annual results presentation 2017 - adapt it annual results... · • caseware is used by 3 ......

ANNUAL RESULTS PRESENTATIONFOR THE YEAR ENDED 30 JUNE

2017delivering solutions for your environment

ADAPT IT ANNUAL RESULTS PRESENTATION 20171

BUSINESS OVERVIEW


ABOUT ADAPT IT

JSE listed ADI Software and Services ProviderLevel 3 B-BBEE contributor1000+ employees

National offices: Durban, Johannesburg, Pretoria, Cape Town International offices: Mauritius, Botswana, Ireland, Australia, New Zealand Serving 10 000+ customers in 40 countriesStrategic Partners: Microsoft | Oracle | IBM | SAP

MISSION

To build and distribute transformational software solutions based on deep industry expertise whilst providing a JSE listed platform to enhance the value of independent software businesses


DIRECTORATE

CRAIG CHAMBERS

CFA, PDM, BComIndependent Non-Executive

Chairman

Appointed 3 May 2011

CA (SA)Independent Non-Executive

Director

Appointed 27 May 2008

BA, LLB, LLMIndependent Non-Executive

Director

Appointed 9 February 2015

MBAIndependent Non-Executive

Director

Appointed 8 February 2013

BComChief

Executive Officer

Appointed 5 December 2007

CA (SA)Commercial

Director

Appointed 18 April 2002

CA (SA)Chief

Financial Officer

Appointed 18 August 2016

BONGIWE NTULI

CATHERINE KOFFMAN

OLIVER FORTUIN

SIBUSISO SHABALALA

TIFFANY DUNSDON

NOMBALIMBAMBO


ENERGY HOSPITALITYMANUFACTURINGFINANCIAL SERVICES

EDUCATION

SECTOR FOCUS


EDUCATION

• Operating in the education sector for over 31 years

• Currently serving over 200 higher and further education institutions

• Intimate understanding of complex education environment

• Global reach with presence in the Europe, Australasia, and the rest of Africa

• Integrated Tertiary Software – ITS Integrator

• CELCAT Timetabling

• Namibian universities run ITS Integrator

• 7 out of 10 public universities in South Africa run ITS Integrator

• 50% of South African Universities use CELCAT timetabling

Background Software Fast facts Customers


MANUFACTURING

Background Software Fast facts

• Software solutions for manufacturing, agri-processing, resources and utilities sectors

• More than 22 years experience servicing over 120 clients in 27 countries

• Providing solutions for large scale procurement; inventory management; control payment of cane growers; to solutions managing the safety of nuclear power plant refueling shutdowns

• Sugar Industry ERP solution - Tranquillity

• Weighbridge and Laboratory Testing Solution - CaneLAB

• Safety Health Environment and Quality Solution (SHEQ) - OpSUITE

• The CaneLAB solution weighs 383 000 deliveries in a season

• Tranquillity is used by the largest sugar producer in Africa at 16 manufacturing sites across 6 countries

Customers


FINANCIAL SERVICES

• Over 21 years experience

• Trusted advisors to South Africa’s leading banks and institutions

• 200 employees

• Over 2 600 customers spanning Audit, Risk Management and Corporate Performance Management

• CaseWare

• TaxWare

• ACL

• Confirmation.com

• CaseWare is used by 3 out of 4 audit firms in South Africa

• Produce GRAP compliant annual financial statements for 7 out of 10 municipalities in South Africa

• 18 000 users across Africa

• Over 1 million tax returns filed in a 21-day period with TaxWare

Background Software Fast facts Customers


ENERGY

• Serving Oil & Gas and Utilities sectors globally for more than 18 years

• 32 customers in 26 countries

• Thought Leaders and innovators in Supply Chain, SAPTM, Terminal Automation Systems, Enterprise Asset Management and System Integration

• Supply Chain and Operational advisory

• Technology & ICT advisory

• Industry Solution development, deployment, and integration

• SAPTM IS-OIL Services

• SAPTM Services and Support

• Business Process Outsourcing (BPO)

• SAPTM Oil-in-One

• FUEL-FACS+ Terminal Automation Software

Background Services Software Customers


TECHNOLOGY EXPENSE MANAGEMENT

• Leading provider of cloud-based communication technology expense management solutions

• Over 1 300 corporate customers across manufacturing and financial services sectors

• The Service Provider Solutions (SPS) competency provides branded self-service capabilities to Mobile Network Operators across Africa

• Software as a Service (SaaS)

• Telecommunication industry benchmarking

• Telecommunication expense management (TEM) best practice

• Customer experience (CX) and self-service advisory

• Technology Lifecycle Management (TLM)

• Corporate Carrier Self Service (CCSS) platform

Background Services Software Customers


Key Attributes

Customers

• Entry into the Hospitality sector, based on deep vertical industry expertise and strong management team

• Unique solution in a niche market – Oracle is the top vendor in this market

• Hospitality management software market expected to grow at a compound annual growth rate of 6.14% between 2016 and 2020

