MYOB Finance Australia Limited ACN 161 013 654
Registered office: Level 3, 235 Springvale Road, Glen Waverley, VIC 3150 27 February 2014 Market Announcements Office ASX Limited
MYOB FY13 Results and Investor Presentation MYOB today announces results for the period ending 31 December 2013. Accounts have been published for the 14 month period ended 31 December 2013 for MYOB Finance Australia Limited (the issuer of MYOB Subordinated Notes) and for the year ended 31 December 2013 for MYOB Holdings Pty Limited (the holding company for the MYOB group). Tim Reed (Chief Executive Officer) and Richard Moore (Chief Financial Officer) will present MYOB's FY 13 results and provide an update to the market through an investor call scheduled for 3.00pm (AEST) today. The call will be followed by a Q&A session. Details of the investor call are provided below. An Investor Presentation is attached to this announcement.
MYOB FY13 Results call—27 February 2014, 3.00pm (AEST) Password: "Software" City Toll numbers Toll free numbers
Adelaide +61-8-8121-0034 1-800-505-544
Brisbane +61-7-3102-0103 1-800-505-544
Canberra +61-2-6100-0227 1-800-505-544
Hong Kong +852-3001-3803
Melbourne +61-3-9010-0399 1-800-505-544
New Zealand +64-9-970-4612 0800-456-282
Perth +61-8-9467-8822 1-800-505-544
Singapore +65-6883-9168 800-120-5199
Sydney +61-2-8214-9002 1-800-505-544
Ian Boylan Company Secretary MYOB Finance Australia Limited
Tim Reed Chief Executive Officer
Richard Moore Chief Financial Officer
27 February 2014
MYOB FY13 Results Presentation
MYOB FY13 RESULTS PRESENTATION 02
Important notice
The information contained in this document (including this notice) or discussed at the presentation (collectively, the Presentation) has been prepared by MYOB Holdings Pty Limited (MYOB).
The Presentation is subject to the conditions outlined below. Your receipt of the Presentation evidences your acceptance of those conditions.
The Presentation is not a prospectus, product disclosure statement, disclosure document or other offer document under Australian law or under any other law. It does not, and is not intended to, constitute an offer for subscription, financial product advice, invitation, solicitation or recommendation by any person or to any person with respect to the purchase or sale of any securities or financial products in any jurisdiction and also does not form the basis of any contract or commitment to sell or apply for securities in MYOB or any of its subsidiaries.
The information in the Presentation is an overview and does not contain all the information necessary to make an investment decision. It is intended to be a summary of certain information relating to MYOB and its subsidiaries (MYOB Group) and does not purport to be a complete description of the MYOB Group. It is provided for information purposes only and is subject to change without notice.
The information contained in the Presentation have been prepared without taking account of any person’s investment objectives, financial situation or particular needs and nothing contained in the Presentation constitutes investment, legal, tax or other advice. You must not rely on the Presentation but make your own independent assessment and rely upon your own independent taxation, legal, financial or other professional advice.
No representation or warranty, expressed or implied, is made as to the accuracy, reliability, adequacy or completeness of the information and opinions contained in the Presentation. The Presentation may contain certain forward looking statements, including estimates, projections and opinions (Forward Statements). Forward Statements may involve known and unknown risks and uncertainties and other factors, many of which are beyond the control of the MYOB Group, and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct. No representation is made or will be made that any Forward Statements will be achieved or will prove to be correct. Actual future results and operations could vary materially from the Forward Statements. Similarly no representation is given that the assumptions upon which Forward Statements may be based are reasonable. Circumstances may change and the contents of this document may become outdated as a result.
To the maximum extent permitted by law, the MYOB Group and each of its affiliates, directors, officers, partners, employees, advisers and agents and any other person involved in the preparation of the Presentation disclaim all liability and responsibility (including without limitation, any liability arising from fault or negligence) for any direct or indirect loss or damage which may arise or be suffered through use or reliance on anything contained in, or omitted from, the Presentation. The MYOB Group accept no responsibility or obligation to inform you of any matter arising or coming to their notice, after the date of the presentation or this document, which may affect any matter referred to in the Presentation.
