Altron Limited Class A · JSE:AEL
Altron Limited Class A — FY2019 Earnings Presentation
37 slides from Altron Limited Class A's earnings presentation, May 2019
Slide 1: Financial Results for the Year Ended February 2019
FINANCIAL RESULTS FOR THE YEAR ENDED FEBRUARY 2019
Slide 2: Delivering Growth, Financial Results, Operational Overview, Strategy and Outlook
Delivering Growth 1 Mteto Nyati Chief Executive Financial Results 2 Cedric Miller Chief Financial Officer Operational Overview 3 Andrew Holden Chief Operations Officer Strategy and Outlook 4 Mteto Nyati Chief Executive
Slide 3: Delivering Growth
01 DELIVERING GROWTH Mteto Nyati Chief Executive
Slide 4: Results Highlights – Continuing Operations
Results Highlights – Continuing Operations Normalised Revenue Normalised EBITDA Normalised HEPS +30% +24% +36% R 19.2 billion R 1.6 billion 183 cents per share (44% from offshore) (29% from offshore) Free Cash Flow Normalised ROCE Improved Gearing R 1.3 billion +804% 21% (including deferred disposal
Slide 5: Delivering Innovation That Matters
Delivering Innovation That Matters A tracking device using Designed an IoT technology Nano technology to protect embedded in a multifunctional assets other than vehicles device (MFD) and uses 3G such as classroom digital network to proactively monitor screens. equipment. The Altron Technology Profes
Slide 6: Key Achievements
Key Achievements Disposals: Bytes UK Growth Successful integration of Successful conclusion of sale of material non-core assets: R9.9 billion Revenue (63% growth) new acquisitions Altech UEC and Powertech Transformers R368 million EBITDA (79% growth) Phoenix, Karabina and Zetta Above average employe
Slide 7: Significant Wins
Significant Wins Altron Bytes Document Altron Bytes UK Netstar Australia Altron Nexus Solutions R2.7 billion over 5 R45 million years R52 million R2.8 billion CyberTech Altron Bytes System Netstar Bytes Security Integration 3 year contract Partnerships R5.5 million R38 million 7000 vehicles R17.7 mi
Slide 8: Region and Segment Contribution
Region and Segment Contribution Regional Contribution Segmental Contribution * EBITDA EBITDA Geographic Revenue% EBITDA % Segment Revenue % EBITDA % growth % growth % South Africa 56 71 15 Digital Transformation 63 38 48 Europe 39 23 80 Smart IoT 10 36 19 Rest of Africa 4 3 41 Managed Services 20 11
Slide 9: Annuity Percentage by Operating Company
Annuity Percentage by Operating Company Annuity % Bytes UK 64% Altron Netstar 86% Altron Bytes Secure Transaction Solutions 74% Altron Bytes Systems Integration 49% Altron Bytes Managed Solutions 52% Altron Nexus 26% Altron Bytes Document Solutions 40% Altron Bytes People Solutions 73% Altron Rest o
Slide 10: Public vs Private Revenue Contribution in South Africa
Public vs Private Revenue Contribution in South Africa Operating Company Public % Private % Altron Netstar South Africa 4 96 Altron Karabina 0 100 Altron Bytes Managed solutions 2 98 Altron Bytes Secure Transaction Solutions 2 98 Altron Arrow 1 99 Altron Nexus 78 22 Altron Bytes People Solutions 1 9
Slide 11: About Sayeeda Khan
About Sayeeda Khan Appointed Group Executive: Risk and Compliance as of 1 April 2019 Former Risk and Compliance Officer of BCX Over 20 years risk, compliance and governance experience Spent 13 years working in ICT 11
Slide 12: About Cedric Miller
About Cedric Miller Appointed Group Chief Financial Officer as of 1 May 2019 Former CFO of Standard Bank’s Personal & Business Banking 27 years financial and accounting experience Former Chief Operations Officer of Standard Bank’s subsidiary in Argentina Has been a member of numerous boards and exec
