Earnings Call: H1 2021

Oct 21, 2020

Slides

Good morning, everyone. Welcome to the Altron Interim Results Presentation for FY 2021. A special welcome to our Chairman, Mike Leaming, to the members of the Board, my leadership team, and the Altron colleagues that have joined this call. We started this financial year on a very strong footing. When we looked at where we were as a company, we were 3 in our 3 year plan. We were ahead of that plan. We were comfortable going in. We're excited about the future. Then we were hit by COVID-nineteen and of course the negative economic climate within South Africa. And that slowed down our growth rate in this current period that we are going to be reporting on. We also saw a number of our operations having a sharp decline in terms of sales during this period. So my leadership team and my managers, we had to take some swift action. We took some actions around expenses and costs. We also took some actions on preserving cash. But further down the lockdown when the President of South Africa announced the extension of the lockdown, we had to regroup and then look at what further actions that we needed to take as a team. I must say this was one of the most difficult periods for us within the company because at that point in time, we came to the conclusion that we have to take some action around rightsizing some of the businesses that were experiencing a sharp decline in sales. That was difficult. But I must thank my managers and the leaders in the way they handled this very sensitive topic and situation that we found ourselves in. Very, very key to them, what I saw them doing was to put the dignity of our employees at the center of what they were doing. What I would like to also mention is that during this time, we made sure right across all of our organization, we made sure that we don't drop the ball when it came to our customers. And we were there when they needed us. And boy, many, many of them needed us during this time. In fact, we were there when it matters. And that's who we are as Altron, being there when our customers looking for support from us. Given all of the challenges that I've shared with you, I must say we still have some highlights, which I would like to share with you. Going in, we thought that we're going to be possibly flat when it comes to the revenue growth. And I must say that we are happy to see that we grew our revenue 7% to $9,100,000,000 At EBITDA, we grew 1.1 percent to $836,000,000 but the biggest driver of all of this growth was our operation in the U. K. The team there continued to do an exceptional performance. They grew the business 51% EBITDA to 4.59%. As you will see that the rest of our operations, many of them being based here in South Africa, grew 28% in terms of the decline. This shows the extent of COVID-nineteen within the territories, both here in South Africa and the rest of South Africa. Our headline earnings per share were down 8.2%. Working capital for the period was very much flat compared to where we were at this time last year. And I'm happy to see that our debt to EBITDA ratio in terms of the multiple were still below the 1 times multiple at 0.9. Our Board made a decision to declare an interim dividend of $0.33 per share is the equivalent of a growth of 14%. At the middle of the pandemic, the leadership team within the company took a decision. Having looked at the behavior of a number of our operations, we took a decision that some of these operations were not quite fitting to where we wanted to take this company in the medium to long term. And those operations that we have identified are Altron Document Solutions, Altron People Solutions, and Altron Arrow. We made the tough call there that these operations, although many of them are number 1 or number 2 in their chosen market spaces, but they didn't quite fit to where we're taking this company in the medium to long term. So collectively, during this pandemic during this period, they delivered a loss of $48,000,000 So we took the call, the decision as management supported, of course, by our Board that we will hold these operations for sale. So going forward, these operations are going to be classified as discontinued operations. So what we are left when we have removed these operations is what we refer to internally within Ultron as Ultron 2.0. This is the base from which we are going to be building the new Ultron, Altron 2.0. Looking at how those operations have performed over the period, they declined minus 6%. So overall, our continued operations meaning Altron 2.0 and BYTES U. K, the continued operations grew 17%. We also had a highlight linked to 2 judgments that were made in the South Africa territory. And these court judgments, both of them have got major positive implications for the industry. In one case, it was the case to an Ultron and the city of Swane, in another case, to Ultron and the Department of Trade and Industry. And the judgment in those cases have done 2 things. 1, in the case of the trade and industry, they have leveled the playing fields within the ICT space because no one now should have an advantage around BEE. We need to have laws that applying equally right across the industry. That is a good thing to have in the industry. The other important implication of the City of Tsuane Judgment is that that project, which is a very important project of digitizing or enabling the city when it comes to connectivity. It was funded by banks and the good thing is now because it has been demonstrated that contracts stick in our country, we can be assured that banks will continue to fund such projects, and we do need this kind of projects. We have seen during the COVID-nineteen situation in South Africa, how the big divide between those who have connectivity and those who do not have can impact education, it can impact healthcare. Now going a little bit deeper in how each of the 5 operations that were negatively impacted by COVID-nineteen and what were the drivers behind those that impact. We saw in Ultron Document Solutions that the volumes were down 42%. The printing volumes were down 42%. That was at the back of the bulk printouts for schools and also for universities that were not operating during the lockdown. This is where we made a decision as a leadership team that we have to implement Section 189 and it affected 134 of our colleagues in that operation. In Altron People Solutions, here is a business that does two things, business process outsourcing and training. And both of those segments or sub segments of the market were affected by the lockdown. We could not do any training really during the lockdown because of social distancing. The same way our business process outsourcing had to comply with the 33% occupancy demand, which was the regulation that we had to comply with. Because of those two things, it forced us to also take some action because the revenue in that operation reduced sharply, and it impacted 320 of our colleagues. The last operation where we took some action was in systems integration business. This business in the top line, you may see that it has not really been affected, but if you go down you start to see that the margins have contracted within this business because largely of the revenue mix. We took action in this business and 87 of our colleagues had to leave the company. 