| Tue 11 Oct 2005, 8:30 | | Altron - Unaudited abridged consolidated interim |
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Altron - Unaudited abridged consolidated interim results for the six months
ended 31 August 2005
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: ZAE000029666)
("Altron" or "the Company")
UNAUDITED ABRIDGED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31
AUGUST 2005
HIGHLIGHTS
Revenue up 17%
Operating income up 14%
Headline earnings per share up 16%
Return on equity increases to 17.2%
Pursuing Growth
Abridged income statements
Six months
ended
31 August
% 2005
Figures in R millions Change (Unaudited)
Revenue 17 6 989
Operating income before goodwill
impaired/adjusted and capital items 14 502
Investment income 49
Finance costs (31)
Income from associates 29
Goodwill impaired/adjusted (3)
Capital items (Note 1) 12
Income before taxation 48 558
Taxation (201)
Income for the period 79 357
Attributable to minority shareholders 122
Attributable to Altron equity shareholders 56 235
357
Basic earnings per share (cents) 54 84
Headline earnings per share (cents) 16 81
Diluted basic earnings per share (cents) 78
Weighted average number of shares (millions) 279
Ordinary shares 94
Participating preference shares 185
Diluted average number of shares (millions) 284
Six months Year
ended ended
31 August 28 Feb
2004 2005
Figures in R millions (IFRS restated) (IFRS restated)
Revenue 5 959 12 206
Operating income before goodwill
Impaired/adjusted and capital items 442 967
Investment income 51 100
Finance costs (22) (62)
Income from associates 6 24
Goodwill impaired/adjusted (134) (205)
Capital items (Note 1) 34 114
Income before taxation 377 938
Taxation (177) (339)
Income for the period 200 599
Attributable to minority shareholders 49 148
Attributable to Altron equity
Shareholders 151 451
200 599
Basic earnings per share (cents) 55 163
Headline earnings per share (cents) 70 162
Diluted basic earnings per share (cents) 49 152
Weighted average number of shares
(millions) 275 276
Ordinary shares 94 94
Participating preference shares 181 182
Diluted average number of shares
(millions) 280 282
Abridged balance sheets
31 August 31 August 28 Feb
2005 2004 2005
Figures in R millions (Unaudited) (IFRS restated) (IFRS restated)
Assets
Non-current assets 2 627 1 880 2 456
Property, plant and
Equipment 901 795 848
Goodwill and intangible
Assets 1 042 724 928
Rental finance advances 89 128 106
Associates and other
Investments 497 136 458
Deferred taxation 98 97 116
Current assets 4 409 4 397 4 457
Inventories 1 231 1 165 1 158
Accounts receivable 2 303 1 822 1 779
Net cash and cash
Equivalents 875 1 410 1 520
Total assets 7 036 6 277 6 913
Equity and liabilities
Total equity 3 793 3 287 3 692
Shareholders" equity 2 748 2 437 2 694
Minority interests 1 045 850 998
Non-current liabilities 514 620 714
Long-term liabilities 291 420 489
Empowerment funding
Obligation 173 170 172
Deferred taxation 50 30 53
Current liabilities 2 729 2 370 2 507
Trade and other payables 2 434 2 003 2 216
Other 295 367 291
Total equity and
Liabilities 7 036 6 277 6 913
Net asset value per
Share (cents) 983 884 968
Shares in issue at end
of period (millions) 280 276 278
- ordinary shares 94 94 94
- participating
preference shares 186 182 184
Operational contribution
31 August 31 August
2005 2004
Figures in R millions (Unaudited) % (IFRS restated) %
Revenue:
Altech 2 933 42 2 653 44
BTG 1 747 25 1 418 24
Powertech, corporate and
financial services 2 309 33 1 888 32
6 989 100 5 959 100
Operating income*
Altech 250 50 248 56
BTG 128 25 95 22
Powertech, corporate and
financial services 124 25 99 22
502 100 442 100
% held at
Headline earnings: 31 August
2005
Altech 57.9 102 45 96 50
BTG 52.1 39 17 30 15
