The Altron group has posted a 19% increase in revenue for the six months to 31 August, to R13.2 billion, and an increase in operating profit of 25%, to R1.1 billion.
This, says the company, reflects the results of both organic and acquisition-related growth.
Headline earnings per share grew by 12%, while adjusted headline earnings per share increased by 15% after removing the effect of the amortisation of intangibles arising from the group's recent and prior acquisitions.
The group has increased its operating margin to 8.5%, from 8.2%, despite subsidiary companies experiencing diverse operating margin movements. Altech significantly improved its operating margin, moving from 7.7% to 9%. Powertech maintained its margin at 10.1%, broadly in line with prior year levels, while Bytes experienced margin pressures, reducing its operating margin to 5.4% from 6%.
There has been an increased investment in working capital in the first six months of the year. This was partly due to the growth in the business and the incorporation of acquisitions, but also due to an increase in inventory days due to strategic purchases and a lower demand in certain operations, says Altron.
It adds that, overall, there has been an outflow of R1.6 billion of cash since the year-end, R1.2 billion of which relates to the substantial acquisition investments made by the group in the past six months.
Tough conditions
Cash generated by operations grew strongly, but was offset by the investment in working capital, a significant increase in tax paid, as well as higher dividends paid.
“Despite tightening economic conditions, the period has been characterised by good revenue and profit growth in our Altech and Powertech operations with Altech recording a pleasing increase in operating margin,” the company says in its SENS announcement.
It says a key development in the telecommunications sector during the period under review was the ruling of the Pretoria High Court in favour of Altech Autopage Cellular. This ruling permits the company to convert its value-added network service licence into an individual electronic communications network service licence.
“Subsequent to the end of the reporting period, the minister of communications has brought an application to appeal the ruling, which Altech will be opposing.”
The group says strong demand for set-top boxes in the local market has continued and is expected to be sustained over the short- to medium-term, particularly with the launch of high-definition programming and government's digital migration programme, scheduled to be launched in November.
“A pilot project, facilitated by the SABC and in which Altech UEC is a participant, has been set up for a period of six months, while commercial deployments are anticipated for mid-2009. Indian markets have responded well to Altech UEC's establishment of a local presence. Chinese and Thai sub-contract manufacturing facilities will support the large volumes that have been negotiated with Indian broadcasters such as Reliance Communications.”
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