Allied Electronics Corporation Ltd FY 2014 financial results

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Allied Electronics Corporation Limited listed on the Johannesburg Stock Exchange has released their Full Year Results. Check out insights into this company in their presentation which appears below. Sign up to theinvestormailinglist.com to recieve earnings presentations of all listed companies in Africa by email.

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Allied Electronics Corporation Ltd FY 2014 financial results

  1. 1. ALTRON SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014 22 SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME % 2014 2013 R millions Change (Audited) (Restated) CONTINUING OPERATIONS Revenue 14 27 772 24 464 Earnings before interest, tax, depreciation, amortisation and capital items (EBITDA before capital items) 8 1 788 1 652 Depreciation and amortisation (446) (453) Operating profit before capital items 12 1 342 1 199 Capital items (Note 1) (38) (78) Result from operating activities 16 1 304 1 121 Finance income 103 56 Finance expense (363) (134) Share of profit of equity-accounted investees, net of taxation 14 15 Profit before taxation – 1 058 1 058 Taxation (326) (364) Profit for the year from continuing operations 5 732 694 DISCONTINUED OPERATIONS Revenue – 280 EBITDA before capital items – (113) Depreciation and amortisation – (52) Operating loss before capital items – (165) Capital items (Note 1) 43 (1 371) Result from operating activities 43 (1 536) Finance income – 2 Finance expense – (92) Profit/(loss) before taxation 43 (1 626) Taxation – (10) Profit/(loss) for the year from discontinued operations 43 (1 636) Net profit/(loss) for the year 775 (942) Other comprehensive income Items that will never be reclassified to profit or loss Remeasurement of net defined benefit asset/obligation 192 19 Taxation on items that will never be reclassified to profit or loss (3) (5) Items that are or may be reclassified subsequently to profit or loss Foreign currency translation differences in respect of foreign operations 164 310 Realisation of negative foreign currency translation reserve on disposal – 196 Fair value adjustment on available-for-sale investments 13 (5) Other comprehensive income for the year, net of taxation 366 515 Total comprehensive income for the year 1 141 (427) Net profit/(loss) attributable to: Non-controlling interests 160 (630) Altron equity holders 615 (312) Altron equity holders from continuing operations 572 484 Altron equity holders from discontinued operations 43 (796) Net profit/(loss) for the year 775 (942) Total comprehensive income attributable to: Non-controlling interests 174 (439) Altron equity holders 967 12 Altron equity holders from continuing operations 924 651 Altron equity holders from discontinued operations 43 (639) Total comprehensive income for the year 1 141 (427) Basic earnings per share from continuing operations (cents) 16 179 153 Diluted basic earnings per share from continuing operations (cents) 17 175 149 Basic earnings/(loss) per share from discontinued operations (cents) 105 13 (252) Diluted basic earnings/(loss) per share from discontinued operations (cents) 105 13 (239) Basic earnings/(loss) per share from total operations (cents) 294 192 (99) Diluted basic earnings/(loss) per share from total operations (cents) 309 188 (90) Dividends per share declared (cents) 33 80 60
  2. 2. ALTRON SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014 23 NOTES Basis of preparation The summarised consolidated financial statements are prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial pronouncements as issued by the Financial Reporting Standards Council and presented in accordance with the minimum content, including disclosures, prescribed by IAS 34 Interim Financial Reporting applied to year end reporting, and the requirements of the Companies Act of South Africa and the JSE Listings Requirements. The accounting policies applied in the preparation of the audited consolidated financial statements, from which the summarised consolidated financial statements were derived, are in terms of International Financial Reporting Standards and are consistent with the accounting policies applied in the preparation of the previous audited consolidated financial statements, except for the adoption of the new accounting standards as detailed below. This report was compiled under the supervision of Mr Alex Smith CA, Chief Financial Officer, and Mr Arno Geldenhuys CA(SA), Group Financial Manager. *Change in accounting policies Altron has adopted the following new accounting standards and amendments to standards, including any consequential amendments to other standards with a date of application of 1 March 2013: a. IFRS 10 Consolidated Financial Statements (2011) b. IFRS 11 Joint Arrangements c. IFRS 12 Disclosure of Interests in Other Entities d. IFRS 13 Fair Value Measurement e. IAS 19 Employee Benefits (as revised in 2011), including amendments to IAS 19 relating to employee contributions to defined benefit plans (early adoption). f. IAS 27 Separate Financial Statements g. IAS 28 Investment in Associates and Joint Ventures h. Presentation of Items of Other Comprehensive Income (Amendments to IAS 1) i. IAS 36 