FY16 RESULTS PRESENTATION
TABLE OF CONTENTS Overview Financial review Strategic review Outlook Annexures 2
HIGHLIGHTS A top global Consistent telematics growth in company profitability > R1 billion in Annuity based revenue business > 500 000 Highest cash subscribers generator in its class 3
CARTRACK’S VALUE PROPOSITION TO CUSTOMERS EVEN MORE BENEFICIAL IN CHALLENGING TIMES Increase fleet Increase workforce Reduce operational productivity efficiency costs Increase customer Increase safety Increase revenue service and security 4
c OUR CUSTOMERS’ CHALLENGES Timecard Excessive Excessive Wasteful High Fuel Costs Vehicle Idling Falsification Overtime Maintenance Costs Poor Driver Unproductive Unauthorised Excessive Mileage Vehicle Theft Behaviour Drivers Vehicle Use 5
CARTRACK CORE SOLUTIONS PER PRODUCT c 6
CARTRACK – SOUTH AFRICA ROI CUSTOMER CALCULATOR c FLEET MANAGEMENT 575.42 R575 Expected minimum R191 191.41 ROI/month 1024.67% 1066% Total Expected Saving = 1,759.76 R391 R3 265 391.67 452.67 R452 R280 Total Cost = 1056.87 R1 056 600.67 R600 7
KEY SECURITY SERVICES AND FEATURES Lifetime Warranty 8
KEY CARTRACK FLEET MANAGEMENT REPORTS c Fuel Efficiency Fuel Card Geo-fence Trip Reports Management Report Reports Toll road Operating Hours Driver Scorecard Speeding Report Idling Report Management 9
STRONG MOMENTUM IN SUBSCRIBER GROWTH TOTAL ACTIVE UNITS 600 000 502 849 500 000 430 386 378 778 400 000 144 224 300 000 246 366 209 680 200 000 100 000 0 2011 2012 2013 2014 2015 2016 10
c PLATFORM FOR GROWTH EUROPE Slow economic recovery • Telemetry communication costs • significantly reduced Increased efficiencies have led to • reduced overhead expenses EUROPE Revenue +12% ASIA & ME AFRICA – OTHER Subscribers +23% Revenue +134% Commodity cycle and forex • Operating profit +53% issues provide short term Subscribers +151% Operating loss +70% challenges Substantial growth opportunities • remain in the longer term Significant churn in subscribers • contracted to services in lower end of the price spectrum We believe the market remains • AFRICA unpenetrated Revenue +22% SOUTH AFRICA Subscribers +10% Operating profit +29% Significant investment in • distribution yielding dividends We believe that growth in this • market remains strong ASIA AND MIDDLE EAST SOUTH AFRICA We continue to invest in the • Revenue +19% brand and distribution Subscribers +16% Starting to see some traction • Operating profit +16% 11
A DIVERSIFIED SUBSCRIBER GROWTH Fleet Management +27% International +16 Subscriber Base % +21% Subscriber 12.1K Base +17% SA Subscriber Base Stolen Item C +16% Vehicle 8.5K Recovery +6% +6 12
A HIGHLY SUSTAINABLE AND PREDICTABLE MODEL Revenue growth Consistent ratios 90% 84% 84% 1 200 80% 74% 1 000 70% 800 60% R million 47% 46% 50% 43% 600 40% 400 30% 20% 200 10% - 0% 2012 2013 2014 2015 2016 2014 2015 2016 Annuity Revenue Revenue Annuity revenue % EBITDA % Diversified base – present in 21 countries, fleet management as well as SVR product offerings Secure annuity-based model – 84% of revenue Longevity and predictability - average customer lifecycle approximately 62 months Scale – few companies globally have a subscriber base > 500 000 contracts Highest margins in its class 13
Financial Review
STRONG YEAR-ON-YEAR GROWTH EBITDA +28% Profit after tax +25% Profit before tax +23% Revenue Operating Profit +20% +19% Item A 15
STRONG PROFITABILITY 1 200 1 005 1 000 835 800 633 R million 600 463 362 362 345 400 296 294 290 254 254 200 - 2014 2015 2016 Operating Profit Profit before tax EBITDA Revenue 16
FOREIGN EXCHANGE IMPACTS ON FINANCIAL RESULTS Despite the sharp decline in the South African Rand, the net effect of currency fluctuations on Cartrack’s global business over the past year has impacted positively on the consolidated profit before tax by an estimated R13 million. The main contributing factors are : R millions non operating foreign exchange gain +15,5 operating foreign exchange gain +11,5 hardware costs in cost of sales - 11,0 the fluctuation in the Rand against other Group trading currencies had a net negative impact on consolidation - 3,0 R13,0 17