Agenda
MYOB FY13 RESULTS PRESENTATION 03
At MYOB we are passionate about making cloud accounting easy for every businessWe provide solutions that are easy to use, available anytime, anywhere, and deliver the best value in our market.
MYOB FY13 RESULTS PRESENTATION
Agenda
04
Business and Strategy Update FY13 Financial Summary
Summary Appendix
01 02 03
Executive Summary
04 05
Agenda
MYOB FY13 RESULTS PRESENTATION 05
MYOB FY13 Executive summary
MYOB FY13 RESULTS PRESENTATION 06MYOB FY13 RESULTS PRESENTATION
MYOB is the leading business solutions provider in Australia and New Zealand
MYOB is delivering superior cloud solutions, supporting existing clients moving to the cloud as well as attracting many new businesses to our cloud solutions
MYOB has driven double digit growth through rapid client adoption of cloud solutions and has a pipeline of innovation that will be delivered to clients in 2014
MYOB today
“Going live means more time to focus on the business and plan ahead more realistically. I would definitely
recommend MYOB software and AccountRight to anyone – without a doubt.”
Annie Quested, Raygas
MYOB FY13 RESULTS PRESENTATION 07
Driven by the uptake of cloud solutions and BankLink acquisition
$247
13%
Revenue OF
with
million
growth
$121
14%
eBitDA OF
with
million
growth
Double digit growth in FY2013
Summary of 2013
MYOB FY13 RESULTS PRESENTATION 08
MYOB MYOB
Upcoming release of MYOB PayDirect is a category first and highlights the capability of MYOB’s cloud offerings
Increased focus on micro business accounting and competitive position with the launch of MYOB Essentials in Q2 2014
PayDirect EssentialsMaking business life easier by being at the centre of a mobile, connected world via a suite of cloud solutions
“It will make our business life easier as we can use a cloud solution with the full advanced features of
MYOB accounting software, meaning no compromise in capabilities.”
Peter Meyers, Purna Yoga P/L
Executing on vision
Summary of 2013
MYOB FY13 RESULTS PRESENTATION 09
BankLink surpassing expectations
BankLink acquisition has surpassed expectations, significantly enhancing product suite and generating strong synergies
Rapid cloud transformation
Market for cloud-based accounting solutions continues to grow quickly - now accounts for half of all new MYOB product registrations and one quarter of the subscriber base has migrated
Enlarged sales force
Significant investment in sales force to cater to rising client demand for cloud solutions and to support upcoming product launches
Strong financial performance
In line with strong financial performance, cash flow generation and covenant headroom continue to improve
“I think MYOB will surpass their existing competitors because of the technology changes they’re doing with
the one ledger. The implementation of the practice suite into client ledgers is huge for accountants.”
Natasha McDowall from Tael Solutions.
Summary of 2013
Agenda
10MYOB FY13 RESULTS PRESENTATION
MYOB FY13 Business and Strategy Update
11MYOB FY13 RESULTS PRESENTATION
Understanding our clients’ world
New SME Businesses SME Revenue Expectations
SOURCE http://abr.business.gov.au/StatisticalSearch.aspx
10,000
JAN
- 10
JUL
- 10
JAN
- 11
JUL
- 11
JAN
- 12
JUL
- 12
JAN
- 13
JUL
- 13
20,000
0
GST ReGiSTRaTionS (monTh)GST ReGiSTRaTionS (LTm)
30,000300,000
100,000
200,000
0
Improving Business Confidence
SOURCE NAB Economics: Monthly Business Survey SOURCE MYOB Business Monitor
CONF 1990s RECN RISE FALL NETCONF GFC
TRENDSEASONALLY ADJUSTED
I I III II IIIII III IIIIV IV IV
2011 2012 2013
20 40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
10
0
-10
-20
-30
-40
BUSineSS ConFiDenCe (neT BaLanCe)
SME business creation closely correlated with GST registrations
2013 growth bodes well for 2014
early signs of a more positive SME environment in 2014
As a market leader with 20+ years’ experience, MYOB understands the current and future needs of SMEs.
