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ALLIED ELECTRONICS CORPORATION LIMITED - Preliminary summarised audited consolidated financial statements for the year ended 28 February 2017

Release Date: 11/05/2017 08:00
Code(s): AEL     PDF:  
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Preliminary summarised audited consolidated financial statements for the year ended 28 February 2017

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

PRELIMINARY SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2017

SUMMARISED CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 28 February 2017
                                                                                          Audited    Audited
R million                                                                     % change       2017       2016

CONTINUING OPERATIONS
Revenue                                                                            (3)     13 892     14 357

Earnings before interest, tax, depreciation, amortisation and capital items
(EBITDA before capital items)                                                        7        950        888
Depreciation and amortisation                                                               (222)      (186)

Operating profit before capital items                                                4        728        702
Capital items (note 1)                                                                          8       (69)

Result from operating activities                                                    16        736        633
Finance income                                                                                218        149
Finance expense                                                                             (441)      (310)
Share of profit of equity-accounted investees, net of taxation                                  -          2

Profit before taxation                                                               8        513        474
Taxation                                                                                     (98)      (114)

Profit for the year from continuing operations                                      15        415        360

DISCONTINUED OPERATIONS
Revenue                                                                                     5 825     12 235

EBITDA before capital items                                                                 (110)      (512)
Depreciation and amortisation                                                                   -      (264)

Operating loss before capital items                                                 86      (110)      (776)
Capital items (note 1)                                                                      (496)      (439)

Result from operating activities                                                            (606)    (1 215)
Finance income                                                                                 45         44
Finance expense                                                                             (117)      (375)
Share of profit of equity-accounted investees, net of taxation                                  -         16

Loss before taxation                                                                        (678)    (1 530)
Taxation                                                                                     (39)         70

Loss for the year from discontinued operations                                              (717)    (1 460)

Loss for the year from total operations                                                     (302)    (1 100)

                                                                                          Audited    Audited
R million                                                                                    2017       2016

Other comprehensive income
Items that will never be reclassified to profit or loss
Remeasurement of net defined benefit asset                                                     26         60
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation differences in respect of foreign operations                    (60)        100
Realisation of foreign currency translation reserve on disposal and closure
of subsidiaries                                                                             (153)       (13)
Effective portion of changes in the fair value of cash flow hedges                            (7)          4

Other comprehensive income for the year, net of taxation                                    (194)        151

Total comprehensive income for the year                                                     (496)      (949)

Loss attributable to:
Non-controlling interests                                                                   (117)      (227)

Non-controlling interests from continuing operations                                           20          6
Non-controlling interests from discontinued operations                                      (137)      (233)

Altron equity holders                                                                       (185)      (873)

Altron equity holders from continuing operations                                              395        354
Altron equity holders from discontinued operations                                          (580)    (1 227)

Loss for the year from total operations                                                     (302)    (1 100)

Total comprehensive income attributable to:
Non-controlling interests                                                                   (118)      (229)

Non-controlling interests from continuing operations                                           20          6
Non-controlling interests from discontinued operations                                      (138)      (235)

Altron equity holders                                                                       (378)      (720)

Altron equity holders from continuing operations                                              341        469
Altron equity holders from discontinued operations                                          (719)    (1 189)

Total comprehensive income for the year                                                     (496)      (949)

Basic earnings per share from continuing operations                             (cents)       117        105
Diluted basic earnings per share from continuing operations                     (cents)       116        104
Basic loss per share from discontinued operations                               (cents)     (171)      (364)
Diluted basic loss per share from discontinued operations                       (cents)     (171)      (359)
Basic loss per share from total operations                                      (cents)      (54)      (259)
Diluted basic loss per share from total operations                              (cents)      (55)      (256)

SUMMARISED CONSOLIDATED
BALANCE SHEET
at 28 February 2017
                                                                                          Audited    Audited
R million                                                                                    2017       2016
 
Assets
Non-current assets                                                                          2 816      2 804

  Property, plant and equipment                                                               569        618
  Intangible assets, including goodwill                                                     1 029      1 042
  Equity-accounted investments                                                                 23          4
  Other investments                                                                           302        199
  Rental finance advances                                                                     113        129
  Non-current receivables and other assets                                                    404        345
  Defined benefit asset                                                                       178        211
  Deferred taxation                                                                           198        256

Current assets                                                                              6 735     11 643

  Inventories                                                                               1 046      1 152
  Trade and other receivables, including derivatives                                        2 669      4 004
  Assets classified as held-for-sale                                                        1 644      4 996
  Taxation receivable                                                                           3          -
  Cash and cash equivalents                                                                 1 373      1 491


Total assets                                                                                9 551     14 447

Equity and liabilities
Total equity                                                                                2 028      2 736
Non-current liabilities                                                                     1 971      2 714

