| Tue 4 May 2004, 15:36 | | AUDITED CONSOLIDATED FINANCIAL RESULTS |
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ALLIED TECHNOLOGIES LIMITED - AUDITED CONSOLIDATED FINANCIAL RESULTS AND
DIVIDEND DECLARED FOR THE YEAR ENDED 29 FEBRUARY
2004
Allied Technologies Limited
(Incorporated in the Republic of South Africa)
(Registration number 1946/020415/06)
JSE Share code: ALT
ISIN: ZAE000015251
AUDITED CONSOLIDATED FINANCIAL RESULTS AND DIVIDEND DECLARED FOR THE YEAR ENDED
29 FEBRUARY 2004
* Revenue from continuing operations up 11 percent
* Cash at 1.5 billion
* Significant increase in order book R824 million (2003: R154 million)
* Acquisition and BEE opportunities realised
* Dividend up by 15 percent
INCOME STATEMENT
Figures in R million % 2004 2003
Revenue 4 143 4 056
- Continuing operations 11 4 143 3 750
- Discontinued operation - 306
Operating income 333 407
- Continuing operations (6) 333 386
- Discontinued operation - 21
- Surplus from the liquidation of the
Altron Group Benefit Fund - 32
Dividend income 16 23
Net interest income 107 82
Goodwill amortised (10) (15)
Goodwill impaired - (14)
Exceptional items (Note 1) 5 300
Income before taxation 451 783
Taxation - normal 116 136
- STC 15 -
Income after taxation 320 647
Attributable to outside shareholders (8) (16)
Attributable earnings 312 631
Basic earnings per share (cents) 297 601
Headline earnings per share (cents) 302 342
Adjusted headline earnings per share (cents) (6) 302 321
Dividends paid per share (cents)
- Ordinary - in respect of prior years 125 100
- Special - in respect of prior years - 50
Weighted average number of ordinary shares
in issue (000) 105 221 105 088
Notes:
1. Exceptional Items
Net gain on disposals 5 -
Loss on disposal of preference shares in
Rethabile Telecoms Investments (Pty) Limited - (20)
Profit on disposal of 40% interest in Alcatel
Altech Telecoms (Pty) Limited - 320
5 300
2. Reconciliation Between Earnings And Headline Earnings
Attributable earnings 312 631
Adjustments for:
Amortisation of goodwill 10 15
Impairment of goodwill - 14
Exceptional items - (note 1) (5) (300)
Net loss on disposal or scrapping of property,
plant and equipment 1 -
318 360
Tax effect (2) -
Outside shareholders 2 -
Headline earnings 318 360
Surplus from the liquidation of the Altron
Group Benefit Fund - (32)
Tax effect - 9
Adjusted headline earnings 318 337
3. The accounting policies and methods of computation followed in this report
are consistent 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.
6. The principles applied in determining adjusted headline earnings per share
are consistent with those applied in prior years. The directors are of the
opinion that the disclosure of adjusted headline earnings per share, which
is in addition to disclosure required by South African Statements of
Generally Accepted Accounting Practice, provides shareholders with a more
meaningful assessment of the normal and sustainable earnings of the group.
