Altron Limited Class A · JSE:AEL
Altron Limited Class A — FY2014 Earnings Presentation
37 slides from Altron Limited Class A's earnings presentation, February 2014
Slide 1: Year-end results February 2014
Year-end results February 2014 Robbie Venter Alex Smith Chief Executive Chief Financial Officer
Slide 2: Agenda
Agenda Overview and financial summary Robert Venter Financial results Alex Smith Operations and way forward Robert Venter
Slide 3: Results Overview
RESULTS OVERVIEW • Good recovery from Altech post Africa disposals • Altech UEC SA showing impressive growth and record order book • Solid performance from Altech Autopage in challenging and evolving market • Altech Netstar records strong performance with good wins in fleet management • Bytes contin
Slide 4: Financial Highlights – Total Operations for the Year Ended February 2014
FINANCIAL HIGHLIGHTS – TOTAL OPERATIONS FOR THE YEAR ENDED 28 FEBRUARY 2014 Feb Feb Rm 2014 2013 % change Revenue 27 772 24 744 12 EBITDA 1 788 1 539 16 EBITDA margin (%) 6.4 6.2 Normalised EBITDA 1 872 1 565 20 Normalised EBITDA margin (%) 6.7 6.3 HEPS (cents) 188 132 42 Normalised HEPS (cents) 206
Slide 5: Corporate Actions
CORPORATE ACTIONS • Acquisition of the Altech minority shares in August 2013 for R1.8bn • Powertech disposed of its 50% in Tridonic South Africa to Tridonic in Austria for R14m in February 2014 • Altech exercised put option to dispose of 8.6% equity interest in Liquid Telecommunications for US$55m.
Slide 6: Corporate Action – Kagiso Tiso Holdings
CORPORATE ACTION – KAGISO TISO HOLDINGS • Agreement reached at a value of R669m for 27% of Bytes SA. Effective 30 June will be 100% owned • HEPS 5% enhancement on a proforma basis, based on 6 months to Aug 2013 • Investing further in what we know and have managed • Will be settled primarily by cash
Slide 7: Altron TMT Integration
ALTRON TMT INTEGRATION • R23m once-off reorganisation costs incurred in 2013/14 will result in an expected R87m annual savings in 2014/15 • Integration of Altech and Bytes progressing well. Completion expected approximately March 2016 • The integration consists of 5 Work streams: • Sales enablement
Slide 8: Group Structure
GROUP STRUCTURE Chief Executive: Robert Venter Market capitalisation: R9bn Number of employees: 12 900
Slide 9: Africa and Public Sector Revenue Growth
AFRICA AND PUBLIC SECTOR REVENUE GROWTH Africa Revenue Public Sector Revenue Rm Rm 3 000 4 500 39% YOY growth 54% YOY growth 4 000 2 500 3 500 2 000 3 000 2 500 1 500 2 000 1 000 1 500 1 000 500 500 0 0 FY Feb 13 Fy Feb 14 FY Feb 13 FY Feb 14
Slide 10: Contribution per Subsidiary
TMT Altech Power Bytes CONTRIBUTION PER SUBSIDIARY Powertech 11% 30% 21% 11% 21% 30% 38% Normalised Revenue Normalised 47% 44% Headline EBITDA* earnings** Feb 14 Feb 14 Feb 14 45% 32% 32% 70% 80% 89% R 10 695m R 890m R 299m R 8 761m R 610m R 310m R 8 379m R 386m R 77m 4% 18% 30% 42% Normalised 37% N
Slide 11: Financial Results
Financial Results Alex Smith Chief Financial Officer
Slide 12: Group Income Statement – Continuing Operations
GROUP INCOME STATEMENT – CONTINUING OPERATIONS Feb Feb Rm 2014 2013 % change Revenue 27 772 24 464 14 Operating profit before capital items 1 342 1 199 12 EBITDA 1 788 1 652 8 Normalised EBITDA 1 872 1 678 12 EBITDA margin (%) 6.4 6.7 Normalised EBITDA margin (%) 6.7 6.9 Net finance expense (260) (7
Slide 13: Movement in Group Revenue
MOVEMENT IN GROUP REVENUE Rm 30000 • Altech revenue flat as strong growth from UEC (48%) was offset by the 28000 effect of last year’s Africa disposals and 1043 27835 9% revenue decline at Autopage 26000 1757 • Bytes 25% revenue growth led by 35% growth at Bytes Systems Integration, 24782 254 35% wi
Slide 14: Movement in Group Normalised EBITDA
MOVEMENT IN GROUP NORMALISED EBITDA Rm 2000 • Altech EBITDA growth reflects good 1900 performance across all operations with 99 1886 only UEC declining as a result of German 1800 operations which have now returned to 79 profitability 1700 125 • Bytes EBITDA increased across most 1600 operations with
Slide 15: Movement in Group Normalised Headline Earnings
MOVEMENT IN GROUP NORMALISED HEADLINE EARNINGS Rm 750 • Increase in Altech’s contribution to the group driven by overall profitability 700 improvement as well as the takeout of the 62 (33) minorities which was effective 1 August, 650 giving the group 100% of Altech’s 660 earnings for seven months 57
Slide 16: Summarised Balance Sheet
SUMMARISED BALANCE SHEET Feb Feb Rm 2014 2013 Total non-current assets 5 496 4 863 Current assets 9 209 6 848 Cash balances 1 411 1 225 Total assets 16 116 12 936 Shareholders’ equity 4 256 4 740 Non-controlling interests 258 489 Non-current liabilities 495 792 Current liabilities 11 107 6 915 Total
Slide 17: Cash Flows
CASH FLOWS Rm 3000 2500 (513) (242) 2000 (270) 2 019 (232) 1500 1000 500 840 (2 866) 0 (314) -500 (39) 989 -1000 -1500