Key Takeaways
2013 Revenue Result 2014 Revenue Expectations
-32%
-8%
24%
34%
18%
-16%
12MYOB FY13 RESULTS PRESENTATION
MYOB clients moving to the cloudRapid technology adoption by MYOB’s clients.
DEC
- 11
JUN
- 12
DEC
- 12
JUN
- 13
DEC
- 13
20%
30%
40%
50%
10%
52% of new product registrations are now cloud solutions – up from 25% last year
22% of paying base was actively using cloud files at end of 2013 – up from 7% last year
MYOB Online registrations (L3M) Cloud users % of total paying clients
“Absolutely LOVING the speed of MYOB AccountRight Live 2013.3. Time to make sure you’re on this
release AND on the cloud!” Pam Pitt, 2 Peas Pty Ltd
“We have been in the cloud for a couple of months now and really
love it. MYOB is so great to use.”Craig Colman, Colman Ltd
5%
10%
15%
20%
25%
DEC
- 11
JUN
- 12
DEC
- 12
JUN
- 13
DEC
- 13
13MYOB FY13 RESULTS PRESENTATION
Cloud across more segments
MYOB at the centre of the connected worldMYOB continues to develop cutting edge cloud technology, with the up-coming launch of mobile payments – an Australian & New Zealand accounting industry first.
CRM / HRM
Websites
Big Data/ Business Intelligence
2014
Cloud
Connected Services
Future
2015+
“The move of technology into the cloud brings a huge range of benefits to users, such as ‘anywhere, anytime’ access, and
increased collaboration between a business and their customers.”Maria Mullane, Managing Director at Aspire Solutions Ltd
Wellington and Wairarapa, New Zealand
AR windows app
AR API
2012 - 1213
14MYOB FY13 RESULTS PRESENTATION
MYOB EssentialsMYOB Essentials is a clearly positioned product with a cashbook and new functionality to meet the evolving needs of micro businesses.
Key Takeaways
Product Overview
Clearly segmented cloud offering for micro businesses+ MYOB essentials replaces and expands upon MYOB LiveAccounts+ Reduces any perceived overlap with MYOB AccountRight
Enhanced product offering+ new cashbook for easy online
cash accounting
An API provides for integration into Client Accounting, MYOB PayDirect and an ecosystem of partners
Available from April 2014
“After having a sneak peek of MYOB Essentials range, my team loves it. It will make client accounting even
more efficient thanks to its flexibility, visibility and simplicity, which allows us even more time to add
value to the client relationships.” Natasha McDowall, Tael Solutions
MICRO (DIY and DIFY)0-5 Employees
SMAll5-30 Employees
MEDIUM30-200 Employees
Business(Do most internally)
Style of Collaboration
Accountant(Do it for me)
SIZE OF BUSINESS
15MYOB FY13 RESULTS PRESENTATION
MYOB PayDirect …leading the next wave of cloud-based technology
how it Works: Connected to the Cloud
Take eFtPOS or credit card payments from customers using a card reader
Accept credit card payments directly on iPhone and Android mobile devices
Payments applied to invoices and automatically recorded in MYOB AccountRight & MYOB Essentials
MYOB’s technology innovation is at the forefront and will drive growth in MYOB’s user base.
Key Takeaways
Interesting, @myob introduces PayDirect - allows businesses to get instant mobile
payments. Excellent.Ben Kepes, journalist.
Expands potential client base Encourages existing clients to take-up cloud offering
Multiple benefits for MYOB clients
+ Manage business on the go+ easy, secure way to get paid fast+ enables SMes to improve their cash flow
Limited release in Q1 in Australia, general release in Q2 2014, New Zealand launch 2H 2014
16MYOB FY13 RESULTS PRESENTATION
MYOB add-on solutionsMYOB released an API to AccountRight Live in 2H 2013. MYOB now has more than 1,200 developer partners with almost 800 working against the API and over 70 having released solutions to the market. These solutions enhance the MYOB platform by extending the capability beyond what exists inside the product.
“MYOB’s move into the cloud is looking really good. For us the API is the critical piece and
means our Mobileezy field sales and order entry software will be right there with you.”
