Allied Electronics Corporation Limited (Altron) today announced its annual results for the year ended 28 February 2014. Revenue increased by 12% to a record high R27.8 billion, normalised earnings before interest, tax, depreciation and amortisation (EBITDA) increased 20% to R1.9 billion and normalised headline earnings per share (HEPS) increased by 49% to 206 cents.It has been a time of change for the Altron group. Significant projects were initiated during the year and we are very pleased with how they are unfolding and the benefits seen so far, said Robert Venter, Chief Executive of Altron.Among the projects that Venter referred to was the reorganisation and rebranding of the group into two simplified operational areas, namely Altron TMT (which is the combination of the Altech and Bytes businesses) and Altron Power (the Powertech businesses).With the convergence of telecommunications, multi-media and IT, it made sense for us to bring Altech and Bytes much closer together. This could not effectively be done until we owned 100% of both of these businesses which is why we bought-out the Altech minorities and BBBEE partners of Bytes. We estimate that the reorganisation of Altech and Bytes will result in significant cost savings and many new revenue generating opportunities, said Venter. The Altron TMT integration is estimated to be completed by the end of the 2015/2016 financial year.Other recent initiatives by Altron include the sale of the lossmaking Altech East and West African businesses and some other noncore assets. We took a long look at our portfolio of assets and decided which are core to the future of the group and which are not. Besides the sale of Altech East and West Africa we recently sold our 50% stake of the lighting business Tridonic and Bytes Document Solutions in the UK, said Venter.The proceeds from the sale of the noncore businesses, primarily the $55 million received for Altrons 8.6% in Liquid Telecoms, will be applied to purchase the 27% stake in Bytes SA owned by Kagiso Tiso Holdings for a value of R669 million.Capital allocation is important to us and we believe our further investment in the Altech and Bytes businesses will unlock further value. Furthermore we see these investments as lower-risk, as we have been operationally involved in them for decades and know the businesses well, said Venter.Altron says it is refocusing its businesses from being product centric to being customer centric. This entails introducing more end-to-end solutions and key account management, building deeper relationships with its customers and selling them not just one, but many products through one contact point focusing on a cross and up-sell strategy.Both Altron Power and Altron TMT have already been generating good revenues, but because the markets in which we operate are so competitive, margins are tight. In order to see further profitable growth we also need to be as efficient as possible, said Venter. To improve cost savings Altron has streamlined some of its factories in Altron Power, combined certain offices in Altron TMT and initiated a shared services project group-wide. The benefits of the last-mentioned will only emerge in the next financial year.In Altron TMT, Altech showed a good recovery during the financial year under review with most of its operations, including Altech Autopage, performing satisfactorily and Altech Netstar and Altech UEC South Africa performing particularly well. Bytes continued its strong performance with Bytes UK operations, Bytes Systems Integration and Bytes Managed Solutions contributing significantly to the overall results. Altron TMT increased revenue by 12% from R17.5 billion to R19.5 billion and normalised EBITDA by 16% from R1.3 billion to R1.5 billion. Normalised headline earnings improved by a pleasing 26% to R646 million. Normalised numbers exclude once-off costs in restructuring Altron TMT and once-off forex losses in converting a foreign loan.In Altron Power, Powertech made a pleasing recovery, particularly in its electric cables business, albeit off a low base. Revenue increased by 14% to R8.4 billion, while EBITDA increased by a pleasing 45% to R386 million. Headline earnings for the Altron Power increased from last years break even to R77 million.Overall, sales into the public sector and into African countries, two areas that have specifically been targeted for growth, have increased significantly.We are very pleased with this set of results and anticipate that many new revenue generating opportunities and cost savings will emerge from our current projects which have only been in existence for a few months, concluded Venter.
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