JSE listed Allied Electronics Corporation Limited (Altron) today announced its interim results for the six-month period ended 31 August 2016.
As part of Altron’s strategy to refocus the group on its core information technology and telecommunications assets and to provide shareholders with insight into the performance of core and non-core operations within the Altron group, the interim financial results have been split between continuing and discontinued operations. As such, the Powertech group, Altech Autopage, and Altech Multimedia have all been classified as discontinued or non-core operations while the continuing (core) operations comprise the information technology and telecommunications businesses of the group.
From a total operations perspective, Altron’s revenue for the period decreased by 14% to R11.4 billion and earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 58% to R380 million. Basic earnings per share (EPS) increased to 6 cents versus the loss of 151 cents reported in the prior corresponding period. Headline earnings per share (HEPS) improved to 31 cents from the loss of 64 cents posted in the prior corresponding period.
Revenue for the core operations increased by 10% to R7.5 billion from R6.8 billion in the prior year, while EBITDA increased 18% from R378 million to R445 million. This resulted in the continuing operations generating a profit before tax of R253 million, double the profits of R126 million posted in the prior corresponding period. Furthermore, headline earnings improved to R183 million from R164 million, resulting in a 10% increase in headline earnings per share to 54 cents.
The results of the non-core operations showed a significant improvement from the previous period as a result of the restructuring that occurred last year. These factors have resulted in a significant reduction in the losses generated from the discontinued operations. While revenue declined as a result of the sale of the Altech Autopage business and the disposal of Aberdare Cables, EBITDA losses decreased from R137 million in the prior period to R65 million in the current period. The main improvement came out of the Altech Multimedia business which is now generating positive EBITDA as a result of certain management interventions.
According to Robbie Venter, Chief Executive of Altron, the interim results reflect the success of Altron’s revised strategy to focus the group on areas where it has the resources, competence and skills to leverage its competitive advantage.
“We are beginning to see the positive results of refocusing the Altron group in line with our stated strategy. The results from the core operations have been pleasing, particularly in the context of difficult and uncertain local economic and political conditions. Furthermore, the successful disposal of Altech Autopage to the major South African mobile network operators and the sale of the majority equity interest in Aberdare Cables to Hengtong, along with other smaller disposals, has enabled Altron to reduce its debt by approximately R1.5 billion and restore the group to profitability,” he said.
“Although more work needs to be done in terms of continuing to improve and grow our core operations and completing the remaining asset disposals in our non-core operations, the outlook is positive with respect to getting the group back on a path of profitability and growth that is sustainable and future-proof,” he concluded.
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