FINANCIAL RESULTS for the year ended 28 February 2018 Delivering - - PowerPoint PPT Presentation
FINANCIAL RESULTS for the year ended 28 February 2018 Delivering on Mteto Nyati commitments Chief Executive Tim Jacobs Financial results Acting Chief Financial Officer Operational Andrew Holden overview Chief Operations Officer
Delivering on commitments
Mteto Nyati Chief Executive
Financial results
Tim Jacobs Acting Chief Financial Officer
Operational
Andrew Holden Chief Operations Officer
Strategy and outlook
Mteto Nyati Chief Executive
Q & A session
Mteto Nyati Chief Executive
Overview – A solid performance
3
Normalised Revenue Normalised EBITDA Normalised HEPS
R14.7 billion
R1.1 billion
135 cents per share Free Cash Flow Normalised ROCE
investing activities (own cash resources)
R47 million
Net debt of
completed We have positioned ourselves for growth
* Adjusted for constant currency (refer to the appendix for additional information)
Altech Radio Holdings ➔ Becoming the broadband infrastructure roll-out partner of choice to the provincial governments and metros Bytes Document Solutions: ➔ Undertook a restructuring process ➔ Improving business results ➔ Increased market share by 3.5 pts to 18% Successfully integrated the acquisition of: ➔ Phoenix Software with Bytes UK ➔ EZY2C with Altech Netstar 4
Altech Netstar ➔ Continues its upward growth trend ➔ Gained market share both in consumer and commercial segments – in South Africa ➔ Won a strategic fleet management deal at eThekwini Municipality Bytes UK continues to deliver double digit revenue growth in a mature market Bytes Secure Transaction Solutions has built a Network and Security Operations Centre (NSOC) that provides security for customer networks globally from Linbro Business Park, South Africa
5
FY’18
FY’20 Delivering Growth FY’22 Accelerated Growth
6
Head-office Appointments Operations Appointments
Chad Baker Managing Director Bytes Managed Solutions Ike Dube Managing Director Altron Rest of Africa Lesley Moodley Managing Director Bytes Systems Integration Pierre Bruwer Managing Director Altech Netstar Collin Govender Group Executive Shared Services Dolores Mashishi Group Executive Human Capital Tim Jacobs Acting Chief Financial Officer Zipporah Maubane Group Executive Marketing & Investor Relations
Phoenix Software Rationale Acquired for
An IT value-added reseller of software products and related services in the UK
➔ 3 000 customers ➔ 27 year history ➔ Number one software value added reseller in the
education and charity sectors in the UK
➔ Markets in which Bytes UK and Phoenix operate are
showing double digit growth
➔ Predominantly based in Northern England. Enables
Bytes UK to serve the total UK market
➔ One of the UK’s pre-eminent suppliers to public sector
housing associations and a number of local authorities
➔ Opportunity to cross-sell Altron’s current offerings into
a new base, while offering Phoenix’s end-to-end solutions to Altron’s customers GBP35.9m Multiple of EBITDA = 7 7
Funding Performance
➔ GBP19 million (R343 million) paid cash from Bytes UK ➔ GBP8 million (R143 million) loan from existing RSA
group facilities (repaid by Bytes UK within 4 months)
➔ GBP18 million (R322 million) trade finance facility was
raised and GBP9 million (R164 million) used to fund
available to the group
➔ Normalised EBITDA of GBP1.5 million (R26.8 million) was achieved to
February 2018, meeting the business plan
EZY2C Rationale Acquired for
An Australian fleet management and asset management solutions company
➔ Geographically expand Altech Netstar’s revenue stream ➔ Driving consolidation in a fragmented market with 9%
market share AUD15.9m Multiple of EBITDA = 6.14
Cape Office Machines (Stellenbosch) Rationale Settlement
Channel partner with significant wins, particularly in Managed Print Services Second largest contributor in the partner channel