David M Bennett, Managing Director at Anigo Systems
Agenda
17MYOB FY13 RESULTS PRESENTATION
MYOB FY13 Financial Summary
18MYOB FY13 RESULTS PRESENTATION
A$m; FY ended 31 Dec(1) 2011 2012 2013 V%
Revenue 204.3 217.6 246.6 13%
Gross Profit 187.8 200.5 224.0 12%
Operating Expenses (86.9) (94.0) (103.1) 10%
EBITDA 101.0 106.5 120.9 14%
13% revenue growth
92% recurring revenue
10% increase in OPEx to fund strategic growth initiatives
14% EBITDA growth
49% EBITDA margin
Note:1: FY13 includes 7 months contribution from BankLink (acquisition completed 31 May 2013)
Summary of FY 2013 resultsStrong revenue growth with continued investment in business.
Key Takeaways
Income Statement
19MYOB FY13 RESULTS PRESENTATION
the market for cloud-based accounting solutions continues to grow, particularly at the micro segment
>50% of new users purchasing cloud solutions by year end
Historic Revenue
MYOB’s growing subscriber base driving an increase in recurring revenue to 91%
Upcoming launch of MYOB essentials enhances and strengthens competitive position
Large opportunity to monetise non-paying installed desktop base
Market Segments Products
Micro & Small Business
Market and Divisional Update
perpetual licence revenuerecurring revenue
20
0
40
60
80
100
120
140
2010 2011 2012 2013
87 91 102 114
2321
17
11109 112
119125
91%
A$m
[CAGR 9%]
[CAGR 5%]
Business Division – 51% of revenueStrong growth in subscription and maintenance revenue as cloud user base grows.
Division Overview
“From an accountant point of view, usability, price and functionality
works for our clients and gives MYOB an advantage over its competitors.”
Matthew Jones, Jones Accounting Services.
“If you are serious about running the best accounting software into the future, then MYOB AccountRight
Live is the answer.“Peter Mayer, Purna Yoga P/L
20MYOB FY13 RESULTS PRESENTATION
Increased client demand, investment in sales team and acquisition of BankLink driving growth in accountant base and revenue.
31%Revenue growth
Strategic investment in sales force in 2014 to cater for demand increase in SME products
97% Recurring revenue
BankLink has proven to be a highly strategic acquisition, outperforming expectations in the first year
Accountants Division – 39% of revenue
Continued innovation and improved integration between Accountant and SME products helps deliver connected accounting vision and the common ledger
Historic Revenue(1)
Market Segments Products
Accountants
Market and Divisional UpdateDivision Overview
10
0
30
40
50
70
80
90
20
60
100
2010 2011 2012 2013
63 67 71 74
20
6671
74
97
97%
A$m
perpetual licence revenue recurring revenue [banklink]recurring revenue
[CAGR 6%]
[CAGR 14%]
“The new platform is comfortable, intuitive and easy. In terms of functionality, it’s easier to access client records and it’s also easier entering timesheets. It’s simple to navigate and you can link into the various
fields a lot more logically than with the classic.”Val Coburn, Farquhar Accountants
Note:1: FY13 includes 7 months contribution from BankLink (acquisition completed 31 May 2013)
21MYOB FY13 RESULTS PRESENTATION
Continued expansion of the partner network in Australia and New Zealand, now the largest in our tier.
18%Growth in subscription revenue
Introduction of additional functional modules such as CRM and social media integration
67% Recurring revenue
9% Revenue growth
New cloud-based ERP solutions under development
5
0
15
20
10
25
2010 2011 2012 2013
8 10 12 13
20
7 7
7
71516
18
20
67%
A$m
perpetual licence revenuerecurring revenue
[CAGR 18%]
[CAGR 9%]
Historic Revenue
Market Segments Products
Medium-sized Businesses
Market and Divisional Update
Enterprise Division – 8% of revenueStrong growth continues as partner network expands and new functional modules are added.
Division Overview
“EXO has given us a vehicle to forecast and plan our business.”
