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Mello, London May 2019 Disclaimer THIS PRESENTATION IS NOT FOR - - PowerPoint PPT Presentation

Mello, London May 2019 Disclaimer THIS PRESENTATION IS NOT FOR PUBLIC RELEASE OR FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART) IN, INTO OR FROM AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF IRELAND, THE REPUBLIC OF SOUTH AFRICA, THE


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Mello, London

May 2019

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Disclaimer

THIS PRESENTATION IS NOT FOR PUBLIC RELEASE OR FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART) IN, INTO OR FROM AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF IRELAND, THE REPUBLIC OF SOUTH AFRICA, THE UNITED STATES OF AMERICA OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION. These presentation slides and the accompanying verbal presentation (together the “Presentation”) are strictly confidential and has been prepared by Pelatro plc (the “Company”) solely for use in connection with announcing and explaining to shareholders Full Year Results to 31 December 2018. This Presentation is not intended to be, nor is it, a substitute for the Company’s Full Year 2018 Annual Report, a copy of which can be found at https://www.pelatro.com/investors/news/ ` These slides do not constitute an admission document, listing particulars or prospectus relating to the Company and this presentation does not constitute an offer to sell or a solicitation to buy or subscribe for securities in the Company and should not be relied upon in connection with a decision to purchase or subscribe for securities. No reliance may be placed for any purpose whatsoever on the information contained in this Presentation or the completeness or accuracy of the same. The information in this Presentation or on which this Presentation is based has been obtained, in part, from sources that the Company believes to be reliable and accurate. However, none of the Company, the Company’s directors, officers, employees, its shareholders or any of their respective advisors, or any other person has independently verified such information in this Presentation and no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information and opinions contained in this Presentation as a whole and no reliance should be placed on such information or opinions. Any opinions, projections, estimates or forecasts contained in this Presentation constitute a judgement of the Company only and should not be relied upon and are provided as at the date of this Presentation and are subject to change without notice. In giving this Presentation the Company does not undertake or agree to any obligation to provide you with access to additional information or to update the Presentation or to correct any inaccuracies or omissions from this Presentation which become apparent. To the extent permitted by law and regulation, neither the Company nor any officer, director, employee or representative of any of them accepts any responsibility or liability whatsoever for any loss, damage or liability howsoever arising, directly or indirectly, express or implied, contractual, tortious, statutory or

  • therwise from any use of this Presentation or its contents or otherwise arising in connection therewith. The recipient of this Presentation shall be responsible for conducting its own investigation and analysis of the information contained or referred to in this Presentation and for evaluating the

merits and risks involved in the securities forming the subject matter of this Presentation. This Presentation does not constitute an offer of securities for sale in Australia, Canada, Japan, the Republic of Ireland, the Republic of South Africa or the United States of America (each a “Restricted Territory”) or in any other country where such distribution may lead to a breach of any legal or regulatory requirement, nor may they be distributed to persons (as defined in Regulation S under the United States Securities Act of 1933 (as amended)) with addresses in the United States, or to any individual outside a Restricted Territory who is a resident thereof in any such case for the purpose

  • f offer for sale or solicitation or invitation to buy or subscribe any securities or in the context where its distribution may be construed as such offer, solicitation or invitation, in any such case except in compliance with any applicable exemption. It is the responsibility of each recipient outside the

