JSE-listed Allied Electronics (Altron) has emerged from what CEO Mteto Nyati says was the most difficult year he has encountered to date.

During the year ended February 28, 2021, Altron reported a decline in revenue and a double-digit contraction in headline earnings per share (HEPS) for the first time in four years.

“There is no question that this has been the most difficult and challenging year I have ever encountered as a business leader. Lockdowns significantly reduced economic activity and inevitably impacted on our financial results,” explains Nyati.

“On a net basis, we had a tough year.”

During the period under review, some of the company’s divisions struggled under Covid-19-related lockdown restrictions, including Altron Document Solutions, Altron People Solutions and Altron Arrow.

Altron embarked on cost reduction measures across a number of operations to minimise the impact of the pandemic, which Nyati says has positioned the company well, and several businesses in the group were restructured during the year to protect and maintain profitability.

“It also meant that we needed to make final the decision to dispose of some business units which had long been profitable and integral divisions of the group, but which no longer aligned with our future direction,” he adds.

However, the onset of the Covid-19 pandemic and the recent Bytes UK demerger created the conditions for demonstrating the resilience of Altron’s strategic direction and validated the choices made in pursuing certain growth areas, such as cloud and security.

During the year under review, some of the business units enjoyed growth in the challenging year, such as Altron Security (Ubusha), which recorded a significant improvement on the prior year and contributed positively to the year-end financial results, and Altron Karabina, which benefited from corporate South Africa’s almost instantaneous embrace of Microsoft remote productivity solutions.

Financial Results

During the year ended February 28, 2021, Altron recorded a 8.5% decline in earnings before interest, taxes, depreciation and amortisation (Ebitda) to R1-billion.

This was attributed to weak market conditions and liquidity pressures resulting in low client confidence levels that led to large-scale investment projects being delayed.

Margin pressures, with customers requiring reduced pricing and discounts, owing to the impact of the pandemic, also impacted on the group’s results for the year under review.

Against the backdrop of the challenging year, owing to the global Covid-19 pandemic, HEPS decreased 18% to 31c, while earnings per share decreased 44% to 23c.

Working through the key priorities for the year of managing through the crisis, unlocking shareholder value and pursuing its 2.0 strategic path, the group reduced its overall net debt to R453-million in 2021, compared with R1.3-billion at the end of the 2020 financial year, which was indicative of strong cash generation during the year.

Cash generated from operations increased by 31% from R1.7-billion in the prior year to R2.2-billion during the year under review, while operating free cash flow increased more than 600% to R612-million.

Altron’s invoiced income gained 4% to R7.7-billion, while cash from operations grew 31% to R2.2-billion.

Shareholder value was unlocked by 152% from a share price of R20.19 to a share value of R50.80.

Altron’s revenue remained flat at R7.4-billion.

Meanwhile, Altron Document Solutions, Altron People Solutions, Altron Arrow and Bytes UK were classified as assets held for sale during the year ended February 28, 2021.

Altron declared a final cash dividend of 15c per share for the year under review.