Perri Kallergis, Town and Country
“Job costing and accounting in one package has freed up our time
dramatically.”Shamilla Jayasuriya, Landells
22MYOB FY13 RESULTS PRESENTATION
7010
600
50 0 400
30
110 40 1000
90
20
800
2010 20102011 20112012 2012 20122013 2013 2013
MYOB HeadcountMYOB R&D ExpenditureMYOB Operating Cost Base
94.1 103.2 29 79829 77730 84736 1000
A$m A$m spent on R&D Total Number of MYOB Employees @ 31 December
10% increase in operating cost base More than A$120m spent on R&D over last four years 153 employees added in 2013
14% EBITDA growth
Highly successful BankLink acquisition22%
Paying clients using the cloud
>50% New clients registering cloud solutions
13% Revenue growth
New suite of cloud solutions with enhanced features in market in 2014
Continued investment driving MYOB success
Ongoing significant investment is delivering resultsInvestment in business through 2012 and 2013 has driven MYOB success in FY13.
“Based in Bathurst in regional NSW ARLive has revolutionised the way I interact with clients. Reduced travel times have given me
the opportunity to provide more services to clients. With Live bank feeds I can monitor accounts more regularly providing more
frequent financial reporting to clients which gives them the ability to plan and respond much quicker.”
Leanne Berry, Owner at The Numbers Game, NSW.
23MYOB FY13 RESULTS PRESENTATION
Strong and stable balance sheetStrong cash generation and pay down of debt continue to strengthen MYOB’s balance sheet.
Balance Sheet $ Million Dec 2012 Dec 2013
Cash 5 34
Goodwill 740 810
Intangible Assets 455 453
Other Assets 22 36
TOTAL ASSETS 1,222 1,333
Senior Debt 408 474
Subordinated Notes 155 155
Other Liabilities 103 96
TOTAL LIABILITIES 666 725
TOTAL EQUITY 556 608
Senior leverage Ratio 4.01x 3.64x
Total leverage Ratio 5.45x 4.86x
Balance sheet continues to improve, driven by earnings growth and strong cash flow
Continued amortisation of intangible assets (commercialised software, customer relationships and brand)
Strong cash generation, with cash increasing by $40 million before $12 million debt repayment in December 2013
Increase in goodwill, senior debt and equity from BankLink acquisition
Key Takeaways
24MYOB FY13 RESULTS PRESENTATION
4.0
3.0
6.0
5.0
(x)
LTM Dec 2012 LTM Dec 20131
Total Leverage Ratio2
5.45x4.86x
2.0
1.0
5.0
4.0
3.0
LTM Dec 2012
(x)
LTM Dec 20131
Senior Leverage Ratio
4.01x
4.40x
3.64x
1.6
1.0
2.8
2.2
(x)
LTM Dec 2012 LTM Dec 20131
Interest Coverage Ratio
2.39x 2.40x
1.60x
1.0
0.8
1.8
1.4
1.6
1.2
LTM Dec 2012
(x)
LTM Dec 20131
Cash Flow Cover Ratio
1.35x
1.62x
1.05x
30% Covenant Headroom
17% Covenant Headroom
33% Covenant Headroom
NOTE 1: Includes 5 months pro forma contribution from BankLink (acquisition completed 31 May 2013) NOTE 2: No formal covenant for Total Leverage
Credit profile continues to strengthenIn line with strong financial performance, cash flow generation and covenant headroom continue to increase.
MYOB RatioSenior Debt Covenant
25MYOB FY13 RESULTS PRESENTATION
A$m; FY ended 31 Dec FY2012 FY2013
EBITDA 106.5 120.9
Change in NWC (4.8) (3.5)
Capital expenditure (12.5) (17.9)
Operating cash flows 89.2 99.5
Cash conversion 84% 82%
Net cash movement (4.5) 28.4
Cash & cash equivalents 5.3 33.6
Financial highlights
Key Takeaways
82% operating cash conversion
Healthy cash position going into 2014
Cash flow profileStrong cash flow conversion continues resulting in healthy cash position.
