To view the PDF file, sign up for a MySharenet subscription.

ALT - Allied Technologies Limited - Summarised audited consolidated

Release Date: 20/04/2011 08:00
Code(s): ALT
Wrap Text

ALT - Allied Technologies Limited - Summarised audited consolidated financial statements for the year ended 28 February 2011 Allied Technologies Limited (Incorporated in the Republic of South Africa) Registration number: 1946/020415/06 Share code: ALT ISIN: ZAE000015251 Summarised audited consolidated financial statements for the year ended 28 February 2011 Highlights - Dividend growth of 5% to 356 cents per share - Turnover growth to R9,7 billion - Continued strong balance sheet - Return on shareholders` equity at 22% - Significant empowerment transactions concluded SUMMARISED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2011 2010 Figures in R million (Audited) (Audited) Revenue 9 651 9 200 Operating profit before capital items 787 933 Capital items (Note 1) (273) (42) Results from operating activities 514 891 Finance income 35 25 Finance costs (90) (40) Profit before taxation 459 876 Taxation (201) (259) STC (33) (32) Profit for the year 225 585 Other comprehensive income Foreign currency translation differences for (281) (332) foreign operations Other comprehensive income for the year (281) (332) Total comprehensive income for the year (56) 253 Profit attributable to: Non-controlling interest 15 65 Altech equity holders 210 520 Profit for the year 225 585 Total comprehensive income attributable to: Non-controlling interest (38) 19 Altech equity holders (18) 234 Total comprehensive income for the year (56) 253 Basic earnings per share (cents) 216 536 Diluted basic earnings per share (cents) 213 529 NOTES Basis of preparation The summarised consolidated financial statements have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB) in issue and effective at 28 February 2011 and the presentation and disclosure requirements of IAS 34, Interim Financial Reporting and in compliance with the Listings Requirements of the JSE Limited and the AC 500 series of interpretations. The accounting policies followed are consistent with those used in the prior year. Auditors` report PKF (Jhb) Inc`s unmodified auditor`s report included in the consolidated annual financial statements and on the summarised consolidated annual financial statements contained in this summarised report are available for inspection at the Company`s registered office. % 2011 2010
Figures in R million change (Audited) (Audited) Headline earnings per share (cents) (15) 488 571 Diluted headline earnings per share (14) 481 562 (cents) Adjusted headline earnings per share (13) 529 605 (cents) Diluted adjusted headline earnings per (12) 522 596 share (cents) 2011 2010 Figures in R million (Audited) (Audited) 1. Capital items Impairment of goodwill (250) - Impairment of property, plant and equipment (14) - Impairment of intangible assets (11) (65) Net profit on disposal of property, plant and 2 - equipment Net profit on disposal of bandwidth capacity - 23 (273) (42) 2. Reconciliation between earnings and headline earnings Attributable earnings 210 520 Capital items - gross 273 42 483 562
Tax effects of adjustments (3) (18) Non-controlling interest in adjustments (5) 9 Headline earnings 475 553
3. Reconciliation between headline earnings and adjusted headline earnings Headline earnings 475 553 Adjustments for: Amortisation of intangible assets arising on 39 40 business combinations IFRS 2 charge 7 - BEE transaction costs 4 - 525 593 Tax effect of adjustments (10) (7) Adjusted headline earnings 515 586 SUMMARISED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 2011 2010 Figures in R million (Audited) (Audited) ASSETS Non-current assets 2 449 2 866 Property, plant and equipment 1 027 1 051 Intangible assets, including goodwill 1 207 1 599 Non-current receivables 133 130 Deferred taxation 82 86 Current assets 2 108 2 204 Inventories 366 370 Trade and other receivables, including 1 251 1 218 derivatives Cash and cash equivalents 491 616 TOTAL ASSETS 4 557 5 070 EQUITY AND LIABILITIES Total equity 2 229 2 607 Altech equity holders 2 137 2 122 Non-controlling interest 92 485 Non-current liabilities 331 544 Loans 231 342 Finance lease liability - 11 Deferred income 46 96 Deferred taxation 54 95 Current liabilities 1 997 1 919 Trade and other payables, including derivatives 1 813 1 803 Warranty provisions 17 15 Bank overdraft 33 - Taxation payable 134 101 TOTAL EQUITY AND LIABILITIES 4 557 5 070 Net asset value per share (cents) 2 193 2 179 SUMMARISED STATEMENTS OF CASH FLOWS Year ended Year ended
