Slide 1: FY19 Results Investor Presentation
FY19 RESULTS INVESTOR PRESENTATION 27 February 2020
Slide 2: Agenda
Agenda Agenda • Strategic Update • SMB Update • Appendices • Appendix 1: FY19 Financial Performance – Continuing Operations • Appendix 2: Adoption of AASB16: Leases • Appendix 3: F19 Reported Results 2 Arq Group FY19 Results Presentation
Slide 3: Strategic Update
ARQ group ( Strategic Update
Slide 4: Strategic Review: Status Update
Arq Recovery Strategic Review: Status Update • In September 2019 the Group announced a strategic review to explore all avenues to maximise shareholder value, following interest from several parties in the Enterprise and SMB divisions. • In February 2020 the Group announced the signing of a binding a
Slide 5: Enterprise Transaction: Wrap-up and Cash
Arq Recovery Enterprise Transaction: Wrap-up and Cash • In February 2020, the Group signed a binding agreement to sell the Enterprise Services Division for a purchase consideration of $35.0m on a cash free, debt free basis. • The transaction is due to complete on 2 March 2020. An estimate of the fin
Slide 6: Cash and Capital
Cash and Capital Net Debt: Proceeds from Enterprise sale to reduce debt The Group has restructured its debt facilities • The Group and its financiers have revised the terms of the existing finance facilities with ANZ and National Australia Bank. The facility provides committed funding of $68.7m (inc
Slide 7: FY19 Result: Achievement vs Guidance
Arq Financials FY19 Result: Achievement vs Guidance Group result achieved was within communicated guidance underpinned by cost management Continuing Discontinuin AASB 117 $m Core Non- Core Arq Group AASB16 Operations g Operations Year ended 31-Dec- SMB AASB 16 Arq Group SMB Direct Corporate Arq Grou
Slide 8: SMB Update
ARQ group ( SMB Update
Slide 9: SMB Update
Arq Recovery SMB Update • Sale of TPP Wholesale business was completed in July 2019, with only the ‘telco’ portion of the Indirect business remaining with the Group an in run-off. • The disputed receivable with a major telco customer is approximately $10.0m at 31 December 2019. A trial date has been
Slide 10: SMB Division: What has been achieved?
Arq Recovery SMB Division: What has been achieved? The recovery in SMB is progressing and we enter 2020 with a stronger business. Issue Status Sale of TPP Wholesale business Sale of TPP Wholesale business was completed in July 2019, with only the ‘telco’ portion of the Indirect business remaining. C
Slide 11: Appendices
ARQ group ( Appendices
Slide 12: Appendix 1: FY19 Financial Performance (Continuing Operations)
Appendix 1: FY19 Financial Performance (Continuing Operations) 12 Arq Group H1 FY19 Results Presentation
Slide 13: FY19 Result: Core and Non-Core Operations
Arq Financials FY19 Result: Core and Non-Core Operations Challenging performance in Enterprise with a recovery in the momentum of the Core SMB business. Discontinue Continued AASB117 $m Core Non- Core d Arq Group AASB16 Operations Operations Year ended 31-Dec- SMB AASB116 Arq Group SMB Direct ∆% Cor
Slide 14: SMB Direct: Segment Results (Core)
SMB Direct SMB Direct: Segment Results (Core) Year ended FY19 FY19 FY18 Notes 1 ∆% 31-Dec-19 AASB 16 AASB 117 AASB 117 (Movements relate to numbers presented under AASB 117) Decline in revenue driven by poor WME new sales reducing subscription Revenue (excl. interest) $66.4m $66.4m $74.5m (11%) reve
Slide 15: SMB Indirect: Segment Results (Non-core)
Non-Core Operations SMB Indirect: Segment Results (Non-core) Year ended FY19 FY19 FY18 Notes 1 ∆% 31-Dec-19 AASB 16 AASB 117 AASB 117 (Movements relate to numbers presented under AASB 117) Decrease driven by sale of SMB reseller business from Aug19 and continued Revenue (excl. interest) $17.2m $17.2
Slide 16: Impairment of non-monetary assets
Arq Recovery Arq Group: Impairment of non-monetary assets • As part of the annual review for impairment the Group has recognised an impairment loss at 31 December 2019 to write down the book value of non-monetary assets of the Enterprise business to its fair value (less costs to sell). • The Group c
Slide 17: Appendix 2: Adoption of AASB 16: Leases
17 Arq Group H1 FY19 Results Presentation Appendix 2: Adoption of AASB 16: Leases
Slide 18: Adoption of AASB 16: Leases
Appendix Two: Adoption of AASB 16: Leases Adoption of AASB 16: Leases • The Australian Accounting Standards Board (AASB) has issued a new leases standard, AASB 16: Leases (‘AASB 16’), which became effective from 1 January 2019. This standard supersedes the previous leases standard AASB 117: Leases.
Slide 19: Results Snapshot
Results Snapshot FY19 Result: Adoption of AASB 16 The new leasing standard (AASB 16) shifts lease costs from opex to depreciation and interest, nominally increasing EBITDA (no cash impact) Year ended Restatement FY19 FY18 FY19 ∆% 1 Notes 31-Dec-19 to AASB 117 AASB 117 AASB 117 Revenue (exc l. intere
Slide 20: Appendix 3: FY19 Reported Results
20 Arq Group H1 FY19 Results Presentation FY19 Reported Results Appendix 3:
Slide 21: FY19 Results: Reported
Arq Financials FY19 Results: Reported Year ended FY19 FY19 FY18 Notes 1 ∆% AASB 31-Dec-19 AASB 16 AASB 117 (Movements relate to numbers presented under AASB 117) 117 Decline largely driven by removal of SMB reseller business, Revenue (excl. interest) $83.6m $83.6m $100.1m (16%) including reduced WME
Slide 22: FY19 Results: Balance Sheet
Arq Financials FY19 Results: Balance Sheet Year ended FY19 FY18 ∆% 1 Notes 31-Dec-19 AASB 117 AASB 117 Cash $8.9m $8.3m 8% Decrease primarily attributed to reduced trade and other receivables from removal Other current assets $27.3m $40.4m (32%) of SMB reseller business and Enterprise business. Asse
Slide 23: FY19 Results: Cash Movement
Arq Financials FY19 Results: Cash Movement Year ended FY19 FY18 AASB AASB Notes 31-Dec-19 117 117 CASH FLOWS FROM OPERATING ACTIVITIES Decrease in cash receipts driven by decline in business Receipt of service revenue and recoveries $187.4m $228.9m performance. Cost saving initiatives have driven op