2 other very interesting businesses, the transaction based businesses, it became clear we learned something during this period. We learned that not all annuities are the same. There are some annuity businesses that are transaction based. So if the volumes come down, although it is annuity, that business gets affected. And this is what happened both in the fintech and in the HealthTech space. But what we are seeing right now is seeing them going back to the original volumes. We are sitting currently at about 85% of the volumes that we used to have before. We always come back to you on the commitments that we have made in the previous presentation. We made 4 commitments. We said we're going to look at the BYES U. K. And execute that demeasure, make sure that we continue to drive the profitability in Nexus and Karabiner and integrate Ubusa. I'm going to talk about Bites U. K. A little bit later. So right now, just looking at Nexus, Nexus were able to deliver very much in line with what we committed. The profits were improving, the same with Karabiner. And we integrated our new acquisition and it met our EBITDA expectation of it, which shows how well that integration was done by the team. We have 4 focus areas where we've got KPIs that we are using to monitor how well are we doing in executing our strategy. It's revenue growth, it's improving profitability, its employee excellence and transforming customer experience. In this period, in this interim results, we'll just focus only on 2 of those focus areas. On the revenue growth, we saw that the revenue growth grew 14% year on year. If we look at gross income gross invoiced income, Gross invoiced income grew 43%. But what is very important in when you look at that figure is the fact that the driver of that growth is largely organic growth, very much in line with the strategy that we have as a company to be growing mainly through organic growth. Also, what I would like to point out is that the income they had increased 45% during the period, which means that our productivity of our people went up. We also saw that we have improved our operating cost margins. We improved those during the period by 320 percentage points. My last slide. In this last slide, really the purpose of this slide is to rebase our Ultron 2.0 base. When you see that we're currently talking about Ultron 2.0 being 424, but in that, there are some ones offs. And we believe that one needs to add those ones off to come up with a base that truly reflects where we are as Altron 2.0. And those costs are the restructuring costs that we had, the salary rollbacks and also the FX losses that we had. If you consider all of those, you'll see that our new base should be $476,000,000 So at this point, I would like to ask and hand over to our Chief Operating Officer, Andrew Holden, to take us in detail around the performance of each and every one of our operations. Andrew. Take better care of patients with MediMass. Quickly access digital patient records. Better diagnoses with up to date patient information. Efficiently manage patient accounts. Altran, there when it matters. Hi, good morning, and thanks very much to Mtero. I'd just like to take a moment and to reflect on what's happened in the global economy and the South African economy. We are very aware that the COVID-nineteen pandemic has infected over 40,000,000 people worldwide with over 1,000,000 deaths and particularly where we look at our 2 geographies where we operate 2 major geographies where we operate, South Africa and the U. K, we have to acknowledge that 1,500,000 people in these two geographies have been infected by COVID 19 and unfortunately, over 60,000 deaths in the 2 geographies. Now I'm first to acknowledge that in our sector, we've been relatively fortunate here, and we have done some hard work into putting these results in, and they didn't just happen, But I just want to take a moment to, I say, acknowledge the rest of the economy that has not been as fortunate as us, and our hearts and prayers go out to the families affected by the COVID-nineteen and the economic affected individuals within South Africa. So with that, I'd like to take us through the operating environments, and I'm going to start off with the BYTES U. K. Now on this slide, I've showed, 2 numbers, particularly those numbers in South African rand and again in the British pound. And the reason for that is that we have suffered a deterioration of the rand value against the pound. Last year at this stage, we were operating at around about ZAR18.40 per pound, the average for H1. And the average for H1 this year, we've operated at ZAR21.92, and that seems to have no, not seems to, it has differently affected our revenue numbers and our EBITDA numbers. So you see a substantial growth of 62% in rand terms to a little bit over ZAR11 1,000,000,000 of gross invoice revenue, and that equates to around 34% in pound terms. Then if you look at the EBITDA, it has grown by 51% in rand terms to ZAR459 million and 25% in pound terms. This organization, particularly, weathered the storm well. We were able to move people off-site very, very quickly, and as we all know, this is centered on software management and security management. And as the company or the country moved into lockdown in the UK, it needed more and more of these services. We've integrated BYT Security Partnerships into BYT's software services, and then I just need to call out Phoenix that have delivered above expectations, and Phoenix was an acquisition we made somewhat 3 years ago. When we look at the next environment, our IoT environment, particularly Netstar, we see all three indicators that are being revenue, EBITDA and EBIT being flat on last year. Now this is a combination of a decline in new car sales year on year in South Africa particularly, and this amounts to somewhat 35% delta from last year to this year. It's also our normal churn included in that and, again, our upliftment from the Toyota contract. Now the Toyota contract, everyone would recall, we launched in September last year. And in these numbers, and particularly the top number there, the 860,000 subscriber base, we have 92,000 Toyotas in that base. So this looks at the 16.6% up mostly Toyota. If I stripped out Toyota, we have to be honest with ourselves and say we're flat or slightly declining year on year into the base. I want to call out Australia in this environment. Australia or our foreign environments, including our exports into Malaysia and other Southeast countries like Indonesia, and Australia now makes up 13.9% of our revenue. That is slightly behind our competition, so most of our competition runs in the high 20s to 30% of their revenue being offshore, and this is something that we need to work on. We have launched a couple of new platforms, e commerce platforms, mostly online purchasing and online scheduling of the installed base. So and one of the other things we've done effectively in this business is move the entire platform into the cloud and Azure, and the team at NetSol performed very well around March April, where we have managed to move the entire complement of staff off-site and operate solely from the cloud. Moving on to digital transformation. And digital transformation here makes up 4 of our operations with Altron Systems Integration, Altron Carabiner, Altron Nexus and Altron Security. Now as a whole, the revenue of this sector remained flat, but I need to call out 