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Monday, 25 October 2021 18:28

Altron delivers solid performance in challenging environment.

By Lehlohonolo Lehana.

JSE-listed technology company Altron on Monday reported interim results for the six months ended August 2021, showing revenue up by 2% to R3.5 billion.

Operating profit was up by 71% to R173 million, while headline earnings per share increased 238% to 11 cents per share.

The company saw cash generated from operations up 79% to R527 million, while Altron declared an interim dividend of seven cents per share.

"The benefits of our diverse and high-quality portfolio of businesses operating across the Own Platforms, Digital Transformation and Managed Services segments resulted in Altron delivering an operating profit growth of 71%,@ said Altron Group chief executive Mteto Nyati.

The Own Platform segment performed well, generating R1.4 billion in revenue, up 6% against the prior year, while the operating income of R251 million grew by 27%, Altron said.

"Our Business Transformation Programme within Netstar South Africa yielded positive operational improvements which saw the brand reach one million subscribers, representing an 18% growth year on year," said Nyati.

Netstar’s revenue of R836 million was a 9% growth on the prior year, supported by the strong performance of Australia. Altron FinTech achieved revenue of R400 million, with its operating profit of R77 million a 75% improvement on the prior year. Altron HealthTech’s revenue of R161 million and operating profit of R44 million remained stable.

"The acceleration to digital transformation benefited Altron Security and Altron Karabina, as they aided customers to migrate their platforms into cloud-based solutions and offered enhanced digital security protection in mitigating the increased threat from what we see as our new way of working."

Nyati said Altron Systems Integration’s revenue of R863 million, down by R186 million on the prior year due to customers holding onto capital expenditure, had adversely impacted the entire digital transformation segment for the financial period.

"This business has been realigned to simplify its offerings to its customers, and right-sized to focus on the identified high growth areas of Cloud, Data, DevOps and Security. This has set the business up to focus on achieving its second half expectations."

Altron Managed Solutions’ banking segment came under pressure during the half, and the business has embarked on a Section 189 restructure to address operational issues.

Altron Nexus encountered challenges due to the freezing of capital expenditure and diversion of funds by its government customers to Covid-19 PPE and social development programmes.

The Altron People Solutions business was split and has been sold. Commenting on other discontinued operations, Nyati said the disposal of Altron Document Solutions and Altron Arrow operations would happen in "the short to medium-term."

Nyati said that 53% of the workforce had been vaccinated and a further 19% were planning to do so in the near future. “We have chosen to encourage our staff to vaccinate instead of going the mandatory route.”

Pressure on the global supply chain will impact order lead times, affecting operations such as Altron Managed Services, Altron Systems Integration, Netstar and Altron FinTech. "This may have an adverse impact on increasing inventory levels, and management will mitigate this risk accordingly."

Looking ahead, Nyati said that the Altron 2.0 strategy would continue to be embedded for the remainder of the financial year. "We are positive about the Group’s growth in automation, cloud computing, data and security aligned with the segments in which we operate.

"We are focused on driving high annuity revenue, ownership of intellectual property and capital light operations. The finalisation of the LawTrust acquisition will allow us to focus on driving security services in jurisdictions outside of South Africa. The Board is considering potential acquisitions which are aligned to the own platform and digital transformation segments."

Altron’s board decided to disinvest from Altron Rest of Africa operations and at the end of H1, Altron will retain a presence in Africa through a partnership operating model.

Nyati said key focus areas for the second half of the year include the acceleration of profitable revenue growth for Altron Systems Integration, and building and qualifying the acquisition pipeline, while disposing of Altron Document Solutions and Altron Arrow.