2017 ADAPT IT INTERIM RESULTS PRESENTATION 2017 BUSINESS OVERVIEW - - PowerPoint PPT Presentation

ADAPT IT INTERIM RESULTS PRESENTATION 2017

INTERIM RESULTS PRESENTATION

for the six months ended 31 December

2017

ADAPT IT INTERIM RESULTS PRESENTATION 2017

BUSINESS OVERVIEW

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ADAPT IT INTERIM RESULTS PRESENTATION 2017

ABOUT ADAPT IT

Education | Manufacturing | Financial Services | Energy | Hospitality 1 000 employees 10 000 customers 40 countries in Africa and the rest of the world Level 3 B-BBEE contributor JSE listed ADI Software and Services Provider

VISION

To be the leading provider of specialised software

PURPOSE

Growing our people and solutions - enabling our clients to achieve more 2

ADAPT IT INTERIM RESULTS PRESENTATION 2017

10 YEARS OF GROWTH

3 OCT 2007 OCT 2008 AUG 2009 OCT 2012 NOV 2013 SEPT 2014 OCT 2015 JUL 2017 NOV 2017

InfoWave merges with Adapt IT creating a software business Adapt IT, specialising in manufacturing software, moves to the main board

• f the JSE

Education specialisation through the acquisition

• f Integrated Tertiary

Software (ITS)—a leader in tertiary education ERP systems expanding the company into Europe and Australasia The Swicon360 acquisition extends the manufacturing

• ffering with SAP

Human Capital Management Business Process Outsourcing Energy sector entry through the Aquilon acquisition expands Adapt IT into Africa’s growing energy sector, serving major oil companies Added Telecommunications intelligence management software through the AspiviaUnison acquisition Financial Services Sector is entered through the acquisition of CQS Micros South Africa, a leader in Hospitality Software, is acquired by Adapt IT The Telecommunications division expands footprint in Australia, Mauritius and the rest

• f Africa through the

acquisition of LGR - CP’s to be fulfilled

MILESTONES

2014

5th fastest growing African Tech Company

2017

R1 billion annualised turnover

2017

2nd in the Sunday Times Top 100 companies

2020

R3 billion annualised turnover target

ADAPT IT INTERIM RESULTS PRESENTATION 2017

DIRECTORATE

4 CRAIG CHAMBERS

CFA, PDM, BCom Independent Non-Executive Chairman Appointed 3 May 2011

BONGIWE NTULI

CA (SA) Independent Non-Executive Director Appointed 27 May 2008

CATHERINE KOFFMAN

BA, LLB, LLM Independent Non-Executive Director Appointed 9 February 2015

OLIVER FORTUIN

MBA Independent Non-Executive Director Appointed 8 February 2013

SIBUSISO SHABALALA

BCom Chief Executive Officer Appointed 5 December 2007

TIFFANY DUNSDON

CA (SA) Commercial Director Appointed 18 April 2002

NOMBALI MBAMBO

CA (SA) Chief Financial Officer Appointed 18 August 2016

ADAPT IT INTERIM RESULTS PRESENTATION 2017

SECTOR FOCUS

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EDUCATION MANUFACTURING FINANCIAL SERVICES ENERGY HOSPITALITY

ADAPT IT INTERIM RESULTS PRESENTATION 2017

MANUFACTURING

• Software solutions for manufacturing, agri-processing,

resources and utilities sectors

• More than 22 years experience servicing over 120 clients in

27 countries

• Providing solutions for large scale procurement; inventory

management; control payment of cane growers; to solutions managing the safety of nuclear power plant refueling shutdowns

MANUFACTURING

CUSTOMERS

6

FINANCIAL SERVICES

CUSTOMERS

• Over 21 years experience
• Trusted advisors to South Africa’s leading banks and

institutions

• 200 employees
• Over 2 600 customers spanning Audit, Risk Management

and Corporate Performance Management

FINANCIAL SERVICES

ADAPT IT INTERIM RESULTS PRESENTATION 2017

ENERGY

CUSTOMERS

7

• Serving Oil and Gas and Utilities sectors globally for more

than 18 years

• 32 customers in 26 countries
• Thought Leaders and innovators in Supply Chain, SAPTM,

