LINKING PEOPLE WITH SERVICE EXCELLENCE. RESULTS PRESENTATION for the period ended 31 March 2018

Transcription

1 LINKING PEOPLE WITH SERVICE EXCELLENCE RESULTS PRESENTATION for the period ended 31 March 2018

2 DISCLAIMER This document, which is personal to the recipient, has been prepared by CSG Holdings Ltd (the Company ), solely for use at the financial results presentation. For the purposes of this disclaimer, the presentation shall mean and include the slides that follow, any oral presentation of the slides by the Company, any question-and- answer session that follows the presentation, hard copies and electronic copies of this document and any materials or information distributed or communicated at, or in connection with, any presentation (together the Presentation ). Certain statements made in the Presentation constitute forward-looking statements. Forward-looking statements are typically identified by the use of forward-looking terminology such as believes, expects, may, will, could, should, intends, estimates, plans, assumes or anticipates or the negative thereof or other variations thereon or comparable terminology, or by discussions of, e.g. future plans, present or future events, or strategy that involve risks and uncertainties. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company's control and all of which are based on the Company's current beliefs and expectations about future events. Such statements are based on current expectations and, by their nature, are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance, expressed or implied, by the forward-looking statement. No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the Company and its subsidiaries. The forward-looking statements contained in the Presentation speak only as of the date of the Presentation and the Company undertakes no duty to, and will not necessarily, update any of them in light of new information or future events, except to the extent required by applicable law or regulation. 2

3 AGENDA 1. Introduction and results overview 2. Financial performance 3. Operations 4. Medium-term goals 3

4 01 INTRODUCTION AND RESULTS OVERVIEW

5 VISION AND MISSION VISION The CSG Group will embrace technology and expand organically and acquisitively into a well-recognised leading brand in all chosen specialist outsource sectors. We will choose segments with high barriers to entry while offering a full range of quality services domestically and across Africa, providing excellence and value to customers and all stakeholders MISSION The CSG Group s mission is to be the leading strategic outsource partner of choice for facilities management, security and risk solutions, and staffing solutions 5

6 WHO WE ARE CSG is a multi-support services group offering a wide range of services in facilities management, security and risk solutions, and staffing solutions in Southern Africa to an array of mostly bluechip clients At the core is good corporate governance combined with an innovative and adaptive corporate culture, sound knowledge and proven experience, underpinned by solid financial backing. The Facilities Management The Security and Risk Solutions division includes managing staff division focuses on providing a restaurants and supplying meals full suite of integrated security to students, patients in hospitals, services to both residential and corporate head offices, mines commercial clients, which and construction sites, while includes safety surveillance and specialised cleaning is access control. performed in the hospitality, Our security services are healthcare and commercial grouped together under alarm industries. It also includes remote monitoring and armed response site accommodation, (village) and specialised security risk construction and operation, services. and management services, as well as conveyor systems, installations and maintenance. Since late 2015, our strategic focus to grow outside staffing solutions into service delivery that is more technology based, resulted in CSG providing a full suite of integrated security services to both residential and commercial clients as part of our integrated facilities management service. The Staffing Solutions division includes the provision of temporary outsourced personnel, permanent placements, time keeping, payroll services, human resource services, industrial relations services and outsourced services on a contracting basis. Our clients value the tailor-made solutions, close relationships, industry expertise and service excellence we offer. Our vertical market approach to recruitment and our superior market knowledge are key differentiators, which position us to assist our clients in meeting their transformation challenges in an exceptional turnaround time. We provide a sound legal, financial, administrative and personnel recruitment and management infrastructure with a proven track record. 6

7 GROUP STRUCTURE FACILITIES MANAGEMENT SECURITY AND RISK SOLUTIONS STAFFING SOLUTIONS 100% 100% 100% 100% 100% 100% 55% 100% 100% 100% 100% 65% 100% 60% of operating profit 37% of operating profit 23% of operating profit 40% of operating profit 7

8 MILESTONES 2018 May 2017 Acquisition of Revert security solution May 2017 Acquisition of Industroserve cleaning January 2018 Further bolt-on acquisition of the monitoring, armed response and guarding business of Incity September 2017 Bolt-on acquisition of alarm and monitoring business of Cortac June 2017 Acquisition of Siyaya Skills and Training Institute 8

9 ACHIEVEMENTS FOR YEAR ENDED 31 MARCH 2018 Revenue EBITDA HEPS increased by 22% to increased by increased R2,1bn 29% to R187,0m by 13% to 21,85cps More diversified 30% black ± Security platform operating platform shareholders employees established to support organic growth 9

10 DIVISIONAL RESULTS CONTRIBUTION Segment representation - operating profit contribution ( ) 60% 45% 52% 49% 48% 48% 40% 34% 37% 40% 23% 20% 18% 3% 3% 0% Mar 15 Mar 16 Mar 17 Mar 18 Facilities Management Security and Risk Solutions Staffing Solutions 10

11 02 FINANCIAL PERFORMANCE

12 FINANCIAL HIGHLIGHTS Revenue increased 22% to R2,1bn Gross profit margin increased from 21,3% to 22,2% Operating profit margin increased from 7,3% to 7,8% Operating profit increased by 30% to R166,4m EBITDA increased by 29% to R187,0m HEPS increased by 13% EPS increased by 13% to 21,83 cents per share Revenue (Rm) Earnings per share (cents) Normalised EPS increased by 12% to 21,68 cents per share

13 FINANCIAL REVIEW 31 March 2018 R March 2017 R 000 % change Revenue % Gross profit % Gross profit margin 22,2% 21,3% 5% Operating profit % EBITDA % Normalised headline earnings % Effective tax rate 24% 26% 8% Cash generated by operations % Cash conversion rate 123% 82% 49% Debt:Equity 0,59 0,60 Net debt:ebitda 0,72 0,85 13

