Mestek Inc

Good morning, everybody. Thanks for joining us on our results presentation for the financial year end of 30 June 2025. My name is Arjen Engelbrecht. I'm the Group Chief Executive Officer of MASTEC. And with me, Shabana Abubakar-Ebrahim, the Group Financial Director of MASTEC. The way we're going to proceed today is I'll give you a bit of a group overview because I'm sure there's some new shareholders or people that might not know the group. After that, maybe just some highlights or lowlights of the results for the year ended. Then I'll hand it over to Shabana where she's going to drill down in a lot more detail as regarding to the financial performance for the last financial year. I will then take over again and maybe just to recap on some of our strategic objectives and how we see the way going forward, give you our view of the industry and the outlook for the next couple of years and things that we've seen and where we want to position ourselves. And then I think one question that might come up is, before we go into questions and answer session, just to give you some feedback on the Novus transaction where we are. and what's likely to happen in the foreseeable future. And then we'll open enough for Q&A. Our email addresses will be at the end of the presentation, so if we can't answer some of your questions immediately, or there's questions that maybe you want to just ask us confidentially or in private, please just pop us a mail in the next day or two, three. I hope we'll be able to get back to you. So, with that, I just want to go and carry on, and if we could just go, if you look at from an overview, and who we are, maybe just some feedback or some retracting on where we were. I started in 1987 as, at that stage, mainly a component distributor, importing from overseas. I mean, sanctions was obviously... applicable in those days, so quite difficult to get hold of the latest technology, and that's where Batmastic effectively started in 1987. In roughly 1990, the decision was taken to establish our own brand, which is the Mesa brand, putting all the components together so it's a complete PC in the local environment. And we were very successful at that stage from a market share perspective. Number one, selling PC and keeping in mind those days was mainly desktop that was sold for a good couple of years until the big boys arrived in late 1990s. middle to late 1990s and at that stage we had a look at this and said maybe we need to reinvent ourselves and we became a general or a mass distributor of IT products not only our own assembled maser pieces Middle 1990s, feeling that maybe we were losing an opportunity as we moved up the value chain, that there's a gap between leaving the market from the component distribution side, we established Electron and that was their main focus then, was to focus then on the component distribution. But over the years, we've evolved. Specifically the last couple of years, and I think part of the reason is there's a couple of opportunities that presented itself. And we felt that, you know, from a sustainability point of view, and looking at our mission where we say it's centered around anticipating materials, take all the needs for long-term sustainability. So we started investing in some other areas of the business with the whole idea of, say, the next three to five years that call it non-distribution. The businesses within the organization will contribute quite a handsome portion to our net profit of the tax. So if you look at it from a group point of view, and we're trying to split it so just to give you some sort of idea that it's not only distribution that we're relying on. We've diversified over the last couple of years. But if you look at it from a distribution point of view, you've got mastic and rectum. And the question is often asked, you know, why both? And I think At this stage still, if you look at it from a product point of view, there's differentiation between them. As I said, a lot more component type equipment in Recton's business than in Mastic's business. Mastic more the complete units. And there are certain other areas where Recton is actually focusing on, like gaming, recently the drones, which is doing very well for them. So that's where they're focusing on. Mastic obviously still being a master distributor of various brands, which if you want to know all the brands, you can get it from our website. Then a second leg is the training leg of the group, and there we've got a company that we've established a couple of years ago called Meister InterEd, 100% L-Biomastic, and that's ICT training, and quite exciting for us, and we're quite excited about the future of training. I think if you look at All reports and comments in the press, not only recently, but the last couple of years, is that SA specifically, not SA, but worldwide, there is quite a substantial skill shortage, specifically in the ICT space. If you look at the segmental analysis, which I think Shabana will go through in a bit more detail at a later stage, MIE are exceptional here. Specifically the last quarter, where there was quite a bit of spend by Microsoft specifically, which they benefited from. July, August, not as busy, but the forecast is still very, very positive for the year, from the next couple of months through to June 2026. Then on the manufacturing side, we've invested a couple of years ago in two companies specifically. There's a CPS, which is a smaller one of them. They manufacture server racks and cases. Not as big as we'd like them to be, but we've got a plan with management over the next two to three years to hopefully grow that substantially. Positioning is for possibly a disposal in, say, three years' time or so. And then Yawa, that's an investment we made, and the factory is sitting in Dewey Airport, or the commercials are in Dewey Airport. They manufacture fiber optic cables. If you look at the results for the year, first six months, you know, through to December, Not that busy, but since January they've been extremely busy. I mean, fortunately two years ago, you know, we cocked up a lot of criticism for doubling our capacity there and investing more money into that operation while the market was still slow. But I think we're getting the benefits of that now, you know, looking at the production that they're doing now and the bottoms they're pushing through. A