Half-year results 31 st December 2018 GBST GBST HO HOLDINGS LDINGS LIM LIMITED ITED (ASX: (ASX:GBT) GBT)
Creating vital technology solutions for the world’s leading financial brands, built on more than three decades of market expertise and product innovation 2
Results at a glance: 1HFY19 vs 1HFY18 NPAT Cash NPAT Revenue EBITDA 4.6 3.7 3.7 7.6 45.6 4.4 43.9 $ 3 .7 $ 43 .9 $ 5 .4 $ 4 .4 42.7 5.4 3.6 2.5 4.6 MILLION MILLION MILLION MILLION UP UP UP UP 1H 2H 1H 1H 2H 1H 3 % 1H 2H 1H 48 % 24 % 1H 2H 1H 19 % FY18 FY18 FY19 FY18 FY18 FY19 FY18 FY18 FY19 FY18 FY18 FY19 Cash EPS 10.3 EBITDA EPS R&D 9.9 6.7 17% 5.5 6.5 5.4 Margin 6 .5 5 .4 5.3 $ 10 .3 12% 3.7 12 % 11% 4.8 CPS MILLION CPS UP UP UP INLINE 1H 2H 1H 1H 2H 1H 24 % 1H 2H 1H 1H 2H 1H 48 % 113 % FY18 FY18 FY19 FY18 FY18 FY19 FY18 FY18 FY18 FY18 FY19 FY19 3
KEY POINTS 1HFY2019 – Key metrics Half-year Revenue was up 3% to $43.9m from 1HFY18, $1.2m ▪ favourable to 1HFY18 with licence fees and third party up $1.7m and service revenue down $0.5m Results Summary ($’millions) 1HFY19 1HFY18 2HFY18 Half-year operating expenses were $38m, $5m above 1HFY18, ▪ Revenue and other income 43.9 42.7 45.6 reflecting Strategic R&D driven one-off and transitional costs; a Operating EBITDA before strategic R&D 5.8 9.7 10.5 short term contractor increase to secure client opportunities and deliver to time frames; cloud expenditure offsetting capital Less strategic R&D (0.4) (4.8) (2.9) expenditure - Gross strategic R&D (10.3) (4.8) (9.9) Gross strategic R&D investment $10.3m, up 113% from $4.8m - Strategic R&D capitalised 9.9 - 7.0 ▪ 1HFY18. Half-year Net Strategic R&D expense of $0.4m (1HFY18 Operating EBITDA 5.4 4.9 7.7 $4.8m), after capitalisation of $9.9m in costs (no capitalisation in Restructure and other non-operating expenses - (0.3) (0.1) 1HFY18) EBITDA 5.4 4.6 7.6 Operating EBITDA and EBITDA $5.4m up 12% and 19% ▪ EBITDA % Margin 12% 11% 17% respectively from 1HFY18 Net finance costs - (0.2) 0.2 Income tax benefit of $0.7m for the half-year primarily reflects ▪ R&D tax credits. The prior half-year recorded an income tax Depreciation & operating amortisation (1.7) (1.4) (1.2) benefit of $0.6m Investment amortisation (0.7) (1.1) (0.8) 1HFY19 Net Profit after tax of $3.7m up $1.2m from 1HFY18, PBT 3.0 1.9 5.8 ▪ but in line from 2HFY18 Income tax credit/(expense) 0.7 0.6 (2.1) Adoption of AASB15 resulted in $1.2m net profit after tax NPAT 3.7 2.5 3.7 ▪ recognised in retained earnings Adjusted NPAT 4.4 3.6 4.6 Net cash inflow from operations of $10.0m up 86% from ▪ Basic EPS (cents) 5.4 3.7 5.5 1HFY18 and 71% from 2HFY18 Adjusted EPS (cents) 6.5 5.3 6.7 An interim dividend has not been declared given the significant ▪ Dividend per share (cents) - 2.5 2.5 investment required in Strategic R&D Cash inflow from operations 10.0 5.4 5.8 Cash at bank 9.6 15.0 11.4 To be read in conjunction with the GBST financial report for the half-year ending 31 December 2018. Please note that due to rounding to the nearest $million, numbers presented in the table to the left may not add up precisely to the totals provided. 4
Strong global presence Recognised globally for quality, innovation and scalability GBST WEALTH MANAGEMENT Registry and fund administration software for life and pension ▪ companies, brokers, fund managers, platforms and banks Clients in Australia, Asia, New Zealand and the United ▪ Kingdom Flagship product is GBST Composer – a market leading ▪ integrated administration system GBST has a leading market position in Australian wealth ▪ management products and is well placed to benefit from continued UK industry consolidation AUSTRALIA Established market leading presence ▪ Post trade processing leader with ▪ GBST CAPITAL MARKETS UNITED KINGDOM REST OF WORLD 63% of market (by volume) Capital markets transaction processing software for global and Strong market position with over ▪ Custody & broking growth ▪ Three new capital market customers ▪ ▪ regional investment banks $230Bn AUM in Hong Kong market Engaged with tier-1 wealth ▪ Clients in Australia, Asia, Europe and North America Catalyst delivered and now live ▪ ▪ Strong growth opportunity management organisation for ▪ for Syn~ strategic migration program Flagship product is Syn~, a multi-product, multi-market, multi- Multi-year build & ▪ ▪ currency, multi-entity transaction processing platform used by implementation for leading Partnership model to drive Rollout of tax solutions continues ▪ ▪ leading global banks and investments houses provider of retirement, scale in new markets such with client uplift & new sales investment & protection as Japan and USA Syn~ is the post trade processing market leader in Australia ▪ products with ~25% market share of transactions 5 5
