for the six months ended 31 December 2017 - Adapt IT IT Interim...OCT 2007 OCT 2008 AUG 2009 OCT 2012 NOV 2013 SEPT 2014 OCT 2015 JUL 2017 NOV 2017 ... education ERP systems expanding

ADAPT IT INTERIM RESULTS PRESENTATION 2017

INTERIM RESULTS PRESENTATIONfor the six months ended 31 December

2017


BUSINESS OVERVIEW

1


ABOUT ADAPT IT

Education | Manufacturing | Financial Services | Energy | Hospitality

1 000 employees10 000 customers40 countries in Africa and the rest of the worldLevel 3 B-BBEE contributorJSE listed ADI Software and Services Provider

VISIONTo be the leading provider of specialised software

PURPOSEGrowing our people and solutions - enabling our clients

to achieve more

2


10 YEARS OF GROWTH

3

OCT 2007 OCT 2008 AUG 2009 OCT 2012 NOV 2013 SEPT 2014 OCT 2015 JUL 2017 NOV 2017

InfoWave mergeswith Adapt IT

creating a software business

Adapt IT, specialising in

manufacturingsoftware, moves

to the main board of the JSE

Education specialisation

through the acquisition of Integrated Tertiary

Software (ITS)—a leader in tertiary

education ERP systems expanding the

company into Europe and Australasia

The Swicon360acquisition extends the manufacturing offering with SAP

Human CapitalManagement

Business ProcessOutsourcing

Energy sectorentry through the

Aquilonacquisition

expands Adapt IT into Africa’s

growing energy sector, serving

major oilcompanies

AddedTelecommunications

intelligencemanagement software

through theAspiviaUnison

acquisition

Financial ServicesSector is entered

through the acquisition of CQS

Micros South Africa, a leader in

Hospitality Software, is acquired by

Adapt IT

The Telecommunications

division expands footprint in Australia, Mauritius and the restof Africa through the acquisition of LGR -CP’s to be fulfilled

MILESTONES

20145th fastest growing African

Tech Company

2017R1 billion annualised

turnover

20172nd in the Sunday Times Top

100 companies

2020R3 billion annualised

turnover target


DIRECTORATE

4

CRAIG CHAMBERS

CFA, PDM, BComIndependent

Non-Executive Chairman

Appointed 3 May 2011

BONGIWE NTULI

CA (SA)Independent

Non-Executive Director

Appointed 27 May 2008

CATHERINE KOFFMAN

BA, LLB, LLMIndependent


Appointed 9 February 2015

OLIVER FORTUIN

MBAIndependent


Appointed 8 February 2013

SIBUSISO SHABALALA

BComChief

Executive Officer

Appointed 5 December 2007

TIFFANY DUNSDON

CA (SA)Commercial

Director

Appointed 18 April 2002

NOMBALIMBAMBO

CA (SA)Chief

Financial Officer

Appointed 18 August 2016


SECTOR FOCUS

5

EDUCATIONMANUFACTURING FINANCIAL SERVICES

ENERGY HOSPITALITY


MANUFACTURING

• 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

MANUFACTURING

CUSTOMERS

6

FINANCIAL SERVICES

CUSTOMERS

• 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

FINANCIAL SERVICES


ENERGY

CUSTOMERS

7

• Serving Oil and 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

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

CUSTOMERS

EDUCATION ENERGY


EXPENSE MANAGEMENTSERVICE PROVIDER SOLUTIONS

CUSTOMERSCUSTOMERS

8

• 17 years experience in corporate and telecommunications management

• Specialised focus on Carrier Networks and other Service Providers

• Implemented by 4 out of 5 tier 1 Service Providers in Southern Africa

• Local Application Development and rich IP• Expanding to the rest of Africa• Ready to use platform

• Specialised focus on large enterprise Telecommunications Expense Management (TEM)

• 30 years experience • Local Support and Application Development• Rich Intellectual Property• Present in Financial Services, Manufacturing Health, Energy

and Public Sector

TELECOMMUNICATIONS MANAGEMENT


HOSPITALITY

CUSTOMERS

HOSPITALITY

• 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• Hospitality management software market expected to grow

at a compound annual growth rate of 6.14% until 2020

9


CUSTOMERSSOLUTIONS

KEY ATTRIBUTESBACKGROUND

TELECOMMUNICATIONS ACQUISITION

10

• Acquisition of the LGR Group effective 1 July 2017• Specialist solutions provider to the global

telecommunications industry• Over 18 years experience, operating in 10 countries

with 36 employees• Will be integrated with Service Provider Solutions

business unit to provide additional value to the Mobile Carrier Network segment

• Strengthened telecommunications industry expertise• Specialised software analytics products• New foreign customers, extending footprint into the

global telecommunications industry

• CDRlive V4• CDRlive RapidReport• CDRlive COMPANA• CDRlive Tarifflive• Everywhere• StarCare


