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ALLIED ELECTRONICS CORPORATION LIMITED - Preliminary Audited Summarised Consolidated Financial Statements for the year ended 29 February 2016

Release Date: 18/05/2016 07:50
Code(s): AEL AEN     PDF:  
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Preliminary Audited Summarised Consolidated Financial Statements for the year ended 29 February 2016

ALLIED ELECTRONICS CORPORATION LIMITED
(Registration number 1947/024583/06)
(Incorporated in the Republic of South Africa)
Share code: AEL         ISIN: ZAE000191342
Share code: AEN         ISIN: ZAE000191359

PRELIMINARY AUDITED SUMMARISED 
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 FEBRUARY 2016

SUMMARISED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME

R millions                                                                          %             2016             2015* 
                                                                               change        (Audited)         (Audited)
CONTINUING OPERATIONS                                                                                                      
Revenue                                                                            20           14 357            12 014   
Earnings before interest, tax, depreciation, amortisation and                                                              
capital items (EBITDA before capital items)                                      (11)              888               993   
Depreciation and amortisation                                                                    (186)             (166)   
Operating profit before capital items                                            (15)              702               827   
Capital items (Note 1)                                                                            (69)                23   
Result from operating activities                                                 (26)              633               850   
Finance income                                                                                     149                79   
Finance expense                                                                                  (310)             (212)   
Share of profit of equity-accounted investees, net of taxation                                       2                 1   
Profit before taxation                                                           (34)              474               718   
Taxation                                                                                         (114)             (222)   
Profit for the year from continuing operations                                   (27)              360               496   
DISCONTINUED OPERATIONS                                                                                                    
Revenue                                                                                         12 235            15 609   
EBITDA before capital items                                                                      (512)               390   
Depreciation and amortisation                                                                    (264)             (390)   
Operating loss before capital items                                                              (776)                 –   
Capital items (Note 1)                                                                           (439)             (423)   
Result from operating activities                                                               (1 215)             (423)   
Finance income                                                                                      44                34   
Finance expense                                                                                  (375)             (299)   
Share of profit of equity-accounted investees, net of taxation                                      16                14   
Loss before taxation                                                                           (1 530)             (674)   
Taxation                                                                                            70               118   
Loss for the year from discontinued operations                                                 (1 460)             (556)   
Loss for the year from total operations                                                        (1 100)              (60)   


SUMMARISED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME

R millions                                                                    %                   2016            2015*
                                                                         change              (Audited)        (Audited) 
Other comprehensive income                                                                                                
Items that will never be reclassified to profit or loss                                                                   
Remeasurement of net defined benefit asset                                                         60                 –   
Items that are or may be reclassified subsequently to profit or loss                                                      
Foreign currency translation differences in respect of foreign
operations                                                                                        100              (10)   
Realisation of foreign currency translation reserve on disposal                                  (13)               (3)   
Effective portion of changes in the fair value of cash flow hedges                                  4               (3)   
Other comprehensive income for the year, net of taxation                                          151              (16)   
Total comprehensive income for the year                                                         (949)              (76)   
Loss attributable to:                                                                                                     
Non-controlling interests                                                                       (227)              (51)   
Non-controlling interests from continuing operations                                                6                35   
Non-controlling interests from discontinued operations                                          (233)              (86)   
Altron equity holders                                                                           (873)               (9)   
Altron equity holders from continuing operations                                                  354               461   
Altron equity holders from discontinued operations                                            (1 227)             (470)   
Loss for the year from total operations                                                       (1 100)              (60)   
Total comprehensive income attributable to:                                                                               
Non-controlling interests                                                                       (229)              (51)   
Non-controlling interests from continuing operations                                                6                35   
Non-controlling interests from discontinued operations                                          (235)              (86)   
Altron equity holders                                                                           (720)              (25)   
Altron equity holders from continuing operations                                                  469               469   
Altron equity holders from discontinued operations                                            (1 189)             (494)   
Total comprehensive income for the year                                                         (949)              (76)   
Basic earnings per share from continuing operations (cents)                                       105               139   
Diluted basic earnings per share from continuing operations (cents)                               104               137   
Basic loss per share from discontinued operations (cents)                                       (364)             (141)   
Diluted basic loss per share from discontinued operations (cents)                               (359)             (140)   
Basic loss per share from total operations (cents)                                              (259)               (3)   
Diluted basic loss per share from total operations (cents)                                      (256)               (3)   
Dividends per share declared (cents)                                                                –                31   


*Comparative information has been re-presented for the discontinued operations, refer to note 10

SUMMARISED CONSOLIDATED
BALANCE SHEET

                                                                                                2016              2015
R millions                                                                                 (Audited)         (Audited)
                                                  
Assets                                                                                                                   
Non-current assets                                                                             2 804             4 496   
Property, plant and equipment                                                                    618             1 888   
Intangible assets, including goodwill                                                          1 042             1 405   
Equity-accounted investments                                                                       4               229   
Other investments                                                                                199               183   
Rental finance advances                                                                          129                93   
Non-current receivables and other assets                                                         345               303   
Defined benefit asset                                                                            211               190   
Deferred taxation                                                                                256               205   
Current assets                                                                                11 643            10 686   
Inventories                                                                                    1 152             2 920   
Trade and other receivables, including derivatives                                             4 004             5 222   
Assets classified as held-for-sale                                                             4 996             1 149   
Taxation receivable                                                                                –                54   
Cash and cash equivalents                                                                      1 491             1 341   
Total assets                                                                                  14 447            15 182   
Equity and liabilities                                                                                                   
Total equity                                                                                   2 736             3 762   
Non-current liabilities                                                                        2 714             3 260   
Loans                                                                                          2 675             3 191   
Provisions                                                                                         5                29   
Deferred taxation                                                                                 34                40   
Current liabilities                                                                            8 997             8 160   
Loans                                                                                          1 003               634   
Bank overdraft                                                                                 1 285             1 050   
Trade and other payables, including derivatives                                                4 504             5 638   
Provisions                                                                                         2                51   
Liabilities classified as held-for-sale                                                        2 058               608   
Taxation payable                                                                                 145               179   
Total equity and liabilities                                                                  14 447            15 182   
Net asset value per share (cents)                                                                845             1 080   