United Kingdom to ensure compliance with the laws of and regulations of any relevant jurisdiction. Neither this Presentation nor any copy of it may be taken or transmitted into or distributed in the United States or to any resident thereof. Neither this presentation nor any copy hereof may be distributed in any other jurisdictions where its distribution may be restricted by law and any persons into whose possession this Presentation comes should inform themselves about, and observe, any such restrictions. The content of the Presentation has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 (“FSMA”). Reliance on the Presentation for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested. Any person who is in any doubt about the subject matter to which the Presentation relates should consult a person duly authorised for the purposes of FSMA who specialises in the acquisition of shares and other securities. Please note that the information in this Presentation has yet to be announced or otherwise made public and as such constitutes non-public price sensitive information for the purposes of the Criminal Justice Act 1993 and inside information for the purposes of the Market Abuse Regulation 596/2014. You should keep confidential the information contained in this Presentation and not deal in any way in the securities of the Company until after the formal release of an announcement by the Company as to do so may result in civil and/or criminal liability. This Presentation contains forward‐looking statements, including but not limited to statements in relation to the Company and its respective subsidiaries, affiliated companies and projects, the future price of, and demand for, products, services, platforms, technologies, operations, licences and new growth market opportunities. Such statements are generally identifiable by the terminology used, such as “may”, “will”, “could”, “should”, “would”, “anticipate'', “believe'', “intend”, “expect”, “plan”, “estimate”, “budget'', “outlook'' or other similar wording. By its very nature, such forward‐looking information requires the Company to make assumptions that may not materialise or that may not be accurate. Such forward‐looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company and/or its respective subsidiaries and/or its affiliated companies, to be materially different from any future results, performance or achievements expressed or implied by such forward‐looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; the actual results of current product development; conclusions of economic evaluations and studies; bank liability; political instability; insurrection or war; delays in obtaining governmental approvals or financing or in the completion of product development. Furthermore, the forward‐looking information contained in this Presentation is made as at the date of this Presentation and the Company does not accept any obligation to disseminate any updates or revisions to such forward‐looking statements. The forward‐looking information contained in this Presentation is expressly qualified by this cautionary statement. This document is not intended to be, and should not be construed as, any advice on the merits of, or any recommendation to any recipient or reader of this document in relation to, the purchase of shares in the Company. Recipients and readers of this document should seek their own independent legal, investment and tax advice as they see fit. By receiving this Presentation you agree to be bound by the foregoing limitations.

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Presentation Team

Subash Menon

Managing Director & CEO

➢ Subash co-founded Pelatro in April 2013 ➢ Prior to Pelatro, Subash was the CEO and Founder of Subex – a company he transformed from a systems integrator in telecoms hardware to a global leader in telecoms software for business optimization ➢ Subash guided Subex through a successful IPO in 1999 and through seven acquisitions in the UK, US and Canada

Nicholos Hellyer

Finance Director

➢ Nic, is a Chartered Accountant and former investment banker of over 25 years of experience ➢ Nic spent the majority of his banking career at UBS and HSBC, advising on a wide range of transactions including public takeovers, private M&A, IPOs and other equity fund raisings ➢ Nic has also spent time in industry as CFO of Buddi Limited and as Partner at Opus Corporate Finance

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Introduction

Telco’s face a growing number of challenges – with their commoditized services Telcos are looking to existing subscribers to generate new revenue streams

Telcos are looking to increase Average Revenue Per User as opposed to increase subscriber numbers

Retaining customers is cheaper and more profitable than acquiring – however, churn is very high

POSITIONED WITHIN THE MULTI CHANNEL MARKETING HUB SPACE

  • mViva collects data on a real time basis which enables the platform to develop accurate profiles of million of subscribers on the actual usage of different products and demographics spread over a long period of time
  • Pelatro’s mViva technology processes and analyses the subscriber data in a real time manner to reveal patterns, trends and key behavioural traits as they evolve to have an accurate of each subscriber at all times
  • mViva facilitates continuous, relevant and contextual interactions in a true omni channel engagement model to influence the usage behavior thereby increasing revenue and reducing churn

MVIVA CONTEXTUAL MARKETING PLATFORM DATA MONETIZATION PLATFORM LOYALTY MANAGEMENT SOLUTION THE PROBLEM

PELATRO’S SOLUTION

Pelatro provides proprietary technology to Telcos to drive underlying subscriber engagement and drive incremental revenue for Telcos of up to 5% per year while reducing churn

Enables Telcos to partner with the B2C players and provide a mobile advertisement and sales platform for non Telco products to the subscriber base (using Data Monetization software)

Application: Send contextual, relevant, personalized and real time campaigns to stimulate higher usage Mr Smith has consistently been browsing YouTube, but does not have a data

  • pack. The Telco can target Mr Smith using this analysis in real time and offer

a special YouTube data pack which will result in incremental revenue for the telco while ensuring higher customer satisfaction. Application: The telco can set up attractive loyalty programs to increase usage and reduce churn Mr Smith has been a customer for several years and uses various products resulting in a high revenue to the telco. Create multiple tiers, position him in the highest tier and offer him points for his usage which can then be redeemed for telco and non telco products. Application: B2C partners of the telco can segment the subscribers and target individuals subscribers with personalized, mobile advertising Mr Smith travels to certain specific countries regularly, used a high end phone, has a monthly bill that is in the upper quartile. An overseas travel insurance company can send a tailor made product to Mr. Smith pricing it based on his risk profile.

