Annual Results - Alviva Holdings
35
Annual Results 2018
Transcript of Annual Results - Alviva Holdings
Annual Results
2018
Agenda• Group Salient Features
• Group Review
• Operational Review
• Acquisition
• Market Update, Strategy and Actions
Group Salient Features
Revenue
R13,6 billion
up 6%
Core EPS
302.2 cents
up 18%
Share
repurchases of
R254 million
Excellent
working capital
management
Attrib. Profit
R422 million
up 4%
Dividend
declared
up 8%
Cash
generated
R1,0 billion
Group Review
Financial Highlights
FY FY FY
Rm (unless otherwise stated) 2018 2017 2016
Revenue 13 629 12 811 10 969
Gross Profit 2 409 2 273 1 663
Gross Profit (%) 17.7 17.7 15.2
EBITDA 820 824 679
Operating Income 690 734 616
Operating Income (%) 5.1 5.7 5.6
Attributable Profit 422 405 342
Basic Earnings per Share (cents) 273.5 244.2 207.1
Basic Headline Earnings per Share (cents) 273.2 243.9 197.8
Basic Core Earnings per Share (cents) 302.2 256.3 205.1
Weighted Average Shares Outstanding (m) 154.2 166.0 165.0
Inventory excluding goods in transit 661 694 895
Total Shareholders Equity 2 138 1 998 2 086
Debt to Equity Ratio excluding Securitisation (%) 16.6 5.8 2.0
Debt to Equity Ratio (%) 37.0 25.8 18.8
Return on Net Equity (%) 20.4 19.9 18.8
EBITDA Mix
51.3%
33.0%
14.2%
ICT Distribution Services & Solutions
Financial Services Group Central Services
55.9%
28.7%14.1%
ICT Distribution Services & Solutions
Financial Services Group Central Services
FY 2018 FY 2017
Revenue and EBITDA
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
2 8
33
16
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20
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32
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43
4 5
25
45
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46
4
679
82
4
82
0
0
100
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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Revenue (Rm) EBITDA (Rm)
3 1
67
4 9
63
5 8
59
6 6
28
7 1
52
7 9
88
10
96
9 12 8
11
13
62
9- -
Working Capital and Cash & Cash Equivalents
FY 2018 FY 2017
R'000 R'000
Total Inventory 774 111 751 702
Inventory on hand 635 285 669 125
Inventory in transit 112 729 58 119
Work in progress 26 097 24 458
Trade and other receivables 2 537 275 2 304 629
Trade and other payables 2 364 929 1 974 752
Deferred Revenue 157 235 148 818
Working Capital 789 222 932 761
FY 2018 FY 2017
R'000 R'000
Cash & cash equivalents 691 458 389 760
Facilities utilised 791 655 515 717
Nedbank securitisation 436 000 400 000
ABSA Preference share 340 000 100 000
Other 15 655 15 717
Net finance costs (121 257) (107 037)
Investment income 39 908 39 453
Interest paid on borrowings (95 528 ) (85 206)
Forward points (65 637 ) (61 284)
Debt to Equity excl. securitisation 16.6% 5.8%
Cash Flow Salient Features
Cash
Generated
R1,0 billion
Share
repurchases of
R254 million
Excellent
working capital
management
Acquisitions
concluded
R243 million
FY 2018 FY 2017
R'000 R'000
Cash generated by operating activities 1 049 100 1 259 803
Key outflows:
Purchase consideration paid on business combinations 243 069 -
Share repurchases 254 084 209 433
Dividends paid 39 662 33 347
Non-controlling interest acquired - 598 107
Operational Review
ICT Distribution
PBT Growth 11%
Operating expenses Well managed
Interest paid Improved by R5,2m
Dividends paid R175 million
Distribution Salient Features
FY 2018 FY 2017
Return on equity 23.3% 22.7%
FY 2018 FY 2017
%R'000 R'000
Revenue 10 440 627 9 537 040 9
Gross Profit 1 165 367 1 098 301 6
GP as % of Revenue 11.2% 11.5%
Total Expenses Incl. depreciation 721 101 688 597 5
Cost as % of Revenue 6.9% 7.2%
Finance Costs 74 211 75 010
Interest 8 574 13 727 (38 )
Forward Points 65 637 61 283 19
Profit Before Tax 370 055 334 694 11
PBT as % of Revenue 3.5% 3.5%
Remains highly competitive and efficient
Continued focus on Net Working Capital
41.4%
8.7%
30.0%
19.9%
37.5%
10.4%
32.9%
19.2%
Enterprise & Infrastructure Software Client Computing Components & Accessories
