Altech posts lower profit

2011-04-20 08:59

Johannesburg - Technology group Allied Technologies [JSE:ALT] on Wednesday reported diluted headline earnings per share of 522c for the year ended February 2011, from 596c previously.

Diluted adjusted headline earnings per share declined to 522c from 596c in 2010, while the company's diluted basic earnings per share fell to 213c from 529c.

Revenue advanced to R9.65bn from R9.2bn, while operating profit before capital items declined to R787m from R933m.

Altech declared a dividend of 356 cents per share, from 339 cents in 2010.

The group described the results as "satisfactory", but said that trading conditions for certain subsidiaries were adversely affected by subdued global and local economic conditions, as well as currency volatility, particularly in respect of both the rand and the Kenya shilling.

"This affected both export revenues and translated results from operations outside of South Africa, specifically," it said.

Cash at year end stood at R458m, with the group's balance sheet continuing to show considerable strength.

Impairments of R275m, mainly in respect of the carrying value of the group's East African operations, were effected to take into account their reduced profit levels, attributable to the trading and currency factors and certain once-off costs which were incurred during the financial year, Altech said.

Altech Autopage Cellular revealed a 5% revenue growth to 5.85 billion rand. The group said that despite difficult trading conditions during the first half of the financial year, compounded by the reduction in mobile termination rates and the disconnection of dormant and high-risk subscribers, revenues increased compared to the prior year largely due to the growth in value-added services and prepaid airtime vouchers.

"The planned reductions in mobile termination rates, as agreed by the industry, saw the implementation of the first reduction during the year. This reduction had an adverse effect on revenues as well as operating margins. However, actions to mitigate those impacts were taken, as planned. Further reductions by the operators are to take place as per the agreed glide path over the coming three years," Altech said.

Subscriber acquisitions remained strong at 183 960 gross connections for the period, although slightly down from the prior year largely due to the difficult trading conditions as well as the after-effects of the organisational restructuring.

Altech pointed out that the latter half of the year saw an improvement across all channels.

The group recorded a growth in billable subscriber vehicles from 467 963 to 505 358 units. Profit before tax grew by 13.4% year-on-year.

Altech underwent a restructuring during the latter part of the year, which saw a 13% reduction in personnel, "contributing towards significant cost savings that will materialise in the next reporting period," it said. The reduction was primarily in areas of duplicated services in regional offices.

Altech Netstar Stolen Vehicle Recovery (SVR) reached a total of 436 917 billable subscriber vehicles, on the back of new vehicle sales which gained strong momentum towards the end of the financial year, representing an increase of 6.8% for the year.

Altech Netstar Fleet Solutions achieved a 16% growth in billable subscribers to close the year with a base of 68 441 subscriber vehicles.

For its digital TV business Altech UEC (UEC) recorded a 5% growth in revenue to R1.145bn. "Despite the global economic slow-down, UEC is starting to see the benefits of investing in developing technologies and products for the Digital Pay TV industry. Local demand for set-top-boxes (STBs) remains firm while exports to Africa, Australia, Middle East, Europe and India are growing steadily," it said.

The group noted that additional investments had been made in local manufacturing plant and equipment and a total of 2.7 million STB units were produced during the year.

Ahead of the South African Digital Migration (DTT) programme, UEC has developed a terrestrial STB and has been participating in trials with all potential operators.

Altech Netstar improved revenue by 7% to R944m.

Looking ahead, Altech said it was confident that it would return to previous profit growth patterns in the future.

"The Altech Group's participation in the South African and Australian digital migration programmes, its East African data centre and network expansion activities, the ICT sector's convergence opportunities and the expansion of its annuity income base (currently at 84%) are all favourable for future prospects and growth.

"Furthermore, Altech will continue to pursue globalisation opportunities through acquisition and trading activities," the group said.