Allied Electronics Corporation Limited

Transcription

1 Altron - Audited Consolidated Preliminary Financial Results for the 28 Februar... Page 1 of 10 Allied Electronics Corporation Limited (Incorporated in the Republic of South Africa) (Registration number 1947/024583/06) ISIN: ZAE JSE Code: ATN ISIN: ZAE JSE code ATNP ("Altron") Consolidated financial results and dividend declaration for the year 28 February Revenue up 15 Operating Income up 20 Headline earnings per share up 16 Cash balances at R1,5 billion NAV per share up 15 Income statement Figures in R000 Change Revenue ,397,337 9,899,547 Gross operating income , ,659 Net foreign exchange (losses)/gains (38,186) 115,217 Surplus from Benefit Fund 73,358 - Operating income , ,876 Net Interest income 79,163 68,965 Income from associates 18,864 23,990 Investment income 17,481 22,329 Income before goodwill amortisation and exceptional

2 Altron - Audited Consolidated Preliminary Financial Results for the 28 Februar... Page 2 of 10 items ,027, ,160 Goodwill amortised (104,951) (48,550) Exceptional items (Note 1) 244,217 (83,923) Income before taxation ,166, ,687 Taxation 288, ,371 Income after taxation , ,316 Attributable to outside shareholders (413,950) (242,309) Attributable earnings , ,007 Basic earnings per share (cents) Headline earnings per share (cents) Proposed dividend per share (cents) Weighted average number of shares in issue (000) - ordinary shares 93,920 94,689 - participating preference shares 175, ,519 Notes: 1. Exceptional items Net surplus/(loss) on disposal of operations 282,644 (22,471) Net loss on disposal of investments/property (21,015) (30,025) Impairment losses (17,412) 4,488 Settlement of obligation to acquire assets at a premium over market value - (36,400) Restraint of trade and Associates exceptional ,217 (83,923) 2. Reconciliation between earnings and headline earnings Attributable earnings 464, ,007 Goodwill amortised 104,951 48,550 Exceptional items - gross (244,217) 83,923 Share of associates goodwill 1,767 - Profit on disposal of property, plant and equipment (2,509) (2,900) Tax effect of above adjustments (4,024) (13,106) Outside shareholders' interest 81,805 (68,892) Headline earnings 402, , The annual results have been prepared in accordance with South African Statements of Generally Accepted Accounting Practice. The accounting policies used in the preparation of the annual financial results are consistent with those used in the annual financial statements for the year 28 February 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. These results for the year 28 February 2003 have been reviewed by the independent auditors KPMG. Their report dated 12 May 2003 is available for inspection at the registered

3 Altron - Audited Consolidated Preliminary Financial Results for the 28 Februar... Page 3 of 10 office of the company, Altron House, 4 Sherborn Road, Parktown. 6. Results of discontinued operations have not been separately disclosed as these are not material Balance sheet Figures in R000 Assets Non-current assets 1,723,092 2,302,110 Property, plant and equipment 665, ,845 Net goodwill 470, ,109 Advances to rental finance customers 285,969 1,041,833 Investments and loans 184, ,539 Deferred taxation 115, ,784 Current assets 4,453,262 4,678,233 Inventories 1,077,405 1,106,345 Accounts receivable 1,866,347 2,127,642 Net cash and cash equivalents 1,509,510 1,444,246 Total assets 6,176,354 6,980,343 Equity and liabilities Ordinary shareholders' interest 2,266,999 1,945,075 Share capital,premium and reserves 2,505,286 2,183,362 Own shares acquired (238,287) (238,287) Outside shareholders' Interest 1,290,677 1,635,780 Non-current liabilities 368, ,303 Deferred taxation 32,682 49,524 Current liabilities 2,217,665 2,457,661 Total equity and liabilities 6,176,354 6,980,343 Net asset value per share (cents) Shares in issue at end of period (000) (excluding own shares acquired) - ordinary shares 93,928 93,902 - participating preference shares 176, ,048 Statement of changes in equity Figures in R000

