Softline Presentation for investors 2 Legal notice Purpose of - - PowerPoint PPT Presentation

Softline

Presentation for investors

Legal notice

Purpose of the Information Presentation

This Information Presentation contains information of a proprietary and confidential nature relating to Softline ("the Company"). The above-mentioned information was prepared by Softline based on its data, as well as on data from other sources, references to which are made in the document. This Information Presentation was prepared solely for the purpose of introducing the Potential Investor (hereinafter the "Recipient") to the activities and financial position of the Company. This Information Presentation, including appendices hereto, and the information it contains does not constitute an offer to sell

• r invitation to purchase any shares or related assets of the Company, and shall not be a part of any investment decision or decision related to the possibility
• f signing any agreement with the Company.

The Recipient of this Information Presentation should not interpret its contents and any preceding or following related information, as well as the data

• f the Company’s Information Presentation, as legal, business, tax, or any other advice. For all legal, business, accounting, or tax issues the Recipient should

consult its corresponding advisors.

Contents of the Information Presentation

Softline does not owe a duty of care to the Recipient, either in relation to this Information Presentation or any other information which the Recipient may be provided with at any time, other than as may arise out of a written agreement. The Recipient must undertake such investigations as it sees fit before entering into any contract. Neither Softline nor any of its partners, officers, employees and agents makes any express or implied representations or warranties, and no responsibility

• r liability is accepted by any of them with respect to the adequacy, accuracy, completeness or reasonableness of the facts, opinions, estimates, calculations,

forecasts, projections or other information set out in this Information Presentation and appendices hereto or any further information, written or oral notice,

• r other document at any time supplied in connection with it, and nothing contained herein, or therein shall be relied upon as a promise or representation

regarding the historic or current position or performance of the Company or any future events or any future events or performance of the Company.

2

• 1. Introduction to Softline
• 3. Strategy highlights
• 4. Market overview
• 2. Financial profile

Agenda

Microsoft’s global partner: One of 6 Globally Managed Licensing Solution Providers (LSPs), which provides selling, marketing, and technical support benefits to Softline Corporate clients: 60,000+ globally

• most of the clients are corporate customers from industrial and

retail sectors and government organizations Headcount:

• ver 4,000 employees, including 500+ engineers, developers and other

IT professionals, 400+ product specialists and over 1,100 account managers

Global Digital Transformation & Cybersecurity Solutions Provider

Gross Profit1 division by product segment (%):

• sale of software and licenses - 49%
• sale of hardware – 10%
• IT-services - 19%
• cloud – 22%

Presence in 50+ countries (% of turnover as of 2019FY):

• Russia - 65%
• CIS – 8%
• LATAM – 12%
• APAC – 14%
• CEE – 2%

Vendors:

3,000+ with the largest being Microsoft, Kaspersky, Oracle, VMWare and HP Partnership statuses: the highest partnership statuses with major software and hardware vendors

4

12019 FY data. Finance year ending in March (e.g., 2019 refers to YE 31-Mar-2020)

Turnover: $899 mn Key devel elopmen ments: s: 3 medium sized M&A deals were closed in 2016 (Compusoftware, IT Guard, Active Cloud) Global al expansion sion: + Laos + USA + Brazil + Costa-Rica + India + Myanmar Multiple M&A transactions are in pipeline for 2020+ Turnover: $1,193 mn Key developments: Additional equity was raised from international Private Equity Fund 4 medium sized M&A deals were closed in 2017 (Enaza, Insight, Zsquare, Infosecurity) Global expansion: + Thailand + Philippines + Ecuador + CEE countries Turnover: $735 mn Key developments: Included in TOP-7 private IT companies in Russia, by Forbes More than 1,000 IT services projects Global expansion: + Chile + Peru + Malaysia + Cambodia Key devel elopmen ments: s: Launch of electronic distribution, web-development, venture projects Global al expansion sion: + Moldova + Romania + Argentina + Turkmenistan Key developments: DeskWork corporate portal – proprietary product Launch of Softline Services

