Altron — Transformation plan drives margin growth

TMT

Altron

Transformation plan drives margin growth

FY24 results

Software and comp services

5 June 2024

Price	ZAR12.65
Market cap	ZAR4,791m
Net debt (ZARm) at end FY24		313

Shares in issue	378.7m
Free float	35.7%
Code	AEL

Primary exchange	JSE
Secondary exchange	N/A

Share price performance

%	1m	3m	12m
Abs	14.9	23.3	68.7
Rel (local)	14.3	16.6	69.3

52-week high/low

ZAR13.50

ZAR7.40

Business description

Altron is a South African provider of platforms and IT services. The company operates via three divisions: IT Services, Platforms and Altron Arrow. In FY24, 89% of revenue was generated in South Africa and annuity revenue made up 60% of total revenue.

Next events

AGM	31 July 2024

Analyst

Katherine Thompson

+44 (0)20 3077 5700

tech@edisongroup.com

Edison profile page

Altron is a research client of Edison Investment Research Limited

Altron’s FY24 results confirmed good progress with its strategic plan, with headline EPS from continuing operations up 36% y-o-y and well ahead of our forecast. The bulk of restructuring is now complete and has already boosted operating margins from 4.9% in FY21 to 9.0% in FY24. Altron is now positioned to drive revenue and profit growth through a combination of innovation, cross-selling and ongoing operational improvements.

Year end	Revenue* (ZARm)	PBT** (ZARm)	Diluted EPS** (ZAR)	HEPS*** (ZAR)	DPS (ZAR)	P/E (x)	Yield (%)
02/23	8,445	482	0.88	0.85	0.35	14.4	2.8
02/24	8,250	634	1.15	1.16	0.58	11.0	4.6
02/25e	8,404	725	1.31	1.29	0.63	9.7	5.0
02/26e	9,076	871	1.57	1.59	0.77	8.0	6.1

Note: *Continuing operations. **PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items, and are for continuing operations. ***Basic continuing headline EPS.

Strong FY24 performance from continuing operations

Altron reported revenue growth of -2% from continuing operations (+8% stripping out the ATM business sold in H124), with 20% growth in EBITDA before capital items and 23% growth in operating profit before capital items. Operating margin increased 1.9pp to 9.0% with improvement in the two largest businesses by revenue (Altron Systems Integration, Netstar) the main drivers of this growth. Headline basic EPS from continuing operations of ZAR1.16 was 16% ahead of our forecast, mainly due to better-than-expected performance from the Platform businesses and lower than forecast net finance costs. Year-end net debt was significantly lower than expected due to tight control of working capital.

Medium-term outlook maintained

Management maintained its medium-term target to triple operating profit from continuing operations from FY21 to FY26e, while highlighting short-term political uncertainty stemming from the recent South African election. We have revised our forecasts to reflect FY24 results, with upgrades to headline EPS (HEPS) from continuing operations offset by larger forecast losses in discontinued operations, leaving group HEPS broadly unchanged. We have increased our dividend forecasts as management targets a payout of 50% of HEPS from continuing operations.

Valuation: Undervalued versus international peers

We have updated our sum-of-the-parts valuation to reflect our revised forecasts and to roll forward by one year. After a 30% holding company/South Africa discount, we arrive at a valuation of ZAR24 per share, 91% above the current share price. A reverse DCF implies that the current share price is factoring in only modest revenue growth and minimal margin growth from FY27. In our view, evidence of continued margin progress and clarity over the disposal of the two discontinued businesses should provide triggers for share price upside.

Review of FY24 results

We summarise Altron’s FY24 results in Exhibit 1.