Distribution Revenue Contribution
FY 2018
% of Revenue
FY 2017
% of Revenue
Distribution – VH Fibre Business Update
• Revenue
o 46% year on year growth
o Split of 70/30 for Product / Services sales
o Market demand is driving good opportunities
o Fibre division is performing ahead of expectations
• Significant contracts won in the period
o Fibrehoods
o Metro Fibre
o Octotel
o Telecom Namibia
o Vumatel
Operational Review
Financial Services
Financial Services - Salient Features
FY 2018 FY 2017
R'000 R'000
Total value of the book 673 394 649 369
Portfolio at Risk - 1 Day overdue
Post 19 842 8 247
Post % 2.9% 1.2%
Period-end 30 960 9 980
Period-end % 4.5% 1.5%
Return on equity 23.7% 28.0%
Gearing 73.7% 70.8%
FY 2018 FY 2017
R'000 R'000 %
Revenue 174 799 172 024 2
Gross Profit 108 353 104 701 3
GP as % of Revenue 62.0% 60.9%
Operating Expenses 48 153 41 433 16
Cost as % of Revenue 27.5% 24.1%
Finance Income 3 933 777
Profit Before Tax 64 133 64 045 -
PBT as % of Revenue 36,7% 37,2%
Credit Risk Management remains market leading
Operational Review
Services and
Solutions
Services and Solutions - Salient Features
• Investing ahead of the curve in skills
• Very difficult infrastructure market
• Balance of the business is competitive and
efficient
• Substantial pipeline
o Over R800 million for Solareff
o Cross border opportunities
FY 2018 FY 2017
%R'000 R'000
Revenue 3 685 842 3 529 563 4
Gross Profit 1 086 361 1 019 589 7
GP as % of Revenue 29.5% 28.8%
Operating Expenses 891 718 777 004 15
Cost as % of Revenue 24.2% 22.0%
Finance Income 6 956 13 844 50
Profit Before Tax 201 599 256 429 (21 )
PBT as % of Revenue 5.5% 7.2%
FY 2018 FY 2017
Return on equity 28.9% 29.0%
• Revenue
o Good growth achieved in core business despite large once off projects ending
o Lack of performance of Infrasol negatively affected overall performance
• Significant contracts won in the period
ABSA | ACSA | African Bank | CCBA | Equra Health | MTN | SA Blood Services | SANRAL | SASFIN | Transnet
• Investments being made in
o Digital transformation and business automation
o Support of new services contracts won in networking, security and outsourcing businesses
• Level One B-BBEE Contributor
• Awards won – Aruba African partner, Citrix mobility, Dell EMC SADC storage partner of the year, HP person of the year,
HPE (various), IBM platinum, Lenovo platinum, McAfee growth partner of the year, Mimecast, Opentext (various), Palo Alto,
Trend Micro, Veeam
Services and Solutions – Datacentrix Business Update
• Review
o 100% of customers have been retained
o Most of the larger projects will roll out in the last quarter of the calendar year
• Significant contracts won in the period
Anglo American | EY | Old Mutual Insure | RMB | SBV
• Investment being made in
o Asset management and outsourcing
o Digital transformation and business automation
• Level One B-BBEE Contributor
• Awards won - Dell server partner of the year, HP Inc service partner of the year
Services and Solutions – DG Business Update
• Revenue
o Annuity income increased by 42%
o Unfortunate delay in new customer contract adjudication stifled revenue growth
• Significant contracts in this period
o 5 year contract renewals
Old Mutual Group (incl. Nedbank, Old Mutual, Old Mutual Insurance) | Standard Bank | Western Cape Government
o New Contracts concluded
Sanlam | Woolworths
• Investment being made in
o Development and upgrade of local software offerings
o Customisation and integration with partner products
o Training and upskilling of developers
• Continued focus on annuity growth and staff efficiencies
Services and Solutions – Sintrex Business Update
• Revenue
o Unfortunate delay in new customer contracts adjudication stifled revenue growth
• Substantial pipeline
o Over R800 million
o Cross border opportunities
• Significant contracts won in the period
Corex Solar Mauritius | Redefine
• Investments being made in an online monitoring platform
• Continued focus on portfolio diversification, growth and efficiencies
