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Interim Results 2018.

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Presentation on theme: "Interim Results 2018."— Presentation transcript:

1 Interim Results 2018

2 Agenda Group Salient Features Group Review Operational Reviews
Acquisitions Strategy and Actions

3 Group Salient Features
Tough trading period Revenue up 1% Infrastructure income down by R60 million EBITDA Core EPS up 29% to 143 cents Cash generated R352 million Acquisitions concluded R151 million Share repurchases of R96 million Excellent working capital management

4 Group Review

5 Financial Highlights H1 Rm (unless otherwise stated) 2018 2017 2016
H1 Rm (unless otherwise stated) 2018 2017 2016 Revenue 6 428 6 346 4 331 Gross Profit 1 150 1 127 557 Gross Profit (%) 17.9 17.8 12.9 EBITDA 403 410 243 Operating Income 350 364 228 Operating Income (%) 5.5 5.7 5.3 Net Profit after Tax 207 214 151 Basic Earnings per Share (cents) 133.2 106.5 94.4 Basic Headline Earnings per Share (cents) 133.0 106.1 94.1 Basic Core Earnings per Share (cents) 142.8 110.2 Weighted Average Shares Outstanding (m) 157 168 159 Inventory 850 778 943 Total Stockholders Equity 2 075 2 155 1 838 Debt to Equity Ratio (%) 26.5 18.7 26.7 Return on Net Equity (%) 20.5 16.9

6 EBITDA Mix H1 2018 H1 2017

7 Revenue and EBITDA for 6 month period
Revenue (Rm) EBITDA (Rm) 7 000 6 000 6 346 6 428 5 000 4 000 4 331 3 000 3 638 3 126 3 183 2 000 2 731 2 099 1 000 1 465 -

8 Working Capital and Cash & Cash Equivalents
Total Inventory Inventory on hand Inventory in transit 82 236 70 206 Work in progress 34 292 30 715 Trade and other receivables Trade and other payables Working Capital H1 2018 H1 2017 R'000 Cash & cash equivalents Facilities utilised Nedbank securitisation ABSA Preference share - Other 14 021 3 218 Net finance costs (62 764 ) (54 205 Investment income 17 426 14 718 Interest paid on borrowings (42 435 (38 689 Forward points (37 755 (30 234 Debt to Equity 26,5% 18,7% Debt to Equity excl. securitisation 6,0% 7,9%

9 Cash Flow Salient Features
H1 2017 R'000 Cash generated by operating activities Changes in working capital (57 313 ) Acquisition of subsidiaries 3 500 Share repurchases 95 567 74 358 Dividends paid 39 662 33 347 Cash generated R352 million Excellent working capital management Acquisitions concluded R151 million Share repurchases of R96 million

10 Operational Reviews

11 Operational Reviews ICT Distribution

12 Distribution Salient Features
H1 2018 H1 2017 R'000 % Revenue 4 Gross Profit - GP as % of Revenue 11,3 11,4 Total Expenses Incl Depreciation 3 - Cost as % of Revenue 6,9 7,0 Finance Costs 39 892 37 934 5 Interest 2 137 7 700 (72 ) Forward Points 37 755 30 234 25 Profit Before Tax 6 - PBT as % of Revenue 3,6 3,5 PBT Growth 6% Margin stable 11.4% to 11.3% Operating expenses Up by only 3% Interest paid R7,7m down to R2,1m Dividends paid R103m up to R175m Remains highly competitive and efficient Continued focus on Net Working Capital H1 2018 2017 Net working capital (days) 24 30 Return on working capital (%) 46 Return on equity (%) 23 19

13 Enterprise & Infrastructure Components & Accessories
Distribution Revenue Contribution % of Revenue H1 2018 % of Revenue H1 2017 Enterprise & Infrastructure Software Client Computing Components & Accessories

