Contact FY20 Full Year Results 29th May 2020 1
Building the future of global communication using machines and humans together 2
BUSINESS UPDATE ______________ Grant Straker Chief Executive O ffi cer 3
On track for ~$40m* run rate prior to COVID-19 Pre COVID-19 Post COVID-19 40 Di ff erence related to: • pausing an acquisition 30 • softening of core revenue in March 20 10 0 Q1 Q2 Q3 Q4 4
Successfully acquiring and integrating strategic acquisitions Expand reach into industrial base in APAC Paused Expands reach into Wellington Industrial customer base in Europe Acquisition #8: DD was completed with an aim of 31 March close. Vitoria Europe 5
MEDIA Combined theatrical and home $97bn entertainment markets worldwide was nearly USD 97bn in 2018. Grew Straker Launched our RAY Media Revenue by Media Platform 1.0 55% Worked on a number of the Driven by new relationships with world’s leading box o ffi ce hits in production houses and expanded 2019 relationships with enterprise customers 6
FY20 Financial Performance 7
Strong Financial Position $27.7m 55.2% Group Revenue Translation Gross Margins 55% ($0.58m) Media Revenue Growth Pro-forma adjusted EBITDA 86% $11.2m Repeat Revenue Cash at bank 8
FY20 REVENUE UP 13% TO $27.7M Continued growth in revenue despite short term slowing as business has strategically shifted towards Enterprise Customers 13% 44% 18% growth in EMEA from enterprise tech-enabled translations & 26 27.7 acquired revenue 24.6 20 APAC growth of 10% on the back of acquired revenues from NZTC 13 17 North America up 6%, a ff ected by the closure of Deutsche Bank’s 7 investment banking division and the move to Enterprise 0 FY-18 FY-19 FY-20 - Within North American, Media up 55% COVID impact from 15th March 2020 YoY Revenue Growth 18% Revenues from repeat customers grow 18% and represent 86% of 26 total 53% 23.9 20 20.2 13 13.2 7 0 FY-18 FY-19 FY-20 9 YoY Repeat Revenue Growth
GROWTH INVESTMENT NZ$m unless otherwise stated FY20 FY19 v FY19 CONTINUES IN FY20 Revenue 27.74 24.59 12.8% Gross M argin 15.20 13.43 13.2% Platform leverage starting to fl ow Gross Margin % 54.8% 54.6% 0.2% Operating Costs (15.81) (13.67) 15.7% Gross margin $ up 13.2% to $15.2m Other Incom e / Costs 0.02 0.08 -70.4% Adjusted EBITDA (0.58) (0.16) -265.3% Gross margin 54.8%. Translation margin % up Adjusted EBITDA Margin % -2.1% -0.6% -1.4% 50 bps to 55.2% bene fi ting from additional work put through our Ai powered RAY D&A (1.26) (0.46) -175.3% platform Adjusted EBIT (1.84) (0.62) -198.5% Adjusted EBIT Margin % -6.7% -2.5% -4.1% Operating costs up 15.7% due to growth investment, as well as additional listed company costs (FY19 did not have a full year of these) Adjusted EBITDA of $(0.58)m down slightly Notes: 1.Earnings adjusted for non recurring costs and amortisation on acquired intangibles. 2.Includes On Global for ten months and NZTC for two months in FY20 Adjusted EBIT of $(1.84)m re fl ects higher D&A 3.FY20 includes the e ff ect of the new lease standard IFRS16 whereby $0.53m of lease due to R&D investment and amortisation costs shift from operating costs to depreciation and fi nance costs. FY19 comparatives do not include this change. 10
REPORTED PBT NZ$m unless otherwise stated FY20 FY19 v FY19 IMPROVED 22% Adjusted EBITDA (0.58) (0.16) -265.3% Acquisition costs (0.77) (0.59) Non-operating (0.53) (0.17) Restructuring costs to align business for future growth EBITDA (1.89) (0.93) -104.0% $0.5m restructuring costs which will result in a lower EBITDA Margin % -6.8% -3.8% -3.0% cost base moving forward in FY21 D&A (1.26) (0.46) Am ortisation on Acq Intangibles* (1.15) (0.68) - These initiatives, as well as initiatives to be implemented are expected to generate $3-3.5m of Im pairm ent (0.80) - annualised cost savings in FY21 IPO Costs (1.95) EBIT (5.10) (4.02) -27.0% Non-cash impairment of $0.8m re Elanex investment EBIT Margin % -18.4% -16.3% -2.1% given impact of Deutsche Bank investment bank closure Net Financing Costs 2.39 (0.47) FX gain of $1.9m on monetary assets, as well as an earnout liability write down of $0.5m re Eule PBT (2.71) (4.49) 39.5% Bottom line Reported Loss Before Tax improves to $(2.71)m 11
