Ioco Limited · JSE:IOC
Ioco — EOH Holdings — FY2021 Earnings Presentation
48 slides from Ioco's earnings presentation, November 2021
Slide 1: Annual Results Presentation FY2021
Annual Results Presentation FY2021 EOH Holdings Limited
Slide 2: Operational Overview
Operational Overview Stephen van Coller Chief Executive Officer
Slide 3: FY2021 – an inflection point
FY2021 – an inflection point Foundation set for executing on growth strategy REVENUE EARNINGS LIQUIDITY Business right-sized Operating Profit of TOTAL DEBT BALANCE with Total Revenue of R147m R2bn R7.9bn R1.3bn loss in FY20 R2.5bn in FY20 R11.3bn in FY20 NET WORKING CAPITAL Adjusted EBITDA* of R263m
Slide 4: EOH now well positioned to serve evolving client needs
EOH now well positioned to serve evolving client needs IP Revenue: R4.9bn Revenue: R1.9bn Revenue: R1 bn Adjusted EBITDA: R524m Adjusted EBITDA: (R35m) Adjusted EBITDA: R267m 10,7% Margin (1.8%) Margin 25.6% Margin Sales & Advisory 2% of revenue Sold for a base price of Infrastructure solutions R211
Slide 5: Rocketlab Ventures is where we develop our exciting IP
Rocketlab Ventures is where we develop our exciting IP Key Customers Key Customers Key Customers Key Customers Key Customers 5 stand alone early-stage product companies currently housed in iOCO Double digit y-o-y growth projected ~2,5% of revenue
Slide 6: Road to green
Road to green Improved governance framework 7 Pillars of Governance May 2019 October 2021 Ethical Ethics Ethical Ethical Ethics Ethical Core Code of Anti-Fraud Competi- Other Core Code of Anti-Fraud Competi- Other Leadership & Values Conduct Program- Recruit- Corruption tion Policies Leadership & Va
Slide 7: Premier partner to global technology providers
Premier partner to global technology providers
Slide 8: Positive momentum in new deals post-remediation
Positive momentum in new deals post-remediation 441 public sector deals won totalling R3,1bn Major Telco Public Sector Utility Contact centre optimization Dev services Payroll outsourcing solution R204m R199m R114m Project duration: 3 years Project duration: 5 years Project duration: 2 years Major M
Slide 9: Resilient business diversified across clients & industries
Resilient business diversified across clients & industries Revenue exposure by industry & region 84% of revenue from services Financial Services 26% 2% Rentals Public Sector 20% Software/license contracts 5% 7% 9% 9% Manufacturing & logistics 9% Hardware sales Telecommunications 9% Mining 7% Informa
Slide 10: Leaving legacy issues behind
Leaving legacy issues behind All contracts settled and terminated 8 problematic legacy contracts Commenced reimbursing for over-charging in 2 contracts Special investigations unit (SIU) Resolution on remaining contract in negotiation Summons issued against former executives Legal process for malfeas
Slide 11: Our purpose is to SOLVE for…
Our purpose is to SOLVE for… Our Clients Our People Our Communities • Launch of new EVP • RebuildSA • Integrated wellness • Live Life Always partnership - • Support during unrest • Diversity and Inclusion Alex cleanup • Digital transformation • Enterprise Social Development • Reskilling and Upskilli
Slide 12: People
People 6 874 employees participated in wellness engagements 481 learnerships and internships 2 441 training interventions 96.5% people received increases between Aug 20 and Aug 21 80 unemployed people provided with bursary support
Slide 13: Financial Overview
Financial Overview Megan Pydigadu Financial Director
Slide 14: Income Statement
Income Statement
Slide 15: 2021 Priorities delivered on
2021 Priorities delivered on Quality earnings – YOY Improvement ✓ Operating profit: R1.3bn loss to profit of R146m for FY2021 ✓. Improved capital structure & liquidity 477 (22%) Gross Profit Rm • Margin improvement from 22% to 28% ✓. • Gross Debt of R2bn • R433m repaid to lenders reducing interest c
Slide 16: Historical Context
Historical Context 22 000 21 121 90 21 000 80 17 000 90 20 000 19 513 70 16 000 80 19 000 15 000 60 70 18 000 16 935 Market Cap R1.3bn 14 000 50 60 17 000 WACC 14% 13 000 40 50 16 000 15 000 25% 12 000 30 40 23% 19% 11 000 25% 30 14 000 17% 14% 20 23% 19% 13 000 10 000 17% 14% 20 7% 5% 10 12 000 9 0
Slide 17: Focus on quality of earnings paying off
Focus on quality of earnings paying off External Revenue Rm FY2019 FY2020 FY2021 -25% 14 949 1 339 -30% 28% 4 010 11 277 20% 22% 932 2 201 9% 7 882 0% 2% 346 335 ( 22) (9%) (12%) ( 534) 9 601 8 145 (29%) 7 201 (1 751) FY2019 FY2020 FY2021 Legacy cleanup Sold/liquidated entities GP Margin Adjusted EB
