Africa-Press – South-Africa. While its revenue could grow by almost a fifth in the year to end-February, ICT group Altron is still feeling the costs of its broadband contract with the City of Tshwane, which has forced it to raise a R134 million provision in spite of its court victory.
Group revenue is expected to rise by between 9% and 19% to as much as R11.33 billion to end-February, the company said, but core profit is expected to fall as much as 10% – by about R100 million – and headline earnings by as much as 32%.
Valued at about R3.8 billion on the JSE, Altron sells hardware and electronic products, but has been looking to shift to professional services, for example, by helping organisations plan for and implement their technology needs.
The company said on Monday it remained strongly cash generative and is sufficiently capitalised, providing a solid platform to pursue its objectives, while it had benefitted from improved demand for hardware.
However, it has raised a R134 million provision due to its exposure to the City of Tshwane after the Auditor General raised questions about whether the City remains a going concern, given material uncertainties in its 2022 financial statements.
Tshwane still owes Altron money following a protracted legal battle.
In 2015, the then ANC-controlled City of Tshwane awarded a contract of more than R1 billion for the installation of a municipal fibre broadband network, but months later the incoming DA city government stopped the contract after it alleged that due process was not followed in awarding it. The city then turned to the courts to try and set the contract side.
In May 2021 the Constitutional Court ruled in favour of Altron, saying its broadband agreement with the metro was valid and enforceable, and allowing it to collect R309 million in debt associated with the contract.
The group said the provision “is raised for Altron’s accounting purposes and does not constitute any waiver, nor does it mean that Altron is abandoning its rights and claim.” It said the two parties had signed an arbitration agreement on 5 April, and this process was ongoing.
Click here for details on Altron’s shares as well as other info.
Shares in Altron were down almost 4% to R8.85 in Monday morning trade, but have risen almost 15% over the past year.
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