  Loans                                                                                     1 923      2 675
  Provisions                                                                                    5          5
  Deferred taxation                                                                            43         34

Current liabilities                                                                         5 552      8 997

  Loans                                                                                       312      1 003
  Bank overdraft                                                                              956      1 285
  Trade and other payables, including derivatives                                           3 177      4 504
  Provisions                                                                                   16          2
  Liabilities classified as held-for-sale                                                   1 024      2 058
  Taxation payable                                                                             67        145


Total equity and liabilities                                                                9 551     14 447

Net asset value per share (cents)                                                             669        845

SUMMARISED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
for the year ended 28 February 2017
                                                                   Attributable to Altron equity holders
                                                          Share                                                Non-
                                                    capital and  Treasury             Retained          controlling     Total
R million                                               premium    shares   Reserves  earnings   Total    interests    equity

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 of 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
Total comprehensive income for the year
Loss for the year                                             -         -          -     (185)   (185)        (117)     (302)
Other comprehensive income
Foreign currency translation differences in
respect of foreign operations                                 -         -       (60)         -    (60)            -      (60)
Realisation of foreign currency translation
reserve on disposal of subsidiaries                           -         -      (153)         -   (153)            -     (153)
Remeasurement of net defined benefit asset                    -         -         26         -      26            -        26
Effective portion of changes in the fair value of
cash flow hedges                                              -         -        (6)         -     (6)          (1)       (7)
Reclassification of statutory reserves on disposal            -         -        190     (190)       -            -         -
Total other comprehensive income                              -         -        (3)     (190)   (193)          (1)     (194)
Total comprehensive income for the year                       -         -        (3)     (375)   (378)        (118)     (496)
Transactions with owners, recorded directly
in equity
Contributions by and distributions to owners
Dividends to equity holders                                   -         -          -         -       -          (4)       (4)
Issue of share capital                                       12         -          -         -      12            -        12
Share-based payment transactions                              -         -        (1)         -     (1)            1         -
Total contributions by and distributions
to owners                                                    12         -        (1)         -      11          (3)         8
Changes in ownership interests in subsidiaries
Buy-back of non-controlling interest                          -         -      (212)         -   (212)          200      (12)
Non-controlling interests of subsidiaries
disposed                                                      -         -          -         -       -        (208)     (208)
Total changes in ownership interests
in subsidiaries                                               -         -      (212)         -   (212)          (8)     (220)
Total transactions with owners                               12         -      (213)         -   (201)         (11)     (212)
Balance at 28 February 2017 (Audited)                     2 747     (299)    (2 536)     2 356   2 268        (240)     2 028

SUMMARISED CONSOLIDATED
STATEMENT OF CASH FLOWS
for the year ended 28 February 2017
                                                                                          Audited    Audited
R million                                                                                    2017       2016

Cash flows from operating activities                                                           94      1 253

Cash generated by operations                                                                1 308        528
Interest received                                                                             241        180
Interest paid                                                                               (557)      (678)
Dividends received from equity accounted investees and other investments                       23         39
Changes in working capital                                                                  (821)      1 443
Taxation paid                                                                                (96)      (152)

Cash available from operating activities                                                       98      1 360
Dividends paid, including to non-controlling interests                                        (4)      (107)

Cash flows from/(utilised in) investing activities                                          1 580    (1 121)

Proceeds on the disposal of subsidiaries, associate
and businesses net of cash disposed of                                                      2 060         49
Additions to intangible assets                                                              (123)      (131)
Additions to property, plant and equipment                                                  (191)      (338)
Other investing activities                                                                  (166)      (701)

Cash flows utilised in financing activities                                               (1 479)      (117)

Loans repaid                                                                              (3 532)      (253)
Loans advanced                                                                              2 065        136
Other financing activities                                                                   (12)          -

Net increase in cash and cash equivalents                                                     195         15
Net cash and cash equivalents at the beginning of the year                                    326        291

Cash and cash equivalents at the beginning of the year                                        206          -
Cash previously classified as held-for-sale                                                   120          -

Effect of exchange rate fluctuations on cash held                                           (192)         20
Cash classified as held-for-sale                                                               88       (120)

Net cash and cash equivalents at the end of the year                                          417        206

NOTES

Basis of preparation
The preliminary 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 of 
South Africa 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 annual 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 28 February 2017 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.
                                                                               % Movement   Audited     Audited
R million                                                                    year on year      2017        2016

Headline earnings per share from continuing operations              (cents)          (10)       114         126
Headline loss per share from discontinued operations                (cents)            84      (43)       (271)
Headline earnings/(loss) per share from total operations            (cents)           149        71       (145)
Diluted headline earnings/(loss) per share from total operations    (cents)           149        71       (143)

