INTERIM RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31 AUGUST 2017
AGENDA BUSINESS TRENDS AND STRATEGY Zak Calisto SEGMENTAL PERFORMANCE Zak Calisto FINANCIAL REVIEW John Edmeston OUTLOOK AND QUESTIONS Zak Calisto
TECHNOLOGY Mobile asset management solutions Asset recovery WE ARE CARTRACK Workforce optimisation Telematics and data analytics Proven global platform 3
AMONG THE LARGEST TELEMATICS COMPANIES GLOBALLY 666 422 subscribers 24 countries 5 continents 4
A ROBUST OPERATING MODEL Economies of scale Vertical integration protects margins Highly scalable business model and technology platform Strong customer retention 5
A LOW-RISK FINANCIAL MODEL Compound 5-yr revenue growth of 20% pa Cash conversion 91% Annuity income 88% of total revenue 6
A RAPIDLY EXPANDING INDUSTRY A significant addressable market Global fleet telematics revenue estimated to reach US$55 billion by 2021, almost double the current market revenue Gartner Inc. estimate 7
MULTIPLE GROWTH DRIVERS Regulatory compliance Global growth of 20% p.a. Barriers to entry New applications Insurance telematics Access to larger data sets Value-added products and services Stronger SVR demand Smart transportation OEM partnering Driver safety and security 8
STRATEGY REVIEW
A CONSISTENT STRATEGY FROM VEHICLE TRACKING KEY STRATEGIC PRINCIPLES Vigorous subscriber acquisition Continuous innovation Margin management through vertical integration Strong cash flow TO AN INTEGRAL PART OF CUSTOMERS LIVES Disciplined capital investment 10
Number of subscribers STRATEGIC DRIVER diversified subscriber base 700 000 650 000 600 000 550 000 500 000 450 000 400 000 350 000 300 000 250 000 200 000 150 000 100 000 50 000 0 2012 2013 2014 2015 2016 2017 HY 18 20% CAGR subscriber growth over five years Spread across a range of economic regions South Africa Africa Europe Asia-Pacific 11
STRATEGIC DRIVER data and technology Scalable proprietary SaaS platform Mobile apps 3G to 4G Software integration New front end Platform improvements DATA SHARING Stolen Vehicle Recovery Fleet Management Insurance Telematics Mobile asset solutions Workforce optimisation Regulatory compliance Driver safety 12
STRATEGIC DRIVER customer retention Customer lifecycle of 64 months vs contractual commitment of 36 months Capitalised rental units depreciated over 36 months Operating margin increases significantly post depreciation period FUTURE SALES LIKELY TO BE PREDOMINANTLY RENTAL-BASED 13
STRATEGIC DRIVER integrated business model Margins 90% 80% 78% 81% 80% 82% 70% Generating industry-leading margins 60% 50% 40% 30% 43% 35% 34% 46% 46% 47% 32% 32% 20% 10% 0% 2015 2016 2017 HY 18 Gross margin % EBITDA % Operating profit % 14
CURRENT STRATEGIC INITIATIVES INFRASTRUCTURE AND DISTRIBUTION CAPACITY PRODUCT DEVELOPMENT SUSTAINABLE REVENUE & SUBSCRIBER GROWTH, GENERATING STRONG MARGINS & RETURNS CUSTOMER PARTNERSHIPS NEW REVENUE STREAMS 15
SEGMENTAL PERFORMANCE
A GREAT START TO 2018 Subscriber base up 21% HEPS up 20% Lucrative growth opportunities across all regions Interim dividend of 18 cps 17
Rm SEGMENTAL PERFORMANCE 1 000 SOUTH AFRICA Revenue 14% Subscription revenue 19% Subscribers 19% Operating profit 22% 900 800 700 600 500 400 300 628 238 749 275 861 312 413 470 Economies of scale and operating efficiencies 200 100 0 145 172 2015 2016 2017 HY 17 HY 18 Revenue Profit before tax 18
SEGMENTAL PERFORMANCE PERFORMANCE IN RAND PERFORMANCE IN CONSTANT CURRENCY Africa-Other Subscription revenue Down 6% Up 10% Subscribers Down 3% Down 3% Operating profit Down 3% Up 14% PERFORMANCE IN RAND PERFORMANCE IN CONSTANT CURRENCY Europe Subscription revenue Up 3% Up 14% Subscribers Up 24% Up 24% Operating profit Down 6% Up 2% Asia-Pacific and ME PERFORMANCE IN RAND PERFORMANCE IN CONSTANT CURRENCY Subscription revenue Up 112% Up 140% Subscribers Up 122% Up 122% Operating profit Up 99% Up 129% 19
SEGMENTAL PERFORMANCE USA 3,1 million vehicles still require ELD telematics Cartrack will benefit from operating in a highly technology-driven society In-field testing expanded in the past six months Further hardware and software adaptions implemented Sales activities have now commenced 20
FINANCIAL REVIEW
Rm SOLID REVENUE GROWTH 115 000 new subscribers year-on-year 1 200 Revenue 1 000 Revenue up 14% to R629,9 million 800 Revenue up 18%, when excluding exchange rate effects on consolidation Subscription revenue up 19% to R557,2 million Subscription revenue is now 88% of total revenue 600 400 200 0 2013 2014 2015 2016 2017 HY 17 HY 18 Revenue Subscription revenue 22
Rm ROBUST PROFITABILITY EBITDA 600 EBITDA of R297,1 million, up 26% EBITDA margin of 47% R5,3 million negative impact from currency fluctuations 500 400 300 200 198 296 361 463 523 236 297 100 0 2013 2014 2015 2016 2017 HY 17 HY 18 23
