| Wed 27 Sep 2006, 16:00 | | Altech - Unaudited Abridged Consolidated Interim |
|
ALT
ALT
Altech - Unaudited Abridged Consolidated Interim Financial Results for the six
months ended 31 August 2006
Allied Technologies Limited
Leading Technologies: Touching Lives
Registration number: 1946/020415/06
ISIN: ZAE000015251
Share code: ALT
("Altech")
Unaudited Abridged Consolidated Interim Financial Results
for the six months ended 31 August 2006
HIGHLIGHTS FOR THE SIX MONTHS
Revenue up 13%
Operating profit up 16%
Headline earnings per share up 9%
Balance sheet remains strong
Declaration of special dividend of R1,00 per share
Income statements
Six months Six months Year
ended ended ended
31 August 31 August 28 February
% 2006 2005 2006
Figures in R million Change (Unaudited) (Unaudited) (Audited)
Revenue 13 3 321 2 933 6 041
Operating profit
before capital items 16 289 250 485
Finance income 43 21 54
Finance expense (9) (5) (5)
Share of profit
from associates - 26 26
Capital items (Note 1) - (1) (8)
Profit before taxation 323 291 552
Taxation 96 87 161
STC 26 22 22
Profit after taxation 201 182 369
Attributable to
minority shareholders 8 6 5
Attributable to Altech
equity holders 193 176 364
Basic earnings
per share (cents) 9 197 180 373
Diluted basic earnings
per share (cents) 193 179 362
Notes
Six months Six months Year
ended ended ended
31 August 31 August 28 February
% 2006 2005 2006
Figures in R million Change (Unaudited) (Unaudited) (Audited)
Headline earnings
per share (cents) 9 197 181 379
Diluted headline earnings
per share (cents) 7 193 180 368
Basis of preparation
The unaudited interim financial results have been prepared in accordance with
International Financial Reporting Standards (IFRS). The accounting policies used
in the preparation of these interim results are consistent with those used in
the annual financial statements for the year ended 28 February 2006.
1. Capital items
Net loss on disposal
of property,
plant and equipment - (1) (1)
Impairment losses - - (82)
Profit on disposal
of Econet Wireless
Global Limited - - 129
Divisional closure costs - - (54)
- (1) (8)
2. Reconciliation between
earnings and
headline earnings
Attributable to Altech
equity holders 193 176 364
Capital items - gross - 1 8
Tax effect of
above adjustments - - 4
Minority interest
in adjustments - - (6)
Headline earnings 193 177 370
3. Dividends
It is the group"s usual policy for dividends to be declared after the financial
year.
Special dividends can be declared on an adhoc basis
Balance sheets
31 August 31 August 28 February
2006 2005 2006
Figures in R million (Unaudited) (Unaudited) (Audited)
Assets
Non-current assets 653 1 172 650
Property, plant and equipment 265 287 279
Goodwill 332 531 332
Intangible assets 9 37 9
Associate and other investment - 310 -
Deferred taxation 47 7 30
Current assets 2 362 1 504 2 326
Inventories 370 315 290
Trade and other receivables 720 625 538
Net cash and cash equivalents 1 272 564 1 498
TOTAL ASSETS 3 015 2 676 2 976
Equity and liabilities
Total equity 1 761 1 592 1 770
Shareholders" equity 1 670 1 492 1 681
Minority shareholders" interest 91 100 89
Non-current liabilities 32 118 39
Long-term liabilities - 70 -
Minority shareholders" loans 30 38 30
Deferred taxation 2 10 9
Current liabilities 1 222 966 1 167
Trade and other payables 1 094 860 1 066
Warranty provisions 7 11 7
Taxation payable 121 95 94
TOTAL EQUITY AND LIABILITIES 3 015 2 676 2 976
Abridged cash flow statements
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2006 2005 2006
Figures in R million (Unaudited) (Unaudited) (Audited)
Cash flows
- operating activities (196) (175) 414
Cash generated by operations 340 293 581
Changes in working capital (243) (194) 181
Net finance income 34 16 49
Taxation paid (120) (115) (222)
Cash available
- operating activities 11 - 589
Dividends paid
- to shareholders (205) (170) (170)
- to minority shareholders (2) (5) (5)
Cash flows - investing
activities (28) (88) 264
Cash flows - financing
activities (2) 15 8
Net (decrease)/increase in
cash and cash equivalents (226) (248) 686
Cash and cash equivalents
- at beginning of period 1 498 812 812
- at end of period 1 272 564 1 498
Supplementary information
31 August 31 August 28 February
