| Tue 5 Oct 2004, 17:42 | | ABRIDGED CONSOLIDATED INTERIM FINANCIAL RESULTS |
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ALLIED TECHNOLOGIES LIMITED - ABRIDGED CONSOLIDATED INTERIM FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2004.
ALTECH
ALLIED TECHNOLOGIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1946/020415/06)
Share code: ALT
ISIN ZAE000015251
ABRIDGED CONSOLIDATED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED
31 AUGUST 2004.
* Revenue up 35%
* Operating income up 57%
* HEPS up 10%
* Cash Generation Strong
Income statement
Six months Six months Year
ended ended ended
31.8.04
% 31.8.03 29.2.04
(Unaudited) (Unaudited) (Audited)
Figures in R million Change
Revenue 35 2 653 1 961 4 143
Operating income 57 249 159 333
Investment income 28 70 129
Finance costs (1) (3) (6)
Income before goodwill
amortisation
and capital items 22 276 226 456
Goodwill amortised (18) (5) (10)
Capital items (Note 1) 8 3 5
Income before taxation 19 266 224 451
Taxation (103) (70) (131)
Income after taxation 6 163 154 320
Attributable to
outside shareholders (9) (7) (8)
Attributable earnings 5 154 147 312
Basic earnings per
share (cents) 7 149 140 297
Headline earnings per
share (cents) 10 158 144 302
Weighted average
number of ordinary
shares in issue
(millions) 103 105 105
Notes:
1. Capital items
Net gain on disposals - 3 5
Net gain on share buy
back 8 - -
8 3 5
2. Reconciliation
between earnings
and headline earnings 154 147 312
Attributable earnings 18 5 10
Goodwill amortised (8) (3) (5)
Capital items
Other - - 1
164 149 318
Tax effect of above
adjustments - 1 (2)
Outside shareholders`
interest (1) 1 2
Headline earnings 163 151 318
3. Accounting policies
The unaudited interim financial results have been prepared in accordance with
South African statements of Generally Accepted Accounting Practice. The
account- ing 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 29 February 2004.
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.
Balance sheet
31.8.04 31.8.03 29.2.04
(Unaudited) (Unaudited)
Figures in R million (Audited)
Assets
Non-current assets 641 328 150
Property, plant & equipment 220 103 120
Intangible assets 392 12 14
Investments and loans - 201 1
Deferred taxation 29 12 15
Current assets 1 604 1 826 2 123
Inventories 309 188 252
Accounts receivable 573 426 396
Net cash and cash equivalents 722 1 212 1 475
Total assets 2 245 2 154 2 273
Equity and liabilities
Ordinary shareholders` interest 1 308 1 396 1 561
Share capital, premium and
reserves 1 565 1 396 1 561
Own shares acquired (257) - -
Outside shareholders` interest 91 43 44
Deferred taxation 20 5 5
Current liabilities 826 710 663
Accounts payable 730 612 598
Taxation payable 96 98 65
Total equity and liabilities 2 245 2 154 2 273
Net asset value per share (cents) 1 343 1 327 1 484
Ordinary shares in issue at end of
period (millions) 97 105 105
Statement of changes in equity
Share capital Non-distributable Distributable
Figures in
R million and premium reserve reserves Total
Balance at
28 February
2003
(audited) 55 36 1 300 1 391
Opening AC
133 fair
value
adjustment - - (10) (10)
Attributable earnings - - 147 147
Dividends - - (132) (132)
Balance at
31 August
2003
(unaudited) 55 36 1 305 1 396
Attributable earnings - - 165 165
Balance at
29 February
2004
(audited) 55 36 1 470 1 561
Attributable earnings - - 154 154
Dividends - - (152) (152)
Issue of
share
capital 2 - 2
Transfer
between
reserves - (35) 35 -
Balance at
31 August
2004
(unaudited) 57 1 1 507 1 565
Cash flow statement
Six months Six months Year
ended ended ended
31.8.04 31.8.03 29.2.04
(Unaudited) (Unaudited)
Figures in R million (Audited)
Operating activities 83 135 232
Cash generated by operations 267 147 327
Net investment income 27 67 123
Changes in working capital 5 104 63
Taxation paid (64) (51) (149)
Cash available from operating
activities 235 267 364