2 things is Outrun Carabiner had a net year on year growth of around about 25%, yes, off a smaller base, but it's returning to profitability and starting to meet the expectations, at least at a revenue side, of where we acquired the business. And for the first time, we see Outron Security, the Ubusa acquisition that we made in March this year being included in this space. So a couple of items that I want to just call out here, maybe 3, is included in the systems integration number, the profit number, and you can see year on year down, but this includes ZAR3 1,000,000 with the once off costs. And I'm Cheto mentioned the 87 colleagues that have left us within the SI, this is the cost associated with that. And then due to the tightening credit environment, we've added ZAR19 1,000,000 to our doubtful debt in this environment. And then I want to then the last call out I want to make is the OUTTRON Nexus environment. Now Teta has alluded to the court case, the Supreme Court of Appeals case that we won. And I just want to take us back to nearly 2 years ago where the Gauteng High Court set aside the contract that we had via our special purpose vehicle to Bella Telecoms into the city of Tuanze. It's taken us 2 years, nearly 2 years to get to a point that the Supreme Court of Appeal has ruled, and it reinstated the contract. So just to remind everybody, this is a ZAR multibillion contract over an 18 year period, and we've probably done 2 years of the build environment. So we're looking forward to restarting that project and delivering it into the future. Onto managed services. Now managed services, you'll see the revenue is up sharply 27%, and this is on the back of several new wins towards the end of last year, particularly end of last calendar year and in the banking environment. So one of the banks, a nice new win for us on the NCR ATM space, and we started that rollout, interrupted a little bit by the COVID environment, but we picked it up in the last 2 months, and we nearly finished that initial rollout that we started in February. And the second one was a large enterprise user support base, and that has continued very, very well. And as one of those clients, Sumtero referred to, is there when it matters for that client. We can see that the EBITDA has not reflected the upswing in the revenue numbers, and that is due mostly to our supply chain. So at the beginning of COVID, we took a decision to import a whole lot of spares to see us through the COVID period, and that unfortunately related to a once off Forex loss. And also, as we've then utilized those spares at a higher rand to dollar exchange rate, it has affected our operating margin somewhat. You'll see a big delta in the EBITDA to EBIT, and the EBITDA has been affected by a simple thing that we do partner delivery services. We buy basically diagnostic tools from NCR, and we buy them in advance. And typically, we buy them in advance of in 3 year chunks. And every quarter, we have a top up payment. What we decided to do in these terms to preserve cash, we've accelerated that depreciation on the so I. E, we've moved we've used our credits, let's say, quicker than we would have done, so I. E, the depreciation has accelerated. But on the converse, we haven't had the operating cost. So that explains the delta for Managed Solutions, and we see this environment returning to quite a big upswing in the second half of the year now that all these one source are out of the way. Healthtech and FinTech. Here, mostly affected by the transaction volumes. Now the two areas of Healthtech and Fintech, different reasons for the transaction volumes being down. Let's deal with Healthtech first. During the hard lockdowns of Level 5 and 4, we see the some of the doctors and the dentists not operating, particularly the elective surgeries, physiotherapists and so on, and that resulted in a small decline on our revenue base, but a small decline on the revenue base hits the bottom line quite hard. And conversely, the same is true if we up the revenue, it hits the bottom line quite well. On the fintech environment, particularly the unsecured lending space, all the shop fronts were not deemed as essential services during the hard lockdown, which resulted in a lower collectible book and therefore, lower transactions for this environment. We have seen, as Metteto has told us, that at the start of H2 this year, we've seen an upswing back to around about 85% of the pre COVID volumes on the transaction base. So we see H2 being a lot stronger in this environment than H1. And lastly, I just want to finish off with the discontinued operations. And largely, as Mpteus said, Document Solutions, People Solutions and Arrow, these environments have had 3 major effects on their COVID space. Let's talk about the nonessential services. So nonessential services closed down or severely closed the subcontract manufacturing environment. It also moved items like the bulk printers, particularly magazines and so on. They were closed down in the environment. And then you look at the work from home environment, and particularly, we look at all of us as workers, we look at the education sector, and that environment has probably, in the height of lockdown, 50% of all of us were working from home. And the third aspect is social distancing. So that affects both Document Solutions and People Solutions where we only allowed 33% of our staff to deliver services to our customers, but also our customers are only allowed 33% of their staff in their buildings, so I. E, the printing volumes down. This environment has, Mpetto alluded to, 600 people. These three organizations, the effect on these three alone has nearly been 500 people. We've taken the costs out of the business, and we are looking forward to the second half of the year returning to profitability of these three environments, and our aim is to breakeven for the full year. So with that, I would like to hand over to our CFO, Cedric Miller. Thank you very much. Keep your fleet on the road with Netstar Fleet Management Solutions, real time location based tracking, 20 fourseven camera surveillance, maximize productivity, minimize costs. Altron, there when it matters. Good morning, everyone. Minto and Andrew have covered the performance of the discontinued operations in a fair amount of detail, so I would like to take this opportunity to take us through the performance of our continuing operations. Now the uplift of 14% in revenue has certainly been strong, assisted by translation benefits that contributed to 10% of this 14%. Reference has already been made to the strong performance of BYTE U. K, and that operation certainly lifted overall revenue performance for Altron as a group. Now sticking a little bit to BYTE's U. K. Performance, if we look at the operational performance in local currency, we have seen that performance revenue uplift of about 4%. And then combined with a 19% translation benefit, that revenue is up 23%. However, if we isolate the revenue from our Bytes U. K. Operation, we have seen that the rest of Altron has shown significant resilience in the face of COVID, with revenue up 2.2%. And then if we combine the recent acquisition that we have made in terms of Abuja, the operational performance excluding the U. K. Is also at 4%, similarly to the statutory revenue performance of BYTES UK. However, we have said in the past that the statutory