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Full year results – 30 June 2015GBST Holdings Limited (ASX: GBT)
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Introduction
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F L A G S H I P P R O D U C T S
F O R
client accounting and
securities transaction processing
C U S T O M E R S I N
Australia, Asia, Europe,
North America
F L A G S H I P P R O D U C T
F O R
wealth administration and
registry
C U S T O M E R S I N
Australia, Asia, New Zealand,
United Kingdom
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GBST FY2015 – Highlights
3
CONTINUED STRONG INTERNATIONAL GROWTH
Revenue up 16% to
$114.3 million
EBITDA up 20% to
$24.5 million
NPAT up 52% to
$15.3 million
Cash NPAT up 35%
to $19.2 million
Operating margin
in line at 21%
EPS up 52%
to 22.9 cps
Cash EPS up 35%
to 28.9 cps
Final dividend up 22%,
to 5.5 cps; full year
dividends of 10.5 cpsFor
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FY2015 - Financial Performance
4
• Strong revenue growth
• Record EBITDA
• Full provision made of $640,000 for bad
debt from BBY administration
• Debt free from August 2014
• Investment amortisation charges declining
• R&D related tax concessions - low tax rate
• Strong NPAT and cash NPAT growth
• Strong EPS and cash EPS growth
Results for the year ended: 30-Jun-15
$m
30-Jun-14
$m
%
Change
Revenue 114.3 98.5 16%
EBITDA 24.5 20.2 21%
EBITDA % Margin 21% 21%
Unallocated 0.0 0.3
EBITDA 24.5 20.5 20%
Finance income / (expense) (0.0) (1.1) 100%
Depreciation & operating amortisation (3.2) (3.1) (3%)
Investment amortisation (4.0) (4.3) 7%
PBT 17.3 12.0 44%
Income tax expense (2.1) (1.9)
Effective tax rate 12% 16%
NPAT 15.3 10.0 52%
Adjusted Cash NPAT 19.2 14.3 35%
EPS (cps) 22.9 15.1 52%
Cash EPS (cps) 28.9 21.5 35%For
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GBST FY2015 – Key Points
• GBST Composer sales growth
supported by recurring revenue and
technology migration projects from
major financial institutions
• Solid capital markets revenue in an
increasingly competitive market
• Significant investment to develop
GBST Syn~ regional solution
• Strong UK GBST Composer
revenue growth driven by ongoing
legislation change
• Substantial increase in higher
margin services work
• Continuing investment to increase
product scale and capability
• Capital markets environment
remains constrained
• Increased international GBST Syn~
revenue; investment required to
support growth
• Global rollout for major international
bank continuing
• Ongoing recurring licence fee
revenue and higher sponsored work
• Technology development centre
continues to contribute to
development of GBST products
• Successful first phase of GBST
Syn~ implementation completed for
cornerstone client
• Preparations for second phase of
development under way
• Strengthened leadership, sales and
product strategy team to drive
business growth
• Further investment required to
support growth
A U S T R A L I A E U R O P E
A S I A U S A
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• Record revenue $114.3 million, up 16%
from FY2014; more than 10% p.a.
average revenue growth in past four
years
• Growing client base internationally
includes some of the world’s leading
financial services companies
• Licence fees include high-quality recurring
annuity income based on long term client
contracts with fixed and variable (activity-
based) components
• Increased services revenue reflects
higher number and size of client
installations
• Strong licence fee and services revenue
growth
Group Revenue
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Group Revenue Analysis
7
• International revenue now 55%, up from
48% in FY2014; confirms success of
growth strategy as international sales
surpass Australian sales for first full year
• Australian revenues were steady as difficult
trading conditions continued
• Strong UK Wealth Management revenue
grew as new clients’ projects continued,
supported by greater ongoing activity
• Capital Markets continued to expand
internationally; Asian revenue increased
• International revenue is denominated
mostly in £ Sterling and US$; lower AU$
favours GBST
• Financial Services division revenue for
FY2015 and prior years is included in
Capital Markets revenueFor
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EBITDA
8
• Record EBITDA driven by strong Wealth
Management earnings in UK; steady
performance in Australia
• Capital Markets Australian earnings
impacted by one-off debtor impairment
from BBY administration; includes nil
contribution from former Financial Services
division ($1.1 million loss in FY2014)
• Investment to build international scale
continues; GBST’s international capital
markets business’ loss reflects ongoing
product development and investment in
new markets
• Investment in R&D consistent with prior
years; all GBST R&D investment is
expensed as incurred
• Capex as a proportion of EBITDA reduced
from 18% in FY14 to 15%; 5-year average
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EPS and Dividend
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• Earnings per share (EPS) improved to 22.9
cents, up 52% from FY2014
• Record Cash EPS 28.9 cents per share
• Final dividend declared 5.5 cents per
share; dividends for the full year 10.5
cents, up 24% from FY2014
• All dividends are fully franked
• Dividend payout ratio 36% of Cash NPAT
• Record date for entitlement is
30 September 2015
• Payment date is 14 October 2015
• Franking credit balance $16.8 million, up
$2 million (30 June 2014: $14.8 million)For
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Financial Position
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• Cash $7.8 million at 30 June 2015
• Intangible assets primarily comprise
purchased software and client contracts
(expensed over 5-10 years); and goodwill
(not amortised)
• Carrying value of intangible assets
comprises InfoComp ($31.5 million),
Coexis ($14.7 million), and other
intangibles ($7.1 million)