Slide 18: Analysis of base revenue
Analysis of base revenue Rm Base Revenue Rm 316 -12% 426 201 8 145 695 7 201 Travel & Hospitality 905 41 1 783 (10%) Beverages 87 1 717 Health (20%) 101 8 145 (24%) 7 201 107 5 667 19 (25%) 4 578 (4%) 71 Retailers (17%) Education & Human Capital Oil & Energy FY2020 FY2021 IP NEXTEC iOCO FY2020 Hardw
Slide 19: Segment performance: GP and EBITDA by business unit
GP: 30% GP: 25% GP: 10% GP: 38% GP: 43% GP: 17% EBITDA: 12% EBITDA: 11% EBITDA: 5% EBITDA: 12% EBITDA: 21% EBITDA: -7% Revenue growth impacted by App dev, automation, big This business unit has been Our OKS business contains Growth in adoption of OT in This is largely made up of hardware sales decli
Slide 20: People and Infrastructure EBITDA
R-35m EBITDA People 42% Gross Revenue -R46m R11m 1 951 EBITDA 19% 19% GP margin Infrastructure GP margin -4% 58% EBITDA margin 1% EBITDA margin R45m EBITDA losses relating to Pia Solar and Autospec
Slide 21: OPEX
OPEX Positive JAWS resulting in operating profit Cash vs non-cash opex Rm Cash cost base remaining after disposals and legacy clean-up Rm -41% 6 464 Non-cash opex Sold/liquidated entities Cash Opex Legacy businesses Once off cost saving Once off cash savings -21% Remaining cash cost base 3 579 2 886
Slide 22: EBITDA
EBITDA Drastic decline in one-offs showing sustainable stability Rm FY2021 FY2020 Δ Δ% FY2021 VS FY2020 FY2021 VS FY2020 Operating Profit/ (Loss) 147 (1 319) 1 466 (111%) EBITDA Adjustments 520 1 338 (818) (61%) Depreciation & amortisation 275 498 (223) (45%) Impairment losses 183 522 (340) (65%) Ga
Slide 23: Decline in adjustments as business stabilises
Decline in adjustments as business stabilises 60 Once off cost savings 526 (105) 20 149 49 46 FY2020 Rm 107 FY2019 Rm 760 FY2021 Rm 20 756 24 1 889 9 50 (100) 496 39 Provision releases 273 Write-off of of inventories Other financial assets write-off and specific provisions 115 155 Advisory and other
Slide 24: Balance Sheet
Balance Sheet
Slide 25: Debt Rm
Debt Rm Net debt to EBITDA ratio down to 2.4 from 89.0 The Group has signed a Common Terms Agreement (“CTA”) with its lenders on 20 October 2021 the 1 482 1 537 1 527 principal features being: 2 841 2 483 R500 million Senior facility repayable in 3 2 065 years’ time with a 100% bullet payment; and R
Slide 26: Cash bridge Rm
Cash bridge Rm AHFS 74 16% Continuing 137 84% 110 663 216 214 118 428 155 458 Business 1 071 17 Legacy outflows Debt outflows 946 as Usual (273) 798 (261) 126 537 Opening Operational Net capital Lease obligation Taxation paid Net finance Cash available iOCO Distressed Cash before Sale proceeds Cash
Slide 27: Net working capital stable in a tough environment
Net working capital stable in a tough environment Gross Receivables Debtors' days stayed constant at 65 days Inventory Payables & Deferred Income Net Working Capital Debtors Debtors Provision Provision 18% 15% 4 733 3 879 3 884 1 549 3 329 2 640 2 329 690 2 090 323 359 426 263 175 378 287 287 204 13
Slide 28: Provisions Rm
Provisions Rm Steady decline after settlements and reversals 91 Onerous contracts 19 SIU 89 70 172 216 PAYE 670 13 Expected outflows 324 79 79 79 43 43 FY2022 FY2023 FY2024 FY2025 FY2026 FY2020 Released Paid Utilised Other FY2021 during the year
Slide 29: Disposals
Disposals Cash proceeds Cash proceeds Enterprise value# Disposal Industry Financial year received to be received EV/PAT multiple Rm Rm Rm Construction CCS - 70% FY2019 651 444 0 19,2 software Construction CCS - 30% FY2020 476 143 0 14,0 software Dental health fund DENIS FY2021 250 224 17 7,2 adminis
Slide 30: Priorities
Priorities 2022 and beyond 1 2 3 Continued focus on Optimising capital Creating efficiencies quality of earnings structure through digitisation
Slide 31: EOH Commercial Overview
EOH Commercial Overview Ziaad Suleman Chief Commercial Officer
Slide 32: iOCO provides products and solutions across the ICT value chain
iOCO provides products and solutions across the ICT value chain Sales & OEM Driven Strategy Own IP Driven Strategy Advisory (enabled by EOH market expertise, (enabled by own IP and multiple technology partners) sales & implementation) iOCO Technology Integrated Sales iOCO Digital Multi-BU Solution S
Slide 33: NEXTEC provides Infrastructure and People solutions
NEXTEC provides Infrastructure and People solutions Infrastructure Solutions SA & SSA People Solutions Talent, Recruitment Consulting Services 1 Staff Outsourcing 2 Tech Leasing BBBEE Advisory Digital Infrastructure Asset Management Solutions and Learning & Development analytics Following our OEM’s
