for personal use only mark hubbard – finance director€¦ · · 2011-08-31expensed ($1.3m+) in...

INSPIRE CREATEDELIVER

UXC FY11 Results and Outlook

September 2011

Cris Nicolli – Managing DirectorMark Hubbard – Finance Director

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FY11 Results and Outlook Inspire CREATE Deliver

Significant Progress on a New Strategic Direction

Agenda

Strategy and OutlookUXC Strategic Plan Phase IProgress - Strategy updateFY11 HighlightsFinancial ReviewUXC Strategic Plan Phase IIUXC PositioningMarket ConditionsSummary

Financial ReviewFinancial HighlightsContinuing OperationsDiscontinued OperationsBalance SheetCash flowRevenue ModelAppendices – summary financialsQuestions

UXC strives to be the leading Australasian ICT Serv ices and Solutions Company, delivering value, innovation and responsiv e business outcomes

with excellent people

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The “Old” UXC

2002 FY11

Grows into an aggregated

20 business unit services

and solutions company

IT Group

Providing IT Solutions in Consulting,

Business Applications and Infrastructure

that support our customers to design,

implement & enhance, and operate &

manage their IT requirements

Field Solutions Group (FSG)

Providing outsourced infrastructure and

end-to-end services to utilities and

governments that support our customers

to create and manage their utility and

environmental assets.

FY11 Continuing Operations:

Revenue $522m

EBITDAC $37.3m

FY11 Discontinued Operations:

Revenue $210m

EBITDAC $14m (normalised)

Feb 2011

Implements strategy to

decouple IT Group from

Field Solutions Group via

demerger or divestment of FSG

Formed by the merger of Utility

Services Corporation and

DVT Holdings

FieldSolutions

Group

ITGroup

Implement

& Enhance

Design

Operate

& Manage

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FY11 Progress and Achievements

Nov 2010 Announced imperative for demerger or divestment of Field Solutions Group from IT Group

Feb 2011 Commenced execution of detailed strategic planPlan to remediate, sell or close FSG businessesSimplification of IT Group structure

July 2011 Announced Agreement for the sale of Field Solutions Group for $61m including $5m earn outProceeds exceed $53 net assetsCompletion expected imminently

Balance sheet strengthened - debt significantly reduced, further reductions from sale proceeds

Shareholder returns strengthened through proposed 2 cents per share return of capital(subject to completion of divestment and shareholder approval at AGM in November)

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FY11 Progress and Achievements

Completed simplification of our IT business (spent $1.1m in transformation)

Integration of GQ-AAS, Lucid IT, Opticon,UXC IM, Planpower & UXC Training

Integration of XSI, Connect, Integ

Bid for a number of large projects: WorkSafe/TAC, CWW, Qld Health, Laminex, Dulux, Breville – all expensed ($1.3m+) in the FY11 P&L

July 2011 backlog of business up by 10% over prior year

Added $150m in new contract commitments since 1 July

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New UXC Overview

Record performance from IT Group. Achieved Revenue of $522M

UXC IS A HALF A BILLION DOLLAR IT COMPANY

Measure Achievement

Organic Revenue Growth Up 11% to $522m

Underlying EBITDA Growth Up 7% to $33m

Debt reduction – net debt Down 35% to $25m

Services per client Up by 20%

Clients spending over $1M per annum 100 – Up by 400% in 4 years

High value contract wins $150m from 1 July 2011

Strong client support

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Revenue $522m, up 11%, a record result

Growth from organic sources

Underlying EBITDAC $39.2m, up 3%,

Renewed focus on core activities

UXC IT Operations performed to expectation

Financial SummaryContinuing Operations

FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Revenue $88.747m $129.148m $164.971m $208.125m $294.087m $406.843m $455.816m $470.079m $522.421m

EBITDA $10.283m $15.587m $19.001m $22.399m $30.683m $36.534m $32.941m $38.279m $39.234m

