Ioco Limited · JSE:IOC
Ioco — EOH Holdings — H1 2019 Earnings Presentation
38 slides from Ioco's earnings presentation, Apr 16, 2019
Slide 1: Interim Results
INTERIM RESULTS For the six months ended 31 January 2019 April 16th 2019
Slide 2: Agenda
AGENDA Strategic and Looking Financial operational forward overview overview Stephen van Coller Megan Pydigadu Stephen van Coller Group CEO Group CFO Group CEO 2
Slide 3: Strategic and Operational Overview
STRATEGIC AND OPERATIONAL OVERVIEW Stephen van Coller Group CEO
Slide 4: EOH continues to be a key player
EOH CONTINUES TO BE A KEY PLAYER We remain an ICT leader … entrenched in …employing the in SA and beyond… our society… best tech minds Continue to deliver right-first-time to our clients Cleaning up the past Building EOH future Aligning financials 2019 H1 RESULTS PRESENTATION 4
Slide 5: Tough times don't last, tough people do
TOUGH TIMES DON’T LAST TOUGH PEOPLE DO 5
Slide 6: Key features
KEY FEATURES Completed strategic Significantly enhanced Strengthened review governance leadership Normalised revenue stable Normalised EBITDA Resolving past mistakes R8,194 million R387 million with appropriate action 2019 H1 RESULTS PRESENTATION 6
Slide 7: Priorities to building the future
PRIORITIES TO BUILDING THE FUTURE Clients Reorganisation People Governance Capital structure Partners 2019 H1 RESULTS PRESENTATION 7
Slide 8: Evolving operating structure
EVOLVING OPERATING STRUCTURE EOH Holdings ICT NEXTEC IP Smart/ Digital infra. safe city CCS1 Sybrin1 Private Smart utility Knowledge Information Services3 Data World2 People Health tech. Public development New IP Syntell2 Advisory Feeds IP business Feeds IP business End-to-end ICT systems Specialise
Slide 9: Client-centric, solutions-led ICT strategy
CLIENT-CENTRIC, SOLUTIONS-LEAD ICT STRATEGY DIGITAL #devanything CLOUD APPS #OpenSI #Anything-as-a-service DATA #fastdata DESIGN & MANAGE & BUILD OPERATE IT #multicloud TURNKEY, COMPUTE FUTURE-FIT ICT SECURITY DIGITAL SOLUTIONS OFFERINGS HY 2019 revenue1: R4 572 million HY 2019 EBITDA1: 7% 1 Based o
Slide 10: Nextec domain specialisation and IP incubation
NEXTEC DOMAIN SPECIALISATION AND IP INCUBATION Incubation Productization Scaling Growth communities NON-EXHAUSTIVE: IP INTENSIVE NEXTEC BUSINESSES/SOLUTIONS Digital industries Smart/ safe cities Smart utilities ENERGY TRADING SYSTEM Knowledge People development Health tech. Advisory Focusing on IP i
Slide 11: Scaling IP independently
SCALING IP INDEPENDENTLY 3 3 4 2 3 4 2 1 HY 2019 revenue1: R953 million HY 2019 EBITDA1: R201 million 21% 1 Based on EOH of tomorrow. For segment reporting included in 2 Nextec; 3 ICT 4 IP 2019 H1 RESULTS PRESENTATION 11
Slide 12: People make it happen
PEOPLE MAKE IT HAPPEN … New EOH leadership: Dealt with implicated staff Key people remain committed Megan Pydigadu – CFO Debbie Millar – Treasury & IR Fatima Newman – Chief Commercial Officer Lufuno Nevhutalu – Public sector Commitment to King IV and JSE compliance 2019 H1 RESULTS PRESENTATION 12
Slide 13: Building an ethical framework
BUILDING AN ETHICAL FRAMEWORK Investigations to be completed ISO37001 compliance by 31 May Due diligence Findings to be made public Risk assessment 3rd party oversight of public New policies sector bid review process Align to King IV, JSE & Companies Act Assisting with due diligenc
Slide 14: Fit for purpose capital structure