• dep. and SaaS store

Global expansion: + Venezuela + Armenia + Vietnam + Turkey Key devel elopmen ents: Leader in software licensing in Russia and CIS Global al expansion sion: + Azerbaijan + Tajikistan + Georgia + Mongolia Key developments: Softline Consulting Services Global expansion: + Kazakhstan + Uzbekistan + Kyrgyzstan Key devel elopmen ments: s: Launch of Softline Solutions consulting company JV with Microsoft – Microsoft solutions center Launch of distribution company Axoft

1993 2001 2003 2005 2007 2009 2012 2015 2016 2017 2020 1998

Foundation

Headcount: 10 employees Main services: scientific software licensing Geo presence: Russia Key devel elopmen ents: Partner of Microsoft Marketing innovations Global al expansion sion: + Belarus Key developments: Launch of Softline education center Development of distribution business Global expansion: + Ukraine Turnover: $1,609 mn (2019FY) + 1 M&A deal closed – HTC Group acquired (Russia) + Partnership with OEP to acquire Crayon stake + CEE expansion

Track Record of 25 years of Successful Development

Reseller of SW in Russia SW, HW, Services, Cloud in BRICS+

• Leading IT Solutions & Services provider, Digital Transformation
• Cyber Security with active organic and M&A development
• Softline as a platform for exporting Russian IT technologies to

BRICS+

5

Russia

Moscow

• St. Petersburg

Arkhangelsk Belgorod Chelyabinsk Ekaterinburg Irkutsk Izhevsk Kaliningrad Kazan Khabarovsk Krasnodar Krasnoyarsk Murmansk Nizhny Novgorod Novosibirsk Omsk Orenburg Perm Rostov-on-Don Samara Saratov Surgut Taganrog Tomsk Tyumen Ufa Vladivostok Volgograd Voronezh

Yaroslavl

EE&CA

Armenia Azerbaijan Belarus Bulgaria Croatia Georgia Hungary Kazakhstan Kyrgyzstan Moldova Romania Serbia Slovenia Tajikistan Turkey Turkmenistan Uzbekistan

Americas

Argentina Brazil Chile Colombia Costa Rica Ecuador Honduras Mexico Panama Paraguay Peru Salvador Uruguay USA Venezuela

Asia

Bangladesh Cambodia India Malaysia Mongolia Myanmar Philippines Thailand Vietnam

Our Core Markets:

• Russia
• Kazakhstan
• Belarus
• Romania
• Thailand
• Philippines
• India
• Vietnam
• Malaysia
• Brazil
• Argentina
• Chili
• Colombia

Softline is a Global IT Services Provider

The company operates in more than 95 cities in 50 countries

6

Software (SW) Hardware (HW) SW&HW Software (SW) Software (SW)

Softline business is composed of 3 key Business Units

Softline Business Structure

7

Business Unit SOFTLINE Business Overview Sales Geography Key Vendors AXOFT ALLSOFT

• B2B Direct Sales
• VAR: Software, Hardware, Services, Cloud
• Russia
• EE&CA
• ROW (Rest of the World)
• Indirect Sales
• VAD: IT Security, Cloud, Infrastructure
• Russia
• CIS
• Russia
• CIS
• Other (Hungary, Czech Republic,

Slovakia, Brazil, India, LATAM)

• E-commerce:
• WEB store
• Shopping Carts for Vendors
• Payments for TELCOs

According to the data of the renown rating agencies, Softline is one of the leaders in most segments of the Russian IT market

Leading position in Russian IT market

8

2018 rank Company 1 NCC 2 Lanit 3 Epam 4 Softlin line 5 1C 6 Kaspersky 7 ITG 8 Rostelecom 9 SAP CIS 10 iTecho 2018 rank Company 1 NCC 2 Lanit 3 Softlin line 4 ITG 5 iTecho 6 Krok 7 FTC 8 Infosystems Jet 9 Compulink 10 SKB Kontur 2019 rank Company 1 Rostech 2 NCC 3 Lanit 4 Softlin line 5 1C 6 Kaspersky 7 ITG 8 Rostelecom 9 SAP CIS 10 iTecho 2019 rank Company 1 Softlin line 2 Krok 3 Borlas 4 Zyfra 5 Consyst 6 ITPS 7 GMCS 8 IPL Consulting 9 Raytech 10 Rdtex

