Wrap Text
Unaudited consolidated interim results for the six months ended 31 August 2019 and interim dividend announcement
ALLIED ELECTRONICS CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1947/024583/06)
Share code: AEL ISIN: ZAE000191342
UNAUDITED CONSOLIDATED INTERIM RESULTS
For the six months ended 31 August 2019
and interim dividend announcement
FINANCIAL COMMENTARY
The consistent implementation of our FY17 One Altron strategy continues to deliver on our
stated goal of doubling EBITDA by FY22, with comfortable debt levels, despite the
ongoing challenging economy. During the financial half-year, the group's financial
performance continued to improve:
- Revenue from continuing operations increased by 8% to R8.53 billion (up 17% excluding IFRS 15 - Revenue from Contracts with Customers - adjustments).
- EBITDA from continuing operations increased by 19% to R803 million (up 9% excluding R67 million IFRS 16 - Leasing - adjustments).
- HEPS from continuing operations increased by 4% to 73 cents.
- Basic earnings per share (EPS) from continuing increased by 4% to 76 cents.
- Interim dividend declared of 29 cents per share.
We continue to stay focused on delivering innovation that matters through technology
solutions and services that deliver impact with tangible results for businesses and have
positive societal impact. To this end, we secured key wins in the financial half-year
under review. These included, amongst others, the partnership agreement entered into
between Toyota, Vodacom and Netstar. Furthermore, Altron Karabina, has recently been
awarded Licencing Solutions Provider status by Microsoft.
We remain on track to double EBITDA by FY22. The growth in our Altron Bytes UK
operations continues to exceed our expectations. Further highlights for the period
under review include our improved employee engagement and customer NPS scores.
During the period under review, the group experienced challenges in one of its
operations. As previously communicated, Altron Nexus was impacted by the City of
Tshwane ("CoT") Municipal Broadband Network judgement handed down against
Thobela Telecoms. In addition, internal investigations following the precautionary
suspension of key executives remains ongoing. Altron Nexus also experienced
increased working capital demands as a result of large infrastructure projects and
increased business activity.
The integration of Altron Karabina, which was acquired during FY19, was slower than
expected. However, this acquisition remains strategically relevant to the group given
their capabilities in the fast-growth cloud and data analytics environment.
To improve market comprehension of our solutions and services, we have again
grouped our operations into the following segments, namely Digital Transformation,
Healthtech/Fintech, Smart IoT and Managed Services.
While the discontinued operations were included in the FY19 interim results, the
process of disposing of non-core assets has largely been concluded and accordingly,
these results are presented with discontinued operations excluded. Continuing
operations' results provide stakeholders a more appropriate measure of the core
sustainable earnings of Altron. The numbers and commentary below are shown post
the incorporation of the impact of IFRS 16 which came into effect on 1 March 2019,
and which had a positive impact of R67 million on EBITDA and a negative impact of
R25 million on NPBT for the period ended 31 August 2019. IFRS 16 has been presented
on a prospective basis without restating prior period numbers, in line with the
accounting standard requirements.
Continuing operations
Revenue increased by 8% to R8.53 billion on a statutory basis. However, the impact
of IFRS 15 on cloud-based sales in our UK operations is material given that these
transactions are treated as agent and therefore only the margin is recognised as
revenue. Taking gross cloud-based transactions with UK customers into account,
group revenue grew by 17% on a like-for-like basis.
EBITDA increased by 19% to R803 million, with strong EBITDA growth from the group's
Digital Transformation operations of 31%. The group's EBITDA margin on reported
revenue increased to 9.4% compared to 8.5% in the prior half-year. Within a South
African context, the group generates 85% of its revenue from the private sector and
15% from the public sector. The EBITDA growth for the half-year was largely attributable
to organic growth.
The depreciation charge for the group increased from R256 million to R347 million and
net finance expense increased from R90 million to R118 million in H1 FY20, both inclusive
of the impact of IFRS 16 adjustments. Capital items were a profit of R10 million relating
to the profit on disposal of fixed property offset by the impairment of contract cost in
Netstar.
INTERIM DIVIDEND
Notice is hereby given that an interim gross cash dividend of 29 cents per share
(23.2 cents net of 20% dividend withholding tax) for the six months ended
31 August 2019 has been declared, payable to shareholders recorded in the register
of the company at the close of business on the record date appearing below. This is in
line with the board's stated 2.5x dividend cover. The board has confirmed by resolution
that the solvency and liquidity test as contemplated by the Companies Act, No. 71 of
2008, as amended, has been duly considered, applied and satisfied. This is a dividend
as defined in the Income Tax Act, No. 58 of 1962 and is payable from income reserves.
The income tax number of the company is 9725149711. The number of ordinary shares
in issue at the date of this declaration is 399 414 023, including 28 180 080 treasury
shares. The salient dates applicable to the interim dividend are as follows:
Dividend dates
Last day to trade cum dividend Tuesday, 12 November 2019
Commence trading ex dividend Wednesday, 13 November 2019
Record date Friday, 15 November 2019
Payment date Monday, 18 November 2019
Share certificates may not be dematerialised or rematerialised between Wednesday,
13 November 2019 and Friday, 15 November 2019.
OUTLOOK
In the ongoing muted economic conditions in the jurisdictions in which the group
operates, Altron remains positioned for continued growth and accelerating the
implementation of its One Altron strategy of offering end-to-end solutions to its extensive
customer base. We continue to focus on organic growth, supplemented by the acquisition
of selective small to medium sized businesses in our focus areas leading to enhanced
capabilities or expanded geographic footprint. We will focus in particular on:
- Return Altron Nexus to profitability and conclude unethical conduct investigations
- Continued focus on working capital management
- Strengthen Top Accounts focus through appointment of Group Sales
Executive and dedicated account managers
- High single digit EBITDA growth due to slow growth in SA economy.
- Expand our Security offerings to the market.
For and on behalf of the board
MJ Leeming M Nyati C Miller
Chairman Chief Executive Chief Financial Officer
23 October 2019
Further information
This short form announcement is the responsibility of the directors and any financial
forecast information has not been reviewed or reported on by the external auditors.
It is only a summary of the information contained in the full announcement and
does not contain full or complete details. Any investment decision should be based
on the full announcement accessible from Thursday, 24 October 2019, via the JSE
link and also available on the Company's website at:
https://www.altron.com/wp-content/uploads/2019/10/altronfy20.pdf
The full announcement is also available at our registered office for inspection,
at no charge, during office hours. Copies of the full announcement may be
requested by contacting WK Groenewald on telephone +27 11 645 3672, or email
wkgroenewald@altron.com.
The JSE link is as follows: https://senspdf.jse.co.za/documents/2019/jse/isse/AELE/H1FY20.pdf
Registered office:
Altron House, 4 Sherborne Road, Parktown, 2193
Sponsor:
Investec Bank Limited
Transfer secretaries:
Computershare Investor Services (Pty) Ltd, 1st Floor, Rosebank Towers, 15 Biermann Avenue,
Rosebank, 2196
Directors:
MJ Leeming (Chairman), M Nyati (Chief Executive)*, C Miller (Chief Financial Officer)*,
AC Ball, BW Dawson, BJ Francis, GG Gelink, P Mnganga, S Sithole (Zimbabwean), SW van Graan,
RE Venter
* Executive
Group Company Secretary:
WK Groenewald
Date: 24/10/2019 08:00:00
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