JSE-listed technology group Altech expects headline earnings per share for the year ended February 2012 to be as much as 30% lower against a year ago as problems at its operations outside SA continue to weigh on the group’s financial performance.
Altech says headline earnings per share will decline by between 24% and 30% as a result of “continued poor results” in both East and West Africa. “Altech management is investigating remedial measures,” the group says in a statement to shareholders.
It says “certain” of the operations in East Africa experienced a “tough trading period with financial performance below expectations”.
Currency fluctuations, high inflation rates and interest costs, sharp drops in broadband pricing, network instability due to fibre breaks and undersea cable breaks contributed to the poor performance in the region, Altech says.
“Exposure to currency fluctuations has been reduced and steps are being taken to address certain underperformance issues. New management is focused on resolving operational and financial challenges and strengthening the positioning of the businesses in the region.”
Altech West Africa was a strong profit performer for five years but its recent trading performance in paper recharge vouchers was affected by mobile operators’ ability to offer cheaper alternatives, the group explains. In addition, its five year “pioneer” tax status in Nigeria recently ended and the Nigerian government had lifted the prohibition on imports of recharge vouchers, leading to increased competition.
“Altech has decided to impair fully the goodwill in respect of the West African operations and to impair the carrying value of the investment in the East Africa operations. These impairments will result in a loss in basic earnings per share, which is expected to be between 281c and 302c compared to a profit of 216c the previous financial year.”
Altech, which is led by CEO Craig Venter, says its other operations “performed to expectations”. The group’s share price was trading 2% lower minutes after it updated the market about its 2012 earnings. — (c) 2012 NewsCentral Media