Slide 13: Financial Results
02 FINANCIAL RESULTS Cedric Miller Chief Financial Officer
Slide 14: Financial Focus Area
Financial Focus Area EFFICIENT CAPITAL GROWTH AND ALLOCATION RESILIENCE OPTIMISATION OF Improving PORTFOLIO MIX CAPITAL STRUCTURE profitability ONE ALTRON WORKING IN CONTEXT OF CAPITAL CUSTOMER CENTRICITY MANAGEMENT 14
Slide 15: IFRS and Normalisation Analysis
IFRS and normalisation analysis Year ended 28 February R’million FY19 FY18 % Change Total EBITDA - IFRS 1 661 1 242 34 Continuing operations 1 607 1 234 30 Discontinued operations 54 8 >100% Total headline earnings - IFRS 708 448 58 Continued operations 663 441 50 Discontinued operations 45 7 >100%
Slide 16: Summarised Income Statement
Summarised Income Statement Continuing Operations Year ended 28 February Statutory Statutory % change R’million FY19 Normalised FY19 1 FY18 1 Normalised FY18 (normalised) Revenue 15 723 19 1543 14 743 14 743 30 EBITDA 1 607 1 633 1 234 1 313 24 EBITDA margin (%) 10.2 8.5 8.4 8.9 Net finance expenses
Slide 17: Normalised EBITDA bridge
Normalised EBITDA Continuing Operations 1 700 92 (4) (17) 1 650 1 633 1 600 152 1 550 1 500 R’million 1 450 97 1 400 1 350 1 313 1 300 1 250 1 200 28 Feb 2018 Altron ICT Altron ICT International Netstar Altron Arrow Corp and SS 28 Feb 2019 17
Slide 18: Organic vs Acquisitive
Organic vs Acquisitive Continuing Operations Revenue EBITDA 20 000 2 987 19 154 3 431 1 700 245 1 633 18 000 1 424 1 500 15 723 75 16 000 1 313 14 743 1 300 14 000 24% 30% 1 100 R’million R’million 12 000 900 Growth: 10 000 Growth: 6% Acquisitive 10% Acquisitive 18% Organic 8 000 700 20% Organic 6 0
Slide 19: Cash Flow Bridge
Cash Flow Bridge 2 000 1533 (184) (222) 1 500 (196) R’million (147) 1 000 (107) (414) 500 (185) 27 200 299 95 (204) - (500) Opening Impact of Restated Cash Change in Change in Net finance Taxation Net Investment Debt Effect of Closing balance Nupay opening generated working merchant expenses paid Di
Slide 20: Summarised Balance Sheet
Summarised Balance Sheet As at 28 February FY18 R’million FY19 Restated % Change Commentary Total non-current assets 4 171 3 798 10 Acquisitions and exchange rates Includes new acquisitions made as well as the Total Current assets 7 430 6 138 21 Powertech & Altech Multimedia disposals. Total assets
Slide 21: Current Asset Growth
Current Asset Growth 8 000 885 (659) 7 500 536 7 430 71 (222) R’million 7 000 681 6 500 6 138 6 000 5 500 28 Feb 2018 Trade and other IFRS15 Non-core assets Other Merchant cash Cash and cash 28 Feb 2019 receivables* adjustment** sold equivalents * Trade and other receivables excluding IFRS15 increas
Slide 22: Adjusted Net Debt Reconciliation
Adjusted Net Debt Reconciliation R’million FY19 FY18 % Change Net debt as reported 1 623 1 940 (16) Less: Net asset value of disposal group1 (55) (249) (78) Less: Deferred disposal receipts2 (305) (201) 52 Adjusted net debt (including deferred disposal receipts) 1 263 1 490 (15) Covenant ratios Cove
Slide 23: Dividends
Dividends 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 a final dividend of 44 cents per share, and therefore a total dividend per share of 72 cents
Slide 24: Operational Overview
03 OPERATIONAL OVERVIEW Andrew Holden Chief Operations Officer
Slide 25: Operational Overview
