Half Year Results Presentation (ASX Code: HIT) 22 FEBRUARY 2018
HiTech overview HiTech Group Australia Limited is a specialist provider of recruitment and • Cloud ICT consulting services Computing & IoT The term information and communications technology (ICT) is generally • accepted to mean all technologies that, combined, allow people and Cyber Applications organisations to interact in the digital world Security Services cover ICT, Office Support, Sales & Marketing and Finance sectors • ICT HiTech generates the majority of its revenue from ICT contracting and • consulting, meaning revenue is almost entirely recurring Big Data Mobile Revenue is underpinned by a long term, blue chip customer base across Internet • & AI Federal Govt, State Govt and the Private Sector HiTech has a well balanced and diversified client base of new and loyal Networks • existing ones Favourable conditions also expected to continue from growing demand • for skilled ICT professionals and large scale public & private IT transformation projects HiTech independently ranked #207 by Financial Times as one of the high- • growth companies in Asia Pacific 2018, Top 40 in Australia* * Source: FT 1000, High-Growth Companies Asia-Pacific, https://ig.ft.com/special-reports/ft-1000/asia-pacific/2018/ 2
Key Investment Considerations HiTech is in a strong and unique position to be a key beneficiary of the fast growing technology sector in Australia Stable & experienced Fast growing Changing towards leadership team technology market contingent workforce in Australia Long term and Immune to disruptive Robust financials diversified client technology and growth potential base 3
Board of Directors Raymond Hazouri Qualifications: BA (Sydney University), DipEd. Experience: Founded HiTech in 1993 and has over 27 years’ experience in the IT industry. Prior to establishing HiTech, Ray worked in a number of capacities in the information technology industry ranging from management positions, technical IT consulting roles Chairman including systems analysis/programming, project management and sales roles. Ray worked and consulted for a broad range of employers in the private, multinational, SME, and public sectors. Elias Hazouri Qualifications: B Sc, MBA Experience: Over 28 years’ experience in IT and banking. Elias was previously a director of HiTech from 1993-March 2000. Elias’s knowledge of HiTech’s business is extensive. Throughout his career, Elias has been integral to the development of many IT systems Executive Director & CEO and IT support departments. He has held roles ranging from programmer to technology support head. Elias is a key resource and knowledge base to the HiTech account managers and is jointly responsible for generating new business. Elias has advised on business strategy, both from a financial and operational perspective, since the inception of HiTech in 1993. Elias is employed in the capacity of Chief Executive Officer. George Shad Qualifications: Solicitor Experience: Appointed to the Board on 30 July 2003. Principal of Shad Partners Solicitors with thirty years’ experience as a lawyer specialising in commercial and conveyancing work. George is a panel solicitor for a number of major banks and his expertise and Non-executive Director contacts in the corporate sector will assist HiTech in furthering its client base. 4
Australia ICT industry overview Historical & Forecast ICT Employment, Selected Sector Spending ⁽²⁾ 2011-22 ⁽¹⁾ A$ BN 30 2016 2019 2011 2016 2022 300,000 25.70 25 250,000 22.00 20 200,000 15 150,000 10.50 9.40 10 100,000 5 50,000 0 0 ICT ICT technical ICT sales ICT trades Electronic ICT industry IT Services Applications management and trades and admin and and professional professional logisitics operations support Strong growth in the ICT workforce is expected to continue, reaching 722,000 workers by 2022. This represents average annual growth of 2.0%, compared to 1.4% for the Australian workforce as a whole. The Australian government is a big employer in terms of procurement of IT Services and additional personnel for the vast number of new and existing ICT / Digitisation initiatives. Source: ⁽ ¹ ⁾ Australia’s Digital Pulse(2017) ⁽ ² ⁾ Atradius Market Monitor Report, 2016 5
Demand for contingent workforce in Australia continues to rise… 2015 Contingent Workforce 2020 Contingent Workforce 30% Contingent Workforce 50% 50% Non Contingent Workforce 70% 975m Contingent Workers Globally, ~30% of 1.75b Contingent Workers Globally, ~50% total global workforce of total global workforce 11% 25% Contingent Workforce Non Contingent Workforce 75% 89% 3.2m Contingent Workers in Australia, 1.3m Contingent Workers in Australia, ~11% of total Australian workforce ~25% of total Australian workforce Source: Ben Eubanks, Associate HCM Analyst, Brandon Hall Group (2015) 6
