39
2018 ANNUAL RESULTS PRESENTATION April 2018
2018 ANNUAL RESULTS PRESENTATION
April 2018
AG
EN
DA
ABOUT CARTRACK
STRATEGIC REVIEW
BUSINESS UPDATE
FINANCIAL PERFORMANCE
SEGMENT PERFORMANCE
OUTLOOK AND QUESTIONS
ANNEXURES
Mobile asset management solutions
Asset recovery
Workforce optimisation
Telematics and data analyticsP
RO
VE
N T
EC
HN
OLO
GY
3
ABOUT
CARTRACK
4
AMONG THE LARGEST TELEMATICS COMPANIES GLOBALLY
5continents
24countries
751 380 subscribers
5
A ROBUST OPERATING MODEL
Economiesof scale
Vertical integration
protects margins
Strong customer retention with alifecycle of more than 64 months
Highly scalable business model and technology
platform
Large growing subscriber base
supported by proven ability to
distribute
6
A LOW-RISK FINANCIAL MODEL
Compound 5-yr revenue
growth of
21% pa
Annuity income
88% of total revenue
Cash conversion
106%
Compound 5-yr subscription
revenue growth of
26% pa
7
Compound 5-yr subscriber growth of
21% pa
A PROVEN TRACK RECORD
Source: Sharedata
RoE 58%
RoA 33%
Industry leading EBITDA margin
of 49%
Audited recovery rate of
91%
Industry leading operating profit
margin of
33%
A GROWING REGIONAL CONTRIBUTION
2012 2018
91%
9%
SA Rest of world
2012 74%
8%
9%
9%
SA Africa Europe Asia USA
2018
R448.4 m
R1324.2 m
Revenue
WHAT WE OFFER INVESTORS
9
STRATEGY
REVIEW
MULTIPLE GROWTH DRIVERS
11
A significant unaddressed
market
Global growth estimates of
between 17% and 22% pa
Regulatory compliance
requirements
Insurance telematics
Driver safety and security
Barriers to entry
New applications
for technology
Larger data sets and use
of data
Value-added products and
services
Stronger SVR demand
Smart transportation
OEM partnering
12
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
BUSINESS
UPDATE
CURRENT FOCUS AREAS
14
Building capacity in infrastructure and distribution
Customer partnerships
Product development
New revenue streams
15
ACCELERATING GROWTH IN SUBSCRIBERS
Net additional subscribers for every six months since listing
43
80
5
32
56
5
39
89
8 48
54
2
49
21
9
65
81
2
84
95
8
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
90 000
100 000
Feb 15 Aug 15 Feb16 Aug 16 Feb 17 Aug 17 Feb 18
Nu
mb
er o
f su
bsc
rib
ers
REVENUE LAGS SUBSCRIBER GROWTH – THE FULL BENEFIT FOLLOWS IN THE FINANCIAL YEAR AFTER THE INITIAL SALE
16
17
ANOTHER CARTRACK INNOVATIVE FIRST-TO-MARKET PRODUCTInitial launch in South Africa
R9.99 theft-only insurance product
launched in February 2018
aimed at the SA uninsured market
THIS INITIATIVE IS AIMED AT THE UNTAPPED UNINSURED MARKET
The Automobile Association of SA
estimates that 70% of the 12
million vehicles on SA roads are
uninsured
Limited to R150 000 –terms and conditions
apply
Cover to R300 000, R500 000 and
R1 million to be implemented soon
18
INSURANCE TELEMATICS
CONTINUOUS INNOVATIVE PRODUCT DEVELOPMENT
Insurance telematics is a
critical component in
risk management
Product development in this application
is a core strategic focus
The launch of theft-only
insurance product opens new
opportunities to generate customer
value
Cartrack remains true to ‘Putting you in
control’
Investment in skills and
infrastructure to facilitate
FINANCIAL
PERFORMANCE
ROBUST 2018 PERFORMANCE GEARED FOR GROWTH
20
Lucrative growth opportunities
across all regions
Subscriber base up 25%
EPS of 100.5cps up 17%
Total dividend of 46 cps
Subscription revenue up 19%
Operating profit up 18%
21
2018 SUBSCRIBER GROWTH ACCELERATING TO 25%
24
6 3
48
29
5 1
04
34
8 2
31 4
30
38
6 50
2 8
94
60
0 6
10
75
1 3
80
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
750 000
800 000
2012 2013 2014 2015 2016 2017 2018
Nu
mb
er o
f su
bsc
rib
ers
COMPOUND 5-YR SUBSCRIBER GROWTH OF 21% pa
22
2018 SUBSCRIPTION REVENUE GROWTH OF 19%
496
633
835
1 005
1 140
1 324
379
467
702
842
979
1 166
0
200
400
600
800
1 000
1 200
1 400
2013 2014 2015 2016 2017 2018
R m
illio
n
Revenue Subscription revenue
23
2018 EBITDA GROWTH OF 25%
174198
296
361
463
523
652
0
100
200
300
400
500
600
700
2012 2013 2014 2015 2016 2017 2018
R m
illio
n
CONSISTENT INDUSTRY LEADING MARGINS
78%81% 80%
82%
43%46% 46%
49%
35% 34%32% 33%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2015 2016 2017 2018
