JSE-listed Altech, which reported a loss for the full-year, is seeking to cut costs through back office synergies and will spend the next 12 months focused on commercialising new offerings in the pipeline.
The company yesterday evening reported higher revenue from continuing operations, at R10.2 billion, from R9.6 billion last year. While it made a R357 million profit from continuing operations, it reported a R1.6 billion loss from discontinued operations and a total comprehensive loss of R840 million, after taking into account gains on foreign exchange movements and other income.
CEO Craig Venter says it is starting with a clean slate and "what's important is what we've done in terms of growth for the next three to five years". Venter conceded that the more than R800 million impairment of its East and West African business was "terrible," but added that the bleeding was now behind the company.
Altech ended the year with a R632 million order book, which Venter says is traditional, but has since secured contracts worth R1 billion. He says these include a deal with the police and the Passenger Rail Association of SA.
Venter is "comfortable" that Altech has a growth strategy. In addition, the group is targeting cost savings of R100 million within the next five years through back-office synergies such as eliminating duplicated licences and streamlining the IT environment.
This equates to creating a business with a turnover of R1.2 billion, says CTO and chief strategy officer Willie Oosthuysen. He adds that the company has created a cross-company business development office to extract gains from its partnership with Huawei Enterprises and take advantaged of opportunities in integrated transport management systems, converged services and its mobile money unit, Eyenza.
Oosthuysen says Altech has been developing products in fleet management, insurance telematics and next-generation set-top boxes. The group aims to spend the next year commercialising and monetising these solutions, says Venter.
Venter adds that Altech, which is currently trading under cautionary, will not shy away from future acquisitions, even though its East African venture was a "bad experience". He says Altech was built on acquisitions, but the company will be more cautious in future.
Altech will, however, let the "dust" settle for the next six months, says Venter.
Frost and Sullivan's ICT research analyst, Lehlohonolo Mokenela says "by trimming down its West and East Africa operations, the company seems intent on realigning its strategy and focusing on its core operations in South Africa".
Potential areas of growth for the group still lie in Altech Multimedia, whose plans are being frustrated by delays in the transition to the digital terrestrial television, says Frost and Sullivan. Other potential areas of growth lie in convergence, following the group's reported merger of Altech Technology Concepts and its cellular arm, Altech Autopage, in order to increase its footprint in that market, it says.
In addition, the company expects to grow profits from its vehicle tracking operations following measures taken to reduce operating costs, says Frost and Sullivan.
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