revenue performance or revenue number of the UK does not adequately reflect the transactions with customers. And the reason for this is that we only reflect in terms of IFRS 15 margin on our cloud based sales as revenue and not the full extent of invoices issued. So if we look at total invoicing, then revenue has been up a very strong 43%. Looking at EBITDA growth of 17%, it is certainly softer than the 43% of gross invoiced income and that points to margin compression. And I will cover that a little bit in more detail in a subsequent slide. Depreciation and interest has increased by less than the 17% EBITDA and that clearly enhanced our headline earnings that grew by a very strong 30%. And that has led to earnings per share headline earnings per share of $0.83 and applying the dividend cover of 2.5x led to an interim dividend declaration of $0.33 up 14% year on year. Moving to our segments performance in terms of revenue, I have alluded to the strong translation benefit that we had on revenue, but all of our segments have contributed to revenue growth, except for Healthtech and FinTech, where we did speak about the impact on transactional volumes. It should be noted that in terms of our other digital transformation opcos that does include for the first time the CHF 52,000,000 revenue relating to our Ebusha acquisition. Ebusha is also subject to the implications of IFRS 15 and its 52,000,000 statutory revenue actually translate into gross invoice income of well over €100,000,000 Andrew has spoken about the performance of managed services on the back of recent contracts 1 and Netstar performance should be seen in terms of the NAMSA figures showing domestic vehicle sales down by 35% year on year. Reflecting on the contribution of EBITDA growth, similarly to what we have seen in revenue, of the 17% uplift to CHF 883,000,000 10% of that relates to translation benefits. Here, I would like just to point out in terms of our Healthtech and FinTech, we can see that the impact on EBITDA is very similar to the impact on revenue and that is because we enjoy high gross margins on that business. So any impact in a reduction in revenue basically falls straight to the bottom line and the inverse also apply as we boost transaction volume, as we add revenue that also impacts the bottom line. We have mentioned that in other year, we have suffered some FX losses, typically in amount of about ZAR35 1,000,000 and this is as a result of the rates moving quite sharply since the 5th March when the first COVID case was reported in South Africa on open FEC contracts as well as the translation impact on intercompany loans that are foreign currency denominated. I've alluded to the impact that certain of the accounting standards, notably 15 IFRS 15 has on our margin. And at a statutory level, our margin seem to have increased from 10.3% to 10.6%. However, that doesn't reflect the real operational performance. And if we normalize for the impact of IFRS fifteen, we will see that our margins, in fact, reduced from about 7.4% down to 6.1%. So that is a 130 bps reduction. And of that 130 bps reduction, 110 bps actually relates to our BYTES U. K. Business. So of that 110 bps reduction, 50 bps relates to operational margin compression, but a whole 80 bps reflects the dilutionary impact that our BYTES U. K. Business has on the margin for the group. And the reason for that is that the strong growth that Bytes U. K. Experience outpaces the EBITDA growth of the rest of the business, albeit at lower margins. Moving to working capital. Here, I would like to reflect on the impact that our BYTE U. K. Operation has its seasonality. What is the impact of that on Altran's overall working capital? If we look at year on year, working capital has basically stayed flat at €1,500,000,000 to €1,500,000,000 dollars But in H2 last year, we will see a significant reduction of ZAR520 1,000,000 relating to BYT's U. K. Working capital and then we see this year a similar impact of an increase of about ZAR450 1,000,000. This is not dissimilar from what we have seen in the past and it's worth reflecting what caused this. Typically in the January, February months, there are strong sales with Public Sector in the U. K. Typically these products involve Microsoft. We have good and favorable payment terms with Microsoft. Public sector also pays quite quickly in the U. K. So approaching our February year end period, we see lower debtors, high cash balances. But fast forward to the European summer and typically what we see in the July, August period is that sales are typically non Microsoft related where we have slightly more onerous payment terms with those suppliers, and these sales are with corporates and they pay on average slower than public sector. So therefore we see at the end of August our interim period we see elevated debtors and lower cash balances. But just to put this in context, we have seen that gross invoice income for Bytes UK has increased 62% and yet debtors has only increased 56%. So this does not point to a debtors problem, but more to the seasonality of that business. Our discontinued operations also increased working capital by €72,000,000 but that relates largely to our document solutions business. The lower volumes caused that we don't have the trade creditor relating to Xerox to the extent that we normally have and the trade creditors typically offsets or lowers our working capital demands. Moving over to our cash flow, cash generated by operations been almost CHF 900,000,000 split almost fifty-fifty between BYTES UK and the rest of Altron. I've alluded to the working capital consumption of CHF540,000,000 of which most of that relates to our BYTES U. K. Operation. If we reflect on investing activities, the key numbers in there would be the acquisition of Abuja around €220,000,000 We also have CapEx in there of CHF 114,000,000 of which half relates to the campus. Financing activities include payments on our amortizing loans CHF 133,000,000 We have also acquired shares from minorities in Nexus as well as Nexstar and that costed us CHF 34,000,000 and the rest relates to lease payments. On my concluding slide, we are very proud about our balance sheet strength. Last year this time, we printed a debt to EBITDA ratio of 1.1. And this year, COVID notwithstanding, we have printed a 0.9x ratio. This is below the one time ratio that we aspire to and for us a great outcome. We have ZAR2 1,000,000,000 worth of debt at the reporting period, but post the reporting period in September, we have received ZAR660 1,000,000 worth of cash from our U. K. Operation and that was utilized to reduce debt level. We expect further cash flows to flow from the BYTES U. K. Unbundling and that will also be applied to reduce debt levels further. We also have upside that we can look forward to and the first one being the debt relating to the city of Tswanik case that both Nteto and Andrew referred to, it's amount of ZAR300 1,000,000. Also our operations that's being held for sale, any proceeds from those disposals will also be used to reduce our debt levels. And then lastly, we have got some outstanding proceeds relating to our Powhatec disposal and some of those cash flows are imminent. Now this all poses very well for debt levels in Ultron 2.0 that we will take forward. And with that, I'll hand you back to our Chief Executive, Nteto Agnati, for some closing remarks. Get