Security and Intelligence Services (India) Limited has informed the Exchange regarding Investor Presentation
4%
VISION 2020 -B|GGER A BETTER~
9-5123
Services (India) Limited
A Market Leader in Security
Date: January 30, 2019
National Stock Exchange of India Limited Exchange Plaza C-l, Block G, Bandra Kurla Complex, Bandra (E), Mumbai-400051
BSE Limited Phiroze Jeej eebhoy Towers Dalal Street
Mumbai-400001
NSE Symbol: SIS
Dear Sir/Madam,
BSE Code: 540673
Sub.: Investor presentation on Financial Results for Q3 & 9M FY19
Pursuant to the provisions of Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, please find enclosed the presentation on financial results
for the quarter and nine months ended December 31, 2018.
This is for your information and records.
Thanking you.
Yours Fai
For Secu
ly, and Intelligence Services (India) Limited
Devesh Desai _/ Chief Financial Officer
Address for correspondence: #106 Ramanashree Arcade 1st Floor 18 MG Road Bangalore - 560001 Registered office: Annapooma Bhawan. Patlipulra Telephone Exchange Road‘ Kurll, Patna 800 010 Bihar Websne. WWW.SISdea com Tel: +91 80 2559 0801
€le L752303R1985PL0002083
1
Q3 FY19 RESULTS January 30, 2019
SAFE HARBOUR
Q3 FY19 2 RESULTS
This presentation and the accompanying slides (the “Presentation”), which have been prepared by Security and Intelligence Services (India) Limited (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company.
This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded.
This presentation contains certain forward looking statements concerning the Company’s future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, competition (both domestic and international), economic growth in India and abroad, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, our ability to manage our international operations, government policies and actions regulations, interest and other fiscal costs generally prevailing in the economy. The Company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any forward looking statements made from time to time by or on behalf of the Company.
2
HIGHLIGHTS – Q3 FY19
Q3 FY19 RESULTS
1837 cr Revenues
98 cr EBITDA
59 cr PAT
Rs7.94 EPS
YoY 19.5% QoQ 8.7%
YoY 16.0% QoQ 25.1%
YoY 26.9% QoQ 34.9%
YoY 25.2% QoQ 19.4%
Strong revenue growth with Dec. run rate at Rs610 cr
Consolidated EBITDA margin increased from 4.6% in Q2FY19 to 5.3% in Q3FY19
RONW of 16.0% and ROCE of 18.6%
3
RESULTS BY BUSINESS LINE – Q3 FY19
Q3 FY19 4 RESULTS
+28.9%
563
+8.7%
725
38.9
42.2
+7.2%
805
+8.3%
863
39.7
36.7
Security - India
Security - Australia
Q3 FY18
Q3 FY19
Q3 FY18
Q3 FY19
Revenues
EBITDA
Q3 FY18
Q3 FY19
Q3 FY18
Q3 FY19
Revenues
EBITDA
+46.3%
172
251
Facility Management
+91.7%
8.6
1.0%
16.4
4.4%
Cash Logistics
-8.3%
79.4
72.8
1.14
Q3 FY18
Q3 FY19
Q3 FY18
Q3 FY19
Q3 FY18
Q3 FY19
Q3 FY18
Q3 FY19
-1.03
*Cash – not included in consolidated financials, follows equity accounting
4
9M SUMMARY
Q3 FY19 RESULTS
5138 cr
250 cr
142 cr
Revenues
EBITDA
21%
11.1%
PAT
12.1%
Strong revenue growth across all service verticals
EBITDA growth back on track after doubtful debt related provisioning and one-off expenses in H1
On track for a strong year of profit growth despite additional provisioning in the first half of the year
Our network
#1 Security
Facility Management Cash Logistics
5
COMPOUNDING STORY PLAYING OUT WITH PREDICTABLE GROWTH
Group Revenues
Group EBITDA
Rs. In crs
1837
Q3 FY19 RESULTS
Rs. In crs
1460
1538
1243
1592
1611
1690
67
74
84
87
74
78
98
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Q2FY19
Q3FY19
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Q2FY19
Q3FY19
Quarterly CAGR over last 7 quarters of 6.7%
Quarterly CAGR over last 7 quarters of 6.5%
6
Q3 FY19 SEGMENTAL RESULTS
SECURITY - INDIA
Revenues
Rs. In crs
EBITDA
Q3 FY19 8 RESULTS
Rs. In crs
Strong QoQ and YoY growth in revenues. QoQ organic growth of 9%.
