Transcript Inset SAI Global logo & The better business people tag

Full-Year Results Presentation
1
Year Ended 30 June 2007
ASX Code: SAI
“SAI has delivered another
solid performance and built a
global business infrastructure
able to support significant
expansion.”
Ross Wraight
Chief Executive
SAI Global Limited
ABN: 67 050 611 642
9 August 2007
INFORM. INSPIRE. IMPROVE
2
Disclaimer
The material contained in this document is a presentation of general information
about SAI Global Limited’s activities current as at the date of this presentation 9
August 2007. It is provided in summary and does not purport to be complete. You
should not reply upon it as advice for investment purposes as it does not take
into account your investment objectives, financial position or needs. These
factors should be considered, with or without professional advice, when deciding
if an investment is appropriate.
To the extent permitted by law, no responsibility for any loss arising in any way
(including by way of negligence) from anyone acting or refraining from acting as
a result of this material is accepted by SAI Global Limited or any of its related
bodies corporate.
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Agenda
1. Results & Highlights
2. Financial Overview
3. Operational Performance
4. Outlook
5. Q and A
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1. Results & Highlights
Ross Wraight
Chief Executive Officer
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Financial Outcomes
– Underlying Business Performance
• Revenue1 up 33.3% to $212.8 million
• EBITDA up 43.7% to $43.2 million
• EBITDA margin up from 18.8% to 20.3%
– Reported Results
• NPAT up 34.1% to $18.8 million
• EPS up 4.8% to 13.1 cents (on expanded share capital)
– Underlying Cash Earnings
• Cash earnings up 29.2% to $25.3 million,
• Cash earnings per share up marginally to 17.6 cents (on expanded
share capital)
1.
Excludes interest income
6
Financial Outcomes
•
Operating cash flow strong at $27.3 million up 25.1% from $21.8 million
•
Cost to income ratio down to 81.6% from 82.8%, despite increased
investment in resources and infrastructure
•
Dividend per share of 11.0 cents up from 10.4 cents last year. Franking
reduced to 85%, as flagged at the half-year
•
Total dividend payment of $15.8 million up 18.1%
•
Net assets down 3.4% from $192.6 million to $186.1million, due to
appreciating Australian dollar, and high payout ratio
•
Current gearing ratio 34.3%
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Business Performance
•
Solid organic growth, excellent Publishing performance and acquisitions drove the
Company’s continued strong revenue and profit growth
•
Organic growth solid at 6.3% for three core divisions – weak second half sales in
Professional Services reduced overall organic growth to 5.0%
•
Corporate infrastructure roll out across group - finance, IT, HR and branding/marketing
•
Significant integration within Compliance and Publishing divisions
•
Significant investment in sales staff, particularly in the Compliance business in the last
quarter
•
Professional Services delivered a strong profit result despite soft sales in North America
•
China joint venture commenced commercial operations and New Zealand JV established
•
Acquisition pace maintained – Certo, Midi and ROOR
•
Improvement in brand recognition and customer satisfaction
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Consolidated Trends
A$M
Revenue
A$M
EBITDA
250
50
200
40
150
30
100
20
50
10
0
0
FY01 FY02 FY03
%
FY04 FY05 FY06 FY07
EBITDA Margin
FY01
FY02
A$M
25
20
20
15
FY03
FY04
FY05
FY06
FY07
FY05
FY06
FY07
NPAT
15
10
10
5
5
0
0
FY01 FY02 FY03 FY04 FY05 FY06 FY07
FY01
FY02
FY03
FY04
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Total Shareholder Return
Total Shareholder Return
