INTERIM RESULTS for the six months ended 31 August 2017 Mteto Nyati | Chief Executive Alex Smith | Chief Financial Officer
Agenda 01 Performance Highlights / Mteto Nyati – Chief Executive 02 Strategy Update / Mteto Nyati – Chief Executive 03 Financial Results / Alex Smith - Chief Financial Officer 04 Operational Update / Mteto Nyati – Chief Executive 02
Performance Highlights Continuing Operations Normalised Revenue Normalised Ebitda Normalised HEPS +5%* +19%* +16%* R6,8 Billion R501 Million 57 cents per share EPS 44 cents Netstar Revenue Growth 12% Net debt of per share R1.1 Billion Consumer Connections 32% Commercial Connections 9% Expected net debt once all disposals completed * Constant Currency 04
02 Strategy Update Mteto Nyati / Chief Executive 05
Driving growth in turbulent times 06
ALTRON BOARD & GOVERNANCE Independent Experienced Active Ethical chairperson of ICT experts as shareholders culture the board non-executive directors 07
OUR EXECUTIVE COMMITTEE Mteto Nyati Group Chief Executive Andrew Zipporah Maubane Alex Smith Collin Govender Dolores Mashishi Holden GE: Shared Services GE: Human Capital GE: Mkg, PR, CFO COO Comms Harry Louw Leslie Johan Gellatly Chad Baker Johan Basson Brett Nash Moodley MD: Altech GE: Bytes Secure MD: Bytes MD: Bytes MD: Altech Netstar MD: Bytes Transaction Managed Document Radio Systems Services Solutions Solutions Holdings Integration 08
OUR STRATEGIC GOALS 09
OUR STRATEGY ROADMAP 03 02 FY’22 01 Accelerated Growth FY’20 Delivering Growth FY’18 Positioning for Growth 10
OUR OPCO STRATEGIES Opco Life Cycle Stage Strategy Altron Growth One Altron Bytes Secure Transaction Services Growth Bolt on acquisitions Altech Radio Holdings Growth Broadband, IoT and Safe Cities Bytes Systems Integration Growth Cloud, Security & Data Analytics Altech Netstar Growth Geo expansion, telematics & fleet mgmt Bytes People Solutions Growth Organic & acquisitive growth Bytes Managed Solutions Mature Multi vendor support (Diebold, IBM, HP) Bytes Document Solutions Mature Channel management & reset cost base Arrow Altech Distribution Mature Leverage Arrow & drive e-commerce Bytes UK Growth Acquisition & extend into adjacencies 11
SOLID FOUNDATION FOR GROWTH Altech Netstar Altech Radio Holdings Bytes Secure Transactions Bytes United Kingdom Bytes People Solutions Arrow Altech Distribution 12
OUR NEW GROWTH AREAS Cloud Services Data Analytics Security Internet of Things 13
DISPOSALS UPDATE DISCONTINUED OPERATION STATUS Powertech Transformers Sale in process CBI Telecom Cable Joint Venture Powertech Batteries Sale concluded PTSI Sale concluded Swanib Cables Sale concluded Crabtree Agreement signed, completing CPs Switchgear/Quadpro Agreement signed, completing CPs Altech Multimedia/UEC Sale in process 14
03 FINANCIAL RESULTS Alex Smith / Chief Financial Officer 15
INTERIM RESULTS - FINANCIAL HIGHLIGHTS Continuing Operations RM H118 H117 % CHANGE Revenue 6 792 7 537 -10 Normalised revenue 6 792 6 497* +5 EBITDA 452 445 +2 Normalised EBITDA 501 420* +19 Normalised EBITDA Margin (%) 7.4 6.5* HEPS (cents) 47 54 -13 Normalised HEPS 57 49* +16 Return on Capital Employed (%) 14.5 12.0 Net Borrowings 1 834 2 038 * Constant Currency 16
GROUP INCOME STATEMENTS - TOTAL OPERATIONS Rm H118 H117 % Change Revenue 8 697 11 427 (24) Operating profit before capital items 325 272 19 EBITDA 443 380 17 EBITDA Margin (%) 5.1 3.3 Net finance expenses (104) (170) Capital items (79) (108) Foreign exchange losses (4) (104) Taxation (66) (48) HEPS – Total operations (cents) 40 31 29 17
NORMALISED CONTINUING OPERATIONS Continuing Operations H118 H117 % Change Rm Revenue as reported 6 792 7 537 (10) Disposed businesses (586) Constant currency adjustment (453) Normalised revenue 6 792 6 497* 5 Continuing Operations Rm H118 H117 % Change EBITDA as reported 452 445 2 Disposed businesses (5) Once-off restructuring costs 49 Constant currency adjustment (20) Normalised EBITDA 501 420* 19 18