2006 2005 2006
Figures in R million (Unaudited) (Unaudited) (Audited)
Taxation
Prior year expense 9 - -
Depreciation 44 43 83
Impairment - - 96
Capital expenditure 28 89 142
Contingent liabilities - 27 27
Capital commitments - 9 1
Lease commitments 166 136 135
Payable within the
next 12 months: 49 37 51
- property 35 29 35
- plant, equipment
and vehicles 14 8 16
Payable thereafter: 117 99 84
- property 115 84 83
- plant, equipment
and vehicles 2 15 1
Net foreign exchange
gains/(losses) 10 9 (5)
Weighted average number
of shares (million) 98 98 98
Diluted average number
of shares (million) 100 98 100
Shares in issue at end
of period (million) 98 98 98
Ratios
EBITDA 376 339 722
Operating margin (%) 8,7 8,5 8,0
ROCE (%) 36,6* 36,6* 31,6
ROE (%) 23,2* 23,8* 22,1
ROA (%) 42,6* 40,8* 43,8
Current ratio 1,9 1,6 2
Acid test ratio 1,6 1,2 1,7
NAV (cps) 1 708 1 529 0 1 721
* Annualised
Abridged segmental analysis
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2006 2005 2006
Figures in R million (Unaudited) % (Unaudited) % (Audited) %
Revenue:
Telecommunications
division 2 419 73 2 224 76 4 521 75
Multi-media and
Electronics divisions 651 20 330 11 801 13
Information Technology
division 297 9 408 14 800 13
Inter group sales (46) (1) (29) (1) (81) (1)
3 321 100 2 933 100 6 041 100
Operating profit:*
Telecommunications
division 229 79 191 76 430 89
Multi-media and
Electronics divisions 66 23 7 3 21 4
Information Technology
division (5) (2) 57 23 40 8
Corporate (1) (0) (5) (2) (6) (1)
289 100 250 100 485 100
* Operating profit is stated before goodwill impaired and capital items
Statements of changes in equity
Ordinary
Share share- Min-
Figures in capital and Treasury Other Retained holders" ority Total
R million premium shares reserves earnings equity interest equity
Balance at
28 February 2005
(Audited) 58 (257) 1 679 1 480 94 1 574
Attributable
earnings 176 176 6 182
Dividends (170) (170) (5) (175)
Foreign currency
translation
differences 3 3 3
Capital introduced - 5 5
Issue of
share capital 3 3 3
Balance at
31 August 2005
(unaudited) 61 (257) 3 1 685 1 492 100 1 592
Share-based
payments 2 2 2
Attributable
earnings 188 188 (1) 187
Foreign currency
translation
differences (2) (2) (2)
Issue of
share capital 1 1 1
Disposal of
joint venture - (10) (10)
Balance at
28 February 2006
(audited) 62 (257) 1 1 875 1 681 89 1 770
Share-based
payments 3 3 3
Dividends (205) (205) (2) (207)
Attributable
earnings 193 193 8 201
Issue of
share capital 1 1 1
Acquisition
of minority (3) (3) (4) (7)
Balance at
31 August 2006
(unaudited) 63 (257) 1 1 863 1 670 91 1 761
Message to our Shareholders
Altech has recorded another successful half-year ended 31 August 2006, improving
headline earnings per share by 9% to 197 cents. This was achieved after
accounting for a once-off taxation settlement of R9 million, relating to prior
periods which finalised the contingent liability previously disclosed. Revenue
increased by 13% to R3 321 billion, with operating profit increasing 16% to R289
million. Altech"s balance sheet remains strong, with a net asset value of 1 708
cents per share. A special dividend of R1,00 (one rand) per Altech ordinary
share has been declared payable to shareholders.
Group Highlights
Corporate Finance
It is envisaged that the closing of the acquisition of the MobiMaster division
of Linedata Services in France will be implemented at the end of September 2006.
The integration of this software support business will enable Altech Isis to
provide a more comprehensive offering to telecommunications network operators
and other clients.
Altech has acquired the Motoma ICT Group"s (Motoma) 30% interest in Altech Alcom
Matomo as a result of Motoma reviewing its investment interests. This investment
will be reserved for a new black empowerment equity partner in the company.
Agreement in principle was reached during the period for black economic
empowerment parties to acquire an aggregate 30% interest in Altech Netstar"s
fleet management division. It is envisaged that the black empowerment consortium
will comprise a private empowerment company, and a trust to be formed by Altech
that will be for the benefit of all previously disadvantaged Altech employees.
