Venters to take a back seat at Altron - TechCentral

Venters to take a back seat at Altron

Altron CEO Robbie Venter

Altron CEO Robbie Venter

Robbie Venter, 56, is likely to step down as Altron’s CEO at the end of February, or soon thereafter, handing the reins to a non-family member for the first time in its storied, 51-year history.

First, though, Venter — the son of Altron founder Bill Venter, now 81 — intends to see through a radical restructuring of the group that will leave it much smaller, but also, hopefully, highly profitable.

This week, Altron reported a full-year loss to 29 February of R1,1bn as a perfect storm of poor performances by subsidiary companies — IT group Bytes was a notable exception — pulled down earnings.

Even the normally reliable performer Netstar had a challenging year, with operating profits under pressure in the consumer stolen vehicle recovery segment, though the fleet tracking business continued to perform well.

Under Venter’s restructuring plan — which enjoys the full backing of his father, who serves as nonexecutive chairman — Altron is selling or writing down a range of assets, including Altech Autopage, Altech Multimedia (essentially the UEC set-top box business), the failed Altech Node set-top box project launched by his brother Craig Venter, who quit the group last year, and a number of businesses under the poorly performing electrical subsidiary, Powertech.

The aim, after the asset sales and disposals, is for Altron to emerge as a leaner business focused on technology, media and telecommunications, turning over about R14bn/year (from R26bn now) with R1bn in earnings before interest, tax, depreciation and amortisation. (Ebitda is a measure of a company’s operating performance.)

Altron reported R888m in Ebitda from continuing operations for the 2016 financial year, so it’s not far off its target. Discontinued operations, however, dragged full-year Ebitda down to R376m, with a large and unexpected loss from Altech Autopage and substantial losses at UEC, where set-top box orders have dried up, and from Powertech, which is feeling the full brunt of the weak South African economy.

“We still have a lot of work to do, but we’re satisfied with the substantial progress we’ve made with the noncore assets, especially the asset sales, which are now close to complete,” Venter said in an interview with Business Times this week. Those sales include the disposal of Altech Autopage’s subscribers, where Venter expects to net between R800m and R850m (from gross proceeds of R1,3bn), and the sale of Aberdare Cables to China’s Hengtong for R1,2bn.

Altron has been criticised for not selling Autopage a year earlier, when rival Reunert disposed of Nashua Mobile, but Venter said he is happy with the proceeds of the deal.

The proceeds from the sales, along with the sale of a property in Pretoria for R107m, will go a long way to reducing high levels of debt on Altron’s balance sheet, Venter said. The more than R2bn in cash inflows will be used almost exclusively to reduce debt.

Robbie Venter, left, and Craig Venter, right, with their father, Altron founder Bill Venter

Robbie Venter, left, and Craig Venter, right, with their father, Altron founder Bill Venter

Altron intends exiting its remaining manufacturing businesses and is also looking to bring in new partners for its UEC business, which has come under immense pressure in the past 12 months, cutting almost 800 jobs as it downsizes operations in the face of vanishing orders. Venter expects to make announcements of further asset sales before the group’s interim results are published later in the year.

Despite the amount of restructuring that still lies ahead, Venter said the plan is to “transition” Altron away from a family-managed business by the next financial year, bringing in an external CEO with extensive experience in technology and telecoms who can “lead the company into its next growth phase”, possibly as early as March.

The Venters, who hold roughly 64% of Altron’s equity, do not intend being silent shareholders, however. “The family will remain active shareholders, represented on the board,” Venter said.

He said he’ll stay on to finish the restructuring, even if it takes a bit longer than expected. “The asset sales will probably be completed somewhere around the end of this financial year, but it’s hard to define specifically these disposal processes.”

Once he relinquishes the reins, Venter intends spending more time with his family, who live overseas. But he said he will retain his residence here as he will still have a substantial role to play in Altron’s affairs.

This article was originally published in the Sunday Times

 

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