To view the PDF file, sign up for a MySharenet subscription.

ALLIED ELECTRONICS CORPORATION LIMITED - 2017 Unaudited Consolidated Interim Results for the six months ended 31 August 2017

Release Date: 26/10/2017 08:00
Code(s): AEL     PDF:  
Wrap Text
2017 Unaudited Consolidated Interim Results for the six months ended 31 August 2017

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

2017
UNAUDITED CONSOLIDATED
INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2017


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                                               Six months     Six months          Year
                                                                                    ended          ended         ended
                                                                        %        31.08.17       31.08.16      28.02.17
R million                                                          change     (Unaudited)    (Unaudited)     (Audited)
CONTINUING OPERATIONS       
Revenue                                                              (10)           6 792          7 537        13 892
Earnings before interest, tax, depreciation and       
amortisation (EBITDA)                                                   2             452            445           950
Depreciation and amortisation                                                       (118)          (108)         (222)
Operating profit before capital items                                 (1)             334            337           728
Capital items (note 1)                                                               (16)            (1)             8
Result from operating activities                                                      318            336           736
Finance income                                                                         85            111           218
Finance expense                                                                     (172)          (194)         (441)
Share of profit of equity-accounted investees,      
net of taxation                                                                       (1)              -             -
Profit before taxation                                                                230            253           513
Taxation                                                                             (60)           (66)          (98)
Profit for the period from continuing operations                                      170            187           415
DISCONTINUED OPERATIONS       
Revenue                                                                             1 905          3 890         5 825
Earnings before interest, tax, depreciation and       
amortisation (EBITDA)                                                                 (9)           (65)         (110)
Depreciation and amortisation                                                           -              -             -
Operating loss before capital items                                                   (9)           (65)         (110)
Capital items (note 1)                                                               (63)          (107)         (496)
Result from operating activities                                                     (72)          (172)         (606)
Finance income                                                                        25               9            45
Finance expense                                                                      (42)           (96)         (117)
Share of profit of equity-accounted investees,     
net of taxation                                                                         -             17             -
Loss before taxation                                                                 (89)          (242)         (678)
Taxation                                                                              (6)             18          (39)
Loss for the period from discontinued operations                                     (95)          (224)         (717)
Profit/(loss) for the period from total operations                                     75           (37)         (302)
Other comprehensive income      
Items that will never be reclassified to profit or loss      
Remeasurement of net defined benefit asset/obligation                                   -              -           26
Items that are or may be reclassified subsequently to       
profit or loss       
Foreign currency translation differences in respect of       
foreign operations                                                                      5           (28)          (59)
Realisation of foreign currency translation reserve on        
disposal                                                                                -          (132)         (154)
Effective portion of changes in the fair value of cash flow        
hedges                                                                                  5              -           (7)
Other comprehensive income for the period, net of       
taxation                                                                               10          (160)         (194)
Total comprehensive income for the period                                              85          (197)         (496)
       
                                                                               Six months     Six months          Year
                                                                                    ended          ended         ended
                                                                        %        31.08.17       31.08.16      28.02.17
R million                                                          change     (Unaudited)    (Unaudited)     (Audited)
Net profit/(loss) attributable to:        
Non-controlling interests                                                            (12)           (57)         (117)
 Non-controlling interests from continuing operations                                   7              5            20
 Non-controlling interests from discontinued operations                              (19)           (62)         (137)
 Altron equity holders                                                                 87             20         (185)
 Altron equity holders from continuing operations                                     163            182           395
 Altron equity holders from discontinued operations                                  (76)          (162)         (580)
          
Net profit/(loss) for the period                                                       75           (37)         (302)
Total comprehensive income attributable to:           
 Non-controlling interests                                                           (11)           (56)         (118)
 Non-controlling interests from continuing operations                                   7              5            20
 Non-controlling interests from discontinued operations                              (18)           (61)         (138)
 Altron equity holders                                                                 96          (141)         (378)
 Altron equity holders from continuing operations                                     178            141           341
 Altron equity holders from discontinued operations                                  (82)          (282)         (719)
          
Total comprehensive income for the period                                              85          (197)         (496)
Basic earnings per share from continuing          
operations                                                   (cents)                   44             54           117
Diluted basic earnings per share from continuing             
operations                                                   (cents)                   44             53           116
Basic loss per share from discontinued             
operations                                                   (cents)                 (21)           (48)         (171)
Diluted basic loss per share from discontinued             
operations                                                   (cents)                 (21)           (47)         (171)
Basic earnings/(loss) per share from total             
operations                                                   (cents)                   23              6          (54)
Diluted basic earnings/(loss) per share from total            
operations                                                   (cents)                   23              6          (55)
        
