Altron Reports Strong Growth with 49% EBITDA Increase & 60% Dividend Boost

Altron delivered another strong set of financial results for the six months ended 31 August 2024, increasing EBITDA from continuing operations by 49% and operating profit by over 100%. The Board declared an interim dividend of 40 cents per share, up 60%. These results were supported by an excellent performance from the Platforms segment, benefiting from the operating leverage as they added scale during the period.

Altron Document Solutions (“ADS”) was reclassified from a discontinued operation to a continuing operation during the period. Altron’s targeted guidance has been updated to accommodate the inclusion of ADS in continuing operations.

Performance highlights from continuing operations include:

• R4.9 billion revenue, down 2%, impacted by the sale of the ATM Business².
• R905 million EBITDA, up 49%.
• R477 million operating profit, up over 100%. 
• 79 cents HEPS, increased over 100%.
• 75 cents EPS, increased over 100%.
• Excluding ADS and the ATM Business², which management believes reflects the core performance most accurately, revenue grew 4%, EBITDA increased 23% and operating profit increased 29%, with HEPS up 50% and EPS up 84%.

Commenting on the results CEO Werner Kapp said, “I am pleased with our overall financial results, evidencing strong growth in profitability and a 60% increase in our interim dividend. The leverage in our platform businesses led to excellent segmental performance as we continued to add scale. Our customer-centric focus and higher margin annuity revenue mix, are laying a strong foundation for future performance.”

Group highlights, including discontinued operation Altron Nexus:

• Focused execution on strategy delivered strong results in comparison to H1 FY24, which was negatively impacted by provisions and impairments raised.
• R5.1 billion revenue, down 6%, impacted by the sale of ATM Business² and a decrease in Altron Nexus’ revenue
• R891 million EBITDA, up from R268 million.
• R463 million operating profit, improved from an operating loss of R118 million.
• 74 cents HEPS, increased over 100%.
• 70 cents EPS, increased over 100%.
• Interim dividend up 60% to 40 cents per share.

Key Business Highlights

• Netstar continued its growth trajectory, growing connected devices 26% to 2.4 million, and increasing subscribers by 21% to 1.9 million. This translated to a strong financial performance, with revenue growing 11%, EBITDA improving 34% and operating profit increasing 45%.
• Altron FinTech grew revenue 10%, EBITDA by 54% and operating profit by 63% driven by an increase in SME customers and the value of debit orders processed in the collections and payments business.
• Altron Document Solutions was reclassified as a continuing operation following a review of strategic options. ADS made a positive EBITDA contribution of R30 million, a turnaround from an EBITDA loss of R123 million last year.
• Altron invested R330 million in growth capital expenditure during the period, focused on Netstar, Altron FinTech and our systems and platforms.

Commenting on the outlook, Kapp said, “Altron continues to execute on its strategy to become the leading platform and IT services business in its chosen markets. Despite the tough economic conditions, we have demonstrated our resilience through our customer obsession and innovative solutions, high annuity income base, and focus on efficient execution. We remain on track to achieve our medium-term targets of +19% operating margin in our Platforms segment and +7% in our IT Services segment. With the inclusion of ADS in continuing operations, together with its successful profit improvement strategy, we have increased our operating profit target for continuing operations to R1.15 billion by FY26.”

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

An investor presentation will be hosted via webcast at 9:30am today. Registration can be accessed via the following link: https://78449.themediaframe.com/links/altron241104.html

Notes

1. Continuing operations include Netstar, Altron FinTech, Altron HealthTech, Altron Digital Business, Altron Security, ADS, Altron Arrow and excludes Altron Nexus.

2. The ATM Business of Altron Managed Solutions was sold effective 1 July 2023, with four months trading included in the comparative results.

3. ADS was previously reported as part of discontinued operations. For H1 FY25 ADS is reported as a continuing operation. H1 FY24 period has been restated for the classification of ADS as a continuing operation. The % changes have been calculated using the restated results.

4. In order to make comparisons more meaningful, continuing operations adjusted to exclude the ATM Business2 and exclude ADS have also been presented.

5. 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.

Johannesburg
04  November 2024

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