AEL: ALLIED ELECTRONICS CORPORATION LIMITED - Preliminary summarised audited consolidated financial statements for the year ended 28 February 2019
Preliminary summarised audited consolidated financial statements for the year ended 28 February 2019
ALLIED ELECTRONICS
CORPORATION LIMITED
(Registration number 1947/024583/06)
(Incorporated in the Republic of South Africa)
Share code: AEL
ISIN: ZAE000191342
PRELIMINARY SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2019 AND FINAL DIVIDEND ANNOUNCEMENT
FINANCIAL COMMENTARY
We continue to deliver on our stated goal of consistent double-digit growth at an EBITDA level despite the
ongoing challenging economy. During the year, the group's financial performance continued to improve
significantly on a statutory basis:
- Revenue from continuing operations increased by 7% to R15.7 billion.
- EBITDA from continuing operations increased by 30% to R1.6 billion.
- HEPS from continuing operations increased by 50% to 179 cents.
- ROCE from continuing operations at 20%.
- Final dividend declared of 44 cents per share, with total dividend for the year of 72 cents per share.
In the financial year under review, we secured key wins in both the private and public sector. These included,
amongst others, the Gauteng Broadband Network Phase 2 contract, secured by Altron Nexus. Altron CyberTech was
awarded the Gautrain management agency tender, through which we provide a secure and protected
technology network. Altron Bytes Systems Integration was awarded a data and analytics contract by
FNB, Netstar won a three-year contract from the eThekwini Municipality for the supply, integration and
maintenance of a vehicle tracking technology solution for 7 000 vehicles, as well as Bytes UK being awarded a
five-year GBP 155 million (R2.7 billion) Windows 10 contract with the UK NHS, as reported at the financial half-year.
Netstar Australia Group was awarded a fleet management contract by Ausgrid.
The disposal of the remaining material non-core businesses and assets of the group has been successfully concluded.
Powertech Transformers was disposed of with effect from 31 July 2018. The disposal of Altech UEC/Multimedia,
being the last non-core control asset, was concluded during the financial year.
To improve market comprehension of our solutions and services, we have grouped our operations into the
following segments, namely Digital Transformation, Fintech/Healthtech, Smart IoT and Managed Services. Our
operating companies are also presented to the market under one identity following the introduction of a new
Altron brand in FY19.
Due to the inclusion of non-core discontinued operations in the total results for the year, the continuing operations' results
provide stakeholders with an accurate measure of the core sustainable earnings of Altron. The numbers
presented in the commentary below are shown on a normalised basis.
FINANCIAL OVERVIEW
CONTINUING OPERATIONS
Gross revenue increased by 30% to R19.2 billion, however, the impact of adopting IFRS 15 Revenue from
Contracts with Customers resulted in reported revenue from the continuing operations increasing by 7% from
R14,7 billion to R15.7 billion, while normalised EBITDA increased by 24% to R1.6 billion, with strong year-on-year
EBITDA growth of 79% from Bytes UK. The group's normalised EBITDA margin on reported revenue increased to
10.4% compared to 8.9% in the prior year. Free cash flow increased significantly to R425 million. Within a South
African context, the group generates 83% of its revenue from the private sector and 17% from the public sector.
Organic EBITDA growth for the year was 18%, with 6% growth attributable through acquisitions.
In line with accounting standards, during the year, the amortisation of contract costs in Netstar were reclassified
from operating expenses to depreciation, resulting in an increase in depreciation and amortisation expense of R253 million
in the current year and by R199 million in FY18. Capital items were a loss of R26 million, mostly as a result of the impairment
of contract costs in Netstar, which were offset by profit on the disposal of property. The net interest costs
in the continuing operations at R176 million remained relatively constant compared to the prior year. Other
comprehensive income for the year includes R113 million (a loss of R62 million in FY18) relating to foreign currency
translation differences in respect of foreign operations, due to the weakening of the rand during FY19.
DISCONTINUED OPERATIONS
The results of the discontinued operations continue to show a significant improvement from the previous
financial year. EBITDA improved to R54 million compared to a prior year of R8 million. This was mainly due to
the operational improvement of the Powertech Transformers and Altech UEC/Multimedia businesses, which
maintained their momentum in delivering strong EBITDA turnaround.
