Allied Electronics (Altron) has issued a trading statement regarding its 2012 interim results, cautioning shareholders that Altech’s loss-making African operations and Powertech’s difficult trading conditions will result is much lower earnings.
Positive news is the Bytes has continued to perform well during the last six months, producing results broadly in line with expectations.

Powertech, however, has experienced difficult trading and operational conditions during the second half of the current financial year, according to a statement from Altron.

Volumes in the cables group have been depressed and pricing pressures have increased, negatively affecting operating margins. Disruptions due to the nationwide transport sector strike in September 2012 also negatively impacted the major operations within the Powertech group.

Altech’s performance since the half-year has not improved, largely as a result of ongoing challenges in its East and West African businesses.

Although the transactions relating to Altech’s telecommunications network interests in East Africa will remove operating losses from the Altron group’s results going forward, Altron anticipates that there will be an estimated loss of R666-million realised at Altech on the disposal of this business.
The transactions between Altech and Liquid are subject to conditions precedent including Kenyan Competition Authority approval.
If the effective date of the transactions occurs in the following financial year, R352-million of this loss will be recognised as an impairment of assets in the current financial year, while the remaining R314-million of this loss will only be recognised on the effective date of the transactions as it arises on the release of the foreign currency translation reserve. This will not impact on Altech’s shareholders’ equity.

Should the transactions become effective during the current financial year ending 28 February 2013, then the full amount of the estimated R666-million will be recorded as a loss on sale.

Both of these amounts will vary depending on factors such as foreign exchange rates, working capital movements and operating losses through to the effective date of the transactions. Altron shareholders will bear 61,5% of these losses.

In light of these developments, Altron has cautioned shareholders that basic earnings per share for the year ending 28 February 2013 could be more than 100% lower as against the previous corresponding period, predominantly as a result of the impairments in the first half at Altech, as well as the losses arising from the Altech East Africa transactions.

Headline earnings per share for the year ending 28 February 2013 are expected to be more than 20% lower as against the previous corresponding period.