                                                                                            Audited     Audited
     R million                                                                                 2017        2016

1.   Capital items
     CONTINUING OPERATIONS
     Net profit/(loss) on disposal of property, plant and equipment                               1         (5)
     Reversal of impairment                                                                      10           -
     Impairment of property, plant and equipment                                                (3)           -
     Impairment of goodwill                                                                       -        (51)
     Impairment of intangible assets                                                              -        (22)
     Profit on disposal of subsidiary and businesses                                              2           9
     Impairment of equity-accounted investment                                                  (2)           -

                                                                                                  8        (69)
     DISCONTINUED OPERATIONS
     Profit on disposal of discontinued operations                                               22         309
     Impairment of property, plant and equipment                                                  -        (60)
     Impairment of intangible assets                                                           (16)        (78)
     Net profit on disposal of property, plant and equipment                                     12           5
     Release of foreign currency translation surplus                                             22           -
     Release of discontinuance provision                                                         12           -
     Impairment of held-for-sale disposal groups                                              (548)       (385)
     Impairment of equity-accounted investment                                                    -        (51)
     Impairment of goodwill                                                                       -       (179)

                                                                                              (496)       (439)

     Total                                                                                    (488)       (508)

2.   Reconciliation between attributable earnings
     and headline earnings
     Attributable to Altron equity holders                                                    (185)       (873)
     Capital items - gross                                                                      488         508
     Tax effect of capital items                                                                 11        (52)
     Non-controlling interests in capital items                                                (74)        (71)

     Headline earnings                                                                          240       (488)

3.   Reconciliation between attributable earnings
     and headline earnings from continuing operations
     Attributable to Altron equity holders                                                      395         354
     Capital items - gross                                                                      (8)          69
     Tax effect of capital items                                                                  -           2

     Headline earnings                                                                          387         425

4.   Reconciliation between attributable earnings
     and headline earnings from discontinued operations
     Attributable to Altron equity holders                                                    (580)     (1 227)
     Capital items - gross                                                                      496         439
     Tax effect of capital items                                                                 11        (54)
     Non-controlling interests in capital items                                                (74)        (71)

     Headline earnings                                                                        (147)       (913)

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

6.   Disposal of subsidiaries and businesses
     Disposal of the Aberdare group
     Effective 30 June 2016, Power Technologies disposed of 75% of its 70% equity interest in Aberdare Cables. Aberdare
     International also disposed of 100% of its equity interest in Aberdare Europe. These operations formed part of
     the Powertech group, which has been disclosed as a discontinued operation. The disposal did not include the
     group's 50% shareholding in the CBI Telecom Cables joint venture. As part of the transaction the group has the
     option to dispose of its remaining 17.5% investment in Aberdare Cables to the acquiror at the same value as the
     initial transaction two years after the conclusion of a new B-BBEE structure which occurred on 28 February 2017.
     The remaining interest in the Aberdare group is included in other investments on the group balance sheet.
     Proceeds received on disposal are as follows:

     R million                                                                                             2017
                                        
     Non-current assets                                                                                     410
                                        
     Property, plant and equipment                                                                          386
     Other                                                                                                   24
                                        
     Current assets                                                                                       1 919
                                        
     Inventories                                                                                            920
     Trade and other receivables, including derivatives                                                     988
     Other                                                                                                   11
                                        
     Non-current liabilities                                                                               (16)
                                        
     Loans                                                                                                 (10)
     Other                                                                                                  (6)
                                        
     Current liabilities                                                                                (1 216)
                                        
     Bank overdraft                                                                                       (160)
     Trade and other payables, including derivatives                                                    (1 031)
     Other                                                                                                 (25)
                                        
     Disposal value                                                                                       1 097
     Less: Non-controlling interest de-recognised                                                         (208)
     Less: Investment in Aberdare Cables (17.5%)                                                           (94)
     Less: Proceeds receivable                                                                              (7)
     Profit on disposal of subsidiaries                                                                      36
     Realisation of foreign currency translation surplus on disposal                                      (132)
     Net cash disposed                                                                                      151
     Loans settled                                                                                           85
                                        
     Proceeds received on disposal                                                                          928
     
     Disposal of Strike Technologies, a division of Powertech System Integrators (Pty) Ltd
     
     Effective 30 June 2016, Powertech System Integrators disposed of its Strike Technologies division for R16 million.
     This operation formed part of the Powertech group, which has been disclosed as a discontinued operation.

     Disposal of Technology Integrated Solutions ("TIS"), a division of Powertech System Integrators (Pty) Ltd
     Effective 30 November 2016, Powertech System Integrators disposed of its TIS division for R27 million. This operation
     formed part of the Powertech group, which has been disclosed as a discontinued operation.