Powertech, corporate and
financial services 100.0 86 38 67 35
227 100 193 100
28 Feb
2005
Figures in R millions (IFRS restated) %
Revenue:
Altech 5 552 45
BTG 2 906 24
Powertech, corporate and
financial services 3 748 31
12 206 100
Operating income*
Altech 493 51
BTG 225 23
Powertech, corporate and
financial services 249 26
967 100
% held at
Headline earnings: 31 August
2005
Altech 57.9 192 43
BTG 52.1 73 16
Powertech, corporate and
financial services 100.0 181 41
446 100
Segmental analysis
31 August 31 August
2005 2004
Figures in R millions (Unaudited) % (IFRS restated) %
Revenue:
Telecommunications 2 681 38 2 169 37
Power electronics and multimedia 2 178 31 1 965 33
Information technology 2 155 31 1 876 31
Corporate, financial services
and eliminations (25) - (51) (1)
6 989 100 5 959 100
Operating income*
Telecommunications 191 38 156 35
Power electronics and multimedia 134 27 109 25
Information technology 185 37 183 41
Corporate and financial services (8) (2) (6) (1)
502 100 442 100
28 Feb
2005
Figures in R millions (IFRS restated) %
Revenue:
Telecommunications 4 713 39
Power electronics and multimedia 3 723 31
Information technology 3 835 31
Corporate, financial services
and eliminations (65) (1)
12 206 100
Operating income*
Telecommunications 356 37
Power electronics and multimedia 227 23
Information technology 376 39
Corporate and financial services 8 1
967 100
* Operating income is stated before goodwill impaired/adjusted and capital
items
Supplementary information
31 August 31 August 28 Feb
2005 2004 2005
Figures in R millions (Unaudited) (IFRS restated) (IFRS restated)
Borrowings 326 530 519
- long-term 291 420 489
- short-term 35 110 30
Depreciation 100 90 189
Capital expenditure 150 137 333
Contingent liabilities 27 27 27
Capital commitments 79 34 77
Lease commitments 468 226 442
Payable within the next
12 months: 108 80 133
- property 81 52 92
- plant, equipment and
vehicles 27 28 41
Payable thereafter: 360 146 309
- property 332 117 273
- plant, equipment and
vehicles 28 29 36
Unlisted investments
- Carrying amount 497 136 458
- Directors" valuation 677 187 479
Abridged cash flow statement
31 August 31 August 28 Feb
2005 2004 2005
Figures in R millions (Unaudited) (IFRS restated) (IFRS restated)
Operating activities (210) 49 750
Cash generated by
operations 611 523 1 122
Net investment income 19 34 40
Changes in working
capital (369) (154) 78
Taxation paid (185) (136) (266)
Cash available from
operating activities 76 267 974
Dividends paid,
including
to minority shareholders (286) (218) (224)
Investing activities (269) (822) (1 381)
Financing activities (166) 181 155
Net funds utilised (645) (592) (476)
Cash and cash
equivalents
- beginning of period 1 520 2 004 2 004
Translation differences
of foreign cash - (2) (8)
Cash and cash
equivalents
- end of period 875 1 410 1 520
Abridged statement of changes in equity
Share
capital and Treasury Retained
Figures in R millions premium shares Reserves earnings
Balance at 29 February
2004 (IFRS restated) 789 (238) 221 1 717
Issue of share capital 7
Attributable earnings 151
Dividends (143)
Transfer between reserves (22) 22
Foreign currency
translation differences (30)
Cash flow hedging reserve 2
Share based payments 1
Fair value of investments 8
Change in shareholding
of subsidiaries (63)
Movement in minority
shareholders" balance
Balance at 31 August 2004
(IFRS restated) 796 (238) 135 1 744
Issue of share capital 10
Attributable earnings 300
Foreign currency
translation differences (4)
Release of translation
surpluses (67)
Cash flow hedging reserve (1)
Fair value of investments 9
Change in shareholding
of subsidiaries 10
Movement in minority
shareholders" balance
Balance at 28 February
2005 (IFRS restated) 806 (238) 82 2 044
Issue of share capital 7
