JSE-listed Altron reported a net loss for the first half of the year, as non-cash items at its 61%-held subsidiary weighed on its results.
The group this morning published its figures for the six months to August and said that revenue gained 11%, to R12.8 billion. However, write downs at Altech's East and West African operations - which need to be carried on the income statement due to accounting rules - led to Altron's profit of R16 million in the first half of 2011 becoming a R293 million loss.
CEO Robert Venter says the impairments led headline earnings per share 2% lower, to 81c. He notes that stripping out the losses in Altech's African businesses, headline earnings per share would have gained 12%.
Although Altech was disappointing, Altron's other wholly-owned entities faired better. Bytes - the largest profit contributor - grew revenue 19%, although headline earnings per share only gained 7%, due to margin pressure, says Venter.
Powertech, which saw some recovery in its cable operations, reported headline earnings 11% higher, the same level as its revenue gain.
Altech's revenue increased 7% during the first half of the year, although it made a R586 million net loss, after writing down East and West Africa to the tune of R676 million.
Priority areas
Robert Venter says, at year-end, Altron identified three areas that required significant attention. "These were Altech's East and West African businesses and Powertech Cable business, specifically the Iberian operations."
Altron has made headway in all three areas, which includes restructuring Powertech's cable business in Iberia, says Robert Venter. "Although headway has been made in all three areas, the rewards of the steps taken are not evident in the interim results and there is still much work to be done," he adds.
Altech will remain a focus area looking ahead and the group is in the final phases of finalising the sale of its West African operation, says Robert Venter. Altech CEO Craig Venter recently said that Altech has agreed to sell its 75% stake in Altech West Africa.
Robert Venter says the group is in the final phases of meeting the conditions for disposal of the unit. The entity was started in 2005 and was profitable for five years until it started making a loss, 18 months ago.
In addition, the other 'bleeding' operation, East Africa is the subject of advanced discussion over a partnership arrangement, says Robert Venter. Altech East Africa was profitable for two years after Altech bought its 51% stake in 2008, but then ran into difficulties as key projects were delayed, while the competitive market moved rapidly, Craig Venter has said.
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