ASSET VISION CO LTD — Annual Report 2014

Aug 25, 2014

Full Year Results – 30 June 2014

2014 Results

Highlights

• EBIT in line with guidance on normalised basis:

• Revenue $63.32m (Actual $35.9m)

• EBIT $6.72m (Actual $4.6m)

• Improved last quarter trading:

• People performing well and to expectations

• Security results improved and industry doing well

• Communications down due to orders not being fulfilled by June

• Cash flows very good - profits turned to cash quickly.

• Fully franked dividend of 3 cents per share to be paid in October 2014

• Regime change has gone well and all businesses with good prospects

• Acquisition of Pure Hacking announced

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Financials Summary (normalised) Year ended 30 June 2014

$'000		Revenue	EBIT
People		40,969	3,449
Securus		3,207	1,376
Hacklabs		2,181	826
Security		5,388	**2,202 **
Allcom Networks		15,505	1,444
Allcom Consulting		1,453	372
Communications		16,958	1,816
Corporate			(751)
Total		63,315	6,716

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Results Detail

People:

 Good result to expectation

• Revenue impacted by less contractors than expected through the year

 At year end billable people (236) up on expectation (216)

• Profit impact offset by higher than expected permanent placement income

• Additional panel wins throughout the year

• Past panel wins starting to impact

• Continue to farm existing clients

• Opportunity to build via new clients and markets

 NSW market a growing opportunity

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Results Detail

Security:

• Improved last quarter

• Market remains buoyant

• Margins better than forecast due to revenue mix

• Privacy Act changes enacted March 2014:

• Driving activity and re-evaluation of security issues

• “C” level now more engaged in security matters

• Additional panels won during the year

• Market continues to grow

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Results Detail

Communications:

• Result impacted by deliveries not made by 30 June 2014

• Won share of deals, delivery dates outside of our control

• Income deferred from June to July gives FY15 a positive start

• Margin better than forecast

• Constant/long-term engagement with strategic customers offers solid base

• Some significant wins in Managed Service offering

• Opportunities arising to widen offering to customer base

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Balance Sheet

• good liquidity

• • no drawn debt • Additional debt facility obtained

• Strong capital base

Balance sheet extract	Balance sheet extract	Balance sheet extract	$'000
Cash			5,552
Receivables			7,681
Other			1,947
Current Assets			15,180
PP&E			476
Deferred tax			1,091
Intangibles			43,656
Non Current assets			45,223
Payables			4,259
Accruals			3,581
Deferred consideration			1,005
Other			988
Current liabilities			9,833
Deferred consideration			4,190
Other			141
Non-current liabilities			4,331
Net Assets			46,239

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Pure Hacking Acquisition

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 Quality business, well led

• Similar offerings as existing businesses

  • Additional payments:

    • 5.5 times FY15 EBIT minus completion payment

    • 3 times EBIT growth from FY15 to FY16

  • Further payments in cash or scrip at PS&C discretion – ideally 50/50

• Managed Service well developed

• Grows PS&C capability and scale

• Payment of 4 times FY14 EBIT:

• 50% cash 50% in scrip

  • Funded with existing cash and debt facilities. Contribution on a full year basis to be in $2.5m to $3m EBIT.

  • Acquisition is EPS accretive

• Payable at completion

• Scrip escrowed over 2 years

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Security Industry

• High growth, high margin services business

• High franchise value

• Commentary and research on global spend on security doubling to 2017 with some saying tenfold increase to 2023

ANZ market and PS&C:

• Fragmented market

• Remains high margin

• Consolidation will lead to:

• Economies of Scale – better buying, resource management and cost saving

• Credibility – bigger customers dealing with ANZ’s largest – will help push to Managed Service solution

• PS&C aiming to become the major player in the industry

PS&C Ltd

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Summary & Outlook

• Normalised EBIT in guidance range

• Improved last quarter from Security business

• Some important wins during the year

• Long standing relationships and defensive nature of earnings should stand us in good stead

• Opportunities arising for all businesses

• Pure Hacking acquisition strengthens PS&C capability

• Additional acquisition opportunities are available

Private & Confidential ~ PS&C Ltd

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