DWS Limited 2013 FULL YEAR RESULTS PRESENTATION. Excellence

Transcription

1 DWS Limited 2013 FULL YEAR RESULTS PRESENTATION Excellence

2 DWS Limited FY2013 RESULTS PRESENTATION 1. Introduction Danny Wallis (CEO) Lachlan Armstrong (CFO) 2. Results Presentation Headlines Full Year Financial Results 4. Apt Business Solution Acquisition 5. Operations Update I. Adapting to the market II. 6. Dividend and Outlook 7. Summary 8. Questions Expanded Service Offering Excellence

3 Financials Operations FY13 revenue down $611K to $109.05M FY13 EBITDA down 8% to $24.32M HY13 earnings down 7% to $16.86M EPS cents (PCP cents) Final fully franked dividend of 5.50 cents per share, representing a total payout ratio of 86% for FY13 Stable payout ratio maintained while enabling acquisitions program to continue Operating cash flow (before interest and tax) of $24.55M. Ratio of operating cash flow to EBITDA 101% Balance sheet remains strong with zero debt and net cash of $11.79M Trading conditions throughout the year were difficult with reduced demand across a range of client sectors Clients have been focussing on cost control and deferring capital project expenditure Demand from Banking and Financial Services, Resources, and Fed Govt. (ATO & Defence) was solid Headcount reductions were undertaken to keep billing capacity at the optimum levels (total cost of ~$550K) Total consultant numbers as at 30 June 2013: 535 (June 2012: 568) Growing demand for integration services around DWS Business Process Automation cloud product (iapply) Commencement of offshore operations delayed due to contract negotiations and will now start in Q1, FY14 DWS JV with Borealis formally commenced operation on 1 July 13 after extensive planning activity during Q4 Continuing to assess EPS accretive acquisitions

4 H ($ 000) H ($ 000) Total FY2013 ($ 000) Total FY2012 ($ 000) % Movement Revenue from continuing operations 55,444 53, , ,644 (.56%) Gross Margin 36% 37% 36.7% 38.8% EBITDA 11,845 12,479 24,324 26,399 (7.86%) EBITDA Margin 21% 23% 22% 24% NPAT 8,306 8,552 16,858 18,221 (7.48%) Contribution from Associates (61) (73) (134) - Revenue performance was flat against PCP H2 utilisation stable on lower staff base Weighted average revenue per billable consultant in FY13 $201K (FY12: $199K) Average utilisation per billable consultant in FY13 75% (H1: 75%, H2: 75%), (FY12: 76.4.%) Gross margin improved in H2 as a result of: Stable utilisation rates being achieved 1 Higher margin project work H2 EBITDA improved notwithstanding significant operating headwinds Associates investment maintained in H2 with consulting staff transitioned from DWS QLD operations on 1 July 13 BDC will therefore contribute to earnings from FY14 Basic EPS 6.27 cents 6.47 cents cents cents (7.48%)

5 Revenue by Sector Analysis FY2013 Defence 4% State Govt 7% FY2012 Transport 6% Resources 7% Utilities 8% Banking & Finance 23% Federal Govt 15% Transport 7% Utilities 12% State Govt 8% Banking & Finance 15% Defence 2% Federal Govt 13% FMCG 6% ICT 18% FMCG 6% Health 2% Other 4% Resources 5% Other 5% ICT 26% Health 1% Significant pull-back in demand from ICT and Utilities sector clients dragged on Vic operations Improved demand from Banking & Financial Services sectors Revenue from Resources continued to grow with development of the BDC joint venture Revenues from Defence have been strengthened with the acquisition of Apt - demand from other Federal Government clients has been patchy

6 JUNE 2013 $ 000 JUNE 2012 $ 000 Cash & Equivalents 11,792 15,206 Receivables 20,021 23,568 Work in Progress 4,160 2,733 Debt / Borrowings NIL NIL Working capital 23,843 28,900 Stable cash position maintained despite acquisition program funding ($5.7M acquisition of Apt in December 2012 from cash) Debtor days also remain stable despite cyclical challenges a benefit of previous system / process improvements Change in tangible asset mix reflects the allocation of capital to the Apt Business Solutions acquisition Net Tangible Assets 27,775 32,289 NTA per share (cents)

7 June 2013 $ 000 June 2012 $ 000 Opening Cash Balance 15,206 10,977 Cash flow from Operations (before interest & tax) 24,554 30,392 Tax Paid (6,423) (9,120) Capital Asset Purchases (636) (1,171) Acquisition Costs (5,845) (300) Dividends Paid (15,552) (16,214) Cash flow before interest and tax represents $24.55M (or 101% of EBITDA) Capital asset purchases office fit-out for Sydney including secure application managed service facility Acquisition Costs Apt Business Solutions completed in December 2012 (further capex expected in H1 2014) Jadelynx complete in April No earn-outs / deferred consideration Interest Income & Other Closing Cash Balance 11,793 15,206