• Oracle Hospitality Simphony POS

• Oracle Hospitality RES POS

• Oracle Hospitality Opera Property Management

• Acquisition of Micros South Africa effective 1 July 2017

• Positions Adapt IT as a leader in the hospitality, retail, and food and beverage industries

• Over 20 years experience, 360 employees

• Specialising in the resale, support, and deployment of Oracle Hospitality software and hardware products

Background

RECENT ACQUISITION

Solutions


TRANSFORMATION

LEVEL 3 B-BBEE CONTRIBUTOR

SCORECARD 2017 TARGET SCORE

Ownership 21,07 25

Management and Control 14,66 23

Skills Development 17,20 20

Enterprise & Supplier Development 48,28 50

Socio-Economic Development 12,00 12

OVERALL SCORE 113,21 130


In 2016, Adapt IT partnered with Adopt-a-School Foundation and committed to an overall investment of R3m over 3 years. A donation of R1,2m was made to the programme, with the specific intent to apply it towards ICT programmes.

SOCIAL RESPONSIBILITY

Adapt IT has a long track record of investing in the upliftment of disadvantaged South African communities and remains committed to continuing with this practice through its sustainable finance practices and policy of extending the impact of projects to embrace more beneficiaries.

• The 2017 selected school was Eketsang Secondary School, established in 1985

• Situated in Katlehong Township outside Germiston

• Classified as a high school with 1 202 learners in grades 8 to 12

• The families depend on government grants, part-time jobs from local supermarkets and some work in factories and companies around Germiston and Alberton

2017 ADOPT-A-SCHOOL FOUNDATION


FINANCIAL HIGHLIGHTS


ADI YEAR ENDED 30 JUNE 2017

FINANCIAL HIGHLIGHTS

25%TURNOVER

18%EBITDA

10%NORMALISED HEPS

22%NORMALISED HEADLINE

EARNINGS


25% 6%

35% 19%

TURNOVER ORGANIC GROWTH

COMPOUND ANNUAL GROWTH RATE

ACQUISITIVE GROWTH

1200

1000

800

600

400

200

02013 2014 2015 2016 2017

303

406

575

796

994

ADI 5 YEAR REVIEWTURNOVER (R’m)


50%

20%

18%

EBITDA CAGR

EBITDA MARGIN

EBITDA250

200

150

100

50

02013 2014 2015 2016 2017

34

56

102

165

194

ADI 5 YEAR REVIEWEBITDA (R’m)


ADI 5 YEAR REVIEW

90

80

70

60

50

40

30

20

10

0

58,7457,61

42,34

34,45

22,25

58,7657,54

42,31

34,55

22,27

78,96

71,67

52,02

34,55

22,27

Basic earnings per share

2013 2014 2015 2016 2017

Headline earnings per share Normalised headline earnings per share

BASIC, HEADLINE AND NORMALISED HEADLINE EARNINGS PER SHARE (cents)


4 X

2% 13,70 cps

POLICY OF

COVERMAINTAINED

DIVIDEND PER SHARE

15TH

DIVIDEND SEPT 2017

ADI 5 YEAR REVIEWDIVIDEND PER SHARE (cents)

16,00

14,00

12,00

10,00

8,00

6,00

4,00

2,00

0,002013 2014 2015 2016 2017

5,56

8,23

10,90

13,4013,70


ADI ABRIDGED CONSOLIDATED STATEMENT

Group 2017

R’000

Group 2016

R’000 % Change

Turnover 993 671 796 178 25

Cost of sales (420 420) (343 573) 22

Gross profit 573 251 452 605 27

Operating expenses (378 925) (287 465) 32

EBITDA 194 326 165 140 18

Depreciation and amortisation (14 238) (11 667) 22

Amortisation of intangible assets acquired (29 105) (17 084) 70

Profit from operations 150 983 136 389 11

Net finance costs (22 851) (15 138) 51

Share of (loss) / profits of equity accounted investment after tax (88) 1 636 (105)

Profit before taxation 128 044 122 887 4

Income tax expense (35 498) (41 930) (15)

Profit for the year 92 546 80 957 14

COMPREHENSIVE INCOME


ADI NORMALISED HEADLINE EARNINGS

Group 2017

R’000

Group 2016

R’000 % Change

Profit attributed to ordinary shareholders 88 133 78 357 12

Loss / (profit) on sale of property and equipment 16 (98) (116)

Headline earnings 88 149 78 259 13

Amortisation of intangible assets acquired 29 105 17 084 70

Deferred taxation on amortisation of intangible assets acquired (8 149) (4 784) 70