EBITDA grew 30.3% QoQ with margins increasing from 5.1% in Q2FY19 to 5.8% in Q3FY19
Organic growth
15.6%
563
+28.9%
9%
630
+15.2%
725
+30.3%
42.2
32.4
38.9
+8.7%
Q3 FY18
Q2 FY19
Q3 FY19
Q3 FY18
Q2 FY19
Q3 FY19
Security services - Crossed monthly run rate of Rs236 cr in December (Rs225 cr in Sept.) on the back of solid new orders
131,871 Trained security
personnel
Mantech – HPCL tanker order of 15 cr on ESAAS model, double
digit margins – example of solution selling
Investments continue to be made in technology, especially M- Trainer, our mobile training initiative and home security solutions through vProtect
4,840
Customers
13,855
Operating sites
8
SECURITY - AUSTRALIA
Revenues
Rs. In crs
EBITDA
Q3 FY19 9 RESULTS
Rs. In crs
Strong QoQ and YoY growth in revenues. All growth is organic in nature. H2 is seasonally strong quarter.
EBITDA grew 28.5% QoQ with margins increasing from 3.7% in Q2FY19 to 4.6% in Q3FY19
844
863
+2.2%
805
+7.2%
39.7
+28.5%
36.7
30.9
+8.3%
Q3 FY18
Q2 FY19
Q3 FY19
Q3 FY18
Q2 FY19
Q3 FY19
MSS
‒
Significant new wins and contract retentions including Qantas, Brisbane and Perth airports Price increases recovering time difference to wage increase
‒ ‒ Margin improvement plans delivering cost savings
SXP ‒ ‒ New contracts through small bolt-on acquisition
Strong seasonal casual revenue in Patrols and Retail
7,165
Trained security personnel
9,878
SXP Customer Sites
9
FACILITY MANAGEMENT SERVICES
Revenues
Rs. In crs
EBITDA
10
Q3 FY19 RESULTS
Rs. In crs
Strong QoQ and YoY growth in revenues. QoQ organic growth of 6.7%
EBITDA grew 5.6% QoQ - Rare acquisition expenses in Q3; margins stabilizing after a period of rapid growth
Organic growth
37.5%
6.7%
251
221
+13.5%
172
+46.3%
16.4
15.6
+5.6%
+91.7%
8.6
Q3 FY18
Q2 FY19
Q3 FY19
Q3 FY18
Q2 FY19
Q3 FY19
Crossed monthly run rate of Rs91 cr in December on the back of solid new orders across business lines
DTSS seeing over 30% YoY growth on back of good clients wins, strong MW hike in Karnataka and became zero debt
SMC showing strong growth with sound contract flow and railway business – over 50% growth YoY
Integration of Rare underway with focus on healthcare FM opportunity
53,699 Skllled
housekeeping personnel
3,183
1,002
Operating Sites
Customers
10
CASH LOGISTICS
Revenues
Rs. In crs
EBITDA
11
Q3 FY19 RESULTS
Rs. In crs
Strong QoQ growth despite giving up many unviable routes/ contracts in Q1
79
73
68
+7.5%
-8.3%
Q3 FY18
Q2 FY19
Q3 FY19
EBITDA losses decreased significantly – direct costs decreased due to decline in fuel prices
Q3 FY18
Q2 FY19
Q3 FY19
1.14
-1.03
-3.72
Price revisions starting to take effect especially in the CIT and DSB business
Deadline to implement RBI directives is March 31st – likely to spur consolidation and also reduce
pilferage, deductions and operating standards
MHA directives to be implemented by February 8th – improved operating standards and
efficiencies on the anvil
Negotiations on with Banks and CATMI (association representing MSPs) for price changes
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Q3 FY19 ACQUISITIONS AND MAJOR DEVELOPMENTS
UNIQ SECURITY ACQUISITION
13
Q3 FY19 RESULTS
M&A Strategy
Deal Structure
Look at tired leaders in attractive geographic clusters
Acquired 51% equity for Rs51 crores with the ability to adjust based on
financial performance in FY19
Hurdle rate of atleast 22%
Continued engagement with the promoters through a staggered buyout and growth incentives
Balance stake to be acquired in 2020 at multiples based on EBITDA growth linked earnout mechanism; promoter becomes a partner to SIS with an incentive to grow together
Market landscape