Impairment of assets (2013) (early adoption). In accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors, the changes in accounting policies described below have been applied retrospectively to adjust the statement of comprehensive income, statement of changes in equity, balance sheet and statement of cash flows for the effects of the new accounting standards. IAS 19: Employee Benefits became effective 1 March 2013. Under its previous accounting policy, Altron elected to apply the corridor method to account for the recognition of actuarial gains and losses. Under IAS 19 (as revised in 2011), the calculations of interest cost and expected return on plan assets have been altered and a net interest income or expense is calculated by applying the discount rate used to measure the defined-benefit obligation to the net defined-benefit asset/obligation at the beginning of the period. Profit from operating activities includes only the current service cost and the net interest income or expense. Remeasurements of the net defined-benefit asset/obligation are now recognised in other comprehensive income. Remeasurements include actuarial gains and losses, the return on plan assets and any change in the effect of the asset ceiling, excluding amounts included in the net interest on the defined benefit asset/obligation. Altron has also adopted the new suite of consolidation standards: IFRS 10: Consolidated Financial Statements (“IFRS 10”), IFRS 11: Joint Arrangements (“IFRS 11”), IFRS 12: Disclosure of Interests in Other Entities, IAS 27: Separate Financial Statements and IAS 28: Investment in Associates and Joint Ventures, which all became effective for Altron on 1 March 2013. As a result of adopting IFRS 10, Altron has changed its accounting policy for evaluating control over its investees. IFRS 10 introduces a new control model that is applicable to all investees, by focusing on whether Altron has power over an investee, exposure or rights to variable returns from its involvement with the investee and ability to use its power to affect those returns. In terms of IFRS 11, proportionate consolidation of joint arrangements is no longer permitted. Joint arrangements are now classified as either joint ventures or joint operations. Joint ventures are required to be equity accounted. Altron has re-evaluated its involvement in its joint ventures with CBi Electric Aberdare ATC Telecom Cables (“CBI Aberdare”) and Tridonic SA Proprietary Limited (“Tridonic”). CBI Aberdare has been reclassified from a jointly controlled entity that was previously proportionately consolidated to a joint venture that is now equity accounted. Tridonic has been reclassified from a jointly controlled entity that was previously proportionately consolidated to a subsidiary. Altron has re-evaluated its treatment of the Autopage Cell Captive. The Autopage Cell Captive is no longer consolidated in terms of the requirements of IFRS 10 and is accounted for as an in-substance reinsurance contract. Report of the independent auditors The unmodified audit reports of KPMG Inc., the independent auditors, on the annual financial statements and the summarised financial statements contained herein for the year ended 28 February 2014, dated 13 May 2014, are available for inspection at the registered office of the company. The auditors’ report does not necessarily report on all of the information contained in this announcement. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditors’ engagement they should obtain a copy of the auditors’ report together with the accompanying financial information from the issuer’s registered office.
  3. 3. ALTRON SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014 24 NOTES continued % 2014 2013 Change (Audited) (Restated)* Headline earnings per share (cents) 42 188 132 Normalised headline earnings per share (cents) 49 206 138 Diluted headline earnings per share (cents) 43 185 129 Normalised diluted headline earnings per share (cents) 51 202 134 2014 2013 R millions (Audited) (Restated)* 1. Capital items CONTINUING OPERATIONS Net gain on disposal of property, plant and equipment 38 14 Impairment of property, plant and equipment (2) (7) Impairment of goodwill (27) – Impairment of intangible assets (6) (9) Net gain/(loss) on disposal of businesses and investments 3 (5) Loss on disposal of held-for-sale disposal group – (42) Impairment of held-for-sale disposal group assets – (29) Impairment of investment (44) – (38) (78) DISCONTINUED OPERATIONS Profit/(loss) on disposal of discontinued operations 43 (730) Impairment of property, plant and equipment – (328) Impairment of intangible assets – (300) Impairment of goodwill – (13) 43 (1 371) TOTAL 5 (1 449) 2. Reconciliation between attributable earnings and headline earnings Attributable to Altron equity holders 615 (312) Capital items – gross (5) 1 449 Tax effect of capital items (2) – Non-controlling interest in capital items (5) (720) Headline earnings 603 417 3. Reconciliation between attributable earnings and diluted earnings Attributable to Altron equity holders 615 (312) Dilutive earnings attributable to B-BBEE non-controlling interest in subsidiaries (3) – Dilutive earnings attributable to dilutive options at subsidiary level – 42 Non-controlling interest in adjustments – (18) Diluted earnings 612 (288) 4. Reconciliation between headline earnings and diluted headline earnings Headline earnings 603 417 Dilutive earnings attributable to B-BBEE non-controlling interest in subsidiaries (2) – Dilutive earnings attributable to dilutive options at subsidiary level – (11) Non-controlling interest in adjustments – 4 Diluted headline earnings 601 410 5. Reconciliation between headline earnings and normalised headline earnings Normalised headline earnings have been presented to demonstrate the impact of material, non-operational once-off costs associated with accessing benefits that will only be realised in subsequent reporting periods, as well as certain restructuring costs on the headline earnings of the group. The presentation of normalised headline earnings is not an IFRS requirement. Headline earnings 603 417 Foreign currency losses on transaction funding 40 – Breakage costs on transaction funding 5 – Restructuring costs 39 26 Tax effect of adjustments (7) (8) Non-controlling interests in adjustments (20) – 660 435
  4. 4. ALTRON SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014 25 NOTES continued 2014 2013 (Audited) (Restated)* 6. Reconciliation between diluted headline earnings and normalised diluted headline earnings Diluted headline earnings 601 410 Foreign currency losses on transaction funding 40 – Breakage costs on transaction funding 5 – Restructuring costs 39 26 Tax effect of adjustments (7) (8) Non-controlling interest in adjustments (20) – 658 428 Fully diluted earnings, diluted headline earnings and normalised diluted headline earnings have been calculated in accordance with IAS 33 – Earnings per share on the basis that: – The recognition of the deferred sale of a 30% interest in Aberdare Cables Proprietary Limited to the Izingwe Consortium based on the assumption that the outstanding purchase price will be settled in cash for R17 million, adjusted for the dilutive effect of the option price at the Aberdare level and after taking into account the 16.67% investment in the Izingwe Consortium by Power Technologies Proprietary Limited. 7. Acquisition of business Acquisition of Brand New Technologies Proprietary Limited Effective 1 March 2013 the Bytes Group acquired the business of Brand New Technologies Proprietary Limited (“BNTech”) for a total estimated consideration of R49 million of which, R35 million is deferred and payable on the achievement of certain earn-outs over three years. BNTech is a leading provider of identity management products and solutions, specialising in protecting, securing and validating identities. The acquisition of BNTech complements existing Bytes offerings and allows the group to offer and provide a holistic identity management solution on a turnkey basis, both in South Africa and into Africa. The acquired business contributed revenue of R57.3 million and net profit after tax of R14.5 million to the group. These amounts have been calculated using the group’s accounting policies. Recognised Fair value Carrying The acquired balances of BNTech at the effective date were as follows: values adjustments amount Current assets 5 – 5 Current liabilities – – – Total net assets on acquisition 5 – 5 Goodwill on acquisition 44 Total consideration 49 Less: Amounts due to vendors (35) Net cash outflow on acquisition 14 8. Post balance sheet events 8.1 Debt refinance On 10 March 2014, Altron refinanced all of its existing term debt. New term loans were taken out totalling R3.1 billion, with R1.9 billion of three-year debt and R1.25 billion of five-year amortising debt. Post the refinance, the group’s balance sheet was affected as follows: Feb 14 Feb 14 (Audited) (Pro forma) Non-current loans 283 3 034 Current loans 2 649 678 Bank overdraft 1 777 997 4 709 4 709 All of the debt has been centralised at the Altron Finance Proprietary Limited level which houses the group’s treasury operations. All the refinanced debt is subject to a common terms agreement and has been raised at a margin of 210 basis points over three-month JIBAR. 8.2 Repurchase of non-controlling interest in Bytes SA On 9 May 2014 the group entered into an agreement to acquire the 27% of Bytes SA that it does not already own from the Kagiso Tiso Holdings group of companies for R669 million. The transaction will be effective on 30 June 2014. 8.3 Nupay Effective 1 May 2014 Altech acquired the remaining 50% less one share equity interest in Altech NuPay Proprietary Limited, which Altech did not already own for a purchase price of R80 million. The purchase price was settled via the issue of Altron participating preference shares by way of a vendor placement. 8.4 Aberdare Izingwe Effective 31 March 2014 the Powertech Group recognised the deferred sale of a 30% interest in Aberdare Cables to the Izingwe Consortium. The obligation to repay the funding has been fully transferred to Izingwe and thus the Powertech group will recognise the non-controlling interest in Aberdare Cables from 1 April 2014. 8.5 Investment in Liquid Telecommunications Holdings Limited On 29 April 2014, Altech received the outstanding R485 million from Liquid Telecommunications Holdings Limited to settle the $55 million put option that had been exercised in January 2014. R103 million had been received in February 2014.