EARNING AND DIVIDENDS +27% Earnings and dividends +20% 90 81 80 70 64 Cents per share 55 60 46 HEPS 50 40 30 20 10 - 2015 2016 DPS HEPS DPS HEPS Final dividend of 35 cents per share Total dividend for FY16 of 55 cents per share Dividend cover of 1.45 times Dividend cover target - 1.25 to 1.55 times 18 18
STRONG BALANCE SHEET POSITIONED FOR GROWTH No gearing Clean debtors book – debtors days 33 days Adequate stock levels of 6 to 9 months trading Current ratio 1,4 Quick ratio 0,9 19
A HIGH CASH GENERATOR Cash conversion 400 Annuity business with strong revenue 350 visibility into FY17 300 250 We have, since inception, financed R million 200 our own growth in both existing and 150 new markets 100 Strong track record of returning excess 50 cash to the shareholders - 2012 2013 2014 2015 2016 Cartrack senior management Operating profit Net cash from operating activities involved in all expansions to minimise risk 20
Shareholder Value Strategic Review
COMMERCIAL CONSUMER CRIME TELEMATICS DEMAND DRIVERS ORIGINAL EQUIPMENT INSURANCE MANUFACTURERS TELEMATICS (OEM) REGULATORY REQUIREMENTS 22
MARKET DRIVERS INDICATE ABUNDANT GROWTH POTENTIAL Consistent with prior years: Increasing demand for big data using Software-as-a-Service (SaaS) to optimise both fleets and workforce Berg Insight states the global market size is 94 million vehicles with only a 14% penetration as at end of 2015 Global commercial telematics market is expected to reach $41 billion by 2020 - compounded growth rate of 16% p.a. for the next five years Increase in demand for safety and security by governments, business and individuals due to the increase in crime rates, the need to improve road safety and the need to decrease pollution Strong increase in vehicle populations Large and underpenetrated markets 23
OUR STRATEGY – DRIVING SHAREHOLDER VALUE Shareholder value Robust subscriber Sustainable Strong cash and profit margins flow and disciplined revenue growth capital allocations Low penetration in high growth market 24
A WELL DEFINED AND ALIGNED OPERATIONAL STRATEGY Global brand Distribution Quality service Strengthen brand Tested expansion model Staying ahead of awareness and market with prudent organic technological trends to share in existing markets growth enhance customer experience Build brand and trust in Conservative allocation new markets of funds into new Continuous geographies improvements of our internal systems and Increased sales software to allow our capabilities in existing staff to make quicker and new markets and more informed Improved installation decisions management and job scheduling 25
GROWTH STRATEGY 2016 STRATEGIC INITIATIVES Start to cross sell additional features and value added services to our existing customer base Continue to organically grow in the countries where we already established Deliver more software and services to our customers as to be the intimate technology partner – we will focus on increasing adoption and usage of the Cartrack applications Continue to enhance our already differentiated modus operandi 26 26
USA OFFICE OPENING IMMINENT The USA market has a 15% to 30% penetration rate of fleets (few conflicting reports) With the mandatory requirement for commercial drivers to keep a Record of Duty Status (RODS) using Electronic Driver Logs by December 2017, there are still over 3.1 million vehicles that require vehicle telematics (Driscoll & Associates 2016) The unit monthly selling price of existing providers in the USA reflects a significant opportunity for Cartrack to enter the market and compete aggressively Cartrack’s software and hardware has highly competitive technological features , cost pricing and reliability. Cartrack’s strong sales and modus operandi track record , in highly competitive and diverse markets, is well suited for the USA market. Cartrack has a proven hands on track record in customer service which is fundamental pillar to a successful USA operation 27
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