Altron ups dividend after strong growth
JSE-listed technology services group Altron has increased its interim dividend, after posting strong financial results for the six months ended 31 August.
In a statement, the company says despite increasingly tough trading conditions, the Altron Group reported improved revenue and profitability from continuing operations for the period.
On the back of this improved performance and strong cash flow, Altron has increased its dividend payout ratio from a minimum of 40%, to a minimum of 50% of headline earnings from continuing operations, says the firm.
It notes that effective 1 July, Altron Managed Solutions sold the ATM Hardware and Support Business (ATM Business).
The results, excluding the ATM Business, are presented to compare performance on a like-for-like basis, it adds.
Altron’s continuing revenue was up by 4% to R4.3 billion, and up 11% excluding the ATM Business.
Continuing operating profit rose 25% to R362 million; and up 32% excluding the ATM Business, says the firm, adding that continuing headline earnings per share increased 19% to 50c per share.
The company’s continuing earnings before interest, taxes, depreciation and amortisation (EBITDA) was up 21% to R724 million, and up 26% excluding the ATM Business.
Cash generated from continuing operations grew 27% to R530 million.
Altron points out that group results were impacted by provisions and impairments raised in two non-core subsidiaries; namely Altron Nexus of R334 million, in relation to the restructuring of Altron Nexus due to the loss of the Gauteng Broadband Network contract and the City of Tshwane exposure, and Altron Document Solutions of R95 million.
This includes the goodwill impairment raised at an Altron Group level of R33 million in relation to goodwill held on the balance sheet for Altron Nexus, says the company.
“We are executing on our strategy to become the leading platform and IT services business in our chosen markets,” says Altron Group CEO Werner Kapp says.
“We are in the early phases of our journey; however, the successful profit improvement strategies in Altron Systems Integration and Netstar, together with focused execution on our growth levers, have delivered pleasing results.
“Operating profit in our core operations increased 25%. This positive momentum, which is yielding improved cash flow generation, combined with our strong balance sheet, allowed us to positively adjust our dividend policy to improve distributions to shareholders.”
Altron increased its interim dividend by 56% to 25c per share, in line with its improved dividend policy.
Key subsidiary Netstar achieved subscriber growth of 26%, growing subscribers to over 1.5 million. Net customer additions improved 91% to 187 273. During the six months ended 31 August 2023, Netstar achieved over 80% of the total subscriber growth it generated for the full 12-month period in 2023, says Altron.
It adds that Netstar surpassed the R1 billion revenue mark for the first time in a six-month period, with revenue growing 12% to R1 billion and EBITDA growing 21% to R364 million.
The profit improvement strategy in Altron Systems Integration delivered operating leverage, with a 5% increase in revenue and a 127% increase in EBITDA to R34 million. Operating profit generated of R31 million amounts to 80% of the total operating profit earned cumulatively over the past three years, the company explains.
Altron Karabina delivered an increase in EBITDA of 29%, underpinned by an 8% increase in revenue and improved margins.
Altron Arrow delivered strong revenue growth of 32% to R424 million and EBITDA growth of 65% to R38 million, supported by strong demand and a continued focus on operational efficiencies.
The company states that effective 1 March 2024, the Altron Group will simplify its operating model. Altron Systems Integration, Altron Karabina and Altron Managed Solutions will be combined to form Altron Digital Business, which alongside Altron Security will form the IT Services division.
“Our own platforms segment will remain unchanged, and Altron Arrow will fall under a new distribution segment,” it concludes.