Investor presentation October 2015 - seb.no · •Atea is always the «local vendor», with 25,000...
Transcript of Investor presentation October 2015 - seb.no · •Atea is always the «local vendor», with 25,000...
September 2016
Group Finance Manager, Chris Sørum
Highlights – Q2 2016
• Revenue of NOK 8,442 million, up 23.4%
• EBITDA* of NOK 215 million, up 36.9%
• Higher sales across all three lines of
business
• Improved EBITDA* across all countries
* Before share-based compensation, expenses related to acquisitions, and restructuring costs
This is Atea
The market leader within IT infrastructure solutions and system integration in the Nordic and Baltic countries
Key statistics
• NOK 28 billion revenue in 2015 (approx. EUR 3 billion)
• Largest IT infrastructure player by far in Nordic region, with 17% market share
• 25,000 customers, with 50% of revenue to public sector
• 6,800 employees across 89 locations in Nordic and Baltic regions
• 4,000 IT consultants and technicians, with more than 6,500 certifications
Our business – IT infrastructure solutions
Infrastructure
volume
products
Infrastructure
high-end
products
Infrastructure
solutions/
middleware
Applications
Business
processes
Analyse Installation Outsourcing
CUSTOMER
VALUE
Operate Design Service
& support
CUSTOMER
LIFE CYCLE
Integrated IT solutions for organizations, with extensive service offering
Target market has grown at a steady pace in Nordic region
NOK billion
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Hardware Software Services
Nordic market – stable and growing
CAGR = 2.5%
Source: IDC, December 2015, adjusted for constant currency exchange rates
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Revenue EBITDA before SBC
Revenue (MNOK) EBITDA (MNOK)
Atea financial performance
Revenue CAGR 8.5%*
EBITDA CAGR 17.7%**
* Estimated organic growth rate of 4.5% + acquisitions ** EBITDA adjusted for share-based compensation, expenses related to acquisitions, and restructuring costs
Strong competitive advantages in the Nordic and Baltic IT infrastructure markets through scale, breadth of competence, and presence in local markets
Atea’s competitive advantages
• Largest reseller in Nordic and Baltic region
• Strategic partner with major IT companies
• Scale drives purchasing power with suppliers
Market leadership
• 89 offices across all regions
• Ensures access to IT purchasers and rapid customer support
• Very strong in public sector, with long frame agreements
Local presence
System integration
• Shared service functions support regional sales and IT delivery organizations
• Shared investment and lower costs, through economies of scale
Shared services
• Integration expert with key vendors and technologies
• IT trends strengthen Atea’s role as a system integrator
Market leadership
Largest partner in Nordic region, and within the top 3 in Europe, for major global IT companies
• Global IT companies rely on Atea to access the Nordic and Baltic customer base
• Scale and negotiation power drive strong pricing advantages
• Strategic partnership with preferred vendors on key products and marketing initiatives
• Product coverage extends across all categories of IT infrastructure
Major trends in IT strengthen demand for Atea as system integrator
System integration expertise
Key trends
Mobility Growth of smartphones/ tablets for workplace
Consumerization Freedom to choose your own device
ITaaS / Cloud New delivery models for products and services
Collaboration Unified communication, video and sharing tools
Big Data solutions Business intelligence, all things connected
Growing complexity of IT infrastructure
• More devices with shorter lifecycles
• Exponential growth in data and processing
• New types of devices and operating systems
• Remote access to data and applications
• More complex collaboration networks
• Greater demands on communication
• More security threats
• Independent advisor with extensive product coverage
• Integration expert across many vendors and technologies
• Supports customers in implementing most appropriate IT solutions, and optimising their performance
Local market presence
89 offices in Nordic and Baltic countries, covering every major regional market
• Atea is always the «local vendor», with 25,000 customers across all regions
• Only systems integrator which can offer regionwide service agreements with short customer response times
• Office network ensures that Atea is in contact with key IT purchasing decision makers and is invited to participate in all major tenders
• Very strong coverage within public sector, representing 50% of Atea’s revenue
Atea holds key public frame agreements – multi-year contracts with high renewal rates
Shared service functions create economies of scale when delivering IT to local markets
Shared services
Denmark
eSHOP
Logistics center
Nearshoring center
Leasing broker
International Customer Center
Norway Sweden Finland Baltics
Country organizations
• Local sales account management
• Local IT service deliveries
Shared services
• Efficient online portal for customer purchases (73% of transactions)
• Internal warehousing and distribution center (27 % of volumes)
• Low cost back office functions in Latvia
• Develops financing alternatives for customers with local banking partners
• Provides global delivery capabilities
Key strategic initiatives across Atea group
Strategic opportunities
SME
ITaaS / Cloud
Collaboration
Big Data
Service Platform
Nearshoring
• Increase SME market share from 7%
• Represents 40% of Nordic market
• Expand “IT as a Service” offering
• Cloud solutions for customers, with integration of local data center and public cloud services
• Major opportunities in videoconferencing, mobility and unified communication solutions
• Tools for data management and analytics
• “Internet of Things” to drive huge growth in data
• Common service offering to promote cross-selling
• Improve efficiency of service delivery
• Utilize Riga office for backoffice support functions
• Reduce organization costs
Sales initiatives
• Quickly adapt to the latest developments in IT and offer to the Nordic and Baltic regions
• Work in close partnership with the largest and most innovative IT companies
Operating initiatives
• Continuously focus on cross-selling, cost and efficiency
Record high Free Cash Flow* of MNOK 868 in 2015 (NOK 8.25 per share) Free Cash Flow has averaged 131% of Net profit after tax since 2010
Free cash flow*
439
824
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625
868
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8.25 6.00 4.20 4.46 8.25 4.56 FCF / Share
* Free Cash Flow defined as Cash Flow from Operations, minus capex. Capital expenditures include assets acquired through financial leases.