SUMMARISED CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY

Attributable to Altron equity holders

                                                Share                                                          Non-
                                          capital and   Treasury                Retained                controlling     Total
R millions                                    premium     shares    Reserves    earnings      Total       interests    equity
Balance at 28 February 2014 (Audited)           2 427      (299)     (1 852)       3 980      4 256             258     4 514
Total comprehensive income for the year         
Loss for the year                                   –          –           –         (9)        (9)            (51)      (60)
Other comprehensive income         
Foreign currency translation differences         
in respect of foreign operations                    –          –         (10)          –       (10)               –      (10)
Realisation of foreign currency         
translation reserve on disposal                     –          –          (3)          –        (3)               –       (3)
Effective portion of changes in the fair         
value of cash flow hedges                           –          –          (3)          –        (3)               –       (3)
Total other comprehensive income                    –          –         (16)          –       (16)               –      (16)
Total comprehensive income for the year             –          –         (16)         (9)      (25)            (51)      (76)
Transactions with owners, recorded         
directly in equity         
Contributions by and distributions to         
owners         
Issue of share capital                             17          –        (17)           –          –               –        –
Dividends to equity holders                         –          –           –       (263)      (263)            (13)    (276)
Share-based payment transactions                    –          –          34           –         34                1      35
Total contributions by and distributions         
to owners                                          17          –          17       (263)      (229)             (12)   (241)
Changes in ownership interests in         
subsidiaries         
Buy-back of non-controlling interest              291          –        (393)          –      (102)            (356)   (458)
Introduction of non-controlling interest            –          –        (261)          –      (261)              284      23
Total changes in ownership interests in         
subsidiaries                                      291          –        (654)          –      (363)             (72)   (435)
Total transactions with owners                    308          –        (637)      (263)      (592)             (84)   (676)
Balance at 28 February 2015 (Audited)           2 735      (299)      (2 505)      3 708      3 639              123   3 762
Total comprehensive income for the year         
Loss for the year                                   –          –            –      (873)      (873)            (227) (1 100)
Other comprehensive income         
Foreign currency translation differences         
in respect of foreign operations                    –          –          102          –        102              (2)     100
Realisation of foreign currency         
translation reserve on disposal of         
subsidiary                                          –          –         (13)          –       (13)                –    (13)
Remeasurement on net defined benefit         
asset                                               –          –           60          –         60                –      60
Effective portion of changes in the fair         
value of cash flow hedges                           –          –            4          –          4                –       4
Total other comprehensive income                    –          –          153          –        153              (2)     151
Total comprehensive income for the year             –          –          153      (873)      (720)            (229)   (949)
Transactions with owners, recorded         
directly in equity         
Contributions by and distributions to         
owners         
Dividends to equity holders                         –          –            –      (104)      (104)              (3)   (107)
Share-based payment transactions                    –          –           32          –         32                1      33
Total contributions by and distributions         
to owners                                           –          –           32      (104)       (72)              (2)    (74)
Changes in ownership interests in       
subsidiaries       
Buy-back of non-controlling interest                –          –            –          –          –              (3)     (3)
Total changes in ownership interests in         
subsidiaries                                        –          –            –          –          –              (3)     (3)
Total transactions with owners                      –          –           32      (104)       (72)              (5)    (77)
Balance at 29 February 2016 (Audited)           2 735      (299)      (2 320)      2 731      2 847            (111)   2 736

SUMMARISED CONSOLIDATED STATEMENT
OF CASH FLOWS

                                                                2016        2015
R millions                                                 (Audited)   (Audited)

Cash flows from operating activities                           1 253       1 169   
Cash generated by operations                                     528       1 703   
Net finance expense paid                                       (459)       (335)   
Changes in working capital                                     1 443         330   
Taxation paid                                                  (152)       (253)   
Cash available from operating activities                       1 360       1 445   
Dividends paid, including to non-controlling interests         (107)       (276)   
Cash flows from investing activities                         (1 121)     (1 018)   
Cash flows from financing activities                           (117)         453   
Net increase in cash and cash equivalents                         15         604   
Net cash and cash equivalents at the beginning of the year       291       (314)   
Effect of exchange rate fluctuations on cash held                 20           1   
Cash classified as held-for-sale                               (120)           –   
Net cash and cash equivalents at the end of the year             206         291   


NOTES

Basis of preparation
The preliminary audited summarised consolidated financial statements are prepared in accordance with the requirements
of the JSE Limited Listings Requirements for preliminary reports, and the requirements of the Companies
Act applicable to summary financial statements. The Listings Requirements require preliminary reports to be
prepared in accordance with the framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards
Council and to also, as a minimum, contain the information required by IAS 34 – Interim Financial Reporting.

The accounting policies applied in the preparation of the consolidated financial statements from which the
preliminary summarised financial statements were derived are in terms of International Financial Reporting
Standards and are consistent with those accounting policies applied in the preparation of the previous consolidated
financial statements.

This report was compiled under the supervision of Mr Alex Smith CA, Chief Financial Officer.

Report of the independent auditors
These preliminary summarised financial statements for the year ended 29 February 2016 have been audited by KPMG Inc., 
the independent auditors, who expressed an unmodified opinion thereon. The auditor also expressed an unmodified opinion
on the annual consolidated financial statements from which these preliminary summarised consolidated financial
statements were derived. A copy of the auditor’s report on the preliminary summarised consolidated financial
statements and of the auditor’s report on the annual consolidated financial statements are available for inspection
at the company’s registered office, together with the financial statements identified in the respective auditor’s report.

The auditor's 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 auditor's
engagement they should obtain a copy of the auditor's report together with the accompanying financial information
from the issuer's registered office.