• Senior debt fully repaid, down from $5
million at 30 June 2014
• Unearned income of $10.1 million
represents advance payments from
clients for licences and services; the
balance varies due to timing of payments
Financial position as at 30-Jun-15
$m
30-Jun-14
$m
ASSETS
Cash 7.8 2.3
Other current assets 23.8 18.3
Intangible assets 54.3 56.5
Other non-current assets 14.6 13.8
TOTAL ASSETS 100.5 91.0
LIABILITIES
Loans and borrowings - current 0.2 0.7
Unearned income 10.4 11.1
Other current liabilities 16.1 13.1
Loans and borrowings - non current 0.1 5.3
Other non-current liabilities 7.2 7.5
TOTAL LIABILITIES 34.0 37.7
NET ASSETS 66.5 53.3
EQUITY
Issued capital 37.7 37.7
Reserves 1.9 (2.4)
Retained earnings 26.9 18.0
TOTAL EQUITY 66.5 53.3
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Cash Flow
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• Cash flow from operations (excluding
interest and taxes) of $25.5 million
• 104% conversion of EBITDA to cash flow
• Strong cash flow from annuity income
• Intangibles purchases relate to third party
software acquired for use within the
business
• No internal development costs are
capitalised
• Cash flows are managed in local
currencies where possible to limit
exposure to foreign currency conversion
Results for the year ended: 30-Jun-15
$m
30-Jun-14
$m
CASH FLOWS FROM OPERATIONS
Receipts 123.0 106.3
Payments (97.6) (85.5)
Finance costs (0.1) (0.9)
Income tax (4.9) (4.4)
Net cash provided from operations 20.4 15.6
CASH FLOWS FROM INVESTMENTS
Purchase of tangible assets (2.9) (1.9)
Purchase of intangible assets (0.7) (1.5)
Deferred consideration received 0.0 1.5
Net cash used in investments (3.6) (1.9)
CASH FLOWS FROM FINANCING
Repayment of finance leases (0.7) (1.0)
Repayment of borrowings (5.0) (9.0)
Dividends paid (6.3) (5.0)
Net cash used in financing (12.0) (15.0)
NET INCREASE/(DECREASE) IN CASH 4.8 (1.3)
Effect of exchange rate fluctuations on cash held 0.6 0.1
Opening cash 1 July 2.3 3.5
CLOSING CASH 7.8 2.3
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GBST Wealth Management – Financial Performance
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30-Jun-15$m
30-Jun-14$m
% Change
Revenue - Australia 19.0 18.2 4%
Revenue - International 50.1 35.6 41%
Revenue - Total 69.1 53.8 28%
EBITDA - Australia 7.4 6.9 6%
EBITDA - International 11.4 6.6 74%
EBITDA - Total 18.8 13.5 39%
Solid revenue, performance in Australia
Strong UK revenue and market share growth
Higher margins in FY2015 reflect increased licence
revenue and scale benefits
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GBST Wealth Management – Highlights
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• Completed compliance with
Client Asset Source Book (CASS),
Pensions Freedom, and
FoFA/Superstream
E N D O R S E M E N T S R E G U L AT I O N
P R O D U C T SM A R K E T S
C L I E N T S
• AI 2015 Business Awards
- financial services
software supplier
of the year
• Licence revenue 35%
of international income
• UK wraps and
platforms market
expected to quadruple
by 2020
• Total assets managed
in the UK estimated at
£6 trillion and growing
• Currently developing
offshore platform to
service Asia with
existing client; GBST’s
Australian and UK
capability is highly
regarded
• Market share continued to expand;
GBST now has 10 UK and more than
30 Australia/New Zealand clients
• GBST composer supports three of
the top six UK wraps and platforms
and five of the leading pensions
providers
• Introduced multiple database
support with Microsoft SQL – a
significant step toward
internationalisation
• Added capability for UK annuities,
guaranteed pensions products,
dealing desks and Crest settlement
• Integration to Superstream
assisting rollover and contribution
processes and insurance
S I G N I F I C A N T
L O N G - T E R M
O P P O R T U N I T Y
M A R K E T L E A D I N G
P O S I T I O N
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GBST Wealth Management – Outlook
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• The 2012 UK Retail Distribution Review initiated once in a generation change to make retail
investment markets work better for consumers; further significant regulatory and policy changes
will include pension reforms and changes to Individual Savings Accounts (ISAs)
• Pensions Freedom legislation introduced 6 April 2015 in the UK allows people over 55 to draw
from their defined contribution benefits fund, a fundamental change; firms are moving to build
new distribution channels for higher wealth, higher margin customers
• Timely delivery of Pensions Freedom changes helped secure new GBST Composer clients;
integrated digital distribution capability ensures a strong pipeline of potential new business
• Support for annuity products is an industry first, opening markets for GBST Composer
• Development of GBST Composer as an international platform continues; current focus on the
Asian market, interest in wealth management growing
• GBST Composer’s unique multiple database capability supports commitment to delivering
technological innovation
• GBST Composer will receive significant investment to increase scale and extend capabilities to
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GBST Capital Markets – Financial Performance
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30-Jun-15$m
30-Jun-14$m
% Change
Revenue - Australia 32.3 32.6 (1)%
Revenue - International 12.4 11.7 6%
Revenue - Total 44.7 44.3 1%
EBITDA - Australia 9.0 9.2 (2)%
EBITDA - International (3.3) (2.5) (33)%
EBITDA - Total 5.7 6.7 (16)%
Steady performance in
Australia despite
increasingly competitive
market
Approximately 80% of
Australian revenue from
annuity licence fees and
long-term contracts
International revenue
increased; loss reflects
product investment and new
market entry costs
Licence based income
and long-term contracts
72% of total
Former GBST Financial Services division (FSD) now included in GBST Capital Markets division. FSD revenue was $2.9 million and EBITDA $0.0 million in FY2015.
