On the back of a strong set of financial results for the year ended 28 February 2018, technology group Altron has said it plans to resume dividend payments from its next set of interim results, due after August.
It will be the first time in three years that the group has paid a dividend to shareholders and a sign that the turnaround of the business is taking root under former MTN South Africa CEO Mteto Nyati, who was appointed a year ago to lead Altron, replacing Robbie Venter.
“The board has considered its dividend policy and intends adopting a 2.5x cover going forward. An interim dividend will be declared for the period ending 31 August 2018,” it said in notes accompanying its full-year results.
At the same time, the group has said it plans to pursue acquisitions in South Africa in four areas, namely data analytics, cloud computing, information security and the Internet of things, Nyati said in an interview with TechCentral on Thursday morning before markets opened in Johannesburg.
Over the past three years, Altron, which found itself in difficulty, not least because of a growing mountain of debt, has been steadily disposing of non-core operations – mainly its old industrial manufacturing businesses – and repositioning itself in the ICT space.
Nyati said he expects all non-core assets, including the remaining Powertech businesses as well as Altech UEC, to be disposed of in the current financial year. A plan to sell Altech UEC in the 2018 financial year fell through, but Altron is now engaged with two potential buyers for the set-top box manufacturer. The sale of the remaining Powertech assets will be concluded in the coming weeks.
“We have made considerable progress in the continued divestment of non-core assets, lowering debt levels and reducing our exposure to the manufacturing sector,” the group said. “Of equal importance was turning the company into a streamlined organisation with the leaders of our business operations joining the Altron group executive committee.”
It has reduced the size of its head office, with 36% fewer employees, which has “significantly reduced” the corporate cost base.
Headline earnings
Revenue from continuing operations increased by 14% to R14.7bn, while Ebitda – a measure of operating performance – rose by 19% to R1.1bn. Headline earnings per share from these operations also increased by 19%, to R1.35.
Net debt remained high at R1.9bn, though with the disposals currently taking place, this number will be reduced to about R1.5bn, Nyati said. In the longer term, he said he’d like net debt to be close to R1.1bn to R1.2bn, though it won’t be rigid about this number if it means passing up acquisition opportunities. Cash generated from operations totalled R1.2bn for the year. Net working capital increased by R298m.
Bytes UK was a standout performer, growing revenue by 49% in local currency and Ebitda by 29%. That business recently won a five-year, R2.5bn IT modernisation contract with the UK’s National Health Service. Another strong performer was Altech Netstar. Nyati said there is “no reason” Netstar shouldn’t be the number one player in its market, and he wants the team to focus on overtaking rival Cartrack into first place.
On a normalised basis, the South African ICT operations saw a 3% decrease in revenue to R6.9bn but achieved an 8% increase in Ebitda to R629m, with the Ebitda margin improving to 9% from 8% in the prior year. The revenue decline was mostly in Bytes Managed Solutions due to a lack of spend from the financial sector – mainly poor sales of automated teller machines. — © 2018 NewsCentral Media
