Wrap Text
Summarised audited consolidated financial statements for the year ended 28 February 2014
ALLIED ELECTRONICS CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1947/024583/06)
Share code: ATN ISIN: ZAE00029658
Share code: ATNP ISIN: ZAE00029666
SUMMARISED AUDITED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2014
Summarised consolidated statement of comprehensive income
% 2014 2013
R millions Change (Audited) (Restated)
CONTINUING OPERATIONS
Revenue 14 27 772 24 464
Earnings before interest, tax, depreciation, amortisation
8 1 788 1 652
and capital items (EBITDA before capital items)
Depreciation and amortisation (446) (453)
Operating profit before capital items 12 1 342 1 199
Capital items (Note 1) (38) (78)
Result from operating activities 16 1 304 1 121
Finance income 103 56
Finance expense (363) (134)
Share of profit of equity-accounted investees, net of taxation 14 15
Profit before taxation - 1 058 1 058
Taxation (326) (364)
Profit for the year from continuing operations 5 732 694
DISCONTINUED OPERATIONS
Revenue – 280
EBITDA before capital items – (113)
Depreciation and amortisation – (52)
Operating loss before capital items – (165)
Capital items (Note 1) 43 (1 371)
Result from operating activities 43 (1 536)
Finance income – 2
Finance expense – (92)
Profit/(loss) before taxation 43 (1 626)
Taxation – (10)
Profit/(loss) for the year from discontinued operations 43 (1 636)
Net profit/(loss) for the year 775 (942)
Other comprehensive income
Items that will never be reclassified to profit or loss
Remeasurement of net defined benefit asset/obligation 192 19
Taxation on items that will never be reclassified to profit or loss (3) (5)
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation differences in respect of foreign operations 164 310
Realisation of negative foreign currency translation reserve on disposal – 196
Fair value adjustment on available-for-sale investments 13 (5)
Other comprehensive income for the year, net of taxation 366 515
Total comprehensive income for the year 1 141 (427)
Net profit/(loss) attributable to:
Non-controlling interests 160 (630)
Altron equity holders 615 (312)
Altron equity holders from continuing operations 572 484
Altron equity holders from discontinued operations 43 (796)
Net profit/(loss) for the year 775 (942)
Total comprehensive income attributable to:
Non-controlling interests 174 (439)
Altron equity holders 967 12
Altron equity holders from continuing operations 924 651
Altron equity holders from discontinued operations 43 (639)
Total comprehensive income for the year 1 141 (427)
Basic earnings per share from continuing operations (cents) 16 179 153
Diluted basic earnings per share from continuing operations (cents) 17 175 149
Basic earnings/(loss) per share from discontinued operations (cents) 105 13 (252)
Diluted basic earnings/(loss) per share from discontinued operations (cents) 105 13 (239)
Basic earnings/(loss) per share from total operations (cents) 294 192 (99)
Diluted basic earnings/(loss) per share from total operations (cents) 309 188 (90)
Dividends per share declared (cents) 33 80 60
Notes
Basis of preparation
The summarised consolidated financial statements are prepared in accordance with the framework concepts and the
measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee, Financial pronouncements as issued by the Financial
Reporting Standards Council and presented in accordance with the minimum content, including disclosures, prescribed by
IAS 34 Interim Financial Reporting applied to year end reporting, and the requirements of the Companies Act of South Africa
and the JSE Listings Requirements.
The accounting policies applied in the preparation of the audited consolidated financial statements, from which the summarised
consolidated financial statements were derived, are in terms of International Financial Reporting Standards and are consistent with
the accounting policies applied in the preparation of the previous audited consolidated financial statements, except for the adoption
of the new accounting standards as detailed below.
This report was compiled under the supervision of Mr Alex Smith CA, Chief Financial Officer, and Mr Arno Geldenhuys CA(SA),
Group Financial Manager.
*Change in accounting policies
Altron has adopted the following new accounting standards and amendments to standards, including any consequential
amendments to other standards with a date of application of 1 March 2013:
a. IFRS 10 Consolidated Financial Statements (2011)
b. IFRS 11 Joint Arrangements
c. IFRS 12 Disclosure of Interests in Other Entities
d. IFRS 13 Fair Value Measurement
e. IAS 19 Employee Benefits (as revised in 2011), including amendments to IAS 19 relating to employee contributions to defined
benefit plans (early adoption).
f. IAS 27 Separate Financial Statements
g. IAS 28 Investment in Associates and Joint Ventures
h. Presentation of Items of Other Comprehensive Income (Amendments to IAS 1)
i. IAS 36 Impairment of assets (2013) (early adoption).
In accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors, the changes in accounting policies
described below have been applied retrospectively to adjust the statement of comprehensive income, statement of changes in
equity, balance sheet and statement of cash flows for the effects of the new accounting standards.
IAS 19: Employee Benefits became effective 1 March 2013. Under its previous accounting policy, Altron elected to apply the corridor
method to account for the recognition of actuarial gains and losses.
Under IAS 19 (as revised in 2011), the calculations of interest cost and expected return on plan assets have been altered and a net
interest income or expense is calculated by applying the discount rate used to measure the defined-benefit obligation to the net
defined-benefit asset/obligation at the beginning of the period. Profit from operating activities includes only the current service
cost and the net interest income or expense. Remeasurements of the net defined-benefit asset/obligation are now recognised in
other comprehensive income.
Remeasurements include actuarial gains and losses, the return on plan assets and any change in the effect of the asset ceiling,
excluding amounts included in the net interest on the defined benefit asset/obligation.
Altron has also adopted the new suite of consolidation standards:
IFRS 10: Consolidated Financial Statements (“IFRS 10”), IFRS 11: Joint Arrangements (“IFRS 11”), IFRS 12: Disclosure of Interests
in Other Entities, IAS 27: Separate Financial Statements and IAS 28: Investment in Associates and Joint Ventures, which all became
effective for Altron on 1 March 2013.
As a result of adopting IFRS 10, Altron has changed its accounting policy for evaluating control over its investees. IFRS 10 introduces
a new control model that is applicable to all investees, by focusing on whether Altron has power over an investee, exposure or rights
to variable returns from its involvement with the investee and ability to use its power to affect those returns.
In terms of IFRS 11, proportionate consolidation of joint arrangements is no longer permitted. Joint arrangements are now
classified as either joint ventures or joint operations. Joint ventures are required to be equity accounted.
Altron has re-evaluated its involvement in its joint ventures with CBi Electric Aberdare ATC Telecom Cables (“CBI Aberdare”) and
Tridonic SA Proprietary Limited (“Tridonic”). CBI Aberdare has been reclassified from a jointly controlled entity that was previously
proportionately consolidated to a joint venture that is now equity accounted. Tridonic has been reclassified from a jointly controlled
entity that was previously proportionately consolidated to a subsidiary.
Altron has re-evaluated its treatment of the Autopage Cell Captive. The Autopage Cell Captive is no longer consolidated in terms of
the requirements of IFRS 10 and is accounted for as an in-substance reinsurance contract.
Report of the independent auditors
The unmodified audit reports of KPMG Inc., the independent auditors, on the annual financial statements and the summarised
financial statements contained herein for the year ended 28 February 2014, dated 13 May 2014, are available for inspection at the
registered office of the company.