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Group Overview

2013

Founded in

17

Telco customers in 16 countries

(1 in 2015)

125%

Revenue CAGR

Since 2016

194%

Adjusted PBT CAGR

Since 2016 1 2 3 4 5 6 7 2015 2016 2017 2018

Revenue in $m

0.5 1 1.5 2 2.5 3 3.5 2015 2016 2017 2018

  • Adj. PBT in $m
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Revenue Models

Revenue Gain Share

Pelatro earns a share of the monthly revenue gain generated by using its product 10% to 20% Customers: Bahamas Telecom Primetel VNPT Ooredoo Maldives Tele2

Licence

Pelatro licenses the product with additional licence fee based on growth of subscribers in the network Includes on-going maintenance income ranging from 10-15% of the cumulative licence fee and Change Requests Customers: All other customers incl. Tele2

Managed Services

Pelatro earns a fixed monthly fee for providing the product and managing the operations Customers: Tele2

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A Review of 2018

Jan

Results to 31 Dec 2017 in-line with market expectations Rev: $3.15m Adj pbt: $1.8m

Apr

Won the largest contract to date with Tele2 – US$1.7 million revenue to Pelatro

Aug

Raised £6 million new equity to fund the acquisition of assets of Danateq

Oct

Entered South Europe with contract with Primetel, Cyprus

Sep

Integrated the acquired assets with Pelatro within a few months

Sep

Expanded product suite thereby offering Multichannel Marketing Hub – repositioning of Pelatro in a fast growing segment

Oct

Added Loyalty Management Solution (LMS) to the Global Framework Agreement with Telenor – leveraging the newly acquired relationship

Oct

Won a contract from Telenor in Bangladesh (Grameenphone) for LMS

Dec

Doubled customer base

  • rganically and

inorganically – from 6 to 14 in the year

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Customers & Growth Opportunities

Customer Location

  • No. of Subscribers

Products currently used

Contextual Marketing New product: Data Monetization Loyalty Management

Bangladesh 90 mln X Philippines 75 mln X Bangladesh 65 mln X X Vietnam 40 mln X Myanmar 20 mln X Sri Lanka 15 mln X Malaysia 15 mln X Nepal 15 mln X Morocco 15 mln X Sudan 14 mln X Kazakhstan 10 mln X X Cambodia 8 mln X Bulgaria 3 mln X Maldives 300,000 X Bahamas 250,000 X Cyprus 250,000 X

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Telco Market – New Opportunities – Medium Term

Total : 12 Target Group : 5 Total : 116 Target Group : 60 Total : 140 Target Group : 120 Total : 160 Target Group : 105 Total : 34 Target Group : 26 Total : 56 Target Group : 46

North America Latin America Africa Europe Middle East APAC

▪ Overall market forecast to grow to US$ 2.7Bln in 2019 ▪ CAGR from 2014 to 2019: 19% Source: Markets & Markets 2016

362

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New Opportunity: Mobile Advertising

➢ Global mobile advertisement market was $138 bln in 2018, growing at 15% CAGR – Statista 2019 ➢ Market opportunity for Telcos in 2020, assuming 5% market share, is $9 bln ➢ Pelatro operates on revenue share model in this virgin market – average revenue share is 20% i.e. a potential market size of $1.8 bln

“Formulate and prioritize investments to develop a position in data monetization in the advertising market before

  • ther advertising strategies. Focus should be on maximizing Communication Service Provider (“CSP”) data usage

and availability, rather than on generating and selling ad inventory. Develop a trusted data provider position with brands, agencies and the wider ecosystem on top of the media or technology activities already developed. As a trusted source of data, CSPs will add transparency by reducing fraud and waste.”