2011 2010 Figures in R million (Audited) (Audited) Cash flows - operating activities 404 514 Cash generated by operations before movements 1 072 1 164 in working capital Movements in working capital (34) (4) Net financial expense (55) (15) Taxation paid (239) (305) Cash available - operating activities 744 840 Dividends paid - Altech equity holders (330) (313) - Non-controlling interest (10) (13) Cash flows - utilised in investing activities (434) (677) Cash flows - applied in financing activities (133) (138) Decrease in net cash and cash equivalents (163) (301) Cash and cash equivalents on acquisition of 5 6 subsidiaries - at the beginning of the year 616 911 - at the end of the year 458 616 SUPPLEMENTARY INFORMATION 2011 2010 Figures in R million (Audited) (Audited) Depreciation and amortisation 285 232 Capital expenditure 264 483 Capital commitments 67 137 Lease commitments 238 235 Payable within the next 12 months: 95 93 - Property 50 50 - Plant, equipment and vehicles 45 43 Payable thereafter: 143 142 - Property 59 73 - Plant, equipment and vehicles 84 69 Net foreign exchange losses (2) (23) Weighted average number of shares (million) 97.389 96.933 Diluted average number of shares (million) 98.677 98.342 Shares in issue at end of year (million) 97.458 97.374 Ratios EBITDA 1 072 1 165 Operating margin (%) 8,2 10,1 ROCE (%) 32,9 35,2 ROE (%) 22,2 26,1 ROA (%) 29,8 35,3 Current ratio 1,1 1,1 Acid test ratio 0,9 1,0 SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ATTRIBUTABLE TO ALTECH EQUITY HOLDERS Share capital Treasury Other Retained Figures in R million and premium shares reserves earnings Balance at 1 March 7 (292) 116 2 418 2009 Total comprehensive income Profit for the year 520 Other comprehensive income Foreign currency - - (286) - translation differences for foreign operations Total other - - (286) - comprehensive income Total comprehensive - - (286) 520 income for the year Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of share capital 38 Dividends to equity (313) holders Share-based payment - - 8 - transactions Total contributions by 38 - 8 (313) and distributions to owners Changes in ownership interests in subsidiaries Changes in ownership - - (94) - following subscription for additional share capital and dilution Total changes in - - (94) - ownership interests in subsidiaries Total transactions 38 - (86) (313) with owners Balance at 28 February 45 (292) (256) 2 625 2010 (audited) Total comprehensive income Profit for the year 210 Other comprehensive income Foreign currency - - (228) - translation differences for foreign operations Total other - - (228) - comprehensive income Total comprehensive - - (228) 210 income for the year Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of share capital 4 Dividends to equity (330) holders IFRS 2 change - - 6 - Share-based payment - - 8 - transactions Total contributions by 4 - 14 (330) and distributions to owners Changes in ownership interests in subsidiaries Change in ownership - - 345 - following dilution Total changes in - - 345 - ownership interests in subsidiaries Total transactions 4 - 359 (330) with owners Balance at 28 February 49 (292) (125) 2 505 2011 (audited) ATTRIBUTABLE TO ALTECH EQUITY HOLDERS
Non- Total controlling Figures in R million Total interest equity Balance at 1 March 2 249 298 2 547 2009 Total comprehensive income Profit for the year 520 65 585 Other comprehensive income Foreign currency (286) (46) (332) translation differences for foreign operations Total other (286) (46) (332) comprehensive income Total comprehensive 234 19 253 income for the year Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of share capital 38 38 Dividends to equity (313) (13) (326) holders Share-based payment 8 - 8 transactions Total contributions by (267) (13) (280) and distributions to owners Changes in ownership interests in subsidiaries Changes in ownership (94) 181 87 following subscription for additional share capital and dilution Total changes in (94) 181 87 ownership interests in subsidiaries Total transactions (361) 168 (193) with owners Balance at 28 February 2 122 485 2 607 2010 (audited) Total comprehensive income Profit for the year 210 15 225 Other comprehensive income Foreign currency (228) (53) (281) translation differences for foreign operations Total other (228) (53) (281) comprehensive income Total comprehensive (18) (38) (56) income for the year Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of share capital 4 4 Dividends to equity (330) (10) (340) holders IFRS 2 change 6 - 6 Share-based payment 8 - 8 transactions Total contributions by (312) (10) (322) and distributions to owners Changes in ownership interests in subsidiaries Change in ownership 345 (345) - following dilution Total changes in 345 (345) - ownership interests in subsidiaries Total transactions 33 (355) (322) with owners Balance at 28 February 2 137 92 2 229 2011 (audited) Segment analysis The segment information has been prepared in accordance with IFRS 8 - Operating Segments (IFRS 8) which defines the requirements for the disclosure of financial information of an entity`s operating segments. The standard requires segmentation based on the Group`s internal organisation and reporting of revenue and operating income based upon internal accounting presentation. In identifying its operating segments, management generally follows the Group`s product and service lines. Each of these operating segments is managed separately as each of these service lines requires different technologies and other resources as well as marketing approaches. The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in its financial statements, except that certain items are not included in arriving at the operating profit of the operating segments (amortisation of intangibles, arising on business combinations). A new segment, Converged Services (International), was included and comparative information was restated. The Group operates a number of different operating segments primarily within the Telecoms and Wireless Communications, Converged Services and Connectivity, Multi-media & Electronics and Technology (Information Technology) sectors. Refer to the Operational review for the major businesses forming part of each sector. The segment revenues and operating profit generated by each of the Group`s reportable segments are summarised as follows:
