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1 Emerging Leaders Conference May 2006 The Gateway to World Business

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The Gateway to World Business. Emerging Leaders Conference May 2006. Our Business SAI Global is a n international professional services company operating in the international standards, regulatory and compliance markets. SAI provides a gateway for: - PowerPoint PPT Presentation

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Page 1: Emerging Leaders Conference   May  2006

1

Emerging Leaders Conference May 2006

The Gateway to World Business

Page 2: Emerging Leaders Conference   May  2006

2

Our Business

SAI Global is an international professional services company operating in the international standards, regulatory and compliance markets. SAI provides a gateway for:

- Business, legal, regulatory, technical and standards information

- Regulatory, risk and compliance training and awareness

- Business improvement, training and consulting services

- Assurance services in the area of standardization, conformity assessment and business improvement

Page 3: Emerging Leaders Conference   May  2006

3

– SAI is a top 300 company listed on the ASX with a market capitalisation $360M, May 4, 2006

– 2004/5 revenues A$106 million

– 2004/5 EBITDA of A$19.4 million

– After full year of acquisitions 2006/07 revenue in excess of A$190 million

– 740 staff with 281 offshore

– Physical operations in Europe, United States, Thailand, Indonesia, Mexico, India, Australia and New Zealand

– Customers across the world

– 70% of revenue is annuity type

– Capex is small

Business Summary

Page 4: Emerging Leaders Conference   May  2006

4

Business Growth

SAI Global Historical Performance

Financial Years ($M)

AGAAP2001

AGAAP2002

AGAAP2003

AGAAP2004

AIFRS2005

AIFRS1st Half 06

Revenue 68.3 73.5 83.2 96.6 105.9 68.9

EBITDA 7.0 10.3 12.2 16.2 19.2 12.8

EBIT 8.6 12.6 15.6 9.2

NPAT 5.6 8.3 11.5 5.9

Adjusted NPAT

6.2 9.8 13.4 8.8

EPS(cents) 5.6 8.3 11.4 5.5

Cash EPS (cents)

7.3 10.4 13.3 8.2

Page 5: Emerging Leaders Conference   May  2006

5

Business Competitors

• SAI is the first organization of its type to list on a stock exchange and has no direct equivalent

• In the international technical publishing space SAI competes with, IHS, Reed Elsevier, Thomson and national standards bodies

• Numerous competitors in regulatory compliance space but few offer SAI’s end-to-end solutions

• The training and consulting market is highly fragmented and SAI has numerous competitors

• In the certification space SAI competes with organizations such as SGS, Lloyds Register, BSI & Bureau Veritas

Page 6: Emerging Leaders Conference   May  2006

6

Industry Demand Drivers

Greater demand for standards

related training andassurance services

Increasing industry turnover

Regulation

Demand to manage risks and compliance

Globalization

Demand for supply chainconfidence

Demand for continuous business improvement

Page 7: Emerging Leaders Conference   May  2006

7

Value proposition for our services

In essence, SAI Global helps organizations comply with therequirements that shape the business world, it:

– Provides easy on-line access to millions of items of Standards, regulatory and technical information

– Takes the burden out of regulatory and internal compliance– Protects brands and reputations– Pushes information and training where and when its needed– Simplifies cross border and language exchange– Provides supply chain confidence– Improves and sustains business

Page 8: Emerging Leaders Conference   May  2006

8

Business Publishing

Professional Services

Develop & license IntellectualProperty

Publish, Index& distribute(39% of revenue)

Sources of Intellectual Property

Commercialisation of Intellectual Property

Enhance throughtraining & consulting services(11% of revenue)

Provide assurancethroughconformity assessment & certification:(41% of revenue)

Assurance Services

ComplianceServices

Deliver compliance, regulatory awareness solutions (9% of revenue)

Business Model - SAI Global

Page 9: Emerging Leaders Conference   May  2006

9

Business Overview – Business MixRevenue by business - pre ILI

Publishing32%

Professional Services

13%

Assurance45%

Compliance10%

Revenue by business - post ILI

Professional Services

11%

Compliance9%

Publishing39%

Assurance41%

EBITDA by business - pre ILI

Professional Services

4%Compliance

13%

Assurance33%

Publishing50%

EBITDA by business - post ILI

Compliance10%

Professional Services

3%

Assurance26%

Publishing61%

Page 10: Emerging Leaders Conference   May  2006

10

Strategic Rationale – Geographic MixRevenue by region - pre ILI

US14%

Europe18%

Other1%

Australia67%

EBITDA by region - pre ILI

US7%

Europe16%

Other1%

Australia76%

Revenue by region - post ILI

US16%

Other1%

Europe23%

Australia60%

EBITDA by region - post ILI

Other1%

Australia59%

US11%

Europe29%

Page 11: Emerging Leaders Conference   May  2006

11

Business Publishing Gateway

Build a $100 million plus technical publishing, distribution and

information business

• Catalogue of more than 700,000 Standards and 150 million database items

• Mainly recurrent revenue

• Business model produces excellent financial outcomes and is efficient, transportable and scalable

