24 Nov

CEOs Presentation to Shareholders

24 November 2021 David Clarke CEO Presentation Annual General Meeting CEO Presentation 24 November 2021 ? Who are Hills? ? Board and Executive Renewal ? Operating Environment – COVID-19 ? FY21 Financial Results ? 1H FY22 Areas of Focus ? Hills Health Solutions – Strategic Direction ? Capital Raising – Increase in Issue Capacity 3 Who are Hills? Market leader in import and distribution of security solutions ? Portfolio of global leading, complementary brands ? Video systems, surveillance, access control, intrusion protection, WiFi, firewalls ? Focus on commercial / infrastructure / government / transport ? National network Technology installation services ? Sources and manages 350+ contract technicians ? Installations in residential and commercial settings ? Telecommunications, broadcast and infrastructure focused ? Proprietary systems support high standards of SLA adherence Digital messaging, workflow and patient engagement solutions in hospital and aged care ? Advanced Nurse call and workflow management solutions ? Hospital Wifi networks ? Patient entertainment, engagement and digitally connected clinical systems ? Pre-admission and post-discharge management ? Market leadership position | Australian design and manufacture Security and IT Distribution Revenue $133.7m Revenue $12.5m Revenue $34m 4 Our Team - Board and Executive Renewal Ken Dwyer Non - executive director 20 September 2016 Peter Steel Non - executive director 31 March 2021 David Clarke Chief Executive Officer May 2021 Natalie Scott Chief Financial Officer March 2021 David Chambers Non - executive director Appointed 8 July 2020 Chairman 1 July 2021 Janet Muir Non - executive director 18 October 2021 Janine King Chief People & Culture Officer July 2021 Feargal O’Farrell General Manager, Sales & Operations - Health Solutions Appointed November 2021 Peter Parslow General Manager, Product, and Research & Development – Health Solutions Appointed July 2021 Mark Rainbird Interim Executive, Strategy & Operations - Security & IT Distribution Appointed November 2021 ? Significant revenues exposed to construction activity ? Risk usually diversified across mix of commercial, infrastructure, government, and health sectors ? Limits on all construction constrained activity in every sector simultaneously ? Labour shortages delayed project completion ? Constraints within hospital and aged care sectors included: • Lack of access to facilities • Deferral of elective surgery reducing patient volumes • Pre-occupation with COVID response deferred longer-term decision making Trading constraints ? Global semiconductor shortages restricts product availability, stretches delivery timeframes and increases price ? Transportation disruption at ports and within shipping lines delay shipments ? Significant increases freight costs ? Lack of key building supplies in Australia disrupts construction recovery Supply chain constraints 5 ? Delayed projects defers billable revenue ? Complexity in inventory management places pressure on working capital ? Uncertainty in product delivery with extreme lead times stalls buying decisions ? Soaring shipping costs puts pressure on margin ? Backlog of project orderbook increases to 2-4 times usual levels Impact Operating Environment – COVID - 19 6 ? Health underlying EBITDA ? 33% to $9.7m ? Health revenue ? 1% to $34m ? Distribution EBITDA ? 16% to $6.2m 1 ? Distribution revenue ? 11% to $146.2m 1 ? Underlying segment EBITDA ? 6% to $12m 2 ? Statutory loss $10.2m ? Working capital release ? $5.5m FY21 Financial Results 1 Movements from FY20 results excludes divested businesses 2 Underlying segment EBITDA exclude non-operating and abnormal items, and divested businesses which occurred in FY20 7 1H FY22 Areas of Focus | People and Governance People ? Strengthened executive team: • Chief Executive Officer | Chief Financial Officer | Chief People and Culture Officer • Other key operational appointments ? Performance management process aligned to business objectives with appropriate review ? People focus - Diversity | Communication | Development ? Core values - Trust | Accountability | Teamwork Governance ? Revision of treasury policies to strengthen governance and manage FX exposures ? Thorough review of financial and inventory procedures to strengthen financial governance and reporting ? Revision of delegations, authorities, and processes to improve internal controls and accountability COVID - 19 Vaccination Policy ? Vaccination is a personal choice ? Encourage vaccination | Ensure compliance with health orders ? Engage with unvaccinated employees prevented from working due to health orders Security and IT Distribution 9 1H FY22 Areas of Focus | Security & IT Distribution – Improving Performance Building on existing expertise in security and IT and strong base of vendors, customers and national networks ? Team • Interim executive appointed to lead grassroots review / organisational change in Australia ? Revenue Performance • Drive lift in sales and ‘share of wallet’ • Effective marketing for demand generation • Support with efficiency in systems, processes, structure ? Margin Performance • Strengthened through pricing, purchasing and value contribution ? Inventory Performance • Focus on availability and sell-through • Revised inventory purchasing practices to manage supply chain, optimise working capital and reduce wastage ? Supplier • Re-negotiated with key suppliers – focus on partnerships ? Cost Management • Greater scrutiny and control over all cost areas ? New Zealand • Closure of loss-making NZ Security Distribution operations 11 1H FY22 Areas of Focus | Technical Services – Organic Growth ? Executed plan to further penetrate existing markets in NBN installation ? Developing strategic pathways to utilise existing capabilities in adjacent and new markets in Australia and New Zealand - to diversify from reliance on NBN ? Merged Australian and New Zealand Technical Services businesses to incorporate Sky NZ contract ? Entered contract in Australia and New Zealand to provide installation services to Powertec ? Shutdown non-core business activities Focus on diversification Developing opportunities utilising existing capability and technology 13 1H FY22 Areas of Focus | Health Solutions – Strong Growth ? Team • Strengthened capability with establishment of GM Sales & Operations, and GM Product, Research & Development ? Strategy • Developing longer term strategy, building on foundations of the 2020 Deloitte/Paxton review • Continued focus on creating an ecosystem of partners including the clinical workflow focused GetWell network, facility messaging systems, and EMR integrations ? Product • Re-platformed Nurse call workflow software onto cloud capable architecture • Upgraded two-way voice capability onto the patient handset ? Roadmap • Established clear two-year product development plan; future proofing existing products, introducing complementary features and technologies Capture the digital health opportunity, to grow organically and inorganically, building on the installed base in acute and aged care 14 Hills Health Solutions – Existing Business Growth Opportunities ? Enhanced or new recurring streams from upgraded technology ? More integrated workflow with voice & messaging features ? Greater leverage of system architecture and IP network capability ? Broader application of AI, sensor technology and computer vision ? Simplified installation and maintenance ? Expanded security, system monitoring and redundancy ? Broadening partnerships for a digitally integrated ecosystem 15 Hills Health Solutions – Broader Growth Pathways Health Strategic Imperatives ? Focus on digital health in aged care, acute care and community care settings, including disability and mental health ? Participate in digitisation of clinical messaging, health record interoperability, and virtual care ? Leverage existing capabilities in acute and aged care installed user base and established relationships ? Strengthen leadership, technology and commercial capabilities ? Undertake targeted, related acquisitions & partnerships COVID - 19 - Driving Digital Health Innovation ? Increased demand for coordinated care with a digitally connected health ecosystem ? Lifted patient expectation of access to medical records and health-related information - anywhere, any time ? Drive need for virtual consultations and messaging technology - with need for access to and documenting of care plans ? Normalised acceptance of shared information ? Accelerated development cycle for technology 16 Hills Health Solutions – New Acquisition ? Acquisition of 70% of Extensia Pty Ltd in November 2021 ? Extensia’s RecordPoint cloud software creates and delivers a permission-based, individual-centric, Community Health Record ? Enables structured and curated medical and other data to be updated at the point of care, and shared within individual's trusted ecosystem of care, on demand and in real time ? Links primary care with other venues of care, including hospitals ? In clinical trials focused on management and coordination of care in remote, rural, and indigenous care settings, disability care, aged care and chronic disease management ? Successfully delivered co-ordinated care projects in QLD, WA, and NSW ? Improves care quality, patient outcomes and reduces health system delivery cost ? Proven platform, at embryonic stage of commercialisation ? Fund revenue growth in Health through investment in people and technology ? Accelerate Health product and market development ? Enable smaller adjacent Health acquisitions ? Support performance improvement in Security and IT Distribution 17 Capital Raising – Increase in Issue Capacity
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