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Altron delivers 100% hike in dividend as outgoing Nyati delivers solid annual results

Outgoing group CEO Mteto Nyati, presiding over his final set of results, said the company had delivered a solid performance even though the 2022 financial year was tough. | Itumeleng English

Outgoing group CEO Mteto Nyati, presiding over his final set of results, said the company had delivered a solid performance even though the 2022 financial year was tough. | Itumeleng English

Published May 17, 2022

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Shareholders in Altron yesterday received a 100 percent hike in the JSE-listed technology company’s dividend of 30c per share as it delivered robust annual results.

This as outgoing group CEO Mteto Nyati, presiding over his final set of results, said the company had delivered a solid performance even though the 2022 financial year was tough due to the sustained Covid-19 pandemic, a global shortage of electronic components and significant cutback on capex by large enterprise customers.

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In January, Altron announced that Nyati would be stepping down from the role as CEO when his 5-year term is completed at the end of next month.

At the time it said its Nomination Committee had started the process to identify and appoint a successor. In April, the firm said on an interim and acting basis only, the board was pleased to announce the appointment of Stewart van Graan as the executive chairperson and acting CEO of Altron effective from July 1 until September 30.

Announcing its financial results for the year to February 2022, the firm saw its headline earnings per share gaining 37.8 percent to 51c a share, while normalised headline earnings per share gained 82.9 percent to 75c a share.

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Its revenue grew 5.7 percent to R7.9 billion while operating income grew in the double digits at 34.2 percent to R498 million compared to the previous year.

Nyati said: “This performance was possible due to the resilience of our Own Platform segment characterised by high annuity revenue, the turnaround of Altron Karabina and Altron Managed Solutions, exceptional performance of Altron Arrow, and a strong focus on cost reduction at the centre.”

Own Platform reported revenue growth of 6.2 percent, up to R2.9bn, while operating income of R546m exceeded the prior year by 16.9 percent off the back of gains from Netstar, Altron FinTech and Altron HealthTech.

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Netstar’s revenue of R1.7bn was a 7.8 percent increase from the prior year. Supported by a strong performance in Australia, the South African business continued to stabilise operational issues that had placed pressure on its subscriber churn rates during the period. As a result, Netstar South Africa had seen consistent net subscriber growth since June 2021, Altron said.

Altron FinTech’s revenue of R854m rose 4.5 percent from the prior year, while operating income of R193m increased 43 percent.

“This profitability has been aided by adding two new insurance products, funeral cover and credit life, and short-term bridging financing for our customers in the microfinancing space,“ Altron said.

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Altron HealthTech grew revenue by 2.9 percent to R323m year-on-year. Altron said with the investment into its new platform, this unit would be able to capture the next generation of medical practitioners, which had been a challenge due to the current ageing technology and offerings.

Nyati said: “Our company is making good progress in setting up Altron 2.0 by disposing capital heavy and loss-making businesses and acquiring assets in high growth segments of the market.”

He added that as a result, Altron 2.0 targeted, among other metrics, high annuity revenue and a net debt to earnings before interest, taxes, depreciation, and amortisation ratio of less than one.

During the year under review, Altron said it had acquired digital security company LAWtrust to strengthen Altron Security and finalised the process of selling Altron Document Solutions to BiAfrica. This transaction was pending Competition Commission approval. It also sold the Altron People Solutions’ business process outsourcing unit to the ISON and Altron People Solutions’ learning solutions business to LRMG.

Other achievements as it moves towards successfully implementing Altron 2.0 included turning around Altron Karabina and Altron Managed Solutions, Altron Arrow becoming a half-a-billion-rand business, Altron Nexus collecting more than R900m in debt – mainly from the public sector amid the Covid-19 pandemic – and head office costs being reduced by R98m, it added.

Looking ahead, for the next year, Altron said it anticipated continued pressure on supply chain and pricing due to the global component shortage.

“However, the resilience of the Own Platform segment should carry through into the first half of the 2023 year, while Altron FinTech anticipates a strong performance to the start of the new financial year,” it said.

By 1.22 pm the share price was at R8.45, down 0.59 percent with the shares down 16.67 percent in the past five years.

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