➔ Buy back into our channel partners ➔ Reduce pricing and margin pressure ➔ Have a more integrated structure with the Bytes Document
Solutions direct channel
➔ Geographically grow market share opportunities through
Altron’s solution sets ZAR10m effective May 2018 Multiple of EBITDA = 4
Digicopiers (Port Elizabeth)
Xerox SA’s longest business partner with close to four decades of excellent service Joint venture Multiple of EBITDA = 2 8
Tango Telecom ➔ Leading provider of data monetisation solutions ➔ Jointly launched Data Retail Engine (Tango DRE™) for African mobile operators ➔ Drives consistent consumer spending on data ➔ Technology provides a seamless and cost-effective service throughout Africa ➔Bytes Systems Integration will promote, sell, implement, integrate and maintain the Tango DRE™ for customers in African markets Performanta ➔Joint venture with Bytes Systems Integration to provide best-of-breed information security services to African enterprise customers ➔Created a specialist division – Bytes Security Powered by Performanta – to market the joint security offerings ➔Provide comprehensive, end-to-end information security solutions to customers across the region ➔Solutions are technology-agnostic to meet individual requirements based on an analysis of their information security risks IoT.Nxt ➔Well developed IoT application framework ➔Software as a Service (SaaS) business model which creates annuity base income ➔Solutions are technology agnostic – overcomes the challenge of connecting any and all devices or systems ➔Achieves interoperability and interconnectivity between deployed systems and devices ➔Allows rapid deployment and businesses to action an IoT strategy with little or no disruption to current operations
Data Analytics Security Internet
9
Sales team alignment
Selling to targeted new clients
Cross selling in existing clients Selling into new geographies Upselling in existing clients Customised interventions included: Sales pipeline & forecasting Sales management Mini account planning Solution selling Complex solution selling
Over 330 strong sales team
11 Sales Executives 33 Sales Managers 289 Account Managers
10
Group head office right-sizing
➔ Closed several head office functions:
➔ Internal Audit outsourced to Deloitte ➔ Tax, Treasury and Finance remains unaffected ➔ R54m savings annually
Business restructure
➔ Bytes Document Solutions restructure
➔ Bytes Universal Systems and Bytes Systems Integration
annually ➔ Bytes Managed Solutions
11
Group annual savings of R96 million
Operations Highlights
Set up shared services function and derived 6.6% cost saving on existing cost base of R350m – for repeatable, transactional and standardised processes Centralising specific functions – Group IT, procurement (non-cost of sale related), recruitment, payroll, legal, real estate management and finance Focus on driving an improved employee experience through digital work place roll out Driving our own cloud transformation – we are one of the largest consumers of Microsoft Azure services Managed through legal department to reduce costs by managing our own IP and disputes Standardised recruitment through one portal across the group Finance: employing robotic process automation to drive cost reduction Introduced Power BI (dash-boarding tool) and data analytics practice for efficient dissemination of information for financials, HR and operational data 12
Discontinued operations Status Realised Deferred
Powertech Batteries Sale concluded R227 million R107 million Aberdare (17.5% put option) Sale concluded R928 million* R94 million PTSI Sale concluded R20 million Swanib Cables Sale concluded R56 million Crabtree Sale concluded R39 million Switchgear/Quadpro Sale concluded R10 million Powertech Transformers In progress R100 million expected 31 May 2018 R150 million CBI Telecom Cable In progress Expected FY 19 Altech Multimedia/UEC In progress Expected FY 19
* Realised FY 17
13