                                                                                              2016        2015*
R millions                                                                                 (Audited)  (Audited)
   
Headline earnings per share from continuing operations (cents)                        (8%)       126        137   
Headline loss per share from discontinued operations (cents)                          530%     (271)       (43)   

Headline (loss)/earnings per share from total operations (cents)                    (254%)     (145)         94   
Normalised headline (loss)/earnings per share from total   
operations (cents)                                                                  (176%)      (76)        100   
Diluted headline (loss)/earnings per share from total   
operations (cents)                                                                  (254%)     (143)         93   
Normalised diluted headline (loss)/earnings per share from total   
operations (cents)                                                                  (176%)      (75)         99   

1. Capital items                                                                                                  
CONTINUING OPERATIONS                                                                                             
Net loss on disposal of property, plant and equipment                                            (5)        (1)   
Impairment of goodwill                                                                          (51)       (15)   
Impairment of intangible assets                                                                 (22)       (22)   
Profit on disposal of subsidiary and businesses                                                    9         61   
                                                                                                (69)         23   
DISCONTINUED OPERATIONS                                                                                           
Profit on disposal of discontinued operations                                                    309          -   
Impairment of property, plant and equipment                                                    (408)       (18)   
Impairment of intangible assets                                                                (115)       (78)   
Net profit on disposal of property, plant and equipment                                            5          1   
Impairment of equity-accounted investment                                                       (51)          –   
Impairment of goodwill                                                                         (179)      (328)   
                                                                                               (439)      (423)   
TOTAL                                                                                          (508)      (400)   


Events and circumstances leading to the recognition of significant
impairment losses

Goodwill
The total goodwill impairment resulted from external market conditions putting sustained pressure on
operating results and a corresponding decline in management's expectations of forecast future cash flows
due to the lower than anticipated activity levels without an envisaged material improvement in the short to
medium term.

The carrying amount of the Powertech System Integrators, Powertech Quadpro, Alliance and ISIS France
cash-generating units were determined to be higher than their recoverable amounts, based on value in use.
Impairment losses of R100 million, R9 million, R49 million and R2 million respectively were recognised
and allocated to goodwill. The impairment of R109 million is included in the Powertech System Integrators
operating segment and the R49 million impairment is included in the Universal Systems operating segment.

The carrying amount of the Powertech Transformers cash-generating unit was determined to be higher than
its recoverable amount, based on fair value less cost to sell. An impairment loss of R69 million was recognised
and allocated to goodwill and is included in the Powertech Transformers operating segment. Fair value less
cost to sell has been determined with reference to indicative offers received from prospective buyers.

Other intangible assets
The R137 million impairment of development costs capitalised related to insufficient forecast contributory
cash flows of the underlying products to support the carrying values of these intangible assets.

Impairment of property, plant and equipment
The R408 million impairment of property, plant and equipment costs related to insufficient forecast
contributory cash flows of the underlying products to support the carrying values of these assets. Of the
R408 million impairment of property, plant and equipment, R60 million related to the Altech Node and Altech Autopage
businesses.

The balance of R348 million resulted from an assessment of the carrying value of the assets compared to
the fair value less costs to sell for the Aberdare Cables, Powertech Transformers, Powertech Batteries and
Altech Multimedia businesses. Fair value less cost to sell has been determined with reference to indicative
offers received from prospective buyers.

Impairment of investment in equity-accounted associate
During the year, the equity accounted investment in Battech of R51 million was fully impaired following an
assessment of the current year operating losses and the prospects for a recovery in the business.

                                                                                                         2 016       2 015
R millions                                                                                           (Audited)   (Audited)

2. Reconciliation between attributable earnings
   and headline earnings                                                
Attributable to Altron equity holders                                                                    (873)         (9)   
Capital items – gross                                                                                      508         400   
Tax effect of capital items                                                                               (52)         (9)   
Non-controlling interests in capital items                                                                (71)        (70)   
Headline earnings                                                                                        (488)         312   
3. Reconciliation between attributable earnings
   and headline earnings from continuing
   operations                  
Attributable to Altron equity holders                                                                      354         461   
Capital items – gross                                                                                       69        (23)   
Tax effect of capital items                                                                                  2          17   
Headline earnings                                                                                          425         455   


4. Reconcilation between attributable earnings
and headline earnings from discontinued
operations
Attributable to Altron equity holders                                                                  (1 227)      (470)   
Capital items – gross                                                                                      439        423   
Tax effect of capital items                                                                               (54)       (26)   
Non-controlling interests in capital items                                                                (71)       (70)   
Headline earnings                                                                                        (913)      (143)  

5. Reconciliation between headline earnings and
   normalised headline earnings                                                                                                                           
Normalised headline earnings have been presented to demonstrate the
impact of material once off costs, 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                                                                                       (488)        312   
Restructuring costs                                                                                       129         33   
Inventory write-off                                                                                       108          -   
Impairment of receivables                                                                                  50          –   
Lease cancellation                                                                                          6          –   
Tax effect of adjustments                                                                                (30)        (8)   
Non-controlling interests in adjustments                                                                 (30)        (5)   
                                                                                                        (255)        332   


6. Reconciliation between attributable earnings and diluted earnings
   There were no reconciling items between attributable earnings and diluted earnings

7. Acquisition of subsidiaries and business
   Acquisition of Pinpoint Communications in Australia
   Effective 1 March 2015, Altech Netstar acquired Pinpoint Communications in Australia, a provider of fleet
   and asset management solutions, for a maximum purchase price of Australian Dollars 8.3 million, of which
   Australian Dollars 3.2 million was paid upfront and the remainder is payable on the achievement of certain
   earn-out targets over the next two years.

   The acquisition contributed revenue of R59 million and a net profit after tax of R7 million to the group.

   Acquisition of Health-Soft
   On 1 March 2015, Med-e-Mass, part of the Altron TMT group of companies, acquired Health-Soft, a provider
   of technology services to the South African healthcare industry, for a purchase price not
   exceeding R10 million, of which R6.5 million was paid upfront and the remainder is payable on the achievement
   of certain earn-out targets over the next one and a half years.

