Altron forges ahead with separation and listing of UK subsidiary Bytes

ALLIED Electronics Corporation (Altron) is forging ahead with the potential separation and listing of its UK subsidiary, Bytes Technology Group (Bytes UK), on the Main Market of the London Stock Exchange and a secondary listing on the JSE.

Bytes UK delivers the latest technology to a diverse customer base, with proven expertise in cloud, infrastructure and security. Bytes UK expects the admission to take place in the fourth quarter of the 2020 financial year, but is subject to market conditions.

The technology group said yesterday that the Bytes UK management team, led by its chief executive, Neil Murphy, would be conducting meetings with a number of institutions in the next coming days in connection with the listing of Bytes UK on the two stock exchanges.

Altron chief executive Mteto Nyati said during the group’s full-year results presentation in May that as part of its strategic review, the board had assessed each of the business units within the group to identify opportunities which have the potential to unlock further value for shareholders and to streamline operations.

The Altron board concluded that the true value of Bytes UK was not reflected in the company’s share price as the business had increasingly developed a growth trajectory and strategic levers that were different to the rest of the group and operated in a different geographical capital market with a highly rated peer group.

In addition to pursuing a potential separate listing and share offering of Bytes UK, the group also considered a demerger of the remaining Altron shareholding in Bytes UK, post the potential share offering to Altron shareholders.

In the presentation Murphy highlighted that listing Bytes UK separately would allow the company to execute on its growth strategy independently, enhance market profile and brand recognition and lastly, widen employee ownership and incentivisation. Murphy said the company had continued to trade well during the Covid-19 outbreak, with trading slightly ahead of the management’s expectations.

The company had also adopted a work from home approach to deal with the pandemic and Murphy said productivity had been maintained and in some areas improved.

“As a result, the introduction of flexible working across the business has accelerated and this should provide Bytes with much more flexibility going forward,” he said.

The subsidiary was instrumental in lifting the group’s earnings for the year to end February after it reported a 66 percent increase in earnings before interest, tax, depreciation and amortisation (Ebitda) to R611 million. The division outperformed the market by achieving these results despite low economic growth in South Africa and Brexit concerns in the UK.

The overall group Ebitda was up by 14 percent to R1.8 billion while group revenue increased by 6 percent to R16.7bn during the year.

Altron shares closed 1.03 percent lower at R19.24 on the JSE yesterday.