Continuing restructuring
➔ Bytes Systems Integration and Bytes Universal Systems restructuring announced last year is incomplete ➔ Reevaluate and streamline our service offerings to the market
Remaining disposals
➔ Altech Multi-Media – experienced delays due to Competition Commission investigation ➔ Independent firm (Bowmans Attorneys) investigation absolved the company of any wrong doing 14
15
LEVEL FY 17 FY 18 (Forecast) Altech Alcom Radio (ARD) 3 3 Altech Alcom Matomo (AAM) 2 1 Arrow Altech Distribution (AAD) 4 3 Bytes Universal Systems (BUS) 4 2 Bytes Managed Solutions (BMS) 4 3 Bytes Secure Transactions Solutions (BSTS) 4 4 Bytes People Solutions (BPS) 4 3 Bytes Document Solutions (BDS) 4 2 Bytes System Integration (BSI) 4 2 Altech Netstar 4 4 Altech Fleetcall (AFC) 4 4 Altron Group 4 4
Final B-BBEE rating expected end May 2018
Tim Jacobs Acting Chief Financial Officer
Ongoing cash management and good earnings growth in a difficult environment
17
Continuing operations
Year ended 28 February R’million Statutory 2018 Statutory 2017 % Change Normalised 2018 Normalised* 2017 % Change Revenue 14 743 13 892 6 14 743 12 891 14 Operating profit before capital items 783 728 8 862 722 19 EBITDA 1 035 950 9 1 114 940 19 EBITDA margin (%) 7.0 6.8 7.6 7.3 Net finance expenses (178) (223) (178) (223) Capital items (38) 8 (38) 8 Taxation (145) (98) (165) (97) HEPS (cents) 119 114 4 135 113 19 EPS (cents) 109 117 (7) 125 115 9 ROCE (%) 18.5% 14.5% 21% 14.4%
* Adjusted for constant currency (refer to appendix for additional information)
18
Continuing operations
Revenue Year ended February R’million 2018 2017 % Change Revenue as reported 14 743 13 892 6 Disposed businesses – (587) Constant currency adjustment – (414) Normalised revenue 14 743 12 891 14 Average exchange rate (Pounds) 17.18 18.92 EBITDA Year ended February R’million 2018 2017 % Change EBITDA as reported 1 035 950 9 Acquisition-related costs 8 – Once-off restructuring costs/closed business 77 6 Foreign currency gains on deferred acquisition liability (6) – Constant currency adjustment – (16) Normalised EBITDA before capital items 1 114 940 19
19
Continuing operations
940 1 114 44 47 25 65 (7)
800 850 900 950 1 000 1 050 1 100 1 150 28 Feb 2017 * Altron ICT SA Altron ICT International Altech Netstar Altech Arrow Corporate and shared services 28 Feb 2018
R’million
* Adjusted for constant currency
12 891 897 955
11 000 11 500 12 000 12 500 13 000 13 500 14 000 14 500 15 000
Normalised * Feb 2017 Acquisitive Organic Normalised Feb 2018 R’million
940 1 114 49 125
700 750 800 850 900 950 1 000 1 050 1 100 1 150
Normalised * Feb 2017 Acquisitive Organic Normalised Feb 2018 R’million
20
Continuing operations
14 743
EBITDA Revenue
Growth: 7.0% Acquisitive 7.4% Organic Growth: 5.2% Acquisitive 13.3% Organic
14.4% 18.5%
* Adjusted for constant currency
21
16 (204)
(400) (200)
400 600 800 1 000 1 200 1 400 1 600 1 800
Opening balance 1 Mar 2017 Cash generated from
Change in working capital Net finance expenses Taxation paid Dividends received Dividends paid Investment activities Finance activities Effect of exchange rate Closing balance 28 Feb 2018
R’million
329 1 233 (298) (239) (141) 32 (970) (160) (6)
22
698 123 84 191 193 237 257
200 400 600 800 1 000 1 200 1 400
FY 17 FY 18 R’million
551 1 232
➔ Acquisition of Phoenix (UK) and EZY2C (Australia) ➔ Investment into PPE and intangibles slightly higher than the depreciation and amortisation charge in the continuing operations, broadly maintaining the capital base ➔ Contract fulfilment costs in Altech
the subscriber base
* The graph presented excludes
proceeds from disposals of operations and other investments
Acquisition of subsidiaries Additions to intangible assets Additions to property, plant and equipment Contract fulfilment costs
23