Exhibit 1: FY24 results highlights

ZARbn	FY23	FY24e	FY24a	Diff	y-o-y
Revenues	8,445.0	8,337.1	8,250.0	-1.0%	-2.3%
EBITDA	1,251.0	1,488.1	1,502.0	0.9%	20.1%
EBITDA margin	14.8%	17.8%	18.2%	0.4%	3.4%
Normalised operating profit	621.0	726.8	766.0	5.4%	23.3%
Normalised operating margin	7.4%	8.7%	9.3%	0.6%	1.9%
Reported operating profit	540.0	645.8	704.0	9.0%	30.4%
Reported operating margin	6.4%	7.7%	8.5%	0.8%	2.1%
Normalised PBT	482.0	574.8	634.0	10.3%	31.5%
Reported PBT	401.0	493.8	572.0	15.8%	42.6%
Normalised net income – continuing operations	338.8	393.6	445.5	13.2%	31.5%
Reported net income	(4.0)	(162.7)	(164.0)	0.8%	N/A
Normalised basic EPS – continuing operations (ZAR)	0.90	1.04	1.18	13.2%	31.0%
Normalised diluted EPS – continuing operations (ZAR)	0.88	1.02	1.15	12.4%	30.1%
Headline diluted EPS – continuing operations (ZAR)	0.83	0.98	1.13	14.9%	35.3%
Headline diluted EPS – discontinued operations (ZAR)	(0.55)	(1.18)	(1.37)	15.7%	147.1%
Headline diluted EPS – group (ZAR)	0.28	(0.20)	(0.24)	19.9%	N/A
Reported basic EPS (ZAR)	(0.01)	(0.43)	(0.43)	0.8%	N/A
Dividend per share (ZAR)	0.35	0.49	0.58	18.0%	65.8%
Net debt – group	563.0	672.3	313.0	-53.4%	-44.4%
Net debt/(cash) – continuing operations	173.0	282.3	(198.0)	N/A	N/A

Source: Altron, Edison Investment Research

For continuing operations, Altron reported a 2% revenue decline for FY24, slightly below our forecast. Stripping out the effect of the disposal of the ATM business from Altron Managed Solutions, which completed on 1 July 2023, underlying revenue increased 8% y-o-y. Despite the lower reported revenue, EBITDA from continuing operations increased 20% y-o-y and was marginally ahead of our forecast. Continuing operations EBITDA margin increased 3.4pp to 18.2% – we discuss the relative contributions to this growth in the divisional section below. Normalised operating profit was 5% ahead of our forecast and increased 23% y-o-y, while reported operating profit from continuing operations increased 30% y-o-y, resulting in a reported operating margin of 8.5% for continuing operations. Capital item charges totalled ZAR35m in FY24 for continuing operations compared to ZAR59m in FY23 – operating profit before these charges was ZAR739m in FY24, up 23% from ZAR599m in FY23. Net finance costs for continuing operations were ZAR134m, below our ZAR155m forecast, resulting in normalised PBT 10% ahead of our forecast representing growth of 32% y-o-y. Reported group EPS was in line with our forecast, whereas the HEPS loss was slightly larger than forecast. Diluted HEPS from continuing operations was 15% higher than our forecast at ZAR1.13 and 35% higher year-on-year. Diluted HEPS from discontinued operations of -ZAR1.37 was 16% lower than our -ZAR1.18 forecast, mainly due to lower-than-expected revenue from Altron Nexus in H224.

Group net debt of ZAR313m was significantly lower than our ZAR672m forecast, with the main difference being a larger than expected reduction in working capital requirements. For continuing operations, the company reported a year-end net cash position of ZAR198m compared to our forecast of net debt of ZAR282m.

The company announced a final dividend of ZAR0.33, which, when added to the interim dividend of ZAR0.25, results in a total dividend of ZAR0.58 for the year, 18% ahead of our forecast. The company policy is to pay out 50% of HEPS from continuing operations.

Divisional performance

Exhibits 2 and 3 below show performance by business line in FY24. As a reminder, this is the last time that Altron Managed Solutions, Altron Systems Integration and Altron Karabina will report their individual results. From 1 March, they were combined to create Digital Business, and together with Altron Security, will make up the IT Services group.

■

Altron Managed Solutions (AMS): as we noted earlier, the ATM business was sold on 1 July 2023. Excluding its contribution in FY23 and FY24, AMS generated revenue of ZAR846m in FY24, up 9% versus FY23 helped by 13% growth in outsourcing and managed services revenue. Reported EBITDA and operating profit declined by 56% and 55% respectively; excluding the ATM contribution, EBITDA was 6% higher year-on-year at ZAR54m.

