JOHANNESBURG - JSE-listed Allied Electronics Corporation (Altron) said yesterday that it had returned to profitability in line with its turnaround strategy as it continued to divest in non-core assets, lowered its debt levels and reduced its exposure to the manufacturing sector.
For the year to the end of February, the technology group reported a 14percent increase in revenue from continuing operations to R14.7billion and a profit of R168million from all operations, compared with a loss of R302m last year.
The group said an interim dividend would be declared for the period to the end of August 31. It last paid a dividend in 2015.
Altron shares gained 2.46percent on the JSE yesterday to close at R14.14.
“We have made considerable progress in the continued divestment of non-core assets, lowering debt levels and reducing our exposure to the manufacturing sector. Of equal importance was turning the company into a streamlined organisation with the leaders of our business operations joining the Altron group executive committee,” the group said.
Last year, Altron’s subsidiary, Powertech Industries, disposed of its 100percent interest in the Auto X group for R324m, as well as 100percent of Webroy for R11m. This was followed by Power Technologies selling its 100percent equity interest in Powertech System Integrators for R30m.
Earnings before interest, tax, depreciation and amortisation (Ebitda) increased by 19percent to R1.1bn on a normalised and constant currency basis.
The normalised Ebitda margin in turn improved to 7.6percent compared with the prior period’s 7.3percent.
The group said organic Ebitda growth was 13.3percent, while the inclusion of Phoenix Software in the second half of the year delivered acquisitive growth of 5.5percent.
However, the overall net debt of R1.9bn remained constant compared with last year.
The group has appointed new managing directors in a number of its core businesses, including Bytes Systems Integration, Bytes Managed Solutions and Altech Netstar to drive the restructuring of these operations.
“We created a much leaner head office structure with 36percent fewer employees, which has significantly reduced our corporate cost base,” the group added.
In the continuing operations, ICT Operations reported 15percent growth in revenue, while Bytes UK grew its revenue by 49percent in local currency. Bytes Secure Transaction Solutions increased revenue by 8percent and Altech Radio Holdings has seen its revenue improving by 2percent.
The discontinued operations, which include Altech UEC, saw its revenue declining by 20percent during the year.
The group said it expected to finalise the disposal of the three remaining non-core assets within the current year.
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said Altron’s results were complicated by restructuring costs, acquisitions made during the year, currency movement and assets earmarked for disposal.
“What they have disclosed as 'normalised' numbers strip out most of those items, but some of the items are likely to continue to affect results in 2019, as it is taking longer to exit the remaining businesses earmarked for sale,” Takaendesa said.
“The company has done well to stabilise the business by selling weaker operations to reduce debt and improving the independence of the board.
"The market will be watching closely as they move to the second stage of their turnaround strategy, which they have termed the growth-delivery stage. The results are, therefore, quite encouraging,” Takaendesa said.