Agen ency List Place The biggest private companies in Russia 170/200 The biggest companies in Russia 221/500 The biggest companies in Russia 163/600 The biggest IT providers for Public sector in Russia 1 The biggest IT providers for Retail sector in Russia 1 The biggest Information Securities providers in Russia 2 The biggest IT providers for Banking sector in Russia 3 The biggest IaaS providers in Russia 1 The biggest IT providers in Industrial sector in Russia 1 The biggest System integrators in Information Security in Russia 1 The biggest SaaS providers in Russia 2 The biggest companies in Information Security industry in Russia 2 The biggest IT providers for Public sector in Russia 2 The biggest IT providers of Data analysis solutions in Russia 3 The biggest IT providers for Banking sector in Russia 4 The biggest IT providers for Telecom sector in Russia 7

Microsoft Gold Partner with 20+ years of collaboration

9

Par artner nersh ship p Statu atuses ses

Gold ld Application Development Gold ld Application Integration Gold ld Cloud Platform Gold ld Cloud Productivity Gold ld Collaboration and Content Gold ld Communications Gold ld Customer Relations Management Gold ld Data Analytics Gold ld Data Platform Gold ld Datacenter Gold ld DevOps Gold ld Enterprise Mobility Management Gold ld Enterprise Resource Planning Gold ld Small and Midmarket Cloud Solutions Gold ld Messaging Gold ld Project and portfolio Management Gold ld Windows and Devices

The only Globally Managed Partner* in Russia1

*Only 8 companies in the world hold this status

#1 #1 Partner of Year

Cambodia, 2018

#1 #1 Microsoft Partner of Year

Cambodia, Chile & Kazakhstan, 2017

#1 #1 Partner in Russia

By sales volume in FY16

#1 #1 Microsoft Partner of Year

Georgia, 2016

#1 #1 Microsoft LSP Partner

Russia, 2015

The only Globally Managed Partner* in Russia

Benefits of

• f globa

bal LSP status

• Direct support from Microsoft in marketing

and market penetration in advancing into new markets and new products

• Microsoft

introduces Softline to major accounts, government and large corporates

• Softline has 26 LSP statuses worldwide

Global LSP status allows to

• sell products to strategic international accounts

(e.g. Fortune 500 companies)

• use dedicated resources at Microsoft HQ
• enjoy

simplified authorization process for agreed markets

• jointly participate in product and program

launches *Only 8 companies in the world hold this status

projects implemented

300 3000+ 0+

• ut-of-the-box

solutions

50+ 0+ 400+ 00+

certified professionals share of Microsoft in Softline’s turnover in FY19

~40%

*Actual as of June 2020. Microsoft did not announce countries awards for 2019

Softline has partnerships with 3000+ Hardware & Software vendors

Licensing Solution Provider (LSPs)

10

Highly diversified customer base

11

Global Accounts Large Corporate Clients Small and Medium Business Government, Public Sector Education, Healthcare Oil & Gas, Industry

Da Vinci Capital is a leading independent investment manager set up in 2007 to make mid-market PE investments in Russia and other Eurasian Economic Union (EEU) countries In 2016, DVC received the Silver Award in the category of “Russian, CEE Private Equity Fund of the Year” at the Private Equity Exchange Awards in Paris. Da Vinci Capital provides a strong mix of fund management experience, sectoral expertise and entrepreneurial capacity Sovcombank is a Russian universal bank with main business activities in retail, corporate and investment banking Zubr Capital is the first professional private firm that manages private equity funds in the Republic of Belarus. The company was established by the top-management of Atlant-M Holding in 2009 Private equity firm Zubr Capital provides assistance in business development to be designated for increase of business’s operational effectiveness and market value growth

