ANNUAL RESULTS PRESENTATION FOR THE YEAR ENDED 28 … › sites › default › files... · Revenue Subscription revenue • Robust subscriber growth of 19% to 600 610 ... payments

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ANNUAL RESULTS PRESENTATION

FOR THE YEAR ENDED

28 FEBRUARY 2017

TA

BL

E O

F C

ON

TE

NT

S

About Cartrack 3

Business trends 6

Strategy overview 8

Segmental performance 15

Financial review 23

Outlook 29

Annexures 32

WE ARE CARTRACK

3

RET

UR

N O

N E

QU

ITY

OF

55

%

Operations across five continents

Geographically diverse base

> 600 000 subscribers

Among the largest telematics

companies globally

Resilient, annuity-based

business

Rapidly growing industry

High cash conversion

Proven proprietary technology platform

Strong financial metrics

Strong investment in distribution

capacity

WE ARE CARTRACK

Represented in 24 countries4

WHAT WE DO

5

• Launched in 2007

• Strong ROI value proposition

• Strong demand in highly regulated economies

• Substantially broader than just logistics


• 93% audited recovery rate

• Proprietary recovery infrastructure

• Strong demand in developing economies

• Launched in 2016/2017

• Growing demand for the service

• Strong applications within SME


• Various applications around high value items

Fleet management

Stolen Vehicle Recovery

Mobile asset solutions

Workforce optimisation

Insurance telematics


• Driver risk assessment offerings

• Utility of big data applications

Business trends

• Global growth – expanding needs with low penetration – transportation mobility technology growing at an estimated 20% per annum (Gartner Inc.)

• Largest market is the Asia-Pacific (APAC) region. APAC set to grow rapidly, due to the increasing number of vehicles in use

• Growing regulatory compliance requirements

• Improvements in networks and coverage provide access to larger data sets and new applications

• Data analytics and value-added products and services

• Emerging Smart Transportation rapidly gaining momentum

• Insurance telematics a growing field

• OEMs partnering with established telematics vendors

• Fragmented industry – consolidation trends evident

• Stronger SVR demand in high-crime countries

• Barriers to entry increasing due to rapid technology development and requirement for substantial recovery infrastructure

A RAPIDLY EXPANDING INDUSTRY

7

Strategy Review

CONSISTENT STRATEGY FOR DRIVING SHAREHOLDER VALUE

9

Shareholder value

Robust subscriber andrevenue growth

Value add through data and innovative technology

Strong cashflow and disciplined capital allocations

Sustainableprofit margins

Highly scalable business model and technology platform

MOVING FROM FLEET MANAGEMENT TO BECOMING AN INTEGRAL PART OF CUSTOMERS’ BUSINESS/LIVES

STRATEGIC DRIVER - DIVERSIFYING THE BUSINESS

10

20

9 6

80

24

6 3

48

29

5 1

04 3

48

23

1

43

0 3

86

50

2 8

94

60

0 6

10

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

450 000

500 000

550 000

600 000

650 000

2011 2012 2013 2014 2015 2016 2017

Nu

mb

er o

f su

bsc

rib

ers

Diversified across a broad spectrum of subscribers

Diversifying subscriber base - FM vs SVR vs Other

1%

31%

68%

2012

61%

35%

4%

FM SVR (No FM) Other

2017

STRATEGIC DRIVER - DIVERSIFYING THE BUSINESS

11

Geographical revenue spread

91%

9%

SA Rest of world

2012

75%

10%

9%6%

SA Africa Europe Asia

2017

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

450 000

500 000

550 000

600 000

650 000

2012 2013 2014 2015 2016 2017

Nu

mb

er o

f su

bsc

rib

ers

Subscribers by geography

South Africa Africa

Europe Asia Pacific

STRATEGIC DRIVER – VERTICAL INTEGRATION

CARTRACK’S INDUSTRY-LEADING MARGINS ARE THE RESULT OF A FULLY INTEGRATED BUSINESS MODEL

78%81% 80%

43%46% 46%

35% 34%32%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2015 2016 2017

Margins

Gross margin % EBITDA %

Operating profit %

ROA OF 35%12

GROWTH STRATEGY - 2018 STRATEGIC INITIATIVES

13

• Product evolution and features

• Data analytics• Complete in-field

business solutions• Mobile apps

• Sell value added services

• Triple the spend on research and development

• Increase distribution substantially

• Expand training facilities

BUILD SUFFICIENT INFRASTRUCTURE AND

DISTRIBUTION CAPACITY

PRODUCT DEVELOPMENTSUSTAINABLE REVENUE & SUBSCRIBER

GROWTH, GENERATING

STRONG MARGINS & RETURNS

NEW REVENUE STREAMS

BUILD CUSTOMER PARTNERSHIPS

• Systems integration

• CRM

• Workflow management

• Integral customer partnerships

• customer centric/entrenchment

TECHNOLOGY – A COMPETITIVE ADVANTAGE

DATA SHARING


Fleet Management


Mobile asset solutions

Workforce optimisation

Mobile apps

3G to 4G

Software integration

Newfront end

Platform improvements

World-class SaaS platform

TECH DEVELOPMENTS

14

Segmental performance

2017 IN PERSPECTIVE

16

Subscriber base increased by 100 000

Significant investment in infrastructure and skills

Sold 185 000 telematics units – a 26% increase on 2016

Strong focus on R&D

Robust expansion in SA, Europe and Asia

Total dividend payment of ZAR165 million or 55 cents per share

FIVE YEARS OF COMPOUNDED SUBSCRIBER GROWTH AT 20% p.a.

