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Home » AEN: ALLIED ELECTRONICS CORPORATION LTD - Altron Trading Statement, Strategic Update and Renewal of Cautionary Announcement

AEN: ALLIED ELECTRONICS CORPORATION LTD - Altron Trading Statement, Strategic Update and Renewal of Cautionary Announcement

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Release Date: 
16 April 2015

AEN: ALLIED ELECTRONICS CORPORATION LTD - Altron Trading Statement, Strategic Update and Renewal of Cautionary Announcement
Altron Trading Statement, Strategic Update and Renewal 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 Trading Statement, Strategic Update and Renewal of Cautionary Announcement

Trading Statement

Shareholders are referred to the company´s trading statements released on SENS on 22
January 2015 and 31 March 2015 respectively and are advised as follows:

The Altron TMT division (telecommunications, multi-media and IT businesses) has
experienced a decline in profit levels notwithstanding the strong performance of the IT
businesses which was insufficient to offset the deterioration in the telecommunications and
multimedia businesses. In particular:

- the Multimedia division was significantly impacted by a combination of reduced order
intake in its core set top box business in Africa, the loss of the Samsung TV assembly
contract and the impact of the NUMSA strike in July 2014. The business which has
already undergone a significant rightsizing process, has seen its order book improve in
recent months and has an encouraging pipeline of local and international prospects
including the South Africa digital migration program.
- the recently launched Altech Node, has performed below expectations, with regard to
retail customer take-up. Altron TMT is well advanced in terms of exploring alternative
opportunities for this business.
- the anticipated recovery in the performance of Altech Autopage did not materialise in
the second half, as market saturation and price deflation offset cost saving gains.

The Altron Power division (Powertech businesses) experienced a deterioration in their
performance resulting in a break even position at headline earnings level. Most of the
businesses were affected by challenging macro-economic conditions, namely the four week
NUMSA strike in July, weak economic growth and the various challenges created by Eskom´s
current position. More specifically:

- the transformers division experienced an extremely challenging year, posting a
substantial loss. This was caused by poor order inflows from its largest customer,
Eskom, particularly in the larger units; the disruption caused by the NUMSA strike
accentuated by poor productivity levels; as well as the non-recurring costs incurred to
close its Johannesburg manufacturing facility. The imminent designation of
transformers should assist going forward, but the resumption of normal purchasing
patterns from Eskom is critical to the future success of this business.
- Encouragingly, the cables division posted much improved results, despite the strike,
following the restructure of a number of its factories and production lines in previous
years. The South African operations expanded into new markets and territories to
compensate for the downturn in Eskom´s demand and benefitted from more stable
pricing and margins. The Iberian cables businesses have returned to profitability and
the Namibian cables business performed well.

Altron Corporate has also recorded a marked decline in earnings, primarily as a result of the
increased interest cost associated with the borrowings taken on to delist Altech in the last
financial year. Altron´s balance sheet remains resilient and the group continues to be well
inside its debt covenants.

Accordingly, shareholders are advised that a reasonable degree of certainty exists that the
company´s headline earnings per share for the financial year ended 28 February 2015 is
expected to be between 45% - 55% lower (between 85 cents and 103 cents) as against the
previous corresponding period (188 cents). Basic earnings per share which incorporates
various significant impairments is expected to be between 95% and 110% lower (between 10
cents and a loss of 19 cents) as against the previous corresponding period (192 cents).

Shareholders are further advised that Altron´s normalised headline earnings per share is
expected to be between 45% - 55% lower (between 93 cents and 113 cents) as against the
previous corresponding period (206 cents). The normalised headline earnings per share
disclosure adjusts headline earnings for various once off costs which are either non-
operational or associated with accessing benefits that would only be realised in subsequent
reporting periods.

Altron´s annual financial results for the year ended 28 February 2015 are expected to be
announced on or about Wednesday, 13 May 2015.

This trading statement has not been reviewed or reported on by Altron´s external auditor.
New Strategic Direction:

As highlighted in Altron´s trading statement of 31 March 2015, the board has undertaken a
fundamental review of the group´s business strategy. This has resulted in the development
of a plan to focus the group in certain areas where the board believes the group has the
resources, competence and skills to leverage a competitive advantage. In the process,
certain material non-core assets have been identified for disposal and the group is exploring
strategic equity and technology partnerships with global industry players in other areas of the
business. Furthermore, particular emphasis is being placed on the need to significantly
reduce central costs by creating a leaner management structure.

The group is currently addressing each of these initiatives, which are at different stages of
completion.

Further announcements will be made at the appropriate time.

Renewal of Cautionary Announcement

Further to the renewal of cautionary announcement released on SENS on 5 March 2015,
shareholders are advised that the company is still in discussions and negotiations, which if
successfully concluded may have a material effect on the company´s securities. Accordingly
shareholders are advised to continue exercising caution when dealing in the company´s
securities until a further announcement is made.

By order of the board.

Johannesburg
16 April 2015

Sponsor
Investec Bank Limited

Date: 16/04/2015 05:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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