Attributable earnings 235
Dividends (176)
Foreign currency
translation differences 1
Share based payments 1
Fair value of investments (4)
Change in shareholding
of subsidiaries (10)
Movement in minority
shareholders balance
Balance at 31 August
2005 (unaudited) 813 (238) 70 2 103
Shareholders" Minority Total
Figures in R millions equity interest equity
Balance at 29 February
2004 (IFRS restated) 2 489 1 082 3 571
Issue of share capital 7 7
Attributable earnings 151 49 200
Dividends (143) (81) (224)
Transfer between reserves - -
Foreign currency
translation differences (30) (3) (33)
Cash flow hedging reserve 2 2
Share based payments 1 1
Fair value of investments 8 8
Change in shareholding
of subsidiaries (63) (178) (241)
Movement in minority
shareholders" balance - (19) (19)
Balance at 31 August 2004
(IFRS restated) 2 437 850 3 287
Issue of share capital 10 10
Attributable earnings 300 99 399
Foreign currency
translation differences (4) (4)
Release of translation
surpluses (67) (67)
Cash flow hedging reserve (1) (1)
Fair value of investments 9 9
Change in shareholding
of subsidiaries 10 50 60
Movement in minority
shareholders" balance - (1) (1)
Balance at 28 February
2005 (IFRS restated) 2 694 998 3 692
Issue of share capital 7 7
Attributable earnings 235 122 357
Dividends (176) (110) (286)
Foreign currency
translation differences 1 1
Share based payments 1 1
Fair value of investments (4) (4)
Change in shareholding
of subsidiaries (10) 20 10
Movement in minority
shareholders balance - 15 15
Balance at 31 August
2005 (unaudited) 2 748 1 045 3 793
Notes
Six months Six months
ended ended
31 August 31 August
2005 2004
Figures in R millions (Unaudited) (IFRS restated)
1. Capital items
Net gain on disposal of
property, plant and equipment 4 1
Foreign currency gain on capital loan 8 -
Release of restructure provision - 33
Foreign currency
translation reserve realised - -
Impairment reversal - -
Net loss on disposal and
closure of businesses - -
12 34
2. Reconciliation between
earnings and headline earnings
Attributable to Altron shareholders 235 151
Goodwill adjusted/impaired 3 134
Capital items - gross (12) (34)
Tax effect of above adjustments 2 1
Minority interest in adjustments (1) (59)
Headline earnings 227 193
3. Reconciliation between
attributable earnings and diluted
earnings
Attributable to Altron shareholders 235 151
Interest earned on proceeds 4 7
Additional earnings attributable
to minorities in subsidiaries (23) (24)
Minority interest in adjustments 5 4
Diluted earnings 221 138
Year
ended
28 Feb
2005
Figures in R millions (IFRS restated)
1. Capital items
Net gain on disposal of
property, plant and equipment 7
Foreign currency gain on capital loan -
Release of restructure provision 44
Foreign currency
translation reserve realised 67
Impairment reversal 5
Net loss on disposal and
closure of businesses (9)
114
2. Reconciliation between
earnings and headline earnings
Attributable to Altron shareholders 451
Goodwill adjusted/impaired 205
Capital items - gross (114)
Tax effect of above adjustments (10)
Minority interest in adjustments (86)
Headline earnings 446
3. Reconciliation between
attributable earnings and diluted
earnings
Attributable to Altron shareholders 451
Interest earned on proceeds 13
Additional earnings attributable
to minorities in subsidiaries (44)
Minority interest in adjustments 8
Diluted earnings 428
Fully diluted earnings have been calculated on the basis that:
- Kagiso Strategic Investments (Pty) Limited exercised its full option on 22%
of the shares in Bytes Technology Group South Africa (Pty) Limited effective
1 March 2004. It is assumed that the proceeds of the issue of these shares
of R198 million would have attracted interest at 6.65% after tax for the
period under review.
