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TRANSCRIPT
INTERIM RESULTSfor the six months ended 31 August 2017
Mteto Nyati | Chief ExecutiveAlex Smith | Chief Financial Officer
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02
03
04
Performance Highlights / Mteto Nyati – Chief Executive
Strategy Update / Mteto Nyati – Chief Executive
Financial Results / Alex Smith - Chief Financial Officer
Operational Update / Mteto Nyati – Chief Executive
02
Agenda
Normalised Revenue
+5%*R6,8 Billion
Normalised Ebitda
+19%*R501 Million
Normalised HEPS
+16%*57 cents per share
EPS 44 cents per share
Netstar Revenue Growth 12%
Consumer Connections 32%
Commercial Connections 9%
Net debt of
R1.1 BillionExpected net debt once all
disposals completed
Continuing Operations
Performance Highlights
04
* Constant Currency
Mteto Nyati / Chief Executive
Strategy Update
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02
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Driving growth in turbulent times
ALTRON BOARD & GOVERNANCE
Active shareholders
Experienced ICT experts as non-executive
directors
Independent chairperson of
the board
Ethical
culture
07
Dolores Mashishi
GE: Human Capital
Mteto Nyati
Group Chief Executive
Alex Smith
CFO
Andrew Holden
COO
Zipporah Maubane
GE: Mkg, PR, Comms
Collin Govender
GE: Shared Services
Johan Gellatly
GE: Bytes Secure Transaction
Services
Harry Louw
MD: Altech Netstar
Brett Nash
MD: Altech Radio
Holdings
Johan Basson
MD: Bytes Document Solutions
Leslie Moodley
MD: Bytes Systems
Integration
Chad Baker
MD: Bytes Managed Solutions
OUR EXECUTIVE COMMITTEE
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OUR STRATEGIC GOALS
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10
OUR STRATEGY ROADMAP
FY’18Positioning for Growth
FY’20Delivering
Growth
0102
03FY’22
Accelerated Growth
OUR OPCO STRATEGIES
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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
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
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
DISPOSALS UPDATE
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Alex Smith / Chief Financial Officer
FINANCIAL RESULTS
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03
16
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
Continuing Operations
INTERIM RESULTS - FINANCIAL HIGHLIGHTS
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
GROUP INCOME STATEMENTS - TOTAL OPERATIONS
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Continuing Operations Rm
H118 H117 % Change
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
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NORMALISED 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 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
MOVEMENT IN NORMALISED EBITDA
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53 149
Continuing Operations
CASH FLOW
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A B C D E F G H I J
A : Net cash & cash equivalents at the beginning of
the period
B : Cash generated by operations
C : Change in working capital
D : Net finance expense
E : Taxation paid
F : Net dividends paid
G : Investing activities
H : Financing activities
I : Other
J : Net cash & cash equivalents at the end of the
period
0
100
200
300
400
500
600
700
800
900
1000
417
598
(363)
(128)
(90) (2)
(296)
73
55
264
• Increase in investing activitiesprimarily due to acquisition activity as well as higher investment into contract fulfilment costs
• Investment into PPE and intangibles slightly lower than the depreciation and amortisation charge in the continuing operations, broadly maintaining the capital base
• Investment into contract fulfilmentcosts relates entirely to Altech Netstarand reflects improved growth in the subscriber base
* The graph presented excludes proceeds from disposals of operations.
