Copyright HUGE GROUP 2018 PRESENTATION TO INVESTORS

Transcription

1 PRESENTATION TO INVESTORS

2 PRESENTATION CONTENTS #1 Our huge story a. Our huge business model b. The growing huge strategy c. Historical strategic performance d. Key personnel and contributors e. Our shareholder base #2 Competitive environment a. Our operational universe b. Our current and potential markets c. Our unique proposition d. Moving beyond fixed infrastructure e. IoT and Fintech in the huge proposition f. Competitor and SWOT analysis g. The huge value proposition #3 Performance review a. Financial performance for the 2018 financial year b. Our huge financial growth #4 Defining the huge future a. Our organic growth story b. Our acquisitive story c. Our huge future d. Metcalfe s law #5 Conclusion 2

3 OUR HUGE STORY

4 Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices OUR BUSINESSES OUR HUGE BUSINESS MODEL OUR VISION Building a group that positions itself to realise extraordinary opportunities OUR MISSION We invest in and grow companies that provide solutions which are simple, innovative and fit for purpose OUR BUSINESS PARTNERS The Group then works with select Business Partners who drive the sales of our products and services by designing customer solutions that unlock value using a customised selection of the various, yet complementary, company offerings OUR SOLUTIONS OUR SERVICE PROVIDERS We provide value-added data services using GSM-based cellular data networks for businessto-business & machine-to-machine applications Working with a common base of suppliers, the group operates within a decentralised management model where each subsidiary company takes control of their own operations OUR BUSINESS ENABLERS All our solutions are locally designed, developed & produced means our people can create & implement bespoke, customer-specific solutions at highly competitive tariffs Extensive distribution capacity Critical scale of operations We provide a wireless full suite telephony service that gives our customers a replacement for their traditional telco fixed line services We provide customers with a complete solution to all their current and future data, internet, communications & private network needs National footprint iecns and iecs licences Our outputs are the solutions that we provide to customers to strengthen their connectivity Wholesale agreements with mobile network operators OUR CUSTOMERS SMEs Corporates Individuals Technical & customer support systems 4

5 Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices THE GROWING HUGE STRATEGY 5

6 Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices THE GROWING HUGE STRATEGY Expand the Huge brand Expand the existing real estate of customers Expand the existing network of Business Partners Leverage existing product and service offering Invest in earnings accretive businesses Deliver bolt-on acquisitions at subsidiary company level Identify new strategic partners to expand into new products and services Increase investor base and share liquidity Add service diversification and amass customer real estate Create people centric operations Advance measurements and data collection Develop and implement comprehensive B-BBEE plans Implement automation in key areas of the operations Improve internal process management Review and refine operating models 6

7 Strategic targets What we delivered Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices HISTORICAL STRATEGIC PERFORMANCE Our past shows a strong track record of delivering on what we set out to achieve We said that we would re-engineer the business model We said that we would build a distribution capability build critical mass increase the number of installed telephone lines settle material litigation strengthen the balance sheet We said that we would continue to grow our distribution footprint build critical mass increase the number of installed telephone lines We said that we would continue to grow our distribution footprint Build critical mass increase the number of installed telephone lines increase profitability Conclusion of first wholesale agreement for wireless GSM based telephony services Business Partner Agreement No. 287 Increased our real estate of customers to Installed our th telephone line Undertook a Rights Offer of shares at 100c per share, fully subscribed Settled material litigation Strengthened the balance sheet Business Partner Agreement No. 425 Increased our real estate of customers to Installed our th telephone line Business Partner Agreement No. 537 Increased our real estate of customers to Installed our th telephone line Increased our gross margin above 40% Increased PAT by 75% from R11 million to R20 million 7

