Transcript Inset SAI Global logo & The better business people tag

1
Half-Year Results Presentation
Half-Year Ended 31 December 2006
ASX Code: SAI
“SAI builds a platform for future
growth”
Ross Wraight
Chief Executive
SAI Global Limited
ABN: 67 050 611 642
15 February 2007
APPLIED INFORMATION SERVICES
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Agenda
1. Results & Highlights
2. Financial Overview
3. Operational Performance
4. Midi Acquisition
5. Outlook
6. 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 46.7% to $100.8 million,
•EBITDA up 50.6% to $19.3 million
– AIFRS Reported Results
•NPAT up 38.1% to $8.1 million,
•EPS up 3.6% to 5.7 cents
– Underlying Cash Earnings
•Cash earnings up 35.5% to $12.3 million,
•Cash earnings per share up 1.2% to 8.6 cents
1. Excludes interest income
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Financial Outcomes
•
Cost to income ratio down to 82.6% from 83.2%, despite increased
investment in resources and infrastructure
•
Operating cash flow strong at $12.3 million up 60.6% from $7.7
million
•
Dividend per share of 5.2 cents up from 5.0 cents last year.
Franking reduced to 85%.
•
Total dividend payment of $7.5 million up 32.4%
•
Net assets up 97% from $97 million to $190.5 million
•
Conservatively geared balance sheet - 14.4% at 31 December,
subsequently increased to 32.3% following the acquisition of Midi
•
Cash in the bank of $33 million at 31 December, subsequently
reduced to $17 million following the acquisition of Midi
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Consolidated Trends
A$M
36
A$M
200
Revenue
EBITDA
30
150
24
18
100
12
50
6
0
0
FY01
FY02
FY03
FY04
FY05
FY06
FY01
1H07
FY02
FY03
FY04
FY05
FY06
1H07
A$M
24.0%
15.0
EBITDA Margin
NPAT
12.0
18.0%
9.0
12.0%
6.0
6.0%
3.0
0.0
0.0%
FY01
FY02
FY03
FY04
FY05
FY06
1H07
FY01
FY02
FY03
FY04
FY05
FY06
1H07
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Business Performance
•
Strong Publishing & Assurance performances and solid contributions
from Compliance and Professional Services, drove the Company’s
continued strong revenue and profit growth
•
Organic growth edging towards 8% - acquisitions enhancing overall
performance.
•
Operational focus on integration,
- establishing effective corporate infrastructure and profile –
finance, IT, HR, brand/marketing
- divisional integration – business systems, products and
organisation
•
Business model refined
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SAI Global Business Model
PUBLISHING
COMPLIANCE
Standards
Alerts
Legislation
News feeds
Databases
Monitoring
Distribution
Property
Databases
Search
Other Technical
Provide Information
Awareness and
understanding
Apply Business Solutions
ASSURANCE
Conformity
Assessment
- Product
- Food
- Systems
Audit Effectiveness
Supported by TRAINING and BUSINESS IMPROVEMENT SOLUTIONS
(Professional Services)
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2. Financial Overview
Geoff Richardson
Chief Financial Officer
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Financial Summary
6 Months
Revenue1
Expenses
EBITDA
Depreciation
Amortization
EBIT
Finance costs - net
Profit before tax
Tax expense
Profit after tax
1 Excludes interest income
1H07
1H06
Change
$M
$M
%
100.8
(81.5)
19.3
68.7
(55.9)
12.8
46.7
45.8
50.6
(1.8)
(4.2)
13.3
(1.7)
11.6
(3.5)
(1.3)
(2.3)
9.2
(1.2)
8.0
(2.1)
42.0
79.0
44.5
47.3
44.1
60.5
8.1
5.9
37.9
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Reconciliation of NPAT to Cash Earnings
1H07
$'000s
1H06
$'000s
Change
%
8,126
5,894
37.9%
794
682
4,228
2,362
350
511
5,372
3,555
Tax impact of non-cash items1
(1,221)
(390)
Cash earnings2
12,277
9,059
35.5%
8.6
8.5
1.2%
AIFRS reported NPAT
Non-cash items:
Equity based remuneration
Amortization of identifiable intangible assets
Unwind of discount on earn-out
Cash earnings per share (cents)
1. The amount by which the actual tax payments in respect of the half-year ended 31 December 2006 will exceed the income tax
expense reported. The income tax expense reported includes movements in deferred tax balances and over provisions from prior
years.
2. No adjustment is made for depreciation as this charge is deemed to be indicative of the annual capital investment made by the
group.
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Balance Sheet
31-Dec-06
$M
Post Midi*
$M
30-Jun-06
$M
Cash
Intangibles
Other assets
Total assets
33.0
248.5
61.4
342.9
17.0
314.5
61.4
392.9
49.6
244.5
58.2
352.3
Debt
Deferred revenue
Other liabilities
Total liabilities
65.0
34.3
53.1
152.4
108.0
41.3
53.1
202.4
65.5
34.2
60.0
159.7
Net assets
190.5
190.5
192.6
Net gearing
14.4%
32.3%
7.6%
Net asset backing (cents)
132.8
132.8
134.5
*Indicative only, pending completion of the purchase price allocation exercise.