Dividends paid to shareholders (152) (132) (132)
Investing activities (834) (14) 145
Financing activities (2) (7) -
Net funds (utilised)/generated (753) 114 377
Cash and cash equivalents -
beginning
of period 1 475 1 098 1 098
Cash and cash equivalents - end
of period 722 1 212 1 475
Operational contribution
Six months Six months
ended ended
31.8.04 % 31.8.03
(Unaudited)
Figures in R million (Unaudited)
Revenue
Telecommunications division 1 792 68 1 492
Multimedia and Electronics
division 454 17 403
Information technology
division 458 17 120
Inter group sales (51) (2) (54)
Operating income 2 653 100 1 961
Telecommunications division 152 61 99
Multimedia and Electronics
division 11 4 52
Information technology
division 88 35 8
Corporate net income (2) - -
Total 249 100 159
Year ended
% 29.2.04 %
Figures in R million (Audited)
Revenue
Telecommunications division 76 3 142 76
Multimedia and Electronics
division 21 886 21
Information technology
division 6 241 6
Inter group sales (3) (126) (3)
Operating income 100 4 143 100
Telecommunications division 62 241 72
Multimedia and Electronics
division 33 52 16
Information technology
division 5 31 9
Corporate net income - 9 3
Total 100 333 100
Supplementary information
Six months Six months Year
ended ended ended
31.8.04 31.8.03 29.2.04
(Unaudited)
Figures in R million (Unaudited) (Audited)
Capital commitments 9 - -
Capital expenditure 49 13 -
Contingent liabilities 27 - 27
Depreciation 38 16 32
Net foreign exchange losses 6 - 3
Lease commitments 74 51 102
Unlisted investments
- Carrying amount - 201 1
- directors` valuation - 201 -
Message to our shareholders
The Directors are pleased to report that Altech has had another successful half-
year ended August 2004 and has improved earnings
per share by 10 percent.Revenue and operational income increased by 35 percent
and 57 percent to R2,653 billion and R249 million respectively. With
continuous focus being placed on strong asset management, Altech`s balance sheet
remains strong with cash and cash equivalents of R722 million after payments
were made for the NamITech Holdings Limited (`NamITech`) acquisition (R543
million) and the share buy back (R247 million).
CORPORATE FINANCE ACTIVITIES
Following the acquisition of NamITech, which has contributed significantly to
Altech`s group earnings, Altech has been engaged in other material corporate
finance deals.
The period saw the conclusion by certain Altech operating companies of two black
economic empowerment (`BEE`) transactions, namely the NamITech 28 percent
disposal to Pamodzi Investment Holdings (Pty) Limited (`Pamodzi`) and Altech
Data (Pty) Limited`s 25.01 percent disposal, also to Pamodzi. The group now
considers its underlying operations well positioned from an empowerment
perspective, and has made significant progress complying with the impending ICT
Charter.
Shareholders were advised in an announcement dated 21 January 2004 that Altech
and the shareholders of Econet, namely Econet Wireless Ventures, had entered
into a heads of agreement to establish a jointly-controlled South African
telecommunications investment holding company, incorporating certain of the
operations of the Econet Wireless Group. A further announcement relating
to this transaction was published on 30 August 2004, confirming the conclusion
of detailed agreements between the parties and the fulfilment of certain of the
conditions precedent to the transaction, which were specified in the previous
announcement.
At current exchange rates, the Econet transaction will involve a net outlay by
Altech of approximately R460 million, funded from its existing cash resources.
This signifies Altech`s entry into the market as an international cellular
telecommunications network operator. Strategically, this acquisition is
anticipated to reposition Altech as a listed company and underpin earnings
growth for the foreseeable future.
