Intelligent Monitoring Group Limited · ASX:IMB
Intelligent Monitoring — Investor Presentation (June 2023)
23 slides from Intelligent Monitoring's investor presentation, Jun 13, 2023
Slide 1: All Australian Security Solution
ASX:IMB All Australian Security Solution. 1
Slide 2: Disclaimer
DISCLAIMER This investor presentation has been prepared by Intelligent Monitoring Group Limited (ACN 060 774 227) (IMG or the Company). It contains general information about the Company and its subsidiaries (Group) and the Group’s business as at the date of this presentation, the proposed acquisitio
Slide 3: Strategic Acquisition, Debt Refinance & Equity Raise
STRATEGIC ACQUISITION, DEBT REFINANCE & EQUITY RAISE Acquisition of ANZ’s largest security monitoring group to de-lever balance sheet Acquisition of market leading security monitoring group • IMG has entered into a binding agreement to acquire all of the shares in Tyco Australia Group Pty Limited (T
Slide 4: IMG Timeline
IMG TIMELINE Dennison Hambling and Peter Kennan have led the wholesale turnaround of IMG’s performance Jun’ 2019 Mar’ 2020 Dec’ 2020 Aug’ 2021 Jul’ 2022 Negative Earnings and Cost-Cutting Improved Improved Growth Acquisitions lack of integration Committee Performance Performance FY19 EBITDA of ($6m)
Slide 5: IMG Opportunity
IMG OPPORTUNITY Australia’s largest independent security monitoring provider Core defensive service • Intelligent Monitoring Group (“IMG”) provides A1 Graded monitored security and IOT solutions that ensure the safety and protection of Australian businesses, homes and individuals 24 hours a day, 365
Slide 6: Experienced Board and Executive Team
EXPERIENCED BOARD AND EXECUTIVE TEAM DENNISON HAMBLING PETER KENNAN ROB HILTON Jason Elks Managing Director Non-Executive Chairman Non-Executive Director Non-Executive Director Joined Jan 2020, Joined 2022 Joined Dec 2022 Joined Jan 2020, Chairman Effective July 2021 Executive Director August 2021 F
Slide 7: IMG Senior Executive Team
IMG SENIOR EXECUTIVE TEAM Experienced and Seasoned Executive Management Team NEIL GREEN PAUL JONES Chief Risk Officer Chief Operating Officer Joined 2017 Joined July 2022 Founded Grade 1 security in 1998, Responsible for 36 years security industry experience building Kingsgrove security monitoring c
Slide 8: ADT Acquisition Overview
ADT ACQUISITION OVERVIEW Funding secured: driving accretive transaction metrics IMG to pay $45m (subject to final customary adjustments) for ”ADT” and concurrently refinance its debt and raise equity (via a proposed entitlement issue). With a forecast FY24 EBITDA of $31.0m (from $5.9m) IMG EV:EB
Slide 9: ADT Overview
ADT OVERVIEW Leading Security Industry Brand Leading ANZ security monitoring provider with a combined footprint of ~120,000 direct lines (as at Sept 2022) Revenue of c. $95m with $65m of recurring revenue. FY22 EBITDA of c. $25m (Sept YE). Receives ~2,000 inbound calls from potential customers
Slide 10: Acquisition: ADT
ACQUISITION : ADT Benefits for Intelligent Monitoring and its shareholders Financially Compelling acquisition with highly accretive metrics Deleverages balance sheet, with pathway to investment grade credit rating through debt repayment and earnings growth Debt maturity extended out to July 20
Slide 11: Financial Overview
Financial Overview P&L Summary IMG FY23 ADT FY23 6A Proforma Forecast Significant change in financial 6A + 6F*** + 6F 6A + 6F FY24 scale for IMG Revenue $m 34.5 99.2 133.7 147.6 EBITDA* $m 5.4 21.0 24.8 31.0* Forecast EBITDA* to lift to $31.0m in FY24 (from $24.8m proforma FY23) EBITDA margin % 16
Slide 12: Balance Sheet
Balance Sheet Summary Balance Sheet IMG IMG (Dec 2022) Pro Forma* Reset and stable balance sheet Cash $m 2.7 13.2 Strong cash starting position ~$13.0m post Receivables $m 3.4 15.3 transaction costs Inventory $m 0 2.6 Asset base increased +203% Property, Plant & Equipment $m 3.6 28.8 Asset bas