     R million                                                                                             2017
     
     Proceeds received on the disposals are as follows:
     Non-current assets                                                                                      11
     Current assets                                                                                          51
     Current liabilities                                                                                    (5)
     
     Disposal value                                                                                          57
     Loss on disposal of subsidiaries and businesses                                                       (14)
     Proceeds receivable                                                                                   (21)
     
     Proceeds received on disposals                                                                          22
     
     Proceeds on disposal of Altech Autopage
     Proceeds amounting to R1.3 billion were received in the current year for the Altech Autopage disposal that was
     effective in the prior year.

7.   Discontinued operations
     Impairment of held-for-sale disposal groups
     The carrying value of each distinct operation was compared to the latest offer from prospective buyers and any
     shortfall to the carrying value was then impaired. The impairments reflect a decline in expected proceeds due to the
     prolonged disposal processes, the performance of the operations and the uncertainties in the local macro-economic
     environment.

     During the previous financial year, the decision was taken to dispose of the Powertech group and the UEC group and,
     as a result, these businesses have been classified as discontinued operations. The relevant requirements of IFRS 5
     have been met for this classification.

     Management believe that the conclusion of the remaining disposals will be effected in the 2018 financial year.
    
     The Powertech and UEC businesses were previously classified as held-for-sale as well as discontinued operations.
    
     The comparative held-for-sale information also included the Altech Autopage business which was disposed of in
     the previous financial year.

     Net assets of disposal groups held-for-sale:
     R million                                                                                 2017        2016
     
                                                                                             
     Assets classified as held-for-sale                                                       1 644       4 996
     
     Non-current assets                                                                         392       1 320
     Current assets                                                                           1 252       3 676
     
     Liabilities classified as held-for-sale                                                (1 024)     (2 058)
     
     Non-current liabilities                                                                   (16)        (56)
     Current liabilities                                                                    (1 008)     (2 002)
     
     Breakdown of disposal groups held-for-sale:
     
                                               2017          2017         2017          2017     2017      2017
                                                        Powertech                  Powertech
                                          Powertech       Battery   Multimedia        System
     R million                         Transformers         Group        Group   integrators    Other     Total
       
                                                805           498          348           182      359     2 192
     
     Non-current assets                         307           164          141            25      216       853
     Current assets                             498           334          207           157      143     1 339
     
     Impairment of held-for-sale
     disposal groups                                                                                      (548)
     
     Assets classified
     as held-for-sale                                                                                     1 644
     
     Liabilities classified
     as held-for-sale                         (276)        (124)         (290)         (109)    (225)   (1 024)
     
     Non-current liabilities                    (5)           -            (9)             -      (2)      (16)
     Current liabilities                      (271)        (124)         (281)         (109)    (223)   (1 008)
     
     R million                                                                                   2017      2016
      
     Cash flows of discontinued operations: 
     Net cash (utilised in)/generated from operating activities                                  (21)       424
     Net cash generated from/(utilised in) investing activities                                   878     (509)
     Net cash utilised in financing activities                                                   (20)      (75)
      
     Net cash flow for the year                                                                   837     (160)

8.   Post balance sheet events
     Post year end and in accordance with the circular issued to shareholders on or about 9 February 2017, the Altron
     group bought back all of the issued N shares in exchange for the issue of new A shares. All of the N shares were
     then cancelled. Following the implementation of this transaction the total number of shares in issue reduced from
     370 million to 319 million.

     As part of the transaction Value Capital Partners then injected R400 million of equity funding in exchange for
     54 million A shares. Following the implementation of the transaction the number of shares in issue has increased to
     373 million in total and 345 million net of treasury shares.

9.   Related party transactions
     The group entered into various sale and purchase transactions with related parties in the ordinary course of business.
     The nature of related party transactions is consistent with those reported previously.

10.  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 with key inputs being discount and perpetuity growth rates as well
     as revenue growth rates. The fair value of the preference share investment was revalued in the current year and
     resulted in no profit or loss on remeasurement. The fair value of the preference share investment remained at
     R21 million at year-end.

     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 with key inputs being forecast revenue growth
     rates, forecast profit margins and discount rates. The fair value of the contingent purchase consideration was
     assessed as R29 million at year-end which resulted in a remeasurement profit of R5 million during the year.

     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) as well as foreign exchange. The fair value of the derivative
     foreign exchange contracts was assessed at R75 million (liability) at year-end which resulted in a remeasurement
     loss of R65 million.

     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 28 February 2017.

     This announcement does not include the information required pursuant to paragraph 16A(j) of IAS 34. The full
     preliminary report is available on the issuers website, at the issuers registered office and upon request.

11.  Standards issued but not yet effective
     Management is in the process of assessing the possible impact of the application of IFRS 9, 15 and 16 that is not yet
     effective at year-end.