$0m

$5m

$10m

$15m

$20m

$25m

$30m

$35m

$40m

$0m$50m

$100m$150m$200m$250m$300m$350m$400m$450m$500m$550m

EBITDACRevenue

Revenue & EBITDA before Corporate CostsUXC IT Group - Underlying Earnings

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Continuing Operations

Complex set of accounts reflecting the transformation in the business

EBITDA from continuing operations impacted by four factors, and includes:

» $1.1m of transformation costs for the restructure & re-organisation for UXC Consulting and UXC Connect;

» $1.6m of divestment costs associated with the sale of FSG;» $0.8m of costs previously classified within FSG;» $1.3m of bid costs for large contracts – though this is not adjusted out of underlying EBITDA

Underlying EBITDA:

$000s EBITDA

From Continuing Operations, as reported $29,469

Restructure and reorganisation costs $ 1,100

Divestment costs $ 1,600

Reclassification of business $ 800

Underlying EBITDA $32,969

Growth from prior year 7%

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Discontinued Operations

Loss from discontinued operations $24.7m Field Solutions Group» $14.9m 1H11 – previously analysed» $9.8m 2H11 comprised of:

• $7.7m goodwill impairment (discontinued ops not sold - non cash)• $0.9m provision for exit of surplus tenancies• $4.0m after tax profit from sale entities• $5.2m after tax loss from loss making operations and asset revaluations from remainder of the

business

Other write-offs in Continuing Operations:» $4.2m write off for earn-outs » $4.0m write off of JV

Clean start to FY12

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Continuing Substantial Debt Reduction;Cash flow impacted by loss businesses and seasonal factors that affect working capital

Debt ReductionNet Debt down 35% to $25.5m

Gross Debt reduced by $24.1m from prior year

Gearing Ratio reduced to 14.7%

Interest cover over 4 times (though measured as

EBITDA from continuing ops over net interest expense

from all sources)

Financial SummaryBalance Sheet & Cash Flow

Balance Sheet FY 2010 FY 2009

Cash $27,163 $37,758

Borrowings $52,666 $76,765

Net Debt $25,503 $39,007

Opening Cash $37,758

EBITDA Continuing Operations $29,469

EBITDA Discontinued Ops ($11,165)

Working Capital Dec Cont Ops $26,104

Working Capital Inc Disc Ops ($17,371)

Net Borrowing Costs paid ($7,113)

Tax Refund received $6,559

Cash provided from Operations $26,483

Cap Ex and Investing Activities ($10,178)

Financing Activities ($24,365)

Net Decrease in Cash held ($8,060)

FX Movement and Held for Sale ($2,535)

Closing Cash Balance $27,163

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Revenue Model

Business type Scale

($m)

Typical engagement

(type of work/

length of contract)

Typical

customer type

EBITDA margin range UXC Opportunity

Consulting ~ $70m T&M

3 – 12 months

Finance, Telco,

Resources

~9%

Med term goal ~12%

Margin Improvement,

utilisation and scale

Applications ~ $225m T&M, project

6 mths – multi year

Resources,

Manufacturing,

Utilities

~10%

Med term goal ~11.5%

Dominant player,

greatest depth, larger

projects

Infrastructure ~ $225m T&M, SLA, annuity

6 mths – multi year

Health,

Government,

Utilities,

Resources

~5%

Med term goal ~5.5%

Increasing size of

contracts, leverage of

scale, increased

productivity

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Strategy Phase II

» Building UXC to be a significantly larger Australasian IT leader and be the # 1 alternative to the multi-nationals for large complex SI and managed services contracts

» Drive earnings improvement in quality and value

» To further advance our position in the ERP application implementation and SI segment

» Strong focus on large client retention and new wins

» To continue to build UXC business in the mid enterprise market to provide balance to our client portfolio mix

» To retain and increase our market leading position in key technology segments by organic growth and acquisitions