peace of mind with MedStar. Advanced vehicle tracking and recovery. Real time travelling updates to loved ones. Wireless panic button and impact protection. Altron, Thank you, Cedric. As I had mentioned in my opening remark, I said that I want I will be going to a little bit more detail around our BiTE demeasure, where are we around that. So I've got 4 points here I would like to address. The first one is from a process standpoint, where are we? We are very much in line with where we thought we would be. We're progressing very well on the major process. We also engaged some targeted investors, And this was done by the leadership team of the BICE U. K. Led by Neil and his CFO, Keith. They engaged some targeted investors. And the feedback that we got out of those engagements was very positive feedback. And that gave us really confidence about us having made the decision to do this demeasure and the prospects of what we can get out of that. So, very good feedback coming from the targeted investors. The second point I want to address is on the separation of the businesses. These businesses have always been loosely tied from a systems, from also management, there's not been too much overlap between the two businesses. So, the separation is not going to be a difficult one. However, we need to make sure that we have a board that is an independent board and that has been set up already. We also have got members of those of that board that have been identified and appointed, and we have an independent Chairman that has been appointed, which is really a good thing. I used to chair that Board and I've handed over to the new Chairman of Bytes UK. When it comes to the capital structure of Altron, we also had to rebalance that capital structure, and we are in that process as we speak. Cedric has indicated some of the proceeds that the cash that we have been bringing back into South Africa to reduce Altron 2.0 debt. We're expecting additional amounts to be coming once we have done the demerger. So all of that, making sure that we have an Altron 2.0 that is very much healthy from a balance sheet and also has a debt to EBITDA that is in line with the 1 or less than 1. The other important reason why we need to do this is we have to release BYTES UK from the common terms agreement, And those discussions are currently underway and Cedric and the team are busy engaging and we feel that we are very much in line to concluding those with the banks. What about the transaction structure? And this has been finalized and we have put it all together and have issued and given the structure to the relevant institutions to make sure that they look at it and they give us their approvals. SUB is one of those institutions, JSE and TRP. So we are currently waiting for those approvals. From a timing perspective, we have said we've always said that we will come out in the Q4, which is now after the results announcement, we'll come out with a very clear plan on the timing of the U. K. Bytes U. K. Listing. So you should be expecting that detailed communication to be coming from Ultron very soon. Now looking at the evolution of the 1 ultron, we have had the 1 ultron strategy for 3.5 years now. It has served us well, but we needed to evolve it as we're doing the demeasure of the U. K. And also thinking about the disposal of the 3 operations that I've already highlighted. But to do that, as we do that, as we think about the future, there are important things that we need to do. And one of them already Andrew has indicated, we must make sure that the 3 businesses that are held for sale, we want to make sure as we exit this year, we're exiting it in a breakeven position. We always say that the businesses, they may be held for sale until they are sold. They remain our responsibility. They remain ours. And we'll treat them and the people in those businesses the way we've always done things within Altron. That's exactly what you're going to do. We're expecting exceptional performance from those businesses and the leaders of those businesses. The disposal of the three assets is important. All of these businesses are either number 1 or number 2 in their spaces. Xerox, the Xerox business here in South Africa has got a market share of 19%. The number 1 in that space has got a market share of 22%. So that we've got an asset that is a very strong asset there. Ultron Arrow has got a market share of 28%. The number 2 in that space has got a market share that is less than half of Ultron Arrow. That's the kind of asset that we have that we are putting for sale. Is not because these businesses are not strong in their market spaces. The key is that they do not quite fit in terms of where we are taking this company. We have taken some key decisions over the last period. We took a number of our colleagues out of Altran. That was painful. But we did that in order to make sure that we protect this company. So one to one to make sure is that as we go forward, we protect those cost savings created by the restructuring that we did. Over and above this though, we are going to be making a restructuring at head office. And this is very important that we have a head office that is fit for purpose, a head office that is also in line with what is required in this new structure that we now have. So we'll be communicating this restructuring later on. So thinking about now the Altron 2.0, what are the growth areas within this business? We have identified 4 areas here. Security is going to be the key area that we are going to be doubling down on. We made we did an acquisition around Ubushah, but Ubusha does not cover everything. We need to make sure that we've got the full capability to address the challenges that our customers are facing in the cybersecurity space. So, we will build some of those capability, some of the capabilities we will acquire them, but security is key in this digital transformation era that we are living in. The Microsoft partnership, Yes, through Altron Karabiner, we're participating in that opportunity. It's a great opportunity. But that's just a small piece of the opportunity that is presented by Microsoft because Karabiner is operating in the Cloud, in the D365 space. There are 2 other Clouds that are relevant in the Microsoft ecosystem. It's D365, it's M365, and it's Azure. We want to make sure that we operate in all of those clouds and are key partners to our customers in those clouds when it comes to Microsoft. 