- The recognition of the deferred 30% interest of the Izingwe Consortium in
Aberdare Cables less dividends utilised to repay the funding obligation.
4. Subsequent event
Subsequent to the results for the period ended 31 August 2005, Altech has
successfully concluded the sale of its fifty percent plus 1 share in Econet
Wireless Global Limited (EWG) effective 1 September 2005. EWG"s contribution to
headline earnings for the six month period ended 31 August 2005 is nil.
The net asset value of EWG, included in the balance sheet, is R409 million
which comprises the following assets and liabilities:
Non-current assets 465
Current assets 126
Total assets 591
Non-current liabilities 70
Current liabilities 112
Total liabilities 182
5. It is group policy for a dividend to be declared after the end of the
financial year.
ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
1. Basis of preparation
The group has adopted International Financial Reporting Standards (IFRS) for
the year ending 28 February 2006. The interim results have been prepared and
presented in accordance with IAS 34 - Interim financial reporting.
The financial statements for the year ending 28 February 2006 will be the
group"s first consolidated IFRS- compliant financial statements and hence IFRS
1 First time adoption of IFRS has been applied in preparing this interim
report.
2. Significant changes to to the group"s accounting policies as a result of the
adoption of IFRS Financial statements of foreign operations
The assets and liabilities of all foreign operations, including goodwill and
fair value adjustments arising on consolidation, are translated to Rands at
foreign exchange rates ruling at the balance sheet date. The revenues and
expenses of foreign operations are translated to Rands at rates approximating
the foreign exchange rates ruling at the date of the transactions. Foreign
exchange differences arising on translation are recognised directly in a
separate component of equity - foreign currency translation reserve. The
foreign currency translation reserve applicable to a foreign operation is
released to the income statement upon disposal of that foreign operation.
Previously, the non-monetary assets and liabilities of all foreign subsidiaries
considered to be integrated foreign operations were translated at historic
exchange rates, and the foreign exchange gains and losses arising on
translation of monetary assets and liabilities were recognised in operating
income.
Goodwill
All business combinations are accounted for by applying the "purchase method".
Goodwill represents amounts arising on acquisition of subsidiaries and
associates. In respect of business combinations that have occurred since the
IFRS transition date, 1 March 2004, goodwill represents the difference between
the cost of the acquisition and the fair value of the net identifiable assets
and contingent liabilities acquired.
The group made an election in terms of IFRS 1 that in respect of acquisitions
prior to this date, goodwill is included on the basis of its deemed cost, which
represents the amount recorded under SA GAAP. The classification and accounting
treatment of business combinations that occurred prior to 1 March 2004 have not
been reconsidered in preparing the group"s opening IFRS balance sheet at 1
March 2004.
Goodwill is stated at cost less accumulated impairment losses. Goodwill is
allocated to cash-generating units and is no longer amortised but tested
annually for impairment.
Previously goodwill arising on each acquisition was amortised over its useful
life on a straight line basis and subjected to annual impairment testing.
Premium on disposal of minority interests in subsidiaries
Following the presentation of minority interests in equity any increase or
decrease in ownership interests in subsidiaries without a change in control are
recognised as equity transactions in the consolidated financial statements.
Accordingly any premium on subsequent sales of equity instruments to minority
interests are recognised directly in the equity of the parent shareholder.
Previously premiums on subsequent sales of equity instruments to minorities
were taken to profit as a capital item in the income statement.
Intangible assets
Intangible assets other than goodwill that are acquired by the group are stated
at cost less accumulated amortisation and impairment losses.