CONDENSED CONSOLIDATED BALANCE SHEET

                                                                                   31.08.17      31.08.16    28.02.17
R million                                                                       (Unaudited)   (Unaudited)   (Audited)
ASSETS                           
Non-current assets                                                                    3 187         2 907       2 816
 Property, plant and equipment                                                          570           591         569
 Intangible assets including goodwill                                                 1 193         1 055       1 029
 Equity-accounted investments                                                            23             5          23
 Other investments                                                                      503           321         302
 Rental finance advances                                                                 95           128         113
 Non-current receivables and other assets                                               432           383         404
 Defined benefit asset                                                                  162           192         178
 Deferred taxation                                                                      209           232         198
Current assets                                                                        5 626         7 624       6 735
 Inventories                                                                            931           899       1 046
 Trade and other receivables, including derivatives                                   2 605         2 874       2 669
 Assets classified as held-for-sale                                                   1 013         2 399       1 644
 Taxation receivable                                                                      5             3           3
 Cash and cash equivalents                                                            1 072         1 449       1 373
                           
Total assets                                                                          8 813        10 531       9 551
EQUITY AND LIABILITIES                           
Total equity                                                                          2 523         2 352       2 028
 Equity holders of Altron                                                             2 760         2 729       2 268
 Non-controlling interests                                                            (237)         (377)       (240)
Non-current liabilities                                                               1 694           198       1 971
 Loans                                                                                1 633           159       1 923
 Provisions                                                                               4             5           5
 Deferred taxation                                                                       57            34          43
Current liabilities                                                                   4 596         7 981       5 552
 Loans                                                                                  323         2 017         312
 Bank overdraft                                                                         808         1 217         956
 Trade and other payables, including derivatives                                      2 654         3 426       3 177
 Provisions                                                                              19             7          16
 Liabilities classified as held-for-sale                                                739         1 189       1 024
 Taxation payable                                                                        53           125          67
                           
Total equity and liabilities                                                          8 813        10 531       9 551
Net asset value per share (cents)                                                       744           807         669

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                               Attributable to Altron equity holders
                                          Share
                                        capital                                                        Non-
                                            and    Treasury                Retained             controlling     Total
R million                               premium      shares    Reserves    earnings    Total      interests    equity
Balance at 29 February 2016
(Audited)                                 2 735       (299)     (2 320)       2 731    2 847          (111)     2 736
Total comprehensive income for the
period
Profit for the period                         -           -           -          20       20           (57)      (37)
Other comprehensive income
Foreign currency translation
differences in respect of foreign
operations                                    -           -        (29)           -     (29)              1      (28)
Realisation of foreign currency 
translation reserve on disposal of 
subsidiaries                                  -           -       (132)           -    (132)              -     (132)
Transfer between reserves                     -           -         190       (190)        -              -         -
Total other comprehensive income              -           -          29       (190)    (161)              1     (160)
Total comprehensive income for the
period                                        -           -          29       (170)    (141)           (56)     (197)
Transactions with owners,
recorded directly in equity
Contributions by and distributions
to owners
Dividends to equity holders                   -           -           -           -        -            (4)       (4)
Issue of share capital                        7           -           -           -        7              -         7
Disposal of non-controlling interest          -           -           -           -        -          (207)     (207)
Share-based payment transactions              -           -          16           -       16              1        17
Total contributions by and 
distributions to owners                       7           -          16           -       23          (210)     (187)
Total transactions with owners                7           -          16           -       23          (210)     (187)
Balance at 31 August 2016 
(Unaudited)                               2 742       (299)     (2 275)       2 561    2 729          (377)     2 352
Total comprehensive income for the
period
Loss for the period                           -           -           -       (205)    (205)           (60)     (265)
Other comprehensive income
Foreign currency translation
differences in respect of foreign
operations                                    -           -        (30)           -     (30)            (1)      (31)
Remeasurement of defined benefit  
obligation                                    -           -          26           -       26              -        26
Realisation of foreign currency
translation reserve on closure of
held for sale group                           -           -        (22)           -     (22)              -      (22)
Effective portion of changes in the 
fair value of cash flow hedges                -           -         (6)           -      (6)            (1)       (7)
Total other comprehensive income              -           -        (32)           -     (32)            (2)      (34)
Total comprehensive income for the
period                                        -           -        (32)       (205)    (237)           (62)     (299)

