Altron shares surge after divident announcement
JSE-LISTED Allied Electronics Corporation (Altron) rose by 6.65 percent on the JSE yesterday after the group announced that it would resume paying a dividend for the first time in two years.
The group declared an interim dividend of 28 cents a share during the six months to end August.
Chief executive Mteto Nyati said the group had delivered on its stated goal of double-digit earnings before interest, tax, depreciation and amortisation (Ebitda) growth, with the majority of the group’s operations producing Ebitda in excess of 20 percent.
“I’m pleased we are paying a dividend for the first time since 2016. Our international businesses continue to deliver growth with 57 percent of our revenue and 35 percent of our Ebitda realised from offshore operations.”
The share price climbed to R17.81 a share yesterday in early trade on the JSE and closed the day at R16.90.
The group has managed to deliver on its growth plans by reducing debt levels and completed the divestment of non-core assets.
The group’s overall net debt position of R1.4 billion was a significant improvement on the February year-end position of R1.9bn, due to increased cash generated from operations of R720 million compared to last year’s R598m. The group said this resulted in a 220 percent increase in free cash flow to R295m, which enabled the group to allocate R249m towards repaying its long-term loans during the period.
Altron increased Ebitda by 16 percent to R686m on a normalised basis and revenue was up by 44 percent to R9.8bn.
Normalised headline earnings per share increased by 25 percent to 71c.
Its subsidiary, Altron UK operations, grew revenue by 109 percent and Ebitda by 90 percent to R207m.
Netstar reported an 11 percent increase in revenue and 14 percent improvement in Ebitda, with improved growth in its subscriber base.
Altron Bytes Secure Transaction Solutions continued to perform well, growing revenue by 15 percent and Ebitda by 22 percent to R134m, driven by profit margins of 23 percent and a number of new contracts secured during the period.
Nyati said the company had concluded the disposal of all controlled non-core assets.
“This allows us to fully focus the business on ICT services and solutions and enables us to position Altron as a trusted adviser for our customers’ digital transformation journey,” he said.
During the period Altron acquired iS Partners for R225m in June.
Ron Klipin, a senior analyst at Cratos Capital, said the results seemed to be on track for recovery having evolved into a focused ICT operation. “In addition, a return to dividend payments is a major plus on the back of strong free cash flow.”