BALANCE SHEET
Figures in R million 2004 2003
Assets
Non-current assets 150 334
Property, plant and equipment 120 106
Intangible assets 14 13
Investments and loans 1 201
Deferred taxation 15 14
Current assets 2 123 1 796
Inventories 252 175
Accounts receivable 396 523
Cash and cash equivalents 1 475 1 098
Total assets 2 273 2 130
Equity And Liabilities
Capital and reserves 1 561 1 391
Outside shareholders" interest 44 43
Deferred taxation 5 12
Current liabilities 663 684
Total equity and liabilities 2 273 2 130
Net asset value per share (cents) 1 484 1 322
Ordinary shares in issue at end of period (000) 105 224 105 217
STATEMENT OF CHANGES IN EQUITY
Figures in R million 2004 2003
Balance at beginning of year 1 391 916
Changes in accounting policy AC 133 (10) -
Restated balance 1 381 916
Earnings attributable to shareholders 312 631
Dividends (132) (158)
Issue of shares - 2
Balance at end of year 1 561 1 391
CASH FLOW STATEMENT
Figures in R million 2004 2003
Operating activities 232 226
Cash generated by operations 327 441
Investment income 123 105
Changes in working capital 63 (54)
Taxation paid (149) (108)
Cash available from operating activities 364 384
Dividends paid to shareholders (132) (158)
Investing activities 145 317
Financing activities - (43)
Net funds generated 377 500
Cash and cash equivalents
- at beginning of year 1 098 598
- at end of year 1 475 1 098
OPERATIONAL CONTRIBUTION
Figures in R million 2004 % 2003 %
Revenue
Telecommunications division 3 142 76 2 878 71
Multi-Media and Electronics divisions 886 21 1 019 25
Information technology division 241 6 285 7
Inter-group sales (126) (3) (126) (3)
4 143 100 4 056 100
Operating Income
Telecommunications division 241 72 189 46
Multi-Media and Electronics divisions 52 16 145 36
Information technology division 31 9 33 8
Corporate net income 9 3 40 10
333 100 407 100
MESSAGE TO OUR SHAREHOLDERS
Altech"s financial year, ending 29 February 2004 was one during which its
operations continued to deliver satisfactory financial results, coupled with
some excellent individual performances, specifically from Autopage Cellular and
Netstar. Fluctuations of the rand with other currencies created difficulties
and, in particular, had a negative effect on UEC"s performance, which adversely
affected Altech"s overall performance. Several corporate finance merger and
acquisition activities were successfully concluded during the year, which will
contribute positively to the future growth of the group, with the highlight
being the NamITech acquisition.
Notwithstanding the stronger rand and difficult local and global economic
trading conditions, Altech is well positioned for the future. The group will
continue to pursue its focus on its telecommunication, multi-media and
information technology (TMT) convergence strategy that is proving so successful.
The group"s revenue from continuing operations increased in excess of 10 percent
to R4.1 billion with operating revenue of R333 million. This resulted in
headline earnings per share of 302.2 cents, which represents a 6 percent
reduction. Return on shareholders" equity remains in excess of 20 percent, with
cash at year-end of R1.5 billion.
GROUP HIGHLIGHTS
Corporate Finance Activities
The proposed acquisition by Altech of a controlling shareholding in NamITech
Holdings Limited (NamITech), involving an outlay of approximately R526 million,
was announced on 6 May 2003. Initially opposed by the Competition Commission,
this transaction was finally approved by the Competition Tribunal, subject to
the implementation of certain remedies proposed by Altech. This enabled
completion and payment for the NamITech transaction, which took place on 5 March
2004, just after Altech"s financial year-end.
As part of the remedies referred to above, Altech has sold to Labat Africa
Limited (Labat) the card manufacturing activities of Africard, a division of the
Altech Card Solutions business, excluding its card personalisation activities.
Associated with the NamITech transaction was the implementation of a pioneering
structure devised by Altech to enable Pamodzi Investment Holdings Limited
(Pamodzi) to acquire an effective 28 percent shareholding interest in NamITech.
Through this structure, NamITech gained the advantages of a Black Economic
Empowerment (BEE) partnership whilst Pamodzi avoided the onerous debt
arrangements traditionally associated with BEE investment transactions.
The attention of shareholders is drawn to an accompanying announcement referring
to proposals concerning a further BEE initiative in terms of which, subsequent
to the financial year-end and through a similar structure as above, Pamodzi has
acquired a 25.01 percent effective shareholding interest in Altech Data (Pty)
Limited (Altech Data), the holding company for Altech"s other information
technology businesses.
During the financial year Altech also successfully implemented a further BEE
transaction in terms of which the Motoma ICT Group acquired a 30 percent
shareholding in Altech"s business which designs, supplies, integrates,
commissions and sells two-way radio communication networks, now renamed Alcom
Matomo (Pty) Limited.
Altech also recently announced a proposed transaction whereby it will become a
substantial shareholder and joint controlling partner in the Econet Wireless
Group (Econet), an international cellular telephony network operator with
operations based primarily in Africa. This transaction, potentially involving an
outlay of $70 million by Altech, is subject to the fulfilment of certain
conditions precedent, including Altech board approval which, in turn, will be
dependent, inter alia, on the outcome of ongoing processes aimed at the
achievement of controlling shareholdings in certain of Econet"s operations.
