Year-end results 2004 - Altron

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www.altron.co.za

Altron Group

Year End Results 2004

Robert Venter

Chief Executive

www.altron.co.za

Altron Group

53,4%

54,6%

100%

Altech

BTG

Powertech

Telecoms,

Multi
-
media, Information

Technology (TMT)

Information Technology


Power Electronics



Employees: 1824

Market Cap: R3.5 bn

Employees: 3647

Market Cap: R920 m

Employees: 5171

JSE listed

*

*

*

*

Revenue: R10 bn

Market cap: R3.3 bn

Employees:
±

11 000

Based on share prices as of 7 May 2004

www.altron.co.za

Products and services

Altech

BTG

Powertech

TELECOMMUNICATIONS

Cellular telephony, vehicle tracking and
recovery systems.

Design, installation and commissioning of two
-
way radio equipment and systems.



MULTIMEDIA & ELECTRONICS

Distributors of professional electronic
components and products.

Design and manufacture of digital satellite
decoders and software applications.



INFORMATION TECHNOLOGY

Integrated computer systems solutions and
smart
-
card technology systems.

INFORMATION TECHNOLOGY

Microsoft licensing & systems integrator.

Independent IT consulting services and solutions.

Network solutions & maintenance.

Software sales, development, implementation &
application maintenance.

ERP implementation.

Exclusive distributor of NCR products (ATMs),
services and implementation of EFT applications
and scanners.

Desktop services and support. Remote
monitoring of IT facilities.

Sole distributor of Xerox office products and
supplier of document management services.

Electronic switching & transactions processing
for the medical industry.

POWER ELECTRONICS

Medium
-

and low
-
voltage power cables.

Power and distribution transformers.

Automotive, traction batteries and DC
power systems.

Electrical accessories.

Lighting control gear.


TELECOMMUNICATIONS


Fibre
-
optic and metallic cables and
accessories.

Data cable systems.

Standby power and rectifier systems.

Solar systems.

www.altron.co.za

Companies per segment

Information

Technology

Power Electronics

& Multimedia

Telecoms

www.altron.co.za

Key financials

2004

2003

% change

Revenue


cont. operations

R10bn

R11bn

-
9

Operating income


cont. operations


R718m

R807m

-
11

Operating margin (%)

7.1%

7.3%

Adjusted HEPS (cents)*

139

137

+2

RONA

17%

22%

Working capital

R0.8bn

R1.2bn

Cash on hand

R2bn

R1.5bn

* Excluding surplus from Benefit Fund in prior year

www.altron.co.za

Group highlights


Increased HEPS under strengthening rand environment


Cash increased to over R2bn


Dividend increased by 21%


12 month share price appreciation of 48%


Key acquisitions concluded (Xerox SA, NamITech)


Pre
-
empted ICT charter with substantial BEE deals
announced


Vision 2010 approved by board


Divestitures continue to focus group


Major orders secured including R500m SAPS 2
-
way
digital radio system for Gauteng

www.altron.co.za


Op income

R 207m


Op. margin

6.2%


*HEPS 12%


Op income

R 333m


Op. margin

8%


*HEPS
-
6%

Op income

R 185m


Op. margin

7.1%


*HEPS 27%

53,4%

54,6%

100%



JSE listed












Altech

BTG

Powertech

Op income:

R 718m

*HEPS:

2%

Op. margin:

7.1%

Group results at a glance

(for the twelve months ended 29 February 2004)

