Altron profit soars on key contract wins

Altron on Thursday (9 May), reported strong revenue growth for the year ended February 2019, despite the ongoing challenging economy.

Diluted headline earnings per share from total operations climbed 58% 191 cents per share, while normalised HEPS from continuing operations was up 36%

The group delivered a 36% increase in operating profit, to R1.015 billion, from R745 million before.

Salient points:

  • Revenue from continuing operations increased by 7% to R15.7 billion.
  • EBITDA from continuing operations increased by 30% to R1.6 billion.
  • HEPS from continuing operations increased by 50% to 179 cents.
  • ROCE from continuing operations at 20%.
  • Final dividend declared of 44 cents per share, with total dividend for the year of 72 cents per share.

“In the financial year under review, we secured key wins in both the private and public sector,” Altron said. These included, among others, the Gauteng Broadband Network Phase 2 contract, secured by Altron Nexus.

“Altron CyberTech was  awarded the Gautrain management agency tender, Altron Bytes Systems Integration was awarded a data and analytics contract by FNB, and Netstar won a three-year contract from the eThekwini Municipality for the supply, integration and maintenance of a vehicle tracking technology solution for 7,000 vehicles.

The disposal of the remaining material non-core businesses and assets of the group has been successfully concluded, the group said.

Bytes UK grew revenue by 5% and EBITDA by 79% to R368 million. The performance of the business was positively impacted by the inclusion of Phoenix Software for the full year -acquired in the second half of the previous financial year. The business is set to grow further, following the five-year, GBP155 million (circa R2.7 billion) NHS contract, secured during the year, it said.

Altron Nexus produced positive results for the year, with revenue largely in line with the prior year, while growing EBITDA by 54% to R123 million, Altron said.

Fintech

Altron Bytes Secure Transaction Solutions grew revenue by 6% and EBITDA by 14% to R289 million, driven by further improved EBITDA margins of 25% and a number of new contracts secured during the year, the group said.

Smart IoT

Netstar, inclusive of its Australian operations, showed continued improvements in its performance, it said. The business reported a 10% increase in revenue and 19% improvement in EBITDA to R582 million against the prior year.

“Netstar further improved the growth in its subscriber base, particularly in stolen vehicle recovery (SVR), with churn and retentions under close control, improving by 6%.

“During the second half of the year, Netstar re-evaluated its ground recovery suppliers in SVR. Through a formal process, managed by Deloitte, Netstar effected a change in its service providers in this space to ensure enhanced services, while having a lower cost of delivery going into FY20.”

Managed service

Altron Bytes Document Solutions saw revenue improve by 11% and EBITDA increase by 10% to R77 million compared to the prior year. “This is testament to the successful efforts by the business of gaining market share in a declining market,” Altron said.

“Strategically the business remains focused on selected growth areas, including managed print services and the high-end production environment. BDS’ growth strategy of driving cross-selling of Altron’s various offerings into its extensive base of more than 4,500 customers remains on course.”

Altron Bytes Managed Solutions reported revenue and EBITDA increase of 14% and 5% year-on-year, respectively. “In a highly competitive market, BMS is focused on quality of service while closely managing its cost base and maintaining its drive to enhance annuity income.

“Further improvement in the performance of BMS are being driven by the ongoing diversification of its offerings, including a focus on growing into retail and end-user computing,” Altron said.

Shares in the group have grown in-line with the group’s financial recovery over the past year.


Read: Altron to get a new 29,000sqm Sandton headquarters

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Altron profit soars on key contract wins