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SAI Global LimitedABN: 67 050 611 642
SAI Global LimitedASX Code: SAI Macquarie Emerging Leaders7 May 2009
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Corporate Overview
Listed on ASX in December 2003
Approximately 154 million shares on issue
Market capitalisation of (approx) $A400 million
Board consists of CEO plus five non-executive directors
Offices in 25 countries across Asia-Pacific, Europe and North America
1,400 employees, circa 40% offshore
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Our Business & Value Proposition
SAI Global provides solutions that help businesses understand and comply with their technical requirements and regulatory obligations in a cost effective manner by providing:
Easy and generally on-line access to need-to-know technical business information and associated embedded workflow solutions
Products, tools and services that reduce the burden and cost of regulatory and internal compliance
Assessment of conformance to various national, international and internal standards thereby providing confidence around processes, products and supply chain
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Our Business & Our Services
Publishing (Information Services)
Standards, regulatory and technical information, databases and workflow solutions
Compliance
Alerts and news feeds, governance, risk and compliance (GRC) products and services and online courseware
Assurance System and product related conformity assessment
services and related training services
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Key Investment Features
Both defensive and growth characteristics to the business
Defensive: Strong demand drivers High proportion of annuity or non-discretionary revenue streams Leading market position in our businesses in Australia, which
underpin performance Business model resilience to economic slowdowns
Growth: Increasing exposure to higher growth products, geographic
markets and business sectors Market share gains
Industry consolidation globally
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Demand Drivers
Regulatory environment Constantly changing Punitive remedies
Boardroom Heightened awareness of compliance and risk management
obligations
Brand Protection Brand impact of regulatory failures Need for supply chain confidence System and product conformity
Globalisation Increasing globalisation of trade flows
Greater demand for
SAI’sservices
Sustained growth rates
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Nature of Revenue Streams
Annuity style = subscription arrangement or renewable contracts exist with SAI
Non-discretionary = “must have” products and services for customers Discretionary = neither annuity nor non-discretionary revenue
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1. Based on Espreon revenue net of disbursements
58%
79%
61%
38% 59%
10%
19%
3%
2%
100%
37%
32%
2%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Group Total
Espreon
Assurance
Compliance
Publishing
Annuity Style Non-discretionary Discretionary
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Geographic and Service mixRevenue1
Publishing
Compliance
Assurance
Espreon
EBITDA
Publishing
Compliance
Assurance
Espreon
Revenue1
Asia Pac
NorthAmerica
Europe
EBITDA
Asia Pac
NorthAmerica
Europe
1. Based on Espreon revenue net of disbursements
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Consolidated Trends
*FY08 EBITDA and EBITDA margin are shown before non-recurring items
EBITDA*
7.7 9.1 12.819.3 20.5
28.28.5
10.1
17.2
23.929.7
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
FY04 FY05 FY06 FY07 FY08 FY09
A$M
1st Half 2nd Half
CAGR >30%
EPS
4.1 5.1 5.5 5.7 4.5
4.2
6.47.0 7.4 9.2
(3.1)
7.1
-4.0
0.0
4.0
8.0
12.0
16.0
20.0
FY04 FY05 FY06 FY07 FY08 FY09
Cents
1st Half 2nd Half Non-recurring
CAGR >15%
Revenue
48.5 51.3 68.7100.8 112.9
142.848.1 54.6
91.0
112.0130.5
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
FY04 FY05 FY06 FY07 FY08 FY09
A$M
1st Half 2nd Half
CAGR >25%
EBITDA Margin*
16.7%18.2% 18.8%
20.3% 20.6%
0.0%
5.0%
10.0%
15.0%
20.0%
FY04 FY05 FY06 FY07 FY08 FY09
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Publishing (Information Services)
Profitability currently underpinned by Publishing License Agreement (PLA) with Standards Australia (15+5 years from Dec 03)
Non-exclusive licenses with more than 250 international standards bodies
Current revenues in Standards distribution estimated to be around 5% of addressable market (USD 830M)
Main competitor is IHS (listed on NYSE), but also competes with SDOs in local markets
Transitioning from being a publisher (distributor) of third party IP to an information services provider with a focus on work flow solutions