4 Altron - Audited Consolidated Preliminary Financial Results for the 28 Februar... Page 4 of 10 Share capital Nondistributable reserve Accumulated reserves Total Balance at 28 February 2001 (audited) 730, , ,052 1,798,943 Attributable to shareholders 308, ,007 Dividend paid (89,723) (89,723) Net gains/(losses) not recognised in the income statement 150,960 (12,071) 138,889 Issue of shares 27, ,246 Transfer between reserves - (28,218) 28,218 - Balance at 28 February 2002 (audited) 757, ,992 1,165,483 2,183,362 Attributable to shareholders 464, ,354 Dividend paid (99,659) (99,659) Net gains/(losses) not recognised in the income statement (65,679) 10,380 (55,299) Issue of shares 12, ,528 Transfer between reserves - 26,292 (26,292) - Balance at 28 February 2003 (reviewed) 770, ,605 1,514,266 2,505,286 Cash flow statement Figures in R000 Operating activities 709, ,244 Cash generated by operations 1,055, ,023 Net investment income 87,037 82,226 Changes in working capital (7,451) 238,578 Taxation paid (201,689) (247,362) Cash available from operating activities 933, ,465 Dividends paid, including to outside shareholders (223,536) (352,221) Investing activities (16,981) (228,363) Financing activities (592,680) (51,293) Net funds generated 100, ,588 Cash and cash equivalents - beginning of period 1,444,246 1,081,901 Translation of foreign cash (34,958) 99,757 Cash and cash equivalents - end of period 1,509,510 1,444,246

5 Altron - Audited Consolidated Preliminary Financial Results for the 28 Februar... Page 5 of 10 Supplementary information Figures in R000 Long term borrowings 281, ,531 - interest bearing 275, ,531 - non-interest bearing 5,464 8,000 Capital commitments 32,235 46,891 Capital expenditure 202, ,443 Contingent liabilities 5,200 - Depreciation 161, ,640 Lease commitments 267, ,088 Unlisted investments - Carrying amount and directors' valuation 184, ,539 Operational contribution Figures in R000 Change Revenue: Altech ,056, ,604, Powertech ,116, ,737, BTG ,035, ,341, Corporate and financial services (12.3) 189, , ,397, ,899, Operating income: Altech , , Powertech , , BTG , , Corporate and financial services (31.0) 54, , , , Headline earnings: held at Altech , , Powertech (Note 1) , , BTG , , Corporate and financial services (Note

6 Altron - Audited Consolidated Preliminary Financial Results for the 28 Februar... Page 6 of 10 2) , , , , Notes: 1. Prior year comparitive reflects Altron's 59.2 share of Powertech 2. Prior year comparitive reflects Altron's 64.3 share of Fintech Segmental Analysis Figures in R000 Change Revenue: Telecommunications ,858, ,460, Power Electronics & Multimedia 8.7 4,155, ,823, Information technology ,320, ,567, Corporate and financial services , , ,397, ,899, Operating income: Telecommunications (19.2) 226, , Power Electronics & Multimedia , , Information technology , , Corporate and financial services , , , , ` Message to our shareholders FINANCIAL OVERVIEW Your directors are pleased to report that Altron posted satisfactory results for the year under review notwithstanding international recessionary market conditions, the unprecedented appreciation in the rand and the continued global downturn in the information technology and telecommunications sectors. Revenue improved by 15 from R9,9 billion to R11,4 billion. Operating income rose by 20 from R763 million to R912 million. Attributable earnings increased by 51 from R308 million to R464 million translating to a 54 increase in earnings per share from 111,9 cents to 172,5 cents. Headline earnings per share increased by 16 from 129,2 cents to 149,4 cents with dividends per share increasing by a marginally higher rate at 43 cents per share. The average rand/us$ exchange rate weakened by 9 from an average of R9,31 in the previous financial year to R10,13 in this financial year. While the average rate had a beneficial effect on the translation of earnings from our offshore operations, the closing rate on 28 February 2003 of R8,22 was significantly stronger than the closing rate of preceding months and 28 stronger than the closing rate of R11,48 on 28 February This resulted in net currency losses of R38 million charged to the income statement as a result of the translation of offshore financial assets at 28 February 2003 and compares to net translation gains in the previous financial year of R115 million. Following the adoption of a new staff benefit structure, the Altron Group Benefit Fund was liquidated. An amount