* HEPS: Adjusted HEPS for the year excludes benefit fund surplus

www.altron.co.za

Summary of key strategic
philosophies


Provide shareholders with above average growth and
dividend returns


Be market share leaders in our focused sectors


Target 25
-
30% of revenue to come from non
-
rand
currencies


Navigate BEE landscape and ICT charters


Provide decentralised management culture and encourage
entrepreneurship


Maintain family control and influence


www.altron.co.za

Corporate activity

Activity



BTG acquires 50% of Xerox SA

BTG sells 27% of BTG to Kagiso*

Altech acquires 85% of NamITech

Altech sells 28% of NamITech to Pamodzi

Altech sells 30% of Alcom Matomo to Matoma

Powertech sells 25.1% of Battech to Kagiso

Powertech sells 30% of Aberdare Cables to Izingwe

Altech sells 25.01% of Altech Data to Pamodzi


Effective date


1 June 2003

1 June 2004

1 March 2004

1 March 2004

1 December 2003

1 March 2004

1 March 2004

31 May 2004



Valuation


R235m

R228m

R526m

±
R180m

±
R7m

R19m

R165m

±
R50m


* Subject to shareholder approval

www.altron.co.za

Share price performance

70
90
110
130
150
170
2003/03/03
2003/04/01
2003/05/05
2003/06/02
2003/07/01
2003/07/29
2003/08/26
2003/09/23
2003/10/22
2003/11/19
2003/12/18
2004/01/20
2004/02/17
2004/03/16
2004/04/19
Altron rebased
Altron preference shares rebased
Electronics index rebased
ALSI rebased
1

2

3

4

1

2

3

4

Cents

www.altron.co.za

Hard currency revenues

0
500
1000
1500
2000
2500
3000
1998
1999
2000
2001
2002
2003
2004
R million

Revenue from foreign operations


Exports

Note: 1998 to 2003 includes AAT exports

Altron Group

Financial results 2004

Diane Radley

Chief Financial Officer

www.altron.co.za

Group income statement

R million

2004

2003

% change

Revenue
-

total

10 045


11 397

-
12 (
-
6)

Continuing operations

718

807

-
11 (
-
7)

Discontinued operations

28

Benefit Fund

-

74

Operating income

718

909

Net investment income

119

96

Income from associates

9

19

Income before amortisation and capital items

846

1 024

Goodwill amortised and impaired

(134)

(105)

Capital items

34

244

Net income before tax

746

1 166

Taxation

(252)

(288)

Net income after tax

494

878

Outside shareholders interest

(152)

(414)

Attributable income

342

464

www.altron.co.za

Group income statement

2004

2003

% change

EPS (cents)

125

173

HEPS (cents)

139

149

Adjusted HEPS (cents)

139

137

+2

Dividend per share declared

52

43

+21

www.altron.co.za

Contribution by subholding company

2003

Revenue

2004

Altech


BTG


Corporate & Financial services


Powertech

41.2%
33.2%
26.0%
36%
36%
27%
1%
www.altron.co.za

46%
29%
26%
Contribution by subholding company

2003

Operating

income

2004

Altech


BTG


Corporate & Financial services


Powertech

45%
29%
20%
6%
www.altron.co.za

Contribution by subholding company

2003

Headline

earnings

2004

Altech


BTG


Corporate & Financial services


Powertech

45%
38%
15%
2%
48%
31%
15%
6%
www.altron.co.za

Group balance sheet

R million

2004

2003

Fixed and non
-
current assets

1 415

1 437

Rental finance advances

189

286

Cash and cash equivalents

2 004

1 510

Receivables and inventories

2 447

2 943

Total assets

6 055

6 176

Ordinary shareholders’ interest

2 475

2 267

Outside shareholders’ interest

1 082

1 291

Long
-
term loans

277

281

Short
-
term loans

247

193

Other long term liabilities

41

120

Current liabilities

1 933

2 024

Total equity and liabilities

6 055

6 176

NAV per share

901

837

www.altron.co.za

Group cash flow analysis

R million

2004

2003

Operating activities

778

710

Cash generated by operations

778

1 056

Net investment income

106

87

Changes in working capital

387

(7)

Taxation paid

(295)

(202)

Cash from operating activities

976

934

Dividends paid

(198)

(224)

Investing activities

(310)

(27)

Financing activities

68

(582)