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Publishing (Information Services)
Annuity style = subscription arrangement or renewable contracts exist with SAI
Non-discretionary = “must have” products and services for customers Discretionary = neither annuity nor non-discretionary revenue
Nature of revenue:
6%
67%
27%
100%
Mix
38%
70%
50%
59%
99%
30%
45%
1%
3%
5%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Total based on productmix
Property Information(ex Espreon)
Legislation (Victoria)
Technical (Standards,databases)
Annuity Style Non-discretionary Discretionary
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Publishing (Information Services) Annual organic revenue growth trend currently 4% - 6%, but expected
to increase over time
EBITDA margins in excess of 40%
Revenue
14.4 15.322.3
36.742.3 45.015.0 15.0
30.7
38.8
43.3
0.0
15.0
30.0
45.0
60.0
75.0
90.0
FY04 FY05 FY06 FY07 FY08 FY09
A$M
1st Half 2nd Half
CAGR >25%
EBITDA
4.26.8
9.1
15.117.5 18.8
6.86.7
12.7
16.4
19.6
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
FY04 FY05 FY06 FY07 FY08 FY09
A$M
1st Half 2nd Half
CAGR >28%
1. Excludes Espreon
1 1
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Publishing (Information Services)
Strategy:
Continue transformation into embedded, value-adding information services supplier in targeted verticals
Focus on “operational excellence” to optimise distribution
Fully develop core tailored product offerings
Expand presence in Asia Pacific through resellers and partnerships
Continue to gain market share through enhanced associations, permissions and products
Collaborate with Compliance division on publishing opportunities presented by deep reach into selected compliance segments
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Compliance Services
Growing annuity revenue base
Double digit market growth driven by changing regulatory environment
Blue chip customer base
No dominant global player - many small niche players in GRC solutions
Major competitors in the provision of on-line regulatory courseware are LRN, Integrity Interactive and Corpedia
World wide addressable market estimated at USD4.1Bn of which content is USD2.2Bn, GRC USD1.1Bn, training and awareness USD200M, consulting USD600M and hotline services USD50M
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Compliance Services
Annuity style = subscription arrangement or renewable contracts exist with SAI
Non-discretionary = “must have” products and services for customers Discretionary = neither annuity nor non-discretionary revenue
Nature of revenue: Mix
65%
15%
14%
6%
100%61%
100%
100%
49%
37%
75%
50%
25%
2%
1%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Total based on productmix
Consulting
GRC (Governance, Risk& Compliance)
Content
Courseware
Annuity Style Non-discretionary Discretionary
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Compliance Services
Medium term annual organic revenue growth of 10% - 15% expected
EBITDA margins in excess of 25% achievable
Revenue
19.7
7.3 10.1
19.416.6
9.5
1.4
15.9
0
10
20
30
40
FY04 FY05 FY06 FY07 FY08 FY09
A$M
1st Half 2nd Half
CAGR >30%
EBITDA
1.2
3.3
1.31.3
4.1
1.83.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
FY04 FY05 FY06 FY07 FY08 FY09
A$M
1st Half 2nd Half
CAGR >40%
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Compliance Services Strategy:
Secure and enhance market leadership position in regulatory on-line learning Integrate LMS and GRC technologies enabling a customer-managed, end-to-end compliance solution Focus GRC and content on targeted verticals where SAI can ascend to market leading positions Build a “thought leadership” and “consulting community” Make technology a core competency Optimise and fully leverage the organisation’s resources
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Assurance Services
Market leading positions in Australia, North America and food sector – growing global capability
Competitive advantage from “Five Ticks” StandardsMark
Supplier and customer driven industry consolidation occurring
Strong underlying demand drivers emanating from the desire of business to provide products and services that have integrity, are safe and comply with national, international and internal standards and specifications
Global TIC market estimated at USD 80bn, of which the certification portion is approximately USD 6bn
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Assurance Services
Annuity style = subscription arrangement or renewable contracts exist with SAI
Non-discretionary = “must have” products and services for customers Discretionary = neither annuity nor non-discretionary revenue
