If there is a Netstar tracker in your car, you are already an Altron customer. The group, founded in 1965 as Allied Electric, reported on Monday that revenue for the six months to August grew 5% to R5.1 billion, its strongest first-half growth in three years, and lifted its interim dividend 15% to 55 cents a share.
Underneath that, Altron runs two very different kinds of business. Its three platforms, Netstar, Altron FinTech and Altron HealthTech, earn mostly recurring fees, which made up 92% of their revenue. Between them they produced 47% of group revenue and more than 95% of operating profit. The rest is mostly technology work for other companies, and Altron counts half of the JSE's top 100 among its clients.
The microlenders' back office
Altron FinTech is now the group's biggest earner, having overtaken Netstar. It checks credit, processes payments and collects money for microlenders, News24 reports, and chief executive Werner Kapp told the publication it has thousands of them as customers. Its operating profit rose 17% to R300 million, more than double what it made three years ago. It also rents card machines to shops, and the number out there rose 61% in the half, to more than 30,000.
Netstar is having a slower year on purpose. After growing past two million subscribers, Altron calls this "a deliberate reset and investment year" for the business, which in June set out plans to sell anonymised data on how vehicles move. Subscribers still rose 8% to 2.3 million, and churn, the share of customers who cancel, held at about 16%.
The IT business that stopped shrinking
IT Services, which brings in about half the group's revenue, grew for the first time after two years of restructuring. Its sales rose 4%, to R2.5 billion, and its operating profit jumped by more than three-fifths. IT services is a business of trust, Kapp told investors, and "credibility takes 10 years to build, and one bad project to lose". Altron Digital Business swung from an operating loss into profit.
Altron Security went the other way. Its revenue fell 18% to R207 million and its operating cash earnings more than halved, which Altron puts down to the timing of software sales and companies holding back on spending. Management says it has started corrective action on the IT side of the unit.
The cash kept coming regardless. Operations generated just over R1 billion in six months, 32% more than a year earlier, and Altron still had more than R800 million in net cash after paying shareholders R755 million in June. The interim dividend is paid on 23 November to anyone who buys the shares by 17 November, the last day to trade with the dividend attached.