Low demand and severe economic headwinds in Africa-Other segment

Currency fluctuations had a R27 million negative impact on 2017 operating profit

PERFORMANCE IN

RAND

PERFORMANCE IN

CONSTANT CURRENCYCOMMENT

Revenue + 15% + 15%• Investment in distribution

resulting in market penetration

Subscribers + 17% + 17% • Strong annuity based income

Operating profit + 13% + 13% • Closely managed cost base

OUTLOOK AND INITIATIVES

• Resilient market and signs of increased demand

• Cartrack increasing penetration of target market

• Underpenetrated lower value SVR and SME fleet segments

• Future revenue opportunity in vast accumulated telematics data

SOUTH AFRICA – A SOLID PERFORMER

REPRESENTATION

Operations across South Africa

17

Mozambican Metical

AFRICA-OTHER – CURRENCY VOLATILITY

Kenyan ShillingNigerian Naira

Tanzanian Shilling

0

0,1

0,2

0,3

0,4

Feb'15 Aug'15 Feb'16 Aug'16 Feb'17

0

0,05

0,1

0,15

0,2


0

0,02

0,04

0,06

0,08

0,1


0

0,002

0,004

0,006

0,008


18

AFRICA-OTHER – OPERATIONALLY SOUND


• Increase distribution infrastructure

• Stronger focus on staff training

• Improve service levels

• Access new sales channels and expand product offering

PERFORMANCE IN

RAND

PERFORMANCE IN


Revenue -22% +1% • Challenging economic conditions

Subscribers -2% -2% • Subscriber base maintained

Operating profit -30% +11% • Highly profitable in local currency

REPRESENTATION

Angola Botswana Kenya Malawi Mozambique Namibia Nigeria Rwanda Swaziland TanzaniaZimbabwe

19

EUROPE – STRONG GROWTH IN COMPETITIVE ENVIRONMENT


• Continued strong subscriber growth

• Accessing new channels to the market

• Competition remains strong

• Insurance telematics emerging as a focus area

REPRESENTATION

Poland Portugal Spain

PERFORMANCE IN

RAND

PERFORMANCE IN


Revenue + 14% + 10% • Good subscriber and revenue growth

Subscribers + 27% + 27%• Continued investment in distribution and

operating capacity

Operating profit - 19% - 24%• EBITDA increased by 20% - significant

impact from capitalised rentals and related depreciation

20

ASIA PACIFIC AND ME – BUSINESS CASE PROVEN


• Continued strong subscriber growth

• Steady progression through all operations, to strengthen

infrastructure, sales force and sales drive

PERFORMANCE IN

RAND

PERFORMANCE IN


Revenue + 147% + 134%• Continued investment in distribution

and operating capacity

Subscribers + 226% + 226% • Start-up entities gaining traction

Operating profit + 104% + 78% • Singapore to act as strategic hub

REPRESENTATION

Hong Kong Indonesia MalaysiaNew Zealand Philippines SingaporeThailand UAE

21


• Offices opened in California and executive team in place

• Development and field testing still in progress• Estimated 3,1 million vehicles still require ELD telematics

(Driscoll & Associates 2016) to comply with regulations• Cartrack will benefit from operating in a highly

technology driven society

UNITED STATES – REGULATIONS SPUR DEMAND

22

Financial Review

24

COMPOUND REVENUE GROWTH OF 18% p.a.