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

                                                February    February         %   February    February        %
R million                                           2017        2016    Growth       2017        2016    Growth

Altech Autopage Group*                               316       5 188      (94)       (75)       (209)        64
Altech Multimedia Group**                          1 225       1 030        19          3       (160)       102
Altech Netstar Group                               1 224       1 161         5        266         252         6
Systems Integration Group                          1 545       1 497         3         63          65       (3)
Radio Holdings Group                               1 127         953        18         84          75        12
Other Altech Segments                                602         419        44         40          32        25

Altech Group                                       6 039      10 248      (41)        381          55       593

Bytes Technology Group UK Software                 4 084       3 554        15        136         132         3
Bytes Document Solutions Group                     1 636       2 117      (23)         48          84      (43)
Bytes Managed Solutions                            1 321       1 528      (14)         89         135      (34)
Bytes Secure Transaction Solutions                   992         837        19        212         192        10
Bytes Universal Systems                              669         703       (5)         63          73      (14)
Other Bytes Segments                                 864         741        17         89          54        65

Bytes Group                                        9 566       9 480         1        637         670       (5)

Powertech Cables Group                             1 836       4 370      (58)         42         (3)     1 500
Powertech Transformers Group                       1 041         881        18       (75)       (156)        52
Powertech Battery Group                              944         931         1         76          74         3
Powertech System integrators                         583         770      (24)       (53)         (9)     (489)
Other Powertech Segments                             197         233      (15)       (57)        (62)         8

Powertech Group**                                  4 601       7 185      (36)       (67)       (156)        57

Corporate, consolidation
and financial services                             (489)       (321)                (111)       (193)        42

Altron Group                                      19 717      26 592      (26)        840         376       123

* In the prior year the majority of this segment was included in the discontinued operations.
** These segments formed part of the discontinued operations.

Segment EBITDA can be reconciled to operating profit before capital items as follows:

R million                                                                                       2017       2016
              
EBITDA                                                                                           840        376
Reconciling items:              
Depreciation                                                                                   (136)      (285)
Amortisation                                                                                    (86)      (165)
              
Total operating profit/(loss) before capital items                                               618       (74)
Discontinued operations operating loss before capital items                                      110        776
              
Continuing operations operating profit before capital items                                      728        702

SUPPLEMENTARY INFORMATION
Total operations
                                                                                             Audited    Audited
R million                                                                                       2017       2016

Depreciation                                                                                     136        285
Amortisation                                                                                      86        165
Net foreign exchange losses/(profit)                                                             226       (41)

Cash flow movements
Capital expenditure (including intangibles)                                                      314        468
Net additions to contract fulfilment costs                                                        20        383

Additions to contract fulfilment costs                                                           237        634
Net expensing of contract fulfilment costs during the year                                     (216)      (167)
Terminations of contract fulfilment costs                                                        (1)       (84)

Capital commitments                                                                               21         55
Lease commitments                                                                                465        604

Payable within the next 12 months                                                                147        241
Payable thereafter                                                                               318        363

Weighted average number of shares                                               (millions)       338        337
Diluted average number of shares                                                (millions)       340        341
Shares in issue at the end of the year                                          (millions)       339        337
Ratios
EBITDA margin                                                                          (%)       4,3        1,4
Normalised EBITDA margin                                                               (%)       4,3        2,5
ROCE                                                                                   (%)      14,5      (1,2)
ROE                                                                                    (%)      11,4     (19,8)
ROA                                                                                    (%)       8,3      (0,6)
RONA                                                                                   (%)      12,2      (0,7)
Current ratio                                                                                  1,2:1      1,3:1
Acid test ratio                                                                                  1:1      1,2:1

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 SHAREHOLDERES

- EBITDA of total operations increased to R840 million from R376 million
- Net debt reduced by 42% to R1.9 billion
- Remaining held-for-sale operations carrying value reduced to R620 million
- Credible performance from the continuing operations lifting EBITDA to R950 million

The Altron annual results for the year ended 28 February 2017 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.

Altron has made good progress over the last year on its stated aim of repositioning the group in the information technology
and telecommunications space, reducing its exposure to the manufacturing sector, and divesting of non-core assets.
Following the recent appointment of Mr Mteto Nyati as Chief Executive and the repurchase of the low voting N shares, the
group has moved from a family controlled and managed business to an independent management structure.

While overall trading conditions remained challenging, which impacted the group's performance, the group has made
meaningful progress on divesting of its non-core assets and has significantly reduced losses from these operations.
In further advancing this process, the group expects to complete a number of these disposals in the first half of the new
financial year, with continued focus being placed on disposal of Powertech Transformers and Altech
Multimedia.