Terminal Automation Systems, Enterprise Asset Management and System Integration

EDUCATION

• Operating in the education sector for over 31 years
• Currently serving over 200 higher and further education

institutions

• Intimate understanding of complex education environment
• Global reach with presence in the Europe, Australasia, and

the rest of Africa

CUSTOMERS

EDUCATION ENERGY

ADAPT IT INTERIM RESULTS PRESENTATION 2017

EXPENSE MANAGEMENT SERVICE PROVIDER SOLUTIONS

CUSTOMERS CUSTOMERS

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• 17 years experience in corporate and telecommunications

management

• Specialised focus on Carrier Networks and other Service

Providers

• Implemented by 4 out of 5 tier 1 Service Providers in Southern

Africa

• Local Application Development and rich IP
• Expanding to the rest of Africa
• Ready to use platform
• Specialised focus on large enterprise Telecommunications

Expense Management (TEM)

• 30 years experience
• Local Support and Application Development
• Rich Intellectual Property
• Present in Financial Services, Manufacturing Health, Energy

and Public Sector

TELECOMMUNICATIONS MANAGEMENT

ADAPT IT INTERIM RESULTS PRESENTATION 2017

HOSPITALITY

CUSTOMERS

HOSPITALITY

• Positions Adapt IT as a leader in the hospitality, retail, and

food and beverage industries

• Over 20 years experience, 360 employees
• Specialising in the resale, support, and deployment of

Oracle Hospitality software and hardware products

• Hospitality management software market expected to grow

at a compound annual growth rate of 6.14% until 2020 9

ADAPT IT INTERIM RESULTS PRESENTATION 2017

CUSTOMERS SOLUTIONS KEY ATTRIBUTES BACKGROUND

TELECOMMUNICATIONS ACQUISITION

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• Acquisition of the LGR Group effective 1 July 2017
• Specialist solutions provider to the global

telecommunications industry

• Over 18 years experience, operating in 10 countries

with 36 employees

• Will be integrated with Service Provider Solutions

business unit to provide additional value to the Mobile Carrier Network segment

• Strengthened telecommunications industry expertise
• Specialised software analytics products
• New foreign customers, extending footprint into the

global telecommunications industry

• CDRlive V4
• CDRlive RapidReport
• CDRlive COMPANA
• CDRlive Tarifflive
• Everywhere
• StarCare

ADAPT IT INTERIM RESULTS PRESENTATION 2017

LEVEL 3 B-BBEE CONTRIBUTOR

SCORECARD 2017 TARGET SCORE Ownership 21.07 25 Management and Control 14.66 23 Skills Development 17.20 20 Enterprise and Supplier Development 48.28 50 Socio-Economic Development 12.00 12 OVERALL SCORE 113.21 130

TRANSFORMATION

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ADAPT IT INTERIM RESULTS PRESENTATION 2017

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FINANCIAL HIGHLIGHTS

ADAPT IT INTERIM RESULTS PRESENTATION 2017

INTERIM RESULTS | 31 DECEMBER 2017

13 FINANCIAL HIGHLIGHTS TURNOVER

46% 29%

EBITDA

11%

NORMALISED HEPS

22%

HEPS

ADAPT IT INTERIM RESULTS PRESENTATION 2017

TURNOVER CAGR

29%

190 261 310 461 674 100 200 300 400 500 600 700 800 2013 2014 2015 2016 2017 23 42 62 90 116 20 40 60 80 100 120 140 2013 2014 2015 2016 2017

17%

ORGANIC TURNOVER GROWTH *

35%

ACQUISITIVE TURNOVER GROWTH

46%

TURNOVER

5 YEAR REVIEW

TURNOVER (R’m) EBITDA (R’m) 14

17%

EBITDA MARGIN

38%

EBITDA CAGR

29%

EBITDA

* From ongoing operations

ADAPT IT INTERIM RESULTS PRESENTATION 2017

13.74 16.82 23.96 24.41 29.70 5 10 15 20 25 30 35 2013 2014 2015 2016 2017 13.74 21.38 28.89 34.74 38.73 5 10 15 20 25 30 35 40 45 2013 2014 2015 2016 2017