As at 28 February R’million 2018 2017 % Change Commentary Total non-current assets 3 709 2 816 32 Acquisition of Phoenix & EZY2C Current assets 4 267 3 718 15 Debtors ARH and acquisitions Assets held-for-sale 714 1 644 (57) Powertech & Altech Multimedia Cash balance 768 1 373 (44) Phoenix acquisition Total assets 9 458 9 551 (1) Shareholder’s equity 2 545 2 028 25 VCP equity injection Non-current liabilities 1 491 1 971 (24) Current liabilities 3 985 3 572 12 Acquisitions Liabilities held-for-sale 465 1 024 (55) Powertech & Altech Multimedia Bank overdraft 972 956 2 Total equity and liabilities 9 458 9 551 (1) Net debt 1 940 1 932 – NAV per share (cents) 752 669 12
24
As at 28 February R’million 2018 2017 Net debt as reported 1 940 1 932
249 620
201 116
1 490 1 082 Covenant ratios Covenant Net debt : Attributable EBITDA < 2.5x 1.6x 1.7x Attributable EBITDA interest cover > 3.5x 5.4x 4.1x
Inventory days Debtors days ARH Acquisitions Creditor days
76 69 58 37 36 55 49 51 59 63 (112) (106) (105) (92) (114) FY 14 FY 15 FY 16 FY 17 FY 18 12 25
71 19 4 4 (7)
Andrew Holden Chief Operations Officer
Good performance from
macro-economic environment
27
REVENUE* (R’m) EBITDA* (R’m)
12 891 14 743
11 500 12 000 12 500 13 000 13 500 14 000 14 500 15 000 FY 17 FY 18
940 1 114
850 900 950 1 000 1 050 1 100 1 150 FY 17 FY 18
14% 19%
* Adjusted for constant currency
Delivering on our strategy ➔ Improve revenue growth, improve profitability, transform the customer experience, and promote employee excellence ➔ Double digit EBITDA growth ➔ Collaborative selling – external (go-to-market) strategy of ONE ALTRON ➔ Be the leading technology solutions provider ➔ Focus on the growth areas of IoT, security, big data and cloud solutions ➔ Deliver shareholder value
28
REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%)
1 224 1 378
1 000 1 080 1 160 1 240 1 320 1 400 FY 17 FY 18
266 291
200 220 240 260 280 300 FY 17 FY 18
13% 9%
21.7% 21.1% Year at a glance Strategy ➔ Continued improvements in the performance ➔ Improved subscriber growth, particularly in stolen vehicle recovery, with churn and retentions under close control ➔ Australian acquisition performing in line with expectations ➔ 9% market share following EZY2C acquisition ➔ Focus on growing market share in telematics and fleet management ➔ Geographic expansion ➔ Alternative routes to market – direct sales to vehicle manufactures and insurers
180%
growth in net connections
ISO 9001:2015
certification
Car park jamming
solution
Insurance Telematics
fast report device
Jamming resistant
solution
602 560
500 520 540 560 580 600 FY 17 FY 18
40 33
20 25 30 35 40 45 FY 17 FY 18
(7%)
6.6% 5.9%
(18%)
Year at a glance Strategy ➔ Reduction in revenue and EBITDA following slow down in the defense industry ➔ Busy with key new lines of business ➔ Strong order book on hand and sizeable new business
➔ Drive eCommerce business
No1
electronic component distributor
Blue chip IoT
connectivity
27%+
market share customers across electronic industry sectors Joint Venture Partner with high growth $27bn Arrow Electronics
29
REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%)
4 090 5 245 843
2 500 3 300 4 100 4 900 5 700 6 500 FY 17 FY 18
155 169 37
50 90 130 170 210 250 FY 17 FY 18
30
3.4% Year at a glance Strategy ➔ Performance positively impacted by the acquisition of Phoenix, contributing:
➔ Existing businesses – 9% organic growth adjusted for constant currency ➔ Overall good performance by the UK operations ➔ Focus on the cloud and cloud migration ➔ Cross selling into 5 000 accounts within the UK ➔ Acquire strategic businesses ➔ Use SA IP to promote additional appropriate solution sets into
* Adjusted for constant currency 206
33%
REVENUE* (R’m) EBITDA* (R’m) and EBITDA margin (%)
28%
3.8%
9%
Without Phoenix acquisition
31
(Includes. Bytes Universal Systems)
