ANNUAL RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2017 1
TABLE OF CONTENTS About Cartrack 3 Business trends 6 Strategy overview 8 Segmental performance 15 Financial review 23 Outlook 29 Annexures 32
WE ARE CARTRACK Geographically Resilient, diverse base Rapidly growing annuity-based > 600 000 industry business RETURN ON EQUITY OF 55% subscribers Among the largest Operations across High cash telematics five continents conversion companies globally Strong investment Strong financial Proven proprietary in distribution metrics technology platform capacity 3
WE ARE CARTRACK Represented in 24 countries 4
WHAT WE DO Stolen Vehicle Fleet Insurance Mobile asset Workforce Recovery management telematics solutions optimisation • • • Launched in 2004 Launched in 2007 Launched in 2014 • • Launched in 2015 Launched in • • • 2016/2017 93% audited Strong ROI value Driver risk • Various recovery rate proposition assessment • applications Growing offerings • • Proprietary Strong demand in around high demand for • value items the service recovery highly regulated Utility of big data infrastructure economies applications • Strong • • applications Strong demand in Substantially developing broader than just within SME economies logistics 5
Business trends
A RAPIDLY EXPANDING INDUSTRY • Global growth – expanding needs with low penetration – transportation mobility technology growing at an estimated 20% per annum (Gartner Inc.) • Largest market is the Asia-Pacific (APAC) region. APAC set to grow rapidly, due to the increasing number of vehicles in use • Growing regulatory compliance requirements • Improvements in networks and coverage provide access to larger data sets and new applications • Data analytics and value-added products and services • Emerging Smart Transportation rapidly gaining momentum • Insurance telematics a growing field • OEMs partnering with established telematics vendors • Fragmented industry – consolidation trends evident • Stronger SVR demand in high-crime countries • Barriers to entry increasing due to rapid technology development and requirement for substantial recovery infrastructure 7
Strategy Review
CONSISTENT STRATEGY FOR DRIVING SHAREHOLDER VALUE MOVING FROM FLEET MANAGEMENT TO BECOMING AN INTEGRAL PART OF CUSTOMERS’ BUSINESS/LIVES Shareholder value Robust Value add Sustainable Strong cash subscriber and through profit flow and revenue data and margins disciplined growth innovative capital technology allocations Highly scalable business model and technology platform 9
STRATEGIC DRIVER - DIVERSIFYING THE BUSINESS Diversified across a broad spectrum of Diversifying subscriber base - FM vs subscribers SVR vs Other 650 000 1% 600 000 31% 550 000 600 610 2012 500 000 502 894 450 000 Number of subscribers 68% 400 000 430 386 350 000 300 000 348 231 4% 250 000 295 104 246 348 200 000 35% 209 680 150 000 2017 61% 100 000 50 000 0 2011 2012 2013 2014 2015 2016 2017 FM SVR (No FM) Other 10
STRATEGIC DRIVER - DIVERSIFYING THE BUSINESS Geographical revenue spread Subscribers by geography 650 000 9% 600 000 550 000 500 000 2012 Number of subscribers 450 000 400 000 91% 350 000 300 000 SA Rest of world 250 000 200 000 6% 9% 150 000 10% 100 000 2017 50 000 0 75% 2012 2013 2014 2015 2016 2017 South Africa Africa SA Africa Europe Asia Europe Asia Pacific 11
STRATEGIC DRIVER – VERTICAL INTEGRATION CARTRACK’S INDUSTRY -LEADING MARGINS ARE THE RESULT OF A FULLY INTEGRATED BUSINESS MODEL Margins 90% 81% 80% 78% 80% 70% 60% 50% 46% 46% 43% 40% 35% 34% 32% 30% 20% 10% 0% 2015 2016 2017 Gross margin % EBITDA % Operating profit % ROA OF 35% 12
GROWTH STRATEGY - 2018 STRATEGIC INITIATIVES BUILD SUFFICIENT INFRASTRUCTURE AND DISTRIBUTION CAPACITY • Triple the spend on research and development • Increase distribution substantially • Expand training facilities SUSTAINABLE BUILD CUSTOMER PRODUCT DEVELOPMENT REVENUE & PARTNERSHIPS SUBSCRIBER • Product evolution and • Systems integration features GROWTH, • CRM • Data analytics • GENERATING Workflow management • Complete in-field • Integral customer STRONG MARGINS business solutions partnerships • Mobile apps & RETURNS • customer centric/entrenchment NEW REVENUE STREAMS • Sell value added services 13
TECHNOLOGY – A COMPETITIVE ADVANTAGE TECH DEVELOPMENTS Mobile 3G Software New Platform apps to 4G integration front end improvements DATA SHARING Stolen Vehicle Fleet Insurance Mobile asset Workforce Recovery Management telematics solutions optimisation World-class SaaS platform 14