Covenant
Leverage covenant: Net Debt / EBITDA < 2.5.
Seasonal fluctuations in debt level, with low point at the end of the year driven by strong cash generation in Q4.
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1,6 1,7
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Net debt / EBITDA
• Bank loan facilities – MDKK 500, 5Y credit facility (2013-2018), 5Y CIBOR + 140bp – MNOK 1 421, short-term facility with MNOK 1 250 AR as collateral, NIBOR + 100bp – MNOK 400, short-term cash credit, NIBOR + 110bp – MNOK 345, short-term money market line, NIBOR + 110bp
• Bond security – MNOK 300, 5Y bond (2013-2018), 3M NIBOR + 210bp
• Leasing – MNOK 700 total facility
Considerations – Starting to prepare for l-t facilities that expire in June 2018 – Value of more funding sources – Value of having both listed stock and bond
• Increased information flow / visibility / transparency, to best valuation of Atea
Debt facilities
• The Board of Directors of Atea has communicated a dividend policy to distribute over 70% of Atea’s free cash flow (cash flow from operations after capex, including assets acquired through financial leases) as a dividend to shareholders.
• At the same time, Atea has maintained a stable investment grade (BBB-) shadow rating in the market since coverage was initiated with the Group’s first bond issuance in 2013.
• The Board of Directors are committed to maintaining the IG rating and has set clear financial guidelines aligned with the financial covenant of Net debt / EBITDA < 2.5 and additionally a solvency ratio > 20%.
• The value of an investment grade rating is perceived as one of the most important strategic financial parameters for the Group.
Dividend and Credit Rating
Appendix:
Financial summary
Income Statement
Currency: MNOK 2016 2015 Growth% 2015 2014 Growth%
Revenue 15 688,7 13 340,3 17,6 % 27 903,5 24 588,4 13,5 %
Total products and services margin (%) 22,1 % 23,1 % -0,9 % 22,9 % 23,3 % -0,3 %
Personnel costs 2 559,4 2 285,1 12,0 % 4 567,8 3 964,7 15,2 %
Other operating expenses 484,7 431,8 12,3 % 884,1 793,8 11,4 %
EBITDA (adjusted) 424,7 359,4 18,2 % 950,7 958,3 -0,8 %
EBITDA (adjusted) margin (%) 2,7 % 2,7 % 0,0 % 3,4 % 3,9 % -0,5 %
Share based / acquisition / restructuring costs 27,6 10,4 166,4 % 26,9 29,0 -7,1 %
EBITDA 397,1 349,0 13,8 % 923,7 929,4 -0,6 %
Depreciation 208,3 192,6 8,2 % 409,4 345,6 18,5 %
Operating profit (EBIT) 188,8 156,5 20,7 % 514,4 583,8 -11,9 %
EBIT (%) 1,2 % 1,2 % 0,0 % 1,8 % 2,4 % -0,5 %
Net financial items -34,6 -46,1 -25,0 % -82,1 -73,2 12,1 %
Tax on continued operations 25,5 17,5 45,4 % 39,3 81,6 -51,8 %
Profit/(loss) for the period 128,8 92,9 38,7 % 393,0 429,0 -8,4 %
H1 actual Full Year actual
Revenue Split
Currency: MNOK 2016 2015 Growth% 2015 2014 Growth%
Total hardware revenue 8 217,6 7 263,0 13,1 % 16 177,1 14 211,6 13,8 %
Total software revenue 4 464,3 3 367,6 32,6 % 6 074,2 5 364,2 13,2 %
Products revenue 12 682,0 10 630,6 19,3 % 22 251,2 19 575,9 13,7 %