■

Altron Systems Integration: the business reported revenue growth of 1.9% in FY24, with H124 y-o-y growth of 5.0% and a 0.8% decline in H224 reflecting the decision to move away from lower-margin work. Gross margin increased 3pp y-o-y and operating expenses fell by 13%. EBITDA increased from ZAR5m in FY23 to ZAR93m in FY24, 10% ahead of our forecast. Reflecting the restructuring undertaken over the last two years, the EBITDA margin increased 4.3pp to 4.6%. Operating profit increased from -ZAR20m in FY23 to ZAR87m in FY24, 11% ahead of our forecast, and the operating margin increased 5.3pp to 4.3%.

■

Altron Karabina: revenue grew 3% y-o-y and was slightly below our forecast. EBITDA grew 14% y-o-y and operating profit grew 57%, with the operating margin expanding 3.4pp to 9.9%. While the precise margin was not disclosed, gross margin increased 9pp y-o-y. Management noted that the business had seen reduced demand from two large customers and growth had been constrained by skills shortages, which it is addressing via training programmes.

■

Altron Security: revenue increased 3% y-o-y while EBITDA and operating profit declined 3% y-o-y, in line with our forecasts. This resulted in a decline in EBITDA margin of 1.4pp to 22.5% and in operating margin of 0.9pp to 16.0%. Management noted it had seen a drop in project services revenue due to customer capex constraints but also referred to less than optimal project management. It has taken corrective action to protect the gross margin and manage expenses and has put in place a growth plan for each segment.

■

Netstar: the business continued to make good progress in improving operational performance while growing revenues. Revenue was 11.6% higher year-on-year, helped by 27% growth in subscribers to more than 1.7 million and 44% growth in connected devices to more than 2.3m. By year-end, churn had reduced to 16% from 22% in FY23, the retention rate was 95%, pre-fitment conversion was 66% (FY23: 32%) and contract fulfilment reached 94% (FY23: 72%). EBITDA increased 27% y-o-y expanding the margin by 4.6pp to 38.4%, ahead of our 37.3% forecast. Reflecting the higher level of depreciation due to the growth in subscribers (tracking devices are depreciated over three years), operating profit increased 16% y-o-y and the operating margin increased 0.4pp to 10.7%.

■

Altron FinTech: revenue increased 5% y-o-y after an exceptionally strong year in FY23 when revenue grew 22% due to a high level of hardware purchases. EBITDA increased 22% y-o-y and was 12% higher than we forecast, resulting in margin expansion of 4.1pp to 30.0%. Operating profit increased 24% and the operating margin expanded 4.0pp to 26.3%, ahead of our 23.6% forecast. A higher proportion of higher-margin annuity revenues than in FY23, combined with the scale effect of higher revenues, drove the margin expansion.

■

Altron HealthTech: revenue increased 7% y-o-y (enterprise 9%, private practice 6%), EBITDA increased 3% and operating profit 6%, all in line with our forecasts. The operating margin declined marginally to 27.3%.

■

Altron Arrow: the joint venture grew revenue by 18% y-o-y, EBITDA by 33% and operating profit by 34%, expanding the operating margin by 1pp to 8.4%.

Exhibit 2: Revenue by business line

ZARm	FY23	FY24e	FY24a	Diff	y-o-y
Managed Services
Altron Managed Solutions	1,882	1,174	1,179	0.4%	-37.4%
Digital Transformation
Altron Systems Integration	2,003	2,104	2,041	-3.0%	1.9%
Altron Security	436	451	449	-0.4%	3.0%
Altron Karabina	350	368	362	-1.6%	3.4%
	2,789	2,923	2,852	-2.4%	2.3%
Own Platforms
Netstar	1,859	2,131	2,074	-2.7%	11.6%
Altron FinTech	1,044	1,079	1,099	1.8%	5.3%
Altron HealthTech	350	373	374	0.3%	6.9%
	3,253	3,582	3,547	-1.0%	9.0%
Altron Arrow	679	771	802	4.0%	18.1%
Corporate/consolidation	(158)	(113)	(130)	15.0%	-17.7%
Other	521	658	672	2.1%	29.0%
Total Revenue	8,445	8,337	8,250	-1.0%	-2.3%