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                               Attributable to Altron equity holders
                                          Share
                                        capital                                                        Non-
                                            and    Treasury                Retained             controlling      Total
R million                               premium      shares     Reserves   earnings    Total      interests     equity
Transactions with owners,
recorded directly in equity
Contributions by and distributions
to owners
Share-based payment transactions              -           -          (5)          -      (5)              -        (5)
Issue of share capital                        5           -         (12)          -      (7)              -        (7)
Disposal of non-controlling interest          -           -            -          -        -            (1)        (1)
Total contributions by and 
distributions to owners                       5           -         (17)          -     (12)            (1)       (13)
Changes in ownership interests in
subsidiaries
Buy-back of non-controlling interest          -           -        (212)          -    (212)            200       (12)
Total changes in ownership 
interests in subsidiaries                     -           -        (212)          -    (212)            200       (12)
Total transactions with owners                5           -        (229)          -    (224)            199       (25)
Balance at 28 February 2017
(Audited)                                 2 747       (299)      (2 536)      2 356    2 268          (240)      2 028
Total comprehensive income for the
period
Profit for the period                         -           -            -         87       87           (12)         75
Other comprehensive income  
Foreign currency translation  
differences in respect of foreign  
operations                                    -           -            5          -        5              -          5
Effective portion of changes in the  
fair value of cash flow hedges                -           -            4          -        4              1          5
Total other comprehensive income              -           -            9          -        9              1         10
Total comprehensive income for the  
period                                        -           -            9         87       96           (11)         85
Transactions with owners,
recorded directly in equity
Contributions by and distributions
to owners
Dividends to equity holders                   -           -            -          -        -            (5)        (5)
Share-based payment transactions              -           -           13          -       13              -         13
Issue of share capital                      410           -         (10)          -      400              -        400
Total contributions by and   
distributions to owners                     410           -            3          -      413            (5)        408
Changes in ownership interests in 
subsidiaries
Acquisition of subsidiary                     -           -            -          -        -              2          2
Buy-back of non-controlling interest          -           -         (17)          -     (17)             17          -
Total changes in ownership 
interests in subsidiaries                     -           -         (17)          -     (17)             19          2
Total transactions with owners              410           -         (14)          -      396             14        410
Balance at 31 August 2017
(unaudited)                               3 157       (299)      (2 541)      2 443    2 760          (237)      2 523

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                                 Six months    Six months         Year
                                                                                      ended         ended        ended
                                                                                   31.08.17      31.08.16     28.02.17
R million                                                                       (Unaudited)   (Unaudited)    (Audited)
Cash flows generated from/(utilised in) operating activities                             15         (279)           94
 Cash generated by operations                                                           598           569        1 308
 Interest received                                                                       86           113          241
 Interest paid                                                                        (214)         (284)        (557)
 Dividends received from equity-accounted investees and other           
 investments                                                                              1            27           23
 Changes in working capital                                                           (363)         (646)        (821)
 Taxation paid                                                                         (90)          (54)         (96)
Cash available from operating activities                                                 18         (275)           98
 Dividends paid, including to non-controlling interests                                 (3)           (4)          (4)
           
Cash flows (utilised in)/from investing activities                                    (296)         1 773        1 580
 Proceeds on the disposal of subsidiaries, associate and businesses           
 net of cash disposed                                                                   117         2 060        2 060
 Acquisition of subsidiaries, net of cash acquired                                     (86)            -             -
 Additions to intangible assets                                                        (43)          (70)        (123)
 Additions to property, plant and equipment                                            (99)          (86)        (191)
 Other investing activities                                                           (185)         (131)        (166)
           
Cash flows from/(utilised in) financing activities                                       73       (1 594)      (1 479)
 Loans repaid                                                                         (335)       (1 592)      (3 532)
 Proceeds from share issue                                                              400             -            -
 Loans advanced                                                                           -             9        2 065
 Other financing activities                                                               8          (11)         (12)
           
Net (decrease)/increase in cash and cash equivalents                                  (208)         (100)          195
 Net cash and cash equivalents at the beginning of the period                           329           326          326
 Cash and cash equivalents at the beginning of the period                               417           206          206
 Cash previously classified as held-for-sale                                           (88)           120          120
 Effect of exchange rate fluctuations on cash held                                       20          (50)        (192)
 Bank overdraft classified as held-for-sale                                             123            56           88
Net cash and cash equivalents at the end of the period                                  264           232          417

NOTES

                                                                              Six months    Six months            Year
                                                                                   ended         ended           ended
                                                                       %        31.08.17      31.08.16        28.02.17
R millions                                                        Change     (Unaudited)   (Unaudited)       (Audited)
Headline earnings per share from continuing   
operations                                          (cents)         (13)              47            54             114
Normalised headline earnings per share from    
continuing operations                               (cents)            8              57            53             116
Headline loss per share from discontinued    
operations                                          (cents)           70             (7)          (23)            (43)
Headline earnings per share from total    
operations                                          (cents)           29              40            31              71
Diluted headline earnings per share from total     
operations                                          (cents)           29              40            31              71
    
BASIS OF PREPARATION
The condensed consolidated unaudited interim financial results have been prepared in accordance with the International
Financial Reporting Standard (IAS) 34 - Interim Financial Reporting, the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards
Council and the requirements of the Companies Act of South Africa. The accounting policies applied in the preparation
of these interim results are in terms of International Financial Reporting Standards and are consistent with those
used in the annual financial statements for the year ended 28 February 2017. This report was compiled under the
supervision of Mr Alex Smith CA, Chief Financial Officer. The condensed consolidated interim financial results have not
been audited or reviewed by the company's auditor, KPMG Inc.
                                                                          Six months      Six months            Year
                                                                               ended           ended           ended
                                                                            31.08.17        31.08.16        28.02.17
     R millions                                                          (Unaudited)     (Unaudited)       (Audited)