Profit after-tax improved significantly from a loss of R253 million in the prior year to a profit of R70 million.
This is mainly due to the improved operational performance, profits on disposals realised in the current year
and a further reduction in the interest expense as proceeds from disposals have been used to reduce debt.
Furthermore, impairments processed in the prior year were not needed in the current year.
CASH MANAGEMENT
The group's overall net debt of R1.3 billion (including deferred disposal receipts) showed a meaningful improvement
on the FY18 year-end position of R1.5 billion. Cash generated from operations totalled R1.5 billion for the year.
A total of R184 million was absorbed into working capital, compared to R298 million in the prior year. Net finance
expenses continued to reduce to R196 million (R239 million in FY18), while tax paid for the year amounted to R147 million.
The group utilised R414 million on investment activities for the year, funded out of internally generated cash.
Included in this amount was R191 million relating to capital rental devices in Netstar, which reflects the
continued improved growth in its subscriber base, R146 million relating to the acquisition of Altron Karabina
and R58 million which was paid towards EZY2C acquired in FY18. Furthermore, R190 million was investment in
property, plant and equipment and R93 million in intangible assets, as development costs were capitalised
throughout the year. Also included in investment activities are inflows of R176 million relating to proceeds on
the disposal of non-core assets and R123 million concerning the disposal of property, plant and equipment.
R185 million cash utilised in financing activities predominantly relates to the net repayment of term loans.
Given the continued improved performance of the group, our long and short-term facilities were successfully
refinanced with effect from 28 February 2019 which will result in a decrease in finance costs during FY20.
OPERATIONAL REVIEW
DIGITAL TRANSFORMATION
Bytes UK had another strong year, growing revenue by 5% and EBITDA by 79% to R368 million. The performance
of the business was positively impacted by the inclusion of Phoenix Software for the full year (acquired in the
second half of the previous financial year). The business is set to grow further, following the five-year, GBP155
million (circa R2.7 billion) NHS contract, secured during the year.
The mandatory adoption of IFRS 15 in the current year impacted the revenue recognition of Bytes UK.
The business changed from a principal to an agent in a major part of its cloud-based business resulting in an
adverse impact of GBP200 million on revenue during the year, although EBITDA remained unaffected.
Altron Bytes Systems Integration ("BSI") refined its operating model which resulted in revenue increasing by 7%,
while EBITDA decreased by 3%. The newly adopted operating model has already started to yield a significant
increase in pipeline opportunities. BSI continues to streamline the business and drives large group initiatives
in Cloud Services, IoT, Data Analytics and Security.
Altron Nexus ("Nexus") produced positive results for the year, with revenue largely in line with the prior year, while
growing EBITDA by 54% to R123 million. The business responded to a disappointing first half of the year, with a
strong performance in the second half, due to delays in the award and implementation of large projects which
have since been realised. The roll-out of the Gauteng broadband network phase 2 project, together with the
closing out of historic projects have resulted in a significant improvement in EBITDA for the year.
As at the date of the release of this announcement, the challenges relating to the City of Tshwane ("CoT")
broadband network contract remain unresolved. While the parties still await the release of the court
judgement, meaningful progress has been made in the group's negotiations with CoT. Management
remains positive regarding the outcome of this matter. The business continues to win and deliver on current
broadband network opportunities, further building on its momentum of evolving into the preferred safe city
solution provider for the smart city evolution.
Altron Karabina was acquired effective 1 September 2018 in response to our strategy to extend Altron's
capabilities in Cloud Services and Data Analytics. The results for the five months of the financial year were in
line with our expectations for the business. We are excited by the enhanced skills introduced to the group by
Altron Karabina, with the team contributing to cross- and up-sell initiatives into our larger customers.
FINTECH/HEALTHTECH
Altron Bytes Secure Transaction Solutions ("BSTS") continues to perform well, growing revenue by 6%
and EBITDA by 14% to R289 million, driven by further improved EBITDA margins of 25% and a number of
new contracts secured during the year. BSTS maintains its status as a key growth focus for the group. All
components of this business performed well, with the NuPay division again being the outstanding performer.
The Healthtech side of the business continues to focus its attention in the healthcare space delivering higher
value services to healthcare professionals, as well as within the public health sector. Looking forward, it is also
assessing opportunities in the Altron Rest of Africa markets. Fintech is expanding its product offerings further
into the unsecured lending environment, which presents significant growth opportunity for this division, while
the CyberTech division is seeing gains through its cyber security operations centre to provide security for
customer networks, such as being awarded the Gautrain management agency tender.