0

200

400

600

800

1 000

1 200

2012 2013 2014 2015 2016 2017

R m

illio

n

Revenue

Revenue Subscription revenue

• Robust subscriber growth of 19% to 600 610

• Subscriber revenue up 16%

• Total revenue up 13% to R1 141 million

• Continued strong investment in operating

capacity

• EBITDA of R523 million, up 13%

• EBITDA margin of 46%

• Normalised EPS (NEPS) of 85 cents, up 12%

• Basic earnings per share (EPS) of 86 cents,

up 8%

• Headline EPS (HEPS) of 85 cents, up 6%

• Return on Equity of 55%

• Final dividend per share of 35 cents

• Cash generated from operating activities

of R387 million, up 48%

• Currency fluctuations had a R27 million

negative impact on 2017 operating profit

SALIENT FEATURES

EARNINGS AND DIVIDENDS

25

64

8185

46

55 55

0

10

20

30

40

50

60

70

80

90

2015 2016 2017

Cen

ts

HEPS and DPS

HEPS DPS

64

80

86

64

75

85

0

10

20

30

40

50

60

70

80

90

100

2015 2016 2017

Cen

ts

EPS and Normalised EPS*

EPS NEPS

*Normalised EPS removes non-operational forex gains/losses

CASH GENERATION AND UTILISATION

26

34% 27% 17%

66% 73% 83%

0%

20%

40%

60%

80%

100%

FY 15 FY 16 FY 17

New sales – cash vs rental

Cash Rental

-50 000

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

450 000

500 000

Cash at 1 March2016

Cash fromoperatingactivities

Capitalisedrentals

Capitalised otherfixed assets

Dividends paid Other cashpayments and

receipts

Cash at 28 Feb2017

R 0

00

Clear dashed items represents FY16 comparatives

Current ratio

1.0

ROE 55%

ROA 35%

Adequate stock levels for 6 – 9

months of trading

Quick ratio

0.7

Clean debtors book – debtors

days 31

Cash generated from operating

activities of

R387 million

STRONG BALANCE SHEET POSITIONED FOR GROWTH

27

P 28 I Strictly private and confidential

Outlook

➢ The telematics industry is experiencing an explosion of expanding opportunities. Cartrack is playing a very active part in this evolution.

➢ We have a substantial active subscriber base, a significant addressable market with a strong appetite for our services, an award-winning technology platform and a brand that is growing in stature and reputation.

➢ Sales are increasing significantly and our order book is filled to capacity.

➢ We are confident that our increased investment in capacity and R&D will position Cartrack for continued strong growth.

➢ Our operations in technology driven societies keeps us innovating and globally relevant.

A ROBUST OUTLOOK

29

Well-positioned for growth and strong operating results

Inte

rna

tio

na

l O

ffic

es Angola

Botswana

Hong Kong

Indonesia

Kenya

Malaysia

Malawi

Mozambique

Namibia

New Zealand

Nigeria

Philippines

Poland

Portugal

Rwanda

Singapore

South Africa

Spain

Swaziland

Thailand

Tanzania

UAE

USA

Zimbabwe

Annexures

• Strong recurring earnings profile

• A proven track record of profitability

• Strong financial metrics

• Strong cash generation & cash conversion

• Low gearing

• Globally, a high-growth industry

• Proven and scalable technology platform

• A large and diversified subscriber base

• Experienced management

• Annuity-based earnings model

WHAT WE OFFER INVESTORS

32

• Strategically acquired CTM•A substantial increase in inventory

levels •An increase in debtors days

•Decrease in debtors days• Increase in

creditors’ days

A CONSISTENTLY HIGH CASH CONVERTER

• Annuity business with strong revenue visibility

• Strong track record of returning excess cash to the shareholders

33

0%

20%

40%

60%

80%

100%

120%

0

50

100

150

200

250

300

350

400

2012 2013 2014 2015 2016 2017

Perc

enta

ge o

per

atin

g p

rofi

t co

nve

rted

to

cas

h

R m

illio

n

Operating profit Net cash from operating activities Cash conversion ratio

77%

13%

9% 1%

2016

76%

17%

6%

1%

2016

74%

14%

9%

3%

2016

75%

10%

9%6% South Africa

Africa – other

Europe

Asia andMiddle EastUSA

2017

83%

11%

5%

-1%

South Africa

Africa – other

Europe


2017

79%

8%

10%2%

-1%

South Africa

Africa – other

Europe


2017

Revenue 2017 2016 Change

South Africa 861 455 748 600 15%

Africa – Other 108 610 139 197 (22)%

Europe 102 745 90 037 14%

Asia and Middle East 68 167 27 647 147%

USA 12 - -

Total 1 140 989 1 005 481 13%

Profit before tax

South Africa 312 222 274 711 14%

Africa – Other 41 834 60 110 (30)%

Europe 19 369 23 477 (17)%

Asia and Middle East 448 3 968 (89%)

USA (4 248) - -

Total 369 625 362 266 2%

EBITDA

South Africa 420 033 355 776 18%

Africa – Other 42 212 59 169 (29)%

Europe 51 239 42 212 21%

Asia and Middle East 9 926 5 981 66%

USA (4 248) -

Total 519 175 463 139 12%34

SEGMENTAL GROWTH

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Subscriber base

CARTRACK’S TECHNOLOGY HISTORY

35

2007 Launch Fleet

Management (FM) 2004 Launch


services (SVR)

In process:

•Data analytics

• Field technology partner of choice

• SaaS platform for OEMs

2014 Launch


2015 Launch

Prisoner Tracking2009

Launch FM incorporating

SVR2010

Launch evolved SaaS platform

2013 Launch Flash

product 2016/17 Launch mesh radio

frequency for data and SVR

Documents

ANNUAL RESULTS PRESENTATION FOR THE YEAR ENDED 28 … › sites › default › files... · Revenue Subscription revenue • Robust subscriber growth of 19% to 600 610 ... payments