1.   CAPITAL ITEMS
     CONTINUING OPERATIONS
     Net profit on disposal of property, plant and equipment                       1               -               1
     Impairment of property, plant and equipment                                   -             (3)             (3)
     Impairment of equity-accounted investment                                     -               -             (2)
     Impairment of intangible assets                                            (17)               -               -
     Reversal of impairment                                                        -               -              10
     Profit on disposal of subsidiary and businesses                               -               2               2
                                                                                (16)             (1)               8
     DISCONTINUED OPERATIONS
     Impairment of intangible assets                                               -               -            (16)
     Impairment of held-for-sale disposal groups                                (48)           (139)           (548)
     (Loss)/profit on disposal of discontinued operations                       (15)              26              22
     Release of foreign currency translation surplus                               -               -              22
     Release of discontinuance provision                                           -               -              12
     Net profit on disposal of property, plant and equipment                       -               6              12
                                                                                (63)           (107)           (496)
     Total                                                                      (79)           (108)           (488)
2    RECONCILIATION BETWEEN ATTRIBUTABLE EARNINGS
     AND HEADLINE EARNINGS
     Attributable to Altron equity holders                                        87              20           (185)
     Capital items - gross                                                        79             108             488
     Tax effect of capital items                                                (12)               -              11
     Non-controlling interest in capital items                                   (5)            (23)            (74)
     Headline earnings                                                           149             105             240

                                                                          Six months      Six months            Year
                                                                               ended           ended           ended
                                                                            31.08.17        31.08.16        28.02.17
     R millions                                                          (Unaudited)     (Unaudited)       (Audited)
       
3.   RECONCILIATION BETWEEN ATTRIBUTABLE EARNINGS AND       
     HEADLINE EARNINGS FROM CONTINUING OPERATIONS       
     Attributable to Altron equity holders                                       163             182             395
     Capital items - gross                                                        16               1             (8)
     Tax effect of capital items                                                 (5)               -               -
     Headline earnings                                                           174             183             387
4.   RECONCILIATION BETWEEN ATTRIBUTABLE EARNINGS AND       
     HEADLINE EARNINGS FROM DISCONTINUED OPERATIONS       
     Attributable to Altron equity holders                                      (76)           (162)           (580)
     Capital items - gross                                                        63             107             496
     Tax effect of capital items                                                 (7)               -              11
     Non-controlling interest in capital items                                   (5)            (23)            (74)
     Headline earnings                                                          (25)            (78)           (147)
5.   RECONCILIATION BETWEEN HEADLINE EARNINGS AND   
     NORMALISED HEADLINE EARNINGS FROM CONTINUING  
     OPERATIONS
     Normalised headline earnings from continuing operations have
     been presented to demonstrate the impact of material once-off
     costs on the headline earnings of the continuing operations.
     The presentation of normalised headline earnings is not
     an IFRS requirement.  
     Headline earnings are reconciled to normalised headline earnings
     as follows:
     Headline earnings                                                           174             183            387
     Foreign currency losses on transaction funding                                2               -              -
     Restructuring costs                                                          47               -              -
     Contribution from closed businesses                                           -             (4)              6
     Tax effect of adjustments                                                  (13)               1            (2)
     Normalised headline earnings                                                210             180            391
    
6.  RECONCILIATION BETWEEN ATTRIBUTABLE EARNINGS AND DILUTED EARNINGS
    There were no reconciling items between attributable earnings and diluted earnings.

7.  ACQUISITION OF SUBSIDIARY
    Acquisition of Fleet Logistics (Pty) Limited ("EZY2C") in Australia
    Effective 1 July 2017, Altech Netstar acquired the issued share capital of EZY2C in Australia, a provider of fleet
    and asset management solutions, for a maximum purchase price of A$15,9 million, of which A$8,7 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 R15 million and a net profit after tax of R 5 million to the group. Management
    is still finalising the full purchase price allocation - the initial assessment is presented below. If the company was
    acquired on 1 March 2017, the contributed revenue would have been R37 million and the net profit after tax would
    have been R6 million.

    R million                                                             Recognised       Fair value      Carrying
    The acquired balances at the effective date were as follows:              values      adjustments        amount
    Non-current assets                                                             1               17            18
    Current assets                                                                12                -            12
    Non-current liabilities                                                        -              (5)           (5)
    Current liabilities                                                          (6)                -           (6)
    Total net assets on acquisition                                                7               12            19
    Goodwill on acquisition                                                                                     142
    Total consideration                                                                                         161
    Less: Cash and cash equivalents in subsidiary acquired                                                      (3)
    Less: Deferred purchase consideration                                                                      (72)
    Net cash outflow on acquisition                                                                              86

8.  DISPOSAL OF SUBSIDIARIES AND BUSINESSES
    Disposal of 100% interest in the Auto X (Pty) Limited group (Powertech Battery Group)
    Effective 1 July 2017, Powertech Industries (Pty) Limited disposed of 100% of its equity interest in the Auto X group
    for R324 million. This operation formed part of the Powertech group, which has been disclosed as a discontinued
    operation. R188 million was received on the effective date, while the balance of the proceeds will be settled out of
    actual receipts received by Auto X from the automotive production development programme. This receivable is in the
    form of a preference share, with a carrying value of R131 million at 31 August 2017. The preference share receivable
    in Auto X is included in other investments on the group's balance sheet.
    