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GBST Capital Markets – Highlights
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• GBST Shares and GBST Syn~ already
equipped to manage change to T+2 trading
in Australia and internationally
N O R T H AM E R I C A R E G U L AT I O N
P R O D U C T SM A R K E T S
C L I E N T S
• World's largest capital market
• Using GBST Syn~, cornerstone US client
increased commission assignment
automation from 30% to 98%
• Strengthened US team;
senior staff appointments
include US CEO
• GBST Shares and
GBST Syn~ support more
than 60 ASX participants
• Services revenue
exceeded 50% of
international sales, reflecting
new implementation work for
GBST Syn~
• As clients go ‘live’, recurring
annual license fees apply
• Enhanced GBST BIR business
intelligence capability for cross-
product reporting
• Ongoing development of GBST’s
powerful, data-driven risk
management analytics for equities
and derivatives
• GBST’s business model is based on
recurring revenue from software rental
L E A D I N G
A U S T R A L I A N
P R O D U C T S
S T R O N G
I N T E R N A T I O N A L
O P P O R T U N I T Y
The former Financial Services division has been integrated into the
Capital Markets division and will no longer be reported on separately
• GBST Syn~ now provides full
integration and settlement with
Singapore Exchange (SGX);
three clients using GBST’s services
• GBST Syn~ now supports
Japanese market trade allocations
with more work planned.
• Asian work increased despite delays in
project starts; includes provision of middle
office services to broker-dealers and
outsourced back office services for custodians
• GBST Syn~ rollout for major international bank continuesFor
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GBST Capital Markets – Outlook
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• Landmark project to transition a global institutional bank back- and middle-offices from GBST
Shares to GBST Syn~ is continuing
• While new participants have entered the Australian market, this is expected to lead to new
opportunities for GBST and its industry-leading products
• Development continues to extend GBST Syn~’s new-generation services to enable clients’
expansion into new market segments, regions and asset classes including fixed income
• GBST has a strong and significant pipeline of potential new business, particularly in Asia, Japan
and the US, and is investing in its technology, sales and marketing expertise; while projects have
long lead times, there is a substantial market opportunity
• The US market for securities processing is the largest in the world with many broker dealers still
using older technologies; while GBST’s costs are expected to increase ahead of sales, the
opportunities for growth are very significant
• GBST has partnered with SAP HANA to roll out its Financial Transaction Tax (FTT) product in
Europe; this is expected to assist sales once FTT activation dates across EU member countries
are agreed
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• GBST’s strategy for global growth continues; in FY2015 international sales rose from
48% to 55% of total sales and this proportion is increasing
• Legislative change in the wealth management industry continues to be a driver of
GBST’s business
• Increasing regulatory and compliance costs in capital markets, such as changes to T+2
settlement, are likely to underpin sales growth
• GBST is actively pursuing new business opportunities in all regions and has a strong
international pipeline in both wealth management and capital markets
• Investment in product development and GBST’s sales network is accelerating as the
company seeks to expand into new markets; technology development centre is
increasingly contributing to product development
• Strong balance sheet and cash flow; potential for both organic growth and acquisition
• Final dividend 5.5 cents; dividends for the year up 24% to 10.5 cents for the year
Summary
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Disclaimer
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While every effort has been made to provide accurate and correct information in this presentation, GBST Holdings
Limited does not warrant or represent that the information is free from errors or omissions. To the extent permitted by
law, no responsibility for any loss, damage, cost or expense arising in any way from anyone acting or refraining from
acting as a result of information in this presentation is accepted by GBST Holdings Limited. This presentation is not
investment advice that can be relied upon as it has not been prepared considering any individual’s objectives, financial
position or needs.
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