Slide 18: Investing Activities in Continuing Operations
INVESTING ACTIVITIES IN CONTINUING OPERATIONS Rm 3200 • Increase in capital expenditure driven by 2800 577 the completion of several projects in Powertech, system upgrades in a number 2400 182 of businesses and capacity expansion at UEC 2000 478 • Increased investment in contract 1600 fulfilment cos
Slide 19: Working Capital
WORKING CAPITAL 76 60 62 53 55 50 Creditor days 26 15 19 Debtors Days Inventory days Net days (87) (97) (112) Feb 12 Feb 13 Feb 14
Slide 20: Refinancing
REFINANCING • On 10 March 2014 the group refinanced all its term debt requirements with senior unsecured debt through a syndicated loan – R1.9bn of three year debt – R1.25bn of five year amortising debt – R500m of revolving credit facilities • Debt refinanced on commercial terms with a margin of 210
Slide 21: Operations
Operations Robert Venter Chief Executive
Slide 22: Altech
ALTECH
Slide 23: Altech Financial Summary – Total Operations
ALTECH FINANCIAL SUMMARY – TOTAL OPERATIONS Feb Feb Rm 2014 2013 % change Revenue 10 695 10 441 2 EBITDA 820 765 7 EBITDA margin (%) 7.7 7.3 Normalised EBITDA 890 765 16 Normalised EBITDA margin (%) 8.3 7.3 Headline Earnings 270 261 3 Normalised Headline Earnings 336 261 29 ROE (%) 25.9 31.5 Net bor
Slide 24: Altech Divisional Review
ALTECH DIVISIONAL REVIEW % Feb 14 % Feb 14 Normalised change change Company / division Revenue Comments on prior EBITDA on prior R’m year year R’m Altech Autopage 5 501 (9) 260 3 Subscriber base at 1,037 million Churn remains low VAS revenue increased to 11% of ARPU Evolving business model Altech Ne
Slide 25: Focus Area: Altech Autopage
FOCUS AREA: ALTECH AUTOPAGE • Upside in being the only Independent Service Provider going forward • Can provide choice to customer • Differentiate from the networks • Unique offering to enterprises • Counter market pressure through • Automation and improvement of systems • Cost cutting • Diversifyin
Slide 26: Bytes
BYTES
Slide 27: Bytes Financial Summary
BYTES FINANCIAL SUMMARY Feb Feb Rm 2014 2013 % change Revenue 8 761 7 004 25 EBITDA 595 531 12 EBITDA margin (%) 6.8 7.6 Normalised EBITDA 610 531 15 Normalised EBITDA margin (%) 7.0 7.6 Headline Earnings 302 253 19 Normalised Headline Earnings 310 253 23 ROE (%) 21.7 20.0 Net borrowings 219 347
Slide 28: Bytes Operational Review
BYTES OPERATIONAL REVIEW % % Feb 14 Feb 14 Change Change Company Revenue EBITDA Comments on prior on prior R’m R’m year year Amalgamation with Bytes Connect‘s networking and outsource customer Systems Integration 1 517 35 89 9 base along with the acquisition of BNTech resulted in good growth and a m
Slide 29: Focus Area: Document Solutions
FOCUS AREA: DOCUMENT SOLUTIONS • BDS is the leading supplier of document solutions and services in Africa and continues to grow in the region • BDS created the Managed Print Service (MPS) industry in SA and will continue to lead the market by broadening the MPS portfolio for channel partners in SA a
Slide 30: Powertech
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Slide 31: Powertech Financial Summary
POWERTECH FINANCIAL SUMMARY Feb Feb Rm 2014 2013 % change Revenue 8 379 7 336 14 EBITDA 386 267 45 EBITDA margin (%) 4.6 3.6 Normalised EBITDA 386 287 35 Normalised EBITDA margin (%) 4.6 3.9 Headline Earnings 77 1 7600 Normalised Headline Earnings 77 15 416 ROE (%) 3.0 0 Net borrowings 502 910
Slide 32: Powertech Divisional Review
POWERTECH DIVISIONAL REVIEW % % Feb 14 Feb 14 Change Change Company Revenue EBITDA on prior on prior R’m R’m year year Powertech Cables 5 054 14 131 623 LOCAL: While Revenue is well up, margin squeeze continues. Overall cost base is down 1.9% YOY. Productivity improvements are happening INTERNATIONA
Slide 33: Powertech Order Book
POWERTECH ORDER BOOK Orders on hand Feb 2012 Feb 2013 Feb 2014 Cables R462m R434m R803m Transformers R851m R692m R765m System Integrators R262m R281m R243m Powertech Quadpro R56m R253m Total R 1 575m R 1 463m R1 964m Enabling Contracts Feb 2013 Feb 2014 Term of Term of Value Value contract contract
Slide 34: Focus Area: Aberdare Cables
FOCUS AREA: ABERDARE CABLES Wins: • Final completion of site consolidation of Gauteng operations to Elandsfontein (GOC) • Improved market share in informal sector (Electrical wholesalers) • Improved productivity and efficiency levels within manufacturing • Improved working capital management • Reduc
Slide 35: The way forward
The way forward Robert Venter Chief Executive
Slide 36: Going Forward
GOING FORWARD • Continue to move from being a financial holding company to an operating entity • Simplify the group – two offerings i.e. Power Electronics and TMT • Extract synergies (cost and revenue) from Altron TMT • Return Powertech to more acceptable returns to be driven by Cables operation • C
Slide 37: Questions
Questions