Ioco Limited · JSE:IOC
Ioco — EOH Holdings — H1 2021 Earnings Presentation
36 slides from Ioco's earnings presentation, Apr 14, 2021
Slide 1: Interim Results
INTERIM RESULTS For the six months ended 31 January 2021 14 April 2021
Slide 2: Agenda
AGENDA 01 02 03 Strategic & Financial Looking Operational Overview Forward Overview Stephen van Coller Megan Pydigadu Stephen van Coller Group CEO Group CFO Group CEO 2
Slide 3: Strategic & Operational Overview
STRATEGIC & OPERATIONAL OVERVIEW Stephen van Coller Group CEO
Slide 4: Continued improvement in business despite COVID-19 disruption
CONTINUED IMPROVEMENT IN BUSINESS DESPITE COVID-19 DISRUPTION REVENUE PROFITABILITY DELEVERAGING LEGACY ISSUES TOTAL Revenue R4.4bn Operating Profit R59m TOTAL DEBT BALANCE R115m R974m increase from H1’20 decrease in financial R2.0bn asset impairments R1.8bn revenue decline Core Normalised EBITDA R3
Slide 5: Resilient business model
RESILIENT BUSINESS MODEL Multi-regional and multiple industry revenue sources Revenue Exposure by Industry & Region 84% of Revenue from Services Financial Services 24% Public Sector 20% Software/licence contracts 7% 13% Health 6% Hardware sales 9% Manufacturing & Logistics 8% 14% Telecoms 7% Informa
Slide 6: How we serve our customers
HOW WE SERVE OUR CUSTOMERS Advisory Technology Digital Services Product Agnostic Software reseller App Dev Network Solutions Solutioning Enterprise Data Analysis Manage & Operate Applications Cloud & Security Digital Industries Hardware Reseller International Knowledge Process Automation Outsourcing
Slide 7: Significant wins
SIGNIFICANT WINS We remain at the forefront of Large Corporates and Public Sector in South Africa RECENT NOTABLE CONTRACTUAL WINS Utility Major Telco Utility Public Sector Mine Demand Response Contact Centre Payroll Solution IT Outsourcing Critical communications Aggregation Automation technology R1
Slide 8: How we serve our customers
HOW WE SERVE OUR CUSTOMERS Intelligent Infrastructure Solutions People Outsourcing Solutions Engineering design & Recruitment & consulting services Headhunting Distribution & logistics Supply & Management of design Environmental skilled & semi-skilled personnel 24% Total Revenue Change Management co
Slide 9: Majority of risky businesses exited
MAJORITY OF RISKY BUSINESSES EXITED Learning & Development and Significant revenue Digital Infrastructure driving revenue growth contribution from infrastructure projects -33% Sold 2 022 Pia Solar & Autospec Other Base Revenue 7% Health 8% People 750 26% -24% 1 354 Revenue (Rm) 320 477 1 029 Infrast
Slide 10: Disposal of IP businesses on track
DISPOSAL OF IP BUSINESSES ON TRACK Remains a key focus for 2021 calendar year Revenue (Rm) Normalised EBITDA (Rm) -49% +50% -48% Disposal concluded +28% in November 2020 795 Advanced stages 610 of negotiation 210 407 141 INFORMATION Due diligence 110 SERVICES underway H1 2020 H2 2020 H1 2021 H1 2020
Slide 11: Legacy contracts update
LEGACY CONTRACTS UPDATE 8 PROBLEMATIC SPECIAL LEGACY INVESTIGATIONS ZONDO CONTRACTS UNIT (SIU) COMMISSION 5 contracts settled Repayment settlement Testimonies concluded reached on 2 contracts in November 2020 1 contract ending April 2021 - natural termination Resolution on remaining Subsequent heari
Slide 12: Financial Overview
FINANCIAL OVERVIEW Megan Pydigadu Group CFO
