Altron to maintain focus on repositioning

After a year of slower-than-anticipated repositioning and difficult trading conditions, JSE-listed Allied Electronics (Altron) aims to maintain its focus on cementing its place in the telecommunications, multimedia and technology (TMT) sector.

Speaking at the group’s 2016 financial results presentation, in Sandton, on Wednesday, CEO Robbie Venter assured shareholders that the repositioning of Altron into a TMT-focused business, downscaling the size of the group and continuing with its revised strategy – which was years in the making amid a rapidly changing landscape – would remain the key initiative for the 2016/17 financial year.

“It’s been a difficult year . . . but we are making some progress,” he said. Altron had initiated the process of divesting from its lossmaking discontinued operations, enabling the group to “redirect its energies” towards growing the TMT business.

Altron was aiming to reduce its exposure to the embattled manufacturing sector through its divestment of Altech UEC Technologies and Altron Power, with discussions under way with a number of prospective interested partners, while focusing on its core information technology (IT) and telecommunications businesses.

The company had embarked on a series of cost-reduction exercises in its Altech Multimedia and Powertech Transformers units during the year to February 29, 2016, and had concluded the disposal of several noncore assets.

Further, Altron had mostly completed the prolonged disposal of Altech Autopage, while the disposal of cables manufacturer Aberdare was currently awaiting the fulfilment of final conditions. The sale of Altech Autopage and Aberdare were expected to generate proceeds of R800-million and R900-million respectively.

Altron’s TMT division, PaperGenie, had already been sold off, as had the Kimberley branch of Bytes Document Solutions and SetOne Italy.

Various smaller Powertech operations, including UK-based Dynamic Batteries, Alcon Marepha and Powertech Africa, were also shed during the year under review for a collective R70-million.

Further, various divestiture processes were under way for the remainder of Altron’s noncore manufacturing businesses.

Altron had sold its Powertech System Integrators offices in Menlyn for R107-million and consolidated its head office, which was expected to generate some R100-million in savings.

In addition, Altron concluded a number of acquisitions during the period, including that of Australia-based fleet and asset management solutions firm Pinpoint Communications; healthcare-focused technology services provider Health-Soft; specialist customer interaction management company Inter-Active; microlending software development company Delter IT Services; and the remaining 50% of Altech Netstar Traffic from Altech Netstar’s joint venture partner.

Despite making progress in repositioning the group, overall trading conditions remained challenging, with Altron’s discontinued operations weighing down the company’s overall performance for the 2016 financial year.

For the year to February 29, Altron posted a headline loss a share of 145c – a 254% plunge from the headline earnings a share of 94c posted in the prior year.

The group’s basic loss a share widened from 3c in 2015 to 259c in the year under review.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) fell 73% to R376-million, while Altron’s loss for the year for total operations increased from R60-million in 2015 to R1.1-billion during the year under review.

Overall, Altron's revenue for the year under review declined 4% to R26.6-billion.

The continuing operations, which comprised the IT and telecommunications businesses of the group, delivered revenue of R14.4-billion, an increase of 20% on the prior year, while Ebitda decreased 11% to R888-million.

Profit for the year from continuing operations declined 27% to R360-million.

The discontinued operations, including Powertech, Altech Autopage, Altech Node and Altech Multimedia, posted a 22% decline in revenue to R12.2-billion.

Ebitda dropped from R390-million in 2015 to a loss of R512-million in 2016, with the discontinued operations widening their loss for the year from R556-million in the prior year to R1.5-billion in the year under review.

It was expected that the “drag” from the discontinued operations would be “significantly less” in the 2016/17 financial year.

Altron did not declare a dividend for the year to February 29.