  5. 5. ALTRON SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014 26 9. Assets and liabilities classified as held-for-sale During the year the decision was taken to sell Bytes Document Solutions UK and the retail ATM base and the operations were subsequently classified as held-for-sale. Effective 30 April 2014, Bytes UK disposed of 100% of its equity interest in the Bytes Document Solutions operation in the UK to Xeratec Group Holdings Limited for a purchase price of R96 million. These operations did not constitute discontinued operations. Assets classified as held-for-sale Property, plant and equipment 46 Intangible assets 1 Goodwill 46 Inventories 11 Trade and other receivables 58 Cash and cash equivalents 52 214 Liabilities classified as held-for-sale Trade and other payables 81 Taxation payable 3 84 10. Buy-back of non-controlling interests in Altech Altron, through its wholly owned subsidiary Altron Finance Proprietary Limited, acquired the Altech non-controlling shareholders’ shares in Altech effective 1 August 2013. This brought Altron’s shareholding in Altech to 100% and will enable it to integrate and initiate synergies between Altech and Bytes, through the creation of the Altron TMT division. The total cash consideration paid to the Altech non-controlling shareholders equalled R1.63 billion (91% of Altech non- controlling interests) and was funded by debt, while 9% of the Altech non-controlling shareholders elected to be settled in Altron participating preference shares. The excess of the consideration paid to Altech shareholders for the non-controlling interest in Altech over the net asset value acquired amounts to R1.45 billion, and has been deducted directly from the equity attributable to Altron shareholders, in accordance with the group’s accounting policies. 11. Related party transactions The group entered into various sale and purchase transactions with related parties in the ordinary course of business, on an arm’s length basis. The nature of related party transactions is consistent with those reported previously. 12. Fair values and risk management (a) Accounting classifications and fair values The following table shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. 28 February 2014 Carrying amount Fair value hierarchy Fair value – hedging Available- R millions instruments for-sale Total Level 1 Level 2 Level 3 Total Financial assets measured at fair value Equity investments – 28 28 1 – 27 28 Derivative assets at fair value: used for hedging 45 – 45 – 45 – 45 45 28 73 1 45 27 73 Financial liabilities measured at fair value Derivative liabilities at fair value: used for hedging (36) – (36) – (36) – (36) (36) – (36) – (36) – (36) 28 February 2013 Carrying amount Fair value hierarchy Fair value –hedging Available- R millions instruments for-sale Total Level 1 Level 2 Level 3 Total Financial assets measured at fair value Equity investments – 525 525 1 – 524 525 Derivative assets at fair value: used for hedging 23 – 23 – 23 – 23 23 525 548 1 23 524 548 Financial liabilities measured at fair value Derivative liabilities at fair value: used for hedging (25) – (25) – (25) – (25) (25) – (25) – (25) – (25) NOTES continued
  6. 6. ALTRON SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014 27 12. Fair values and risk management continued (a) Accounting classifications and fair values continued Financial assets that are not measured at fair value namely; rental finance advances, trade and other receivables, cash and cash equivalents and non-current loans receivable are categorised as loans and receivables. It has been concluded that the carrying amount of these assets approximates their fair value. Financial liabilities that are not measured at fair value namely; loans, empowerment funding obligation, bank overdrafts and trade and other payables are categorised as other financial liabilities. It has been concluded that the carrying amount of these liabilities approximates their fair value. The different levels as disclosed in the table above have been defined as follows: Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 Inputs for the asset or liability that are not based on observable market date (unobservable inputs). (b) Measurement of fair values Valuation techniques and significant unobservable inputs The following tables show the valuation techniques used in measuring Level 2 and Level 3 fair values, as well as the significant unobservable inputs used. Financial instruments measured at fair value Inter-relationship between significant Significant unobservable inputs and Type Valuation technique unobservable inputs fair value measurements Derivative assets and liabilities at fair value: used for hedging Market comparison technique: The fair value of foreign currency contracts (used for economic hedging) are marked-to-market by comparing the contracted forward rate to the present value of the current forward rate of an equivalent contract with the same maturity date Not applicable Not applicable Equity investments (TAR) Directors’ valuations using discounted cash flows · Discount rate of 17.3% (2013: 18.0%) The estimated fair value would increase (decrease) if: · Forecast annual revenue growth (2014 – 3.5%) · the discount rate were lower (higher): · the annual revenue growth rate were higher (lower): Transfers There were no transfers between Levels 1, 2 or 3 of the fair value hierarchy for the years ended 28 February 2014 and 28 February 2013. Reconciliation of Level 3 fair values The movement in Level 3 fair valued equity investments available for sale related to the disposal of the investment in Liquid Telecommunications Holdings Limited and the impairment of the investment in Gradolite Proprietary Limited during 2014. NOTES continued