    Disposal of 100% interest in Webroy (Pty) Limited
    Effective 1 March 2017, Powertech Industries disposed of 100% of its equity interest in Webroy for R11 million. This
    operation formed part of the Powertech group, which has been disclosed as a discontinued operation.
    
    Disposal of 100% interest in Powertech System Integrators (Pty) Limited ("PTSI")
    Effective 1 August 2017, Power Technologies (Pty) Limited disposed of 100% of its equity interest in PTSI for R30
    million. This operation formed part of the Powertech group, which has been disclosed as a discontinued operation.
    Net assets of the above operations disposed are as follows:
                                                                                                           R million
    Non-current assets                                                                                           123
    Current assets                                                                                               484
    Non-current liabilities                                                                                      (1)
    Current liabilities                                                                                        (226)
    Disposal value                                                                                               380
    Loss on disposal of subsidiaries                                                                            (15)
    Cash and cash equivalents disposed                                                                          (94)
    Proceeds receivable (PTSI)                                                                                  (30)
    Preference share receivable                                                                                (131)
    Proceeds received on disposal                                                                                110
 
9.  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 2016 financial year, the decision was taken to dispose of the Powertech group and the Multimedia 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 within the next 12 months.
    The Powertech and Multimedia Group businesses were previously classified as held-for-sale as well as discontinued operations.

    Net assets of disposal groups held-for-sale:
    R million                                                          31.08.2017     31.08.2016    28.02.2017
       
    Assets classified as held-for-sale                                      1 013          2 399         1 644
    Non-current assets                                                        256            815           392
    Current assets                                                            757          1 584         1 252
    Liabilities classified as held-for-sale                                 (739)        (1 189)       (1 024)
    Non-current liabilities                                                   (9)           (36)          (16)
    Current liabilities                                                     (730)        (1 153)       (1 008)
      
    Breakdown of disposal groups held-for-sale:
                                                         31.08.2017     31.08.2017   31.08.2017     31.08.2017
                                                          Powertech     Multimedia
    R million                                          Transformers          Group        Other          Total
                                                                812            310          400          1 522
    Non-current assets                                          308            158          215            681
    Current assets                                              504            152          185            841
    Impairment of held for sale disposal group                                                           (509)
    Assets classified as held-for-sale                                                                   1 013
    Liabilities classified as held-for-sale                   (355)          (243)        (141)          (739)
    Non-current liabilities                                       -            (9)            -            (9)
    Current liabilities                                       (355)          (234)        (141)          (730)
    
    Breakdown of disposal groups held-for-sale:

                             28.02.2017    28.02.2017    28.02.2017     28.02.2017    28.02.2017    28.02.2017
                                            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
    group                                                                                                (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)
    
                                                                        Six months    Six months
                                                                             ended         ended    Year ended
    R million                                                           31.08.2017    31.08.2016    28.02.2017
    Cash flows utilised in discontinued operations:
    Net cash utilised in operating activities                                  (6)           (2)          (21)
    Net cash generated from investing activities                                84           921           878
    Net cash utilised in financing activities                                  (1)         (793)          (20)
    Net cash flow for the period                                                77           126           837

10. FAIR VALUE OF FINANCIAL INSTRUMENTS
    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 remained at R21 million for the period.

    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 considerations was assessed as R75 million at
    the reporting period which resulted in a remeasurement loss of R2 million.

    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. A market comparison technique is used to 
    determine fair value. The fair value of the derivative foreign exchange contracts was assessed as R28 million (liability) 
    at the reporting period which resulted in a remeasurement loss of R20 million.
    
    The derivative total equity return swap used for hedging the share linked incentive expense is disclosed as Level 2
    financial instruments in terms of the fair value hierarchy with fair valuation inputs determined from quoted prices
    (unadjusted) in active markets for identical assets or liabilities. The fair value of the total equity return swap entered
    into in the current year was assessed at R4 million (asset) at the reporting period which resulted in an equal gain of
    R4 million being recognised.
    
    There were no transfers between Levels 1, 2 or 3 of the fair value hierarchy for the period ended 31 August 2017.

11. POST-BALANCE SHEET EVENTS
    Post the reporting period, Bytes Technology Group Limited UK acquired 100% of the issued share capital of Blenheim
    for a consideration of GBP35,9 million.
    
    Blenheim is the holding company of Phoenix Software Limited, a business focused on the resale of software products
    and associated services.
    
    The transaction was effective on 1 October 2017. The transaction was funded from a combination of cash resources in
    Bytes UK, existing group facilities and a new trade finance facility in Bytes UK.

12. 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.

SEGMENTAL 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.