Remaining outstanding conditions precedent for the Econet transaction relate
only to South African Reserve Bank approval, as well as cabinet approval for the
acquisition by Econet of the announced majority interest in Telikom Papua New
Guinea. These processes are at an advanced stage and a positive outcome is
expected shortly. Shareholders will be kept advised of progress in this regard.
During the interim period Altech also effected an indirect repurchase of 8 048
242 of its own ordinary shares at a price of 3180 cents per share (plus
acquisition and holding costs of 32 cents per share) from its listed holding
company, Allied Electronics Corporation Limited. These repurchased shares amount
to approximately 7.6 percent of the current issued ordinary share capital of
Altech and will be held as treasury stock for acquisition or other purposes.
Following these material transactions, Altech will still have significant cash
resources with no material borrowings. Therefore, Altech is well positioned to
take full advantage of any future network expansion and acquisition
opportunities within the proposed Econet investment and in other areas.
TELECOMMUNICATIONS DIVISION
Wireless Communications
Autopage Cellular performed well ahead of expectations in a market which has
recorded good growth, but which is also showing signs of maturity. For the
interim period Autopage Cellular reported a healthy increase of more than 30 000
net subscribers. These connections were weighted towards post-paid (contract)
consumer tariffs. However, high-end connections, through corporate least-
cost routing and commercial payphone operators, have assisted in increasing the
average revenue per user (ARPU). The subscriber base of Autopage Cellular now
exceeds 615 000.Autopage Cellular is focused on maintaining market share in an
increasingly competitive post-paid market and this has resulted in a
better than expected connection performance for the period. ARPU is still
increasing, compared with expected levels. The company expects to achieve an
even higher gross connection performance in the second half of the financial
year due to peak trading over the October to December period.
During the reporting period churn management has proved extremely successful,
resulting in a significantly reduced churn percentage of just over 10 percent on
an annualised basis.Sales of electronic pre-paid vouchers continued to perform
well, particularly through ABSA ATM channels. Voucher distribution
has been further developed to include sales through Autopage Direct franchised
partners. The addition of further retail outlets and the development of planned
additions to the partner channel will add to distribution capacity over the next
six months.Looking ahead, Autopage Cellular will continue offering unique and
creative services for communications users. Negotiations with Sentech have been
concluded to offer the `My Wireless` broadband service through Autopage
Cellular. This provides exciting opportunities.
The South African telecommunications market has become increasingly deregulated
following the recent announcements by the government. The opening of the market
for voice-over-internet-protocols (VOIP) as well as other concessions has
created opportunities for Autopage Cellular to leverage its significant
subscriber base into a broader communications company.Netstar, the leader in
stolen vehicle tracking and recovery (SVR) in Southern Africa, maintained its
share of the market against its largest competitor. Profit growth is ahead of
expectations and the company has exceeded cash flow targets.
The strong growth in Netstar`s subscriber base continued during the reporting
period and the company now services over 320 000 vehicles, valued at R35
billion.
The introduction of the Vigil fleet management product has proved most
successful. This system uses GSM technology and is combined with Netstar`s
leading SVR technology to provide a comprehensive service offering. Over 2000
such systems are already in use.
The Malaysian operation is growing steadily. Targeted African and other
international expansion markets are being actively pursued
as a part of the company`s long-term growth plans.Alcom Matomo has experienced a
busy half-year with activity generated by the award in February 2004 of the R500
million SAPS Gauteng Digital Trunked Radio Network. Additional tenders have been
submitted for similar communications systems during the period.
A number of other telecommunications related projects for cellular network
operators have been undertaken during the period. A further highlight was the
award by ESKOM of a contract to the company`s SCADA division, demonstrating
recognition of Alcom Matomo`s capabilities in this field.
Alcom Matomo is currently also pursuing a number of opportunities in Southern
Africa, in line with a strategic alliance agreement with Motorola. This
agreement has been extended for a further period of five years.
