parties will oppose the
Commission"s recommendation on substantive merits. The final ruling on the
acquisition is currently in the jurisdiction of the Competition Tribunal.
An agreement for the acquisition of a 30% equity interest in Altech"s Alcom
Systems business (which designs, supplies, integrates, commissions and sells two
way radio communications networks) by a new black economic empowerment partner,
the Matomo Group (Pty) Limited, has been finalised. This transaction is also
subject to the approval of the competition authorities. An application for this
has been lodged accordingly.
Altech"s subsidiary, Netstar (Pty) Limited, has reached agreement for an amount
of approximately R8 million, to acquire from certain overseas principals the
rights relating to technology previously licensed to it.
Regulatory approval for the disposal of the computer products division of
Altech"s subsidiary, Arrow Altech Distribution (Pty) Limited, for a
consideration of R15 million, has been received and this transaction has now
been implemented.
The Isis Information Systems Division of Altech Data (Pty) Limited has concluded
an agreement for the disposal of its Defence Systems Division, for approximately
R6.5 million, subject to the fulfillment of certain conditions precedent.
Altech is involved in discussions concerning other potential transactions which
would be significant for the group"s future. Altech is currently under a
cautionary relating to these discussions.
TELECOMMUNICATIONS DIVISION
Wireless Communications
Autopage Cellular has performed ahead of expectations in a market which is still
buoyant. For the interim period, Autopage Cellular showed a healthy increase of
more than 11 500 net subscribers, with a good percentage of those being high-end
tariff connections. The total subscriber base of Autopage Cellular now exceeds
465 000.
Autopage Cellular is focused on acquiring subscribers with high airtime revenues
per user (ARPU). This has resulted in better than expected revenue performance,
but a slight decrease in net connections when compared with the same period in
2002. The company traditionally achieves a higher gross connection performance
in the second half of the financial year, due to more active trading over the
November to January holiday period.
During the reporting period churn management projects have proved extremely
successful, resulting in single-digit churn percentages being achieved both at
Autopage Cellular and Supercall Cellular.
Sales of electronic pre-paid vouchers continue to perform well, with month-to-
month growth continuing, particularly through the ABSA ATM channels. Voucher
distribution has been further developed to include direct sales through the
Autopage Direct franchised partners. The number of these partners has now grown
to 90 outlets and, together with their sub-dealers, account for 175 retail
points nationally.
Looking ahead, Autopage Cellular remains focused on offering unique and creative
services for communication users. Opportunities are being investigated in
Africa, and also in broadening the spectrum of communication services which can
be offered by the company. The South African telecommunications market is
becoming increasingly deregulated and continues to provide opportunities for
service providers such as Autopage Cellular to leverage its significant
subscriber penetration towards the broader communications market.
Netstar, the leader in stolen vehicle tracking and recovery in Southern Africa,
maintained its market share at above 47% and further widened the gap with its
next largest competitor. Profit growth is in line with expectations.
The strong growth in Netstar"s subscriber base continued during the reporting
period and the company now services a total of 264 000 vehicles valued at an
amount in excess of R31 billion. Netstar"s extensive ground and air recovery
teams are now responding to close on 600 incidents per month throughout Southern
Africa. The current subscriber growth rate is expected to continue for the
foreseeable future.
The recently acquired ownership of the worldwide intellectual property rights to
the deployed RF (radio frequency) technology which, combined with the ownership
of the recently launched GSM fleet management system, will enable the
unencumbered exploitation of these systems globally.
The Malaysian operation is growing satisfactorily with in excess of 6 000
vehicles on the system and 100 recoveries after the first year of operation.
Other offshore expansion opportunities are being actively pursued as part of the
company"s long-term growth plans.
Alcom Systems (Alcom) has experienced a satisfactory half-year, dominated by
tender submissions for both the SAPS Gauteng Digital Trunked Radio Network and a
re-tender to the City of Tshwane for a Tetra Trunked Radio Network.
Alcom recently reached agreement to sell a 30% stake in the business to a black
economic empowerment partner, the Matomo Group. This venture, subject to
regulatory authority approval, will continue to engineer and project-manage
advanced public-safety radio systems such as TETRA from its principal, Motorola,
a world leader in these systems.