From listing to 30 June 2007 relative to S&P/ASX 300 Index
300.0%
258.0%
250.0%
200.0%
162.2%
150.0%
92.2%
100.0%
50.0%
23.0%
0.0%
25th
percentile
50th
percentile
75th
percentile
SAI Global
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2. Financial Overview
Geoff Richardson
Chief Financial Officer
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Financial Summary
12 Months
FY07
FY06
Change
$M
$M
%
212.8
(169.6)
43.2
159.7
(129.6)
30.1
33.3
30.9
43.7
Depreciation
Amortization
EBIT
(4.0)
(8.8)
30.4
(2.6)
(5.5)
22.0
53.7
60.4
38.3
Finance costs - net
Share of Associates
Profit before tax
Tax expense
Minority Interest
(4.3)
(0.2)
25.9
(7.1)
-
(3.1)
18.9
(4.8)
(0.1)
38.0
37.4
48.8
-
Profit after tax
18.8
14.0
34.1
Revenue1
Expenses
EBITDA
1 Excludes interest income
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Reconciliation of NPAT to Cash Earnings
FY07
$'000s
FY06
$'000s
Change
%
18,822
14,038
34.1%
873
805
Amortization of identifiable intangible assets
8,813
5,494
Unwind of discount on earn-out
(164)
1,227
28,344
21,564
Tax impact of non-cash items1
(3,065)
(2,005)
Cash earnings
25,279
19,559
29.2%
17.6
17.3
1.7%
NPAT
Significant non-cash items:
Equity based remuneration
Cash earnings per share (cents)
1. The amount by which the actual tax payments in respect of the year ended 30 June 2007 will exceed the income tax expense
reported. The income tax expense reported includes movements in deferred tax balances and over provisions from prior years.
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Balance Sheet
30 June
2007
$M
2006
$M
Change
%
Cash
Intangibles
Other assets
Total assets
14.9
298.4
74.5
387.8
49.6
244.5
58.2
352.3
(70.0)
22.0
28.0
10.0
Debt
Deferred revenue
Other liabilities
Total liabilities
101.6
41.6
58.5
201.7
65.5
34.2
60.0
159.7
55.2
21.7
(2.5)
26.3
Net assets
186.1
192.6
(3.4)
31.8%
7.6%
318.4
129.7
134.5
(3.6)
Net gearing 1
Net asset backing (cents)
1 Currently at 34.3%
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Impact of appreciating Australian dollar
•
Immaterial impact on FY07 result because the reduction in the value of US profits
relative to FY06 has been offset by increases in the value of profits denominated in
British pounds.
•
Estimated impact relative to FY06:
– Revenue reduced by $373K
– EBITDA reduced by $ 93K
•
Larger adverse impact expected next year, covered on “outlook” slide
•
Adverse impact on net assets due to re-translation of net assets denominated in US
dollars and British pounds at period end rates, reflecting the full appreciation of the A$
against these currencies. This impact is reflected in the movement in the foreign
currency translation reserve.
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3. Operational Performance
Tony Scotton
Chief Operating Officer
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Business Publishing
FY07
$M
FY06
$M
Change
%
Revenue
75.5
53.0
42.4
EBITDA
24.0
15.7
52.6
31.8%
29.7%
2.1%
EBITDA margin (%)
A$M
Revenue
80
70
60
50
40
30
20
10
0
A$M
EBITDA
30
25
20
15
10
5
0
FY01 FY02 FY03 FY04 FY05 FY06 FY07
FY01 FY02 FY03 FY04 FY05 FY06 FY07
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Business Publishing
•
Strong revenue and profit growth driven by:
–
–
Strong organic growth in Property Information and Standards Publishing
Full 12 months inclusion of acquisitions
•
EBITDA margins higher at 31.8%
•
Operational Focus
–
–
–
•
Integration of acquisitions into a single global Publishing Division
Appointment of a Global Head for the division
Global database and web shop development well advanced
2008 Outlook - continued solid revenue and profit growth
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Compliance Services
FY07
$M
FY06
$M
Change
%
Revenue
26.0
16.8
55.0
EBITDA
5.4
3.5
52.8
20.8%
21.1%
-0.3%
EBITDA margin (%)
A$M
Revenue
A$M
30
6
25
5
20
4
15
3
10
2
5
1
0
EBITDA
0