  • “Market Trends: CSPs Must Transform Their Advertising Model”, Gartner
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Pelatro’s Offering: Data Monetization Platform

➢ Pelatro’s new product, the Data Monetization Platform (DMP), selected by Tele2 Kazakhstan, facilitates mobile advertising ➢ Using Pelatro’s existing proprietary Big Data technology, the analysis and insight into subscriber actions and patterns allows Telcos to offer mobile advertisement service to other B2C companies like banks, insurance companies, retail, brands etc. ➢ In certain countries, Pelatro provides its mViva solution to c. 70% of the population – this provides the B2C companies a vast target audience whose behavioural patterns are already analysed

* Statista 2019

Country Population (2017) Pelatro’s Penetration Penetration % Malaysia 32 mln 24 mln 75% Bangladesh 165 mln 120 mln 73% Sri Lanka 22 mln 15 mln 68% Philippines 105 mln 65 mln 62% Morocco 35 mln 15 mln 43% Total 359 mln 239 mln 67%

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Financial Highlights

1.21 3.15 6.12 1 2 3 4 5 6 7 2016 2017 2018

Group Revenue

0.49 2.01 3.75 1 2 3 4 2016 2017 2018

EBITDA

➢ Group Revenue increased by 95% to $6.12m (2017: $3.15m) ➢ Adjusted EBITDA increased by 87% to $3.75m (2017: $2.01m) ➢ Adjusted PBT of $3.1m (2017: $1.8m) ➢ Repeat Revenue, which includes managed services, revenue gain share, change requests and support, now forms 51% of the total revenue – up from 20% ➢ Adjusted PBT: Exceptional items $310k, amortisation of acquisition-related intangibles $286k (2017: exceptional items $701k) ➢ Adjusted EBITDA: Exceptional items $310k, depreciation and amortisation $889k (2017: Exceptional items $701k, depreciation and amortisation $223k

0.62 3.1 0.5 1 1.5 2 2.5 3 3.5 2016 2017 2018

Repeat Revenue

0.4 1.8 3.1 0.5 1 1.5 2 2.5 3 3.5 2016 2017 2018

Profit Before Tax

All Figures in US$ Mln

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Balance Sheet & Cash Collection

0.3 0.6 0.5 2.2 1.8 0.5 1 1.5 2 2.5 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1

Quarterly Collection in $m

➢ Trade receivables at 31 December 2018 of $4.1m (2017: $1.8 million)

  • Increase relates largely to the weighting of

revenues in the second half of the year, with over 60% of the total revenue accounted for in the last quarter

  • Of these receivables, approximately $1.8m has

been received since the year end and to date ➢ Cash collection key to management:

  • Cash outflow of $52,000 in the first half comparing

to adjusted operating cash inflow of approximately $1.2m in the second

  • This improvement is expected to continue as the

Group becomes more established and also with an increasing proportion of repeat or monthly contracts in the revenue mix (e.g. from revenue share or managed services). ➢ Current net cash $2.22m (31 Dec 2018: $1.8m) ➢ Debtors days now at 153 (31 Dec 2018: 251)

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Debtor Days

251 153 50 100 150 200 250 300 Dec 2018 Mar 2019

Total AR to Total Revenue

176 78 20 40 60 80 100 120 140 160 180 200 Dec 2018 Mar 2019

Invoiced AR to Invoiced Revenue

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Income Statement

Profit & Loss 2018 2017 $’000 $’000 (audited) (audited) Revenue 6,123 3,146 Cost of providing services (555) (799) _______ _______ Gross profit 5,568 2,347 Overhead expenses (1,818) (343) _______ _______ Adjusted EBITDA 3,750 2,004 Amortisation and depreciation (excl. acquisition- related) (603) (203) _______ _______ Adjusted operating profit 3,147 1,801 Exceptional items (310) (701) Amortisation of acquisition-related intangibles (286)

  • _______

_______ Statutory operating profit 2,551 1,100 Finance income 33

  • Finance expense

(71) (4) _______ _______ Profit before taxation 2,513 1,096 Income tax expense (334) (252) _______ _______ PROFIT FOR THE YEAR 2,179 844 Earnings per share Statutory 8.0¢ 4.8¢ Adjusted 10.1¢ 8.9¢

