The Altron group has posted continuing strong results for the six months ended 31 August 2007 driven by exceptional growth in the Powertech businesses and satisfactory performances from Altech and Bytes, resulting in a 32% increase in revenues and a 38% increase in headline earnings per share. 

Robert Venter, Chief Executive of Altron, says that demand from infrastructure development is continuing at the expected pace in both the public and the private sectors and the building and construction industry is maintaining good overall growth levels with infrastructure spend from state-owned enterprises and local authorities gaining momentum.
Altron revenue increased by 32% from R8.3-billion to R11-billion, with operating profit rising by 27% from R711-million to R902-million, which, Venter said, reflects a slight operating margin decline to 8.2% from 8.5% in the prior year.
“Our headline earnings per share exceeded operating profit growth, primarily as a result of the increased contribution from our 100% owned subsidiary, Powertech,” he says.
In referring to the group’s investment in working capital, Venter points out that although it has decreased, it still remains high due to a combination of higher trading volumes and increased raw material prices.
“I am, however, satisfied that Altron improved its annualised return on equity to 27.3% with return on net assets and return on capital employed also improving to 35.6% and 34.9% respectively. Our cash generation has also been positive with over R1-billion generated from operations and the balance sheet remains strong with cash at R1.8-billion,” says Venter.
With regards to Powertech’s robust growth, Venter pointed out that this trend is continuing with a substantial increase in revenue of 38% to R4.2-billion primarily as a result of  increased orders coming through from government’s power infrastructure spend as well as from the building and construction industry during the first six months.  
“Powertech increased its operating profit by 58% from R272-million in the prior year to R429-million, with its operating margin increasing from 8.9% to 10.2%.  This improved operating margin is primarily due to improved trading conditions, operating leverage, a favourable currency and commodity environment as well as our focus on the reduction of expenses,” says Venter.  
He says Aberdare Cables’ local operations benefited from the current conditions, growing its revenue by 47%. “Their operating margin was augmented by a successful first six months experienced by the telecoms joint venture, CBi Electric Aberdare ATC Telecom Cables.  
“Aberdare Cables’ international operations, based in the Iberian Peninsula, furthermore produced very pleasing results, increasing revenue by 35% and doubling operating profit in rand terms."
He says ABB Powertech Transformers reported a strong performance with increasing demand from infrastructure projects and added that agreements have been signed for Powertech to acquire the 50% shareholding owned by ABB in the transformer joint venture, ABB Powertech Transformers, for a consideration totalling R320-million.
“This will facilitate the introduction of a 25.1% empowerment shareholder into the business and we have, at the same time, signed a long-term technology agreement and an exclusive marketing agreement with ABB to secure leading edge transformer technology going forward. The transaction is subject to competition authorities approvals,” adds Venter.
Venter says Powertech’s balance sheet reflects a substantial investment in working capital over the past 18 months primarily as a result of an increase in trading levels, but he added that Powertech is generating sufficient cash flows to fund most of the significant capital expenditure programmes planned to take advantage of the current high market demand.
Commenting on Altech’s results, Venter says he is satisfied that Altech delivered a satisfactory set of results by growing its headline earnings per share by 11% to 220 cents and increasing revenues by 20% to R4-billion from R3.3-billion in the prior period. Altech’s operating profit is up by 6% at R306-million.
“Given the slower turnaround, R47-million of the remaining goodwill arising on the Altech NamITech South Africa operation was impaired,” says Venter.
Venter says Bytes increased headline earnings per share by 12% to 65 cents per share off a high base following an exceptionally strong first six months in the previous financial year, and has reported improved revenues of 44% to R2.8-billion predominantly due to growth from the international operations where a significant three-year Microsoft licensing contract was obtained from National Health Services (NHS).  
In summarising the group’s corporate activity during the first six months of the financial year, Venter says some of the major actions by Powertech included obtaining approval from the Competition Tribunal for the purchase of the electrical engineering operations of the IST group for R550-million; purchasing the remaining 25% issued share capital of Aberdare Cables’ Spanish subsidiary Cables de Comunicaciones for €8.6-million (R81-million); and acquiring Swanib Cables, the largest cable distributor in Namibia for R40-million.
During the period under review Altech signed an agreement to purchase Comtech (Pty) Limited, a vehicle fleet management services company for a maximum amount of R90-million and Altech also signed heads of agreement with the Sameer ICT group of Kenya to acquire a 51% controlling interest in Kenya Data Networks Limited (KDN), Swift Global (Kenya) Limited and Infocom Limited subject to various conditions precedent.
During the period Altech acquired the Altech Netstar’s franchisee in North-West province for R11-million and  signed heads of agreement for the proposed acquisition of a 50% joint controlling interest in a new company which will hold 60% of Netstar Advanced Systems Sdn Bhd (Netstar Malaysia), Altech Netstar’s franchisee in Malaysia.   
Venter expects favourable conditions will continue for all three of our subsidiaries – Altech, Bytes and Powertech – during the second half of the financial year. “However, it is unlikely that we will be able to maintain growth at the current high levels, due to the high base of earnings, particularly at Powertech."