Altron Limited Class A · JSE:AEL
Altron Limited Class A — H1 FY19 Earnings Presentation
36 slides from Altron Limited Class A's earnings presentation, May 2019
Slide 1: H1 FY19 Interim Results
H1 FY19 INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2018
Slide 2: Delivering growth: agenda and presenters
1 2 3 4 Delivering Financial Operational Strategy growth results overview and outlook Mteto Nyati Mteto Nyati Andrew Holden Mteto Nyati Chief Executive Chief Executive Chief Operations Officer Chief Executive 2
Slide 3: Overview – A Solid Performance
01 OVERVIEW – A SOLID PERFORMANCE Mteto Nyati Chief Executive
Slide 4: Results Highlights
Results Highlights Normalised Revenue Normalised EBITDA Normalised HEPS +44% +16% +25% R 9.8 billion R 686 million 71 cents per share Free Cash Flow Adjusted net debt of ROCE +220% 19% R 991 million R 295 million (including deferred disposal receipts) Interim dividend of 28c per share 4
Slide 5: Delivering Innovation That Matters
Delivering Innovation That Matters Healthcare Management Safety and Security 64 of 81 primary health clinics use Vehicle on mines fitted with Altron e-health record system collision avoidance system with a 360 view in-vehicle display Financial Inclusion Skills Development Pioneered the technology to
Slide 6: Key Achievements
Key Achievements 70% of our operations have net Successfully Integrated Two Powertech Transformers and Altech promoter scores above industry acquisitions UEC disposals completed average Number one Microsoft licencing 57% of our revenue offshore partner in the UK 35% of our EBITDA offshore Strong Cov
Slide 7: H1 Performance Overview
H1 Performance Overview Solid Performing Operations Netstar Bytes Secure Transaction Solutions Bytes UK Underperforming Operations Altron Bytes Document Solutions Altron ARH Altron Bytes Systems Integration Altron Arrow Altron Bytes People Solutions 7
Slide 8: Disposal of Non-core Assets
Disposal of Non-core Assets Discontinued operations Status Realised Deferred Expected date of receipt Powertech Batteries Sale concluded R227 million R107 million Quarterly receipts of ±R6.5m per quarter Aberdare (17.5% put option) Sale concluded R928 million R94 million June 2019 PTSI Sale conclude
Slide 9: Financial Results
02 FINANCIAL RESULTS Mteto Nyati Chief Executive
Slide 10: Summarised Income Statement
Summarised Income Statement Continuing operations 6 months ended 31 August Statutory Once-off Normalised Statutory Once-off Normalised % change R’million H1 FY19 costs1 H1 FY19 H1 FY18 costs1 H1 FY18 (normalised) Revenue 9 779 9 779 6 792 6 792 44 Operating profit before capital items 421 9 430 334
Slide 11: EBITDA Margin Reconciliation
EBITDA Margin Reconciliation R’m Revenue EBITDA Margin Prior Year Comments Normalised 9 779 686 7.0% 8.7% Client mix in public Phoenix acquisition (1 527) (62) sector Lower margin due to National Health deliberate strategic Service contract (518) (3) intention to secure future (“NHS”) in Bytes UK bu
Slide 12: Normalised EBITDA bridge
Normalised EBITDA Continuing operations 750 31 (6) (39) 730 710 100 686 690 670 R’million 650 39 (32) 630 610 593 590 570 550 31 Aug 2017 Altron ICT SA, exc ARH Altron ARH Altron ICT International Netstar Altron Arrow Corporate Corp andand SS 31 Aug 2018 Shared Services 12
Slide 13: Organic vs Acquisitive
Organic vs Acquisitive Continuing operations Revenue EBITDA 11 000 750 (32) 60 1 529 (90) 700 686 10 000 9 779 65 650 9 000 1 548 593 600 8 000 550 R’million R’million 7 000 6 792 500 16% 44% 450 Growth: 6 000 Growth: 11% Acquisitive 23% Acquisitive 10% Organic 400 22% Organic (5%) ARH 5 000 (1%) AR