Shareholders will be advised of material developments in this regard as they
occur, but final clarity on this proposed transaction will be provided within
the next month or so.
During January 2004 Altech Data acquired the business of the Financial
Transaction Services Division of AST Group Limited, providing on-line financial
transaction switching to customers in the retail sector. The purchase, at an
attractive price, offers substantial synergies to Altech Card Solutions"
Electronic Funds Transfer Point of Sale (EFTPOS) terminal business.
The financial year also saw the completion and implementation of the following
additional transactions, which were referred to as proposed deals in Altech"s
last annual and/or interim reports:
1. The acquisition of the remaining 49.75 percent interest in the Altech IT
subsidiary, Keops Altech (Pty) Limited, since renamed Altech Informatics
(Pty) Limited, from Keops Technologies Inc. of Canada.
2. The acquisition by Altech"s subsidiary Netstar (Pty) Limited of the
remaining rights relating to technology previously licensed to it from an
overseas principal.
3. The disposal by Arrow Altech Distribution (Pty) Limited of its Computer
Products Division to Sahara Computers (Pty) Limited.
4. The disposal of the Defence Systems Division of the Isis Information
Systems Division of Altech Data.
TELECOMMUNICATIONS DIVISION
The group"s Telecommunications Division is currently focused on the provision of
wireless communications through four companies, Autopage Cellular, Netstar,
Alcom Matomo and Alcom Radio Distributors.
WIRELESS COMMUNICATIONS DIVISION
Autopage Cellular, the largest independent cellular service provider in South
Africa with a base of 560 000 subscribers, exceeded its budget expectations for
the year and continues to perform outstandingly. The company is actively seeking
and evaluating a number of exciting opportunities, both in cellular and the
wider communications markets, to capitalise on the deregulation taking place in
the South African telecommunications market and is well-positioned as a broad-
based telecoms service provider to the SNO and Sentech.
Autopage Cellular has ensured that the majority of its airtime profit margin
levels are protected going forward after successfully negotiating agreements
with South African cellular operators for the renewal of its service provider
arrangements and the incentive portion thereof. These renewals are on a longer-
term basis than in the past and also provide the company with an appropriate
exit mechanism for parts of its business in what could become a potentially
challenging cellular market at that time.
Netstar recorded strong profit growth and cash generation for the review period
and maintained its market position and share as the leading vehicle tracking and
recovery company in South Africa. The company"s entry into the fleet management
market, with an innovative GSM product and service, has proved to be successful.
Other developments, in both GSM and low cost vehicle tracking are expected to
broaden Netstar"s penetration in the local market.
They will also leverage Netstar"s expertise in offshore ventures. Alcom Matomo,
which designs, supplies and manages advanced radio infrastructure, experienced a
highly satisfactory conclusion to the year with the winning of a R506 million
tender for a digital two-way radio system project for the South African Police
Services (SAPS) in Gauteng. This was the largest tender of its kind in Africa.
Looking ahead, a number of other major system projects, including one for SAPS
Free State, are being considered for award and Alcom Matomo is well placed to
participate in these projects which have a total value of R300 million. The
company also recently renewed its technology partnership agreement with Motorola
for a five-year period.
Alcom Radio Distributors (ARD), which supplies and distributes advanced Motorola
two-way radio products, exceeded budgeted expectations and returned a strong
performance. ARD maintained its leading position as the largest indirect
Motorola distributor in Africa and the Middle East. A number of new products
available from Motorola will enhance ARD"s ability to service the local market
and to grow its business in 2004.
MULTI-MEDIA AND ELECTRONICS DIVISIONS
Trading conditions remained tough for South African exporters over the past year
and, as a gross exporter, UEC Multi-Media (UEC) was affected by the sharp
strengthening of the rand. Unit volumes were significantly up from previous year
(39 percent), but rand revenue remained flat and profitability was negatively
affected. In US Dollar terms the revenue was up by 28 percent. UEC has been
restructured to enhance efficiencies and to ensure that it remains competitive
in the current strong rand environment. This restructuring will see the company
emerge as an even stronger competitor. It is pleasing to note that UEC has
already achieved 44 percent of its budgeted annual sales in orders for the
current year.