8 Staff Summary June 2013 June 2012 June 2011 Consulting Staff Total chargeable Management Office Staff BD/Sales Admin Grand Total Continued focus on ensuring business remains rightsized in both billable and non-billable head count Offshore recruitment activity commenced in July 2013 adding capacity in H Chargeable headcount assigned to BDC operation from 1 July 2013 Selective recruitment activity is occurring in H where warranted Full staff by geography 2013 SA 9% Geelong 2% Specialist practices 4% QLD 15% WA 2% NSW 8% Billable head count Vic 55% ACT 5%

9 Apt Business Solutions (Apt) Acquisition Acquisition of business assets effective from 1 December 2012 Total consideration - $5.70M Funded 100% from cash, no further consideration payable $156K in fixed assets $5.54M in goodwill / intangibles Apt is a specialist outsourced application managed services business based in the ACT providing services to several large Federal Government departments Apt has signed multi-year managed services contracts with Federal Government agencies, including Dept. of Defence, all of which have been transferred to DWS This acquisition also sees DWS take possession of a Federal Government security certified premises for conducting secure offsite software development activity DWS will be expanding this facility to provide greater capacity for additional secure application managed services work to be undertaken for Defence clients. This expanded facility is expected to be operational in mid-october 2014 Apt is an important part of DWS strategy to increase its application managed services footprint with Federal Government agencies. Such contracts typically provide strong annuity revenue flows with the work completed on-shore.

10 Adapting to the market The operating environment over the past five years has been volatile, characterised by: Global economic issues Political instability Rapid technological change Structural changes (eg offshore providers) Technological and structural changes have required DWS adapt to the market. To date, this has included: Introduction of a new offshore operation in Manila to deliver a blended rate offering Initial focus on application managed services and testing services Expansion anticipated in FY14 and beyond Introduction of isolutions business process automation cloud technology Strong demand from all sectors Particularly strong in Government where cost reduction via process automation is a core objective Introduction of Insight Analytics BI specialist practice Further investment in human capital required in FY14, demand remains strong Created a strategic JV with Canadian Software company Borealis Has greatly increased DWS presence is Resources Sector where historically DWS has been underweight

11 Expanded Service Offering DWS will continue to invest into our existing services portfolio, but will focus on expanding our service offerings over the next five years Areas of expansion may include: SAAS Applications Integration Digital & Mobility Cloud / Infrastructure Managed Services Application Managed Services High Security Onshore and blended Onshore / Offshore capabilities Additional Strategic Partnerships (eg Borealis JV) We expect this expanded offering to come from a combination of EPS accretive acquisitions and investment into the extension of existing products and services (eg isolutions) Strategic objectives: Maximise utilisation of existing resources across a broader range of solution offerings Increased proportion of annuity revenue streams Extend offshore delivery capability inline with existing market demand Exploit existing strategic client positioning for cross-sell opportunities

12 Outlook Dividend Political instability (incl. election) continues to weigh heavily on local business sentiment. Expect improvements in CY14 Q1 indicates clients are continuing to defer capex and focus on cost reduction Q1 Banking & Finance strong, most other sectors remain subdued Dividend payout ratio has been maintained at high levels due to strong operating cash flows 100% franking for Australian shareholders at 30% tax rate isolutions activity on business process automation / cost reduction initiatives remains strong Trading update will be given at AGM in Nov Selective recruitment activity is occurring subject to demand (Vic / QLD / WA / Insight Analytics / Offshore) - no recruitment in ACT / NSW/ SA Balance sheet remains strong which enables different funding options to be considered for EPS accretive acquisitions June 2013 Dividend 5.50 cents Total Payout Ratio 87% Record Date 14 September 2013 Expected Pmt Date 4 October 2013

13 Summary Achieving a sustainable and differentiated competitive offering requires DWS to progressively reposition Immediate focus however, remains on existing business operations to minimise the impact of the cyclical downturn Expect H1 14 to be tough July trading has been soft outside of Victoria Expect pick-up in business sentiment to occur in CY14 Our business remains strong overall and we are maintaining stable cash flows Our broader growth strategy will see DWS: Expand our application managed services capability (both onshore and through blended onshore/offshore models) Continue to invest into existing business lines (eg isolutions) where demand is strong Expand service offerings through acquisition (eg Digital / Mobility / SAAS Apps / Cloud) Leverage our growing partnership network to build a differentiated offering (eg BDC) Fundamentals for growth remain positive in FY15 (assuming political stability)

14 DWSAustralia DWSConsulting Company/DWS