Slide 13: Highlights
HIGHLIGHTS REVENUE Rm GROSS PROFIT Rm NORMALISED EBITDA Rm 29% decline from H1 2020 GP Margin EBITDA Margin mainly due to disposals and exit of Up 3.4% to 27.6% from 24.2% Up 0.5% to 8.3% from 7.8% risky & underperforming businesses Medium term target > 10% 609 250 119 14% 21% 33% 1 796 625 4 376 1
Slide 14: Nimble organisation responding to revenue pressure
NIMBLE ORGANISATION RESPONDING TO REVENUE PRESSURE PROPERTY RATIONALISATION TAX OPTIMISATION PEOPLE Additional buildings & c.9 581 sqm R98m reduction exited year to date in tax payments from H12020 Reduction of 1 566 # employees as a result of: Decrease in gross R23m* interest payments 413 annualize
Slide 15: Income statement
INCOME STATEMENT HY2021 HY2021 HY2021 HY2020 HY2020 HY2020 Rm Unaudited Unaudited Continuing Discontinued Continuing Discontinued Restated Revenue 4 376 3 767 609 6 194 4 650 1 545 R115m reduction in financial Gross Profit 1 208 958 250 1 498 999 499 asset impairments Net financial asset impairment
Slide 16: Revenue
REVENUE TOTAL REVENUE Rm BASE REVENUE Rm (18%) 6 194 320 (5%) (14%) (8%) 4 642 1 232 5 082 4 389 470 24 245 4 032 669 4 376 59 822 472 285 1 038 881 4 642 4 389 4 032 3 322 3 134 2 679 PiA Solar IP Sold entities NEXTEC Base revenue iOCO H1 2020* H2 2020 H1 2021 H1 2020* H2 2020 H1 2021 16 *Restated
Slide 17: Average TTM revenue
AVERAGE TTM REVENUE Technology (5%) +15% Digital Manage and Operate & Network +1% solutions Digital +33% Industries* Advisory (32%) Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 *Digital Industries excludes Nextec Advisory 17
Slide 18: Analysis of revenue
ANALYSIS OF REVENUE Hardware sales negatively affected by COVID-19, with positive growth in Cloud revenue as a result (948) (419) (261) (70) (50) (70) Other iOCO DENIS 6 194 disposals 310 245 4 376 Other NEXTEC disposals Syntell 354 267 Dataworld 57 R’m H1 2020* Disposals Hardware Sales PiA Solar Le
Slide 19: Adaptable cost base
ADAPTABLE COST BASE TOTAL OPEX Rm CASH OPEX Rm R134m total OPEX saved from H2 2020 (46%) 2 209 R79m cash OPEX saved from H2 2020 1 326 R35m cash OPEX saved by remaining entities 322 from H2 2020 883 (11%) 1 194 867 (213) 76 788 1 060 33 437 272 (36) 1 004 1 326 791 Non-cash opex 755 867 788 Once-off
Slide 20: Improving earnings
IMPROVING EARNINGS OPERATING PROFIT/ (LOSS) Rm LOSS PER SHARE cents +410 +564 59 (60) (107) (145) (351) (318) (350) HEPS (915) (643) EPS H12020* H22020 H12020 H12020* H22020 H12021 *Restated 20
Slide 21: Revenue & EBITDA
REVENUE & EBITDA 11% 10% 15% 19% 7% 12% 20% 2% 23% MARGIN MARGIN MARGIN MARGIN MARGIN MARGIN MARGIN MARGIN MARGIN Revenue (R’m) Normalised EBITDA (R’m) 1 028 784 694 563 610 269 246 111 141 75 75 41 40 29 70 22 14 21 (0) (96) Digital Technology Digital Advisory and M&O and NS OKS Cornastone Nextec I
Slide 22: Normalised EBITDA
NORMALISED EBITDA Normalisation adjustments down 76% from H2 2020 and 95% from H1 2020 Rm H1 2020 H2 2020 H1 2021 Operating loss presented in FY 2020 (990) (276) Highveld adjustment* 75 (75) Operating Profit/ (Loss) (915) (351) 59 EBITDA Adjustments 776 561 270 Depreciation & amortisation 250 248 15
Slide 23: Normalisation adjustments
NORMALISATION ADJUSTMENTS Rm H1 2020 H2 2020 H1 2021 Specific IFRS9 impairments and 149 - 46 provisions IFRS15 adjustments 7 - - Advisory and other 90 9 14 Impairment of inventory 14 6 - Retrenchment and settlement costs 39 11 4 Onerous contracts and other provisions 49 (10) (62) Cost savings in 202
