abax group as 2020 - q2 report · intangible assets 1 918 - 1 918 1 906 1 870 tangible assets 134 -...

ABAX GROUP AS

2020 - Q2 Report

FROM THE DESK OF THE CEO

▪ Q2 2020 will likely be an historic quarter in the world economy. The quarter has seen a

massive shutdown across many geographies, and hit our part of the world with what looks

like a GDP reduction of between 6-10% over 2019. In light of these events, we are happy

to announce our strong financial performance, where we have executed well, managed

cost, and maintained a growth momentum in an uncertain world. June alone gave us a

12% increase in new subscriptions sold, and we have continued to see positive trends into

Q3. Our engineering team has been workin uninterrupted with the release of our next

generation Telematics IOT platform, which is on schedule for a Q3 release.

▪

▪ We have also, as previously presented, been working hard at our acquisition target list,

and through Q2 we initated a final negotiation to sign our first acquisition in 2020 in early

August. The financials of this transaction will be part of our Q3 reported results.

▪

▪ Overall, our performance, the market improvements, and the growth initatives we have are

showing positive results, and we expect a continued strong H2 performance.

2

▪ Q2 2020 will likely be an historic quarter in the world economy. The quarter

has seen a massive shutdown across many geographies, and hit our part of

the world with what looks like a GDP reduction of between 6-10% over 2019. In

light of these events, we are happy to announce our strong financial

performance, where we have executed well, managed cost, and maintained a

growth momentum in an uncertain world. June alone gave us a 22% increase

in new subscriptions sold YoY, and we have continued to see positive trends

into Q3. Our engineering team has been working uninterrupted with the

release of our next generation Telematics IOT platform, which is on schedule

for a Q3 release.

▪ We have also, as previously presented, been working hard at our acquisition

target list, and through Q2 we initated a final negotiation to sign our first

acquisition in 2020 in early August. The financials of this transaction will be

part of our Q3 reported results.

▪ Overall, our performance, the market improvements, and the growth initatives

we have are showing positive results, and we expect a continued strong H2

performance.

ABAX + WeForest launched

Some of many organisational achievements in Q2 2020

3

Successful certification of ISO Standards Won Fleet Derby 2020 in Poland with ABAX Triplog

▪ ISO 9001 – General Quality Management

▪ ISO 27001 – Information Security

▪ ISO 14001 – Environmental

▪ In the Fleet Derby 2020 fleet plebiscite, specialists

and managers from the fleet industry recognized

ABAX Triplog as the best product, fleet service in

the telematics category.

▪ ABAX Triplog received the award for the best

product, fleet service in the telematics category

▪ In this year’s poll, a total of 170,000 votes were

cast

Financial Results Q2 2020

Financial Highlights

4

▪ Net sales increased by 1% from Q1 despite the impact of Covid 19

▪ Adj. EBITDA of 71.2 MNOK. Holiday pay increased EBITDA in Q2 with 17 MNOK. Normalized EBITDA would be 54.2 MNOK, 1 MNOK above Q1

▪ Cash Flow from operations adjusted at 26.9 MNOK slightly below last quarter

▪ Gross Margin at 92%, in line with Q1

▪ Adjusted EBITDA margin of 49%. Normalized for holiday pay in Q2, EBITDA margin would be 37%, in line with last quarter

▪ New sales 22% higher in June 2020 compared to same month last year, despite the effect of COVID-19.

▪ Strong performance in the Netherlands as a result of the successful strategic agreement with Hitachi

▪ Number of subscriptions in our portfolio increased by nearly 15k (+6%) from last year

Net SalesNOK millions

145.7

Adj. EBITDA

MarginPercentage

49%

Adj. Operating

Cash FlowNOK millions

26.9

Adj. EBITDANOK millions

71.2

Gross Margin adjPercentage

92%

Income Statement

Pro-forma financials under NGAAP and SaaS revenue recognition Commentary

5

1) 2019 Prof-Forma Financial statement post finalised audit under NGAAP and SaaS revenue recognition

▪ Sales increased by 1 MNOK from 2020-Q1

towards 2020-Q2 despite COVID 19

impacting new sales

▪ Payroll cost in Q2 include seasonality

effects from holiday pay in June resulting in

lower payroll costs and hence increased

EBITDA compared to the other quarters of

the year

▪ Adj. PF EBITDA Q2 2020 vs 2019: +10%

▪ E/O items consists of legal costs treated as

exceptionals, as they do not relate to the

general operation of ABAX Group AS on a

day to day basis

▪ See page 10-11 for further details around

E/O items

▪ Organisational transition expenses of 28

MNOK reclassified to a reduction of equity in

audit 2019

▪ Tax calculations finalised in audit 2019

▪ In 2020-Q1 financial net was positive due to

large fluctuations in FX

NOKm 2019 IP Delta 2019A1 2020 – Q1 2020 – Q2

Sales 558 - 558 145 146

COGS (31) - (31) (11) (11)