Key Operating Metrics
Bangalore is the fastest growing security market in India
Bangalore region has attractive pricing and has the second highest minimum wages in the country
6,800
Trained security personnel
740
Sites
430
Customers
Strategic Rationale Uniq is one of the top 4 security companies in Bangalore with
over 90% revenues coming from Bangalore
Strong Geographical fit, increases SIS’ market share by ~ 75%
Well-diversified, long standing client base
Financials
Revenues (in crores)
2016
112
2017
153
2018
157
Note – for FY19, consolidation will be effective September 1st, 2018
13
HENDERSON SECURITY ACQUISITION
14
Q3 FY19 RESULTS
M&A Strategy
Look at tired leaders in global regulated and mature markets
Continued engagement with promoters through a staggered buyout and growth incentives
Deal Structure
Purchase consideration of SGD 43 million for the 60% shareholding being acquired initially – consideration in cash
Balance stake to be acquired in 2021 or 2023 at multiples based on EBITDA margin and EBITDA growth linked earnout mechanism
Market landscape
Singapore security market populated by a few large companies
Market size of ~ 800 Mn USD of which 30% is from alarm
monitoring and balance from physical guarding
Singapore is increasing its governance on the security industry through introduction of Progressive Wage Model which may lead to consolidation in the market.
Strategic Rationale
No. 3 in the market and fastest growing at 14% CAGR over the
past three years
Garners 10% revenues from electronic security – overall EBITDA
margins at upwards of 11%
Debt free entity - EPS and RoE accretive
Key Operating Metrics
1,500
Trained security personnel
200
Sites
>90%
Customers renewal
Financials
Revenues (in SGD Mn)
2016
42.1
2017
52.2
2018
58
14
Q3 FY19 FINANCIAL RESULTS
CONSOLIDATED FINANCIAL STATEMENTS
16
Q3 FY19 RESULTS
Rs. In crs
Q3 FY19 Q3 FY18
Y-o-Y
Q2 FY19
Q-o-Q
9M FY19
9M FY18
Growth
Revenue from operations
1836.8
1537.7
19.5%
1690.2
8.7%
5183.4
4241.2
21.2%
EBITDA
EBITDA %
Profit after taxes
Profit after taxes %
EPS (Rs)
Diluted EPS (Rs)
97.8
5.3%
59.1
3.2%
8.07
7.94
84.3
5.5%
46.5
3.0%
5.58
5.48
16.0%
26.9%
44.6%
44.9%
78.2
4.6%
43.8
2.6%
5.98
5.89
25.1%
34.9%
34.9%
34.8%
250.4
4.9%
142.3
2.8%
19.55
19.24
224.6
5.3%
127.0
3.0%
18.11
17.79
11.5%
12.1%
8.0%
8.2%
Revenue and margin growth across all verticals and regions led to a QoQ EBITDA growth of 25.1%%
Organic QoQ revenue growth of 5.2% and organic QoQ EBITDA growth of 22.2%
9M FY18 included IND-AS related true-up of the FV of the SXP shareholding of 10% and prior period accounting of tax benefits in DTSS
PAT growth on a normalised basis post these adjustments is over 42% in 9M FY19
16
LOOKING AHEAD
Q3 FY19 RESULTS
Growth Strong order book across BUs with run rate in line with expectations FY20 to see full impact of acquisitions – annualised impact of Rs800 cr from the 4 acquisitions
Technology Technology investments continue in both solutions and internal productivity improvements
M&A Strong pipeline built over the last 12 months has resulted in the acquisition of SLV, Uniq, Rare and Henderson over the past 6 months. Focus in FY20 to shift to integration of acquired entities, explore synergies and lead generation
Market Leadership On track to becoming No.1 in India security replacing incumbent of 25 years in FY20 FM run rate takes us close to leadership position
17
Security Services
Cash Logistics
Facility Management
CIN L75230BR1985PLC002083 Mr. Vamshidhar Guthikonda
vamshidhar@sisindia.com
Email Website www.sisindia.com
CIN U74140MH2010PTC204285 Mr. Shogun Jain
shogun.jain@sgapl.net
Email Website www.sgapl.net