Revenue Year Year ended ended Growth 2011 2010 Cur/Pyr
Rm Rm % Altech Autopage 5 855 5 597 5 Cellular Altech UEC Group 1 145 1 079 6 Altech Netstar Group 944 880 7 Converged Services 426 488 (13) (International) Other Altech Segments 1 429 1 372 8 Altech Group 9 799 9 371 5 Amortisation of - - - intangibles Corporate - - - Inter-segment (148) (171) (13) eliminations Altech Group 9 651 9 200 5 Operating profit
Year Year ended ended Growth 2011 OM 2010 OM Cur/Pyr Rm % Rm % %
Altech Autopage 280 4,8 296 5,3 (5,4) Cellular Altech UEC Group - - 5 0,5 (100,0) Altech Netstar Group 289 30,6 269 30,6 7,4 Converged Services 32 7,5 154 31,6 (79,2) (International) Other Altech Segments 230 16,1 251 18,9 (8,3) Altech Group 831 8,5 975 10,4 (14,7) Amortisation of (39) - (40) - (2,5) intangibles Corporate (5) (2) Inter-segment - - - - eliminations Altech Group 787 8,2 933 10,1 (15,6) Revenues and operating profit from segments below the quantitative thresholds are attributable to smaller operating segments of the Altech Group. None of those segments has met any of the quantitative thresholds for determining reportable segments for the reportable periods. Quantitative thresholds have been calculated based on totals for the Altech Group. Inter-segment revenues represent transactions between reportable segments. The price is set on an arm`s length basis which is eliminated on consolidation. See operational reviews for description of each segment. Business combinations Acquisitions Acquisition of 100% interest in Swist Technology Solutions (Pty) Limited ("Swisttech") The Group acquired 100% of the issued share capital of Swist Technology Solutions (Pty) Limited in December 2010. The maximum purchase price is R52 million, payable in cash. The purchase price is payable as follows: - first tranche: R30 million (Paid in December 2010) - second tranche: R10 million - third tranche: R2 million - fourth tranche: R10 million. The second, third and fourth tranches will be paid in terms of an earn-out mechanism over three years based on after-tax profit targets for the financial years ending February 2011, 2012 and 2013 being achieved. The acquired business contributed revenues of R4 million and net profit after tax of R1 million to the Group. If the acquisition had occurred on 1 March 2010, Group revenue and net profit after tax before allocations would have increased to R24 million and R7 million respectively. These amounts have been calculated using the Group`s accounting policies. A purchase price allocation will be performed in the next financial year. Swisttech is an Independent Software Vendor (ISV) focusing on infrastructure and integration services, mobile services and software development and is a major billing software vendor in the South African market. Fair Carrying value Recognised amount adjustments values
Rm Rm Rm The acquiree`s balance sheets at the date of acquisition is as follows: Goodwill acquired 9 - 9 Trade and other receivables 9 - 9 Trade and other payables (1) - (1) Tax liability (1) (1) Cash and cash equivalents 5 5 Total net assets on acquisition 21 - 21 Goodwill on acquisition 29 Interest on deferred payment terms 2 Total purchase consideration 52 Cash and cash equivalents in (5) subsidiary acquired Less: Amounts due to vendors (20) Less: Unrealised interest on (2) deferred payment terms Net cash outflow on acquisition 25 Disposal Disposal of 25% plus 1 share shareholding of the the Group`s interest in Altech Netstar Group The Group entered into an empowerment transaction where Thebe Investment Corporation (Pty) Limited and Identity Capital Partners (Pty) Limited acquired a 25% plus 1 share shareholding in the Altech Netstar Group effective 1 December 2010. The transaction as announced in the 28 February 2010 annual financial statements as a post-balance sheet event was restructured to enable the vendor funding for the empowerment shareholders. The empowerment consortium acquired its interest in the Altech Netstar Group for a nominal consideration. The related IFRS 2 BEE charge accounted for in profit and loss in the current financial year was R7 million. Post-balance sheet events The Group has signed agreements to sell 25% plus 1 share of its interest in Altech Alcom Motomo (Pty) Limited, Altech Alcom Radio Distributors (Pty) Limited and Altech Fleetcall (Pty) Limited to Southern Palace Group of Companies (Pty) Limited, effective 1 March 2011. The empowerment consortium acquired its shareholding for a nominal consideration. The Group has signed agreements, effective 1 March 2011, to sell 25% plus 1 share of its interest in UEC`s South African entities to Power Matla ((Pty) Limited, Empower a Thousand (Pty) Limited and Epiworx Investment (Pty) Limited. The empowerment consortium acquired its shareholding in UEC`s South African entities for a nominal consideration. COMMENTARY MESSAGE TO