Alcom Radio Distributors (ARD) has exceeded its budget for the period as it
continues to distribute Motorola two-way radio
products to the Southern African market through its network of authorised
dealers. A renewed agreement has also been signed with
Motorola for a further 5 years. Exports have shown significant growth and
prospects remain positive.
MULTI-MEDIA AND ELECTRONICS DIVISION
UEC Technologies (UEC) posted an acceptable performance in the first six months,
despite further strengthening of the rand.
Significant growth statistics to highlight the underlying good trading business
of UEC include:
* Volumes (unit sales) up by 38 percent
* Sales (in South African rand) up by 44 percent
* Sales (in United States dollars) up by 71 percent
* Exports up from 32.7 percent to 74.2 percent.
UEC`s portfolio of five new high-end products has resulted in the average price
per product improving by 24 percent in US dollar
terms. However, the stronger rand caused only a 4 percent increase in SA rand
terms. The introduction of newly developed decoder
products facilitated entry into the growth markets of Brazil, Mexico, Israel,
Cyprus and India.
The UEC service and maintenance facility in Australia, Global Decoder Logistics
(GDL), became fully operational during the
period. The company is expecting a good profit contribution from GDL in the
second half of the financial year.
Arrow Altech Distribution (AAD), through tight cost controls and good working
capital management, remains profitable despite the
strong rand and low dollar electronic component prices.
During the reporting period AAD secured a number of product design
registrations, resulting in product and price protection. This
will position the business for margin enhanced sales opportunities during the
next six months.
INFORMATION TECHNOLOGY DIVISION
NamITech performed above expectations for its first reporting period.
The Mobile Solutions division remains the pre-eminent supplier of pre-paid
vouchers, SIM cards and Value Added Solutions to the Mobile Networks in Sub-
Saharan Africa.
The Banking Solutions division has signed a number of material
Europay/MasterCard/Visa (EMV) chip-card contracts with several
South African banks. The full benefits of these contracts are anticipated in the
2005 financial year.
Increased demand for Managed Security Services and Application Security
Solutions are expected to translate into increased sales.
NamITech is establishing a pre-paid voucher facility in Nigeria after being
awarded a licence to manufacture vouchers in that country by the Nigerian
Communications Commission. The Nigerian pre-paid voucher market is substantial
and offers significant growth opportunities in all of NamITech`s products and
solutions.
The shareholders` agreement between Altech, Pamodzi, Giesecke & Devrient GmbH
(G&D) and NamITech has been finalised. This agreement solidifies NamITech`s
relationship with G&D (the third largest smart card manufacturer in the world)
and Pamodzi.
Altech Card Solutions (ACS) continues to perform to expectations and has
recorded good results. The full installation and integration of an on-line
financial transaction switch to customers in the retail sector and has been
implemented.
The Datacard Personalised Solutions, Cardtronic, Terminal Solutions and
Integrated Technology Solutions all have performed above expectation.
Altech Informatics` trading has been constrained, however, ISIS Information
Systems (ISIS) has been successfully restructured and has delivered pleasing
results for the period. The company has now positioned itself as one of the
country`s leading system integrators and suppliers of software solutions in the
telecoms sector.
The directors, taking into account the group`s recent acquisitions, orders on
hand and increasing annuity income, remain confident that real growth will be
achieved in the second period of the financial year.
On behalf of the board
Dr Hilton Davies Craig Venter Dr John Carstens
Non-Executive Chairman Chief Executive Officer Financial Director
5 October 2004
Directors
Dr HK Davies (Non-executive Chairman), CG Venter (Chief Executive Officer),
Dr JEW Carstens, PMO Curle*, ML Leoka#, R Naidoo#, DC Radley#,
Dr HA Serebro#, RE Venter#, Dr WP Venter#, (Alt. DC Mpofu#),
PL Wilmot# *British #Non-executive
Secretaries: Altech Management Services (Pty) Limited
The financial results are also available on the internet at www.altech.co.za and
the JSE News Service - SENS
Date: 05/10/2004 05:37:48 PM Produced by the JSE SENS Department