FIT FOR PURPOSE CAPITAL STRUCTURE Sales process stage Non-binding Initialise process Due diligence Binding offer Closure offer Asset 1 Asset 2 Non-core asset sales Asset 3 Total expected proceeds Asset 4 > R 1 billion Asset 5 over the next Asset 6 3 – 12 months partnerships Asset 7 Strategic Asset 8
Slide 15: What would the business of tomorrow look like today
WHAT WOULD THE BUSINESS OF TOMORROW LOOK LIKE TODAY … Normalised HYresults HY Normalised results HY Sustainable1 results HY2019 Revenue HY2019 Revenue IP Margins 15% R8,194mn Circa R6,500mn 44% Nextec ICT 56% 24% Nextec ICT 62% HY2019 EBITDA2 HY2019 EBITDA2 R387mn Nextec Circa R600mn IP 26% 30% 5% 9
Slide 16: Key features of the last six months
KEY FEATURES OF THE LAST SIX MONTHS Cleaning up the past Building EOH future Aligning financials 2019 H1 RESULTS PRESENTATION 16
Slide 17: Financial Review
FINANCIAL REVIEW Megan Pydigadu Group CFO
Slide 18: Overview of the first 90 days
OVERVIEW OF THE FIRST 90 DAYS… Balance sheet review Better Governance a priority team and compliance System and Cash of c. R1billion process overhaul 2019 H1 RESULTS PRESENTATION 18
Slide 19: Balance sheet review completed
BALANCE SHEET REVIEW COMPLETED Asset Equity and liabilities Restated Restated Unaudited at unaudited Unaudited at unaudited ZAR ‘000 31 Jan 2019 31 Jul 2018 Diff ZAR ‘000 31 Jan 2019 31 Jul 2018 Diff PPE 745 823 742 983 2 840 Equity 4 574 479 7 461 885 (2 887 406) Goodwill 3 185 719 4 255 281 (1 069
Slide 20: Non-cash impairments and write offs unpacked
NON-CASH IMPAIRMENTS AND WRITE OFFS UNPACKED Once-off adjustments Other financial assets 4% Non-cash flow Inventory Equity accounted 4% Goodwill impairments R1,138 million investments ICT R311 million 5% Nextec R827 million Intangible asset impairments R481 million ERP templates in dis
Slide 21: Adjustments to opening balance sheet
ADJUSTMENTS TO OPENING BALANCE SHEET IFRS 9 adoption - R211 million Prior year adjustments - R666 million Provision Provision Difference to under under opening 31 July ZAR ‘000 IAS39 IFRS9 equity ZAR ‘000 2018 Impairment Net Trade receivables 447 574 127 GCT other financial assets 424 (124) 300 Othe
Slide 22: Context of the numbers
CONTEXT OF THE NUMBERS… S E P E R AT E D F RO M N O R M A L I S E D I N : Financial report Operating segments Business of tomorrow Assets held for sale Mehteketo Group (Nextec) Discontinuing Large scale Public Sector Non-Core ERP Implementations (ICT) Middle East and Selected BPO African ERP Electri
Slide 23: Abridged income statement
ABRIDGED INCOME STATEMENT Unaudited at Unaudited at ZAR ‘000 31 Jan 2019 31 Jan 2018 Change Revenue 8 428 280 8 353 606 74 674 Gross profit 1 667 250 2 682 280 (1 015 030) Gross profit margin 20% 32% Net financial asset impairment losses (513 986) (14 524) (499 462) Operating expenses (4 031 562) (1
Slide 24: Revenue review
REVENUE REVIEW Revenue profile ZAR 000’s 10000 8354 8428 7025 8000 6002 6000 4610 4000 2000 5 year CAGR 16% 0 H1:2015 H1:2016 H1:2017 H1:2018 H1:2019 H1:2018 H1:2019 ICT Nextec Nextec ICT 57% 43% 44% 56% ICT negatively impacted by International Nextec positively impacted by IP 2019 H1 RESULTS PRESEN
Slide 25: Revenue mix
REVENUE MIX ICT International ICT International 13% 14% International slow down ICT original ICT original 87% 86% IP IP 1 Nextec 7% Nextec 10% BPO BPO 2 41% IP growth 43% 3 Industrial Tech Industrial Tech 53% 47% H1:2018 H1:2019 2019 H1 RESULTS PRESENTATION 1 Only CCS and Sybrin; 2 Includes Informat
Slide 26: Gross margin analysis
