After a tough two years, JSE-listed Allied Electronics (Altron) has marked the conclusion of its turnaround phase, with growth on the cards as it tracks a year ahead of its five-year strategy plan.
During the year-end presentation of its 2019 financial results, the group announced it was in sight of its goal of doubling earnings before interest, taxes, depreciation and amortisation (Ebitda) by year-end 2022.
“We are two years into the One Altron strategy five-year roadmap and have already surpassed our set key milestones, putting us ahead of plan by almost a year,” says Altron group CEO Mteto Nyati.
Two years ago, and four months into his then new role, Nyati completed an intensive review of Altron’s strategy and unpacked the new five-year structured roadmap, founded on a One Altron principle.
Strategic Pillars The revised strategy, themed ‘Positioning for Growth’, was based on the company’s four standing strategic pillars of revenue growth, profitability improvement, customer experience, transformation and employee excellence, and synergised within the company’s four focus areas – healthcare, financial inclusion, safety and security, and training and development.
“We have successfully completed the turnaround of Altron through our continued focus on [the] four priorities driving the One Altron strategy,” Nyati says, adding that the group is now entering its growth phase.
The company continues to deliver on its stated goal of consistent double-digit growth at Ebitda level, despite the ongoing challenging economy.
The technology company achieved a 30% increase in normalised revenue to R19.2-billion – a 24% increase in normalised Ebitda to R1.6-billion from its continuing operations and a 50% increase in headline earnings per share from continuing operations to 179c during the year ended February 28, 2019.
Despite a tough economic climate, Altron’s South African operations posted 15% growth in Ebitda, with investments into the rest of Africa resulting in Ebitda growth of 41%.
The group’s European operations recorded more than 80% Ebitda growth, with Bytes UK Altron’s star performer recording growth of 79%, followed by Netstar’s 19% growth and Altron Bytes Secure Transaction Solutions’ 14% growth during the year ended February.
This followed a year of recovery in the 2018 financial year, which had also seen the company achieve double-digit growth targets in revenue, Ebitda and earnings.
“Overall, we want to continue to grow organically but will keep looking for bolt-on acquisitions in the areas of data analytics, cloud and the Internet of Things – these remain growth drivers for the company,” Nyati says.
In the financial year under review, Altron secured “key wins” in both the private and public sectors.
These included, among others, the Gauteng Broadband Network Phase 2 contract, secured by Altron Nexus; the Gautrain Management Agency tender, awarded to Altron CyberTech; an FNB data and analytics contract, obtained by Altron Bytes Systems Integration; and a three-year contract, awarded to Netstar by the eThekwini municipality for the supply, integration and maintenance of a vehicle tracking technology solution for 7 000 vehicles.
Fleet ManagementBytes UK was also awarded a five-year, £155-million (R2.7-billion) Windows 10 contract by the UK National Health Service, while Netstar Australia Group was awarded a fleet management contract by Ausgrid.
During the year under review, Altron’s free cash flow increased significantly to R425-million and the group’s debt was reduced to R1.6-billion by February, from R1.94-billion last year.
A dividend of 72c per share was declared for the year under review.
Despite the muted economic conditions in the jurisdictions in which the group operates, Altron remains well positioned for continued growth to accelerate the implementation of its One Altron strategy.
“We continue to focus on organic growth, supplemented by selective acquisitions, as well as cross- and upselling in Altron’s top accounts in South Africa; extending our Microsoft capabilities to include Licensing Solutions Provider status; driving margin expansion in Altron BSI; increasing focus on the automotive sector within Netstar South Africa; solidifying our Netstar operation in India; and committing to double-digit Ebitda growth,” Nyati concludes.