SMART IoT
Netstar, inclusive of its Australian operations, showed continued improvements in its performance. The
business reported a 10% increase in revenue and 19% improvement in EBITDA to R582 million against the prior
year. Netstar further improved the growth in its subscriber base, particularly in stolen vehicle recovery ("SVR"),
with churn and retentions under close control, improving by 6%.
During the second half of the year, Netstar re-evaluated its ground recovery suppliers in SVR. Through a
formal process, managed by Deloitte, Netstar effected a change in its service providers in this space to
ensure enhanced services, while having a lower cost of delivery going into FY20.
During the year, the business consolidated its Australian operations, Pinpoint and EZY2C. These are now driven
through a single Netstar Australia brand.
MANAGED SERVICES
Altron Bytes Document Solutions ("BDS") has seen revenue improve by 11% and EBITDA increase by 10% to
R77 million compared to the prior year. This is testament to the successful efforts by the business of gaining
market share in a declining market.
Strategically the business remains focused on selected growth areas, including managed print services
and the high-end production environment. BDS' growth strategy of driving cross-selling of Altron's various
offerings into its extensive base of more than 4 500 customers remains on course.
Altron Bytes Managed Solutions ("BMS") reported revenue and EBITDA increase of 14% and 5% year-on-year,
respectively. In a highly competitive market, BMS is focused on quality of service while closely managing its
cost base and maintaining its drive to enhance annuity income. Further improvement in the performance of
BMS are being driven by the ongoing diversification of its offerings, including a focus on growing into retail
and end-user computing.
Altron Bytes People Solutions ("BPS") grew revenue by 5% for the year, with EBITDA in line with the prior year.
As BPS' customer base continues to digitally transform their businesses and finding new and innovative ways
to service their customers, it results in declining call volumes through BPS' call centre environments. This
has necessitated an internal drive by the business to reduce costs in line with declining call volumes. BPS is
furthermore focusing on growing its enabling technologies, including robotic processes, in order to diversify
its offerings from traditional call centres, to providing digitally transformed customer experiences.
ALTRON ARROW
Altron Arrow's experienced a challenging year, given the problems faced in the SA contract manufacture
space, whereby the demand for the delivery of components have been curtailed. This resulted in revenue and
EBITDA for the year declining by 11% and 12%, respectively. In challenging economic conditions, the business
maintained its leading component distributor position, with a market share of 27%. Altron Arrow continues to
drive market share expansion in a declining market by leveraging their established global brand.
DIVIDEND
Notice is hereby given that a final cash dividend of 44 cents per share (35.2 cents net of 20% dividend
withholding tax) for the financial year ended 28 February 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. 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, 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 399 380 572,
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, 28 May 2019
Commence trading ex dividend Wednesday, 29 May 2019
Record date Friday, 31 May 2019
Payment date Monday, 3 June 2019
Share certificates may not be dematerialised or rematerialised between Wednesday, 29 May 2019 and Friday,
31 May 2019.
DIRECTORATE AND CHANGE IN FUNCTION
During the past financial year, our board took further steps to ensure alignment to our ICT focused strategy
and implementing its diversity policy at board level. As part of this process, Ms Phumla Mnganga was
appointed as an independent non-executive director on the Altron board, with effect from 1 February 2019.
On 14 March 2019, the board announced the appointment of Mr Cedric Miller as executive financial director
and Chief Financial Officer ("CFO") of Altron, with effect from 1 May 2019. Following Mr Miller's appointment,
Mr Andrew Holden, the Altron Group Chief Operations Officer, who assumed the additional role of acting
CFO on 20 October 2018, stepped down as acting CFO, with effect from 30 April 2019. Furthermore, Mr Miller has
also been appointed to the Altron Risk Management Committee and the Altron Investment Committee, with effect
from 9 May 2019.
The board further announced that Dr WP Venter, Chairman Emeritus, retired as non-executive director of
the Altron board, with effect from 31 July 2018. Dr Penuell Maduna and Ms Dawn Mokhobo also retired as
independent non-executive directors from the board, with effect from 28 February 2019.