Source: Altron, Edison Investment Research

Exhibit 3: Profitability by business line

	EBITDA before capital items					EBITDA margin before capital items
	FY23	FY24e	FY24a	Diff	y-o-y	FY23	FY24e	FY24a	Diff	y-o-y
Managed Services
Altron Managed Solutions	117	57	51	-9.7%	-56.4%	6.2%	4.8%	4.3%	-0.5pp	-1.9pp
Digital Transformation
Altron Systems Integration	5	85	93	10.0%	1,760.0%	0.2%	4.0%	4.6%	0.5pp	4.3pp
Altron Security	104	102	101	-1.1%	-2.9%	23.9%	22.6%	22.5%	-0.1pp	-1.4pp
Altron Karabina	43	54	49	-9.3%	14.0%	12.3%	14.7%	13.5%	-1.1pp	1.3pp
	152	241	243	1.0%	59.9%	5.4%	8.2%	8.5%	0.3pp	3.1pp
Own Platforms
Netstar	629	795	797	0.2%	26.7%	33.8%	37.3%	38.4%	1.1pp	4.6pp
Altron FinTech	271	295	330	11.8%	21.8%	26.0%	27.4%	30.0%	2.7pp	4.1pp
Altron HealthTech	103	106	106	-0.3%	2.9%	29.4%	28.5%	28.3%	-0.2pp	-1.1pp
	1,003	1,197	1,233	3.0%	22.9%	30.8%	33.4%	34.8%	1.4pp	3.9pp
Altron Arrow	52	71	69	-2.8%	32.7%	7.7%	9.2%	8.6%	-0.6pp	0.9pp
Corporate/consolidation	(73)	(77)	(94)	22.1%	28.8%	46.2%	68.1%	72.3%
Other	(21)	(6)	(25)	316.0%	19.0%	-4.0%	-0.9%	-3.7%	-2.8pp	0.3pp
Total EBITDA	1,251	1,488	1,502	0.9%	20.1%	14.8%	17.8%	18.2%	0.4pp	3.4pp
	Operating profit before capital items					Operating margin before capital items
	FY23	FY24e	FY24a	Diff	y-o-y	FY23	FY24e	FY24a	Diff	y-o-y
Managed Services
Altron Managed Solutions	73	35	33	-5.7%	-54.8%	3.9%	3.0%	2.8%	-0.2pp	-1.1pp
Digital Transformation
Altron Systems Integration	(20)	79	87	10.7%	-535.0%	-1.0%	3.7%	4.3%	0.5pp	5.3pp
Altron Security	74	72	72	-0.1%	-2.7%	17.0%	16.0%	16.0%	0.0pp	-0.9pp
Altron Karabina	23	38	36	-5.3%	56.5%	6.6%	10.3%	9.9%	-0.4pp	3.4pp
	77	189	195	3.4%	153.2%	2.8%	6.5%	6.8%	0.4pp	4.1pp
Own Platforms
Netstar	192	212	222	4.6%	15.6%	10.3%	10.0%	10.7%	0.7pp	0.4pp
Altron FinTech	233	255	289	13.2%	24.0%	22.3%	23.6%	26.3%	2.6pp	4.0pp
Altron HealthTech	96	100	102	1.6%	6.3%	27.4%	26.9%	27.3%	0.3pp	-0.2pp
	521	568	613	8.0%	17.7%	16.0%	15.9%	17.3%	1.4pp	1.3pp
Altron Arrow	50	69	67	-2.9%	34.0%	7.4%	8.9%	8.4%	-0.6pp	1.0pp
Corporate/consolidation	(122)	(155)	(169)	9.0%	38.5%	77.2%	137.2%	130.0%
Other	(72)	(86)	(102)	18.6%	41.7%	-13.8%	-13.1%	-15.2%	-2.1pp	-1.4pp
Total operating profit	599	705	739	4.8%	23.4%	7.1%	8.5%	9.0%	0.5pp	1.9pp

