Altech Annual Report 2005

The year under review has been exciting and challenging for the Bytes Technology Group (BTG) and several transactions of a strategic nature have been concluded. These include a BEE transaction whereby Kagiso became a 27% equity holder in the subsidiary, BTG SA; the acquisition of CS Holdings (CSH), as well as, subsequent to year end, the acquisition of the outstanding shareholding in Digital Healthcare Solutions from Business Connexion and Netcare creating a wholly-owned subsidiary of BTG SA.

Bytes Document Solutions, the biggest contributor to BTG SA, successfully transitioned from a Xerox joint venture company to a wholly-owned Xerox distributor by posting another set of solid results in terms of revenue and operating income. Strong cash ﬂows, improved debtors days and good inventory management contributed to its success. Bytes Specialised Solutions (BSS) is the exclusive distributor for NCR products and systems in South Africa. BSS continued to beneﬁt from the increased hardware revenue generated by the upgrading of the ATM base in the banking sector to become compliant with the new EMV encryption and security regulations. BSS’s ATM annuity business has shown pleasing growth and the Retail Solutions Group, Business Intelligence Solutions, the Local Government Business and First Data Systems all contributed towards delivering a solid set of results.

Bytes Communication Systems (BCS) reported record proﬁts for the year despite the marginal growth in revenue due to rand strength and the decline in export revenue. Digital Healthcare Solutions (DHS) comprises a transaction switching business and a software business. DHS reported a pleasing improvement compared to the previous year in terms of operating income and both operations also expanded their customer bases.

The continued competitiveness and downward pressure in the UK IT and services markets resulted in both Bytes Technology Group UK – Software

Services and Bytes Technology Group UK – IT Solutions (previously trading as Plato Computer Services) delivering improved but still disappointing results. However, remedial steps have been taken and progress has been made in positioning the companies for a proﬁtable year ahead and in establishing a platform for future growth.

With effect from November 2004, following the acquisition of CSH, the

Managed Services operation of CSH has been amalgamated with the Specialised Services operation to form Bytes Managed Services. Bytes Outsourced Services is another new division in BTG out of CSH with a solid track record in its area of expertise and Bytes People Solutions (BPS) (previously CS Education Solutions) is a leading people solutions and IT training provider in South Africa.

Bytes Systems Integration (SI) is a relatively new operation, comprising several businesses from the BTG and CSH stables and includes businesses operating in the managed network services, Microsoft licensing, software products, solutions and SAP implementation arenas.

Within Altech, the IT businesses include NamITech, a supplier of cellular SIM cards (SIM), prepaid vouchers, cheques and magnetic stripe bank cards. NamITech has strengthened its sub-Saharan position with exports now accounting for 38% of revenue and with a geographical coverage of 28 African countries. In line with its pan-African strategy, NamITech has established a prepaid voucher manufacturing facility in Lagos, Nigeria. The acquisition of the Africard Personalisation Bureau has further strengthened NamITech’s position as a leading supplier of magnetic stripe and smart cards. The roll-out of EMV compliant smart cards continues to have a positive impact.

This migration to the EMV payment standard has also beneﬁted Altech Card Solutions (ACS). The ongoing deployment of Electronic Funds Transfer at Point of Sale (EFTPOS) terminals, as well as the gearing-up of banks to issue EMV smart cards, has led to substantial investment in infrastructure. Altech Informatics was sold to BTG after year end.

ISIS Information Systems recorded signiﬁcant ﬁnancial and organic growth during the year and has strengthened its position as a supplier of end-to-end operational systems solutions in South Africa and Africa and its partnerships with Vodacom and Telkom remain robust. Isis added two additional global systems for mobile (GSM) network operators, Nigeria and Tanzania, to its customer base and is set to break into the Europe Middle-East Africa and Asia Paciﬁc markets.