» Manage the business with a more conservative balance sheet

» Look for market consolidation opportunities

» Promotion of UXC brand to leverage business

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UXC IT Company Vision

“To be the leading Australasian IT Services and Sol utions company delivering value, innovation and responsive business outcomes with ex cellent people”

We are:

» Unique in our scale, through the depth and breadth of our capability coupled with local management

» Unrelenting in creating a reputation and reality that is customer centric and value adding, through the quality of our service and character of our staff

» The number one alternative to multi nationals in our market space

» A safe, pragmatic “go to” organisation

» Agile and easy to do business with

» Leveraging our preferred vendor partner relationships for our customers

» Focussed on attracting and retaining the best and most talented employees in our industry

» Inspired to create and deliver sustained stakeholder value

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Our Five Strategic Pillars to Drive Growth

People • Engaged &

Valued• Committed• Empowered• Positive &

Decisive• Highly Capable• Easy to Deal

with• Fair Return in

UXC Success• Community

Giver• IT Choice for

Staff

People • Engaged &

Valued• Committed• Empowered• Positive &

Decisive• Highly Capable• Easy to Deal

with• Fair Return in

UXC Success• Community

Giver• IT Choice for

Staff

Customers & Market

• Largest Scale• True

Alternative to Multinationals

• Nimble,Flexible

• OutcomesFocussed

• Large Client Retention &Wins

• RecognisedBrand

Customers & Market

• Largest Scale• True

Alternative to Multinationals

• Nimble,Flexible

• OutcomesFocussed

• Large Client Retention &Wins

• RecognisedBrand

Products & Solutions

• Focus on Core& Adjacencies

• Staff Capability

• VendorRelationship

• NewTechnologies

• MarketingCapability

• SalesCapability

• Life Cycle Mgt

Products & Solutions

• Focus on Core& Adjacencies

• Staff Capability

• VendorRelationship

• NewTechnologies

• MarketingCapability

• SalesCapability

• Life Cycle Mgt

Operational Excellence

• Ulilisation• GM

Improvement• OH Reductions• Process

Simplifications• Risk

Management• Project Delivery• Standardisation

Operational Excellence

• Ulilisation• GM

Improvement• OH Reductions• Process

Simplifications• Risk

Management• Project Delivery• Standardisation

Investors• Trusted by

Community• Transparency &

Governance• Regular

Communication• Strong Free

Cash• Earnings

Improvements• Conservative

Balance Sheet• Shareholder

Returns

Investors• Trusted by

Community• Transparency &

Governance• Regular

Communication• Strong Free

Cash• Earnings

Improvements• Conservative

Balance Sheet• Shareholder

Returns

M

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Teams within Teams within TeamsTeams within Teams within Teams

11 22 33 44 55

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Growth Drivers

» Continue to be clear # 1 in Applications segment especially Red Rock with Oracle, Eclipse with Microsoft and Oxygen with SAP

» Continued drive for services revenue and multi year contracts

» Oracle based business Red Rock leading growth and client wins

» Growth achieved despite large internal transformation program

» Significant investment and cost in large scale multi year contract and panel renewals should be rewarded

» Drive to increase utilisation and GM improvement

» Reduction in cost base through standard systems and increased efficiency

» Selected acquisitions

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Staff by location

1,688

150

12 40

3

1

FIJI

CANADA

16

Brisbane 220

Sydney 550

Melbourne 600

Hobart 30

Adelaide 60

Perth 80

Canberra 150

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IT Group Overview

Mobility

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New Simplified Structure

Advisory, Professional Solutions, Training

Infrastructure, Communications, Networks,

Mobility, Outsourcing, Support

MicrosoftOracle SAP

Applications

Delivering the IT needs of more than 2,500 businesses and Government

organisations across Australia and New Zealand

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Strong Industry Partnerships

Applications Infrastructure

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Latest Gartner Rankings – UXC is #2!

