JSE-listed Altron expects to deliver higher normalised earnings for the year ended February 28, 2023.

The group’s normalised earnings before interest, taxes, depreciation and amortisation (Ebitda) from continuing operations are expected to be between 1% and 21% higher, from R1.19-billion in 2022 to between R1.21-billion and R1.45-billion.

Actual Ebitda is predicted to be between 0% and 10% lower from R1.1-billion in 2022 to between R990-million and R1.1-billion in 2023.

Normalising for one-off adjustments, Ebitda across continuing operations delivered robust growth year-on-year, the company said in a trading update on Monday.

Altron’s earnings per share (EPS) for continuing operations on a normalised basis are expected to be 70% to 88% higher, at between 73c and 81c in 2023, from the reported 43c in 2022.

Headline earnings per share (HEPS) are set to be 8% to 28% higher, at 81c to 96c a share in the financial year ended February 28, 2023, from 75c in 2022.

The group’s actual EPS will be 86% to 100% higher, at between a loss of 4c and 0c from a loss of 28c in 2022, while HEPS is expected to contract 14% to 32% from 37c in 2023 to between 25c and 32c in 2023.

“Notwithstanding the increasingly tough trading conditions, the group’s continuing operations have pleasingly delivered robust double-digit revenue growth year-on-year, evidencing Altron’s resilient high annuity base,” Altron’s trading update notes.

Revenue on a normalised basis is set to be between R9.04-billion and R9.83-billion, a 14% to 24% increase on the R7.93-billion achieved in 2022.

Altron expects to report actual revenue of between R10.38-billion and R11.33-billion, which is 9% to 19% higher than the R9.52-billion revenue posted in 2022.

“The group continues to remain strongly cash generative and is sufficiently capitalised, providing a solid platform to execute the immediate strategic initiatives,” Altron said in the trading update, published on Monday.

The group’s results for the year ended February 28, 2023, were positively impacted by several factors, including positive momentum from Altron Karabina’s profit improvement strategy, an improvement in operating leverage; improved hardware sales in Altron FinTech, Altron Managed Solutions (AMS) and Altron Arrow as product demand intensified; a strong performance by Altron Security which was underpinned by increased demand and the acquisition of LawTrust; and disciplined cost management and process efficiencies which produced solid performance within AMS.

However, the variance between the increase in revenue growth and the lower Ebitda growth is largely owing to margin pressures in two of Altron’s largest revenue contributing businesses, Netstar and Altron Systems Integration (ASI), which are currently the subject of accelerated performance improvement strategies.

“Both businesses are implementing their accelerated performance improvement strategies, which are gaining positive momentum in the 2024 financial year,” says Altron.

Several other one-off non-cash adjustments exacerbated the negative impact on group earnings.

The group’s digital transformation segment achieved double-digit growth in both revenue and Ebitda during the year under review, supported by exceptional growth from Altron Security, which more than doubled both revenue and Ebitda, boosted by the inclusion of acquisition LawTrust for the full 12 months.

Altron Karabina continues to deliver robust growth in revenue and double-digit growth in Ebitda since its profit improvement strategy which started in the 2022 financial year.

ASI continued to face challenges, with double-digit growth in revenue, but a disappointing Ebitda performance for the year.

Altron’s own platforms segment also achieved double-digit growth in revenue and single-digit growth in Ebitda, impacted by margin pressures experienced in Netstar, which continued to face headwinds.

FinTech, meanwhile, achieved double-digit growth in both revenue and Ebitda, while Altron HealthTech delivered single-digit growth in both revenue and Ebitda.

The managed services segment reported double-digit revenue growth; however, Ebitda was negatively impacted by one-off provisions.

AMS delivered single-digit growth in revenue and strong double-digit growth in Ebitda.

The Ebitda from Nexus, which achieved double-digit growth in revenue, was negatively impacted by the provisions raised for City of Tshwane and Gauteng Broadband Network Phase 2 inventory. Normalising for the impact of these two provisions, the core Nexus business achieved over 100% growth in Ebitda.

Altron Arrow continues to outperform expectations against prior years, achieving double-digit growth in revenue and more than doubling Ebitda.

Altron expects to publish the results for its 2023 financial year on May 15.