Altron to pursue acquisitions - TechCentral

Altron to pursue acquisitions

Mteto Nyati

JSE-listed Altron, now under the leadership of former MTN South Africa CEO Mteto Nyati, will pursue acquisitions to bolster its capability in four areas Nyati and his management team have identified as key to the technology group’s future growth.

Nyati, speaking to TechCentral on Thursday following the publication of Altron’s financial results for the year ended 28 February 2017, said he will pursue deals that will plug any gaps that exist in the four areas that have been identified as strategic focus areas for the group. These are safety & security, healthcare management, financial services and skills development.

He said Altron has strong intellectual property in all of these areas, and where there are gaps in the portfolio, the group will consider strategic acquisitions. These will also be the areas where Altron directs the bulk of its future research and development spend, he added.

Altron’s core operations delivered a “credible performance” in the year ended 28 February, despite the weak macroeconomic conditions, said Nyati, who joined Altron as CEO on 3 April, replacing long-serving CEO Robbie Venter.

The group, which has transitioned from a family-run and -controlled business in which the Venter family are minority shareholders (founder Bill Venter has stepped down as chairman recently), was impacted by “challenging trading conditions”, but managed to substantially reduce total losses.

Headline earnings per share swung to a profit of 71c (from a loss of R1,45 before), while basic earnings per share were reduced to a loss of 54c (from a loss of R2,59 before). Earnings before interest, tax, depreciation and amortisation rose by 123% to R840m.

Most of this sharp operational performance, however, came from the disposal of loss-making and legacy non-core assets, mainly in the Powertech stable, rather than from any large improvement in operating performance in the group’s core assets in the technology space.

For total operations, Altron’s revenue declined by 26% to R19,7bn.

“Our core businesses delivered a credible performance in a challenging economic environment, with the telecommunications operations displaying growth on the back of strategic contract wins in the public sector, most notably the City of Tshwane municipal broadband network, the eThekwini municipality digital radio network for municipal public safety and utility services, and the Passenger Rail Agency of South Africa signalling and communication network,” Nyati said in a statement alongside the results.

“The performance of the non-core assets, which predominantly operate in the manufacturing sector, were much improved from the prior year, but remain loss making and traded below expectations.”

A range of businesses remain held as non-core assets for sale, including Powertech and Altech UEC, the set-top box manufacturing business.

However, there are positive signs in both of these businesses, with Powertech winning significant orders from Eskom for transformers subsequent to the year-end and Altech UEC being well positioned to benefit from government’s reversal on encryption for digital terrestrial television. These businesses will still be sold, Nyati said. The improved prospects, however, should help Altron sell the companies.

At 9.24am, shortly after markets opened, Altron’s share price was trading 0,9% higher at R10,10/share. The counter has added 68,6% in the past 12 months.  — © 2017 NewsCentral Media

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