  7. 7. ALTRON SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014 28 SUMMARISED CONSOLIDATED BALANCE SHEET 2014 2013 2012 R millions (Audited) (Restated) (Restated) ASSETS Non-current assets 5 496 4 863 4 800 Property, plant and equipment 2 028 1 765 2 238 Intangible assets, including goodwill 1 725 1 597 1 716 Equity-accounted investments 243 250 248 Other investments 181 673 233 Rental finance advances 68 45 67 Non-current receivables and other assets 921 414 150 Defined benefit asset 180 – – Deferred taxation 150 119 148 Current assets 10 620 8 073 7 446 Inventories 3 116 2 586 2 415 Trade and other receivables, including derivatives 5 805 4 262 3 860 Assets classified as held-for-sale 214 – 135 Taxation receivable 74 – – Cash and cash equivalents 1 411 1 225 1 036 Total assets 16 116 12 936 12 246 EQUITY AND LIABILITIES Total equity 4 514 5 229 5 821 Non-current liabilities 495 792 936 Loans 283 609 707 Empowerment funding obligation – 17 47 Provisions 36 25 20 Deferred income – – 51 Deferred taxation 176 141 111 Current liabilities 11 107 6 915 5 489 Loans 2 649 1 308 613 Empowerment funding obligation 17 29 24 Bank overdraft 1 777 385 550 Trade and other payables, including derivatives 6 374 5 067 4 041 Provisions 59 100 118 Liabilities classified as held-for-sale 84 – 67 Taxation payable 147 26 76 Total equity and liabilities 16 116 12 936 12 246 Net asset value per share (cents) 1 311 1 497 1 585
  8. 8. ALTRON SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014 29 SEGMENTAL REPORT Segment analysis The segment information has been prepared in accordance with IFRS 8 – Operating Segments which defines the requirements for the disclosure of financial information of an entity’s operating segments. The standard requires segmentation based on the group’s internal organisation and reporting of revenue and EBITDA based upon internal accounting presentation. During the year the Bytes SA Group implemented a business rationalisation programme, and divisionalised a number of subsidiaries in order to align business offerings. Certain operations at Bytes Connect were transferred to Bytes Managed Solutions and Bytes Systems Integration. The business management oversight responsibilities were transferred on 1 March 2013. Revenue and EBITDA for Bytes Systems Integration and Bytes Managed Solutions for the prior year have therefore been restated. The segment revenues and earnings before interest, tax, depreciation and amortisation (EBITDA) generated by each of the group’s reportable segments are summarised as follows: Revenue EBITDA Growth Growth Cur/Pyr Cur/Pyr R millions 2014 2013 % 2014 2013 % Powertech Cables Group 5 053 4 431 14 131 18 623 Powertech Transformers Group 1 609 1 459 10 160 138 16 Powertech Battery Group 775 680 14 82 82 0 Powertech Services Group 845 752 12 27 43 (38) Other Powertech Segments 97 20 (385) (14) (14) 0 Powertech Group 8 379 7 342 14 386 267 45 Bytes Technology Group UK Software 2 066 1 541 34 76 45 69 Bytes Document Solutions Group 2 470 2 216 11 124 142 (12) Bytes Managed Solutions 1 630 1 205 35 175 150 17 Bytes Systems Integration 1 517 1 120 35 89 82 9 Other Bytes Segments 1 078 922 17 131 112 17 Bytes Group 8 761 7 004 25 595 531 12 Altech Autopage 5 501 6 027 (9) 260 253 3 Altech UEC Group 2 674 1 802 48 169 180 (6) Altech Netstar Group 1 079 1 045 3 317 291 9 Altech Converged Services (International)* 280 (100) – (125) 100 Other Altech Segments 1 441 1 287 12 74 165 (55) Altech Group 10 695 10 441 2 820 764 7 Corporate and financial services 6 18 (67) (13) (23) 43 Inter segment revenue (69) (61) Altron Group 27 772 24 744 12 1 788 1 539 16 * The majority of this segment formed the discontinued operations. Segment EBITDA can be reconciled to group operating profit before capital items as follows: R millions 2014 2013 Segment EBITDA 1 788 1 539 Depreciation (326) (345) Amortisation (120) (160) Group operating profit before capital items 1 342 1 034 The creation of Altron TMT (Telecommunications, Multi-media and Information Technology) in August 2013 followed Altron’s successful purchase of all the remaining shares in Altech Limited that it did not already own and the subsequent delisting of Altech Limited from the Johannesburg Stock Exchange (JSE) in August 2013. The rationale for the creation of Altron TMT is to reorganise Altron for future growth and to capture the full benefits that scale and integration offer. As part of the TMT reorganisation, Altron TMT which comprises both Altech and Bytes will undergo structural changes to its subsidiaries and divisions in FY2015.