Source: Gartner IT Services Asia/Pacific Market Share, May 2011

Consulting

Market Share

2010

Name %1 IBM 9.1%

2 UXC 7.0%

3 Accenture 5.9%

4 KPMG International 5.2%

5 Ernst & Young 4.4%

6 CSC (Comp.Sci.Corp.) 4.4%

7 Deloitte 4.1%

8 PricewaterhouseCoopers 4.0%

9 SMS 3.0%

10 Oakton 2.6%

11 Salmat 2.2%

12 Dimension Data 1.3%

13 HP 1.3%

14 Mincom 1.2%

15 SAP 1.1%

16 Unisys 0.9%

17 McKinsey & Co. 0.9%

18 CPT Global 0.8%

19 DWS 0.7%

Other Providers 39.7%

Software Support

Market Share

2010

Name %

1 HP 13.0%

2 Oracle 4.4%

3 Salmat 3.6%

4 IBM 3.2%

5 Microsoft 2.6%

6 Symantec 2.3%

7 CSC 2.2%

8 UXC 2.2%

9 SAP 2.1%

10 Sage 1.8%

11 CA Technologies 1.8%

12 Cisco 1.7%

13 Datacom 1.3%

14 Mahindra Satyam 1.2%

15 Accenture 1.1%

16 Fujitsu 0.9%

17

Tata Consultancy

Services 0.9%

18 Unisys 0.9%

19 Parametric Technology 0.9%

Other Providers 51.9%

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Breadth and Depth of Customers

90141

193

376

150966%

10% 11%9%

3%0%

10%

20%

30%

40%

50%

60%

70%

0

200

400

600

800

1000

1200

1400

1600

Account Rev : $1m

& above

Account Rev : $500K

to $1m

Account Rev : $250K

to $500K

Account Rev : $100K

to $250K

Account Rev <

$100K

Percentage of Revenue

No. Client Accounts

This number has been reduced to

approximately 900 in 1st half

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IT Group Growth

2004

Revenue: $130M

Staff: 800

$1M+ Customers: 5

Access Level:

Mid – Snr Mgt

Revenue: $130M

Staff: 800

$1M+ Customers: 5

Access Level:

Mid – Snr Mgt

Revenue: $300M

Staff: 1250

$1M + Customers: 25

Access Level: Snr – Exec Mgt

2007

2011Revenue: $522M

Staff: 1800+Contractors

$1M Customers: 110

Access Level: CXO

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UXC – DifferentiatorsUnique Breadth, Depth and Size

» #1 Oracle in Australia & AP

» Global leader in Microsoft – AX Global Partner FY11

» Top 3 in SAP

» Strong Business Intelligence practice

» Strong Integration, Project and Risk Management

Leading

Applications

Capability

800 Staff

Leading

Applications

Capability

800 Staff

Strong

Infrastructure

Business

750 Staff

Strong

Infrastructure

Business

750 Staff

Strong

Professional

Services &

Advisory

350 Staff

Strong

Professional

Services &

Advisory

350 Staff

» Managed Services

» Unified Communications

» Networking

» Contact Centres

» Storage Management

» Cloud Services

» Telecommunications

» IT process improvement

» Project Management

» Systems Integration and testing

» Capability development and training

» Transformation

» Engineering Solutions

» Cloud Services

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Major WINS In Past Six Months

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Strategic Objective #5: Our Investors

Investors

» Delivery of above market shareholder returns

» Respected by the investor community

» Prudent management of the business

» Transparency and Governance

Key Initiatives – next 12 months

» Improvements in working capital management

» More conservative Balance Sheet Management for 12-18 months

» Increased communication & transparency with Investors

» Increase core institutional investors to 25% of book

» Enhance Coverage and Corporate PR Capability

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Market Conditions and Outlook

» Robust book of work and positive pipeline

» Some caution based on Global issues and potential flow on impact to ANZ market

» Spending expected to stay positive

» Staff retention and attraction will continue to be a major source of opportunity and challenge

