Altech posts R240m pre-tax loss on African units

ICT group, Allied Technologies (ALT) on recorded on Wednesday (April 23, 2012) a pre-tax loss of R240 million for year ended February 2012, from a prior profit of R459 million, following losses in East and West Africa.

Revenue improved marginally to R9.97 billion, from R9.65 billion in 2011.

Operating profit before capital items declined 17.5% to R649 million from R787 million, while  EBITDA before capital items amounted to R919 million, a reduction of 14.3% from the prior year.

Adjusted headline earnings per share decreased by 27% to 388 cents, from 529 cents for the prior year.

On 14 February 2012 the decision was taken to sell Altech West Africa, and the operation was subsequently classified as held-for-sale.

The other operations within Altech performed to expectations, with Altech UEC returning to profit after two years of losses.

Taking into account the losses in East and West Africa, Altech said it had impaired the goodwill and carrying value of its East and West African investments.

Altech West Africa (AWA), located in Lagos, Nigeria, underperformed due to margin pressures in the voucher and scratch card businesses and the shift to extremely low-cost, non-secure paper products. Altech said that the company’s product lines had been expanded to include supply of initialised and personalised chip-card products to Nigerian telecommunications network operators and financial service providers.

“It is expected that growth in the supply of chip-card-based products will increase rapidly going forward. Despite its underperformance, AWA expects to benefit from the Nigerian government’s drive to convert the bank and retail market segments from cash-based transacting to a card-based model,” the group said.

“Results from our East and West African operations were disappointing. However, we remain positive that the remedial measures that we have put in place in East Africa will have a positive effect in the future,” said Craig Venter, Altech CEO.

“We are busy restructuring our East African operations into a more regional-focused business entity to provide regional unity and a single interface into key customers. This close collaboration between the regional operations is already having a positive impact on our business in the region,” he said.

“Furthermore, the recent completion of our Kampala–Kigali fibre link has closed the regional ring network for us, from Mombasa through Nairobi to Kampala to Kigali and back through Tanzania to Dar es Salaam. This provides us with a competitive advantage in that we are now able to offer our corporate customers improved high-speed connectivity and network resilience to all their sites and customers in the region,” he added.

In view of the reduced headline earnings, a dividend of 248 cents per share was declared, from 356 cents per share in 2011.

Looking ahead, Altech said it is confident that it will overcome the operational challenges in East and West Africa and return to its normal pattern of profit growth in the future.

“In this regard, Altech is reviewing its options regarding certain of its investments in Africa, but will continue pursuing acquisition opportunities both locally and internationally,” it said.

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Altech posts R240m pre-tax loss on African units