7 Altron - Audited Consolidated Preliminary Financial Results for the 28 Februar... Page 7 of 10 of R33,7 million was included in headline earnings in respect of the liquidation of the Benefit Fund. Excluding the above foreign exchange effects as well as the income from the Benefit Fund from both 2002 and 2003 would have resulted in an increase of operating earnings of 35 from the underlying operations. Long-term liabilities decreased substantially as a result of the securitisation of R680 million of the Fintech office automation receivables, offset by external funding of R120 million required for the acquisition of the UK IT company, Plato by BTG. Both Altech and BTG recorded strong performances, reflecting pleasing growth in adjusted headline earnings per share of 20 and 32 and headline earnings per share of 28 and 14 respectively. Powertech, which was impacted by the downturn in the telecommunications market, reported a decrease in headline earnings of 12 mainly as a result of the tax rate increasing to 31 from 21 in the prior year. The reduction in earnings from the telecommunications sector was mitigated by the excellent contribution from Powertech s power electronics businesses, resulting in a 23 growth at the operating income level. Fintech, our financial services business, reported growth in headline earnings of 8. Group exports coupled with revenue generated by offshore operations amounted to R2,9 billion representing 26 of group revenues versus R2,3 billion and 23 of revenues in the prior year. Through reduced borrowings, Altron has strengthened its balance sheet when compared to the prior year with cash and cash equivalents at year end of R1,5 billion. Net asset value per share rose by 15 from 725,9 cents to 837,0 cents. BUSINESS ACTIVITIES TELECOMMUNICATIONS The global downturn in the telecommunications sector saw a significantly reduced contribution from Aberdare Cables copper and fibre optic cable manufacturing businesses, both locally and internationally. This was, however, off-set by strong growth in Altech s wireless telecommunications businesses, represented by Autopage Cellular, Netstar, Alcom Radio and Alcom Systems. In particular, Autopage Cellular performed exceptionally well and remains the largest independent cellular service provider in South Africa. With a subscriber base of over , the sales focus was on high-value tariffs, and, together with growth in the net contract base, increased the average revenue per user. Netstar recorded significant growth for the year and continued to be the leader in the Southern African vehicle tracking and recovery market, growing its market share from 44 to 47 at year end. As reported at the interim stage, significant downsizing and rationalisation programmes were implemented within our telecoms cables business. Further rationalisation continues in the current financial year. New markets in Africa, the Middle East and Asia Pacific are being explored together with diversification into industrial markets such as instrumentation cable and rapid transit railway cable. Along with global trends, the prospects for the telecommunications industry are expected to remain sluggish over the medium term. Lambda Cables, Battery Technologies and Rentech recorded good performances despite challenging market conditions. The telecommunications sector as a whole accounted for 34 (2002: 35) of Altron s revenue and 25 (2002: 37) of operating income. POWER ELECTRONICS AND MULTI-MEDIA Altron achieved a 9 increase in revenue from the group s electronics and multi-media sector for the year under review which represents some 37 (2002: 39) of total revenue and contributed 41 (2002: 34) in terms of Altron s operating income. All of Powertech s businesses operating in the power electronics sector, particularly Aberdare Power Cables, ABB Powertech Transformers, Desta Power Matla and the Industrial Group, recorded exceptionally strong