Amortisation is charged to the income statement on a straight-line basis over
the estimated useful lives of intangible assets unless such lives are
indefinite. Intangible assets with an indefinite useful life are tested
systematically for impairment at each balance sheet date.
Other intangible assets are amortised from the date they are available for use.
The estimated useful lives are as follows:
Patents and trademarks 5 years
Distribution rights term of distribution agreements
Previously distribution rights were classified as goodwill on the balance sheet
and amortised to the income statement as goodwill amortisation on a straight
line basis over the useful life of the intangible asset.
Share based payment transactions
The fair value of share options and deferred delivery shares granted to
employees is recognised as an employee expense with a corresponding increase in
equity. The fair value is measured at grant date and expensed over the period
during which the employee becomes unconditionally entitled to the equity
instruments. The fair value of the instruments granted is measured using
generally accepted valuation techniques, taking into account the terms and
conditions upon which the instruments are granted. This accounting policy has
been applied to all equity instruments granted after 7 November 2002 that had
not yet vested at 1 January 2005. The fair value of share based payments was
not recognised under the group"s previous accounting policies.
Application of IFRS 2 to Black Economic Empowerment (BEE) transactions
The sale of 30% of Aberdare Cables to the Izingwe Consortium and the 27% of BTG
SA to Kagiso were equity instruments that were considered to have fully vested
in the hands of the participants before 1 January 2005.
Under the exemption offered by IFRS 1: First time adoption of IFRS the
transactions were not accounted for as share based payments.
The group continues to account for the NamITech BEE transaction with Pamodzi on
the same basis as disclosed in the 2005 annual financial statements, pending the
finalisation of the accounting standards relating to these transactions. On
the assumption that Pamodzi had acquired their full economic interest in
NamITech in 2005, an amount of R114 million would have been reflected as their
minority interest in the company.
Straight-lining of operating lease payments
Payments made under operating leases are recognised in the income statement on
a straight-line basis over the term of the lease. Past practice, whereby
operating lease payments were expensed on a payments basis, was based on an
interpretation that was generally accepted in the South African community. This
interpretation considered the contractual payments basis as being most
representative of the time pattern of the entity"s benefit obtained from the
leased property. The global spotlight has led to the view that the entity is
obliged to adopt the straight-line basis of accounting for all lease payments.
The adjustment has been made as required by IAS 8 with the necessary
restatement of comparative figures.
Fair valuing of held-to-maturity investments
Investments held to maturity are non-derivative financial assets, with fixed or
determinable payments and fixed maturity, that the group has the positive
intention and ability to hold to maturity other than:
(a) those that the group upon initial recognition designates as at fair value
through profit or loss;
(b) those that the group designates as available for sale; and
(c) those that meet the definition of loans and receivables.
Gains or losses from fair valuing these investments shall be recognised
directly in equity, through the statement of changes in equity.
The investment in Fintech Receivables 1 meets this criteria and as such has
been fair valued.
The comparative figures have been restated.
3. Reconciliation of equity
28 Feb 31 Aug 1 Mar
Figures in R millions 2005 2004 2004
Equity previously reported under SA GAAP 3 566 3 393 3 571
Adjustment upon adoption of IFRS 126 (106) 15
Equity reported under IFRS 3 692 3 287 3 586
Equity adjustments
Retained earnings:
Net reversal of goodwill
amortised and impaired 95 43 -
Expensing of share based payments (2) (1) -
Foreign operations 3 1 -
PPE and intangible assets 2 1 -
Operating leases (4) (2) (3)
Derecognition of Izingwe minorities* - 55 -
Reversal of premium on minority equity
transactions - (14) -
Share based payment reserve 2 1 -
Foreign currency translation reserve (3) (1) -
Derecognition of Izingwe minorities* - (225) -
Premium on minority equity transactions - 14 -
Revaluation reserve 35 26 18
Minorities (2) (4) -
126 (106) 15
Assets and liabilities adjustments
PPE and intangible assets 2 1 -
Goodwill 95 43 -
Associates and other investments 35 26 18
Deferred tax 3 1 -
Empowerment funding obligation* - (170) -
Accounts payable (9) (7) (3)
126 (106) 15
* The Izingwe deal was derecognised in the February 2005 accounts.