Gross profit 528 - 528 134 134

Personnel cost sales (89) 2 (92) (27) (20)

Other sales fixed cost (21) - (21) (6) (4)

Personnel cost marketing (15) - (15) (2) (1)

Other marketing fixed cost (12) - (12) (3) (2)

Other administrative personnel cost (107) - (107) (25) (16)

Other administrative fixed cost (80) (2) (78) (19) (20)

Total operating expenses (323) - (323) (81) (63)

Adjusted pro-forma EBITDA 204 - 204 53 71

E/O items (19) (11) (30) (8) (7)

Depreciation (4) - (4) (1) (1)

Organisation transition expenses (28) 28 - - -

EBITA 154 17 171 45 64

Amortisation (249) - (249) (55) (59)

EBIT (96) 17 (78) (11) 5

Financial net (40) - (40) 21 (41)

Income before tax (135) 17 (118) 11 (36)

Tax - 31 31 - -

Net Income (135) (49) (86) 11 (36)

Balance Sheet


6


▪ The 2020-Q2 balance sheet is mainly

affected by the Nordic bond transactions

which increased cash from 114 MNOK to

476 MNOK and increased long term liabilities

from 649 MNOK to 1017 MNOK.

▪ Equity Ratio of 37% 2Q 2020 compared to

41% 1Q 2020.

▪ Leverage ratio of Q2-LTM: 2.4x

− Debt: NOK 1 000m (Interest bearing debt)

− Cash: NOK 476m

− 2020-Q2 LTM EBITDA: NOK 223m

▪ In conjunction of the audit process, ABAX

recategorize “accrued not invoiced” and

“invoiced not accrued” amounts. As both

items are built up during the year, both items

are then reduced and hence explains the

difference between the IP and actual

financials. The recategorization is only

conducted once a year in conjunction with

the audit process

▪ The change in “Deferred tax liabilities” is

derived to the tax calculation, finalised in the

audit 2019

NOKm 2019 IP Delta 2019A1 2020 – Q1 2020 – Q2

Intangible assets 1 918 - 1 918 1 906 1 870

Tangible assets 134 - 134 131 119

Financial assets 1 1 2 1 2

Total fixed assets 2 053 1 2 054 2 039 1 990

Inventory 9 - 9 8 9

Accounts receivables 61 (1) 60 65 56

Other receivables 90 14 104 83 88

Prepaid expenses and accrued income 217 (115) 102 75 61

Cash 47 - 47 114 476

Total current assets 423 (101) 322 345 690

Total assets 2 476 (101) 2 375 2 384 2 680

Total equity 978 9 987 987 981

Deferred tax liabilities 317 (32) 284 287 286

Long term liabilities 584 8 591 649 1 017

Total non-current liabilities 900 (24) 876 936 1 303

Advance payments - - - - -

Accounts payable 39 - 39 27 37

Tax payable (5) 6 1 (2) (4)

Other current liabilities 379 (91) 288 283 267

Deferred income and accrued expenses 184 - 184 154 96

Total current liabilities 597 (85) 597 461 397

Total equity and liabilities 2 476 (101) 2 375 2 384 2 680

Capex, NWC and operating cash flow


7


▪ CAPEX increased by 3 MNOK from Q1

towards Q2, mainly due to activity in the

tech section as they reach the releasing

point of our next generation Telematics IOT

platform

▪ The change in NWC in Q2 is affect by the

holiday accruals in June for the Nordic

countries (normalized for holiday accruals,

change in NWC would be 0)

▪ Cash conversion is also affected by the

holiday accruals, increasing EBITDA and

decreasing NWC in Q2. Normalised cash

conversion would then be 51% in Q2,

compared to 54% in Q1

▪ The change in Net Working Capital between

2019 IP and actual is derived to the

recategorization of “accrued not invoiced”

and “invoiced not accrued” amount,

described in the previous page

NOKm 2019 IP Delta 2019A1 2020 – Q1 2020 – Q2

Capex 3 - 3 1 2

Capitalised R&D 61 - 61 16 19

Capitalised device cost 42 - 42 7 6

Capex and capitalised R&D 107 - 107 24 27

As % of sales

Capex 1% 1% 1% 1% 1%

Capitalised device cost 11% 11% 11% 11% 13%

Capitalised sales commission 8% 9% 8% 5% 4%

Capex and capitalised R&D 19% 21% 19% 17% 18%

NOKm 2019 IP Delta 2019A 2020 – Q1 2020 – Q2

Delta Net Working Capital 45 (25) 20 (0) (18)