lot of the big customers either have got additional rail routes that they are doing. And quite interesting, a lot of it's focused on townships and its aerial solutions. And I think we're well positioned with a great product to supply them with it. And then some of the bigger boys are also now at a stage where they need to replace the infrastructure that they put in about 10, 15 years ago. And there's some big developments. I think a lot of people would have noticed the massive group and announcements that they've made on their capital expenditures that are going to embark on the next 18 to 24 months. And although we're not the only supplier to them, we're getting a fair slice of their business and hopefully a lot more of that continues. Then on the services side, I think we're looking at the services side specifically from a margin point of view as well and trying to grow the business. Because as much as the distribution side, it seems like the margins are stabilizing a bit and the margin pressure down is not as severe as maybe two, three years ago. We need to have a look at from a group point of view to expand our margins within the business. Quite exciting investment we made is CyberAntics. Maybe just a bit of a background on what they do. It's SOC as a service, so it's a security operating system as a service. So in layman's terms, what they basically do is, obviously with agreement with the customer, they will monitor 24-7 your IT environment. Should they pick up anything untoward or potentially a cyber attack, Alert will be made. They're not doing remedial work, but within the SLA there will be certain levels of reporting that they will then obviously communicate with the IT manager or whoever's responsible for cyber security in the environment that they're looking after. Things changed quite a bit in their lives when we took over control in, I think it was October, November last year. And then suddenly the floodgates opened, the people are signing up left, right and centre. And we are extremely positive about the future of that business and where it can actually take us and obviously within the master group as well. Carlisa is, call it the man in the van for lack of a better word, the on-site desktop maintenance service and support, had the SAPS contract, lost it unfortunately a couple of years ago, won a decent contract in the Western Cape Department of Education, which is doing fairly well, bringing them to at least a break even in a slight profitable situation. where historically, well, the last three or four years, maybe four years, they were actually incurring losses. And there's some other opportunities we're working on. Hopefully we can get some good news from that side as well. And then the last one, it's a startup, but also very exciting for us. We're hoping to launch the... the business in November this year. Still a bit of ground work to do. We are supplying the funding capital or the seed capital for that organization. And what Business AI is doing is a marketplace for AI solutions. So what that means is they created the marketplace or we're busy establishing the marketplace and then customers can subscribe to the marketplace and there's a lot of suppliers are from various levels whether it's developers hyperscalers hardware suppliers anything that and everything that's got to do with ai after vetting they'll be able to present their services and support on the on the marketplace and then transact obviously through the marketplace There's a subscription model where you've got to pay X amount to be a member on a monthly basis, and then there's also a revenue sharing model. I think that's quite exciting. We've seen in the market, through feedback that we've got from the areas, From various initiatives that a lot of people are saying that we hear about this AI, but where do I start and where do I go? And I think this is a great opportunity where people can come together and say, listen, I've got a specific need and then see what comes out of the marketplace to actually address that need for you as an organization. Just some of the salient features before we, and Shabana will give you the details on maybe the whys. The revenue down 15% on last year. EBITDA down 29%. A lot of it's got to do obviously with the revenue lost GPs there. But I think where some of the positives started coming through, headline earnings per share up 7%. Not where we want it to be, but at least we're moving in the right direction. The NAV is the NAV. And then the big one that we're quite happy about is the cash generated from operations. The people that attended this presentation last year would remember that we said that The main focus for this year will be the balance sheet and the cash generation from the operations. We did indicate as well that for us to generate cash, maybe smaller will be better, and I think we started seeing some of those benefits coming through. Through to 2024, a lot of the contribution from the cash came from Recton, but I think this year the master team did exceptionally well and generated an exceptional amount of cash. Shabana will give you a bit more detail, but it could have looked even better because there was a substantial receivable received after the end, which unfortunately we couldn't recognize during this period. And then from a dividend point of view, in line with our policy as a minimum of about 20% of attributable earnings, not having all the write-offs that we had last year, it allowed us to increase the dividend quite substantially to 87%, up by 87%. to 13.75 cents a share, and if you want to know 13.75, the reason is after tax it will be 11 cents, because we found it's going to be difficult to pay out 10.7 cents a share or 10.8 cents a share. So that's how we got to that number, so it might be slightly more than the 20%, but yeah, the dividend up 87% to 13.75. census yet. So what I'll do now is obviously I'll hand over the clicker and the presentation to Shabana and then she will obviously go through a lot more detail with all of you guys. But please, as I said, if there's any more questions, make notes and send it through. We've got Dimitri in the control room. He'll relay the messages through to us and then right at the end we can hopefully take care of that. But we'd like to see if we can't answer as many of the anticipated questions in our presentation. So Shabana?