The auditors' report does not necessarily report on all of the information contained in this announcement. Shareholders are
therefore advised that in order to obtain a full understanding of the nature of the auditors' engagement they should obtain a copy of
the auditors' report together with the accompanying financial information from the issuer's registered office.
% 2014 2013
Change (Audited) (Restated)*
Headline earnings per share (cents) 42 188 132
Normalised headline earnings per share (cents) 49 206 138
Diluted headline earnings per share (cents) 43 185 129
Normalised diluted headline earnings per share (cents) 51 202 134
2014 2013
R millions (Audited) (Restated)*
1. Capital items
CONTINUING OPERATIONS
Net gain on disposal of property, plant and equipment 38 14
Impairment of property, plant and equipment (2) (7)
Impairment of goodwill (27) –
Impairment of intangible assets (6) (9)
Net gain/(loss) on disposal of businesses and investments 3 (5)
Loss on disposal of held-for-sale disposal group – (42)
Impairment of held-for-sale disposal group assets – (29)
Impairment of investment (44) –
(38) (78)
DISCONTINUED OPERATIONS
Profit/(loss) on disposal of discontinued operations 43 (730)
Impairment of property, plant and equipment – (328)
Impairment of intangible assets – (300)
Impairment of goodwill – (13)
43 (1 371)
TOTAL 5 (1 449)
2. Reconciliation between attributable earnings and headline earnings
Attributable to Altron equity holders 615 (312)
Capital items – gross (5) 1 449
Tax effect of capital items (2) –
Non-controlling interest in capital items (5) (720)
Headline earnings 603 417
3. Reconciliation between attributable earnings and diluted earnings
Attributable to Altron equity holders 615 (312)
Dilutive earnings attributable to B-BBEE non-controlling interest in subsidiaries (3) –
Dilutive earnings attributable to dilutive options at subsidiary level – 42
Non-controlling interest in adjustments – (18)
Diluted earnings 612 (288)
4. Reconciliation between headline earnings and diluted headline earnings
Headline earnings 603 417
Dilutive earnings attributable to B-BBEE non-controlling interest in subsidiaries (2) –
Dilutive earnings attributable to dilutive options at subsidiary level – (11)
Non-controlling interest in adjustments – 4
Diluted headline earnings 601 410
5. Reconciliation between headline earnings and normalised headline earnings
Normalised headline earnings have been presented to demonstrate the impact of material,
non-operational once-off costs associated with accessing benefits that will only be realised
in subsequent reporting periods, as well as certain restructuring costs on the headline
earnings of the group.
The presentation of normalised headline earnings is not an IFRS requirement.
Headline earnings 603 417
Foreign currency losses on transaction funding 40 –
Breakage costs on transaction funding 5 –
Restructuring costs 39 26
Tax effect of adjustments (7) (8)
Non-controlling interests in adjustments (20) –
660 435
2014 2013
(Audited) (Restated)*
6. Reconciliation between diluted headline earnings and normalised
diluted headline earnings
Diluted headline earnings 601 410
Foreign currency losses on transaction funding 40 –
Breakage costs on transaction funding 5 –
Restructuring costs 39 26
Tax effect of adjustments (7) (8)
Non-controlling interest in adjustments (20) –
658 428
Fully diluted earnings, diluted headline earnings and normalised diluted headline earnings have been calculated in
accordance with IAS 33 – Earnings per share on the basis that:
– The recognition of the deferred sale of a 30% interest in Aberdare Cables Proprietary Limited to the Izingwe Consortium based on
the assumption that the outstanding purchase price will be settled in cash for R17 million, adjusted for the dilutive effect
of the option price at the Aberdare level and after taking into account the 16.67% investment in the Izingwe Consortium by
Power Technologies Proprietary Limited.
7. Acquisition of business
Acquisition of Brand New Technologies Proprietary Limited
Effective 1 March 2013 the Bytes Group acquired the business of Brand New Technologies Proprietary Limited (“BNTech”)
for a total estimated consideration of R49 million of which, R35 million is deferred and payable on the achievement of certain
earn-outs over three years. BNTech is a leading provider of identity management products and solutions, specialising in
protecting, securing and validating identities. The acquisition of BNTech complements existing Bytes offerings and allows
the group to offer and provide a holistic identity management solution on a turnkey basis, both in South Africa and into Africa.
The acquired business contributed revenue of R57.3 million and net profit after tax of R14.5 million to the group.
These amounts have been calculated using the group's accounting policies.
Recognised Fair value Carrying
The acquired balances of BNTech at the effective date were as follows: values adjustments amount
Current assets 5 – 5
Current liabilities – – –
Total net assets on acquisition 5 – 5
Goodwill on acquisition 44
Total consideration 49
Less: Amounts due to vendors (35)
Net cash outflow on acquisition 14
8. Post balance sheet events
8.1 Debt refinance
On 10 March 2014, Altron refinanced all of its existing term debt. New term loans were taken out totalling R3.1 billion, with
R1.9 billion of three-year debt and R1.25 billion of five-year amortising debt. Post the refinance, the group's balance sheet
was affected as follows:
Feb 14 Feb 14
(Audited) (Pro forma)
Non-current loans 283 3 034
Current loans 2 649 678
Bank overdraft 1 777 997
4 709 4 709
All of the debt has been centralised at the Altron Finance Proprietary Limited level which houses the group's treasury operations.
All the refinanced debt is subject to a common terms agreement and has been raised at a margin of 210 basis points over
three-month JIBAR..
8.2 Repurchase of non-controlling interest in Bytes SA
On 9 May 2014 the group entered into an agreement to acquire the 27% of Bytes SA that it does not already own from the
Kagiso Tiso Holdings group of companies for R669 million. The transaction will be effective on 30 June 2014.
8.3 Nupay
Effective 1 May 2014 Altech acquired the remaining 50% less one share equity interest in Altech NuPay Proprietary Ltd, which Altech
did not already own for a purchase price of R80 million. The purchase price was settled via the issue of Altron participating
preference shares by way of a vendor placement.
8.4 Aberdare Izingwe
Effective 31 March 2014 the Powertech Group recognised the deferred sale of a 30% interest in Aberdare Cables to the
Izingwe Consortium. The obligation to repay the funding has been fully transferred to Izingwe and thus the Powertech group
will recognise the non-controlling interest in Aberdare Cables from 1 April 2014.
8.5 Investment in Liquid Telecommunications Holdings Limited
On 29 April 2014, Altech received the outstanding R485 million from Liquid Telecommunications Holdings Limited to settle
the $55 million put option that had been exercised in January 2014. R103 million had been received in February 2014.
9. Assets and liabilities classified as held-for-sale
During the year the decision was taken to sell Bytes Document Solutions UK and the retail ATM base and the operations
were subsequently classified as held-for-sale. Effective 30 April 2014, Bytes UK disposed of 100% of its equity interest in the Bytes
Document Solutions operation in the UK to Xeratec Group Holdings Limited for a purchase price of R96 million.
These operations did not constitute discontinued operations.
Assets classified as held-for-sale
Property, plant and equipment 46
Intangible assets 1
Goodwill 46
Inventories 11
Trade and other receivables 58
Cash and cash equivalents 52
214
Liabilities classified as held-for-sale
Trade and other payables 81
Taxation payable 3
84
10. Buy-back of non-controlling interests in Altech
Altron, through its wholly owned subsidiary Altron Finance Proprietary Limited, acquired the Altech non-controlling shareholders'
shares in Altech effective 1 August 2013. This brought Altron's shareholding in Altech to 100% and will enable it to integrate
and initiate synergies between Altech and Bytes, through the creation of the Altron TMT division.