STABLE CASHFLOWS & NZ$m unless otherwise stated FY20 FY19 v FY19 STRONG CAPITAL POSITION Adjusted EBITDA (0.58) (0.16) -265.3% Non-operating expenses (0.53) (0.17) Changes in working capital (0.49) (0.73) $11.2m cash and no debt at 31 March 2020 Operating cash flow (1.60) (1.07) -50.4% Paym ents for capitalised software developm ent (1.19) (0.74) Operating cash out fl ow of $(1.6)m, includes restructuring Paym ents for plant & equipm ent (0.24) (0.10) costs of $0.5m Free cash flow (3.03) (1.90) -59.3% Paym ents for acquisitions of subsidiaries (2.21) (2.75) - Underlying operating cash fl ow was stable at $(1.1)m (2.21) (2.75) Investing Cash Flow 19.7% - Cash In fl ows up 12.9%, inline with revenue growth Net Proceeds from issue of shares 0.061 18.67 R&D investments continue with 10% of revenues IPO Costs (0.21) (1.84) invested in FY20, with $1.2m capitalised Lease Liability Paym ents (0.47) Interest Charges (0.07) - Investment went into Ai powered RAY platform and the Paym ent of deferred consideration (1.51) (1.56) new RAY Media platform Financing Cash flow (2.20) 15.27 -114.4% Continued investment in acquisitions, with the purchase N et cash flow (7.44) 10.62 -170.1% of On Global and NZTC 12
COVID-19 Update 13
COVID-19 RESPONSE Re activated online revenue streams Executive reduced remuneration by which provide good cash average 18% for 3Q1 97% of Staff and Board reduced $500k government COVID-19 stimulus remuneration by 10% Executing plan to remove Quickly moved to remote working $3-3.5m of operating costs 14
Executing on Strategic Priorities Remain focused on becoming a $100m revenue company Become the most Drive organic Aim to be a top 10 Media productive translation and acquisitive Localization company company in the world enterprise growth 15
23% Growth in the Jobs running on the Ray AI number of business Platform run at 56% margin customers using the and have grown by 25% RAY platform 25% 25 2,700 $25m 2,400 18.75 $20m 2,100 12.5 1,800 6.25 1,500 FY19 FY20 0 FY19 FY20 FY19 FY20 Category Axis 16
Exponential Released RAY Workbench growth in data 4.0 leading the industry with adaptive A.I allowing assets to drive A.I unique productivity platform based pricing 200 150 Billions 100 50 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 17
Driving to be a top 10 Media Localization company We want to be a leading provider of media localisation globally. To do this we need to use innovation and not just scale. Platform for huge volume turnaround in short timeframes Example of our media workbench use for movie feature We have partnered with leading industry technology providers We have increased our media sales teams Closed deals with existing translation customers Example of our media workbench use for online conference 18
Organic Growth Aggressively approaching new marketing opportunities Enterprise focus gaining traction and signi fi cant opportunities in the pipeline COVID-19 driving change in purchasing decisions positive for Straker Conferences and customer interactions going virtual Online marketing campaigns focused on better value through A.I, automation and simplicity 19
FIRST 6 WEEKS TRADING IN FY21 We have maintained flat pro-forma sales orders 5 through the worst of the COVID-19 crisis. 0% We saw a drop in some core customer sales orders 4.2 4.2 3.75 as they went into lockdown We have offset the sales orders drop with our ability to be agile through the crisis and open up new 2.5 $NZ revenue streams Millions Seamlessly moved organisation to work remotely within a 2 week period 1.25 Based on first six weeks’ performance and what we can see ahead, revenue expected to be stable over 0 FY21 relative to FY20 FY20 FY21 YoY Like for Like Sales Orders 20
M&A 210 Advanced stage Still a large number of potential Current acquisition opportunities opportunities around 140 $200m in total Possible new targets come to revenue spread Mid stage market across 30 opportunities Ability to increase earn out and use 70 less cash up front Our ability to integrate faster Early stage proven with NZTC 0 Will re-engage with all previous opportunities Total revenue of acquisitions opportunities in pipeline 21
SUMMARY Committed to M&A and see Strong gross margins due to opportunities post COVID-19 technology advantage Have carried out restructuring activity to Revenue has been steady through lower cost base moving forward COVID-19 with new opportunities Repeat revenue customers now Strong financial position to get comprising 86% of total revenue through COVID-19 and continue to execute growth strategy 22
www.strakertranslations.com grant@strakertranslations.com ronn.bechler@marketeye.com.au 23
Appendix 24
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