Message to our shareholders

The directors are pleased to report that the Altech group has again produced satisfactory results for the full year ended 28 February 2006, improving headline earnings per share by 12% to 379 cents. Revenue increased by 9% to R6 billion, with operating income of R485 million. Altech"s balance sheet remains strong with a net asset value of 1 721 cents per
share and cash of R1,5 billion.

OPERATIONAL REVIEWS

Telecommunications division
 
Wireless Communications

Altech Autopage Cellular (Altech Autopage) remains the largest independent cellular service provider in South Africa and has performed well ahead of expectations. The market for cellular services has continued to evolve, resulting in increasing volumes of post-paid and hybrid (post- paid/pre-paid) consumer connections.

High-end connections through corporate and fixed cellular enabled Altech Autopage to maintain the average revenue per user (ARPU) achieved last year.  Altech Autopage increased its subscriber base by more than 67 900 net  connections for the year. The company"s total subscriber base now exceeds 700 000.

Notable key achievements for the year were the signing of five-year agreements for service provision with both Vodacom and MTN, acknowledging the vital role played by independent service providers in the cellular industry in South Africa.

Sales of electronic pre-paid vouchers continued to perform above expectations, particularly through ABSA ATM"s and Autopage Direct franchised partners.  The South African telecommunications market is moving rapidly towards deregulation through a number of regulatory initiatives, including mobile number portability (expected in July 2006), handset subsidies investigation, the Electronic Communications Bill and the award of the second network operator licence.

Looking forward, Altech Autopage remains focused on further entrenching itself as a broad-based communications company, providing unique and creative solutions to communication users, both in South Africa and internationally.

Altech Netstar maintained its impressive market position in the stolen vehicle tracking and recovery (SVR) market. Profit growth has been well ahead of expectations with exceptional cash generation.

On the back of a buoyant new vehicle market, strong growth in Altech Netstar's subscriber base continued during the year. The company now manages a subscriber base of over 362 000 vehicles for SVR services. Altech Netstar"s extensive ground and air recovery teams respond to around 600 incidents per month throughout Southern Africa. Subscriber growth is expected to continue for the foreseeable future, based on current penetration of a growing insured vehicle market in South Africa.

Altech Netstar has retained its unique ability to develop and introduce technologies that enhance and improve its services to subscribers. In addition to continuous developments of the Altech Netstar system, a new low-cost GSM-based product "Cyber Sleuth", has been introduced to provide positioning and SVR capabilities for commercial fleets and vehicles. Altech Netstar"s fleet management system, Vigil, successfully commenced operations during the financial year under review. Altech Netstar aims to achieve significant market penetration in this sector of its activities.

The Malaysian business is growing steadily with over 32 800 vehicles on the Altech Netstar system. Plans are well advanced to establish Altech Netstar in a major African market, as well as targeting other international expansion opportunities.

Altech Alcom Matomo exceeded profitability and cash flow targets for the year.  The company is fully involved in activities resulting from the award in 2004,  of the R500-million Gauteng South African Police Services" digital Trunked Radio (TETRA) network. Work on the project including high site installations is progressing in line with expectations. A number of further tenders has been submitted to various customers in Southern Africa for TETRA systems and prospects are encouraging that these tenders will be successful.

Altech Alcom Radio Distributors exceeded its financial targets for the year and continues to distribute leading Motorola two-way radio products to the Southern African market through its network of authorised dealers.

Multi-Media and Electronics divisions

Altech UEC Multi-Media (Altech UEC), develops, manufactures and deploys innovative and advanced set-top-box (STB) products and associated software. Turnaround activities in Altech UEC are complete and the company is reaping the
benefits, especially as it is now able to manufacture competitively at the current strong rand exchange rate. Altech UEC reported strong earnings growth and now contributes positively to the earnings of the group.

The acceleration of converging technologies in the multi-media sector continues to provide opportunities for specialist companies such as Altech UEC.

This is demonstrated by the highly-successful launch of the MultiChoice dual-view PVR decoder in November 2005 which contributed over R70 million of revenue in just one quarter. This product is also attractive to offshore pay TV operators and has already resulted in orders emanating from Greece and Dubai.

The strength of the rand supported strong consumer demand for local pay television this year which resulted in record quantities of STB units being sold to MultiChoice South Africa. Sales were also increased into other regions of Africa, including Nigeria, which has shown strong demand over the past two years and has resulted in the Altech UEC order book exceeding R421 million worldwide at the year end.

The after-sales service division, Global Decoder Logistics, earned good profits during the year under review. Having established a new facility in Sydney in 2004, this division has rapidly matured into a centre of excellence in Australia and is poised to attract new customers throughout the region.

The deployment of satellite television services in India during the third quarter has significantly increased demand for pay television products across that country. Through its robust technology, ability to bring products to market rapidly and its established presence in India, Altech UEC is well-positioned to exploit the strong growth this region is experiencing.

Altech Arrow Altech Distribution (AAD) reported improved results for the year, driven by increased margins and supported by further growth in revenue from new sales initiatives.

AAD's positive trading figures reflect the benefit of past restructuring strategies designed to reduce operating costs and improve operational procedures.

Information Technology division

Altech NamITech is a leading player in Africa for cellular SIM cards, pre-paid vouchers and magnetic stripe bank cards.