Year at a glance Strategy ➔ Integration of BSI and BUS commenced October 2017 ➔ New MD appointed ➔ R20 million cost savings ➔ Strong EBITDA results, benefitting from some gains from integration ➔ Increase in EBITDA margin ➔ Refining the operating model through streamlining of the business ➔ Altron’s engine room to drive IoT, security, big data and cloud solutions ➔ Improving EBITDA margin by:
30 000
service desk calls managed per month
Partnership
with Lumidigm
ISO 9001
certified named Best Partner in a Networking Project
REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%)
1 943 1 897
500 1 000 1 500 2 000 2 500 FY 17 FY 18
102 123
50 65 80 95 110 125 FY 17 FY 18
(2%)
5.2% 6.5%
21%
32
Year at a glance Strategy ➔ Marginal increase in revenue ➔ Focused on outbound sales campaigns ➔ Broadening skills development offering beyond ICT sector training ➔ Drive efficiencies in BPO environment by focusing on enabling technologies – robotic processes and multi-channels
+100 000
student days delivered annually
1.1 million
sales calls dialled monthly
+12 000
People received workplace experience
+2.4 million
calls managed monthly
+1 650 people with
disabilities gained workplace experience
REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%)
426 438
400 408 416 424 432 440 FY 17 FY 18
41 29
20 25 30 35 40 45 FY 17 FY 18
3%
9.6% 6.6%
(29%)
33
Year at a glance Strategy ➔ Challenging trading conditions contributed to a marginal increase in revenue ➔ Broadband contributes 54% to revenue and narrowband the balance ➔ Built an exceptional sales pipeline on back of local and provincial government broadband strategy ➔ City of Tshwane broadband project delays due to legal action and other public projects delays due to protracted processes ➔ To win and deliver on current opportunities presented by broadband ➔ To evolve into the preferred safe city solution provider for the smart city evolution ➔ Start building similar competencies in selected markets within rest of Africa
1460 sites
Gauteng Broadband Network largest distributor of two-way radios
130 business
partners in SA Double Huawei certified
71 708
incidents managed 24/7 at the National Network Operations Centre
REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%)
1 127 1 155
600 720 840 960 1 080 1 200 FY 17 FY 18
84 80
50 58 66 74 82 90 FY 17 FY 18
2%
7.5% 6.9%
(5%)
34
Year at a glance Strategy ➔ Despite strengthening Rand and a declining print market, revenue remained flat ➔ Restructuring the business in line with industry trends ➔ Managed to increase market share by 3.7% ➔ Xerox launched 26 new products into growth segments in the print market ➔ Focus our attention on only three growth areas:
➔ Continue our growth strategy into Rest-of-Africa ➔ Collaborative cross-selling of other Altron products and services into BDS’s +4 500 customers
50%
market share high-end printers
ISO 9001
certified Largest Xerox distributor in the world
4 665
active customers
Stockholding
188 locations 788 items 526 147 units
REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%)
1 365 1 353
600 760 920 1 080 1 240 1 400 FY 17 FY 18
57 70
30 40 50 60 70 80 FY 17 FY 18
(1%)
4.2% 5.2%
23%
35
Year at a glance Strategy ➔ Revenue and EBITDA down due to reduced spend from the big four banks ➔ New MD appointed in September 2017 ➔ Convert the traditional retail sector with new technologies such as self-service checkout ➔ Expand managed services to incorporate the Internet-of- Things (IoT) ➔ Currently launching cloud-based retail solutions for the hospitality and restaurant sector
259 949
retail devices
+40 000
service calls per month
14
African countries
+13 500
ATMs serviced per month
3 million
DELL devices
REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%)
1 321 1 027
600 740 880 1 020 1 160 1 300 FY 17 FY 18
89 74
50 60 70 80 90 100 FY 17 FY 18
(22%)
6.7% 7.2%
(17%)
36
