Altron Limited Class A · JSE:AEL
Altron Limited Class A — FY2013 Earnings Presentation
41 slides from Altron Limited Class A's earnings presentation, 2013
Slide 1: Year-end results 2013
Year-end results 2013 Robert Venter Chief Executive Alex Smith Chief Financial Officer
Slide 2: Agenda
AGENDA Overview and financial summary Robert Venter Financial results Alex Smith Operations Robert Venter Closing remarks Robert Venter
Slide 3: Cautionary
CAUTIONARY Altron and Altech are both trading under cautionary announcements originally released 22 March 2013 and renewed 7 May 2013
Slide 4: Overview
Overview 2013 Robert Venter Chief Executive
Slide 5: Results overview
RESULTS OVERVIEW • Tough year for the Altron group with margin pressure and losses in Africa • Bytes continued to perform in line with expectation, coming off a high base • Bytes UK businesses performed particularly well • Powertech delivered disappointing results. Particularly the Cables group in t
Slide 6: What went right
WHAT WENT RIGHT • Major inroads made into public sector in Bytes and Altech • Entry into renewable energy market showing good successes for Powertech • Disposal of Altech’s East and West African operations removes EBITDA losses of R151m • Plans to counteract margin pressure in place • Shared service
Slide 7: Key wins
KEY WINS Altech Alcom Matomo Bytes Managed Solutions Aberdare / Powertech • SAPS Maintenance contract for • Exclusive services contract awarded by Transformers R196m major bank for SA and Africa of R400m • R150m of cables and • PRASA Radio Network for over 3 years transformers orders in the Round si
Slide 8: Financial highlights for the year ended February 2013
FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED 28 FEBRUARY 2013 February February Rm 2013 2012 % change Revenue 25 049 23 563 6 Continuing operations 24 769 23 167 7 Discontinued operations 280 396 (29) EBITDA 1 579 1 946 (19) Continuing operations 1 692 1 919 (12) Discontinued operations (113) 27 (519) EB
Slide 9: Contribution per subsidiary
Altech Bytes Powertech CONTRIBUTION PER SUBSIDIARY Corporate & eliminations 4% 18% 0% 30% 42% Headline 37% Revenue EBITDA 48% earnings Feb 2013 Feb 2013 Feb 2013 34% 59% 28% R 10 441m R 765m R 160m R 7 004m R 531m R 253m R 7 641m R 288m R 1m R 17m 3% 26% 21% 32% 34% 42% Headline Revenue EBITDA 47% e
Slide 10: Financial Results
Financial Results 2013 Alex Smith Chief Financial Officer
Slide 11: Group income statement
GROUP INCOME STATEMENT February February Rm 2013 2012 % change Revenue 25 049 23 563 6 Operating profit before capital items 1 066 1 384 (23) EBITDA 1 579 1 946 (19) EBITDA margin (%) 6.3 8.3 Net finance expense (167) (85) Capital items (1 449) (900) Foreign exchange profits / (losses) 18 (21) Taxat
Slide 12: Performance excluding Altech African operations
PERFORMANCE EXCLUDING ALTECH AFRICAN OPERATIONS Altech Altron 6% 6% 7% 5% 3% (1%) (10%) (17%) (18%) (19%) (23%) (29%) Reported Adjusted Reported Adjusted Reported Adjusted Revenue EBITDA Headline Earnings 12 Altron Results presentation for the year ended 28 February 2013
Slide 13: Movement in group revenue
MOVEMENT IN GROUP REVENUE Rm • Altech revenue growth driven by strong 25000 119 25 086 performance at Altech Multimedia • Bytes South Africa generated 10% revenue 24500 910 growth. A very strong performance from Bytes UK saw international revenue increase by 29% 24000 469 • Powertech revenue growth
Slide 14: Movement in group EBITDA
MOVEMENT IN GROUP EBITDA Rm 2000 • Decline in Altech EBITDA driven by 1900 1946 (154) worsening performance in African operations which produced R151m of 1800 4 (212) EBITDA losses 1700 • 4% decline in Bytes’ SA operations due to 1600 margin pressure, particularly at Document 1584 1500 Solutions. Of
Slide 15: Movement in group headline earnings
MOVEMENT IN GROUP HEADLINE EARNINGS Rm 650 • Altech decline reflects performance of African operations which also adversely 600 603 (48) affects the tax rate and interest cost 550 0 (124) • Bytes had a stable performance, with 500 revenue growth offsetting margin pressure 450 • Powertech decline dri
Slide 16: East and West Africa disposals
EAST AND WEST AFRICA DISPOSALS • Tax rate will normalise over time • Interest cost on new debt taken on in the East Africa disposal • EBITDA benefit - R151m of EBITDA losses last year • Management time - refocus on core operations • Revisit Africa strategy in Altech • Investment in Liquid to be kept
Slide 17: Summarised balance sheet
SUMMARISED BALANCE SHEET February February Rm 2013 2012 Total non-current assets 4 757 4 695 Current assets 6 908 6 482 Cash balances 1 302 1 103 Total assets 12 967 12 280 Shareholders’ equity 4 741 5 003 Non-controlling interests 479 810 Non-current liabilities 787 936 Current liabilities 6 960 5
Slide 18: Tax rate
TAX RATE Loss before tax (R545m) Capital items R1 449m Profit before tax and capital items R904m Tax (excluding STC) (R368m) 40.7 (9.8) (2.1) 0.3 (1.1) 28 18 Altron Results presentation for the year ended 28 February 2013
Slide 19: Cash flows
CASH FLOWS Rm 174 (94) (375) (433) 33 - 1 878 (687) (1 137) 1 005 917 553 19 Altron Results presentation for the year ended 28 February 2013
Slide 20: Investing activities in continuing operations
INVESTING ACTIVITIES IN CONTINUING OPERATIONS Rm 1200 97 • Substantial investment into customer 1000 retention and new subscriptions at 430 Autopage and Netstar of R430m 800 101 • Research and development capitalised of 600 137 156 R156m on increased investment in own 82 intellectual property 400 49
