Independent Online

Saturday, December 2, 2023

View 0 recent articles pushed to you.Like us on FacebookFollow us on TwitterView weather by locationView market indicators

Altron expects annual earnings growth to be blunted by once-off impairments

Netstar continued to face the headwinds, and while revenue increased by double-digits, Ebitda was flat. File photo

Netstar continued to face the headwinds, and while revenue increased by double-digits, Ebitda was flat. File photo

Published Apr 18, 2023


Altron group’s operations generated double digit turnover growth in the year to February 28, but headline earnings a share growth was expected to be slower due to once-off impairments.

The share price slipped 4.13% to R8.82 yesterday afternoon.

The IT group said in an operational update yesterday – the results are expected to be released on May 15 – that the good results were achieved in spite of increasingly challenging trading conditions.

Revenue was expected to be between 14-18% higher, while headline earnings per share was expected to be 8-28% higher at 81-96 cents per share. Ebitda was expected to increase 1-21% to between R1.21 billion and R1.45bn.

The difference between the lower Evitda growth and revenue growth was due mainly to margin pressures at two of Altron’s largest businesses, Netstar and Altron Systems Integration.

The results were positively impacted by Altron Karabina’s profit improvement strategy and improved hardware sales in Altron FinTech, Altron Managed Solutions AMS and Altron Arrow.

Altron Security delivered a strong performance, underpinned by increased demand and the acquisition of LawTrust, while better efficiencies produced a solid performance within AMS.

Ebitda was normalised for once-off adjustments that included a R134 million provision for Altron Nexus, after the Auditor General identified material uncertainties in the City of Tshwane’s 2022 financial statements.

A Constitutional Court ruling found the contract binding in May 2021, the City of Tshwane embarked on a Municipal Finance Management Act (MFMA) process in October 2022, while arbitration began on April 5 this year, in parallel with the MFMA process.

Another adjustment to negatively affect earnings was a R31 million impairment in Nexus after the extended Gauteng Broadband Network contract, phase 2 came to an end on March 8.

“The rollout experienced delays outside of Altron’s control, resulting in fewer sites being deployed than initially scoped for in the original tender awarded,” the group said, adding that inventory related to this project resulted in the impairment.

Another R74m inventory impairment and R30m on outstanding receivables was provisioned after the sale of Altron Document Solutions to Bi-Africa Investment Holdings fell through.

The Digital Transformation segment achieved double-digit growth in revenue and Ebitda. Altron Security more than doubled revenue and Ebitda, boosted by the LawTrust acquisition for the full 12 months.

Excluding LawTrust, the operation still delivered double-digit organic growth in Ebitda by growing its customer base and cost controls.

Altron Security experienced increased demand and was well positioned to solve cyber security threats, which were front and centre for Altron’s clients, the group said.

Altron Karabina continued to deliver robust growth in revenue and double-digit growth in EBITA since its profit improvement strategy, which started in the 2022 financial year.

Growth in revenue was from gaining market share in the licensing business unit, which grew revenues by over 50%. Growth in Ebitda was supported by a focus on costs.

ASI continued to face challenges, with double-digit growth in revenue but a disappointing Ebitda performance for the year.

The Own Platforms segment saw double-digit growth in revenue and single-digit growth in Ebitda.

Netstar continued to face the headwinds, and while revenue increased by double-digits, Ebitda was flat.

FinTech saw double-digit growth in both revenue and Ebitda. Altron HealthTech delivered single-digit growth in both revenue and Ebitda.

The Managed Services segment achieved double-digit revenue growth, but Ebitda was impacted by once-off provisions.

AMS delivered single-digit growth in revenue and strong double-digit growth in Ebitda.

Nexus saw double-digit growth in revenue, but Ebitda was hurt by the provisions. Altron Arrow continues to outperform expectations, the group said.