Slide 34: NEXTEC is a leading technology systems integrator
NEXTEC is one of the leading technology systems integrator with best-in-class people solutions 1 2 3 4 Saved 52 megalitres of water Implemented Smart Estate Provided 1 million + hours of Lead Western Cape in for the City of Cape Town. Security Solutions into South online tutoring to mainland designi
Slide 35: Digital trends
Digital trends Trends affecting our clients in 2021-2022 IT/OT CONVERGENCE SECURITY AUTOMATION, DATA, AI & MACHINE INNOVATION LEARNING TECH CONVERGENCE & DIGITAL TRANSFORMATION SPEED & SCALE DISTRIBUTED TEAMS SOFTWARE ECOSYSTEM CULTURE
Slide 36: Drivers of our Value Proposition
Drivers of our Value Proposition Technological capabilities in areas A presence in strong where growth rates are strong as growth sectors companies migrate away from inefficient legacy systems A leaner, Capabilities to expand more client into new markets Expanding into UK, Europe and focused whilst
Slide 37: Our International footprint is a base for expansion
Our International footprint is a base for expansion Czech office South Africa to serve Sub-Saharan Africa UK business Middle East - Egypt, Saudi Arabia & UAE - # OF CLIENTS 170 Egypt positioned as a hub to expand into the Middle East Swiss office Current Offering • Software Reseller & Digital offeri
Slide 38: A day in the life of a SA Citizen
A day in the life of a SA Citizen Unmatched capabilities across all sectors of the economy 06:00 07:20 Wakes up 07:00 Makes online 08:00 payments on digital banking platform Makes a purchase Sends airtime at the pharmacy via cell phone banking Logistics and supply chain management systems 20:00 Watc
Slide 39: Outlook
Stephen van Coller Chief Executive Officer OUTLOOK
Slide 40: Sustainable competitive advantage
Sustainable competitive advantage Network & Reach Depth & Breadth of Offering Scale to deliver large projects Diverse client base across sectors End-to-end ~5000 total clients ICT offering ~6000 full-time Enduring High potential client relationships IP business to create ~380 future platforms develo
Slide 41: Significant potential provides foundation for growth
Significant potential provides foundation for growth Optimal capital structure International Future proof with investment expansion into own IP platforms OEM partnership strategy – Automation across the OT/ IT spectrum expand with the help of OEMs STRATEGIC Tailored Go-To-Market strategy PILLARS Sig
Slide 42: Thank you
Thank you Investor Relations: IR@eoh.com
Slide 43: Disclaimer
Disclaimer CAUTIONARY REGARDING FORWARD-LOOKING STATEMENTS We may make statements that are not historical facts and relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable. These are forward looking statements as defined in the U.S.
Slide 44: Appendix 1: Income Statement
Appendix 1: Income Statement Continuous and sustained improvement FY2021 FY2020 Rm Audited Continuing Discont. Audited Continuing Discont. Revenue 7 882 6 874 1 008 11 277 8 772 2 505 Gross Profit 2 200 1 723 477 2 469 1 798 671 Operating expenses (2 053) (1 687) (366) (3 788) (2 734) (1 054) Operat
Slide 45: Appendix 2: Balance Sheet
Appendix 2: Balance Sheet Assets Audited 31 July 2021 Audited 31 July 2020 R’000 Total Continuing Total Continuing Non-current Assets Property, plant, equipment and right-of-use assets 398 452 341 464 789 664 544 846 Intangible assets 382 676 64 493 458 288 112 967 Goodwill 1 215 808 745 844 1 520 8
Slide 46: Balance Sheet: Equity & Liabilities
Balance Sheet Equity & Liabilities Audited 31 July 2021 Audited 31 July 2020 R’000 Total Continuing Total Continuing Equity Stated capital 4 217 285 4 217 285 4 250 219 4 250 219 Shares to be issued to vendors 393 393 15 300 15 300 Other reserves 598 500 598 500 924 862 924 862 Retained earnings (4
Slide 47: Appendix 3: Digital transformation and automation
Appendix 3: Digital transformation and automation Digital innovation is at the heart of our 4000+ strategic and technical specialists JOURNEY TO THE CLOUD Public Cloud - AWS, GCP, Azure, OEM Cloud offerings - Oracle, SAP & IBM, Migrated major hospital group into the cloud CUSTOM SOFTWARE DEVELOPMENT
Slide 48: Appendix 4: International business commercial strategy
Appendix 4:The International business commercial strategy centres on: CUSTOMER NEEDS TARGET CUSTOMERS OR SEGMENTS OUR UNIQUE VALUE PROPOSITION • Help with emerging tech Corporate/mid-market • Global presence, local relevance • Customer experience • Financial Services • Customer centric – close touch