Dr Enos Banda, who joined the Altech board earlier this year, owns 56,6% of the
private empowerment company which will, on conclusion of the transaction, hold
an effective interest of 17% in Altech Netstar"s fleet management division.
Telecommunications Division
Altech Autopage Cellular posted excellent results for the prior six months, with
several record months contributing to an increase of over 100 000 gross post-
paid subscribers across all networks. Altech Autopage Cellular"s total
subscriber base, including pre-paid, now exceeds 757 000, and the nation-wide
franchise network has passed the 150-store mark. Average revenue per user was
maintained.
As the South African telecommunications market adjusts to a deregulated
environment, Altech Autopage Cellular is leveraging off its significant
subscriber base into a broader communications market, particularly broadband
services where monthly demand is increasing exponentially. This company further
entrenched its reputation for innovation by introducing mobile music memory
cards and a customer service initiative, Altech Supercall Private Client
Services during the period. Altech Autopage Cellular is also well prepared to
manage the imminent introduction of mobile number portability, given its proven
service standards, unique product offerings and strong relationships with South
African network operators.
Altech Netstar increased its impressive market share in stolen vehicle tracking
and recovery in southern Africa, through targeted and aggressive marketing of an
affordable and effective product range. Following the award of three sizeable
contracts, good growth was recorded in its fleet management business. Altech
Netstar now manages a subscriber base in excess of 400 000 vehicles for Stolen
Vehicle Recovery and Fleet Management services, covering assets totalling an
estimated R45 billion. Altech Netstar"s ground and air recovery teams respond to
over 600 incidents per month throughout southern Africa.
In a market showing steady growth amid increasing competition, Altech Netstar is
entrenching its expertise through continuous product refinements in line with
developing technology and customer trends.
The Malaysian operation has shown steady connection levels through its OEM
arrangement with Malaysian car manufacturer PROTON. International expansion
through targeted markets, including Africa, is being actively pursued.
Altech Netstar fully met expectations for the period under review, building on
previous profitability levels.
Altech Alcom Matomo"s results exceeded expectations during the period under
review. The company is at full capacity, as a result of the award in 2004 of the
R540 million Gauteng South African Police Services" Digital Trunked Radio
(TETRA) network tender. Work on the project including high site installations is
progressing as planned. A number of further tenders have been submitted to
various customers in southern Africa for TETRA systems and prospects are
positive that these tenders will be successful.
Altech Alcom Radio Distributors remains the dominant Motorola distributor of two
way radio products for Africa and the Middle East through its network of
authorised dealers. The period was characterised by record dealer sales in South
Africa following the launch of an entry-level Motorola radio. This company is
entering the retail marketplace with the Motorola consumer "Talk About" radio,
aimed at leisure markets.
Multi-media and Electronics Divisions
Altech UEC Multi-Media Technologies (Altech UEC) returned to sustainable
profitability during the period, with divisional performance reflecting the
benefits of efficiency programmes to reduce operating costs and improve margins.
Altech UEC develops, manufactures and deploys innovative and advanced set-top
box products and associated software.
Sales of the MultiChoice dual-view Personal Video Recorder (PVR) , developed and
supplied by Altech UEC, contributed to substantially higher volumes for this
customer. In its inaugural year, this ground-breaking technology has also
generated orders from pay TV operators in Israel, Brazil, Mexico and Dubai.
Altech Global Decoder Logistics (GDL), the after sales service division of
Altech UEC with support and logistics operating units in Australia and South
Africa, performed well, increasing both revenue and profitability.
A three-year agreement has been signed with Australian operator, Austar, for the
initial supply of 100 000 decoders.
The deployment of satellite television services in India has significantly
increased demand for pay television products across this country. Through its
robust technology, ability to bring new products to market quickly and its
established presence in India, Altech UEC is well positioned to exploit the
rapid growth this region is experiencing.
Altech Arrow Altech Distribution again improved trading results and
profitability, retaining its market share and reflecting the benefits of past
restructuring strategies to reduce operating costs and improve operational
efficiencies. With unit sales over 30% above the prior corresponding period,
this company exceeded both rand and dollar year-on-year growth targets. A strong
order book reflects increased activity from customers across all markets - from
pre-paid utility meters to domestic and automotive security systems, vehicle
tracking and fleet management products and electronic contract manufacturing
services.
Information Technology Division
Altech Isis Information Systems (Altech Isis) recorded excellent results for the
half year, entrenching its position as a supplier of end-to-end operational
support systems (OSS) solutions in South Africa and Africa.