Slide 13: Cashflow Overview
Cashflow Overview Cashflow Summary Significant free cashflow (post restructuring IMG Pro Forma IMG Pro Forma and one-off costs) (FY23)* (FY24)* EBITDA $m 5.4** 28.9**** Significant expected lift in operating cashflow Non recurring costs*** $m 1.0 14.6 Scale of ADT’s recurring subscription revenu
Slide 14: IMG After ADT Acquisition
IMG AFTER ADT ACQUISITION >180,000 >$6.5m >64% One of Australia’s largest security Combined recurring Revenue is subscription based with diversified “sticky” monitoring providers focused on both monthly revenue (RMR) customer base across govt, commercial, residential and commercial and residential c
Slide 15: Focused Corporate Strategy
FOCUSED CORPORATE STRATEGY DRIVE CASHFLOW REDUCE DEBT IMG will focus on improving IMPROVE GROWTH IMG will focus cashflow the ADT business and operating (and utilise its tax losses*) TRAJECTORY model to drive combined to drive Net Debt from 2.2x to IMG will implement two cashflow. <1.5x EBITDA in ord
Slide 16: Clear Operating Strategy
CLEAR OPERATING STRATEGY SHIFT OF EMPHASIS FOR RESIDENTIAL RE-COMMENCEMENT OF COMMERCIAL FOCUS ON COST BASE INSTALLATIONS INSTALLATIONS AND SIMPLIFICATION • Currently, the business OF BUSINESS largely resells wired security • In late 2020, ADT exited panels commercial security • Immediate cost syner
Slide 17: Operating Strategy #1 – Residential: Do It Yourself
OPERATING STRATEGY #1 – RESIDENTIAL: DO IT YOURSELF • Australian penetration of monitored alarms has essentially grown at the rate of physical housing formation • The US experience has been totally different. With penetration of monitored lines >3x Australia currently. • The difference has come thro
Slide 18: Operating Strategy #2 – Commercial: Bring ADT Back
OPERATING STRATEGY #2 – COMMERCIAL: BRING ADT BACK • IMG has identified another growth opportunity in rebooting the commercial installation business which is expected to contribute significantly to monitoring revenue from FY24 onwards. • ADT currently has c. 4,000 large commercial customers. • Initi
Slide 19: Operating Strategy #3: Simplification
OPERATING STRATEGY #3 : SIMPLIFICATION OVERHEADS MONITORING SUPPLIER LOGISTICS AND SALES CENTERS AND CONSOLIDATION OPERATORS Monitoring centres will be Unwinding standard benchmarked across the IMG will work to harmonise corporate costs with JCI. its telco and With a change in emphasis group
Slide 20: Investment Thesis
INVESTMENT THESIS: Industry leader with strong balance sheet and focused deleveraging strategy Drive equity value and Deleverage multiple Strong cashflow balance sheet expansion (+17.9m* in FY24) (2.2x to <1.5x in 18 (Target 10x months) multiple business) * Expected free cashflow before transaction
Slide 21: IMG: Industry Leader with Focused Cashflow Strategy
IMG: INDUSTRY LEADER WITH FOCUSED CASHFLOW STRATEGY #1 INDEPENDENT SEASONED GOOD BALANCE MONITORING MANAGEMENT TEAM SHEET, WITH OPERATOR IMG team have EXCELLENT CASH ~180,000 lines significant integration GENERATION experience CAPABILITY Significant subscription- IMG’s journey of cost out With
Slide 22: Appendix 1: ADT Acquisition Key Terms
APPENDIX 1: ADT ACQUISITION KEY TERMS • Conditions precedent - completion of JCI’s internal restructure and material landlord change of control consent • Warranties and indemnities – standard for a transaction of this nature, and subject to customary limitations and exclusions • Termination events –
Slide 23: Appendix 2: Debt Terms
APPENDIX 2: DEBT TERMS 3-Year, $80m Facility with TOR Investments Cash interest rate 10% p.a. Payment in kind (PIK) interest 5% p.a. Zero exercise price warrants in IMG to be issued over 7.5% of the new equity base (post equity raise) 3 year term (July 2026) No amortisation for 18 months
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