The total cash consideration paid to the Altech non-controlling shareholders equalled R1.63 billion (91% of Altech non-
controlling interests) and was funded by debt, while 9% of the Altech non-controlling shareholders elected to be settled in
Altron participating preference shares.
The excess of the consideration paid to Altech shareholders for the non-controlling interest in Altech over the net asset
value acquired amounts to R1.45 billion, and has been deducted directly from the equity attributable to Altron shareholders,
in accordance with the group's accounting policies.
11. Related party transactions
The group entered into various sale and purchase transactions with related parties in the ordinary course of business, on an
arm's length basis.
The nature of related party transactions is consistent with those reported previously.
12. Fair values and risk management
(a) Accounting classifications and fair values
The following table shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the
fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair
value if the carrying amount is a reasonable approximation of fair value.
28 February 2014 Carrying amount Fair value hierarchy
Fair value
– hedging Available-
R millions instruments for-sale Total Level 1 Level 2 Level 3 Total
Financial assets measured at
fair value
Equity investments – 28 28 1 – 27 28
Derivative assets at fair value:
used for hedging 45 – 45 – 45 – 45
45 28 73 1 45 27 73
Financial liabilities measured
at fair value
Derivative liabilities at fair
value: used for hedging (36) – (36) – (36) – (36)
(36) – (36) – (36) – (36)
28 February 2013 Carrying amount Fair value hierarchy
Fair value
–hedging Available-
R millions instruments for-sale Total Level 1 Level 2 Level 3 Total
Financial assets measured at
fair value
Equity investments – 525 525 1 – 524 525
Derivative assets at fair value:
used for hedging 23 – 23 – 23 – 23
23 525 548 1 23 524 548
Financial liabilities measured
at fair value
Derivative liabilities at fair
value: used for hedging (25) – (25) – (25) – (25)
(25) – (25) – (25) – (25)
Financial assets that are not measured at fair value namely; rental finance advances, trade and other receivables, cash and
cash equivalents and non-current loans receivable are categorised as loans and receivables. It has been concluded that the
carrying amount of these assets approximates their fair value.
Financial liabilities that are not measured at fair value namely; loans, empowerment funding obligation, bank overdrafts
and trade and other payables are categorised as other financial liabilities. It has been concluded that the carrying amount of
these liabilities approximates their fair value.
The different levels as disclosed in the table above have been defined as follows:
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 Inputs for the asset or liability that are not based on observable market date (unobservable inputs).
(b) Measurement of fair values
Valuation techniques and significant unobservable inputs
The following tables show the valuation techniques used in measuring Level 2 and Level 3 fair values, as well as the
significant unobservable inputs used.
Financial instruments measured at fair value
Inter-relationship
between significant
Significant unobservable inputs and
Type Valuation technique unobservable inputs fair value measurements
Derivative assets and Market comparison technique: Not applicable Not applicable
liabilities at fair value: The fair value of foreign currency
used for hedging contracts (used for economic
hedging) are marked-to-market
by comparing the contracted
forward rate to the present value
of the current forward rate of
an equivalent contract with the
same maturity date
Equity investments Directors' valuations using
- Discount rate of 17.3% The estimated fair value would
(TAR) discounted cash flows (2013: 18.0%) increase (decrease) if:
- Forecast annual revenue - the discount rate were lower
growth (2014 – 3.5%) (higher):
- the annual revenue growth rate
were higher (lower):
Transfers
There were no transfers between Levels 1, 2 or 3 of the fair value hierarchy for the years ended 28 February 2014 and
28 February 2013.
Reconciliation of Level 3 fair values
The movement in Level 3 fair valued equity investments available for sale related to the disposal of the investment in Liquid
Telecommunications Holdings Limited and the impairment of the investment in Gradolite Proprietary Limited during 2014.
Summarised consolidated balance sheet
2014 2013 2012
R millions (Audited) (Restated) (Restated)
ASSETS
Non-current assets 5 496 4 863 4 800
Property, plant and equipment 2 028 1 765 2 238
Intangible assets, including goodwill 1 725 1 597 1 716
Equity-accounted investments 243 250 248
Other investments 181 673 233
Rental finance advances 68 45 67
Non-current receivables and other assets 921 414 150
Defined benefit asset 180 – –
Deferred taxation 150 119 148
Current assets 10 620 8 073 7 446
Inventories 3 116 2 586 2 415
Trade and other receivables, including derivatives 5 805 4 262 3 860
Assets classified as held-for-sale 214 – 135
Taxation receivable 74 – –
Cash and cash equivalents 1 411 1 225 1 036
Total assets 16 116 12 936 12 246
EQUITY AND LIABILITIES
Total equity 4 514 5 229 5 821
Non-current liabilities 495 792 936
Loans 283 609 707
Empowerment funding obligation – 17 47
Provisions 36 25 20
Deferred income – – 51
Deferred taxation 176 141 111
Current liabilities 11 107 6 915 5 489
Loans 2 649 1 308 613
Empowerment funding obligation 17 29 24
Bank overdraft 1 777 385 550
Trade and other payables, including derivatives 6 374 5 067 4 041
Provisions 59 100 118
Liabilities classified as held-for-sale 84 – 67
Taxation payable 147 26 76
Total equity and liabilities 16 116 12 936 12 246
Net asset value per share (cents) 1 311 1 497 1 585
Segmental Report
Segment analysis
The segment information has been prepared in accordance with IFRS 8 – Operating Segments which defines the requirements for
the disclosure of financial information of an entity's operating segments.
The standard requires segmentation based on the group's internal organisation and reporting of revenue and EBITDA based upon
internal accounting presentation.
During the year the Bytes SA Group implemented a business rationalisation programme, and divisionalised a number of
subsidiaries in order to align business offerings. Certain operations at Bytes Connect were transferred to Bytes Managed Solutions
and Bytes Systems Integration. The business management oversight responsibilities were transferred on 1 March 2013.
Revenue and EBITDA for Bytes Systems Integration and Bytes Managed Solutions for the prior year have therefore been restated.
The segment revenues and earnings before interest, tax, depreciation and amortisation (EBITDA) generated by each of the group's
reportable segments are summarised as follows:
Revenue EBITDA
Growth Growth
Cur/Pyr Cur/Pyr
R millions 2014 2013 % 2014 2013 %
Powertech Cables Group 5 053 4 431 14 131 18 623
Powertech Transformers Group 1 609 1 459 10 160 138 16
Powertech Battery Group 775 680 14 82 82 0
Powertech Services Group 845 752 12 27 43 (38)
Other Powertech Segments 97 20 (385) (14) (14) 0
Powertech Group 8 379 7 342 14 386 267 45
Bytes Technology Group UK Software 2 066 1 541 34 76 45 69
Bytes Document Solutions Group 2 470 2 216 11 124 142 (12)
Bytes Managed Solutions 1 630 1 205 35 175 150 17
Bytes Systems Integration 1 517 1 120 35 89 82 9
Other Bytes Segments 1 078 922 17 131 112 17
Bytes Group 8 761 7 004 25 595 531 12
Altech Autopage 5 501 6 027 (9) 260 253 3
Altech UEC Group 2 674 1 802 48 169 180 (6)
Altech Netstar Group 1 079 1 045 3 317 291 9
Altech Converged Services
(International)* 280 (100) – (125) 100
Other Altech Segments 1 441 1 287 12 74 165 (55)
Altech Group 10 695 10 441 2 820 764 7
Corporate and financial services 6 18 (67) (13) (23) 43
Inter segment revenue (69) (61)
Altron Group 27 772 24 744 12 1 788 1 539 16
* The majority of this segment formed the discontinued operations.
