JSE-listed technology group Altron said on Wednesday that profit improvement strategies are starting to show meaningful benefits, particularly in Netstar and Altron Systems Integration, the largest businesses in the group.
The purpose of the reviews on continuing operations was to ensure each operation is aligned to the group’s
new strategy and has performance optimisation plans in place to grow revenue and improve operating
leverage.
“Pursuant to these business reviews, targeted operating models are being executed in each
operation, with early leading indicators highlighting strong year-to-date performance, with all operations on
track to achieve their growth objectives,” said Altron.
Altron added that Netstar’s profit improvement strategy is progressing well, with benefits already flowing from enhanced operational efficiencies and growing Software as a Service.
“The conversion rates on pre-fitments have increased from 32% at Year End to 63%, and the fulfillment rate on contracts has improved to 93% from 72% at Year End. Churn has decreased from 21% at Year End to the targeted level of 17%.”
Altron added that Altron Systems Integration’s profit improvement strategy is also progressing well, with the team securing the largest outsourcing contract in its history.
“The Group continue to remain strongly cash generative and is sufficiently capitalised, providing a solid platform to execute its immediate strategic initiatives.”
As a result, Altron expect its headline earnings per share – South Africa’s true profit measure – from continuing operations to be between 43 cents and 51 cents, representing an increase of between 5% and 24%.
Discontinuing operations
Furthermore, following recent developments during the reporting period, Altron said it has undertaken material and decisive actions to streamline two non-core operations, which will adversely impact the overall financial performance.
The company said its results will be negatively impacted by provisions raised within two non-core subsidiaries namely, Altron Nexus of R336 million and Altron Document Solutions of R95 million, together with a provision raised at a group level of R33 million in relation to goodwill held on the group balance sheet for Altron Nexus.
Altron Nexus and Altron Document Solutions will be classified as held-for-sale and will be reported in
discontinued operations. These two entities contributed 21% to the group’s revenue at year end however
both subsidiaries were loss-making and therefore did not contribute to the group’s profit.
“As communicated at the Group’s results for the year-end 2023, we are actively focussed on ensuring once-
off adjustments do not recur.,”Werner Kapp, Altron’s CEO.
“Since joining the Group, I have worked with the management teams in scrutinising all operations to ensure they are strategically aligned and have performance optimisation plans in place.
“Unfortunately, this process together with recent market developments, has resulted in further provisions in Altron Nexus and Altron Document Solutions, which are accounted for in discontinuing operations.
“However, I am confident we are now at a point where we have a stable base for the Altron Group to grow from.
“The Group maintains a very healthy balance sheet, remains strongly cash generative and is committed to maintaining its dividend policy. Our continuing operations are delivering a strong year-to-date performance and I am looking forward to presenting our delivery against our strategy at the half- year results in October.”