• Increasing use of electronic delivery services

• Growth opportunity in global Standards and database markets

• Penetration of non-traditional markets through Anstat and ILI acquisitions

• Aggressive targeting of new business opportunities

Revenue

15,000

17,000

19,000

21,000

23,000

25,000

27,000

29,000

31,000

00/01 01/02 02/03 03/04 04/05 1H05/06

EBITDA

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

00/01 01/02 02/03 03/04 04/05 1H05/06

Page 12: Emerging Leaders Conference   May  2006

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Diversify product range and develop sources of recurring revenue

that drive growth and profitability improvement

• Continue to develop non-standards based products

• Development of information based products

• Business development component of our value chain • Few recurring revenue streams • Standards based product sales depend on new product releases • Significant growth in business improvement products• Electronic training model starting to grow strongly (technology

now available through compliance services)

Professional Services Gateway

Revenue

0

5,000

10,000

15,000

20,000

25,000

00/01 01/02 02/03 03/04 04/05 1H05/06

EBITDA

(1,000)

(500)

0

500

1,000

1,500

2,000

00/01 01/02 02/03 03/04 04/05 1H05/06

Page 13: Emerging Leaders Conference   May  2006

14

Establish SAI Global as a leading international assurance business

• Recurrent revenue streams, solid growth and profit model• Physical presence in key geographic markets• Products deliver brand protection, consumer and customer

confidence• Integrated offering i.e. QMS, EMS, workplace safety, ISMS • Consistent international delivery platform with people capable of

delivering • Competitive advantage from “Five Ticks” StandardsMark• Supplier and customer driven industry consolidation • Growth in new products such as food safety, corporate

governance and social responsibility

Assurance Services Gateway

Revenue

0

10,000

20,000

30,000

40,000

50,000

60,000

00/01 01/02 02/03 03/04 04/05 1H05/06

EBITDA

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

00/01 01/02 02/03 03/04 04/05 1H05/06

Page 14: Emerging Leaders Conference   May  2006

15

• SAI Global has made 12 acquisitions with seven being completed since listing in December 2003, most recent:

Easy i - May 2005 - A$28.3 million

Anstat - August 2005 – A$50 million

EFSIS December 2005 - A$12 million

CCS March 2006 – A$720 thousand

ILI May 2006 - A$81 million

• All acquisitions continue to perform in-line with guidance

Acquisition History

Page 15: Emerging Leaders Conference   May  2006

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• ILI a key part of SAI’s strategic intent to build a A$100+ million revenue, international technical publishing, distribution and information business

Annualized publishing revenues will now exceed A$70 million, up from current A$50 million

Establishes SAI Global as a significant international competitor in the standards and technical information space

Delivers front end to SAI’s business model in Europe and North America

Delivers a major and stable annuity earnings engine

Broadens the product base through database services

Provides the opportunity to tender for major international contracts

Further reduces reliance on individual publishing contracts

ILI Acquisition - Overview

Page 16: Emerging Leaders Conference   May  2006

17

ILI Business Overview

• ILI is an international standards publishing and database subscription services business

• Expected FY2006 revenue of A$20.1 million 51% from sale of international standards 49% from database subscription services Revenue split 1/3 each UK, other Europe and North America

• Expected FY2006 EBIT of A$8.4 million 27% from sale of international standards 73% from database subscription services

• ILI is based in the UK with operations in other parts of Europe and North America

• 50 employees (35 in the UK and 15 in the USA)

Page 17: Emerging Leaders Conference   May  2006

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USA Military Specifications and many others

ILI Business Overview – IP Providers

Page 18: Emerging Leaders Conference   May  2006

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ILI Business Overview – Publications

• Sales of standards provide 51% of ILI’s revenue and 27% of ILI’s EBIT

• Licences to sell standards are not limited to territory and have different royalty arrangements depending on supplier

• Non-exclusive licences with more than 250 international standards bodies including BSI (UK), ASTM (USA) and NFPA

• Exclusive distributor of Irish Standards – agreement similar to SAI Global arrangement with Standards Australia

• Distributor of USA Military Specifications

• Sales are both hard copy and electronic depending on supplier agreements and customer requirements

Page 19: Emerging Leaders Conference   May  2006

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ILI Business Overview - Databases• Database subscription sales are a major profit driver of the

business - 49% of revenue and 73% of EBIT, a trend that is likely to grow

• 100% subscription service – provides access to bibliographic searchable databases that allow customers to quickly identify the standard or specification that they require

• Key databases are:

- Standards Infobase (700,000 Standards)- Metals and Materials Infobases (14,000 related Standards and

materials and 70,000 grades)- Eurolaw (Industry treaties, directives, regulation and case law)- Logicom (150 million items)

• Logicom currently has only one competitor in the USA government procurement space

Page 20: Emerging Leaders Conference   May  2006

21

1 Assumes FX rate of A$1 = US$0.74

Financial Information – ILI Historical Trading and FY2007 Projections

A$ 000's1

Pro-forma

FY2003

Pro- forma

FY2004

Pro-forma

FY2005

Pro-forma

FY2006 CAGRProjected

FY2007 Growth

Revenue 18,759 19,012 19,570 20,109 2.3% 21,174 5.3%

EBITDA 6,436 6,659 7,564 8,443 9.5% 9,290 10.0%

EBIT 6,280 6,527 7,480 8,384 10.1% 9,230 10.1%

EBITDA Margin 34.3% 35.0% 38.7% 42.0% 43.9%EBIT Margin 33.5% 34.3% 38.2% 41.7% 43.6%

Page 21: Emerging Leaders Conference   May  2006

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• Existing businesses continue to trade well

• Recent acquisitions are trading in-line with guidance provided

• More acquisitions possible as part of industry rationalization

• More information? Visit www.saiglobal.com or call Investor Relations on +61 2 8206 6863

FY2006 Group Outlook