SHAREHOLDERS The financial year ended 28 February 2011 saw satisfactory results from most of Altech`s operating companies. The group`s overall turnover increased by 5%, but trading conditions for certain subsidiaries were adversely affected by subdued global and local economic conditions, as well as currency volatility, particularly in respect of both the Rand and the Kenya shilling - this affected both export revenues and translated results from operations outside of South Africa, specifically. Operating profit for the financial year was R787 million, with an operating margin of 8,2%. Due to the factors referred to above, adjusted headline earnings amounted to 529 cents per share (2010: 605 cents). An encouraging factor was that the second six months of the financial year reflected results materially better than the first six months. Cash at year end was R458 million, with the group`s balance sheet continuing to show considerable strength. Impairments of R275 million, mainly in respect of the carrying value of the group`s East African operations, were effected, to take into account their reduced profit levels, attributable to the trading and currency factors mentioned above and certain once-off costs which were incurred during the financial year. As a result of this non-cash adjustment, basic earnings per share amounted to 216 cents. A highlight of the financial year has been BEE ownership transactions relating to three of Altech`s major sub-groups, Altech Netstar, Altech Radio and Altech UEC. These have involved restructurings of the sub-groups concerned, to facilitate vendor-financed empowerment mechanisms, which have assisted Altech`s recent achievement of a level 3 BBBEE status. A dividend of 356 cents per share has been declared, representing an increase of 5% over the dividend paid in respect of the previous financial year. OPERATIONAL REVIEWS Telecoms Telecoms and Wireless Communications Altech Autopage Cellular Despite difficult trading conditions during the first half of the financial year, compounded by the reduction in mobile termination rates and the disconnection of dormant and high-risk subscribers, revenues increased compared to the prior year largely due to the growth in value-added services and prepaid airtime vouchers. The planned reductions in mobile termination rates, as agreed by the industry, saw the implementation of the first reduction during the year. This reduction had an adverse effect on revenues as well as operating margins; however, actions to mitigate those impacts were taken, as planned. Further reductions by the operators are to take place as per the agreed "glide path" over the coming three years. The acquisition of, and co-operation with, Altech Technology Concepts has provided a platform to take various converged voice and data products and offerings to market. Channel activities are underway within both organisations to leverage the products and solutions developed. Subscriber acquisitions remained strong at 183 960 gross connections for the period, although slightly down from the prior year largely due to the difficult trading conditions as well as the after-effects of the organisational restructuring. The latter half of the year did see an improvement across all channels. Altech Netstar Group The group recorded a growth in billable subscriber vehicles from 467 963 to 505 358 units. Profit before tax grew by 13,4% year-on-year. The Group underwent a restructuring during the latter part of the year, which saw a 13% reduction in personnel, contributing towards significant cost savings that will materialise in the next reporting period. The reduction was primarily in areas of duplicated services in regional offices. Simultaneously, a corporate restructuring to facilitate the introduction of the Altech Netstar Group`s new BEE partners, Thebe Investments Corporation (Pty) Limited and Identity Capital Partners (Pty) Limited, was accomplished. Altech Netstar Stolen Vehicle Recovery (SVR) SVR reached a total of 436 917 billable subscriber vehicles, on the back of new vehicle sales which gained strong momentum towards the end of the financial year, representing an increase of 6,8% for the year. This growth must be viewed within the context of a slight migration of subscriber vehicles from SVR to Fleet Management, which has recorded a more robust growth as detailed in the next section. There is a growing trend in First World countries for insurance companies to use driver behaviour as a risk rating engine. This is known as insurance telematics. We expect this trend to also take hold in South Africa, where we have already witnessed elementary forms of driver behaviour products offered by Altech Netstar and the competition. Far more sophisticated systems are available overseas and Altech Netstar recently concluded a deal with OCTO Telematics, the global leader in insurance telematics. This agreement will enable Altech Netstar to offer insurance telematics services to the market and is expected to bolster the SVR business in years to come as insurance companies pursue additional services over and above stolen vehicle recovery. Altech Netstar Fleet Solutions (ANFS) ANFS achieved a 16% growth in billable subscribers to close the year with a base of 68 441 subscriber vehicles. A number