UEC has launched a repair and maintenance support company, Global Decoder
Logistics (GDL), in South Africa and Australia. This will add R59 million to
turnover and approximately R8 million profit before tax in the first year. The
year also saw UEC introducing five new product lines into its portfolio, with an
emphasis on more complex, higher value products. The increased value-added
components of these advanced products should improve margins and, considering
that all these products only started shipping in the last quarter, UEC is
looking forward to a much better financial year.
Arrow Altech Distribution (AAD) met its growth and profit targets despite the
lowering of its prices throughout the past financial year in line with the
strengthening of the rand. AAD is optimistic that the electronics industry will
show resurgence in the coming financial year in support of the company"s three-
year market share growth plan.
INFORMATION TECHNOLOGY DIVISION
The Information Technology Division of Altech posted a credible performance and
faces the new financial year as an equally strong pillar within the group"s
overall TMT structure.
In line with Altech"s strategy the NamITech deal has been concluded and the IT
Division of Altech will now have a revenue in excess of R1 billion per annum
while positioning the group at the forefront of the smart card industry in
Africa. It also positions Altech at the forefront of the Europay Mastercard Visa
(EMV) banking transformation process in Africa while enhancing the group"s
investment in the telecommunications industry via its offerings of pre-paid
voucher solutions, cellular sim cards (SIM"s) and secure mobile banking
solutions.
It also ensures that Altech has a leading market position in the provision of
other smart card-related solutions and services as well as secure payment and
switching solutions.
In parallel with the process above, the existing Information Technology Division
of Altech has been restructured. The Defence Division of Isis Information
Systems (Isis) was sold to Grintek (Pty) Ltd. This was Altech"s last remaining
involvement with the defence industry. The Projects and Contracting Divisions of
Isis were sold to Keops Altech and the name of Keops Altech was changed to
Altech Informatics. The only division remaining within Isis, the Telecoms
Division, achieved budgeted profitability.
Despite the effects of foreign exchange and the unforeseen requirement to pay ad
valorem duty on locally manufactured magnetic cards, Altech Card Solutions
performed to expectations. It should however be noted that subsequent to this
payment, ad valorem duty is no longer payable as from 1 April 2004. An
application for the refund of the ad valorem duty already paid has been
submitted.
In line with the requirements of the Competition Tribunal, Africard"s Card
Manufacturing Division has been sold to Labat. The Personalisation Division has
been retained. Altech Card Solutions will continue to focus on the sale of
Payment Transaction Solutions. The acquisition of the transaction switch from
AST positions Altech Card Solutions to address the broader spectrum of
transaction solutions and offers exciting opportunities going forward.
OUTLOOK
Altech, with its recent acquisitions and with orders on hand of R824 million,
coupled with approximately 65 percent of revenues based on annuity income,
remains confident that it will continue to create shareholder value and show
real growth in the year to come.
DECLARATION OF ORDINARY DIVIDEND NUMBER 61
Dividend number 61 of 143.75 cents per share (2003: 125 cents) in respect of the
year ended 29 February 2004, is declared payable on Monday 7 June 2004 to
ordinary shareholders recorded in the register at the close of business on
Friday 4 June 2004. The timetable relating to the payment of the dividend is as
follows:
2004
Last day to trade cum dividend Friday 28 May
Trading ex dividend commences Monday 31 May
Record date Friday 4 June
Payment date Monday 7 June
Share certificates may not be dematerialised or rematerialised between Monday
31 May 2004 and Friday 4 June 2004, both days inclusive.
On behalf of the board:
Dr Hilton Davies Craig Venter John Carstens
Independent Chief Executive Officer Financial Director
non-executive Chairman
4 May 2004
Directors:
Dr H K Davies* (Independent non-executive Chairman), C G Venter (Chief Executive
Officer), J E W Carstens, P M O Curle#, M L Leoka*, R Naidoo*, D C Radley*,
Dr H A Serebro*, R E Venter*, Dr W P Venter* (Alternate: D C Mpofu), P L Wilmot*
#British
*Non-executive
Secretaries:
Altech Management Services (Pty) Ltd
The financial results are also available on the internet at www.altech.co.za and
the JSE News Service - SENS
Date: 04/05/2004 03:24:16 PM Produced by the JSE SENS Department
