unique investment opportunity - spark atm systems · privately-owned, independent atm deployer with...

Company OverviewMarch 2016

Strictly Confidential

Uniquely positioned growth business

A proven business with an impressive track record of revenue and earnings growth,

sustainability and innovation

Privately-owned, independent ATM deployer with a significant presence: over 2,600

ATMs installed countrywide & deploying 40+ new ATMs each month

Relatively under developed market in South Africa and elsewhere in Africa: significant

scope for more ATMs; active in Zimbabwe and exploring other African opportunities

Focused short-medium-long term growth strategy with tangible expansion

opportunities

Operational excellence which results in unparalleled customer service, satisfaction

and retention

Industry pioneers supported by experienced management team and long-serving

employees

1

2

3

4

5

6

We live our values of passion, integrity & excellence7

Full service offering

Site selection,

acquisition &

score-carding

CRM

Dispute resolution

Vendor / SLA

management

Preventative

maintenance

First and second

line maintenance

Contact centre

365/7 11am-7pm

CIT cash

forecasting and

reconciliation

Merchant

contracts and

payments

Hardware import,

purchase and

upgrades

ATM programming

and commission

Transportation

installation &

de-installion

Signage and

branding

Custodian training

Terminal driving

and transaction

processing

ATM monitoring

and alerts

Settlement &

reconciliation

Risk, security and

and insurance

Reporting and

analysis

CIT float and

vendor

management

Communication &

gateway network

Consumables –

paper, bulbs

End-to-end

ATM network

Key relationships and growth drivers

10+ year relationship with Capitec Bank; Spark

accounts for circa ¾ of Capitec’s entire ATM network

Awarded Absa RFP in 2015; live deployments with

Absa Bank drive elevated levels of revenue growth

Strong financial performance: FY2015 transaction

fee and EBITDA growth rates of 27% and 50%

Operational with 6 of top 8 SA retailers, all 6 major

petroleum companies, 2 of top 5 banks, exclusive

deployment agreements with many others

1

2

3

4

5

Uniquely positioned as a truly end-to-end ATM

deployer in SA; only one that controls entire software

environment

6

10+ year relationship with hardware supplier

Chungho Comnet; drives continued hardware and

product innovation and customisation

10+ year relationship with core communications and

gateway providers7

Successful expansion into Zimbabwe; proven

expansion capabilities for larger markets8

210 365

720 975

1,287

1,661

2,076

2,554

2,918

3,418

4,400

5,000

614 851

1,110

1,545

2,122

2,829

3,706

4,677

5,388

6,244

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2,006 2,007 2,008 2,009 2,010 2,011 2,012

Combined Capitec & Spark ATMs Capitec ATMs Spark ATMs Capitec clients (thousands)

F

F

F

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Partnership with South Africa’s fastest growing retail bank

Customer acquisition mirrors ATM network growth; Spark accounts for 73% of Capitec ATMs

Exclusive partnership with Chungho Comnet

Korea is world no 1 ATM market by

density: 1,844 ATMs per 1m ppl

Chungho has 60% domestic market

share and is a leading exporter

Public company listed in Seoul

40 years experience

Spark has exclusive African distribution

rights

Spark is 2nd largest distributor globally

Entire software environment shared

Single component & cabling system

Exclusive partnership with Chungho Comnet

Innovative ATM design for over 40 years:

• Market-leading cash dispensers

• Recyclers

• Biometric fingerprint readers

• Desktop & small footprint ATMs

• XFS available

• Touchscreen

• Unlimited customisation options

The Spark Team

Marc Sternberg

Managing Director

Russel Berman

Sales & Marketing Director

Technology

Buks Hanekom

Contact Centre

Kim Hendricks

Engineering

Derick Laker

Finance

Shelton

Saungweme

Business

Development

Delmari Ehlers

Human

Resources

Valeska Stroebel

Marketing

Anli van

Jaarsveld

ATM

Performance

Danie Ellis

Field Services

Rashaad Khan

Facilities

Tracy Pulcella

Our people are our secret sauce:

• Weekly Manco and Exco meetings

• Off-site quarterly strategy sessions

• Management and team leader incentive structures

• Intensive use of departmental KPIs

• Future managers development programme

• Gym @ work

• Masterchef lunches

• Charity days off

• Extensive internal and external training

programmes

• 85 Employees

• Settled motivated workforce

• 32 have been with Spark for 5+

years

Ryan Tzamtzis

Operations Executive

No ATMs deployed since inception

“Spark ATM, founded in 2005,

is the fastest growing of all 11

ATM deployers in South Africa”

(RBR Report, June 2013)

Company timeline

Price and product get you into the game but customer service wins you the game

Industry recognition

ABSA Jewish Achievers Awards

2012: Entrepreneur of the Year Award

Dept of Science & Technology

TT100 Awards, 2009 & 2011:

Overall Excellence,

Management of People,

Management of Technology

Productivity SA Western Cape

Winner 2011

Sanlam

Entrepreneur

of the Year

2011

Top Performing

Entrepreneur

of 2012

Branded ATMs are strategically located

We give bank customers what they want, where they want it

Convenient access to cash

Safety and convenience

Latest bank branding and screens

Same fee structure as at bank branch ATM

Neat, well maintained ATM and signage

Near 100% up-time and availability

Spark ATMs offer extended banking hours in secure locations

Nationwide ATM footprint

Operational efficiency and nationwide coverage

Sales centre

Service depot

• iPad-enabled field automation Journey app drives paperless

field engineer and site acquisition activities

• Common ATM hardware and component platform ensures

interoperability, reduced spares holding and faster issue

resolution

• Robust, reliable, attractive, easy-to-operate hardware

• Cellular (majority) and land-based communications supported

• 93% of technical callouts are resolved in under 4 hours

• Nationwide Return-to-service SLA of 6 hours

• First-line-maintenance telephonic SLA of 20 mins

• Client dispute % < 0.01%

• Nationwide installation lead time of 7 days

Cash remains SA’s dominant payment medium

144,183161,440

175,969

194,586

212,710

0

50,000

100,000

150,000

200,000

250,000

Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

M0 Money Supply (Rbn) (SARB)

88%

54%

12%

46%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

By volume By value

Retail Payments Profile (SARB)

Cash Card/cheque/eft

0

3,000

7,000

9,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Mar 2012 Sept 2012 Mar 2013 Sep 2013

Social Grant ATM Tx Growth (millions) (PASA)

• Cash remains dominant payment medium,

accounting for 88% of tx by volume

• 47% growth in M0 cash in circulation in SA

over past 4 years

• 9m new Social Grant ATM transactions

introduced into the ATM network in 18

months to Aug 2013

Operating in a high growth market

MEA ATM market forecast

to grow by 76% between

2010 - 2016

(RBR Report, Nov 2011)22%

44% 46% 51% 65%

South Africa UK Australia USA Canada

Independent ATMs Bank ATMs

ATM density per

100,000 people

52

110

184

132

152

SparkView

SparkConnect (FEP and switch)

Spark

Remote

Spark

Manage

Spark

Web

Live replication

Spark

DisputeSparkTerminal

SparkPro –our unique ATM software platform

SparkPro - our unique ATM software platform

SparkTerminalFull control over terminal development including source code,

peripherals, screens and messaging

SparkConnectMigrated off a Postilion onto our own Front-End Processor and Switch

Maintain triple redundant active-active core systems with near 100%

uptime; Integrated end-to-end monitoring and alerting

SparkManage

• Asset Configuration

• Contact Centre Event Management

• Field Service & Sales Automation (integrated to Journey Platform)