8 Strategic targets What we delivered Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices HISTORICAL STRATEGIC PERFORMANCE Our past shows a strong track record of delivering on what we set out to achieve We said that we would move our listing to the Main Board of the JSE continue to grow our distribution footprint continue to increase the size of our customer real estate increase the number of installed telephone lines substantially increase our gross margin increase profitability strengthen our management team grow our shareholder base We said that we would continue to grow our distribution footprint continue to increase the size of our customer real estate increase the number of installed telephone lines close our first acquisition lower our existing cost structures launch a new telephony service build a holding company structure substantially grow revenue, gross margin and profitability strengthen our Board launch a new strategy for growth Listed on the Main Board of the JSE Signed Business Partner Agreement No. 648 Increased our real estate of customers to Installed our th telephone line Increased our gross margin substantially from 40% to 48% Increased PAT by 36% from R20 million to R27 million Appointed Duarte da Silva as Chairman and Zunaid Bulbulia as Chief Financial Officer Signed Business Partner Agreement No. 719 Increased our real estate of customers to Installed our th telephone line Acquired Huge Connect and Huge Networks Concluded a wholesale agreement for the substantial lowering of base costs Launched full suite telephony Created a holding company structure Implemented the Growing Huge Strategy Grew revenue by 63% Increased gross margin from 48% to 56% Grew PAT by 188%, from R27 million to R77 million Appointed Craig Lyons and Brian Armstrong to the Board 8

9 Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices KEY PERSONNEL AND CONTRIBUTORS DUARTE DA SILVA Non-Executive Chairman BSc (Mech Eng), PhD JAMES HERBST Chief Executive Officer BCom, BAcc, CFA, CA(SA) ZUNAID BULBULIA Chief Financial Officer BCom, BCompt, CTA, CA(SA) 25 years of investment experience Previously Africa Regional Head of Macquarie Group Limited 20 years of investment experience and 14 years of telecommunications experience 24 years telecommunications experience Previously Chief Executive Officer of MTN SA & Chief Operations Executive of MTN Group BOARD OF DIRECTORS EXECUTIVE COMMITTEE Steve Tredoux Lead Independent Director Andre Lessing MD: Huge Connect Vincent Mokholo Non-executive director Marius Oberholzer MD: Huge Networks Dennis Gammie Independent non-executive director Craig Rowan MD: Huge Software Craig Lyons Independent non-executive director Gunter Engling MD: Huge Telecom Brian Armstrong Independent non-executive director Elsabe Van Heerden Group Financial Executive Karen Robinson Company Secretary 9

10 Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices OUR SHAREHOLDER BASE Praesidium Capital 31.56% Management 28.35% Stanlib 11.26% Sentio 10.35% Element Capital 1.20% 0% 5% 10% 15% 20% 25% 30% 35% 40% 10

11 COMPETITIVE ENVIRONMENT

12 Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices OUR OPERATIONAL UNIVERSE Connecting customers and devices Building an eco-system for service and product delivery 12

13 Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices OUR CURRENT AND POTENTIAL MARKETS Current markets SME customers Potential markets Providing Fintech & IoT connectivity to SMEs in South Africa* SME customers *67% of forma SME market Bureau for Economic Research, Research Note 2016, No.1 13

14 Our huge story Financial highlights Competitive environment Defining the huge future Conclusion Appendices OUR UNIQUE PROPOSITION T h e m o st re c e nt g l o b a l b i l l i o n a i re s o r i g i n ated fro m e nterprises, with n o f i xe d i n f rast r u c t u re. T h e ex t ra o rd i n a r y success of these endeavours h a s b e e n t h e i r a b i l i t y t o a s s i m i l ate c u stomers a n d d e l i ver b e s p o ke a n d s i m p l e s e r v i c e s. 14

15 Our huge story Financial highlights Competitive environment Defining the huge future Conclusion Appendices MOVING BEYOND FIXED INFRASTRUCTURE I n s p i re d b y t h i s i n d u st r i a l re v o l u t i o n, H u g e h a s d e v e l o p e d i t s p h i l o s o p hy o f S M E c u stomer re a l e state a n d collaborative e co - systems. I n a w o r l d m o v i n g t o w a rd s s e r v i c e p ro v i s i o n b e yond dependence on f i xe d infra st r u c t u re, H u g e h a s b e e n a g g re s s i v e l y b u i l d i n g a n d a g g re gat i n g a s i ze a b l e S M E c u stomer re a l e state. I n i t i a l l y fo c u s s i n g o n m o b i l i t y a n d c o n n e c t i v i t y - b a s e d s o l u t i o n s, H u g e i s n o w e v o l v i n g into the re a l m o f m a c h i n e to m a c hine communicat i o n ( I o T ) a n d d i s r u ptive f i n a n c i a l s o l u t i o n s ( F i n t e c h ). 15