3rd area of growth for us is custom application development. This is something that we do well even today. But more and more of the customers as they are moving to the cloud, there's going to be less differentiation as they embrace ERP and CRMs. There's not going to be too much differentiation. The only thing that's going to help them to differentiate themselves is to building applications that are unique. That's where we come in, custom application development. And we will also be scaling our 3 platforms. Those are the areas of focus, the areas of growth for our company as we move forward. The new segments, we have got 3 new segments that we are going to be reporting on. It's going to be digital transformation, our own platforms, and managed services. My last slide. When you to conclude, our H2 outlook, some of the key things that we want to do in H2, the $80,000,000 of cost savings that we have created, we need to bank those. We need to collect. Yes, it's going to be difficult, but we have given ourselves a goal to go after and collect this €309,000,000 The payment that is due coming up around Powertech transformers and also we identified 2 assets within Bicy Systems Integration that also do not quite talk to where they want to take that business. We want to sell those assets. We want to conclude that transaction. In Altron 2.0, one thing that I've seen in the many, many years that I have been in management and running companies is that leadership matters. So we have identified all of these growth areas, but it is absolutely critical that we need to have the right people that will drive and lead those areas as we go forward. So, big focus area for us. Reduction of the debt, something that we're going to do, then the communication of the strategy internally and externally, very, very important. Everybody knows about the 1 OUTTRON strategy. We need everybody knowing and being very clear about the OUTTRON 2.0 strategy. So what are some of our key goals in the new plan? Our key goals are we want to triple the operating income in 5 years. We want to continue to provide leading returns in the ICT space. When it comes to differentiation, we want to be best in class when it comes to customer service and customer experience. And last but not least, we want to maintain our net debt to EBITDA below 1. So that's the business that we are going to be building over the next period. So with that, I'd like us to go to questions and answers. Thank you so much. Keep connected with Altron's broadband infrastructure. Get linked networks, data centers, and storage solutions. Enable economic opportunities. Access public services. Good morning. I'm Zipporah Maubani. I'm going to take us through the Q and A. We've got the first question from Myles Faury and it's actually a comment. He's saying that I note that the minimum market cap of BYTES is £450,000,000 this is equivalent to a 15 times trailing PE, whilst peers, SUFCAD and Computer Center, are on 31x and 25x trailing PE. I hope that the actual listing market cap doesn't come in below a 20 times trading PE or £600,000,000 Is this realistic? I will ask my CFO to come in here. Thank you for the I'm not sure if it's a question or a statement. In I think in the end, clearly, the market will determine what the market cap is on the day. At the time of listing, we have put out a detailed cautionary today explaining whatever we can say about the transaction. And for now, I will leave it there. Thank you. Okay. We're going to ask Muteo to just unpack Altron 2.0 for now. So Altron 2.0, it's we are excited about it. We are as excited as we were on Altron on 1 Altron. We have a perfect opportunity here to build something quite unique in South Africa and something that is quite special. We as a leadership team together with the rest of our colleagues came up with this Ultron 2.0 strategy where we say we want to create a highly differentiated technology company. What are some of the characteristics of this highly differentiated technology company? It's going to be capital light. It's going to be, yes, international. We continue to be an international company. We will build our own IP largely, yes. Of course, we will partner with OEMs, but those partnerships have to be strategic partnerships, and it will be a company that has got at least 60% annuity revenue. Those are some of the characteristics of the business that we are building in the 2.0 plan. It is when you look at those characteristics and then you go back to what we have, then you start to understand some of the decisions that we have made, decisions around Ultron Document Solutions, Ultron Arrow and, of course, Ultron People Solutions. You can see where they did not quite meet some of our requirements. And that is the company that we're going to be taking forward, and that's the company that we're going to be building, and it's a company that is going to be based really on 2 things. Its differentiator will be 2 things. It will be relevant, exceptional offerings, yes, but coupling the offerings that we have with exceptional customer experience. Combining the two things is a thing that is going to set us apart. Of course, we'll be set apart by the offerings themselves, But if you bring also the element of customer service, which if you were to look over the last three and a half years, each and every time we report our results, we are seeing a progress in our net promoter score is how happy our customers are with regards to service because we have been intentional about it. It's one thing to say I want to have a great customer service, but you need to be intentional and take practical steps making sure that you put together systems that are going to address that. And that is the company that we are building. Sipora? Thank you, Mthetto. The next question is from Singa. What efforts are management doing to improve the liquidity profile of Altran on the JSE? In my opinion, clearly, if the results are translating into a share price that is appropriately valued, that will encourage trading in the share. That will improve liquidity. We are also working extensively with the investor community, really signaling exactly where this company is going, building the excitement around it, what we as management feels about, where Ultron 2.0 is going. We focusing on, as Metteto said, the right leadership, making sure that it's a capital light organization, making sure that debt is at a fairly low and manageable level. Once we succeed in building that profile and continuing with the investor engagement, certainly, that will encourage trading in the share and will broaden the investor base in Altran 2.0. Thank you, Cedric. The next question is from Andrew Bryson. Given that post BYTES U. K. Unbundling, you will be essentially a South African business. Do you see sufficient growth in the South African market to sustain Altron 2.0? Well, this I'm going to ask the other Andrew to answer this. Hi, Andrew. Thanks for that, Umteto. So yes, we do, in short, because what we've looked at is this highly differentiated business that Umteto has spoken about. And if you look at the segments that we are reporting into, 3 segments, 8 operations in South Africa. And if we have a look at why we want to do this and why we want to have 8 is the focus and the intent that Tejas spoke to. So if you look at security, globally, it's growing high teens, low 20 percent growth, and that's our security driver. If you have a look at the custom app development or our integration space, again, high teens in South Africa growth, this has a dual effect of creating skills in South Africa and also delivering a much needed environment. And then not last or it's similar growth patterns in the health tech space. We are only active in the private sector. We've had some growth into the public sector, but we see a lot more growth in that. FinTech carries on growing. And then lastly, but not least, is our Microsoft relationship is way under par to what we would want to see it. And Cheetah spoke about the 3 clouds, the M365 cloud, the Azure cloud and the Dynamics cloud. We're very good in the Dynamics environment, and there's so much space in the other two clouds to grow. So we certainly think that there's enough space in South Africa to grow, but also remember that we're not going to the demerger of the