Altron ups dividend after strong growth in profitability from continuing operations

Despite increasingly tough trading conditions the Altron Group reported improved revenue and profitability from continuing operations for the six months ended 31 August 2023.  On the back of this improved performance and strong cash flow, Altron has increased its dividend payout ratio from a minimum of 40% to a minimum of 50% of headline earnings from continuing operations. 

Effective 1 July 2023, Altron Managed Solutions sold the ATM Hardware and Support Business (the “ATM Business”). Results excluding the ATM Business are presented to compare performances on a like-for-like basis. 

Salient Features – Continuing Operations

• Continuing Revenue up by 4% to R4.3 billion, and up 11% excluding the ATM Business; 
• Continuing Operating Profit up 25% to R362 million; and up 32% excluding the ATM Business 
• Continuing HEPS increased 19% to 50 cents per share; 
• Continuing EBITDA up 21% to R724 million; and up 26% excluding the ATM Business; 
• Cash generated from continuing operations grew 27% to R530 million  
• Net Debt: EBITDA at 0.23 times, from 0.22 times at FY2023. 

Salient Features – Group

The Altron Group results were impacted by provisions and impairments (collectively referred to as the “Non-Cash Adjustments”) raised in two non-core subsidiaries, namely Altron Nexus of R334 million, in relation to the restructuring of Altron Nexus due to the loss of the Gauteng Broadband Network contract and the City of Tshwane exposure, and Altron Document Solutions of R95 million. This includes the goodwill impairment raised at an Altron Group level of R33 million in relation to goodwill held on the balance sheet for Altron Nexus 

• Revenue increased by 3% to R5.5 billion. 
• Operating loss before capital items of R106 million.  
• EPS decreased by over 100% to (86) cents per share. 
• HEPS decreased by over 100% to (63) cents per share 
• Group working capital reduced by R447 million to R829 million. 

Commenting on the results Altron Group CEO Werner Kapp said “We are executing on our strategy to become the Leading Platform and IT Services business in our chosen markets. We are in the early phases of our journey, however, the successful profit improvement strategies in Altron Systems Integration and Netstar, together with focused execution on our growth levers, have delivered pleasing results.  

Operating profit in our core operations increased 25%. This positive momentum, which is yielding improved cash flow generation, combined with our strong balance sheet, allowed us to positively adjust our dividend policy to improve distributions to shareholders.”  

Altron increased its interim dividend by 56% to 25 cents per share, in line with its improved dividend policy. 

Key Operational Highlights 

• Netstar achieved industry-leading subscriber growth of 26%, growing subscribers to over 1.5 million. Net customer additions improved 91% to 187 273.   
• During the six months ended 31 August 2023, Netstar achieved over 80% of the total subscriber growth it generated for the full 12-month period in 2023.  
• Netstar surpassed the billion-rand revenue mark for the first time in a six month period, with revenue growing 12% to R1 billion and EBITDA growing 21% to R364 million.  
• The profit improvement strategy in Altron Systems Integration delivered operating leverage with a 5% increase in revenue and a 127% increase in EBITDA to R34 million. Operating Profit generated of R31 million, amounts to 80% of the total Operating Profit earned cumulatively over the past three years. 
• Altron Karabina delivered an increase in EBITDA of 29% underpinned by an 8% increase in revenue and improved margins. 
• Altron Arrow delivered strong revenue growth of 32% to R424 million and EBITDA growth of 65% to R38 million, supported by strong demand and a continued focus on operational efficiencies. 

Effective 1 March 2024, the Altron Group will simplify its operating model. Altron Systems Integration, Altron Karabina and Altron Managed Solutions will be combined to form Altron Digital Business, which alongside Altron Security will form our IT Services division. Our Own Platforms segment will remain unchanged, and Altron Arrow will fall under a new Distribution segment. 

The full SENS announcement is available on the Company’s website, altron.com.

An investor presentation will be hosted virtually via webcast at 09:30 CAT on 13 November 2023, to present the Group’s financial results for the six months ended 31 August 2023. To attend the webcast please register here. 

Johannesburg
13 November 2023
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