The R400 million capital injection post year-end, following the introduction of Value Capital Partners as a new strategic
partner, will be a catalyst in driving shareholder value creation by enabling the acceleration of Altron's growth initiatives
within its core information technology and telecommunications businesses.

From a total operations perspective, Altron's revenue for the year under review declined by 26% to R19.7 billion and
earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 123% to R840 million. Basic earnings
per share (EPS) reduced to a loss of 54 cents from the loss of 259 cents reported in the prior year. Headline earnings per
share (HEPS) improved to a profit of 71 cents from the loss of 145 cents posted in the prior year.

In order to provide shareholders with a clearer understanding of the impact of the discontinued operations on the group,
the income statement is 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 Multimedia and Altech Node (only in the prior year) in accordance with the
requirements of IFRS.

FINANCIAL OVERVIEW
INCOME
Continuing operations
Despite the challenging economic environment, particularly in South Africa, the continuing operations delivered a credible 
performance at an operating level. The telecommunications operations generally showed growth, with one exception, while the
information technology operations declined compared to the prior year as a result of some major contract losses at the
end of the prior financial year. Corporate costs declined in line with expectations.

Revenue declined by 3% to R13.9 billion from R14.4 billion in the prior year, while EBITDA increased by 7% from
R888 million to R950 million. The EBITDA margin improved to 6.8% compared to the prior year's 6.2%. However, depreciation
and amortisation charges increased to R222 million from R186 million, resulting in an operating profit improvement of 4%
to R728 million. Operating margins improved from 4.9% to 5.2%.

Capital items were positive for the financial year compared to the R69 million in costs for the prior year. This contributed
to a 16% increase in operating activities to R736 million. However, net finance costs increased significantly from R161
million to R223 million as a result of higher borrowing rates during the past 12 months as well as reduced expectations of
proceeds from non-core disposals, which increased the allocation of interest to the continuing operations.

The effective tax rate of 19% reflects some prior year adjustments, the benefits of lower tax rates in some of the
international operations, and some utilisation of assessed losses. These factors resulted in a profit of R415 million from
continuing operations for the year compared to a profit of R360 million during the prior year. Headline earnings amounted to
R387 million compared to the R425 million generated in the prior year.

Discontinued operations
The non-core operations, which predominantly operate in the manufacturing sector, are much improved from the prior
year, but remain loss making and traded below expectations.

Revenue for the non-core operations reduced to approximately R5.8 billion following the disposal of Altech Autopage
at the end of the last financial year and the sale of Aberdare Cables with effect from 30 June 2016. At an EBITDA level,
losses were significantly reduced from R512 million in the prior year to R110 million in the current year. This was due to
a return to profitability in Altech Multimedia, reduced losses out of Powertech and the reduction in ongoing costs related
to Altech Autopage.

Capital items remain substantial at R496 million for the year due to a reduction in the expected disposal proceeds
from several of the discontinued operations. The majority of this relates to the Powertech Transformers business where
repeated delays in tender awards have adversely impacted the future prospects of the business.

Net finance costs decreased from R331 million in the prior year to R72 million in the current financial year as a result of the
proceeds received on the various disposals, as well as an increased allocation of interest into the continuing operations
as discussed above.

These factors resulted in a significant reduction in the loss after tax in the discontinued operations to R717 million from
the R1.5 billion loss incurred in the prior year.

The group believes there is a high probability of concluding the disposal of the remaining operations classified as
discontinued in the 2017/2018 financial year.

CASH MANAGEMENT
Total operations
The overall net debt position has reduced to R1932 million from R3435 million in the prior year due to the disposals and 
resulting repayment of debt. From an operational cash flow perspective, there has been a marked reduction due to a significant 
increase in working capital, although a good portion of this is a once-off permanent outflow related to the disposals, particularly
Altech Autopage, and reflects a partial reversal of the exceptional release achieved last year.

Cash generated by operations is significantly up on the prior year due to the slightly stronger performance in the continuing
operations and the significant reduction in operating losses in the discontinued operations. Net finance expense is well
down on the prior year due to the non-recurrence of the Altech Autopage factoring and the reduction in debt.

Investing activities relate primarily to the disposal of Altech Autopage and Aberdare, which generated cash inflows of
approximately R2.1 billion during the period. Capital expenditure was significantly lower, reducing to R551 million from
over R1.1 billion (including investment in contract fulfilment costs) in the prior year. Included in this is a much reduced
investment into subscribers due to the sale of the Altech Autopage business. Altech Netstar continues to invest in
subscribers but at levels broadly similar to the prior year.

The R1.5 billion of cash utilised in financing activities is predominantly due to the repayment of borrowings from the
proceeds of disposals. All of the group's remaining term debt was refinanced in February 2017.