Following the retirement of Ms Mokhobo, Mr Stewart van Graan assumed the role of Chairman of the Altron
Social and Ethics Committee, with effect from 3 May 2019.
OUTLOOK
Despite the muted economic conditions in the jurisdictions in which the group operates, Altron remains well-
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 selective acquisitions. In particular:
- cross- and up-selling in Altron's top accounts in South Africa;
- extending our Microsoft capabilities to include Licencing Solutions Provider status;
- driving margin expansion in Altron BSI;
- increased focus on the automotive sector within Netstar South Africa;
- solidify our Netstar operation in India; and
- the group remains committed to double digit EBITDA growth.
For and on behalf of the board.
MJ Leeming M Nyati C Miller
Chairman Chief Executive Chief Financial Officer
Registered office
Altron House, 4 Sherborne Road, Parktown, 2193
Sponsor
Investec Bank Limited
Transfer secretaries
Computershare Investor Services Proprietary Limited, 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
9 May 2019
AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2019
Independent auditor's report on the summary consolidated financial statements
To the Shareholders of Allied Electronics Corporation Limited
Opinion
The summary consolidated financial statements of Allied Electronics Corporation Limited, contained in the
accompanying preliminary report, which comprise the summary consolidated balance sheet as at 28 February 2019,
the summary consolidated statements of comprehensive income, changes in equity and cash flows for the year then
ended, and the related notes, are derived from the audited consolidated financial statements of
Allied Electronics Corporation Limited for the year ended 28 February 2019.
In our opinion, the accompanying summary consolidated financial statements are consistent, in all material respects,
with the audited consolidated financial statements, in accordance with the requirements of the JSE Limited
Listings Requirements for preliminary reports, as set out in note 3 to the summary consolidated financial statements,
and the requirements of the Companies Act of South Africa as applicable to summary financial statements.
Summary Consolidated Financial Statements
The summary consolidated financial statements do not contain all the disclosures required by
International Financial Reporting Standards and the requirements of the Companies Act of South Africa as applicable
to annual financial statements. Reading the summary consolidated financial statements and the auditor's report thereon,
therefore, is not a substitute for reading the audited consolidated financial statements and the auditor's report thereon.
The Audited Consolidated Financial Statements and Our Report Thereon
We expressed an unmodified audit opinion on the audited consolidated financial statements in our report dated 8 May 2019.
That report also includes communication of key audit matters. Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the consolidated financial statements of the current period.
Director's Responsibility for the Summary Consolidated Financial Statements
The directors are responsible for the preparation of the summary consolidated financial statements in accordance with
the requirements of the JSE Limited Listings Requirements for preliminary reports, set out in note 3 to the summary
consolidated financial statements, and the requirements of the Companies Act of South Africa as applicable to summary
financial statements.
Auditor's Responsibility
Our responsibility is to express an opinion on whether the summary consolidated financial statements are consistent,
in all material respects, with the audited consolidated financial statements based on our procedures, which were conducted
in accordance with International Standard on Auditing (ISA) 810 (Revised), Engagements to Report on the Summary Financial Statements.
PricewaterhouseCoopers Inc.