FY01 FY02 FY03 FY04 FY05 FY06 FY07
FY01 FY02 FY03 FY04 FY05 FY06 FY07
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Compliance Services
•
•
Strong revenue and profit growth driven by:
–
–
Continued solid organic growth at 10.1%
Inclusion of 5 1/2 months of Midi
Major focus on divisional integration
–
–
–
–
Management restructure
Delivery platform integration
Courseware integration
Establishment of regional sales and marketing business units
•
AML database acquired (ROOR)
•
Significant investment in business development resources – challenge
bringing quality people on board in timely fashion
•
2008 outlook – expect continued strong revenue and profit growth
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Assurance Services
FY07
$M
FY06
$M
Change
%
Revenue
89.4
67.7
31.9
EBITDA
13.2
10.4
27.1
14.8%
15.4%
-0.6%
EBITDA margin (%)
A$M
Revenue
100
A$M
EBITDA
14
12
10
8
6
4
2
0
80
60
40
20
0
FY01 FY02 FY03 FY04 FY05 FY06 FY07
FY01 FY02 FY03 FY04 FY05 FY06 FY07
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Assurance Services
•
Continued revenue and profit growth – result includes full 12 months of EFSIS
(6 months last year) and 9 1/2 months of Certo
•
Margins slightly lower – EFSIS and Certo at lower (but expanding) margins to
the base business.
•
Solid growth in Food, OHS and Product Certification.
•
ISO 9000 not growing in mature economies – focus on value adding product
•
Recent acquisitions (EFSIS and Certo) performing ahead of business case
•
Global Head of Assurance commenced
•
Investment in key geographic areas:
– Japan, China, India
•
2008 Outlook – solid revenue and profit growth
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Professional Services
FY07
$M
FY06
$M
Change
%
Revenue
21.8
22.5
(3.1)
EBITDA
1.7
1.3
28.5
7.8%
5.9%
1.9%
EBITDA margin (%)
A$M
Revenue
A$M
25
2
20
1.5
15
1
10
0.5
5
0
0
-0.5
FY01 FY02 FY03 FY04 FY05 FY06 FY07
-1
EBITDA
FY01 FY02 FY03 FY04 FY05 FY06 FY07
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Professional Services
•
Solid growth in Australian business but weak conditions in USA led to
small revenue decline
•
Continued focus on cost base resulted in increased profit and EBITDA
margins
•
Continues to be an important support activity to other businesses,
particularly Assurance
•
Continued diversification away from purely standards related services
towards business improvement products
•
Management integrated into Assurance Services from July 1
•
2008 Outlook – small revenue growth but increasing margins
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5. Outlook
•
Demand for SAI’s products and services remains robust
•
More acquisitions likely
•
Directors expect continued dividend growth from current levels,
having regard to future business conditions and opportunities, the
level of retained earnings and the cash flow requirements of the
company
•
The directors expect the next two dividends to be 85% franked
•
Forex Assumptions:
1 AUD = .42 GBP and .84 USD
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Revenue:
Between $240.0 million and $245.0 million, implying growth of
12.8% to 15.1%
Constant currency - between $247.0 million and $252.0
million, implying growth of 16.1% to 18.4%
EBITDA:
Between $50.0 million and $52.0 million, implying growth of
15.8% to 20.4%
Constant currency between $51.0 million and $53. million,
implying growth of 18.1% to 22.7%
Amortization:
$8.2 to $8.5 million
Depreciation:
$6.2 to $6.6 million
Tax Rate:
Acquisitions:
30 -32 %
As per announcements
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Consolidated Trends
A$M
Revenue
A$M
EBITDA
250
50
200
40
150
30
100
20
50
10
0
0
FY01 FY02 FY03
%
FY04 FY05 FY06 FY07
EBITDA Margin
FY01
FY02
A$M
25
20
20
15
FY03
FY04
FY05
FY06
FY07
FY05
FY06
FY07
NPAT
15
10
10
5
5
0
0
FY01 FY02 FY03 FY04 FY05 FY06 FY07
FY01
FY02
FY03
FY04