The segment revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) generated by each of the
group's reportable segments are summarised as follows:

                                                                   Revenue                                     EBITDA
                                                    Aug 2017      Aug 2016     Feb 2017        Aug 2017      Aug 2016   Feb 2017
Continuing operations
Altech Radio Holdings Group                              586           455        1 127              32            27         84
Bytes Document Solutions Group                           660           951        1 636              25            35         48
Bytes Managed Solutions                                  517           670        1 321              29            32         89
Bytes People Solutions                                   220           219          426              19            21         41
Bytes Secure Transaction Solutions                       504           465          992             110            95        212
Bytes Systems Integration SA Group                       625           647        1 274               7             2         39
Bytes Universal Systems                                  296           362          669              16            28         63
Altron ICT South African operations                    3 408         3 769        7 445             238           240        576
Bytes Technology Group UK                              2 525         2 479        4 504             109           110        171
Other International operations                           114           208          284              12             6         20
Altron ICT International operations                    2 639         2 687        4 788             121           116        191
Shared Services, Corporate and cons                        -             4            5               6             3         17
Altron ICT                                             6 047         6 460       12 238             365           359        784

Altech Autopage Group                                      -           316          316               -             3          3
Altech Netstar Group                                     668           597        1 224             133           126        266
Arrow Altech Distribution                                291           308          602              21            24         40
Corporate and Cons and financial services              (214)         (144)        (488)            (67)          (67)      (143)
Continuing operations                                  6 792         7 537       13 892             452           445        950

Discontinued operations
Altech Multimedia Group                                  599           566        1 225              47            17         21
Altech Autopage Group                                      -             -            -             (7)          (49)       (78)
Powertech Cables Group*                                  103         1 721        1 836               5            42         46
Powertech Transformers Group                             522           630        1 041            (51)          (38)       (73)
Powertech Battery Group**                                344           481          944              33            32         78
Powertech System Integrators***                          214           341          583            (12)          (56)       (52)
Other Powertech Segments                                 123           151          196            (24)          (13)       (52)
Powertech Group                                        1 306         3 324        4 600            (49)          (33)       (53)
Discontinued operations                                1 905         3 890        5 825             (9)          (65)      (110)

Altron Group                                           8 697        11 427       19 717             443           380        840

*    Powertech Cables Group for the half year ended 31 August 2017 consists of Swanib Cables, prior year comparatives include Aberdare
     Cables Group which was disposed effective 30 June 2016.
**   Powertech Battery Group disposed of 1 July 2017 (refer to note 8), this segment also includes Webroy which was disposed 1 March 2017.
***  Powertech System Integrators disposed of 1 August 2017. System Integrators segmental includes QuadPro, which has not been disposed
     of as at 31 August 2017.


Segment EBITDA can be reconciled to group operating profit before
capital items as follows:                                                                      Aug 2017    Aug 2016     Feb 2017
Segment EBITDA                                                                                      443         380          840
Reconciling items:                            
Depreciation                                                                                       (71)        (65)        (136)
Amortisation                                                                                       (47)        (43)         (86)
Group operating profit before capital items                                                         325         272          618

SUPPLEMENTARY INFORMATION - TOTAL OPERATIONS                     
                                                                                             31.08.17       31.08.16    28.02.17
R million                                                                                 (Unaudited)    (Unaudited)   (Audited)
                      
Depreciation                                                                                       71             65         136
Amortisation                                                                                       47             43          86
Net foreign exchange losses                                                                         4            104         226
 Cash flow movements                       
 Capital expenditure (including intangibles)                                                      142            156         314
 Net additions to contract fulfilment costs                                                        26              8          20
 Additions to contract fulfilment costs                                                           118            101         237
 Net expensing of contract fulfilment costs during the year                                      (92)           (89)       (216)
 Terminations of contract fulfilment costs                                                          -            (4)         (1)
                      
Capital commitments                                                                                 5             36          21
Lease commitments                                                                                 410            443         465
 Payable within the next 12 months                                                                166            165         147
 Payable thereafter                                                                               244            278         318
Weighted average number of shares                                             (millions)          369            338         338
Diluted average number of shares                                              (millions)          371            342         340
Shares in issue at end of period                                              (millions)          371            338         339
Ratios (total operations)                       
EBITDA margin                                                                          %          5,1            3,3         4,3
ROCE                                                                                   %        14,5*          12,0*        14,5
ROE                                                                                    %        11,5*           8,4*        11,4
ROA                                                                                    %         9,5*           6,5*         8,3
RONA                                                                                   %        12,6*          10,4*        12,2
Current ratio                                                                                   1.2:1            1:1       1.2:1
Acid test ratio                                                                                   1:1          0.8:1         1:1


* Annualised.

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

During the past six months, Altron has continued to make good progress on delivering on its strategy of repositioning 
the group in the ICT space, divesting of non-core assets, lowering debt levels and reducing its exposure to the manufacturing
sector. Two key acquisitions have been completed and the group's financial performance has improved significantly on a 
normalised and constant currency basis:

-  EBITDA from continuing operations increased by 19%* to R501 million
-  HEPS from continuing operations increased by 16%* to 57 cents
-  Net debt expected to reduce to R1.1 billion on conclusion of disposals

*Constant currency information.