Total services revenue 3 006,5 2 709,4 11,0 % 5 651,9 5 011,9 12,8 %
Revenue 15 688,7 13 340,3 17,6 % 27 903,5 24 588,4 13,5 %
Hardware margin (%) 13,5 % 13,3 % 0,2 % 13,1 % 13,0 % 0,1 %
Software margin (%) 7,8 % 9,7 % -1,9 % 10,2 % 10,9 % -0,7 %
Product margin (%) 11,5 % 12,2 % -0,7 % 12,3 % 12,4 % -0,1 %
Total services margin (%) 66,9 % 65,8 % 1,1 % 64,8 % 65,5 % -0,7 %
Total products and services margin (%) 22,1 % 23,1 % -0,9 % 22,9 % 23,3 % -0,3 %
H1 actual Full Year actual
Segment Revenue & EBITDA
Actual Actual Actual Organic Actual Actual Actual Organic
2015 2014 Growth% Growth% 2015 2014 Growth% Growth%
Norway 7 268,4 6 806,5 6,8 % 2,5 % 193,0 275,5 -30,0 % -32,1 %
Sweden 10 779,1 9 681,0 11,3 % 11,7 % 355,1 284,1 25,0 % 25,8 %
Denmark 6 398,6 5 803,2 10,3 % 0,2 % 304,6 326,5 -6,7 % -18,7 %
Finland 207,1 204,3 1,4 % 0,4 % 2,3 3,1 -27,2 % -25,6 %
Baltics 105,3 94,7 11,2 % 5,2 % 5,8 4,3 34,0 % 3,2 %
Other -133,2 -113,4 -18,8 -6,2
Atea Group 27 903,5 24 588,4 13,5 % 9,2 % 950,7 958,3 -0,8 % -7,5 %
Currency:
Local in million
Full Year Revenue Full Year EBITDA (adjusted)
Actual Actual Actual Organic Actual Actual Actual Organic
2016 2015 Growth% Growth% 2016 2015 Growth% Growth%
Norway 3 612,5 3 335,5 8,3 % 8,3 % 94,7 79,8 18,8 % 18,8 %
Sweden 6 253,0 5 508,1 13,5 % 13,3 % 177,7 145,4 22,2 % 21,8 %
Denmark 3 312,4 3 064,8 8,1 % 8,1 % 103,0 109,1 -5,6 % -5,6 %
Finland 126,1 117,1 7,7 % 7,7 % 1,8 1,0 76,7 % 76,7 %
Baltics 46,3 47,7 -2,9 % -6,8 % 2,7 2,2 22,9 % -2,4 %
Other -130,1 -117,5 -27,5 -14,4
Atea Group 15 688,7 13 340,3 17,6 % 17,4 % 424,7 359,4 18,2 % 16,4 %
Currency:
Local in million
H1 Revenue H1 EBITDA (adjusted)
Segment share of total
Currency: MNOK Actual Actual Share of total Share of total Actual Actual Share of total Share of total
2015 2014 2015 2014 2015 2014 2015 2014
Norway 7 268,4 6 806,5 26,0 % 27,7 % 193,0 275,5 20,3 % 28,7 %
Sweden 10 303,8 8 893,0 36,9 % 36,2 % 339,4 261,0 35,7 % 27,2 %
Denmark 7 670,7 6 503,6 27,5 % 26,4 % 365,1 366,0 38,4 % 38,2 %
Finland 1 852,1 1 707,2 6,6 % 6,9 % 20,3 26,1 2,1 % 2,7 %
Baltics 941,7 791,6 3,4 % 3,2 % 51,6 36,0 5,4 % 3,8 %
Other -133,2 -113,4 -0,5 % -0,5 % -18,8 -6,2 -2,0 % -0,6 %
Atea Group 27 903,5 24 588,4 100,0 % 100,0 % 950,7 958,3 100,0 % 100,0 %
Full Year Revenue Full Year EBITDA (adjusted)
Currency: MNOK Actual Actual Share of total Share of total Actual Actual Share of total Share of total
2016 2015 2016 2015 2016 2015 2016 2015
Norway 3 612,5 3 335,5 23,0 % 25,0 % 94,7 79,8 22,3 % 22,2 %
Sweden 6 334,9 5 096,7 40,4 % 38,2 % 180,0 134,6 42,4 % 37,4 %
Denmark 4 189,5 3 552,7 26,7 % 26,6 % 130,2 126,5 30,7 % 35,2 %
Finland 1 188,4 1 011,7 7,6 % 7,6 % 16,9 8,8 4,0 % 2,4 %
Baltics 436,4 412,2 2,8 % 3,1 % 25,9 19,3 6,1 % 5,4 %
Other -72,8 -68,5 -0,5 % -0,5 % -23,0 -9,5 -5,4 % -2,6 %
Atea Group 15 688,7 13 340,3 100,0 % 100,0 % 424,7 359,4 100,0 % 100,0 %
H1 Revenue H1 EBITDA (adjusted)
Balance Sheet
ASSETS
