Healthier Altron to refinance debt

With its turnaround materialising, technology group Altron is talking to lenders about refinancing expensive debt, CEO Mteto Nyati said on Thursday. The group expected to “substantially” cut its interest bill.

“We are now a much healthier company,” Nyati said after Altron reported a 44% increase in revenue and said it would resume dividend payments.

Despite it being on more stable footing, Altron has had to service expensive debt incurred when it was in a precarious financial position.

Group net finance expenses were R100m in the six months to end-August, and Nyati said that number was “too high”.

The group plans to refinance debt by the end of February, he said. Debt net of disposals totalled R991m in August, from R1.5bn six months earlier. Altron’s share price was R16.90, or 1.2% up, at close of trade on Thursday, the best level in more than three years.

“Altron seems to be on track for recovery, having evolved into a focused ICT [information and communications technology] operation,” said Ron Klipin, a portfolio manager at Cratos Capital.

“New management has turned around a legacy family business and has brought in new skills and a tighter ICT focus… The group’s growth appears to be more robust than that of its peers, with a strong balance sheet, and it may be eating somebody’s lunch.”

Revenue from continuing operations rose 44% to R9.8bn in the six months to August. Earnings before interest, tax, depreciation and amortisation (ebitda) from continuing operations rose 16% to R686m.

Nyati said the sharp increase in revenue was due largely to the recent acquisition of Microsoft reseller Phoenix Software in the UK.

The group’s Bytes UK business won a five-year contract with the National Health Service (NHS) worth £150m (R2.8bn).

Bytes will migrate the NHS’s 1-million desktops to the Windows 10 operating system.

“It was a strategic deal for us,” Nyati said. While the contract was secured at low margins, Altron would be able to sell other products to the NHS.

Altron was also pushing into SA’s public health-care sector, he said. The group offers electronic records management services and has partnered with the City of Johannesburg.

Meanwhile, the group’s Netstar business would launch in India in November through a joint venture, Nyati said.