of Provincial Government and Municipal tenders were won, with the most significant being the City of Cape Town, for an amount of R65 million, representing a total of 5 000 vehicles. The full implementation of this project will begin during the first quarter of the new financial year. Altech Netstar International (ANI) Investigations into a significant potential acquisition in Latin America were ultimately terminated by Altech Netstar due to inadequate prospective returns. We continue to search for international opportunities. Sales through the existing footprint in Africa remained stable. Our expansion into Cote d`Ivoire was unfortunately delayed by political turmoil in that country, but we anticipate establishing operations in other countries in Africa within the near future. Altech Netstar Traffic (ANT) The rate of take-up of traffic services by the on selling channels (such as Motor Manufacturers, Cellular Handset Manufacturers and Portable Navigation Device Manufacturers) was somewhat disappointing, but is expected to improve in the year ahead. Good progress was made in developing a media traffic solution that allows traffic congestion to be visually displayed in 3-D format on TV and we are optimistic of our prospects in interesting a major TV channel to adopt this product. Altech Technology Concepts (ATC) ATC focused its efforts during the second half of the year on the implementation of its new network and managed services which went live in February 2011. The network was built to cater for redundancy and resiliency requirements and this has been evidenced by positive feedback from both the media and customers. Despite ATC`s internal focus on its new network and services developments, the overall business still achieved more than 40% growth in revenue. ATC has also invested significantly in additional systems and sales and technical resources to support the expected growth for the next financial year. ATC is now perfectly positioned to capitalise on converged voice and data opportunities and expects significant growth in these areas in the coming financial year. ATC will specifically target the SME and corporate markets through both direct and indirect sales channels. A focused channel partner programme will be launched during the year to support this drive. The consumer market will be addressed by Altech Autopage and other partners. Converged Services and Connectivity An important milestone was achieved in this sub-group with the incorporation of a new holding company for Altech Alcom Matomo, Altech Alcom Radio Distributors and Altech Fleetcall and the introduction of a BEE consortium, as ownership partners with Altech in respect of these companies` South African assets and activities. Altech Alcom Matomo (AAM) AAM provides a number of specialised mission-critical radio, broadband and telemetry products and solutions for various customers. The company again recorded a solid performance, despite an adverse market environment, experiencing on-going customer growth in the SADC region, with key projects for police services. A contract with the FIFA 2010 World Cup Organising Committee, to provide digital TETRA communications inter-linked across all stadiums for the duration of the event, proved to be a resounding success. Over 2 000 users benefited from the secure solution which was professionally supported by constant on-site engineering personnel. Buying contracts for intelligent remote terminal units were awarded by the national power utility with an initial order already fulfilled, and the balance of the national roll-out planned across the contract term. Further buying contracts have been awarded by both the City of Cape Town and Ekurhuleni Metropolitan Municipality for the supply of TETRA technology equipment. Promising opportunities are emerging for other national agencies. Altech Alcom Radio Distributors (AARD) AARD recorded a stable performance and was again amongst Motorola`s top distributors for Europe, Middle East and Africa, notwithstanding challenging trading conditions locally. Digital radio sales continued to flourish in the marketplace, with various sectors adopting the technology. Software-based radio applications support further expansion of the product range. The wireless broadband product portfolio continues to grow and gain market share amongst users in South and southern Africa. Altech Fleetcall (AF) AF maintained its position as a leading radio network operator, providing superior and reliable national network coverage. The company successfully increased its subscriber base, whilst expanding and upgrading the network in order to improve national coverage and exploit new opportunities. Major achievements included providing a national voice communication solution to the FIFA 2010 World Cup Organising Committee, in conjunction with Altech Alcom Matomo, in addition to implementing radio communication services to the Gautrain Rapid Rail Link. The first phase of the Gautrain project provided communication services between OR Tambo International Airport and the Gautrain Sandton station, whilst phase two was to provide communication services between Sandton and Park stations, as well as communication services between Marlboro and Hatfield stations. Both phases were successfully