Segment EBITDA can be reconciled
to group operating profit
before capital items as follows:
R millions 2014 2013
Segment EBITDA 1 788 1 539
Depreciation (326) (345)
Amortisation (120) (160)
Group operating profit before
capital items 1 342 1 034
The creation of Altron TMT (Telecommunications, Multi-media and Information Technology) in August 2013 followed Altron's
successful purchase of all the remaining shares in Altech Limited that it did not already own and the subsequent delisting of
Altech Limited from the Johannesburg Stock Exchange (JSE) in August 2013.
The rationale for the creation of Altron TMT is to reorganise Altron for future growth and to capture the full benefits that scale and
integration offer.
As part of the TMT reorganisation, Altron TMT which comprises both Altech and Bytes will undergo structural changes to its
subsidiaries and divisions in FY2015.
Summarised consolidated statement of cash flows
2014 2013
R millions (Audited) (Restated)
Continuing operations
Cash flows from operating activities 762 1 135
Cash generated by operations 2 019 1 871
Net finance expense (242) (95)
Changes in working capital (513) 172
Taxation paid (270) (380)
Cash available from operating activities 994 1 568
Dividends paid, including to non-controlling interests (232) (433)
Cash flows utilised in investing activities (2 866) (1 132)
Cash flows from financing activities 989 1 005
Discontinued operations
Cash flows utilised in operating activities – (90)
Cash flows utilised in investing activities – (22)
Cash flows utilised in financing activities – (146)
Cash flows on disposal of discontinued operations (63) (429)
(63) (687)
Net (decrease)/increase in cash and cash equivalents (1 178) 321
Net cash and cash equivalents at the beginning of the year 840 486
Effect of exchange rate fluctuations on cash held 24 33
Cash classified as held for sale (52) –
Net cash and cash equivalents at the end of the year (366) 840
Operational contribution from total operations
% 2014 % 2013 %
R millions Change (Audited) (Restated)
Revenue:
Altech 2 10 695 38 10 441 42
Bytes 25 8 761 32 7 004 28
Altron TMT 12 19 456 17 165
Powertech 14 8 379 30 7 336 30
Corporate and eliminations (63) – (37) –
12 27 772 100 24 744 100
Normalised EBITDA*
Altech 16 890 47 765 49
Bytes 15 610 33 531 34
Altron TMT 16 1 500 1 296
Powertech 34 386 21 287 18
Corporate and eliminations (14) (1) (18) (1)
20 1 872 100 1 565 100
% held at % held at
28 February 28 February
Normalised headline earnings** 2014 2013
Altech 100,0 61,4 87 299 45 160 37
Bytes 100,0 100,0 23 310 47 253 58
Powertech 100,0 100,0 413 77 12 15 3
Corporate and eliminations (26) (4) 7 2
52 660 100 435 100
* Normalised EBITDA is stated before capital items and non-operational once-off costs relating to foreign exchange losses and
breakage costs on transaction funding as well as certain restructuring costs.
** Normalised headline earnings is stated for total operations and before non-operational once-off costs relating to foreign
exchange losses and breakage costs on transaction funding as well as certain restructuring costs.
Supplementary information (total operations)
2014 2013
R millions (Audited) (Restated)
Depreciation 326 345
Amortisation 120 160
Net foreign exchange gains 3 18
Cashflow movements
Capital expenditure (including intangibles) 759 670
Net additions to contract fulfilment costs 186 272
Additions to contract fulfilment costs 478 430
Net expensing of contract fulfilment costs during the year (266) (141)
Terminations of contract fulfilment costs (26) (17)
Capital commitments 109 126
Lease commitments 878 953
Payable within the next 12 months: 256 232
Payable thereafter: 622 721
Weighted average number of shares (millions) 321 316
Diluted average number of shares (millions) 325 319
Shares in issue at the end of the year (millions) 325 317
Ratios
EBITDA margin (%) 6,4 6,2
Normalise EBITDA margin (%) 6,7 6,3
ROCE (%) 18,0 14,4
ROE (%) 15,2 9,1
ROA (%) 9,8 9,7
RONA (%) 18,1 14,5
Current ratio 1:1 1,2:1
Acid test ratio 0,7:1 0,8:1
Definitions:
Contract fulfilment costs
Contract fulfilment costs include hardware, fitment, commissions and other costs directly attributable to the negotiation and
conclusion of customer service contracts. These costs are expensed over the expected period of the customer service contract.
Summarised consolidated statement of changes in equity
Attributable to Altron equity holders
Share Non-
capital con-
and Treasury Retained trolling Total
R millions premium shares Reserves earnings Total interests equity
Balance at 29 February 2012 (Audited) 2 244 (299) (1 100) 4 158 5 003 810 5 813
Impact of changes in accounting policies – – – – – 8 8
Balance at 29 February 2012 (Restated) 2 244 (299) (1 100) 4 158 5 003 818 5 821
Total comprehensive income
for the year
Loss for the year – – – (312) (312) (630) (942)
Other comprehensive income
Foreign currency translation differences
in respect of foreign operations – – 192 – 192 118 310
Realisation of negative foreign currency
translation reserve on disposal – – 120 – 120 76 196
Fair value adjustment on available-
for-sale investments – – (3) – (3) (2) (5)
Remeasurement of net defined benefit
asset/obligation – – 14 – 14 – 14
Total other comprehensive income – – 323 – 323 192 515
Total comprehensive income for the year – – 323 (312) 11 (438) (427)
Transactions with owners, recorded
directly in equity
Contributions by and distributions
to owners
Dividends to equity holders – – – (291) (291) (142) (433)
Issue of share capital 10 – (10) – – – –
Share-based payment transactions – – 17 – 17 6 23
Total contributions by and
distributions to owners 10 – 7 (291) (274) (136) (410)
Changes in ownership interests in
subsidiaries
Introduction of non-controlling interests – – – – – 3 3
Disposal of subsidiary – – – – – 242 242
Total changes in ownership interests
in subsidiaries – – – – – 245 245
Total transactions with owners 10 – 7 (291) (274) 109 (165)
Balance at 28 February 2013 (Restated) 2 254 (299) (770) 3 555 4 740 489 5 229
Total comprehensive income
for the year
Profit for the year – – – 615 615 160 775
Other comprehensive income
Foreign currency translation differences
in respect of foreign operations – – 163 – 163 1 164
Fair value adjustment on available-
for-sale investments – – – – – 13 13
Remeasurement of net defined
benefit asset/obligation – – 189 – 189 – 189
Total other comprehensive income – – 352 – 352 14 366
Total comprehensive income for the year – – 352 615 967 174 1 141
Transactions with owners, recorded
directly in equity
Contributions by and distributions
to owners
Issue of share capital 15 – (15) – – – –
Dividends to equity holders – – – (190) (190) (42) (232)
Share-based payment transactions – – 30 – 30 3 33
Total contributions by and
distributions to owners 15 – 15 (190) (160) (39) (199)
Changes in ownership interests in
subsidiaries
Buy-back of non-controlling interest 158 – (1 449) – (1 291) (355) (1 646)
Disposal of subsidiary – – – – – (11) (11)
Total changes in ownership interests
in subsidiaries 158 – (1 449) – (1 291) (366) (1 657)
Total transactions with owners 173 – (1 434) (190) (1 451) (405) (1 856)
Balance at 28 February 2014 (Audited) 2 427 (299) (1 852) 3 980 4 256 258 4 514
* Change in accounting policies: Summarised consolidated
statement of comprehensive income
Year Year Year
ended ended ended
