Slide 1: Investor Presentation H1 CY14 Results
For personal use only Investor Presentation H1 CY14 Results Deven Billimoria – Managing Director and CEO Tim Looi – Chief Financial Officer 27 August 2014 STRICTLY CONFIDENTIAL PAGE 0
Slide 2: Important notice and disclaimer
Important notice and disclaimer (“Important Notice”) For personal use only Disclaimer This presentation has been prepared by Smartgroup Corporation Ltd (ACN 126 266 831) (“Smartgroup”) and is general background information about Smartgroup’s activities current as at the date of this presentation. Th
Slide 3: Overview of H1 2014 performance
For personal use only Overview of H1 2014 performance Deven Billimoria Managing Director and CEO PAGE 2
Slide 4: An overview of the business shows Smartgroup is tracking well
An overview of the business shows Smartgroup is tracking well… For personal use only 1. On track to deliver full year prospectus results 2. Recap of recent major client contract wins • North Sydney Local Health District (Dec-13, c.6,000 employee customers) • Northern NSW Local Health District (Apr-1
Slide 5: Results on track to meet prospectus forecast
…with results on track to meet prospectus forecast… For personal use only H1 2014 Full year 2014 H1 2014 % of Pro-forma Prospectus Prospectus Operating revenue $m 34.8 69.6 50% EBITA $m 11.5 22.6 51% NPATA $m 8.5 16.5 52% NPATA per share* $0.08 $0.16 50% Full year 2014 H1 2014 Prospectus Packages 11
Slide 6: Novated Leasing orders having recovered with a stable legislative outlook
…and Novated Leasing orders having recovered with a stable legislative outlook For personal use only Novated Lease daily orders index Index rebased to 100 (Jul-12 – Jun-13 index = 100) Period from Labor Govt FBT announcement to Federal election PAGE 5
Slide 7: The business and industry
For personal use only The business and industry Deven Billimoria Managing Director and CEO PAGE 6
Slide 8: Capital-light business model, principally focused on salary packaging
Smartgroup employs a capital-light business model, principally focused on salary packaging For personal use only Competitor product offering – key areas of focus Lower capital intensity Source: Management estimate 1. Smartgroup is also a provider of software and stand alone cards salary packaging so
Slide 9: The market for outsourced salary packaging comprises c.550,000 employees
The market for outsourced salary packaging currently comprises c.550,000 employees For personal use only Employees by category Salary packaging benefits by employer Employer Types of employer Typical benefits subject to salary packaging category Australian Workforce Government departments ~12.3 mill
Slide 10: Smartgroup has won 45% of all public tenders
Within outsourced salary packaging, Smartgroup has won 45% of all public tenders For personal use only Tender outcomes – September 2007(1) to June 2014 Tender win rate – September 2007(1) to June 2014 Only one salary packaging Employer Client with >1000 Employee Customers have ever left Smartgroup s
Slide 11: Strong growth from organic uptake from existing clients
In addition to tender wins, strong growth comes from organic uptake from existing clients For personal use only Package growth by source 2002-2006 2013-2014 Large client wins 2007-2012 Multiple large client from competitors Organic growth transitions (1) (2) Notes: 1. Employers that had not packaged
Slide 12: Success attributed to our People focus
We attribute our success to our People focus, which is at the foundation of our strategy… For personal use only Smartgroup’s core capabilities Smartsalary awards 2011, 2012, 2013 NSW State Award for Service Excellence in the Medium Business category 2012 National Service Excellence Award in the
Slide 13: Smartsalary accredited an Aon Hewitt Best Employer