The board identified the current financial year as the one in which the business is to be repositioned for growth in
order to deliver on Altron's intention of producing consistent, double digit growth at the earnings before interest,
tax, depreciation and amortisation (EBITDA) level. To this end, good progress has been made in the right-sizing of
the corporate cost base, the simplification of reporting lines, regrouping the operations in a more customer-centric
manner, and improving the sales efficiencies across the group with a strong focus on customer marketing around One
Altron. This process will be largely completed in the current financial year, and will accelerate our focus on delivering
superior growth.

An important aspect of this process is to close out the disposal of the remaining discontinued operations. Since the
last report to shareholders, the group has successfully concluded the disposal of Powertech Batteries, Swanib Cables,
Powertech IST, Powertech Quadpro and Powertech Switchgear, with all proceeds being used to repay borrowings.
The disposal of Crabtree is awaiting Competition Commission approvals in neighbouring countries, while we continue
to work on the disposal of Altech Multimedia and Powertech Transformers.

During the review period the group's continuing operations have delivered results in line with expectations, despite
the difficult local economy, a strengthening currency, and the once-off costs associated with the various restructuring
processes. In order to give a clearer view of the underlying performance, we have disclosed normalised information for
the continuing operations in our interim reporting. In this message we have also made adjustments to show the results
on a constant currency basis to remove the significant impact of the strengthening of the Rand in respect of our UK
operations. The constant currency financial information has been compiled by the directors to illustrate the impact 
of foreign currency movements on Altron's reported financial performance for the six months ended 31 August 2017 for 
illustrative purposes only. This information is the responsibility of the directors and has not been reviewed or audited 
by the auditors.

FINANCIAL OVERVIEW 
INCOME

Continuing operations
Revenue for the continuing operations grew by approximately 5%* to R6.8 billion, while EBITDA increased by 19%* to
R501 million on a normalised and constant currency basis. The normalised EBITDA margin improved to 7.4% compared
to the prior period's 6.5%*. Much of this growth came from the international operations as local trading conditions
remain challenging.

Depreciation and amortisation charges increased to R118 million, while capital items were a loss of R16 million during
the current period compared to a negligible loss in the prior period. Net interest costs in the continuing operations
marginally increased from R83 million to R87 million. This increase reflects a combination of higher borrowing costs
as well as an increased allocation of debt to the continuing operations as a result of the reduced expectations around proceeds 
from the sale of the discontinued operations compared to those in August 2016, although some of this was offset by the 
benefits of the equity injection in April 2017.

Normalised and constant currency headline earnings increased by 27%* from R165 million* to R209 million.
Normalised and constant currency headline earnings per share grew by 16%* to 57 cents against the prior year
of 49 cents* following the specific issue of shares for cash to Value Capital Partners in May 2017.

Discontinued operations
The results of the discontinued operations showed a significant improvement from the previous period. EBITDA
losses in the current period improved to a loss of R9 million compared to a prior period loss of R65 million. The main
improvement came out of the Altech Multimedia business which generated strong EBITDA growth, while the Powertech
businesses saw a 48% deterioration from the prior corresponding period. The results were further assisted by the
reduced costs associated with the closure of the Altech Autopage business.

The substantial improvements in the discontinued operations, with the loss from these operations again reducing
significantly from R224 million to R95 million, are a combination of improved operational performance, progress on the
disposals and the resultant decline in the interest expense.

CASH MANAGEMENT

Total operations
The overall net debt position continues to improve. Cash generated by operations was higher than the prior period on the 
improved EBITDA performance, but cash available from operating activities was affected by an absorption into working capital.
Much of this is cyclical, which is expected to reverse into the year-end.

Cash utilised in investing activities relates primarily to capital expenditure, the normal investment into contract
fulfilments costs at Altech Netstar and the Australian acquisition completed by Altech Netstar. These were partly
offset by the proceeds on the various Powertech disposals completed during the period. Capital expenditure in the
continuing operations is broadly in line with the depreciation charge, while the net investment into contract fulfilment
costs amounted to R26 million.

The R73 million of cash flow from financing activities is predominantly due to the R400 million from Value Capital
Partners, offset by the repayment of loans of R335 million.

SUBSIDIARY REVIEW

SUBSIDIARY INCOME AND GROWTH

Continuing operations
ICT Operations
After normalising for the factors referred to above, revenue from the group's ICT businesses is up 5%* to R6 billion,
with EBITDA increasing by 12%* to R376 million and EBITDA margin improving to 6.2% from 5.9%*. This growth was
driven by the performance of the international operations.

The Bytes UK operations had another exceptional six months, growing revenue by 25% in local currency terms and
EBITDA by 21%, with the business benefiting from increased market share as well as price increases linked to the
weaker British Pound. The acquisition of the Blenheim Group and its largest subsidiary Phoenix Software, as announced
to shareholder on SENS on 29 September 2017, will add further scale to Bytes UK, making it a significant player in the
UK software market and operating in a space with good revenue growth prospects.

On a normalised basis the South African ICT operations saw a 3% decrease in revenue to R3.4 billion, but achieved
a 6% increase in EBITDA to R254 million, with the EBITDA margin improving to 7.4% from 6.8%. The revenue decline
is indicative of the challenging local economic environment, while the margin expansion arose from the increased
contribution of the higher margin businesses, particularly Bytes Secure Transaction Solutions.