28.02.13 28.02.13 28.02.13
R millions (Audited) (Adjustments) (Restated)*
CONTINUING OPERATIONS
Revenue 24 769 (305) 24 464
Earnings before interest, tax, depreciation, amortisation and capital items
(EBITDA before capital items) 1 692 (40) 1 652
Depreciation and amortisation (461) 8 (453)
Operating profit before capital items 1 231 (32) 1 199
Capital items (Note 1) (78) – (78)
Result from operating activities 1 153 (32) 1 121
Finance income 57 (1) 56
Finance expense (134) – (134)
Share of profit of equtiy-accounted investees, net of taxation 5 10 15
Profit before taxation 1 081 (23) 1 058
Taxation (374) 10 (364)
Profit for the period from continuing operations 707 (13) 694
DISCONTINUED OPERATIONS
Loss for the period from discontinued operations (1 636) – (1 636)
Loss for the period (929) (13) (942)
Other comprehensive income
Items that will never be reclassified to profit or loss
Remeasurement of net defined benefit asset/obligation – 19 19
Taxation on items that will never be reclassified to profit or loss – (5) (5)
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation differences in respect of foreign operations 310 – 310
Realisation of negative foreign currency translation reserve on disposal 196 – 196
Fair value adjustment on available-for-sale investments (5) – (5)
Other comprehensive income for the period, net of taxation 501 14 515
Total comprehensive income for the period (428) 1 (427)
Net profit/(loss) attributable to:
Non-controlling interests (631) 1 (630)
Altron equity holders (298) (14) (312)
Altron equity holders from continuing operations 498 (14) 484
Altron equity holders from discontinued operations (796) – (796)
Net profit loss) for the period (929) (13) (942)
Total comprehensive income attributable to:
Non-controlling interests (439) – (439)
Altron equity holders 11 1 12
Altron equity holders from continuing operations 650 1 651
Altron equity holders from discontinued operations (639) – (639)
Total comprehensive income for the period (428) 1 (427)
Basic loss per share from total operations (cents) (94) (5) (99)
Diluted basic loss per share from total operations (cents) (86) (4) (90)
Headline earnings per share (cents) 136 (4) 132
Diluted headline earnings per share (cents) 133 (4) 129
HEADLINE EARNINGS ARE DERIVED FROM:
Profit attributable to Altron equity holders (298) (14) (312)
Capital items – gross 1 449 – 1 449
Non-controlling interests in capital items (720) – (720)
Headline earnings 431 (14) 417
* Change in accounting policies: Summarised
consolidated balance sheet
28.02.13 28.02.13 28.02.13
R millions (Audited) (Adjustments) (Restated)*
Assets
Non-current assets 4 757 106 4 863
Property, plant and equipment 1 822 (57) 1 765
Intangible assets including goodwill 1 613 (16) 1 597
Equity-accounted investments 80 170 250
Other investments 673 – 673
Rental finance advances 45 – 45
Non-current receivables and other assets 414 – 414
Deferred taxation 110 9 119
Current assets 8 210 (137) 8 073
Inventories 2 653 (67) 2 586
Trade and other receivables, including derivatives 4 255 7 4 262
Cash and cash equivalents 1 302 (77) 1 225
Total assets 12 967 (31) 12 936
Equity and liabilities
Total equity 5 220 9 5 229
Non-current liabilities 787 5 792
Loans 609 – 609
Empowerment funding obligation 17 – 17
Provisions 25 – 25
Deferred income – – –
Deferred taxation 136 5 141
Current liabilities 6 960 (45) 6 915
Loans 1 308 – 1 308
Empowerment funding obligation 29 – 29
Bank overdraft 385 – 385
Trade and other payables, including derivatives 5 105 (38) 5 067
Provisions 100 – 100
Liabilities classified as held-for-sale – – –
Taxation payable 33 (7) 26
Total equity and liabilities 12 967 (31) 12 936
Net asset value per share (cents) 1 498 (1) 1 497
* Change in accounting policies: Summarised
consolidated balance sheet
28.02.12 28.02.12 28.02.12
R millions (Audited) (Adjustments) (Restated)*
ASSETS
Non-current assets 4 695 105 4 800
Property, plant and equipment 2 300 (62) 2 238
Intangible assets including goodwill 1 732 (16) 1 716
Equity-accounted investments 74 174 248
Other investments 233 – 233
Rental finance advances 67 – 67
Non-current receivables and other assets 150 – 150
Deferred taxation 139 9 148
Current assets 7 585 (139) 7 446
Inventories 2 475 (60) 2 415
Trade and other receivables, including derivatives 3 872 (12) 3 860
Assets classified as held-for-sale 135 – 135
Cash and cash equivalents 1 103 (67) 1 036
Total assets 12 280 (34) 12 246
EQUITY AND LIABILITIES
Total equity 5 813 8 5 821
Non-current liabilities 936 – 936
Loans 707 – 707
Empowerment funding obligation 47 – 47
Provisions 20 – 20
Deferred income 51 – 51
Deferred taxation 111 – 111
Current liabilities 5 531 (42) 5 489
Loans 613 – 613
Empowerment funding obligation 24 – 24
Bank overdraft 550 – 550
Trade and other payables, including derivatives 4 079 (38) 4 041
Provisions 118 – 118
Liabilities classified as held-for-sale 67 – 67
Taxation payable 80 (4) 76
Total equity and liabilities 12 280 (34) 12 246
Net asset value per share (cents) 1 583 2 1 585
* Change in accounting policies: Summarised
consolidated statement of cash flows
Year Year Year
ended ended ended
28.02.13 28.02.13 28.02.13
R millions (Audited) (Adjustments) (Restated)*
Continuing operations
Cash flows from operating activities 1 150 (15) 1 135
Cash generated by operations 1 878 (7) 1 871
Changes in working capital 174 (2) 172
Net finance expense (94) (1) (95)
Taxation paid (375) (5) (380)
Cash available from operating activities 1 583 (15) 1 568
Dividends paid, including to non-controlling interests (433) – (433)
Cash flows utilised in investing activities (1 137) (5) (1 132)
Cash flows from financing activities 1 005 – 1 005
Cash flows utilised in discontinued operations (687) – (687)
Net increase in cash and cash equivalents 331 (10) 321
Net cash and cash equivalents at the beginning of the period 553 (67) 486
Effect of exchange rate fluctuations on cash held 33 – 33
Net cash and cash equivalents at the end of the period 917 (77) 840
* Change in accounting policies: Summarised consolidated
statement of changes in equity
28.02.13 28.02.13 28.02.13
R millions (Audited) (Adjustments) (Restated)*
Loss for the period (929) (13) (942)
Foreign currency translation differences in respect of foreign operations 310 – 310
Remeasurement of defined benefit obligation – 14 14
Realisation of negative foreign currency translation reserve on disposal 196 – 196
Fair value adjustment on available-for-sale investments (5) – (5)
Dividends to equity holders (433) – (433)
Share-based payment transactions 23 (2) 21
Introduction of non-controlling interests 3 – 3
Disposal of operations 242 – 242
Equity at the beginning of the period 5 813 10 5 823
Equity at the end of the period 5 220 9 5 229
Made up as follows:
Share capital and premium 2 254 – 2 254
Treasury shares (299) – (299)
Reserves (784) 14 (770)
Retained earnings 3 570 (15) 3 555
Non-controlling interests 479 10 489
5 220 9 5 229
Message to shareholders
The Altron financial results for the year ended 28 February 2014 are reported in an integrated manner in accordance with the
G3 Guidelines of the Global Reporting Initiative (GRI) as recommended by King III, reflecting those issues that are applicable
and which materially affect or contribute to the sustainable development of Altron in terms of its financial and non-financial
performance.
