Allied Electronics Corporation Limited

(Incorporated in the Republic of South Africa)
(Registration number 1947/024583/06)

Consolidated audited financial results (and dividend declaration)
for the year ended 28 February 2001

Financial Highlights

• Revenue up 29%
• Headline earnings per share up 19%
• Operating income up 16%
• Exports at R1 billion

	% Change	Year ended 2001	Year ended 2000
Revenue	28.7	8 973 640	6 971 569
Operating Income	16.1	627 300	540 227
Dividend income		22 077	41 179
Net interest income		59 891	81 434
Income from associates		10 529	14 730
Amortisation of goodwill		(43 285)	-
Exceptional items (Note 1)		63 615	10 751
Income before taxation	7.5	740 127	688 321
Taxation		157 411	188 818
Income after taxation		582 716	499 503
Attributable to outside shareholders		(285 111)	(244 088)
Attributable earnings	16.5	297 605	255 415
Basic earnings per share (cents)		103.3	88.9
Headline earnings per share (cents)	19.2	101.5	85.2
Dividend per share (cents)		31.0	28.0
Weighted average number of shares in issue (000)
- ordinary shares		96 984	96 878
- participating preference shares		191 150	190 563
Notes:
1. Exceptional items
Net Surplus on sale of operations		32 834	(7 211)
Net surplus on disposal of investment		85 417	17 962
Impairment losses		(49 500)	-
Restructuring costs		(5 136)	-
		63 615	10 751
2. Reconciliation between earnings and headline earnings
Attributable earnings		297 605	255 415
Amortisation of goodwill		43 285	-
Exceptional items - gross		(63 615)	(10 751)
		277 275	244 664
Tax effect of above adjustments		(7 690)	( 2 163)
Outside shareholders' interest		23 013	2 323
Headline earnings		292 598	244 824
3. The group changed its accounting policies for land and buildings and goodwill. Previous revaluations of land and buildings were reversed and additional depreciation was provided in the year to Feb 2000. Effective from 1 March 2000, goodwill is capitalised and amortised over its useful life. Comparative figures have not been restated for this change. The accounting policies and methods of computation adopted in this report are consistent with statements of Generally Accepted Accounting Practice. 4. Diluted earnings per share and diluted headline earnings per share are not materially different from basic earnings per share and headline earnings per share respectively.

	2001	2000
Assets
Non current assets	2 138 730	1 717 691
Fixed assets	672 391 256 344 (24 137) 853 811 300 811 79 510	542 442 - - 623 980 511 317 39 952
Goodwill
Negative goodwill
Advances to rental finance customers
Investments and loans
Deferred taxation
Current assets	4 074 855	3 197 367
Inventories	1 124 716 1 868 238 1 081 901	1 120 323 1 234 352 842 692
Accounts receivable
Net cash and cash equivalents
Total assets	6 213 585	4 915 058
Equity and liabilities
Ordinary shareholders' interest	1 666 547	1 399 897
Outside shareholders' interest	1 472 610	1 300 053
Non-current liabilities	660 210	384 900
Deferred taxation	50 216	53 348
Current liabilities	2 364 002	1 776 860
Total equity and liabilities	6 213 585	4 915 058
Net asset value per share (cents)	582.6	486.2
Shares in issue at end of period (000)
- ordinary shares	96 997	96 973
- participating preference shares	189 043	190 926

	2001	2000
Balance at start of period	1 430 636	1 510 439
Changes in accounting policies	(26 753)	(30 739)
	1 403 883	1 479 700
New share issues movement	5 730	3 023
Change in equity as result of subsidiary company acquiring its own shares	(37 789)	-
Attributable earnings	297 605	254 688
Dividends	(88 711)	(80 664)
Net gains and losses not recognised in the income statement	85 829	(256 850)
Revaluation of property and investments	- 69 510 - 16 319	26 986 3 387 (281 338) (5 885)
Foreign currency translation
Goodwill on acquisition
Other movements
Balance at the end of period	1 666 547	1 399 897