   The acquisition contributed revenue of R2 million and a net loss after tax of R1 million to the group.

   Acquisition of Inter-Active Technologies
   Effective 3 March 2015, the Competition Tribunal approved the acquisition by Bytes People Solutions, part
   of the Altron TMT group of companies, of Inter-Active Technologies, a specialist customer interaction
   management business for a nominal consideration.
   
   The acquisition contributed revenue of R201 million and a net profit after tax of R7 million to the group.
   
   Delter IT Services
   Effective 1 December 2015, Altech Nupay, part of the Altron TMT group of companies, acquired Delter IT
   Services, a microlending software development company which provides client management systems to
   microlenders, for a purchase price of R25 million.
   
   The acquisition contributed revenue of R6 million and a net profit after tax of R1 million to the group. If the
   acquisition had occurred on 1 March 2015, group revenue would have increased by R23 million.
   
   Altech Netstar Traffic
   Effective 1 July 2015, Altech Netstar acquired the remaining 50% of Altech Netstar Traffic from its joint
   venture partner, Inrix UK Ltd, for R3 million.
   
   These amounts as indicated above have been calculated using the group's accounting policies.

                                                                    Recognised       Fair value         Carrying
                                                                        values      adjustments           amount
The acquired balances at the effective date were as follows:        R millions       R millions       R millions
 
Property, plant and equipment                                               12                -               12
Intangible assets on acquisition                                             –               35               35   
Deferred tax                                                                 1             (10)              (9)   
Inventories                                                                  6                –                6   
Trade and other receivables                                                 22                –               22   
Trade and other payables                                                  (36)                –             (36)   
Net loans                                                                 (24)                –             (24)   
Cash and cash equivalents                                                    9                –                9   
Provisions                                                                 (9)                –              (9)   
Total net assets on acquisition                                           (19)               25                6   
Attributable to non-controlling interests                                                                      3   
Goodwill on acquisition                                                                                       88   
Total purchase consideration                                                                                  97   
Less: Cash and cash equivalents in subsidiaries and          
businesses acquired                                                                                          (9)             
Less: Deferred purchase consideration                                                                       (33)   
Net cash outflow on acquisitions                                                                              55   


8. Disposal of subsidiaries and businesses

   Disposal of PaperGenie, a division of Altron TMT

   PaperGenie was sold effective 1 April 2015 for R18 million being the carrying value of all PaperGenie's tangible
   net assets and goodwill as at the effective date. Accordingly, no accounting profit or loss was recognised on
   the transaction. The operation did not constitute a discontinued operation.

   Disposal of Kimberly branch of Bytes Document Solutions, a division of Altron TMT
   
   The Kimberly branch was sold effective 29 February 2016 for R9 million realising a profit on the disposal of
   the same amount. The operation did not constitute a discontinued operation.
   
   Disposal of 100% interest in SetOne Italy
   
   Effective 2 November 2015, SetOne Germany disposed of 100% of its equity interest in SetOne Italy for Euro
   1 giving rise to a loss on disposal of R1 million. This operation formed part of the Altech Multimedia division,
   which has been disclosed as a discontinued operation.
   
   Disposal of 100% interest in UEC Technologies Private Limited
   
   During February 2016, there was a management buyout of UEC Technologies Private Limited for a nominal
   consideration, giving rise to a loss on disposal of R2 million. This operation formed part of the Altech
   Multimedia division, which has been disclosed as a discontinued operation.
   
   Disposal of 100% interest in Dynamic Battery Services in the UK
   
   Effective 1 March 2015, Powertech Batteries International Holdings disposed of 100% of its equity interest
   in Dynamic Batteries Services for R31 million. A loss of R11 million was recognised on the disposal. This
   operation formed part of the Powertech group, which has been disclosed as a discontinued operation.

Net assets of the above operations disposed:

                                                                Rm   
Non-current assets                                               4   
Current assets                                                  93   
Current liabilities                                           (21)   
Disposal value                                                  76   
Loss on disposal of subsidiaries and businesses                (5)   
Proceeds receivable                                            (9)   
Cash and cash equivalents disposed                             (7)   
Release of foreign currency translation surplus on disposal   (13)   
Proceeds received on disposal                                   42   

   
   Disposal of Altech Autopage
   The Altech Autopage disposal was effective in February 2016. As part of the disposal, Altech Autopage disposed of its
   business to Vodacom, MTN and Cell C, for approximately R1.3 billion. Approximately R1 billion of the proceeds
   was received subsequent to the balance sheet date with the balance receivable in June 2016. The disposal
   gave rise to a profit of R322 million. Altech Autopage has been classified as a discontinued operation.

Net assets of Autopage disposed:

                                                               Rm   
Non-current assets                                          1 141   
Current liabilities                                         (158)   
Disposal value                                                983   
Proceeds receivable                                       (1 305)   
Profit on disposal of Autopage                                322   
Proceeds received on disposal                                   –   


9. Disposal of equity accounted investment
   Disposal of interest in Alcon Marepha
   During February 2016, Aberdare Cables disposed of its 49.9% equity interest in Alcon Marepha for R19 million
   giving rise to a profit on disposal of R1 million. This investment formed part of the Powertech group, which
   has been disclosed as a discontinued operation.

                                                              Rm   
Carrying amount of equity accounted investment disposed       18   
Profit on disposal of equity accounted investment              1   
Proceeds                                                      19   
Proceeds receivable                                         (12)   
Proceeds received on disposal                                  7   


10.Discontinued operations
   At the interim reporting date, Altech Autopage, Altech Node and Powertech Transformers were classified as
   discontinued operations and assets held-for-sale.

   Since that date, the decision was taken to dispose of the remainder of the Powertech group as well as the
   Altech Multimedia group and, as a result, all of these businesses have been classified as discontinued
   operations and assets held-for-sale.