Director: A.M Motaung
Registered Auditor
Johannesburg
8 May 2019
SUMMARY CONSOLIDATED
BALANCE SHEET
GROUP
R millions Note 28 Feb 2019 28 Feb 2018 1 Mar 2017
Restated(1) Restated(1)
ASSETS
Non-current assets 4 171 3 798 2 893
Property, plant and equipment 620 615 569
Intangible assets and goodwill 1 965 1 669 1 029
Equity-accounted investments 19 20 23
Other investments - 468 302
Financial assets at amortised cost 350 - -
Financial assets at fair value through profit or loss 202 - -
Financial assets at fair value through other
comprehensive income 21 - -
Finance lease assets 196 187 190
Contract costs capitalised 83 - -
Capital rental devices 293 461 404
Trade and other receivables 87 - -
Defined benefit asset 180 164 178
Deferred taxation 155 214 198
Current assets 7 430 6 138 6 991
Inventories 1 017 993 1 046
Trade and other receivables 4 725 3 360 2 752
Financial assets at fair value through profit or loss 6 - -
Contract assets 195 -
Taxation receivable 25 4 3
Restricted cash 26 - -
Cash and cash equivalents 1 381 1 067 1 546
7 375 5 424 5 347
Assets classified as held-for-sale 9 55 714 1 644
Total assets 11 601 9 936 9 884
EQUITY AND LIABILITIES
Total equity 3 373 2 545 2 028
Share capital and share premium 2 866 2 861 2 448
Retained earnings 3 148 2 543 2 356
Other reserves (2 479) (2 614) (2 536)
Attributable to Altron shareholders 3 535 2 790 2 268
Non-controlling interests (162) (245) (240)
Non-current liabilities 1 424 1 580 2 048
Loans 1 262 1 502 2 000
Provisions - 5 5
Contract liabilities 87 - -
Deferred taxation 75 73 43
Current liabilities 6 804 5 811 5 808
Loans 484 404 395
Bank overdrafts 1 181 972 956
Provisions 15 20 16
Trade and other payables 3 603 3 881 3 350
Financial liabilities at fair value through profit or loss 18 - -
Contract liabilities 1 423 - -
Taxation payable 80 69 67
6 804 5 346 4 784
Liabilities classified as held-for-sale 9 - 465 1 024
Total equity and liabilities 11 601 9 936 9 884
(1) Refer to note 17 for more detail in respect of the restatement of prior year balances
SUMMARY CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
% Restated*
R millions Notes Change 2019 2018
CONTINUING OPERATIONS
Revenue 13 7 15 723 14 743
Operating costs excluding capital items* (14 116) (13 509)
Earnings before interest, taxation, depreciation,
amortisation, capital items and equity accounted losses
(EBITDA and capital items)** 30 1 607 1 234
Depreciation and amortisation* (566) (451)
Operating profit before capital items 33 1 041 783
Capital items 5 (26) (38)
Operating profit 36 1 015 745
Finance income 130 164
Finance expense (306) (342)
Share of loss of equity accounted investees, net of taxation (1) (1)
Profit before taxation 48 838 566
Taxation (158) (145)
Profit for the year from continuing operations 62 680 421
DISCONTINUED OPERATIONS
Revenue 13 (59) 1 202 2 938
Operating costs excluding capital items (1 148) (2 930)
Earnings before interest, taxation, depreciation,
amortisation, capital items and equity accounted losses
(EBITDA and capital items)** 54 8
Operating profit excluding capital items 575 54 8
Capital items 5 24 (271)
Operating profit/(loss) 78 (263)
Finance income 24 56
Finance expense (27) (77)
Proft/(loss) before taxation 75 (284)
Taxation (5) 31
Profit/(loss) for the year from discontinued operations 70 (253)
Profit for the year from total operations 750 168
* Costs incurred to fulfil contracts relating to hardware and fitment have been reclassified from materials and
services consumed to depreciation and amortisation, as a result the prior year has been restated.
** The group presents in its consolidated statement of comprehensive income earnings before interest, taxation,
depreciation, amortisation, capital items and equity accounted losses from associates. This represents the contribution by
the group from its revenue after deducting the associated employee costs and materials and services consumed expenses.
This also includes other income earned; and finance lease interest income that is considered to be to be revenue for the group.
% Restated*
R millions Note Change 2019 2018
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurement of net defined benefit asset 4 (5)
Items that are or may be reclassified subsequently
to profit or loss
Foreign currency translation differences in respect of
foreign operations*** 113 (62)
Effective portion of changes in the fair value of cash flow hedges 3 2
Transfer to reserves - (3)
Other comprehensive income for the year, net of taxation 120 (68)
Total comprehensive income for the year 870 100
Net profit/(loss) attributable to:
Non-controlling interests 39 (19)
Non-controlling interests from continuing operations 25 17
Non-controlling interests from discontinued operations 14 (36)
Altron equity holders 711 187
Altron equity holders from continuing operations 655 404
Altron equity holders from discontinued operations 56 (217)
Net profit for the year 750 168
Total comprehensive income attributable to:
Non-controlling interests 39 (18)
Non-controlling interests from continuing operations 25 17
Non-controlling interests from discontinued operations 14 (35)
Altron equity holders 831 118
Altron equity holders from continuing operations 775 356
Altron equity holders from discontinued operations 56 (238)
Total comprehensive income for the year 870 100
Basic earnings per share from continuing operations (cents) 6 62 177 109
Diluted earnings per share from continuing operations (cents) 6 62 175 108
Basic earnings/(loss) per share from discontinued operations
(cents) 6 125 15 (59)
Diluted earnings/(loss) per share from discontinued operations
(cents) 6 126 15 (58)