• Awards received as the best contractor for TOTAL SA in 2017
Services and Solutions – Solareff Business Update
• “New to market” technology
• Focus on establishment of GridCars as market pioneer
• Significant contract won in the period
Land Rover Jaguar
• Investment being made in
o Electric Vehicle Charging Infrastructure
o Locally manufactured chargers developed
Services and Solutions – GridCars Business Update
o Blue Charge Point: GridCars branded site
o Green: GridCars branded shopping centre site
o Pink Charge Point: Partner branded site
o Yellow Charge Point: Partner branded shopping centre site
Acquisition
Tricon Services
Acquisition – Tricon Services
The Transaction
• Acquired 100% of the services business of Tri
Continental Ltd
• Transaction structure:
o 100% payable cash
• All key employees have signed
o 2 year service agreements
o 2 year restraints of trade
• All key OEMs, agencies, vendor/distribution, client
and supplier agreements secured
• Granted the right to use the name “Tricon Services”
Rationale for Acquiring
• The Group has a relatively small exposure to the
growing African market
• Tricon Services provides immediate access to both
intellectual property and an existing customer &
technical services base in 37 African countries
• Resources: 200 multi-disciplined certified resources
• Technical Services to Global Integrators for
multinational clients representing 43% of the
revenue
Market update,
Strategy and Actions
What’s your outlook for 2018/19
Source: The Margin – Issue 23, sponsored by Axiz, DellEMC & Microsoft
>500 respondents
Respondents
Focus today vs expected focus in five years
Biggest threat to me
Technology focus
Key IT Industry Trends In SA
140.0
120.0
100.0
80.0
60.0
40.0
20.0
FY17 FY18 FY19 FY20 FY21 FY22
Services contribution estimated at 38% in FY22
Cloud computing a key growth area supported by financial, retail & telecoms as a means to achieve competitive differentiation
IT Sector Sales - R bn - FY17 to FY22
• Services contribution to increase from 32% to 38% in FY22 , at a total of
R48.7bn being the largest contributor to the sector. Services still depends
heavily on government programs and, despite an efficiency drive, the
state will remain the largest spender
• Software contribution is expected to be 24% by FY22 at R30.7bn. Cloud
computing is forecast to be strong, particularly with investment in
datacenters and related infrastructure. In addition, customer-centric
industries such as financial services, retail and telecoms, where
businesses are recognizing that solutions can be a competitive
differentiator will support demand
• PC contribution to the sector is expected to decline from 16% to 13%.
The SME business sector will sustain demand for products and services,
but muted GDP forecast to FY22 and the current credit rating could affect
investor confidence. PC and tablet volume growth is contracting due to a
quickly depleting pool of first-time buyers, combined with the rise of
larger smartphone screens
• Hardware contribution to the sector is expected to decline from 16% to
13%, with the ICT sector as a whole remaining at 1.7 to 1.8 percent of
GDP to FY22Service Software PC Hardware
32.8 35.9 39.1 4
2.4 4
5.5
48.7
19.9 2
2.0
24.1 2
6.3 2
8.5
30.7
14
.5
14.7 1
4.9
15.0 1
5.4
16.3
29.2
29.7
30.1
30.6
31.6
33.1
Source: BMI Research
• Bed down acquisitions
• Continued focus on cash generation
• Maintain and improve ICT Charter B-BBEE initiatives
• Build reputation as “a well-diversified ICT group”
• Maintain discipline on working capital management
• Continue digital transformation and automation to increase efficiency
Strategy and Actions
“There's no such thing as business ethics; there's just
ethics. And ethics makes no concessions for the real or
imagined necessities of making a profit”
Michael S. Josephson
Q & A
Thank you
Any reference to future performance included in this presentation has
not been reviewed nor reported on by Alviva’s auditors.E&OE - Errors and omissions excluded.