	2001	2000
Operating activities	392 620	115 963
Cash generated by operations	765 417 167 482 (149 246) (216 500) 567 153 (174 533)	615 071 120 373 (50 336) (328 928) 356 180 (240 217)
Net investment income
Changes in working capital
Taxation paid
Cash available from operating activities
Dividends paid, including those to outside shareholders
Investing activities	(581 682)	(623 638)
Financing activities	359 401	202 233
Cash acquired in acquisitions	68 871	1 925
Net fundss generated/(utilised)	239 210	(303 517)

Headline earnings
	% held at 28.2.2001	2001	%	2000	%
Altech	53.4	125 211	42.8	86 002	35.1
Powertech	59.2	76 436	26.1	73 185	29.9
Fintech	64.3	57 490	19.6	65 134	26.6
BTG	54.0	(6 287)	-2.1	-	0.0
Altron Corporate	100.0	39 748	13.6	20 503	8.4
		292 598	100.0	244 824	100.0
Revenue
Altech		3 690 850	40.7	3 058 586	43.9
Powertech		3 351 581	38.1	2 451 019	35.2
Fintech		1 525 849	16.8	1 461 593	21.0
BTG		382 886	4.2	-	0.0
Altron Corporate		22 474	0.2	371	0.0
		8 973 640	100.0	6 971 569	100.0

COMMENTARY

Message to our shareholders

As predicted the past year has seen significant transformation and restructuring for the group together with a decisive step in its determination to become a key global player in its chosen markets. For the first time export sales exceeded R1 billion and the foundation was also laid for the group’s stated globalisation objectives through the acquisition of foreign-based subsidiaries. Despite difficult trading conditions, the group achieved pleasing results for the year ended 28 February 2001, with headline earnings per share increasing by 19,2% from 85,2 cents to 101,5 cents.

Turnover improved by a significant 29% to a record R9 billion (2000: R7 billion) while operating income increased by 16,1% from R540 million to R627 million. Attributable earnings rose by 16,5% to R298 million from R255,4 million. This translated into earnings per share of 103,3 cents up from 88,9 cents.

The group continues to maintain a strong balance sheet and net cash resources at year-end were some R1 billion (2000: R842,6 million). Net asset value per share increased by 20% from 486,2 cents to 583,4 cents.

A number of stated objectives were achieved during the year by refocussing the group, restructuring management and reducing the number of investor entry points. Autopage was delisted and Ventron unbundled and likewise delisted. The Telemetrix PLC investment was sold, several non-core businesses disposed of and the offshore holding structure simplified. The assets of Fintech were sold to the Bytes Technology Group (“BTG”) at year-end to create an IT vehicle with critical mass and a projected turnover in excess of R2 billion, thus resulting in Fintech now being a focussed financial service business. In February 2001, a number of operational management changes were announced. Of significance was the decision to split the role of Chairman and Chief Executive. As a result, Mr Robert Venter was appointed Chief Executive Officer of Altron whilst Dr Bill Venter remains as Chairman.

Business activities

Altech

By focussing its business on the strategy of globalisation and TMT convergence Altech has for the fifth successive year recorded excellent results as well as substantial growth. Headline earnings per share rose from 153,3 cents to 223,1 cents, an increase of 45,5%. Turnover increased by 21% to R3,7 billion (2000: R3 billion).

Autopage Cellular performed well, growing its base to more than 400 000 subscribers which allowed it to retain its position as southern Africa’s largest dual independent service provider. UEC Multi-Media, Altech’s multi-media operation, produced strong results and has now also expanded into the cable and terrestrial multi-media markets. Arrow Altech Distribution, having completed a restructure programme, is now performing according to plan, with a strong order book and Alcatel Altech Telecoms continues to be a leader in the South African telecommunications market with tenders pending totalling more than R1,5 billion. Altech’s IT Division, comprising Isis, Keops Isis, Altech Smart Card Technologies and Africard recorded satisfactory results and all the remaining companies produced good results.

Exports totalling R485 million continue to be a major strategic objective for Altech and form part of its globalisation initiative. Several offshore acquisitions are currently being evaluated. Altech envisages that despite present uncertainties in the international TMT business climate, further real growth and earnings will be achieved in the current financial year.

Powertech

Powertech significantly increased its turnover by 31% to R3,2 billion from R2,5 billion and reported a headline earnings increase of 3,4% from 46,6 cents to 48,4 cents. This underscores the upturn experienced by the building and construction industries, the mining sector and the growth in GDFI. Foreign revenues totalled R906 million with exports reaching a record R609 million.

