Autopage Cellular performed ahead of expectations in a market which has undergone significant restructuring since the entry of Cell C in late 2001. Netstar achieved remarkable growth resulting in a subscriber base of over 200 000 and is now the market leader with a market share of over 46%. The Malaysian Netstar venture is now well underway and this augurs well for future annuity income.  Similar global ventures are currently being negotiated.

The overcapacity in the international telecommunications industry, together with sluggish demand from Telkom and delays concerning licence awards for the Second Network Operator, negatively impacted Powertech’s telecommunication businesses during the first six months. Significant downsizing and rationalisation programmes were implemented, primarily in the Aberdare Cables optical fibre and copper telecommunication cable businesses. New markets in Africa, the Middle East and Asia Pacific are being explored by Aberdare Telecom Networks with initial orders having been received from Nigeria, the Middle East and Lesotho. Cables de Comunicaciones in Zaragoza, the group’s Spanish cable manufacturer, has successfully diversified into railway telecommunication cable for high speed train requirements in Spain and the United Kingdom. Battery Technologies performed satisfactorily while Rentech benefited from the award of a sizable tender for Lesotho Telecoms during the first six months. Lambda Cables recorded excellent results for the period under review achieving revenues and profits well ahead of budget and that of the previous period.

The prospects for the telecommunications industry are expected to remain sluggish due to worldwide overcapacity. Continuing local and global economic uncertainty leaves little doubt that the coming months will be challenging. However, given the efforts made by group operations to find new markets and reduce the cost base, the group remains positive with regards to the medium- and long-term prospects for its telecommunications’ businesses.  

Electronics and Multi-media

Altron recorded a 21% increase in revenue from R1.9 billion to R2.3 billion by the group’s electronics and multi-media sector for the six months under review. Electronics and multi-media represents 37% of group revenue and reported a steep rise in operating income of 82% to R178 million for the past six months compared to R98 million for the previous comparable period.  These exceptional results largely offset the impact the down turn in the telecoms industry had on the group’s performance.

Most of Powertech’s businesses operating in the electronics sector, particularly Aberdare Power Cables, ABB Powertech Transformers and the Industrial Group have recorded exceptionally strong performances for the period under review.

Municipalities have started to invest substantially in maintaining their existing networks while sizable projects in the sub-Saharan region, such as Mozal II and Scorpion, coupled with exports to China Light & Power in Hong Kong, have provided buoyant market conditions far exceeding forecast expectations for the power cables business. Tridonic SA also recorded a strong first half and it is anticipated that this will continue for the remainder of the year.

Powertech’s DC Power Systems, together with the industrial batteries businesses performed satisfactorily but the automotive battery market continues to be overtraded, especially in the United Kingdom where action has been taken to reduce the cost base.

Arrow Altech Distribution capitalised on its dominant position in the domestic electronic component market and surpassed expectations for its profits and cash flow despite depressed industry conditions.  UEC Multi-Media (UEC) exceeded its forecast profit before tax, and recorded a satisfactory increase in revenue, despite difficult market conditions. It is encouraging to note that UEC’s major customers such as MultiChoice Africa and Foxtel Australia are ordering product volumes higher than the corresponding period last year. UEC is presently responding to several opportunities in the USA cable market.

Information technology

Information technology, the second largest contributor to revenue in the group at 30.8% of the total, recorded significant growth in operating income of 82.9% to R93.3 million from R51. The broadly based improvement in results achieved, following BTG’s major restructuring some 18 months ago, has continued with increased momentum during the period under review. As recently announced, BTG has concluded the acquisition of Plato Computer Services, an IT services company in the United Kingdom for £22.5 million as an initial cash purchase consideration and an additional cash consideration not exceeding £5.5 million based on the earnings before interest and tax of Plato for the 12 months ending 31 December 2002.

ISIS Information Systems performed well for the review period and is increasing its share of the export market. Keops Isis Industrial Information Systems performed above expectation. Altech Card Solutions (ACS) has consolidated its dominant position within its areas of operation and has performed well for the review period.

Altech has entered into an agreement to acquire the country's foremost electronic funds transfer and bill payment processing services business, Prism TranSwitch Services (Pty) Limited, from Prism Holdings Limited for a consideration of R47 million. Subject to certain conditions, the sale will become effective on 1 December 2002.

Financial Services and Corporate

Altron’s financial services business recorded a 12% increase in revenue and operating profit for the six months under review. Altron has subsequently disposed of the management and administration business of Fintech to a consortium comprising Gensec Bank, Altron and Fintech management for R13 million, whilst retaining the asset based financing book and related profits.  This sale is in line with Altron’s policy of focusing on core operations. In addition, Fintech is exploring alternative capital raising options, including securitisation of its asset based financing book and an announcement will be made shortly in this regard.

Recent payments to acquire the minority shareholdings of Fintech and Powertech, reduced interest income earned by Altron Finance.

Outlook

Unlike many companies around the world that are active in the diversified high technology arena, Altron remains with a strong and well-structured balance sheet, which provides the capacity to take advantage of further acquisition opportunities.

Market conditions are expected to remain difficult. However, with group wide order books at a satisfactory level, overall growth should be achieved for the twelve month period to 28 February 2003. 

On behalf of the board