Gross margin % EBITDA % Operating profit %
24
EARNINGS AND DIVIDENDS
25
64
8185
100
46
55 55
46
0
20
40
60
80
100
120
2015 2016 2017 2018
Cen
ts
HEPS UP 17%
HEPS DPS
64
8086
101
64
75
85
100
0
20
40
60
80
100
120
2015 2016 2017 2018
Cen
ts
EPS UP 17% NORMALISED EPS* UP 18%
EPS NEPS
*Normalised EPS removes non-operational forex gains/losses
STRONG BALANCE SHEET
26
POSITIONED FOR GROWTH
• Minimal gearing
• Strong performing debtors book
• debtors’ days FY18: 29 days – FY17: 31 days
• Stock levels positioned for growth
• inventory days FY18: 271 days– FY17: 197 days
• Strong cash generation
• Clean, uncomplicated Balance Sheet
CONSISTENTLY HIGH CASH CONVERSION
• Annuity business with strong revenue visibility
• Strong track record of returning excess cash to the shareholders
27
0%
20%
40%
60%
80%
100%
120%
0
50
100
150
200
250
300
350
400
450
500
2012 2013 2014 2015 2016 2017 2018
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
SEGMENT
PERFORMANCE
Key metrics and growth percentages
ZAR
South Africa Africa – Other Europe Asia Pacific & ME United States
R’000 Change R’000 Change R’000 Change R’000 Change R’000 Change
Subscribers 575 052 26% 54 262 (2%) 71 783 26% 48 969 59% 1 314 -
Revenue 983 690 14% 104 664 (4%) 116 263 13% 118 256 73% 1 392 -
Subscription revenue 854 416 18% 92 618 (4%) 111 065 14% 105 689 80% 1 392 -
Operating Profit 376 156 20% 31 809 (20%) 18 994 (3%) 15 300 3205% (7 912) 84%
EBITDA 523 838 24% 34 672 (18%) 64 527 26% 35 938 257% (7 687) 81%
EBITDA margin 53% 8% 33% (15%) 56% 11% 30% 106% - -
SEGMENT PERFORMANCE SUMMARY
Subscribers 23%
Revenue 14%
Subscription
revenue18%
Operating profit 20%
EPS contribution 108.6 cps
Mature operations¹
Subscribers 84%
Revenue 85%
Subscription revenue 60%
Operating loss 74%
EPS impact of losses 8.1 cps
SEGMENTAL PERFORMANCE
30
Start-up operations²
¹ includes South Africa, Europe, Africa Other and
Singapore
²includes Asia (excluding Singapore), USA
P 31 I Strictly private and confidential
OUTLOOK& QUESTIONS
CONNECTED AND AUTONOMOUS CARS
32
DYNAMIC SOFTWARE PLATFORM
• Smart mobility is gaining momentum despite being in its infancy stage
• Cartrack has established relationships with two major global players
• Affirms the applicability of a universal platform for connected-vehicles
regardless of the vehicle brand
• This is a further strengthening of the value proposition of telematics
companies and particularly those with stable, proven and dynamic
platforms, such as Cartrack
• This will in future leverage both OEM and third-party telematics
devices to provide decision-useful information
A ROBUST OUTLOOK
Double digit revenue and subscriber growth
expected for the foreseeable future
Well-positioned for growth and strong operating results
Exciting new
applications
Demand for telematics data
continues to increase
33
• Present dividend policy - targeted cover of between 1.25 and 2.5 times HEPS
• Significant growth opportunities require a revised dividend policy - target cover of between 2 and 4 times HEPS, to be effective for FY19
Lucrative growth
opportunities across all channels
Continued and significant investment in
technology and capacity
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
Zimbabwe
ANNEXURES
CARTRACK’S TECHNOLOGY HISTORY
36
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Subscriber base
2007 Launch Fleet
Management (FM) 2004 Launch
Stolen Vehicle Recovery services
(SVR)
In process:
• Data analytics
• Field technology partner of choice
• SaaS platform for OEMs
2014 Launch
Insurance telematics
2015 Launch
Prisoner Tracking
2009 Launch FM
incorporating SVR
2010 Launch evolved SaaS platform
2013 Launch Flash
product2016/17 Launch
mesh radio frequency for data
and SVR
2018
2018Drive and
Save
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
750 000
800 000
2012 2013 2014 2015 2016 2017 2018
Nu
mb
er o
f su
bsc
rib
ers
South Africa Africa Europe Asia-Pacific
37
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
38
STRATEGIC DRIVER – data and technology
Regulatory compliance
Driver safety
39
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