Year at a glance Strategy ➔ Good revenue and EBITDA growth primarily in the FinTech space ➔ HealthTech companies continue to deliver to expectation ➔ Solid growth from FinTech with exceptional growth in the NuPay environment ➔ HealthTech – continues to grow eco systems and platforms to deliver higher value services to health care professionals as well as public health sector ➔ FinTech – evolve new product offerings into the unbanked environment – significant growth opportunity ➔ CyberTech – Built a technology centre to provide security for customer networks
+R1 billion
Collections/mth
7.8 million
member claims/mth
+6.7 million
transactions/mth
10 000
health service providers
Own IP
REVENUE (R’m) EBITDA (R’m) and EBITDA margin (%)
992 1 073
940 970 1 000 1 030 1 060 1 090 FY 17 FY 18
212 253
190 205 220 235 250 265 FY 17 FY 18
8%
21.4% 23.6%
19%
Mteto Nyati Chief Executive
Delivering Growth
FY’20
38
FY’18 Positioning for Growth
FY’22 Accelerated Growth
39
Our core growth areas:
Overview of IT services spending (Rm) by service area in South Africa, 2016 – 2021
IT Service area 2016 2017 2018 2019 2020 2021 CAGR System integration 11 968 12 926 14 089 15 357 16 739 18 246 8.8% Custom application development 2 307 2 630 2 972 3 299 3 629 3 955 11.4% Cloud enablement 108 130 155 181 205 230 16.4% Maintain, Support, Upgrade 10 624 11 261 11 937 12 534 13 160 13 753 5.3% Train 645 677 711 747 784 823 5.0% Managed Services 13 770 15 284 16 813 18 494 20 159 21 973 9.8% Full Outsource 9 779 10 170 10 678 11 212 11 773 12 244 4.6% Cloud services 2 994 3 605 4 309 5 026 5 696 6 398 16.4% IT Services total 59 223 64 427 70 168 76 135 82 213 88 507 8.4% Growth YoY 4.3% 8.8% 8.9% 8.5% 8.0% 7.7%
Internet of Things Security Data Analytics Cloud Services
ZA IT Services Market to Grow by CAGR 8.4% for next five years
* Source: BMIT, 2017
40
0,0% 5,0% 10,0% 15,0% 20,0% IT services breakdown by Service Area
1,0% 6,0% 8,0% 3,0% 4,0% 17,0% 5,0% 5,0% 28,0% 23,0%
IT services breakdown by Vertical
Agriculture Mining and quarrying Manufacturing Electricity, gas and water Construction Retail and wholesale Transport, storage and logistics Media and communication Financial, business and other services Overall government and personal services System integration Custom application development Maintain, Support, Upgrade Training Managed Services Full Outsource/Multisource Cloud services Cloud Enablement
8.8% 11.4% 16.4% 5.3% 5.0% 9.8% 4.6% 16.4%
ZA IT Services Market to Grow by CAGR 8.4% for next five years
Internet of Things Security Data Analytics Cloud Services * Source: BMIT, 2017
Managed services
➔ Altech Radio Holdings
Outsourcing Rental subscription
➔ Altech Netstar ➔ Bytes Software Services UK
Transactional
41
Once-off
➔ Altech Netstar ➔ Bytes Systems Integration
Multi-year
➔ Altech Radio Holdings
Project based
~45%
Annuity income
~55%
Our strategy is to increase Cloud, Security, IoT, and Data Analytics revenue
➔ Bytes Systems Integration ➔ Bytes Systems Integration
➔ Successful implementation of the 4 strategic initiatives ➔ Follow the customer strategy from SA to the rest of Africa ➔ Partnering with OEMs ➔ Right pricing model between OPCOs and BTG Companies: Zero margin (profit share) model ➔ Registration of BTG Companies in key markets
Organic growth
42
Bytes Technology Group (BTG) Company Business from Mauritius Partner Entity
22
Countries
46
Partners
6
Bytes Technology Group companies
5
Countries
➔ Identification of partners to acquire ➔ Investment budget for partner acquisitions ➔ Identification of reputable in-country partners to work with and streamlining of existing partners ➔ Partner contracts should be between BTG Company or BTG Africa and country partner ➔ Relationship with partners to be managed in-country
Partner acquisition
➔ Identification of ICT companies or existing partners with established footprint in Africa for acquisition ➔ Investment budget for acquisitions ➔ Detailed in-country due diligences to be performed for all targets
Acquisitions
EBITDA growth HEPS growth ROCE
43
ONE GOAL 2-5-1
Double (2) EBITDA in 5 years and become number 1 in-market