SUBSIDIARY REVIEW
SUBSIDIARY INCOME AND GROWTH
Continuing operations
Telecommunications
Telecommunications revenue was down 12% to R4.2 billion, with an EBITDA increase of 12% on the prior year. The results
were impacted by the loss of the high revenue, low margin airtime business that was initially retained from the Altech
Autopage disposal. Excluding this effect, revenue was up 8% to R3.9 billion and EBITDA up 4% to R413 million.

Altech Netstar reported a 5% increase in revenue due to marginal increases in both subscriber numbers and average
revenue per user. We have seen the benefits of reduced churn in the subscriber base following various interventions,
although the business has faced headwinds from the significant reduction in new vehicle sales. EBITDA increased by
6% compared to the prior year with a small increase in EBITDA margins. The business continues to improve its six monthly
sequential results since the low point of the second half of the last financial year.

Altech Radio Holdings has seen revenue increase by 18% and EBITDA by 12% compared to the prior year. The increase in
activity levels is primarily attributable to the commencement of the City of Tshwane broadband project in December 2016,
the build phase of which will continue for three years. Operating margins were reduced due to a change in mix within the
business and the increased contribution from mega projects.

Bytes Systems Integration delivered results below expectations with revenue up only 3%, but EBITDA down by 3% compared
to the prior year. As a business that is dependent on large IT projects, it continues to face challenges as a result of delays
in the award of various significant projects.

Multimedia
Arrow Altech Distribution posted excellent results with revenue up 44% and EBITDA up 54%. While gross margins are
slightly lower than the prior year, operational leverage has resulted in some EBITDA margin expansion. The business has
successfully grown market share and expanded into new areas aligned to the global Arrow Inc., business model.

Technology (IT)
The technology division reported a more muted performance against a very strong second half in the prior year. As a result,
revenue increased by 1% to R9.6 billion, while EBITDA declined by 4% to R644 million.

The South African operations reported a decline of 9% in revenue and a decline of 8% in EBITDA, resulting in a small
improvement in margins to 9.4%. The international operations generated strong revenue growth of 14%, however, the
EBITDA increase was only 3% due to a change in revenue mix in the UK operations.

Bytes Document Solutions reported lower revenue, primarily due to the closure of the NOR Paper business in June 2016.
Excluding the effect of NOR Paper, the core Xerox business saw revenue decrease by 4%. The marked reduction in EBITDA
was largely due to the loss of contracts at the end of the prior year, but also affected by the weakness of the Rand in the
first half of the year.

The Bytes Managed Solutions revenue and EBITDA decline was due to the loss of several large contracts at the end of
the prior financial year as previously communicated. Progress is being made on replacing this business in other market
segments, but sales cycles are relatively long.

Bytes Universal Systems, which includes the operations of Alliance, BUS Telecoms (formerly Altech Isis) and the old Bytes
Universal Systems, had a challenging second half due to various project delays, resulting in a 5% decline in revenue and
a 14% decline in EBITDA.

Bytes Secure Transaction Solutions, which includes the businesses of Bytes Healthcare Solutions, Altech NuPay and
Altech Card Solutions, continued to perform exceptionally well, growing revenue by 19% and EBITDA by 10%. Altech NuPay
had a particularly strong year growing EBITDA by almost 40%, while the other main operations recorded more muted
EBITDA growth.

The Bytes UK operations reported a 14% increase in revenue and a 4% improvement in EBITDA despite the strength of
the Rand working against them in the second half. The margin erosion was predominantly the result of a substantial
increase in low margin public sector business in the UK. The average exchange rate for the year amounted to R18.93 to the
UK pound compared to R20.43 in the prior year. Local currency results were therefore extremely strong.

Bytes People Solutions maintained revenue and EBITDA at prior year levels following the successful expansion of the
previous year. While some headwinds were faced, the operation is growing its presence in key customers.

Discontinued operations
Multimedia
Altech UEC delivered a much improved performance with revenue up 19% to R1.2 billion and EBITDA recovering to
R3 million compared to the R160 million loss for the prior year. The business continues to make positive progress having
significantly reduced its cost base and has won several contracts in adjacent manufacturing areas.

Powertech
Powertech's results were significantly affected by the disposal of its Powertech Cables operation on 30 June 2016, with a
number of its other operations reporting improved results despite challenging economic conditions. Revenue reduced by
36% to R4.6 billion while EBITDA losses reduced from R156 million to R67 million.

Powertech Transformers had another difficult year but managed to increase revenue and reduce EBITDA losses. Much of
the revenue growth was achieved at the expense of margins in a very competitive environment, but new business is now
being obtained at more appropriate margins. The recent increase in demand from Eskom, albeit in smaller units, raises
expectations of a recovery in the local industry.

The Powertech Batteries group performed well during the year in challenging market conditions, growing revenue by 1%
and EBITDA by 3% despite some issues in the first half of the year. This was assisted by lower input costs on the 
strength of the Rand in the second half of the year.