Source: Altron, Edison Investment Research

Discontinued operations

This includes Altron Document Solutions (ADS) and Altron Nexus. In FY24, discontinued operations generated a net loss of ZAR574m compared to our ZAR500m forecast and a net loss of ZAR283m in FY23. Significant one-off charges were taken in both businesses in H124 for restructuring and provisions against inventory and receivables. The company has already put in place new management for both businesses and continues to be in active discussions with potential buyers of ADS. In H224, ADS returned to profitability and positive cash flow generation helped by strict working capital management and grew revenue 13% in FY24. Altron Nexus conversely saw a revenue decline of 35% in FY24, partly due to the loss of the Gauteng Broadband Network contract but also due to the transfer of the Huawei networking and enterprise services business into Altron Systems Integration from October 2023, and generated an EBITDA loss of ZAR421m and an operating loss of ZAR433m. There is also an active sales process underway for Nexus.

Outlook and changes to forecasts

Management maintained its medium-term outlook as per Exhibit 4. In the shorter term, management referenced the South African elections as potentially creating uncertainty. With the shape of the coalition government yet to be decided, it is difficult to quantify risks but, whatever the outcome, it is possible that this period of uncertainty will lead to delays in decision making by corporates and the public sector. Management is focused on controlling what it can and providing continuity for its customers.

Exhibit 4: Management guidance

Source: Altron

At a business line level, management aims to maintain Altron HealthTech, Altron FinTech and Altron Security margins at current levels, while targeting Netstar margins of 16%. As there is a global ongoing correction in demand in Altron Arrow’s market, we are forecasting a revenue decline in FY25 but management is aiming to maintain the operating margin.

We have revised our forecasts to reflect FY24 results. For FY25, we have increased our operating profit forecast by 2%, reflecting better profitability from the Platforms business (better FinTech profitability offset by slightly lower revenue in Netstar). For FY26, we have factored in slightly higher depreciation for Netstar and slightly lower revenue in Altron Systems Integration, which reduces our operating profit forecast by 3%. We are forecasting operating profit before capital items of ZAR1.0bn in FY26, slightly below management’s target. As we are now forecasting a lower net finance cost due to lower net debt, our normalised and reported PBT forecasts are higher in both years, driving upgrades to HEPS from continuing operations. We have reduced our revenue expectations for Altron Nexus, resulting in a larger loss from discontinued operations in both years. Overall, group HEPS is unchanged for FY25 and 1% higher in FY26.