Slide 14: Cash Flow Bridge
Cash Flow Bridge 600 720 (90) 500 (100) 400 (48) R’million 300 4 (65) (249)* 200 100 50 82 - (100) (200) (204) (300) Opening Cash Change in Net finance Taxation paid Dividends Investment Finance Effect of Closing balance generated working expenses received activities activities exchange rate balance
Slide 15: Group Cash Flow Statement
Group Cash Flow Statement Condensed consolidated statement of cash flows R millions Six months Six months Year ended ended ended 31.08.18 31.08.17 28.02.18 (Unaudited) (Unaudited) (Audited) Cash flows from operating activities 486 15 582 Cash generated by operations 720 598 1 234 Interest received 7
Slide 16: Summarised Balance Sheet
Summarised Balance Sheet As at 31 August R’million H1 FY19 H1 FY18 % Change Commentary Total non-current assets 3 787 3 187 19 Acquisition of Phoenix Current assets 4 658 3 541 32 Debtors ARH and acquisitions Assets held-for-sale 274 1 013 (73) Powertech & Altech Multimedia disposals Cash balance 1
Slide 17: Adjusted Net Debt Reconciliation
Adjusted Net Debt Reconciliation R’million H1 FY19 H1 FY18 FY18 Net debt as reported 1 432 1 834 1 940 Less: Net asset value of disposal group (78) (274) (249) Less: Net debt in disposal group - (142) - Less: Deferred disposal receipts (363) (269) (201) Adjusted net debt (including deferred disposal
Slide 18: Working Capital
Working Capital 55 49 51 59 71 60 76 69 58 37 36 28 19 12 4 4 (7) (4) (92) (112) (106) (105) (114) (92) FY14 FY15 FY16 FY17 FY18 H1 FY19 Inventory days Debtors days Creditor days Net working capital days 18
Slide 19: Dividends
Dividends The Group has resumed paying dividends since the year ended 29 February 2016 Dividend policy considerations: • Maintaining sufficient headroom in facilities • Well within debt covenants • 2.5 times dividend cover on continuing operations going forward The board has declared an interim divi
Slide 20: Operational Overview
03 OPERATIONAL OVERVIEW Andrew Holden Chief Operations Officer
Slide 21: Results Highlights
Results Highlights Normalised Revenue Normalised EBITDA Normalised HEPS +44% +16% +25% R 9.8 billion R 686 million 71 cents per share Free Cash Flow Adjusted net debt of ROCE +220% 19% R 991 million R 295 million (including deferred disposal receipts) Interim dividend of 28c per share 21
Slide 22: Bytes Technology Group UK (with Phoenix) - normalised
Bytes Technology Group UK (with Phoenix) - normalised REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) 6 000 250 3.9% 5 000 200 4 000 150 3 000 4.3% 109% 5 288 100 90% 207 2 000 1 000 2 525 50 109 0 0 H1 FY18 H1 FY19 H1 FY18 H1 FY19 Interims at a glance Strategy ➔ Performance positively impacted by
Slide 23: Bytes Technology Group UK (without Phoenix) – normalized
Bytes Technology Group UK (without Phoenix) – normalized REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) 4 000 160 3.8% 3 500 140 3 000 120 4.3% 2 500 100 2 000 80 1 500 49% 3 761 60 32% 144 2 525 109 1 000 40 500 20 0 0 H1 FY18 H1 FY19 H1 FY18 H1 FY19 23
Slide 24: Netstar (with EZY2C) – normalized
Netstar (with EZY2C*) – normalized REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) 800 280 34.8% 260 720 240 34% 640 11% 742 14% 258 220 668 227 560 200 H1 FY18 H1 FY19 H1 FY18 H1 FY19 Interims at a glance Strategy ➔ Continued improvements in the performance ➔ Focus on growing market share in telem
Slide 25: Netstar (without EZY2C) - normalised
