JSE-listed technology company Altron has announced its financial results for the year to end February. The company saw invoiced income gain four percent to R7.7 billion, while cash from operations grew 31% to R2.2 billion. Shareholder value was unlocked by 152% from a share price of R20.19 to a share value of R50.80.
The Group said earnings before interest, tax, depreciation, and amortisation (EBITDA) declined 8% to R1 billion. The operating free cash flow of R612 million increased by more than 600%. Cash generated from operations was up 31% to R2.2 billion while headline earnings per share (HEPS) declined 18% to 31c a share. A dividend of 15 cents per share was declared.
“The cost containment measures taken across our operations to minimise the impact of Covid-19 have positioned us well,” said Altron Group Chief Executive, Mteto Nyati. Several businesses in the Group were restructured during year to protect and maintain profitability.
Altron’s star performers enjoyed growth in a challenging year, including Altron Security (Ubusha), which recorded a significant improvement from the prior year and contributed positively to Altron’s results. Altron Karabina benefited from corporate South Africa’s almost instantaneous embrace of Microsoft remote productivity solutions.
“There is no question that this has been the most difficult and challenging year I have ever encountered as a business leader. Lockdowns significantly reduced economic activity and inevitably impacted on our financial results,” said Nyati.
However, he said that the “onset of the Covid-19 pandemic and the Bytes UK demerger created conditions for demonstrating the resilience of our strategic direction and validated the choices we made in pursuing certain growth areas like cloud and security”.
During the year under review, Altron Documents Solutions, Altron People Solutions, Altron Arrow and Bytes UK were classified as assets held for sale. Bytes UK was demerged with a successful initial public offering on the London Stock Exchange as its primary listing and the JSE as its secondary listing. Bytes UK was included in Altron’s numbers for nine-and-a-half months before it was separately listed, unlocking value for shareholders.
The new Altron 2.0 strategy builds on the successful implementation of One Altron, which resulted in the identification of four key high-growth areas in the information technology sector as part of Altron 2.0, targeting tripled operating income in five years. These growth areas are automation (DevOps), cloud services, data, and security. Bytes UK’s growth is on the back of the trend towards cloud computing. “Given that South Africa lags behind the UK on the same trend by three to four years, we believe Altron will reap the benefits of early positioning in the cloud space through Altron Karabina and Altron Systems Integration,” said Nyati.
Altron recently acquired LawTrust (pending competition commission approval), which will create end-to-end security capability when combined with Ubusha to form Altron Security, with a presence in the United Kingdom where its offerings are in demand.
Like the rest of the South African economy, Altron instituted remote working arrangements during 2020, which impacted half its staff. “We were able to move to working remotely with minimal disruption to productivity and processes,” said Nyati.
“The health and wellbeing of our employees led our list of priorities during lockdown, which necessitated an elevated volume of communications and changes to shore up the Group’s balance sheet.”
“Ultimately, while many companies fell victim to the economic ravages induced by the pandemic, Altron continues to provide jobs for more than 7 000 employees and we did our best to minimise job losses.”
Looking ahead, Altron will focus on wrapping up its disposal of three operations that are not aligned to the revised strategy; exploring opportunities to further unlock value for the operations that fall within Altron 2.0; and accelerating growth of the digital transformation segment that is housing Altron Karabina, Altron Systems Integration and Altron Security.