R000 INVESTING IN THE FUTURE Expenditure on Research and Development 30 000 25 000 20 000 20 462 28 229 Significant investment in distribution over the past three years 15 000 15 503 10 000 10 267 11 120 5 000 - H1-16 H2-16 H1-17 H2-17 H1-18 24
Cents Cents EARNINGS AND DIVIDENDS HEPS and DPS EPS and Normalised EPS* 90 80 70 60 50 40 30 20 64 46 81 85 55 55 38 20 46 18 100 90 80 70 60 50 40 30 20 64 64 80 75 86 85 39 38 47 46 10 10 0 2015 2016 2017 HY 17 HY 18 0 2015 2016 2017 HY 17 HY 18 HEPS DPS EPS NEPS *Normalised EPS removes non-operational forex gains/losses 25
R000 CASH GENERATION AND UTILISATION Clear dashed items represents HY 17 comparatives 250 000 200 000 150 000 100 000 50 000 0-50 000-100 000-150 000 Cash at 1 Mar 2017 Cash from operating activities Capitalised rentals Capitalised other fixed assets Dividends paid Other cash payments and receipts Cash at 31 Aug 2017 26
STRONG BALANCE SHEET POSITIONED FOR GROWTH ROE 59% ROA 33% Clean debtors book debtors days 30 Stock levels increased to accommodate growth expectations Current ratio 0,9 Quick ratio 0,5 27
OUTLOOK P 28 I Strictly private and confidential
A ROBUST OUTLOOK Well-positioned for growth and strong operating results Demand for telematics data continues to increase Lucrative growth opportunities across all channels Double-digit revenue and subscriber growth expected for the foreseeable future 29
International offices 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 30
ANNEXURES
WHAT WE OFFER INVESTORS 32
Rm Percentage operating profit converted to cash A CONSISTENTLY HIGH CASH CONVERTER 400 350 300 250 200 150 100 50 0 140% 120% 100% 80% 60% 40% 20% 0% 2012 2013 2014 2015 2016 2017 HY 17 HY 18 Operating profit Net cash from operating activities Cash conversion ratio Annuity business with strong revenue visibility Strong track record of returning excess cash to the shareholders 33
SEGMENTAL GROWTH R million Revenue HY 18 HY 17 Change South Africa 470 413 14% South Africa Africa-Other 53 57-7% Europe 55 55-1% Asia-Pacific 52 29 80% USA HY 18 Africa-Other Europe Asia-Pacific HY 17 Total 630 554 14% USA Profit before tax South Africa 172 145 19% Africa-Other 19 19 1% Europe 9 10-8% Asia-Pacific -1-4 85% USA -4-1 >100% Total 196 168 17% HY 18 South Africa Africa-Other Europe Asia-Pacific USA HY 17 EBITDA South Africa 243 194 25% South Africa Africa-Other 19 20-2% Europe 30 24 23% Asia-Pacific 9-1 >100% USA -4-1 >100% Total 297 236 26% HY 18 Africa-Other Europe Asia-Pacific USA HY 17 34
SOUTH AFRICA A SOLID PERFORMER REPRESENTATION Operations across South Africa CURRENT RESULTS Investment in distribution resulting in market penetration Strong sales pipeline Single-digit operating expense growth reflects economies of scale and operating efficiency OUTLOOK AND INITIATIVES Market remains underpenetrated with significant opportunity for further growth Lower value vehicle segment offers attractive opportunities 35
AFRICA-OTHER OPERATIONALLY SOUND REPRESENTATION Angola Botswana Kenya Malawi Mozambique Namibia Nigeria Rwanda Swaziland Tanzania Zimbabwe CURRENT RESULTS Resilient performance despite challenging economic conditions Subscriber base maintained and constant currency revenue increased by 9% Highly profitable in local currency and positive cash flows Operating costs decreased by 6% OUTLOOK AND INITIATIVES New management structure implemented Sales and distribution strategy refreshed Changes expected to impact positively over the next 6-18 months 36
EUROPE STRONG GROWTH IN COMPETITIVE ENVIRONMENT REPRESENTATION Poland Portugal Spain CURRENT RESULTS Strong subscriber growth Revenue unchanged due to exchange rate effects and competitive pricing Continued investment in distribution and operating capacity EBITDA increased by 23% - significant impact from capitalised rentals and related depreciation OUTLOOK AND INITIATIVES Continued strong subscriber growth Lucrative growth opportunities evident Competition remains strong Insurance telematics and individual retail markets remain underpenetrated 37
ASIA-PACIFIC BUSINESS CASE PROVEN REPRESENTATION Hong Kong Indonesia Malaysia New Zealand Philippines Singapore Thailand UAE CURRENT RESULTS Continued investment in distribution and operating capacity Start-up entities deliver strong growth Singapore acts as strategic hub EBITDA turns positive as subscriber base starts to achieve scale OUTLOOK AND INITIATIVES Startups in Thailand, Malaysia, Philippines and Indonesia now 18-30 months into establishment cycle Strong sales pipeline Significant cross-border opportunities Cartrack s sophisticated and reliable products ideally positioned to take advantage of considerably underpenetrated and fragmented market 38