$99.5million operating cash to cover $53 million of interest payments
$11.5million senior debt repayment made in December 2013
$28.4million Net cash movement
Agenda
26MYOB FY13 RESULTS PRESENTATION
MYOB FY13 Summary
27MYOB FY13 RESULTS PRESENTATION
Leverage level reduced
Strong financial performance and cash flow conversion reducing leverage levels
Revenue growth
Consistently delivers revenue growth
Investment
Ongoing significant investment in both product development and sales channels
Earnings Quality
Recurring revenue increased to 92% of total revenue improving the quality of earnings
Bigger and better
MYOB generates more than 2.5x the revenue of its nearest competitor and works with 1.2 million businesses and 40,000+ accountants and other business partners
Innovation
MYOB is innovating and delivering on its new generation product development
• Release of mobile payments highlights the capability of MYOB’s cloud offerings
• Increased focus on micro business accounting and competitive position with launch of MYOB Essentials
Cloud growth
The market for cloud-based accounting solutions continues to grow strongly with MYOB performing strongly in both new client acquisition and migration of the paying base
Summary of 2013
Agenda
28MYOB FY13 RESULTS PRESENTATION
MYOB FY13 Q&A
Agenda
29MYOB FY13 RESULTS PRESENTATION
MYOB FY13 Appendix
30MYOB FY13 RESULTS PRESENTATION
MYOB Holdings Income Statement
A$m; Full Year ended 31 Dec 2012 2013 V%
P&L
Revenue 217.6 246.6 13%
COGS (17.1) (22.6) 32%
Gross Profit 200.5 224.0 12%
Expenses (94.0) (103.1) 10%
EBITDA 106.5 120.9 14%
EBITDA Margin 48.9% 49.0%
Other Costs (12.9) (14.7) 14%
Depreciation/Amortisation (63.1) (65.0) 3%
EBIT 30.5 41.2 35%
Net interest (46.3) (52.8) 14%
Debt Cost Amortisation (6.2) (7.2) 17%
Profit Before Tax (22.0) (18.8) -15%
Tax 7.2 4.7 -35%
NPAT (14.8) (14.1) -5%
NPATA 27.2 28.9 6%
Income Statement
31MYOB FY13 RESULTS PRESENTATION
Financial Covenant Analysis
$Million, unless otherwise notedProforma LTM Sep 2012 from
Prospectus
LTM 31 Dec 2012
LTM Jun 2013 LTM Dec 2013Senior Facility
Covenants
Note Covenants
Suspension of Interest Condition
Restriction of Additional Debt and
Distributions
LTM CovenantA EBITDA 106.7 107.5 121.2 126.9
LTM CovenantA Cashflow 92.9 89.5 99.9 107.4
LTM CovenantA Cashflow conversion 87.1% 83.3% 82.4% 84.6%
Cashflow Cover Ration1 (times) 1.47 1.35 1.53 1.62 Not less than 1.05Not less than or equal
to 1.10
Senior Leverage Ratio2 (times) 4.04 4.01 3.95 3.64 Not greater than 4.40
Interest Cover Ratio3 (times) 1.92 2.39 2.53 2.40 Not less than 1.60
Total Leverage Ratio4 (times) 5.45 5.45 5.23 4.86 Not greater than 5.50
NOTES1. Cashflow/debt service
2. Senior net debt/EBITDA3. EBITDA/Senior net cash interest costs
4. Senior net debt + subordinated notes /EBTDA
A. Jun-13 Adjusted to include 11 months of BankLink pro-forma EBITDA; Dec-13 adjusted to include 5 months
Financial covenants - detailStrong cash flow and interest coverage.
32MYOB FY13 RESULTS PRESENTATION
Covenant cashflow (covenant EBITDA adjusted for movements in net working capital and capex) of $107.4 million results in a 84.6% cash flow conversion ratio
• Covenant EBITDA, cashflow and debt service adjusted to add 11 and 5 months of BankLink pro-forma EBITDA and debt service, for Jun-13 and Dec-13, respectively
Cashflow cover of 1.62x (up from 1.35x)
• 30% headroom vs senior debt covenants
• 27% headroom vs Notes covenants
Senior leverage of 3.64x (down from 4.01x)
• 17% headroom vs senior debt covenants
Interest cover of 2.40x (in line with Dec-12)
• 33% headroom vs senior debt covenants
Total leverage of 4.86x (down from 5.45x) Overall MYOB is performing well within its senior debt and notes covenants
Financial covenants - detailStrong cash flow and interest coverage.
33MYOB FY13 RESULTS PRESENTATION
Thank you