14 Operational Reviews Financial Services

15 Credit Risk Management remains market leading
Financial Services Salient Features H1 2018 H1 2017 R'000 % Revenue 87 476 85 887 2 Gross Profit 80 322 80 519 - GP as % of Revenue 91,8 93,7 Operating Expenses 21 880 22 410 ( 2 ) - Cost as % of Revenue 25,0 26,1 Finance Costs 22 717 23 346 ( 3 Profit Before Tax 35 725 34 763 3 - PBT as % of Revenue 40,8 40,5 H1 2018 H1 2017 R'000 Total value of the book Portfolio at Risk - 1 Day overdue Post 8 118 9 000 Post % 1.2% 1.3% Period-end 15 276 14 406 Period-end % 2.2% 2.1% Return on equity % 27.0% 30.5% Gearing % 76.5% 74.5% Credit Risk Management remains market leading *Certain of the prior period figures have been represented to be comparable to the current period

16 Services and Solutions
Operational Reviews Services and Solutions

17 Services and Solutions Salient Features
HY 2018 HY 2017 % R'000 Revenue (1 ) Gross Profit - GP as % of Revenue 28,9 28,6 Operating Expenses 4 - Cost as % of Revenue 23,0 21,9 Finance Costs (1 586 (5 184 (69 Profit Before Tax (14 - PBT as % of Revenue 6,1 7,0 Investing ahead of the curve in skills Very difficult infrastructure market Balance of the business is competitive and efficient Substantial pipeline Over R1 billion for Solareff Cross border opportunities

18 Services and Solutions – Datacentrix Business Update
Revenue Flat with all large, once off project rollouts ending The infrastructure division was under pressure due to market constraints Significant contracts won in the period ABSA | ACSA | MTN | Sanral | SRA | Transnet Investment being made For new services contracts won in networking, security and outsourcing businesses. Cybersecurity offering is the fastest growing division Further investments being made to enable automation Continued focus on growth and efficiencies Level One B-BBEE Contributor Awards won – HPE Partner of the year, Citrix Mobility, Huawei Energy, Opentext (various)

19 Acquisitions

20 Acquisitions

21 Acquisitions – VH Fibre Optics (VHF) Rationale for Acquiring
The Transaction Acquired 100% of the equity: Dec 2017 Transaction structure: 60% payable: on deal closing 20% payable on earn-out: June 2018 20% payable on earn-out: June 2019 All key employees have signed 3 year service agreement 3 year restraint of trade Background Specialised services in Fibre-to-the-Home (FTTH) Fibre-to-the-Building (FTTB) Exclusive SA representative of Prysmian Group The business profit mix is: 68% from product distribution 32% from turnkey installation services Rationale for Acquiring The Group has limited exposure to the booming fibre market Immediate access to both intellectual property and an existing customer base Will leverage Alviva’s footprint and credentials for expansion Key Customers FibreHoods SA Digital Villages Telkom Vumatel

22 Acquisitions

23 Acquisitions – Digital Generation (DG) Rationale for Acquiring
The Transaction Acquiring 70% of the equity: effective March 2018 All key employees have signed: 3 year service agreement 2 year restraint of trade Background 18 years experience in the delivery of integration services related to: ICT infrastructure Business solutions Cloud computing VAULT: on-demand secure cloud and hybrid data backup storage solutions Full turnkey provider Rationale for Acquiring The Group strategy is to acquire companies within the services and solutions sector Access to high end customers Will leverage Alviva’s product portfolio, skills base and credentials for expansion Key Customers Discovery Liberty Old Mutual Sanlam Shoprite Standard Bank

24 Acquisitions

25 Acquisitions – Obscure Technologies Rationale for Acquiring
The Transaction Acquired 72%: effective January 2018 Transaction structure is as follows: 25% payable on earn-out: June 2020 35% payable on earn-out: June 2021 40% payable on earn-out: June 2022 All key employees have signed 3 year restraint of trade Background Provides innovative information cybersecurity technology and solutions Partner with system integrators such as Dimension Data, EOH, Datacentrix, Xon Rationale for Acquiring The Group gains access to prominent advanced cybersecurity software vendors Immediate access to scarce cybersecurity skills A fast growth company - will leverage Alviva’s footprint and credentials for expansion Key Vendors Palo Alto Trend Micro Radware Kenna Symantec Imperva Blackberry RiskIQ

26 Strategy and Actions

27 Strategy and Actions Bed down acquisitions
Continued focus on cash generation Maintain and/or 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

28 “No action is too small when it comes to changing the world… I’m inspired every time I meet an entrepreneur who is succeeding against all odds.” - Cyril Ramaphosa

29 E&OE - Errors and omissions excluded.
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.

30 Q & A


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