   Management has committed to a plan to sell these operations in the 2017 financial year, following a
   strategic decision to focus the group in certain areas where the board believes the group has the resources,
   competence and skills to leverage a competitive advantage.

                                                       2016          2015
Net assets of disposal group held-for-sale:       R millions   R millions

Assets classified as held-for-sale                     4 996        1 149   
Non-current assets                                     1 320        1 051   
Current assets                                         3 676           98   
Liabilities classified as held-for-sale              (2 058)        (608)   
Non-current liabilities                                 (56)            –   
Current liabilities                                  (2 002)        (608)   
                                                        2016         2015   
Cash flows utilised in discontinued operations:   R millions   R millions   
Net cash generated from operating activities             424          341   
Net cash utilised in investing activities              (509)        (385)   
Net cash utilised in financing activities               (75)          (3)   
Net cash flow for the year                             (160)         (47)   


RE-PRESENTED COMPARATIVE INFORMATION

The Powertech and Multimedia groups have been classified as discontinued operations in
the current financial year. The comparative consolidated statement of comprehensive income has been
re-presented.

11.Post-balance sheet events
   11.1  Altech Autopage
         Post financial year-end, Altech Autopage re-acquired certain handset receivables from Nedbank for
         R464 million. As part of the Altech Autopage disposal, R210 million of handset receivables was disposed of
         to MTN.

         A further R83 million of handset receivables was sold to Glocell on deferred payment terms, while
         the balance of the receivables will be collected over their remaining term. A loan of R160 million was
         entered into in order to fund the acquisition and will be repaid out of the collections.

   11.2    IST Holdings Menlyn building
         Post financial year-end, IST Holdings entered into a sale agreement in respect of an office building in
         Menlyn, with expected proceeds of R107 million.

12.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.

13.Financial instruments at fair value
   The group measures a preference share investment, its derivative foreign exchange contracts used for
   hedging and contingent purchase considerations at fair value.

   The preference share investment is disclosed as a Level 3 financial asset in terms of the fair value hierarchy
   with fair valuation inputs which are not based on observable market data (unobservable inputs). A discounted
   cash flow valuation model is used to determine fair value.

   The contingent purchase considerations are disclosed as Level 3 financial liabilities in terms of the fair value
   hierarchy with fair valuation inputs which are not based on observable market data (unobservable inputs).
   A discounted cash flow valuation model is used to determine fair value.

   The derivative foreign exchange contracts used for hedging are disclosed as Level 2 financial instruments
   in terms of the fair value hierarchy with fair valuation inputs (other than quoted prices) that are observable
   either directly (i.e as prices) or indirectly (i.e derived from prices). A market comparison technique is used to
   determine fair value.

   There were no transfers between Levels 1, 2 or 3 of the fair value hierarchy for the year ended 29 February 2016.

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.

                                                           Revenue                    EBITDA
                                       
                                                     Feb      Feb     Growth     Feb     Feb     Growth
R millions                                          2016     2015    Cur/Pyr    2016    2015    Cur/Pyr

Altech Autopage Group*                             5 188    5 650       (8%)   (209)     137     (253%)   
Altech Multimedia Group**                          1 030    1 821      (43%)   (160)      61     (362%)   
Altech Netstar Group                               1 161    1 121         4%     252     310      (19%)   
Systems Integration Group                          1 497    1 678      (11%)      65     132      (51%)   
Radio Holdings Group                                 953      726        31%      75      66        14%   
Other Altech Segments                                419      188       123%      32      36      (11%)   
Altech Group                                      10 248   11 184       (8%)      55     742      (93%)   
Bytes Technology Group UK
Software                                           3 554    2 644        34%     132     106        25%   
Bytes Document Solutions
Group                                              2 117    2 212       (4%)      84     115      (27%)   
Bytes Managed Solutions                            1 528    1 520         1%     135     136       (1%)   
Bytes Secure Transaction
Solutions                                            837      697        20%     192     158        22%   
Bytes Universal Systems                              703      856      (18%)      73     107      (32%)   
Other Bytes Segments                                 741      399        86%      54     (6)         nm   
Bytes Group                                        9 480    8 328        14%     670     616         9%   
Powertech Cables Group                             4 370    4 973      (12%)     (3)     202     (101%)   
Powertech Transformers Group                         957    1 330      (28%)   (146)    (66)     (121%)   
Powertech Battery Group                              984      945         4%      74      76       (3%)   
Powertech System Integrators                         770      820       (6%)     (5)       3     (267%)   
Other Powertech Segments                             104      220      (53%)    (76)       5         nm   
Powertech Group**                                  7 185    8 288      (13%)   (156)     220     (171%)   
Corporate, consolidation and
financial services                                 (321)    (177)      (81%)   (193)   (195)         1%   
Altron Group                                      26 592   27 623       (4%)     376   1 383      (73%)   


* The majority of this segment formed part of the discontinued operations.
** These segments formed part of the discontinued operations.

                                                                                       2016       2015   
Segment EBITDA can be reconciled to group operating profit before capital items
as follows:                   
EBITDA                                                                                  376      1 383   
Reconciling items:                                                                                       
Depreciation                                                                          (285)      (377)   
Amortisation                                                                          (165)      (179)   
Group operating (loss)/profit before capital items                                     (74)        827   


OPERATIONAL CONTRIBUTION FROM TOTAL
OPERATIONS

                                       %         2016               2015*
R millions                         change   (Audited)       %   (Audited)      %

Revenue                                                                      
Altech                                (8)      10 248      38      11 184     41   
Bytes                                  14       9 480      36       8 328     30   
Powertech                            (13)       7 185      27       8 288     30   
Corporate and eliminations                      (321)     (1)       (177)    (1)   
Altron                                (4)      26 592     100      27 623    100   
Normalised EBITDA *                                                                
Altech                               (75)         187      28         752     53   
Bytes                                  10         676     101         616     44   
Powertech                           (138)        (92)    (14)         243     17   
Corporate and eliminations                      (102)    (15)       (195)   (14)   
Altron                               (53)         669     100       1 416    100   
Normalised headline earnings **                                                    
Altech                              (326)       (203)      80          90     27   
Bytes                                  13         440   (173)         391    118   
Powertech                              nm       (289)     113           4      1   
Corporate and eliminations                      (203)      80       (153)   (46)   
Altron                              (177)       (255)     100         332    100   