Basic earnings per share from total operations (cents) 6 276 192 51
Diluted earnings per share from total operations (cents) 6 280 190 50
*** This component of other comprehensive income is not subject to tax.
SUMMARY CONSOLIDATED
STATEMENT OF CASH FLOWS
Restated*
R millions 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated by operations 1 127 1 062
Interest received 134 178
Interest paid (330) (417)
Dividends received from equity accounted investees and other investments 4 32
Taxation paid (147) (142)
Dividends paid, including to non-controlling interests (111) (5)
Net cash inflow from operating activities 677 708
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiaries, net of cash acquired (218) (698)
Proceeds on the disposal of subsidiaries, associate and businesses net of cash
disposed of 176 233
Proceeds on disposal of property, plant and equipment and intangible assets 123 3
Cash (outflow)/received relating to finance lease arrangements (6) 15
Acquisition of intangible assets (93) (84)
Acquisitions of property, plant and equipment (190) (194)
Other investing activities (206) (246)
Net cash (outflow) from investing activities (414) (971)
CASH FLOWS FROM FINANCING ACTIVITIES
Loans repaid (1 716) (755)
Loans advanced 1 543 195
Settlement of finance leases (12) -
Proceeds from share issue - 400
Net cash (outflow) from financing activities (185) (160)
Net increase (decrease) in cash and cash equivalents 78 (423)
Net cash and cash equivalents at the beginning of the year 95 502
Cash and cash equivalents at the beginning of the year 95 590
Cash previously classified as held-for-sale - (88)
Effect of exchange rate fluctuations on cash held 27 16
Net cash and cash equivalents at the end of the year 200 95
* Refer to note 17 for more detail in respect of the restatement of prior year balances.
SUMMARY CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
Attributable to Altron equity holders
Share Non-
capital and Treasury Retained controlling Total
R millions premium shares Reserves earnings Total interests equity
Balance at 28 February 2017 2 747 (299) (2 536) 2 356 2 268 (240) 2 028
Total comprehensive income for the year
Profit for the year - - - 187 187 (19) 168
Other comprehensive income
Foreign currency translation differences in respect of foreign operations - - (62) - (62) - (62)
Remeasurement of net defined benefit asset - - (5) - (5) - (5)
Effective portion of changes in the fair value of cash flow hedges - - 1 - 1 1 2
Transfer to reserves - - (3) - (3) - (3)
Total other comprehensive income - - (69) - (69) 1 (68)
Total comprehensive income for the year - - (69) 187 118 (18) 100
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Dividends to equity holders - - - - - (5) (5)
Issue of share capital 413 - (13) - 400 - 400
Share-based payment transactions - - 20 - 20 - 20
Total contributions by and distributions to owners 413 - 7 - 420 (5) 415
Changes in ownership interests in subsidiaries
Buy-back of non-controlling interest - - (16) - (16) 16 -
Acquisition of subsidiary - - - - - 2 2
Total changes in ownership interests in subsidiaries - - (16) - (16) 18 2
Total transactions with owners 413 - (9) - 404 13 417
Balance at 28 February 2018 3 160 (299) (2 614) 2 543 2 790 (245) 2 545
Adjustment on initial application of IFRS 9 and IFRS 15 - - - (1) (1) - (1)
Restated total equity at the beginning of the year 3 160 (299) (2 614) 2 542 2 789 (245) 2 544
Total comprehensive income for the year
Profit for the year - - - 711 711 39 750
Other comprehensive income
Foreign currency translation differences in respect of foreign operations - - 113 - 113 - 113
Remeasurement of net defined benefit asset - - 4 - 4 - 4
Effective portion of changes in the fair value of cash flow hedges - - 3 - 3 - 3
Total other comprehensive income - - 120 - 120 - 120
Total comprehensive income for the year - - 120 711 831 39 870
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Dividends to equity holders - - - (105) (105) (5) (110)
Issue of share capital 5 - (5) - - - -
Share-based payment transactions - - 20 - 20 - 20
Total contributions by and distributions to owners 5 - 15 (105) (85) (5) (90)
Changes in ownership interests in subsidiaries
Disposal of operations - - - - - 49 49
Total changes in ownership interests in subsidiaries - - - - - 49 49
Total transactions with owners 5 - 15 (105) (85) 44 (41)
Balance at 28 February 2019 3 165 (299) (2 479) 3 148 3 535 (162) 3 373
Dividend per share declared 44 cents(final) and 28 cents(interim)(2018: nil).