installed and commissioned during the year, in accordance with AF`s contractual milestones. AF`s financial performance for the financial year was better than expected, building on the growth achieved in the preceding financial year. The focus for the new financial year is to develop and deploy an overlay digital network infrastructure. This will increase coverage, enhance the customer value proposition and assist in exploiting synergies that exist with other Altech Group companies. Altech Stream East Africa (ASEA) ASEA had a challenging year. There was substantially increased competition within the telecommunications and data broadband sectors generally, as evidenced by major reductions in the published profitability of East Africa`s listed companies in these fields of activity. These background circumstances were triggered primarily by the introduction of cheaper, large-volume international submarine cable connectivity with East Africa, which largely replaced the more expensive satellite-based gateway traffic during the reporting period, in addition to the entry of new operators who tended to reduce prices in order to gain market share. Management of ASEA is confident that within the near future the disruptions caused by these events will diminish, the market will stabilise and the ASEA Group will benefit from the overall substantial increase in data broadband traffic which will result from these developments. Significant changes took place in the portfolio managed by ASEA through clearer segmentation of business focus and management restructuring. Carrier bandwidth sales were positive and the full SEACOM bandwidth acquired has now been utilised. At least 25% of the TEAMS bandwidth capacity held by ASEA is now also utilised. Altech Data International (ADI) (Mauritius) ADI performed to expectations, with all SEACOM bandwidth being sold. Kenya Data Networks (KDN) KDN experienced a shortfall in expected revenues, which combined with increased depreciation on projects completed, had a negative trading impact. However, the overall market position is still very positive and KDN is well- positioned to capitalise on this. Recent large and long-term infrastructure and support contracts with cellular operator Bharti-Airtel are indicative of this potential. KDN`s new Data Centre in Nairobi will begin operations in the first quarter of the new financial year and has already contracted major corporate and public sector clients. This will enhance profitability and growth for KDN going forward. KDN has been refocused to participate exclusively in the carrier market and this has seen a positive market reaction from the majority of the alternative network providers (ISPs) in Kenya. Swift Global (Kenya) (Swift) It has been a year of consolidation and rationalisation for Swift across its products and services. The company is now focused as an alternative network provider and purchases most of its connectivity from KDN. Infocom Uganda (Infocom) Infocom is the leading Internet Service Provider (ISP) brand in Uganda and is recognised as a technologically-strong service entity. It also holds important telecommunications infrastructure and service licensing rights within Uganda. In addition to its existing Wi-Fi and WiMax network business, Infocom is starting to generate strong revenue from distributing undersea data cable capacity to Uganda. This also provides the vital link between KDN and Altech Stream Rwanda. Infocom returned to profitability during the financial year. Altech Stream Rwanda (ASR) ASR is a start-up broadband Network Operator and Internet Service Provider (ISP) which was granted Internet and gateway licences in June 2007. The business has completed the roll-out of an outdoor Wi-Fi network for consumers and a WiMax network for corporate customers, both covering most of Kigali, the capital city. The company did well in providing carrier services during the reporting period, exceeding its profitability targets. MULTI-MEDIA AND ELECTRONICS Altech UEC (UEC) Despite the global economic slow-down, UEC is starting to see the benefits of investing in developing technologies and products for the Digital Pay TV industry. Local demand for set-top-boxes (STBs) remains firm while exports to Africa, Australia, Middle East, Europe and India are growing steadily. Additional investments have been made in local manufacturing plant and equipment and a total of 2,7 million STB units were produced during the year. Ahead of the South African Digital Migration (DTT) programme, UEC has developed a terrestrial STB and has been participating in trials with all potential operators. Coupled with this opportunity, UEC has developed the "MediaGate" concept which allows movies from a kiosk located in retail outlets, or other central points such as post offices, to be downloaded and played from a USB storage device via a DTT STB in the home. This concept will open up a new market in the telecommunications arena as converged technologies increasingly become a customer requirement. The Australian Digital Migration project has commenced and UEC Australia has been contracted to participate and has already supplied 60 000 STBs into this market. The UEC Group has undertaken a corporate restructuring to facilitate the introduction of a BEE consortium, led