4. Reconciliation of profit for the year ended 28 February 2005
As reported
previously Effect of IFRS
(Audited) IFRS restated
Operating income before goodwill
amortisation and capital items 968 (1) 967
Investment income 100 - 100
Finance costs (62) - (62)
Income from associates 24 - 24
Goodwill amortised and impaired (300) 95 (205)
Capital items 114 - 114
Income before taxation 844 94 938
Taxation (340) 1 (339)
Income for the period 504 95 599
Attributable to:
Altron shareholders 400 51 451
Minority shareholders 104 44 148
504 95 599
EPS 145 18 163
HEPS 161 1 162
5. Reconciliation of profit for the six months ended 31 August 2004
As reported
previously Effect of IFRS
(Unaudited) IFRS restated
Operating income before goodwill
amortisation and capital items 443 (1) 442
Investment income 51 - 51
Finance costs (17) (5) (22)
Income from associates 6 - 6
Goodwill amortised and impaired (177) 43 (134)
Capital items 9 25 34
Income before taxation 315 62 377
Taxation (178) 1 (177)
Income for the period 137 63 200
Attributable to :
Altron shareholders 89 62 151
Minority shareholders 48 1 49
137 63 200
EPS 32 23 55
HEPS 69 1 70
6. Further to Altron"s trading statement published on 12 September 2005, in
restating the previous corresponding periods results to comply with IFRS, the
increase in basic earnings per share compared to the restated figure for the
previous year (anticipated to be 120% to 130%) is lower than originally
anticipated due to the reversal of a loss on disposal of 30% of Powertech"s
shareholding in Aberdare to Izingwe in derecognising this transaction. This has
resulted in the increase in basic earnings per share being 54%.
Message to our shareholders
Your directors are pleased to report that the Altron group has again posted
good results for the financial half year ended 31 August 2005.
Business environment
Business confidence levels remain positive in South Africa driven by a sound
economic climate. Domestic growth is accelerating, the rand remains stable
against major currencies and interest rates and inflation have remained under
control. This has created positive trading conditions for the Altron group.
Strong consumer spending has stimulated growth within the Altech operations
whereas an increase in public sector spending and a buoyant building and
construction industry has driven demand for Powertech group products and
services. The successful integration of the CS Holdings and Digital Healthcare
Solutions (DHS) acquisitions coupled with a recovering ICT market, has resulted
in strong growth at BTG.
Within the Telecommunications sector, the move to a more liberalised market is
gaining momentum with the introduction of new products and services such as
voice-over-internet-protocol. This liberalisation is expected to continue with
the introduction of the Second Network Operator and the finalisation of the
Convergence Bill. The Altron group, particularly through Altech, is well
positioned to benefit from this situation. The mobile market, both in South
Africa and in Africa, continues to grow above market expectations.
The Power Electronics and Multi-media sector is buoyant due to increasing
capital expenditure spending in infrastructure projects by both the public and
private sector. This is expected to continue as a result of, amongst others,
the recently announced capex plans of Eskom and Transnet, Soccer World Cup 2010
and the Gautrain project. The Powertech operations are set to benefit from the
above, and significant internal investment has taken place to increase capacity
and improve efficiencies. This is essential to combat the threat of imported
products.
The outlook for the Information Technology sector is improving with clear
indications of a recovery in spending taking place in this market. The ongoing
conversion of the financial sector to the Europay Mastercard Visa (EMV)
standard has seen some delays but continues to offer good opportunities to the
Altech and BTG groups in the medium term.