Netstar (without EZY2C) - normalised REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) 720 260 35% 240 34% 220 200 640 180 706 248 8% 160 221 12% 652 140 120 560 100 H1 FY18 H1 FY19 H1 FY18 H1 FY19 180% Jamming Car park growth in net ISO 9001:2015 Insurance Telematics resistant jamming connections ce
Slide 26: Altron Bytes Secure Transaction Solutions - normalised
Altron Bytes Secure Transaction Solutions - normalised REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) 600 150 23.1% 135 570 120 21.8% 105 540 90 75 22% 510 580 60 134 15% 45 110 480 504 30 15 450 0 H1 FY18 H1 FY19 H1 FY18 H1 FY19 Interims at a glance Strategy ➔ Good revenue and EBITDA growth due t
Slide 27: Altron Bytes Systems Integration - normalised
Altron Bytes Systems Integration - normalised REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) 45 3.5% 1 000 3.1% 12% 30 500 1 028 24% 921 36 15 29 0 0 H1 FY18 H1 FY19 H1 FY18 H1 FY19 Interims at a glance Strategy ➔ Strong EBITDA results, benefitting from integration gains. ➔ Refining the operating
Slide 28: Altron ARH - normalised
Altron ARH - normalised REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) 600 40 5.5% 32 24 480 586 (15%) 16 32 496 (100%) 8 360 0 0 H1 FY18 H1 FY19 H1 FY18 H1 FY19 Interims at a glance Strategy ➔ Delays in public sector contracts ➔ To win and deliver on current opportunities presented by broadband ➔
Slide 29: Altron Bytes Document Solutions - normalised
Altron Bytes Document Solutions - normalised REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) 800 40 4.4% 30 3.8% 640 20 9% 28% 32 720 25 660 10 480 0 H1 FY18 H1 FY19 H1 FY18 H1 FY19 Interims at a glance Strategy ➔ Improved margins in the production systems ➔ Focus our attention on only three growth
Slide 30: Altron Bytes Managed Solutions - normalised
Altron Bytes Managed Solutions - normalised REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) 560 40 420 0% 30 (6%) 280 20 517 517 32 30 140 10 0 0 H1 FY18 H1 FY19 H1 FY18 H1 FY19 Interims at a glance Strategy ➔ Revenue and EBITDA in line with prior year ➔ Convert the traditional retail sector with n
Slide 31: Altron Bytes People Solutions - normalised
Altron Bytes People Solutions - normalised REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) 240 25 9.7% 20 8.6% 232 15 21% 224 8% 237 10 23 19 216 220 5 208 0 H1 FY18 H1 FY19 H1 FY18 H1 FY19 Interims at a glance Strategy ➔ Improved EBITDA due to the call centre business ➔ Broadening skills developme
Slide 32: Altron Arrow – normalized
Altron Arrow – normalized REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) 600 25 7.2% 500 20 5.2% 400 15 300 (29%) (1%) 10 21 200 15 100 291 287 5 0 0 H1 FY18 H1 FY19 H1 FY18 H1 FY19 Interims at a glance Strategy ➔ Reduction in EBITDA following lower gross margin levels and overall ➔ Busy with key
Slide 33: Strategy & Outlook
04 STRATEGY & OUTLOOK Mteto Nyati Chief Executive
Slide 34: Altron Group - Outlook
Altron Group - Outlook § Altron BDS and BSI Integration to maintain H1 performance. § We expect ARH to achieve its full year Revenue and EBITDA plan. § Debt refinancing to be finalized before the end of the financial year. § Netstar has launched an India operation with equity partner C-Ahead § Netst
Slide 35: Altron Group - Outlook
Altron Group - Outlook § Expect double digit EBITDA growth. § Fully integrate Altron Karabina § Strong Cloud and Data Analytics capabilities § Operationalise Huawei and Altron internet of things partnership § Establish presence in India through Netstar § Finalise debt refinance with our lenders 35
Slide 36: Thank You
ALTRON THANK YOU