U. K. Doesn't mean that we have given up our international aspirations. And so we do have the Australia issues. We have a little company in France, and we have significant African exposure into 6 different markets. We have a bit of exposure into Malaysia and Indonesia, and our intent is to take the centers of excellence that we have in South Africa and take them out into Europe. So we will be an international company going forward. Thank you, Andrew. The question is from Mans Forrie. Why is Nestor materially lagging Kartrak? And what are your plans to narrow this gap? Yes, this is really a good question. Thank you, Mayans, for that question. And I'll try to be honest about it. It's very straightforward. They are beating us. If you look at the market, there are 3 areas, the market segments. There is a consumer market segment, there is an SME and there is corporate segment. Kartrak is very strong, great offering and growing very fast in the SME space. We came up with offerings that are easy to understand, easy to communicate to the customers, and they have been driving that, and it has paid off. It continues to pay off, and we have not done the same. We can choose to try and do the same and follow, and yes, we'll have to try and match them, but we have decided to do something different. We have decided to go and establish our own competitive advantage in the consumer space. Over the last year, it's actually 18 months now, we've been building our capabilities in that space where we are saying that the key focus for us is going to be not the car but the driver and all of the services that the driver is interested in, things like license renewals you know, because if we then address all of the drivers' needs and the pain points, which means that we will stay with that driver wherever that driver goes, and that's the capability that we are building and it's the capability that we'll be taking to market soon. But because of the complexity of what we are trying to do and some of the partnerships that we have to be signing with 3rd parties, we are not yet ready to be making this announcement. But that's the area where we believe we can beat or yeah, we can beat Cartrack. So that's the area of competition for us. That's how we are going to be narrowing this gap. But the other dimension, which I have not highlighted, is the fact that they are a much more global company than we are or much more international company. We have to release Netstar and allow Netstar to go and establish themselves. They've established themselves in Australia and look at the contribution that is being made by Australia now, just over 12% of the revenue coming from Australia. It's a small business, but it's contributing so much. We need to have more and more of that from the leadership of Netstar. So the combination of what we do in the consumer space and the geographic expansion, these are the two things that we're executing on as we speak. Thank you, Mtecho. The next question is from Zintle Mayekiso. Zintle is asking according to management, what will be the fastest growing business segments within Altron 2.0. Thank you. Simply, yes, as I alluded to from the question from Andrew Bryson is that we are focused on these sort of 6 growth areas. But let me just call out 3 for now, and it's a combination of where we are in that environment. So let me call out security. Security is roundabout 5% of our revenue currently in South Africa, and we're talking very much the identity access management in the cyber tech environment, not the sort of the traditional access layer security like biometrics or firewalls and that. That's a separate comment. We think this is growing at high single digits and towards the 20%. So that will be a growth area, but we offer relatively small base. If I look at Microsoft and if we look towards the Bytes U. K. And we've seen the numbers in the Bytes U. K. And we look at the pound terms of growing at 25%, South Africa and Africa should be no different into the growth environment. We do know how big the market is. And so I think this one is potentially the biggest impact, maybe not the biggest growth percentage, but the biggest impact that we can have within Alton 2.0 and the third one to call out, as I said, the custom app development environment. And I think this one for me is and for all of us is actually a social connection as well. We know that South Africa has got an unemployment rate. We need to bring this work back into South Africa. We need to train and deliver skills that we can, as an industry, and deliver those back to our customers. So I think those three areas I'd like to call out to the future. Thank you. And the next one from Taylor Ginsberg. In the health sector, do you have any significant partners or clients such as Nedco? Andrew? Hi. Thanks, Peter. Yes, we do. So in the Healthtech space, we have a couple of operations inside that, and it's the switching operation. So the switching operation will switch between the doctors and the health care hospitals and so on, the pharmacies into the medical aid providers. But we do have a couple of clients within the bigger groups, and these are mostly drivers to become paperless. So, it is a focus, but what we need to focus on in this environment is particularly the public health care. And the second focus for us is also to take what we have internationally. And I just want to I just want Cedric to And I just want Cedric to once again to just stress a few points around the VAT. That's perfect. Thank you so much, Nteto. Regarding the BYTES U. K. Transaction, there were some EBITDA multiples mentioned relating to a credible competitor in the U. K, namely Softcat. We also spoke about the value unlock exercise that this demerger is all about. Those numbers that's mentioned there is clearly why we are excited about this whole transaction. And clearly, as I mentioned, that the market will determine the market cap and the multiples on the day, but the Board has decided that GBP 450,000,000 that would be the absolute minimum that we would accept for this transaction. In other words, should the market determine a price for our Bytes U. K. Business below £450,000,000 then the demerger won't happen. But clearly, we would expect and would anticipate a higher amount than the £450,000,000. So I'd just like to stress that the SEK450 1,000,000 is the cutoff. That is the minimum. Below that, the merger will not happen because then the value uplift and the value unlock that we want to create for shareholders, that would be not that assertion would not be satisfied. So expectation for us is above the €450,000,000 So just to stress and to clarify that the €450,000,000 would be the minimum that would be accepted, below which the demerger would in fact not happen. I trust that will clarify. Thank you. A question from Paul van Eyden, is there any plans to take any other OpCos to Australia? Paul, certainly, today, we own what we have is Netstar in Australia. And our model, we made some strategic choices as a new team, as a team. We made some choices. One of those choices is that we want to run a country based model, meaning in each and every country where we are at, we bring all of the capabilities that Ultron have in that to that country. Today, we only have 1, which is the Netstar. We can bring security there. Our offerings are very, very competitive. Some of the things that this