Nature of revenue:Mix
81%
100%
8%
11%
79%
80%
90%
20%
19%
100%
10%
2%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Total based on productmix
Training
Product Certification
Systems Certification
Annuity Style Non-discretionary Discretionary
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Assurance Services
Sustainable annual organic revenue growth of 5% - 7%
EBITDA margins in “high teens” achievable
Revenue
55.479.3
68.7
33.5 35.2 38.854.0
57.2
32.7 37.751.5
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
FY04 FY05 FY06 FY07 FY08 FY09
A$M
1st Half 2nd Half
CAGR >15%
EBITDA
6.2
6.9
11.2
5.2 4.7 5.9 7.2
10.1
5.3
7.3
3.2
0.0
5.0
10.0
15.0
20.0
25.0
FY04 FY05 FY06 FY07 FY08 FY09
1st Half 2nd Half
CAGR >20%
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Assurance Services
Strategy: Continue to build geographic capability
Presence in “top” 25 countries (now 19) Use a mix of acquisition, JV and organic start ups Specifically target/ focus on Europe
Enable enhanced global account capability Seamless account management model and structure World class end-to-end business processes A single, global, scaleable IT system
Drive high growth product development Enhance our Product Lifecycle management capability Develop a cohesive Supply Chain offering Exploit emerging opportunities in food and the environment
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Espreon
Espreon is a national provider of property information and conveyancing & lending workflow solutions
Customers include major Australian banks (lenders) and top 200 law firms (conveyancers)
Espreon is both the largest provider of property information required to execute a property transaction and the largest property settlement agent in the Australian market
Revenue is driven by transaction volumes, not transaction values
Employs circa 230 staff with offices in all States and major centres
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Lending Workflow Platform
ConveyanceWorkflowPlatform
Information Services
Settlement, Stamping& Registration Services
Espreon Business Model
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Espreon
Annuity style = subscription arrangement or renewable contracts exist with SAI
Non-discretionary = “must have” products and services for customers Discretionary = neither annuity nor non-discretionary revenue
Nature of revenue: Revenue Mix
85%
100%
15%
100%
100%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Total based on product mix
Lending
Conveyancing
Annuity Style Non-discretionary Discretionary
Gross Net
58%
42%
100%
Net revenue = Gross revenue less disbursements
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Espreon
Rationale for the acquisition:
It is consistent with SAI’s core strategy to build information services businesses that provide need-to-know information and workflow solutions
The combination of Espreon’s and SAI’s property businesses will result in an Australian property services business with a strong market position
Espreon’s and SAI’s businesses have complementary strategies with no substantial overlap
It is financially compelling - integration of the businesses will generate cost savings and the acquisition will deliver EPS accretion throughout the market cycle
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Espreon
SAI Ownership at 62.5%, Vectis at 36.2%
Consideration:
Cash (new debt) $ 8.8M
8.5M SAI shares, VWAP $2.20 $18.8M
Incidentals $ 1.2M
$28.8M
FY10 EPS accretion of circa 5% expected
Intention is to delist Espreon – as per SAI’s Bidder’s Statement
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As at 31 Dec 08
Pro-Forma with
Espreon$M $M
Total assets 477.5 548.8
Debt 176.2 195.4Other liabilities 113.7 122.2Total liabilities 289.9 317.6
Net assets 187.6 231.2
Net gearing 47.2% 43.2%
Interest cover 6.2x 7.3x
Net asset backing (cents) 129.6 150.1
Balance Sheet
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Borrowings – Maturity Analysis
Debt Maturity By Quarter
AUD 23.0
AUD9.0
GBP 11.1
GBP 4.5
USD8.0
USD34.0
USD38.8
AUD 10.2
0.00
20.00
40.00
60.00
80.00
Dec08
Mar09
Jun09
Sep09
Dec09
Mar10
Jun10
Sep10
Dec10
Mar11
Jun11
Sep11
Dec11
Mar12
Jun12
Sep12
Dec12
Mar13
Jun13
AUD GBP USD Espreon
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Outlook – FY09
Whilst the impact of the current economic climate is evident in some of our businesses overall demand for our products and services remains firm
The outcome for the year will be a record result for the SAI Group
The profit guidance range remains unchanged with the impact of the recent strength of the Australian dollar mitigating to some extent the expected positive contribution from the Espreon acquisition