Net funds generated

536

101

Cash and cash equivalents

1 510

1 444

Translation & effect on cash of proportionate consolidation

(42)

(35)

Cash and cash equivalents


end of year

2 004

1 510

www.altron.co.za

Powertech

R million

2004

2003

% change

Revenue

3 332

4 117

P/C 3 790

-
19

-
12


Operating income

207

267

P/C 228

-
22

-
9


Headline earnings

146

143

+2

Headline earnings


(excl Benefit Fund)

146

130

+12

P/C


Proportional consolidation

www.altron.co.za

Powertech

Segmental results

18%
82%
27%
74%
6%
94%
15%
85%
Revenue

Operating

income

2004 *

2003*

Telecoms


Power Electronics

* Proportionally consolidated

www.altron.co.za

Powertech

Segmental results by product
(revenue)

Electrical accessories


Battery & solar


Transformers


Cables

2004

2003

R 333m

R 610m

R 312m

R 2054m

R 264m

R 634m

R 274m

R 2534m

*

ABB PTT and Tridonic proportionally consolidated

*

*

Segmental review

www.altron.co.za

37%
36%
28%
Contribution per segment

Power Electronics

/ Multimedia


IT

Telecoms

Corporate & Financial Services

Revenue

Operating

income

2004

2003

34%
36%
29%
1%
35%
32%
30%
3%
25%
41%
24%
10%
www.altron.co.za

Telecoms

Risks and opportunities

Risks


Slowing of growth in SA mobile market


International weakness in demand for
infrastructural telecoms products


Delays in SNO provides no incentive for
Telkom to expand network


Need for GSM
-
based vehicle tracking
product


Opportunities


SNO


when it happens!


Mobile opportunities in Africa


world’s
largest unexploited territory


NamITech provides entry into SIM and
pre
-
paid voucher market


SAPS Gauteng tender and Free State
government opportunity


Altron action


Extended Autopage agreements
with SA mobile operators


Reduced exposure to infrastructure
segment


Right
-
sized fibre optic business


Key successes in African markets
for SIM cards and pre
-
paid
vouchers


GSM
-
based vehicle tracking product
developed and launched






www.altron.co.za

Multimedia & Power electronics

Risks and opportunities

Risks


Strong rand environment


Increased competition in low
-
end set top
boxes


Rising interest rates


High base of power electronics


Supply of copper


Opportunities


Infrastructure spend in SA region to
remain strong


Major projects in mining and industrial
sectors announced


Strong order book at UEC


World Cup 2010


Regional electricity distribution supply
(REDS)

Altron action


Currency hedging in place for both
imports and exports


Developed and received orders for
high
-
end STB’s (PVR, etc.)


Capital expenditure in power
electronics focused on efficiencies


not additional capacity


Developing alternate suppliers of
copper





www.altron.co.za

Information Technology

Risks and opportunities

Risks


BEE landscape and ICT Charter


Market conditions in UK IT sector


Exchange rate impact on major imports


Pressure on pricing


Opportunities


Improving market conditions for IT
sector


Addressable market enhanced through
BEE credentials


Europay/Mastercard/Visa (EMV)
standard


Security (PKI’s and digital certificates) is
growth area


Altron action


Empowerment deals concluded at
BTG SA and NamITech


Complete offering relating to EMV


Increased level of annuity income to
fight price erosion and establish
barriers to entry


Streamline and consolidate UK
businesses


www.altron.co.za

Growth strategies going forward

Altech

growth to be driven by a combination of external acquisitions and
internal investment in R&D and intellectual capital. Balance sheet
provides good flexibility.


BTG

growth to be driven by consolidation of IT industry and
internal investment in systems and intellectual capital. Current
balance sheet restricts significant external opportunities.


Powertech

growth strategies to be driven around reinvestment in capital
equipment focusing on efficiencies in the right areas. Complemented by
synergistic small to medium size acquisitions.


Thank You