Altron set on acquisitions

RESUMING DIVIDENDS: TO BE PAID FOR THE FIRST TIME IN THREE YEARS

Has been disposing of non-core operations and repositioning itself in ICT space.

On the back of strong financial results for the year ended February 2018, technology group Altron has said it plans to resume dividend payments from its next set of interim results, due after August.

It will be the first time in three years that the group has paid a dividend to shareholders and a sign that the turnaround of the business is taking root under former MTN SA CEO Mteto Nyati, who was appointed a year ago.

“The board has considered its dividend policy and intends adopting a 2.5x cover going forward. An interim dividend will be declared for the period ending 31 August 2018.”

Over the past three years, Altron, which found itself in difficulty, not least due to a growing mountain of debt, has been steadily disposing of non-core operations – mainly its old industrial manufacturing businesses – and repositioning itself in the ICT space. It plans to pursue acquisitions in SA in four areas: namely data analytics, cloud computing, information security and the Internet of Things, Nyati told TechCentral.

Nyati expects all non-core assets, including the remaining Powertech businesses and Altech UEC, to be disposed of in the current

financial year. A plan to sell Altech UEC in the 2018 financial year fell through, but Altron is now engaged with two potential buyers for the set-top box manufacturer. The sale of the remaining Powertech assets will be concluded in the coming weeks.

“We have made progress in the divestment of non-core assets, lowering debt levels and reducing our exposure to the manufacturing sector,” the group said. “Of equal importance was turning the company into a streamlined organisation with the leaders of business operations joining the Altron group executive.”

It has reduced the size of its head office, with 36% fewer employees, which has “significantly reduced” the corporate cost base.

Revenue from continuing operations increased 14% to R14.7 billion, while Ebitda – a measure of operating performance – rose 19% to R1.1 billion. Headline earnings per share from these operations also increased 19%, to R1.35.

Net debt remained high at R1.9 billion, though with the disposals taking place, this number will be reduced to about R1.5 billion, Nyati said. Longer term, he’d like net debt to be close to R1.1 billion.

Bytes UK was a standout performer,

growing revenue by 49% in local currency and Ebitda by 29%.

Another strong performer was Altech Netstar. Nyati said there is “no reason” Netstar shouldn’t be the number one player in its market, and he wants the team to focus on overtaking rival Cartrack into first place.

On a normalised basis, the SA ICT operations saw a 3% decrease in revenue to R6.9 billion but achieved an 8% increase in Ebitda to R629 million, with the Ebitda margin improving to 9% from 8% in the prior year.

This article was first published on TechCentral.