Slide 21: Working capital
WORKING CAPITAL 150 62 60 100 54 55 56 50 26 52 52 51 20 46 18 43 16 14 Accounts payable days 0 Accounts receivable days Inventory days Net days -50 -81 -81 -86 -89 -100 -100 -150 Feb 09 Feb 10 Feb 11 Feb 12 Feb 13 21 Altron Results presentation for the year ended 28 February 2013
Slide 22: Operations
Operations 2013 Robert Venter Chief Executive
Slide 23: Altech
Altech
Slide 24: Altech financial summary
ALTECH FINANCIAL SUMMARY February February Rm 2013 2012 % change Revenue 10 441 9 972 5 Continuing operations 10 161 9 576 6 Discontinued operations 280 396 (29) EBITDA 765 919 (17) Continuing operations 878 892 (2) Discontinued operations (113) 27 (519) EBITDA margin (%) 7.3 9.2 Continuing operatio
Slide 25: Altech divisional review
ALTECH DIVISIONAL REVIEW % % Feb 13 change Feb 13 change Company / division Revenue on EBITDA Comments prior on prior R’m R’m year year Altech Autopage 6027 (1) 253 (4) Decline in ARPUs due to network pricing competition. Increased Cellular and ATC customer focus reduced churn to give a steady perfo
Slide 26: Key strategic growth initiatives
KEY STRATEGIC GROWTH INITIATIVES Reinforce existing strengths and harness cross-company assets • Consolidation and focus on core assets • Commercialisation of bundled solutions • Active management of Altech’s IPR portfolio • Setup of an innovation centre to build on future trends efficiently • Captu
Slide 27: The way forward
THE WAY FORWARD • Focus on core business competencies within the TMT sector without the resources demanded by the loss making entities • Removal of losses attributable to East and West Africa • Maintain momentum at UEC Accelerate growth momentum • Cautiously explore opportunities in four major growt
Slide 28: Bytes
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Slide 29: Bytes financial summary
BYTES FINANCIAL SUMMARY February February Rm 2013 2012 % change Revenue 7 004 6 094 15 EBITDA 531 527 1 EBITDA margin (%) 7.6 8.6 Headline earnings 253 253 0 ROE 20.0 22.0 Cash 347 218 29 Altron Results presentation for the year ended 28 February 2013
Slide 30: Bytes operational review
BYTES OPERATIONAL REVIEW % % Feb 13 Feb 13 Change Change Company Revenue EBITDA Comments on prior on prior R’m R’m year year Significant new business, particularly in the financial services sector. Systems Integration 979 4 62 (4) Acquisition of Alliance (Oracle Software consultancy) contributed pos
Slide 31: Key strategic growth initiatives
KEY STRATEGIC GROWTH INITIATIVES • Grow the business in Africa – leverage BDS points of presence and “follow financial and retail customers” • Cross selling and public sector • Acquisition of new products/solutions/services (expand revenue streams) • BNTech acquisition • Maintain and grow partner re
Slide 32: The way forward
THE WAY FORWARD Improve Operating Margin sustainably • Realign business units to respond better to customer needs • Introduce shared service model to improve productivity • Bolt on acquisitions to either consolidate or create new value propositions • Remove unnecessary duplications and costs • Impro
Slide 33: Powertech
Powertech
Slide 34: Powertech financial summary
POWERTECH FINANCIAL SUMMARY February February Rm 2013 2012 % change Revenue 7 641 7 522 2 EBITDA 288 500 (42) EBITDA margin (%) 3.8 6.7 (43) Headline earnings 1 125 (99) ROE - 4.9 Net borrowings 910 682 34 Altron Results presentation for the year ended 28 February 2013
Slide 35: Powertech divisional review
POWERTECH DIVISIONAL REVIEW % % Feb 13 Feb 13 Change Change Company Revenue EBITDA Comments on prior on prior R’m year R’m year Revenue growth due to higher copper price. Weak demand from major customer in second half. Volumes holding up but significant Powertech Cables 4756 5 55 (54) pricing pressu
Slide 36: Powertech order book
POWERTECH ORDER BOOK Orders on hand Feb 2010 Feb 2011 Feb 2012 Feb 2013 Cables R365m R435m R462m R434m Transformers R863m R958m R851m R692m System Integrators R253m R325m R262m R281m Total R1 481m R1 718 R1 575m R1 407m Enabling Contracts Feb 2012 Feb 2013 Value Term of contract Value Term of contra
Slide 37: Key strategic growth initiatives
KEY STRATEGIC GROWTH INITIATIVES • Turnkey Substation tenders are being actively submitted by Powertech QuadPro Africa • Projects in Ghana and DRC still to come through on wide array of products • Traditional markets of Namibia, Botswana and Mozambique strong • Dedicated and focused team in place •
Slide 38: The way forward
THE WAY FORWARD • Continue to implement strategic growth and value creation initiatives • Fix, close or sell loss making operations • Utilise spare capacity in Africa • Eliminate excess costs from the business • Manage possible labour disruption • Increase exposure to Infrastructure Segment • Transf
Slide 39: Closing Remarks
Closing Remarks 2013 Robert Venter Chief Executive
Slide 40: Conclusion
CONCLUSION • Actions taken to enable turnaround in performance • Non-recurring losses and once off costs in 2013 are substantial • Focus on consolidation and enhancing core assets – back to basics • Profitable revenue growth: • Organic Africa strategy • Renewable / Rail • Public sector • Converged s
Slide 41: Questions
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