SOUTH AFRICAN ALTECH CASH PILE TOPS R1,5BN ON YEAR OF GROWTH

Mergers, Acquisitions and Financial Results

Technology group Altech is sitting on R1,5bn in cash while its directors continue their long-running quest to find suitable acquisitions to spend it on.

A solid year of cash generation from its 20 businesses has seen Altech grow into a R6bn company, turning in an after-tax profit of R369m.

Now the directors are assessing several potential acquisitions to strengthen its telecommunications, information technology and multimedia operations both locally and abroad.

For the year ending February 28, Altech's revenue was up 9% from R5,5bn and headline earnings a share of 379c were up 12% from 338c. The cash pile alone generated R54m in interest, allowing the company to declare a dividend of R2,09, or R200m, and barely dent its bank balance.

"It's a good set of results, and our order book sits at R855m where last year it was R665m," said CEO Craig Venter.

The one blip came from NamITech, a division specialising in smart cards and SIM cards. NamITech's poor performance dragged down the operating income of the IT division from R151m to just R40m this year.

"We bridged the shortfall from NamITech with an exceptional performance from the other companies and still got 12% growth in headline earnings a share," said Venter.

The strong rand, pricing pressures and management issues hit NamITech, and a "rectification programme" has cut its costs by R70m but clocked up a goodwill impairment of R82m.

Its new manufacturing plant in Nigeria is already profitable and producing a million pre-paid cellular vouchers a day, and NamITech should post sound results this year, said Venter.

The UEC division, which produces set-top boxes, reported strong earnings after a previously poor performance. The successful launch of its personal video recorder (PVR) decoder for MultiChoice in November contributed R70m of revenue in just one quarter. The product has won orders from pay-TV operators in Greece, Dubai and Nigeria, generating business worth R421m.

Overall, Altech's most successful units were Autopage Cellular and Netstar. Autopage is SA's largest independent cellular service provider, serving 700000 users.

Autopage has secured its future by signing five-year deals with cellular providers Vodacom and MTN, preventing either of those operators from trying to muscle out the middleman.

Stolen vehicle tracking division Netstar benefited from strong sales of new cars and now tracks 362000 vehicles, boosting its profit by 50%. It also tracks 32800 vehicles in Malaysia and is working on African expansion plans.

Venter said he was happy with Altech's composition but wants to beef up each division. "We are keeping everything and will complement with some large acquisitive growth," he said.

Business Day