NOTES TO THE SUMMARY CONSOLIDATED
FINANCIAL STATEMENTS
1. INDEPENDENT AUDIT
The summary consolidated financial statements have been derived from the audited consolidated
financial statements. The directors of the company take full responsibility for the preparation of the
summary consolidated financial statements and that the financial information has been correctly
derived and are consistent in all material respects with the underlying audited consolidated financial
statements. The summary consolidated financial statements for the year ended 28 February 2019 have
been audited by our independent auditors, PricewaterhouseCoopers Inc. who have expressed an
unmodified opinion thereon. The auditors also expressed an unmodified opinion on the consolidated
financial statements from which the summary consolidated financial statements were derived.
A copy of the auditor's report on the consolidated financial statements is available for inspection at the
company's registered office, together with the financial statements identified in the auditor's report.
2. GENERAL INFORMATION
Altron is a leading ICT business, operating in a number of geographies. Its principal subsidiaries are
Altron TMT Proprietary Limited (which includes various operating divisions); Netstar Proprietary Limited
and the balance of the Netstar group (including its Australian operations); Altron Nexus Proprietary
Limited (previously known as Altech Radio Holdings Proprietary Limited); Bytes Software Services Limited
and Phoenix Software Limited in the UK; and the Altron Rest of Africa operations.
3. BASIS OF PREPARATION
The summary consolidated financial statements are prepared in accordance with the requirements
of the JSE Limited Listings Requirements for preliminary financial statements and the requirements of
the Companies Act applicable to summary financial statements. The summary financial statements
were prepared in accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee (APC) and the Financial Pronouncements
as issued by the Financial Reporting Standard Council (FRSC), and to also, as a minimum, contain the
information required by IAS 34 Interim Financial Reporting.
The accounting policies applied in the preparation of the consolidated financial statements from which
the summary consolidated financial statements were derived, are in terms of IFRS and are consistent
with those accounting policies applied in the preparation of the previous consolidated financial
statements, apart from restatements and the changes to accounting policies noted below. The summary
consolidated financial statements should be read in conjunction with the consolidated financial
statements for the year ended 28 February 2019, which have been prepared in accordance with IFRS.
A copy of the full set of the audited consolidated financial statements is available for inspection from
the company secretary at the registered office of the company.
This report was compiled under the supervision of Mr Andrew Holden, Chief Operating Officer and
Mr Cedric Miller CA(SA), Chief Financial Officer.
4. PRINCIPAL ACCOUNTING POLICIES
The group adopted all new, revised or amended accounting pronouncements that became effective in the
current reporting period. The following standards had an impact on the group:
- IFRS 9 Financial Instruments
- IFRS 15 Revenue from Contracts with Customers
The group had to change its accounting policies and make certain retrospective adjustments, which
were recorded on 1 March 2018 in terms of the adoption approach elected, following the adoption of
IFRS 9 and IFRS 15, which is disclosed in note 14. The other amendments listed above did not have a material
impact on the amounts recognised in prior periods and have not; and are not expected to significantly
affect the current or future periods.
The accounting policies applied in the preparation of the summary consolidated financial statements
are in terms of IFRS and are consistent with those accounting policies applied in the preparation of the
consolidated financial statements.
R millions 2019 2018
5. CAPITAL ITEMS
Continuing operations
Impairment of goodwill - (30)
Net profit on disposal of property, plant and equipment 16 1
Impairment of property, plant and equipment (7) (17)
Contract costs written off (35) -
Reversal of provision related to East Africa - 10
Impairment of historic proceeds receivable - (2)
(26) (38)
Discontinued operations
Profit/(loss) on disposal of discontinued operations 30 (90)
Profit/(loss) on disposal of intangible assets (2) (6)
Profit on disposal of property, plant and equipment 63 -
Impairment of held-for-sale disposal groups (67) (175)
24 (271)
Total (2) (309)
Cents % change 2019 2018
6.