Property, plant and equipment 691 671 742 613
Deferred tax assets 552 545 553 546
Goodwill 3 713 3 575 3 815 3 588
Other intangible assets 334 350 357 369
Other non-current receivables 12 12 12 9
Non-current assets 5 302 5 153 5 479 5 125
Inventories 761 772 762 632
Trade receivables 5 229 4 400 5 988 5 496
Other current receivables 915 907 872 787
Cash and cash equivalents 115 292 630 583
Current assets 7 019 6 372 8 252 7 498
Total assets 12 321 11 525 13 731 12 624
EQUITY AND LIABILITIES
Equity 3 185 2 908 3 480 3 549
Interest-bearing long-term liabilities 1 125 1 122 1 182 1 121
Other non-current liabilities 22 5 5 4
Deferred tax liabilities 245 247 274 246
Non-current liabilities 1 391 1 374 1 461 1 371
Trade payables 4 394 3 853 5 707 4 681
Interest-bearing current liabilities 775 678 197 291
Other current liabilities 2 577 2 712 2 885 2 731
Current liabilities 7 746 7 243 8 790 7 704
Total liabilities 9 136 8 617 10 252 9 074
Total equity and liabilities 12 321 11 525 13 731 12 624
Currency: MNOK 31. des 2015 31. des 201430. jun 2016 30. jun 2015
Cash Flow
2016 2015 2015 2014
Profit before taxes 155 110 432 511
Taxes paid -88 -38 -56 -39
Depreciation & amortisation 207 193 409 346
Share based compensation 17 7 20 20
Other corrections -0 - 6 -6
Cash earnings 292 272 812 831
Change account receivables 537 1,009 -107 -330
Change inventory -34 -143 -74 -130
Change trade payables -1,100 -752 662 529
Other changes in working capital -208 -423 -6 58
Cash flow from operations -512 -38 1,287 959
Capital expenditures -142 -135 -291 -196
Purch./sale of subs./assoc./investm. -16 -68 -68 -457
Cash flow from investments -158 -203 -359 -652
Payment of dividends -340 -339 -679 -622
Other equity transactions 14 3 5 48
Change in debt 529 312 -276 28
Cash flow from financing 203 -24 -950 -546
Net cash flow -467 -265 -23 -240
Cash start of period 630 583 583 746
Currency effects on cash -48 -26 69 76
Cash end of period 115 292 630 583
H1 FYNOK in million
Shareholding, June 30 2016
Top 20 Shareholders Geographic Split
SYSTEMINTEGRATION APS 25993510
STATE STREET BANK & TRUST CO. 8932041
FOLKETRYGDFONDET 8896812
STATE STREET BANK AND TRUST CO. 4553215
RBC INVESTOR SERVICES TRUST 4471225
JP MORGAN CHASE BANK, NA 4210217
SKANDINAVISKA ENSKILDA BANKEN AB 3436985
ODIN NORGE 2667975
VPF NORDEA KAPITAL 2466118
STATE STREET BANK AND TRUST CO. 1945473
JPMORGAN CHASE BANK NA, LONDON 1662321
THE BANK OF NEW YORK MELLON 1542321
VPF NORDEA AVKASTNING 1493077
J.P. MORGAN CHASE BANK N.A. LONDON 1389264
DANSKE INVEST NORSKE INSTIT. II. 1097574
BNP PARIBAS SEC. SERVICES S.C.A 1013930
J.P. MORGAN CHASE BANK N.A. LONDON 1010716
NORDEA BANK DANMARK A/S 1000999
STATE STREET BANK AND TRUST CO. 945517
KLP AKSJENORGE INDEKS 798677
Region/Country Shareholding %
Nordics 65 189 667 62,0 %
US 21 365 976 20,3 %
UK 13 405 169 12,7 %
Continental Europe 5 155 447 4,9 %
Other 54 452 0,1 %
Total 105 170 711 100,0 %
Nordics US UK Continental Europe Other