The integration of the MobiMaster business into the Altech Isis portfolio, will
add a Camel-compliant billing system for pre- and post-paid, voice and data, and
content services.
During the period the marketing relationship with Hewlett Packard was formalised
and marketing initiatives are under way in Japan. Altech Isis also enjoys strong
relationships with customers across Africa, serviced by a team of 150 highly-
skilled telecommunications OSS specialists.
Altech Card Solutions performed commendably during the period, with excellent
growth in its plastic card and personalisation equipment business units. In
South Africa, bank relationships remain strong, with this company"s products and
services operating in all four major banks. Its switching division recorded
significant progress following the launch of a card-based gift voucher programme
in December 2005. Opportunities in Africa are increasing as electronic banking
gains momentum in targeted markets.
Altech Cardtronic has exceeded expectations in the first six months of the year,
with this trend set to continue during the second half of the year. The benefit
of the recapitalisation project has positioned Altech Cardtronic as the pre-
eminent supplier in a market showing a significant demand for non-secure cards
and personalisation services.
Altech NamITech, through its operations in Nigeria and locally, is the leading
manufacturer of cellular SIM cards, pre-paid vouchers and magnetic stripe and
Europay/Mastercard/Visa (EMV) bank cards in Africa. The full benefits of the re-
engineering and cost-reduction exercise initiated in February 2006 are expected
to become evident during the second half of the financial year and should result
in a return to profitability of the South African operations.
Altech NamITech"s pre-paid cellular voucher manufacturing facility in Lagos,
Nigeria, has proved extremely successful, achieving profitability in its first
full year of operation. This facility is operating at a capacity of over 33
million vouchers being manufactured per month, including sizeable contracts from
MTN and Globalcom for the second half of the year.
In South Africa, quality and delivery issues have been addressed to the
satisfaction of customers and Altech NamITech has been short-listed for a number
of major solutions projects valued at over R2 billion. Despite the current short
term pressures, this company remains strategically well positioned for the long
term and has secured contracts with a number of major local banks ahead of the
imminent roll out of compliant smart cards.
Prospects
Altech is capitalising on its strategic market focus and the considerable
strength of its operating companies. Management has proved its ability to turn
around underperforming companies, as it has done with Altech UEC, and Altech
NamITech is on track to resume contributing positively to the group.
Altech"s strong balance sheet, with current cash reserves of well over R1
billion, positions the group advantageously for acquisition, share buy-back and
related activities. The process of identifying, assessing and investigating
acquisition opportunities, within the group"s areas of activity, both
internationally and locally, continues. This is conducted with the group"s
policy of caution regarding unrealistic valuations and risk profiles, as well as
careful due diligence procedures.
With strong order books and growing annuity revenue, the liberalisation and
deregulation of the telecommunications sector, the board believes that Altech is
well positioned for continued real growth during the second half of the
financial year.
Declaration of special dividend
The directors have declared a special dividend of R1,00 (one rand) per Altech
ordinary share in respect of the six months ended 31 August 2006.
The salient dates in respect of the special dividend are as follows:
Date of declaration Wednesday, 27 September 2006
Last date to trade cum dividend Friday, 27 October 2006
Shares commence trading ex dividend Monday, 30 October 2006
Record date Friday, 3 November 2006
Payment date Monday, 6 November 2006.
Share certificates may not be dematerialised or rematerialised between Monday,
30 October 2006 and Friday, 3 November 2006, both dates inclusive.
By order of the board
Dr Hilton Davies Craig Venter Dr John Carstens
Non-executive Chairman Chief Executive Officer Chief Financial Officer
Directors
Dr HK Davies (Non-executive Chairman), CG Venter (Chief Executive Officer), Dr
EN Banda#, Dr JEW Carstens (Chief Financial Officer), PMO Curle*, ML Leoka#, R
Naidoo#, DC Radley#, Dr HA Serebro#, RE Venter#, Dr WP Venter#, PL Wilmot#
* British # Non-executive
Secretaries
Altech Management Services (Pty) Limited
Ms R Wolmarans
Sponsor
Investec Bank Limited
Altech
Registration number: 1946/020415/06
ISIN: ZAE000015251
Share code: ALT
The annual financial results are also available on the internet at
www.altech.co.za and the JSE News Service (SENS)
Proudly South African
A member of the Altron Group
Date: 27/09/2006 04:00:18 PM Produced by the JSE SENS Department