The continued strength of the rand, pricing pressures and management issues had a severe adverse impact on the South African operation which significantly underperformed against its prior results. As a result of this underperformance
and the closure of certain operations, goodwill impairment of R82 million has been recorded in the current year. A re-engineering process and a cost-reduction exercise are under way to reposition Altech NamITech as a strong contributor to the earnings of the group.

The impending roll-out of Europay/MasterCard/Visa (EMV) compliant smart cards in South Africa will be a major contributor to Altech NamITech"s financial success in future, based on existing contracts with a number of the major local banks to supply these cards.

In line with its pan-African strategy, Altech NamITech's new pre-paid cellular voucher manufacturing facility in Lagos, Nigeria, which is now profitable and producing more than one million vouchers per day, has entrenched the company as
a dominant player in that country.

Altech NamITech has made significant progress in the development of secure payment solutions (especially in the banking and public sector segments of its business) and this should add to future growth.

Altech Card Solutions

The continued migration to the Europay/MasterCard/Visa (EMV) payment standard had a positive impact on the results of Altech Card Solutions (ACS) for the year. The ongoing deployment of "Electronic Funds Transfer at Point Of Sale"  (EFTPOS) terminals, as well as banks preparing to issue EMV smart cards, has led to substantial investment in infrastructure from which ACS has benefited.

With ongoing personalisation infrastructure upgrades by card issuers and outsource bureaus, the DataCard division has again achieved outstanding growth for the year. Equipment sales and the resulting maintenance agreements will generate annuity income in future.

The introduction of new payment initiatives thoughout Africa creates potential for the EFTPOS division.

Cardtronic had a satisfactory financial year and has completed its recapitalisation project. This has enabled Cardtronic to compete more effectively in the higher volume business segment. Good future growth is expected in the coming year.

The integration of the switching business, purchased during 2004, is complete and switching volume is growing. The business launched a card- based gift voucher programme during December 2005 which was a major success.

Altech ISIS recorded exceptional financial and organic growth during the year strengthening its position as a supplier of end-to-end operational support systems (OSS) solutions in South Africa and Africa. The company employs 150 highly skilled individuals, specialising in the Telecoms OSS sector.

Altech ISIS has further entrenched its position in this market through the purchase (subject to the fulfilment of certain conditions precedent) of MobiMaster, which owns and develops billing systems. MobiMaster"s billing systems are capable of billing pre- and post-paid, voice and data and are fully prepared for content billing. This acquisition combined with its extensive knowledge on the provision of fraud management and revenue assurance solutions and services through its partnership with Hewlett Packard bodes well for the future of Altech Isis.

Corporate Finance Activities

During the second half of the year, Altech disposed of its joint controlling shareholding in Econet Wireless Global Limited(EWG), a Botswana holding company with interests in international cellular network activities. Altech"s interest in EWG was acquired in 2004 and the disposal was due to the breakdown of the relationship with EWG"s other shareholders. The proceeds on this disposal amounted to US$87.5 million (R561 million) with a profit of US$17.5 million (R141 million) for Altech, which upon consolidation amounted to R129 million.

As reported above, the Altech Isis division of Altech Data reached agreement on the acquisition of the MobiMaster division of Linedata Services in France, subject to the fulfilment of certain conditions precedent.

Altech has substantial cash resources as well as other resources to fund future acquisitions. A number of acquisition opportunities are currently under investigation.

Outlook

A number of factors are contributing to a confident outlook for real growth in the coming year.These include:
* Increased order books and growing annuity revenue at Altech Autopage and Altech Netstar;
* A strong order pipeline at Altech UEC;
* Continued liberalisation and deregulation in the telecoms environment;
* Ongoing acquisition activity; and
* Turnaround expectations at Altech NamITech.
The above underscore a solid foundation for Altech's performance over the next twelve months.

Directorate

Dr E N Banda was appointed as an independent non-executive director to the Altech board on 1 February 2006. He is highly regarded and experienced in South Africa with a career that spans banking, business and the legal profession.

Declaration of Ordinary Dividend no 63

Ordinary dividend number 63 of 209 cents (2005:174 cents) per share for the year ended 28 February 2006 is declared payable on Monday 5 June 2006 to ordinary shareholders recorded in the register at the close of business on Friday 2 June 2006. The timetable for the payment of the dividend is as follows:
 

Last day to trade cum dividend	Friday 26 May 2006
Trading ex dividend commences	Monday 29 May 2006
Record date	Friday 2 June 2006
Payment date	Monday 5 June 2006

Share certificates may not be dematerialised or rematerialised between Monday 29 May 2006 and Friday 2 June 2006, both days inclusive. The certificated register will be closed for this period.

Further cautionary announcement

Further to the cautionary announcement dated 10 March 2006, shareholders are advised that Altech continues to be involved in discussions which, should they develop, may have a material affect on the price of the company's ordinary
shares. Accordingly, shareholders are advised to continue to exercise caution when dealing in the company"s ordinary shares until a further announcement is made.

On behalf of the board

 

Dr Hilton Davies	Craig Venter	Dr John Carstens
(Non Executive Chairman)	Chief Executive Officer	Financial Director

19 April 2006

Directors: Dr H K Davies (Chairman)#, C G Venter (Chief Executive Officer), Dr E N Banda#, Dr J E W Carstens, P M O Curle*, M L Leoka#, R Naidoo#, D C Radley#, Dr H A Serebro#, R E Venter#, Dr W P Venter#, P L Wilmot#
* British # Non-Executive
Secretaries: Altech Management Services (Pty) Limited
Sponsor: Investec Bank Limited