5 YEAR REVIEW

HEPS (cents) NORMALISED HEPS (cents) 15

17%

HEPS CAGR

22%

HEPS

23%

NORMALISED HEPS CAGR

11%

NORMALISED HEPS

ADAPT IT INTERIM RESULTS PRESENTATION 2017

ABRIDGED CONSOLIDATED STATEMENTS

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Unaudited 6 months ended 31 Dec 2017 R’000 Unaudited 6 months ended 31 Dec 2016 R’000 Audited year ended 30 June 2017 R’000 Period-on- period change % Turnover 673 559 460 691 993 671 46 EBITDA Depreciation and amortisation Amortisation of intangible assets acquired 116 052 (13 105) (16 815) 89 869 (6 892) (13 501) 194 326 (14 238) (29 105) 29 90 25 Profit from operations Net finance cost Share of profits of equity accounted investment after tax 86 132 (11 078)

• 69 476

(12 998) 829 150 983 (22 851) (88) 24 (15) (100) Profit before taxation Income tax expense 75 054 (26 119) 57 307 (20 251) 128 044 (35 498) 31 29 Profit for the year 48 935 37 056 92 546 32 Headline earnings Amortisation of intangible assets acquired net of deferred tax Fair value adjustment to financial liability (imputed interest) 47 369 12 107 2 298 35 515 9 721 5 299 88 149 20 956 9 356 33 25 (57) Normalised headline earnings 61 774 50 535 118 461 22 Weighted average number of ordinary shared in issue 159 509 145 476 150 028 10 HEPS (cents) Normalised HEPS (cents) 29,70 38,73 24,41 34,74 58,76 78,96 22 11

COMPREHENSIVE INCOME

ADAPT IT INTERIM RESULTS PRESENTATION 2017

ABRIDGED CONSOLIDATED STATEMENTS

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Unaudited 6 months ended 31 Dec 2017 R’000 Unaudited 6 months ended 31 Dec 2016 R’000 Audited year ended 30 June 2017 R’000 Non-current assets Current assets 926 724 508 144 773 367 377 959 730 781 355 666 Total assets 1 434 868 1 151 326 1 086 447 Total equity Non-current liabilities Current liabilities 708 053 305 289 421 526 608 289 253 145 289 892 668 537 193 178 224 732 Total equity and liabilities 1 434 868 1 151 326 1 086 447 Gearing ratio 40% 26% 15%

FINANCIAL POSITION

ADAPT IT INTERIM RESULTS PRESENTATION 2017

ABRIDGED CONSOLIDATED STATEMENTS

18 CASH FLOWS

Unaudited 6 months ended 31 Dec 2017 R’000 Unaudited 6 months ended 31 Dec 2016 R’000 Audited year ended 30 June 2017 R’000 OPERATING ACTIVITIES Cash generated from / (utilised in ) operations Finance income Finance costs Dividends paid Taxation paid 33 273 1 754 (10 671) (24 492) (32 333) (8 056) 968 (9 993) (19 634) (25 816) 139 325 1 601 (16 249) (23 359) (42 102) Net cash flow (utilised in) / generated from operating activities Net cash flows utilised in investment activities Net cash inflow from financing activities (32 469) (115 526) 133 154 (62 531) (25 722) 96 108 59 216 (59 487) 20 903 Net (decrease) / increase in cash resources Exchange differences on translation Cash and cash equivalents at beginning of period (14 841) 951 98 049 7 855 845 77 724 20 632 (307) 77 724 Cash and cash equivalents at end of period 84 159 86 424 98 049

ADAPT IT INTERIM RESULTS PRESENTATION 2017

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SECTOR RESULTS

ADAPT IT INTERIM RESULTS PRESENTATION 2017

SECTOR CONTRIBUTION - TURNOVER

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12% 12% 24% 24% 14% 14% 24% 24% 26% 26%

