Allied Technologies : Altron TMT results show excellent growth

14 May 2014

Following the release of Altron's Year-End Results for the year ended 28 February 2014, Craig Venter, Group Executive: Altron TMT / Chief Executive Officer: Altech, said he was pleased with the solid performance of both Altech and Bytes under the Altron TMT banner.

"Both Altech and Bytes contributed handsomely to Altron TMT's results for the year and since the establishment of Altron TMT we have seen significant successes with new customers coming on board and the award of large tenders, such as the R1,2 billion Gauteng Broadband Network contract. We are certainly beginning to reap the benefits of the collective power of these two organisations and have produced a set of results that are significantly better than what we had originally anticipated," said Venter.

On a consolidated total operations level, Altron TMT increased revenue by 12% from R17.5 billion to R19.5 billion and normalised EBITDA by 16% from R1.3 billion to R1.5 billion. The normalised EBITDA margin improved from 7.4% to 7.7%. Normalised headline earnings improved 26% to R646 million.

"In the face of tough trading conditions, Altech's and Bytes' core businesses performed exceptionally well for the year ended February 2014, displaying stability and profitable growth as we continued to focus on an improvement in growth in our customer base; the quality and breadth of our products and services; and our financial fundamentals of working capital, capex and delivering operating profits," added Venter.

The creation of Altron TMT (Telecommunications, Multi-media and Information Technology) in August 2013 followed Altron's successful purchase of all the remaining shares in Altech that it did not already own and the subsequent delisting of Altech from the Johannesburg Stock Exchange (JSE) on 20 August 2013.

The acquisition of the Altech minority shareholders' shares in Altech enabled Altron to reorganise its TMT businesses in a more efficient way in order to increase revenue growth, enable effective business cross-sell and up-sell opportunities, and achieve cost savings.  Craig Venter was appointed as Group Executive: Altron TMT, while retaining his position as Chief Executive Officer: Altech.

"The creation of Altron TMT is the result of the increasing convergence that we see between the Telecommunications, Multi-media and Information Technology sectors and by bringing Altech and Bytes together, we are able to put forward the best possible combination of products, solutions and services to our customers," said Venter.

Altech increased revenue by 2% to R10.7 billion compared to the prior year and profitability recovered strongly with normalised EBITDA increasing by 16% to R890 million. Total Altech Group Operating Profit was R647 million and 18% up on the prior year.

Altech Netstar increased revenue by 3% and remained the largest profit contributor with an excellent Operating Profit contribution of R294 million and a 9% improvement on the prior year as a result of a number of important contract wins in the fleet management side of the business.  The business has launched several enhanced products into the market and the total subscriber base has grown to 580,503.

Altech Autopage achieved subscriber growth of just short of 5% at 1,037 million. As the only remaining Independent Service Provider, Altech Autopage is unique in that it is able to provide customers with differentiated network choice and offerings. The operation continues to investigate ways of diversifying its business from GSM to converged offerings and as part of Altron TMT is well positioned to integrate voice, data and multimedia services.

Altech Multimedia saw revenue increase by 48%. However, EBITDA was down by 6% as a result of the poor performance of Altech SetOne in Germany. Altech UEC South Africa performed exceptionally well during the year with increased sales and profitability due to digital migration in Africa (other than South Africa) and continued international diversification of its customer base. The Altech Multimedia order book currently stands at R1.1billion.

Altech Radio Holdings experienced good revenue growth as a result of Alcom Matomo commencing work on several large projects including the Gauteng Broadband Network.
EBITDA for the Altech Information Technology group increased by 29% with Altech NuPay and Altech Isis being key contributors to the profitability of this division. Post year-end, the remaining 50% minus one share of Altech NuPay was acquired which will enable Altron TMT to integrate its various transaction solutions businesses (namely Altech NuPay, parts of Altech Card Solutions and Bytes Healthcare Solutions).

Bytes reported a very pleasing 25% increase in revenue to R8.8 billion and a 12% increase in EBITDA to R595 million.  However, EBITDA margin declined from 7.6% to 6.8% on continued gross margin pressure.

Bytes Document Solutions (South Africa and UK) reported an 11% increase in revenue. Unfortunately challenging market conditions and the impact of the depreciation of the Rand on inputs costs relating to services saw a decrease of 12% in EBITDA.

Bytes Managed Solutions improved revenue by 35% and EBITDA by 17%, with higher sales of NCR Automated Teller Machines and Point of Sale devices. The business won a three year contract to the value of approximately R400m from Absa/Barclays for desktop support services in South Africa and a number of selected African countries.  This business continues to perform extremely well.

Bytes Systems Integration achieved exceptional growth in revenue of 35% with 9% EBITDA growth. A decline in EBITDA margins in this business is indicative of some of the margin pressure in the industry, particularly in commoditised products and services.  The hardware and network elements of this business have been integrated under the Telecommunications division of Altron TMT.

Bytes Healthcare Solutions performed well, increasing revenue by 7% and EBITDA by 12%. This business has been teamed up with the Altech payment solutions businesses under the Technology division of Altron TMT.

Bytes Universal Systems increased revenue by 12% and although EBITDA reduced by 8% due to margin pressures, the business performed particularly well in the public sector, an area which Bytes has specifically targeted for growth.

The Bytes UK operations (excluding Bytes Document Solutions UK) produced excellent results, increasing revenue by 35% and EBITDA by 57% in Rand terms. 

"The future of Altron TMT is premised on convergence and being the leading one-stop solutions provider for Telecommunications, Multi-media and Information Technology. As collaboration across the organisation gains momentum, fuelled by our focused, empowered and specialised business units, we are ideally positioned to take advantage of opportunities as they arise. I am confident that we will be able to generate increased revenues and produce bottom-line growth on a sustainable basis," concluded Venter.

Notes to Editors:
About Allied Technologies Limited
Allied Technologies Limited (Altech) is a leading South African multi-billion rand group involved in the design, development and convergence of Telecommunications, Multi-media systems and IT solutions.The company focuses on the Telecommunications, Multi-media and Information Technology (TMT) industries and employs more than 3 580 employees in South Africa and abroad.

About Bytes Technology Group
Bytes Technology Group (Bytes), a principal subsidiary of JSE-listed Altron, is a federation of leading IT companies. It operates in South Africa with operations in several other African countries, the United Kingdom and the Middle East.Sustainable and constant growth through strategic acquisitions has enabled the group to provide unlimited solutions to customers and become a leader in the IT field. It has a multitude of products and solutions, technical skills and specialised services that support enterprise-wide IT infrastructure and telecommunications in a wide range of industries.

About Allied Electronics Corporation Limited
Allied Electronics Corporation Limited (Altron) (www.altron.com), through its principal subsidiaries, Allied Technologies Limited (Altech), Bytes Technology Group (Pty) Ltd (Bytes) and Power Technologies (Pty) Ltd (Powertech), is invested in telecommunications, power electronics, multi-media and information technology. The Altron group employs more than 12 500 employees globally.

For further information please contact:
Shenanda Janse van Rensburg
Group Executive: Marketing, PR & Communications - Altech Head Office
Tel: +27 11 715 9031
Email: sjvrensburg@altech.co.za

www.altron.com
JSE code: ATN and ATNP