ONE SET OF VALUES
partners and communities
ONE SET OF STRATEGIC PRIORITIES
GROWTH AREAS
ONE PURPOSE
Delivering innovation that matters
ONE VISION
Be the leading technology solutions provider
Safety & Security Skills Development Financial Inclusion Healthcare Management
44
SOCIETAL IMPACT
Internet
Security Data Analytics Cloud Services
Bytes Document Solutions continues to execute our joint venture dealer strategy in South Africa Altron to resume it’s dividend policy of 2.5 times cover from August 2018 45
Altech Netstar to make a step change in fleet management and telematics at the back of breakthroughs in our routes-to-market Altron has developed a Smart City blueprint in collaboration with key players in the local government
security and healthcare. The broadband infrastructure being rolled out by Altech Radio Holdings is a key enabler Altron is building a Microsoft practice focusing on cloud computing, data analytics and security. These fourth industrial revolution capabilities are being built
We are in our second year of our 2-5-1 strategic goal. In line with this goal, we plan to once again deliver double digit EBITDA and HEPS growth in FY19
Investor relations contacts
Tim Jacobs Acting Chief Financial Officer Email: tim.jacobs@altron.com Tel: +27 (0) 11 645 3600 Zipporah Maubane Group Executive: Marketing & Investor Relations Email: zipporah.maubane@altron.com Tel: +27 (0) 11 645 3600 46
47
The information contained in this document has not been verified independently. No representation or warranty express or implied is made as to and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Opinions and forward looking statements expressed represent those of the Company at the time. Undue reliance should not be placed on such statements and opinions because by nature, they are subjective to known and unknown risk and uncertainties and can be affected by other factors that could cause actual results and Company plans and
the Company nor any of its respective affiliates, advisors or representatives shall have any liability whatsoever (based on negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation and do not undertake to publicly update or revise any of its opinions or forward looking statements whether to reflect new information or future events or circumstances otherwise. This presentation does not constitute an offer or invitation to purchase or subscribe for any securities and no part of it.
49
Altron ICT Feb 2018 Revenue R’million Feb 2017 Revenue R’million Change Feb 2018 EBITDA R’million Feb 2017 EBITDA R’million Change Altech Radio Holdings Group 1 155 1 127 2% 80 84 (5%) Bytes Document Solutions Group 1 353 1 365 (1%) 70 57 23% Bytes Managed Solutions 1 027 1 321 (22%) 74 89 (17%) Bytes Secure Transaction Services 1 073 992 8% 253 212 19% Bytes Systems Integration SA Group* 1 897 1 943 (2%) 123 102 21% Bytes People Solutions 438 426 3% 29 41 (29%) Altron ICT South Africa 6 943 7 174 (3%) 629 585 8% Bytes Technology Group UK 6 088 4 504 35% 206 171 20% Other International operations 244 284 (14%) 16 20 (20%) Altron ICT International 6 332 4 788 32% 222 191 16% Shared Services and Corporate
33 17 Total Altron ICT 13 275 11 967 11% 884 793 11%
* Bytes Systems Integration SA Group and Bytes Universal Systems were merged into one segment effective 1 October 2017
50
Other Operations Feb 2018 Revenue R’million Feb 2017 Revenue R’million Change Feb 2018 EBITDA R’million Feb 2017 EBITDA R’million Change Total Altron ICT 13 275 11 967 11% 884 793 11% Altech Netstar Group 1 378 1 224 13% 291 266 9% Altech Arrow Group 560 602 (7%) 33 40 (18%) Total Operations 15 213 13 793 10% 1 208 1 099 10% Corporate, cons and financial services (470) (488) 4% (94) (143) 34% Total Altron – continued 14 743 13 305 11% 1 114 956 17%
51
Shareholding as at 28 Feb 2018
Fund Managers Hedge Funds Private Investors Venter family Value Capital Partners Company
