Mergers, Acquisitions and Financial Results

Telecommunications infrastructure and support systems supply group Africa Cellular Towers has continued to benefit from trading conditions. The company, which listed on AltX in November last year, increased net profit 48.7% for the year ending February, it said when releasing results last week.

Revenue increased 52.4% to R197.3m from R129,4m the previous year. This was attributed to contracts secured by the company in Nigeria, Ghana and the Republic of Congo. Gross profit grew 28.4% to R61.6m from R47.9m, but the gross profit margin fell to 31.2% from 37% due to greater competition and rising steel prices.

Ebitda (earnings before interest, tax, depreciation and amortisation) increased 49.3% to R43.8m from R29.3m.

MD Chris Kruger said last year was characterised by "supply-only" contracts as opposed to the year ended February, which saw more "supply and install" contracts. As a result, Ebitda margins dropped to 22.2% from 22.7%.

Actual revenue for the period exceeded the forecast by 25.5%, ebitda by 23.7% and profit after taxation by 22.9%. Diluted headline earnings a share of 15.8c were achieved, which exceeded the forecast by 21.5%, he said.

The company was working on a contract for Huawei, which was supplying a cellular operator in the Democratic Republic of Congo, which brought in R10,3m this financial year. Because of the volatile situation in that country, the company took a very conservative view on the contract, leaving no gross profit on the contract, he said. "We are still happy with these levels of gross profit and ebitda margins, which can be maintained or even improved."

The company's balance sheet was strengthened by the private share placement prior to listing, where it raised R50m. Kruger said the capital raised enabled the company to buy more raw materials to ensure higher work in process.

"The reason for the high increase in work in process is that during January and February 2006, two big projects in Chad and the Democratic Republic of Congo were completed. These projects were invoiced in the 2006 year-end." The company also had further roll-outs of contracts in Chad and the Democratic Republic of Congo, which started this year, he said. In February, the company announced that it had entered into an agreement to purchase JK Shelters for R40m, based on a profit after tax of R8m.

Business Day


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