  9. 9. ALTRON SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014 30 SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS OPERATIONAL CONTRIBUTION FROM TOTAL OPERATIONS 2014 2013 R millions (Audited) (Restated) Continuing operations Cash flows from operating activities 762 1 135 Cash generated by operations 2 019 1 871 Net finance expense (242) (95) Changes in working capital (513) 172 Taxation paid (270) (380) Cash available from operating activities 994 1 568 Dividends paid, including to non-controlling interests (232) (433) Cash flows utilised in investing activities (2 866) (1 132) Cash flows from financing activities 989 1 005 Discontinued operations Cash flows utilised in operating activities – (90) Cash flows utilised in investing activities – (22) Cash flows utilised in financing activities – (146) Cash flows on disposal of discontinued operations (63) (429) (63) (687) Net (decrease)/increase in cash and cash equivalents (1 178) 321 Net cash and cash equivalents at the beginning of the year 840 486 Effect of exchange rate fluctuations on cash held 24 33 Cash classified as held for sale (52) – Net cash and cash equivalents at the end of the year (366) 840 % 2014 2013 R millions Change (Audited) % (Restated) % Revenue: Altech 2 10 695 38 10 441 42 Bytes 25 8 761 32 7 004 28 Altron TMT 12 19 456 17 165 Powertech 14 8 379 30 7 336 30 Corporate and eliminations (63) – (37) – 12 27 772 100 24 744 100 Normalised EBITDA* Altech 16 890 47 765 49 Bytes 15 610 33 531 34 Altron TMT 16 1 500 1 296 Powertech 34 386 21 287 18 Corporate and eliminations (14) (1) (18) (1) 20 1 872 100 1 565 100 % held at % held at 28 February 28 February Normalised headline earnings** 2014 2013 Altech 100,0 61,4 87 299 45 160 37 Bytes 100,0 100,0 23 310 47 253 58 Powertech 100,0 100,0 413 77 12 15 3 Corporate and eliminations (26) (4) 7 2 52 660 100 435 100 * Normalised EBITDA is stated before capital items and non-operational once-off costs relating to foreign exchange losses and breakage costs on transaction funding as well as certain restructuring costs. ** Normalised headline earnings is stated for total operations and before non-operational once-off costs relating to foreign exchange losses and breakage costs on transaction funding as well as certain restructuring costs.
  10. 10. ALTRON SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014 31 SUPPLEMENTARY INFORMATION (TOTAL OPERATIONS) 2014 2013 R millions (Audited) (Restated) Depreciation 326 345 Amortisation 120 160 Net foreign exchange gains 3 18 Cashflow movements Capital expenditure (including intangibles) 759 670 Net additions to contract fulfilment costs 186 272 Additions to contract fulfilment costs 478 430 Net expensing of contract fulfilment costs during the year (266) (141) Terminations of contract fulfilment costs (26) (17) Capital commitments 109 126 Lease commitments 878 953 Payable within the next 12 months: 256 232 Payable thereafter: 622 721 Weighted average number of shares (millions) 321 316 Diluted average number of shares (millions) 325 319 Shares in issue at the end of the year (millions) 325 317 Ratios EBITDA margin (%) 6,4 6,2 Normalised EBITDA margin (%) 6,7 6,3 ROCE (%) 18,0 14,4 ROE (%) 15,2 9,1 ROA (%) 9,8 9,7 RONA (%) 18,1 14,5 Current ratio 1:1 1,2:1 Acid test ratio 0,7:1 0,8:1 Definitions: Contract fulfilment costs Contract fulfilment costs include hardware, fitment, commissions and other costs directly attributable to the negotiation and conclusion of customer service contracts. These costs are expensed over the expected period of the customer service contract.
