Janison Education Group Ltd. · ASX:JAN
Janison Education — Merger or Acquisition (March 2019)
24 slides from Janison Education's merger presentation, Mar 25, 2019
Slide 1: Strategic Acquisition of LTC
ASX:JAN Strategic Acquisition of LTC March 2019
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Janison Education Group Limited. Each recipient of this presentation is deemed to have agreed to accept the qualifications, limitations and disclaimers set out below. By receiving this presentation, each recipient warrants to Janison Education Group
Slide 3: Disclaimer (continued)
Disclaimer (continued) Permitted Recipients Australia If you are in Australia, you are a “professional investor” or “sophisticated investor” who is also a “wholesale investor” (as those terms are defined in section 709(11), 708(8) and 761A respectively of the Corporations Act 2001 (Cth) (Corporation
Slide 4: Table of Contents
Table of Contents 1. Transaction overview 2. Overview of LTC 3. Transaction rationale and impact on Janison 4. Transaction funding and pro-forma financials 5. Offer summary 6. Key risks 4
Slide 5: Table of Contents
Table of Contents 1. Transaction overview 2. Overview of LTC 3. Transaction rationale and impact on Janison 4. Transaction funding and pro-forma financials 5. Offer summary 6. Key risks 5
Slide 6: Transaction overview
Transaction overview Janison is expanding its reach into the Higher Education and Certifications markets ▪ Janison has entered into an agreement to acquire LTC Language & Testing Consultants Pty Ltd (“LTC”) ▪ LTC provides in-person exam invigilation services to c.40 large domestic and international
Slide 7: Transaction summary
Transaction summary Cash Shares Total Upfront Payment $4.5m $2.0m $6.5m Deferred Payment $1.5m -- $1.5m Consideration $6.0m $2.0m $8.0m Earn-out Payment (estimate)1 $3.3m $3.3m $6.6m Total $9.3m $5.3m $14.6m ▪ Purchase price: approximately $8m + $6.6m potential earn-out (total $14.6m subject to earn
Slide 8: Table of Contents
Table of Contents 1. Transaction overview 2. Overview of LTC 3. Transaction rationale and impact on Janison 4. Transaction funding and pro-forma financials 5. Offer summary 6. Key risks 8
Slide 9: Overview of LTC
Overview of LTC LTC is the largest examination services provider in Australia. It is highly regarded as a secure service provider able to facilitate customisable end-to-end exam management services ranging from 1 to 8,000 students per sitting. ▪ Established in 1988 ▪ Family-run business until 2016 ▪
Slide 10: Financial performance of LTC
Financial performance of LTC 1 Revenue Revenue & Gross Profit % ▪ Revenue growth of 20% in FY18 primarily driven by client expansion (additional Revenue Gross Profit % assessment subjects), candidate growth and new client wins 47% 50% 39% ▪ Revenue consists of the marked-up cost of staff supervision
Slide 11: Recent half year performance of LTC
Recent half year performance of LTC 1 Revenue Gross Profit % Norm. EBITDA EBITDA Margin % 52% 50% 48% 45% 46% $3.2m 35% 33% 37% $2.5m $2.6m 24% 27% $1.9m $1.2m $1.7m $0.9m $0.9m $0.4m $0.5m H1 FY17 H1 FY18 H1 FY19 H2 FY17 H2 FY18 H1 FY17 H1 FY18 H1 FY19 H2 FY17 H2 FY18 ▪ 30% growth in revenue for fi
Slide 12: Customers
Customers ▪ Nearly all LTC clients are new to Janison ▪ 58% (by count) of clients in FY18 were universities, the remainder being professional bodies ▪ University client revenue grew 14% in FY18, the remainder grew at +20% ▪ The top 11 customers account for 80% of FY18 revenue and the top 3 account f
Slide 13: Table of Contents
Table of Contents 1. Transaction overview 2. Overview of LTC 3. Transaction rationale and impact on Janison 4. Transaction funding and pro-forma financials 5. Offer summary 6. Key risks 13
Slide 14: Strategic rationale and highlights
Strategic rationale and highlights Opportunities for Growth Accretive Acquisition ▪ LTC’s strong client relationships provide Janison a significant opportunity to ▪ LTC generates free cash flow of c.$2m p.a. and has growing revenues of grow its customer base on Janison’s Assessment product. c.$6m p.
Slide 15: Australian universities have the potential to generate $26m revenue per year
Within the Higher Education sector, Australian universities have the potential to generate $26m revenue per year University Monash University Students ('000) 69.4 1.3m students Enrolled in Australian universities1 RMIT University 59.4 University of Melbourne 57.8 University of Sydney 57.6 x $20 per
Slide 16: Digitisation enables Janison to capture a greater share of wallet
Digitisation enables Janison to capture a greater share of wallet within universities The test is only one component in the university assessment process: $1,000 Annual Assessment cost breakdown for a large Australian University ($000s)1 Reporting and Analysis $400k Incremental Revenue Marking $750
Slide 17: Table of Contents
Table of Contents 1. Transaction overview 2. Overview of LTC 3. Transaction rationale and impact on Janison 4. Transaction funding and pro-forma financials 5. Offer summary 6. Key risks 17
Slide 18: Transaction funding and pro-forma financials
Transaction funding and pro-forma financials Acquisition Terms Janison has entered into an agreement to acquire 100% of the shares of LTC HoldCo Pty Ltd (the parent entity of LTC Language & Testing Pty Ltd) for an upfront consideration of $8.0m plus an earn-out based on 5.175 x LTC Purchase Price no
Slide 19: Pro forma combined Balance Sheet
Pro forma combined Balance Sheet Pro forma Balance Sheet (31 Dec 2018) Janison LTC Net Adjustments Pro forma Cash 1 $6.8m -- $1.1m $7.9m Receivables & Unbilled Revenue 1 $6.2m $1.3m -- $7.5m Fixed Assets $0.6m $0.2m -- $0.8m Other Assets (incl. DTA) $6.2m $0.2m -- $6.4m Goodwill & Intangibles $3.6m
Slide 20: Table of Contents
Table of Contents 1. Transaction overview 2. Overview of LTC 3. Transaction rationale and impact on Janison 4. Transaction funding and pro-forma financials 5. Offer summary 6. Key risks 20
Slide 21: Offer summary
Offer summary An equity raising comprising a placement (the Offer) of approximately 18.2m fully paid ordinary shares (Shares) to raise $6.0m (before costs) at an issue price of $0.33 per Share. Placement Offer The shares under the Placement will be issued utilising the Company’s existing capacity un
Slide 22: Table of Contents
Table of Contents 1. Transaction overview 2. Overview of LTC 3. Transaction rationale and impact on Janison 4. Transaction funding and pro-forma financials 5. Offer summary 6. Key risks 22
Slide 23: Key Risks
Key Risks ▪ Contracting risk Only a few of LTC’s existing customers are under contractual obligations. There is a risk that clients may decide not to continue using LTC’s services, adversely impacting revenue and earnings. Since the average length of relationship with the Company’s top 10 clients is
Slide 24: Contact: Tom Richardson, CEO
Contact: Tom Richardson, CEO trichardson@janison.com +61 421 029 620 24
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