EDUCATION MANUFACTURING FINANCIAL SERVICES ENERGY HOSPITALITY

ADAPT IT INTERIM RESULTS PRESENTATION 2017

122 162 85 91 176 160 84 94 160 20 40 60 80 100 120 140 160 180 200 Manufacturing Financial Services Education Energy Hospitality

TURNOVER BY SECTOR

(R’m) 21

2016 2017

46%

TURNOVER

ADAPT IT INTERIM RESULTS PRESENTATION 2017

EBITDA BY SECTOR

22 (R’m)

2016 2017

29%

EBITDA

30 24 15 22 38 22 14 20 25 5 10 15 20 25 30 35 40 Manufacturing Financial Services Education Energy Hospitality

ADAPT IT INTERIM RESULTS PRESENTATION 2017

TURNOVER MIX

23

90%

Rands

5%

US $

2%

Australian $

2%

Euro

1%

Other

CURRENCY

83%

South Africa

12%

Other African countries

2%

The Americas

2%

Australasia

1%

Europe

GEOGRAPHY

ADAPT IT INTERIM RESULTS PRESENTATION 2017

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LOOKING AHEAD

ADAPT IT INTERIM RESULTS PRESENTATION 2017

STRATEGY FOR INTERNATIONAL EXPANSION

GROWTH COMPLEXITY

PHASE 1: SINGLE MARKET Establish competitive position; Grow, defend and unlock potential; Optimise performance

South Africa

• Cape Town
• Durban
• Johannesburg
• Pretoria

PHASE 2: PROXIMATE REGIONAL EXPANSION Geographical expansion form core market; Leverage core capabilities; Building growth capabilities

SADC

• Namibia
• Botswana
• Mozambique
• Zambia
• Zimbabwe
• Malawi

PHASE 3: MULTI-REGIONAL HUB Multiple hubs; Leverage growth capabilities; Develop scalable infrastructure Adapt to changing risk and compliance profile

East Africa

• Kenya
• Tanzania
• Uganda
• Rwanda
• Ethiopia

Indian Ocean

• Mauritius

West Africa

• Nigeria
• Ghana
• Sierra Leone
• Cameroon
• Benin
• Gambia

Central Africa

• DRC
• Congo

PHASE 4: INTERNATIONAL EXPANSION Integrated rest of Africa and Global expansion P1 P2 P3 P4

Australasia

• Australia
• New Zealand

ADAPT IT INTERIM RESULTS PRESENTATION 2017

CAPITAL RAISING NEW B-BBEE CODES GEARING PROFITABLE WITH GOOD TRACK RECORD NEW GEOGRAPHIES SIZEABLE ACQUISITIONS

ACQUISITION CRITERIA AND FUNDING

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• > 25% up to 100% of turnover
• High annuity income ratio
• Sector specialisation
• Niche IP
• Strong management
• Good cultural fit
• Africa
• Rest of world
• Up to 50% of balance sheet
• Private placement
• Improve equity ownership

ADAPT IT INTERIM RESULTS PRESENTATION 2017

INVESTMENT CASE

27 SHARE MOVEMENT

• Sector diversified
• Solid growth record
• Successful acquisitions

TRACK RECORD

• Annuity income
• Organic growth across sectors
• Software and services

GROWTH STRATEGY

• Strong turnover growth
• Improved annuity turnover

PERFORMANCE

31 Dec 2017 SHAREHOLDER DISTRIBUTION Free float 76% Held by Directors, Management and Staff 24% Share liquidity 16% Estimated future dilution (from transactions already executed) 1%

20 40 60 80 100 120 140

January 2017 March 2017 May 2017 July 2017 September 2017 November 2017

Adapt IT Software & Computer (J953) EOH J203 - FTSE/JSE All Share

ADAPT IT INTERIM RESULTS PRESENTATION 2017

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THANK YOU

Investor Relations: : investors@adaptit.co.za