 * Normalised EBITDA is stated for total operations before capital items and non-operational once off costs relating to inventory
   written-off, impairment of receivables, lease cancellations as well as certain restructuring costs
** Normalised headline earnings is stated for total operations and before non-operational once off costs relating to inventory
   written-off, impairment of receivables, lease cancellations as well as certain restructuring costs

SUPPLEMENTARY INFORMATION (TOTAL
OPERATIONS)

                                                                2016       2015*
R millions                                                 (Audited)   (Audited)

Depreciation                                                     285         377   
Amortisation                                                     165         179   
Net foreign exchange (profit)/losses                            (41)          64   
Cash flow movements                                                                
Capital expenditure (including intangibles)                      468         650   
Net additions to contract fulfilment costs                       383         148   
Additions to contract fulfilment costs                           634         486   
Net expensing of contract fulfilment costs during the year     (167)       (327)   
Terminations of contract fulfilment costs                       (84)        (11)   
Capital commitments                                               55          71   
Lease commitments                                                604         927   
Payable within the next 12 months:                               241         244   
Payable thereafter:                                              363         683   
Weighted average number of shares (millions)                     337         333   
Diluted average number of shares (millions)                      341         337   
Shares in issue at the end of the year (millions)                337         337   
Ratios                                                                             
EBITDA margin                                                   1,4%        5,0%   
Normalised EBITDA margin                                        2,5%        5,1%   
ROCE                                                          (1,2%)       10,9%   
ROE                                                          (19,8%)        9,3%   
ROA                                                           (0,6%)        6,4%   
RONA                                                          (0,7%)        9,9%   
Current ratio                                                  1,3:1       1,3:1   
Acid test ratio                                                1,2:1         1:1     

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.

MESSAGE TO SHAREHOLDERS 

The Altron annual results for the year ended 29 February 2016 are reported in an integrated manner in
accordance with the G4 Guidelines prepared by the Global Reporting Initiative (GRI) and the Integrated
Reporting <IR> Framework (Version 1) developed by the International Integrated Reporting Council
(IIRC), 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.

While Altron has made progress on its stated aim of repositioning the group in the Telecommunications,
Multimedia and Technology ("TMT") space, this process is taking longer than anticipated and in the
meantime the financial results have been materially impacted by difficult trading conditions as well as
the process itself. In order to provide shareholders with a clearer understanding of the impact of the
discontinued operations on the group, the income statement for the current year has been split between
continuing and discontinued operations. The continuing operations comprise the information
technology and telecommunications businesses of the group, while discontinued operations include the
whole of Powertech, Altech Autopage, Altech Node and Altech Multimedia in accordance with the
requirements of IFRS.

The various initiatives and actions taken by management in order to achieve its revised strategy have
been well documented in various SENS announcements released since April 2015.

On a more positive note, the Bytes operations delivered pleasing results, performing ahead of
expectations. However, these results were impacted by a decline in profitability in the Altech Netstar
operation as well as by certain restructuring costs associated with right-sizing the corporate overheads.

Overall trading conditions remained extremely challenging, which negatively affected the group's
performance especially in the discontinued operations. In addition to the four areas previously
identified as having a material impact on Altron's results, Aberdare Cables also experienced a marked
decline in its results. All of the manufacturing operations, with the exception of Powertech Batteries,
experienced very low demand levels as well as depressed margins, leading to substantial losses.

From a total operations perspective, Altron's revenue for the year under review declined by 4% to
R26.6 billion and earnings before interest, tax, depreciation and amortisation (EBITDA) reduced by
73% to R376 million. Basic earnings per share (EPS) reduced to a loss of 259 cents from the loss of 3
cents reported in the prior year. Headline earnings per share (HEPS) declined to a loss of 145 cents
from the profit of 94 cents posted in the prior year.

As a result of the difficult trading conditions being experienced by the Altron group, and the current level
of debt, the main focus is to strengthen the financial position and to reduce debt. As a result, the
directors have decided not to declare a dividend for the financial year ended 29 February 2016.

Financial overview

Income

Continuing operations

Revenue increased by 20% to R14.4 billion from R12.0 billion in the prior year, while EBITDA declined
by 11% from R993 million to R888 million. The EBITDA margin declined to 6.2% compared to the prior
year's 8.3%. While margin decline was evident in a number of operations, this was magnified by the
inclusion of certain once-off charges and, with the exception of Powertech, all corporate overheads in
continuing operations,    which will be reduced by approximately R100 million for the year ahead.
Depreciation and amortisation charges increased from R166 million to R186 million, resulting in
operating profit decreasing by 15%. Operating margins decreased from 6.9% to 4.9%.

Capital items have increased from the prior year primarily due to the impairment of R51 million of
goodwill and R22 million of intangible assets in the Bytes Universal Systems business unit on
acquisitions made in previous periods. This resulted in a profit of R633 million from operating activities,
significantly lower than last year's profit of R850 million. Net finance costs have increased from R133
million to R161 million as average borrowings remain high and interest rates have increased over the
prior year.

The effective tax rate of 24% reflects the benefits of lower tax rates in some of the international
operations as well as some utilisation of assessed losses. These factors resulted in a profit from
continuing operations for the period of R360 million compared to a profit of R496 million during the prior
year.

Discontinued operations

The results of the discontinued operations showed a significant decline from the previous year with
revenue declining by 22% on reduced demand, and EBITDA dropping from a profit of R390 million to a
loss of R512 million. This reflects the significant challenges which each of these operations faced
during the year under review as well as the costs of various initiatives implemented to reduce the
losses being incurred.

