ICT service provider Altron unlocks shareholder value by 152%

ALLIED Electronics Corporation (Altron) said yesterday it had unlocked shareholder value by 152 percent in the year to the end of February despite trading in a tough economic environment because of Covid-19.

This comes after the demerger last year of former subsidiary Bytes UK, which unlocked R7 billion in value for its shareholders.

Bytes UK was demerged with an initial public offering on the London Stock Exchange (LSE).

Bytes has a primary listing on the LSE and a secondary listing on the JSE.

In the year to the end of February, Bytes UK was included in Altron’s results for nine-and-a-half months before it was separately listed, unlocking value for shareholders.

As a result, the share price was unlocked from R20.19 to R50.80 at the end of the period.

During the year, Altron embarked on a new Altron 2.0 strategy, building on the implementation of its One Altron strategy, which resulted in the identification of four key high-growth areas in the information technology sector as part of Altron 2.0, with the target of tripling its operating income in five years.

Chief executive Mteto Nyati said these growth areas were automation, cloud services, data and security.

“Given that South Africa lags behind the UK on the same trend by three to four years, we believe Altron will reap the benefits of early positioning in the cloud space through Altron Karabina and Altron Systems Integration,” Nyati said.

Altron intends to unlock further shareholder value in the year ahead and has identified three assets to be sold, which were Altron Documents Solutions, Altron People Solutions and Altron Arrow.

Nyati said Altron would focus on wrapping up its disposal of three operations that are not aligned to the revised strategy, explore opportunities to unlock value for the operations that fall within Altron 2.0, and accelerate growth of the digital transformation segment that houses Altron Karabina, Altron Systems Integration and Altron Security.

In the financial results, the group reported an 18 percent decline in headline earnings per share to 31 cents a share.

Revenue was flat at R7.4bn, while earnings before interest, tax, depreciation and amortisation fell by 8 percent to R1bn.

Its gross invoiced income inched up by 4 percent to R7.7bn.

Cash generated from operations increased by 31 percent to R2.22bn.

The group declared a final dividend of 15c, up from last year’s 12c despite the impact of Covid-19 on its operations.

Nyati said the cost containment measures taken across Altron’s operations to minimise the impact of the Covid-19 pandemic had positioned the group well.

“Lockdowns significantly reduced economic activity and inevitably impacted on our financial results. Several businesses in the group were restructured during the year to protect and maintain profitability,” he said.

Altron shares closed 0.83 percent higher at R10.92 on the JSE yesterday.