JSE-listed technology group Altron scored key victories in the year to February, lifting the group with double-digit growth compared to the previous year.
Altron reported its full-year performance today, saying its achievements included the acquisition of digital security company Lawtrust to strengthen its security business, collecting over R900 million in debt and head office costs being reduced by R98 million.
Outgoing group CEO Mteto Nyati, presiding over his final set of results, says the company delivered a solid performance despite the negative impact of COVID-19, the global shortage of electronic components and significant cutback on capex by large enterprise customers.
Nyati will step down from his role next month after joining Altron in 2017 during its transition from a family-controlled and -managed business to an independent corporate entity.
“This performance was possible due to the resilience of our Own Platform segment, characterised by high annuity revenue, the turnaround of Altron Karabina and Altron Managed Solutions, exceptional performance of Altron Arrow, and a strong focus on cost reduction at the centre,” he says.
In the year, Alton recorded solid gains in revenue and operating income.
Revenue grew 5.7% to R7.9 billion, while operating income grew in the double digits at 34.2% to R498 million, compared to the previous year, as a result of notable wins during the year.
Headline earnings per share gained 37.8% to 51c a share, while normalised headline earnings per share gained 82.9% to 75c a share.
Altron declared a dividend of 30c per share, an increase of 100% year-on-year.
Turning to the group’s business units, Own Platform reported revenue growth of 6.2%, up to R2.9 billion, while operating income of R546 million exceeded the prior year by 16.9%.
This, the company says, was off the back of gains from Netstar, Altron Fintech and Altron Healthtech.
Netstar’s revenue of R1.7 billion was a 7.8% increase from the prior year.
“Supported by a strong performance in Australia, the South African business continues to stabilise operational issues that have placed pressure on its subscriber churn rates during the period. As a result, Netstar South Africa has seen consistent net subscriber growth since June 2021.”
In the year, Altron says, fintech’s revenue of R854 million exceeded the prior year by 4.5%, while operating income of R193 million increased on the prior year by 43%.
“This profitability has been aided by adding two new insurance products, funeral cover and credit life, and short-term bridging financing for our customers in the microfinancing space,” says the company.
In the same measure, Altron Healthtech grew revenue by 2.9% to R323 million year-on-year, with the company saying: “With the investment in its new platform, Altron Healthtech will be able to capture the next generation of medical practitioners, which has been a challenge due to the current ageing technology and offerings.”
Master plan
Addressing the successes of the Altron 2.0 strategy, which seeks to triple operating income, among other metrics, Nyathi says: “Our company is making good progress in setting up Altron 2.0 by disposing capital-heavy and loss-making businesses and acquiring assets in high-growth segments of the market.”
Other metrics targeted by the Altron 2.0 strategy are high annuity revenue and a net debt to EBITDA ratio of less than one.
The company says it seeks to achieve these outcomes through Altron being capital-light, owning its intellectual property and providing differentiated offerings in cloud, security, data and software application development.
For the future, Altron says it anticipates continued pressure on supply chain and pricing due to the global component shortages.
However, it notes the resilience of the Own Platform segment should carry through into the first half of the 2023 year, while Altron Fintech anticipates a strong performance to the start of the new financial year.
Within the digital transformation segment, the company says, a strong focus will be placed on the turnaround of Altron Systems Integration to improve its performance.
“The segment will be strengthened by Altron Security’s performance with the addition of Lawtrust.”
Also, it says Altron Karabina is expected to continue its strong growth trajectory against the first half of 2022.
At the same time, Altron notes that it is in advanced discussions with a potential buyer to acquire Altron Managed Solutions’ banking business as it moves towards its strategic objective of being a capital-light organisation.
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