Alcom is currently pursuing a number of opportunities in the broader African
environment.
Alcom Radio Distributors (ARD) has exceeded its financial budget for the period
as it continues to distribute Motorola two-way radio products to the South
African market through its network of authorised dealers.
MULTI-MEDIA AND ELECTRONICS DIVISION
Multi-Media
UEC Technologies (UEC) posted an acceptable performance in the first six months
of the current financial year, taking into consideration the tough economic
conditions worldwide and the negative effect of the strong Rand on exports. UEC
anticipates an even better performance in the second half of the year, having
already received major orders from Foxtel in Australia, RCN in the USA, Euskatel
in Spain, Sky Brazil and Sky Mexico, totalling in excess of R520 million for
present and future deliveries. MultiChoice remains UEC"s major customer, having
placed significant orders with the company for the first six months of the year.
A major milestone is that all the above export orders received are for new
products, which required the development of new hardware and software as well as
new production processes. A further highlight was the receipt by UEC of its
first Personal Video Recorder (PVR) order for Sky Brazil.
UEC"s acquisition of 3CTV, a multi-media software development company based in
Holland, has resulted in the company being able to offer extensive software
support for the MultiChoice installed base. It has also developed new middleware
solutions which will allow UEC to address more aggressively a different segment
of the digital set-top-box market.
Electronics
Arrow Altech Distribution (AAD) exceeded expectations during the interim period
and achieved a good overall financial performance in a globally depressed
electronics industry.
During the reporting period, AAD consolidated its core focus through the
divestiture of its Computer Products Division to Sahara Computers and is now a
more focused value-added distributor of professional industrial electronic
components.
INFORMATION TECHNOLOGY DIVISION
ISIS Information Systems (ISIS) will in future focus solely on its Telecoms
activities, which delivered good results for the first six months.
Subject to some resolutive conditions being met, the Defence Systems Division of
ISIS, has been sold. The Projects and Contracting Division of ISIS has been
integrated into Keops Altech. This was made possible by Altech"s earlier
reported acquisition of the remaining shareholding held by Keops of Canada.
Keops Altech, ahead of budget for the reporting period, has received and is
implementing several contracts, including two large aluminium smelter upgrade
projects for Mozal and Hillside Aluminium.
All projects are ahead of schedule, which is testimony to internal efficiency.
On the business development side, Keops Altech has traditionally won a
significant amount of return business. However, in the first six months of this
year, it has also succeeded in securing many new customers and is currently
working on several other large project opportunities. Keops Altech recently
achieved ISO 9001:2000 certification.
Keops Altech has completed the integration of the ISIS Projects and Contracting
Division and looks forward to bringing this exciting new offering to its
customers.
Altech Card Solutions (ACS) met expectations within its areas of operation and
has posted a satisfactory performance for the review period.
The migration to Europay/MasterCard/Visa (EMV) by the financial institutions, as
well as the need to upgrade existing infrastructure within South Africa, have
resulted in the Card Personalisation Solutions Division achieving its targets.
Outlook
Altech"s growth has been excellent over the past number of years despite
challenging local and global trading conditions. While the coming months will be
difficult, the Altech group remains committed to creating long-term shareholder
value through its focus on annuity based revenues and through sound
acquisitions.
Provided that there are no adverse changes in global trading conditions, it is
expected that Altech"s first half performance will at least be maintained for
the full year.
On behalf of the board
Dr Hilton Davies Craig Venter John Carstens
Non-Executive Chairman Chief Executive Officer Financial
Director
8 October 2003
Directors: Dr HK Davies+ (Non-executive Chairman) CG Venter (Chief Executive
Officer) JEW Carstens PMO Curle* ML Leoka+ DC Radley+ Dr HA Serebro+ RE Venter+
Dr WP Venter+ (Alternate:DC Mpofu+) PL Wilmot+ *UK +Non-executive
Secretaries: Altech Management Services (Pty) Limited
The interim financial results are also available on the Internet at
www.altech.co.za and The JSE News Service - SENS
Date: 08/10/2003 05:24:39 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