Exhibit 5: Changes to forecasts

	FY25e				FY26e
ZARbn	Old	New	Change	y-o-y	Old	New	Change	y-o-y
Revenues	8,508.3	8403.6	-1.2%	1.9%	9,191.5	9075.9	-1.3%	8.0%
EBITDA	1,689.3	1710.6	1.3%	13.9%	1,972.5	1971.9	0.0%	15.3%
EBITDA margin	19.9%	20.4%	0.5%	2.1%	21.5%	21.7%	0.3%	1.4%
Normalised operating profit	824.6	844.8	2.5%	10.3%	1,017.2	986.7	-3.0%	16.8%
Normalised operating margin	9.7%	10.1%	0.4%	0.8%	11.1%	10.9%	-0.2%	0.8%
Reported operating profit	787.6	802.8	1.9%	14.0%	980.2	954.7	-2.6%	18.9%
Reported operating margin	9.3%	9.6%	0.3%	1.0%	10.7%	10.5%	-0.1%	1.0%
Normalised PBT	652.6	724.8	11.1%	14.3%	841.2	870.7	3.5%	20.1%
Reported PBT	615.6	682.8	10.9%	19.4%	804.2	838.7	4.3%	22.8%
Normalised net income – continuing operations	453.6	508.4	12.1%	14.1%	590.5	611.5	3.6%	20.3%
Reported net income	342.6	336.4	-1.8%	-305.1%	479.5	489.5	2.1%	45.5%
Normalised basic EPS – continuing operations (ZAR)	1.20	1.34	12.1%	14.1%	1.56	1.61	3.5%	20.3%
Normalised diluted EPS – continuing operations (ZAR)	1.18	1.31	11.3%	14.1%	1.53	1.57	2.8%	20.3%
Headline basic EPS – continuing operations (ZAR)	1.16	1.29	11.4%	11.0%	1.52	1.59	4.5%	23.2%
Headline basic EPS – discontinued operations (ZAR)	(0.20)	(0.35)	73.0%	-75.1%	(0.20)	(0.24)	20.9%	-30.1%
Headline basic EPS – group (ZAR)	0.95	0.94	-1.7%	-481.3%	1.31	1.34	2.0%	43.2%
Headline diluted EPS – continuing operations (ZAR)	1.13	1.25	10.6%	11.0%	1.49	1.55	3.8%	23.2%
Headline diluted EPS – discontinued operations (ZAR)	(0.20)	(0.34)	71.8%	-75.1%	(0.20)	(0.24)	20.0%	-30.1%
Headline diluted EPS – group (ZAR)	0.93	0.91	-2.4%	-481.3%	1.29	1.31	1.3%	43.2%
Reported basic EPS (ZAR)	0.90	0.89	-1.8%	-305.1%	1.27	1.29	2.1%	45.5%
Dividend per share (ZAR)	0.57	0.63	10.6%	8.1%	0.74	0.77	3.8%	23.2%
Net debt – group	716.4	552.5	-22.9%	76.5%	729.4	634.1	-13.1%	14.8%
Net debt – continuing operations	326.4	41.5	-87.3%	-121.0%	339.4	123.1	-63.7%	196.7%

Source: Edison Investment Research

Exhibit 6: Financial summary

Year end 28 February	ZARm	2019	2020	2021	2022	2023	2024	2025e	2026e
INCOME STATEMENT		IFRS	IFRS	IFRS	IFRS	IFRS	IFRS	IFRS	IFRS
Revenue		15,723.0	7,383.0	7,505.0	7,930.0	8,445.0	8,250.0	8,403.6	9,075.9
Costs		(14,116.0)	(6,283.0)	(6,472.0)	(6,790.0)	(7,194.0)	(6,748.0)	(6,693.0)	(7,104.0)
EBITDA		1,607.0	1,100.0	1,033.0	1,140.0	1,251.0	1,502.0	1,710.6	1,971.9
Normalised operating profit		1,041.0	456.0	371.0	518.0	621.0	766.0	844.8	986.7
Amortisation of acquired intangibles		0.0	0.0	0.0	(20.0)	(22.0)	(27.0)	(27.0)	(17.0)
Exceptionals/capital items		(26.0)	1.0	(23.0)	(213.0)	(59.0)	(35.0)	(15.0)	(15.0)
Share-based payments		0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Reported operating profit		1,015.0	457.0	348.0	285.0	540.0	704.0	802.8	954.7
Net Interest		(176.0)	(255.0)	(179.0)	(146.0)	(142.0)	(134.0)	(120.0)	(116.0)
Joint ventures & associates (post tax)		(1.0)	(30.0)	(41.0)	3.0	3.0	2.0	0.0	0.0
Exceptionals		0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Profit Before Tax (norm)		864.0	171.0	151.0	375.0	482.0	634.0	724.8	870.7
Profit Before Tax (reported)		838.0	172.0	128.0	142.0	401.0	572.0	682.8	838.7
Reported tax		(158.0)	(50.0)	(34.0)	(63.0)	(105.0)	(139.0)	(184.4)	(226.5)
Profit After Tax (norm)		701.1	121.3	110.9	208.6	355.8	468.5	530.5	634.3
Profit After Tax (reported)		680.0	122.0	94.0	79.0	296.0	433.0	498.4	612.3
Minority interests		(39.0)	20.0	12.0	(9.0)	(17.0)	(23.0)	(22.0)	(22.7)
Discontinued operations		70.0	506.0	12,048.0	(174.0)	(283.0)	(574.0)	(140.0)	(100.0)
Net income (normalised)		662.1	141.3	122.9	199.6	338.8	445.5	508.4	611.5
Net income (reported)		711.0	648.0	12,154.0	(104.0)	(4.0)	(164.0)	336.4	489.5