Fair value adjustment to financial liability (imputed interest) 9 356 6 921 35

Normalised headline earnings 118 461 97 480 22

Number of ordinary shares in issue 153 597 140 062 10

Weighted average number of ordinary shares in issue 150 028 136 016 10

HEPS (cents) 58,76 57,54 2

Normalised HEPS (cents) 78,96 71,67 10



Group 2017

R’000

Group 2016

R’000

ASSETS

Non-current assets 730 781 705 321

Goodwill 500 347 472 515

Intangible assets 180 875 170 032

Other non-current assets 49 559 62 774

Current assets 355 666 259 556

Total assets 1 086 447 964 877

FINANCIAL POSITION



Group 2017

R’000

Group 2016

R’000

EQUITY

Equity attributed to shareholders of the company 661 578 466 680

Non-controlling interests 6 959 6 008

Total equity 668 537 472 688

FINANCIAL POSITION



Group 2017

R’000

Group 2016

R’000

LIABILITIES

Non-current liabilities 193 177 190 767

Interest-bearing borrowings 101 486 145 791

Financial liabilities 43 815 -

Deferred taxation 47 876 44 976

Current liabilities 224 733 301 422

Interest-bearing borrowings 581 19 374

Financial liabilities 14 198 59 476

Other liabilities 209 954 222 572

Total equity and liabilities 1 086 447 964 877

Gearing ratio 16% 35%

FINANCIAL POSITION



Group 2017

R’000

Group 2016

R’000

OPERATING ACTIVITIES

Cash generated from operations 139 325 173 602

Finance income 1 601 5 091

Finance costs (16 249) (15 377)

Dividends paid (23 359) (18 630)

Taxation paid (42 102) (55 029)

Net cash flow generated from operating activities 59 216 89 657

Net cash flows utilised in investment activities (59 487) (138 358)

Net cash inflow from financing activities 20 903 96 636

Net increase in cash resources 20 632 47 935

Exchange differences on translation (307) 817

Cash and cash equivalents at beginning of year 77 724 28 972

Cash and cash equivalents at end of year 98 049 77 724

CASH FLOWS


SEGMENT RESULTS


ADI SEGMENT TURNOVER CONTRIBUTION

ENERGYMANUFACTURING FINANCIAL SERVICESEDUCATION17% 30% 34% 19%


25%

TURNOVER

400

350

300

250

200

150

100

50

0Education Manufacturing Financial Services Energy

171 171

285

223

350

160188

242

TURNOVER BY SEGMENT (R’m)

2016

2017


18%

EBITDA

80

70

60

50

40

30

20

10

0Education Manufacturing Financial Services Energy

3430

70

45

53

3944

50

EBITDA BY SEGMENT (R’m)

2016

2017


20%

EBITDAMARGIN

30%

25%

20%

15%

10%

5%

0%Education Manufacturing Financial Services Energy

20%

17%

25%

20%

15%

24%23%

21%

EBITDA MARGIN BY SEGMENT (%)

2016

2017


TURNOVER

76% South Africa

84% Rands

14% Other African countries

2% Other

4% The Americas

8% US $

4% Australasia

2% New Zealand $

1% Australian $

1% Europe

3% Euro

1% Asia

GEOGRAPHICTURNOVER

TURNOVER BY CURRENCY


LOOKING AHEAD


GROWTH STRATEGY

ORGANIC ACQUISITIVE

• Consolidate sector focus

• New products for existing sectors

• Increase Public Sector

• Expand into African and global markets

• Leverage technology partnerships

• Leverage group operating synergies- Consolidated Johannesburg campus- Third amalgamation- Business integration- Cloud enablement

• Acquire successful software businesses with “blue chip” customers

• Provide a platform for growth

• Remove barriers to new markets and geographies

• Acquire intellectual property

• Offer high value IT products and services


STRATEGY FOR INTERNATIONAL EXPANSION


ACQUISITION CRITERIA AND FUNDING

SIZEABLE ACQUISITIONS PROFITABLE WITH GOOD TRACK RECORD NEW GEOGRAPHIES

• > 25% up to 100% of turnover

• High annuity income ratio

• Sector specialisation

• Niche IP

• Strong management

• Good cultural fit

• Africa

• Rest of world

GEARING CAPITAL RAISING NEW B-BBEE CODES

• Up to 50% of balance sheet • Private Placement

• R84m capital raised

• Improve equity Ownership


ADI INVESTMENT CASE

TRACK RECORD

ADI SHARE MOVEMENT

GROWTH STRATEGY PERFORMANCE

• Sector diversified

• Solid growth record

• Successful acquisitions

• Annuity income

• Organic growth across sectors

• Software and services

• Strong turnover growth

• Improved annuity turnover

30 June 2017

SHAREHOLDER DISTRIBUTION

Free float 73%

Controlled by Directors and Management 14%

Share liquidity 29%

Estimated future dilution (from transactions already executed) 4%

40

50

60

70

80

90

100

110

120

130

140ADI- AdaptIT

Software&Computer (J953)

SmallCap(J202)

J203- Ftse/JseAllShare

www.adaptit.co.za

annual results presentation 2017 - adapt it annual results... · • caseware is used by 3 ......

Documents