Financial overview
In accordance with JSE Limited requirements the Altron group is operating in
terms of International Financial Reporting Standards (IFRS) and has restated
the prior year"s half year and full year results to comply with IFRS.
The interim results for the Altron group for the six months ended 31 August
2005 have shown good growth with a 16% increase in headline earnings per share.
Revenue increased by 17% from R6.0 billion for the prior period to R7.0 billion
with operating income increasing by 14% from R442 million to R502 million which
reflects a slight margin decrease from 7.4% to 7.2%. This was mainly
attributable to the inclusion of losses from our telecom cable operations which
were subsequently mothballed in early September 2005 as well as losses incurred
in Econet Satellite Services.Furthermore, NamITech experienced a reduction in
margins resulting from delays in the delivery of capital equipment which has
now been commissioned. Taxation, including STC, has decreased marginally from
36.9% (before goodwill and capital items) to 36.1%.
Altron"s annualised return on equity improved to 17.2% with return on net
assets improving to 24.4% from 15.9% in the prior period. The balance sheet
remains strong with cash at R875 million.
Altech delivered a sound set of results for the financial half year ended 31
August 2005, reporting improved headline earnings per share of 15.3% to 181
cents per share. This was driven by better than expected performances from most
of its operating companies including Autopage Cellular, Netstar, Altech Card
Solutions and Isis. Revenue increased by 11% percent to R2.9 billion from R2.6
billion for the prior period with operating income at R250 million. On 10
October 2005, a 5-year agreement with an option to renew for a further five
years was signed between Autopage Cellular and Vodacom renewing their service
provider and incentive agreement. Agreements with Cell C are already in place
and discussions with MTN in this regard are at an advanced stage.
Altech"s balance sheet remains strong with a net asset value of 1528 cents per
share and cash of R564 million. Cash has been utilised in the current period in
the funding of working capital. Return on shareholder"s equity is in excess of
23%. On 1 September 2005, Altech disposed of its 50% plus 1 share in Econet
Wireless Global Limited (EWG) for a cash consideration of US$87.5 million plus
interest representing a R155 million profit on its investment. These funds were
received in September and all relevant litigation and claims between the
parties have been settled in full.
BTG performed above expectations with revenues increasing 23% to R1.7 billion
which reflects, for the first time, the inclusion of the businesses acquired
from CS Holdings and the consolidation of 100% of DHS.
Operating income improved by 36% from R94 million to R128 million when compared
to the prior period.
Headline earnings improved by 31% to 46.5 cents over the IFRS restated earnings
of 35.4 cents for the corresponding period of the prior year. BTG moved from a
net cash position of R61 million at financial year end to a net borrowing
position of R171 million at 31 August 2005 due to acquisitions totalling R143
million, the payment of a dividend of R55 million, increased tax payments and
an investment in working capital.
Powertech reported a good increase in revenue of 22% to R2.3 billion despite
the continuing strong rand, depressed conditions in the telecoms cabling
industry and increased competition from foreign imports which impacted on
margins. Operating income increased by 28% to R131.1 million from R102.7
million on the back of good results produced by ABB Powertech Transformers,
Aberdare Power Cables, the Battery Group and the Industrial Group.
The return to profitability of Aberdare Cable"s offshore operations has had a
beneficial impact on headline earnings. This has also been enhanced by an
improved performance from the power cables division when compared to the
previous corresponding period which was impacted by the erratic supply of
copper. The downturn in the telecoms sector has resulted in the mothballing by
Aberdare Cables of its copper and fibre telecom cables manufacturing plant in
Port Elizabeth during the month of September. Copper and other base metal
prices continue to remain high, placing additional pressure on working capital
requirements.
Fintech increased new business written for the first six months of the current
financial year by 39% to R327.5 million from R235.6 million for the prior
corresponding period. Discussions are being held with Fintech for a buy-back of
the Altron shares in accordance with their call option in order to issue these
to a BEE partner. If successful, Altron will divest from Fintech (Pty) Ltd, but
will retain its investment in Fintech Receivables 1.
