INVESTOR PRESENTATION 2019 FULL YEAR RESULTS 4iG Nyrt. 3 rd March 2020
TODAY’S PRESENTERS • Mr. Linczényi serves Mr. Fekete serves as • as a Board Member Advisor to the and General Deputy Chairman CEO He is responsible for • • He is responsible for all international, the day-to-day capital markets and operations of the M&A activities of the Company Company Aladin Linczényi Péter Fekete General Deputy CEO Advisor to the Chairman Mr. Farkas is Deputy Mr. Thurzó is Deputy • • CEO and serves as the CEO and CFO CTO of 4iG He is responsible for • He is responsible for accounting, finance, • all engineering and tax, controlling and delivery activities of HR activities the Company Csaba Thurzó Péter Farkas Deputy CEO Deputy CEO Chief Financial Officer Chief Technology Officer 4IG OVERVIEW 2
2019 KEY HIGHLIGHTS • 4iG now is the #2 IT system integrator in Hungary since the change of ownership • From #6 in 2018 • 2019 was 4iG ’s strongest ever year • 41bn HUF of revenue (a 194% increase on 2018) • 4,1bn HUF of EBITDA (a 383% increase on 2018) • Topline growth of 193,6% was purely organic • Employee numbers increased to close to 600 in December 2019 • From 376 in December 2018 4IG OVERVIEW 3
A COMPREHENSIVE BUSINESS TRANSFORMATION NEW • Gellért Jászai first became Chairman in July 2018 then CEO in March 2019 and finally the largest owner of 4iG with a 40,2% control in July 2019 OWNERSHIP VISION AND • Our strategic goal is for 4iG to become the #1 IT system integrator in Hungary and a STRATEGY significant company in the broader CEE region MANAGEMENT • The existing management team of 4iG was complemented with new additions to help TEAM implement the new growth strategy • Solution oriented by understanding client needs, client focused by introducing SALES account management for large corporates, target market sector based sales and STRATEGY pro active sales to drive demand of customers DELIVERY • Introduction of improved process management to handle 4iG’s increasing number of CAPABILITIES large projects and clients Efficiency improvement initiatives implemented including changes in the • OPERATIONAL organizational structure, consolidation of previously duplicate activities, review EFFICIENCIES of contracts, strengthening of project control • EBITDA margin improved from breakeven in 2018 to c. 10% in 2019 Hiring of new staff with a focus on flagship technologies and new matrix structure • ORGANISATION • Our headcount increased from 376 in December 2018 to close to 600 in December 2019 EXPANSION • Organic growth expected to be complemented with acquisitions and partnerships / JVs APPROACH 4iG OVERVIEW 4
NEAR TERM OUTLOOK • Our goal is to become the #1 IT system integrator within the next two years • Expectations for 2020 are robust with 23bn HUF contracted revenue for 2020 (compared to 11 bn HUF contracted revenue in February 2019 for 2019) • We will continue to grow strongly but we expect the growth rate to normalize • c. 20%+ topline growth expected in 2020 • similarly dynamic average annual growth rate beyond 2020 • the above-mentioned growth expectations are organic and the planned acquisitions can increase further • We are targeting an 8-10% EBITDA margin in the medium term (2-3 years) • We expect to declare a dividend for 2019 • Dividend policy to be discussed by the Board of Directors • Recommendations to be submitted to the Shareholders’ Meeting in April 2020 4IG OVERVIEW 5
COMPANY OVERVIEW
COMPANY SNAPSHOT Business Highlights Financial Highlights • 4iG has proven to be flexible in order to fulfill our clients’ expectations in timing and resources. 50 41,1 • 4iG’s most important assets are the 400+ technical • employees (consultants and highly qualified engineers 14,0 4,1 and technicians) 0,8 • 0 4iG continuously thrives to improve services using the most up to date technology solutions. 2018A 2019A Revenue EBITDA Select Key Customers Long-standing Partnerships 4IG OVERVIEW 7
HIGHLY DIVERSIFIED BUSINESS MODEL REVENUE BY SERVICE TYPE REVENUE BY INDUSTRY Other Support, consulting Implementation, other 19% IT, Communication 2% 3% 23% Trade, Commerce Operation 4% 8% FIG 4% Development Transport, 14% Warehousing HW sales Public Admin 5% 56% 15% Manufacturing 5% SW sales Consulting, Science, Legal Education 17% Healthcare 6% 11% 8% 2019 revenue breakdown REVENUE BY CLIENT TYPE REVENUE BY NATURE SMEs 16% Recurring 10% Public Non-recurring 62% Large corporates 90% 22% 4iG OVERVIEW 8