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3. Operational Performance
Tony Scotton
Chief Operating Officer
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Business Publishing
6 Months
1H07
$M
1H06
$M
Change
%
Revenue
36.7
22.3
64.2
EBITDA
11.7
6.7
75.3
31.9%
29.9%
6.7
EBITDA margin (%)
A$M
20
A$M
60
EBITDA
Revenue
15
40
10
20
5
0
0
FY01
FY02
FY03
FY04
FY05
FY06
1H07
FY01
FY02
FY03
FY04
FY05
FY06
1H07
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Business Publishing
•
Continued strong revenue and profit growth
•
Acquisitions and solid organic growth in Standards Publishing and
Property Information
•
EBITDA margins higher at 31.9%
•
Operational Focus
– Migration to single web shop delivery platform commenced
– Standards Publishing, Anstat, and ILI being fully integrated
– Product cross-selling commenced
– Search commenced for Global Head of Division
•
Revenue and profit growth expected to continue in second half
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Compliance Services – as reported
6 Months
1H07
$M
1H06
$M
Change
%
Revenue
10.1
7.3
38.6
EBITDA
1.6
1.5
10.6
16.3%
20.4%
(20.0)
EBITDA margin (%)
A$M
4
A$M
20
Revenue
EBITDA
15
3
10
2
5
1
0
0
FY01
FY02
FY03
FY04
FY05
FY06
1H07
FY01
FY02
FY03
FY04
FY05
FY06
1H07
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Compliance Services - analysed
6 Months
1H07
$M
1H06
$M
10.1
1.2
11.3
7.3
0.6
7.9
38.6
88.7
43.1
EBITDA as reported
EBITDA margin in revenue deferred
EBITDA of booked business
1.6
0.7
2.3
1.5
0.3
1.8
10.6
113.8
29.2
Normalisation adjustments 1
Normalised EBITDA
0.1
2.4
(0.1)
1.7
42.9
21.6%
21.6%
_
Revenue as reported
Revenue deferred in period
Total business booked
Normalised EBITDA margin (%)
Change
%
1. Relates to sales reversed in current half which were previo usly repo rted in prio r perio d.
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Compliance Services
•
Results include Easy i and the whole Lawlex business
•
Strong revenue growth due to high organic growth rates for all
compliance solutions
•
Profit growth not reflecting sales increase because of addition of
sales resources to drive growth and increase in deferred
revenue
•
Integration a key priority especially following Midi acquisition
– Single international organisation being established
– Combining LMSs in Easy i and Midi
– Product cross selling commencing
•
Continuing development of new range of products and services
•
Stronger second half expected
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Assurance Services
6 Months
1H07
$M
1H06
$M
Change
%
Revenue
43.2
28.4
52.0
EBITDA
6.1
4.6
30.3
14.0%
16.4%
(14.6)
EBITDA margin (%)
A$M
12
A$M
80
Revenue
EBITDA
60
8
40
4
20
0
0
FY01
FY02
FY03
FY04
FY05
FY06
1H07
FY01
FY02
FY03
FY04
FY05
FY06
1H07
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Assurance Services
•
Continued revenue and profit growth, driven by acquisitions and
organic growth in core business.
•
EFSIS exceeding acquisition assumptions but at lower margins than
core business
•
Products maturing in developed markets - focus on new product
development.
•
Global Head of Assurance commenced
•
Closed key geographic gaps
– Joint Venture in Japan
– Joint Venture in China
– Certo acquisition in Italy
•
Solid second half expected
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Professional Services
6 Months
1H07
$M
1H06
$M
Change
%
Revenue
10.8
10.4
3.1
EBITDA
0.8
0.7
21.0
7.9%
6.7%
17.9
EBITDA margin (%)
A$M
3
A$M
30
EBITDA
Revenue
25
2
20
1
15
10
0
5
(1)
0
FY01
FY02
FY03
FY04
FY05
FY06
1H07
FY01
FY02
FY03
FY04
FY05
FY06
1H07
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Professional Services
•
Small increase in revenue, but expanded EBITDA and margins
achieved through restructuring initiatives.
•
Standards training continues to be an important support activity
to other businesses.
•
Continued diversification away from purely standards related
services towards business improvement products
•
e-learning products showing encouraging growth
•
Similar second half performance expected
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4. Midi Acquisition
•
Completion occurred on 19 January 2007
•
Midi is one of the leading compliance services businesses in the USA
•
Purchase price of US$45M, funded by new long-term debt of US$30M
and from existing cash reserves
•
Results will be consolidated from 19 January 2007, minimal impact on
FY07 EPS expected.
•
Midi has an established annuity revenue model with high growth rates
and a blue chip customer base.
•
Excellent strategic fit with SAI’s other compliance assets which are to
be combined under the SAI brand
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5. Outlook
•
Demand for SAI’s products and services remains robust
•
More acquisitions possible
•
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
•
Franking capability is reducing. The directors expect the next two
dividends to be 85% franked.
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5. Outlook
Revenue:
Revenue growth to exceed 30%. Impact
of any further acquisitions as per announcements
EBITDA:
EBITDA growth in excess of 40%
Amortization:
$8.7m - $9.1m (including Publishing License
Agreement), depending on exchange rate movements
Discount on earn-out:
circa $750K
Tax Rate:
30%.
Earnings per share:
Continued growth
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6. Q & A