Annual report 2010

Corporate Responsibility 2010

Vision 2012

Altron corporate news

ALTECH PROFIT UP 17%
Tuesday, September 29, 2009

JSE listed Allied Technologies Limited (Altech) today announced the group’s interim results for the six months ended 31 August 2009. “I am particularly pleased with the strong performance that has been delivered by all of Altech’s operating companies. What is even more impressive is that we have increased our operating profit margin to 10%. This has resulted in a 17% increase in our profits. Altech East Africa is showing exceptional growth and already contributes 18% of the Altech group’s total operating profit, proving that it has been a very successful and sound investment. Altech East Africa, which perfectly complements our existing and successful group of companies, should contribute approximately 45% of Altech’s total profit over the next two to three years. It is definitely the growth engine for the Altech group,” said Altech CEO, Craig Venter.

He continued, “The results were underscored by various strategic acquisitions and alliances with emphasis particularly on the East African region. Annuity revenue remained a strong focus, increasing to 82%, previously 79%, of total revenue, and providing stability and exceptional profit for the group notwithstanding turbulent markets. Working capital management, stringent cost control and improved profit margins resulted in a strong balance sheet and impressive profitability.”

Financial highlights for the 6 month period are as follows:

· Revenue up to R4.7 billion

· 82% annuity revenue

· Operating profit up 17% to R479 million

· Operating income margin rose to 10% (2008: 9%)

· Profit after tax up 14% to R322 million

· Adjusted headline earnings per share up 13% to 304 cents per share

· Cash at R460 million

· Return on equity 29% (2008: 26%)

“Although a number of acquisitions were made during the period, Altech’s balance sheet and cash position remain extremely desirable. We conserved cash during the high priced acquisitive boom and have in the past, and are now able in the future, to enter into transactions at much more favorable terms. This strategy has resulted in a competitive market advantage with our group growing to 30 operating entities,” said Venter.

Transactions concluded during the period included the acquisition of the entire share capital of both Fleetcall, South Africa’s leading radio trunking network operator, and internet technology solutions and broad-based IT Company, Technology Concepts. Altech also concluded the purchase of 50% plus 1 share in NuPay, a transaction service provider and switching company.

Two Altech Netstar franchises were acquired by the Altech Netstar subsidiary, namely Nelspruit and Polokwane.

The disposal of Altech NamITech SA to Gemalto NV became effective in April 2009.

Altech increased its economic interest in Kenya Data Networks (KDN) from 51% to 60.8% by subscribing for additional non-voting ordinary shares and acquiring a minority shareholder’s voting ordinary shares. KDN is the leading data network infrastructure operator in Kenya, with a terrestrial fibre optic network spanning Kenya, Uganda, Rwanda and soon Tanzania and the DRC. The terrestrial fibre network will link the undersea cables, which land in Mombassa, to the landlocked countries in East and Central Africa.

“Altech was thrilled to increase its stake in KDN as it is our infrastructure pillar and the growth engine of the group. The additional USD39.5 million capital injection will be used to roll out the KDN network, further entrenching KDN as the key provider of broadband in East Africa,” said Venter.

Two East African submarine cables i.e. TEAMS and Seacom, will play a large strategic role at Altech. During the period, KDN acquired an 8.5% overall (10% of the Kenya share) stake in TEAMS, the submarine cable stretching from Kenya to the United Arab Emirates. Altech also entered into a strategic bandwidth alliance with Seacom, the submarine cable which links South and East African countries to their European and Asian counterparts. The alliance saw Altech procuring two STM-16s from Seacom for 20 years, with the option to upgrade, within three years, to double this capacity, to an STM-64. Seacom in turn, purchased significant bandwidth capacity on the Altech East Africa terrestrial backbone network owned by KDN.

“The equity stake owned by KDN in TEAMS equates to an initial capacity of 10.2Gb per second. The addition of the 5Gb per second capacity purchased through the Seacom strategic alliance, results in Altech being one of the largest bandwidth suppliers on the continent. Significant bandwidth customers have already been secured with almost 70% of the Seacom capacity already on-sold. We expect the benefits of these transactions to bare fruit in the next six months and beyond,” said Venter.

All businesses in the group delivered solid results, with exceptional performances from Altech Autopage Cellular, Altech Card Solutions, Altech Netstar and Altech Stream East Africa.

Altech Autopage Cellular performed well and met expectations. The total post-paid subscriber base increased by over 105 000 and ARPU (Average Revenue Per User) increased from February 2009 (but declined slightly year-on-year), underpinned by strong Data and Value-added-Service sales.