14 OVERVIEW OF PERFORMANCE Revenue increased by 22% to R2,1bn (2017: R1,7bn) Operating profit increased by 30% to R166,4m (2017: R127,5m) EBITDA increased by 29% to R187,0m (2017: R144,8m) Normalised earnings increased by 28% to R110,7m (2017: R86,4m) Headline earnings per share increased by 13% to 21,85 cents per share (2017: 19,42 cps) Revenue, EBITDA and headline earnings growth Revenue R millions Profitability R millions Jun 11* Jun 12* Jun 13* Mar 14# Mar 15 Mar 16 Mar 17 Mar 18 EBITDA Headline earnings Revenue -50 * Previously M&S Holdings # 13 months 14

15 ORGANIC AND ACQUISITIVE GROWTH EBITDA Total growth 4Y CAGR 2014 R R R R R 000 4Y CAGR Revenue ,1% Gross profit ,1% Gross profit margin 20% 18% 20% 21% 22% 3,3% Operating profit ,5% EBITDA ,8% Organic: Total organic growth excluding SSS is 13,2% over the four year period SSS is a cyclic type of business and we believe the cycle is currently at the bottom and an increase in earnings is imminent in the near future Total EBITDA growth, including new acquisitions Total EBITDA growth including acquisitions and SSS is 18,8% Should we exclude SSS, total EBITDA growth including new acquisitions would have been 25,5% 15

16 03 OPERATIONS

17 OPERATIONS GENERAL Decentralised management model with lean HO adding value to group companies through strategic actions Focus areas Organic Growth through cross selling between group companies Increase operational margins through improved buying and minimising costs Improve cash conversion Maximise B-BBEE status Accurate monthly financial reporting Unlocking synergies of various business units Building a team working effectively together Integrated solutions model offering a one-stop service point Existing basket of services includes (i) contract catering (ii) remote site services (ii) cleaning (iv) security solutions (v) training (vi) contract workers and (vii) executive recruitment 17

18 OPERATIONS FACILITIES MANAGEMENT Contract catering has a good spread in healthcare (private & government), tertiary/education and commercial sectors Matured business with depth in management Generating solid profits with healthy cash conversion Current strategic drives in this business: Organic growth Retaining client base Improve buying Implementing UK based operational system focusing on catering Finalise ISO9001 accreditation Improve efficiencies by centralising production 18

19 OPERATIONS FACILITIES MANAGEMENT Cleaning focus on hospitality (hotels) and health sectors, but growing other sectors aggressively Current strategic drives: Organic growth Implementing operational IT systems Integrate Industroserve Diversify business model to hygiene Remote site services is managing construction camps at infrastructure development projects such as Gamsberg Expansion (Aggenys) Not capital intensive, focus on management of camps Small specialised senior management team Low fixed overhead structure Close supplier relations with Sasol, Group 5, ELB Engineering, Bonnati, Odebrecht, VGI Consulting, Aurecon, etc. Sale pipeline includes: Temane gas fields phase2 (Moz) Rovuma Basin (gas fields in Moz) Lesotho Highlands Water project phase 2 (Polihali dam) Uganda oil project 19

20 OPERATIONS SECURITY AND RISK SOLUTIONS Providing a full basket of integrated security services to both residential and commercial clients, including safety surveillance and access control Division consists of: Alarm monitoring and armed response - Focus Lowveld and Johannesburg - ± links - Building density in specific geographical areas - Unlocking synergies between acquired businesses Integrated Security Services Division - Guarding, High risk freight protection, Technology installations, Employee screenings - CCTV monitoring and surveillance - Farm protection, anti-illegal mining - Special investigations and intelligence Constantly researching and utilising the latest available technology 20

21 OPERATIONS STAFFING SOLUTIONS Staffing Solutions consists of: Permanent executive recruitment Blue-collar industrial contracting White-collar contracting (above threshold) Contract outsourcing Training and consulting Good momentum in executive recruitment capitalising on positive business outlook Blue-collar contracting has long-standing relations with key clients supplying temporary staff Momentum in white-collar contracting in line with international trends Training business is gaining from: Seta funding of learnerships SA drive to employ and upskill youth Advising on BEE codes 21

22 04 MEDIUM TERM GOALS

23 MEDIUM-TERM GOALS Unlock synergies and improve organic growth rate Introduction of technology to increase barrier of entry and enhance operational efficiencies Build a CSG multi-support services brand Continue earnings accretive acquisitions Continue bolt-on acquisitions, unlocking further synergies Balance dividend pay out with strategy 23

24 06 APPENDICES

25 GEOGRAPHICAL FOOTPRINT Lephalale Polokwane LIMPOPO Swakopmund, Namibia Palma, Mozambique Beira, Mozambique Vilancoulos, Mozambique Rustenburg Middelburg Nelspruit Mmabatho Pretoria Witbank Lichtenburg GAUTENG MPUMALANGA Potchefstroom NORTH WEST Johannesburg Secunda Steelpoort Piet Retief Postmasburg Kathu FREE STATE Aggeneys Kimberley Bloemfontein KWAZULU-NATAL Ballito Richards Bay NORTHERN CAPE Gamsberg Durban FACILITIES MANAGEMENT Vredendal Saldanha WESTERN CAPE EASTERN CAPE East London Mthatha SECURITY AND RISK SOLUTIONS Cape Town Knysna George Port Elizabeth STAFFING SOLUTIONS 25 25

26 CONTACT DETAILS FACILITIES MANAGEMENT SECURITY AND RISK SOLUTIONS STAFFING SOLUTIONS (0) (0) (0) (0) (0) (0) (0) (0) /1/ (0) (0) (0) (0) (0)