Black Economic Empowerment (BEE)
The Altron group"s associations with BEE partners are firmly in place and
consist of three "anchor" partners namely Kagiso within BTG SA, Izingwe within
Powertech, and Pamodzi within Altech.
Following the launch of the Altron Transformation Vision 2010 document earlier
this year, the last six months saw the commencement of the implementation phase
of the Altron group"s internal scorecard with a pleasing and significant
improvement registered in terms of most of the broad-based BEE indicators
throughout the operations.
Corporate activity
During the period under review the following significant transactions and
developments took place:
BTG"s purchase of Altron"s interest in the lease financing business relating
to products marketed by BTG for a purchase consideration of R43 million, was
effective on 1 March 2005.
BTG SA acquired a further 61% interest in DHS for R85 million from Business
Connexion, Netcare and USAP, and BTG sold its 39% interest in DHS to BTG SA,
effective 1 March 2004. Following the acquisition and restructure, BTG SA now
holds a 100% interest in DHS.
Powertech acquired Calidus Von Roll Isola (Pty) Ltd, a leader in the
electrical insulation business, effective 2 August 2005, for a purchase
consideration of R32 million.
In September 2005, Altech disposed of its 50% plus 1 share in EWG to the
remaining EWG shareholders for a purchase consideration of US$87.5 million,
plus interest.
NamITech"s West African pre-paid cellular voucher facility in Lagos, Nigeria
was commissioned and will be operating to full production levels early in
the second half of this year. Volumes are expected to increase to 30 million
vouchers per month by year end.
Directorate
On 10 October 2005, Buddy Hawton, an independent non-executive director of
Altron resigned from the board of the Company. The board wishes to record its
appreciation to Buddy for his valuable contribution over the past 16 years and
wishes him well for the future.
Mark Lamberti, the Deputy Chairman and Chief Executive Officer of Massmart
Holdings Limited, was appointed to the board of Altron as an independent
non-executive director with effect from 12 October 2005.
Norbert Claussen, the Chief Executive Officer of Power Technologies (Pty)
Limited was appointed to the board of Altron as an executive director witheffect
from 12 October 2005.
As announced on 21 July 2005, former executive director, Dali Mpofu remains on
the Altron board as a non-executive director, following his recent appointment
as Chief Executive Officer of the SABC.
The board takes this opportunity of welcoming Messrs Lamberti and Claussen to
the Altron board.
Outlook
The outlook for the sectors in which the Altron group operates remains
positive, especially in terms of continued infrastructure spending, the
increased activity in the building and construction industries, the
opportunities available in a liberalised and deregulated telecoms market and
recovering IT market conditions. These factors position the Altron group well
to achieve acceptable growth in headline earnings and dividends for the
financial year ending 28 February 2006.
On behalf of the board
Dr Bill Venter Robert Venter Diane Radley
Chairman Chief Executive Chief Financial Officer
11 October 2005
Directors: Dr WP Venter (Chairman), RE Venter (Chief Executive), MC Berzack,
PMO Curle*, DA Hawton, MJ Leeming, Dr PM Maduna, JRD Modise, DC Mpofu,
DC Radley, PD Redshaw*, Dr HA Serebro, CG Venter, PL Wilmot
* British
Secretaries: Altron Management Services (Pty) Limited
- Mr AG Johnston(Group Secretary)
The interim financial results are also available on the internet at
www.altron.co.za
ALTECH
Leading Technologies: Touching lives
BYTES TECHNOLOGY GROUP LIMITED
IT Services for the Enterprise
POWERTECH
POWER TECHNOLOGIES (PTY) LTD
Altron - 40 years of success
Date: 11/10/2005 08:31:14 AM Produced by the JSE SENS Department
