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ALTRON LIMITED - Operational Update and Trading Statement

Release Date: 26/02/2024 17:25
Code(s): AEL     PDF:  
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Operational Update and Trading Statement

(Registration number 1947/024583/06)
(Incorporated in the Republic of South Africa)
Share Code: AEL      ISIN: ZAE000191342
("Altron" or "Group")


In terms of the JSE Limited Listings Requirements, a listed company must publish a trading statement once
it is satisfied that a reasonable degree of certainty exists that its financial results for the period to be reported
on next, will differ by at least 20% from the reported financial results for the previous corresponding period.

Shareholders are referred to the SENS announcement released on 26 July 2023 and 13 November 2023,
highlighting that the results for the six months ended 31 August 2023 ("H1 FY24") were negatively impacted
by provisions and impairments totalling R462 million (collectively referred to as the "Non-Cash
Adjustments"). These Non-Cash Adjustments were raised within two discontinued operations namely, Altron
Nexus of R334 million and Altron Document Solutions of R95 million, together with an impairment raised at
a Group level of R33 million, in relation to goodwill held on the Group balance sheet for Altron Nexus.

The Non-Cash Adjustments raised in H1 FY24 negatively impacted the results for the twelve months ended
29 February 2024 ("Reporting Period") and have necessitated the release of a trading statement.

Accordingly, shareholders are hereby advised that a reasonable degree of certainty exists that the financial
results for the Reporting Period will differ by at least 20% from the comparative twelve months ended 28
February 2023 ("Comparative Period") as set out below, largely because of the Non-Cash Adjustments
raised in H1 FY24:

    •    Headline earnings per share ("HEPS") from Continuing Operations1 is estimated to be between 99
         cents and 105 cents, representing an increase of between 16% and 24% compared to HEPS from
         Continuing Operations of 85 cents2 reported for the Comparative Period;
    •    Group HEPS is estimated to be between (21) cents and (16) cents, compared to Group HEPS of
         29 cents reported for the Comparative Period, largely impacted by the Non-Cash Adjustments
         raised in H1 FY24;
    •    Earnings per share ("EPS") from Continuing Operations is estimated to be between 89 cents and
         101 cents, representing an increase of between 20% and 36% compared to EPS from Continuing
         Operations of 74 cents2 reported for the Comparative Period; and
    •    Group EPS is forecast to be at least (35) cents lower when compared to Group EPS of (1) cents
         reported for the Comparative Period, largely impacted by the Non-Cash Adjustments raised in H1

1.   Continuing operations excludes Altron Documents Solutions, Altron Nexus and Altron Rest of Africa ("Continuing Operations").
2.   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.
3.   Earnings before interest, taxation, depreciation, amortisation, capital items, equity accounted profits and foreign exchange
     gains and losses on cash and cash equivalents ("EBITDA").
4.   Operating profit before capital items ("Operating Profit").
5.   Capital Items excluded from EBITDA and Operating Profit, comprise loss and costs on disposals, impairments, capital rental
     devices written o?, and lease modifications and terminations where applicable.

Certain financial information presented in this announcement constitutes pro-forma financial information in terms of the JSE Listings
Requirements. The pro-forma financial information includes adjusting for the impact of the sale of businesses to show a like-for-like
comparison of results and is prepared for illustrative purposes only. The pro-forma financial information is the responsibility of the

Altron performs an annual fair-value evaluation of its defined benefit plan surplus, which will commence after its year-end. This may
necessitate an adjustment that could result in the financial results for the Reporting Period falling outside the outlined ranges above.
In this event, an updated trading statement will be issued.


Continuing operations

The Group's Continuing Operations are evidencing a strong year-to-date performance. Normalising for the
sale by Altron Managed Solutions of its ATM Hardware and Support Business (the "ATM Business"), which
was effective 1 July 2023, the Group's Continuing Operations are delivering year-to-date revenue growth,
with double-digit growth in EBITDA3,5 and Operating Profit4,5.

The effective implementation of the target operating models established in H1 FY24, is enabling the positive
momentum achieved in H1 FY24 to carry over into the second half of the fiscal year 2024 ("H2 FY24"), with
all operations on track to achieve their growth objectives.

Own Platforms

The Own Platforms segment is delivering a strong year-to-date performance, with Altron FinTech, Altron
HealthTech and more significantly, Netstar, all growing revenue, together with notable growth in EBITDA
and Operating Profit.

Netstar's performance into H2 FY24 is stronger than that of H1 FY24, reflecting the effectiveness of
strategic initiatives, operational enhancements, and market share growth. As at 31 January 2024, Netstar
surpassed the significant milestone of over 2 million connected devices, with subscribers growing to over
1.7 million, supported by strong double-digit growth in enterprise and consumer customers.
Netstar remains an exciting business within the Group. The launch of its new state-of-the-art Global Fleet
Bureau will unlock key opportunities in the Big Data space, further advancing the digitalisation of mobile
assets for its customers.

Digital Transformation

Enhanced operational efficiencies within Altron Karabina and Altron Systems Integration are supporting
robust performance within the Digital Transformation segment, with Altron Systems Integration experiencing
stronger performance into H2 FY24 compared to H1 FY24.

Managed Services

Post the reclassification of Altron Nexus as a discontinued operation, the Managed Services segment
consists only of the Altron Managed Solutions business.

Normalising for the sale of the ATM Business, the remaining Altron Managed Solutions business is to date
delivering a slightly stronger performance in H2 FY24 in comparison to H1 FY24, as it continues to focus
on driving top-line growth and delivering operational efficiencies.


Altron Arrow continues to outperform expectations against prior years. A reduction in operating costs and
streamlining of business processes, is leading to further operating leverage across the business.

Discontinued operations

Following developments during H1 FY24, the Group took decisive actions to streamline Altron Nexus and
Altron Document Solutions, two non-core operations. These actions adversely impacted the overall Group
financial performance, as detailed in H1 FY24 results. As a result, both Altron Nexus and Altron Document
Solutions will report an EBITDA and operating loss for the Reporting Period.

Both businesses were restructured and the management teams strengthened in H1 FY24. Profit
improvement strategies were implemented, to improve cash flow generation and return these businesses
to profitability.

The profit improvement strategy implemented within Altron Document Solutions is resulting in stronger
trading into H2 FY24 compared to H1 FY24, with the business generating a positive EBITDA and Operating
Profit in H2 FY24 to date.

Active disposal processes are currently underway. During the disposal processes, both businesses will
continue to be managed for value.
Capital structure and working capital

Working capital will be optimised in line with performance. Inventory levels have normalised within Netstar
and Altron Arrow, post the chip shortage and floods in Kwa-Zulu Natal, and accounts receivables remain
well managed.

Altron has made considerable progress on its strategic priorities and will maintain focus on growing revenue
and driving operating leverage to increase profitability. The Group remains highly cash-generative and
continues to degear. This supports its already strong balance sheet position and provides a solid platform
to execute its immediate strategic initiatives and deliver long-term value to shareholders.

The financial information on which this operational update and trading statement is based is the
responsibility of the directors of Altron and has not been reviewed or reported on by the Group's
independent external auditor. The Group's financial results for the Reported Period are expected to be
released on SENS on 20 May 2024.

26 February 2024
Investec Bank Limited

Date: 26-02-2024 05:25:00
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