» New technologies will create more opportunities

» Key growth areas will include ERP solutions, secure mobility, managed services, analytics, cloud services, customer focus

» Focus on operational improvements should provide upside in late FY12

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» Major focus on operational improvements should provide upside in late FY12 and then ongoing

» Expand further into WA and Queensland to provide full UXC capability and depth

» Investment in Enterprise team to drive strategic architecture within key clients

» Investment in new solutions – cloud, secure mobility, analytics

» Selected acquisitions to build on strategic positioning in targeted market segments

» Have a plan to achieve double digit earnings improvement

Market Conditions and Outlook

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Summary

» FY11 Underlying EBITDA of $33m from IT operations – satisfactory improvement and benchmark for expected future improvement

» FY11 complex results highlight the transformation to the new UXC

» FSG sold. Debt reduced, balance sheet strengthened

» “Simplification” substantially done - clean start to FY12

» Built a premium, leading Pure IT Company with unique position in a growing IT industry with a strong track record

» Significant opportunities for growth and improved margins

» Strive to consistently increase earnings and improve returns for shareholders

» Increase transparency and governance

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Appendices

» Income statement summary

» Balance sheet summary

» Cash flow summary

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Financial Highlights from Continuing Operations

– Income Statement

Statutory Results FY10 FY11 Change % Note

Revenue $470m $522m +11% Record result in

unsettled & distracting

period

EBITDA $30.8m $29.5m -4% Impacted by four

factors

NPAT $20.3m $4.5m -78% Impairments and loss

on disposals

Diluted Reported EPS 7.11 1.48 -79%

Return of Capital nil 2 cents p.s. Subject to shareholder

approval at AGM

Underlying Results FY10 FY11 Change % Note

EBITDAC $38.3m $39.2m +2% $1.9m transformation

& other costs

EBITDA $30.8m $33m +7% $1.6m Divestment

costs

PBT $18.6m 20.8m +12% Earnings growth

above revenue growth

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Financial Highlights – Balance Sheet

*Includes assets held for sale

**Includes liabilities directly associated with assets held for sale

FY10 FY11 Change % Note

Cash assets $37.8 $27.2m -28% cash used in debt

reduction

Total Current Assets* $214.8m $243.4m +12% Held for sale

Goodwill & intangibles $183.0m $150.3m -18% Divestments

Total Non Current Assets $232.6m $174.1m -25% Held for sale

Current debt $27.0m $24.0m -11%

Total Current Liabilities** $198.4m $210.5m +6% Held for sale

Non current debt $49.8m $28.7m -42% debt reduction

Non current liabilities $55.7m $34.5m -38%

Net assets $193.3m $172.4m -11% Discontinued Ops


Net debt $39.0m $25.5m -35% Further reductions

from proceeds

Net debt / Equity % 20% 15% -25%

EBITDA / Net Int Expense (x) 4.4 4.6 +5%

Return on assets (%)*** 6.7% 7.9% +18%

Return on equity (%)*** 15.5% 19.1% +23%

***Underlying EBITDA

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Financial Highlights – Cash Flows


Receipts from customers $842.4m $800.1m

Payments to suppliers &

employees

$803.9m $773.1m

Operating cash flows $27.9m $26.5m Strong H2 cash flows:

+10% vs pcp.

Capex $7.0m $6.0m

Payments for other

intangibles

$4.8m $5.0m

Investing cash flows ($10.7m) ($10.2m)

Net Borrowings $58.3m $24.3m

Repayment of borrowings $68.7m $48.6m

Financing cash flows ($8.9m) ($24.4m) Dividends will be paid in

line with performance

Cash at the end of he

financial year

$37.8m $27.2m

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INSPIRE CREATEDELIVER

UXC FY11 Results and Outlook

September 2011

Questions?

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for personal use only mark hubbard – finance director€¦ · · 2011-08-31expensed ($1.3m+) in...

Documents