The substantial capital items are related to the closure of the Altech Node business and the impairment
of the various business units, now classified as held-for-sale, down to fair value. Impairments were
taken on Powertech Transformers during the first half, while Altron also had to take impairments in
respect of Aberdare's local operations, Powertech Batteries and the investment in the associate
company, Battech. Net finance costs have also increased significantly, primarily due to an increase in
the factoring costs associated with the Altech Autopage handset receivables book, as well as the
increase in interest rates.

These factors resulted in a loss from discontinued operations of R1.5 billion compared to a loss of R556
million in the prior year.

The Altron group believes there is a high probability of disposing of these operations in the 2016/2017 financial year.

Cash management

Total operations

Cash generated by operations of R528 million was 69% down on the prior year, while R1.4 billion was
released from working capital, which represented a significant improvement on the R330 million
released in the prior year. The significant increase in the net finance expense was more than offset by
reduced tax payments as well as a significantly lower dividend. These factors resulted in cash flows
from operating activities being marginally higher than the previous year.

Investing activities remained high at R1.1 billion. Capital expenditure relating to property, plant and
equipment as well as intangible assets amounted to R469 million, which was 28% lower than the prior
year. However, the investment in contract fulfilment costs increased to R634 million as Altron
continued to focus on preserving its subscriber bases at Altech Autopage, and to a lesser extent, Altech
Netstar. This is expected to reduce significantly following the disposal of Altech Autopage.

The R117 million of cash utilised in financing activities is predominantly due to the repayment of the
amortising loan funding of R125 million which occurred in March 2015 – the August payment was
deferred for six months and has been settled post the balance sheet date.

Given the current cash flow position of the group, the focus remains on reducing the amount of debt.
To this end, the proceeds from the disposal of Altech Autopage and Aberdare Cables, as well as the
other potential disposals, will be used to reduce the group's debt.

SUBSIDIARY REVIEW

Subsidiary income and growth

Continuing operations

Telecommunications

Altech Netstar reported a marginal increase in revenue but posted a 19% decline in EBITDA. The
decline in profitability primarily arose as a result of the increased cost of acquiring subscribers – both in
terms of commission, and in the cost of funding units. The stolen vehicle recovery (SVR) side of the
business contracted due to increased churn as consumers came under pressure.                 However, fleet
management continues to see favourable growth as a result of several contract wins and now
represents some 35% of the business. Pinpoint Communications, the Australian acquisition concluded
in March 2015, performed in line with expectations and has facilitated access to new fleet and asset
management markets in Australia.

Bytes Systems Integration saw a marginal decline in revenue, but a significant reduction in EBITDA.
Although the international side of the business performed well off the back of successful projects in
Africa, the local business declined with the non-recurrence of some large sales during the prior period
and a reduction in gross margins, particularly in the hardware business. A cost reduction process has
been initiated in the local operation and much focus is on converting a healthy order pipeline, despite
continual delays in the adjudication and awarding of tenders.

Altech Radio Holdings performed exceptionally well, growing revenue by 31% and EBITDA by 14%,
primarily as a result of the Gauteng Broadband Network project which is being implemented on
schedule with the scope being enhanced in the process. Its subsidiaries, Altech Radio Distributors and
Altech Fleetcall, are finding conditions more challenging in the current economic climate.

Multimedia

Arrow Altech Distribution is performing exceptionally well. While revenue is up 13%, margins have
remained stable and EBITDA is also up 13%. The business has successfully increased its market
penetration, which has also reduced its dependency on intra-group business.

Technology (IT)

The Technology division had a good year with a 14% uplift in revenue, with much of the growth coming
from the UK operations, although Bytes People Solutions and Bytes Secure Transaction Solutions each
achieved good growth in the domestic market. EBITDA has increased by 9%, with the EBITDA margin
moving from 7.4% to 7.1%. The reduced margin is primarily due to margin reductions at Bytes
Universal Systems and Bytes People Solutions and an increased contribution from the Bytes UK
operations.

The South African operations increased revenue by 3% but maintained EBITDA, resulting in the
EBITDA margins moving from 9.7% to 9.4%. The international operations grew revenue by 36% and
EBITDA by 29% - assisted by the depreciation of the Rand, but also growing in local currency terms.

Bytes UK again produced excellent results. The local currency results exceeded expectations as the
business expanded its higher margin operations. The Bytes UK operations have seen a 36% increase
in revenue and a 32% improvement in EBITDA, although approximately 15% of this growth can be
attributed to the depreciation of the Rand against the British pound.

Bytes Document Solutions is performing in line with expectations with its revenue and EBITDA decline
affected by the sale of the LaserCom business in the prior year and margin pressures from the
depreciation of the Rand. The Xerox business is performing better than in the prior year, however the
returns at NOR Paper remain poor and Altron has taken a decision to sell the inventory to a third party
and close this business.

Bytes Managed Solutions performed well despite a reduction in revenue and EBITDA, which was
expected given the total technology refresh that occurred in the prior year at one of its major
customers. The business was however affected by foreign exchange losses and the disposal of the
retail ATM business in August 2014, and faces some challenges in the coming year following certain
contract losses.

Bytes Secure Transaction Solutions, which includes the businesses of Bytes Healthcare Solutions,
Altech NuPay and Altech Card Solutions, continues to perform exceptionally well. The top performer
was Altech NuPay which achieved good revenue and profit growth, assisted by the Delter IT acquisition
in December 2015.

Bytes Universal Systems, which includes the operations of Alliance, Altech ISIS and the old Bytes
Universal Systems, experienced a decline in performance, though much of this was expected given the
end of the SAPS contract earlier this year. However, the business finished the year strongly with an
encouraging pipeline of prospects.

Revenue doubled at Bytes People Solutions and EBITDA also increased substantially following the
acquisition of Inter-Active Technologies, a call centre business. While this has reduced margins in the
operation, it has resulted in the achievement of critical mass in the call centre business, opening up
new opportunities.

Discontinued operations

Telecommunications

Altech Autopage experienced an extremely difficult last six months as it protected its subscriber bases
ahead of the disposal to the network operators in the face of on-going delays. Its results have also
been affected by some of the costs of disposing of the business.