HiTech FY2017 & 1H FY2018 results highlights 2015 2016 2017 1H 2016 1H 2017 1H 2018 A$ M A$ M 25 23.32 15 13.28 20 18.26 11.15 15.04 10 15 8.17 10 5 5 0 0 Revenue Revenue FY2017 Revenue up 27% driven by 28% growth in contracting and 13% growth in permanent placement revenue • FY 2017 is the company’s fourth consecutive year of double digit growth • 1H FY2018 revenues increased 19% over the previous corresponding period in 1H FY2017 • 7
HiTech FY2017 & 1H FY2018 results highlights cont’d 2015 2016 2017 1H 2016 1H 2017 1H 2018 A$ M A$ M 5 3 4 3.43 2 3 1.60 2.19 1.24 2 0.99 1.35 1 1 0 0 Underlying EBITDA Underlying EBITDA Underlying EBITDA continues to grow steadily • 1H FY2018 Underlying EBITDA increased by an impressive 29% over the previous corresponding period in 1H FY2017 • 8
HiTech FY2017 & 1H FY2018 results highlights cont’d 2015 2016 2017 1H 2016 1H 2017 1H 2018 A$ M A$ M 4 2.0 3 1.5 2.41 1.07 2 1.0 0.84 1.59 0.69 1 0.81 0.5 0 0.0 Underlying NPAT Underlying NPAT An interim dividend for 1H FY2018 of 4 cents fully franked has been declared payable on 19 March 2018, which if annualised • equates to a 8.9% dividend yield before grossing up or 12.7% after grossing up ⁽¹⁾ 1H FY2018 Underlying NPAT increased by an impressive 27% over the previous corresponding period in 1H FY2017 • ⁽¹⁾ Dividend yield is calculated based on HIT share price of 90 cents as at 21 February 2018 9
Strong Balance Sheet and financial discipline Quick Ratio Net Debt ⁽²⁾ ⁽¹⁾ 6.00x A$ M 0 4.96x 4.87x 5.00x -1 4.00x -2 -1.84 3.36x -3 3.00x 2.56x -4 2.00x -4.41 -5 -5.21 1.00x -6 -5.94 0.00x -7 2015 2016 2017 1H 2018 2015 2016 2017 1H 2018 HiTech is a resilient and strong company with a robust balance sheet and no debt which is unique in the industry ⁽¹⁾ Quick ratio = (Cash & Cash Equivalents + Accounts Receivable) / Current Liabilities ⁽²⁾ Net Debt = Total Debt - Cash & Cash Equivalents. 10
Specialised service with a winning formulae for success HiTech works closely with select, identified blue chip client base • names on talent acquisition Management intimately understands the key drivers of recruitment • and ICT consulting services for its clients Continually seeking out permanent ICT work with the strongest • margins or avenues for value added growth Execute and deliver on time for clients and is rewarded with long, • established business relationships and recurring revenue stream Opportunity cost of each piece of business is always at the forefront • of HiTech’s thinking No revenue growth for revenue growth’s sake • Deliberate push into technology consulting and services space as • these sectors are exhibiting strong growth Board and management teams have a uniquely engrained culture • of financial discipline across all areas and aspects of its business 11
HiTech revenue breakdown 1H FY2018 Revenue Breakdown - Top 10 Clients Average History of Service by Client Type Concentration 19% Australian Govt (Federal & State) Private Sector 81% + Years 0 4 8 12 16 20 Top 10 Others HiTech has a long history and robust working relationship with its key established clients • Revenue from its Consultancy business is generally a higher margin business which HiTech seeks to identify and secure on a • long term basis 12
Stable client base – majority are Federal Government clients 1H FY2018 Revenue Breakdown – Client Type 1.00% 4.00% 1.00% 2.00% 2.00% 8% 2.00% 2.00% 2% 16.00% 4.00% 4.00% Further breakdown of 4.00% 1H FY2018 Federal Govt 4.00% Revenue 10.00% 4.00% 4.00% 13.00% 7.00% 90% Federal Department 1 Federal Department 2 Federal Department 3 Federal Department 4 Federal Govt State Govt Private Sector Federal Department 5 Federal Department 6 Federal Department 7 Federal Department 8 Federal Department 9 Federal Department 10 Federal Department 11 Federal Department 12 Federal Department 13 Federal Department 14 • HiTech has a long history and robust working relationship with its key established clients • HiTech has a diversified blue chip client base with solid revenue base supported by over 300 active corporate and government clients, with strong representation by high technology companies, banking and financial services companies as well as Federal Government departments and agencies 13
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