INVESTING ACTIVITIES
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AUG ‘16 AUG ‘17
0
50
100
150
200
250
300
350
400
450
Other
Acquisition of subsidiaries
Additions to property, plant and equipment
30
67
86
8699
7043
101 118
Additions to intangible assets
Investment to contract fulfillment costs
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
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SUMMARISED BALANCE SHEET
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
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NET DEBT POSITION AND CARRYING VALUE OF DISPOSAL GROUP
(112)(96)
(106)(95)
(105)
(81)(92) (95)
76
52 49 47 51
31 37 36
WORKING CAPITAL
24
-150
-100
-50
0
50
100
150
FEB ‘14 AUG ‘14 FEB ‘15 AUG ‘15 FEB ‘16 AUG ‘16 FEB ‘17 AUG ‘17
Debtors days Creditors days
76
66 69 59 58
5659 62
19 2212 11 4 6
4 3
55
Inventory days Net days
Mteto Nyati / Chief Executive
Operational Update
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04
Altech Radio Holdings
• Increase in activity levels primarily attributable to
the City of Tshwane broadband project though
other areas also growing
• Lower operating margins reflect increased
contribution from mega projects
Bytes Document Solutions
• Challenging first half, though improved on the
second half of last year. Right-sizing process
underway to complete end October.
Bytes Managed Solutions
• Revenue well down due to reduced spend from
traditional financial services customer base. New
MD appointed and focused on top line growth
Bytes Secure Transaction Services
• Continued strong performance from this focus
area, with growth primarily in the Fintech space
Bytes Systems Integration / Bytes
Universal Systems
• Improved performance from Bytes Systems
Integration though still below expectations
• Bytes Universal Systems poor performance for
first half
• Businesses to be combined and refreshed under a
new MD
Company/DivisionH118 Revenue Rm
% change on prior year
H118 EBITDA Rm
% change on prior year
Altron ICT
Altech Radio Holdings Group
586 29 32 19
Bytes Document Solutions Group
660 (31) 25 (29)
Bytes Managed Solutions
517 (23) 29 (9)
Bytes People Solutions
220 - 19 (10)
Bytes Secure Transaction Services
504 8 110 16
Bytes Systems Integration SA Group
625 (3) 7 NM
Bytes Universal Systems
296 (18) 16 (43)
Altron ICT South Africa Operations
3 408 (10) 238 (1)
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OPERATIONAL REVIEW
Bytes Technology Group UK
• Excellent first half from the UK operations
growing revenue by 25% and EBITDA by 21% in
local currency terms
Other international operations
• Primarily Bytes African operations
• Reduced revenue on non-recurrence of a
significant project in the prior year
• EBITDA significantly affected by forex
movements – favourable in the current period
Company/DivisionH118 Revenue Rm
% change on prior year
H118 EBITDA Rm
% change on prior year
Altron ICT continued
Bytes Technology Group UK
2 525 2 109 (1)
Other International operations
114 (45) 12 NM
Altron ICT International operations
2 639 (2) 121 4
Shared Services, Corporate and cons
- NM 6 NM
Total Altron ICT 6 047 (6) 365 2
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OPERATIONAL REVIEW
Altech Netstar Group
• Continued improvements in the performance of
Altech Netstar
• Improved subscriber growth in the period,
particularly in SVR, with churn and retentions
under close control
• Australian acquisitions performing in line with
expectations
Arrow Altech Distribution
• Reduction in revenue and EBITDA following
significant growth in the prior year due to slow
down in several projects
• Strengthening of the Rand works against the
business as all product imported
Corporate
• Significant once-off costs in the period due to
head office right-sizing
Company/DivisionH118 Revenue Rm
% change on prior year
H118 EBITDA Rm
% change on prior year
Altron Operations
Altech Netstar Group 668 12 133 6
Arrow Altech Distribution
291 (6) 21 (13)
Corporate, cons and financial services
(214) NM (67) -
Total AltronContinuingOperations
6 792 (10) 452 2
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OPERATIONAL REVIEW
Interim results
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• Achieve our 2nd half financial commitments
• Finalise BDS restructuring & BSI / BUS integration
• One Altron One Customer sales enablement initiative
• Complete Powertech Transformers and Altech UEC disposals
• Strategic Partnerships
• Global consultants
• Technology firms
• Gear up ARH for hyper growth
LOOKING AHEAD
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Questions?
Driving growth in turbulent times
THANK YOU
31