by Power Matla (Pty) Limited,as ownership partners in UEC`s African operations, whilst separating UEC`s other international operations and IPR into a different structure which is 100% owned by the Altech Group. Arrow Altech Distribution (AAD) A proactive response from AAD`s management to the generally difficult market and economic conditions in South Africa has resulted in excellent operational results for the year. Positive contributions from AAD`s entire product range have resulted in AAD achieving revenue, profit and market share growth for the year. AAD has entered into a distribution agreement for specialist products to service the military and aerospace market. The transfer of technology thereunder was completed during February 2011 and the full contribution from this activity will be realised in the new financial year. TECHNOLOGY (INFORMATION TECHNOLOGY) Altech ISIS Altech ISIS met expectations for the year and has strengthened its position with existing customers. The company is well-positioned to generate strong revenue and income growth going forward. Its innovative real-time converged customer care and billing solution, supported by its project management, business analysis and systems integration capabilities, will cement its position as a reliable and reputable supplier of turnkey business support systems. Altech West Africa Located in Lagos, Nigeria, Altech West Africa is the predominant supplier of prepaid cellular vouchers for all the major telecommunications operators in the country. Its financial performance was negatively affected by delays in large customer orders compounded by late delivery and commissioning of certain manufacturing equipment. It is expected that order flow will normalise going forward. The project to add manufacturing facilities to initialise and personalise chip-card products for Nigerian tele-communications network operators and financial service providers has been completed, with the pipeline for these products already exceeding 2,2 million cards. The supply of Altech`s e- Security range of products and servicesin West Africa has been slower than originally envisaged due to the long sales cycles involving customer education for the monitoring and intrusion detecting product range. It is expected that with the region`s increasing integration into the international banking infrastructure, uptake of these e-Security products and services will steadily increase. Altech Card Solutions (ACS) ACS has experienced an excellent trading performance, surpassing all expectations. This was driven by growth in the supply of EFT Point-of-sale, PIN-pad end-to-end solutions and the supply of electronic security solutions supported by its fully PCI and EMV compliant security hosting operation centre. Instant and central issuance card personalisation solutions and integrated financial transaction services performed as expected. Altech NuPay Altech NuPay exceeded all of its profit targets, despite the global economic downturn. The launch of its co-branded NuCard product range has surpassed all expectations, with excellent prospects for continued future growth. It is expected that this new product line will assist clients in leveraging their own infrastructure to offer value-added products and services. Swist Technology Solutions (Swisttech) Swisttech, acquired by Altech with effect from 1 January 2011, is a provider of data integration and data management solutions and services and complements the products provided by Altech ISIS. Its blue-chip customer base is synergistic with the Altech Information Technology Group`s overall customer base and is well placed to meet demand for sustainable, reliable supplies. Its integration with the Group has been successfully completed. CORPORATE FINANCE TRANSACTIONS Salient transactions during the reporting period under review were as follows: Acquisition - Altech has acquired 100% of the equity in Swist Technology Solutions (Pty) Limited ("Swisttech"). Swisttech is an Independent Software Vendor (ISV) focusing on infrastructure and integration services, mobility services and software development and is a major billing software vendor in the South African market. The maximum purchase consideration is R52 million, of which R30 million was paid up-front in cash, with the balance being payable over three years, dependent on specific and agreed profit targets being achieved. Empowerment Transactions - Altech Netstar (Pty) Limited has implemented an empowerment ("BEE") transaction whereby Thebe Investment Corporation (Pty) Limited and Identity Capital Partners (Pty) Limited acquired a combined 25% plus 1 share equity shareholding in the Netstar Group. This transaction reflected certain amendments to the previously-reported structure, to facilitate its implementation and certain group efficiencies, but the financial effects and substance thereof remain unchanged. The total value of the assets involved in this empowerment transaction was in excess of R1,5 billion. The international business and intellectual property of the Altech Netstar Group have been retained and remain wholly-owned by Altech. - Altech has recently entered into a further empowerment transaction whereby a consortium of BEE partners led by Power Matla (Pty) Limited will acquire