Thank you, Hein, and good morning, everyone. Thank you for joining our results presentation for the year in the 30th June 2025. I'll just touch on, this is just a five-year historical overview of the group, and for those that are joining for the first time or haven't really had exposure to the Maastricht group previously, just to explain, where we're coming from, from financial year 2021 or the year end of June 2021. So the FY21 and FY22 were years that were where Mustake was very fortunate to have benefited significantly from the COVID pandemic and the work from home phenomena. And that resulted in a fantastic performance. and also that over those years it was almost trading in perfect conditions with demand being way exceeding supply and margins were very healthy. And then also interest rates being at one of its lowest, and that contributed very positively to overall profitability. Then we moved into the financial year 2023, where on the traditional business, or if I can call it the IT distribution side of the business, where we already had started seeing declines in the volumes that we've seen over the previous two financial years, For MassTech, MassTech was able to benefit from load shedding, where load shedding was at its height in the financial year 2023. And with our sustainable energy product offerings, we were able to maximize and benefit from that phenomena or that period that the country experienced with ESCOMM. FY24, then we started seeing significant decline in revenue. Big drop in 2024 resulted from the drop in sustainable energy that we had in 2023. And then market constraints with interest rates starting to increase, disposable income coming under pressure, and just the general markets are feeling under pressure that impacted our financial year 2024. And then 2025, I think the 2025 year was unfolding in the context of there was considerable pressure and complexity in this year. And I'll go through some of the detail with regards to, you know, each of the line items on that. But just to set the scene for where we came from and where we currently are. with regards to profitability. Let us start off with our top line or revenue in the statement of comprehensive income. Yes, we see a 15% drop in revenue from the previous financial year, and there's a couple of reasons for that which I'd like to answer. So the first one, I think a part of our drop in revenue was by design. As I mentioned, the focus for us this year was to strengthen our balance sheets and cash generations. And we said that if we are smaller, it might be actually better for us to focus on more profitability or higher margins as opposed to just chasing revenue. And so with that for us, I think a selective approach to pursuing those deals that were consistent with the group's risk and profitability criteria that did have an impact overall on our revenue. But then I think also general market constraints, especially within our distribution sector, must take into account facing some headwinds with regards to market conditions, economic conditions. And then the public sector. So we experienced significant bottlenecks within public sector procurement. And I think just year on year, and specifically with regards to master corporations, we've seen a 33% decline in public sector revenue over the current financial year. Then we've also seen some ongoing slow demand for green energy products or sustainable energy products. So year-on-year, we did see in excess of 250 million yen revenue decline just on the sustainable energy. If I just look at the other segments within the group, Maastricht InterEd performed extremely well. They actually seen about an 11% growth in revenue up to about 95 million yen year-on-year. And then with Saba Antics, just 30 million in profit, 30 million in revenue, but that also we see potential growth coming through from a revenue perspective, but then obviously having a much bigger impact with the margins that they operate on. on its overall profitability. And then if I can explain, go through just margins in general. So overall, we had an overall improvement of margins from 12.2% to 13.3%. And that was more to a more favorable product range where we're focusing more on

Then I can continue the meeting? Are we back on?