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 Strategy Mteto Nyati and outlook Chief Executive Q & A session
Overview – A solid performance Mteto Nyati Chief Executive DELIVERING ON COMMITMENTS
Our continued operations highlights Normalised Revenue Normalised EBITDA Normalised HEPS +14%* +19%* +19%* R14.7 billion R1.1 billion 135 cents per share R970 million investing activities (own cash resources) Free Cash Flow Normalised ROCE +110% 21% Net debt of R1.5 billion R47 million once all disposals completed We have positioned ourselves for growth 3 * Adjusted for constant currency (refer to the appendix for additional information)
Our performance highlights 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 Document Solutions: Successfully integrated the acquisition of: ➔ Undertook a restructuring process ➔ Phoenix Software with Bytes UK ➔ Improving business results ➔ EZY2C with Altech Netstar ➔ Increased market share by 3.5 pts to 18% Altech Radio Holdings ➔ Becoming the broadband infrastructure roll-out partner of choice to the provincial governments and metros Bytes Secure Transaction Solutions has built a Network and Security Operations Centre (NSOC) that provides Bytes UK continues to deliver double digit revenue growth in a mature market security for customer networks globally from Linbro Business Park, South Africa 4
We are guided by this strategy roadmap 03 02 FY’22 Accelerated 01 Growth FY’20 Delivering Growth FY’18 Positioning for Growth 5
We have strengthened our leadership Operations Appointments Head-office Appointments Chad Baker Collin Govender Managing Director Group Executive Bytes Managed Solutions Shared Services Ike Dube Dolores Mashishi Managing Director Group Executive Altron Rest of Africa Human Capital Lesley Moodley Tim Jacobs Managing Director Acting Chief Financial Officer Bytes Systems Integration Pierre Bruwer Zipporah Maubane Managing Director Group Executive Altech Netstar Marketing & Investor Relations 6
Our Phoenix acquisition positions us as Microsoft’s largest partner Phoenix Software Rationale Acquired for An IT value-added reseller of software products and ➔ Markets in which Bytes UK and Phoenix operate are GBP 35.9m related services in the UK showing double digit growth Multiple of ➔ Predominantly based in Northern England. Enables EBITDA = 7 Bytes UK to serve the total UK market ➔ 3 000 customers ➔ One of the UK’s pre -eminent suppliers to public sector ➔ 27 year history organisations, including the NHS, emergency services, ➔ Number one software value added reseller in the housing associations and a number of local authorities education and charity sectors in the UK ➔ Opportunity to cross- sell Altron’s current offerings into a new base, while offering Phoenix’s end -to-end solutions to Altron’s customers Funding Performance ➔ GBP19 million (R343 million) paid cash from Bytes UK ➔ Normalised EBITDA of GBP1.5 million (R26.8 million) was achieved to February 2018, meeting the business plan ➔ 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 transaction. The balance is unutilised and now available to the group 7
We made strategic acquisitions to drive growth EZY2C Rationale Acquired for An Australian fleet management and asset ➔ Geographically expand Altech Netstar’s revenue stream AUD 15.9m management solutions company ➔ Driving consolidation in a fragmented market with 9% Multiple of market share EBITDA = 6.14 Cape Office Machines (Stellenbosch) Rationale Settlement Channel partner with significant wins, ZAR 10m effective particularly in Managed Print Services May 2018 ➔ Buy back into our channel partners Second largest contributor in the partner Multiple of channel EBITDA = 4 ➔ Reduce pricing and margin pressure ➔ Have a more integrated structure with the Bytes Document Digicopiers (Port Elizabeth) Solutions direct channel Xerox SA’s longest business partner with close Joint venture ➔ Geographically grow market share opportunities through to four decades of excellent service Altron’s solution sets Multiple of EBITDA = 2 8
Our strategic partnerships are informed by our chosen growth areas 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 Data ➔ Technology provides a seamless and cost-effective service throughout Africa Analytics ➔ 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 Security ➔ 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 Internet ➔ Solutions are technology agnostic – overcomes the challenge of connecting any and all devices or systems of Things ➔ 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 9
We enabled cross-selling to increase wallet share within existing customers Over 330 strong sales team 11 Sales Executives 33 Sales Managers 289 Account Managers Sales team Upselling in Cross selling in Selling into new Selling to targeted alignment existing clients new clients existing clients geographies Customised interventions included : Sales pipeline & Sales Mini account Solution Complex solution forecasting management planning selling selling 10
We right-sized our head office and key operations Group head office right-sizing ➔ Closed several head office functions: ➔ Internal Audit outsourced to Deloitte - Corporate Finance ➔ Tax, Treasury and Finance remains unaffected - Strategy & Technology ➔ R54m savings annually - Intellectual Property Management - Business Development (Head office sales) - Corporate Affairs Business restructure ➔ Bytes Document Solutions ➔ Bytes Universal Systems and Bytes Systems ➔ Bytes Managed Solutions restructure Integration - Cost-containment exercise - R22m savings annually - Initial integration yielded R20m savings annually Group annual savings of R96 million 11
Our new shared-services model is delivering savings Operations Highlights Focus on driving an improved employee experience through digital work place roll out Set up shared services function and derived 6.6% Driving our own cloud transformation – we are one of the cost saving on existing cost base of R350m – for largest consumers of Microsoft Azure services repeatable, transactional and standardised processes 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 Centralising specific functions – Group IT, reduction procurement (non-cost of sale related), recruitment, payroll, legal, real estate management and finance Introduced Power BI (dash-boarding tool) and data analytics practice for efficient dissemination of information for financials, HR and operational data 12
Our disposals strategy is yielding results under difficult market conditions 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 R100 million Powertech Transformers In progress R150 million expected 31 May 2018 CBI Telecom Cable In progress Expected FY 19 Altech Multimedia/UEC In progress Expected FY 19 * Realised FY 17 13
Some execution challenges were experienced and we remain focused on getting things right 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
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