an effective 25% plus 1 share equity stake in the Altech UEC sub-group`s African operations. The total value of the assets involved in this empowerment transaction is R509 million. The international business of Altech UEC outside of Africa and the intellectual property of Altech UEC have been retained and remain wholly- owned by Altech. - Altech has entered into an empowerment transaction whereby the Southern Palace Group of Companies (Pty) Limited ("Southern Palace") has acquired an effective 25% plus 1 share equity holding in the holding company for the sub- group consisting of Altech Alcom Matomo, Altech Alcom Radio Distributors and Altech Fleetcall. Southern Palace is an industrial holding company with investments in telecommunications, transport, automotive, equipment manufacturing, steel and metal recycling. The vendor-financed value of the assets concerned amounted to approximately R405 million. Any international business of the sub-group concerned outside of South Africa and its intellectual property have been retained and remain wholly- owned by Altech. - Altech has agreed to acquire the 25% plus 1 share equity holding of Pamodzi Investment Holdings (Pty) Limited ("Pamodzi") in Altech Information Technologies (Pty) Limited ("Altech IT"), the holding company for Altech`s information technology sub-group. The purchase price for the interest concerned is R37,5 million, payable in cash, and the shares will be acquired, ex any dividend, to be paid by Altech IT in respect of the financial year ended 28 February 2011. This transaction will be followed shortly by a further vendor-financed empowerment transaction involving Altech IT and which will include the recently acquired Swisttech operation. ALTECH TRANSFORMATION During the year Altech was awarded a consolidated level 3 BBBEE verification status by an accredited verification agency. The company achieved a 110% procurement recognition level, 28,6% black ownership and 13,2% black female ownership, scoring maximum points in these areas. Altech was also rated the 7th most empowered company in the ICT sector by the Financial Mail Empowerdex Top Empowered Companies in South Africa survey, was rated number 6 of the top empowered ICT companies, number 7 of the top companies that procure from black-owned and empowered companies and the number 3 ICT company that procures from black-empowered companies. Altech was rated as the number one company on Skills Development - this was achieved through the success of the Altech Academy. Altech also completed several important empowerment ownership transactions involving key operating subsidiaries and assets. Altech is committed to transformation and empowerment through skills enhancement, representative shareholding and widespread development of disadvantaged communities. The company is proud to have achieved its target of a level 3 BBBEE rating, ahead of the Altron Vision 2012 Transformation timetable. OUTLOOK Altech is confident that it will return to previous profit growth patterns in the future. The Altech Group`s participation in the South African and Australian digital migration programmes, its East African data centre and network expansion activities, the ICT sector`s convergence opportunities and the expansion of its annuity income base (currently at 84%) are all favourable for future prospects and growth. This forecast has not been reviewed or reported on by Altech`s external auditors. Furthermore, Altech will continue to pursue globalisation opportunities through acquisition and trading activities. DECLARATION OF ORDINARY DIVIDEND NO 68 Ordinary dividend number 68 of 356 cents per share (2010: 339 cents) for the year ended 28 February 2011 is declared payable to ordinary shareholders recorded in the register at the close of business on 30 May 2011. The timetable for the payment of the dividend is as follows: Last day to trade cum dividend Friday, 20 May 2011 Trading ex-dividend commences Monday, 23 May 2011 Record date Friday, 27 May 2011 Payment date Monday, 30 May 2011 Share certificates may not be dematerialised or rematerialised between Monday, 23 May 2011 and Friday, 3 June 2011, both days inclusive. The certificated register will be closed for this period. ANNUAL GENERAL MEETING The company`s 65th annual general meeting will be held in the Boardroom, Altech Corporate Offices, 79 Central Street, Houghton on Wednesday, 20 July 2011 at 15h00. Further details on the company`s annual general meeting will be included in Altech`s annual report to be posted to shareholders on or before 29 June 2011. On behalf of the board Dr Hilton Davies Craig Venter Dr John Carstens (Non-Executive Chairman) (Chief Executive (Chief Financial Officer) Officer) 19 April 2011 Directors: Dr HK Davies (Chairman)# CG Venter (Chief Executive Officer) Dr JEW Carstens (Chief Financial Officer) PMO Curle*, ML Leoka#, R Naidoo#, M Sindane# ZJ Sithole#, AMR Smith*# RE Venter#, Dr WP Venter# * British #Non-executive Secretaries: Altech Management Services (Pty) Limited Sponsor: Investec Bank Limited Altech (Incorporated in the Republic of South Africa) Registration number: 1946/020415/06 Share code: ALT ISIN: ZAE000015251 www.altech.co.za Date: 20/04/2011 08:00:04 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

Share This Story