Slide 24: Balance Sheet
‘BALANCE SHEET
Slide 25: Balance sheet: assets
BALANCE SHEET Assets Unaudited 31 January 2021 Audited 31 July 2020 R’000 Total Continuing Total Continuing Non-current Assets R182m Property plant equipment and right-of-use assets 475 058 431 185 789 664 544 846 decline as a Intangible assets 384 679 44 348 458 288 112 967 result of sold businesse
Slide 26: Balance sheet: equity & liabilities
BALANCE SHEET Equity & Liabilities Unaudited 31 January 2021 Audited 31 July 2020 Foreign currency R’000 translation Total Continuing Total Continuing reserve Equity OTHER Stated capital 4 250 360 4 250 360 4 250 219 4 250 219 RESERVES 14% H1 2021 Shares to be issued to vendors 393 393 15 300 15 300
Slide 27: Debt steadily coming down
DEBT STEADILY COMING DOWN -9% -10% 2 498 2 267 2 033 R’m 31-Jan-2020 31-Jul-2020 31-Jan-2021 Balances only include Interest-bearing bank loans secured through security SPV 27
Slide 28: Working capital management
WORKING CAPITAL MANAGEMENT Working capital key focus in a tough environment Gross Receivables H2 2020 to H1 2021 Inventory movement in Net working capital Rm Payables & Deferred Income Net Working Capital 130 51 3 329 2 640 2 329 359 427 252 R’m 175 204 137 120 7071 130 (2 023) (2 602) (3 174) Leave
Slide 29: H1 2021 cash flow bridge
H1 2021 CASH FLOW BRIDGE SOURCES BUSINESS AS USUAL DEBT CASH FLOWS ONCE OFFS OF FUNDING (33) (74) (214) 232 (72) 410 (118) (472) 52 (20) (87) (95) 946 R196m R53m (R538m) (R202m) 455 Opening Sale proceeds Cash gone with Operational cash Net capital Lease obligation Taxation paid Net finance costs Deb
Slide 30: 2021 priorities
2021 PRIORITIES OPTIMISED WORKING QUALITY CAPITAL CAPITAL FOCUS EARNINGS STRUCTURE IN TOUGH ENVIRONMENT Foundation built on People & Financial Discipline 30
Slide 31: Looking Forward
LOOKING FORWARD Stephen van Coller Group CEO
Slide 32: EOH post-IP disposals
EOH POST-IP DISPOSALS • Remaining EOH business geared to ICT growth segments GROWTH • Automation, Data Analytics, Cloud & Security, IoT, App Dev • Geographical Expansion in Platform businesses EBITDA MARGIN • Stable self-sustaining business going forward • Target: 10% over medium term OPTIMAL COST B
Slide 33: Growing our international footprint
GROWING OUR INTERNATIONAL FOOTPRINT UK Austria STRATEGY PILLARS Switzerland Prague Build a Be an enabler for sustainable SA business in Egypt Saudia business and taking services Arabia presence and products UAE in-country into Global market Cost advantage CONSOLIDATION OF UK & EUROPE AND MIDDLE EAST
Slide 34: Continued improvement in business despite COVID-19 disruption
CONTINUED IMPROVEMENT IN BUSINESS DESPITE COVID-19 DISRUPTION REVENUE PROFITABILITY DELEVERAGING LEGACY ISSUES TOTAL Revenue R4.4bn Operating Profit R59m TOTAL DEBT BALANCE R115m R974m increase from H1’20 decrease in financial R2.0bn asset impairments R1.8bn revenue decline Core Normalised EBITDA R3
Slide 35: Thank you
THANK YOU
Slide 36: Disclaimer
DISCLAIMER CAUTIONARY REGARDING FORWARD-LOOKING STATEMENTS We may make statements that are not historical facts and relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable. These are forward looking statements as defined in the U.S.