Message to our shareholders
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.
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)
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
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
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
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
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
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.
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
* Ongoing acquisition activity; and
* Turnaround expectations at Altech NamITech.
The above underscore a solid foundation for Altech's performance
over the next twelve months.
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
Friday 2 June 2006
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
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
Dr John Carstens
(Non Executive Chairman)
Chief Executive Officer
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