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- ICT group Altron grew revenue by double digits in its 2023 year, but earnings were under pressure from previous legal battles.
- The company has been forced to make a R134 million provision for its exposure to debts the City of Tshwane may be unable to pay.
- Altron says it's pushing ahead with its new 'customer centric' growth strategy, confident in its own innovation and demand for digitalisation among firms.
- For more financial news, go to the News24 Business front page.
ICT group Altron, the owner of vehicle tracker Netstar, has reported double-digit revenue growth for its 2023 year, saying it will press ahead with spending hundreds of millions of rands on its growth strategy, confident in demand for its services.
Group revenue rose 14% to R10.9 billion in the year to end February, though core profit fell 4% to about R1 billion, with the company hit by a need to provide for possible nonpayment on a previous controversial contract with the City of Tshwane.
Speaking at an investor presentation on Monday, CEO Werner Kapp said the company would pushing "customer obsession at every level of the organisation", with SA companies still scrambling to ditigalise in a world with billions of smart phones.
Valued at more than R3 billion on the JSE, Altron sells hardware and electronic products, but has been looking to shift to professional services, for example, by helping organisations plan for and implement their technology needs.
Kapp said on Monday that Altron had spent 88% of its R472 million on growth initiatives in its 2023 year, and was planning a similar ratio in 2024. The company was focusing on its top 40 customers for cross selling opportunities, had improved sales incentives for staff, and had put in place metrics to continuously measure customer satisfaction, part of the new growth focus.
However, it has raised a R134 million provision due to its exposure to the City of Tshwane after the Auditor General raised questions about whether the City remains a going concern, given material uncertainties in its 2022 financial statements. Kapp said it was a "conservative approach" from the group.
READ | AG flags 'material uncertainty' around Tshwane's ability to continue as going concern
Tshwane still owes Altron money following a protracted legal battle.
In 2015, the then ANC-controlled City of Tshwane awarded a contract of more than R1 billion for the installation of a municipal fibre broadband network, but months later the incoming DA city government stopped the contract after it alleged that due process was not followed in awarding it. The city then turned to the courts to try and set the contract side.
In May 2021 the Constitutional Court ruled in favour of Altron, saying its broadband agreement with the metro was valid and enforceable, and allowing it to collect R309 million in debt associated with the contract.
The group said the provision "is raised for Altron’s accounting purposes and does not constitute any waiver, nor does it mean that Altron is abandoning its rights and claim."
Altron upped its dividend in 2023 to 35c per share, from 30c in 2022, saying on Monday management expects the ongoing challenges facing the industry including load shedding, inflationary and currency pressures to continue to put pressure on Altron and its customers’ businesses
Shares in Altron were up almost 3% on Monday morning, but have fallen more than 9% over the past one year. Click here for details of Altron's shares as well as other info.