48,1% 12,3% 6,9% 16,3% 15,6% 0,8%
Managed services Outsourcing Rental subscription Transactional Once-off Multi-year
➔ Altech Radio Holdings ➔ Bytes Document Solutions ➔ Bytes Systems Integration ➔ Bytes People Solutions ➔ Altech Netstar ➔ Bytes Software Services UK ➔ Bytes Document Solutions ➔ Bytes Secure Transaction Solutions
52
➔ Bytes Systems Integration ➔ Bytes People Solutions ➔ Altech Netstar ➔ Altech Radio Holdings
Project based
45%
Annuity income
55%
Our strategy is to increase annuity revenue with a strong focus on transaction and rental business
53
Basis of preparation The purpose of the Constant Currency Pro Forma Financial Information of the Company included in the 2018 SENS Announcement is solely to illustrate the impact of the Constant Currency Pro forma Adjustments on the Audited Financial Information as if the Constant Currency Pro forma Adjustments had been undertaken on 1 March 2016 for purposes of the pro forma normalised revenue from continuing operations, normalised EBITDA before capital items from continuing operations and normalised headline earnings from continuing operations for the year ended 28 February 2017. The constant currency adjustment was calculated by translating the prior year foreign currency amounts for normalised revenue from continuing
normalised EBITDA before capital items from continuing
segment into Rands using the current year average exchange rate. The average exchange rate (Pounds) used to translate the prior year amounts was R17.18:GBP. The Constant Currency Pro Forma Financial Information included in the message to shareholders is prepared for illustrative purposes only, and because of its nature, it may not fairly present the issuer’s financial results of
A reasonable assurance report, prepared in terms of International Standard on Assurance Engagements (IASE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information included in a Prospectus, has been obtained with regard to the Constant Currency Pro Forma Financial Information and is available for inspection at the Company’s registered office.
54
The following depicts constant currency adjustments made to the reported financial information as reported in the segmental analysis:
Normalised revenue from continuing operations Year ended February R’million 2018 2017 % Change Normalised revenue as reported (unadjusted financial information) 1 14 743 13 305 Constant currency adjustment (pro forma adjustments) 3 – (414) Normalised revenue (pro forma financial information) 14 743 12 891 14 Exchange rate (Pounds) 17.18 18.92 EBITDA before capital items from continuing operations Year ended February R’million 2018 2017 % Change Normalised EBITDA before capital items as reported (unadjusted financial information) 1 1 114 956 Constant currency adjustment (pro forma adjustments) 3 – (16) Normalised EBITDA (pro forma financial information) 1 114 940 19
55 Headline earnings from continuing operations Year ended February R’million 2018 2017 % Change Normalised headline earnings as reported (unadjusted financial information) 2 441 387 Normalised adjustments after tax 2 59 4 Constant currency adjustment (pro forma adjustments) 3 – (9) Normalised headline earnings (pro forma financial information) 500 382 19
1 The information was obtained from the segment analysis included in the audited summarised consolidated
financial statements
2 This is the sum of all the normalised adjustments in respect of the continuing operations, adjusted for tax and
amounts attributable to non-controlling interests, obtained from the segment analysis and note 5 included in the audited summarised consolidated financial statements
3 The pro forma adjustments were calculated by converting the prior year foreign currency amounts related to the
Bytes Technology Group UK segment into Rands, using the average Rand/Pound exchange rate for the year ended 28 February 2018.