Shareholders

12

Shareholders

Igor Borovikov

Igor Borovikov is a founder of the company and its main shareholder. He was twice named among the best 25 managers of Russian IT companies, in 2014 he became the winner of EY “Entrepreneur of the year” in the “IT services” nomination

Oleg Zhelezko

Board Member Founding partner of Da Vinci Capital Group

Jacques Guers

Independent Director

Oleg Zhelezko is the founding partner of Da Vinci Capital Group. Oleg’s experience includes investment management, investment structuring, principal investment and M&A deals in the UK and other European countries, emerging markets such as Russia and South Africa In 1993 Igor founded Softline and spearheaded its development. He was twice named among the best 25 managers of Russian IT companies, in 2014 he became the winner of EY “Entrepreneur

• f the year” in the “IT services” nomination. Igor has a PhD

in Mathematics and Computer Science, he is an author of over 30 scientific studies Jacques has more 30 years of experience with IT companies, having passed through the roles of companies’ President for different European countries, Western Europe as a region and Emerging Markets region that gave him a broad international and multicultural leadership experience. In 2007 Jacques was Awarded “Legion of Honour” by French Government for personal efforts to develop French IT Industry Alexander Galitsky is co-founder and managing partner of Almaz Capital. He is an innovator, entrepreneur and investor renowned for his work bridging CEE companies to the global marketplace. Alexander founded and led as CEO five successful companies in the software, communications, semiconductor, internet and security sectors

Leadership

Alexander Galitskiy

Independent Board Member Founder of Almaz Capital Partners 13

Igor Borovikov

Chairman of the Board Founder of Softline Group

• 1. Introduction to Softline
• 3. Strategy highlights
• 4. Market overview
• 2. Financial profile

Agenda

25,7 30,1 39,1 50,5 2016FY Fact 2017FY Fact 2018FY Fact 2019FY Actual

103,2 132,1 151,9 168,4 20,4 21,6 24,6 27,6 20,4 24,7 27,6 28,8 144,0 178,5 204,0 224,7

2016FY Fact 2017FY Fact 2018FY Fact 2019FY Actual ROW CIS Russia 898,9 1 193,4 1 351,6 1 610,1 2016FY Fact 2017FY Fact 2018FY Fact 2019FY Actual

Softline demonstrates steady financial performance

15

EBITDA, USDm Group Turnover USDm / 2016-2019 CAGR 21.6% Group Gross Profit, USDm / 2016-2019 CAGR 19.3%

Margin1

22.3%

32.8% 13.3% 19,1%

Growth %

19.8% 17,9% 16,9% 19,1% 22,5% 14.3% 10,1%

24.0% Growth %

1 Margin = EBITDA/GP

Softline debt profile

Debt structure (Long/Short)

16 ruBBB, outlook Stable

• Oct. 2019

B, outlook Stable

June 2020

Debt maturity profile (bonds), USDk (as of 31.03.20) Credit Rating: Net Debt / EBITDA Interest rates on short bank loans

95% 5% Short Long All figures in USDk. Upd. 31.03.20 Short – 88,295; Long – 4,521 ex. leasing 88% of debt is denominated in RUB 12 022

• 12 022
• 3 636
• 17 367

Q1'20 Fcst Q2'20 Fcst Q3'20 Fcst Q4'20 Fcst Q1'21 Fcst Q2'21 Fcst Q3'21 Fcst Q4'21 Fcst Q1'22 Fcst Q2'22 Fcst Q3'22 Fcst Q4'22 Fcst 13,00% 10,90% 9,70% 9,30% 2016FY Fact 2017FY Fact 2018FY Fact 2019FY Actual 0,9 1,5 1,8 1,0 2016FY Fact 2017FY Fact 2018FY Fact 2019FY Actual

0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0

Crayon stock quotes

Investment in Crayon

SL owns 10,139% stake in Crayon's Equity. Stake value is $50,2m at 10.06.2020

17

10.08.2018

Acquisition of Crayon shares by SL

10.06.2020

+277%

+$36,9m

• 1,74 $/share – deal price
• 7 644 039 shares
• 13 330 USDk share value
• 10.139% of Equity
• 6,57 $/share – current price
• 7 644 039 shares
• 50 206 USDk share value
• 10.139% of Equity