STRATEGY OVERVIEW Vision and strategy • Our goal is to become the #1 IT system integrator in Hungary and a significant player in CEE region Target areas for growth • Technologies: AI, Blockchain, Cyber Security, Digitalization, Fintech, Industry 4.0 • Market Segments: Transportation, Banking, Healthcare, Agriculture, Energetics • Product Strategy: Developing own solutions 4IG OVERVIEW 9
ACQUISITION PLANS Robust organic growth complemented by acquisitions In Hungary • ▪ Our goal is to consolidate our position ▪ Invest into new technologies and ▪ Enhance our capabilties in new sectors • In Central and Eastern Europe ▪ We are looking at opportunitistic targets in the CEE region • Acquisition financing ▪ Combination of external financing (bond and loan) and own cash resources Strategic partnerships - JVs • ▪ Long-term cooperation with European / overseas group with complementary resources 4IG OVERVIEW 10
SHAREHOLDER INFORMATION KEY SHAREHOLDERS (1) BEST PERFORMING STOCK IN 2019 IN THE BET Share Price Evolution (Ft) 1 400 KZF 1 200 Vagyonkezelő , Freefloat Manhattan PE 36% 1 000 40% 800 Market capitalization 600 as of 28-Feb-2020 400 52 bn bn HUF HUF 200 Treasury Shares OPUS 2% 02.jan.19 02.ápr.19 02.júl.19 02.okt.19 02.jan.20 Konzum PE GLOBAL 12% 10% 4iG is Part of The Austrian Wiener Börse region CECE Index Note (1): Shareholders as of 31st December 2019 Source: BET 4iG OVERVIEW 11
HUNGARIAN IT MARKET HUNGARIAN IT MARKET EXPECTED TO GROW BY 2% ON AVERAGE, DRIVEN MAINLY BY PUBLIC SPENDING IT spending of end users by segments (bn HUF ) Key Drivers Need for Digital transformation • Internet of Things (IoT) is used in the production, retail, utilities, agriculture and logistics, while Artificial Intelligence (AI) is used in customer service GDPR related backlog • Regulation (mainly in EU GDPR) was a key factor in the Hungarian Information service market in 2018 Major expenses of the public sector • The public sector spent more than 50 billion HUF for IT services, which is the 21,3% of the whole information service market, including the use of the majority of EU funds till 2021 Source: IDC, BCG 4iG OVERVIEW 12
HUNGARIAN IT MARKET LANDSCAPE FULL SCALE T-Systems 4iG SERVICE CAPABILITY Delta Unisys Asseco Invitech S&T EuroONE Symmetria Duna Tigra Elektronika 100+ Micro ICT companies NICHE 100 1000+ Note: Size of the bubble indicated 2019 estimated revenue Source: 4iG, public sources EMPLOYEE # 4IG OVERVIEW 13
4iG OVERVIEW 14 INDUSTRY SPECIFIC SOLUTIONS VERTICAL (PRHARMA, UTILITY, PRODUCTION) FINTECH SOLUTIONS INDUSTRY 4.0 SERVICE PORTFOLIO STRUCTURE development customized DEVELOP- MENT (SI) CUSTOM DEVELOPMENT Deliver (DESKTOP, MOBILE) BUSINESS INTELLIGANCE, DATA WAREHOUSE CERTIFIED PARTNER DISTRIBUTOR OF GLOBAL SW AND HW FIRMS Infrastructure hardware and software CYBER SECURITY INTEGRATIONS (IT) COMPLIACE, AUDIT, implementations QUALITY ASSURANCE, CONSULTANCY NETWORK HORIZONTAL CLOUD TECHNOLOGIES DATA CENTRE SYSTEMS (VIRTUALIZATION, DATABASE, OPERATING SYSTEMS, MONITORING) DATA CENTRE INFRASTRUCTURE (SERVER, STORAGE, BACKUP) remote system operations and support „as a” SERVICES SLA based, 24/7 hours field and MANAGED SECURITY SERVICES OUTSOURCING APPLICATION services SUPPORT DATA CENTRE SUPPORT WORKSTATION SUPPORT HELPDESK
FINANCIAL OVERVIEW
2019 FINANCIAL SUMMARY EBITDA: Net Profit: Revenue: Diluted EPS: 41,2 bn HUF 4,1 bn HUF 2,8 bn HUF 30,1 HUF 2019 FY Y-on-Y Growth: EBITDA Margin: Profit Margin: Y-on-Y Growth: 9,88% 6,87% 194% 2 673% Revenue: EBITDA: Net Profit: Diluted EPS: 16,2 bn HUF 1,6 bn HUF 1,1 bn HUF 12,1 HUF 2019 Q4 Y-on-Y Growth: EBITDA Margin: Profit Margin: Y-on-Y Growth: 243% 9,79% 7,02% 188% 4IG OVERVIEW 16
2019 REVENUE BRIDGE SALES REVENUE BRIDGE SALES REVENUE BUILD-UP HUF m +194% HUF m 2018 2019 45 000 41 129 40 000 35 000 30 000 24 973 25 000 20 000 14 539 14 007 15 000 9 302 10 000 4 850 6 225 5 000 3 106 0 Q1 H1 Q1-Q3 Y 4iG OVERVIEW 17
2019 EBITDA BRIDGE EBITDA BRIDGE EBITDA BUILD-UP HUF m +383% HUF m 2018 2019 4 500 4 065 4 000 3 500 3 000 2 484 2 500 2 000 1 500 1 009 842 1 000 483 500 45 25 27 0 Q1 H1 Q1-Q3 Y 4iG OVERVIEW 18
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