Altech Netstar delivered strong results for the period despite low motor vehicle sales in the passenger vehicle and commercial vehicle categories. Altech Netstar now manages a base of 470 000 vehicles with an approximate value of R6 billion.

Testing of the Netstar GSM platform in Malaysia proved successful, and roll-out is expected to start during the second half of the year.

Altech Netstar Fleet Solutions (ANFS) continues to deliver strong results and organic growth.

Altech Netstar Traffic is due to launch its traffic information product and solutions imminently. Altech Netstar Traffic has the ability to become a strong revenue and profit driver within the Altech Netstar group of companies.

Altech Fleetcall continued to delver strong results and was recently selected to provide seamless and instantaneous radio communication services for the Gautrain Rapid Rail link.

Altech Alcom Matomo and Altech Alcom Radio Distributors (ARD) met expected targets for the period. ARD was once again awarded Motorola’s “Biggest EMEA Distributor” award, for the fourth time.

Altech Stream East Africa (ASEA) has shown massive growth for the period under review. The restructuring of the Internet Service Provider entities, in light of the arrival of submarine capacity, into Converged Services Entities is nearing completion. KDN has successfully connected submarine bandwidth capacity from Mombasa (Kenya) to Kampala (Uganda) and into Kigali (Rwanda) through its extensive 4,000 km terrestrial fibre network.

ASEA has received a full Network Operator license for the DRC, and is currently examining several opportunities to extract value from it.

Altech Technology Concepts has exceeded its profit targets for the first half of this financial year. It has seen a dramatic growth in its business, spearheaded by its TC Channel Bonding product. The company will continue to grow its infrastructure and resource base, in order to support the accelerated growth anticipated in the next six months.

Altech UEC delivered satisfactory results for the period. It has recently concluded a number of new contracts with broadcasters in Eastern Europe, the Middle East and Africa, and is well positioned to benefit from the opportunities presented by the South African Digital Terrestrial Television migration (DTT) programme. An investment was made in the additional manufacturing capacity at its Durban set-top-box (STB) facility as well as in the Far East.

Altech MediaVerge continues to contribute strongly to the group and has developed a range of value-added Commercial and e-Government products and services that will leverage off the South African DTT platform.

Arrow Altech Distribution delivered solid operational performance and achieved growth in the mid-tier market with a forward order book at satisfactory levels.

All the divisions in Altech Information Technologies recorded solid performances:

Altech Isis experienced a steady performance. The addition of KDN as a customer during the trading period contributed positively.

Altech Card Solutions exceeded all targets. The sale of EFTPOS terminals and software solutions was better than anticipated. The switching division, which achieved good growth, is currently working on strategic projects that should make a substantial contribution in the second half of the year. The new e-Security business division is trading ahead of budget due to the increased business development initiatives in South Africa, West and East Africa.

Altech West Africa’s pre-paid cellular voucher manufacturing facility in Lagos, Nigeria continues to maintain its position as the leading supplier of secure paper-based products. Increased regional business development initiatives have resulted in export orders to the West Africa region.

Altech NuPay exceeded profit targets. Exciting projects are underway to launch new reconciliation facilities to a broad market sector, as well as to individuals.

“With a strong order book and growing annuity revenue, Altech is well positioned for continued growth in the second half of the financial year. We will continue to focus on cost containment and improvement of operating margins. We look forward to the continued success of all businesses, in particular our East Africa operations, where our association with the undersea cables will reap rewards by year-end and is set to change the face of the Altech group,” said Venter.

Ends

Notes to Editors:

Altech, is listed on the Johannesburg Stock Exchange (JSE). It is focused on the Telecommunications, Multi-media and information Technology (TMT) industries and employs over 5000 employees in South Africa and abroad.

As a leading South African multi-billion rand high-technology group, Altech is involved in the design, development and convergence of telecommunications, multi-media systems and IT solutions. There is a strong focus on the convergence of these technologies and Altech is now also entrenched in the arena of secure technology solutions.

Altech has ongoing access to the latest technologies worldwide, while the group’s own research and development programme actively encourages and promotes internal technology.

FOR FURTHER INFORMATION PLEASE CONTACT:

Craig Venter: Chief Executive Officer

TEL: (011) 715-9004

FAX: (011) 715-9045

CELL: 083 236 8000

EMAIL: cventer@altech.co.za

Andy Baker: Chief Operating Officer

TEL: (011) 715-9023

FAX: (011) 715-9047

CELL: 083 657 2886

EMAIL: abaker@altech.co.za

Wessie van der Westhuizen: Chief Strategic Officer