LEVEL 3 B-BBEE CONTRIBUTOR

SCORECARD 2017TARGET SCORE

Ownership 21.07 25

Management and Control 14.66 23

Skills Development 17.20 20

Enterprise and Supplier Development 48.28 50

Socio-Economic Development 12.00 12

OVERALL SCORE 113.21 130

TRANSFORMATION

11


12

FINANCIAL HIGHLIGHTS


INTERIM RESULTS | 31 DECEMBER 2017

13

FINANCIAL HIGHLIGHTS

TURNOVER

46% 29%EBITDA

11% NORMALISED HEPS

22%HEPS


TURNOVER

CAGR

29%

190

261310

461

674

0

100

200

300

400

500

600

700

800

2013 2014 2015 2016 2017

23

42

62

90

116

0

20

40

60

80

100

120

140

2013 2014 2015 2016 2017

17%

ORGANIC

TURNOVER

GROWTH *

35%

ACQUISITIVE

TURNOVER

GROWTH

46%

TURNOVER

5 YEAR REVIEW

TURNOVER (R’m) EBITDA (R’m)

14

17%

EBITDA

MARGIN

38%

EBITDA CAGR

29%

EBITDA

* From ongoing operations


13.7416.82

23.96 24.41

29.70

0

5

10

15

20

25

30

35

2013 2014 2015 2016 2017

13.74

21.38

28.89

34.74

38.73

0

5

10

15

20

25

30

35

40

45

2013 2014 2015 2016 2017

5 YEAR REVIEW

HEPS (cents) NORMALISED HEPS (cents)

15

17%

HEPS CAGR

22%

HEPS

23%

NORMALISED

HEPS CAGR

11%

NORMALISED

HEPS


ABRIDGED CONSOLIDATED STATEMENTS

16

Unaudited 6 months ended

31 Dec 2017

R’000

Unaudited 6 months ended

31 Dec 2016

R’000

Audited year ended 30 June

2017

R’000

Period-on-period change

%

Turnover 673 559 460 691 993 671 46

EBITDA

Depreciation and amortisation

Amortisation of intangible assets acquired

116 052

(13 105)

(16 815)

89 869

(6 892)

(13 501)

194 326

(14 238)

(29 105)

29

90

25

Profit from operations

Net finance cost

Share of profits of equity accounted investment after tax

86 132

(11 078)

-

69 476

(12 998)

829

150 983

(22 851)

(88)

24

(15)

(100)

Profit before taxation

Income tax expense

75 054

(26 119)

57 307

(20 251)

128 044

(35 498)

31

29

Profit for the year 48 935 37 056 92 546 32

Headline earnings

Amortisation of intangible assets acquired net of deferred tax

Fair value adjustment to financial liability (imputed interest)

47 369

12 107

2 298

35 515

9 721

5 299

88 149

20 956

9 356

33

25

(57)

Normalised headline earnings 61 774 50 535 118 461 22

Weighted average number of ordinary shared in issue 159 509 145 476 150 028 10

HEPS (cents)

Normalised HEPS (cents)

29,70

38,73

24,41

34,74

58,76

78,96

22

11

COMPREHENSIVE INCOME



17

Unaudited 6 months

ended 31 Dec 2017

R’000

Unaudited 6 months

ended 31 Dec 2016

R’000

Audited year ended 30

June 2017

R’000

Non-current assets

Current assets

926 724

508 144

773 367

377 959

730 781

355 666

Total assets 1 434 868 1 151 326 1 086 447

Total equity

Non-current liabilities

Current liabilities

708 053

305 289

421 526

608 289

253 145

289 892

668 537

193 178

224 732

Total equity and liabilities 1 434 868 1 151 326 1 086 447

Gearing ratio 40% 26% 15%

FINANCIAL POSITION



18

CASH FLOWS

Unaudited 6 months

ended 31 Dec 2017

R’000

Unaudited 6 months

ended 31 Dec 2016

R’000

Audited year ended 30

June 2017

R’000

OPERATING ACTIVITIES

Cash generated from / (utilised in ) operations

Finance income

Finance costs

Dividends paid

Taxation paid

33 2731 754

(10 671)(24 492)(32 333)