MOVEMENT IN NORMALISED EBITDA Continuing Operations • On a normalised basis (before constant currency adjustments) EBITDA increased to R501 million with most segments contributing to the growth • Growth in the ICT operations was led by 53 149 Bytes Secure Transaction Services, with the international operations also performing well • A significant improvement from the corporate line on a normalized basis reflects the restructuring activities undertaken during the period 19
CASH FLOW 1000 900 (363) 800 598 700 600 (128) 500 (2) (90) 400 55 300 (296) 417 200 73 264 100 0 F A B C D E G H I J A : Net cash & cash equivalents at the beginning of F : Net dividends paid the period G : Investing activities B : Cash generated by operations H : Financing activities C : Change in working capital I : Other D : Net finance expense J : Net cash & cash equivalents at the end of the E : Taxation paid period 20
INVESTING ACTIVITIES AUG ‘16 AUG ‘17 450 Increase in investing activities • primarily due to acquisition activity as 400 well as higher investment into contract 67 fulfilment costs 350 Investment into PPE and intangibles • slightly lower than the depreciation and 300 86 amortisation charge in the continuing 30 operations, broadly maintaining the 250 capital base 86 Investment into contract fulfilment • 200 99 costs relates entirely to Altech Netstar and reflects improved growth in the 150 subscriber base 43 70 100 * The graph presented excludes proceeds from disposals of operations. 101 118 50 0 Other Additions to intangible assets Acquisition of subsidiaries Investment to contract fulfillment costs Additions to property, plant and equipment 21
SUMMARISED BALANCE SHEET Rm H118 H117 Total non-current assets 3 187 2 907 Current assets 3 541 3 776 Assets held for sale 1 013 2 399 Cash balance 1 072 1 449 Total assets 8 813 10 531 Shareholder’s equity 2 760 2 729 Non-controlling interests (237) (377) Non-current liabilities 1 694 198 Liabilities held for sale 739 1 189 Current liabilities 3 857 6 792 Total equity and liabilities 8 813 10 531 22
NET DEBT POSITION AND CARRYING VALUE OF DISPOSAL GROUP Rm H118 FY17 Net debt 1 834 1 932 Net asset value of disposal group 274 620 Net debt in disposal group 142 114 Deferred disposal receipts 269 116 • Continual progress being made on the disposals • Reduction in carrying value of disposal group mainly due to disposal of Batteries and PTSI • Some of the proceeds deferred and now carried on main balance sheet 23
WORKING CAPITAL 150 100 76 66 69 58 59 62 76 59 56 50 55 52 51 47 49 36 31 37 22 19 0 12 6 11 4 4 3 (96) (81) (106) (95) (112) (92) -50 (95) (105) -100 -150 FEB ‘14 AUG ‘14 FEB ‘15 AUG ‘15 FEB ‘16 AUG ‘16 FEB ‘17 AUG ‘17 Debtors days Inventory days Creditors days Net days 24
04 Operational Update Mteto Nyati / Chief Executive 25
OPERATIONAL REVIEW Altech Radio Holdings % Increase in activity levels primarily attributable to % • H118 change H118 change the City of Tshwane broadband project though Company/Division Revenue on EBITDA on prior Rm prior Rm other areas also growing year year Lower operating margins reflect increased • contribution from mega projects Altron ICT Bytes Document Solutions Altech Radio Holdings • Challenging first half, though improved on the 586 29 32 19 Group second half of last year. Right-sizing process Bytes Document underway to complete end October. 660 (31) 25 (29) Solutions Group Bytes Managed Solutions Bytes Managed Revenue well down due to reduced spend from • 517 (23) 29 (9) Solutions traditional financial services customer base. New Bytes People MD appointed and focused on top line growth 220 - 19 (10) Solutions Bytes Secure Transaction Services Bytes Secure Continued strong performance from this focus • 504 8 110 16 Transaction Services area, with growth primarily in the Fintech space Bytes Systems Integration / Bytes Bytes Systems 625 (3) 7 NM Integration SA Group Universal Systems Bytes Universal Improved performance from Bytes Systems • 296 (18) 16 (43) Systems Integration though still below expectations Altron ICT South • Bytes Universal Systems poor performance for 3 408 (10) 238 (1) Africa Operations first half Businesses to be combined and refreshed under a • new MD 26
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