East and West African Operations Affect Altech Performance
13 April 2012
East and West African Operations Affect Altech Performance:
JSE listed Allied Technologies Limited (Altech) today issued a Trading Statement to advise its shareholders that the company’s headline earnings and adjusted headline earnings per share for the financial year ended 29 February 2012 are expected to be between 24% and 30% lower than the equivalent figures for the financial year ended 28 February 2011 (“the previous financial year”).
These reductions are primarily due to continued poor results in Altech’s East and West African operations. Altech Management is investigating remedial measures.
Certain of the operations in East Africa experienced a tough trading period with financial performance below expectations with a number of challenges, including currency fluctuations, high inflation rates and interest costs, sharp drops in broadband pricing, network instability due to fibre breaks and undersea cable breaks. Exposure to currency fluctuations has been reduced and steps are being taken to address certain underperformance issues. New management is focused on resolving operational and financial challenges and strengthening the positioning of the businesses in the region.
A green-field start-up operation by Altech in Nigeria, Altech West Africa was a strong profit performer for five years. Its recent trading performance on paper recharge vouchers was affected by mobile operators’ ability to offer cheaper alternatives. In addition, its five year “pioneer “ tax status in Nigeria recently ended and the Nigerian Government has lifted the prohibition on imports of recharge vouchers, leading to increased competition.
Altech has decided to impair fully the goodwill in respect of the West African operations and to impair the carrying value of the investment in the East African operations. These impairments will result in a loss in basic earnings per share, which is expected to be between 281 cents and 302 cents compared to a profit of 216 cents the previous financial year.
The other operations within Altech performed to expectations for the financial year ended 29 February 2012. Altech Multimedia returned to profit after several years of losses. Six out of the seven acquisitions made and joint ventures initiated during the past three years have shown satisfactory profit performances and the remaining one has now been successfully integrated into Altech Autopage Cellular. In addition, the three significant empowerment transactions implemented over the past 18 months, in Altech Multimedia, Altech Radio Holdings and Altech Netstar, have assisted the Altech Group in achieving Level 3 empowerment status.
The full results for the period ended 29 February 2012 are expected to be published on SENS on or about 25 April 2012.
Notes to Editors:
About Allied Technologies Limited
Allied Technologies Limited (Altech) is listed on the Johannesburg Stock Exchange (JSE). The company focuses on the Telecommunications, Multi-media and Information Technology (TMT) industries with a global footprint in 14 countries and employs more than 4 000 employees.
As a leading South African multi-billion rand group, Altech is involved in the design, development and convergence of Telecommunications, Multi-media systems and IT solutions.
For further information please contact:
Shenanda Janse van Rensburg
Group Executive: Marketing, PR & Communications - Altech Head Office
Tel: +27 11 715 9031
Mobile: +27 84 777 1977
JSE code: ALT