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INTERIM RESULTS PRESENTATION
FOR THE SIX MONTHS ENDED
31 AUGUST 2017
AG
EN
DA
BUSINESS TRENDS AND STRATEGY
Zak Calisto
SEGMENTAL PERFORMANCE
Zak Calisto
FINANCIAL REVIEW
John Edmeston
OUTLOOK AND QUESTIONS
Zak Calisto
Mobile asset management solutions
Asset recovery
Workforce optimisation
Telematics and data analyticsTE
CH
NO
LO
GY
WE ARE
CARTRACK
Proven global platform
3
4
AMONG THE LARGEST TELEMATICS COMPANIES GLOBALLY
5continents
24countries
666 422 subscribers
5
A ROBUST OPERATING MODEL
Economiesof scale
Vertical integration
protects margins
Strong customer retention
Highly scalable business model and technology
platform
6
A LOW-RISK FINANCIAL MODEL
Compound 5-yr revenue growth
of 20% pa
Annuity income
88% of total revenue
Cash conversion
91%
A significant addressable market
Gartner Inc. estimate
A RAPIDLY EXPANDING INDUSTRY
7
Global fleet telematics revenue estimated to reach
US$55 billion by 2021, almost
double the current market revenue
MULTIPLE GROWTH DRIVERS
8
• Regulatory compliance
• 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
Global growth of 20% p.a.
STRATEGY REVIEW
10
A CONSISTENT STRATEGY
TO AN INTEGRAL PART OF CUSTOMERS’ LIVES
FROM VEHICLE TRACKINGVigorous subscriber acquisition
Continuous innovation
Strong cash flow
Margin management through vertical integration
Disciplined capital investment
KEY STRATEGIC
PRINCIPLES
STRATEGIC DRIVER – diversified subscriber base
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
700 000
2012 2013 2014 2015 2016 2017 HY 18
Nu
mb
er o
f su
bsc
rib
ers
South Africa Africa Europe Asia-Pacific
11
20% CAGRsubscriber
growth over five years
Spread across a range of economic
regions
DATA SHARING
Stolen Vehicle Recovery
Fleet Management
Insurance Telematics
Mobile asset solutions
Workforce optimisation
Mobile apps
3G to 4G
Software integration
Newfront end
Platform improvements
Scalable proprietary SaaS platform
12
STRATEGIC DRIVER – data and technology
Regulatory compliance
Driver safety
13
STRATEGIC DRIVER – customer retention
Customer lifecycle
of 64 months
vs contractual commitment of 36
months
FUTURE SALES LIKELY TO BE PREDOMINANTLY RENTAL-BASED
Capitalised rental units
depreciated over
36months
Operating marginincreases
significantly post depreciation
period
Generating industry-leading margins
STRATEGIC DRIVER – integrated business model
78%81% 80%
82%
43%46% 46% 47%
35% 34%32% 32%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2015 2016 2017 HY 18
Margins
Gross margin % EBITDA % Operating profit %
14
CURRENT STRATEGIC INITIATIVES
15
SUSTAINABLE REVENUE & SUBSCRIBER
GROWTH, GENERATING STRONG MARGINS & RETURNS
INFRASTRUCTURE AND DISTRIBUTION CAPACITY
PRODUCT DEVELOPMENT
NEW REVENUE STREAMS
CUSTOMER PARTNERSHIPS
SEGMENTAL
PERFORMANCE
A GREAT START TO 2018
17
Lucrative growth opportunities
across all regions
Subscriber base up 21%
HEPS up 20%
Interim dividend of 18 cps
Revenue 14%
Subscription
revenue19%
Subscribers 19%
Operating profit 22%
SOUTH AFRICA
SEGMENTAL PERFORMANCE
18
628
749
861
413
470
238 275
312
145 172
0
100
200
300
400
500
600
700
800
900
1 000
2015 2016 2017 HY 17 HY 18
Rm
Revenue Profit before tax
Economies of scale and operating
efficiencies
SEGMENTAL PERFORMANCE
PERFORMANCE IN
RAND
PERFORMANCE IN
CONSTANT CURRENCY
Subscription revenue Down 6% Up 10%
Subscribers Down 3% Down 3%
Operating profit Down 3% Up 14%
Africa-Other
PERFORMANCE IN
RAND
PERFORMANCE IN
CONSTANT CURRENCY
Subscription revenue Up 3% Up 14%
Subscribers Up 24% Up 24%
Operating profit Down 6% Up 2%
Europe
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
20