team is doing here, they are doing for customers abroad. So we should be able to take some of these capabilities to the U. K. And to Australia. So to answer your question, yes, we will be, but all of this, we don't want to rush and do crazy things. We want to make sure that we are ready. We want to make sure that the base in South Africa is strong enough to allow us to do some of the things that you are asking about. But certainly, our model is a country based model. In each country that we're in, we want to make sure that all of the offerings of Altron that are relevant, that can be bought in that country, we make sure that they are available in that country. Thank you. We have a question from Samantha Steyn, who is posing it on behalf of Adrian Saville, it's from Tertum. What do you consider the biggest headwinds to growth in South Africa? Yes. Look, I looked as we're putting together this strategy here, we looked at some of the drivers and look where our sector is. We actually are one of those sectors that's going to be benefiting out of COVID-nineteen and many others are going through different challenges. So we are lucky in that sense. You know, we have that because many of the companies that our customers will have to embark on some kind of a digital transformation, and that digital transformation requires the offerings that we have as a company. So we will be able to execute on that. But what will stop us from being able to capture that opportunity is very something very simple, the skills, the lack of skills in this country. When you look at some of the very complex projects that we have to undertake for the banks and for some of the companies in the health space, you cannot just take someone from university and that person is able to execute on that. That person needs to have had huge experience. So that to me is probably the thing that is going to limit that may limit that growth. But what we have done as a company is to continue to build and build this is bringing young people in, making sure that we train them and attach them to the key projects so that they can learn as quickly as possible. And we have to just keep doing something like that all the time. Otherwise, the skills problem will be the thing that limits our growth in our country. Okay. Thank you. The next question from Ernest Kaplan. I believe Nexus has lost some management and key skills, the MD and the CTO. How will you deliver going forward on the big broadband project? Do you have the right skills in the country? I can see Mpetto smiling, so this is going to be handed to me. So thanks very much, Mpetto. No. So yes, yes. And Ernest, you did right. At the end of last year, we had an exit of skills that you're speaking about, the MD CTOthe Operations Director and also the FD environment. So what we did in December of last year, we brought in industry stalwarts, including Mark Harris, and Mark Harris has had a long history of delivering IT services in South Africa. We brought in, Emera Thomas from 1 of the telcos to take over the CTO role. And we must be bear in mind that we are currently delivering on 2 other major contracts, the Gauteng broadband to SITA as the customer, and we're still delivering on the Limpopo broadband contract. So yes, the addition now of the Twente contract will stretch our environments and it will take some time not to build the senior management, but to build the 2nd line management because those are the skills that I'm most worried about. And these are really skills that are available in the market. We need to get the conversation going with the City of Twente through Tebello Telecoms, and we will rebuild it. It won't take us that long, but we do have the skills to know how to deliver those contracts. It's just a rebuild. So thanks. Thank you. The next question from Eric Harindimana in Rwanda. Is there any plan to bring your solutions to Rwanda? So to answer that question, is there any plan to bring our solutions to Rwanda? I've indicated that our approach to all of this is a country based approach. When we've analyzed and found that a particular country is a country where we want to be, then we want to build ourselves within that particular country. Australia is one of those countries. We have already today are providing a great solution to Rwanda today. And Rwanda happens to be one of the countries that we have chosen. It's not each and every country we're going to be going to on the continent, but Rwanda is one of those countries, and Rwanda is one of the countries where we are delivering a very complex problem project around motorbikes and monitoring those motorbikes and building and helping provide great taxi services through motorbikes and through telematics. And the next logical offerings that we should be taking into that market, It is actually next year. So that's the thing. We need to be looking at what's the next logical thing, not just going in there. Next logical, then we take that and build that. But Rwanda certainly is one of those countries, and we will certainly be building around the projects that we are currently delivering on. Okay. Thank you. A question from Miles Fori. What are the drivers to tripling EBITDA in Altron 2.0 in the next 5 years? So thanks, Myles. We have alluded to some of the growth segments that we are working in, so but I want to split this down towards something that we haven't lost from the One Altron strategy is that of collaboration. So as we walk down the path of the differentiated offerings, we spoke about the 8 opcos that we have, And the idea here is to continue to drive the collaboration, continue to drive the value add and hopefully higher value adds to our customers. So customer centricity key to what we're doing and then these high growth segments key to what we're doing and then international expansion into the chosen geographies. So those chosen geographies, we've spoken about Rwanda, we've spoken about Australia, Cheetah has mentioned the U. K, Mainland Europe. And these are areas that we need to focus on, and we truly believe that coupling with cost management because that is the driver, working capital light, so I. E, this also not on the EBITDA line but interest charges. If we manage our working capital correctly, we will have the cash to expand acquisitively, but we're not looking at big acquisitions. We're looking at bolt on. We're looking at very, very specific in line with differentiation, capital light and the skills that we spoke about. So that will drive the tripling of the EBITDA. And bear in mind, I just want to because I know this is going to end up being It's not tripling of EBITDA. Yes. So that's what I'm saying. Bear in mind that I just want to talk about this tripling of EBITDA. If you recall, one of Tetho's slides is setting the new base. And we need to set that new base of, I think it was ZAR476 million operating profit. So that is what we're promising to triple, not EBITDA, because that is complex with the IFRS 15 environment, but tripling the operating income within 3 years off the new set base for Alton 2.0. So please don't take our current EBITDA of SEK 1,800,000,000 and expect us to triple that. So step 2, 4, maybe the next 5 years. Thanks. Thank you. Thank you, Matero, Cedric and Andrew. We have no further questions and thanks to you for tuning in into the Altron interim financial results. Thank you very much. Goodbye.