During the year, Altron achieved good revenue growth of 12% to R27.8 billion, as well as a very pleasing 49% increase in
normalised headline earnings per share (normalised HEPS) to 206 cents. A number of significant projects were initiated during
the period under review, among them, the establishment of Altron TMT, the restructuring of Powertech System Integrators, the
refinancing of the group's debt and the rebranding of Altron.
As previously reported, Altron, through its wholly owned subsidiary Altron Finance Proprietary Limited, acquired the Altech
non-controlling shareholders' shares in Altech effective 1 August 2013. This brought Altron's shareholding in Altech to 100%
and enabled the integration of Altech and Bytes, through the formation of Altron TMT. Altech showed a good recovery with most
of its operations performing satisfactorily and Altech Netstar and Altech UEC South Africa performing particularly well.
Bytes continued its strong performance with Bytes' UK operations, Bytes Systems Integration and Bytes Managed Solutions
contributing significantly to the overall results. Powertech made a pleasing recovery, particularly in its power cables business,
albeit off a low base. Overall, sales into the public sector and into African countries have increased significantly.
FINANCIAL OVERVIEW
Income
In accordance with the treatment of Altech East Africa as a discontinued operation at the last year end, we continue to show the
split between continuing and discontinued operations. There have also been restatements to the comparative results in order to
implement various accounting standard changes that are effective this year and which have to be retrospectively applied. In some
cases reference is made to normalised results which excludes the once-off non-operational forex and breakage costs associated
with the repatriation of the East Africa loan, as well as various once-off costs associated with the formation of Altron TMT which
are expected to deliver benefits in future years. The comparative normalised results make adjustments for similar items in the
prior year.
Continuing operations
Altron's revenue from continued operations increased by a pleasing 14% to R27.8 billion from R24.5 billion in the prior period,
while earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 8% from R1.6 billion to R1.8 billion.
Normalised EBITDA amounted to R1.9 billion, up nearly 12%, which excludes the effect of once-off, non-operational costs
referred to above, being R45 million in respect of the repatriation of an East African loan and R39 million in respect of various
restructuring costs. Normalised EBITDA margin was 6.7% compared to the prior year's 6.9%.
Reduced capital items, as well as a lower depreciation charge, related to the disposal of Altech's West African operation in
the prior year, resulted in a profit of R1.3 billion from operating activities, 16% higher than last year's R1.1 billion. Net finance
costs have increased from R78 million to R260 million as average borrowings have increased significantly due to the additional
borrowings taken on to acquire the Altech non-controlling interest as well as an increased operational funding requirement to finance higher
working capital and the continued investment into the Altech Autopage subscriber base.
The effective tax rate on continuing operations is down to 30.8% from 32.9% in the prior year, after adjusting for the effects of the
capital items and STC in the prior year. This continues to run above the statutory tax rate due to the non-recognition of deferred tax
assets in certain operations. All of these effects resulted in a 5% increase in profit after tax from continuing operations.
Total operations
After taking into account the discontinued operations, the profit for the year improved from a loss of R942 million in the prior year
to a profit of R775 million. The capital items in the current year from discontinued operations relate to the profit on disposal of the
Liquid investment, offset by some warranty claims and the final settlement of a dispute with the Kenyan Revenue Authority.
HEPS is up 42% at 188 cents while normalised HEPS increased 49% to 206 cents. Return on equity was 15.2%.
Cash management
Cash generated by operations of R2.0 billion was up 8% on the prior year, but R513 million was absorbed into working capital.
Despite continued focus on working capital there has been a four day increase in the net investment when compared to
February 2013, mostly coming out of debtors but partly offset by creditors. Much of the increase can be attributed to the strong
activity levels in the last two months of the year. A significant reduction in dividends paid and tax paid offset by the higher finances
charges paid, resulted in R762 million of cash flow being generated from operating activities.
Investing activities increased to R1.2 billion, excluding the effects of the R1.6 billion invested as a result of the acquisition of the
Altech non-controlling interest. A significant portion of the increase was due to the continued investment into capitalised subscriber acquisition
costs of R478 million in the Altech group, which are recovered over the term of their contracts. Capital expenditure amounted
to R759 million in both property, plant and equipment and intangible assets, with the latter reflecting the group's focus on
generating its own intellectual property.
Debt refinance
Post the balance sheet date, Altron concluded the refinance of term debt. The R3.1 billion of term debt in place at year end, was
classified as short term, except for R120 million. This debt was refinanced with R1.9 billion of three year debt and R1.2 billion of
five year amortising debt, obtained from both banking and financial institutions. All of the funding has been centralised and was
secured at a margin of 210 basis points over three month JIBAR.
While the balance sheet has a higher gearing ratio than in the past, these levels remain relatively conservative. Nevertheless, the
board will look to reduce gearing levels over the short to medium term.
SUBSIDIARY REVIEW
Subsidiary income and growth
Altron TMT
The acquisition of the Altech non-controlling shareholders' shares has enabled Altron to reorganise its telecommunications, multi-media and
technology (IT) businesses in a more efficient way. Significant successes have already been achieved with new customers
coming on board, large tenders being won (such as the R1.2 billion Gauteng Broadband Network) and good cost savings coming
through. To date, reorganisation costs of about R23 million have been incurred with a sustainable annual cost savings benefit of
approximately R87 million to be realised from the next reporting period onwards. The integration process is operating through five
different workstreams, and is expected to run through to the end of the 2016 financial year.
On a consolidated total operations level, Altron TMT consisting of Altech and Bytes, increased revenue by 12% from R17.5 billion
to R19.5 billion and normalised EBITDA by 16% from R1.3 billion to R1.5 billion. The normalised EBITDA margin improved from
7.4% to 7.7%. Normalised headline earnings improved by a pleasing 26% to R646 million.
Altech increased revenue by 2% to R10.7 billion compared to the prior year, while normalised EBITDA increased by 16% to
R890 million with the normalised EBITDA margin increasing from 7.3% to 8.3%. Normalised headline earnings increased by
29% to R336 million.
Revenue at Altech Autopage decreased by 9%, while EBITDA increased by 3%, though a repeat of this level of performance is
unlikely given margin pressure in the channel. The Average Revenue Per User (ARPU) has continued to decline, though at a
slower rate. ARPUs on new subscribers are encouraging, while churn is being maintained at better than industry acceptable
levels. The number of subscribers increased to approximately 1 million and full-circle data and telephony offerings to
enterprises increased.
