Altech CEO, Craig Venter says he is “feeling buoyant” over the group’s operations in East and West Africa, having signed a document to dispose of the latter, while the chief executive still believes there is potential for growth in East Africa.
Altech clawed back some of its earlier losses in trade on the JSE on Thursday (27 September), adding 1.43% to R42.60, having slumped 6.67% to R42 on Wednesday (26 September).
Altech reported a R420 million loss in results from operating activities for the six month period ending August 2012, from a R283 million profit in 2011.
Revenue increased by 6.8% to R5.2 billion, and its operating profit before capital items was 13.5% lower than that of the prior period, mainly due to losses incurred in Altech’s operations in East and West Africa.
“Taking into account the continued losses in East and West Africa, the board has decided to further impair the goodwill and carrying values of certain property, plant and equipment and intangible assets within its East and West African operations. Principally due to these impairments, there was a loss before tax of R485 million,” Altech said.
In a presentation to the media on Thursday, Venter stressed that, while there was no quick fix for East Africa, he, along with his executive team, had worked hard to turn things around.
“We’ve got the management team involved to a point that we almost lived there. Rectification’s have (are) been done, but not financially,” Venter said. “However, we know the business is strong, or much stronger than what it was,” he said.
Venter confessed that, in hindsight, Altech had probably underestimated some of the risks involved in East Africa, pointing to high cost implications and high volatility in the region.
He noted that, following a 51% acquisition by the group in 2008, Altech’s division in East Africa recorded two profitable years of R30 million and R100 million before declining.
“With respect to our East African operations, we have initiated discussions concerning the introduction of partners into these operations and will advise shareholders of progress in this regard, in due course,” Venter said.
The group chief said that, as of July 2012, Altech had initiated a process for partnerships with “big” network operators.
Venter said that the impairments incurred by Altech over the interim period solely related to East and West Africa.
“The other 33 companies outside of East and West Africa performed extremely well,” Venter said. He said further that, without the East and West Africa drain, investors could expect to Altech’s operating profit margin to rise up to 9%.
“Altech will return to its prior records, and profit patterns prior to the East Africa pressures,” Venter said.
“I am more confident now than I was six months ago,” he said in terms of the company’s future.