16 Our huge story Financial highlights Competitive environment Defining the huge future Conclusion Appendices IOT AND FINTECH IN THE HUGE PROPOSITION F i n t e c h, a s a H u g e p ro p o s i t i o n, i s t h e d e l i v e r y o f s i m p l e, d i s r u pt i ve a n d i n n ovat i ve s o l utions t o o u r c u stomers, i n p a r t n e rs h i p w i t h f i n a n c i a l i n st i t u t i o n s. C u r re n t l y, t h e H u ge e co - system consists o f over devices, m a k i n g t h e H u g e c u stomer re a l e state o n e o f t h e l a rgest p l atfo r ms fo r m a c h i n e t o m a c h i n e c o m m u n i c at i o n i n S o u t h e r n A f r i c a. D i s s e c t i n g t h e c u stomer base using d e tailed d ata a n a l y t i c s, coupled with o u r c o n n e c t i v i t y ex p e r t i s e, p o s i t i o n s H u g e t o c o n c e i v e, d e v e l o p a n d d i st r i b u t e a s u i te o f b e s p o ke I o T a n d F i ntech o ffe r i ngs w h i c h w i l l u n l o c k va l u e fo r a l l sta ke h o l d e rs. 16

17 Our huge story Financial highlights Competitive environment Defining the huge future Conclusion Appendices COMPETITOR & SWOT ANALYSIS OUR COMPETITORS HUGE Larger companies SME customer real estate of Broader product offering devices in communication Infrastructure dependent Cross-selling into Huge customer real estate Superior B-BBEE profile Extensive distribution network Independent of infrastructure Ability to scale Proven track record in financial services Proven ability to innovate 17

18 Our huge story Financial highlights Competitive environment Defining the huge future Conclusion Appendices THE HUGE VALUE PROPOSITION 18

19 PERFORMANCE REVIEW

20 Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices FINANCIAL PERFORMANCE FOR THE 2018 FINANCIAL YEAR Basic earnings per share increased by 80% cents to cents Headline earnings per share increased by 76% cents to cents Net profit after taxation increased by 188% R26.8 million to R77.1 million Total revenue increased 63% EBITDA increased by 145% Net asset value increased by 198% R376 million to R744 million Operating profit increased by 168% R42.2 million to R112.9 million R245.9 million to R401.3 million Key ratios Current ratio times Acid test ratio times Return on equity 8% 14% percent Return on real assets 13% 21% percent Return on invested capital 11% 15% percent Net debt to EBITDA (1.15) 0.58 times Earnings yield 3% 5% percent PE ratio (R8.50 share price) (R8.70 share price) times 20

21 Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices OUR HUGE FINANCIAL GROWTH Market capitalisation Gross profit Revenue (Rbn) (Rm) (Rm)

22 DEFINING THE HUGE FUTURE

23 Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices OUR ORGANIC GROWTH STORY Creating a platform for organic growth Delivering bolt-on acquisitions and creating platforms for organic growth, Huge is building a substantial SME customer real estate and developing bespoke offerings for the SME market Leveraging the connected devices to create an IoT presence through Huge Connect Increasing the SME customer real estate of Huge Telecom from to customers in the next three years Invest in aggressive growth of Huge Networks through complementary acquisitions, targeting R100 million revenue in the next three years 23

24 Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices OUR ACQUISITIVE GROWTH STORY Growing the Group by acquisition Potential acquisition targets Earnings accretive Service diversification Significant customer real estate Offer depth to current Huge offerings Low cost base, with proven operational efficiencies Ability to scale rapidly through bolt-on acquisitions Cross-selling opportunities from current and future Huge offerings Operate in the mobile connectivity space, with Fintech and IoT prospects Financial profile of annuity income and high conversion from EBITDA to cash Entrepreneurial management teams with expertise and capacity to create sustainable value 24

25 Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices OUR HUGE FUTURE What does the Huge future look like? Successfully executing the Growing Huge Strategy, resulting in a huge future Enter the JSE Top 100 listed companies Show consistent, above average growth in excess of 20% per annum Participate in the Fintech and IoT industrial revolution Remain independent of fixed network infrastructure Create a machine-to-machine connected network in excess of half a million devices SME customer real estate of over Aggregate cross-selling opportunities Sustain low cost operating structures 25

26 Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices METCALFE S LAW Metcalfe s law suggests that the community value of a network grows as the square of the number of its users increases. As Huge grows its customer real estate, value to its stakeholders will expand exponentially. 26

27 CONCLUSION

28 Our huge story Competitive environment Performance review Defining the huge future Conclusion Appendices GROWING HUGE TOGETHER 28