  11. 11. ALTRON SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014 32 SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Attributable to Altron equity holders Share Non- capital con- and Treasury Retained trolling Total R millions premium shares Reserves earnings Total interests equity Balance at 29 February 2012 (Audited) 2 244 (299) (1 100) 4 158 5 003 810 5 813 Impact of changes in accounting policies – – – – – 8 8 Balance at 29 February 2012 (Restated) 2 244 (299) (1 100) 4 158 5 003 818 5 821 Total comprehensive income for the year Loss for the year – – – (312) (312) (630) (942) Other comprehensive income Foreign currency translation differences in respect of foreign operations – – 192 – 192 118 310 Realisation of negative foreign currency translation reserve on disposal – – 120 – 120 76 196 Fair value adjustment on available- for-sale investments – – (3) – (3) (2) (5) Remeasurement of net defined benefit asset/obligation – – 14 – 14 – 14 Total other comprehensive income – – 323 – 323 192 515 Total comprehensive income for the year – – 323 (312) 11 (438) (427) Transactions with owners, recorded directly in equity Contributions by and distributions to owners Dividends to equity holders – – – (291) (291) (142) (433) Issue of share capital 10 – (10) – – – – Share-based payment transactions – – 17 – 17 6 23 Total contributions by and distributions to owners 10 – 7 (291) (274) (136) (410) Changes in ownership interests in subsidiaries Introduction of non-controlling interests – – – – – 3 3 Disposal of subsidiary – – – – – 242 242 Total changes in ownership interests in subsidiaries – – – – – 245 245 Total transactions with owners 10 – 7 (291) (274) 109 (165) Balance at 28 February 2013 (Restated) 2 254 (299) (770) 3 555 4 740 489 5 229 Total comprehensive income for the year Profit for the year – – – 615 615 160 775 Other comprehensive income Foreign currency translation differences in respect of foreign operations – – 163 – 163 1 164 Fair value adjustment on available- for-sale investments – – – – – 13 13 Remeasurement of net defined benefit asset/obligation – – 189 – 189 – 189 Total other comprehensive income – – 352 – 352 14 366 Total comprehensive income for the year – – 352 615 967 174 1 141 Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of share capital 15 – (15) – – – – Dividends to equity holders – – – (190) (190) (42) (232) Share-based payment transactions – – 30 – 30 3 33 Total contributions by and distributions to owners 15 – 15 (190) (160) (39) (199) Changes in ownership interests in subsidiaries Buy-back of non-controlling interest 158 – (1 449) – (1 291) (355) (1 646) Disposal of subsidiary – – – – – (11) (11) Total changes in ownership interests in subsidiaries 158 – (1 449) – (1 291) (366) (1 657) Total transactions with owners 173 – (1 434) (190) (1 451) (405) (1 856) Balance at 28 February 2014 (Audited) 2 427 (299) (1 852) 3 980 4 256 258 4 514
  12. 12. ALTRON SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014 33 *CHANGE IN ACCOUNTING POLICIES: SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year Year Year ended ended ended 28.02.13 28.02.13 28.02.13 R millions (Audited) (Adjustments) (Restated)* CONTINUING OPERATIONS Revenue 24 769 (305) 24 464 Earnings before interest, tax, depreciation, amortisation and capital items (EBITDA before capital items) 1 692 (40) 1 652 Depreciation and amortisation (461) 8 (453) Operating profit before capital items 1 231 (32) 1 199 Capital items (Note 1) (78) – (78) Result from operating activities 1 153 (32) 1 121 Finance income 57 (1) 56 Finance expense (134) – (134) Share of profit of equtiy-accounted investees, net of taxation 5 10 15 Profit before taxation 1 081 (23) 1 058 Taxation (374) 10 (364) Profit for the period from continuing operations 707 (13) 694 DISCONTINUED OPERATIONS Loss for the period from discontinued operations (1 636) – (1 636) Loss for the period (929) (13) (942) Other comprehensive income Items that will never be reclassified to profit or loss Remeasurement of net defined benefit asset/obligation – 19 19 Taxation on items that will never be reclassified to profit or loss – (5) (5) Items that are or may be reclassified subsequently to profit or loss Foreign currency translation differences in respect of foreign operations 310 – 310 Realisation of negative foreign currency translation reserve on disposal 196 – 196 Fair value adjustment on available-for-sale investments (5) – (5) Other comprehensive income for the period, net of taxation 501 14 515 Total comprehensive income for the period (428) 1 (427) Net profit/(loss) attributable to: Non-controlling interests (631) 1 (630) Altron equity holders (298) (14) (312) Altron equity holders from continuing operations 498 (14) 484 Altron equity holders from discontinued operations (796) – (796) Net profit loss) for the period (929) (13) (942) Total comprehensive income attributable to: Non-controlling interests (439) – (439) Altron equity holders 11 1 12 Altron equity holders from continuing operations 650 1 651 Altron equity holders from discontinued operations (639) – (639) Total comprehensive income for the period (428) 1 (427) Basic loss per share from total operations (cents) (94) (5) (99) Diluted basic loss per share from total operations (cents) (86) (4) (90) Headline earnings per share (cents) 136 (4) 132 Diluted headline earnings per share (cents) 133 (4) 129 HEADLINE EARNINGS ARE DERIVED FROM: Profit attributable to Altron equity holders (298) (14) (312) Capital items – gross 1 449 – 1 449 Non-controlling interests in capital items (720) – (720) Headline earnings 431 (14) 417