(8 056)968

(9 993)(19 634)(25 816)

139 3251 601

(16 249)(23 359)(42 102)

Net cash flow (utilised in) / generated from operating activities

Net cash flows utilised in investment activities

Net cash inflow from financing activities

(32 469)(115 526)

133 154

(62 531)(25 722)

96 108

59 216(59 487)

20 903

Net (decrease) / increase in cash resources

Exchange differences on translation

Cash and cash equivalents at beginning of period

(14 841)951

98 049

7 855845

77 724

20 632(307)

77 724

Cash and cash equivalents at end of period 84 159 86 424 98 049


19

SECTOR RESULTS


SECTOR CONTRIBUTION - TURNOVER

20

12%24% 14% 24%26%

EDUCATIONMANUFACTURING FINANCIAL SERVICES

ENERGY HOSPITALITY


122

162

8591

176

160

8494

160

0

20

40

60

80

100

120

140

160

180

200

Manufacturing Financial Services Education Energy Hospitality

TURNOVER BY SECTOR

(R’m)

21

2016

2017

46%

TURNOVER


EBITDA BY SECTOR

22

(R’m)

2016

2017

29%

EBITDA

30

24

15

22

38

22

14

20

25

0

5

10

15

20

25

30

35

40

Manufacturing Financial Services Education Energy Hospitality


TURNOVER MIX

23

90% Rands

5%US $

2%Australian $

2%Euro

1%Other

CURRENCY

83% South Africa

12%Other African countries

2%The Americas

2%Australasia

1%Europe

GEOGRAPHY


24

LOOKING AHEAD


STRATEGY FOR INTERNATIONAL EXPANSIONG

RO

WTH

COMPLEXITY

PHASE 1: SINGLE MARKETEstablish competitive position;Grow, defend and unlock potential;Optimise performance

South Africa- Cape Town- Durban- Johannesburg- Pretoria

PHASE 2: PROXIMATE REGIONAL EXPANSIONGeographical expansion form core market;Leverage core capabilities;Building growth capabilities

SADC- Namibia- Botswana- Mozambique- Zambia- Zimbabwe- Malawi

PHASE 3: MULTI-REGIONAL HUBMultiple hubs;Leverage growth capabilities;Develop scalable infrastructureAdapt to changing risk and compliance profile

East Africa- Kenya- Tanzania- Uganda- Rwanda- Ethiopia

Indian Ocean- Mauritius

West Africa- Nigeria- Ghana- Sierra Leone- Cameroon- Benin- Gambia

Central Africa- DRC- Congo

PHASE 4: INTERNATIONAL EXPANSIONIntegrated rest of Africa and Global expansion

P1

P2

P3

P4

Australasia- Australia- New Zealand


CAPITAL RAISING NEW B-BBEE CODESGEARING

PROFITABLE WITH GOOD TRACK RECORD NEW GEOGRAPHIESSIZEABLE ACQUISITIONS

ACQUISITION CRITERIA AND FUNDING

26

• > 25% up to 100% of turnover

• High annuity income ratio

• Sector specialisation

• Niche IP

• Strong management

• Good cultural fit

• Africa

• Rest of world

• Up to 50% of balance sheet • Private placement • Improve equity ownership


INVESTMENT CASE

27

SHARE MOVEMENT

• Sector diversified

• Solid growth record

• Successful acquisitions

TRACK RECORD

• Annuity income

• Organic growth across sectors

• Software and services

GROWTH STRATEGY

• Strong turnover growth

• Improved annuity turnover

PERFORMANCE

31 Dec 2017

SHAREHOLDER DISTRIBUTION

Free float 76%

Held by Directors, Management and Staff 24%

Share liquidity 16%

Estimated future dilution (from transactions already executed)

1%0

20

40

60

80

100

120

140

January 2017 March 2017 May 2017 July 2017 September 2017 November 2017

Adapt IT

Software &Computer (J953)

EOH

J203 - FTSE/JSE AllShare


28

THANK YOUInvestor Relations: [email protected]

Documents

for the six months ended 31 December 2017 - Adapt IT IT Interim...OCT 2007 OCT 2008 AUG 2009 OCT 2012 NOV 2013 SEPT 2014 OCT 2015 JUL 2017 NOV 2017 ... education ERP systems expanding