30.06.2019

• 3,19 $/share – current price
• 7 644 039 shares
• 24 413 USDk share value
• 10.139% of Equity

• 1. Introduction to Softline
• 3. Strategy highlights
• 4. Market overview
• 2. Financial profile

Agenda

• We expect global Cloud spending to grow 5.0x and 2.5x faster

than worldwide IT spending and worldwide software spending respectively

• Cloud software resale and cloud services are the fastest growing

and highest margin segment of our revenues

• We offer our own as well as third party solutions in SaaS, IaaS and PaaS

IT Solutions Specialist Global Presence, Emerging markets Focus

• Build high margin services upon our vast client base in the LSP business
• Further develop IT services and cloud to enhance margins and value
• Solutions business drives sale of Software and Hardware
• Continue development of core business – Software and Hardware resale
• We have presence in 50+ countries in LATAM, APAC, CEE
• The markets we are active in account for over 30% of global IT spending
• Our markets demonstrate faster growth than the world average
• We are a top 5 player in Russia, Brazil, Argentina
• We

aim to be the undisputed leader in digital transformation and information security with a market share of at least 35% in Russia

Embrace the Cloud

We view ourselves as a Global IT Company with focus on Emerging markets providing IT Solutions & Services, Digital Transformation & Cyber Security to over 60,000 clients

Strategy highlights

19

Products & Vendors Developing services

• Focus
• n

cooperation with Top-10 vendors. Execute a 3-year plan with Microsoft;

• Maintain

Software business growth

• f

15% YoY, Hardware business growth of 20% YoY;

• Increasing margins due to better conditions of the contracts

(thanks to license statuses), better services, financial services such as leasing;

• The key model is “All as a service”
• Managed Services;
• Cybersecurity;
• Outsourcing: developing new software, maintaining business

processes (accounting, HR), IT maintenance for clients;

• Developing
• wn

IP: Active Platform, Maestro, Transfer of the entire business to Softline Digital platform

3

Cloud services

• Target: We aim to be the leading company in the area of public,

hybrid and private clouds;

• Highest level of partnership and technology expertise in public

clouds – Azure, AWS, Google, AliCloud, Huawei Cloud;

• Highest expertise in private cloud construction;
• Automated cloud management based on its projects and IP:

Active Platform, Maestro

2

Strategy highlights

• Making profit on all current markets;
• Focus on key markets, three main sources of profits – Russia,

India, Brazil;

• Enter African market with Microsoft and other partners;
• Priority is India and Asia as the most promising markets

Developing geographies (2019-2020)

4 1

20

Cloud Services Providers

4

• Cloud

sector

• utperforms

the

• verall

IT market and grows rapidly, both in Russia and Globally

• Accelerating

expansion

• f

Cloud services creates new

• pportunities

throughout the IT value chain blurring border lines between distributors, VARs and IT services providers

• For VARs (such as Softline),

it creates a unique

• pportunity

to tap into cloud support and services market due to resale lack of relevant in-house expertise and deployment complexity experienced by the clients

• Provide consulting, system integration, development and outsourcing services

to end users as well as develops proprietary vertical solutions

• People/expertise based, project oriented business with low operating leverage,

highly correlated with the economic cycle

• Differentiate through

innovations in the high growth areas of Cloud Computing, Big Data, Mobility

• Provides externally hosted, dedicated or shared, scalable IT infrastructure,

and associated infrastructure software and support services

• Scalable business model with high profitability potential, based on the mix of tools
• Smaller platform and

service providers need to develop a portfolio

• f third party public

cloud and hybrid clouds

• Capitalize on complexity
• f cloud computing

implementation for end customers, requiring additional guidance

Cloud transformation: Cloud redefines roles of different participants of the IT market

