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Altron Business Update, Trading Statement and Withdrawal of Cautionary Announcement
Allied Electronics Corporation Limited
(Registration number 1947/024583/06)
(Incorporated in the Republic of South Africa)
Share Code: AEL ISIN: ZAE000191342
Share Code: AEN ISIN: ZAE000191359
(“Altron” or “the company”)
Altron Business Update,Trading Statement and Withdrawal of Cautionary
Announcement
Business Update
Shareholders are referred to the company’s business update, trading statement and renewal
of cautionary announcement released on SENS on 14 March 2016 and are advised as
follows:-
For the year under review, the Altron TMT division (telecommunications, multi-media and IT
businesses) produced a strong performance from its IT businesses which unfortunately was
insufficient to offset the decline in profit levels and significant losses incurred at Altech
Autopage (prior to its disposal) and Altech Multimedia. In particular:
- The core IT and Technology businesses have continued to perform well in what have
been challenging macro-economic conditions and are expected to post results ahead of
expectations.
- Altech Autopage successfully disposed of its post-paid GSM subscriber bases to MTN,
Cell C and Vodacom and has received a significant portion of the purchase
consideration to date.
- The Multimedia division experienced significant losses due to a previously disclosed
once-off inventory write off and a material reduction in demand. During the year it has
undergone a rightsizing process, with associated costs, of closing most of its
international operations and aligning its cost base with the lower demand levels.
Management remains in discussions and negotiations with various third parties to
dispose of this business.
The Altron Power division (Powertech businesses) continued to experience a deterioration in
their performance resulting in substantial losses. Most of the businesses were affected by
difficult macro-economic conditions, namely the worsened situation in the South African
economy and the on-going challenges created by a lack of demand from Eskom. More
specifically:
- The transformers division has continued to experience an extremely challenging year,
posting a substantial loss.Despite ongoing cost reduction exercises, the lack of
demand from Eskom for power transformers continues to result in the business
incurring losses, though demand has recently improved in respect of distribution
transformers. Management remains in discussions and negotiations with third parties to
dispose of this operation.
- As indicated to shareholders on 2 December 2015 and 11 April 2016 respectively,
Powertech has entered into legal agreements with a leading global cable manufacturer,
Hengtong, to dispose of its majority equity interest in Aberdare Cables. Hengtong is the
fourth largest cable company in China.This transaction was approved by Altron
shareholders on 22 April 2016, but is still awaiting Competition Commission approval in
order for it to become unconditional and be implemented.
The Altron group continues to make progress regarding the implementation of its new
strategic direction, as set out in its announcement released on SENS on 16 April 2015. This
has included, among others, finalising certain key disposals, realising cash to reduce the
Altron group’s borrowings, transitioning from a family managed business to an independent
management structure and continuing to focus on the remaining disposals of identified non-
core manufacturing businesses.
Trading Statement
In line with the communicated strategy of refocusing the Altron group, the financial results for
the year-ended 29 February 2016 have been split between continuing and discontinued
operations in accordance with IFRS criteria. In this regard, the entire Powertech group,
Altech Autopage, Altech Multimedia and Altech Node have all been classified as
discontinued operations for reporting purposes with comparatives restated accordingly. This
disclosure provides shareholders with insight into the performance of the core and non-core
operations within the Altron group.
Shareholders are advised that a reasonable degree of certainty exists that in respect of the
company’s continuing operations the headline earnings per share for the financial year
ended 29 February 2016 is expected to be between 116 cents – 126 cents (between 8% and
15%) lower as against the previous corresponding period (137 cents). Basic earnings per
share is expected to be between 100 cents – 110 cents (between 20% and 28%) lower as
against the previous corresponding period (138 cents).
In respect of the company’s discontinued operations the headline earnings per share for the
financial year ended 29 February 2016 is expected to be a loss of between 265 cents – 275
cents as against the previous corresponding period (a loss of 43 cents). Basic earnings per
share is expected to be a loss of between 350 cents – 370 cents as against the previous
corresponding period (a loss of 141 cents).
In respect of the company’s total operations (continued and discontinued) the headline
earnings per share for the financial year ended 29 February 2016 is expected to be a loss of
between 140 cents – 150 cents as against the previous corresponding period (a profit of 94
cents). Basic earnings per share is expected to be a loss of between 255 cents – 265 cents
as against the previous corresponding period (a loss of 3 cents).
Altron’s annual financial results for the year ended 29 February 2016 are expected to be
announced on or about Wednesday, 18 May 2016.
This trading statement has not been reviewed or reported on by Altron’s external auditor.
Withdrawal of Cautionary Announcement
Shareholders are referred to the business update contained in this announcement and are
advised that the Altron group continues to pursue the disposal of non-core assets in line with
its previously communicated strategy, particularly those operations in or exposed to the
manufacturing sector. There are various processes underway to achieve this goal.
Shareholders are further referred to the renewal of cautionary announcement released by the
company on SENS on 14 March 2016 and are advised that as the specific discussions and
negotiations in respect thereof (as distinct from the remaining on-going discussions and
negotiations to dispose of other non-core assets) have been terminated, caution is no longer
required to be exercised by shareholders when dealing in Altron’s securities.
By order of the board.
Johannesburg
29 April 2016
Sponsor
Investec Bank Limited
Date: 29/04/2016 04:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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