➢ Revenue up 95% and includes some $3.1m of repeat revenue (of which c. $1.3m is acquisition of Danateq assets in August 2018) ➢ Revenue of $6.1m comprises repeat software (mainly Change Requests) and managed services of $2.4m, support of $0.7m, plus new licenses $2.3m and $0.5m consulting ➢ Customer concentration down markedly (14 in total v. 7 in 2017) ➢ Overheads reflect growth of Group and Plc expenses; net of capitalised development costs of $1.6m (2017: $0.8m) ➢ Amortisation of development costs c. $560k, including $130k on assets acquired from Danateq

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Balance Sheet

Balance Sheet as on 31st December 2018 2017 $’000 $’000 (audited) (audited) Assets Non-current assets Intangible assets 10,609 1,324 Property, plant and equipment 362 30 _______ _______ 10,971 1,354 Current assets Trade receivables - invoiced 1,813 1,721 Trade receivables – Unbilled Revenue 2,325 57 _______ _______ Total trade receivables 4,138 1,778 Contract assets 384

  • Other assets

382 217 Cash and cash equivalents 2,224 4,126 _______ _______ 7,128 6,121 Liabilities Non-current liabilities Borrowings 382 266 Other financial liabilities 1,141

  • _______

_______ 1,523 266 Current liabilities Trade and other payables 609 474 Short term borrowings 69 774 Contract liabilities 238

  • Other financial liabilities

298

  • _______

_______ 1,214 1,248 Total liabilities 2,737 1,514 NET ASSETS 15,362 5,961

➢ Intangibles reflects acquisition of Danateq assets (mainly customer relationships and acquired development cost assets) ➢ "Debtor days" on invoiced revenue down to 179 from 203 ➢ Net cash position of $1.8m ➢ $1.8m cash collected since year end ➢ Other financial liabilities represent contingent consideration for Danateq acquisition

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Cashflow

Cash Flow 2018 2017 $’000 $’000 (audited) (audited) Operating cash flows before movements in working capital 3,681 2,009 (Increase)/decrease in trade and other receivables (2,438) (1,698) (Increase)/decrease in contract assets (273)

  • Increase/(decrease) in trade and other payables

57 440 Increase/(decrease) in contract liabilities 146

  • _______

_______ Cash generated from operating activities (before exceptionals) 1,173 751 Income tax paid (292) (78) _______ _______ Net cash generated from operating activities (before exceptionals) 881 673 Exceptional items (310) (701) _______ _______ Cash generated from operating activities 571 (28) Cash flows from investing activities Acquisition of property, plant and equipment (384) (1) Development of intangible assets (1,604) (752) Acquisition of intangible assets (69)

  • Cash inflow/(outflow) on acquisition of businesses net of cash acquired

(7,035) 9 _______ _______ Net cash used in investing activities (9,092) (744) Cash flows from financing activities Proceeds from issue of ordinary shares, net of issue costs 7,395 4,742 Proceeds from borrowings 394 2 Repayment of borrowings (including related parties) (949) (37) Net finance costs (26)

  • _______

_______ Net cash generated by/(used in) financing activities 6,814 4,707 Net increase/(decrease) in cash and cash equivalents (1,707) 3,935 Foreign exchange differences (195) (5) Cash and equivalent at beginning of period 4,126 196 _______ _______ Cash and cash equivalents at end of period 2,224 4,126

➢ Operating cash flow of c. $1.2m before exceptional items, reflecting improving cash collection and revenue mix ➢ A further $1.8m collected since the year end ➢ $1.6m of development costs capitalised reflecting continuing investment in wider range

  • f products

➢ Danateq acquisition cost $7m, funded by equity placing

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Strategy

➢ Facilitate an ecosystem consisting of telcos and other B2C players like banks, insurance companies, retail etc. with the telcos at the centre in countries where Pelatro has more than 50% penetration

  • to take advantage of the growing and lucrative mobile advertising market by addressing such a large market
  • pportunity in a relevant, contextual and real time manner

➢ Pelatro’s platform will be the key enabler for:

  • Telcos to sell more and more Telco products to its existing subscriber base (using Contextual Marketing and

Loyalty Management solutions)

  • Telcos to partner with the B2C players and provide a mobile advertisement and sales platform for non Telco

products to the subscriber base (using Data Monetization software) ➢ Cross sell multiple products into the existing and expanding customer base