Delta Net Working Capital % of sales 8% n.a. 4% (0%) (12%)

NOKm 2019 IP Delta 2019A 2020 – Q1 2020 – Q2

Adjusted EBITDA under new rev. rec. 204 - 204 53 71

Capex (3) - (3) (1) (2)

Capitalised R&D (61) - (61) (16) (19)

Capitilised device cost (42) - (42) (7) (6)

Deferred sales commission (6) - (6) - -

Change in Net Working Capital 45 (25) 20 (0) (18)

Adjusted Operating Cash Flow 136 (25) 111 29 27

E/O items (19) (11) (30) (8) (7)

Organisation transition expenses (28) 28 - - -

Reported Operating Cash Flow 89 (8) 81 21 20

Adjusted cash conversion (as % of adjusted EBITDA) 66% 41% 54% 54% 38%

Reported cash conversion (as % of reported

EBITDA)56% 19% 47% 46% 31%

Current trading update Q2 2020

Subscription base bridge Revenue bridge

8

Adjusted EBITDA bridge Adj. Operating Cash Flow bridge

252

255

3

Q1-20 Delta Q2-20

145

146

1

Q1-20 Delta Q2-20

53

71

19

Q1-20 Delta Q2-20

71

27

(18)

(27)

Adj. EBITDAQ2-20

Delta NWC Capex Adj. Operating Cash Flow

Continued growth in the subscription base along with a strong focus on cost control and the value proposition to ensure that the

COVID-19 impact on the global economy does not significantly impede ABAX and its future prospects

Subscriptions (000s) NOKm

NOKm NOKm

1%

34%

1%

38%

Adjusted cash conversionGrowth%

9

Appendix

Complimentary information to ABAX Group AS 2019 Financial Statements (1/2)

Revenue bridge from Investor Presentation to Financial Statements Commentary

10

1) Revenues in ABAX Group AS IFRS, Group Financial Statements 2019

Recognition of up-front revenue over contract term – See adjustment no 2.1 page 64

Investor Presentation

558

539

530

19

9

Revenues per IP

Rev. Rec. Adj.

RevenuesNGAAP 2019 FS

per IP

Revenue adj.from 2019 Audit

Revenues 2019FS

NOKm

Revenues NGAAP Financial Statement per Investor Presentation – reported NGAAP

EBITDA pro-forma under new revenue recognition

Revenues per Investor Presentation – See page 64 Investor Presentation

Exceptional adjustment – Related to audit of historical contracts for which the majority is

related to previous years but with some impact on fiscal year 2019. Under IFRS, revenue

has to be adjusted but can market as exceptional

Revenues Financial Statement – See ABAX Group AS Financial Statement 2019 (Audit)1

Complimentary information to ABAX Group AS 2019 Financial Statements (2/2)

EBITDA bridge from Investor Presentation to Financial Statements Commentary

11

1) Revenues in ABAX Group AS IFRS, Group Financial Statements 2019

Adjustment related to recognition of up-front revenue over contract term – See

adjustment no 1, 3 and 6 page 67 Investor Presentation

186

130

119

119

119

145

56

9

2

26

Reported EBITDAper IP

Rev. Rec. Adj.

EBITDA FS per IP

Revenue adj.from 2019 Audit

COGS adj. from2019 Audit

EBITDA NGAAP2019 FS

NGAAP to IFRSadj.

EBITDA IFRS2019 FS

NOKm

EBITDA Financial Statements per Investor Presentation– See page 67 Investor

Presentation

Reported EBITDA per Investor Presentation – See page 67 Investor Presentation

Exceptional adjustment – See exceptional adjustment comment on the previous page

EBITDA Financial Statement IFRS – See ABAX Group AS Financial Statement 2019

(Audit)1

Additional adjustment related to closure of operations in China – See Adjustment no 4

page 65 Investor Presentation

Reported EBITDA Financial Statement NGAAP

Adjustment going from NGAAP to IFRS – Adjustment mainly related to leasing

abax group as 2020 - q2 report · intangible assets 1 918 - 1 918 1 906 1 870 tangible assets 134 -...

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