Powertech System Integrators had a challenging year as it disposed of various businesses. Strike Technologies was sold
in June 2016, with Technology Integrated Solutions (TIS) sold in November 2016. The sale of Powertech IST is expected to
be concluded in the coming months. The operation went through a significant cost reduction exercise ahead of the disposals due to
reduced revenue levels and these factors resulted in a 24% decline in revenue and the business recording a R53 million
EBITDA loss for the year.

The remaining Powertech businesses recorded mixed results. Switchgear had a disappointing year due to tender delays,
while there was an improved result from Crabtree, with Swanib Cables being affected by challenging economic conditions
linked to the drought in Namibia.

Human capital
Altron and Altron TMT were rated as Level 2 Broad-Based Black Economic Empowerment contributors for the 2016/2017
financial year. 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
To ensure that good corporate governance is effectively practised throughout the Altron group, the Altron board materially
applies the principles of King III and the JSE Listings Requirements. On 1 November 2016, the Institute of Directors of
Southern Africa (IODSA) and the King Committee released the King IV Report on Corporate Governance in South Africa
("King IV"). King IV became effective for organisations with a financial year that starts on, or after, 1 April 2017. Altron will
take appropriate steps during the current year in order to commence with the implementation of the required principles of
King IV which will be wholly embraced and reported on by the group as from 1 March 2018.

Directorate
On 23 February 2017, shareholders were advised that Dr WP Venter, the founder of Altron, had decided to retire as non-
executive chairman of the Altron board with effect from 28 February 2017. Dr Venter assumed a non-executive director role
on the board, as Chairman Emeritus, with effect from 1 March 2017.

The board confirms its gratitude to Dr Venter for the important and central role he has played in the development of the
South African electronics industry and the South African economy as a whole. The board also thanks Dr Venter for his
leadership of and significant contribution to Altron over the years. The board looks forward to Dr Venter continuing to
provide his entrepreneurial skills, leadership and integrity to Altron as a non-executive director.

Furthermore, the board announced that Mr MJ Leeming had been appointed as independent non-executive chairman of
the Altron board, with effect from 1 March 2017. Mr Leeming was an independent non-executive director on the Altron
board since 2002 and served as lead independent director since 2009.

With the appointment of Mr Mteto Nyati as Chief Executive on 1 April 2017, Mr Robbie Venter has stepped down from
that role. Mr Venter remains on the Altron board as a non-executive director to continue to provide his knowledge and
experience to the group. The Altron board would like to take this opportunity to again thank Mr Venter for the positive
contribution he has made to the group over the past 27 years and welcomes Mr Nyati in the role of Altron Chief Executive.

Further steps are currently underway in order for the constitution of the board to more closely align with the group moving 
to a focused ICT business.

With respect to the announcement released by Altron on SENS on 15 November 2016, advising that Mr WK Groenewald was
appointed as the interim group company secretary of Altron, the board advised that Mr Groenewald was appointed as the
group company secretary of Altron, with effect from 1 March 2017.

Outlook
The Altron group has made good progress in repositioning itself in line with its stated strategy and as a result has
significantly reduced the group's debt to sustainable levels. The disposal of the remaining non-core assets remains a
priority in order to release further capital to strengthen the balance sheet and enable further investment in the core
assets.

The capital injection of R400 million by Altron's new strategic partner, Value Capital Partners, provides Altron with the
added flexibility to implement its growth strategy in its core businesses, exit the non-core manufacturing assets, and
create capacity for acquisitive growth. Under the new Chief Executive, Mr Mteto Nyati, a full review of the strategy for
growth of the core businesses is currently underway and will be communicated to shareholders when appropriate.

Annual general meeting
Altron's annual general meeting will be held in the Altron Boardroom, 5 Winchester Road, Parktown, Johannesburg on
17 July 2017 at 09:30. 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 31 May 2017.

On behalf of the board
MJ Leeming                    Mteto Nyati              Alex Smith
Chairman                      Chief Executive          Chief Financial Officer

11 May 2017

Board of directors
Independent non-executive
Mr MJ Leeming, Mr GG Gelink, Dr PM Maduna, Ms DNM Mokhobo, Mr SN Susman, Mr JRD Modise

Non-executive
Dr WP Venter (Chairman Emeritus), Mr RE Venter, Mr MC Berzack, Mr AC Ball, Mr S Sithole*
* Zimbabwe

Executive
Mr M Nyati (Chief Executive), Mr AMR Smith*
* British

Secretaries
Altron Management Services Proprietary Limited - Mr WK Groenewald (Group Company Secretary)

Sponsor
Investec Bank

http://www.altron.com

Date: 11/05/2017 08:00:00 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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