Altron shares rallied more than 20% on Thursday after the technology services group reported solid interim results despite the effects of the Covid-19 pandemic and said it was proceeding with plans to list its Bytes UK business in London.
Bytes UK, which Altron said it plans to list on the London Stock Exchange, with a secondary listing on the JSE, reported a 51% improvement in earnings before interest, tax, depreciation and amortisation (Ebitda), or 27 % on a constant-currency basis.
Group revenue for the six months ended 31 August 2020 rose by 7%, despite the Covid-19 lockdown being imposed through most of the reporting period. Cash generated from operations rose by 75% to R294-million, while headline earnings per share slipped by 8% to 67c.
However, for continuing operations, Heps rose 27% to 85c. Altron declared an interim dividend per share – an increasingly rare feat in the current economic environment – of 33c, up from 29c in the same period a year ago.
During the six-month period, Altron decided to mark several operating subsidiaries as held for sale as they are no longer core to its growth strategy in the ICT space.
“These operations include our Document and People Solutions businesses as well as the Altron Arrow electronic component distribution operation. These businesses are exciting businesses in their own right, but they do not fit the refined vision of a future Altron, which speaks to a highly differentiated technology solutions provider,” it said.
Retrenchments
Group CEO Mteto Nyati said Altron let go of 600 employees in South Africa during the reporting period over concerns about the impact of the lockdown. However, its operations “proved to be highly resilient during the reporting period”.
“This is evident in overall Ebitda being slightly up (+1%) from the prior year, assisted by positive currency translation impacts. However, within our various operations, some benefited from the pandemic, while others were negatively impacted.”
Bytes UK was a net beneficiary of an elevated need for remote connectivity. Altron Karabina also benefited from accelerated cloud adoption as customers transitioned from on-premise data centres to cloud hosting and computing. Altron Security assisted customers in addressing the increased security vulnerabilities as a result of elevated remote working.
“With a peak protracted economic environment and a record low in business confidence, we have seen major capex expenditure projects placed on hold or delayed, which widely impacted hardware sales across the group. A number of our operations were unfortunately negatively impacted during the period under review,” Nyati said.
“The global and local economic environments deteriorated significantly during the reporting period and Altron took painful decisions to ensure future sustainability and limit the impact of revenue reduction. Consequently, we can look forward to a very different second half, which will yield the benefits of our extensive cost reduction initiatives and less restrictive lockdown levels.”
Nyati said Altron’s focus is now on expanding its security offerings; deepening its relationships with Microsoft and Amazon Web Services in sub-Saharan Africa to “capture opportunities in the fast-growing cloud computing space”; scaling up high-margin IP platforms in healthtech and fintech as well as vehicle telematics in Netstar; and growing its custom application development capabilities to assist customers in large-scale ERP deployments. – © 2020 NewsCentral Media