Strategy highlights

Wholesale Distributors

• Connect vendors with resellers and end users and act as global logistics of hardware,

software and system inventory

• Volume based low margin business between vendors defining prices and end users

choosing between multiple distributors

• Cloud computing

helps wholesale distributors to expand into higher margin service-based business

Value Added Resellers

• Bundle software and hardware from multiple suppliers with selected IT services into

integrated solutions sold directly to end users (mostly to enterprises and SMBs)

• Low margin and sales oriented business largely based on long term client

relationships

IT Services Providers

5

21

Well tried and tested support model under Microsoft’s LSP strategy

Partner of Microsoft since 1993 - Licensing Solutions Partner (LSP) status received in 2000 Support in advancing into new markets and new products

• Microsoft supports Softline as a global partner to advance

in new markets and new products, services and licensing models

• For instance, in 2017FY Microsoft granted Softline 3 new

authorizations – Hungary, Romania and Bulgaria

• Softline obtained regional Cloud Solutions Provider (CSP)

status in Russia & EE&CA.

• Softline is one of 12 Microsoft partners globally participating

in a strategic Accelerated Growth Incentive program

Microsoft supported strategy

Overview

• One of 8 globally managed LSPs Direct support from Microsoft

in marketing and market penetration

• Global LSP status allows to

−

sell products to strategic international accounts (e.g., Fortune 500 companies)

−

use dedicated resources at Microsoft HQ

−

enjoy simplified authorization process for agreed markets

−

co-market and co-engage resources and

−

jointly participate in product and program launches

Selected areas of support

• Microsoft introduces Softline to major accounts, government and large corporates, where

possible

• Joint Microsoft/Softline meetings held with the clients

Initial support

• Cloud IT Services: business and infrastructure solutions, e.g. corporate portals and e-mail,

virtual desktop, distant access to applications and software, etc. There are three main types of cloud: private, public and hybrid

• MS grants Softline marketing budget to boost development of new cloud offering

products

• Funded

head program facilitates new product development and lowers Softline manpower costs

• MS set up BIF (business investment funds) for presale Client support of sophisticated

products Cloud Offering

• Add our own services and solutions: Consulting, Training, Technical support,

Outsourcing, Outstaffing, IT-strategy

• Other software and hardware vendors

IT Services & Solutions

• Direct support from Microsoft in new geographies
• Softline evaluates opportunities provided by Microsoft -only countries meeting selected

criteria are chosen

New Geographies

22

• 1. Introduction to Softline
• 3. Strategy highlights
• 4. Market overview
• 2. Financial profile

Agenda

Software is the biggest and fastest growing category with a projected increase of 10% in 2020 & 2021, exceeding the total market growth of 3.7% in the same years

• Global IT market is expected to show steady growth

and reach USD 4.017 trillion in 2021

• Software, which is Softline’s main line of business by

turnover share, is expected to grow at higher rates than the global IT market, at 10% in 2020 and 2021 (Global IT market: 3.7% in 2020 and 2021)

• In the total global IT market of USD 3.732 trillion,

software is one of the largest component with applications representing almost half of it

• EMEA and APAC, representing particular interest of

the Group, contributed 28% to total tech purchases in 2019 *Source: Gartner

Global industry outlook

• Digital transformation market significantly increases demand for IT services
• The market is consolidating. Only big global players can survive on the market.
• Vendors aim to work only with global partners
• Transformation requires investments. Only big companies can afford it
• Key business model – All As A Service (XaaS, ITaaS, etc.)

24

Global purchases of tech goods and services (USD bn)

Source: Forrester Global Tech Market Outlook For 2018 To 2019

Global industry outlook

25

41,8% 3,8% 26,3% 4,9% 23,1% Canada and USA Latin America Western and Central Europe EMEA Asia Pacific

T

• tal IT spendi

ding g in 2019 - $3,73 732B est.

205 210 212 457 507 560 675 683 685 1 031 1 088 1 147 1 364 1 384 1 413 500 1000 1500 2000 2500 3000 3500 4000 4500 2019 2020 2021

Worldwide IT Spending Forecast (USD bln)

Communications Services IT Services Devices Enterprise Software Data Center Systems 3 732 3 872 4 017