• SMS and Email Engines

• Month End Transaction Closing and GL Posting

• Settlement and Reconciliation

• Lead Management and CRM

• Reporting

• Knowledgebase

SparkViewDashboard view of transaction feed, connectivity run rate, contact

centre event status and other KPIs

SparkWebOnline merchant and bank portal for terminal management,

dashboard, reporting, statements, dispute resolution, etc

SparkRemoteRemote terminal diagnostics, settings, downloads, software

upgrades

Spark maintains full development control over its ATM switch, monitoring and terminal

software, and has introduced a number of innovative and proprietary systems

Operating our own

systems platform allows

us to be the lowest cost

operator, facilitates agility

and allows speedy

customisation

Pro-active software

supports real-time

monitoring, accurate

analytics and fast

decision making

Linux Ubuntu OS deployed

throughout

5 FT Software Engineers

and 1 Project Manager

Spark’s head office

Spark’s new head office is a symbol of the Company’s commitment

to cutting edge technology, employee wellness and growth


Modern, relaxed, ‘Silicon Valley’ design


24-Desk 24/7/365 Nerve Centre


Warehouse, central

spares and

commissioning areas


8-man board-level repair centre


Fitness centre and cafeteria


Business development and relaxation

Over 2,700 ATM installations

Dedicated signage kit to promote each ATM

Over 2,700 signage installations

Mobile event ATMs

Drives branding and

awareness for bank

partners in informal

environments

Attend major

exhibitions and

events countrywide

Corporate social investment

Rural ATM installations offer these

communities access to convenient

cash, support the Financial Services

Charter objectives and keep

economic activity contained within

the region

We view the

upliftment and

empowerment of our

fellow South Africans

as a moral

imperative and key

corporate objective

Blue chip customer base

Broad, quality customer base

Approved national supplier to leading retailers: Pick ‘n Pay,

Spar, OK Foods, Friendly, Metcash and Masscash

Pioneers and leaders in the leisure and betting industries

‒ exclusive distribution agreements with 6 of the 7 national

LPM route operators

‒ approved supplier to the National Horse Racing Trust, Gold

Circle, Phumelela and Tote betting companies

Exclusive supplier to largest independent national pharmacy

chain, Alpha Pharm

3 of the 4 largest butchery chains are clients

Approved supplier to all leading independent liquor retailers

Strong customer relationships

92% of our customers rate us the best supplier to their business (internal Spark customer survey)

Benefit for host sites

Increased revenue due to having convenient, safe

cash on site

Increased footfall and loyalty by offering

convenient and secure cash

Savings on expensive merchant terminal fees vy

increasing cash spent on site

For those that self-fill, the opportunity to save on

expensive cash-related deposit, handling and lost

interest charges

Marketing and promotion opportunities on the ATM

screen and receipt

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5

Merchants receive SparkPro, unlimited parts and

labour servicing and Spark’s renowned customer

service levels at no additional charge

6

Offer consumers access to their cash in a safe and convenient location and allow

all the benefits to flow directly back to the host merchant and acquiring bank

• Growth driven by customised SparkPro

CRM and Leads Management System

with over 70,000 South African

merchants contacted, documented and

actively managed

• Integrated with Google Apps – calendars

ensures seamless diary management

• Customised scorecard completed by

sector / bank to ensure optimal targeted

sites are acquired

• Dedicated account managers become

single point of contact -> 94% renewal

rate

• 91% of our customers would recommend

us to their colleagues, friends and family (internal Spark customer survey)

Risk and Regulatory

Risk Assessment of material business risk areas and mitigations

Regulatory

• EMV Level 1 & 2 compliance; Visa and Mastercard network certifications

obtained; All certificates are current

• PCI v3.1 Attestation of Compliance obtained for past 3 years

• PCI EPPs utilised

• SABRIC, Bankserv, ATMIA and SARB best practices adhered

Security

Physical ATM security addressed per ATM installation wrt:

• Safe category

• Locks

• Roller shutters

• Dye stain solution

• Alarm

LegalAnti-money laundering laws (AML)

Prevention of organised crime (POCA)

Privacy Keypad privacy covers utilised

Business Continuity and

Disaster RecoveryPlans in place and regularly stress tested

Risk and Regulatory Committee meets monthly to address relevant matters including:

Contact details

Spark ATM Systems

Spark House

31 Transvaal St

Paarden Eiland

Cape Town

South Africa

www.sparkatm.co.za

Marc Sternberg Russel Berman

Managing Director Sales Director

+27 21 512 3100 +27 21 512 3100

+27 84 600 1600 +27 83 630 7083

[email protected] [email protected]

unique investment opportunity - spark atm systems · privately-owned, independent atm deployer with...

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