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
FINANCIAL REVIEW
22
0
200
400
600
800
1 000
1 200
2013 2014 2015 2016 2017 HY 17 HY 18
Rm
Revenue
Revenue Subscription revenue
• Revenue up 14% to R629,9 million
• 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
SOLID REVENUE GROWTH
115 000 new subscribers
year-on-year
23
• EBITDA of R297,1 million, up 26%
• EBITDA margin of 47%
• R5,3 million negative impact from currency fluctuations
ROBUST PROFITABILITY
198
296
361
463
523
236
297
0
100
200
300
400
500
600
2013 2014 2015 2016 2017 HY 17 HY 18
Rm
EBITDA
INVESTING IN THE FUTURE
Significant investment in
distribution over the past three
years
10 267 11 120
15 503
20 462
28 229
-
5 000
10 000
15 000
20 000
25 000
30 000
H1-16 H2-16 H1-17 H2-17 H1-18
R0
00
Expenditure on Research and Development
24
EARNINGS AND DIVIDENDS
25
64
8185
38
4646
55 55
20 18
0
10
20
30
40
50
60
70
80
90
2015 2016 2017 HY 17 HY 18
Cen
ts
HEPS and DPS
HEPS DPS
64
80
86
39
47
64
75
85
38
46
0
10
20
30
40
50
60
70
80
90
100
2015 2016 2017 HY 17 HY 18
Cen
ts
EPS and Normalised EPS*
EPS NEPS
*Normalised EPS removes non-operational forex gains/losses
CASH GENERATION AND UTILISATION
26
-150 000
-100 000
-50 000
0
50 000
100 000
150 000
200 000
250 000
Cash at 1 Mar2017
Cash fromoperatingactivities
Capitalisedrentals
Capitalised otherfixed assets
Dividends paid Other cashpayments and
receipts
Cash at 31 Aug2017
R0
00
Clear dashed items represents HY 17 comparatives
27
STRONG BALANCE SHEET POSITIONED FOR GROWTH
ROE 59%
ROA 33%
Stock levels increased to
accommodate growth
expectations
Clean debtors book
– debtors days 30
Current ratio
0,9Quick ratio
0,5
P 28 I Strictly private and confidential
OUTLOOK
A ROBUST OUTLOOK
29
Demand for telematics data
continues to increase
Lucrative growth
opportunities across all channels
Double-digit revenue and subscriber
growth expected for the
foreseeable future
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
Zimbabwe30
ANNEXURES
WHAT WE OFFER INVESTORS
32
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%
140%
0
50
100
150
200
250
300
350
400
2012 2013 2014 2015 2016 2017 HY 17 HY 18
Perc
enta
ge o
per
atin
g p
rofi
t co
nve
rted
to
cas
h
Rm
Operating profit Net cash from operating activities Cash conversion ratio
Revenue HY 18 HY 17 Change
South Africa 470 413 14%
Africa-Other 53 57 -7%
Europe 55 55 -1%
Asia-Pacific 52 29 80%
USA
Total 630 554 14%
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%
EBITDA
South Africa 243 194 25%
Africa-Other 19 20 -2%
Europe 30 24 23%
Asia-Pacific 9 -1 >100%
USA -4 -1 >100%
Total 297 236 26%34
SEGMENTAL GROWTH
R million
South Africa
Africa-Other
Europe
Asia-Pacific
USA
South Africa
Africa-Other
Europe
Asia-Pacific
USA
South Africa
Africa-Other
Europe
Asia-Pacific
USA
HY 18
HY 18
HY 18
HY 17
HY 17
HY 17
SOUTH AFRICA – A SOLID PERFORMER
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
REPRESENTATION
Operations across South Africa
35
AFRICA-OTHER – OPERATIONALLY SOUND
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
REPRESENTATION
36
Angola Botswana Kenya Malawi Mozambique Namibia Nigeria Rwanda Swaziland TanzaniaZimbabwe
EUROPE – STRONG GROWTH IN COMPETITIVE ENVIRONMENT
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
REPRESENTATION
Poland Portugal Spain
37
OUTLOOK AND INITIATIVES
• Continued strong subscriber growth
• Lucrative growth opportunities evident
• Competition remains strong
• Insurance telematics and individual retail markets remain underpenetrated
ASIA-PACIFIC– BUSINESS CASE PROVEN
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
REPRESENTATION
38
Hong Kong Indonesia MalaysiaNew Zealand Philippines SingaporeThailand UAE