The Altech Node business was closed on 31 October 2015, with all closure costs fully accounted for in
the 2015/2016 financial year.

Multimedia

Altech Multimedia was significantly impacted by reduced order intake in its core set-top box business in
Africa as a result of delays in the roll-out of various African DTT programs. Although demand in South
Africa remains at reasonable levels, the reduction in orders from Africa and the loss of the Samsung TV
assembly contract resulted in under recoveries in the factory. This also resulted in a significant
inventory obsolescence provision in the current reporting period. Action has been taken to right-size
the business with the headcount reducing by approximately 60% and the closure of the international
operations. Factory overheads have also been significantly reduced, halving the break-even point from
a volume perspective. The pipeline is more encouraging for the 2016/2017 financial year which will also 
benefit from the reduced cost base.

Powertech

The 2015/2016 financial year has seen Powertech revenue decreasing by 13% with a substantial 171%
decrease in EBITDA levels compared to the prior year, with EBITDA margins slipping from 2.7% to
negative 2.2%. The business is reporting an operating loss of R269 million.

Overall the Powertech Cables group has seen a 12% decrease in revenue, with the local operations
down 19% and the international operations up 4%, assisted by the depreciation of the Rand against the
Euro. At an EBITDA level, margin has slipped from 4.2% to 0%, decreasing EBITDA to a loss of R3
million. The decline in revenue in the local operations is driven by weak demand in both the informal
(primarily building and construction) and formal (Eskom, municipalities and other large power users)
sectors and a resultant renewal of margin pressure. The international operations had a good year,
benefitting from increased infrastructure spend, particularly in Spain.

At Powertech Transformers, the continued absence of orders from Eskom for large power transformers
led to an unfavourable product mix and a significant under recovery at the Pretoria-West factory which
has been significantly downscaled. The distribution transformer side of the business also had a difficult
year, but has seen a recent improvement in order flow from both renewable projects and export
markets.

Powertech Batteries performed satisfactorily given that margins were under pressure due to an
increasing Rand lead price as well as on-going competition from imports despite the weak Rand and an
increase in import duties.

Powertech System Integrators' performance continues to disappoint as its reliance on capital projects
continues to negatively impact performance. Aggressive expansion into Africa is required to improve its
outlook. Powertech Quadpro, the turn-key substation business, has also seen very low order intake
this year with intense competition in both its local and targeted African markets.

Human capital

Altron has been rated as a Level 2 Broad-Based Black Economic Empowerment contributor for the
2015/2016 financial year while Altron TMT will remain a Level 2 contributor under the ICT Charter. This
can be attributed to a well-executed strategic intent to transcend from a compliance driven process to a
more transformative process.

Training of Altron group employees remains a priority and is managed through the Bill Venter Academy.

Sustainability

Altron's sustainable business strategy remains the driving force in terms of achieving its targets and
objectives. The four key value drivers for sustainable development remain Financial Capital, Human
Capital, Products and Services, and External Relationships.

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.

Directorate

On 31 July 2015, Mr Craig Venter resigned as an executive director of Altron after 27 years of service
to the Altron group, 18 of which had been as an executive director of Altron.

Shareholders are referred to the SENS announcement published by Altron on 12 November 2015
advising that with effect from 12 November 2015, Mr Ronnie Ntuli had resigned from the board in order
to focus on his executive responsibilities at the Thelo Group (Pty) Limited.

On 29 February 2016, Mr Rob Abraham retired as an executive director and employee of the Altron
group after 18 years of service.

The board wishes to express its gratitude to Messrs Venter, Ntuli and Abraham for their many years of
devoted service and commitment towards the Altron group.

Shareholders are further referred to the SENS announcement published by Altron on 29 April 2016
advising shareholders that the Altron group continued to transition from a family managed business to
an independent management structure. It is envisaged that this transition will be finalised by the end of
the 2016/2017 financial year and shareholders will be kept updated on developments.

Outlook

The Altron group is repositioning itself into a TMT focused business. This process remains the key
initiative for the 2016/2017 financial year as Altron strives to exit from its discontinued operations, which
will enable the Altron group to redirect its energies towards growing the strong TMT business that
resides within the group. Through the process Altron will also concentrate on aligning its corporate

structure and overheads with a significantly smaller, but more profitable group. Altron believes that the
prospects for the core TMT business remain good, despite the challenges of local economic conditions.

With the action taken to date, the drag from the discontinued operations should be significantly less in
the 2016/2017 financial year, though some of it will continue, albeit at much reduced levels, until the
repositioning process is concluded.

Altron's balance sheet reflected more leverage than the board would like at year end, though this has
reduced since year end with the receipt of the first proceeds from the Altech Autopage transaction.
With the expected conclusion of the Aberdare Cables transaction in the coming months, Altron's
gearing ratios will reduce to more acceptable ranges.

Annual General Meeting

Altron's 70th annual general meeting will be held in The Altron Boardroom, 5 Winchester Road,
Parktown, Johannesburg on Monday, 18 July 2016 at 09h30. Further details of the company's annual
general meeting will be contained in Altron's annual statutory report to be posted to shareholders on or
about Wednesday, 1 June 2016.

On behalf of the board

Dr Bill Venter                Robert Venter               Alex Smith
Non-Executive Chairman        Chief Executive             Chief Financial Officer

17 May 2016

Board of directors

Independent non-executive:

Mr NJ Adami, Mr GG Gelink, Mr MJ Leeming, Ms SN Mabaso-Koyana, Dr PM Maduna, Ms DNM
Mokhobo, Mr JRD Modise, Mr SN Susman

Non-executive:

Dr WP Venter (Chairman), Mr MC Berzack

Executive:

Mr RE Venter (Chief Executive), Mr AMR Smith*

* British

Secretaries:

Altron Management Services Proprietary Limited – Mr AG Johnston (Group Company Secretary)

Sponsor:

Investec Bank

Date: 18/05/2016 07:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

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