As announced at the interim stage, Powertech acquired Cables de Comunicaciones Zaragoza SL, Spain, the leading Spanish metallic telecommunication and data cable manufacturer. This has further strengthened Powertech’s globalisation initiatives. Powertech’s transformer business, ABB Powertech Transformers, again exceeded all expectations and recorded another exceptional good year of which export sales accounted for 70% of this company’s turnover. The remainder of Powertech’s power electronics businesses reported satisfactory results and several companies in the Telecommunications Division was successful in receiving accreditation with a host of international telecommunication companies. This placed Powertech in a favourable position to secure profitable export orders which offset the shortfall in local demand for certain products. Corning, the world’s largest producer of fibre optic cables and products concluded an important alliance with Powertech.

The loss making luminaire business was disposed of during the year under review. Powertech expects that the deregulation and liberalisation in the power electronic and telecommunications markets will provide further opportunities for broadening its customer base and so reducing its erstwhile dependency on individual customers. Powertech is well positioned to produce real growth in the year ahead.

Fintech

Fintech successfully completed its restructuring programme, through the sale to BTG of its IT and IT related interests, comprising Xerox South Africa, National Data Systems and Alcatel Business Systems, and is now a fully focussed financial services company. The remaining non-core businesses were sold. Fintech, as reconstituted, achieved solid growth and reported an increase in proforma headline earnings per share of 13,5% from 32,5 cents to 36,9 cents. Capital financed by Fintech increased by 36% from R624 million to R846 million.

Both growth in capital finance and earnings per share is expected from Fintech in the current financial year.

BTG

BTG recorded disappointing results reporting a headline loss per share of 5,2 cents for the year. A comprehensive restructuring programme was implemented during the year, which involved recapitalisation of the company together with a rationalisation exercise. A significant improvement was recorded in the second six months where a headline loss of R15 million was recorded compared to R56 million headline loss in the first six months of the year under review. As previously stated above, BTG acquired certain Fintech IT and IT related assets to create a focussed IT vehicle with critical mass and a projected turnover in excess of R2 billion. Prospects for the current year indicate that BTG will henceforth be cash producing and should also earn profits.

Repurchase of shares

During the period under review, the group under a general authority from shareholders, repurchased 1 846 162 Altron participating preference shares at an average price of R7,46 per share and 1 262 100 Altron ordinary shares at R7,80 per share. This represents 0,96% of the issued participating preference shares 1,3% of the issued ordinary shares respectively.

Outlook

Current developments with the second telecom network operator, the restructuring of the electricity distribution industry, and the appointment of the third cellular license operator augurs well for the group. The group’s growing global capability is expected to create new market opportunities facilitating increased revenues and earnings. In the year ahead, the group will continue with its stated objectives in reviewing its structure and streamlining its businesses. Improved market conditions in the domestic economy coupled with success in our export and globalisation thrust will generate earnings growth in the current financial year.

Dividends

Notice is hereby given that the following dividends have been declared in respect of the year ended 28 February 2001:

• Ordinary dividend No. 53 of 31 cents per share (2000: 28 cents); and
• Participating preference dividend No.7 of 31 cents per share (2000: 28 cents).

The above dividends are payable on or about Friday 6 July 2001 to ordinary and participating preference shareholders registered in the books of the company on Friday 25 May 2001.

Annual Report

The annual report of Altron for the year ended 28 February 2001 will be posted to shareholders at the end of May 2001.

STRATE

Shareholders are advised that the company’s share capital will be transferred to the electronic STRATE environment as of Tuesday 17 July 2001. Shareholders that are not already participating on the STAR programme, are advised to consult with their banker, financial advisor or stockbroker concerning the dematerialisation of their shares in the company.

On behalf of the board

Directors:
Dr WP Venter (Chairman), RE Venter (Chief Executive), IM Ayob, MC Berzack, L Boyd, PMO Curle* (alternate: GJ Trollope), DA Hawton, F Mabuza-Suttle, PD Redshaw*, GM Rochussen, Dr HA Serebro (alternate: Adv DC Mpofu), CG Venter, PL Wilmot

* British

Secretaries:
Altron Management Services (Pty) Limited: Ms SF Linford, Group Secretary