Basic average number of shares outstanding (m)		371.0	371.2	371.6	371.9	377.3	377.3	378.6	378.7
EPS – diluted normalised (ZAR)		1.77	0.38	0.33	0.53	0.88	1.15	1.31	1.57
EPS – basic reported (ZAR)		1.92	1.75	32.70	(0.28)	(0.01)	(0.43)	0.89	1.29
EPS headline basic (ZAR)		1.91	1.73	1.35	0.37	0.29	(0.25)	0.94	1.34
Dividend (ZAR)		0.44	0.55	1.44	0.30	0.35	0.58	0.63	0.77

Revenue growth (%)			-53.0%	1.7%	5.7%	6.5%	-2.3%	1.9%	8.0%
EBITDA Margin (%)		10.2%	14.9%	13.8%	14.4%	14.8%	18.2%	20.4%	21.7%
Normalised Operating Margin (%)		6.6%	6.2%	4.9%	6.5%	7.4%	9.3%	10.1%	10.9%

BALANCE SHEET
Fixed Assets		4,171.0	4,550.0	3,793.0	3,965.0	4,013.0	4,139.0	4,407.2	4,630.4
Intangible Assets		2,048.0	2,159.0	1,623.0	1,918.0	2,105.0	2,251.0	2,403.9	2,525.0
Tangible Assets		1,109.0	1,655.0	1,719.0	1,476.0	1,346.0	1,326.0	1,441.3	1,543.4
Investments & other		1,014.0	736.0	451.0	571.0	562.0	562.0	562.0	562.0
Current Assets		7,430.0	9,063.0	6,592.0	5,404.0	5,649.0	5,216.0	4,980.1	5,082.2
Stocks		1,017.0	1,252.0	833.0	972.0	1,023.0	706.0	678.2	724.7
Debtors		4,725.0	5,726.0	2,497.0	1,961.0	2,055.0	1,684.0	1,715.3	1,852.6
Cash & cash equivalents		1,381.0	1,810.0	1,454.0	757.0	740.0	1,137.0	897.5	815.9
Other (including assets held for sale)		307.0	275.0	1,808.0	1,714.0	1,831.0	1,689.0	1,689.0	1,689.0
Current Liabilities		(6,804.0)	(7,360.0)	(3,753.0)	(2,917.0)	(3,274.0)	(3,566.0)	(3,505.6)	(3,606.6)
Creditors		(5,026.0)	(5,705.0)	(2,319.0)	(1,853.0)	(1,964.0)	(2,045.0)	(1,984.6)	(2,085.6)
Tax and social security		(80.0)	(110.0)	(28.0)	(77.0)	(103.0)	(127.0)	(127.0)	(127.0)
Short term borrowings		(1,665.0)	(1,347.0)	(710.0)	(244.0)	(62.0)	(514.0)	(514.0)	(514.0)
Lease liabilities		0.0	(181.0)	(108.0)	(117.0)	(111.0)	(79.0)	(79.0)	(79.0)
Other (including liabilities held for sale)		(33.0)	(17.0)	(588.0)	(626.0)	(1,034.0)	(801.0)	(801.0)	(801.0)
Long Term Liabilities		(1,424.0)	(2,502.0)	(1,766.0)	(2,098.0)	(2,088.0)	(1,720.0)	(1,720.0)	(1,720.0)
Long term borrowings		(1,262.0)	(1,707.0)	(602.0)	(854.0)	(851.0)	(425.0)	(425.0)	(425.0)
Lease liabilities		0.0	(391.0)	(971.0)	(896.0)	(788.0)	(730.0)	(730.0)	(730.0)
Other long term liabilities		(162.0)	(404.0)	(193.0)	(348.0)	(449.0)	(565.0)	(565.0)	(565.0)
Net Assets		3,373.0	3,751.0	4,866.0	4,354.0	4,300.0	4,069.0	4,161.7	4,386.0
Minority interests		(162.0)	(193.0)	102.0	106.0	118.0	146.0	124.0	101.3
Shareholders' equity		3,211.0	3,558.0	4,968.0	4,460.0	4,418.0	4,215.0	4,285.7	4,487.2

