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SAI Global Limited ABN: 67 050 611 642

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SAI Global Limited ASX Code: SAI Macquarie Emerging Leaders 7 May 2009. SAI Global Limited ABN: 67 050 611 642. Corporate Overview. Listed on ASX in December 2003 Approximately 154 million shares on issue M arket capitalisation of (approx) $A400 million - PowerPoint PPT Presentation
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1 SAI Global Limited ABN: 67 050 611 642 SAI Global Limited ASX Code: SAI Macquarie Emerging Leaders 7 May 2009
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Page 1: SAI Global Limited ABN:  67 050 611 642

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SAI Global LimitedABN: 67 050 611 642

SAI Global LimitedASX Code: SAI Macquarie Emerging Leaders7 May 2009

Page 2: SAI Global Limited ABN:  67 050 611 642

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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

Page 3: SAI Global Limited ABN:  67 050 611 642

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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

Page 4: SAI Global Limited ABN:  67 050 611 642

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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

Page 5: SAI Global Limited ABN:  67 050 611 642

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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

Page 6: SAI Global Limited ABN:  67 050 611 642

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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

Page 7: SAI Global Limited ABN:  67 050 611 642

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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

1

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

Page 8: SAI Global Limited ABN:  67 050 611 642

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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

Page 9: SAI Global Limited ABN:  67 050 611 642

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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

Page 10: SAI Global Limited ABN:  67 050 611 642

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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

Page 11: SAI Global Limited ABN:  67 050 611 642

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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

Page 12: SAI Global Limited ABN:  67 050 611 642

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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

Page 13: SAI Global Limited ABN:  67 050 611 642

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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

Page 14: SAI Global Limited ABN:  67 050 611 642

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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

Page 15: SAI Global Limited ABN:  67 050 611 642

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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

Page 16: SAI Global Limited ABN:  67 050 611 642

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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%

Page 17: SAI Global Limited ABN:  67 050 611 642

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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

Page 18: SAI Global Limited ABN:  67 050 611 642

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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

Page 19: SAI Global Limited ABN:  67 050 611 642

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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

Page 20: SAI Global Limited ABN:  67 050 611 642

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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%

Page 21: SAI Global Limited ABN:  67 050 611 642

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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

Page 22: SAI Global Limited ABN:  67 050 611 642

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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

Page 23: SAI Global Limited ABN:  67 050 611 642

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Lending Workflow Platform

ConveyanceWorkflowPlatform

Information Services

Settlement, Stamping& Registration Services

Espreon Business Model

Page 24: SAI Global Limited ABN:  67 050 611 642

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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

Page 25: SAI Global Limited ABN:  67 050 611 642

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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

Page 26: SAI Global Limited ABN:  67 050 611 642

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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

Page 27: SAI Global Limited ABN:  67 050 611 642

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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

Page 28: SAI Global Limited ABN:  67 050 611 642

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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

Page 29: SAI Global Limited ABN:  67 050 611 642

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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


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