Shares in Allied Technologies (Altech) slumped nearly 6% in midday trade on the JSE on Tuesday (7 May), despite an announcement from its CEO, Craig Venter, that he is to forego his bonus for the 2012/13 financial year.
By 11h45, shares in Altech receded as much as 5.91% or R2.07 to R32.93, having gained 10.58% to R35 on Monday (6 May). The group is some way off its 52 week best of R54 and currently has a market cap of R3.56 billion.
Analysts believe that Altech’s parent company, Allied Electronics Corporation (Altron), may be in talks to take full control of the ICT group and delist it from the stock exchange.
Altron already owns a 62% stake in Altech.
Both groups advised in separate notes on SENS in March that they were in negotiations, but Craig Venter recently declined to comment on a potential merger between the two companies at a results presentation at the group’s headquarters in Johannesburg.
Altron is expected to publish its full year results on Wednesday (8 May), which is perhaps the reason for all the activity around Altech, one trader suggested.
In mid-April, Altron advised that it expects headline earnings per share for the financial year ended February 2013 to be lower by between 27% and 32% compared to the previous corresponding period.
Basic earnings per share for the financial year ended 28 February 2013 is expected to be a loss of between 91 cents and 99 cents, compared to a profit of 55 cents in the previous corresponding period.
“Basic earnings per share has been affected by a combination of the loss on disposal of Altech’s East and West African operations, as well as the impairments taken at the half year with respect to these same operations,” Altron said.
Shares in Altron remained flat on Tuesday at R20.85, giving the group a market cap of R2.20 billion.
Late last month (24 April), Altech reported a diluted basic loss per share from total operations of 920 cents for year ended February 2013, from a prior loss of 275 cents before.
Revenue from continuing operations improved 4.7% to R10.16 billion, from R9.58 billion before, while results from continuing operating activities grew to R626 million, from R476 million in 2012.
However, from discontinued operations following the disposal of its Telecommunication Network interests in East Africa, Altech pointed to a R1.54 billion loss from its operating activities, compared to a prior loss of R657 million.
It recorded an overall loss for the year from discontinued operations of R1.636 billion.
Altech decided not to declare a dividend in respect of the current financial year to conserve cash resources.
Altech board confident in Venter
On Tuesday, Altech said its board welcomed the decision by Venter to forego his bonus for the 2012/13 financial year.
“The board appreciates Mr Venter’s decision as it clearly demonstrates that he continues to place the interests of all stakeholders above short-term considerations,” said Moss Leoka, board chairperson of Altech.
Altech recently announced a realignment of its interests to stave off losses from its East Africa operations.
The East Africa operations were housed within a separate legal entity that had autonomy in terms of how the business was managed, however Venter dismissed the suggestion that accountability should lie elsewhere and said that “the buck stops with me”.
The realignment comes at a time when new strategic partnerships are also being forged to put the company on a growth path, Altech said.
“While these decisions have resulted in some short-term financial pain for shareholders, the board is pleased to see that the CEO has demonstrated faith in the future of the business, aligning his interests with the long-term interests of stakeholders by taking a short-term financial set-back,” said Leoka.
“On behalf of the Altech board, I would like to reiterate the board’s confidence in Mr Venter. We are certain that we will see benefits from the strategic realignment of the business to maximise shareholder value, which was spearheaded by Mr Venter,” Leoka said.