The Altech Netstar group achieved revenue growth of 3%, while EBITDA increased by a very pleasing 9% with margins enhanced
as a result of a number of important contract wins in the fleet management side of the business. The business has also launched
several enhanced products into the market.
Altech Multimedia's results were somewhat disappointing with revenue increasing by 48%, but EBITDA down by 6% as a result of
a poor performance at SetOne in Germany. Altech UEC produced an excellent performance with increased sales and profitability
due to digital migration in Africa (other than South Africa) and continued international diversification of its customer base,
which has also led to an improvement in the product mix. Additional capacity was added to the manufacturing facility in Mount
Edgecombe in KwaZulu-Natal and a record number of over five million set-top-boxes were produced this past financial year.
Remedial action has been taken by management in respect of the SetOne business which has been restructured and returned to
profitability since year end.
The Altech Information Technology group's revenue was flat, while EBITDA increased by 29%. Each of the business units
performed well, though Swisttech was somewhat behind expectations. It has now been absorbed into Altech Isis, which will
provide synergies and economies of scale. Post year-end, the remaining 50% minus one share of Altech NuPay was acquired
which will enable Altron TMT to integrate its various transaction solutions businesses (namely Altech NuPay, parts of Altech Card
Solutions and Bytes Healthcare Solutions). Going forward most of the IT assets in Altech will be operationally merged with the
Bytes businesses, streamlining the group's IT products and services offerings.
Altech's return on equity was 25.9%.
Bytes reported a very pleasing 25% increase in revenue to R8.8 billion and a 12% increase in EBITDA to R595 million. However,
the EBITDA margin declined from 7.6% to 6.8% on continued gross margin pressure. Headline earnings for the Bytes group was
up 19% to R302 million.
Bytes Document Solutions (South Africa and UK) reported an 11% increase in revenue but a decrease of 12% in EBITDA as a
result of challenging market conditions. EBITDA was primarily impacted by the effect of the depreciation of the Rand on input
costs relating to services. Lasercom performed satisfactorily but Nor Paper and Xerox both experienced margin pressures.
Encouragingly, Xerox won some good contracts during the period under review. Efforts are now focused on improving margins
through various means.
Bytes Managed Solutions improved revenue by 35% and EBITDA by 17%, with higher sales of NCR Automated Teller Machines
and Point of Sale devices. The business won a three year contract to the value of approximately R400m from Absa/Barclays for
desktop support services in South Africa and certain African countries. This business continues to perform extremely well.
Bytes Systems Integration achieved exceptional growth in revenue of 35%, but saw EBITDA grow by only 9%. The decline in
EBITDA margins in this business is indicative of some of the margin pressure in the industry, particularly in commoditised
products and services. The hardware and network elements of this business have been integrated under the Telecommunications
division of Altron TMT, with the software elements moving to Bytes Universal Systems.
Bytes Healthcare Solutions performed well, increasing revenue by 7% and EBITDA by 12%. As mentioned, this business has been
teamed up with Altech payment solutions businesses going forward under the Technology division of Altron TMT.
Bytes Universal Systems increased revenue by 12% but EBITDA reduced by 8% on the margin pressure referred to earlier.
The business performed particularly well in the public sector, an area which Bytes has specifically targeted for growth.
The Bytes International operations produced excellent results, increasing revenue by 35% and EBITDA by 57% in Rand terms.
The UK Software Services side of the business performed particularly well increasing revenue by 34% and, to an extent,
diversifying the business model. Security Partnerships delivered a strong performance with a 49% increase in revenue, as IT
security remains a high growth area. Of these growth percentages, approximately 19% can be attributed to the depreciation of the
Rand, indicating these businesses achieved a pleasing double digit growth in local currency terms.
Bytes' return on equity was 21.7%.
Altron TMT's prospects are positive as it builds on the momentum of the new platform created by the reorganisation of Altech and
Bytes. We anticipate new revenue streams being created from cross and up-sell opportunities and further cost savings from the
shared services and integration projects that are currently under way.
Altron Power
Powertech revenue increased by 14% to R8.4 billion, while EBITDA increased by a pleasing 45% to R386 million. EBITDA margin
increased from 3.6% to 4.6%. Headline earnings for the Powertech group increased from last year's break even to R77 million.
The Powertech Cables group experienced a 14% increase in revenue and a substantial 623% increase in EBITDA to R131 million,
with the growth coming out of the South African operations. Pricing pressures continue in the market but higher volumes in the
trade sector have improved the recovery of fixed manufacturing costs. The benefits from restructuring in the previous reporting
period are starting to materialise. In Iberia, the Portuguese operation is profitable but Spain remains loss-making. Albeit
improved, overall returns remain very low and the current focus is on lifting gross margins locally and exploiting opportunities in
Africa, renewable energy and the transport sector.
The Powertech Transformers group increased revenue by 10% and EBITDA by 16%. The Pretoria West power transformer plant
is still experiencing some productivity issues but the new small power transformer manufacturing line is now complete and is
expected to contribute to profitability going forward. The Johannesburg distribution transformer business returned to losses in
the second half due to a lack of orders, while the distribution transformer manufacturing facility in Cape Town produced excellent
results.
In the Powertech Batteries group, revenue increased by 14% while EBITDA was flat. The automotive battery business held on to
market share gains made in the previous year but margins have declined as a result of cost pressures, most notably from the
increasing lead price.
Powertech System Integrators' performance was disappointing. Revenue increased by 12%, EBITDA declined by 38%. Powertech
QuadPro grew revenue strongly and has built a significant order book for turnkey electrical substations which bodes well for the
future profitability of this business. The remaining operations in Powertech System Integrators saw lower revenue and much
reduced profitability due to some high margin contracts coming to an end in the prior year and not being replaced. Furthermore,
continued lack of capital projects affected the utilisation of the highly skilled workforce. Certain management changes have been
made to this business and there are several promising prospects which could significantly improve the business' outlook.
Powertech's return on equity was 3.0%.
Altron Power's prospects are encouraging considering the emphasis on the electrification of Africa and promised infrastructure-
spend in South Africa. Continued focus will be placed on improving manufacturing efficiencies as well as exploiting opportunities
in the renewable energy sector as well as rail projects and increased supply into Africa. The high likelihood of strike action in the
steel and engineering sector in the coming months will have a detrimental impact in the short term.
Corporate activity
The following transactions were concluded during the financial year ended 28 February 2014:
- Effective 1 March 2013, Bytes Technology Group South Africa acquired Brand New Technologies Proprietary Limited (“BNTech”) for a
total estimated purchase price of R49 million of which, R35 million is deferred and payable on the achievement of certain
earn-outs over three years. BNTech is a leading provider of identity management products and solutions, specialising in
protecting, securing and validating identities.
- Effective 1 August 2013, Altron Finance purchased the remaining Altech ordinary shares that the Altron group did not already
own, from Altech non-controlling shareholders. The total cash consideration paid to 91% of the Altech non-controlling shareholders
equalled R1.6 billion while 9% of the Altech non-controlling shareholders elected to be settled in Altron participating preference
shares amounting to R158 million.
- On 7 January 2014, Altech exercised its put option and signed an agreement with, inter alia, Econet Wireless Global Limited
to dispose of its 8.6% equity interest in Liquid Telecommunications for a cash consideration of US$55 million. The exercise of
the put became unconditional on 21 January 2014 and the transaction became effective on 28 February 2014. $10 million was
received in February 2014, with the balance being received after year end.
