Altron sees earnings growth from Bytes demerger
The technology firm says basic earnings per share should increase more than 100% in the first quarter of 2021
Technology firm Altron expects earnings to double in the full-year to end-February 2021, mainly due to profits gained from its recent demerger of Bytes Technology Group.
On Wednesday, the company said it would report basic earnings per share of between 3,256c and 3,270c, an increase of more than 100% compared to the restated 175c for the prior comparative period.
Headline earnings per share (HEPS) — which strips out the effect of one-off financial events — is expected to be between 124c and 137c, reflecting a reduction of between 21% and 29%, as compared to the restated 174c seen in 2020.
The group said the increase in basic earnings per share was mainly as a result of the realised profit on the demerger of Bytes, finalised in December 2020.
Bytes, a software, security and cloud services specialist, is a former subsidiary of technology group, Altron. The company listed on the London Stock Exchange in December with a secondary inward listing on the JSE after a demerger that created R13bn in value for Altron shareholders.
Altron had argued that the true value of the UK business was not fully reflected in its share price. Since listing, the company’s market capitalisation has grown to R23.5bn.
On the other hand, HEPS — which exclude the profit on the Bytes UK demerger — was negatively affected as Bytes UK was previously a big contributor to Altron’s group earnings. This was coupled with “the poor economic activity and the trading restrictions brought about by the Covid-19 pandemic”, the group said.
Having taken Bytes out of the group in December, Altron’s share price immediately fell from R34.60 to R9.15 to reflect the unbundling. Since then, Altron’s stock is up 26%, trading at R11.57 on Wednesday morning.
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