Group Strategic Pillars – FY2019 OUR BUSINESS AND SOLUTIONS OUR PEOPLE Growth Delighted Best Enterprise Performance Clients Solutions Agile & People ▪ Deliver E-VOLVE ▪ Educate, pilot and ▪ Embed our GBST ▪ Continual ▪ Implement new improvement in releases to clients embed enterprise performance Clients client satisfaction agile methodology framework ▪ Complete Catalyst ▪ Expand Syn~ ▪ Retain clients with and rollout to clients ▪ Progress Dev Ops ▪ Celebrate/Reward adoption in Asia renewals across all product high performance Pacific ▪ Plan and scope for lines ASX CHESS changes ▪ Continuously ▪ Deliver projects to ▪ Expand "T ax plan to ensure client improve capabilities Management" readiness in our people solutions ▪ Innovate and ▪ Partner with other ▪ Expand partner enhance product organisations to grow distribution offerings key capabilities relationships for different markets and ▪ Enhance risk verticals management culture 6
Attractive investment proposition Long term recurring revenues with well established client base Diversified business model with Regulatory change is driving global client and geographic Well positioned to continue to customers to increase footprint capture change and growth in investment in technology global wealth management solutions. products Long term recurring revenue with sticky customers Investing in future opportunities Flexible products, adaptive to and technologies to drive future clients and reporting revenue and market leadership requirements 7
Results summary: Wealth Management 8
Who are we? ENDORSEMENTS GBST won Vitality’s 2018 New Suppli lier of the Year Wealth Management – market leading position, significant long-term opportunity “There are well “We are delighted to have GBST as documented difficulties the strategic technology partner for in implementing Tax our new proposition, VitalityInvest ” CLIENTS BUSINESS OPPORTUNITY Aware Investment Management (TAIM), Focus on wealth administration Justin Taurog, Managing Director, Regulatory change is increasing however some large and registry Sales & Distribution at the reporting and compliance MARKETS funds, including VitalityInvest and VitalityLife burden on industry participants GBST’s Composer platform is the Customers in Australia, Asia, New Mercer, Australian top direct-to-consumer software This is forcing increased Zealand and the United Kingdom Super and UniSuper platform for distribution of tax- investment in automated have made public their Significant market opportunity in incentivised products in the UK technology solutions such as use of external the £6.9 trillion UK investment GBST Composer Well established provider in industry consultants to optimise Australian wealth management Increasing consumer demand for tax management Market growth is driven by and broking online, low cost delivery from (GBST 2017). This market and regulatory change – digital platforms Benefitting from UK industry suggests that at least Composer offers a digital solution “By partnering with GBST, we can regulatory change Catalyst Project delivered a some funds are taking which allows wealth managers to offer a compelling comprehensive market-leading digital front-end address regulatory burden and this relatively new outsourcing proposition to this GBST is now partnering with capability, already driving new reduce cost obligation seriously, Eagle investment systems to growing market.“ client wins and also that it is not Total assets managed on provide GBST Tax modules to GBST is working with global prohibitively difficult to their service offering Composer continue to grow in Enrique Sacau, Head of Financial pensions consultant to provide a the UK to over $234bn implement.” Services at Equiniti first-of-a-kind after-tax GBST now powers the largest benchmark Productivity investment platform in the UK Commission on GBST and Australian markets 9
Wealth Management clients Investment funds and institutions 10
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