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Altron posts strong earnings despite discontinued operations

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 20 May 2024
Werner Kapp, Altron Group CEO.
Werner Kapp, Altron Group CEO.

Altron Group has achieved strong earnings for the full year, with the IT services company delivering a 46% increase in net profit after tax and a 46% increase in earnings per share.

In its year-end results for the 2024 financial year, released this morning, the company says strategy execution drove strong results from core continuing operations, with revenue up 8% to R7.9 billion (excluding the recently sold ATM Business), EBITDA was up 27% and operating profit up 33%.

Headline earnings increased 36% to 116c, while earnings per share increased 46% to 108c.

Altron Document Solutions and Altron Nexus are considered non-core and are accounted for as discontinued operations, with disposal processes under way.

As a result, Altron Group’s financial results were materially affected by non-cash adjustments, including provisions and impairments in these discontinued operations, raised in the first half of FY24, notes the company.

These adjustments included R334 million relating to the restructuring of Altron Nexus due to the loss of the Gauteng Broadband Network contract and the City of Tshwane exposure, and R95 million in respect of Altron Document Solutions. A goodwill impairment was raised at Altron Group level of R33 million in relation to Altron Nexus.

Altron Group CEO Werner Kapp says: "Our purpose is to use technology to transform today into a simpler, safer and smarter tomorrow.

“We are guided by a clear strategy to become the leading platform and IT services business in our chosen markets. Our execution of this strategy resulted in a pleasing 36% increase in headline earnings per share from our continuing operations. Increased cash generation supported by a strong balance sheet allowed us to increase our final dividend per share by 74%.”

Altron invested R463 million in growth capital expenditure during the period, predominantly focused on Netstar, Altron FinTech, and its systems and digital platforms to improve user experience.

Key operational highlights:

  • Annuity revenue excluding ATM Business increased 9% and now comprises 61% of total revenue.
  • Netstar grew subscribers 27% to over 1.7 million subscribers, with 2.3 million connected devices. This growth reflects a notable market share gain, with enterprise customers increasing 33% and consumer customers increasing 14%. Net subscriber additions improved 60%.
  • Netstar surpassed the R2 billion milestone, with revenue growing 12% to R2.1 billion, and EBITDA growing 27% to R797 million.
  • Altron Fintech delivered a robust performance, with EBITDA increasing 22% to R330 million.
  • The profit improvement strategy in Altron Systems Integration delivered over 100% improvement in EBITDA to R93 million, from R5 million.
  • Altron Karabina delivered an increase in EBITDA of 14% to R49 million, underpinned by higher margins.
  • Altron Arrow delivered strong revenue growth of 18% to R802 million and EBITDA growth of 33% to R69 million, supported by strong demand and a continued focus on operational efficiencies.

Kapp comments that the company will continue navigating through the challenging economic landscape exacerbated by political uncertainty, and remains committed to achieving its medium-term targets.

“By 2026, we are targeting an operating profit margin of +19% for our platforms segment and +7% for our IT services segment. Additionally, we are targeting operating profit of R1.1 billion from continued operations. Our strategic positioning within the platform and IT services sectors, supported by our proprietary IP solutions, enables us to identify opportunities and solve real-world problems for our customers.”

“We remain dedicated to enhancing long-term shareholder value through the execution of our strategy, disciplined capital management, strategic investments and a strong focus on sustainable, profitable growth.”