Operational Overview KEY ACHIEVEMENTS International Netstar Altron BSI Altron Karabina • Revenue growth 63% • Margin expansion • Early signs of payoff in • Acquired effective 1 • Bytes UK now Microsoft #1 • Launch into India relation to reorganization September 2018 reseller of Cloud and LSP • Repla
Slide 26: Altron Arrow
Altron Arrow REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) 600 35 6.0% 500 30 6.0% 400 (11%) 25 (12%) 20 300 560 33 499 15 29 200 10 100 5 0 0 FY18 FY19 FY18 FY19 No1 27%+ customers across electronic Joint Venture Partner with high Blue chip IoT electronic component distributor market share indus
Slide 27: Digital Transformation Overview
Digital Transformation Overview Bytes Altron Bytes Technology Altron Nexus Systems Altron Karabina Group UK Integration REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) Total:627 700 4.5% 12 000 Total: 13 406 10 Total: 9 384 600 105 Total: 425 10 000 500 4.7% 8 000 43% 400 48% 368 9 939 6 000 6 088
Slide 28: Managed Services Overview
Managed Services Overview Altron Bytes Altron Bytes Altron Bytes Document Managed People Solutions Solutions Solutions REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) Total: 184 Total: 173 3 500 Total: 3 124 200 5.9% Total: 2 818 180 6.1% 3 000 29 458 458 160 438 29 6% 2 500 140 11% 1 168 1 168 120
Slide 29: Healthtech & Fintech Overview
Healthtech & Fintech Overview Healthtech Fintech REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) Total:1 141 Total:289 1 200 350 Total:253 Total:1 073 25.3% 1 000 299 300 23.6% 293 6% 250 800 104 94 14% 200 600 150 400 842 780 100 185 159 200 50 0 - FY18 FY19 FY18 FY19 +R1.5 billion +6.7 million 10
Slide 30: Smart IOT Overview
Smart IOT Overview Netstar REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%) 1 600 700 38% 1 400 600 36% 1 200 10% 500 1 000 400 19% 800 1 521 1 378 300 36% 582 600 490 200 400 200 100 0 0 FY18 FY19 FY18 FY19 6% ISO 9001:2015 Insurance Telematics Jamming resistant Car park jamming growth in net conne
Slide 31: Netstar Data
Netstar Data Netstar South Africa FY19 FY18 Change Number of consumer subscribers 554 286 519 328 6.7% Number of business subscribers 161 091 158 660 1.5% Market share 20% 20% 0 Vehicle recovery success rate 90.1% 92.2% -2.1 Churn and attrition -16.8% -17.8% 1.0 31
Slide 32: Strategy and Outlook
04 STRATEGY AND OUTLOOK Mteto Nyati Chief Executive
Slide 33: Our Turnaround is Complete
Our Turnaround is Complete Whether in a turnaround or growth phase, it is still the job of leadership to keep your people focused on the goal. Paraphrasing Anne M. Mulcahy, former CEO of Xerox Corporation
Slide 34: One Altron Strategy
One Altron Strategy OUR PURPOSE OUR VISION OUR SEGMENTS Delivering innovation that matters Be the leading technology solutions provider ONE GOAL 2-5-1 ONE SET OF VALUES Smart Managed Digital Fintech & Double (2) EBITDA in 5 years by: IOT Services Transformation Healthtech ⎻ Openness, honesty and int
Slide 35: Altron B-BBEE Status
Altron B-BBEE Status Our Businesses FY19 Actual Rating FY20 Targeted Rating Altron Bytes Secure Transaction Solutions B-BBEE Level 4 B-BBEE Level 3 Altron Nexus B-BBEE Level 1 B-BBEE Level 1 Altron Bytes Systems Integration B-BBEE Level 2 B-BBEE Level 2 Altron Bytes Document Solutions B-BBEE Level 2
Slide 36: Outlook
Outlook Extend our Microsoft Increase wallet share in Capability to include top 44 accounts Licensing Solution through cross and Provider and geographic upselling expansion Increase focus on Automotive Sector in Margin Expansion in Netstar South Africa Altron BSI Scale operations in Netstar India Do
Slide 37: Thank You
ALTRON THANK YOU