Altron suspends dividend after R1.1bn loss

As it works to reduce debt and sell poorly performing non-core businesses.

Troubled technology group Altron has reported a normalised diluted headline loss per share for the 2016 financial year to February 29 of 75c, a sharp reversal from headline earnings per share (Heps) in 2015 of 99c.

In light of the poor numbers, and the need to reduce debt on its balance sheet, it has decided not to pay shareholders a full-year dividend.

Heps for continuing operations came in at R1.26, down by 8% from the R1.37 reported a year ago, while discontinued operations reported a headline loss of R2.71/share, from a loss of 43c/share a year ago.

Revenue from total operations came in at R26.6 billion, a R1 billion decline. However, revenue from continuing operations rose by a healthy 19.5% to R14.4 billion.  

Discontinued operations include the whole of Powertech, Altech Autopage, Altech Node and Altech Multimedia (effectively the UEC set-top box business).

Profit for the year from continuing operations was R474 milliom, a 34% decline over 2015’s R496 milliom. For discontinued operations, Altron reported a loss of R1.5 billion from a R556 million loss previously. The group’s total loss for the year was R1.1 billion.

The only bright spot of real consequence in Altron’s 2016 financial year results came from IT group Bytes, which improved earnings before interest, tax, depreciation and amortisation (Ebitda) by 9% to R670 million and revenue by 14% to R9.5 billion.

Poor performers included Altech Autopage, which swung to a surprise R209 million Ebitda loss from R137 million in earnings a year ago, and Altech Multimedia, which reported an Ebitda loss of R160 million on a 43% slump in revenue to R1 billion.

“While Altron has made progress on its stated aim of repositioning the group in the telecommunications, multimedia and technology space, this process is taking longer than anticipated and, in the meantime, the financial results have been materially impacted by difficult trading conditions as well as the process itself,” the group warned shareholders.

“Overall trading conditions remained extremely challenging, which negatively affected the group’s performance, especially in the discontinued operations,” it said.

“In addition to the four areas previously identified as having a material impact on Altron’s results, Aberdare Cables also experienced a marked decline in its results. All of the manufacturing operations, with the exception of Powertech Batteries, experienced very low demand levels as well as depressed margins, leading to substantial losses.”

Cash generated by operations of R528 million was 69% down on 2015, while R1.4 billion was released from working capital, which represented a significant improvement on the R330 million released in the prior year.

Altron said that in order to reduce debt on its balance sheet, it has decided not to declare a dividend for the 2016 financial year.

“Given the current cash flow position of the group, the focus remains on reducing the amount of debt. To this end, the proceeds from the disposal of Altech Autopage and Aberdare Cables, as well as the other potential disposals, will be used to reduce the group’s debt,” it said.

This article was first published on TechCentral. To access the original, please click here.

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