  13. 13. ALTRON SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014 34 *CHANGE IN ACCOUNTING POLICIES: SUMMARISED CONSOLIDATED BALANCE SHEET 28.02.13 28.02.13 28.02.13 R millions (Audited) (Adjustments) (Restated)* Assets Non-current assets 4 757 106 4 863 Property, plant and equipment 1 822 (57) 1 765 Intangible assets including goodwill 1 613 (16) 1 597 Equity-accounted investments 80 170 250 Other investments 673 – 673 Rental finance advances 45 – 45 Non-current receivables and other assets 414 – 414 Deferred taxation 110 9 119 Current assets 8 210 (137) 8 073 Inventories 2 653 (67) 2 586 Trade and other receivables, including derivatives 4 255 7 4 262 Cash and cash equivalents 1 302 (77) 1 225 Total assets 12 967 (31) 12 936 Equity and liabilities Total equity 5 220 9 5 229 Non-current liabilities 787 5 792 Loans 609 – 609 Empowerment funding obligation 17 – 17 Provisions 25 – 25 Deferred income – – – Deferred taxation 136 5 141 Current liabilities 6 960 (45) 6 915 Loans 1 308 – 1 308 Empowerment funding obligation 29 – 29 Bank overdraft 385 – 385 Trade and other payables, including derivatives 5 105 (38) 5 067 Provisions 100 – 100 Liabilities classified as held-for-sale – – – Taxation payable 33 (7) 26 Total equity and liabilities 12 967 (31) 12 936 Net asset value per share (cents) 1 498 (1) 1 497
  14. 14. ALTRON SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014 35 *CHANGE IN ACCOUNTING POLICIES: SUMMARISED CONSOLIDATED BALANCE SHEET 28.02.12 28.02.12 28.02.12 R millions (Audited) (Adjustments) (Restated)* ASSETS Non-current assets 4 695 105 4 800 Property, plant and equipment 2 300 (62) 2 238 Intangible assets including goodwill 1 732 (16) 1 716 Equity-accounted investments 74 174 248 Other investments 233 – 233 Rental finance advances 67 – 67 Non-current receivables and other assets 150 – 150 Deferred taxation 139 9 148 Current assets 7 585 (139) 7 446 Inventories 2 475 (60) 2 415 Trade and other receivables, including derivatives 3 872 (12) 3 860 Assets classified as held-for-sale 135 – 135 Cash and cash equivalents 1 103 (67) 1 036 Total assets 12 280 (34) 12 246 EQUITY AND LIABILITIES Total equity 5 813 8 5 821 Non-current liabilities 936 – 936 Loans 707 – 707 Empowerment funding obligation 47 – 47 Provisions 20 – 20 Deferred income 51 – 51 Deferred taxation 111 – 111 Current liabilities 5 531 (42) 5 489 Loans 613 – 613 Empowerment funding obligation 24 – 24 Bank overdraft 550 – 550 Trade and other payables, including derivatives 4 079 (38) 4 041 Provisions 118 – 118 Liabilities classified as held-for-sale 67 – 67 Taxation payable 80 (4) 76 Total equity and liabilities 12 280 (34) 12 246 Net asset value per share (cents) 1 583 2 1 585
  15. 15. ALTRON SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014 36 *CHANGE IN ACCOUNTING POLICIES: SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS * CHANGE IN ACCOUNTING POLICIES: SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year Year Year ended ended ended 28.02.13 28.02.13 28.02.13 R millions (Audited) (Adjustments) (Restated)* Continuing operations Cash flows from operating activities 1 150 (15) 1 135 Cash generated by operations 1 878 (7) 1 871 Changes in working capital 174 (2) 172 Net finance expense (94) (1) (95) Taxation paid (375) (5) (380) Cash available from operating activities 1 583 (15) 1 568 Dividends paid, including to non-controlling interests (433) – (433) Cash flows utilised in investing activities (1 137) 5 (1 132) Cash flows from financing activities 1 005 – 1 005 Cash flows utilised in discontinued operations (687) – (687) Net increase in cash and cash equivalents 331 (10) 321 Net cash and cash equivalents at the beginning of the period 553 (67) 486 Effect of exchange rate fluctuations on cash held 33 – 33 Net cash and cash equivalents at the end of the period 917 (77) 840 28.02.13 28.02.13 28.02.13 R millions (Audited) (Adjustments) (Restated)* Loss for the period (929) (13) (942) Foreign currency translation differences in respect of foreign operations 310 – 310 Remeasurement of defined benefit obligation – 14 14 Realisation of negative foreign currency translation reserve on disposal 196 – 196 Fair value adjustment on available-for-sale investments (5) – (5) Dividends to equity holders (433) – (433) Share-based payment transactions 23 (2) 21 Introduction of non-controlling interests 3 – 3 Disposal of operations 242 – 242 Equity at the beginning of the period 5 813 10 5 823 Equity at the end of the period 5 220 9 5 229 Made up as follows: Share capital and premium 2 254 – 2 254 Treasury shares (299) – (299) Reserves (784) 14 (770) Retained earnings 3 570 (15) 3 555 Non-controlling interests 479 10 489 5 220 9 5 229

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