Press Release

Altron's relentless focus on executing a purpose-driven strategy delivers strong growth in profitability from core operations

20 May, 2024

Altron, the proudly South African-founded platform and IT services company, has achieved impressive results for the full year. Under Altron Group CEO Werner Kapp's leadership, the organisation has cultivated an unwavering customer focus driven by a growth-oriented mindset.

Altron’s successful delivery of profit improvement strategies in Netstar and Altron Systems Integration, together with the adoption of effective target operating models across the Group, led to a 46% increase in net profit after tax and a 46% increase in earnings per share from continuing operations. Due to the strong results and improved cash generation, the dividend payout ratio was raised earlier this financial year to a minimum of 50% of headline earnings from continuing operations, leading to a 74% increase in the final dividend to 33 cents per share.
Effective 1 July 2023, Altron Managed Solutions sold the ATM Business. Results excluding the ATM Business2 are presented to compare performances on a like-for-like basis.

Robust Performance From Continuing Operations

Strategy execution driving strong results from core continuing operations.
Revenue up 8% (excluding the ATM Business2 sold).
EBITDA up 27% (excluding the ATM Business2 sold).
Operating Profit up 33% (excluding the ATM Business2 sold).
HEPS increased 36% to 116 cents.
EPS increased 46% to 108 cents.

Table-1

Group Highlights:

Altron Document Solutions and Altron Nexus are considered non-core and are accounted for as discontinued operations with disposal processes underway. The Altron Group financial results were materially affected by non-cash adjustments, including provisions and impairments (collectively referred to as the “Non-Cash Adjustments”) in these discontinued operations, raised in the first half of FY24. These adjustments included R334 million relating to the restructuring of Altron Nexus due to the loss of the Gauteng Broadband Network contract and the City of Tshwane exposure, and R95 million in respect of Altron Document Solutions. A goodwill impairment was raised at the Altron Group level of R33 million in relation to Altron Nexus.

Revenue down (5%) to R10.3 billion (+3% growth excluding the ATM Business2 sold). - EBITDA3 declined (6%) to R985 million (+1% growth excluding the ATM Business2 sold). - Operating Profit3 down (39%) to R210 million ((30%) decline excluding the ATM Business2 sold).
HEPS decreased to (25) cents, from 29 cents per share.
Loss per share of (43) cents, from (1) cents per share.
Final dividend per share increased 74% to 33 cents.
Cash generated from operations grew 25% to R1.6 billion.
Net debt reduced by (44%) to R313 million.

Altron Group CEO Werner Kapp said,

"Our purpose is to use technology to transform today into a simpler, safer and smarter tomorrow. We are guided by a clear strategy to become the leading platform and IT services business in our chosen markets. Our execution of this strategy resulted in a pleasing 36% increase in headline earnings per share from our continuing operations. Increased cash generation supported by a strong balance sheet allowed us to increase our final dividend per share by 74%. As a purpose-driven, customer-obsessed organisation, we are poised for growth to transform our aspirations into achievements as we continue to partner with our customers on their digital transformation journey.”

Key operational highlights

Annuity revenue excluding ATM Business2 increased 9% and now comprises 61% of total revenue. - Netstar grew subscribers 27% to over 1.7 million subscribers, with 2.3 million connected devices. This growth reflects industry-leading rates and a notable market share gain, with enterprise customers increasing 33% and consumer customers increasing 14%. Net subscriber additions improved 60% to c. 370,000.
Netstar surpassed the R2 billion milestone, with revenue growing 12% to R2.1 billion, and EBITDA growing 27% to R797 million.
Altron FinTech delivered another robust performance with EBITDA increasing 22% to R330 million. - The profit improvement strategy in Altron Systems Integration delivered over 100% improvement in EBITDA to R93 million, from R5 million.
Altron Karabina delivered an increase in EBITDA of 14% to R49 million underpinned by higher margins.
Altron Arrow delivered strong revenue growth of 18% to R802 million and EBITDA growth of 33% to R69 million, supported by strong demand and a continued focus on operational efficiencies.
Altron invested R463 million in growth capital expenditure during the period, predominantly focussed on Netstar, Altron FinTech and in our systems and platforms and to improve user experience.

Commenting on the outlook, Kapp added,

“Looking ahead, as we navigate through a challenging economic landscape exacerbated by political uncertainty, we remain committed to achieving our medium-term guidance. By 2026, we are targeting an Operating Profit margin of +19% for our platforms segment and +7% for our IT services segment. Additionally, we are targeting Operating Profit of R1.1 billion from continuing operations. Our strategic positioning within the platform and IT services sectors, supported by our proprietary IP solutions, enables us to identify opportunities and solve real-world problems for our customers. We remain dedicated to enhancing long-term shareholder value through the execution of our strategy, disciplined capital management, strategic investments, and a strong focus on sustainable, profitable growth.”

Werner Kapp on Altron's new strategy implementation.

The full SENS announcement is available on the Company’s website www.altron.com.

Altron Group CEO Werner Kapp invites all who would like to attend the Altron Group’s 2024 annual results presentation webcast at 9:30am today, to please register via the following link: https://themediaframe.com/mediaframe/webcast.html?webcastid=h6nuuWHt

Notes
1. Continuing operations excludes Altron Documents Solutions, Altron Nexus and Altron Rest of Africa. 2. Adjusted for the impact of the sale of the ATM Business, effective 1 July 2023 to show a like-for-like comparison of results. The comparative period was adjusted to ensure consistency across both periods.
3. Capital Items excluded from EBITDA and Operating Profit, comprise loss and costs on disposals, impairments, capital rental devices written off, and lease modifications and terminations where applicable.
4. Comparative information has been restated for:
• The classification of Altron Nexus as a discontinued operation, and
• The net profit or loss arising from foreign exchange exposures relating to cash and cash equivalents was previously disclosed within Operating Profit and EBITDA. The net impact of these exposures has been reclassified and disclosed after Operating Profit as a separate line item on the statement of comprehensive income due to its nature.

Johannesburg
20 May 2024
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