Segmental performance
2017 IN PERSPECTIVE Subscriber base increased Sold 185 000 telematics by 100 000 units – a 26% increase on 2016 Significant investment in Strong focus on R&D infrastructure and skills Robust expansion in SA, Total dividend payment of Europe and Asia ZAR165 million or 55 cents per share Low demand and severe Currency fluctuations had a economic headwinds in R27 million negative impact Africa-Other segment on 2017 operating profit FIVE YEARS OF COMPOUNDED SUBSCRIBER GROWTH AT 20% p.a. 16
SOUTH AFRICA – A SOLID PERFORMER REPRESENTATION Operations across South Africa PERFORMANCE IN PERFORMANCE IN COMMENT RAND CONSTANT CURRENCY Investment in distribution • Revenue + 15% + 15% resulting in market penetration Subscribers + 17% + 17% • Strong annuity based income Operating profit + 13% + 13% • Closely managed cost base OUTLOOK AND INITIATIVES • Resilient market and signs of increased demand • Cartrack increasing penetration of target market • Underpenetrated lower value SVR and SME fleet segments • Future revenue opportunity in vast accumulated telematics data 17
AFRICA-OTHER – CURRENCY VOLATILITY Mozambican Metical Tanzanian Shilling 0,4 0,008 0,3 0,006 0,2 0,004 0,1 0,002 0 0 Feb'15 Aug'15 Feb'16 Aug'16 Feb'17 Feb'15 Aug'15 Feb'16 Aug'16 Feb'17 Nigerian Naira Kenyan Shilling 0,1 0,2 0,08 0,15 0,06 0,1 0,04 0,05 0,02 0 0 Feb'15 Aug'15 Feb'16 Aug'16 Feb'17 Feb'15 Aug'15 Feb'16 Aug'16 Feb'17 18
AFRICA-OTHER – OPERATIONALLY SOUND REPRESENTATION Angola Botswana Kenya Malawi Mozambique Namibia Nigeria Rwanda Swaziland Tanzania Zimbabwe PERFORMANCE IN PERFORMANCE IN COMMENT RAND CONSTANT CURRENCY Revenue -22% +1% Challenging economic conditions • Subscribers -2% -2% Subscriber base maintained • Operating profit -30% +11% Highly profitable in local currency • OUTLOOK AND INITIATIVES • Increase distribution infrastructure • Stronger focus on staff training • Improve service levels • Access new sales channels and expand product offering 19
EUROPE – STRONG GROWTH IN COMPETITIVE ENVIRONMENT REPRESENTATION Poland Portugal Spain PERFORMANCE IN PERFORMANCE IN COMMENT RAND CONSTANT CURRENCY Revenue + 14% + 10% Good subscriber and revenue growth • Continued investment in distribution and • Subscribers + 27% + 27% operating capacity EBITDA increased by 20% - significant • Operating profit - 19% - 24% impact from capitalised rentals and related depreciation OUTLOOK AND INITIATIVES • Continued strong subscriber growth • Accessing new channels to the market • Competition remains strong • Insurance telematics emerging as a focus area 20
ASIA PACIFIC AND ME – BUSINESS CASE PROVEN REPRESENTATION Hong Kong Indonesia Malaysia New Zealand Philippines Singapore Thailand UAE PERFORMANCE IN PERFORMANCE IN COMMENT RAND CONSTANT CURRENCY • Continued investment in distribution Revenue + 147% + 134% and operating capacity Subscribers + 226% + 226% • Start-up entities gaining traction Operating profit + 104% + 78% • Singapore to act as strategic hub OUTLOOK AND INITIATIVES • Continued strong subscriber growth • Steady progression through all operations, to strengthen infrastructure, sales force and sales drive 21
UNITED STATES – REGULATIONS SPUR DEMAND OUTLOOK AND INITIATIVES • Offices opened in California and executive team in place • Development and field testing still in progress • Estimated 3,1 million vehicles still require ELD telematics (Driscoll & Associates 2016) to comply with regulations • Cartrack will benefit from operating in a highly technology driven society 22
Financial Review
SALIENT FEATURES Revenue Robust subscriber growth of 19% to 600 610 • 1 200 Subscriber revenue up 16% • Total revenue up 13% to R1 141 million • 1 000 Continued strong investment in operating • capacity 800 EBITDA of R523 million, up 13% • R million EBITDA margin of 46% • 600 Normalised EPS (NEPS) of 85 cents, up 12% • Basic earnings per share (EPS) of 86 cents, • 400 up 8% Headline EPS (HEPS) of 85 cents, up 6% • 200 Return on Equity of 55% • Final dividend per share of 35 cents • 0 Cash generated from operating activities 2012 2013 2014 2015 2016 2017 • of R387 million, up 48% Revenue Subscription revenue Currency fluctuations had a R27 million • COMPOUND REVENUE GROWTH negative impact on 2017 operating profit OF 18% p.a. 24
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