Bytes Secure Transaction Solutions continues to perform well, growing revenue by 8% and EBITDA by 16%,
reaffirming its status as a key growth focus for the group. Most components of this business performed well, with the
NuPay division continuing to deliver strong growth. The healthcare side of the business has been successful in moving
into new adjacencies, thereby achieving growth in an otherwise stagnant market.

Altech Radio Holdings has seen revenue improve by 29% and EBITDA by 19% compared to the prior period. The strategy
of diversifying the businesses' product suite to include broadband products and services continues to result in
significant growth for the business compared to the previous period, despite challenges around the City of Tshwane
broadband contract. There remain significant opportunities in this market segment that the business is well placed
to exploit.

Bytes Document Solutions and Bytes Managed Solutions, experienced both revenue and EBITDA declines. New initiatives 
are under way in each of the operations, with the focus on maximising revenue while ensuring that cost bases are 
appropriate and operating efficiencies are maximised.

Bytes Systems Integration produced improved results but continues to operate at very low margins, while Bytes
Universal Systems had a slow first half, falling short of its potential. These two businesses are in the process of being
combined under a new managing director.

Altech Netstar
Altech Netstar had a strong performance, reporting a 12% increase in revenue and 6% improvement in EBITDA against
the prior corresponding period. Consumer gross connections grew by 32%, while fleet management's gross connections
grew by 9%. Altech Netstar saw some benefit from its recently acquired Australian business EZY2C as it further diversifies 
its income streams in line with Altron's strategy to increase off-shore earnings. The business is accelerating its focus 
into telematics and fleet management using the intellectual property from the Pinpoint acquisition.

Arrow Altech Distribution
Arrow Altech Distribution's revenue was down 6% impacted by the stronger rand, with EBITDA decreasing by 12.5%.
In challenging economic conditions, the business maintained its leading component distributor position in this market,
holding onto the significant gains made in the prior year. The business continues to strategically align itself with its
international partner, Arrow Electronics Inc, in introducing new initiatives to diversify revenue streams.

Discontinued operations

Altech Multimedia
Altech UEC delivered a good performance, increasing revenue by 6% and generating R47 million of EBITDA compared
to the R17 million in the prior period. This improved performance is a reflection of reasonable manufacturing volumes,
a more stable foreign exchange environment, and the benefits of some of the restructuring of previous periods.

Altech Autopage
The final close-out of the disposal for Altech Autopage is progressing well, with the collection of the debtors' books
continuing in line with expectations.

Powertech
Meaningful progress has been made with regard to the disposal of the remaining Powertech businesses. Powertech
Batteries was disposed of effective from 1 July 2017, whilst Powertech System Integrators was sold effective 1 August
2017. Powertech Quadpro, Powertech Switchgear and Swanib Cables were sold after the balance sheet date. We are
awaiting Competition Commission approval for the Crabtree disposal, while Powertech Transformers remains in the
Powertech stable at this time. The results for the period have been influenced by a further restructuring exercise at
Powertech Transformers as well as the closure of the Powertech head office.

DIRECTORATE
Messrs MC Berzack, JRD Modise and SN Susman retired from the Altron board as non-executive directors and from
the relevant committees with effect from 31 May 2017. Messrs BW Dawson and SW van Graan were appointed as
non-executive directors of Altron with effect from 1 June 2017. Mr Dawson has been appointed to the Altron Investment
Committee, while Mr Van Graan serves on the Altron Audit Committee, Risk Management Committee, Social and Ethics
Committee and Investment Committee.

Our new board has brought expertise and relevant experience to our various deliberations and are playing an active
part in supporting the executive team.

OUTLOOK
The focus of the remainder of the current financial year is to position the group to deliver on its growth targets going
forward by completing the process of focusing the group squarely into the ICT sector and completing the restructuring
and realignment exercises.

Conditions remain challenging in the South African economy but we remain confident that our continuing operations
will generate growth over the prior period. Our recent investments into international markets are aligned with the
strategic intention to geographically diversify earnings, with a focus on businesses with a high element of annuity
income, and these should make a contribution to the second half of the year.

The closing out of 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 ICT assets.

Much has been achieved in the first half of the financial year and the board is confident that the group is well positioned
to complete its initiatives for the current financial year.

On behalf of the board

Mike Leeming
Chairman

Mteto Nyati
Chief Executive

Alex Smith
Chief Financial Officer

26 October 2017

Board of directors
Non-executive
Mr MJ Leeming, Mr AC Ball, Mr BW Dawson, Mr GG Gelink, Dr PM Maduna, Ms DNM Mokhobo, Mr S Sithole(#), 
Mr SW van Graan, Dr WP Venter, Mr RE Venter
    

Executive
Mr M Nyati (Chief Executive), Mr AMR Smith(##)
(#)Zimbabwean, (##)British

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

Sponsor
Investec Bank





Date: 26/10/2017 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.

Share This Story