8 Altron - Audited Consolidated Preliminary Financial Results for the 28 Februar... Page 8 of 10 performances for the period under review. This was mainly as a result of strong demand within both the power electronics sector driven by a recovery in the building and construction industry. The improvement in the power electronics business was further driven by platinum mining expansion, the modernisation and expansion of the country s electrical distribution infrastructure especially at municipal level, as well as the impetus given by the aforementioned infrastructural development. However, indications are that demand from the building and construction sector appears to have peaked and any further delay in reducing interest rates may well reduce demand in this sector. Altech s UEC Technologies (UEC) and MediaVerge Solutions enjoyed a good year against the backdrop of a somewhat depressed market. UEC continued to expand its exports into its traditional international markets and also entered new markets including the United States. Significant market share with its primary local customer Multichoice was maintained. High value added products such as the innovative DualView DSTV Decoder were recently introduced to the South African market and received an enthusiastic response. This again proving the significant software development capabilities of UEC in developing a world-first product. Arrow Altech Distribution, our electronics component distribution company, grew its market share and profitability despite a worldwide decline for demand of these products. INFORMATION TECHNOLOGY The information technology businesses, contributed 29 (2002: 26) of the group s revenue and 24 of the group s operating income (2002: 18). All of the businesses within this segment improved their performance. BTG s Software Products and Solutions, Managed Networking Services and Digital Healthcare Solutions also recorded pleasing results while operating income within the Document Management Services (Xerox SA) and Enterprise Solutions (UK) businesses improved by a significant 40 and 70 respectively. As announced at the interim stage, BTG concluded the acquisition of Plato Computer Services, a UK-based IT services business, for 22,5 million. Notwithstanding the depressed IT service market in the United Kingdom, the strategic rationale for the acquisition remains valid. In the Altech Group, Keops Altech (formerly Keops Isis), now a wholly-owned subsidiary, and Isis performed above expectations while Altech Card Solutions consolidated its position as a leading supplier of card related solutions to the local market. Altech recently announced that agreement had been reached for the purchase of NamITech Holdings (NamITech), a market leader in Africa for the manufacture and supply of secure tokens such as SIM cards, smartcards and magcards, plus secure solutions technology for a consideration of R559,3 million. The acquisition will be of Nampak Limited s 51 plus Pamodzi s existing 28 shareholdings giving Altech an effective interest of 79. Agreement has been reached for Pamodzi to repurchase a 28 shareholding thereby remaining as a significant empowerment partner in NamITech. This acquisition complies with Altech s IT vision and convergence strategy and is highly complementary to Altech s existing smart card technology business, Altech Card Solutions. CORPORATE During the second half of the year, the major portion of the Fintech office equipment lease portfolio was successfully securitised through Fintech Receivables 1 (Pty) Limited which purchased R680 million of the lease portfolio. Altron retained a R27,2 million interest in the securitised lease portfolio through a participation loan and the remaining R653 million of the securitised lease portfolio was financed through the sale of non-recourse secured floating rate notes by Fintech Receivables. This resulted in the significant repayment of long-term liabilities, thus strengthening the balance sheet. In addition, Altron disposed of the administration and management business of Fintech to a consortium comprising of Altron, Gensec Bank and Fintech Management. BLACK ECONOMIC EMPOWERMENT

9 Altron - Audited Consolidated Preliminary Financial Results for the 28 Februar... Page 9 of 10 During the year several new partnerships were formed in terms of black economic empowerment (BEE) throughout the group s operations in compliance with Altron s aggressive BEE strategy. CORPORATE GOVERNANCE In line with our objectives to stay abreast of South Africa s corporate governance guidelines, Altron recently announced a number of important changes to the board which focus on having a particularly strong representation of non-executive independent directors. OUTLOOK Market conditions in the telecommunications and information technology sectors are not likely to show improvement in the short- to medium-term, especially with regards to the international markets in which we operate. However, the local economy should remain buoyant for many of our products should the widely predicted reduction in interest rates materialise. If the rand remains at current levels, the rate of growth in profits in the first half of the year for our group will possibly be lower than that achieved in the first half of the previous year. Altron will concentrate on expanding the existing group s operations while seeking appropriate acquisitions. Our management team remains committed to expanding our businesses under the current volatile and unpredictable conditions and we expect to show continued growth in the year ahead. DIVIDENDS The following dividends are hereby declared in respect of the year 28 February 2003: ordinary dividend No. 55 of 43,0 cents per share (2002: 37,0 cents); and participating preference dividend No. 9 of 43,0 cents per share (2002: 37,0 cents). The above dividends are payable as follows: Last day for trading to qualify for and participate in the dividend (cum dividend) Trading ex dividend commences Record date Dividend payment date (electronic and certificated register) 2003 Friday 27 June Monday 30 June Friday 4 July Monday 7 July Dividend cheques in payment of these dividends to certificated shareholders will be posted to shareholders on or about Monday 7 July Electronic payment to certificated shareholders will be undertaken simultaneously. Shareholders who have dematerialised their share certificates will have their accounts at their CSDP or broker credited on Monday 7 July In the case of certificated shareholders, notice of any change of address of shareholders must reach the transfer secretaries, Computershare Investor Services Limited, on or before Friday 27 June Share certificates may not be dematerialised or rematerialised from Monday 30 June 2003 to Friday 4 July 2003, both days inclusive. On behalf of the board Dr Bill Venter Robert Venter Diane Radley Chairman Chief Executive Chief Financial Officer 13 May 2003 Directors: Dr WP Venter (Chairman) RE Venter (Chief Executive)

10 Altron - Audited Consolidated Preliminary Financial Results for the 28 Februa... Page 10 of 10 IM Ayob MC Berzack PMO Curle* DA Hawton JRD Modise DC Mpofu MJ Leeming DC Radley PD Redshaw* Dr HA Serebro LC van Vught CG Venter PL Wilmot *British Secretaries: Altron Management Services (Pty) Limited: Ms SF Linford, Group Secretary * British