CASH FLOW
Op Cash Flow before WC and tax		1,095.0	1,084.0	968.0	440.0	346.0	210.0	623.8	825.7
Working capital		(406.0)	(254.0)	393.0	(44.0)	194.0	579.0	(64.0)	(82.6)
Exceptional & other		656.0	865.0	859.0	672.0	755.0	822.0	617.8	704.1
Tax		(147.0)	(169.0)	(226.0)	(94.0)	(50.0)	(131.0)	(144.4)	(196.5)
Net operating cash flow		1,198.0	1,526.0	1,994.0	974.0	1,245.0	1,480.0	1,033.2	1,250.7
Capex		(283.0)	(258.0)	(484.0)	(396.0)	(473.0)	(567.0)	(606.0)	(649.3)
Acquisitions/disposals		81.0	184.0	309.0	(76.0)	(76.0)	27.0	0.0	0.0
Net interest		(196.0)	(231.0)	(165.0)	(127.0)	(127.0)	(104.0)	(96.0)	(92.0)
Equity financing		0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Dividends		(111.0)	(274.0)	(220.0)	(442.0)	(152.0)	(170.0)	(243.7)	(265.0)
Other		(438.0)	(648.0)	(432.0)	(408.0)	(361.0)	(304.0)	(306.0)	(306.0)
Net Cash Flow		251.0	299.0	1,002.0	(475.0)	56.0	362.0	(218.5)	(61.6)
Opening net debt/(cash)		2,033.0	1,623.0	1,336.0	453.0	811.0	563.0	313.0	552.5
FX		27.0	24.0	29.0	(3.0)	11.0	(6.0)	0.0	0.0
Other non-cash movements		132.0	(36.0)	(148.0)	120.0	181.0	(106.0)	(21.0)	(20.0)
Closing net debt/(cash)		1,623.0	1,336.0	453.0	811.0	563.0	313.0	552.5	634.1
Closing net debt/(cash) – continuing operations		1,546.0	1,244.0	(142.0)	341.0	173.0	(198.0)	173.0	(198.0)

Source: Altron accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Altron and prepared and issued by Edison, in consideration of a fee payable by Altron. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

Australia

New Zealand

United Kingdom

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

Equities

Equities by Sector

Sectors

Investment Strategy

Latest

Equity strategy and market outlook – April 2024

Equity strategy and market outlook – March 2024

Equity strategy and market outlook – February 2024

Thematics

Latest

Emerging markets – Worthy of consideration

Dynam Capital at the 2024 Vietnam ESG Conference

MediaWatch – Glimpses of positivity

Audiovisual

Latest

Regional REIT – executive interview

CoinShares International in 60 seconds

Fund manager interview with Laurence Hulse of Dowgate

About Edison

About Edison

Careers

Altron (JSE: AEL)

Altron — Transformation plan drives margin growth

TMT

TMT

Latest

The London Tunnels — Hidden reserves

Deutsche Beteiligungs — Convertible bond issue

1Spatial — Contract wins underpin US growth opportunity

Templeton Emerging Markets IT — Proactive board seeking to lower the discount

Cereno Scientific — CS1 Phase II results inbound; first dose of CS014

More on Altron

Altron — Transformation plan drives margin growth

Altron — Rising star

Latest from the TMT sector

1Spatial — Contract wins underpin US growth opportunity

MoneyHero — Encouraging start to FY24

Checkit — No intention to bid for Crimson Tide

Datatec — Positive outlook for FY25

Checkit — Potential bid for Crimson Tide

Subscribe to Edison