Altech nears R4bn at half-year

Johannesburg, 27 Sep 2007

JSE-listed Allied Technologies (Altech) has posted another period of solid growth in its interim results to end August.

Revenue for the six months increased 20%, from R3.3 billion in 2006, to just shy of R4 billion. Operating profit, before the R47 million net loss from the sale of capital items, climbed 6% to R306 million.

Headline earnings per share were up 11%, to R2.15; however, basic earnings per share declined 13%, to R1.72.

Altech CEO Craig Venter says the company's continued strong balance sheet and net asset value of 1 734c per share maintains the group's expansion strategy. He notes that significant developments have been completed in several strategic areas during the review period.

Divisional review

In the telecommunications division, Altech Autopage Cellular produced satisfactory results, increasing its total base to over 850 000 subscribers, says Altech.

Higher average revenue per user than the corresponding period in 2006 underscores management's focus on the quality of new business, it says.

"In a deregulated South African telecommunications market environment, Altech Autopage Cellular is capitalising on its subscriber base to move into a broader communications market, particularly wireless data services where demand is increasing exponentially," says Venter.

Altech says Netstar's acquisition of ComTech is expected to expand both the range of services and customer base in its fleet management division, Altech Netstar Fleet Management Services. This acquisition is still subject to the approval of the competition authorities.

A further smaller acquisition has been made to expand regional geographic coverage into Malaysia, says Venter. This will enhance Altech's presence in a market with considerable potential, he explains.

Altech Alcom Matomo completed system upgrades for Transnet's rail freight subsidiary, which will provide data communications and location of locomotives as part of a programme to improve freight handling services.

The company is also due to complete a R540 million digital terrestrial trunked radio network for Gauteng's South African Police Services (SAPS) by October.

Based on this track record, a number of similar systems are under discussion with SAPS and other parties, says Venter.

Altech Alcom Radio Distributors remains a dominant distributor of two-way radio products for southern Africa through its network of authorised dealers and sub-distributors, says Altech.

Altech Stream Rwanda's recent licence to deliver broadband Internet access services in major Rwandan cities, using WiFi and WiMax technology and dedicated spectrum, included the rights for Altech Stream to install its own satellite earth-station for direct connection to the Web.

Venter says Rwanda is an important springboard in Altech's strategy to operate broadband networks in Africa.

"Detailed engineering designs of the broadband infrastructure are under way and the Kigali network is expected to be operational before the end of this year."

Altech UEC Multimedia recorded good results, reflecting strong demand for the advanced set-top-box products and associated software.

Says Venter: "We have seen dramatically increased local and global demand for Altech UEC products, including the hotly contested Indian market. In addition, the subcontracting of manufacturing demand in South-East Asia has greatly increased our visibility in the region."

Arrow Altech Distribution exceeded its targets off 2006's high base, despite margin pressure caused by fluctuations in the rand exchange rate.

Altech Isis Information Systems division, Altech Isis France, recorded satisfactory results, says Venter. This was due to access to MobiMaster clients in new regions, as well as the acquisition of operations in Martinique in the West Indies.

Altech Card Solutions also delivered a strong performance, with continued growth in its plastic card and personalisation equipment business units.

"Altech is noting emerging opportunities in Africa as electronic banking gains momentum in targeted markets."

Aggressive re-engineering at Altech NamITech continues, says Venter, and is expected to deliver an improved performance in the near-term.

"New business solutions with respect to electronic voucher distribution, as well as payment switching for a major global media company, bode well for the company's continued turnaround."

Conquering Kenya

Venter notes a heads of agreement has been signed with the Sameer ICT group, of Kenya. As a result, Altech will acquire a 51% controlling interest in Kenya Data Networks, Swift Global (Kenya) and Infocom.

"Through this potential acquisition, the Altech group will become a leading data network operator and Internet service provider in east and central Africa."

Commenting on Altech's future prospects, Venter says: "Strategically, the pace of change in the technology environment requires equal measures of prudence and agility. Equally, a competitive global market requires a significant geographic footprint.

"Altech's broadband initiatives are under way and the company's global presence is increasing exponentially. We believe Altech has demonstrated its willingness and capacity to meet these challenges and continues to deliver steady growth."