- Effective 1 February 2014, Powertech disposed of its 50% equity interest in Tridonic South Africa to Tridonic in Austria for a
selling price of R14 million.
The following transactions were concluded post the balance sheet date:
- From 1 April 2014 the 25% non-controlling interest in Aberdare Cables will be fully recognised following the repayment of the funding structure.
- Effective 30 April 2014, Bytes UK disposed of 100% of its equity interest in Bytes Document Solutions operation in the UK to
Xeratec Group Holdings Limited for a purchase price of £5.4 million.
- Effective 1 May 2014, Altech acquired the remaining 50% less one share equity interest in Altech NuPay Proprietary Limited, which Altech
did not already own for a purchase price of R80 million. The purchase price was settled via the issue of Altron participating
preference shares by way of a vendor placement.
- On 9 May 2014, Bytes SA entered into an agreement to acquire Kagiso Strategic Investments' 27% equity interest in Bytes SA
for a purchase price of R669 million. The transaction will become effective on 30 June 2014.
HUMAN CAPITAL
Altron has been rated as a Level 2 Broad-Based Black Economic Empowerment contributor for the period 2014/15. This has been
as a result of a well-executed strategic intent to transcend from a compliance driven process to a more transformative process.
The transformation strategy embodied in the “Beyond 2012 Altron Transformation and Human Capital Strategy” document is one
that requires the creation of sustainable economic empowerment and transfer, as well as development of skills in the power and
telecommunications sector. The challenge remains attraction and retention of black professionals. Programmes with a targeted
focus on recruitment of Coloured, Indians and Black persons will be put in place. Training of the Altron employees is a priority
and is handled at a group level through the Bill Venter Academy.
SUSTAINABILITY
Altron's sustainable business strategy remains the driving force in achieving our targets and objectives. The four key value drivers
for sustainable development remain Financial Capital, Human Capital, Products and Services and External Relationships. The
recent acquisition of the non-controlling shareholders' shares in Altech and the establishment of the Altron TMT division is evidence
of the group's commitment to improve profitable revenue growth, invest in its people, lead through innovation and build and
maintain strategic alliances.
CORPORATE GOVERNANCE
The Altron group continues to embrace and implement the recommendations of the King Report on Governance for South Africa,
2009, as well as the King Code of Governance Principles for South Africa 2009 (the Code) and has satisfied itself that Altron has
complied throughout the prior year in all material aspects with the Code and the Listings Requirements of the JSE.
DIRECTORATE
Shareholders are referred to the SENS announcement published by Altron on 9 October 2013 advising that with effect from
8 October 2013, Mr RS Ntuli and Ms SN Mabaso-Koyana had been appointed as independent non-executive directors of Altron.
Both Mr Ntuli and Ms Mabaso-Koyana previously served as independent non-executive directors of Altech. The board extends a
warm welcome to both of these directors.
OUTLOOK
Management is extremely pleased with the progress and associated benefits already achieved from the establishment of Altron
TMT in August 2013, many of which will only be reflected in the financial results in the coming financial year.
Altron Power is showing encouraging signs of recovery and we believe it can again contribute meaningfully to the group in the
future, though it will face challenges in the coming months from likely industrial action in the steel and engineering sector.
Altron is transforming from an investment holding company to an operational business through the pooling of talent, funds and
businesses. This will result in new income streams, innovations and growth opportunities.
With the positive momentum generated from the many changes made in the last 12 months, we believe the prospects for the
group in the year ahead are encouraging.
ACKNOWLEDGEMENTS
The board would like to once again express its appreciation to all of its customers, staff, business partners, shareholders and
other stakeholders for their support during the past year and for their continued belief in the future sustainability of the group
and its strong underlying businesses.
DIVIDENDS
Notice is hereby given that on Tuesday, 13 May 2014, Altron declared a gross ordinary dividend (number 66) of 80 cents per
ordinary share (2013: 60 cents) and a gross participating preference dividend (number 20) of 80 cents per participating preference
share (2013: 60 cents) for the period 1 March 2013 to 28 February 2014, payable on Monday, 7 July 2014 to holders of the ordinary
and participating preference shares recorded in the books of the company at close of business on Friday, 4 July 2014.
The dividends have been declared out of income reserves and will be subject to dividends tax. The local dividends tax rate is 15%.
The company has no secondary tax on companies' credits available.
Accordingly, the net local dividend amount is 68 cents per ordinary and participating preference shares for shareholders
liable to pay dividends tax and 80 cents per ordinary and participating preference shares for shareholders exempt from paying
dividends tax.
In terms of the dividends tax legislation, the dividends tax amount due will be withheld and paid over to the South African Revenue
Service (“SARS”) by a nominee company, stockbroker or Participant (previously CSDP) (collectively “Regulated Intermediary”)
on behalf of shareholders. However, all shareholders should declare their status to their Regulated Intermediary, as they may
qualify for a reduced dividends tax rate or they may even be exempt from dividends tax.
Altron's issued share capital at the declaration date is 105 669 131 ordinary shares and 253 359 875 participating preference
shares. Altron's tax reference number is 9725/149/71/1.
In compliance with the requirements of STRATE, the following dates are applicable:
Last day of trading to qualify for and participate in the dividend (cum dividend) Friday, 27 June 2014
Trading ex-dividend commences Monday, 30 June 2014
Record date Friday, 4 July 2014
Dividend payment date (electronic and certificated) Monday, 7 July 2014
Dividend cheques in payment of these dividends are no longer, as a result of increasing fraud, posted to certificated shareholders,
but may instead be collected from the offices of the transfer secretaries on or about Monday, 7 July 2014. Electronic payment to
certificated shareholders will be undertaken simultaneously.
Shareholders who have dematerialised their share certificates will have their accounts at their Participant (previously CSDP) or
broker credited on Monday, 7 July 2014.
Share certificates may not be dematerialised or re-materialised from Monday, 30 June 2014 to Friday, 4 July 2014, both days
inclusive.
In accordance with the company's memorandum of incorporation, dividends amounting to R30.00 or less due to any one holder of
the company's ordinary or participating preference shares, held in certificated form, will not be paid, unless otherwise requested
in writing, but will be aggregated with other such amounts and be donated to a charity nominated by the directors.
ANNUAL GENERAL MEETING
Altron's 68th annual general meeting will be held in The Altron Boardroom, 5 Winchester Road, Parktown, Johannesburg on
Monday, 21 July 2014 at 09h30. Further details of the company's annual general meeting will be contained in Altron's integrated
annual report to be posted to shareholders on or about 2 June 2014.
On behalf of the board
Dr Bill Venter Robert Venter Alex Smith
Non-Executive Chairman Chief Executive Chief Financial Officer
13 May 2014
Company information
Board of directors
Independent non-executive:
Mr NJ Adami
Mr GG Gelink
Mr MJ Leeming (Lead Independent Director)
Ms SN Mabaso-Koyana
Dr PM Maduna
Ms DNM Mokhobo
Mr JRD Modise
Mr RS Ntuli
Mr SN Susman
Non-executive:
Dr WP Venter (Chairman)
Mr MC Berzack
Executive:
Mr RE Venter (Chief Executive)
Mr RJ Abraham
Mr AMR Smith*
Mr CG Venter
* British
Secretaries:
Altron Management Services Proprietary Limited – Mr AG Johnston (Group Company Secretary)
Sponsor:
Investec Bank
www.altron.com
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