…indeed in both 2013 and 2014 Smartsalary was accredited an Aon Hewitt Best Employer… For personal use only Aon Hewitt Employee Engagement Score Aon Hewitt recognise: • Employee engagement • Committed leadership • High performance culture • Differentiated employment branding PAGE 12
Slide 14: Strong customer service culture and awards
…which naturally leads to a strong customer service culture, with NSW State and National Service Excellence Awards in recent years… For personal use only Customer Service Institute of Australia (CSIA) Score NSW State Winner Best Medium Business 2011, 2012, 2013 National Winner Best Medium Business 2
Slide 15: Customer loyalty with record 50% Net Promoter Score
…and ultimately this translates into strong customer loyalty with Smartsalary’s July 2014 Net Promoter Score (NPS) at a record 50% For personal use only What does a 50% NPS look like(1)? How does this compare to Australian industry benchmarks? Survey question: How likely are you to recommend Smartsa
Slide 16: Financial results H1 CY2014
For personal use only Financial results H1 CY2014 Tim Looi Chief Financial Officer Tim PAGE 15
Slide 17: Double digit growth on key financial metrics
Smartgroup has achieved double digit growth on key financial metrics for the half year ….. For personal use only Proforma Statutory H1 2014 H1 2013 Change % Total operating revenue $m 34.8 31.1 12% EBITA pre corporate costs $m 12.2 10.7 14% EBITA $m 11.5 10.6 8% NPATA $m 8.5 6.5 31% Cashflow from op
Slide 18: EBITA pre corporate costs increasing from $10.7m to $12.2m
… with EBITA pre corporate costs increasing from $10.7m to $12.2m due to revenue growth from packaging and fleet For personal use only 15 1.50 14 2.20 13 12.20 - 12 (2.20) 11.50 - 10.70 (0.70) 11 $m 10 9 8 7 6 5 H1 2013 Packaging Fleet Employee Other H1 2014 Listed H1 2014 EBITA pre revenue revenue
Slide 19: Cashflow from operations conversion is strong
Cashflow from operations conversion is strong with capital expenditure remaining low For personal use only Summary of cashflows Proforma Statutory $ millions H1 2014 H1 2013 change % Receipts from customers 37.6 33.6 Payments to suppliers and employees (24.3) (22.3) Interest paid (net of interest re
Slide 20: Conservative balance sheet with net debt at $5.4m
The balance sheet is conservative with net debt at $5.4m For personal use only Summary balance sheet Proforma Statutory 30 June 31 Dec $ millions 2014 2013 ASSETS Cash and cash equivalents 16.5 16.9 Trade and other current assets 10.1 9.0 Current Assets 26.6 25.9 Property, plant and equipment 2.6 3.
Slide 21: Positive outlook for rest of the year
Positive outlook for rest of the year For personal use only 1. On-track to meet prospectus NPATA of $16.5m 2. As flagged in the prospectus, one further large client is expected in December 2014 with over 4,000 packages 3. Stable legislative outlook 4. Continued focus on staff engagement, innovation
Slide 22: Appendices
For personal use only Appendices PAGE 21
Slide 23: Reconciliation of earnings
Reconciliation of earnings Statutory H1 2014 to proforma H1 2014 For personal use only Statutory Adjustments Proforma $ millions H1 2014 IPO costs Proforma H1 2014 Total operating revenue 34.8 - - 34.8 Total operating expenses 22.0 - - 22.0 Operating EBITDA 12.8 - - 12.8 Depreciation expense 0.6 - -
Slide 24: Reconciliation of balance sheet
Reconciliation of balance sheet Statutory to proforma to show the balance sheet as if the IPO had occurred at 30 June 2014 For personal use only Statutory Adjustments Proforma P&L $ millions 30 June 2014 IPO costs Proforma Capital structure Equity issue 30 June 2014 ASSETS Cash and cash equivalents
Slide 25: Reconciliation of cashflow from operations
Reconciliation of cashflow from operations Statutory to proforma to show the cashflow associated with the proforma P&L and excluding IPO and RPS payments For personal use only Statutory Adjustments Proforma $ millions H1 2014 IPO costs RPS payment P&L proforma H1 2014 Receipts from customers 37.6 -