GROSS MARGIN ANALYSIS Gross Margin Gross profit contributions Gross profit contribution International H1:2019 11% 32% (2.2%) Nextec (3.5%) 41% (1.7%) ICT (1.1%) 41% (3.5%) 20% IP 7% International H1:2018 13% Nextec 33% ICT IP January International ICT ICT Margin Nextec Discontinuing January 48%
Slide 27: Operating cost analysis
OPERATING COST ANALYSIS Operating costs ZAR millions 119 6 146 158 1 719 4 032 1 884 January Impairments Loss on disposal IFRS2 Discontinuing1 Other January 2018 of TTCs equity Lebashe 2019 investment 1 Based on operating segment analysis 2019 H1 RESULTS PRESENTATION 27
Slide 28: EBITDA bridge before non-core adjustments
EBITDA BRIDGE BEFORE NON-CORE ADJUSTMENTS EBITDA bridge ZAR millions Non-cash, normalization adjustments Once-off, cash normalisation (R410 million) adjustments (R182 million) 96 86 387 253 157 585 (790) EBITDA Discontinuing 1 Lebashe IFRS 2 Specific Inventory Advisory Normalised HY2019 charge IFRS
Slide 29: Cash bridge
CASH BRIDGE Analysis of use of cash ZAR millions 720 215 1418 (167) 1167 (133) (167) 2 (75) (856) 957 Opening Cash Working Net Taxation Net cashflow Proceeds Net repayment FCTR Closing cash generated capital finance from from of other cash costs investing insure of financial activities shares capabi
Slide 30: Improved credit policies
IMPROVED CREDIT POLICIES 2018 2019 44% 42% Trade receivables of R 3,561 million (R3,806 million) 35% 24% 20% 13% 8% 5% 5% 4% Current 30 Days 60 Days 90 Days 120 Days + 2019 H1 RESULTS PRESENTATION 30
Slide 31: Debtors industry exposure
DEBTORS INDUSTRY EXPOSURE H1 2018 H1 2019 Public sector 29% Public sector Other 29% 37% Other 40% Financial Financial services services 10% Mining 11% 5% Mining Information 5% Telecommunication technology Health Telecommunication 9% 10% 7% 8% 2019 H1 RESULTS PRESENTATION 31
Slide 32: Reduced gross liabilities
REDUCED GROSS LIABILITIES R852 million reduction in liabilities from R4,104 million at YE VFA 13% Other non Ongoing engagement and support of funders interest bearing Interest bearing 2% Additional facilities raised during the period to support loans (property) 0% implementation of a central t
Slide 33: Net debt analysis
NET DEBT ANALYSIS 31 January 31 January 31 July VFA liabilities excluded from gross debt ZAR ‘000 2019 2018 2018 Net debt has been reducing funded in part by equity injections Interest bearing liabilities 2 833 3 608 3 469 Cash and cash equivalents 957 1 302 1 418 Gross debt lower in current p
Slide 34: CFO initiatives identified
CFO INITIATIVES IDENTIFIED Structural improvements Procurement centralisation Creation of treasury, finance & Ensure greater control and benefit advisory and tax departments in the purchasing process through System and process improvements collective procurement Centralised credit control Dr
Slide 35: Looking Forward
LOOKING FORWARD Stephen van Coller Group CEO
Slide 36: Priorities building EOH future
4 PRIORITIES BUILDING EOH FUTURE Clients Reorganisation People Governance Capital structure Partners 2019 H1 RESULTS PRESENTATION 36
Slide 37: What would the business of tomorrow look like today
WHAT WOULD THE BUSINESS OF TOMORROW LOOK LIKE TODAY … Normalised HYresults HY Normalised results HY Sustainable1 results HY2019 Revenue HY2019 Revenue IP Margins 15% R8,194mn Circa R6,500mn 45% Nextec ICT 55% 24% Nextec ICT 62% HY2019 EBITDA2 HY2019 EBITDA2 R387mn Nextec Circa R600mn IP 27% 30% 5% 9
Slide 38: Q&A
Q&A